Panama’s Unraveling Democracy: The Social Cost of Martinelli’s Chorizo Law

by COHA Research Associate Alexander Brockwehl

• The Panamanian President’s anti-labor law delivers killer blow on Panamanian workers and sparks protest and citizen unrest
• The administration attempts to quiet discontent through physical repression, detainment of journalists, and the declaration of a “National Dialogue” to discuss the law’s most controversial provisions
• Martinelli holds talks with Honduran President Porfirio Lobo about importing 5,000 Honduran guest workers to replace striking Panamanians
• Pending Free Trade Agreement with the U.S. could further infringe upon labor rights
On June 12th, the Panamanian National Assembly passed Law 30, nicknamed by critics the “chorizo law,” for what they perceive to be an excess of political pork stuffed into one omnibus piece of legislation. As Panamanians have learned more about the controversial legislation, and particularly those provisions that greatly curtail the influence of organized labor, angry street protests have erupted, and the government has reacted harshly and recklessly, straining democratic principles in the process. From violently suppressing labor protestors and detaining journalists, to endeavoring to replace striking laborers with Honduran guest workers (“strike breakers”), the past several weeks have revealed President Ricardo Martinelli’s penchant for arrogance and impetuousness at the expense of his fellow citizens.

While Panamanian authorities have been frantically trying to deal with the increasing disorder throughout the country, Washington has been buzzing over the prospect of finally moving on a long-awaited trade agreement with Panama. The present tumult taking place in the isthmian country could derail trade talks, as the White House Trade Office is becoming increasingly apprehensive. Though the U.S.-Panama Free Trade Agreement was signed in 2007, it has yet to be approved by the U.S. Congress, in part because of neo-liberal concerns that Panamanian labor laws are too stringent. Through the implementation of Law 30’s anti-labor provisions, Martinelli has demonstrated that he is more than willing to be flexible when it comes to accommodating Washington and has confirmed that he is bent on ensuring ratification of the FTA with the U.S., regardless of the human rights costs.

The “9-in-1” Law
President Ricardo Martinelli Berrocal came to power in 2009 on a conservative reform-ticket that stressed change from the policies of the long-ruling Democratic Revolutionary Party (PRD). Martinelli promised the electorate to cut crime and corruption, but since taking office he has done little to substantiate his forceful rhetoric on these issues. The result of his abandonment of these two pervasive concerns can be seen in his poll numbers, which have been dramatically declining in the last few months. Instead of responding to the needs of the populace, Martinelli, a prominent businessman and owner of the largest grocery store chain in Panama, has directed the bulk of his efforts toward satisfying his corporate cronies by instituting various business-friendly reforms.

In the context of Martinelli’s agenda, Law 30’s prioritization of private interests over public ones should come as no surprise. The whirlwind manner in which he passed these reforms, however, could hardly have been anticipated. Despite widespread skepticism about the new president combining so many reforms into an integrated, if confusing law, and outright opposition to the law’s specific ambiguities and inconsistencies, Martinelli reneged on his pledge to let representatives from various organizations take part in the deliberative process. Instead, he forced the bill through the Legislative Assembly during a special weekend session. The final result of a short four-day deliberation was a jumble of seemingly unrelated measures ranging from commercial aviation regulations to tightened sanctions for human trafficking, all packed into a twelve-page document.

It took days for civil society to discover all that the legislative document entailed, but when they did many became furious, specifically in regard to the law’s anti-labor provisions. According to Chapter 2, Article 12 of Law 30, “an employer shall not be obliged to deduct from its workers for a union the ordinary and extraordinary dues that it establishes.” Chapter 2 elaborates that during a strike, the contracts of striking workers can be suspended, and companies can even hire temporary replacements.

