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Remarks: President of Panama Juan Carlos Varela at 46th Annual Washington Conference of the Americas

Juan Carlos Varela (Image: U.S. Department of State)

May 03, 2016

REMARKS AS PREPARED



On behalf of the people and the Government of Panama, I would like to begin by thanking the Council of the Americas for giving me this opportunity to address such a distinguished audience. It is an honor and a pleasure to be with you in Washington today. I speak with you not only as the President of the Republic of Panama, but as a proud father. My son graduates from American University this week.

I would like to share with you this afternoon the vision of my country as well as the path that we have chosen to build a functional and sustainable democracy in Panama that is now a model for democratization in our region.

It is not lost on me that this Council was founded to promote a common commitment to economic and social development, open markets, democracy, and the rule of law throughout the Western Hemisphere. Today’s Panama is driven by the pursuit of the same values.
And you all play a key role in encouraging the Americas to celebrate and leverage our shared political, economic, cultural, and social agendas. I speak to you today as the democratically elected leader of an independent, peace-loving Panama.   

We sometimes forget that democracy is neither easy, nor inevitable. In the last 50 years, many of our Latin American countries have gone through periods of political change and transition, on the road to restoring our democracies. After military dictatorships, we achieved democracy, but one that was controlled by narrow economic and political interests. We then had populism, which as we all know too well, often subordinates the long-term national interest for short-term political expediency.

Nowadays, Latin America is realizing a "new democratic era," where each country is responsible to find their own path to a functional and sustainable democracy, with the rise of a new political leadership focused on solving the problems that affect their people.

In Panama, this means an overriding commitment to transparency and accountability in the use of public funds, so that all men and women in public life clearly understand that politics shall only be used to serve the people.

That will enable us to ensure good governance, social peace and political stability within our countries, as we face our domestic challenges ahead and work together with other governments to tackle the common problems that affect our region, and the rest of the world.

Panama’s path to becoming a functional democracy was hard fought and won.

We had democracy in the 20th century, only to lose it to dictatorship. In those dark years, the Jesuits taught me that social justice and freedom were possible. I was among the many who chose to fight for and defend these ideals over 25 years ago and now, as Panamanians, we feel proud to have consolidated a peaceful and orderly democracy, where the rule of law and legal certainty prevails, with an economy open to foreign direct investments, strong institutions and a balance of power between the different branches of government. My administration is fully committed and dedicated to each of these values.

All these efforts have paid off for our country, socially as well as economically. Today Panama´s democracy has flourished to become one of the fastest growing economies in Latin America and the world, growing at the rate of 6.2 percent in 2015, with an unemployment rate below 4 percent and inflation below 1 percent.

But our success story did not happen overnight. For over 500 years Panama has been meeting point of civilizations and an important transit route for goods and services, a land of opportunity, at the service of the international community with our Interoceanic Canal and world-class system of ports and airports, running efficiently to facilitate international trade.

The Panama Canal, which has been at the service of world trade for more than 100 years, is in the process of a dramatic expansion.

This monumental project will be completed on June 26 of this year. The canal is why Panama was not just the backdrop but the lasting metaphor for the successful 2015 Summit of the Americas, which broke new ground with the historic overture between Presidents Obama and Castro, paving the way for a new era of dialogue and cooperation. Once again, Panama brought the world together.

Due to our privileged geographical position and the consequent development of our service-based economy to take advantage of it, we have become the Hub of the Americas, which facilitates communication and connectivity between our continent and the rest of the world, with direct flights to more than 30 countries in the western hemisphere and 5 European countries. That is why over a 100 transnational companies have chosen Panama to host its regional offices.

Panama´s success does not depend on irregular flows of money into our financial system. Our success story is based on the hard work of the Panamanian people: a noble people and peace-loving nation, that despite of being a small country in terms of size and population, has found its way to earn an important place within the concert of nations.

As a country, we feel that it is our duty to protect Panama´s financial center and logistic platform so that it cannot be used for any illegal activities or purposes that do not represent the common good. This has been a top priority for me since I entered into public life, and our country´s commitment to the financial transparency and security of Panama´s entire logistic and service platform becomes stronger every day. The path that we have chosen will not be reversed.

Seven years ago, as vice president and minister of foreign affairs, I promoted the creation of a High Level Commission for the Defense of Panama´s International Financial Services and through this Commission, we negotiated and approved a Tax Information Exchange Agreement with the United States and more than 25 double taxation agreements with countries of the European Union, Latin America and the Caribbean. These agreements also included provisions to facilitate the exchange of tax information.

As President of Panama, I retook these efforts and in the 22 months of my administration, we have enacted significant legal and institutional reforms to improve the accountability and financial transparency that enabled our country to be excluded from the Grey List of the Financial Action Task Force (FATF) early this year.

In parallel, we have had extended talks with the OECD, long before the recent media controversy known as the “Panama Papers,” which revealed a global problem, that involves many countries, whose legal and financial structures are still vulnerable of being used for purposes that do not represent the common good. Against this adverse situation, Panama held its head up high and continued our irreversible course toward reform and transparency. We called upon the international community to maintain a respectful dialogue through the diplomatic channels.

We reaffirmed Panama's commitment to the transparency of financial systems, and above all, we reiterated that our country is committed towards the automatic exchange of tax information in a bilateral way, as I previously announced during my speech before the UN General Assembly last year.

