PANAMA: POLITICS AS USUAL By William I. Robinson LADB news analyst The recent conflicts in Panama's governing alliance are unfolding into the most serious crisis since the December 1989 US invasion. If the political crisis continues, say observers, it could bring down the regime of President Guillermo Endara. The latest disputes pit the Christian Democratic Party (PDC), led by First Vice President Ricardo Arias Calderon, against the other three parties of the Democratic Civic Opposition Alliance (ADOC). In March, Endara's Authentic Panamanian ("Arnulfista") Party (PPA) accused Arias Calderon and the PDC of conspiring against the government, and then in mid-April, ADOC expelled the PDC from the ruling coalition. Behind the frictions is a political struggle among Panama's elite groups over quotas of power, the nation's social and economic policies, and intrigues over drugs and money laundering. There is also the heavy hand of continued US interference--the ever-present backdrop to Panamanian politics throughout this century. Since its inception in 1987, ADOC has been characterized by weakness, corruption, splits and inability to develop unified and coherent policies. The alliance congealed around Washington's 1987-1989 campaign against Noriega. With US funds and political support, it went on to organize the Civic Crusade, the broad-based national coalition that opposed the Noriega regime. ADOC won the presidential elections of May 1989, annulled by Noriega, but was placed in power seven months later by US troops. ADOC is an amalgam of antagonistic parties and groups from the traditional oligarchy and the civilian business elite that emerged in the 1970s and 1980s around the development of the international financial and service center in Panama. The alliance squared off against a corrupt military elite which had accumulated wealth and power over the past 20 years, and particularly, against the Democratic Revolutionary Party (PDR) which Noriega inherited from General Omar Torrijos. In addition to the PDC, the ADOC is comprised of: Endara's PPA, the party of right-wing populism founded 50 years ago by Panamanian caudillo Arnulfo Arias; the Liberal Republican Nationalist Movement (MOLIRENA), an amalgam of now-defunct oligarchic parties, financiers and modern business sectors, headed by Second Vice President Guillermo Ford; and the Authentic Liberal Party (PLA), another organization grounded in defunct oligarchic groups. Rise of Panamanian Christian Democracy? As elsewhere in Latin America, the PDC is a middle class reformist party, although it is linked to right-wing of the Christian Democratic International. The PDC is trying to establish itself as the Panamanian political force of the future, following the collapse of the two major political movements of the past half century--"Torrijismo" and "Arnulfismo." Torrijismo waned in the years of the Noriega regime and saw its definitive political demise with the US invasion. "Arnulfismo" quietly faded as a significant political force in national life with the untimely death ofthe caudillo in early 1989. The PDC's bid for political leadership has antagonized its rivals in ADOC. The party currently holds a majority in the national legislature, and most mayors, provincial governors and municipal officials are Christian Democrats. Although the PDC was important to the US campaign against Noriega because of its not insignificant social base, Washington had developed closer ties with the other parties, and particularly with Guillermo Ford, considered the point man of neo-liberalism in Panama. Until recently the PDC had endorsed ADOC's anti-worker economic adjustment programs, and Arias Calderon is himself a prominent member of the Panamanian aristocracy. However, the PDC is not tied to powerful economic interest groups, and some groups in the party see populist rhetoric against the government's neo-liberal policies as the best way to expand their political base at present. The economic crisis is perceived as an opportunity to try and project the PDC as a popular alternative for the poor. "Endara should know that the voice of the poor will speak loudly and clearly through the Christian Democrats," declared Arias Calderon in mid-April, as the current government crisis was building. The desire to expand its political base among the poor places the PDC at odds with important oligarchic and right-wing elements in the government and with multilateral lending institutions, and forms part of the backdrop to the governmental crisis. Post-Invasion Panama The Endara-Arias-Ford triumvirate is made up of previous political adversaries. Their politicking now takes place in an especially volatile situation because the spoils of government were divided up in the wake of the invasion among the ADOC coalition parties. For example, the PDC received the top positions in the interior ministry (responsible for internal security) and the ministries of government and education, providing the party with a significant ideological apparatus. Guillermo Ford's MOLINRA is in charge of economic policy ministries and the foreign ministry. Endara's Arnulfismo has the presidency, which increasingly appears to be a mere administrative apparatus in the developing factional struggles. The current situation in which political groups use branches of government they control in competing with rivals fuels a peculiar environment of instability, rumors and intrigues in Panama City. According to recent polls, the Endara government's popularity has declined to about 15% of the citizenry from a high point of over 80% in the wake of the US invasion. The government's slide in popularity is a result of demonstrated