Oct 23, 2012

Perhaps I was Too Optimistic

When I wrote that the unrest over Law 72  would blow over quickly, because everyone could see its implementation would benefit Colon and the country,  I think I was being naïve.   I’ve never had a business head, and this matter requires thinking like a business person.
It initially seemed obvious to me that selling inhabited and developed public lands to those businesses already occupying the land, for the purpose of improving infrastructure while generating additional income and higher revenue for the country, the province, and the municipality, would be something everyone could get on board with.
What never occurred to me was that certain business people, presumably those with the most money, would get their noses bent out of shape and have the means to sabotage the efforts.   Colon riots and vandalism have gone on for longer than anticipated, and it now appears those funding the unrest have deep pockets.
Although the law doesn’t obligate anyone to purchase the occupied land in question, in retrospect it probably does pressure the wealthiest to go that route.
The government essentially wants to sell these lands because they are being leased out at ridiculously low prices to individuals or corporations with long term contracts. Apparently these entities haven’t been paying the lowly taxes assigned with the contracts, either (something like 1%).  Prior governments have either been unsuccessful or unaggressive in collecting this revenue.   According to reports, payments have been pending for 12 years.  Those entities that hold these long term contracts with the government are able to sublet the properties at significantly higher rates (up to 20x higher) to 3rd parties who are doing business in the free zone.   The contract holders are the ones making all the money. 
Along comes Law 72 which allows for the purchase of these public lands.  I am probably missing some things here, but my understanding is that purchase of these lands is not obligatory and is not necessarily an open market.  Maybe that will change, however.   At the current time, the ability to purchase the properties in question is being extended only to those who hold the contracts.  The hope is they WILL purchase the properties, invest in improvements, and pay the government its due share.  According to Frank de Lima, the Minister of Economy and Finance, there are three mechanisms for acquiring title to the public properties. 
1.      Outright purchase
2.      Option to Purchase, putting 10% down and paying the remainder over 5 years.
3.     Continuing to rent, and understanding that at the end of 5 years the property values and applied taxes will be re-evaluated and adjusted.
I’m not clear on whether the lands for sale will be up for grabs by others if the concession holders decline to purchase by the end of the indicated 5 year period.
It's imaginable that businessmen who already have a sweet deal with these government contracts may not want to avail themselves of the above mechanisms at extra expense.  Perhaps, even if they were to choose option 3,  they would face income and expense changes they didn't like in the next five years.
Unfortunately, few businesses / corporations are praised for their social conscience.  And people with no business acumen can easily get deceived by false rhetoric and the scapegoating of an unpopular president.  I wouldn't rule out the existence of false government promises, either.  I suspect a lot of the student protests and criticism from other social groups may be due to this.
But I'm beginning to realize I'm watching corporate-style warfare between those on top who like things as they are versus the have nots  who either want a piece of the pie, or at least want to make those who have the pie,  share a little more of it.
This may get nastier than it is, or it might get negotiated out at the 'conference' level.  The sad part is that the country could be held hostage during the negotiations.  It’s probably going to depend on who can fund their position the longest.   Meanwhile, police as well as citizens are getting shot in the streets, and children are being killed.  This is greed at its ugliest level, and it’s sickening.   I have to give Don Winner credit for his following comment which I think I now comprehend:
It makes sense that the businessmen should be meeting with the government delegation, because the protesters are being paid for and funded by the businessmen of the Colon Free Trade Zone, who don't want Law 72 to stand. They are willing to fund a whole lot of unrest in order to make it go away.