Contributed by: Don Winner
By DON WINNER for Panama-Guide.com - Sam Taliaferro, the developer of Valle Escondido and Paul McBride from Prima Panama spent this week lobbying members of the Panamanian government as well as opposition politicians, talking to them about the issues of recent changes of the tourist visa law, property tax exemptions, and privacy issues. They met with Danilo Toro, the Director of Internal Security at the Ministry of Government and Justice, as well as David Saied, the communications director for the Ministry of Finance. They also met with Vice President Samuel Lewis and Ricardo Martinelli of the opposition Cambio Democratico party. According to Paul McBride, the various representatives of the government "underestimated the backlash" from the community of international investors, and are suffering the effects of unintended consequences. They listened to what Sam and Paul had to say, reviewed the "book" of comments from participants in the survey, and are at least thinking about it. (more)
Will It Work? Good question. It's good to see Sam and Paul leading this lobbying effort to effect change but I wonder if it's going to work. The one consistent message has been that the government made this change in an attempt to improve their internal security and to control the influx of Colombians to Panama who would do illegal activities. The one real catalyst was the brazen assassination of Luis Hermida Madrid on 30 April, with two Colombian hit-men pumping 17 rounds from an Uzi into his body at point-blank range, less than 50 yards from the El Carmen church and in broad daylight. Torrijos has been getting hammered in the polls on the issue of internal security and every time there's a hit, a murder, a stabbing, or any kind of violence (especially drug or gang related) then people immediately call for Martin Torrijos to do something to improve internal security.
Too Many To Count: The fire in Curundu? Rival drug gangs taking revenge burn down more than 100 homes. Tourists coming to Panama to buy merchandise in the Colon Free Trade Zone are robbed at gunpoint on the highway and left naked on the side of the road. The harder the government works to stop the flow of drugs, the more they find (and, it's everywhere.) 20-ton busts at sea. Hundreds of kilos of cocaine and marijuana buried in the sand of the Pacific beaches. Increases in busts and interdiction end up with more people getting killed in reprisals and retaliation attacks. Illegal aliens being smuggled by "coyotes" are washing up on the beaches (dead) or being caught by the dozens. The National Police make high-visibility raids in Curundu, Chorrillo, and San Miguelito in an effort to curtail youth and gang violence. They round up hundreds of people but three days later they are all set free. So, what's being done to improve internal security that will actually have a lasting effect? There are too many incidents to keep track of, but the overall perception is that internal security is severely lacking and needs to be improved.
Critical Political Issue: The issue of internal security is a critical political issue for the administration of Martin Torrijos. This is the one issue where he is seen as being ineffective. The other major negatives are public health (as a result of the contaminated medicines) and public safety (as a result of the bus fire.) Health, safely, and security. If you're not getting that job done, then you can have a kick-ass economy all day long and you still lose politically. The Canal Expansion, refineries, bay cleanup, and construction boom are all good or great. But if Juan six-pack is afraid to ride the bus, afraid to take the medicine he gets from the Social Security health clinic, or afraid to walk past the kids on the corner on his way home, well then he's just afraid all the time. He wants the government to do something about that. Nothing is more important for Martin Torrijos right now.
Hard Row to Hoe: In all honestly I don't see this one getting reversed. It's a long shot because of the internal security issue. Martin Torrijos knows that he's seen as weak with regards to internal security, and so do all of the people who want his job. So in the end this issue is becoming a balance between what Torrijos needs against what the gringos want, and gringos don't vote. Any eventual solution will have to address both needs, or if not then the needs of the Executive will win out over the wants and desires of the snow-birding baby boomers. Bet on it.
