Panama’s Minister of Trade and Industries Melitón Arrocha traveled to Venezuela in late October to discuss an agreement on the debt. The debt is owed to Panamanian companies, including Copa Airlines, pharmaceutical companies, and companies in the Colon Free Trade Zone.
According to different sources, the exact debt owed to Panama by Venezuela differs. Spanish newspaper El País reports a debt of only US$700 million, while Panama’s La Prensa reports that it’s US$1.2 billion.
According to the International Business Times, Venezuela accounts for 30% of the total business in the Colon Free Trade Zone, making it the port’s largest partner.
During the administration of Panama’s former Presdient Ricardo Martinelli, Venezuela severed both diplomatic and economic ties with Panama. Venezuelan President Nicolas Maduro claimed that Panama had been working with the United States in a conspiracy against him during antigovernment protests that left thousands of people arrested, hundreds injured, and dozens killed. During this time, Venezuela’s foreign minister claimed that the debt owed to Panama was fraudulent and that 90% of it wouldn’t be paid.
The dispute, however, may have been based on political differences between Maduro and Martinelli more than anything else. Following the defeat of Martinelli’s political party, Cambio Democratico, in Panama’s presidential elections in May, Venezuela restored relations with Panama. Maduro welcomed the newly elected Panamanian President Juan Carlos Varela into office, saying, “We are going to deepen economic, diplomatic, trade, and energy relations. Applause and a hug to the Panamanian people.”
Collecting on the Venezuelan debt is important for Panama. After an array of expensive infrastructure projects, Panama’s public debt has increased in recent years.
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