Cablegate: Panama: Scenesetter for President's Meeting With


DE RUEHZP #0336/01 1192050
R 282050Z APR 08

S E C R E T PANAMA 000336




E.O. 12958: DECL: 04/28/2018

Classified By: Ambassador William A. Eaton. Reasons: 1.4 (b), (c), an
d (d).


1. (C) President Martin Torrijos will meet with you on May 6
at the White House in the hopes of revitalizing his
administration's initiatives in which our bilateral
relationship plays a significant role. Panama's primary
season is now in full swing, Torrijos cannot run for
re-election, and Panama's general elections will be held on
May 3, 2009. U.S. ratification of the U.S.-Panama Trade
Promotion Agreement (TPA) will top Torrijos' agenda, though
he will also be looking for assistance in advancing his
social agenda. The U.S. should take advantage of this
meeting to: underscore our desire to see Panama's next
elections strengthen its democracy, reiterate our commitment
to ratify and implement the TPA, and to address security
issues, particularly the recent kidnapping of a U.S. citizen
who was kidnapped by criminal elements associated with the
Revolutionary Armed Forces of Colombia (FARC). Torrijos last
met with you on February 16 in the Oval Office.

Panama's Political Scene

2. (C) Torrijos is constitutionally prohibited from running
for re-election in May 2009 (though he may run again after a
10-year absence from the presidential palace). These
elections will lead to the fifth peaceful, democratic
transition since democracy was restored in 1989 in the wake
of OPERATION JUST CAUSE. Though he himself cannot run,
Torrijos and the Revolutionary Democratic Party (PRD) are
striving to break the pendulum effect in Panamanian politics
that, since Noriega was removed from power, has replaced the
governing party with the opposition in each of the past four
elections. Torrijos, who recently won re-election as PRD
Secretary General, has set as his core political goal

securing the election of the PRD candidate so as to ensure
the continuity of his reformist policies. These elections,
however, are unique in that neither the governing PRD nor the
opposition has an obvious successor to assume leadership.
3. (C) The PRD has scheduled its primary for August 17, and
two PRD candidates -- Panama City Mayor Juan Carlos Nvarro
and former Minister of Housing Balbina Herrera -- have
already officially launched their campaigns for the party's
presidential nomination. (Other minor contenders may declare
their candidacies but, at this time, would have little chance
of defeating either Herrera or Navarro.) Navarro, a centrist
member of the PRD, draws his support primarily from Panama
City, has worked assiduously for years to cultivate Panama's
interior and to build a nationwide political machine, and is
stronger among professionals, businessmen, and elites.
Herrera, a member of the PRD's left-wing "Tendency
(Tendencia)" faction, was Torrijos' Minister of Housing until
April 27, lacks a structured campaign apparatus, and is very
popular with working class and poor Panamanians. In the
1980s, Herrera was Noriega's Mayor in San Miguelito, Panama's
second largest municipality located on the outskirts of
Panama City. In 1992, Herrera organized demonstrations
against your father during his first visit to Panama
following OPERATION JUST CAUSE. Torrijos has not endorsed
either candidate and is unlikely to do so any time soon.

4. (C) Herrera currently leads the national polls. A few
short weeks after her campaign launch, Herrera toppled
Democratic Change (CD) presidential candidate Ricardo
Martinelli from the lead that he had sustained in the polls
for over two years. According to one poll, Herrera leads
Martinelli by ten points (28 percent vs. 18 percent), though
a second poll over roughly same period gave Herrera only a
1.3 point lead (21.6 vs. 20.3). Inside the PRD, Herrera
appears to hold a commanding lead over Navarro leading him
25.1 percent to 13.2 in one poll and 45 percent to 31 percent
in another poll. Significant numbers of undecided voters,
however, still remain on the sidelines. This year's PRD

primary is likely to be more bruising, more costly, and more
likely to leave behind bitterness that could complicate
efforts to unify the party for the general elections.

5. (C) The opposition panorama remains murky. The largest
opposition party, the Panamenista Party, will hold its
primaries on July 6 and its two leading candidates remain
deadlocked. CD's Martinelli remains at the top of the polls
in the opposition, but is currently alone and at the helm of
his untested political machine, one of the newest parties in
Panama. Efforts to form opposition alliances have been for
naught to date as smaller parties refrain from aligning with
either the eventual Panamenista nominee or Martinelli.
Torrijos' PRD presently confronts a divided opposition. The
U.S. is not taking sides in the upcoming elections, but
rather is underscoring the need for free, fair, and
transparent elections that further strengthen Panama's

