business & economy

After a semi-open bidding process in which most potential contestants were excluded by pre-qualification rules, the Panamanian subsidiaries of Irish-based Digicel and of Mexican billionaire Carlos Slim's Claro won the two new cell phone concessions. There will be hardware to be installed and if the past is any guide most likely litigation and negotiation with Cable & Wireless over the new companies' interconnections with the land line phone system, but the new services should be up and running by early next year. The new competitors will likely make competition according to price a new reality in the Panamanian cell phone market, and meanwhile the government has moved to make cell phone numbers the personal property of the user rather than of the cell phone company, which will make it possible for people to use the prepayment cards of more than one service provider on the same cell phone.

The National Medical Negotiating Committee (COMENENAL), the coalition of public health care system physicians that defeated the Torrijos administration in a 39-day strike over a new contract last year, has authorized another strike. This time it's about the plan, adopted in a "dialogue" among mostly PRD-controlled or allied organizations, to unify the Social Security and Health Ministry health systems. The plan would have those who pay into the former system foot most of the bill for the latter system, in short order bankrupting the Social Security Fund. It's a formula for privatization, COMENENAL argues, warning that if the National Assembly takes up the plan its members will walk off their jobs again. The Torrijos administration argues that because the public entities would still exist its plan is not privatization.

The last time, the threat was that the diablo rojo (painted former North American school bus), the mainstay of the metro area's public transportation system would be replaced by the large articulated buses of a bus rapid transit system. The only three things that President Torrijos understood when making that threat against the driver/owners who run the diablos rojos were that it was an opportunity to replace a lot of small businesses with one or two big businesses of his choice, that the buses would be large and hinged in the middle and that he hates the bus driver syndicates. The plan failed when it turned out that the president didn't understand the infrastructure concepts like dedicated lanes that other traffic physically can't use and platforms at which people pay their fares that are inherent in bus rapid transit and didn't take into account that his ongoing city street projects conflicted with this. Nor could he get the PRD caucus in the National Assembly to share his passionate enmity for the bus drivers and their organizations. Now, when virtually every urban transit expert worth his or her salt advocates some sort of mass transit system that doesn't use our current gridlocked city street system, the president has a new idea. Now he says that he's going to replace the diablo rojo buses with new ones to be purchased by the government and run by a state-owned bus company. That puts the hiring of drivers and purchase of buses within the political patronage sphere, if the president and his party can get away with it. The new metro area transportation transportation service that the president says he'll create will also be in charge of the computerized synchronization of Panama City traffic lights, something Torrijos promised in his first week in office and has not delivered.

The commie radicals in FRENADESO were the first to raise the demand for an across the board increase in wages to meet the ravages of high inflation. When the PRD-aligned groups and company unions within CONATO agreed to a minimum wage hike that didn't keep up with inflation that both caused a split within the government-recognized labor organization and gave the upper hand to the leftist unions in the battle for public support. Now, concerned about their prospects in next year's elections, the PRD is jumping on the bandwagon. The National Assembly is considering a proposed law to automatically raise wages with inflation. The proposal, which came to the legislature from the president, is meeting stiff opposition from business groups. One of the reasons that opponents cite is the PRD's habit of never doing their homework --- the proposal was submitted to the legislature without any study about its potential impact on the national economy.

Carmen Lita Dominicci, a middle manager at Banco Uno, used to be living pretty well. Now she calls the women's prison in Tocumen home. She systematically looted the funds of foreigners who thought their money was protected and in fixed term certificates of deposit at the bank, siphoning off and pocketing the interest earned to the tune of about $2 million. What recourse the depositors will have is unclear. There is no deposit insurance in Panama, but a private bank that doesn't reimburse its customers who have been robbed in this way generally will not be long for this world. If a bank goes under here, foreigners are last in line to receive compensation in any liquidation.

