I spent three years of my life in Panama. When I sit and watch the business ne over the ws and this 'Panama-papers' thing comes up.....I mostly just grin.
From 1881 to 1894.....for thirteen lousy years, the French tried to build their version of the Panama Canal....with no locks....just a canal straight through.
At the time, it was all still part of Columbia, and fairly undeveloped. No one ever does analysis over the population of this area of Columbia....but at the time, I would take a humble guess that there weren't more than 300,000 people in the region (today's population is around 3.9 million).
Tens of thousands arrived and were part of the French effort, and some fell into the background of bars, stores, and 'support'. After the French episode came to a miserable failure.....a fair number of folks left, and the ones remaining.....were left with a marginal business atmosphere.
You see....most of what Panama does....at least for the past hundred years.....is grow bananas and some fruit.....herd some cattle for global beef markets....and carry out a limited tourism situation.
When the Americans came along in 1903 with their ideas for the canal.....they wanted to settle up with a long-term deal.....yearly cash for the permission to build....and sovereignty over the 'zone'. The treaty (Hay-Bunau-Varilla) that came along? It was only after Columbia turned down the original deal, and the US decided to stage or help a rebellion in Panama. When the rebellion was finished....they quietly went to the political figures of the newly formed Panama and did the deal.
No, it was never a territory or state or district. It was a zone....run with US laws in place.
I doubt if the locals had much confidence in the Americans....as the French had failed and spent millions locally, and now the Americans would repeat the whole episode.
But the Americans went with the three-lock concept, and built an entire American city along the canal. They built their own lake and hydroelectric plant.....put in housing for canal employees (all Americans in the beginning).....and put in military ports and airfields to ensure the safety and security of the zone.
By the 1914, Panamanians were kinda surprised. The canal was finished and operational. Everything worked mostly as designed. Oh, there was water shortages which Madden Dam in the early 1930s was designed to prevent.
Big money flowing into Panama itself? There was always money flowing into the country....just not big money. Everyone was convinced by the 1960s that they should be getting some of the profits off the canal. If you tried to explain to folks that the money collected by boats passing through.....covered just operating costs, and there was no profit, they wouldn't believe you. Every time an upgrade was required for the canal....it came out of US tax revenue...NOT canal charges.
Riots by students and political charged-up events eventually brought about the Carter-Torrijos Treaty. By the treaty, as 1999 came along, it'd all be Panama property.
When I arrived in 1986....my view of the Panama economy was more of comic relief than a legit country.
They still depended on beef export, fruit and vegetables, their under-the-table banking empire, a real estate situation where upper-class premium neighborhoods were built for rich VIPs who flew in for the safety and security of Panama, their flagged-ship empire, and some secret connection to the cocaine cartels.
In the 1988 time-frame....they had roughly two million people. It's true.....there was a large segment of people in the middle-class and Panama-City itself had lots of growth. But you just kept wondering where all this extra money was coming from.
There just wasn't a real industry in Panama....other than portraying the nation as some box where you could hide yourself or your money.
Around five years ago, I was reading a piece where this American lawyer had set up shop in Panama and was 'helping' clients. He'd help you move your money, buy a condo, and set-up a credit card to charge your expenses as some fake company.
None of this was secret....like the news media portrays it now. It was all factual and various state governments knew about it, and did nothing......mostly because they had lots of lobbyists talking up the positives of this.
When the President of Panama stood up this week and talked up some international banking group to help Panama fix all this business....he's simply asking for some fake talk, which helps to keep the underground banking establishment keep working in Panama.
The business economy of Panama? It survives because everyone wants to look the other way and allow this little hidden box empire to continue....as is.