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December 17 will be seen as an important date in the history of Latin American economic integration. On that day Colombia, Ecuador and Venezuela became associate members of the South American Common Market (MERCOSUR), joining founding members Brazil, Argentina, Paraguay and Uruguay and associates Chile, Bolivia and Peru. Also on that day, President Martín Torrijos addressed the organization’s summit in Brazil and asked for Panamanian membership in the group, as did President Vicente Fox of Mexico on behalf of his country. While US attempts to create a Free Trade Area of the Americas on the NAFTA model have languished, the expansion of MERCOSUR has been the centerpiece of a Latin American alternative to Washington’s proposals.

A sixth round of free trade talks between the United States and Panama has ended without an agreement, so negotiators will be meeting again in Washington between January 10 and 16. As has been the case all along, the main bone of contention is about agricultural tariffs, with the United States wanting to open the Panamanian market but producers here complaining that they will be ruined by the influx of US products that are both government subsidized and produced on a vast industrial scale. The Americans have also been resisting Panama’s attempts to break down US protectionism in the cruise tourism industry, by getting this country classified as a “distant port.” With such a classification passengers could board a cruise liner headed for a US port in Panama, which presently is not allowed and which part of the American tourism industry would rather not allow. Panama is also resisting US demands to end discrimination in favor of Panamanians in Panama Canal Authority contracting.

The president of the real estate industry group Asociacion Panameña de Corredores y Promotores de Bienes Raices (ACOBIR), José Angel Delvalle, has called on the government to crack down on illegal and unethical real estate sales practices in Bocas del Toro and the Chiriqui highlands. A number of unlicensed people have gone into the real estate business there, some of them are crooks in any sense of the word, and some have in cooperation with corrupt public officials been selling lands from which the rightful owners have been unlawfully dispossessed. ACOBIR’s call coincides with a broad investigation by the Ministry of Economy and Finance’s Catastro office about the widespread land grabbing of recent years, and with the criminal prosecution of former Bocas del Toro Mayor Eladio Robinson, who is in jail facing charges that he evicted families with well established squatters’ rights from lands that were then sold to foreigners.

It seems that the Panama Canal Authority (ACP) has begun Fiscal Year 2005 full speed ahead. The fiscal year began on October 1 and the authority says that in October and November they set a two-month record for tonnage of cargo transiting through the canal. As in 46,956,399 Panama Canal/Universal Measurement System (PC/UMS) tons for those months, 7.1 percent more than the same time in Fiscal 2004. In November they put a daily average of 778,176 PC/UMS tons through the waterway, which topped the old record set this past April by more than 4,000 tons.

Although the government’s 2005 budget is austere, one area where there will be a spending increase will be the road system in the Ngobe-Bugle Comarca. The Social Investment Fund plans to spend $23.4 million on the roads in this, the most economically depressed part of Panama.

The Economic Commission for Latin America and the Caribbean (CEPAL), whose headquarters is in Santiago, Chile, estimates that in 2004 Panama’s Gross Domestic Product will have grown by six percent. That’s up from 4.7 percent in 2003 and 2.1 percent in 2002. It appears to be part of a general economic advance across the region, an economic improvement that’s also mirrored in increased cargo passing through the Panama Canal and more activity in the Colon Free Zone.

Financial analysts for Credit Suisse / First Boston are saying favorable things about this country. They like the delay in the government’s presentation of a social security reform package, which had been expected in early December but has been put off until probably January to give various economic sectors and interest groups more opportunity to weigh in on the issue. But the bank does expect fiscal reforms from the Torrijos administration, noting lower than expected tax revenues as on sign of urgency and the government’s desire to get its financial house in order so as to be able to attract investment for a canal expansion project. Such a canal modernization, the bank believes, “holds enormous political upside for President Martin Torrijos and is key to our positive view of the credit.”

The IFO economic research institute in Frankfurt, Germany predicts that Latin America as a whole will see increased exports and better economic times during the first half of 2005 and notes that the region’s economic crisis and attendant exaggerated political and social woes of the past few years are over. However, the institute rated Panama’s economic performance as unsatisfactory, based largely on our high debt.

The National Front for the Defense of Social Security, and umbrella group of leftist organizations and militant labor unions, has issued a new version of its proposal to address the actuarial deficit in Seguro Social’s retirement fund and lesser financial problems with the other programs of the Social Security Fund (CSS). As before, the centerpiece of the plan is the transfer of the unsold real estate from the former Canal Zone to the CSS, something that was rejected out of hand during the Moscoso administration. The alternative plan would also raise the penalties for evasion or late payments, make a greater effort to recover losses due to embezzlement, corrupt contracting and other abuses over many years, eliminate the CSS subsidy to the National Bank of Panama through bond sales at less than market interest rates, exempt the fund from having to pay sales taxes on its purchases, assign a portion of net canal revenues to the CSS, reform the medicine purchasing system to reduce costs and transfer surpluses from other parts of Seguro Social and the deductions from thirteenth month payments to the pension fund. By doing all this the coalition believes that increases in the retirement age and other benefit cuts, as well is increases in deductions from workers’ paychecks could be avoided. The Torrijos administration may adopt parts of this plan, but it is unlikely that any canal revenues or much former Canal Zone real estate would be transferred to the CSS.

