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The Union Fenosa electric company, citing higher petroleum prices, says it will raise its rates on July 1. How much of an increase remains to be announced. At this time of the year, most of Panama’s electricity comes from hydroelectric generation rather than gas or oil-fired power plants, but higher world oil prices would drive the actual cost of providing the electricity that Panama needs up in the dry season that will come at the end of the year.

Panama’s public hospitals are experiencing many shortages and complaining that the Moscoso administration’s post-election budget cuts may force them to close down some of their functions. At the Hospital del Niño, the administration says that it needs a $50 million budge to meet demands, but the government is only giving them $20 million and purchases of equipment and supplies have been cut by nearly half. The hospital in Las Tablas has suspended surgery in its operating room when the one surgeon’s contract expired and was not renewed. At the Anita Moreno Hospital in La Villa de Los Santos, all 16 staff physicians signed an open letter denouncing the lack of funding, declaring that “we cannot remain silent in the face of the chaotic situation that our hospital faces.” At the regional hospital in La Chorrera, the only cardiologist died last year and there is no money to hire a replacement. Some of the clinics at San Miguelito’s San Miguel Arcangel Hospital are closed because there is no money to pay the private contractors that run them. And the new wing of Santo Tomas Hospital, whose pre-election inauguration was a major Mireyista campaign event, remains largely unused for lack of equipment.

The nation’s teachers’ unions are complaining that 1,200 of the men and women who teach in the nation’s public schools have not received paychecks due to them, with many of the arrears going back three months to the beginning of this school year. The Education Ministry, for these past five years a wholly-owned subsidiary of the Rosas family, has in most of these cases failed to pay teachers who started in new school assignments this year. The Rosas family’s MOLIRENA party --- a junior partner in Mireya Moscoso’s coalition --- forced many public school teachers to join their organization, pay dues and support the Rosases in their efforts to purge party rivals, but on May 2 the election results indicate that most of these new party members voted against MOLIRENA.

Prominent people in Panama’s sports fishing and scuba tourism industries are complaining that the waters around Coiba Island have been stripped of much of their wildlife by commercial fishing operations using longline and purse seine techniques. The Moscoso administration has granted about 100 licenses for such operations, mostly to Asian companies, and there is also a fair amount of poaching in Panamanian waters, mainly by Costa Rican and Colombian vessels. These commercial fleets are in search of tuna but the methods that they use tend to be fairly indiscriminate in what they kill, particularly in the case of purse seines. A number of photos taken in Panamanian waters by sports fishing enthusiasts have shown billfish being taken in the large seines along with tuna. Part of Panama’s problem is that we lack the resources to adequately patrol our waters in order to enforce fishing regulations, but critics say that another part of the problem is that the sale of too many licenses and the opening of a tuna processing center in Puerto Armuelles are Moscoso administration policies that overtly promote overfishing. The situation has prompted Nancy Hanna, who runs the panamainfo.com website and has been active in promoting Panamanian tourism, to begin an online petition drive urging the government to take action.

The United States has reassigned funds originally destined to the Panamanian court system to non-governmental groups and people close to our courts say that money in other foreign assistance pipelines to this country’s judiciary has also dried up, but the European Union denies that it’s participating any any cutoff. “I can affirm that the EU has no intention to cut off its assistance to the Panamanian court system,” European spokeswoman Diane van der Stegen told The Panama News, adding that later this year the EU will start to disburse a 6-million-euro aid package to the courts here.

The Coalition of Canal Unions is complaining that the Panama Canal Authority (ACP, by its Spanish initials) is moving ahead with canal expansion plans without a mandate and in a manner that will cost their members jobs. The immediate issue is the ACP’s announcement that it will build a $45 million dredge, but according to the unions, without having first done a rigorous analysis of what the canal’s needs will be and without a public discussion of how the canal expansion work will be done, and by whom. The labor objections add to opposition from farmers who stand to be displaced by the flooding of the Western Watershed and from businesspeople and canal experts who doubt that the contemplated expansion project can be amortized with ship tolls generated from extra canal traffic. Later this month the ACP is expected to release the results of its studies, which have all along proceeded from the conclusion that new dams will be built to flood the Western Watershed and a third set of locks that can accommodate larger-than-Panamax ships will be installed. Before any such plan can take effect it would have to be approved in a national referendum.

After a two-day strike that was largely effective outside of the capital but mostly a dud in the Panama metro area, the bus syndicates agreed to resume operations and the government promised a one-week freeze on diesel and gasoline prices. The drivers has demanded a reduction in fuel prices or else an increase in fares to cover their extra costs. It was a clear defeat for the bus drivers, and it may well lead to the breakup of the National Transportation Chamber (CANATRA), the national umbrella group of bus syndicates.

Panama Oeste’s second-largest municipality, Arraijan, stinks these days. A few years ago this community privatized its garbage collection, giving the contract to a company called CREDESOL, which has gone bankrupt and is now functioning under a court-appointed administrator. Privatization means that residences and businesses that don’t pay don’t get their wastes picked up, and during the economic woes of the past few years a lot of people couldn’t afford to pay. Generally such people would take their garbage to the side of a highway and dump it there, and CREDESOL wouldn’t pick it up. Occasionally, when the odors and rat populations get out of hand, someone will set such roadside garbage piles on fire. With a substantial part of the population not paying, CREDESOL’s initial economic projections became meaningless. To get the money that they need to continue, CREDESOL raised rates for supermarkets. However, the city council had never approved the increase and a number of the businesses have refused to pay it. Then there is the question of how to dispose of the refuse, as Arraijan has no city dump. CREDESOL was using La Chorrera’s dump, but the mayor in the next door city, noting that the landfill will only last a few more years, closed it to Arraijan garbage. Thus on June 3 CREDESOL workers decided to make their protest in the national style, and blocked the Pan-American Highway for an hour. Nothing was resolved.

