Note: This document may not always reflect the actual appropriations determined by Congress. Final budget allocations for USAID's programs are not determined until after passage of an appropriations bill and preparation of the Operating Year Budget (OYB).
PANAMA
FY 1997 FY 1998 FY 1999 Actuals Estimate Request Development Assistance.............. $2,741,000 $2,932,000 $4,850,000
Introduction
U.S. assistance to Panama supports the successful implementation of the Panama Canal Treaties. Under the treaties, Panama will assume full ownership, control and operation of the Canal on December 31, 1999. The assistance also contributes to the achievement of other U.S. foreign policy objectives in the areas of economic growth, democracy, law enforcement and environment.
Assistance to Panama at this critical juncture is clearly in the U.S. national interest. Substantial amounts of U.S. (13%-14%) and world (4%) ocean-going cargo transit the Panama Canal. The protection of the Panama Canal Watershed's natural environment is vital to safeguarding the fresh water resources upon which Canal hydrology depends. Additionally, a democratic, transparent, prosperous and stable Panama will help ensure smooth transfer of Canal ownership and control, contributing to efficient Canal operations well into the 21st Century. Well-planned, productive uses of U.S. military bases and other properties scheduled to revert to Panama can help offset the loss of income from the closure of the bases, contribute to political stability and help preserve the ecology of the Canal Watershed.
Development Challenge
Fresh water powers the Panama Canal. The Panama Canal Watershed is the only source of water to meet the needs of the Canal as well as fast growing population in the area. During the past 50 years, massive deforestation has reduced the forest cover in the Watershed by 60% and in the process eroded its river valleys and lake shores. As a result, the fresh water supplies of the Canal Watershed are increasingly vulnerable to siltation, sedimentation and the reduction of storage capacity of the lakes. USAID will continue to provide assistance to improve the management and technical capabilities of key responsible Government of Panama (GOP) institutions, local governments, non-government organizations, and communities in the area, to better protect and conserve the natural resources of the Panama Canal Watershed. As a result of USAID ongoing assistance, four of the five national parks established to help protect the Panama Canal Watershed have been demarcated, provided with essential infrastructure, communication and transportation equipment, and have developed management plans. USAID has also supported a monitoring program to measure changes in forest cover, hydrology, biodiversity and human settlements.
It is essential to Panama's future political stability that the process of assuming ownership and control of the Panama Canal in 2000, as well as the productive uses adopted for the reverted areas, be carried out in an open, transparent, and efficient fashion. This process should produce results in which all Panamanians from all social classes clearly benefit. USAID supports these Panamanian efforts by providing technical assistance to facilitate the transfer of the Canal and to evaluate management and asset disposition options related to reverted military areas. USAID assistance was instrumental in the development of GOP's Canal Transition Plan and the framework law which created the new Panama Canal Authority, successor agency to the Panama Canal Commission (PCC). Additionally, USAID has funded numerous feasibility studies which have guided the decision making process related to disposition of major reverted military areas and infrastructure. USAID assistance is being provided to assist the environmental protection of the Panama Canal Watershed, to support the transfer of Panama Canal operations to Panamanian control, and to facilitate the productive uses of the reverted U.S.
military and other properties. We anticipate completing our assistance to Panama by September 30, 2000. Currently, the GOP's external public debt is $5.2 billion. The U.S. Government has no plans for debt relief.
Other Donors
The Inter-American Development Bank (IDB) is the lead donor in Panama, with a projected $800 million loan program over the next few years. The IDB is optimally positioned to move into sectors which USAID has either left or will soon leave. These include: financial management reform, economic policy development and administration of justice. The IDB also provides loan funding for major new initiatives in road construction, energy development, agriculture, health services, secondary and technical education, housing and improved systems for urban potable water and sanitation. Germany, Spain, the European Union and Japan provide a total of approximately $40 million annually in grant assistance. All are involved to some extent in supporting environmental protection, although none has provided assistance to address the needs of the Panama Canal Watershed. The U.S. is virtually the only donor in the Canal Watershed.
