Panama Investor Blog

Chavez political stability in question

While Hugo Chavez was out giving away free and discounted oil to everyone who would sympathize with his Bolivian revolution, along with expanding social programs he has neglected the energy industry in his country. Both infrastructure and energy production have been jeopardized and now there are major protests against the government. Many protesting are the same students who brought him into power. The end result is that with 70% of the electricity in the country produced by hydro and water levels being well below normal, coupled with deteriorating oil burning plants, almost daily the people are seeing electricity blackouts. Even with 30 cent a gallon gas, people don't like being in the dark and they are getting angry. This is an amazing development when you consider the greatest exporting resource the country has is oil. I for one certainly wish him the worst! This report from Startfor.

The Latin American voter wants refrigerators and washing machines

Although the U.S. turned decidedly left in their last presidential election, Latin countries seem to be moving the other direction. This article from the Washington Times points out that Latins want the same thing everyone else does; A better life with more conveniences. Ideology is taking a backseat to the general populations desire for these things. As long as there are opportunities there is hope for people to pull themselves out of poverty. Maybe as North Americans see themselves losing opportunities and  slipping into poverty, they too will change back to free markets as opposed to ideology and class warfare.

Excerpts From the Washington Post

"Voters are more calculating and rational than we give them credit for," said Christopher Sabatini, senior policy director at the Council of the Americas in New York. "People are making the choice to support market economies and rational leaders."

In Panama, Ricardo Martinelli, a supermarket-chain owner with close ties to the United States, won the presidency in May. In Brazil, the popular governor of Sao Paulo state, José Serra, enjoys a solid lead in the polls over his more left-leaning rival ahead of October's presidential election. Polls show the winner in Costa Rica's election next month will probably be the ruling party's Laura Chinchilla, who is expected to closely hew to the current government's market-friendly policies.

Read the whole story here...

Former Panama President Arrested

This is the first time a Panamanian president has ever been arrested and is certain to make all of Panama's politicians and public office holders sit up and take notice. If it can happen to the bull, it can happen to anyone.

La Prensa this morning: SANTIAGO Fascetto
JOSÉ OTERO
[email protected] 

  Ernesto Pérez Balladares yesterday became the first former president of Panama who is deprived of his liberty for an alleged act of corruption: the Public Ministry (MP) ordered his arrest in a criminal case that accuses him of course money laundering.

  The precautionary measure dictated Ayú prosecutor Jose Prado, in charge of the Special Prosecutor's Organized Crime after the former president (1994-1999) refused to testify a second time.

  The extension of the investigation was scheduled for today, but the prosecutor and defense lawyers agreed and 24 hours ahead of diligence.

  Perez Balladares admitted to the prosecutor's office at 8:05 am and left guarded by National Police agents shortly thereafter.

  Apart from the prohibition to leave his home, he dictated the Prado Ayú barred from leaving the country.

  The charge of guarding the former head of state does not leave his home will be the agents of the Institutional Protection Service.  Ayú Prado-reported-not frozen the accounts or property of Perez Balladares.

  "We decided to take certain precautionary measures for procedural health record," said the prosecutor, after issuing the injunctions.

  The defense of Pérez Balladares, meanwhile, unveiled two new resources that add to the other seven: another habeas corpus before the Supreme Court and a reconsideration with the prosecutor for outlawing measures.

  The MP opened the investigation into alleged money laundering against former President Ernesto Pérez Balladares, after a series of investigative reports published in the press and that uncovered links Balladares gaming company with Lucky Games Ltd., the than the government of former president was granted a concession to operate direct free slot machine halls in 1996.

  That company turned steadily money to an account of society "paper" Shelf Holding Inc., which controls the former head of state.

  Ayú Prado, on the other hand, decided yesterday to prosecute seven others, bringing the number to 12.  The latter group reported "relates to people who have benefited from money Shelf Holding Inc.

  SEE Perez Balladares, under house arrest

Panama's ex-president on the run?

Since President Ricardo Martinelli has come to power, a number of past government officials have been under investigation for corruption and several are now in prison awaiting trial. I have not blogged about these matters because most new administrations accuse past politicians of being guilty of corruption for political purposes.

But the news in the paper this morning has surprised me, not because past President Ernest Balladares is on on the Lam, but because for the first time in the history of the Republic, a president is being arrested and may be prosecuted for corruption and money laundering. I heard there were road blocks in Boquete yesterday and that a search was on at his home here and that of his brother Mario in Volcancito.

