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Cablegate: Business Leaders Despair Over Pmg's Effect On Tpa

VZCZCXYZ0000
OO RUEHWEB

DE RUEHZP #1592/01 2692348
ZNY CCCCC ZZH
O 262348Z SEP 07
FM AMEMBASSY PANAMA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1217
RUEAIIA/CIA WASHDC IMMEDIATE
RHEHAAA/NSC WASHDC IMMEDIATE
RUCPDOC/DEPT OF COMMERCE WASHDC IMMEDIATE
RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEHBO/AMEMBASSY BOGOTA 2624
RUEHPE/AMEMBASSY LIMA 0711

C O N F I D E N T I A L PANAMA 001592

SIPDIS

SIPDIS

STATE FOR WHA - A/S SHANNON
ALSO FOR EB - A/S SULLIVAN AND WHA/EPSC - SHAPIRO
STATE PASS TO USTR - SCHWAB AND VERONEAU
USDOC Q BASTIAN

E.O. 12958: DECL: 09/25/2017
TAGS: ETRD ECON PREL PGOV PM
SUBJECT: BUSINESS LEADERS DESPAIR OVER PMG'S EFFECT ON TPA


Classified By: Ambassador William A. Eaton - Reasons 1.5(b and d)

1. (C) Summary: Panamanian business leaders are increasingly glum
about the country's prospects for securing Trade Promotion Agreement
(TPA) ratification in the U.S. owing to Pedro Miguel Gonzalez's (PMG's)
September 1 elevation to PanamaQs National Assembly presidency. In
their meetings with several U.S. congressmen in Washington last week,
they came away with the clear impression that the TPA would not advance
in Congress so long as PMG remains in place. Private sector figures and
politicos have sought to blame President Martin Torrijos and Vice
President/Foreign Minister Samuel Lewis Navarro for their "failed
leadership" that gave rise to PMG and his potential impact on the TPA.
Relentless media coverage of the issue has further aggravated
Panamanian despair over the inevitable clash between PMG and the TPA.
Meanwhile, Post hears that PMG is trying to pitch the line that
regardless what happens to the TPA, it has nothing to do with his
ascension to the National Assembly presidency. His departure appears
highly unlikely. End summary.

Business Leaders Bemoan PMG Effect on TPA
-----------------------------------------

2. (C) On September 24, PanamaQs American Chamber of Commerce President
Carlos Urriola gave board members of the U.S.-Panama Association (USPA)
a sobering read-out of his trip last week to Washington, DC to lobby
for the U.S.-Panama TPA. Together with other members of the American
Chambers of Commerce of Latin America (ACCLA), Urriola met with several
House members, including Reps. Sander Levin, Gregory Meeks,
Joe Crowley, Xavier Becerra, and others. He said that the members were
clearly perturbed by PMG's September 1 elevation to Panama's National
Assembly presidency and that their basic message to ACCLA was that the
Panama TPA would not go forward so long as PMG remained in place.
Urriola said one member warned, "If Lou Dobbs puts this (PMG) issue out
over CNN, this TPA won't be dead. It'll be buried."

3. (C) Urriola said that Rep. Crowley appeared to waver in his support
for the TPA precisely because of PMG. He added that Crowley told the
entire ACCLA group that he and other members were concerned about the
lack of "rule of law" in Panama and how PMG's "impunity" casts doubt on
how U.S. investors might fare with Panama's corrupt judiciary.
(Comment: Panama's notoriously corrupt judicial system has long posed a
problem for foreign investors faced with arbitrary and capricious
proceedings. Even if the PRD's manipulation of PMG's 1997 trial
ultimately boomerangs to dash Panamanian hopes for a TPA with their
biggest trade partner, it is unclear whether this would be enough to
finally prompt PanamaQs elites to embrace meaningful judicial reform.
End comment.)

4. (C) Urriola added that Rep. Sander Levin appeared unmoved by
arguments that failing to approve the TPA could embolden Venezuelan
President Hugo Chavez. "Levin said he was bored with the Chavez
argument and wanted us to discuss the PMG issue directly, not in terms
of the Chavez threat," according to Urriola.

5. (C) Other USPA members bemoaned the GOP's "stupidity" and "failure
of leadership" in allowing PMGQs rise to potentially torpedo the TPA.
Eloy Alfaro, former Panamanian Ambassador to the U.S., criticized
President Martin Torrijos and Vice President/Foreign Minister Samuel
Lewis Navarro for their public support for PMG. Alfaro suggested that
Panama's chief executive had aggravated the "negative signals" sent to
the U.S. by the National Assembly. He also discounted continued
displays of support for the TPA by Bush Administration officials,
noting that the U.S. Congress would "make its own decisions." Alfaro
observed that the views of congressmen could easily harden, noting that
some continue to repeat the decade-old canard about the GOP having
supposedly given the Chinese control over the Panama Canal. (Comment:
Alfaro is a political ally of Torrijos' political enemy, former
President Ernesto Perez Balladares, and is ostensibly interested in
discrediting the Torrijos administration. End Comment.)

