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Cablegate: Scenesetter: Panamanian President Torrijos


DE RUEHZP #0726/01 2491957
R 051957Z SEP 08

C O N F I D E N T I A L PANAMA 000726


E.O. 12958: DECL: 09/02/2018

REF: A. (A) PANAMA 704
B. (B) PANAMA 714
C. (C) PANAMA 725

Classified By: Ambassador Barbara J. Stephenson.
Reasons: 1.4 (b), (c) and (d)


1. (C) Panamanian President Martin Torrijos will visit
Washington in mid-September for meetings with the Secretary
of State and the President. These meetings will take place
about ten days after the ruling Revolutionary Democratic
Party (PRD) will have selected its presidential candidate.
The PRD primary on September 7 will close Panama's primary
season, and the country will turn its attention to general
elections scheduled for May 3, 2009 to not only elect
Torrijos' successor but also to fill every elected seat in
Panama. Likely to be Torrijos' last one-on-one meeting with
the President, this visit provides an excellent opportunity
to review the state of the U.S.-Panamanian bilateral
relationship with an eye to consolidating our achievements.
Furthermore, in meeting Ambassador to receive her credentials
on August 6, Torrijos shared his desire to take the bilateral
relationship to the next level, a view he subsequently
reiterated to Senator Hagel on August 27.

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2. (C) We expect Torrijos to detail how his Administration
has laid the groundwork for Panama to take off on a
trajectory to establish itself as a First World nation by
continuing Panama's prosperity and democracy and, in
particular, attacking the conditions that leave 37 percent of
Panamanians in poverty. First VP and FM Samuel Lewis, who
will accompany Torrijos, previewed for Ambassador on August
29 that Torrijos would ask the President to submit the
U.S.-Panama Trade Promotion Agreement (TPA) to Congress
before his term expires, even if the Colombia TPA has not
been approved; we do not believe that Torrijos will make a
public appeal to jump the queue, something Ambassador and
EMBOFFs have counseled against.

3. (C) Security cooperation should figure prominently in the
discussion between the two presidents, but Torrijos may not
raise the issue; we should. The U.S. and Panama mutually
benefit from a broad, extensive, and mutually beneficial
security cooperation relationship (REFTEL A). That security
relationship, however, has come under renewed scrutiny as
Panamanians wrestle with a "militarization" debate.
Torrijos, likely to be defensive on his security reform
efforts, needs to hear that the U.S. highly values its
security cooperation with Panama, believes that this aspect
of our broader relationship can be taken to a higher level.
However, we should avoid giving blanket USG approval for his
security reform plan. Torrijos should be encouraged to
anchor his security reform process in democracy, respect for
human rights, and the broadest possible basis of political
support he can muster. How Torrijos and his administration
manage their security reform process will determine the
degree to which we can transform our security cooperation
(REFTEL C). Thankfully, Panama's most pressing emerging
security threat -- the FARC presence -- is manageable if it
is met with a calibrated, coordinated, and concentrated
effort to strengthen governability in Panama's Darien
province that abuts Colombia. END SUMMARY

Panama is Ready for Take-Off

4. (C) Panamanian President Torrijos is rightfully very proud
of his record of achievement at putting Panama's house in
order to prepare for take-off on a trajectory that will take
Panama to First World status. The President will hear from
Torrijos how he reversed a grim fiscal situation (a budget

deficit of 5.4 percent of GDP in 2004), re-vamped Panama's
tax structure and increased collection, and produced fiscal
surpluses since 2006. Additional, Torrijos will explain how
he took on Panama's insolvent social security system (Caja de
Seguro Social) and assured its short-term solvency. Having
put Panama on firm financial footing, Torrijos next secured
popular approval via national referendum in October 2006 to
expand the Panama Canal by constructing a third set of locks
that will not only be able to handle significantly larger
ships but that will also double the canal's cargo capacity.
"American ports need to start getting ready -- some already
are -- to handle larger ships and more traffic," Torrijos has
told Ambassador. "The canal expansion will strengthen the
strategic relationship between Panama and the U.S." Finally,
Torrijos pushed through the U.S.-Panama Trade Promotion
Agreement (TPA), overcoming opposition within his own party
and protectionist sectors, and firmly committed Panama to
global leadership to foster free trade and integration.
"These steps were essential to giving Panama the capacity to
tackle the economic disparities and rid Panama of poverty,"
First VP and FM Samuel Lewis told Ambassador on August 29.
"The next administration will have the tools and resources to
address the plight of the 37 percent of Panamanians who today
live in poverty." Today, the Torrijos Administration has a
newly heightened sense of urgency to implement programs and
put in place structures to channel resources and political
attention to meeting major challenges in education,
healthcare, judicial reform, law enforcement, and welfare.
Torrijos recently distributed to all his ministers and other
key GOP leader count-down clocks that tick off the time that
remains until he steps down from office on July 1, 2008.

