Spotlight: Panama

The Republic of Panama, although of only intermittent focus in the news today, has continuously proved to be central to debates over international economic policy, constant political corruption, and pronounced social inequality. August 15th 2011 marked the 97th birthday of the Panama Canal, which was a hugely famous engineering achievement at its inauguration. The birthday, while rarely invoked, serves as a reminder that the country has yet to achieve a firm and reputable global standing. In fact, the role of corruption, perhaps democracy's most dangerous foe, has continuously proven to be paramount in Panamanian politics. Highlighted in this edition of 'Spotlight' are two articles that have been fashioned to illustrate Panama's multi-faceted relationship with the United States, the industrializing world, and the Panamanian government's so-called justice system.

A Legacy of Corruption Marches on: New Insight into Panama’s Infamous Lucom Case

Just five years after his death, Wilson Charles Lucom, a multimillionaire expatriate born in Pennsylvania, still cannot rest in peace. Lucom’s last testament dictated that a variety of liquid and physical assets worth upwards of USD 50 million were to be sold, with the proceeds to be consigned to the Wilson C. Lucom Foundation, a trust established in order to provide needy children of the tiny Central American country with food and resources. However, Lucom’s third wife, Hilda Arias of Panama’s all-powerful Arias clan, has extensive connections with a number of political power hitters in the Panamanian establishment. Using her influence, her agents have claimed the entire estate for Hilda herself, creating a far different scenario than the U.S. millionaire ever envisioned.
Richard S. Lehman, a highly regarded Florida tax lawyer and long-time friend of the conservative philanthropist, was appointed by the Panama Probate Court as sole Executor of Lucom’s will. The instructions were explicit and the task was simple: the drawn up bequest, totaling millions of dollars, was to be donated to the foundation and distributed in the form of daily meals to thousands of deserving children. However, it has been just over five years since Lucom’s death, and Lehman continues to face a heartlessly corrupt legal establishment in a no-hold battle against the Arias family’s crusade to nullify the will, install Hilda as sole executor, and quickly siphon off Lucom’s assets.
This analysis was prepared by COHA Research Associate Natalie Simpson.
To read the full article, click here.

The Panama Canal at 97: A Tradition of Innovation and Opposition Continues

In a 2007 speech, U.S. Ambassador William Eaton lauded Panama’s “bright future” and celebrated the 2006 referendum that approved the USD 5.2 billion Panama Canal expansion. Since that moment, the Canal expansion project, the first since the construction of the facility was initially finalized in 1914, has drawn steadfast international support. The United States, which is responsible for an estimated 1/3 of the total 4,800 containers and equipment that pass through the Canal every year, has been especially enthusiastic. However, it is not the only country excited over the expansion for Panama’s now 97-year-old attraction. The Panamanian government, which has been far from stable, has cited the project as instrumental for the continued and future growth of the country’s GDP. By the year 2007, hopes were high amongst Panamanians that the project would add over 50,000 jobs and steadily increase foreign investment by 40 percent until its completion in 2014, the same year as the Canal’s centennial celebration.

A New Canal for an Age of Expanding Trade

The Canal expansion seemed to reflect a logical investment. The Panama Canal Authority (PCA), an independent agency in charge of operating and overseeing the Panama Canal, estimated in 2006 that the Canal would exceed its capacity between the years 2009 and 2012. This would have led to huge losses for Panamanian trade, which, without the finalized expansion, continues to be at a disadvantage compared to other ports that welcome larger post-Panamax ships. As the cost of maritime export remains high due to steep oil prices, the solution for many companies has always been to construct bigger ships able to carry more cargo, but without the capacity to pass through the narrow Panama Canal.“Without an expansion,” the PCA concluded, “the Canal would face new competitors as well as permanent and irreversible changes in trade patterns in which Panama would stop being relevant as a global maritime route”. As more than 14 percent of the Panamanian government’s annual budget, estimated at USD 3.4 billion, comes from toll revenue, construction was likely to promote long-term economic growth. But even though the Canal’s expansion has so far delivered on its promise of raising the country’s GDP, worries over high costs, and continued resentment from some Panamanian environmental and good-government activists, slows progress with questions over economic inclusion and environmental sustainability.
This analysis was prepared by COHA Research Associate Sandra Zuniga Guzman.
To read the full article, click here.

Wednesday, August 17, 2011 | Research Memorandum 11.3
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