Panama Rises

The Central American nation, now celebrating its centennial, has come into its own since the United States ceded control of its vital waterway

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But the canal is not a spigot that spits out money. The Panamanians are, in Alemán Zubieta’s words, “constrained by the market.” Tolls have been raised four times since the turnover (the Falstaff paid more than $143,000 for its transit), but if tolls get too high, shippers might choose to go through the Suez Canal or unload containers on either coast of the United States and ship them onward by rail. Thus, if Panama wishes to grow its economy, it must look beyond the canal.

As if to underscore the point as I spoke with Alemán Zubieta on the golf course, a train chugged by on the Panama Canal Railway, pulling open carriages, each laden with two truck-size containers. Completed in 1855, it once shuttled prospectors en route to the California gold fields across the isthmus. More recently it has proved a training ground for Panamanians in managing assets transferred by the United States. Their record after the 1979 takeover was not encouraging. The railroad became a fiefdom of the military, which at that time controlled the country. (Strongman Manuel Noriega, who was removed by American troops in 1989, was convicted in 1992 of six counts of racketeering, drug trafficking and money laundering. He is currently serving a 40-year sentence in a federal prison in Miami.) Track and rolling stock deteriorated for lack of maintenance, and the payroll was bloated with politically connected employees who did little more than collect checks. By the 1990s, the railroad was unsafe, ran few trains and required millions of dollars a year in government subsidies.

In 1998, the Panamanians tried another approach—privatization and foreign management. The government granted a 50-year concession to operate the railroad to a joint venture created by the Kansas City Southern Railroad and Mi-Jack, an Illinois company that manufactures freight-handling equipment. The new venture has rebuilt tracks, renewed rolling stock and improved freight carriage. Recently it bought and refurbished six passenger cars, including a glass-roofed 1938 Southern Pacific observation car, which had been serving as an ice-cream parlor in Jacksonville, Florida. The observation car now has air-conditioning, mahogany paneling, leather seats and wall-to-wall carpeting.

The passenger train, which leaves Panama City at 7:15 a.m., permits passengers to see a cross section of the country. Pulling out of the station, you can see remnants of the old Canal Zone, row after row of precisely positioned buildings, formerly used as offices and barracks. They are now given over to a variety of uses, but still testify to the American military culture that built them. Next comes a district of blocky, concrete structures with patchy lawns and low palm trees. Once housing for American administrators and technicians, they are now sold on the open market for about $100,000.A few minutes later, the train slips into a rain forest. Trees crowd the tracks. Heron take flight over algal ponds. GatunLake appears on the western side of the track, freighters churning through it. Within an hour, the train enters Colón, the country’s chief Atlantic port. Laundry flaps from clotheslines and paint peels in trackside neighborhoods. The only thing gleaming in Colón is the sweat on the backs of its inhabitants.

Privatization, accompanied by foreign management, has had an impact not just on the railroad but on other key sectors of Panama’s economy in the six years since concessions were given out. Major ports on both the Atlantic and Pacific sides of the canal are run now by Hutchison-Whampoa, Ltd., a Hong Kong firm. The Panamanian government has sold its electrical utilities to several foreign-owned companies and 49 percent of its telephone company to Britain’s Cable & Wireless.

If there are Panamanians who see this as colonialism via the backdoor, I met very few of them. “The model chosen to open the railroad to private investment and to bring in the most efficient technology has proved to be the right one, and it’s already paying dividends to the Panamanian economy,” says Juan Carlos Navarro, the mayor of Panama City, who has degrees from both Dartmouth and Harvard.

The Panamanians I met were less concerned with colonialism than with making a living in a poor country under the auspices of a government plagued by corruption. I dropped in one afternoon on a boxing gymnasium in Curundu, a neighborhood in Panama City filled with grim, concrete tenements. The gym is a humid place with a tin roof, concrete walls painted a fading blue, and a concrete floor.

A bright brass plaque on the outer wall says the gym was named for Pedro “El Roquero” Alcazár, a local boy who had trained here and was the 20th Panamanian boxer to hold a world championship. Alcazár won a World Boxing Organization championship in 2001 and held it until June 2002, when, in Las Vegas, a Mexican fighter named Fernando Montiel pounded Alcazár’s body and head until the fight was stopped in the sixth round. Two days later, Alcazár collapsed and died of brain swelling.

“He left five children by five different women,” Franklin Bedoya, a volunteer coach at the gym, told me. “None of them has seen any of his purse. It’s been held up by some sort of investigation.”

Around us, young men were hitting heavy bags, sparring, skipping rope. Panamanian fighters tend to be from the lower weight, as well as the lower socioeconomic, classes. Their bodies are pared to bone, muscle, and skin the color of coffee, from mocha to black.


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