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### Viewing cable 08PANAMA652, PANAMA: A VIEW FROM THE LEFT -- NO PLACE FOR

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
08PANAMA652 | 2008-08-05 21:58 | 2011-05-31 00:00 | CONFIDENTIAL | Embassy Panama

`

    VZCZCXYZ0000
    RR RUEHWEB

    DE RUEHZP #0652/01 2182158
    ZNY CCCCC ZZH
    R 052158Z AUG 08
    FM AMEMBASSY PANAMA
    TO RUEHC/SECSTATE WASHDC 2376
    INFO RHMFISS/CDR USSOUTHCOM MIAMI FL
    RUEAIIA/CIA WASHDC
    RHEFDIA/DIA WASHDC
    RHMFISS/JOINT STAFF WASHINGTON DC
    RHEHAAA/NSC WASHDC
    RUEKJCS/SECDEF WASHDC

` `

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

    SIPDIS

    E.O. 12958: DECL: 08/05/2018
    TAGS: PGOV PREL PM
    SUBJECT: PANAMA:  A VIEW FROM THE LEFT -- NO PLACE FOR
    ANTI-AMERICANISM

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

    -------
    Summary
    -------

    ¶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
    U.S.  END SUMMARY

    -----------------------------
    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.

    ------------
    Malnutrition
    ------------

    ¶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.

    -------
    Comment
    -------

    ¶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
    Panama.
    STEPHENSON

`