When asked about these provisions for an article that later appeared in La Prensa, Martinelli claimed that the law was not meant to kill workers’ unions or curtail worker rights: “it does not affect labor rights and only gives the option to employees, among other things, to decide whether to pay union dues or not.” Despite Martinelli’s urgings, the trade unions are not buying his explanation, and for sound reason. By nullifying existing contractual agreements between unions and employers and essentially stripping workers of the ability to organize without fear of being dismissed, the Martinelli government has taken a giant step toward making organized labor redundant. Labor unions and the long-existent laws that grant them their effectiveness are almost exclusively responsible for protecting workers in Panama. Thus, Article 12 should not be dismissed as merely the latest phase of Martinelli’s privatization agenda, but should instead be recognized as a dangerous encroachment on labor rights.

Protest Erupts in Changuinola
Soon after the passage of the bill, Bocas Fruit Company, a Chiquita Brands subsidiary, announced that it would no longer collect union dues, breaking a contract it had made with the Banana Industry Workers’ Union (SITRAIBANA) and provoking outrage among the union’s members. What began on July 2nd, as a 48-hour workers’ strike quickly evolved into a divisive and ultimately violent 10-day showdown between Bocas and its predominantly indigenous employees. When Bocas condemned the strike as illegal, announced a postponement of pay, and threatened to discharge those workers who participated in the demonstration, protestors became incensed and took to the streets. Under government direction, police officials—many of whom were border guards and had minimal, if any training regarding how to deal with domestic conflicts nonviolently—moved in and attempted to quash the protest by using tear-gas and weapons. They also arrested hundreds of labor activists and environmentalist leaders. All in all, the government’s official tally counted three deaths and over one hundred and forty injuries, but sources outside of the government estimate that the casualties, in reality, were considerably higher.

In March of this year, the United Nations condemned the Panamanian government for its repeated use of police violence and its racial discrimination against indigenous communities. Unfortunately, the UN Report seemingly had no visible effect, as countless civilians, many of whom were indigenous, were blinded or left in critical condition because of the police’s propensity to violence. In recent weeks, the Panamanian government has received further condemnation from the International Federation for Human Rights, Human Rights Everywhere, and Ricardo Julio Vargas, Panama’s ombudsman; however, there is little reason to believe that the government will soon reconsider its hair-trigger approach.

Following the banana demonstration and similar protests throughout Panama, labor, environmentalist, and indigenous groups organized a national strike on July 13th. On the same day, facing increasing criticism and citizen unrest, the Cabinet Council approved a “National Dialogue” under the guidance of a now apprehensive President Martinelli. The authorities’ fallback position included the announcement that the Dialogue would suspend implementation of the law’s three most controversial provisions for ninety days.

Lashing out at Journalists
While the government’s violent response to the protests was alarming, its subsequent attempt to portray reporters as the primary source of the discontent leading up to violence has been even more so. Soon after protests erupted, Martinelli told La Prensa that “misinformation and a series of lies” were at the heart of widespread anger in Changuinola. In an ostensible attempt to prevent this allegedly false information from reaching the citizenry, the Martinelli government has begun targeting—and in some cases even arresting—journalists on a medley of manufactured charges. Carlos Nuñez, Mauricio Valenzuela, and Ronaldo Ortiz are among an increasing number of reporters who have been targeted by the Martinelli government. While Ortiz has written recent pieces criticizing Martinelli, Nuñez was imprisoned for a story he wrote five years ago about environmental degradation due to a government-approved tourism project, and Valenzuela was arrested for taking photos of police detaining members of a construction workers’ union.

Probably the most publicized case of misbehavior on the part of the authorities was that of Paco Gomez Nadal, a writer for La Prensa, who was detained for hours in Tocumen Airport without being granted a substantive explanation. During this period, his passport was confiscated and the authorities threatened that, upon leaving Panama, he would not be permitted to return. In a recent interview with Reporters Without Borders, a human rights organization focused on advocating for press freedom, Gomez Nadal was critical of the Martinelli administration and expressed concern about the present perilous state of affairs in Panama: “There is no doubt that what is currently happening to me is linked to my journalistic activities,” he asserted. “I think that the government wants to intimidate journalists and I fear that it could be effective.”

