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Panama, a Rich Country that Convulses

Panamá, un país rico que convulsiona

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We were worried that the road to the airport would be closed, as had happened two days earlier. People who were going to travel then had to get out of their cars and walk miles to the Tocumen International Airport in order to be able to fly. Fortunately it was at night and after six o’clock in the evening the protests that have taken over Panama are not so strong.

Since July 6 of this year the Central American country suffers a wave of protests, almost unprecedented, which has paralyzed much of society. A bit volatile, with days more intense than others, for more than two weeks there is not a single day in which dozens of people do not take to the streets to shout slogans against the government.

A rich country

It is difficult to understand. Panama is one of the most prosperous countries in the American continent and is the richest in Central America. Its GDP ($14,500) is considerably higher than that of Costa Rica ($12,500), a nation known for its prosperity and stability, and up to three or four times that of its neighbors.

According to data collected by EFE, Panama’s poverty is low compared to the rest of the Central American countries. In Costa Rica it is around 27%, while in countries such as El Salvador, Honduras and Guatemala it is 22.8%, 73% and 60%, respectively. In Panama, on the other hand, it is 12.3%.

Its skyline is a reflection of this prosperity. Skyscrapers, opulent hotels and luxurious shopping malls that stand out in a bay that, who has been in Singapore, compares it with that of the Asian country. It is not for nothing that Panama is nicknamed “the Miami of Central America.”

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But there is still frustration. And it is palpable, almost uncomfortable, even for the tourist who is oblivious to local issues.

A frustrated country

Emilio, a cab driver, told us indignantly: “How is it possible that I have to kill myself to earn $800 a month and a public official earns up to $15,000? There are very few people here who share the money.”

In a bodega in the Seafood Market in the capital, a waitress told us: “I came from Nicaragua because I thought that since there is a lot of money here it would be easier, but it has been the opposite. It’s not easy to get a job, wages are low and everything is very expensive. Can you believe that a single tomato costs $2?”

The person who was with me joked: “With $2 you can buy a kilo of tomatoes in Colombia.”

People are upset. There are not thousands of people in the streets, but a few dozen block the main roads and that is when the rest are affected, but they adjust and take it. Those who can’t get through, in some way, understand those who prevent them from getting through.

One day we were in a cab, going through a low-income neighborhood. At that, about ten people, some barefoot and with torn clothes, ran out into the street, shouting and blocking it with several traffic cones. “Down with the corrupt!” shouted a thin young man. The rest smiled. They didn’t want to let us go through, until the cab driver rolled down his window and gave a dollar to a guy.

The cab driver told us, “They can keep protesting, but they should let us pass. The truth is that this country is screwed up.”

It’s hard to know who is behind those who close the roads. Today many groups have joined the uprising against the social democratic president Laurentino Cortizo.

On July 6 the teachers’ union began protesting in the small town of Santiago de Veraguas, 250 kilometers west of Panama City. Since then, demonstrations have spread throughout the country, and other social groups, such as the construction union, called Suntracs, and indigenous groups, have joined in.

With the participation of the indigenous people and the construction workers led by the communist Saúl Méndez, the protests have taken on a different color and have become more radical and insurgent. Although many in Panama agree with the motives of the protests, there are also many who disagree with the forms.

“When they block it all day long, it affects us. And people can’t do anything. The other day a pregnant woman was in an ambulance and they wouldn’t let her pass. There are limits,” a cab driver told me. A woman from the Panamanian upper class agrees: “At the beginning they were right, but they have lost it. They lost their way and the intention of the demonstrations has been completely diluted.”

Panamá, un país rico que convulsiona

NATÁ (PANAMA), 07/22/2022.- Photograph of trucks being blocked during a protest of teachers and truck drivers on the Pan-American highway, in the sector of Natá, province of Coclé (Panama). EFE/ Bienvenido Velasco

Specifically, Panamanians are protesting that their precious economic stability and prosperity has been disrupted and today there is a sense of a country in crisis.

Writes Mary Anastasia O’Grady in the Wall Street Journal: “Panama is no different from most of the world’s emerging economies in the aftermath of the Covid-19 pandemic. A government-mandated shutdown of the economy in 2020 bankrupted a large number of businesses and forced others to shrink their workforce. Unemployment is now over 10% and many have had to go to the informal economy to feed their families. Fuel and fertilizer prices have spiked as has the cost of food and medicine.”

An unequal country

An expression that always comes up in discussions with anyone in Panama (whether poor, middle class or rich), is that “Panama is one of the most unequal countries in the world.” And it is not a lie. The same skyline that served as a reflection of prosperity tells you about this obscene contrast: the skyscrapers and luxury hotels are surrounded by towns with dilapidated buildings, poorly painted, where poor families are crowded together. The historic center of the city, where some of the most expensive apartments in the entire region are concentrated and where the nightlife and culinary life converge, is surrounded by neighborhoods identical to those seen in destroyed cities like Havana.

University of Florida historian Carlos Guevara Mann told the BBC this week that “the most acute analysts have been warning for years that prosperity only reaches a tiny segment of the population, while the majority becomes poorer.”

In the Gini index, which measures inequality, Panama has 0.498. It is well above the world average and is one of the highest in the Americas. Likewise, the country’s informality is extremely high, over 60%, due to the rigidity of a labor market that is protected and hostile to foreigners.

“In Panama there is an important middle class. I do not think it is correct to say that wealth is only concentrated in a few. What happens is that those who have a lot, have a lot. And those who have little, have very little. There is a big difference between the wealthy class and the poor class in Panama. There is a middle class that is robust, but has less and less purchasing power,” journalist and renowned radio broadcaster in Panama, Gonzalo Lazzari, told me.

