If you’d asked people a couple of weeks ago where Panama was located, they would probably say it’s somewhere on the American continent, but not be entirely sure where. They might have heard of the Panama Canal, but just like the one in Suez, we’ve all heard of it, but most can’t really point to it on a map.

But today the story is completely different. If you ask people about Panama, it’s very likely that they have heard of something called the ‘Panama Papers’, not the ‘Mossack Fonseca Papers’, which should be the real name, since this is a multinational firm based in Panama, but which, as the Guardian says ‘runs a worldwide operation.’

The Mossack Fonseca website boasts of a global network with 600 people working in 42 countries. It has franchises around the world, where separately owned affiliates sign up new customers and have exclusive rights to use its brand.”

This is one of those instances in which the news cycle, and media labelling, have had a profound effect on a nation’s brand. When looked at in detail, the activities shown in the Panama Papers deal more with the financial systems of tax havens (many of them British) such as the British Virgin Isles or Jersey, but the country getting most of the negative press is Panama; so much so that the French government reintroduced it into its list of countries failing to comply with anti-money laundering policies.

Now the odd thing is that according to the OCDE’s Global Forum on Transparency and Exchange of Information “no jurisdiction is currently listed as an uncooperative tax haven by the Committee on Fiscal Affairs.” This is funny if you read the Statement from OECD Secretary-General Angel Gurría on the “Panama Papers”, where she states that “Panama is the last major holdout that continues to allow funds to be hidden offshore from tax and law enforcement authorities.” In reading the activities of Mossack Fonseca, one can clearly see that there are several countries still involved in “offshore tax evasion”, like Luxembourg, Switzerland and the British Overseas Territories.

One of the most interesting side effects from this scandal is its effect on the reputations of the countries involved. Take a look at Iceland, where the Prime Minister resigned due to popular protests. This sends a message across the world of a functioning democracy, where the people have a say and their voices matter.

In contrast, Russia’s response simply reaffirms the image of a totalitarian regime controlled by the Kremlin, with similar stories from China, Azerbaijan and Iran – hardly a surprise. The undecided factor right now is the United Kingdom, where the people have yet to decide if Prime Minister David Cameron should resign, due to his father’s use of offshore trust funds to evade taxes.

But any way you look at it, the biggest loser here is Panama, so much so that even its internal image is hurt, as can be seen in this mock tourism campaign by Panamanian satirical web TV channel “La Cáscara TV” “#PanamaIsMoreThanPapers”.

Should the Panamanian government be doing more than issuing bland remarks from President Varela about “continued cooperation” with international tax authorities? Remarks that fall short of the mark since Panama is the only big tax haven that has not agreed to implement the “common reporting standard” proposed by the OECD and already agreed to by 96 countries.

Is there a way to turn this sudden interest in the Central American nation into a positive opportunity? It seems unlikely, but you never know.

By Daniel Reyes

Daniel Reyes is former Chief Communications Officer of the Colombia Country Brand Office. He now works as a private consultant in strategic communications, with an emphasis on place brands in the digital sphere. Follow Daniel on Twitter, or find him on LinkedIn.

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