ineptitude in resolving the country's problems, and continual charges of corruption and nepotism. The administration's image has been tarnished in particular by its imposition of a harsh economic liberalization and structural adjustment program at the behest of Agency for International Development (AID) and the International Monetary Fund (IMF). Panama, once the bustling financial hub of the Caribbean basin, suffered a crippling 27% decline in GDP in 1987-1989 as a consequence of US economic sanctions, political instability and capital flight. Overall losses accruing from the sanctions and the invasion are estimated at $4 billion. The Endara government requested $1.5 billion in aid from the US after the invasion. As seen in the government's June 1990 "National Strategy for Development and Economic Modernization," economic policies were grounded on the expectation of US funding. The program consists of the classic neo-liberal recipe of labor market and price deregulation, elimination of import restrictions, fiscal budget cutbacks, public sector layoffs, concessions to foreign investors, and a sweeping privatization process, among other measures. The Endara administration's economic program was designed to please USAID and the IMF as a prerequisite to renegotiating a $6 billion foreign debt, and toward obtaining new foreign loans. However, the program is also aimed at satisfying "New Right" neoliberals, and rebuilding the economic base of the traditional Panamanian oligarchy severely eroded by two decades of Torrijismo. "Modernization" means reorientation of the Panamanian economy toward export growth and recovery of the services sector as the driving force in development, and the privatization of state-run enterprises. However, Washington committed only $420 million, of which about half has been disbursed. The remainder is conditioned on demonstrated results of the adjustment program. In addition, the release of US funds and appropriation of new aid were contingent on the approval by the Panamanian government of the US-proposed "Mutual Legal Assistance Agreement," which permits Washington access to Panamanian bank records in investigations of drug money laundering cases. (See CAU 04/24/91.) Implementing a harsh adjustment program with little foreign assistance severely limited the Endara government's ability to address the demands of an impoverished population whose living conditions had already deteriorated result of US economic sanctions and destabilization. Under the assumption that massive US aid was forthcoming, the new government allocated $400 million, or over 30% of the 1990 budget to payment of $540 million in debt service arrears accumulated under Noriega. In other words, what little funds the government had last year in the wake of the invasion were used for debt service rather than reconstruction or emergency social welfare programs. According to the UN Economic Commission for Latin America and Caribbean (ECLAC), GDP in 1990 increased 1%, and per capita GDP decline by 1.2%. Urban unemployment runs as high as 35%. In a country of 2.2 million, over one million live below the poverty line, 150,000 are unemployed, and 250,000 underemployed. The housing deficit in Panama City is estimated at about 250,000 units. Panama City residents are particularly sensitive to the housing problem, given the destruction of the Chorillo neighborhood by US aircraft in the early hours of the invasion, and the refusal of the US to provide adequate compensation to Panamanians who lost their homes and belongings. The government's plummeting credibility quotient, and growing impoverishment are generating a new popular protest movement. A new labor code implemented in late 1990--including a three-year wage freeze, a longer work day, and provisions to force strikers into arbitration--triggered labor unrest throughout the country. These protests led to the creation in late 1990 of the "National Coordinating Committee for the Right to Life," which brings together practically all of the nation's labor groups and several civic organizations, in opposition to the government's social and economic policies. In December, one year after the invasion, the Coordinating Committee staged a successful national work stoppage and march through the streets of the capital. The inability of the government to secure foreign aid for economic recovery and maintaining social peace has fed divisions in the governing alliance and contributed to the current crisis. In mid-April, the local press reported that the World Bank was pressuring Panamanian officials to dismiss another 19,000 public employees, sell off vital state-owned companies, and reform social security legislation as conditions for helping Panama renegotiate its foreign debt. The proposal was endorsed by Guillermo Ford. But Arias Calderon insisted that the World Bank proposals would have to be submitted for approval to the parliament, where the PDC controls 28 seats as opposed to the 27 seats of the other ADOC coalition members. Corruption and Intrigues However, it was the US-proposed Legal Assistance Agreement which did the most to exacerbate both divisions over policies and political intrigue within the government. On the one hand, since the treaty was grounded on the end of bank transaction secrecy, it was perceived by many as a mortal blow to Panama's hopes of recovering status as an international banking and financial center. The treaty was opposed by lawyers, accounts, administrators and businesspersons who became prosperous through the growth of Panama as a financial services center. On the other hand, the public exposure of corruption, drug dealing and money laundering in