Mireya Moscoso may be in a big rush to negotiate a free trade agreement with the United States before she leaves, but meanwhile in the United States the Bush administration has effectively admitted that there are not enough votes in the Congress to approve such treaties. That tacit admission came by way of the US president signing the Central American Free Trade Agreement (CAFTA), but then declining to submit it for congressional consideration before the November elections. In the United States the deal faces strong opposition from farm and labor groups.

Ruling on a major intergenerational conflict and worsening the Social Security Fund’s actuarial problems, the Supreme Court has held that people need not quit working to collect their old age pension checks. Since September of 2001 Seguro has maintained that those who continue working can’t collect pensions. The public argument has been that with chronic high unemployment the long-term reality in this country, older workers should step aside to make room for younger people in the labor force. The underlying financial reality behind the policy was an attempt to cut back on the amounts paid out for pensions. However, the high court ruled that the right to work is constitutionally protected and that vested retirement benefits can’t be taken away in order to force senior citizens to give up this right.

Last year, in a widely criticized decision, the Supreme Court banned Generally Accepted Accounting Principles in Panama. Now we see one of the results in a dispute over government phone bill arrears. The government, which owns 49 percent of Cable & Wireless Panama, says that the company made money in the past fiscal year and is thus owed enough in dividends to pay off its phone debts. The parent company in London also reports a profitable fiscal year. However, C&W Panama argues that those are merely according to Generally Accepted Accounting Principles, but by the Panamanian way of figuring things --- basically putting a $136 million special charge that in other places would be spread out over time onto this year’s tab --- the company lost money despite its $115 million operating surplus. Thus no dividends, and the possibility of phone shutoffs in government offices.

The Union Fenosa electric company has cut power to the squatter community of Villa Escondido, in the David corregimiento of Pedregal, because the 300 families that live there can’t prove that they own the land. According to public records the land belongs to the national government, and as the residents have occupied it for some time and made improvements, the normal course of action is that the would apply through the Housing Ministry for land titles. But some politically connected individuals also apparently want the land, and thus, even though Villa Escondido had been legally connected to the power grid and its residents had been paying their bills, Union Fenosa took it upon itself to turn off the lights. The residents vow to stay.

A settlement of a monopolistic practices case between the Free Trade and Consumer Affairs Commission (CLICAC) and 13 ad agencies, which also had the blessing of the Cabinet Council and Attorney General José Antonio Sossa, has been rejected by the Eighth Civil Court. The case arose when the agencies fired Control de Inversion Publicitaria SA and replaced it with IBOPE Time SA as its arbiter of broadcast audiences and newspaper readerships. The former company sued, alleging anti-competitive practices. As a practical matter, Panamanian ad agencies do not use any scientific measurement of audiences for ad placements, but rather have established relationships with specific media, usually based upon family ties and bulk discount schemes, such that ads tend to be placed without regard to clients’ needs. It’s not a crime to lie about newspaper readerships or broadcast audiences here, and such figures as are stated for these things are largely fictional. But these aspects of the advertising cartel’s operations were not central to this particular case. Here it was a matter of the ad agencies agreeing to have just one arbiter, to the exclusion of the company that had previously held the job.

The Eighth Civil Court has found Sociedad Macello SA, Servicarnes, Productos Sonaneños, Coclesana de Carnes, Sociedad Importadora Ricamar and Casa de la Carne --- who among them dominate the beef slaughtering business in Panama --- liable for illegally coming to either written or tacit agreements to fix the prices of several cuts of beef in 1999 and 2000. The managements of the companies admitted to discussing their costs among themselves, but denied that there were any monopolistic agreements. The court will announce the civil fines to be imposed.

Racing against the calendar to be done in time for Mireya to cut the ribbon before she leaves office, the Bilfinger Berger AG construction firm has added another $340,000 to the bill for changes and additions to the project. Originally priced at $103.9 million, the project is still less than one-third of one percent over budget.

The Paris-based Organization for Economic Cooperation and Development (OECD), essentially a group of and for the interests of the world’s leading industrial powers, has postponed its Global Forum until the end of next year. That means that its plans to move against “tax havens,” which are expected to be the main topic of business at the forum, will also be postponed. At one point the OECD had Panama on its list of tax havens because this country’s bank secrecy laws prohibit the disclosure of financial information to foreign tax authorities, but after the group backed down on tax secrecy demands against several European jurisdictions it was obliged to also take Panama off the list. However, a new OECD blacklist has been issued, which includes Andorra, Barbados, Brunei, Costa Rica, Dubai, Guatemala, Hong Kong, Liberia, Liechtenstein, Macao, Malaysia, the Marshall Islands, Monaco, the Philippines, Singapore and Uruguay. The OECD’s big political problems is that “financial privacy” is an important issue for part of George W. Bush’s conservative base of support and within the Democratic Party most of the Congressional Black Caucus opposes restrictions that hit Caribbean and African countries with bank secrecy laws, and that odd coalition has limited US support for moves against the “tax havens.”

Panama’s COPA airlines, half-owned by the US-based Continental Airlines and half owned by Panamanian investors dominated by members of the Motta family, has apparently lost its bid to buy Colombia’s bankrupt AVIANCA airlines. It seems that AVIANCA will be acquired by the Brazilian Sinergy/OceanAir aviation company.




Also in this section:
Business & Economy Briefs
Cutting construction costs the common but illegal way
What happens if you wait until the last day to pay Seguro
Panama Canal complies with ISPS
New readership record for The Panama News

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