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Panama City gangs go from competing for territory to competing for jobs

KC Hardin
McNulty Prize
Panama City, Panama

This is part of a series of leadership case studies featuring McNulty Prize Laureates.

“Urban revitalization is in my blood,” says KC Hardin. “I grew up in neighborhoods that were either declining or revitalizing. I feel like I lived that process so many times. It was just natural that the first time in my professional life I came across a place that was in that transition, I was drawn to doing it.”

KC, formerly a lawyer in New York City, had moved to Panama City and settled in Casco Viejo, a World Heritage Site, in the degraded inner city. Tuned in as he was to the ebb and flow of urban neighborhoods since his childhood, KC looked at his new home, which had a reputation as one of the most violent neighborhoods in Panama City, and developed a charismatic vision for Casco Viejo that involved initiating sustainable, inclusive urban revitalization.

KC-Profile.jpg#asset:453He found a business partner who shared his vision, formed a property development company, Conservatorio, and started work.

Many of Conservatorio’s projects are familiar facets of real estate development. Some are tourism-supporting developments like hotels; others involve commercial and office spaces and apartments across the spectrum of affordability. But Conservatorio has a very particular approach: “We approach projects with the intention of getting all the great stuff that urban revitalization brings, without going too far,” says KC, “and containing the negative externalities of displacement and cultural homogenization” that often go alongside regeneration projects. In other words, Conservatorio’s intention is to revitalize an area in such a way that it retains both its human and its architectural heritage.

It’s a difficult balancing act, and Conservatorio approaches each project in a spirit of co-creation. “We ask: ‘What problem can this piece of land solve for people in this area?’, and we enlist the community to co-create with us, taking a design thinking approach to arrive at a solution that offers the best fit for their needs.”

The venture has been highly successful, not only in its own right as a business, but also in terms of maintaining its integrity, and fulfilling its intended contribution to the urban environment and community.

Left life as a New York corporate lawyer and settled in the historic center of Panama City, Casco Viejo.

Built a $50m B-Corp Certified real estate development company, Conservatorio SA focused on revitalizing the historic city center.

Co-founded Esperanza in 2013 with Matt Landau.

However, KC and his colleagues were soon wrestling with how to respond to one of the big problems of the inner city: street gangs.

“Twice in the year after our first hotel opened we got bullets through the window,” says KC “A tourist was caught in crossfire about a block away.

“When we were getting ready to open another hotel, I found out that a gang had been extorting protection money from the contractor throughout the construction period. I wondered how things would work when the hotel opened, and when we had guests staying.”

For KC, this also became personal. “An eight-year-old kid, Kevin, was shot, right in front of where I live, by a rival gang looking for his big brother. It was completely senseless. Kevin was a great kid, everyone’s favorite.

“We buried him, and at the church I realized the priest, although he was speaking to a whole neighborhood of people crying, was just not able to inspire any kind of shift in community tensions.”

It was a pivotal moment for KC As long as gangs and feuds held sway, and as long as mainstream society believed that the only way to deal with gang members was to “use the hard hand”—to imprison or chase them away—the community was caught between a rock and a hard place. Life and work would be compromised, not only for himself and his family, but for all who lived in the richly diverse society he was committed to.

Of Esperanza graduates are formally employed or have started their own business
Of residents in the area now feel safer, and 90% feel that crime dropped since Esperanza arrived.
Gang-related crimes from 2014-15 in territories where Esperanza intervened.

Knowing there must be a different way, KC revisited an early project, run by the Panamanian government, which was based on the theory that gangs could be integrated into mainstream society, and their territories into wider society. The project itself had failed, but it did generate some important contacts within those communities. A grant from the Massachusetts Institute of Technology allowed KC to start building up a stronger and more relevant methodology, and to start developing a case.

But still, he says, “the commitment and risk seemed too great, and the odds too long.”

It was during his immersion in the introspection and conversations of the CALI Fellowship of the Aspen Global Leadership Network that KC pivoted from thinking: “how can I?” to “how can I not?” Without having answers for the risks this would involve, or for the long odds, he could no longer postpone taking action.

So, KC began to assemble a technical team. He put in his own money and raised some additional funds. His neighbor in Casco Viejo, Matt Landau, came on board as co-founder. Esperanza was born. It had a theory of change, and had some connections, and it was ready to take its first tentative steps.

There’s a perception that gang members are by nature sociopaths. They’re guys who are probably the most marginalized people in our society, but deep down, what they want is an opportunity.

