WINNING THE CANAL BUT LOSING THE COUNTRY?: A Decade of Torrijismo
After several months it was clear that the National Guard would remain in power. By that time the military had routed a pro-Arias guerrilla effort in the province of Chiriqui, abolished the...
...School of the Americas in the Canal Zone...
...3 4 On the other hand, state spending and investment, largely with loans from foreign public and private lending institutions, were used in transportation, electrification and to increase the export capacity of state enterprises (e.g., sugar, cement and copper...
...25N ACLA Report or oligarchic groups in the administration of the state...
...But the main thrust of the "reform" was the creation of state-sponsored argarian production collectives, mainly on public lands, called Asentamientos Campesinos...
...The heroic posture of the FEP in the 1950s and especially their participation in the 1964 student struggle against U.S...
...2) formation of a tripartite commission, with a representative from labor, capital and government to deal with labor questions...
...Its new economic role enabled the regime to play "broker" within the populist alliance...
...In contrast, closer inspection of the economy's performance reveals that the banking and financial sectors showed positive rates of growth of 21.3%, 9.5% and 7.9% between these same years, while the agricultural, industrial and even commercial sectors stagnated.s 3 The depth and scope of Panama's economic downturn, as part of the world capitalist crisis, was due to the unique distortion of its dependent capitalist economy...
...Between 1973 and 1977 only 92 asentamientos were introduced, reaching another 4,065 families...
...The early emphasis on the asentamientos was used by Torrijos to obtain political support from the rural sectors for his populist alliance, although the reforms never included more than 5% of cultivable land nor employed more than 5% of the agricultual workforce...
...By February 1969 Omar Torrijos and Boris Martinez emerged as contenders for the leadership of the National Guard, representing two obviously different tendencies within the military...
...Ruben Dario Zanza, Secretary General of the Partido del Pueblo, in a pamphlet published in 1973, described why the Party joined with the military regime: "The military coup of 1968, by the nationalist officers of the National Guard, created objective conditions that favored the development of mass organizations and actions...
...The Rural Sector: To secure political support in the rural sector, Torrijos promised an agrarian reform which would provide land, tools, credit and distribution facilities to a majority of the rural population...
...2 4 Two factors account for the participation of middle class professionals and technicians in the military regime...
...29NACLA Report The objective basis of Torrijos' populism was in crisis, and while a large sector of the popular classe still believed in the "miracle" of Canal negotiations, they were no longer so willing to forego acting in their class interest...
...Torrijos offered them an opportunity to share with the military in this undertaking...
...tional business...
...In addition to the increasing gap in Panama's balance of trade, the government argued that the recession-inflation cycle was worsened because the local bourgeoisie, still hostile to the regime's populist policies, was not investing...
...ROUNDING OUT THE ALLIANCE In addition to the FEP and the Partido del Pueblo, Torrijos made tactical alliances with sectors of the middle class, peasantry and labor...
...In 1972, 62.3% of bank loans went to the commercial sector while agriculture and cattle breeding obtained 7.2% and industry a meager 8.5...
...As of the signing of these accords, many progressive and independent Left groups, which had emerged when the student movement split in 1972 over the question of support for the Torrijos regime, raised serious questions about several of the eight points...
...The National Assembly of Community Representatives, consisting of 505 local representatives--of which 480 represented agrarian interests-served to legitimize the regime to the Pan'amanian people...
...Panamanian representative to UN Security Council meeting, March 1973 The Torrijos regime, capitalizing on its image abroad as anti-imperialist and "socialist" - a confusion largely perpetrated by die-hard conservatives in the U.S...
...3 2 Although Torrijos was able to receive millions from the international financial community to finance his development projects, foreign bankers retained control over the expansion of the economy...
...He added that he would assure "an honest, modern and more responsible public administration...
...THE CANAL ZONE TO THE PANAMANIANS Decolonization of the Canal Zone was Torrijos' highest political priority...
...The Constitution also provided for a wide range of popular participation, under the control of the state...
...blockade of that country...
...Both the FEP and the Partido del Pueblo characterized the National Unity as a "tactical readjustment" on the road to national liberation.42 But the popular masses, as seen from the September demonstrations, had begun to discover that their class interests had been subordinated to this so-called national interest...