Back in the late 1990s when the Pérez Balladares administration was privatizing state-owned enterprises, people who had doubts were reassured that the proceeds from the sales would be deposited into a Fiduciary Fund for Development, the principal of which would be left untouched and allowed to grow while the interest would be spent --- to the extent that it would be spent --- on projects to raise the standard of living of Panama's many poor. At the beginning of 2000 the fund had deposits of $1.356 billion. Also by law, the proceeds from the sales of properties in the Reverted Areas --- the former Canal Zone --- were supposed to go into that fund. But from September of 1999 until September of 2004 the Mireya Moscoso kleptocracy diverted payments that were supposed to go into the Fiduciary Fund into the government's general fund and in many cases into the pockets of Mireya Moscoso and her friends and relatives. Under the Torrijos administration, according to La Prensa, only $35.2 million of $66.9 million that by law should have been deposited into the fund actually was. And now, with the Torrijos administration dipping into this and that fund for its exaggerated election campaign political patronage spending, the principal is being touched. And thus the principal in the fund is down to $1.127 billion when according to the law it should have hundreds of millions of dollars more than that.

After the privatization of the public electricity and telecommunications companies in the 90s, the government was left with 49 percent stakes in Cable & Wireless Panama and the Bayano Dam. Due mainly to exaggerated management costs and creative accounting, the Panamanian people have received very little from these investments. Meanwhile, the Torrijos administration is looking for extra funds for a spending binge that the president hopes will keep his party in power in next year's elections, and one of the things being considered is the sale of the government shares in these businesses. There is a problem about a public debate on this, however. There has been no appraisal of the shares' values. Moreover, the government has been fighting against citizens' habeas data suits under the Transparency Law that were brought to find out the financial details of Cable & Wireless that are in the government's possession. However, major financial decisions based on nonexistent or false data would have ample precedent in the current administration.

A record for smuggling, money laundering and tax evasion in Turkey? According to La Prensa that poses no obstacle to getting a casino license out of the Torrijos administration. ASAJA, the casino industry association, complains that despite this criminal record of his, Turkish citizen Sudi Ozkan was certified by the president's Public Security and National Defense Council as having a clean record and eligible for a casino license. The problem is getting down to questions about sources and international corruption --- Ozkan apparently showed some official certificate from Turkey that mentioned no criminal record, but reports in the Turkish press tell a different story and the Torrijos administration is taking the position that it need not investigate when sources readily available online contradict an official-looking piece of paper presented to it. Taking a stand contrary to the Gambling Control Board is Amado Barahona, the director of the Financial Analysis Unit that heads the fight against money laundering, who argues that it's legitimate to look further into matters when the press or other online sources contradict the certifications of foreign governments. The bottom line? Taken in its most innocent light, the president's security council people are in effect arguing that they get to collect paychecks without working, as they reject any duty to actually investigate claims that are made to them.

The worldwide spike in food prices is causing political instability in many places, but here in Panama the government is trying to blunt its sharp edges by key food subsidies. Some of these, especially the importation and sale of cheaper rice, annoy some of this country's farmers. One of the products that Panamanian farmers don't produce, however, is wheat. The government's Agricultural Marketing Institute (IMA) is now importing wheat flour and selling it to bakeries at prices that run between $9 and $13 less per quintal than the going market price. How long this subsidy will last is an open question, especially as world wheat prices appear to be headed up rather than down in the short term.

The worldwide price of corn is way up because the United States is paying large subsidies to its farmers to grow corn to make into ethanol, and that has meant less corn available for food and higher corn prices. In keeping with its "free trade" policies and reacting to public pressures over high food prices, the Torrijos government isn't complaining about US farm subsidies. It has instead approved the importation of 251,832 metric tons of corn, not necessarily from the United States, to keep Panama from running out of tortillas or chicken feed. Panamanian corn farmers aren't happy about it.

The Comptroller General reports that, as of the end of March, wholesale prices in Panama were 17.1 percent higher than at the same time in 2007. Import prices rose the most, much of which would be a function of the weak state of our currency, the US dollar. When one looks at the substantially higher rise in retail prices, it would appear that many retailers are passing on greater cost increases to their customers than they themselves have had to bear. This, in turn, may be in large measure due to anticipation of a continued climb in inflation.

The government's IPAT tourism bureau, basing itself on the number of foreigners coming in through Tocumen Airport, the Paso Canoa border crossing with Costa Rica, the cruiser ports and other points of entry, says that in the first three months of this year tourism went up 11.9 percent as compared to the same period in 2007. Part of this increase would be the change in tourist visa rules that require those who are living here on repeated tourist visas to leave the country more often because visas now have shorter durations, but there has been a real increase in tourism, and particularly from Europeans and Canadians, whose currencies are strong against the US dollar that we use here and so make Panama a better vacation deal for them.

