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Panama Today, Tomorrow And Always

Molina & Co
20 February, 2008

This Christmas season 2007 everyone is asking: What is happening in Panama? Every single hotel, whether in the city, at the beach or up in the mountains, is full. The malls and streets are throbbing with tourists from the whole world, in a shopping, business and holiday frenzy. Workers from hundreds of construction sites emerge at 3 o’ clock, invading streets, squares and stores with their lunch boxes and backpacks as they make their way home. Cranes scattered everywhere are becoming part of the scenery. All the restaurants are full to capacity and long lines await customers trying to get a table. The streets are congested with cars, newly acquired for the most part. Sprawling and modern shopping centers boasting fabulous designs bedazzle both foreigners and locals. We have already surpassed the 1 Million threshold in terms of tourists coming into our country every year, mainly through the newly refurbished and enlarged Tocumen International Airport. The Canal expansion projects are underway, generating many direct and indirect jobs, with good wages. The Atlantic and Pacific ports see millions of containers every year and have become the largest in Latin America. The banking center is steadily growing and many banks from different countries have opened for business in the last few months.

Residential tourism, especially the US retiree kind, has grown in the last years and constitutes an important aspect in the country’s economic growth.

The Colon Free Zone, which generates huge earnings and plenty of jobs, is at its best, showing incredible figures for import and export ventures to and from many countries of the globe, especially Asia, the United States, Europe and Latin America.

Amazing public works are underway:
The Panama-Colon freeway
The Biodiversity Museum
The coastal belt and new public roads
The Panama Bay clean-up project

Economic growth has been gradually achieved since the Canal and Canal Zone handover. The Panama Canal administration has yielded important earnings for the National Treasury, thanks to toll fees, which have also increased precisely to the benefit of the rightful owners of the waterway. In seven years of Panamanian administration, the Canal has generated more revenue in terms of taxes than what was produced during the eighty-five (85) years of American administration.

Significant progress is being made in the field of non-traditional produce exports, such as melons, watermelons, pineapples, fish and medicinal plants.

This is a positive overview, albeit very abridged, of present-day Panama. Following I will try to reminisce the Panama of yesterday.

During the thirties, poverty was global due to the world financial crisis. The so-called Canal Zone was an oasis of wealth because the overwhelming majority of canal and defense workers earned wages higher than those earned in the rest of the country. These workers bought their food, clothing, shoes and other items in Canal Zone stores, in direct and illegal competition with homeland trade. Smuggling goods from the Canal Zone was a common thing and was tolerated by both national and US authorities. In December 1941, the Second World War broke out and lasted four years, ending in 1945. During the armed conflict, the US Empire dotted the landscape with military bases, making use of the right that the 1903 pernicious treaty gave them to do so. The Panamanian workers and artisans for the construction and functioning of so many bases not being nearly sufficient, foreign laborers, chiefly from Central America, had to be imported. The streets were teeming with soldiers and marines going in and out of bars that back then, just as today, thrived in the capital city. Thousands of soldiers were posted in the military bases; others disembarked their ships or planes, in transit towards the European and Pacific fronts. The city swarmed with men and women, soldiers and civilians, of all ethnic groups and nationalities, the nation’s secular cosmopolitanism, which was boosted by the state of war of that time. Many were the verbal and physical abuses committed by soldiers against Panamanian citizens, especially women, in spite of the presence of the Military Police that patrolled every street. Fights would break out very often between Americans and locals, which brought to mind episodes, such as the watermelon slice incident in 1856, when Panama was the route chosen by American adventurers coming from New England to cross the isthmus by railway towards California, attracted by the Gold Rush.

During the Second World War years, Panama’s performance was probably null. Many people from the countryside moved to the capital, attracted by the jobs available in the military bases and other works carried out by the American Armed Forces, such as the Transisthmian highway and other roads within the Canal Zone. Dollars showered upon the capital and sprinkled the interior as well. The soldiers and a good amount of the local population were so fond of gambling that the National Lottery doubled and even tripled the emission of bills. Back then, just as today, people spoke of the great business boom and the abundance of money circulating in the country.

All of this bonanza could be explained due to the millions of Dollars that the United States spent in our country during the war. But one must remember that workers did not pay any taxes in Panama and that they bought their food and all their household items in Canal Zone stores. And on top of it all, income arising from taxes levied on Canal activities did not reach one Million dollars per year. Outrageous abuse from the occupying country!

