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Cablegate: Panama's New Government in Productive Talks With

This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L SECTION 01 OF 05 PANAMA 002530



E.O. 12958: DECL: 01/26/2014



1. (C) WHA Deputy Assistant Secretary Dan Fisk's October 5-7
meetings with President Torrijos and key cabinet officials
brought friendly and productive exchanges on security and law
enforcement cooperation; foreign policy; economic and trade
policy; and good governance/anti-corruption. DAS Fisk
emphasized that the USG wants to continue close collaboration
with Panama on security matters, especially on transnational
crime and emerging regional threats, such as gangs. DAS Fisk
spent October 6 near the Colombian border touring Panama's
Darien province with Ambassador Watt and Panama National
Police (PNP) Chief Gustavo Perez (to be reported septel) and
attended a dinner with Panamanian business leaders.

2. (C) DAS Fisk's meetings with President Martin Torrijos,
Foreign Minister Samuel Lewis, Minister of the Presidency
Ubaldino Real, Minister of Commerce and Industries Alejandro
Ferrer, and Minister of Government and Justice Aleman touched
on the following issues:

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-(security) proposals to centralize public forces, form a
specialized police border unit, found a maritime
academy/training center, and establish an International Law
Enforcement Academy (ILEA) in Panama;

-(foreign policy) Haiti, Colombia, and Venezuela;

-(economic and trade policy) bilateral Free Trade Agreement,
Free Trade Area of the Americas (FTAA), Canal expansion, and
enhancing Panama's comparative advantage as a trade

-(anti-corruption and good governance) Aleman/Portillo
corruption cases and a soon-to-be-named anti-corruption

In an October 7 meeting, FM Lewis told DAS Fisk that the GOP
had decided to turn down the USG's proposal to base an ILEA
for Latin America in Panama, for fear that it would attract
too much political heat.

End Summary.

President Torrijos Outlines Ambitious Agenda

3. (C) At an October 5 luncheon with DAS Fisk and other
participants attending a U.S. Embassy Panama-hosted Central
America chiefs of mission conference, President Torrijos
discussed his government's ambitious agenda. Torrijos,
accompanied by his ministers of foreign affairs (Samuel Lewis
Navarro), trade (Alejandro Ferrer), and the presidency
(Ulbadino Real), noted that his government plans to pursue an
integrated strategy aimed at combating corruption,
establishing clear rules of the game and enhancing
transparency in order to attract greater domestic and foreign
investment, which will in turn generate employment and reduce

4. (C) Torrijos said his government seeks to capitalize on
Panama's comparative advantage as a strategic crossroads for
commerce. Thus, a central component of his government's
strategy is the expansion and modernization of the Canal,
along with the development of Panama's seaport and airport
facilities, which serve as critical regional hubs.
Elaborating on Canal expansion, Torrijos and his ministers
explained that this 10-to-12-year modernization project would
cost an estimated $5 billion, which would likely be funded
through a combination of Canal revenues (which are robust and
rising), new user fees for major shipping companies, and
bridge loans to finance any gaps.

5. (C) Torrijos underscored the importance of cultivating
closer relations with the United States, pointing to our
mutual economic and security goals. In this context, Trade
Minister Ferrer stressed the importance of reaching a free
trade agreement (FTA), ideally by early December. He noted
that the GOP seeks an FTA that takes into account Panama's
sensitive agricultural sector. Ferrer pointed out that seven
or eight key agricultural products generate significant
employment in Panama's impoverished rural areas (where he
cited an estimated 70% of the population lives in poverty).
Minister of the Presidency Real highlighted the serious
security implications of this issue, observing that a restive
rural sector could threaten domestic stability. In this
regard, Torrijos added that while Canal expansion would
attract important ancillary service sector businesses, it
would not generate significant employment for Panama's
working classes. (Comment: Construction during the
decade-long project is expected to generate considerable
well-paid temporary employment. End Comment.)

6. (C) On foreign policy, Torrijos said Panama is
reassessing its relations in the region, including the issue
of integration with other Central American countries.
Torrijos said his government is currently considering a more
realistic approach to regional issues that would stress
shared interests -- such as cooperation on common customs and
transportation policies -- rather than a top-down approach
focused on political integration, which he averred had been
undermined by intractable problems within Parlacen.

--------------------------------------------- -------
Aleman/Portillo, Security, Free Trade, Zak Hernandez
--------------------------------------------- -------

7. (C) In a pull-aside following lunch, DAS Fisk told
Torrijos that the USG looks forward to developing an even
closer relationship with Panama based on a broader range of
issues. For example, the USG seeks Panama's cooperation in
the corruption case involving former Nicaraguan President
Aleman as well as in any cases which develop involving former
Guatemalan President Portillo. Fisk noted that the USG does
not want to interfere in the judicial aspects of these cases
but views them as important precedents that would send a
strong message throughout the region. In response, Torrijos
pledged Panama's cooperation but noted that returning
Aleman's ill-gotten money to the Nicaraguan government is
complicated because the GOP and Panamanian banks are
navigating uncharted legal waters. Nonetheless, Torrijos
suggested that the Nicaraguan Attorney General send a formal
request seeking the repatriation of Aleman's accounts in
Panamanian banks. Torrijos stressed that the GON needs to
state explicitly in its request that these accounts belong to
the Nicaraguan government.

