PANAMÁ BLOG

FROM a swimming pool halfway up Latin America’s tallest skyscraper, tourists and businessmen gaze out towards the fast-expanding fringes of Panama City. Off the Pacific coast, ships line up to enter the Panama Canal, ferrying Christmas presents from China to the east coast of the United States. In the background is the hum of construction work, as glass and steel buildings go up along the seafront.

Panama’s economy has grown faster than that of any other Latin American country this year, as it did last year. Growth has averaged nearly 9% a year for six years, transforming the skyline of the steamy capital. Though it lies in Central America, the poorest and most violent region in the West, the country’s 3.6m citizens are now richer than most Latin Americans.

Yet despite the boom, Panama is unhappy. Last month saw a week of riots in Colón, a city at the Caribbean mouth of the canal (see map), which left three people dead. Crowds set fire to buildings after the government passed a hasty law to sell the state-owned land on which Colón’s free-trade zone—the world’s second-largest—is built. Businesses were unhappy at the prospect of higher rents; workers feared losing their jobs, one of the few sources of income in an otherwise depressed part of the country. The unrest spread to the capital, where shops were looted. After a few days of mayhem the government scrapped its plans.

The Colón episode was not the first such explosion. In February two people were killed during protests by Ngäbe-Buglé Indians about mining and proposed hydroelectric dams in the western province of Chiriquí. In 2010, in nearby Bocas del Toro, a man died during protests by banana workers at proposals to restrict the right to strike. In all three incidents the government deployed troops and then backed down after a few days of violence.

Leave the booming capital and Panama’s discontent becomes less mysterious. On Achutupu, a speck of an island off the Caribbean coast, 2,500 Kuna Indians live in wretched conditions. Most of their thatched huts lack electricity; sanitation consists of open latrines built over the sea. Your correspondent arrived during a party to celebrate the ritual piercing of a child’s septum for the insertion of a nose-ring. Sugar-cane liquor was flowing freely; several men were carried away unconscious by their exasperated wives.

Life on the island is tough, according to Emperatriz, who runs a small shop and makes extra money letting people climb the tree in her yard to get a mobile-phone signal. Her severely disabled 20-year-old daughter, Stefanía, sits motionless in the shade. The government has provided an antique-looking wheelchair, but she faces a long wait for promised treatment. A health clinic offers basic services on the island, though its family-planning efforts seem ineffective: many couples have ten or more children. There is a primary school but not a secondary one. The Kuna region is the country’s poorest: 73% are indigent (living on less than $53 per month), compared with 3% in Panama City.

The progress in some regions has highlighted the poverty elsewhere. The fact that much of Panama’s wealth comes from nationally administered assets—such as the canal, the ports and the Colón free-trade zone—also causes tension. “These powerhouses deal directly with the central government. Sometimes the local population feels it is not benefiting,” says Mario Cuevas of the Inter-American Development Bank. Still, as he points out, some things are improving: extreme poverty has fallen from 18% to 10% over the past six years, partly thanks to conditional cash-transfers which encourage parents to get their children vaccinated and into school. The elderly poor receive a $100-per-month pension. Such payments mean that the incomes of the poorest 10% are now 35 times lower than those of the richest 10%, rather than 60 times lower, according to the finance ministry.

The trouble is, the urban middle class is restive too. Panama City’s skyscrapers are dazzling, but look down and the pavements are often covered in leaking sewage. The traffic is dreadful (though Central America’s first underground metro, due to open in 2014, should help). Crime is lower than elsewhere in the region, but the murder rate has doubled since 2006. There is a shortage of secondary schools, and teaching is weak in those that exist: Panama’s education system comes 62nd out of 65 countries ranked by the OECD, an inter-governmental think-tank.

Panama’s economy outclasses others in Central America, but its government is every bit as dysfunctional. Ricardo Martinelli, a supermarket tycoon who became president in 2009, is at war with his vice-president, Juan Carlos Varela, who comes from a different party and whom the constitution prevents the president from sacking. Mr Varela has accused the president of taking a $30m bribe in return for awarding a contract for helicopter and radar services to an Italian firm. Mr Martinelli is suing Mr Varela for $30m in damages.

Critics accuse the president of packing the Supreme Court with his acolytes, in order to overturn a constitutional ban on re-election. Mr Martinelli has responded by promising that he will not run in the next election, due in 2014. He is also accused of pushing around the National Assembly, which obediently passed (and then speedily repealed) the law to sell the Colón land. And in a country that has no army, some Panamanians fear that the newly beefed-up Border Service is starting to look like one, having staged an unusual march through the capital on independence day earlier this month.

A leaked cable from the United States embassy reveals that in 2009 Mr Martinelli requested help in the wiretapping of his political opponents, noting his “penchant for bullying and blackmail.” The political situation has not improved since. In some ways Panama is an inspiration to its Central America neighbours; at the same time, as its angry population attests, it remains an example of some of the region’s most debilitating problems. FUENTE: THE ECONOMIST