“There is a big difference between poverty and inequality. A large part of Panama’s economy is developed in the capital. When we go outside the capital, there are too many areas that are not developed, neither by private enterprise nor by the state. That is where you see the absence of the state,” said Lazzari.

PANAMA CITY (PANAMA), July 19, 2022.- Photograph of the Boca La Caja neighborhood and the Punta Pacifica buildings on July 9, 2022, in Panama City, Panama. Luxurious buildings or spacious and modern houses rise next to shantytowns or improvised settlements. EFE/ Bienvenido Velasco

A fearful country

The increase in the cost of living in Panama, which provoked the protests, forced the government to react. Due to the demonstrations controlled by unions, indigenous people and social leaders, President Cortizo called for dialogue which resulted in the freezing of gasoline prices and, later, in their reduction — from more than $5 per gallon, the Government reduced it to $3.25.

Cortizo also announced food subsidies and spending reductions. During the dialogues, mediated by the Catholic Archdiocese of Panama, it was agreed to control food and medicine prices, increase spending on education and subsidize electricity.

The Government has yielded, but the demonstrators have not retreated. It has been several days since agreements have been reached at the dialogue tables, and the protests remain intact. Public school teachers, for example, are still in the streets, or on strike, preventing the most vulnerable children from attending classes — and teachers are still being paid their salaries.

Panama is a strange and complex country. The capital, a tall, modern and prosperous city, stands on cracked, neglected streets and deteriorated infrastructure. Large avenues and highways, leading to streets with unpleasant and annoying wiring. Regions without internet or electricity, while marble frames the halls of skyscrapers and hotels. It is a country that looks under construction, and that has provoked the idea that only a few enjoy what should be for everyone.

Perhaps the sudden prosperity, innate to a country that is one of the few tax havens in the world, has caused this fickle and uneven growth that bothers so many. In the end, it must be considered that Panama and its capital, Panama City, operate under a fairly young liberal republic. This boom that has turned the Central American country into a financial and economic center, where the wealthiest go to shelter their wealth, is only a few years old.

“Thirty years ago we had nothing of what we see today. And these big avenues and walkways, these big buildings, were only built about eight years ago or less,” the waiter at an expensive restaurant in Multiplaza, a shopping mall that houses stores like Chanel, Carolina Herrera and Louis Vuitton, told me.

Until recently, Panama was another Central American country, very much a Caribbean country, dependent on the Panama Canal — which, since it has been government-owned, has earned Panamanians millions of dollars in revenue. Today, together with the Panama Canal, the capital inflows attracted by the country’s fiscal flexibility represent the greatest assets.

The great concern, in view of these historic protests, is where the country is headed. If the current course is the right one, and if it could lead to the ghost that has haunted the rest of the region and from which Panama, so far, has been spared: the extreme left-wing populist regimes.

SANTIAGO DE VERAGUAS (PANAMA), 07/21/2022.- Two people walk in front of a sign during a protest in Santiago de Veraguas (Panama). EFE/ Bienvenido Velasco

A country adrift

Several of the people I spoke with stated that, along with inequality, Panama’s biggest problem is corruption. However, it is imminent that Ricardo Martinelli, who was president between 2009 and 2014 and to whom the golden years of Panamanian democracy are attributed due to the undeniable economic boom experienced under his government, will become president again when he triumphs in the next presidential elections on May 5, 2024.

Martinelli is one of the Panamanian politicians most accused of corruption. Today he faces many legal challenges, especially after he was extradited from the United States in June 2018 for a case of illegal spying on political opponents.

Odebrecht, which for the bribery scheme that was set up throughout the continent has swallowed several presidents or former presidents, roars on Martinelli’s neck. Two of the former president’s sons are detained in the United States in connection with Odebrecht corruption.

Corruption is uncomfortable and has also served as fuel for protests, but most people want the buoyant Panama of ten years ago to be resurrected. In the end, it has been the depleted and volatile economy that has fueled the protesters and that today brews a perfect storm that we don’t yet know what it will cause.

In the Wall Street Journal, O’Grady raises the possibility that the demonstrations, led by explicitly communist leftist leaders who propose the redistribution of wealth and an end to the current “neoliberal economic model,” will eventually lead to the emergence of a far-left alternative that will persuade today’s frustrated voters.

“Panamanians are disgusted by a system in which powerful people carve out privileges for themselves and their cronies but refuse to look for real solutions to problems, such as deregulating labor markets and the process of importing medicines,” writes Mary Anastasia O’Grady.

According to the Wall Street Journal reporter, “we’ve seen this movie before, from Venezuela to Chile and most recently Colombia.”

” Any attempt to diffuse it with price controls and subsidies is at best a Band-Aid. Without structural reforms designed to restore credibility, Panama’s democracy is in grave danger,” O’Grady continues.

It is true that among its political class there is no specter of extreme left-wing populism, which is why some say that extremist ideas would never be imposed in a country that owes its growth to capital, especially foreign capital. Several people told me that they aspire to reduce inequality and put an end to impunity for the corrupt, but no one raises the ideological debate. There are only a few activists who speak of socialism and neoliberalism, like the leaders of the protests, but their words do not find an echo among the population.

However, there is no room for naivety either. It is time for the opportunists, who must be ready to jump in and sink their fangs. The political class is discredited, and this discredit is the necessary preamble for the emergence of the caudillos who promise to do away with everything that has been established.

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