8. (C) Fisk underscored that the USG would like to enhance
security and law enforcement cooperation with Panama. He
also urged Panama to think more expansively about its role in
the region and to play a more prominent role in discussions
of security issues. Fisk noted that Panama could help other
Central American countries whose military establishments
remain mired in outdated Cold War thinking. Panama,
unburdened by a military, could help re-focus other Central
American countries on current challenges such as gangs and
transnational threats.

9. (C) Turning to trade, Fisk noted that President Bush
remains committed to pursuing a vigorous free trade policy in
the hemisphere, including the conclusion of an FTAA.
Torrijos agreed with Fisk's assessment that the FTAA has more
life to it than some countries in the region are willing to

10. (C) In closing, Fisk stressed the importance that the
USG attaches to the GOP pursuing legal measures to achieve
justice in the case of U.S. serviceman Cpl. Zak Hernandez,
who was murdered while stationed in Panama in 1991. Fisk
said this issue would remain a bilateral irritant unless the
GOP pursued effective legal measures against those
responsible for Hernandez's murder. (Note: Former Panamanian
President Perez Balladares stage-managed the acquittal of PRD
legislator Pedro Miguel Gonzalez, who is wanted by U.S.
authorities for his role in the Hernandez murder. End Note.)

--------------------------------------------- -------------
Meeting With Foreign Minister Focuses on Regional Security
--------------------------------------------- -------------

11. (C) In a detailed October 7 discussion, FM Lewis told
DAS Fisk and Ambassador Watt that President Torrijos had
decided not to accept the USG's proposal to establish an ILEA
in Panama because it could generate unwelcome political heat
at a moment when the GOP must husband its political capital
before taking potentially unpopular decisions to reform
Panama's Social Security Fund and making budget and personnel
cuts. (Note: Also, the GOP plans to ask voters to approve a
referendum on Canal expansion during 2005. End Note.)

12. (C) Lewis also was cautious when DAS Fisk proposed
establishing a Coast Guard international training facility in
Panama. He explained that the GOP currently is studying an
unrelated Texas A&M University proposal for a maritime
institute in Panama to train merchant seamen and to undertake
related initiatives. Although the two ideas are dissimilar,
Lewis proposed exploring whether the Coast Guard might want
to participate under the (civilian) umbrella of Texas A&M.
(Note: Torrijos and Minister of the Presidency Ubaldino Real
are Texas A&M graduates.) The Texas A&M proposal would not
need approval by the Legislative Assembly, Lewis noted.
Panama is keen to greatly increase employment opportunities
for Panamanians aboard Panamanian-flagged vessels, Lewis
said, but currently lacks the means to train them.

13. (C) DAS Fisk said the USG is pleased by the high level
of cooperation it enjoys with Panama on security issues.
Many of the same transnational crime and security concerns
affect all of Central America, such as drugs and undocumented
immigrants (which flow north toward the United States) and
arms (which flow south toward Colombia). The USG would like
to see greatly improved cooperation among Central American
nations on all aspects of regional security and transnational
crime that affect the entire region. As an example, Fisk
pointed out that drug running pilots often fly directly over
the borders of two countries, confident that each country's
air authorities will be reluctant to chase an airplane that
may move into the other country's airspace. The same problem
obtains on the sea. A welter of bilateral problems and
inhibitions is getting in the way, Fisk said.

14. (C) Panama wants to "play a role," Lewis said, promising
to raise those topics at a meeting of Central American
nations in El Salvador during the week of October 11-15. The
region probably should concentrate on improving, customs,
roads, electricity transmission, and security. Panama will
host a Caribbean summit in July 2005, Lewis said, adding that
Caribbean nations are interested in concluding a multilateral
shipboarding agreement, which would accord with Fisk's


15. (C) Lewis said that President Torrijos would go to
Colombia to attend a November 1 three-way
Colombia-Venezuela-Panama summit with presidents Uribe and
Chavez. The meeting would discuss Chevron proposals to
integrate Colombian and Venezuelan natural gas fields and
possibly build a gas pipeline to Panama. Lewis noted
estimates of up to 300,000 Colombians living in Panama,
mostly illegally. On Haiti, Lewis said Panama was interested
in contributing where it could, such as helping to organize
the electoral process, using resources of Panama's highly
respected Electoral Tribunal.