...DEALING THE OLIGARCHY OUT AND THE COMMUNIST PARTY IN Although the military outlawed political parties, the regime sought an alliance with the Partido del Pueblo, given the Party's involvement with the nationalist and populist struggle of the 60s...
...The criticisms raised by these groups were curiously labeled "oligarchic" and "imperialistic...
...colonialism is well documented.0o Their participation and collaboration with the military-led populist alliance was important to Torrijos: The FEP, identified in the minds of Panamanians as anti-militarist and anti-colonial, had to be won over by the National Guard in order to legitimize both the military and its anti-colonial policies...
...military, excellent communications systems, geographical advantages, a heavy concentration of clients, and certainly not least because Panama's monetary unit is the U.S...
...And in return CONEP in August 1977 gave its explicit support for Torrijos' Canal policy...
...Torrijos, unlike his oligarchical predecessors, had offered some benefits to labor, albeit mediated by the state...
...and 3) by integrating the agrarian middle sectors into the populist alliance, it serves "as a political instrument to displace the landowning fraction from the bloc in power...
...Two colonels led a coup attempt against Torrijos in December 1969 while the latter was visiting Mexico...
...2 3 The transnational bankers were additionally attracted to Panama because of the presence of the U.S...
...As early as November 1974, Torrijos offered the non-hegemonic bourgeoisie some economic and fiscal incentives to promote reinvestments of their profits: subsidized loans of up to 4% to those investing in the export sector...
...2 5 The cooperation of the Partido del Pueblo and the CONAC in this prevented the radicalization of the process--they were not even able to modify the 1962 Agrarian Code approved by the oligarchical regime of Roberto Chiari...
...2 6 The support of these sectors was essential at a moment when the entire economy was undergoing a readjustment, a modernization of its relationship to the international capitalist system...
...The bankers, in turn, funneled hundreds of millions of dollars into Panama's economy through the public sector...
...Having forged an alliance with the most popular and democratic forces of Panama, Torrijos hoped to succeed in removing the "causes of conflict" existing between Panama and the United States...
...Prior to 1968 the majority studied in Nicaragua, El Salvador and Mexico, receiving their advanced training at the U.S...
...3) direct political participation for the Consejo Nacional de Empresas Privadas (CONEP) which, in the absence of political parties, represented the interests of all fractions of the local bourgeoisie...
...WINNING OVER THE STUDENT MOVEMENT One of the most important anti-imperialist mass organizations is the Panamanian Student Federation (FEP...
...33 The credit policies of these bankers favored the already hypertrophied 28Sept/Oct 1979 service sector...
...To that end Torrijos, talking to a group of business executives in 1969, affirmed that his policy would be one "of expanding markets and ample maritime, aeronautical, banking, legal and labor facilities and a cultural attitude favorable to interna24Sept/Oct 1979 The growing financial center is sandwiched between the Pacific Ocean and one of Panama City's slum sections...
...3 6 Moreover, most of the public debt was owed to private U.S...
...Torrijos conceded the first two demands and promised to fulfill the third in the near future...
...banks and financial institutions, running interest rates as high as 12% .37 CLASS CONTRADICTIONS MOUNT As a result of the halt in the economy, national income declined, unemployment and inflation soared, and both the non-hegemonic groups (commercial, agricultural and industrial) and the urban popular masses pressed the regime for concessions, each in their own interest...
...dent Ford, interim U.S...
...GATHERING SUPPORT ABROAD By the following year Torrijos had garnered enough international support to embarrass the United States at the UN Security Council meeting held in Panama...
...In addition, some of its most important members were given important ministerial and subministerial positions...
...2 Torrijos continued to reassure the New York business community when he emphasized that "we have a government team which is young, professional and competent...
...The Code provided for obligatory collective agreements, obligatory payroll deduction of union fees, the establishment of a Superior Labor Tribunal, and an immediate incorporation of some 15,000 workers, including street vendors and peddlers...
...Before almost 200,000 Panamanians, Torrijos announced the Labor Code on the third anniversary of the military regime on October 11, 1971...
...He began by expropriating a few foreign holdings, such as 200,000 hectares of Boston Coconut Co...
...By 1974, sugar export became the second most important foreign exchange earner in agricultural exports...
...There is stability and calm in our country today, and we are functioning in an orderly fashion...
...and lastly, the creation of a special office within the Ministry of Commerce and Industry where local entrepreneurs with problems could seek aid...