I first met Toro (The Bull) my first year in Panama when he was president of the republic. We had a thanksgiving dinner in 1997 with him and his wife Dora, along with about 20-30 other locals at the Panamonte hotel in Boquete. The President has a home here in Boquete and spends a few days a month here enjoying the cool mountain air. He would frequently visit Valle Escondido during its construction and laughingly called me "Gringo Loco". He could not believe that anyone would really be interested in moving to Panama much less that a project in the middle of nowhere could attract an international buyer. I always found him to be a sober and straight talking person with a quiet yet powerful demeanor.

I held a great deal of respect for Toro, as in my opinion he had done much to bring Panama out from the shadow of Noriega's dictatorship by privatizing state run operations and opening the country up to international investment. Most people believed that in keeping with most politicians, he was enriching himself along the way, but accepted it as just part of being in power. Many Panamanians I know aspire to be in politics in order to enrich themselves beyond a public salary. It is just part of the deal. For many a five year stint in a political position may be their only chance in life to gain wealth. Working for the public good is rarely the intention when seeking political office. So if an official is doing some good and getting rich it is better than them doing bad and getting rich. This has been the gauge by which most politicians have been measured.

Now after 12 years and two administrations, Ernesto Balladares is the focus of a man hunt in regards to past deals that have recently come to light. Although I personally liked Toro, I would say that the country will greatly benefit if he is subjected to a transparent and fair trial. I hate to see someone I consider a "friend" being prosecuted, but if he is guilty of the crimes of which he is accused, he should pay a price for it. A very clear and loud message would be sent to all Panamanians that the rules of the game have drastically changed in Panama and the country will be much better for it.

The following is a machine English translation of La Prensa's articles with details and time lines of the investigation.

You can also read a English analysis of Eric Jackson on his website here.

Taiwan buys executive jet for Panama

This is what I call a nice gift to maintain recognition.

From La Prensa

  during the campaign, proposed to establish diplomatic relations with China

  Taiwan woos Martinelli

Taiwan is recognized as an independent, worldwide, by 24 countries (including the Vatican).  Panama is a member of that group.

  JARAMILLO OHIGGINIS ARCIA
[email protected] [email protected]

Presione para ampliar Click to enlarge

  In the political campaign, President Ricardo Martinelli, considered necessary to establish long-term diplomatic relations with China.  However, Taiwan launched a diplomatic offensive that included visits and donations of millions of dollars.

  The most recent was the donation of an Embraer Legacy 600 (EMB-135BJ), which will allow the Government transport service team Martinelli.  The cost of this aircraft is 22 million.

  Through this grant, the Taiwan government cured the headache of the President, after suspending the purchase of a presidential jet for the widespread negative reaction.

This aircraft can travel up to 6.019 miles, thanks to its extra fuel tank that allows you to get from Panama to any part of our continent, nonstop, and Europe with one stopover to refuel (see graphics).

  And with the purchase of this aircraft, the Taiwanese Government said the president Martinelli many amenities, and its working group.

  For example, the spacious main cabin is divided into three distinct areas.  It has leather chairs, couches, shelves, and a large dining table.

  The materials used in decoration are of the highest quality and personalized.

  Moreover, the country's president, Ma Ying-jeou, was commissioned personally start with this diplomatic offensive, to attend the inauguration of President Martinelli, last July.

  Since the arrival of Martinelli to power, Taiwanese diplomats have made numerous visits to Panama for the purpose of making grants to institutions like the National Police, the Ministry of Government and Justice, the Authority of Fisheries and Aquatic Resources, the Civil Aviation Authority, the Ministry of Public Works, and the Foreign Ministry, among others.

This year 2009, Taiwan has made donations to Panama reached an amount of approximately $ 40 million.

Populism, Corruption concern business execs in Latin America

Latin Business Chronicles carries an article about a recent poll by the American Association of the American Chamber of Commerce in Latin America with over 900 business executives. The survey results do not surprise those of us who live and work in Latin America as these same themes are the ones I post most about in my blog each week. Here are some excerpts of that poll.

“Despite a forecast of negative growth for the region in 2009, survey respondents overwhelmingly indicated that they expect 2010 to be a recovery year,” commented Adrean Rothkopf, the outgoing executive vice president of AACCLA.