--------------------------------------------- --
Torrijos to Ask Privately to Jump the TPA Queue
--------------------------------------------- --

5. (C) Lewis laid out for Ambassador on August 29 that
Torrijos would ask the President to submit the U.S.-Panama
TPA to the U.S. Congress for consideration before his term
expires, even if the U.S.-Colombia TPA has not yet been
approved. Presidential palace foreign affairs advisor Jorge
Ritter, who will also travel with Torrijos, reiterated to
POLCOUNS on September 4 that Torrijos would indeed ask the
President to jump Panama ahead of Colombia in the TPA queue.
Panama would most likely push for action on its TPA with the
U.S. in a lame duck U.S. Congressional session. Ambassador
and EMBOFFs have cautioned against going public with this
request to jump the queue and urged the Torrijos
Administration to not get in front the President on this
matter. Embassy has cautioned against creating unforeseen
political problems for consideration of the U.S.-Panama trade
deal. That Torrijos would consider approaching the President
with this request underscores Panama's desire to finalize the
fourth leg of the Torrijos Administration's strategy to ready
Panama for economic take-off. In his other activities in
Washington -- meetings on the Hill, two days of roundtables
and sessions with trade groups entitled "Panama Forum," press
availabilities, and interaction with supporters of the trade
deal -- Torrijos will seek to raise the profile of the
U.S.-Panama TPA by underscoring its strategic significance
for the U.S. and Panama. Furthermore, he will advocate for
approval of both the Colombia and Panama TPAs to put the U.S.
relationship with the hemisphere on a firm strategic footing.
Torrijos will need to hear clearly from the U.S. regarding
its strategy to secure Congressional approval, not only of
the Panama deal, but also of all pending trade deals.

FARC Threat: Manageable

6. (C) Lewis told the Ambassador that the FARC threat in the
Darien was in the process of changing. Lewis said the FARC
had suffered several major blows since May, including the
hostage rescue, the deaths of several members of the
Secretariat, and the capture of the Reyes computers. The real

threat to Panama now is that FARC forces may flow into the
Darien looking for refuge and supplies and spreading chaos.
This is an especially serious problem given that the Darien
is, for the most part, ungoverned space. The fact that the
FARC have not been more successful up to now in building up
support in the Darien owes more to strong anti-Colombian
prejudice in the Darien than to effective GOP policies. Given
this scenario, Lewis believes the GOP must calibrate its
response to the FARC, and use more of a soft-power approach,
concentrating on issues of governability. This includes
improving the quality of life of local security officers, the
effectiveness of local government, providing economic
opportunity for the local population, as well as bolstering
the capacity of the police.

7. (C) Lewis, analysis is right on target. Post believes
that with limited support from the USG for a comprehensive,
calibrated approach to the Darien, the GOP will lead the
effort to strengthen governability in this province that
borders Panama. Strengthening local government is the area
where U.S. assistance is likely to be most beneficial.
Panama,s highly centralized government has failed to
effectively govern its Darien province for the last one
hundred years. Based on recent USAID pilot efforts to address
community needs, now is the time to develop effective local
government and other structures that can coordinate with the
central government to improve basic services, education and
health care. This will assure the support of the local
population, and the eventual isolation and defeat of the FARC
in the Darien. USAID has proposals in this area pending
funding through the Merida Initiative, and Post asks that
they be given full consideration. Post is also developing an
interagency Section 1210 Security and Stabilization proposal
to counter FARC and narcotics trafficking activities in the
Darien through strengthening local government, enhancing
border security, reconstruction infrastructure, and
developing alternative economic activities.

Panama Helps Itself

8. (C) The last time President Torrijos met with President
Bush, he asked for USG assistance acquiring helicopters, as
part of a plan to militarily confront the FARC in the Darien.
While Post does not believe that this military response is
now a top priority, we are pleased to report that the GOP is
taking the initiative on its own to meet its security
aviation needs. Minister of Government and Justice Daniel
Delgado told SouthCom Deputy Commander Lt. Gen. Spears August
21 that the National Assembly had authorized his ministry
over $40 million to upgrade the equipment of Panama,s Police
and National Aero-Naval Service (SENAN) currently being
formed by the merger of its air and maritime services.
According to Delgado, this includes money for the
refurbishment of seven Huey helicopters, including pilot
training and spare parts, in addition to seven patrol boats.
He said he hoped to have four of the helicopters operational
by December. Post believes that these helicopters will go a
long way to meet Panama,s need for multi-mission aircraft,
and represent a very positive step in upgrading the
capabilities of its forces.