Opposition Political Hay: Sam and Paul visited with Ricardo Martinelli and gave him a copy of their book. Torrijos and Martinelli have been exchanging barbs all week long in the press as part of the dance of the Presidental politicians. Martinelli didn't waste any time to use Sam's "book" as a weapon against Torrijos, and complained that "changing the length of stays for tourists to 30 days is having an impact on the North Americans who are coming here to invest." He went on to say that "Torrijos says that the change was directed at the Colombians and was supposed to improve internal security in the country, but they didn't consider the impact the change to the tourist visa law would have on foreign investors." The reporter then asked Martinelli what he thought about Torrijos' recent comments about him. Torrijos had said that Martinelli was just sitting in his office waiting for reports to come in from his supermarkets. Martinelli laughed, said that the comments were ridiculous, and complained that Torrijos didn't have anything better to do than to make comments about him, and that he's not doing anything about the real problems facing the country, like internal security for example.
The Old One-Two: So, Martinelli criticized the recent law changing the tourist visas to 30-days because it was going to effect investment from North American, and in the same breath criticized Martin Torrijos for not doing anything to improve internal security. So I guess he wants to have it both ways. And, besides criticizing what the Torrijos administration is doing, Martinelli didn't make any suggestions or recommendations as to what he would do to improve internal security in the country. Hypocriticial, anticipated, expected, and politics as usual.
How Does The Tourist Law Effect Security? The bad guys are going to come in anyway, right? Well, maybe not so much. A great majority of the internal security problems in Panama stem from Colombia and are brought here by drug traffickers, money launderers, gun smugglers, arms smugglers, and prostitutes. Other smaller concerns are illegal workers who are taking jobs away from Panamanians. But most of the really serious crime has to do with the drug trade.
Coming Through... Panama is a transit country for drugs. The drugs go North and money comes South. Drug traffickers have two eternal problems - how to get the illegal product to market, and how to get the proceeds from those sales back to where they can use it. Both of those activities call for the establishment of bases of operations here in Panama and the rest of the countries between Colombia and the United States. There have been innumerable incidents of busts in warehouses, storage facilities, and buildings where the drugs are being packaged for shipment to the markets in the north. And, a great number of the Colombians who are busted in Panama involved in the drug trade are (you guessed it) here in Panama as tourists. How many times have you heard "Police made another major drug bust today, and in the operation arrested three Colombians and one Panamanian." The Colombians usually come here to oversee things and they have one local Panamanian contact who knows where to go and what to do. Most of these foreigners who are getting busted are here as tourists.
Not Just Making This Up: The Panamanian government made this change to their immigration law "on purpose." That is to say, it wasn't some kind of a misconceived accident, like they woke up one morning to find that someone had passed a change to the immigration law while they were sleeping. They knew what they were doing, balanced the pros against the con's, and made their choice. The fact that Sam and Paul were talking to Danilo Toro (and not Olga Golcher) is an indication that they will sit and listen, but that they are fighting an uphill battle. The gringos are going to be pissed, but I think they knew that already.
Who Said What? Sam wrote that he got a call from an "influential Assembly member" who said the tourist issue would be addressed by the special session of the National Assembly in July. Sam said "we have been told that the tourist visa will be extended back to the previous 90-day policy (without the need of extensions)..." I have two questions. First of all, who is the "influential Assembly member"? Putting aside the fact that all Deputies in the National Assembly are at least somewhat influential, it's important to know who was doing the talking. If you know what political party they are from then you can gauge what the chances are of this proposal actually getting passed. If the proposal is coming from the opposition or if it doesn't have the support of Elias Castillo, the PRD or President Torrijos then it doesn't stand a snowball's chance in hell of going anywhere. And, "we have been told..." by who? Again, same logic. Who is making promises?
Pedro Miguel Gonzales: On Sam's blog Paul McBride writes: "Our final meeting of the day was with two bright and able legislators, Yassir Purcait, President of the Commission on Commerce and Industry, and Pedro Miguel Gonzales, President of the Budget Committee for the National Assembly." Here's a little background on the "bright and able" (terrorist) Pedro Miguel Gonzales - I would not have been able to attend that meeting because I would have punched the "bright and able" Gonzales in the teeth and happily gone to jail for having done so:
So I Guess Ignorance Is Still Bliss: I'm not knocking Sam and Paul's efforts on this issue, but going to Samuel Lewis Navarro and Ricardo Martinelli at the same time was probably a mistake, politically speaking. Martinelli ran to the cameras with the issue and made it his own, so now the chances of getting a change implemented are actually slimmer. When I called Paul McBride and talked about their efforts he said "who's Zak Hernandez?" When I explained the history to him he questioned if what I was telling him about Pedro Miguel Gonzalez was real.
