Varela’s trip to Germany: the Panama Papers problem is not over

President Varela and Chencellor Merkel: she doesn't LOOK so overjoyed about what he's saying. Photo by the Presidencia.
President Varela and Chencellor Merkel: she doesn’t LOOK so overjoyed about what he’s saying. Photo by the Presidencia.

Varela in Germany: small economic and political gains, a big media setback

by Eric Jackson

The local spinmeisters are predictable. Ricardo Martinelli’s media report Juan Carlos Varela’s October 18-22 trip to Germany, with stops in Hamburg, Munich and Berlin, as an unmitigated disaster. The Presidencia’s claims are cautiously upbeat. The Mossack Fonseca cheering section oscillates between ecstatic and irate. A lot of the rest of that sliver of Panama that directly or indirectly profits from “offshore asset protection” or other hues of money laundering are cheering a victory wherein German Chancellor Angela Merkel is going to save Panama from the wrath of France and the OECD in the wake of the Panama Papers revelations.

Some useful commercial and intergovernmental agreements came out of the trip, perhaps the most important an accord between the Panamanian Tourism Authority and Lufthansa Airlines to promote Panama as a tourist destination in Germany and neighboring European countries. The aim is to increase the Frankfurt to Tocumen air service that began earlier this year. But it’s only a $4 million program over three years. As a symbol to both Panamanian and German observers, Varela and his large Panamanian delegation flew to Germany not on the presidential jet but on Lufthansa. In another tourism-related deal, Panama contracted the Munich firm Messe Munchen to promote conventions at the Amador convention center whenever that stalled project is done. Also in that sector the Port of Hamburg agreed to give technical help to develop a cruiser port at Amador and the German-based TUI Group announced that it would add 10 new cruise ship calls at Colon.

In the field of education Varela toured the vocational training center that Siemens runs, and said that some of the methods the company uses there will be adopted in the pilot project to establish a two-year vocational college in Tocumen. In meetings at all stops in Germany, hundreds of business people heard pitches about Panama’s advantages for investors.

The biggest events, however, were about a controversial intersection of politics and economics, the fallout from the Panama Papers affair. At the start, Varela met with Merkel and she noted that Varela took some quick steps in the aftermath of the massive leaks from the law firm whose founders included Varela’s powerful at the time Minister Without Portfolio Ramón Fonseca Mora. She said that those were steps in the right direction and noted ongoing negotiations about a German-Panamanian tax information sharing deal. If things go as hoped, the two leaders expect to sign such an agreement next year. Meanwhile France has imposed financial sanctions on Panama and is urging the OECD to do likewise. Although some Varela fans predicted that a data sharing accord with Germany would get the OECD off of Panama’s back, Merkel made no such promise.

Not much reported in Panama are Merkel’s own domestic and European woes.

The European Union has largely been under German leadership but is battered from many sides, most notably nationalists of various stripes and the poorer countries of Europe’s periphery. With the United Kingdom leaving and much of Southern and Eastern Europe annoyed with Germany’s hard-line austerity demands, the EU could well collapse and with it the common market that Germany needs to sell its industrial products in the face of competition from Asia and other regions. So is she going to get into a fight with France over Panama? Or is she going to be stern with Greece and Spain, while making a show of being lax with Panama? In the carefully worded statements she made in her meetings with Varela, Merkel didn’t indicate that she would go that far.

Within Germany Merkel’s conservative Christian Democratic Party is losing a bit of ground to the far-right Alternative fur Deutschland party and faces a terrorist threat from the smaller and farther-right neo-nazi Reichsburger. This fringe to her right is not going to make a serious bid for power anytime soon but in the German scheme of politics where majorities are almost unheard-of and coalitions are the rule, lost votes at the margin can cost Merkel and her party their powerful positions. The far right doesn’t like globalization on corporate terms, doesn’t like the European Union and calls Merkel corrupt. Meanwhile, among more sedate parts of the German political spectrum you find the folks from Transparency International (which began in Germany) and the newspaper that received and coordinated the publication of the Panama Papers. It all adds up to a substantial political risk for Merkel if she gets identified as soft on the sorts of things revealed in the leaks from Mossack Fonseca.

From the ambiguities of Varela’s meeting with Merkel at the start, Varela’s visit ended with a disastrous interview with Jenny Pérez, a Chilean journalist for the German state-owned Deutsche Welle’s Spanish-language television channel. Varela appeared to be taken aback and left silent or stumbling by questions which took as a starting presumption that Panama’s reputation in the world is damaged by the revelations from the Mossack Fonseca files. People might argue that Pérez is a world-class hard case of an interviewer, but it should also be noted that in Panama the rabiblanco mainstream media don’t allow such hard-nosed interviewing. The social expectation here is that mere working class reporters must show great deference to those richer, more powerful and more illustriously surnamed than themselves. Varela simply didn’t appear ready to be interviewed by someone as irreverent as Pérez, and that interview, in its Spanish original and in translation, was seen around the world. The appearance was that Varela can’t defend his or Panama’s record. The different Panamanian factions reacted with curses, cheers or shrugs.

The bottom line? Varela’s visit to Germany did not end his Panama Papers woes.


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