Caribbean & Central America - February 2011 (ISSN 1741-4458)

The pro-business government of President Ricardo Martinelli is facing the prospect of unrest following a deeply unpopular change to the 1963 mining law which repeals the ban on foreign government investment. Protests from civil society groups and the indigenous sector - the latter up in arms given many concessions lie within its territory- have already prompted some hasty reassurances from Martinelli. This suggests that just as he was forced to backtrack last July over his attempt to weaken union and environmental legislation (Ley Chorizo) [RC-10-09], the mining issue, which has also reportedly caused tensions within his coalition, could well prove another misjudgment.

Martinelli first announced his interest in changing the law in March 2010, in a bid to boost investment in the largely dormant metallic mining sector [RC-10-05]. While an October 2010 report by the economy ministry (MEF) put Panama's copper reserves at some 47.2bn pounds, worth an estimated US$141.6bn in situ and its gold reserves at US$8.3bn in situ, there is only one mine currently in commercial production - the Canadian-owned Petaquilla Gold. Critics specifically link the law's changes, which were approved by congress on 10 February (see sidebar), to plans by Canada's Inmet mining company to secure financing from two foreign governments (Singapore and South Korea) for the Cobre Panama mine, Panama's second largest copper reserves (20bn pounds) located some 120km west of Panama City in the Colón province.

With a recent poll by Dichter & Neira showing 67.7% of respondents oppose the development of mining activity in the country, the main outcry over the changes to the law concerns the copper reserves in the Cerro Colorado (25bn pounds/US$75bn) which lies in the Ngí¤be Buglé comarca, one of five indigenous political regions. There have been protests in various parts of the country, including in the provinces of Chiriquí­ and the Bocas del Toro, both in the comarca - the latter notably the site of the deadly July violence which forced Martinelli's repeal of the Ley Chorizo [RC-10-10].

While on 14 February Martinelli issued a public assurance that reserves which lie within indigenous territory would not be developed, this has failed to provide much reassurance given his June 2010 decree eliminating much of the political autonomy of the Ngí¤be Buglé comarca. Following the decree, which returned decision-making powers to the central government, the national electoral authorities (TE) held regional elections in October 2010. This was widely considered to be an attempt by Martinelli to install local officials more likely to back the development of the Cerro Colorado and other projects which are deeply unpopular with indigenous groups [RC-10-11].

• Divisions at the top?

While the 71-seat legislature approved the change to the mining law by a convincing 42 in favour and 15 against, the local press cited as evident of divisions at the top the fact that Vice President Juan Carlos Varela, who is president of the Partido Panameñista (PP) - the main coalition partner in Martinelli's Alianza por el Cambio-, refrained from signing the ministerial resolution dated 26 October 2010, allowing the initiative to be put forth in congress. This follows other signs of strain within the coalition, which notably surfaced over the issue of presidential re-election [RC-11-01].