editorial

A fait accompli?

The power of political connections in the Panamanian courts manifested itself the other day in most embarrassing fashion. The country learned of a February 2 decision by the Supreme Court's Administrative Bench that upheld a November 25, 2004 city building department's "stop work" order against Jean Figali's Grupo F, which was creating a landfill for a marina on the Amador Causeway. Figali went on filling that part of Panama Bay anyway, and the following March the city hit him with another order to stop, which he also ignored.

Then, in July of 2006, Figali's friend Winston Spadafora, also the president of the high court's administrative bench, suspended the city's orders, a few weeks before he actually agreed to have the court hear the lawsuit that Grupo F had filed against the city in the dispute.

This was not the only act of largess that Figali received from Spadafora. In another case, even without Grupo F having asked for it, Spadafora canceled the arrears that Figali's company owed to the Panamanian government for the land concession it occupies on Amador.

So finally, nearly five years after the city building inspectors told Figali to stop work on his marina for sound environmental, urban planning and procedural reasons, the high court's Administrative Bench ruled in favor of the city. But Figali finished his landfill some time ago. He appears to have "won" despite his loss in court, by way of running out the clock. The expectation is that he will soon be another player in the lucrative marina business.

It shouldn't be allowed to happen that way. Whether it should be considered stolen public property, the fruit of an illegal act, an encroachment rather than an improvement, an asset supposedly bought but not paid for or whatever, the legal system should be wise enough to deal with wise guys like this.

Figali and his Grupo F need to be ousted from this property, without compensation. Maybe they should even be given a bill for the expense of digging up the landfill and restoring that part of the bay to its former condition.

Any result that lets Figali or Grupo F retain ownership or control of this landfill would amount to one more public notice that we have corruption with impunity in Panama. This is one case in which expropriation without compensation would be a healthy thing for this country's reputation as a place to do business, because if a well connected individual can thumb his nose at City Hall and the law, then another well connected individual can thumb his nose at a rival foreign or domestic investor notwithstanding the law.

Budget deficits: is "responsibility"
a mostly "situational" concept?

In Washington, President Obama has unveiled a record $3.55 trillion budget proposal. Yet he says that "irresponsible budgets --- and inexcusable practices --- are now in the past."

Rush Limbaugh et al are having a field day with that one. It helps the folks who openly admit that they'd like to see Obama's efforts to get the United States out of a difficult economic situation fail that the Bush budgets appear smaller by comparison than they really were. This is so because of the former administration's "off the books" accounting --- things like not including the cost of the Iraq War in the general budget, and moreover not including things like taking care of the disabled vets in the cost of the war.

Here in Panama, the Torrijos administration is the great master of creative accounting, which not only understates the national debt but then in the face of still undeniable figures explains that because of this or that circumstance the higher debt figures are actually lower when arbitrarily compared to some other number. For some purposes the Panama Canal is "off the books" and for others it's on them, and then the canal expansion is partly on and partly off the Panama Canal Authority's books.

Ricardo Martinelli is making some promises that will cost money, like a minimum retirement benefit for those whose ability to earn a Seguro Social pension was eliminated by the PRD government's "reforms." He's also promising some budget austerity. He's probably going to be the next president, and, whether or not that turns out to be the case, whoever takes office in July will face some terrible economic problems. The conservative British business magazine The Economist, for example, projects a 1.3 percent contraction in the Panamanian economy this year.

Big spending versus austerity, or high taxation versus low taxation, these are really not the dichotomies that separate what's responsible from what's irresponsible in government budgeting. The main questions to ask are what the people have to show for their money that is spent, whether there is any reasonable correlation between what is spent and the revenue that comes in, and whether the budget meets the needs of the situation.

Lord Keynes has not had the ultimate word in the theory of government budgets, but his idea of moderating the ups and downs of business cycles by taxation that lowers boom-time peaks and social spending that cushions economic crashes has stood the test of time. A large and relatively rich country like the United States is able to more fully afford Keynesian counter-cyclical policies during hard times than a small and relatively poor country like Panama, but both countries are on the down cycle and both need to make economic stimulus a higher priority than balanced budgets at the moment.

Obama will increase Bush's deficit from $1.3 trillion in 2008 to $1.79 trillion in 2009, but he plans to have a national health care system and an array of investments in infrastructures on which the whole economy depends and assistance to build the industries of tomorrow to show for all of this. His right-wing critics are hypocrites when they call his spending plans irresponsible, considering how they blew public money when they were in charge. Their real objection to Obama's economic strategy is that its principal purpose is not to make the rich even richer.

The numbers will be much smaller, but the squeeze that the next president of Panama will face may be much tighter. Here we may not have a propagandist analogous to Rush Limbaugh, but the distribution of wealth in Panama is much more starkly uneven than in the United States and the pressure on the next Panamanian president to maintain the diversion of the nation's wealth to a few privileged families will be much greater than the leverage that GOP demagogues who want similar policies in the USA can apply to Obama.

What can and ought to be done in the two countries' different circumstances will vary a bit, and there really isn't a single "responsible" way to handle a nation's finances. But all valid economic strategies begin with transparency. "My administration inherited a $1.3 trillion budget deficit, the largest in history. And we've inherited a budgeting process as irresponsible as it is unsustainable. For years, as Wall Street used accounting tricks to conceal costs and avoid responsibility, Washington did, too," Obama noted in his March 7 radio address. Laying out the details of the true situation in which a country finds itself, so that rival policies based on different philosophies or assumptions can be reasonably debated in light of that situation, is the necessary first step toward fiscal responsibility.