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### Viewing cable 05PANAMA1591, PANAMA'S COLON: FLINT MICHIGAN ON THE CARIBBEAN

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
05PANAMA1591 | 2005-07-28 20:25 | 2011-05-29 00:00 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Panama

`

    This record is a partial extract of the original cable. The full text of the original cable is not available.

` `

    UNCLAS SECTION 01 OF 04 PANAMA 001591

    SIPDIS

    SENSITIVE

    DEPARTMENT FOR WHA/CEN
    SOUTHCOM ALSO FOR POLAD
    VANCOUVER FOR CG ARREAGA

    E.O. 12958: N/A
    TAGS: PHUM PGOV PREL ECON SNAR PINR PM POLITICS FOREIGN POLICY
    SUBJECT: PANAMA'S COLON: FLINT MICHIGAN ON THE CARIBBEAN

    REF: PANAMA 0594

    SUMMARY & COMMENT
    ------------------
    ¶1.  (SBU) When the USG began to draw down military forces
    from its bases in the Panama Canal Zone in the 1970s, the
    port city of Colon, on the Canal's northern terminus, was hit
    hard, experiencing the same rapid decline that made one-time
    car manufacturing center Flint, Michigan infamous.  By the
    2000 Canal hand-over, the fall of this former Caribbean jewel
    was complete.  Embassy Panama has succeeded in directing more
    GOP attention to this strategically important city (reftel)
    and Panama's politicians are just starting to devise policies
    to solve Colon's "inner-city" social pathologies:
    unemployment, deteriorating housing, family disintegration,
    and crime, compounded by government inadequacy and racial
    discrimination (see Para 13).  Colon is a crucial focal point
    for regional U.S. security initiatives, such as stopping the
    flow of illegal arms, drugs, and money through the Canal and
    Colon Free Zone.  Economic growth, job creation, and GOP
    remedies to decrease the broad gap in living standards
    between Panama City and Colon are critical to U.S. long-term
    security interests.  End Summary and Comment.

    A Culture of Entitlement
    ------------------------
    ¶2.  (SBU) Colon's problems are in part psychological.  The
    source of Colon's by-now-mythic prosperity was the U.S. Canal
    Zone and its irreplaceable jobs.  The departure of those jobs
    left the city depressed economically, socially, and mentally,
    perhaps not unlike the aftermath of the U.S military's
    withdrawal from Clark and Subic Bay in the Philippines.  That
    depression is the flip side of Colon's sense of superiority
    over the capital that prevailed during the 1900s.  Its
    passing has given rise to a paradoxical culture of
    entitlement and dependency, as a younger generation often
    refuses to come to terms with its changed circumstances.
    Colon may be one of the few places in the world where the
    unemployed have formed unions and regularly go on "strike."

    ¶3.  (SBU) On July 13, 2005 President Torrijos announced in
    Colon a virtually unprecedented $24 million infrastructure
    development project for Colon province "to combat poverty and
    unemployment," promising that it was only the beginning.
    (The plan includes building a police center, road
    improvements, buying fire engines, dredging projects and
    improvement of aqueducts.)  In addition, under GOP pressure
    the U.S.-owned Manzanillo International Terminal (MIT) and
    Panama Ports, two large Colon container port facilities,
    agreed to donate millions of dollars to the Colon social
    development fund as part of a port expansion deal.  The total
    $9-10 million MIT-PP donation (most of which is MIT money) is
    ear-marked for education and health care initiatives.  Local
    university professors and students and unions of the
    unemployed demonstrated against the GOP's $24 million plan,
    calling it "insufficient."

    Colon's 1950s-1970s Heyday
    --------------------------
    ¶4.  (U) U.S. spending was the foundation of Colon's economic
    prosperity since 1903.  In 1950s, 1960s, and early 1970s
    heyday, beautiful, colonial, Caribbean Colon surpassed Panama
    City in elegance and economic advancement, and Colon was
    known for its civic pride.  The U.S. military employed
    hundreds of Colon residents, mostly English-speaking blacks
    of West-Indian descent at nearby bases, particularly the
    giant, sprawling Ft. Sherman.  Wages were high, much higher
    than the prevailing rate on Panama's economy, and benefits
    were priceless.  Base workers had free transportation and use
    of the base post office and commissaries.  Others got jobs as
    maids, cooks, and gardeners.  Until the early 1970s, Indian
    merchants still offered the finest linen money could buy,
    shops offered fine Lemoges china, and at least seven movie
    theaters adorned the 16 tidy, grided streets of Colon's 2.9
    square kilometers.