My administration leaves the door open for a multilateral agreement on automatic exchange of tax information in the future, but at this time, we must be responsible and consistent with international obligations that we assume to be able to comply with them.

For this reason and considering the large amount of resources and staff that would be required by our Tax Collection Agency to comply with multilateral exchange of information, in addition to its daily job of collecting taxes for our government to deliver the works and projects that we need for the Panamanian people, we have decided to start negotiations on bilateral agreements for the automatic exchange of tax information, incorporating the CRS-OECD standard, as it has been done by Singapore, Hong Kong and the Bahamas among others. Panama will soon begin the negotiations of tax information exchange agreements with G-20 members, like Japan and Germany, who have endorsed our position.

In addition, we have appointed an independent commission to review our domestic laws and regulations and our independent judiciary has launched an investigation of its own into the law firm at the heart of the leak.

Our commitment to regional security and to protect Panama's logistic and service platform from the threats posed by organized crime remains to be strong. We stand among the countries with the largest amounts of drugs seized in our region per year.

The peace in Colombia will be a milestone for Latin America but we must be aware that it has transitioned from what was once an ideological issue to an organized crime and drug trafficking problem. Despite of the progress of the peace process, which Panama fully supports, I have to share with you our concern for the increase of drug production in our neighboring countries. According to the information provided by the intelligence community, cocaine production and shipping has significantly increased in the past few years as well as the violence caused by drug trafficking across Central America.

Panama will continue to fight hard against drug trafficking, and at the end, I am confident that the law enforcement efforts will prevail.

However, in order to win this battle, the efforts of our neighboring countries to stop drug production shall be increased, and we all must work together to increase the intelligence sharing and security information exchange mechanisms between the countries of the region.

Each year more than 250 tons of illegal drugs are being smuggled by land and sea routes throughout Central America, with an estimated market value that goes from 500 million dollars up to 3 billion dollars as it gets closer to the borders of Mexico and the United States.

This drug trade creates an illegal economy that challenges the authority of the Governments and it also competes with the States for the loyalty of the law enforcement officers and the people.

On the law enforcement side, all governments must endeavor to strengthen our National Security Agencies, providing our career officers with all the training, equipment, intelligence and working conditions they need, to be loyal to the State and to fulfill their mission to protect and serve the people.

At the same time, all government officials must set forth an example of rightfulness, by conducting all public matters with efficiency, transparency, accountability and showing their loyalty to the State in every action and decision they take.

The main challenge that Latin America faces is the insecurity caused by inequality, poverty, and lack of opportunity for its citizens.

Having reached peace in the Americas, and standing on trusted models of collaboration and support, the time has now come to focus the power of our states on combating internal insecurity. And above all, we must focus on eradicating poverty and inequality, which form the root of the problem. 

In order for development and economic prosperity to exist, there must be stability and social peace.

Equally important as law enforcement is the prevention of crime, which entails to increase the presence of the State in the poorest and most vulnerable areas of our countries, investing the public funds with transparency to ensure the access to drinking water, basic sanitation, decent housing, education, healthcare and transportation.

This public investment has to be done, providing the youth at social risk with job opportunities and teaching them how to use their own hands to build a better future, instead of destroying and hurting each other.    

I strongly believe that all the cooperation in the region and the multilateral financial institutions must focus on these efforts to identify and develop these “social and public infrastructure projects” in the high-risk areas, where the presence of the State needs to be increased.

In line with this vision, my administration is investing 19 billion dollars in public infrastructure within the next three years to improve the life of the Panamanian people. By 2019, we will provide basic sanitation to more than three hundred thousand Panamanian families nation wide, we are building more than one hundred thousand social homes, ten thousand new classrooms will be built and more than 3,000 public schools will be fully renovated.

In addition we are building Lines 2 and 3 of Panama´s Metrorail system, new technical institutes, hospitals, roads and waste managements plants, with State vision and long term planning.

My administration is committed to make sure that Panama´s economic system becomes a model of sustainable human development for all Panamanians. These public investment efforts are being executed with fiscal responsibility, the added value of having an honest and transparent government.

All these reform efforts in Panama have cut domestic drug-related violence and unrest. In the past two years Panama’s homicide rate has gone down from 17 to 10 per hundred thousand, which makes us one of the safest countries in Latin America.

By the end of our respective government terms, all heads of state should ask ourselves what is the legacy that we are leaving behind. While we can all build major infrastructure projects I am convinced that the most important legacy that we can pass on to the future generations is a functional and sustainable democracy, which is the main goal that I have been pursued since our Government took office in Panama.

I am part of a new generation of political leaders in Panama and the region who are fighting very strongly to change politics, or the drifting of politics, from a business to a national service.

The path to a functional democracy is about transforming the country we have received, fighting for more transparency and accountability, supporting justice without hurting the people in whose name justice must be made.

Panama is a country at the service of the international community that is ready to offer cooperation. We are ready to be partners and strategic allies of our region, willing to contribute with our own resources to address the common problems that affect our people. Panama's does not ask for funds, we just ask for a space to participate and work together, as equals, to build a better future for all the nations.

Panama stands ready to contribute to the development and growth in our region and to lead the collective efforts to promote equality, human rights, and democracy in the western hemisphere. Through joint efforts, we can all enjoy the fruits of peace, prosperity, freedom, and justice, at home, and across the globe.

Thank you.