FY 1999 Program
USAID will focus resources on the protection of the Panama Canal Watershed and on issues related to the effective and efficient transfer of the canal and the reverted areas adjacent to the Panama Canal.
In FY 1999, USAID will continue to support the institutional strengthening of Panama's Institute of Renewable Natural Resources (INRENARE) to provide sustainable environmental protection of the Panama Canal Watershed. Additionally, USAID will continue to support the Panama Canal Transition Commission/Panama Canal Authority (PCTC/PCA), which came into existence in 1997. Assistance will be used to help the two entities to set up organizational and operational policies for overseeing the management, maintenance, use and conservation of water resources in the Panama Canal Watershed. This support will also include activities with key municipalities, the private sector and NGOs within and bordering the Canal Watershed. During FY 1999, the last of five national parks in the Canal Watershed will become completely operational. Additionally, USAID will continue to support specific objectives of the Interoceanic Regional Authority (ARI), which is responsible for the planning and implementing privatization or productive uses of the reverted areas as well as for its appropriate share of the environmental protection of the Canal Watershed. During FY 1999, feasibility studies and technical assistance will enhance the decision making process of PCTC/PCA and ARI.
PANAMA FY 1999 PROGRAM SUMMARY
($000s)
USAID
Strategic and Special
ObjectivesEconomic Growth and Agriculture Population and Health Environ-ment Democracy Human Capacity Develop-ment Human-itarian Assistance
TotalS.O. 1
Improve Man-agement and Protection of Panama Canal Watershed
- DA
3,300
3,300
Sp.O.
Ensure Smooth Transfer of the Panama Canal and Facilitate Productive Use of Reverted Areas
- DA
1,550
1,550
Totals
- DA
1,550
3,300
4,850
USAID Mission Director: Lars Klassen
ACTIVITY DATA SHEET
PROGRAM: PANAMA
TITLE AND NUMBER: Improved Management and Environmental Protection of the Panama Canal Watershed, 525-SOO1
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1999: $3,300,000 DA
INITIAL OBLIGATION: FY 1995 ESTIMATED COMPLETION DATE: FY 2000
Purpose: To protect and preserve fresh water sources vital to the operation of the Panama Canal.
USAID Role and Achievements to Date: USAID supported a Government of Panama (GOP) development plan for coordinated protection and sustainable development of the Panama Canal Watershed (PCW). The GOP Institute for the Management of Renewable Natural Resources (INRENARE) and the Smithsonian Tropical Research Institute (STRI) are our principal partners in this effort. In this regard USAID supported a GOP initiative, the Monitoring Program of the Canal Watershed to measure forest cover, hydrology, biodiversity, and human settlements through a grant agreement with STRI. Staff have been trained and baseline data established in these areas. USAID further supported the development of INRENARE's provision of essential infrastructure in the protected areas throughout the PCW. Also, park guard training, equipment, transportation, communications and management plans have been provided for the protected areas in the PCW. As a result of USAID assistance, four of the five parks established to help protect the PCW are now complete.
The FIDECO Trust Fund continues supporting environmental activities. To date, 33 grants representing $2 million were provided to NGOs for environmental programs. An additional $1,000,000 was provided to INRENARE for protection, maintenance and operation of Panama's national parks in the PCW and throughout the country. USAID continued training community leaders and progressive farmers in the PCW in agroforestry techniques. USAID also supported NGOs and Community Based Organizations (CBOs) involved in project implementation in the PCW and local governments, the business community and civil society in their active involvement in the protection of the PCW.
Description: During FY 1999, USAID will continue to work with INRENARE, STRI, NGOs, communities and municipalities, within and bordering the Canal Watershed, and civil society to discourage encroachment into national parks and encourage agroforestry activities, and protection of natural resources within the watershed.
Effective and sustained management and protection of the Panama Canal Watershed requires appropriate policies and regulations, particularly with respect to changes in land use, adequate funding for Watershed protection activities, effective coordination among GOP institutions, and an informed civil society. Economic alternatives for the Canal Watershed's residents that are compatible with effective protection and management will also be stressed, as will a continued monitoring of the watershed's monitoring system.