Democracy in Crisis
The events of the last month have exposed the Martinelli government’s clear affinity for anti-democratic behavior. On a procedural level, the method in which Law 30 was passed was not only deplorable, but also likely unconstitutional. The call for a special legislative session to push through the controversial omnibus law did not mention all subjects of the proposed legislation, thus making it prone to legal challenge. Martinelli has recently announced a number of appointments of Supreme Court justices sympathetic to his party’s cause, so it is unlikely that the judicial branch will act as a check on the President’s increasingly unfettered power. Nonetheless, recent acknowledgements of misguided policy and rash implementation procedures by the Education Minister and by the Commerce and Industry Minister reveal the impetuous and careless nature of the law’s passage.

Since passing the law, Martinelli has demonstrated a willingness to jeopardize freedom of speech rights in favor of hiding Law 30’s true impact from the Panamanian people. When protest broke out in Changuinola and other parts of Panama, the Martinelli government blamed citizen unrest on misinformation, even as it was actively impeding journalists from carrying out their informative duties. While Reporters Without Borders ranked Panama an anemic 55th in its 2009 Press Freedom Index, the recent arrests of Panamanian journalists signal a giant step toward censorship of the country’s press and curtailment of freedom of speech.

Additionally, both the legislation itself and the administration’s subsequent harsh treatment of union members represent a trend toward the shrinking of labor rights. Despite Martinelli’s claims to the contrary, Law 30 is undoubtedly targeted against labor unions, with the intention of stacking the deck in favor of private businesses. As the incident in Changuinola demonstrates, Panamanian workers already have minimal protections without the ability to effectively organize. In a July 11th article, Martinelli gave some sense of both his priorities and his line of reasoning in pushing through such blatantly anti-labor legislation, telling La Prensa, “we will not allow the banana industry in Changuinola to disappear, thanks to union leaders…who have no idea of what democracy is in a country and who want to end the rule of law.” Ironically, the past month’s events have called into question how well acquainted President Martinelli is with core democratic rights and freedoms.

In recent weeks, numerous reports have stated that Martinelli is in the process of negotiating a deal with Honduran President Porfirio Lobo. The proposed deal would export 5,000 Honduran guest workers to Panama to replace the striking workers in Changuinola and elsewhere. Because Law 30 allows for striking workers to be replaced, such an agreement, though controversial, would likely be legal, assuming that the law is upheld. While no official agreement has been made, the Honduran government’s official website has posted information about the talks publicly. President Lobo has begun lauding the proposed arrangement as a meaningful step for Honduras toward social development and increased inclusion in the apparatus of globalized capitalism. As for Martinelli, even if the agreement is not ratified, his gesture has already had its intended effect: to intimidate Panamanian workers with the hopes of diverting them from protesting by forcing them into helpless submission to his anti-labor agenda.

Obama’s Contradictory Free Trade Policy
Panama’s increasing instability is particularly critical considering that President Obama has recently declared support for the 2007 U.S. Free Trade Agreement with Panama. Though President Obama has never opposed this particular trade agreement, he has voted against other agreements that are relatively similar. In 2005 he voted against the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR) for its lack of labor protections, writing in an op-ed that appeared in the Chicago Tribune that “[CAFTA-DR] does less to protect labor than previous trade agreements.” A Congressional Research Service (CRS) Report for Congress on the FTA with Panama, issued during the same year, stated that “the labor chapter [of the proposed FTA with Panama] is reportedly identical to that of CAFTA-DR.” In other words, the labor-related problems that Obama saw in CAFTA-DR have not been remedied in the proposed FTA with Panama. Moreover, with regard to the agreement as a whole, the CRS asserts, “it will likely follow closely the text framework of the CAFTA-DR.” In effect, there is no discernable difference between the trade agreement that Obama rejected and the one he currently supports.