— KC Hardin

Many tried to talk KC and Matt out of it, arguing that the society which gave rise to the gangs was intrinsically dysfunctional and the problem too intractable. But Esperanza persisted, because they held a fundamentally different perspective. “There’s a perception that gang members are sociopaths by nature, that they’re predators. Our experience is that they are probably the most marginalized people in our society. Their social connections are their mothers, their fellow gang members, maybe the clergy. Other than that, they don’t know anyone.

“Joining a gang is one of the most sensible things you can do as a young man growing up in a chaotic environment where you’re threatened on all sides. Where your chance for social mobility is almost nil. Where your only possession is this particular notion of respect which constitutes gang currency. It just makes sense to join a group of guys who offer you the ability to have some status and more of this mythical, objective respect.”

Gang members thus tend to live in two modes, says KC: mostly, they are in victim-mode, feeling victimized by the police and by general society; they occasionally switch into aggressor mode, “where they lash out because of that victimization. That always leads to feeling victimized again when there are repressive police operations, or they go to prison again.”

Essentially, Esperanza sets out to move people from that victim-aggressor cycle to feeling responsible for their own lives. Change happens when people feel they have the tools and capabilities to change their lives, those of their families, and the state of their communities. “At the base of everything, what they really want, is to be part of society,” says KC By engaging the gangs and their leaders through the prism of their individual strengths, their street smarts and charisma could be seen as an asset rather than a threat. “We interview them afterwards and they say things like, ‘People used to fear me. Now they respect me. I know important people, I have a picture of myself with the President, so who can say I’m nobody?”

It is a source of pride to KC that at almost every graduation, former gang members say they are motivated to become leaders and examples to society. Though many graduates retain, as KC says, “one foot in the shadow,” there is an aspirational path ahead, and there is immediate success. “We don’t turn them into angels. But we have stopped the violence. Guys, especially really young ones, sometimes go back to prison but go straight when they come out because they tell us they had a lot of time to reflect on what they learned in the program,” he says.

Social integration, however, is a two-way street. There needs to be will on both sides – on the gang’s side there needs to be the will to change; on the community’s side, the will to enable change and enable the formerly rejected gang members to come into the formal society.

It’s in the latter part of that equation that the major challenge lies. The gangs, KC says, want to be part of a society that for the most part doesn’t want them. “You have to work at it from the side of society towards the marginalized population. Not expect the marginalized population to start doing everything society requires of them before you reach out and help them come in.”

So, how does Esperanza approach it?

In part, the success of the program lies in its demands that members step up: “We believe completely in their human potential. We don’t allow the guys to make excuses for not doing basic things they’re capable of doing. It’s very important that we hold them to a high standard, and we don’t fall into the trap of seeing them as the victims they sometimes see themselves as.”

We take the gang’s natural talents—their ability to hustle, their entrepreneurialism, their toughness—and channel it towards being resolvers of their own problems and their community’s problems.

— KC Hardin

Failure is when a community lets its members who would normally be part of society fall to the margins. Esperanza consciously works against that. As a result, crime has been dramatically reduced: “There hasn’t been a gunfight since we started,” says KC. Employment has increased: at any one time about 70% of Esperanza’s graduates are employed or have their own business. Recidivism has decreased to below 10%; long-standing gang rivalries have been neutralized; and a highly marginalized population has been integrated into mainstream society. “We measure individual social capital increase in order to measure social integration,” explains KC “The more networks grow, the more integrated they are.”

These are all excellent outcomes. But “on a more profound level,” says KC, “we have begun to change the way our society is looking to address violence.” He’s speaking in terms both of the formal legal system, and the mores of street justice. “Gangs are a highly localized problem requiring locally tailored solutions, but at its core it is an issue of social integration, something pervasive across Central America and the world. We hope to work with Panamanian authorities and international organizations to provide training and replicate Esperanza’s methodology elsewhere.”

At the level of street justice, a critical challenge at this stage in the program is that of restorative justice. To get killers – like the man who shot and killed 8-year-old Kevin – to ask for forgiveness from the families of the victims, and to have those apologies witnessed by the community and truly accepted, would eliminate another generation of violence. “Hopefully, if the restorative justice process works, little by little what you have is a big zone of peace where ex-rivals no longer see each other as threats. That zone of peace can extend indefinitely.”

Esperanza is now scaling outside its initial scope in Casco Viejo, into adjoining districts where bigger and even more notorious gangs who have heard of the success of the program are asking for “their turn.” “I think we’ll grow incrementally and I think we can grow throughout the city,” says KC

Esperanza also sees a wider role for itself. “We think Esperanza can provide hope and inspiration to people in other communities that want to try something similar.” Those who have observed the work of Conservatorio and Esperanza would agree. “[Casco Viejo] has been totally transformed from a war zone into a jewel,” said one McNulty Prize jury member. “It is a signal to the entire continent that this problem can be solved.”

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