Isabel de Saint Malo de Alvarado - Vice President and Foreign Minister, Panama HARDtalk

For a tiny Central American nation, Panama packs quite an international

punch - it has the Canal, a key asset to international shipping,

and it has a financial sector which specialises in parking the cash of

people who want to keep their wealth from prying eyes.

During the notorious regime of Manuel Noriega, it also developed

a reputation for dodgy governance - but that was a generation ago.

My guest today is Vice President Isabel de Saint Malo de Alvarado.

Isabel de Saint Malo de Alvarado, welcome to HARDtalk. Thank you for

the opportunity. Would you agree that Panama has a reputational

problem? If you ask most people what they think of when they think of

your country, they would say financial services, the Canal, and

Manuel segment. We are a success. We have a democracy. We have liberties.

We have freedom. We respect the rule of law. We have a strong economy and

diversifying economy. We are growing when the rest around us are having

trouble. We have had steady growth for the last years, 8% average in

the last 15 years, 6.5% last year. Even during the crisis, we have the

Canal but we are much more than that. We have a strong sector, our

ports system is rated by the World Bank is one of the top in Latin

America. Our logistics sector just second to Chile, and by the World

Bank. I will stop you there because you have given me a litany of

economic facts did suggest you are doing well. And I asked about

reputation. When it comes to reputation, I think about the last

president before your boss, the current president. The last

president left behind him a mountain of allegations, of sleaze and

scandal. He is currently in the US and facing six different

investigations back in Panama. We have had about 26 years already in

democracy, definitely the last period was hectic and compensated.

We have been in government about a year and spent about the first year

really cleaning up the government and cleaning up the act. You don't

seem to have cleaned it up at all. I can go through a litany of current

allegations facing people at the top of the government machine, and the

judiciary. The judiciary and executive are separate branches and

we are respectable of separation of powers. In terms of the executive,

we have had allegations, and most people have left the government. We

have spent time making sure their projects, we have turned information

into justice. That is just a set head. We have insured a proper and

transparent system. We ensure we follow processes and rules, and that

is very clear in all of our actions as a government. Let's talk about

the former president. He is still in the United States. Are you sitting

his extradition right now? The Supreme Court approved to ask his

extradition and the Supreme Court is preparing the documents. They will

need to hand them to the Ministry of foreign affairs. We have not

received from the Supreme Court the request yet. They have told us they

are working on that. You know one of the key allegations against the

former president is his meddling and interference and unconstitutional

actions with regards to the Supreme Court, and in particular, the

appointment of the President of the Supreme Court. A man who under your

watch, your administration, is still in post. Why is he still there? I

have the same question. They elected him. The Supreme Court members,

which again, we are respectful of separation of power, and the Justice

is separate from the executive. Yes, you were selected again to be

president. There are many different civil society groups in your country

who say this is untenable as the public have lost faith in the

judiciary and the highest court in the land, would you agree? I believe

we have a lot of work to do in terms of our judicial system from the side

of the executive. We need to support the strengthening of the judicial

system, and yes, I would agree... The opposition say the government

needs to convene a national constituent assembly. That is the

constitutional reform even the way the executive has interfered in the

judicial branch, the only way to sort it out is to redefine the

powers within the constitution. Is your government ready to do that?

That is one of our commitments. Was or is? Was, before we were elected.

Still is. We are considering what is the best way to approach that. When

we took office, they said it would be dealt with during a second year

of government, and that is where we are heading. The Chamber of Commerce

in Panama said the other day we are an institutional crisis of epic

proportions. You are telling me a year and a half after getting into

office you are still vaguely talking about constitutional reform having

promised it in an election campaign. That is not seem a sense of urgency

even this crisis. The way of addressing government reform,

constitutional reform, it is something that needs to be addressed

but that is not the only way. Take a look at what Panama has done in

terms of our processes, in terms of organising the state, in terms of

abiding by the rule of law, in terms of providing and giving freedom to

civil society. We believe in the strength of civil society today in

Panama. You can speak freely. It did not happen before. Today in Panama

if you are a member of the civil society you can publicly express

your position and contribute. I government has an approach to

decision-making that takes into consideration participation in civil

society. The private sector participation as well. We do need to

continue to work on strengthening our institutions, and what we have

done in a year and a half speaks for itself. Are there still crooked

politicians in Panama? The police found a kilo of cocaine in a vehicle

belonging to an aide of a legislator the other day. How money crooked

politicians are there? Can you tell me how many there are in the UK? You

could ask me and I would say I think our politics is relatively clean.