However, nearly half – 47 percent – believe populism and authoritarianism will rise over the next four years and 29 percent say it will stay the same. Only 14 percent believe it will decline.

 

“Respondents predict no quick end to the worrisome trend of populism and authoritarianism in the region,” Rothkopf says.

Most of the respondents had a clear preference for democratic countries versus authoritarian ones. Two-thirds said they were not likely to invest or expand business in countries that have had democratic setbacks.

 

“The judgment has been firm both in survey responses and foreign direct investment statistics - foreign investors are steering clear of countries where democracy and its attendant freedoms are under attack,” Rothkopf says.

“By and large, rule of law and investor protections remain a serious concern for countries throughout the region, but especially in Spanish-speaking Latin America, where 79 percent of respondents characterized rule of law as poor,” Rothkopf says.

Nicaragua moves one step closer to dictatorship

Daniel Ortega has made a successful move to get the constitution changed to allow him to run for reelection in 2011. Although it still has to be approved by the supreme court, this should be only a technicality. Once he is reelected he will be able to tighten his grasp on all elements of the country and stay in power as long as he wishes, which as with most dictators is as long as they live. I know that many investors in Nicaragua had hoped that he would be out by 2011, but chances are growing slim of this happening.

AFP Managua

Sandinistas celebrate the ruling that allowed re-election of Ortega in Nicaragua

06:59 PM, 20 Octubre 2009 06:59 PM, 20 October 2009
MANAGUA, 20 Oct 2009 (AFP) -  MANAGUA, 20 Oct 2009 (AFP) - Hundreds of supporters took to the streets Sandinistas of Nicaragua to "celebrate" and "defend" a court ruling that removed legal obstacles to the intention of President Daniel Ortega to run for reelection in 2011, and that the opposition branded as "illegal".
"I burn with Daniel that we" read banners carried by hundreds of supporters gathered near Ortega in Managua Parliament to express their support for the decision of the judges Sandinistas in the Supreme Court.
"We will not let anyone else take power," said a young man who was involved in the mobilization called by party organizations.
  In the streets adjacent to Parliament in the historical center of Managua, the traffic was closed and sound equipment were installed to encourage the manifestation with music and with explosion of firecrackers, AFP journalists found.
  The mobilization also occurred at the various roundabouts in the city, where youths waved flags with the red and black Sandinista National Liberation Front (left) and blue and white of Nicaragua.
  "We're going to take to the streets to celebrate and defend the decision given by the Supreme Court and accepted by the Supreme Electoral Council," the Sandinista union leader Gustavo Porras.
  Sandinista magistrates on Monday declared "irrelevant" a constitutional provision forbidding reelection of the president and mayors continuous, but not the deputies, Ortega considered an inequality before the law.
  The ruling has legal history in similar processes in Costa Rica and Colombia, allowing the re-election of current President Oscar Arias and Alvaro Uribe, respectively, said Porras.
  If the international community accepted in those countries "must be accepted in Nicaragua," he said.

Iran Is Not a Good Partner for Latin America

This is an extremely well written article that I hope is read by many politicians both in America and Latin America. The influence of Iran in Latin America is significant and growing. To my knowledge Nicaragua is the only Central American country that has made deals with the regime.

I hope you take the time to read this from the Council of the Americas.

Abraham Foxman
Summer 2009

The fraudulent Iranian presidential election and its repressive aftermath put the focus on the Islamic regime's behavior in an unprecedented manner. Even during the more than one year hostage crisis of 1979-1980, Iran had its defenders, based on criticism of U.S. treatment of Iran going back to the U.S.-supported coup against Prime Minister Mohammad Mossadegh in 1953.

Today, Iran has been exposed. Efforts to blame the U.S., Israel, and Britain expectantly continue but have no impact. The government has attacked its own people, has abandoned any pretense of respecting the voice of its citizens, and has come under attack from some fairly conservative clerics. It has lost legitimacy and can't successfully conjure up the usual enemies to divert attention from its abuses.

As a result, internal and external actors are more willing to pay attention to Iran as a destructive force in the world. Most importantly, this applies to the potential of a nuclear Iran and its clear intention to develop nuclear arms. There is new opportunity to put the squeeze on Teheran.

