Panama: A Central American Singapore?

By Tom Long*

Singapore (left) and Panama City (right) / William Cho and Jim Nix / Flickr / Creative Commons

Singapore (left) and Panama City (right) / William Cho and Jim Nix / Flickr / Creative Commons

As a transportation hub, logistics center, and regional financial player, Panama has long been painted by investment bankers and Panamanian politicians as a potential “Singapore of Latin America,” but that vision still seems a way off.  In some respects, Panama’s story has been quite impressive.  For a decade, it has boasted GDP growth far beyond the regional average, even surpassing 10 percent in some recent years.  Unlike many of its neighbors, its dollar-based economy relies on services, not exports of commodities or low-value-added light manufacturing.  Since the 1989-1990 U.S. invasion to unseat General Manuel Noriega, the total size of the Panamanian economy has quadrupled in constant dollars.  It is also different from Singapore in important ways.  Singapore’s approach to planning and public housing might be helpful in Panama City, which has suffered traffic, environmental degradation, and inadequate housing for the poor as a consequence of poorly planned growth.

In other important ways, however, the Panama-Singapore comparison is less apt.

  • Singapore is a city, with nearly two million more people than Panama has spread across 100 times the landmass. Urban-rural divides are wide in Panama, with poor delivery of health and education services outside the cities, exacerbating inequality.  A Singapore-style strategy in Panama would leave the countryside behind – and indigenous and Afro-Caribbean populations would benefit much less.
  • Differences between the two countries in governance – for better and worse – are profound. The Panamanian people are much freer under the country’s democracy than they would be under a single-party-dominated system like Singapore’s.  In other ways, though, Panama’s governance leaves much to be desired.  Corruption is a massive problem, and watchdog groups highlight weakness in the rule of law, judicial independence, and press freedom.  Projects to expand the Panama Canal and build a capital city subway are over budget and behind schedule, and have suffered from strikes, contract disputes, and questionable bidding practices.  While it may seem easy to blame the corruption on former President Martinelli, who faces criminal charges, the problem has much deeper roots.
  • The two countries have very different policies toward education. Singapore invested, and continues to invest, heavily in world-class universities.  Panama lacks these, weakening its ability to compete globally in industries where innovation is key.  While Panama’s primary education has improved, its research and development lags.
  • A final difference is where the countries find themselves in their political and economic evolution. Singapore became independent 50 years ago, but it has been only a quarter century since Panama ended its kleptocratic, military rule.  It has been just 15 since the United States officially turned control of the canal over to Panamanian authorities.  The roots of its problems cannot be easily or quickly extirpated.

Panama’s boosters often use the comparison to highlight the areas in which Panama excels – economic growth, unique geography, and infrastructure crucial to global shipping and air transit.  The comparison might be more helpful in highlighting areas where Panama needs to improve.  These include dedicating resources to higher education and R&D, addressing inequality, rooting out corruption, and enhancing political and bureaucratic accountability.  Singaporean scholar Alan Chong argues that Singapore’s attempt to present itself as a model, global city is in part a foreign policy strategy of “virtual enlargement.”  The city-state’s wealth, reputation, and active role in international organizations allow it to “punch above its weight” in Southeast Asia and beyond.  Some chapters of Panama’s recent economic story might be the envy of neighbors with their own canal dreams, but the country will need to focus on governance and accountability if even its logistics-hub strategy is in fact going to deliver shared welfare at home and enhanced influence abroad – let alone become a Latin American equivalent of an Asian Tiger.

March 2, 2015

* Dr. Long is a visiting professor in International Relations at the Centro de Investigación y Docencia Económicas in Mexico City.  He is the author of Latin America Confronts the United States: Asymmetry and Influence, which is forthcoming with Cambridge University Press.

Chávez’s Passing: In the Hemisphere’s Words

"Chavez" | by Donmatas1 | Flickr | Creative Commons

Chavez | by Donmatas1 | Flickr | Creative Commons

Below are excerpts from statements made by leaders of the Western Hemisphere upon learning of the passing of Venezuelan President Hugo Chávez.  The tone of the U.S. President and Canadian Prime Minister’s remarks is different from the Latin Americans’.

Barack Obama (U.S.A.)
“As Venezuela begins a new chapter in its history, the United States remains committed to policies that promote democratic principles, the rule of law, and respect for human rights.”

Stephen Harper (Canada)
” I would like to offer my condolences to the people of Venezuela on the passing of President Chávez.

“Canada looks forward to working with his successor and other leaders in the region to build a hemisphere that is more prosperous, secure and democratic.

“At this key juncture, I hope the people of Venezuela can now build for themselves a better, brighter future based on the principles of freedom, democracy, the rule of law and respect for human rights.”

Enrique Peña (México)
“Lamento el fallecimiento del Presidente Hugo Chávez. Mis más sentidas condolencias a su familia y al pueblo venezolano”.

Ollanta Humala (Perú)
“Adiós Comandante y amigo Hugo Chávez. Mis sentidas condolencias a su familia y a todo el pueblo venezolano”.

Ricardo Martinelli (Panamá)
“Deseamos expresarle nuestro pésame al Pueblo Venezolano y a la Familia Chávez por el sensible fallecimiento del Presidente Hugo Chávez”.

Evo Morales (Bolivia)
“Duele, pero también queremos decir a los pueblos, fuerza y unidad ahora más que nunca. Estamos destrozados”.

