July 28th, 2009

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The Latest From Planet Panama

By Matt Atlee

Panama’s new President Ricardo Martinelli made good on a campaign pledge to give all Panamanians over the age of 70, who do not have a pension, $100 a month. The monies for the campaign pledge will come from new taxes levied on casinos; the new taxes will raise $50 million.

Minister of Government and Justice, Jose Raul Mulino, revealed a plan to electrify the fences around La Joya (The Jewel) prison. La Joya was built in the 1990s as a replacement prison for Coiba Island, which since closing in 2004 has become a popular tourist destination.

Almost as soon as La Joya opened its doors there were all kinds of problems with the prison. Prisoners escaped and the facilities were poorly designed and too small. Over the last two years there have been numerous high profile breakouts at La Joya which have let some of Panama’s most notorious criminals free to roam the streets. The hope is that the new electrical fence at the prison will keep prisoners inside the walls of the prison.

Jose Raul Mulino also announced a “mano dura” policy to fight crime, especially among juveniles. “Mano dura” means a “hard hand” towards crime. Mulino spent last week in Colombia talking with police officials about how best to beef up security in Panama. He also spent time talking to prison officials in Colombia. The new hard line towards crime in Panama will mean more arrests for small crimes like drunk driving and stealing. President Martinelli is determined to create conditions of peace and security in Panama and his “mano duro” policy is part of that effort.

There is a consensus building in Central America and the Caribbean that there will soon be an offensive from the G 20 countries to try and shut down “tax havens”. The effort is being led by the Organization for Economic Cooperation and Development (OECD). If Panama is put on a blacklist by the OECD it could cost the country $268 million in ship registrations and corporations. There has been a fear in the Caribbean and Central America that offshore tax havens would be hit in any reform of the global financial system. Most of the “tax havens” in the region depend economically on the sale of corporations and tourism.

President Ricardo Martinelli has pledged to return corridor freeways to the public. The freeways were originally built by Mexican road builders who have been collecting the tolls on them ever since. The Mexican companies are wondering how they will be compensated for their investment. In all likelihood they will be paid for their initial investment.

As a sign of the global economic slowdown, the amount of tonnage passing through the Panama Canal has dropped by 3 percent from last year. The Canal Authority expects a further drop in the second half of the year. Tonnage on the Panama Canal has also dropped dramatically over the last year: some estimates put the drop at 60 to 70 percent.

A $3.2 billion contract to build a new set of locks on the Panama Canal was won by a consortium led by the Spanish construction firm Sacyr Vallehermoso SA. The Spanish led consortium beat out a consortium led by Bechtel Group Inc. out of San Francisco, California. Bechtel lost the contract to manage Balboa Port to Hutchison Whampoa in the mid-90s.

For the last few years the big story in Panama has been the plan to expand the Panama Canal. Of less notice has been the expansion of Panama’s road system. There is now a new road – Cinta Costera – running parallel to Balboa Boulevard, Panama City’s most important street. The Cinta Costera has lessen traffic jams in Panama City and made the city much more livable. The new road to Colon has also opened and it has made the trip from Panama City to Colon much easier; the old road to Colon was one of the most dangerous roads in Latin America. The new Colon road will help speed up the movement of people and products from the Pacific to Atlantic sides of Panama. The extension of the Corredor Norte has also been an important road project. In the not too distant future, Panama will have a ring road around it that will allow people to leave the international airport in Tocuman and travel around the city from the south or north. The new road projects should help the economy and ease traffic.

So far the new president of Panama has been very popular. He has focused on lowering living costs, by lessening the price of electricity. He has also tightened security in Panama. The police have been very visible on the streets of Panama City – everyone is talking about it. The new drunk driving law is being vigorously enforced. If you are pulled over for drunk driving you get a $150 fine and lose your license for three months. Martinelli has also been very friendly towards the U.S. Photos of him with the U.S. ambassador during July 4th celebrations appeared in local newspapers.

President Martinelli also shutdown two marinas that were being built on the Amador Causeway: both marinas have not paid their taxes to the government and both were quickly thrown together and never finished; both projects are now the property of the Panamanian state, a move very popular with most Panamanians.

So far Martinelli has had a few very good weeks as president.

For the first time in a long time Panama had a large earthquake. The quake was centered near the city of Colon on Panama’s Atlantic coast. The quake measured 6.0 on the Richter scale. A few days later a second quake hit Panama. Panama is known for not having earthquakes or hurricanes. There is the potential for a large earthquake in Panama; there are fault lines on both the Caribbean and Pacific sides of Panama. Both of Panama’s neighbors, Costa Rica and Colombia are earthquake countries. When the first quake hit people panicked and ran out of their apartments to the streets below. Because so many people live in high rises there is a great fear that all those tall buildings will fall in a very strong earthquake. Let’s wait and see. Written By Matt Atlee

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