...In return for its unconditional and ardent support for the regime, the FEP was awarded control of the university, which carried with it government recognition and funding...
...Between 1973 and 1977 the regime have priority to building sugar refineries to tap the export market...
...3 Nevertheless the old oligarchy continued to conspire against Torrijos, provoking the expulsion of 14 of its leading members by the military in 1976.39 POPULISM UNRAVELS In September of the same year a spontaneous mass demonstration in Panama City erupted against the high cost of living and unemployment...
...military bases and U.S...
...By August 1975 Panama became a member of the non-aligned movement...
...2 2 Following that speech Torrijos passed the 1970 Banking Reform, which allowed, among other things, the unrestricted movement of money in and out of the country...
...As part of his anti-colonial policy, Torrijos also established relations with several countries of the socialist bloc and a number of African and Arab nations, and opened an embassy in Algeria...
...GOODBYE POPULAR UNITY HELLO NATIONAL UNITY...
...The tasks of these mass organizations, he went on to say, were ". the destruction of oligarchic power, the expulsion of Yankee imperialism and the transformation of the economic structures of the country...
...Panama exports 32% of its products and imports 37% of its consumption...
...The military, largely an anti-guerrilla and anti-riot combat force, unlike its counterparts in Peru was unable to adminsiter the state directly...
...The regime launched 138 asentamientos in the period 1969-72, primarily in rice production for the domestic market...
...Panama is not seeking a change of terminology, but a change of structures...
...Renato Pereira, Panama: Fuerzas armadas y politicas, Panama, Ediciones Nueva Universidad, 1979...
...Secondly, the middle class' professional aspirations were always to replace U.S.-imposed bureaucrats *Since the 1940s the officer corps of the National Guard has been drawn from the middle class as well...
...Referring to the significance of the agrarian reform, sociologist Marco Gandesegui argues that it achieved three things: 1) it stabilized the domestic grain market...
...powers to general Torrijos for a six-year period...
...This neighborhood became part of an urban renewal project that relocated its former inhabitants to a more remote district...
...2) it freed land for cane cultivation geared to sugar production for the foreign market...
...This aggressive project reached 5,340 rural families...
...President, to conclude an early treaty with Panama...
...3 5 By that year, with Panama's gross national product showing zero growth, government credits and loans from international lending institutions and foreign banks in Panama spiraled in cost and contracted in amount...
...The Partido del Pueblo played an important role in the formation of these asentamientos and in the creation of the Confederacion Nacional de Asentamientos Campesinos (CONAC...
...This new tactical alliance between Torrijos' popular base of support and the CONEP, representing the oligarchy, was promoted by the regime as "National Unity...
...In 1976 and 1977 the oligarchy demanded the following concessions from Torrijos: 1) the return of rightwing exiles...
...dollar...
...The reality, however, was that the new economic program of accumulation was based largely on a model favoring international finance with the state acting as a junior partner...
...Organized in 1943, it has been in the vanguard of the nationalist struggle to decolonize the Canal Zone...
...Torrijos emerged victorious and Martinez was exiled to Miami...
...Controlled by foreign enclaves and highly dependent on the external market, the economy declined rapidly as traditional exports (bananas, sugar, shrimp, meat) either experienced lower external demand or lower prices...
...Indeed, they had discovered just as the CONEP had earlier that, contrary to Torrijos' desires, there was a class struggle going on in Panama...
...2 8 Unable to ignore Torrijos' nationalistic thrust both at home and abroad, president Nixon dispatched Secretary of State Henry Kissinger to Panama in early February 1974 to sign the Tack-Kissinger Agreement on Principles...
...To further illustrate, personal loans, geared toward purchasing mainly sumptuous imported goods, totaled $101.5 million, or 10% of total domestic loans made by foreign-owned banks...
...Torrijos returned immediately and with the help of loyals crushed the coup and consolidated his hold over the National Guard...
...Public spending and investment temporarily softened the impact of the recession, at least until 1976 when the country's capacity to borrow was seriously endangered by a foreign debt which had reached the astronomical figure of $2 billion...
...Workers: The 1972 Labor Code approved and put into effect by the Torrijos regime was the main tool to incorporate workers into the populist alliance...
...Shrimp is Panama's third-largest export...
...The Frente Revolucionario Estudiantil, Guaykucho-NIR and the Independent Lawyers Guild questioned the concepts of joint military defense, legalization of U.S...
