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President Martín Torrijos of Panama, who is to meet George W. Bush, US president, at the White House on Friday, is fond of describing his nation as the commercial and transportation “hub of the Americas”.

In political terms, he tends to see himself in a similar light, equally at home discussing free trade with Mr Bush or plans for the construction of an oil pipeline with the US leader’s bête noire in the region, Venezuelan president Hugo Chávez.

On a recent visit to Cuba, the pro-business Mr Torrijos chatted affably with Raúl Castro, the communist island’s interim leader, underlining his credentials as a broker between the hemisphere’s political extremes. Yet Panama’s unbridled capitalism – too unbridled for some tastes – could hardly mark a sharper contrast with Mr Chávez’s “Bolívarian revolution” or the hardline socialism of the regime in Havana.

In Latin America, however, family connections are often of overwhelming importance and, in that sense, the 40-year-old Mr Torrijos has an ace up his sleeve. His father, Gen Omar Torrijos, who ruled Panama from 1968 until his untimely and somewhat mysterious death in a 1981 plane crash, was the idol of the young Hugo Chávez and admired by Fidel Castro, the now ailing Cuban leader.

Omar Torrijos was the archetypal Latin American strongman, with rugged good looks to go with it, combining social reform with an appalling disregard for human rights while – in what used to be the timid cliche of British obituary writers – “living life to the full”.

No matter that leftwing opponents were left to rot in jail or tossed from helicopters into the sea, Omar Torrijos was adored by most of Panama’s dark-skinned, downtrodden majority who saw him as breaking the mould of the nation’s traditional elite.

Most of all, Omar Torrijos is revered for removing what he called the “stake in the heart” of the nation’s sovereignty through the 1977 treaty with former US president Jimmy Carter that led to the handover of the Panama Canal in 1999.

That legacy proved invaluable to Mr Torrijos in winning the presidency comfortably by a comfortable margin in 2004, as he did last year’s referendum over a $5.2bn plan to expand the canal to meet the requirements of a new generation of huge cargo vessels.

Unlike his swashbuckling military father, the US-educated Mr Torrijos, who once served hamburgers in a Chicago McDonald’s, is a political and economic conservative who has improved human rights and promoted press freedom.

A successful businessman, he has presided over a national boom that he has facilitated rather than engendered. In recent years, foreign investment has poured into Panama, notably in 2006 with HSBC’s $1.8bn takeover of Banistmo, Central America’s largest bank.

The toughening of US airport security in the wake of the 9/11 attacks, coupled with a year-round fine climate, low living costs, low crime levels and comparatively relaxed financial regulations have combined to allow Panama to gain ground over Miami as a business centre for Latin America.

The most striking physical manifestation is a real estate boom that is transforming the skyline of Panama City, where apartments are being built at twice the rate of those in Miami – to house foreign executives but also with an eye on the growing market of US baby boomers seeking a retirement home in the sun.

Questions were raised over the sustainability of the explosive growth in real estate when Spain’s Olloqui Group was forced by financial and permitting problems to halt construction of what was to have been Latin America’s tallest building, Palacio de la Bahía. Yet enthusiasm continues unabated.

“The flow of investment dollars into Panama continues at a breathtaking pace,” Paul McBride of the Prima Panama consultancy told the Latin Business Chronicle website.

While the real-estate bubble remains intact, another is floating on Mr Torrijos’s horizon. In a country where about 40 per cent of the population lives below the poverty line and per capita income is less than $5,000 a year, few Panamanians can be expected to inhabit the gleaming new towers.

The nation’s sharp social inequalities blew up in the president’s face last year when his measures to save the social security system from bankruptcy led to a wave of demonstrations. Mr Torrijos cleared that hurdle by placing the burden of the rescue on the system’s contributors.

Meanwhile, the canal project and the real estate boom will promote huge capital flows for a nation of only 3.2m inhabitants.Construction jobs, albeit low-paid, can also be expected to be created on a massive scale.

Yet, to paraphrase one of his father’s favourite dictums, the poverty and low educational standards of a great swathe of the nation’s population remain as a stone in the elegant footwear of Mr Torrijos.

Copyright The Financial Times Limited 2017. All rights reserved.
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