Panama's international bank dealings could prove disastrous to numerous senior officials of the Endara government who have investments in banking. President Endara has been accused of personal involvement in such activity following the discovery that he holds interests in, and is a former executive board member of the Inter-Oceanic Bank, which has been linked to money laundering. Since then, the US Drug Enforcement Administration (DEA) has suggested that he has ties with the Colombian drug cartels. The Christian Democrats, who possess the fewest ties to banking and financial services operations, expressed the most willingness to finalize the Mutual Assistance Treaty with the US. The PDC's position on the treaty inspired even greater antagonism with other ADOC parties. Endara attempted to project his opposition to the treaty as a reflection of his "nationalist" persuasion. "Under the Pentagon's Umbrella" In the most fundamental sense, the current political crisis is rooted, both in the immediate sense and in a broader context, to the country's continued subordination to the US. The century-long crisis of national identify returned to the agenda after the December 1990 national strike and demonstration in the capital was quashed by US troops who were still occupying Panama City. Following this episode of US intervention, the Coordinating Committee added the restoration of national sovereignty to its demands. A prominent Panamanian social scientist recently commented: "Many Panamanians confused the invasion with liberation. Now more and more of us yearn for a country free from foreign domination, a country with a real democracy, where we the people are protagonists of our own affairs." After Puerto Rico, Panama ranks second in Latin America as a target of US military intervention. Since political independence in 1903, Panama has seen 14 US military interventions and occupations. Independence itself was the result of a US business deal. Last July, the Panamanian government signed an agreement with AID which assigned US economic advisers to almost all government ministries. Combined with the US military presence, Panama appears to have reverted to a crude, modern-day colony. "Operation Just Cause" was carried out under the banner of combatting drug trafficking and restoring democracy. But it was seen by many Latin American observers as part of a broader campaign to redefine Panama's social and political make-up and the regional balance of forces in such a way that would permit the US to retain a military presence in Panama beyond the year 2000. The Canal Zone houses the Southern Command, which coordinates all US military, paramilitary and intelligence activities from the Rio Grande to Tierra del Fuego. The 1977 Panama Canal treaties stipulate full Panamanian control over Canal facilities by the year 2000, and the departure of all US military personnel. Some conservative groups in the US were vehemently opposed to the treaties, aruging that the strategic bridge between the Pacific and the Atlantic is essential to US security interests, and have launched a campaign to modify or renounce the treaty. The same conservatives placed the issue on the 1980 Republican campaign agenda. The "Santa Fe Document" produced in the same year, described as the Republican blueprint for US policy toward Latin America in the 1980s, said that "once a democratic government is in power, the United States and Panama should seriously begin to plan an appropriate administration of the Canal...At the same time, discussions should begin with respect to its realistic defense after the year 2000. Those talks should include the United States retention of a limited number of installations in Panama, for an adequate projection of strength in the Western hemisphere." The 1977 treaties stipulate that the US must shut down its six bases and withdraw all troops by December 31, 1999, ending nearly a century of US military occupation, and turn over full responsibility for defense of the canal to Panamanian forces. Dismantlement of the Panamanian Defense Force after the invasion and replacement by a domestic police force under US tutelage leaves Panama with few resources to take over responsibility for defense of the Canal. The Quito-based Latin American Human Rights Association noted in a report last February that the US military presence and the Panamanian police force's failure to guarantee security, order and demilitarization have "alarming" consequences for the fulfillment of the Panama Canal Treaties. Endara's government "is incapable...without foreign intervention, of exercising some of the essential functions of the state, which puts the government's survival at risk." In March, the president of the Panamanian legislature's canal affairs committee, Leo Gonzales (from ADOC) proposed that the treaties be renegotiated. Gonzales said that "the US military withdrawal should be reviewed" because "the resources and planning required for taking charge of the Canal's operations and the defense and protection of the zone are inadequate," and because "the dismantling of the bases will leave many Panamanians jobless." Panama's status as a type of colony since political independence gave rise to an oligarchy and a group of elite politicians who came to regard politics as the art of winning favor with Washington. From 1903 to Omar Torrijo's military coup in 1968, Panama suffered chronic political instability evidenced by no less than 38 governments in 65 years. The traditional class of politicos was displaced by Torrijismo's nationalism but are now back in power. The current crisis, seen in historical context, is really just "politics as usual" in Panama.