Panama, but not “The Papers”

Panama is in the neck of land which joins North and South America, Colombia to the SE and Costa Rica to the NW, total area 75,000 km2, a little smaller than S Carolina or Ireland.Population 3.9 million,Spanish speaking & almost 50% live in the capital Panama City which has a 70 storey Trump Hotel & Tower!An alternative view of life in Panama can be found in its 2nd city Colon which provides a stark reminder that 40%+ of the citizens live in poverty. Not really surprising when the bottom 10% earn 1% of country’s income and top 10% earn 40%+.Its Gini index is 0.58, (an index of 1.0 is where 1 person has everything, 0 is where everyone has an equal amount) comparative figures USA 0.41, Scandanavian countries all around 0.30, UK 0.38.

Panama is a Republic, gaining independence from Colombia in 1903; has a 71 seat Parliament, and its currency is the balboa, tied to USA dollar. The % of GDP generated by the different sections of the economy are as follows,(figures in brackets show % of working population employed in these sections) Agriculture 3%(17%), Industry 20%(18%), Services 77%(65%). Government income from duties & taxation is 21% of GDP, which puts obvious limits on its capacity to provide public services. Equivalent figures, EU Ave 35%, Ireland has a young population,45% of the population are under 25years.

The USA has taken an active interest in Panama. In 1919 it began registering ships there to help Standard Oil escape American taxes & regulations. From 1927 Wall St “helped” Panama to set up laxed company incorporation laws and the laundering continued to grow and grow. In 1937, the US Treasury Secretary Henry Morgenthau was sufficiently concerned to write to the President , “Dear Mr President, A preliminary report discloses conditions so serious that immediate action is called for,>>>>>>> the companies are organised through foreign lawyers, with dummy incorporations and dummy directors, so that the names of the real parties in interest do not appear.” Almost 80 years later where are we?

The 77Km long Panama Canal which links the Atlantic to the Pacific was built by USA & opened in 1914.It was an expensive project in many ways. The French in 1890 had begun building a canal but gave up and sold their assets to USA. The newly independent Panama got $10 Mil and gave USA an area of 500 sq miles “in perpetuity”, the French got $40 Mil and another $325 Mil was spent building the canal. In addition some 25,000 workers died on the project. Annually13,500 ships make the 9 hour journey & pay out $1.8 Bil in tolls. Control of the canal passed to Panama in 1999.Work to widen & deepen the canal is nearing completion and this will enable Maersk’s massive container ships which carry 18,000 20ft cotainers to use it.

In the next day or two we will look at USA’s invasion of Panama in Dec 1989, somewhat cynically called “Operation Just Cause” and referred to by others as The War That Started All Wars!. Then there is a US-Panama Trade Promotion Agreement signed off in 2012 which will merit a close look.