It’s early Saturday evening and new customers arrive at Panama City’s Porsche dealership every twenty minutes in name-brand polo shirts and pressed linen. Roughly fifteen miles to the East, flights at Tocumen International Airport unload tourists into the roped-off maze of immigration, a hallway of refugee-like disorder and commotion. On their way into the city, visitors will pass a 500 year-old bell tower, a neighborhood of rundown fishermen shacks, billboards for luxury watches, and the 70-story Trump Ocean Club still under construction.
Outside the Marriott Hotel in Panama City’s banking district, busses pick up and drop off tourists amidst a glimmering strip of casinos, restaurants, bars, and a cigar parlor known better for its wide selection of prostitutes. “We’re still busy all the time,” says Mr. Clark, the shop’s cashier and unofficial talisman. We’re walking through the lounge’s grotto-like passageways passing a sea of googly-eyed Colombians as he explains business, amidst the recession otherwise hurting Panama, is still good. “The American men come down for girls and booze just like they always did. Recession don’t change that. No sir it don’t.”
Despite the global crunch, the tiny Republic of Panama will still finish the year as one of the fastest-growing economies in Latin America. On paper, the majority of this decade has been remarkable: real estate sales through the roof, hotel occupancy brimming, plans for expansion ubiquitous. Optimism for a bigger, better, and more developed Panama has been the name of the game and some ten years after shedding its status as a vestige of US power, Panama has indeed been winning big.
Growth in Panama spawned via an unusual relationship between business and politics. On one hand, the country’s elite – retail giants, shipping heirs, politicos – dared not relinquish their homegrown power. On the other hand, possessing a regional juggernaut served all their development goals. And so it was born several years into the new millennium when Panama’s attention turned to quick-cash condo towers, nightly hotel booms, and a spree of overnight land-grabbing that saw cattle farms sold for many times their initial worth. This movement for foreign direct investment came escorted by a notable dose of protectionist laws: a network of contingencies and “if” clauses designed by and for Panama’s upper class to maintain control on a rising tide.
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It’s a delightful near-summer day on Panama City’s newly constructed coastal highway. Eerily, the vast majority of visible construction sites sit idle, though its hard to know just why. Desperate selling techniques are being employed with unrealistic rental guarantees, discounts, and freebies as developers try anything to shift units. While no one knows when or if the cycle will suddenly restart, it’s clear that the big profits have passed. It could be interpreted as the beginning of a bust – but no one in Panama wants to call it that.
Within a two-mile radius, one can count three of the nation’s largest hotel groups expanding with one, the Decameron Group-owned Megapolis adding more than 850 hotel/condo units to its downtown fleet. Tourism, one of Panama’s newest fads, is still largely unproven due in part to the time and expertise it takes to develop as an industry. So much has happened so fast in Panama – and with the recent slow down, the integrity of Panama’s long-term vision is in question. Would it be possible for the Panama model of success to move past day-tripping and into sustainability? A destination that attracts sophisticated travelers and rewards dynamic entrepreneurs?
One crux of this argument is quite straightforward. Panama as a nation has always welcomed foreigners. Legacy of its diverse ethnic past is everywhere: Yugoslavian architecture in Chiriqui, French cornerstones in Casco Antiguo, Spanish plazas in Los Santos. But with the blueprints for mega resorts, demolition of historic architecture, and blind eye to the country’s national parks, many worry that the fate of Panama’s patrimony is being distorted amidst its gold rush. This concern has been accentuated by a meltdown in foreign direct investment and in tourism where May of 2009 saw nearly 20% less tourists than May of 2008.
A second factor is Ricardo Martinelli, supermarket tycoon turned President on July 1st, 2009. Martinelli’s gun-slinging crusade against corruption in the first months of his term have been unprecedented, declaring that if Panama wants foreign money, business expertise, and venture capital, than it must clean up its act. Opposite him are former aristocrats as well as experts who argue Panama’s corruption is simply too intrinsic to its society – that in the same manner democracy cannot work in the Middle East, corruption cannot be eradicated from the isthmus. Forever, corruption was the lubrication that made Panama tick and now, it’s one of the country’s greatest obstacles to success. Under the Martinelli administration, Panama’s clandestine support structures could be sent tumbling down.
Not everyone’s happy about Panama’s transformation. Says Adolfo Diaz, a 40-year-old banker who’s lived in Panama all his life: “I used to be able to see the ocean from my apartment. Now all I see is noise, traffic, and others peoples’ living rooms.” Water shortages in the country’s interior, increasing crime rates, and pollution concerns around the glamorous Panama Canal Expansion are budding issues as well.
Foreign investment has defined the face of Panamanian life and while many claim such a dependence can be damaging, Bob Adams, CEO of New Global Initiatives and an expert on emerging markets, believes absorbing money isn’t necessarily a bad thing. “How many nations collapse because of too much money?” he provokes. “Even the weakest – Nigeria comes to mind – somehow manage to carry on. Panama is in much better shape than Nigeria and that is an understatement. This is a human society. It will grow in human fashion, with all its fits and starts, just like every nation that has had to deal with success.”
Perhaps its inherent and inevitable – the process of progress in the developing world. The rich get richer, and the poor get poorer. Currently presiding over the second most unequal income distribution in Latin America, Panama’s people are becoming increasingly aware of the costs of poor management and corruption. Can the large-scale model of global stardom be tailored to a country like Panama? Or are there intrinsically treacherous roadblocks, ones barely yet discovered, that could be standing in the way?
