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Volume 17, Number 8
August 7, 2011
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news

Also in this section:
The great hacking scandal expands, crumbles
Electoral Tribunal blocks Martinelli takeover of MOLIRENA, nixes PRD plans
Martinelli goes to Spain, says Panama "looks like a Dubai in the Americas"
Presidential interference in the courts brings on new restrictions on photojournalists
New Cinta Costera plan passes costs to the next government
One of Morgan's ships said to be found off of Fort San Lorenzo
Noriega's headed home, probably in October
The prosecutor's take on David Murcia Guzmán's sentencing
Martinelli's alliance continues, without much enthusiasm
Martinelli's crude demand for respect respect has pundits atwitter
Martinelli goes after PRD figures for alleged email hacking
The battle over the Cinta Costera III intensifies
The Anti-Chávez is watching you

Many things that used to be in a Panama News Briefs feature of the website have now migrated to our constantly updated Facebook page


Was it the drinking? Photo by the Presidencia

Martinelli takes a large entourage to Spain, where he says some odd things
Panama "like a Dubai in the Americas"
by Eric Jackson

Yes, Spain is one of Panama's main aid donors, and there are many Spanish-Panamanian business ties. But this is not a good time to drum up investment in Spain. As the Martinelli entourage's plane touched down in Madrid on July 11 for a three-day visit, the Spanish economy was in total panic. (It still more or less is, to the extent that on August 4 the European Central Bank decided that, despite drastic austerity measures, it would not buy bonds to rescue Spain's financial institutions and the industries they control. With worldwide markets falling in the wake of a US national debt compromise that hardly satisfied anybody, that decision was reversed as this article was being written.)

So why were the President Ricardo Martinelli, Vice President and Foreign Minister Juan Carlos Varela, Minister of Commerce and Industry Roberto Henríquez, Minister of Public Works Federico Suárez, two vice ministers, presidential aide Larry Maduro and National Institute of Culture director María Eugenia Herrera, in Madrid? The publicity on the presidential website emphasized a royal reception with the king and queen of Spain, a presentation of a key to the city of Madrid, a visit with the management of the Real Madrid soccer team, talks with Spain's unpopular lame duck socialist president and the slightly less unpopular leader of the conservative opposition, a forum about the Panama Canal expansion and a presentation to several dozen executives of Spain's biggest companies.

Mentioned just in passing was a meeting with executives of Sacyr Vallehermoso, the Spanish general contractor for the design and construction of the new post-Panamax Panama Canal locks. But when that company won the contract it had been brutally battered by the collapse of Spain's upscale housing bubble and most impartial and knowing observers believe that the company's winning bid was a lowball, which was probably made possible by some covert guarantees by the Spanish government (even though these would violate European Union rules). Now, with the Spanish economy near collapse, Sacyr Vallehermoso shares on a continued slide and the incumbent administration deeply unpopular, what happens if the contractor can't deliver for the promised price and a government that may have given assurances isn't in a position to comply with them? Nothing has been made public, but that was likely one of the principal discussions to be had during this state visit.


Spring and summer for Sacyr Vallehermoso shares

Whatever the subject and nature of private talks with Sacyr Vallehermoso and Spanish political leaders, the impression that Martinelli sought to give back at home was of the hard-working president going out to drum up new investment in Panama. The sales pitches he made to assemblies of Spanish business leaders were very much on the record.

It might be that in these troubled times for Spain, people with a lot of money in that country might be looking for some offshore venue in which to put it. It might also be the case that a lot of Spanish business leaders are mainly concerned with staving off insolvency and not thinking in terms of new investments. In the former case, Panama's banking center is suffering from massive withdrawals of cash by erstwhile US clients, so even if it might make Spain's Indignados even more indignant, the pitch to the wealthiest Spaniards to ship their money offshore to Panama would make a certain amount of sense for Panama.

The general puffery about how Panama is fashionable, and how it has a great climate for foreign investors and a central location from which to run Latin American business empires are also to be expected at such gatherings, even though nobody in the audience would be learning anything new. Those sorts of talks were expected, and given by Martinelli.


Martinelli in Madrid --- note the forum's recycled dot-com bubble name.
Photo by the Presidencia


However, one would think that when the rhetoric goes from the banal to the foolish, a room full of sophisticated business leaders would notice. In that case the speech might go from boring to entertaining, which might increase its giver's notoriety as a comedian but would detract from its effectiveness as a sales pitch.

And how might it play back at home? Our public schools are designed for certain gaffes to fly right over the heads of the poorly educated masses, but in Panama we have the confluence of all of the world's great trading cultures, in which business mistakes get noticed.

So wouldn't you know that President Martinelli's remarks at a forum on the Panama Canal expansion hosted by Madrid's Fundacion Ramon Areces would get picked up first of all in Panama by the television network controlled by the Mottas, TVN? Martinelli told the group, in addition to all of the slogans about us being "a paradise to discover," that "We're in the middle of everything, like a Dubai in the Americas."

"The next Dubai" was the trite and somewhat frantic sales pitch for Panama made by some of the swarms of condo flippers who came to our shores a few years ago. Dubai's bubble burst a few months after ours and a few months before Spain's, and the real estate hustlers who kept making the pitch became something of a national joke. To be sure, the money launderers and a few odd buyers kept Panama's real estate sector from complete rout and abandonment --- just as Nigerians with a lot of money keep Dubai in business at a certain slow level. But what has happened in Dubai is precisely what happened in parts of Spain and where the more sober Panamanian business leaders fear that Martinelli is leading us: a huge bust after a massive buildup of pharaonic public works and Babylonian towers for which there are few tenants.

Why would the president say such a thing, and especially at a gathering like that? He hasn't explained, and he honestly might not be able to do so.


Dubai's celebrated --- and mostly empty --- Burj al-Arab, of which Panama City's Trump Ocean Club is more or less a copy, but with enough differences to avoid lawsuits. Since they peaked in the middle of 2008, real estate prices in Dubai have gone down about 64 percent. Photo by Fabien Martinez

So what is the truth of the matter? Dubai is, like Panama, something of a shipping, commercial and wholesaling and warehousing center. It is not as centrally located in the world as we are, but on the other hand it is set among the oil-rich countries of the Middle East while we are in much less affluent Latin America.

Panama has ecological issues, but Dubai's are the stuff of legends. Our water treatment and distribution systems are inadequate and crumbling, while theirs are modern, but Dubai is on a desert. Before the building boom, they used to pipe in their water from a well miles outside of the city, but now they get their water from the sea, through massive, expensive to build, polluting and energy guzzling desalination plants. One of the world's 30 richest nations, Dubai is considered by many environmental analysts to be the most environmentally degraded of all rich countries. Its waters are contaminated by raw sewage and heated salty sludge from the desalinization plants. Its fossil fuel dependence gives it one of the world's highest carbon footprints. Its attempts to diversify its economy have included steel and aluminum mills and the wastes from these have not been carefully controlled. Of course, given Martinelli's antipathy toward environmentalists, it is entirely possible that he sees Dubai's environmental situation as something that Panama ought to duplicate. Whether or not that is precisely so, to take Dubai as a development model is to embrace a "conquest of nature" mentality.

So what was the president thinking about? And what do the movers and shakers in Spain's business community now think about him?


A polite hearing for some remarkable words. Photo by the Presidencia







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© 2011 by Eric Jackson
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