TPA to Top Torrijos' Agenda

6. (C) Undoubtedly, Torrijos will raise U.S. ratification of
the bilateral U.S.-Panama Trade Promotion Agreement (TPA).
In the wake of the September 1, 2007 election as National
Assembly President of Pedro Miguel Gonzalez (PMG), who is
under U.S. federal indictment for the 1992 murder of a U.S.
serviceman, the prospects for rapid U.S. congressional
approval eroded significantly. (Panama National Assembly
ratified the treaty by a wide 58-3 margin in July 2007.)
Today, the Embassy is hearing from high-level PRD contacts
that PMG will not/not run for re-election on September 1, but
rather will step down. Were PMG to step aside, a significant
irritant to U.S. congressional approval would be removed.
Torrijos will assure you that PMG will not run for reelection
and that were he to attempt to run for reelection that he
would be defeated. In striving to assure you that PMG no
longer presents an obstacle to TPA ratification, Torrijos
will likely press for Panama's TPA to jump the queue and be
presented to the U.S. Congress for approval. The Embassy has
consistently reiterated that, given the Administration's
policy of submitting the trade agreements to Congress in the
order in which they were signed, there was little chance of
putting the Panama deal ahead of Colombia in the queue. At
this stage, as the PRD is striving to show PMG the door, it
would be best to not comment publicly on PMG's re-election,
but rather to simply comment that the U.S. and Panama remain
committed to implementing this important bilateral trade

Canal Expansion Project Continues

7. (C) The U.S. has applauded Panama's leadership in
expanding the vital Panama Canal to ensure its continued
ability to handle ever greater traffic and commerce. In
September 2007, the Panama Canal Authority (ACP) formally
launched the USD 5.25 billion expansion project, which is
planned for completion in 2014. U.S. firms have thus far
competed successfully for expansion-related work, including a
seven-year project management deal won last August by
Denver-based engineering firm, CH2M Hill. Four consortia are
currently bidding for an estimated USD 3 billion design/build
contract for the construction of the Canal's new, much larger
locks. One consortium is U.S.-led (Bechtel), while the other
three consortia have minority U.S. participation. Bids are
due in October, after which the ACP expects to decide the
winning consortium by the end of December 2008. Our
expectation is that U.S. supplies and services in support of
the canal expansion would receive full and fair
consideration, regardless of the winning consortium for the
construction of the new locks.

Support for Torrijos' Social Agenda

8. (C) Torrijos will also seek continued U.S. support to
advance his social agenda. While Panama has enjoyed
phenomenal economic growth in recent years, the rising tide
has not lifted all boats. GDP growth has been incredible
topping 11 percent last year, unemployment has been reduced
by about half since 2003, and Panama has enjoyed strong
fiscal performance. However, some 40 percent of Panamanians
still live in poverty, and 16 percent live in extreme
poverty. In the semi-autonomous indigenous territories
(comarcas), the poverty rate is over 90 percent. Torrijos
remains committed to preparing Panama to compete in a
globalized economy. Through his "Network of Opportunities
(Red de Oportunidades)" and his "Community Development
Program (Programa de Desarollo Comunitario - PRODEC),"
Torrijos is striving to share the wealth by linking monetary
assistance to school attendance and childhood vaccinations in
the first program and to involve communities in solving their
own problems by engaging them in the latter program to
develop infrastructure projects to meet their needs. The
First Lady is a strong proponent for improving education and
promoting greater respect and opportunity for handicapped
persons as well as other social efforts. The U.S. has a good
track record in supporting Torrijos' efforts to build a more
equitable society in which all Panamanians have an
opportunity to fully partake in Panama's economic success

-- American firms - Procter and Gamble, Caterpillar,
Occidental Petroleum, and Ports America - are all making
major investments in Panama. U.S. investors have been
attracted to Panama's long-term commitment to greater
transparency and market-friendly policies, and we should
continue to encourage Torrijos to stay the course on these
effective policies, particularly in combating corruption that
remains a serious problem that could undermine Panama's
investment climate and economic progress.

-- Torrijos is likely to express concerns regarding growing
inflation and the decline of the U.S. dollar, two phenomena
that are hitting Panama's dollarized economy hard, most
notably in the steep increase of the cost of the basic basket
of goods and the erosion of the purchasing power of the
average worker.

-- In June 2007, Secretary of Health and Human Services
Leavitt and Minister of Health Alleyne inaugurated in Panama
City the Regional Healthcare Training Center (RHTC) to
provide a forum for training healthcare professionals
throughout Central America. The U.S. and Panama are
committed to the RHTC's long-term success and to encouraging
private sector support and participation. You can expect
that Torrijos will seek more USG financial support for the

-- In March 2008, Under Secretary of Education Sara Margaret
Tucker and her counterpart signed a memorandum of
understanding to promote teacher exchanges. The Department
of Education will share information and models for Panama to
study and frame an exchange program best suited to Panama's
needs, and the Department of Education stands ready to
facilitate the identification of state-level partners
interested in participating in an exchange program with

-- Torrijos may also request U.S. helicopter lift from
SOUTHCOM to deliver construction materials, equipment, and
personnel to remote corners of Panama. While committed to
facilitating such assistance, we need to tread carefully so
as to not become involved in political activities in what is
being an increasingly political period, but, more
importantly, we need specifics and advance notice to be able
to extend this kind of assistance. Periodically, Torrijos
also raises requests for U.S. military engineering
assistance, but we have seen few details and no follow-up and
need to be cautious about remaining politically neutral.