--------------------------------------------- -------------
Anchoring Security Reforms in Democracy Key to Cooperation
--------------------------------------------- -------------

9. (C) Security cooperation should figure prominently in the
discussion between the two presidents, though it is uncertain
whether Torrijos himself, wounded by his own mishandling of
Panama's "militarization" debate, will raise the matter.
Torrijos is likely to defend his enactment, by executive fiat
and without robust consultation, a series of security reform
laws that have raised the specter in the minds of many
Panamanians that Torrijos wishes to "militarize" Panama,
something that was constitutionally outlawed after the U.S.
removed former strongman Manuel Noriega from power in
December 1989. Torrijos has essentially told Ambassador that
these security reforms are too important to be left to the
democratic process. Unfortunately, Torrijos' mismanagement of
the security debate has unleashed a political dynamic that
imperils his own security reform effort and threatens to
strain our bilateral security relationship as critics -- that
they conflate with the controversial reforms -- take aim at
essential U.S. security activities in Panama.

10. (C) Fortunately though, Panama's most pressing emerging
security threat -- the growing FARC presence and activity in
Panama -- is manageable if it is met now with a calibrated,
coordinated, and concentrated effort to strengthen
governability in Panama's Darien province that abuts
Colombia. The U.S. needs to foster partnership with Panama
to assist the GOP to strengthen governability in Panama's
remote border region with Colombia. SOUTHCOM currently has a
12-person Army Joint Planning and Assitance Team (JPAT)
imbedded with the Frontier Force providing training and
assistance. To assist Panama in this endeavor, Torrijos
needs to understand that how he manages this critical debate
will determine the degree to which the U.S. can partner with
Panama on vital security cooperation. We should encourage
Torrijos to ensure that security reform efforts are anchored
in democracy and respect for human rights. At the GOP's
request, SOUTHCOM is actively assisting in the establishment
of a human rights office in Panama's Ministry of Government
and Justice (MOGJ) along with human rights training at all
levels of the MOGJ and Panama's public forces.

--------------------------------------------- -------
Skeptical About "Alliance for Growth and Prosperity"
--------------------------------------------- -------

11. (C) Torrijos is eager to join the President on September
24 in a meeting New York City on the margins of the UN
General Assembly with leaders from other countries that have
signed trade deals with the U.S. While it was "a great idea
to meet," Lewis told visiting Acting A/S for International
Organization Affairs Brian Hook on August 27, "It would be
counterproductive to deploy the 'Alliance for Prosperity and
Growth' banner." Lewis explained that such a formalized
effort could "actually be a drag on efforts to promote free
trade." Though supportive of free trade, Lewis said such an
endeavor could politicize and create an ideological struggle
over free trade.

Securing Panama's Recognition of Kosovo

12. (C) Panama has been dithering for months over granting
recognition to Kosovo. The question is not "if" Panama will
recognize Kosovo, but rather when and how. In the face of
dogged and multi-level Embassy approaches, the GOP has
repeatedly provided different stories regarding how and when
it will recognize Kosovo. Shortly after Kosovo declared its
independence, Panama told the U.S. it would recognize Kosovo,
"soon, but after the Europeans." Subsequently, Panama said
it was working to organize a block of Central American
countries to jointly recognize Kosovo, though it does not
appear that Panama put much diplomatic energy into this
effort. Then Panama said it wanted to follow the "larger
countries like Mexico, Brazil or Colombia" in its
recognition. Now that Colombia has recognized, Panama has
indicated that it will do so once Panama leaves the UN
Security Council on December 31.

--------------------------------------------- ----------
ICE Raid Ensnares 50 Illegal Panamanians in Mississippi
--------------------------------------------- ----------

13. (C) On August 25, U.S. Immigration and Customs
Enforcement (ICE) agents executed a federal criminal search
warrant at Howard Industries, an electric transformer

manufacturing facility in Mississippi, for evidence relating
to aggravated identity theft, fraudulent use of social
security numbers and other crimes and a civil search warrant
for individuals illegally in the U.S. Of the 595 illegal
aliens who were arrested, some 50 were Panamanians. Noting
that Panama was not a significant source country for illegal
immigration to the U.S., Lewis explained to Ambassador on
September 4 that Panama wanted to defuse this matter by
facilitating the voluntary return of the Panamanians to
Panama. Lewis said the MFA was sending additional personnel
to bolster its consular staff in the U.S. as they dealt with
this challenge. Each individual arrested will need to have
their cases reviewed as some may be entitled to immigration
benefits. We are coordinating closely with the GOP to manage
public relations.

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