Cablegate: Gutierrez Delivers Positive Tpa Message And

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C O N F I D E N T I A L PANAMA 001532

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 - BASTIAN

E.O. 12958: DECL: 09/04/2017
TAGS: ETRD KPAO PGOV OVIP PM
SUBJECT: GUTIERREZ DELIVERS POSITIVE TPA MESSAGE AND
CONCERNS ABOUT PMG

REF: PANAMA 1503

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

1. (C) Summary: Commerce Secretary Carlos Gutierrez visited
Panama September 12-13 with a strong message on the benefits
of a TPA for Panama and the U.S. Alluding to Pedro Miguel
Gonzalez's (PMG's) elevation to National Assembly presidency,
Secretary Gutierrez also made clear in all his public and
private statements that a "problem now exists that did not
exist before," emphasizing that Panama and the U.S. have
worked "too long and too hard" on the TPA to let any problem
affect its passage. Secretary Gutierrez and several
Congressmen reinforced this message with blunter language in
private with Torrijos and with top PMG allies. Secretary
Gutierrez - in concert with Congress - delivered a message
that Torrijos needed to hear to strengthen his hand with a
defiant PMG and PMG's supporters. The Secretary's message
needs a bit of time to percolate as we plan next steps. End
summary.

Gutierrez Delivers Strong TPA Message, But . . .
--------------------------------------------- ---

2. (SBU) During Secretary Gutierrez's participation in a
reception with Panamanian business and poltical leaders, a
visit to the Panama Canal, and a meeting and lunch with
President Torrijos, he delivered a strong message on the
benefits of a TPA for Panama and the U.S., highlighted
Panama's strong economic performance and plans for Canal
expansion, and underscored our long-standing bilateral ties.
Without ever once referring to newly elected Panamanian
National Assembly (NA) President Pedro Miguel Gonzalez (PMG)
by name, he made clear in all his public and private
statements and in response to media questions that a "problem
now exists that did not exist before," emphasizing that
Panama and the U.S. have worked "too long and too hard" on
the TPA to let any problem affect its passage.

3. (C) The Torrijos administration had been somewhat
schizophrenic about the issue. On the one hand they had
hoped that the visit would signal "business as usual" on the
TPA and that the problem would go away. On the other, they
knew that such a message would make permanent PMG's elevation
to the top of the National Assembly, which would be a
constant reminder of PMG's challenge to Torrijos' authority.
Thus, close advisors to Torrijos expressed privately their
relief that Secretary Gutierrez had signaled the potential
problem PMG poses to TPA ratification. Private sector
leaders shared similar fears about a "business as usual"
visit and worried that PMG's ascendancy signaled a weakening
of Torrijos and his pro-trade/pro-business wing of the PRD.
Despite intense efforts by administration and private sector
leaders to encourage PMG to either not accept the NA
presidency or to later step down, he refused to do so.

4. (SBU) Since Sept. 1, PMG strengthened his resolve to stay
in office. PMG and his allies denied any evidence of adverse
reaction from the USG vis a vis the TPA that would warrant
his exit. Increasingly pessimistic that they could encourage
PMG to exit for the good of the TPA and the country, GOP and
private sector leaders felt that their best hope would be an
unequivocal message from Washington that PMG represents an
obstacle to the TPA.

5. (SBU) As post expected (reftel), all Panamanian
electronic and print media hung on Secretary Gutierrez's
every word and action, resulting in unprecedented coverage
for an official visit. They also picked up Senator Baucus'
Sept. 13 statement, released by his office only to the
Panamanian press, that PMG represents a "serious impediment"
to TPA passage. The media's stories and commentary have
echoed Secretary Gutierrez's messages, reiterating their
earlier calls for PMG to step down.

Blunt Message to Torrijos: Lance the PMG Boil Now
--------------------------------------------- ----

6. (C) In private September 13 meetings with President
Martin Torrijos, Commerce Secretary Carlos Gutierrez gave
Torrijos an even blunter warning that the PMG matter
"complicates" the Congress' approval process for the
U.S.-Panama Trade Promotion Agreement (TPA). Advising
Torrijos that "time is not your friend" on this one,
Gutierrez urged him to resolve the issue sooner rather than
later. He cautioned that, if left unresolved, PMG's
continued presence at the Assembly's helm will only aggravate
growing Congressional concern.

7. (C) A stoic Torrijos acknowledged his need to "manage"
the situation, but did not commit to any specific action.
Gutierrez stressed that, with Panama's pro-TPA friends
beginning to get worried about the Panama deal because of the
PMG issue, the GOP should recognize that anti-TPA and
fence-sitting congressmen could use the issue to dodge a
"yes" vote. He pointed to earlier public comments by pro-TPA
Senator Charles Grassley and others, as well as growing
unhappiness among Congress' Hispanic Caucus members.

