Given that I live in the United States and have a development project going on in Panama, I get to see alot of reactions from maintream America that reveal peoples’ understanding of Central America’s politics and geography (generally speaking, it is very weak). Yesterday’s coup in Honduras certainly doesn’t do much for the reputation of Central America, at least among the average American, who typically doesn’t distinguish between the individual countries. However, for those in the know, this coup primarily serves to set other Central American countries, like Costa Rica and Panama, in a better light.

Given our (continual) search for property in Central and South America, we’ve studied the politics, economic development, physical infrastructure, legal system, culture, etc, of alot of countries in Latin America. And our analyses of these issues was one of the factors that led to our purchase of Isla Palenque, in Panama. (The other being that it’s an absolutely amazing piece of land, but that’s another entry.)

We, as developers, have made a huge investment here, and we didn’t do it lightly. I personally would have never made an investment like this in Nicaragua or Honduras, and would have thought very hard before going into Guatemala. Belize: okay; Costa Rica: okay. But Panama, despite being behind these last two countries in developing its tourism, in fact beats them hands down on almost every front.

A first visit to Panama quickly reveals the economic and infrastructural  lead this country has over other Central American countries: Panama City is comparable to Miami (I’m not saying it’s in the same league, I’m just saying one can make the comparison, which is not true for cities like San Jose or Managua). I’ve had more than a few experienced travelers who have been all over Mexico and other Central American countries come to Panama and be shocked at the airport, the city, the highway, etc: “it’s all so modern”.

Underlying all these visible improvements, though, is an equally well developed political and economic system that is geared towards democracy, free trade, and upholding property rights and the rule of law. No, it’s not the same as the United States. But it’s hard not to see that the country was given a great model for development by the US presence in the country for some 100 years, along with some great infrastructure: the Canal of course, but also: military bases that are being transformed into intermodal transport and logistics centers; some of the best highway I’ve ever driven south of the border; and even a John Hopkins hospital.

And, while this is pure speculation, I also think that the US presence likewise has played a big part in the less physical infrastructural advantages that Panama has over its neighbors: highly developed legal and banking systems and a culture that does not easily lean too far left.

Panama has been a haven for capital and people for some time; I’ve met multiple Nicaraugans who left for Panama in the 1980s, and currently Venezualans are pouring money into Panama as fast as they can, lest Chavez appropriate it. Panama’s recent election of Martinelli, who trounced the leftist Balbina, was widely seen as a bucking of the trend in recent Latin American elections. But it wasn’t a one-time event in Panama, it is part of a trend and way of thinking that the Panamanians have: the culture simply isn’t geared towards leftist revloutionaries the way that some countries in the region seem to be.

The recent economic boom in Panama owes itself a lot to these foundations, as well as other more temporaneous factors. And the boom is sure to recede for awhile as the global economic slowdown reduces GDP everywhere, undoubtably creating lots of economic and social problems. But the risk of something like Honduras’ coup, or the electon of a Chavez lookalike, are very remote indeed. If they weren’t, we wouldn’t be making the massive investment that we are in developing Isla Palenque.