Security: A Growing Concern

9. (C) The U.S. continues to enjoy outstanding law
enforcement cooperation with Panama. In calendar year 2007,
Panama accounted for close to 60 metric tons of seized
cocaine, out of roughly 160 tons seized in the hemisphere.
The U.S. and Panama have established excellent sensitive
vetted units that have led to numerous arrests and the
disruption of narco-trafficking operations. Our judicialized
phone intercept program (MATADOR) is currently targeting
close to 200 dirty cellular numbers affiliated with major
traffickers and/or the Revolutionary Armed Forces of Colombia
(FARC). Extraditions of fugitives wanted in the U.S.
continue apace. On the negative side, our ability to work
productively with Panamanian law enforcement and security
entities is hampered by the lack of Panamanian resources
destined to those entities. Our counterparts often depend on
USG monetary assistance for fuel and other basic operational

10. (S/NF) There has, however, been a recent and disturbing
up-tick in Revolutionary Armed Forces of Colombia (FARC)
activity in Panama. On November 9, armed FARC members were
captured near Puerto Obaldia. On January 24, an injured FARC
squad commander was captured in Panama City. On February 22,
a Panamanian National Police (PNP) launch encountered a FARC
launch in Pina Bay off of La Palma in Panama's Darien
Province. Following a brief fire fight, the PNP took into
custody 6 FARC members who are believed to have been involved
in illegal narcotics trafficking. The FARC members continue
to be in custody in Panama, and indictments in the U.S. are
likely. On April 4, a U.S. businessman was kidnapped from
the upper class Panama City neighborhood of Costa El Este,
and he is now believed to be held by the FARC in Colombia.
Unfortunately, several PNP members were implicated in this
kidnapping. Finally, on April 25, PNP elements encountered a
decent-sized FARC detachment south of the Darien town of
Jaque. Out-gunned and out-manned, the PNP broke off contact.
The situation remains unresolved as of this writing.

11. (S/NF) Grappling with the FARC has been a neuralgic
issue for Panamanians in general as well as for Torrijos.
You may hear that the Pina Bay incident was an isolated and
rare incident. Similarly, you may hear that it is not clear
that there are FARC linkages to the kidnapping of the U.S.
citizen. Information from various Embassy elements makes the
FARC tie direct and clear. USG law enforcement agencies have
substantial proof and evidence of the FARC's involvement,
information that has been shared with Panamanian law
enforcement and intelligence agencies. The Jaque incident
makes the FARC's activities in Panama hard to ignore. The
FARC uses Panama as a safe haven, a drug transportation
corridor and to conduct operations. Panamanians prefer that
impenetrable jungles of the Darien -- the famous Darien Gap
-- serve as their best defense from Colombia's illegal
guerrilla groups. Ill-prepared to do anything about FARC
forces operating in Panama, the Torrijos Administration, as
evinced by its public comments denying a significant FARC
presence in Panama, has generally been content to co-exist
with the FARC. Further complicating the situation is the
fact that the Torrijos Administration has closed several PNP
bases in Darien Province transferring their personnel to the

12. (S/NF) There may, however, now be an opportunity to
secure Torrijos' full support for our regional Plan Colombia
efforts. At Torrijos' direction, Panamanian law enforcement
leadership met on April 28 with the Embassy's DEA country
attache. In addition to passing the message that Torrijos
wants to get serious about dealing with the FARC, Panamanian
law enforcement proposed -- and we have agreed to --
establish an investigation/operation coordination center.
This center would coordinate all intelligence collection
against the FARC while simultaneously coordinating the
assembly of case information with the goal of successfully
prosecuting FARC members in Colombia, Panama, or the U.S.
Torrijosmay use these latest FARC activities to push for
donation of U.S. helicopters to augment Panama's anemic air
defense service.

13. (S/NF) As Torrijos and his Administration will need to be
brought along gradually and carefully on this growing
security problem, I would recommend that you engage Torrijos
on the kidnapping of the U.S. citizen and press for greater
assistance in bringing the perpetrators of this crime to
justice. Having wedged open the door for engagement on the
FARC, the U.S. can then press for a more open and candid
discussion of the FARC threat and the best ways to meet it.

An Ally in International Fora

14. (C) Panama has been a stalwart partner of the U.S. in
international fora. As a non-permanent member of the UN
Security Council (UNSC), Panama has consistently voted with
the U.S., including in tough votes on Iran and nuclear
non-proliferation. Recently, Panama agreed to take the lead
on a UNSC resolution concerning Somalia and piracy. In the
Organization of American States (OAS), Panama, taking to
heart the U.S. recommendation to "de-Chavezize the problem,
crafted a resolution that moved the hemisphere beyond the
diplomatic incident between Ecuador and Colombia, into which
Venezuela inserted itself, following Colombia's attack on a
FARC encampment in Ecuador.

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