It also applies, however, to another troubling area which has been the subject of far less attention: Iran's threatening expansion in Latin America. Iran has seen Latin America as a region of opportunity at least for 20 years. Its planning and implementation in the early 1990s of the terrorist attacks against the Israeli Embassy and the Jewish Community Center in Buenos Aires (AMIA), and its use of its surrogate Hezbollah in those destructive operations signaled that Iran believed it had a certain freedom to carry out terrorist attacks on Latin American territory. Since then, a series of factors have come together to allow Iran to spread its influence on the continent.

Most important has been the coming to power in several countries of leaders and parties who are inimical to the United States. This has translated into economic deals because of the a key factor at work, Iran's oil wealth. Had Iran simply looked for allies based on “the enemy of my enemy is my friend,” that would have been one thing. But Iran has cut a series of deals in the region that make tangible its influence. It is now the second-largest investor in Venezuela, playing a substantial financial role in the further development of Venezuelan oil deposits and is funding housing projects for the poor.

In Bolivia, Iran has a cooperative arrangement worth over $1 billion to develop Bolivia's oil, gas, and industrial sectors. It has set up health clinics and training programs for physicians. In Ecuador, Iran has signed a series of economic agreements in the last year including one for energy production.  In Nicaragua, Iran has promised millions to aid to building a dam and a hydroelectric power station, and donated $2 million for the construction of a hospital.

Magical Realism

Susan Kaufman Purcell of the Center for Hemispheric Policy has written a very insightful piece on the hypocrisy of the OAS in its dealing with Honduras verses Cuba and other non democratic countries in Latin America. Recent statements from the U.S. administration make one wonder why they support these non democratic regimes when one that is striving to maintain democracy is being threatened.

Excerpts from the Latin Business chronicle.

The OAS's condemnation of Honduras while admitting the Cuban dictatorship is surrealistic.

BY SUSAN KAUFMAN PURCELL

The recent behavior of the Organization of American States (OAS) regarding Honduras is worthy of a magical realist novel. According to one definition, magical realism is “what happens when a highly detailed realistic setting is invaded by something too strange to believe.”  

Among the things that are “too strange to believe” is the precipitous classification of events in Honduras as a traditional military coup, despite the fact that the military was asked to intervene by the Honduran Congress and Supreme Court after the incumbent president, Manuel Zelaya, decided to ignore Honduras’ constitution, which forbids reelection, by organizing a “poll” to show that “the people” wanted him to run again. This supposedly would then make it all right for Zelaya not only to ignore the constitution, but to change it. The OAS had sent a team of observers to oversee the “poll,” a strange decision, given that the organization had never before observed a Latin American poll.

ADMITTED CUBA

Even more surrealistic was the condemnation by the OAS of the overthrow of democracy in Honduras only weeks after the OAS had pushed hard to readmit Cuba, a dictatorship that has not held a presidential election in fifty years. The fact that the OAS had earlier added a “democratic clause” to its charter apparently was not considered relevant to its decision to readmit Cuba. Nor, according to the secretary general of the OAS, was it relevant to the situation in Venezuela, where President Hugo Chávez has systematically used the democratic rules of the game to destroy Venezuelan democracy.  

Why wasn’t the “democratic clause” applicable to Cuba and Venezuela? Because, according to the secretary general, the lack of democracy in those countries was an “internal” issue, and the OAS doesn’t intervene in the internal affairs of member countries. But if democracy or its absence is an “internal” issue, why is the involvement of the Honduran military in the internal affairs of Honduras also not an “internal”  issue? 

Equally surrealistic was the sight of the leaders of the most non-democratic countries in the hemisphere -- Cuba, Venezuela and Nicaragua  -- calling for the return of the democratically-elected president of Honduras.

Panama vows to quit Central American Parliament

I don't know much about the Central American Parliament, but based on what I know of most governing bodies and the fact that each of the five member country can have 20 emissaries, I suspect that it is nothing but a waste of time and money. They say the cost is about $4.2 million a year. The new government is being polite in saying it is "part of the past". Another good move by the new administration!  If anyone knows anything more about them please share it with us.

From AP

Panama's foreign minister says his country will quit the Central American Parliament.

The Cabinet of President Ricardo Martinelli has already approved the proposal to exit the largely consultative body.

Minister Juan Carlos Varela says he will present the country's letter of intention to resign from the body soon.

He calls the group "part of the past" and said Sunday it had contributed little to resolving the region's problems.

The Central American Parliament is based in Guatemala City and has 132 members representing five nations.