8. (C) Torrijos bristled when several Congressmen
accompanying Gutierrez pointed to fundamental shortcomings
with Panama's judiciary as a key part of the PMG problem.
Representatives Dennis Hastert, David Dreier, and Joe Crowley
said that the PMG issue highlights Panama's weak rule of law
and warned that it could have negative consequences for
foreign investment in Panama. Hastert stressed that foreign
investors go where they find stability and rule of law. He
said that the PMG matter may cause some to doubt whether
Panama's legal system will be fair and transparent. Crowley,
noting that his District has the second-highest concentration
of Puerto Rican residents, said that his pro-Panama TPA
stance would waver if the PMG-Zak Hernandez matter picks up a
head of steam. Although members of Congress departed Panama
with greater concern about the PMG issue's potential impact
on final TPA passage, they all supported Secretary
Gutierrez's message. None indicated that he would now vote
against the TPA and one s
tated that he still fully intends to vote for the deal
despite potential political blowback over PMG.

Meeks and Dreier Work Over PMG Lieutenant
-----------------------------------------

9. (C) At a lunch for the delegation hosted by Torrijos,
Reps. Gregory Meeks and David Dreier were seated at the same
table with Yasir Purcait, the National Assembly's Commerce
Committee Chairman and the floor manager for PMG's NA
presidential campaign. As PMG's emissary to top private
sector leaders, Purcait had told business leaders that this
was strictly an issue of Panama's sovereignty and denied that
PMG would have any effect on the TPA. In trotting out
similar arguments with Meeks and Dreier, Purcait also
defended the adequacy of Panama's 1997 sham trial that
"exonerated" PMG. Meeks and Dreier stressed that, regardless
of arguments about sovereignty or the adequacy of PMG's
trial, the bottom line is that PMG's presence as NA President
will affect Congress' outlook on the TPA. Meeks later told
Econ Chief that he believed his message "got through" clearly
to Purcait. He also felt that Purcait, as a businessman
himself, might see that his own interests would ultimately be
best served by PMG's exit.

PMG Remains Defiant
-------------------

10. (U) Despite Gutierrez's crystal clear public and private
signals regarding PMG's threat to the TPA, PMG remained
defiant. In comments to the press on September 13, PMG
played the "independence" card and said that his yielding to
USG pressure would be a "setback for the history of this
nation."

11. (C) On the margins of the Gutierrez-Torrijos bilat,
First Vice President/Foreign Minister Samuel Lewis Navarro
told Ambassador that he (Lewis) and Trade Minister Alejandro
Ferrer met Sept. 12 with PMG to encourage him to step down.
According to Lewis, PMG called the issue a "tempest in a
teapot" that the U.S. Congress would not care about. PMG
accused Lewis and Ferrer of whipping up local media over the
past week to further pressure him to step down. Lewis said
he urged PMG to consider how his potential impact on the TPA
could affect Panama for years to come and undoubtedly harm
PMG's legacy and reputation. Lewis also said he believed
that former President Ernesto Perez Ballardares had deployed
many of his supporters to egg PMG on with his anti-U.S.

rhetoric and defiance as a way to destroy Torrijos'
authority. For Torrijos, he said, the rupture with PMG was
both a personal, as well as political blow, as Torrijos feels
betrayed by his longtime friend and PRD colleague, PMG.

Comment and Recommendation
--------------------------

12. (C) We need to give Secretary Gutierrez's message a few
days to percolate through the various players in this saga,
especially within the PRD. This Sunday is likely to provide
a window into its most immediate impact when the 300 most
important members of the PRD (the National Directorate) meet
to discuss the party's election agenda. There is little
doubt that the subtext of the meeting will be Pedro Miguel
Gonzalez and efforts to close the deep fissures his election
caused within the party. Torrijos is clearly nervous that
his weakened position could worsen.

13. (C) This also gives us time to plot our next moves to
get the Pedro Miguel problem resolved, before it gets a
chance to gain traction or significant notice on the Hill.
Post believes the way ahead requires us to work closely with
the business sector, civil society, and the Torrijos
administration, all of whom want PMG to step down. It is
particularly important that we continue our efforts to
strengthen Torrijos' hand. He and his wing of the PRD share
our agenda of a secure pragmatic, pro-trade, pro-U.S. Panama.
Under his leadership, Panama has been a reliable partner in
the UN Security Council and in virtually every other major
issue importance to the U.S. Torrijos needs and wants the
TPA as much as we do. We can ill afford to seriously wound
Torrijos as he enters his final two years in office.

14. (U) The Commerce delegation departed without the
opportunity to clear this message.
EATON

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