On May 14 Panama set a record for electricity usage, 1,057 megawatts, two megawatts more than the record set the previous week. Most of this power was generated at hydroelectric dams, but one of the problems is that we haven't had enough rains and the reservoirs behind those dams are low. The government is urging people to conserve electricity, but due to unseasonably hot weather a lot more air conditioners are being run than usual and that has more than offset the ban on most lighted outdoor advertising in Panama City and measures to conserve power at government offices.

Los Santos province, home to the Sarigua Desert, is Panama's most arid place. The destruction of the natural tropical dry forests and erosion of the soil by overfarming and overgrazing there have surely not helped matters. Still, it was generally possible for farms and towns to get the water they need from wells. Now, however, some existing wells are starting to run dry and drillers are coming up with more dry or low-pressure holes, which are indications that local aquifers are shrinking. According to La Prensa, one problem in the province is that Panama really has no useful map of the groundwater supplies in Los Santos. The Ministry of Agriculture is calling on the US National Aeronautics and Space Administration to see if it has satellite resources that can help Panama map and better manage the water supply in the province.

An amendment to the Judicial Code that was proposed by a member of the Partido Popular and quietly inserted into the law under the direction of National Assembly president Pedro Miguel González in the late December legislative rush ought to be repealed, according to presiding Supreme Court magistrate Harley Mitchell. The law had for many years provided that the owner of a business that's in bankruptcy could not leave the country without a judge's permission. But the Torrijista - Christian Dem coalition changed that to in effect allow the owner of an insolvent business to strip the company's assets, take the money and run. Mitchell thinks that's bad for the administration of justice and submitted proposed legislation to undo this pro-corruption political maneuver. The legislature approved his suggestion and now we shall see whether President Torrijos signs the repeal.

Last year American investor William Murphy thought that he had bought Nautipesca, a Panama City marine and fishing supply store that was seized in the international roundup of the Ray Montaño drug gang and its members' assets. Now, nearly a year after the judicial auction in which he was the high bidder at $369,000, he has been unable to take possession. It seems that the government had no legal right to transfer the property until a criminal conviction was entered against its owner and that has yet to happen and may not for years.

Not long ago the Canada-based mining giant Teck-Cominco bailed out of the incohate copper mining side of Richard Fifer's Petaquilla strip mining project, which is in the exploration and planning phase. (The strip mining for gold and driving local people from their homes parts of the project, on the other hand, are proceeding even without the environmental permits.) Fifer's Petaquilla Copper Ltd. has announced that "On April 28, 2008, the Company commenced arbitration proceedings against Teck Cominco Limited ("Teck"), on the basis that Teck had not fulfilled the preconditions necessary to exercise its option to acquire one half of the Company's interest in the property. If the Company is successful in the proceedings, the Company will regain a 52% interest in the Project." In other words, the guy who has stalled the embezzlement prosecution against himself for misappropriation of the Spanish government's support for the Arias Madrid Brothers Museum in Penonome and for putting phantom employees on the payroll when he was governor of Cocle province is betting his project on litigation rather than production.

Richard Fifer's Petaquilla Minerals has announced that in August it will begin refining gold using cyanide in the process at its strip mine in the Donoso district of Colon province, and that it won't seek an environmental permit or do an environmental impact study because it doesn't need to do so. The company has already muddied the waters around the pit it's digging, and mobilized most local residents against them. However, company security guards with the support of the government have cordoned off 20 communities and are moving in ways subtle and not so subtle to drive all who oppose them out of their homes. The National Environmental Authority (ANAM) is going through the motions of opposing Petaquilla in court and administrative proceedings and Panama's fractious environmental movement is strongly united to do battle with Fifer. A lot will depend on who wins the PRD presidential primary. Balbina Herrera supports Fifer and Juan Carlos Navarro opposes him. An opposition president would be another question, but by Panamanian norms the price of political protection for a lawless operation goes way up when there's a change of parties in power. The bottom line appears to be that Fifer is going to grab what he can before Martín Torrijos leaves office.