In fairness to Obama, each country’s political and legal climate poses unique obstacles to the implementation of free trade. In 2008, Obama opposed the FTA with Colombia because of government-sanctioned violence against unions, telling the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) in a speech, “the violence against unions in Colombia would make a mockery of the very labor protections that we have insisted be included in these kinds of agreements.” In light of the past month’s events, however, it would now seem reasonable to say the same of Panama. The Martinelli government’s attempt to shrink the influence of labor unions through eleventh-hour laws and violent repression should be seen as an indicator of the impact that the ratification of the U.S.-Panama FTA would have on labor rights in the country.

The Damaging Prospect of a Free Trade Agreement with the United States
Particularly in the country’s current state, the effects of a FTA with the U.S. would be detrimental for organized labor and the protection of worker rights in Panama. Law 30 began the deregulatory process, empowering multinational corporations at the expense of the average worker. Though the law has created many short-term problems for Martinelli, it has the potential to immensely benefit his agenda, as well as that of the country’s wealthy tycoons, in the long-term. According to the CRS Report, “critics [of the FTA with Panama] have pointed out that…Panama’s relatively high labor costs (for the hemisphere) and inflexible labor laws can be a frustration if not an impediment to U.S. foreign direct investment.” In this context, Law 30 can be viewed as an essential step toward removing this “impediment” of existing labor protections, and is likely one of the numerous measures Martinelli will attempt to put into effect in the interest of making Panama a more appealing trade partner.

The passage of Law 30 is also especially important considering the specific stipulations it will lodge in the proposed FTA. Like CAFTA-DR, the FTA includes three standards that the involved parties are expected to adhere to with regard to labor rights: “effective enforcement of domestic labor laws…the reaffirmation of commitments to basic [International Labor Organization] principles, and…non-derogation from domestic standards.” The third provision is in place as a barrier to prohibit the government from cutting labor protections with the hope of luring increased trade and investment opportunities. It would, in theory, defend labor rights even after the agreement had been ratified. However, conveniently placed in the legislation is the stipulation that only the first of these three provisions—the failure to enforce domestic labor laws—can be challenged through the dispute resolution process. The other two provisions are merely supported on principle and intentionally lack an enforcement mechanism. Taking this fact into consideration, the timing of Law 30 could not have been better planned by Martinelli. His successful alteration of the laws governing organized labor will provide legal backing to those private businesses and multinational corporations that stand to be the main beneficiaries of the trade measures. With these laws in place and under the admittedly lax labor provisions of the FTA, it will be very difficult for those wronged by various labor abuses to find any semblance of justice.

What’s Next for Martinelli?
The coming weeks will reveal just how far Martinelli is willing to go in order to further open Panama up to trade and investment. His announcement of a “National Dialogue” has helped to quiet protestors for the time being. Unfortunately, once deliberations begin, private sector interests, along with Martinelli’s barely concealed anti-labor phobias, will outweigh those of labor unions, and the law will almost undoubtedly not be repealed. Law 30 will most likely prove to be just the first of numerous ruthless and careless initiatives taken by the Martinelli government in order to enhance international trade. He might be wise to review the sad fate of Bolivian President Gonzalo Sánchez de Lozada who was forced to resign and flee the country after his neoliberal policies outraged the public.

Martinelli’s potential agreement with Honduran President Pepe Lobo to export 5,000 Honduran guest workers to Panama would constitute yet another step toward empowering private businesses to the intended detriment of the Panamanian working class. If the Martinelli government continues down this perilous path of Darwinian deregulation, the future looks bleak for organized labor and for human rights in Panama. President Obama might want to reconsider supporting a free trade agreement with a country where labor rights are being neither honored nor respected and where only the “winners of globalization” stand to gain from an increasingly unbalanced and unethical corporate beneficiary program.