Cablegate: Panama: A View From the Left -- No Place For


DE RUEHZP #0652/01 2182158
R 052158Z AUG 08

C O N F I D E N T I A L PANAMA 000652


E.O. 12958: DECL: 08/05/2018

Classified By: POLCOUNS Brian R. Naranjo. Reason: 1.4 (d)


1. (C) Recent meetings with prominent left wing leaders Juan
Jovane and Olmedo Beluche focused on the threat to social
stability posed by rising prices and the surprising small
impact of the crisis on the political campaign. Jovane
concluded that the increase in the price of staple goods was
causing real hardship for people throughout the country, but
that this would neither effect the elections, nor lead to
serious street disturbances. Jovane asserted that PRD
presidential nomination candidate Balbina Herrera would never
"dare" run against the legacy of Martin Torrijos by running
on a radical platform. He said the best hope to deal with the
problem of hunger, would be a national school lunch program,
modeled on the U.S. system. Beluche, who is trying to
establish a Bolivarian party in Panama, said that preventing
parties like his from registering ultimately weakened the
democratic system in Panama, by allowing the traditional
parties to become complacent. He noted that there were groups
like SUNTRACS and FRENADESO that rejected elections and
preferred to use street violence to push their agenda, and
suggested they were getting Venezuelan support. While
expressing his opposition to many American policies,
including the invasion of Iraq and the support for free
trade, Beluche noted that anti-Americanism was not an
effective campaign slogan in Panama, and that no party could
seriously expect to govern Panama without close ties to the

Prices of Basic Goods Soaring

2. (C) University of Panama Professor of Economics and
left-wing intellectual Juan Jovane told POLOFF and DAO
analyst on July 22 that Panama's inflation understated the
social crisis effecting Panama. He said the 9% official
inflation rate (Note: The official inflation rate is 9.6%.
End Note) hid critical details like a 50% increase in the
price of corn oil, a 30% increase in the price of bread and a
substantially higher increase in the price of milk. These
increases in food staples, together with the rise in the
price of gasoline, was putting a huge strain on poor and
working class Panamanians, who were forced to make dramatic
choices in their consumption. He blamed the price spike in
these foods on monopolistic practices by the small number of
food importers and supermarket owners (Note: Democratic
Change (CD) presidential candidate Ricardo Martinelli, one of
the two opposition candidates for President, owns Panama's
largest supermarket chain Super99, though the retail food
business is dominated by independently owned "mini-super"
corner grocery stores. End Note). He criticized the GOP for
weak enforcement of already weak anti-monopoly laws, and
compared the GOP unfavorably with the USG on this matter.


3. (C) Jovane quoted a FAO study as stating that 23% of
Panamanians were malnourished, principally in indigenous
regions. He criticized the GOP's Compita program that sells
subsidized food directly to the public, because the program
was implemented in an erratic manner and inconsistently. For
example, trucks of food showed up in different areas at
irregular intervals. He compared it unfavorably with
Venezuela's system of government-owned stores in poor
neighborhoods. He thought the best solution, however, would
be the establishment of a school lunch program, along the
lines of what schools in the U.S. do, as this would attack
the twin problems of malnutrition and scholastic failure.

4. (C) Asked about the possibility of increased domestic
agricultural production, he said it was technically feasible,
but that the farmers did not want to increase production if
they were not guaranteed a high price for their crops, having
learned the lessons of past boom and bust cycles. He said
expansion of domestic agricultural production would require a
government price support system, something that would
represent a radical change from the GOP's recent policy to
encourage the production of profitable agricultural goods for
export, and not food staples for domestic consumption. Jovane
said that a price support program was advisable not only for
food security purposes, but to help the rural population to
maintain itself on the land. He said that if there was not an
active agricultural policy, the expansion of the Canal would
lead to a massive wave of migration from the countryside into
the cities, bringing with it massive social disruption. At
the same time, Jovane noted that turning away from free trade
on a large scale would be economic suicide for Panama and a
silly political slogan.