The Panama Canal Authority (ACP) flatly denies it and has the Martinelli - Alemán Zubieta "transparency" rules in place that would allow them to fire any employee who talks about it with the press. Nevertheless, word is out in many directions from many sources that there are long delays for ships passing through the Panama Canal, due to a canal pilots' "work to rule" slowdown that has some vessels waiting nearly a week to transit. The canal management is insisting on no contract with the Pilots Union and no pay raise without some sort of increase in productivity --- even though Mr. Alemán Zubieta's well paid acolytes have been boasting for years about how his management genius has sharply increased canal productivity. The union is demanding a three percent pay raise, which means a less severe cut in real wages, given inflation.

Roberto Alfaro, the former Panamanian ambassador to the United States, has been nearly unanimously chosen as president of the Panamanian Business Executives Association (APEDE) for a one-year term beginning on August 1.

On May 14 Héctor Requena was elected rector of the Autonomous University of Chiriqui (UNACHI) by a narrow margin. He defeated the outgoing rector's preferred successor and another candidate, garnering 34 percent in the three-way race. Requena calls it a victory for those who want to change the university's image.

As a de facto means to cut back on public higher education and guarantee the better jobs in Panama to the kids of the rich who are educated in English-language schools, the University of Panama has requires students to pass English proficiency tests to get into the school and now to graduate. (A 2003 law provides that all public and private schools must teach and require proficiency in a second language, and this has been interpreted as mandatorily being English.) The problem? At the University of Panama some of 80 percent of students have been failing the English test they need to pass to graduate.

PRD presidential candidate Balbina Herrera says she's tired of "offensive websites." So what's her party going to do about it? It appears that under the guise of commercial regulations of proposed Law 281, now wending its way through the legislature, everyone doing business online in Panama will have to register and be approved by the government. The professed concern is online fraud, but of course Panama has laws against fraud, via the Internet or any other medium, which it does not enforce. The details of the proposal have not been published online, but corporate interests allied with the telecom companies, the ad cartel and the PRD have been pushing the "need" for this legislation, so we can well guess that the final provisions will be about pushing out what independent media are left and a lot of small businesses that people with illustrious surnames want to grab.

The $35 checks that the government passes out to destitute families for keeping their kids in school through the Red de Oportunidades program for Kuna Yala families in the months of December 2007 and March 2008 have gone missing. The government's version is that the checks disappeared from the post office in Nargana and the matter has been turned over to police and prosecutors.

The biggest and best-known scandal in our public schools has been in San Miguelito, where members of Balbina Herrera's political entourage appear to have stolen some $1.4 million from the School Quality and Excellence Fund (FECE) under the education minister before the last one. So did order get restored when President Torrijos brought in Belgis Castro, the guy whose career in public life began as a psychologist with Manuel Antonio Noriega's torture and espionage G-2 unit? Well, yes, a new order of sorts --- according to a series of investigative reports Castro brought in massive fraud in the program to remove fiberglass insulation from public schools. Companies with the right political connections were paid to remove the irritant from many schools that never had it in the first place. Other favored contractors were paid for work that they never did or started but never finished. Some contracts grossly overestimated the amount of insulation to be removed and thus the payments to be made. Like Balbina, who stepped down as Housing Minister to run for president, Castro has stepped down as Education Minister to run for the legislature. Also forced to resign were three of the top Ministry of Education officials in charge of the fiberglass removal program. Audits are underway and there may be criminal charges. A private criminal complaint has already been filed against Castro by attorney and Partido Popular activist Willy Cochez.

An early morning fight outside the Hard Rock Cafe that ended in an automobile chase a shooting death has revived calls for action about Panama City's rowdy night club scene. The most common complaints are noise and prostitution and altercations on the streets, all of which bother people who live near the clubs. One palliative now being suggested by several of Panama City's representantes is a 2:00 a.m. closing time for city licensed drinking establishments.

