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editorial

Canal to start producing electricity for the market again

ACP corrects a bad decision

The Panama Canal Authority (ACP) has announced that it will once again be selling electricity that it generates at the Gatun and Madden dams to the nation’s ETESA power grid. Earlier the authority had announced that it would phase out its power generating business. Thus ends a self-destructive economic policy experiment, one that belied pretensions that the ACP shared with a lot of politicians in a lot of places around the world.

How many candidates have told their would-be constituents that they intend to “run government like a business?”

Likewise, the ACP has presented itself as a for-profit business corporation run for the benefit of its shareholders, the Panamanian people. But what we have found with the great majority of politicians who are elected promising to run government like a business is that once in office, they proceed to run government for the benefit of certain businesses, which is an entirely different proposition. That has been only part of the problem with the ACP, which took management of an impressive conglomerate that not only included the canal business, but also important power generation, recreation, tourism, fisheries, publishing, real estate and other assets from the Americans, and then shed or tried to shed most functions other than getting ships through the canal. This doesn’t well serve the interests of the Panamanian people.

It’s a problem that flows from the Panamanian government, of which the ACP is a semi-autonomous part. Since at least the death of Omar Torrijos the Panamanian government has been heavily infested with, and sometimes under the complete domination of, dogmatic people who would buy any proposition, no matter how foolish or inimical to the interests of the Panamanian people, that has a “privatization” or “free market” label attached. The problem was aggravated after the 1989 US invasion and became very severe under the Pérez Balladares and Moscoso administrations.

Toro and Mireya may not be able to stand one another, but one key aspect of their foreign policies is also indicative of a domestic economic philosophy they held in common. Their support for Panama’s integration into Central America was nothing more than an embrace of the banana republic social model. Whether it was Toro’s pronouncements about how the Honduran maquiladora sector was the way that Panama ought to go or or Mireya’s kleptocratic proclivities, they both supported a paradigm in which a tiny elite, beholden to and personally benefiting from their assistance to foreign corporations, enjoys luxuries and impunity for their abuses while most of the country’s people are peons who don’t count. Unlike Guillermo Endara, both Ernesto Pérez Balladares and Mireya Moscoso took their seats in the Central American Parliament because they needed the immunity from investigation and prosecution that these positions confer.

Meanwhile, the technocrats and members of the business elite that these presidents appointed to the ACP board of directors have avoided the corruption of which Toro and Mireya are poster children --- at least with respect to the canal --- but they have by and large bought into a philosophy that has led them to abandon businesses that they should have continued for the ACP’s profit and the public’s benefit.

And so the impressive multilingual publishing house that was the Panama Canal Commission print shop was dismantled, rather than continued or converted into a City of Knowledge publishing house, under the wrong presumption that the private sector would pick up its functions. And so the ACP has not made profitable use of all the housing it owns, and instead has torn a lot of it down. And so the old program to control Gatun Lake’s crocodile population has been discontinued. And so the Panama Primate Sanctuary has been evicted. And so the Gatun ski docks are closed, the Gatun Yacht Club is under-used and the Gatun Tarpon Club has been torn down. And so there is a long-running effort to evict the Pedro Miguel Boat Club.

Worst of all, because it represents the biggest loss to the Panamanian people resulting from the ACP’s privatization policy, has been the acceptance of the argument that the generation of electricity for sale on the public market, being an activity that generates handsome profits, should be left to the private sector.

That’s completely insane. Why shouldn’t the Panamanian people’s canal business use the dams that are a necessary part of running the canal to generate power, sell it on the open market and add to the revenues it brings in for the people of this country? The canal directors and managers decided to phase out the sale of electricity because Toro privatized the state-owned power company, because Mireya let a former ENRON exec write the nation’s energy policy, because Martín has mostly done what the big business boosters who surround him have urged him to do, and the political appointees on the ACP board tend to go with the flow. It was an ideological decision in favor of narrow, mostly foreign-owned, special interests. What’s best as a practical matter for this country did not figure into the equation.

Now we have had an energy crisis, for which the neoliberal doctrinaires have been able to offer no solution. Now the ACP’s policy of throwing away one of its most profitable sidelines has been shown to be as foolish as it really is. Now there has been a reconsideration, and a proper correction has been undertaken.

But that ought not be the end of it. Are they really talking about a new set of locks through which 52 million gallons of water will flow out to the ocean each time a ship goes through --- and not planning to install generators in the tubes through which that water flows? What an irresponsible answer that would be to the many serious businesspeople who worry that it might not be possible to amortize the canal expansion project through ship tolls alone, and that too steep of a rise in tolls will merely prompt the world shipping industry to seek alternatives to the Panama Canal.

Moreover, what about flooding the Western Watershed? Yes, it could be a matter of paying the displaced campesinos as little as possible for their flooded farms, overpaying Petaquilla Minerals for its unproductive mining concession, and doling out lucrative construction contracts to all the best connected family businesses. That's the sort of thing that the critics fear. But such a project could also be done well enough to give the ACP the power generating resources to make the sale of electricity even more important than ship tolls on the revenue side of its ledgers, and to create options to generously compensate farmers who are forced to move with new farms that have irrigation water, waterfront properties that could be turned into attractive tourism businesses or productive fish farms in the new lake.

However, creative and equitable solutions won't be found so long as Panamanian public institutions act on the beliefs that hugely profitable ventures belong in the hands of big private corporations and that people without much money are disposable nuisances to be cleared away at the cheapest cost. That sort of banana republic mentality is unsuitable for Panama. We need to run our canal on a different basis.

Bear in mind…

When the rich think about the poor, they have poor ideas.

Evita Peron

If you want to make peace, you don't talk to your friends. You talk to your enemies.

Moshe Dayan

People see God every day; they just don't recognize Him.

Pearl Bailey