6. (C) Clearly frustrated by PMGQs stubborn refusal to step down for
the sake of the TPA and the broader national interest, USPA members
discussed ways they might boost the pressure on PMG to step aside.
While some called for all business chambers to unite in a nationwide
campaign aimed at prompting PMG's resignation, others cautioned against
the potential for such an effort to backfire, further hardening PMG's
resolve to stay put. They all agreed, however, that this was
ultimately a problem that only Panamanians themselves could resolve.
They also worry that, even if PMG steps down immediately, this
episode may have done irreversible damage to the TPAQs prospects in
Congress.

PRD Members Point Fingers Over PMG Debacle
------------------------------------------

7. (C) On September 19, President TorrijosQ private secretary, Leonel
Solis, told an embassy official that "Martin is the only one to blame
for this huge mistake" and that Torrijos "never thought that PMG would
go this far." He added that he's only seen Torrijos seriously
concerned about two crises: protests in 2005 against Social Security
reforms and the PMG matter.

8. (SBU) Sensing the potential political fall-out the PRD could
suffer from possibly losing the TPA over the PMG issue, Panama City
Mayor Juan Carlos Navarro openly criticized Vice President/Foreign
Minister Samuel Lewis on September 14 for allowing the PMG debacle to
harm Panama's relationship with the U.S. Lewis retorted that his
cousin the mayor (and fellow PRD presidential aspirant) should stay
out of the GOP's diplomacy and attend to the city's trash collection
problems.

9. (SBU) Former Minister of Government and Justice and current Chair
of the AssemblyQs Foreign Relations Committee, Hector Aleman,
explained to DCM that the Pedro Miguel debacle got caught in internal
PRD politics. According to him, the National Assembly had a growing
number of gripes about how Torrijos had sidelined the National
Assembly and how he had become increasingly dictatorial in his
treatment of them. Martin simply sent his edicts to the Assembly and
expected them to fall in line, which created deep resentment among
members. Many in the Assembly saw the Pedro Miguel election as a way
to get back to Torrijos and to teach him a lesson. (Comment: Despite
his professed support for Torrijos, it is well known that Aleman's
pride had been wounded by his dismissal from the Ministry and he may
have lent himself to consummation of the September 1 circus that
elected Gonzalez. End comment.) In response to the DCM's admonition
that the PRD had willingly adopted an unhelpful anti- American speech,
Aleman explained that it was the only way for them not to be isolated
politically and that some viewed it as the insurance policy against
the resignation of Gonzalez. He predicted that Gonzalez would not
step down, but expressed concern about the future of the TPA. He
predicted dire consequences if the Agreement is not ratified and
professed a willingness to find a way ahead, short of Gonzalez's
resignation. He also conceded that the PRD could lose the 2009
election if the TPA were not ratified and that he has told this to
Gonzalez. Aleman said that Gonzalez had agreed to not make any
more public anti-American statements.


Press Contacts Say PMG Delusional
---------------------------------

10. (C). In an off-the-record conversation, three prominent media
directors and a popular TV journalist related to the Ambassador, DCM
and PAO their views on PMG based on conversations and interviews that
have had with him. The four were unanimous in saying that PMG was
"delusional," living in his own fantasy world with respect to his
potential negative impact on the TPA. PMG refused to acknowledge that
he would be a factor at all in the congressional deliberations and
that he could turn out to be the critical factor in a final vote on
the TPA. One director noted that PMG accused the Panamanian press,
especially leading daily QLa Prensa,Q of being in cahoots with the
Americans in orchestrating an anti-PMG campaign.

Comment
-------

11. (C) Local media coverage of the "PMG dilemma" has been
relentless, driven by Panama's internal politics as well as outside
forces, such as the Puerto Rican Senate's efforts to make an issue of
PMG. (Zak Hernandez, whose 1992 ambush slaying was allegedly done by
PMG, was Puerto Rican.) Likewise, international media coverage of the
PMG story in late August/early September has further aggravated the
private sector's despair and frustration over the inevitable clash
between PMG and ratification of the TPA.

12. (C) Every indication suggests that PMG is convinced his rise will
not affect the ratification of the TPA. Post has heard that PMG
thinks that the U.S. Congress will ratify the TPA because its national
interest is greater than the complications created by his ascension.
Post has also heard that PMG thinks that if the TPA is not ratified it
will be owed to internal political differences in the U.S. over free
trade and not his ascension. In any event it looks as if Gonzalez is
entrenching his position and that he will not leave.
EATON

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