    Age-Old Resentments...
    ----------------------
    ¶5.  (SBU) Other Panamanians resented Colon's superior
    attitudes and derived a measure of schadenfreude from the
    city's fall.  Vindictive attitudes linger.  During the Canal
    Zone era, Colon residents got jobs faster than other
    Panamanians because they spoke English.  If Colon prospered
    in the past, Panamanians reasoned, then Colon's current
    misfortunes are just.  While the Panama Canal Authority
    continues to be a major employer in Panama, Colon job
    applicants of West Indian descent tell stories of being told
    "your time is over."  But it's worth mentioning that some of
    the GOP's key players -- including Minister of Government and
    Justice Hector Aleman and Minister of the Presidency Ubaldino
    Real, not to mention former Vice President Kaiser Bazan --
    are from Colon.

    Rapid Decline and Unemployment
    ------------------------------
    ¶6.  (U) In the 1970s, as the U.S. military draw-down
    coincided with the shutdown of the Panama-Colon railroad and
    the decline of the oil refinery industry, Colon deteriorated
    rapidly.  According to the Panamanian Census Bureau, in 1980
    Colon had 46,000 residents over the age of ten and the
    unemployment rate stood at 13.4%.  By 2000, Colon's over-10
    population had shrunk to 33,000, and unemployment had jumped
    to 21.9%.  As Colon's economy worsened, the black
    middle-class fled for jobs in Panama City, often abandoning
    buildings they could no longer rent or sell.  Indigenous and
    Latino farmers from nearby Colon province moved in.
    Suddenly, squatter families began to occupy small rooms in
    the dilapidated buildings, living without plumbing and
    storing their beds in the rafters.

    Creating a Ghetto
    -----------------
    ¶7.  (U) In the late 1970s and early 1980s, the Panama's
    military governments razed Colon's decaying but elegant
    wooden structures and replaced them with unsightly cinder
    block towers.  What wasn't torn down, mysterious fires
    continued to destroy, creating a war-zone atmosphere but
    consoling owners that the squatters had to move.  Walking
    through Colon City today, the decay and poverty appear so
    intractable it is hard to imagine the city's prosperity just
    30 years ago.

    Crime and Violence: Nowhere to Hide
    -----------------------------------
    ¶8.  (U) As Colon's decay became pronounced, crime and
    violence increased.  Colon City's four prosecutors currently
    each receive about 30 cases of domestic violence per week and
    the Ministry of Youth cannot find enough shelter for the
    affected children.  Despite contributions from the Embassy's
    Narcotics Affairs Section (reftel), Colon City has few law
    enforcement resources.  Police investigators maintain only a
    superficial presence in Colon, with 100 under-equipped
    officers rotating in three shifts.  Colon Prosecutor Yolanda
    Austin attributed much of Colon's crime problem to lack of
    resources combined with its small size.  "With only 16
    streets, everyone knows everyone and the police cannot
    protect witnesses."

    GOP Centralization: That Sucking Sound
    --------------------------------------
    ¶9.  (SBU) GOP centralization has reinforced Colon's problems
    by removing resources and making Colon (and other Panamanian
    cities) hard to govern because local politicians lack the
    power of the purse.  Tax revenues from the Colon Free Zone
    and ports are distributed on a national level.  Colon's
    elected mayor does not have resources to fix Colon's
    problems.  Even Colon's GOP-appointed Governor Olgalina
    Quijada has no budget for projects and must essentially beg
    the GOP for funding.  As a result, only one block separates
    Colon's overwhelming poverty from the gleaming showrooms for
    international wholesale buyers in the Free Zone.  And one
    cross street -- Calle Primera and Melendez -- separates the
    homes of prosperous Indian and Arab Free Zone Merchants from
    the Colon residents they do not employ.

