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### Viewing cable 09PANAMA373, MARTINELLI'S U.S. AMBASSADOR-DESIGNATE SUPPORTS

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
09PANAMA373 | 2009-05-07 23:23 | 2011-04-11 00:00 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Panama

`

    VZCZCXYZ0000
    RR RUEHWEB

    DE RUEHZP #0373/01 1272323
    ZNR UUUUU ZZH
    R 072323Z MAY 09
    FM AMEMBASSY PANAMA
    TO RUEHC/SECSTATE WASHDC 3365
    INFO RUCPDOC/DEPT OF COMMERCE WASHDC
    RHMFIUU/DEPT OF HOMELAND SECURITY WASHINGTON DC
    RHMFIUU/DEPT OF JUSTICE WASHINGTON DC
    RUEATRS/DEPT OF TREASURY WASHDC
    RUMIAAA/HQ USSOUTHCOM MIAMI FL
    RHEHAAA/WHITE HOUSE WASHDC

` `

    UNCLAS PANAMA 000373

    SENSITIVE
    SIPDIS

    WHSC PLEASE PASS TO USTR AUSTR EISSENSTAT

    E.O. 12958: N/A
    TAGS: ECON EFIN EFTA ETRD PGOV PM PREL SNAR
    SUBJECT: MARTINELLI'S U.S. AMBASSADOR-DESIGNATE SUPPORTS
    TIEA COMMITMENT

    REF: PANAMA 367

    ¶1. (SBU) Summary.  Jaime Aleman, President-elect Martinelli's
    Ambassador-designate to Washington, told Ambassador
    Stephenson today (May 7) that Martinelli would support
    initiation of Tax Information Exchange Agreement (TIEA)
    negotiations with the United States soon as part of Panama's
    2002 and 2009 OECD commitments, so long as it is not billed
    as a quid pro quo for the U.S.-Panama Free Trade Agreement
    (FTA) and contains restrictions such as exchange by request
    only and a bar on triangulation of information.  Aleman also
    confirmed that Martinelli supports the Torrijos
    Administration (reftel) carrying forth labor and bearer
    shares legislation as part of the GOP's efforts to secure
    passage of the FTA.  Post believes, and Aleman appeared to
    confirm, that the Torrijos government is in the best position
    to deliver those reforms, especially changes to labor laws
    and regulations.  Ambassador Stephenson emphasized that time
    is tight on achieving an FTA and suggested that the
    Martinelli camp issue a clarifying press statement on its
    willingness to consider a TIEA.   "We have to do this (a
    TIEA); it is in our interest," Aleman said, noting that at
    this point he was still speaking personally. End summary.

    ¶2. (SBU) Ambassador Stephenson hosted a lunch at her
    residence on May 7 for President Elect Martinelli's
    Ambassador Designate to Washington, lawyer and power broker
    Jaime Aleman, and Martinelli's campaign economic advisor and
    prospective Vice Minister of Economy and Finance Frank De
    Lima.  DCM Gilmour and EconCouns also attended. Aleman's
    younger brother, Jose Miguel Aleman, served as Foreign
    Minister during the Moscoso Administration. Jaime Aleman, as
    Minister of Government and Justice under President Delvalle
    in 1988, signed the decree dismissing Manuel Noriega as Head
    of the Armed Forces and was forced into exile in Miami.  He
    is a graduate of Georgetown Preparatory School, Notre Dame
    (BA in Economics) and Duke (JD).  Frank De Lima is a dual
    U.S.-Panamanian citizen, a Boston University graduate, and
    most recently held a management position in Martinelli's
    supermarket firm and  advisory position in his campaign.

    ¶3. (SBU)  On the issue of a TIEA, Aleman said, "We have to do
    this, it is part of our commitment." In addition, he noted
    that holding out would be futile.  Aleman also mentioned that
    entering into TIEAs did not hinder other offshore banking
    centers and was aware of the OECD's guideline for 12 TIEAs as
    a basis for jurisdictions that had implemented the
    internationally agreed tax standard.  He ridiculed
    application of Panama's retaliatory Ley de Retorcion as
    "insane - if it is applied, down goes the Canal expansion
    ...," and called holdouts "dinosaurs."  Aleman, however,
    mentioned that publicizing a TIEA as a quid pro quo for the
    Administration's FTA support was not acceptable and noted
    that Panama would protect its interests by insisting on
    exchange of information by request only (as opposed to an
    automatic exchange) and a bar on the triangulation of
    information (sharing with third parties).  Aleman also
    confirmed that Martinelli had accepted the Torrijos endgame
    (reftel) and would not interfere with the current President's
    efforts to pass labor reforms and bearer share regulation as
    a precursor to passage of an FTA by the U.S. Congress.  He
    appeared very comfortable with the Torrijos government
    carrying responsibility on these matters, especially changes
    to Panama's labor laws and regulations.

    ¶4. (SBU)  Ambassador Stephenson emphasized that timing is
    tight on achieving an FTA and suggested that the Martinelli
    camp issue a clarifying press statement soonest on its
    willingness to consider a TIEA - apart from the FTA.  She
    noted that prior press statements by Martinelli  and other
    officials were causing confusion in Washington.  Aleman
    replied that passage of the FTA remained Martinelli's highest
    priority and that he would convey this advice to the
    President-elect.  Significantly, Aleman revealed that he had
    asked Yavel Francis, currently Panama's Ambassador to the
    United Nations, to serve as his DCM. Francis was the
    indispensable leader of the inaugural Pathways to Prosperity
    Ministerial in Panama in December.  She also had served as an
    advisor on tax haven issues in the Foreign Ministry.  Aleman
    added that the Minister of Economy and Finance (and Frank De
    Lima's boss) would be Alberto Vallarino, who shared an
    interest in meeting OECD standards on transparency.

    ¶5. (SBU) Comment. The lunch was striking in that Aleman
    needed no convincing on the necessity of committing to
    negotiating a TIEA shortly. Almost as if he were reading our
    talking points, he noted that a TIEA combined with bearer
    shares regulation was essential to the continued growth of
    Panama's emerging economy based on maintaining foreign
    investment flows.  Aleman's voice is powerful and
    encouraging.  Nonetheless, resistance to a TIEA will continue
    in some quarters.  Most importantly, reaching an FTA will
    take close coordination with both the outgoing Torrijos and
    incoming Martinelli administrations. Torrijos' center-left
    PRD party is far and away in the better position to deliver
    labor reforms and bearer share regulation.  A TIEA - apart
    from an FTA - must be sensitively negotiated with
    President-elect Martinelli. End comment.
    STEPHENSON

`