Neoliberal Panama: The Path to Mass Privatization

The official end to the Cold War in 1991 would usher in a new wave of U.S. hegemonic control over Latin America. From the 1990s to the present day, it is described that Latin America faced a second wave of neocolonialism, now referred to as neoliberalism. With the war over, the United States became the sole military superpower and the champion of capitalism. What came about after the end of the Cold War was U.S. political and economic influence over Latin America to ensure a free market, export-production, economic ventures, a doctrine of comparative advantage, and globalization.  

The United States had always had a hand in the affairs of Panama, ever since the establishment of the nation, however, implementation of neoliberal practice and policy had become relatively easy following the U.S. invasion of Panama in 1989. The U.S. had developed Operation Cause to direct attention to Panamanian dictator Manuel Noriega. Following the arrest capture and imprisonment of Noriega, the U.S. was able to develop a greater influence on the newly established democratic presidency of Guillermo Endara. The invasion, along with the downfall of the Soviet Union that would soon follow, became a marker of neoliberalism in Panama. 

A key feature of the neoliberal ideology is the establishment of a free market. To do so, a nation new to the scheme, like Panama, would need retroactive policy enactment to repeal much of the framework from the social revolutions. Under former Chief of Government, Omar Torrijos, the public sector and social benefit system of Panama had been developed greatly, what would come next by the neoliberal politicians of Panama would be disestablishment of said framework and privatization. Panama would be a handsome sight for foreign investors given the canal, markets, ports, and river system. But what would bring in many more investors and companies was the privatization of public services. 

In the early 1990s, Panamanian President Endara began a massive campaign to privatize much of Panama’s public sector like the distribution of electricity, water, and telecommunications. Such actions would draw in investors and companies almost immediately. The establishment of economic policy that turned former public services as private sector business opportunities did some good. Much of the services became more regulated which resulted in more satisfactory items like safer water. Along with these changes, many global business chains began to develop interests in Panama and other Latin American countries. Soon, McDonald’s restaurants could be viewed on many of Panama’s city streets. Such effects of this aspect of neoliberalism result in the growth of Latin American economies. 

Many of the neoliberal policies would later result in high numbers of unemployment due to a large underdeveloped workforce in Panama that was unable to adjust to the new forms of labor. Likewise, high demand for basic services, low income, a large percentage of indebtedness in the populace, and the need to modernize for the sake of prevailing in the globalized world resulted in rampant wealth inequality which has lasted even to today and the foreseeable future. It is certain to say that the result of the wave of neoliberalism furthered Panamanian and Central American subservience to capitalist nations and corporations. 

Works Cited:

“Privatization of Latin America In The Early 1990s,” New York: United Nations Department of Economic and Social Affairs Division for Public Economics and Public Administration, 1999. Accessed on May 1st, 2020. https://publicadministration.un.org/publications/content/PDFs/E-Library%20Archives/1999%20Privatization%20in%20Latin%20America%20in%20the%20Early%201990s.pdf

Chasteen, John Charles, Born In Blood and Fire: A Concise History of Latin America, New York: W. W. Norton & Company, 2016.

By Peyton O’Laughlin