    Filling the Vacuum: The Unemployed Movement
    -------------------------------------------
    ¶10.  (SBU) Many Colon-watchers name "the unemployed" as the
    true power players in Colon.  Indeed, for at least a decade,
    being the head of an unemployed union was one way to get
    ahead in Colon.  While Governor Quijada has plans to phase
    out the program, about 800 of the "unemployed" -- most of
    them women -- are paid for make-work jobs, 75% of them in
    positions within the public sector.  The dissatisfied
    unemployed frequently close the road leading to Colon and the
    Free Zone in protest, most recently in April 2005 over the
    high cost of gasoline.

    A Legacy of Governmental Neglect
    --------------------------------
    ¶11.  (SBU) Until the Torrijos administration took office in
    2004, the Panama-Colon road (built by the U.S. military in
    the 1940s) was not repaired once in ten years.  Previous
    administrations justified the inattention, saying that they
    did not want the road to compete with the new Panama-Colon
    toll road, a road that is still not complete.  While the new
    GOP wants to shift $2 million of Colon's $10 million in taxes
    back to Colon programs, the GOP may struggle to overcome its
    historic tendency to shift resources out of Colon.  For
    example, GOP acquisition of reverted land from the former
    Canal Zone drained resources from Colon, as the Governor
    moved out of Colon to a USG-era building located outside the
    city.  Similarly, the Ministry of Housing (MIVI) is using a
    multi-million-dollar InterAmerican Development Bank loan to
    renovate 14 colonial buildings in Colon as a pilot project
    for reinvigorating Panama City.

    GOP Outreach: Community Consultations
    -------------------------------------
    ¶12.  (SBU) The GOP is tackling its over-centralization
    problem by conducting community consultations at the
    provincial level that culminated in a July 9 "Community
    Council" in Kuna Yala (Colon Province) attended by President
    Torrijos and the cabinet.  According to Governor Quijada,
    consultations with Colon Province's five districts and 40
    corregimientos yielded four priorities: Colon-Panama road
    widening, improved water quality and waste management, more
    housing, and more police.  The consultations may succeed in
    identifying local needs (Embassy will align its Colon efforts
    to the outcome), they offer no long-term solution to
    governmental inadequacy and over-centralization.

    Racial Discrimination vs. Economic Dependency
    ---------------------------------------------
    ¶13.  (SBU) There is no doubt that racial discrimination plays
    a part in Colon's problems.  Colon is largely a "black" city.
     One Free Zone contact told Human Rights Officer outright
    that Colon residents are not good workers because they are
    from the "black race."  Many Panamanians in the capital, in
    the Free Zone, and in the GOP believe that Colon residents
    are lazy and don't want to work.  Free Zone businesses in
    Colon often hire workers almost exclusively from Panama City.
     One middle class former Colon resident explained that people
    from Colon often hide that fact when applying for a job
    because businesses discriminate against them in hiring.

    ¶14.  (SBU) The negative feedback loop that sets in between
    Colon workers and employers serves to perpetuate the
    stereotype.  Indeed, so ingrained is the image of Colon
    "laziness" that it is blamed for the results of GOP policies.
     For example, as English-Spanish call centers become an
    engine for job growth in Panama, some Panamanians lament
    Colon residents' "laziness" for losing their English
    mother-tongue.  Forgotten are past GOP policies that forced
    West Indians into Spanish language schools in the mid-1900s
    and gave them "Spanish" names.

    Only More Investment Will Solve Colon's Problems
    --------------------------------------------- ---
    ¶15.  (SBU) Complicating the issue is the lack of employment
    opportunities on a par with what was available to Colon
    residents when the U.S. military bases operated at full
    capacity.  Although big investments have been made at
    Manzanillo and Panama Ports, the hundreds of new dock jobs
    pay only a fraction of what Colon workers earned in the past.
     In addition, since the Panama Canal Authority (ACP) took
    over Canal operations, its increased efficiency has decreased
    its need for employees.  The result is fewer, lower-quality,
    lower-paying jobs.  Only sustained private economic
    investment outside the Free Zone can change Colon's
    intractable culture of economic dependency on outside
    authorities to sustain the standard of living.

    DANILOWICZ

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