PANAMA

More Pressure on Afú

The Revolutionary Democratic Party (PRD) leadership is attempting to distance itself from Carlos Afú, the PRD legislator accused of having accepted bribes to vote for the ratification of two Supreme Court judges (see Vol. 21, Nos. 1-3). On 25 Mar, the nine members of the PRD’s internal Tribunal of Honor and Discipline decided unanimously to expel Afú from the party and revoke the controversial legislator’s mandate.

Members of the honor tribunal claim that Afú, whose vote helped assure the appointments of Winston Spadafora and Alberto Cigarruista to the Supreme Court, openly violated party policy. According to PRD attorney Leonel Solís, Afú participated in all the internal party meetings during which participants agreed to and signed resolutions promising to vote against the ratification of the judges.

Afú and his attorney Roberto García Flores filed an appeal to the National Directive Council (CDN) immediately following the tribunal’s announcement. The tribunal, claimed García Flores, “hasn’t proven with any certainty or satisfaction the charges [against Afú] of complicity with adversaries of the party.”

The accused legislator’s seat in Congress seems safe for the moment. If his appeal is rejected by the CDN, Afú will still have the legal option to file additional appeals before the Electoral Tribunal and the Supreme Court.

The PRD tribunal, meanwhile, is currently considering issuing a similar reprimand against legislators Tomás Gabriel Altamirano Duque and Carlos Alvarado, who like Afú broke party lines by voting to appoint the controversial Supreme Court judges.

Oil Refinery to Convert Operations

The Chevron-Texaco Corporation announced on 13 Mar that it plans to convert the Petroleum Refinery of Panama from a crude oil processing facility to a center for the storage and distribution of finished petroleum products. The multinational company, which has been involved in a legal dispute with the Panamanian government since ’98, has received mixed responses following its decision to cease refinery operations and back out early from a 20-year contract it signed with Panama in ’92.

Refinery president Kevin Walahn claims that Chevron-Texaco made the decision solely for economic reasons. The company has suffered financial losses over the last three years and hopes that by concentrating activities on the storage and distribution of finished products it can again earn a profit in the region. Rafael Jaén, the company’s manager of government affairs, blames the corporation’s woes on volatile crude oil prices and the liberalization of the economy. Oil refining, he claims, is no longer a viable business in either the short or long term.

The ongoing legal disputes between the Panamanian government and Chevron-Texaco may also have contributed to the company’s decision. In ’98, Texaco filed an $89 million suit against Panama, accusing the government of breach of contract after it began allowing electricity-generating companies to import petroleum derivatives tax free. The government of Panama then filed a counter-suit, blaming Texaco for environmental damages. With both suits still pending, Chevron-Texaco, by requesting that it be allowed early exit from the ’92 contract, is proposing by default that all legal disputes be completely dropped. The Panamanian government has not yet recognized Chevron-Texaco’s request for contractual annulment and considers the ten-year-old agreement still valid.

Marcos Fernández, a financial analyst for the Institute of Economic Studies, foresees some positive results from an eventual conversion of the refinery. Chevron-Texaco currently produces between 50 and 55 thousand barrels of processed petroleum each day and has a complete monopoly over the oil products used in Panama. By converting its activities, the Corporation would in effect free up the market, a scenario that Fernández imagines could result in increased competition and lower prices for consumers.

Others are less optimistic about the eventual transformation of the refinery. Gabriel Castillo of the National Union Coordination is concerned about inevitable worker layoffs and has accused Chevron-Texaco of attempting to destroy the labor movement. The refinery, which currently employs approximately 290 people, has tried to downplay the eventual job losses by promising a “gradual, programmed and organized” downsizing process to be put into effect over the course of the next six to nine months. Walahn expects to retain only 40 to 50 employees. Castillo predicts that the economic fallout from the conversion will affect more than just the laid-off refinery workers. “Unemployment levels in [the Colón region],” he explains, “are at 30% and as a consequence of this measure many businesses that revolve around this activity will be affected.”

Economic Reactivation Plan in Motion

On 26 Mar, the members of a round table group collectively known as the National Dialogue for Economic Reactivation handed President Mireya Moscoso their first completed recommendation report. Moscoso, who approved the report before passing it on to the Legislative Assembly, is optimistic that the National Dialogue proposals will help boost the static Panamanian economy. Early figures estimate GDP growth for the first three months of ’02 at a miserable .3%.

Norberto Delgado, the Minister of Economy and Finances and member of the round table advisory group, believes that the National Dialogue project, having completed its first counsel report, deserves some credit. “We have demonstrated that the essence of the accomplishment is our ability to reach a national consensus.” President Moscoso agrees. “We have never tried to impose measures without opening them up to a national dialogue,” she reminded members of the press upon receiving the completed report.

The economic advisory team did not reach consensus quickly or easily. In fact, the report, the first issued since meetings began in Nov ’01, was only completed after the dialogue participants, deadlocked on the issue of how best to spend the Trust Fund for Development (FFD), eventually agreed to disagree.

Labor representatives had objected vehemently to a proposal that the government spend $600 million from the FFD coffers to reduce the public debt. On 21 Mar some 2,000 students and union members marched to the president’s offices to protest against the “modern pirates” who they fear will loot the FFD. Though proponents of the debt relief plan had for five months consistently refused to yield, the final report currently under congressional scrutiny protects the disputed $600 million. Labor representatives are claiming victory.

Committee members did, however, reach consensus on the remaining stimulus proposals. The final report contains recommendations to limit both public debt and spending and to designate $200 million of FFD money toward infrastructure projects. The advisory group also proposed that up to 100% of the remaining $1 billion in the FFD be invested in Republic of Panama bonds. Finally, plans were spelled out for the use of Inter-Oceanic Regional Authority (ARI) land to fund several infrastructure projects. The ARI has already identified 2,541 hectares for negotiation.

With the Legislative Assembly currently deliberating these proposals, the National Dialogue now prepares to debate tax reform strategies.

-Benjamin Witte