Self Serving? Sam and Paul are breaking their butts on this issue because it means money to them. Anything that reduces their potential client pool means less potential profits. The tax changes to the tax law (20 year tax exemption) means Panama is less attractive to foreign investors. And part-time residents will have a harder time if they can't count on the exceptionally loose tourism requirements (nine months as a tourists, and "perpetual tourists"), again making Panama less attractive for potential foreign investment. But less attractive is not the same as unattractive. These changes might take a little bit of the shine off of the apple, but the fundamentals of the underlying economics don't really change all that much. Panama is still a very attractive retirement destination, and anyone who was going to forget about Panama because of these changes probably was not all that serious in the first place.
In The Spotlight: Sam is a great promoter and he promotes himself better than anyone. This issue got him into the offices of some important people in Panama as the champion for the cause. Well, good for him. I'm glad he's doing it and I hope the law is changed. Actually it would be fairly easy to create a new kind of visa that would cater specifically to people who want to come here to buy property and live here part time (more than 30 days). Some kind of a new visa that would allow people to apply once, get approved, carry a card, and never have to deal with immigration again.
Nair - The Perfect Cat-Skinner
Ways to Skin a Cat: Paul told me there are ways to achieve both desired outcomes - increase the internal security with regard to the Colombians and still make Panama as attractive as possible for foreign direct investment, especially for the baby boomers and those who are looking to buy part-time vacation homes in the mountains and beaches. The unintended consequence of this change to the tourism law is that Panama is now very much less attractive for those snow-birders. I would suggest some kind of a snow-bird visa, good for 20 years or something, so you can register once and then whisk your way through the airport as an invited guest. Paul said the feedback they received indicates that people don't want to have to register in any way. And, exactly how would you implement that change.
Comprehensive Immigration Law Reform: There are several versions of new laws proposed to completely revamp the immigration law in Panama floating around, and elements from all three proposals will eventually be blended into some new law that has yet to be written. This one-line reduction to 30 days on the tourist visa was a stop-gap measure designed to create the perception that the government was "doing something" with regards to internal security. And, now there is talk that the one-line change will be rescinded during the special sessions in July to ratify the Free Trade Agreement. Let's see if that actually happens. The "real" or comprehensive immigration law reform isn't going to happen until sometime this fall and the bill has not even been drafted yet.
Politics, Economics, and Shrill Panic: Whatever the end result, Sam and Paul have certainly succeeded in getting their message on the table. Now, will the local politicians make hay over this issue? Yup. Do Sam and Paul stand to make (or lose) money on this issue? Yup. And, how much of this is real, and how much is hype? Who knows. The "survey" was designed to elicit a certain desired response which Sam and Paul then used to try to elicit a certain desired action from politicians. But the jury is still out on the economics. Right now the economy is still expanding at a phenomenal rate so there's a tendency to say "so what" with regards to the tourist visa issue.
Bottom Line: Don't have one yet. This is a moving target and the only constant is change. Scooby-snacks to Sam and Paul for leading the charge on these issues and championing the cause. Now, let's see what actually happens on the other side of the time line. Again, I personally don't see "going back to the way it was" happening. The Panamanian government might come up with some kind of a middle ground, but the analysis indicates that local political requirements trump the potential loss of some expat income, especially when the current perception is that "there's more out there where those came from" and that anyone who is turned off or turned away will be replaced by someone else. Let's watch and see what happens.
Copyright 2007 by Don Winner for Panama-Guide.com. As usual, go ahead and use whatever you want as long as you credit the source. Salud.
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