When the war ended in 1945, the United States negotiated the Filos-Hines Agreement, whereby the Panamanian state granted the United States the right to maintain one hundred and thirty military bases in the Republic of Panama. The National Assembly did not ratify this agreement due to the opposition of the Panamanian people, who demonstrated massively and forcefully against such ratification. The students of the University of Panama, founded in 1935 by Octavio Méndez Pereira, led a huge demonstration that spilled over the French Plaza, demanding that assemblymen reject the agreement. Once the military bases were vacated, many Panamanians lost their jobs and many apartments that had been rented out to American soldiers and technical support personnel in the cities of Panama and Colon were left unoccupied. This economic situation was temporary, since the war in Korea and Vietnam brought back military personnel to the colonial enclave and the Canal terminal cities. Around 1949 the Colon Exterior Free Trade Zone commenced operations, which has steadily grown until this day, holding a key position in the nation’s economy. In May 1951, the School of Medicine opened for classes in the grounds of our sole university, a transcendental event in the history of Panamanian education and public health system. This school has seen many a student from underprivileged groups graduate as doctors and lead the health teams required “to redeem our race”, as stated by its founder, professor Octavio Méndez Pereira.

When the new Canal treaties that were subscribed in 1977 came into force, the Railroad was handed over, and the ports and some canal zone areas were reintegrated into the national patrimony. We have seen how the ports, the railroad, as well as the power and telecommunication services have been privatized. We have also witnessed the wonderful development of the Amador area and the big success of the City of Knowledge, which houses important national and international organizations.

I have but outlined some of the facts of the Panama of today, threading ideas from the Panama of yesterday. These are my personal observations and follow no historical rigor. Following I will try to expand on the expression: the Panama of Always. Since the appearance of the Isthmus of Panama three million years ago, it has always served as a communicating bridge between Central and South America, and between the Atlantic and the Pacific oceans. Through this land and air bridge numerous species of plants, mammals, insects, plants and other biological organisms have passed, including man. The waters of both oceans are home to hundreds of species of fish, whales, shell fish, turtles and other sea creatures that prefer our warm waters to mate and reproduce. Our extensive mangrove and solitary beaches represent an important ecological atmosphere for the cycle of life of numerous species.

Interoceanic communication is possible today by land and train, but ever since Balboa traversed the isthmus and discovered the Pacific Ocean in 1513, communication is chiefly made by land. Let’s remember the Camino de Cruces and the Camino Real, which linked the city of Panama to Chagres, Portobelo and Nombre de Dios. Witnesses to the history of these terminal ports are the Puente del Rey in Panama Viejo, the ruins of San Lorenzo in Chagres and the old Customs House in Portobelo

The Panama of always is that which has been forever globalized and cosmopolitan, with cyclic and transit-based economy.

We could visualize the economic activity and the hubbub that reigned in the city when the conquest of Peru was being planned?

We could visualize in our minds the commotion and activity when those great shipments of gold and other treasures from South America transited through the isthmus and to then leave Panama and Portobelo? And what about the trade and military activity conducted by the Spanish empire in the isthmus of Panama?

The world-known Portobelo Fairs, which paved the way for the Panama International Commercial Exhibit, saw commercial exchanges that generated enormous wealth. These riches sparked the greed of pirates, who sacked the ports of Panama and Portobelo.

And what about the Panama Railroad construction years, completed in 1855, where hundreds of workers toiled so that thousands of Americans could use it to reach California?

Between 1904 and 1914, the fabulous feat of building of the Panama Canal took place, and this period marked for ever the historical destiny of the isthmus of Panama.

The globalization of the world economy, the fantastic technological progress in the communications and information technology fields, total sovereignty in the entire Panamanian territory, juridical security, the efficient administration of our Canal, which is now undergoing expansion works, the development of shopping, ecological, health and cultural tourism, and the improvement of education and health indicators, are all factors that will certainly contribute to maintain and consolidate the Panama of today, with solid projections towards a bright future, for the benefit, well-being and joy of all those who live on Panamanian soil.

Rodrigo Julio Molina Ortega, Esq.
Offshore services providers and an international law firm MOLINA & CO is well known for its practical, creative and cost-effective approach to legal and financial challenges
Email: rjm@moliasoc.com


About the Author

Molina & Co

Rodrigo Julio Molina Ortega, Esq. Offshore services providers and an international law firm MOLINA & CO is well known for its practical, creative and cost-effective approach to legal and financial challenges. Contact: rjm@moliasoc.com, www.panamaoffshorecenter.com


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