The US Aid for International Development agency (USAID), the Panamanian Council of Private Enterprise (CoNEP) and this country’s National Environmental Authority (ANAM) have signed a memorandum of understanding to create a National Cleaner Production Center, mainly so that various industries will dump less pollution into the Panama Canal Watershed. Whether it the San Miguelito cabinet maker who dumps the last bit of varnish into the storm drain or the Chorrera pig farmer whose sewage leaks into an adjoining stream, a growing number of industrial producers are to a trend that’s making the water of the Panama Canal Watershed, once legendary for its cleanliness, ever worse. The center will promote work methods that create less waste in the first place.

The consolidations in Panama’s banking sector continue, this time with Banco General buying BankBoston’s assets in this country. The move is in turn part of a global consolidation, given that BankBoston has been absorbed by Bank of America, which decided to shed the latter’s Latin American operations. In addition to Panama, BankBoston has done business in Colombia and Peru. BankBoston served mostly business clients, with a little bit of presence in the home loan market. According to El Panama America, BankBoston’s Panama branch has a loan portfolio of some $663.2 million and $270.9 million on deposit.

For some 40 years Refineria Panama held a monopoly over this country’s asphalt market, and when that operation passed into the hands of Chevron-Texaco the Moscoso administration enacted regulations to conserve that monopoly. Not only for the usual price gouging problems that generally accompany monopolies, it wasn’t a good idea, according to highway engineers. It seems that all along Panama has been supplied with a grade of asphalt that doesn’t very well withstand the tropical heat, which has driven our road repair costs higher than they ought to be over many years. Now, however, the Torrijos administration has revised the regulations to eliminate the asphalt monopoly. If we get down to prevailing world prices, we’ll be paying about 40 percent less for asphalt and getting access to the appropriate grades for our local conditions.

Work on the Brisas de Amador hotel and cruiser port project, planned for Perico Island and a landfill to be installed, has been suspended by the Inter-Institutional Committee on Reverted Areas Works. The work had been proceeding without the proper environmental permits and the developer, Abraham Hasky, had ignored orders to cease work until and unless the permits were obtained. The Interoceanic Regional Authority (ARI) also alleges that Hasky’s company is in arrears for contractual payments for infrastructure improvements.

The Figali Convention Center on Amador is the best known financial fiasco in which Jean Feghali Waked (Jean Figali) is involved, given his legal battles with building contractors and his non-payment of his debts to the Panamanian government for the land on which the center was built. (And quite frankly, the unfinished interior makes the place a not-so-wonderful venue for concerts, boxing matches and other events.) That problem, however, seems to be only the tip of the iceberg. Like some of the other impresarios most favored by recent Panamanian administrations, Figali was backed by Miami’s notoriously corrupt Hamilton Bank, which is now in the custody of liquidators for the US Federal Deposit Insurance Corporation (FDIC). According to a report by La Prensa’s Mónica Palm, the FDIC is foreclosing on loans in the amount of some $1.47 million made to Figali, and has sued in the Panamanian courts to sequester 11 of his businesses here. The companies whose assets the US authorities seek to freeze include Figaltex Inc, Panama Real Investment Corporation, Crillon Real Estate Corporation, France Field Real Estate Corporation, El Cangrejo Real Estate Corporation, Financiera Conavi Panama, Conimex Trading SA and Crillon Overseas Corporation.

The governor of Panama province, Eric Rodríguez, has issued new regulations for the sale of firecrackers, fireworks and other recreational pyrotechnics. Mainly, sale to minors is now prohibited and the police have been told to strictly enforce the regulation as New Year’s approaches.

The Legislative Assembly’s Labor Committee has approved a proposal to prohibit the firing of patients afflicted with cancer, AIDS or chronic kidney failure for missing work due to their illnesses. The proposal would have to be passed on second and third readings by the assembly and then signed by President Torrijos, and these developments are expected.

The nation’s electricity distribution companies are adding penalties to people’s power bills in poor neighborhoods where there is a lot of electricity theft --- but not in upscale areas where such losses are even greater --- and the nation’s Ombudsman (Defensor del Pueblo) is crying foul. Ombudsman Juan Antonio Tejada’s office points out that the imposition of surcharges on electricity customers to pay for the losses created by others is illegal. The problem --- or from the electric companies’s point of view, the profit --- is that people who are improperly charged and don’t notice it won’t complain, and all such overcharges accrue to the companies’s benefit, even if some individuals challenge the practice and end up not having to pay the surcharge.

Recently Minister of the Presidency Ubaldino Real has been talking about a $600 million “megaport” project to be installed on an artificial island to be built off of the former US military areas of Kobbe and Farfan, and some of the local media have been reporting that the project is near the bidding phase. It does seem that such a project is on the mind of the Torrijos administration, and that it would be a part of a canal expansion project, the the island largely to be made from material excavated to make a larger third set of canal locks. However, that canal project has not been formally unveiled, let alone passed in a public referendum as it must be to proceed. Thus, although the minister’s discourse is to be taken as a serious indication of the direction in which the administration is moving, it would be mistaken to believe that work on the megaport project is imminent. A seaport as suggested would have the advantage of being next door to the former Howard Air Force Base, which is slated for conversion to an air freight hub and duty-free industrial and import/export zone.



Also in this section:
Canal toll hike for container ships
Darien coastal management study
Organic farming boom in Costa Rica
Business & Economy Briefs

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