Well, good for you. I think we still have a lot of work to do. I think we

are a country in the process of growth. We have come a long way, and

I'm sure we will continue to strengthen our democracy and

strengthen transparency and to ensure that practices where

corruption exist are no longer tolerable. So you are a big believer

in transparency? I am a full believer in transparency. In that

case, I imagine you are actively considering the appeal of the OECD

for you to apply the same rules that banks across the world are now

adhering to, which is to be completely transparent in their

financial operations. And to provide automatically that information to

outsiders. We are completely in agreement with the OECD's proposal

for automatic dissemination of information. In the address to the

UN, we committed to automatic strange. We have taken important

steps -- exchange. You have mentioned a couple of times the

Manuel Noriega days, the financial system was very different. You are

patently not doing what OECD wants. Switzerland's commitment, a historic

land of banking secrecy, the media and many other financial centres

have signed up. It is important for Panama to do the same and understand

it is still pretty far from what these other jurisdictions have done.

They are two separate things. Committed to automatic exchange of

information and the commitment to the common reporting standards are

different. I'm talking about your commitment. These common reporting

standards. There are many explained. They are two separate things. We

have stated last year the General Assembly committed to automatic

dissemination. We have almost 30 agreements with different countries

for exchange of information. But the OECD says, the OECD said we wanted

down to the common reporting standards and Panama are saying no,

we don't think that is in Panama's West interests. You just told me you

were committed to transparency. I see a contradiction. There is no

contradiction. We fully agree with the objective, but not the method.

