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Volume 15, Number 15
October 8, 2009

economy special

Also in this section:
Net tax increase
Coronado's commercial expansion
Avenida Central landscape changes
NARFE hotline
Contractor for new locks heavily indebted
First glance at Tourism Minister Salomón Shamah

Beach and island land tenure issue comes back to center stage in national political discourse
Proposed law on beach and island land titles immediately attacked
by Eric Jackson

On October 6 the Ministry of Economy and Finance presented proposed Law 71, which the Martinelli Cabinet Council had approved on October 1, to the National Assembly and, unlike in the proceedings leading to prior land tenure laws, to the general public as well. If passed this law would replace the Torrijos administration's Law 23, which is opposed by Minister of Economy and Finance Alberto Vallarino as a large-scale virtual give-away of valuable public assets and also by various indigenous, labor, environmental and leftist groups for a variety of reasons mostly other than Vallarino's.

The proposed new law was accompanied by a separate proposal to reorganize the government's apparatus for dealing with most land titling issues by creating a Vice Ministry of Lands within the Ministry of Economy and Finance, putting the Agrarian Reform Office (now part of the Ministry of Agriculture), the National Land Administration Program (PRONAT), the Survey Office (Catastro), and the Instituto Tomy Guardia land records repository (currently part of the Ministry of Public Works) into the new vice ministry. The reorganization is related to the proposed new law in that the chronic chaos in land tenure, particularly in the Bocas del Toro Archipelago, owes much to incessant turf battles between Reforma Agraria and Catastro.

At the law's presentation we saw the familiar astroturf façade of indigenous and campesino faces, but by and large these sectors have not yet been heard from. The immediate outcry is from a coalition of all of Panama's major business organizations and associations of developers, real estate vendors, large-scale farmers and cattle ranchers, libertarians who advocate privatization of most public assets and the most aristocratic of the nation's environmentalist groups, the National Association for the Conservation of Nature (ANCON). The first echo, and a force that the organized opposition is trying to mobilize, is from people who have bought right of possession (ROP) land in the Bocas del Toro islands.

What the proposed law empowers the government to do and what the current administration intends to do may be different things. A joint statement by the Chamber of Commerce, the Panamanian Business Executives Association (APEDE), the National Private Enterprise Council (CoNEP), the libertarian Fundacion Libertad, the Ranchers Association of Panama (ANAGAM), the National Farmers Association (UNPAP), the Fundacion Para el Desarrollo del Caribe (mainly developers who want to build roads and tourist projects on the currently trackless coast between Miguel de la Borda in Colon and Chiriqui Grande in Bocas), the Panamanian Real Estate Dealers Association (ACOBIR), the Asociacion para el Desarrollo de las Islas de las Perlas (developers promoting projects in the Perlas), the Property Owners Association (mainly a product of the now burst real estate speculation bubble) and ANCON characterized the law in one word as "expropriation." The seven-point statement claimed that proposed Law 71 "expropriates the land of thousands of Panamanians and foreigners who bought and paid for rights of possession under laws that were in effect."

Arguably so, but then under the often ignored legal framework, ROP land was owned by the government, with a designated person having an acknowledged and transferrable right to possess and use it but with that right being extinguished and reverting to the government in the event that the ROP holder abandoned the holding. The practice that creates much of the apprehension is the treatment of registered rights of possession as if they were titles, without regard to whether the holder of such possessory rights was actually in possession.

The distinctions are drawn in sections 2 and 3 of the proposed law's article 2, which define "possession" and "derived possession." Section 2 defines possession not in terms of what any papers from Reforma Agraria might say, nor in terms of squatters' rights, but as five or more years of continuous actual possession of state-owned land that is "alleged and proven." Article 3 refines the concept of "possession" to add the requirements that possession must be "with the animus of an owner" and "with the acceptance of said possession by adjacent property owners or the community."

Section 3 of Article 2 defines "derived possession" as a right bought by a natural or juridical person from someone who was a "possessor" as defined in the law, and who can show a sales contract with such a person. So if the notorious Tom McMurrain bought ROP land from some family that had a fishing hut, and some years later a person bought such land right from McMurrain, his company or the successors to such that he had when he was whisked off to prison in the United States, that person would not have "derived possession" because she, he or it would not have bought from a "possessor."

Article 4 provides that juridical persons that have held ROP land for 15 years or more are recognized as "possessors," as are those who have had their ROP land for less than 15 years but have a Panama Tourism Authority-approved tourism development project underway and can show that the people from whom they bought were possessors.

Article 5 generally limits what natural persons can claim as their ROP land to 5,000 square meters, but if the neighbors or the community and PRONAT agree, a larger parcel can be approved.

Titles acquired by individual possessors are to be issued free, but those titles will be heritable by spouses or domestic partners, children or grandchildren only and can't be sold or taken in a mortgage foreclosure. This provision would seem to take care of the principal objection raised to Law 23 by FRENADESO and other leftists and community groups, that hustlers would lend someone who's not in the cash economy $100 and have them sign some form which turns out to be a mortgage, which is promptly foreclosed and by which a parcel worth tens of thousands of dollars passes into the hands of a speculator.

Article 8 of the proposed law mandates several price lists by Catastro and the Ministry of Economy and Finance, according to region, of what beach and island land is worth per square meter. Those scales, which would be adjusted every three years, would help in determining what constitutes an "adjudicacion onerosa," or property acquisition well below value. The government would not have to recognize the validity of property transfers at what Finance and Economy Minister Vallarino calls "irrisory values."

Article 9 promises easy access to natural persons seeking recognition of their rights of possession for family homes, while Article 10 is about ROP land intended for tourist developments, in which case getting the property titled will cost one-quarter of the price paid to obtain the land rights.