Economic Risk Factors

5. (C) Jovane said that global economic changes also
threatened Panama's macroeconomics stability. He noted that
the relentless rise in oil prices had raised the price of
shipping a container from Shanghai to the East Coast of the
U.S. from $3,000 in 2000 to $8,000 now, and said it could be
up to $13,000 if oil hits $200 a barrel. He said this could
effect the revenues from the Canal if it led to changes in
the global distribution system. He noted that Panama's
economy had several sectors that generated a great deal of
revenue -- the Canal, banking and the Colon Free Trade Zone
-- but created relatively little employment. He described
the construction sector as the key to social stability, as it
provided many well paying jobs. He said he was perplexed by
information he had found on the Banking Supervisor's website,
indicating a 10% rise in mortgages, but a 30% rise in
construction loans. He said he did not like any of the
possible explanations, which ranged from foreign buyers, to
money laundering.

Politics as Usual

6. (C) Jovane said he did not think the social crisis could
have political repercussions. He said that while people are
very worried about the price rises, they did not expect any
solutions from politics or collective action. Rather,
Panamanians sought individual answers to their problems. As
proof he pointed to the protests the radical unions
continually threatened, but never managed to organize due to
lack of popular support. In discussing the Democratic
Revolutionary Party (PRD) presidential candidate Balbina
Herrera, who is perceived by many as a populist leftist,
Jovane said she could not take a radical attitude towards the
crisis, because she had been a minister in the present
government, along with most of the members of the left wing
"Tendencia" faction in the PRD. He also said she would not
"dare" to run against Martin Torrijo,s legacy. This last
point was echoed by University of Panama Sociology Professor
Olmedo Beluche. Beluche, who was trying to organize a
Bolivarian party, the Popular Alternative Partido (PAP), told
POLCOUNS, POLOFF, DAO analyst that the PRD left had been
completely compromised by their service in the Torrijos
government, and could not run a credible radical campaign,
and would not try. He said it was ironic that Martinelli, a
millionaire, was the presidential candidate with the most
populist rhetoric.

High Flood Walls Lead to Bigger Floods

7. (C) Beluche said that he had only gathered 1,000 of the
60,000 signatures the law required to register a new party.
(Note: To form a party, a "party in formation" must collect
the signatures of 4 percent of the voter rolls from the last
election, in this 2004. Furthermore, those signatures must
be collected from individuals who are not already enrolled
with an already existing party.) Beluche said that this high
bar to registering a new party weakened Panamanian democracy,
since it prevented new voices from emerging that could help
the system recognize new demands from the people, and new
solutions. He argued that this eliminated the threat of a
real democratic challenge to the established parties, and
that this allowed them to ignore the people and the social
reality while they fight for the spoils of power. This would
make a catastrophic collapse of the system more likely in the
future, Beluche asserted.

Venezuelan Influence

8. (C) Beluche criticized the radical unions FRENADESO and
SUNTRACS for rejecting electoral participation and instead
engaging in street protests and violence. He also implied
that these groups were being financially supported by the
Government of Venezuela, while denying that he had received
any money from Venezuela. He said that taking money from
outside Panama would be unacceptable to nationalistic
Panamanian voters. Asked about his attitude towards the U.S.,
Beluche said he was very critical of many American policies,
such as the invasion of Iraq, the promotion of free trade,
and hostility to Cuba and Venezuela, but he noted that Panama
had always had a special relationship with the U.S., and that
anti-Americanism was neither a good campaign tactic in
Panama, nor a viable governing strategy. He said Panama would
always need to maintain good relations with the U.S., but not
subservient relations. He also tempered his hostility to free
trade by noting that Panama could not turn its back on the
world. He said that in the unlikely event he were to be in
power, he would probably press for some nationalizations
(e.g, electricity, telephones) and for more protection of
agriculture, but not for a radical change of economic course.


9. (C) Jovane and Beluche are seen by Panama's political
elites as extreme radicals, who espouse a Venezuelan-style
revolution in Panama. Jovane is in fact a keen observer of
Panama's economic, social and political reality, whose ideas
are quite within the realm of reason. School lunch programs
are widely seen as the best way to tackle hunger, and
national agricultural policies are hardly radical ideas. Most
of what he suggests falls into the policy line of the present
government. At the same time, Beluche's brand of
Bolivarianism has been largely depleted of its most radical
elements by the economic and political reality of Panama,
which make anti-Americanism and anti-trade agendas unpopular,
as they are seen in Panama to be truly dangerous by the
majority of voters, and not just by the elites. This alone is
a powerful antidote to the spread of Bolivarian ideology in

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