When you start laying conditions as I believe you have done with the

OECD, we would do it if you do this this and this, they looked at your

conditions and said your conditions are, and don't want to be rude,

putting up a middle finger to the OECD. You have no real intention of

changing the secrecy of your financial sector. The OECD is

completely mistaken. There is a vision of the OECD currently in

Panama. They need to see for themselves what it is we are doing

in Panama. Actions speak stronger than commitment. But Panama in terms

of its financial sector, would pass an additional law on NT money

laundering, making sure that money for crime and terrorism does not go

through out financial system -- NT. We are completely committed to

automatic exchange of information and more than half of the members

have signed. We are talking practical cases now. We sell

prosecutors say there is evidence that one of Panama's largest legal

companies wanted money for some of those indicated in a vast bribery

scandal centred on Petrobras, the huge Brazilian Corporation. How come

this kind of allegation is still coming out? I have seen information

on the allegation and I think that needs to be cleared up and straight

in. So for all of the strong commitment and fine words, you are

admitting that you know there are still huge problems in Panama and

inside your financial services sector? We are working hard and have

come a long way. Our financial sector abides at the highest

standard internationally and commits to the information that needs to be

provided. We have a world-class financial sector. Just go there for

yourself. Check. There is no way our financial centre can be being

appointed as not complying. -- finger pointed. But you won't sign

up to the rules Switzerland have signed up to. The reporting

standards. Because it is one thing for some regions of the world. We

are completely committed to schedule information the tax purposes and

need to ensure information we provide on our clients is first of

all not wrongly used, and that happens in some countries, perhaps

not in this continent but in other continents. And second, yes, we are

concerned about the cost to our financial institutions for the

reporting system. We need to take that into consideration. Let us talk

about perhaps the other keep your lot of Panama's economy, and that is

the Canal. You have inherited a massive project to expand the

capacity of the Canal, and I believe it is very late. It was due to be

finished last year, and now it may be finished in the summer or autumn

of this year if you are lucky. They have also been cost overruns to the

tune of billions of dollars, and at one point, it turned out the

concrete that had been made light sufficient steel enforcement. All I

read about this expansion suggests that your public infrastructure,

your ability to deliver is limited. I want to have you in Panama to see

for yourself. We are proud of what we have done. At the cost from the

beginning of last century when the original was built we are building

another. This is a major service to trade internationally. The project

is now about 96-97% completed. There are some things being done. It will

be elaborated by the beginning of next year... Let me talk about the

incompetence of the process,, building and delivering. The chief

of the organisations said, in 2015 when it should have been delivered,

the designer has not delivered the estimated quality. We are losing $1

million a day that it is late. All in all, we have lost 450 million US

dollars by the time this structure is open. It is unfortunate that the

company is doing the work, international companies, have been

delayed. -- companies. But it has been taken care of and we are in the

final stages. For a major infrastructure like the Panama

Canal, a few months isn't anything. It is more like 1.5 years. Not at

all. 2014 was the first Judaic and you are beyond that. But let's talk

about timing. -- due date. You talk about triple the capacity the

original... Yeah. Unfortunately, the timing is terrible. The Orwell Prize

has plummeted. -- oil price. It is so much cheaper to use the long

route around the bottom of South Africa than to use the canal. Look

at the end of this year and we will see how it goes. Have you looked at

the figures recently? We haven't. I have been. Reports released this

month found that since October last year, 115 vessels transporting from

Asia to the east coast of America sailed around South Africa rather

than the Panama Canal. We are fortunate to be in our geographic

position and to be at the service of the world in this regard for over

100 years. We are proud to offer this expanded canal. Yeah...

(LAUGHING). The world will consider whether it is worth it. I tell you

what it will also consider, the chief of the canal authority

declaring before this thing had even opened, the new expanded canal, he

said that he may have to improve and expand its more, $17 billion

projects, to allow it to take the world's very biggest ships. Why

didn't you do it all in one go? The analysis for this expansion was done

more than 20 years ago, about 50 years ago. We are already very

competitive. To remain active and take the steps we need we are

already analysing a third expansion. That might happen, but

not yet. You are telling me that the timelag has been so bad it is

already not enough. No, you are saying that.

(LAUGHING). Now it needs to be even bigger... Already, when the ex-

tension started, there were vessels of different sizes. -- expansion.

There are many larger than we have today which will be of service to

the world. Will we need to consider them in a few years? Perhaps. We

don't know. Analysis is being done. A final thought for you. I think

there was a Summit of the Americas in Panama last year. You said, when

talking about the growth of the Latin economy, the quality.

Therefore,, it is interesting that it appears to be one of the most

unequal societies in Latin America, Panama. Why is that? We are country

that is growing. We still have to address the situation. If you look

at the poverty figures they have been dramatically dropping for the

last 15-10- five years. A quarter of your population apparently is

delivered in poverty. -- still lives in. You talk about -7% growth

rates. -- 6-7. Fine. But you still have a quarter of your population

living in poverty. We do. And our government will address that. We

came into office with a commitment to prioritise that issue. We have an

investment programme for a five-year term of millions of dollars. The

poor of that is addressing water sanitation, a major issue of quality

for people. -- the quality. Education. Giving people the

opportunity to be part of this growth. That is definitely

unfortunate. That is still a challenge for Panama. We have come a

long way. Ultimately, you are a small nation and depend upon trade

and the help of neighbours and major economic players like China.

Venezuelan and Columbia as well, and Columbia is not doing that well. --

Venezuela. It seems that your growth rates are slowing. According to the

IMF, Columbia will be tonight economy in the world, quite a lot

for such a small economy. -- the ninth. In terms of key factors,

foreign direct investment, and so on, Panama is a very diverse

economy. That has allowed us to continue to grow. We have some

resilient and institutions that has allowed us to continue in that

direction. -- resilience. If you look at the forecast, that is what

the forecast says. I will end with one more thought on the reputation

issue. Manuel Noriega is in a Panamanian jail. Will he spent the

rest of his life there? About a year ago... Could your government

releasing ever? There is a lot of debate about that. The country is

divided on the issue still. It was a hard period for Panama. I cannot

tell you what will happen. He may be in a jail for the rest of his life

in your country and you have suggested to me there may be moves

to bring the last president into a Panamanian court, and who knows,

possibly a prison as well. But if they are both languishing in prison

while you say your country now is a modern, clean... Those are concrete

examples we are cleaning up our act. We are saying, "no more." We

will not accept those conducts. It is not what we want to be. It is not

true -- truly what we are. What about the Zika virus? Panama has not

been exempt. How can you ensure you protect your population? In the case

of anima, because we are... We have forests and have been forever

fighting these types of diseases and we have experience with it, the

Cabinet agreed upon a degree last year, not because the situation was

out of hand, but because we want to be repaired, we are going to take

strict measures to control the spread of the mosquito. -- decree.

-- prepared. It is a fundamental public health challenge. Is your

government really capable of meeting that kind of public sector

challenge? Completely. The Ministry of Health... As I said, we are

cooperating with other countries on this issue. We have strong

experience with this type of situation, so, yeah, we are very

well prepared and have taken measures and are working hard. Madam

vice president, thank you very much for coming on HARDtalk. Thank you so

much for the opportunity. Thank you. Temperatures as low as -8

in Scotland. Into Monday it will be a cold

and frosty start.