A court has ordered a receivership for Máximo Haddad's fly-by-night but politically connected PYCSA construction and toll road company, because it never paid for the land that it took from the Parque Natural Metropolitano to build the Corredor Norte. The park is not the only unpaid creditor. But the old head of General Noriega's Dignity Battalions goon squad, now Minister of Public Works Benjamín Colamarco, never was much of one for legal niceties and the receivership has been neglected by the Torrijos administration. Now PYCSA is extending the Corredor Norte through San Miguelito, building right next to people's houses in the Torrijos-Carter neighborhood, and the heavy equipment and pounding are causing cracks in people's houses. The neighbors have repeatedly protested, but the company is saying that it's up to the government to reimburse people for the damage that PYCSA causes to their property. The government, meanwhile, is assuming no such responsibility.

During the financial crisis leading up to and immediately following the 1989 US invasion, the government couldn't afford to pay public workers all that they were owed. In particular, six "13th month" wage payments were missed in 1989, 1990 and 1991. So are the public workers going to get reimbursed after all these years? Well, not really. What the PRD-dominated National Assembly proposes to do is pass a law declaring this debt "acquired property," without actually paying the debt. Whether this can win the PRD any votes that it wouldn't otherwise get next year is an exceptionally dubious proposition, but hope for re-election springs eternal among the deputies of a disreputable legislature, even when stickers calling for the ouster of all incumbents are starting to be seen.

The Colon Free Zone is not well protected against disaster. We learned that last year when several firefighters were killed or injured by a live electric wire while fighting a blaze, and even had the power been shut off as it should have been the fire crews were hampered by the lack of fire hydrants, the narrow streets and all the obstacles blocking the fire lanes. On May 5 we saw another pointed albeit less tragic reminder of how bad the case is. One bombero was injured, seven warehouses were totally destroyed and two other warehouses were seriously damaged. Again, fire crews had insufficient water pressure to fight the blaze, plus highly flammable materials in and in one case in front of some of businesses increased the hazards. The value of the damage will surely be the subject of litigation among merchants and insurance companies for some time to come.

Civil service status theoretically exists in Panama, but its rules and procedures are rarely followed. Generally with every new administration there is a wave of firings of people with or without civil servant status and the mass hiring of campaign workers from the new ruling party, plus a lot of jobs go to relatives of the politicians in power. Then, as the five-year term approaches its end there is an attempt to grant civil service protection to the jobs of as many of these political and familial hirees as possible. This time the PRD seeks to ensure its legion of campaign workers by promising civil servant status to some 17,000 government workers. If the PRD retains power in next year's elections, this protection may stick for awhile. If they lose, experience suggests that for the most part it won't.

A Comptroller General's audit of the Panamanian consulate in New York has found all manner of mismanagement, theft and sloppy practices there throughout both the Moscoso and Torrijos administrations. But then, it's not like that's something new. After all, the FBI still wants Frank Iglesias, the Pérez Balladares administration's consul in New York, for using the Avenue of the Americas diplomatic outpost as a gallery for the fencing of illegally smuggled antiquities from Peru.

While politicians and bureaucrats in Washington struggle over how much online radio stations must pay in royalties to the musicians' and composers' associations, a judgment handed down by a federal district court in San Francisco held that AOL, Yahoo and RealNetworks owes the American Society of Composers, Authors and Publishers (ASCAP) 2.5 percent of their gross music revenues. It's much more than these Internet companies wanted to pay, but very reasonable if that's all or most of what online music stations have to pay. Since ASCAP has reciprocal agreements with Panama's analogous Panamanian Society of Authors and Composers (SPAC), if that percentage is upheld for the United States it will probably apply here as well. However, the really big royalty battle over Internet radio is with the record companies, who in alliance with the major chains of broadcast stations are trying to make exclusively Internet radio royalties prohibitively high, far higher than what radio stations that stream their music online have to pay. It's essentially a power play by about six broadcasting companies who have dragged the precipitously declining recording industry along for the ride. If the United States ratifies the US-Panama Trade Promotion Agreement and if the radio station chains win their battle with Internet radio, then Panama will be subject to US intellectual property policies and our possibilities for exporting this country's culture via online radio will likely be prohibited as a practical matter. Then only that Panamanian music permitted by US corporations would reach North American ears.

What's important to the Torrijos administration? Not especially Panama's history. The government has put in orders for $20 million in new quarters. Of these 25¢ coins, $12 million will commemorate the pink ribbon campaign against breast cancer and $8 million will honor the semi-autonomous public entity that runs the Hospital del Niño.


These briefs were compiled on May 15