Meeting with MOGJ Hector Aleman

16. (C) At an October 5 meeting that the Ambassador
attended, Minister of Government and Justice Aleman told DAS
Fisk that the GOP is determined to establish a stronger
official and police presence in the Darien border region with
Colombia. Panama's most ethnically diverse province, the
Darien is beset by land disputes between settlers from other
Panamanian provinces, Afro-Panamanians, and indigenous
groups, Aleman explained. Aleman said the GOP is giving
serious thought to proposals to create a specialized police
border unit with a new law to clearly codify its mission and
to staff it with more police than are now assigned to duty
there. (Note: At present approximately two companies --
about 150 effectives -- of militarized police in the Darien.
End Note.) The GOP's aim is to take back areas now
controlled by criminals and guerrillas and to improve
security for the population, as well as to interdict flows of
weapons, narcotics, and undocumented aliens. Increasing
numbers of undocumented Ecuadorians, Peruvians, and Chinese
are using the Darien and Panama to head north toward the
United States.

17. (C) The challenge to improve security extends as well to
sea and air. Panama has more seacoast to defend than land.
Vast stretches of coast are currently unpatrolled as are
Panama's offshore islands. What Panama needs is a real Coast
Guard, instead of an understaffed National Maritime Service
(SMN) which lacks a clear mission, Aleman said. The National
Air Service (SAN) also lacks capability and a clear mission.
Radar operators daily track unidentified, illegal flights in
Panama's airspace but the SAN lacks the means to intercept
them. That's very frustrating, Aleman said.

18. (C) Under the previous GOP, the Panamanian National
Police (PNP) was king, the Ambassador said, and got the
lion's share of resources, crowding out the SMN and SAN. DAS
Fisk said Washington had understood, apparently incorrectly,
that the PNP also had air and sea capabilities. (Comment:
The PNP does have helicopters and several "brown water"
patrol vessels. End Comment.)

19. (C) Shifting to personal security, Aleman outlined an
ambitious-sounding plan to convert Panama's prisons to
resocialization enterprises. He pledged "equal
applicability" of the law to all Panamanians. Gangs in
Panama are far from reaching Salvadoran or Guatemalan
proportions, Aleman continued. Even so, MOGJ has identified
102 separate gang entities in Panama which as yet have no
great criminality but "if we don't act now, we'll be in
trouble." The PNP has no specific unit to deal with gangs or
child criminals, for example.

--------------------------------------------- --------
Meeting with Minister of the Presidency Ubaldino Real
--------------------------------------------- --------

20. (C) At an October 7 meeting with Ambassador Watt, MOP
Real told DAS Fisk that he is deeply involved in the new
GOP's efforts to enforce a "zero tolerance" anti-corruption
policy. President Torrijos plans to unveil the GOP's new
Anti-Corruption Commission on October 18. Confronting
corruption means forcing cultural change in Panama, Real
said. People need to be educated on public sector ethics,
for example, not to use publicly funded cars, telephones, or
office supplies for private use. Meanwhile, the government
must lead by example and bring wrongdoers to justice.
Prosecuting a "big fish" would make an especially big
impression. On the other hand, the GOP must be careful to
follow the rule of law and avoid a "lynch mob" mentality. We
want to accuse wrongdoers of breaking the law, Real said, but
we also will have to prove it. We must proceed step by step.

21. (C) DAS Fisk told Real that Washington had "great
expectations" for the Torrijos government's "forward-looking"
agenda and on anti-corruption. It makes sense that the
government proceed carefully to avoid "tying itself into
knots" while pursuing a corruption case. He agreed that
fostering a "culture of lawfulness" would be important for
success and also praised the GOP for cooperating in
investigating Panamanian bank accounts allegedly belonging to
former Nicaraguan President Aleman. This government is not
the old PRD, Real said, adding that he welcomed constructive
criticism. Change needs time. How could the previous
government leave us with such a mess? he asked rhetorically,
adding that the new GOP wants to start changing popular
attitudes and practices toward corruption now, so that the
next government will not inherit such large difficulties.

22. (SBU) At an October 6 dinner with Panamanian business
leaders, DAS Fisk reviewed regional problems and USG
approaches, especially regarding free trade (CAFTA) and
security cooperation. In general, U.S. policy has had major
success in Central America during the past two decades, he
said, but inequality of opportunity remains a problem.
Collusion between business and government is unfairly
stacking the economic deck in favor of a small number of
privileged insiders. Central America, Panama included, will
need to open and democratize its economic structure to ensure
participation by all. Why is it that Central American
immigrants in the United States can be highly successful as
entrepreneurs while they seem stifled at home? he asked
rhetorically. Several participants spoke of the need for a
greatly improved education system, as many Panamanians who
complete formal public schooling find themselves woefully
unprepared for workplace realities.

23. (U) This message has been cleared by DAS Fisk.



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