Juan Manuel Santos (Colombia)
“Lamento profundamente la muerte del presidente de Venezuela Hugo Chávez Frías. Nuestras sinceras condolencias”

Dilma Rousseff (Brasil)
“Estamos de luto por la pérdida de un gran amigo. Va a dejar un hueco en ‘la historia y en las luchas’ de América Latina”.

Sebastián Piñera (Chile)
“Fue un hombre profundamente comprometido con la integración de América Latina. …  Sin duda teníamos diferencias, pero siempre supe apreciar la fuerza, el compromiso y la voluntad con la cual el Presidente Chávez luchaba por sus ideas”.

 

Central America on U.S. Elections: A Shy Shadow

Photo by Norman B. Leventhal Map Center at the BPL’s | Flickr | Creative Commons

The U.S. election doesn’t seem to matter much for Central America.  Salvadoran President Mauricio Funes – speaking at an event with U.S. Ambassador Mari Carmen Aponte – publicly wished the “best of luck” to President Barack Obama, reflecting his close relationship with the American President.  At the Summit of the Americas in Cartagena last spring, Funes – along with Honduran President Porfirio Pepe Lobo – appeared to be Washington’s closest ally in the “war on drugs.”  This came after newly elected Guatemalan President Otto Pérez had raised the idea of legalizing marijuana, which Obama´s State Department has opposed fiercely.  Costa Rican President Laura Chinchilla slammed “the international community” – code for the United States – for pushing a policy in which only Central Americans died.  Nicaraguan President Daniel Ortega, while perhaps Washington’s most effective partner in counternarcotics, has resorted to old-school anti-U.S. rhetoric.  Panama is missing in action as a Central American voice.

The U.S. has two main interests in the subregion.  One is combating the drug trade, and the other, according to informed observers, is blocking the influence of Venezuelan President Hugo Chávez.  The U.S. Southern Command estimates that roughly 500 tons of cocaine enters the U.S. market through Central America, accounting for some 60 percent of U.S. consumption.  But there are very few clues in the American electoral narrative about either Obama´s or Republican contender Mitt Romney´s views on Latin America, not to mention Central America.  Romney´s Latin America advisors are perceived as the same hawks, with the same close ties to the Miami lobby, who dominated during the Bush administration.  Robert Zoellick, the fixer for the Central American Free Trade Agreement (CAFTA) in Washington some eight years ago, is also close to the GOP campaign and has been mentioned as a potential cabinet member, perhaps suggesting a push for some sort of second chapter of neoliberal reform.  To date there are no signs of fresh faces in the Obama camp, casting doubt as to whether a second-term State Department will be more open to out-of-the-box thinking.

This apparent estrangement comes at a time that the northern triangle of Central America – Guatemala, Honduras and El Salvador – is on a very dangerous path towards uncontrolled violence and even more weakened states. Neighboring countries are hardly in a position to help.  President Laura Chinchilla´s tenure in Costa Rica is fading rapidly toward lame-duck status, and Panamanian President Ricardo Martinelli is surrounded by corruption allegations.  For a second-term or incoming U.S. President, Nicaragua´s slippage on good-governance, despite the country’s economic tranquility, provides little political space for cooperation.  The next U.S. President will have no easy options in the most violent region of the world, which now faces, as Colombia did 20 years ago, a clear and present danger.  The absence of visible alternatives is probably a consequence of the fact that, since the Salvadoran Peace Accord ended the Cold War in Central America, Washington has not perceived much urgency to grapple with the fundamental political and economic challenges confronting the region.  Only by doing so will a new administration identify opportunities to move forward with a jointly articulated agenda.

Panamanian President Martinelli Examined

Photo by: Congreso de la Republic del Perú via http://www.flickr.com/photos/congresoperu/4923731107/


Wall Street Journal columnist Mary Anastasia O’Grady on June 20 published a commentary about right-leaning Panamanian President Ricardo Martinelli that had a tone and edge that she usually reserves for leaders she suspects of being communists, populists or nationalists.  Entitled Panama’s Democracy Goes South, Ms. O’Grady documented “the warnings from a growing chorus of Panamanians that [he] is moving the country toward authoritarianism.”

Martinelli – blessed by the Obama Administration last year with a Free Trade Agreement in part based on an evaluation of Panama’s democratic institutions – is “tearing down institutions,” stacking the Supreme Court, and apparently steering government lucre to build a parliamentary coalition that made the national assembly into a rubberstamp of his agenda.  O’Grady points out that this amounts to “the erosion of Panamanian pluralism” and compares him with Venezuelan President Chávez.

This portrayal of Martinelli’s leadership is not unique – it is well documented – but official Washington’s embrace of it would be.  The authoritarian tendencies of some ALBA presidents have been well publicized and, at times, exaggerated, but rightwingers with similar tendencies often get a pass.  In this context, such comments in the Wall Street Journal are significant.  For now, no regional institution and no major democracy, including the United States, has threatened sanctions against Martinelli.  Last week, the State Department announced that some assistance to Nicaragua will be suspended because of poor progress toward achieving transparency in government budgets – precisely one of the areas where Panama has experienced egregious backsliding.  Sanctions against Martinelli, however, seem remote.  Latin American leaders at times have bridled at the double-standards of external criticism more than at the sanctions themselves.  O’Grady’s commentary challenges the State Department to send a message to the region that its “democracy promotion” agenda applies to conservatives as well as those it often categorizes as on the Left.