Article 11 may answer most of the objections that various indigenous and environmentalist groups posed to Law 23. The biggest change of all might be a single comma. It's a list of types of land that can't be adjudicated --- sold or otherwise transferred under the law. Law 23 excluded indigenous lands within the comarcas only, with the Torrijos administration making it abundantly clear that it didn't recognize the collective land rights of indigenous people outside the comarcas. But proposed Law 71 lists those lands that can't be adjudicted as "mangrove areas, indigenous territories, comarcas, protected areas and whatever other territory subject to legal restrictions on private appropriation." Strike that comma and you get "indigenous territories in the comarcas," so look for a huge political battle over punctuation here. But collectively owned lands outside the comarcas, as well as public rights of way, would also arguably qualify as "subject to legal restrictions on private appropriation. The section includes a grandfather clause for ROP lands within protected areas when those rights were in existence before the area was declared protected.

The most frequently heard environmentalist critique of Law 23 was that it would lead in short order to most of Panama's beaches and natural attractions being fenced off and closed to the public. The law didn't actually allow that but was vague about it and in the wake of its passage there were many complaints about private parties blocking access to the beaches. But section 12 of proposed Law 71 is specifically about beach access, providing that the present (and long-existing) laws and norms apply and a schedule of fines for blocking public access to the beaches that range from a $5,000 maximum on first offense to $100,000 for third and subsequent offenses. Fines for blocking beach access would be administrative rather than criminal, and thus theoretically easier to impose.

The proposed law recognizes titles acquired under the 2006 tourist concession law, adjusts Catastro's role by giving it charge of all non-agricultural land tenure, and provides stiff penalties --- fines of five times the land value --- for appropriations of public land. The blanket suppression of invasions on public lands would be a radical departure for Panamanian public policy if enforced.

Proposed Law 71 would also adopt the use of satellite technology --- the WGS-84 system --- to locate and identify land parcels. There are exemptions from public bidding for contracts when only one person or entity is interested in a matter. Proposed Law 71 would be retroactive in the sense that all land tenure recognition procedures now in progress would have to conform to the new law.

The Ministry of Economy and Finance press release that accompanied the publication of the proposed new law has added an extra element of sting as far as many of critics are concerned. "Profiteers can't buy at irrisory prices," the press release promised --- and several people who made phone calls or sent emails to The Panama News mentioned either the special capital gains tax break for Alberto Vallarino's sale of BANISTMO to HSBC, or the bargain he got on the land for his Buenaventura beachfront tourism and residential development, as examples of hypocrisy for one who would talk about profiteers.

"I spent more than two million dollars and followed all the laws that were in effect at the time," complained one American investor who wants to develop a tourist project in Bocas. "Now they want to change the law and take it away." She added that such a move would be noticed in the international business press and would in short order dry up foreign investment in Panama.

One Panamanian-American lawyer who divides his time between both countries complained that:

Most coastal and island lands do not have title, and thousands like me purchased the equivalent of squatter rights. Such purchases are valid and binding under Panamanian law. In most cases, they were done pursuant to purchase agreements drafted by Panamanian lawyers, and the possession rights as well as the respective surveys were usually registered with local and national authorities.

However, a proposed new Law 71 which is currently being debated in the Legislative Assembly, renders inoperative such purchases and gives the government the right to disregard the possession rights which were acquired, unless the person can prove it has occupied the land for more than fifteen years or plans to build a tourist project. Unless this is the case, the land is deemed government property, and the Ministry of Finance can evict possessors, order demolition of buildings, fine the occupier five times the value of the land, and sell it to whoever it wants.

Proposed Law 71 would seem to allow such things, and the 11-group coalition's protest alleges that the discretion allowed in the law would "create conditions for corruption, nepotism and abuses to flourish."

But do President Martinelli and Minister Vallarino intend mass dispossessions? It's this reporter's estimate that they intend something more along the line of a mass billing --- which, of course, would still raise the ire of the groups in question.

But why the discretion that leaves open more draconian possibilities in the first place? It's because some of the normal practices in Bocas del Toro since foreign retirees began to arrive there tended to conflict with the national laws as written, for innocent practical reasons as well as for sinister corrupt ones. Scofflaw judges, hoodlum mayors, minor functionaries who could be bribed to alter public records and a rogue's gallery of international and domestic imported hustlers took advantage of the remoteness from the central government in Panama City to make some legendary messes. In proposed Law 71 the Martinelli administration could get sweeping powers to set aside some of the more egregious land grabs --- or carry out some of their own.

Notice how now the administration of a conservative businessman is being nearly universally denounced by the nation's business leaders. That probably doesn't overly upset either Martinelli or Vallarino.

Those indigenous communities that could be affected tend to be far away, and moreover have slower political processes in which hot-button issues are debated at length within the community before any pronouncements that someone back in the capital would hear are made.

The environmental movement, which includes establishment and anti-establishment factions, has also mostly not been heard. The 11-group protest onto which ANCON signed made no environmental arguments. The group's stand appears to be based more on its leaders' rabiblanco identity rather than any environmental principles.
FRENADESO et al? They might be expected to oppose anything coming out of the Martinelli administration, except that they are about to take the plunge into electoral politics and may not care to wear the mantle of opportunist posturers by making knee-jerk stands. However, the president's honeymoon period is over and there is a long-standing and growing deficit in the public's trust of this country's politicians. Lawyer Miguel Antonio Bernal, who admitted that he had not yet read the proposal, told The Panama News that he's "suspicious" of the proposal based on the person promoting it and the reputation of Catastro, which would seem to be the big winner in the proposed bureaucratic shuffle.

Also in this section:
Net tax increase
Coronado's commercial expansion
Avenida Central landscape changes
NARFE hotline
Contractor for new locks heavily indebted
First glance at Tourism Minister Salomón Shamah

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