One-Third of Panamanians Jobless in a ‘Time Bomb’ for the Country

Noriega is gone, but one-third of Panamanians are out of work and unemployment has become the greatest threat to the new government.

“It has to be resolved or the country will go into a spiral of robberies . . . strikes, demonstrations against the government and backlash against the United States,” said Carlos Rodriguez, a Panamanian who is vice president of the American Chamber of Commerce.

For now, there seems to be no opposition to President Guillermo Endara’s new government. The end of Gen. Manuel Antonio Noriega’s corrupt, repressive dictatorship and the lifting of U.S. economic sanctions have brought hope.

The government is scratching to keep itself afloat, however, and has nothing to invest in reactivating the economy. It is looking to U.S. aid and private enterprise to do the job.

Jorge Heraza, 21, finished high school three years ago with a specialty in commercial accounting, which seemed sensible in an economy that is 70% to 80% services. He still fills out job applications, and still has no job.

The Dec. 20 invasion that ousted Noriega and installed Endara seemed like a good idea, he said, “but they must follow through. They say they’re going to give jobs, but unemployment--with what has happened, it is worse.”

Government officials say about 33% of the work force, estimated at 650,000 people, is unemployed.

Looting and vandalism that accompanied the invasion caused about 90% of businesses to close, raising the jobless figure from about 20%. Before the political crisis began in 1987, about 10% of Panamanians did not have jobs.

Endara fasted during the first 12 days of March to dramatize Panama’s economic problems. He has criticized the slow pace of U.S. aid and of freeing government funds frozen during the Noriega regime.

“People cannot eat democracy,” the president said. “There could be popular unrest unless there are some quick solutions. The congressional delay of approval endangers our democracy.”

Of the Bush Administration’s $1-billion package, Congress has approved $43 million to rebuild the Chorrillo neighborhood, which was destroyed in the invasion, and the start of credit the Administration says is worth $500 million.

Panamanians say they are well-equipped to use aid effectively.

“Panama is not a basket case like some other countries,” said Rodriguez, the general manager of Colgate-Palmolive’s operations in Panama. “It has good infrastructure, a good entrepreneurial class.”

With the U.S. dollar as its currency, Panama was a thriving international banking and trade center.

That ended with the political crisis created by U.S. indictments of Noriega for drug trafficking, his dismissal of presidents, the closing of banks for nine weeks in 1988 and U.S. economic sanctions.

Assets in the cluster of gleaming, modern banking towers plummeted from $40 billion in June, 1987, to less than $15 million two years later.

On streets that had teemed with visitors buying cameras, electronic equipment, watches and tailored suits, business slowed to a trickle.

The gross national product fell 20% in 1988 and 7.5% more in 1989. Much of the government’s revenue was lost to corruption.

“If you stop the corruption, that by itself is income. It was that bad,” said Guillermo Ford, the second vice president and planning minister.

Since the invasion, the government has survived on gradually improving tax revenue and partial release of the $390 million in frozen funds.

“There is a change in mentality” about taxes, said Willie Cochez, the new mayor of Panama City. “They know people like President Endara will not steal the money and they decide to pay.”

Officials continue plugging corruption leaks. Kindergartens are $3,000 a month better off since Cochez sent a department head to jail for stealing that much.

New officials cut their own salaries, which saves $2.1 million a year. Endara’s pay was reduced from $10,000 a month to $7,000.

Until Panama pays the $540 million in arrears on its $5.2-billion foreign debt, it will not be eligible for new loans.

Rodriguez, the businessman, feels Panamanians may be too optimistic.

“People probably feel the problems are over and they are not,” he said. “They probably think it will rebound to pre-1987 in three months and it will not.”

He said unemployment is a “time bomb against the Endara government or any democratic government.”

Government strategy is to strengthen the private sector by selling state-owned Air Panama, sugar mills and cement and citrus processing plants, Ford said.

Some businessmen even suggest that the Panama Canal, to be turned over to Panama at the end of 1999, could be operated as a concession.

A major worry in this strategy is reducing the payroll of 150,000 before there are enough new jobs for the people dismissed.

Crime has skyrocketed because of unemployment and because so many weapons are in the hands of paramilitary groups set up by Noriega. Police said murders have gone up from four a month to 30.

For the long term, Rodriguez said, officials speak of a U.S.-Panama free trade agreement similar to those the United States has with Canada and Israel.

Panama has had the Colon free-trade zone for years and it was not seriously affected by the crisis. Officials are promoting establishment of new in-bond plants there, which assemble products for export, and expansion of existing ones.

The zone also does a brisk trade in transshipment of goods.

International banking could revive, but is considered unlikely to regain its former prominence. Panamanians dismiss concerns that the banks could again become a haven for drug money and say current secrecy laws allow access to information when laundering is suspected.

“The perception in Panama is that the United States is delaying approval of the economic recovery package to squeeze out tighter restrictions on banking, tighter restrictions on Cuba-related companies,” Rodriguez said.

Ruben Dario Carles, a former banker and now the government’s comptroller, said: “We cannot sit and wait. We have to deliver the goods. We have to get this thing moving.

“Every unemployed person has a reason to protest, and it will be bad if 200,000 protest.”