To achieve the proposed Strategic Objective, USAID will continue to support GOP efforts, the Panama Canal Transition Commission/Panama Canal Authority (PCTC/PCA) and Interoceanic Regional Authority (ARI) to assure reverted areas land uses are compatible with ARI's Regional Plan. Geographic information system (GIS) data will generate annual information of changes.
USAID will work with the PCTC/PCA and the Panama Canal Commission (PCC) in the implementation of Panamanian Laws that give the PCA the responsibility for management, maintenance, use and conservation for the water resources of the Canal Watershed when the Canal is transferred. An Inter-Institutional Commission (IIC) will be established to harmonize the Policy/Legal/Regulatory framework of all GOP, NGO and private sector entities operating within the PCW.
USAID will work with corresponding GOP agencies and other institutions to assure financing for the management and protection of the PCW, e.g., that Canal tolls will be set to cover the costs of operating the Canal, including support for water resources protection. With IDAAN's (the GOP water company) anticipated privatization in 1998, the new entity will either pay for raw water or provide some funding arrangement for the protection of the watershed. USAID will work with PCA/PCC, STRI and INRENARE to ensure the institutionalization and sustainability of the PCW monitoring program. The monitoring program will continue measuring forest cover, hydrology, biodiversity and demography within the Canal Watershed.
USAID and FIDECO grants to NGOs will support pilot agroforestry projects in buffer areas of the PCW national parks as well as funding INRENARE agroforestry efforts in key communities of the watershed and support INRENARE in managing the PCW protected areas effectively. Support for the provision of essential infrastructure, park guard training, and development of management plans will continue.
USAID will continue to promote participation by local governments, the business community and civil society in the formulation and implementation of PCW management and protection efforts.
Host Country and Other Donors: USAID continues to be the primary donor supporting management of natural resources in the PCW. INRENARE, PCA/PCC through the IIC will become more and more responsible with USAID assistance and guidance. Japan and several other countries continue active but small-scale assistance efforts in other areas of the country, but not in the Watershed. For 1998, INRENARE's budget is $16 million, a reduction from the $18 million in 1997.
Beneficiaries: The sustainable improvement in management and protection of the Panama Canal Watershed will benefit the U.S. and other international users of the Panama Canal and 1.5 million Panamanians of Panama and Colon city which depend upon the canal lakes for potable water.
Principal Contractors, Grantees or Agencies: USAID implements activities through a grant with the Smithsonian Tropical Research Institution, PASA agreements with U.S. Army Corps of Engineers, the USDA Forestry Service, Cooperative Agreements with regional organizations, Technoserve and Panamanian NGOs and GOP agencies.
Major Results Indicators: Baseline Target (1999) All waterways and forested areas in the Canal 156,000(1990) 245,000 watershed declared legally protected (in hectares) Forest cover in the PCW (in hectares) 122,575(1990) 126,000 Land Area reforested in the canal Watershed 100(1990) 6,400 (in hectares) Funding disbursed from the Ecological Trust to NGO's, community associations, education groups and GOP $000(1994) $ 6,100 entities for conservation/environmental activities ($000 - cumulative)
ACTIVITY DATA SHEET
PROGRAM: PANAMA
TITLE AND NUMBER: Efficient Transfer of the Panama Canal and Facilitate the Productive Use of the Reverted Areas, 525-SpO01
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1999: $1,550,000 DA
INITIAL OBLIGATION: FY 1995ESTIMATED COMPLETION DATE: FY 2000 Purpose: The purpose of this special objective is to prepare for a seamless transition of the Panama Canal to Panamanian ownership, control and operation, and to offset the loss of employment and income resulting from the closure of U.S. military bases.
USAID Role and Achievements to Date: USAID is acting primarily as a facilitator in the Canal transfer and reversion processes in those areas of expertise where the U.S. possesses a particular, comparative advantage to help accelerate the process, and to ensure high quality of the technical assistance "products" that the Interoceanic Regional authority (ARI) and the Panama Canal Transition Commission/Panama Canal Authority (PCTC/PCA) need in order to evaluate management and asset disposition options.