...Congress-began a political campaign to isolate and neutralize all independent progressive groups which opposed or questioned the Tack-Kissinger Agreements...
...Before consolidating his power within the National Guard, Torrijos would have to face another challenge-this time from the CIA collaboration within the Guard...
...But he needed to legitimize and reinforce both the internal and external support structures necessary for an aggressive campaign to force the United States to negotiate a new treaty with Panama...
...The state increased its ownership of production units and its control over resources only as a result of this large-scale and expensive borrowing from the international banking community...
...The demonstration, the first since 1968, was swiftly repressed...
...Colonel Martinez, who had initiated the coup, was known to favor the Brazilian model of military rule...
...The regime felt that in view of the economic crisis, the populist alliance was weakened and that the oligarchy should be further conciliated...
...4 The authentic mass protest was characterized by the government as an act of "destabilization by the CIA in collaboration with the oligarchy and the independent Left.'""` If the oligarchy's conspiracy threatened the regime in January 1976, the demonstration dealt it a hard blow, undermining the populist alliance...
...As economist Juan Jovane noted, "Since November 1974, 66.2% of the loans provided through the Panamanian banking system were foreign loans, and 87.66% of the deposits in the system were also foreign...
...Thus by 1976 Torrijos had begun a real reversal in his class alliances...
...But this was difficult because the student movement and the Panamanian police-military force had both emerged in the early 1940s and have consistently clashed over the traditional prooligarchical and pro-imperialist position of the military...
...Colonel Omar Torrijos, however, was in favor of a military alliance with sectors of the popular classes...
...These investments were necessary to prepare the country for a transition from an enclave economy to one based on the platform for transnational services...
...But the real problem for an early Canal settlement was not the independent Left, rather it was the inability or unwillingness of Presi27NACLA Report A shrimp boat crew unloads their catch at Panama fishing port...
...By that time the military had routed a pro-Arias guerrilla effort in the province of Chiriqui, abolished the National Assembly, outlawed political parties and set up a provisional Military Junta...
...3 Together with this serious drop in exports, the rate of imports, especially for equipment, machinery and food increased rapidly...
...On August 20, 1974, Panama established diplomatic relations with Cuba, defying the U.S...
...Not having full confidence that he could shape a one-party system where civilians would have ample power, and still maintain control over the state, Torrijos in 1972 ordered constitutional reforms which concentrated political power in the executive branch (Torrijos' handpicked ministers) and gave vast 26Sept/Oct 1979 International support for Torrijos at March 1973 UN Security Council meeting includes Soviet Union's Ambassador Yakob Malik (left) and Chile's Sub-Minister of Foreign Affairs Luis Orlandini (right...
...JUNIOR PARTNERS The Middle Sector: The intellectual petit bourgeoisie, namely technicians and professionals, is represented in the alliance by those "competent young men" Torrijos boasted of.* Torrijos increased employment in the public sector from 45,000 in 1968 to over 60,000 in 1975 as a result of the expanded role of the state sector and massive public investments...
...These projects gave a large share of the domestic rice market to middle and lower level producers...
...The economic basis for satisfying some of the demands of these sectors was that the military would allow foreign financial groups to convert Panama into a platform for transnational services...
...Landero Perez, head of the Agrarian Reform Agency, made it clear in a speech in May 1972 that, "the agrarian reform will be carried out without confrontations...
...rights in the event of a sea level canal...
...a $30 million government-guaranteed credit from private banks...
...ten year exoneration on real estate taxes for construction beginning January 1, 1976...
...On the basis of the government's initiative the CONAC proclaimed its unconditional support for the regime at its first national congress in 1970...
...ECONOMY FALTERS Between the years 1960-72 the Panamanian economy had experienced an 8% average annual growth in its GNP...
...2 9 However, in 1973 the growth rate slipped to 6.5%, and since then has moved steadily downward to 2.6% in 1974, 0.6% in 1975 and 0.0% in 1976...
...He claimed that "the new Code humanizes the conditions of work and offers real and effective protection to the man that works...
...9 By 1970, the Partido del Pueblo was playing an important role in the formation of the state-sponsored Asentamientos Campesinos and bringing the regime closer to the powerful Confederacion Nacional de Trabajadores (National Workers' Confederation...
Vol. 13 • September 1979 • No. 5
