ORIGINS OF THE PERMANENT CRISIS LEADING TO SOCIAL EXPLOSIONS IN THE COUNTRY OF THE PANAMA CANAL
Recent developments
have shocked everyone. A country well known for its people that loves to party,
suddenly exploded into protests from one corner to the other, even though many
groups did so with music and dances of indigenous origins. Only in this tiny, tropical country where
people party more than anywhere else such a strange thing could happen.
Historically, Panama
has been characterized by great activity in the narrowest part of the isthmus.
This has produced an economy based on international services and a strong
concentration of resources, in certain groups, linked to that model.
The high price paid
for this culture of serving the world has been the complete deformation of the
country´s productive structure. Any international economic crisis can be easily reproduced in Panama,
affecting all sectors
and further
exacerbating the permanent
problems of lack
of full occupation of
resources, worsening the uneven income
distribution, while compressing the internal market, as real incomes for most
people fall.
The use of
the United
States dollar, as legal tender for all domestic and
international transactions, has generally kept inflation low and allowed the
people living in the country to use this strong currency for purchasing a wide
variety of goods produced in other countries developing a culture of apparent
opulence based on imports of most goods including indispensable things such as
food and medicines that usually by oligopolies.
The creation of
the International
Banking Center in
1970, and
Panama's acquisition of sovereignty over
the former
Panama Canal Zone,
have strengthened Panamanians’ access to
public and private financial and credit
resources; thus, creating the conditions
for an increasing monetary supply feeding mostly on imports for consumption
rather than stimulating new, expanded local capacity for the production high
priority goods to satisfy social needs and a sustainable, well-developed
economy.
As a result of
the distorted
growth pattern, the level
of occupation
and production
remains permanently below
the GDP potential. When COVID-19 created a global crisis
from the supply side, with lower production and eventually relatively higher
international prices, the conditions were already becoming very difficult for
large segments of the population.
Increasing public
debt, mainly from foreign sources, served to help develop a successful, yet,
painful (in a number of deaths and social tensions from a long lockdown),
combined with expanding subsidies and other government expenses eventually had
begun to show sign of economic recovery, mainly stimulated by the mining
sector, the Panama Canal and some commercial and international activities as
well as the public sector services.
Yet, prices
remained above the pre- COVID 19 level, and disguised employment, grew, even
faster than before, when suddenly the War in Ukraine created another
international shock on the supply side, pushing prices higher, and creating new
pressures on the job market. At the same time, the political class continued
demonstrating little concern about the reduction in real income and the
accumulated social dissatisfaction accumulated during the COVID-19 pandemic.
As greater
reopening took place, the masses became free to protest about all their
unresolved expectations, with the embattled government becoming the main
target. The manifestations went from one part of the country to another, and in
the end they all came together, demanding changes, while sending signs of a
higher quality of social organization that the status quo will have to deal
with, for the future, of this strategic country that host the vital Panama
Canal.