USAID helped to develop the terms of reference and funded the development of the GOP's Canal Transition Plan which guides current planning. Based on that planning, the PCTC/PCA developed the framework law to operationalize the new PCA. This law was approved by the GOP Legislature in mid-1997. USAID has also assisted the PCTC/PCA by funding technical assistance efforts to: develop a public information plan to explain to a world-wide audience the role of the PCA; determine the programming, monitoring and control mechanisms required to manage the transition process; establish a documentation and translation center with Internet outreach; analyze insurance/risk management and support non-confrontational resolution of labor issues using the services of the U.S. Federal Mediation and Conciliation Service.
USAID is actively supporting the institutional strengthening of ARI as the primary interlocutor of the GOP for reversion and investment. USAID funded feasibility studies for tourism development for Fort Amador, optimal uses for Albrook Air Force Station, and privatization of Gorgas Military Hospital. ARI has carried out planning, marketing and sales activities for private sector productive use of the U.S. military bases and certain Canal operating areas that are being transferred to Panamanian control.
USAID support of Fundación ANDE is encouraging the private sector's partnership with the GOP in a fair and transparent reversion process, through improvements to the business climate, particularly as they relate to the Canal and reverted areas. Fundación ANDE has produced an incentive law for tourism development in the reverted areas and another law for streamlining procedures for business licensing by the GOP and is actively involved in promoting intellectual property rights and fair business practices.
Description: In FY 1999, technical assistance will be provided to the GOP's PCTC/PCA to strengthen financial management, including budgeting, accounting, procurement and auditing, labor relations, insurance/risk management, a documentation/translation center and a sustainable management plan for public-private stewardship of Canal operating areas.
The International Executive Service Corps will continue to provide highly experienced U.S. technical experts on a short-term basis to address a wide range of specific base conversion issues identified by the PCTC/PCA and ARI, e.g., optional uses, opportunity costs, market feasibility, marketing appropriate areas for tourism, light industry, maritime uses, and research/educational development needs. Further strengthening of the Geographic Information System (GIS) is anticipated to assist the base conversion work.
Selected assistance to the GOP Financial Controller office will be provided to assist with the completion of the automatization of the National Integrated Financial System through which accurate accounting data on reverted areas will be generated.
Host Country and Other Donors:
The IDB provided ARI with loan-funded technical assistance to develop a General Use and Regional Plans for the reverted areas in 1997. Also, under its Multilateral Investment Fund (MIF) program, IDB makes available a small grant to finance investment banking costs, associated with Reverted Area projects, complementary to USAID's assistance to ARI through the IESC grant. The United Nations Development Program (UNDP) has financed workshops and seminars between the GOP and selected NGOs to encourage participation in the Canal and military property reversion process and to develop a unified Panamanian "visionary" approach to these processes. USAID's use of the NGO community will be increased to ensure equitable and sustainable investments occur in the Reverted Areas.
Beneficiaries: The beneficiaries are the U.S. and other international users of the Panama Canal; the Panamanian people, who depend on revenues derived from the U.S. military bases and the Panama Canal, and its 8%-15% contribution to gross domestic product; and the Panamanian labor force, including 7,500 permanent Panama Canal Commission employees, and 8,000 U.S. military contract and concession employees.
Principal Contractors, Grantees or Agencies: The primary implementor is the U.S.-based NGO, the International Executive Service Corps. USAID is also providing services of advisors through the Free Market Development Advisory Program to a number of Panamanian institutions involved in various aspects of the reversion process and the transfer of the Canal. Lastly, the Federal Mediation and Conciliation Service is implementing training in support of non-confrontational resolution of labor issues for the Panama Canal labor force.
Major Results Indicators: Baseline (1995) Target (1999) New jobs created replacing those lost by closure of U.S. military bases (cumulative) 0 10,000 New revenues generated replacing income lost by closure of U.S. military base ($000 - cumulative) $0 $125,000 Additional wages generated offsetting lost due to U.S. military base closure ($000 - cumulative) $0 $63,000
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