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### Viewing cable 07PANAMA185, PANAMA: SCENESETTER FOR PRESIDENT TORRIJOS'

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
07PANAMA185 | 2007-02-06 21:08 | 2011-05-31 00:00 | CONFIDENTIAL | Embassy Panama

`

    VZCZCXYZ0004
    RR RUEHWEB

    DE RUEHZP #0185/01 0372108
    ZNY CCCCC ZZH
    R 062108Z FEB 07
    FM AMEMBASSY PANAMA
    TO RUEHC/SECSTATE WASHDC 9773
    INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
    RUEHBO/AMEMBASSY BOGOTA 2498
    RUEHCV/AMEMBASSY CARACAS 1104
    RUEHMU/AMEMBASSY MANAGUA 0564
    RUEHUB/USINT HAVANA 0065
    RUEAIIA/CIA WASHDC
    RHMFISS/CDR USSOUTHCOM MIAMI FL
    RHEFHLC/DEPT OF HOMELAND SECURITY WASHINGTON DC
    RHMFISS/DEPT OF JUSTICE WASHINGTON DC
    RHEFDIA/DIA WASHDC
    RHMFISS/JOINT STAFF WASHINGTON DC
    RHEHNSC/NSC WASHDC
    RUEKJCS/OSD WASHDC
    RUEKJCS/SECDEF WASHDC
    RUCNDT/USMISSION USUN NEW YORK 0252
    RHEHAAA/WHITE HOUSE WASHDC

` `

    C O N F I D E N T I A L PANAMA 000185

    SIPDIS

    SIPDIS

    NSC FOR FISK AND CARDENAS

    E.O. 12958: DECL: 02/02/2017
    TAGS: PREL PGOV ECON ETRD SNAR KJUS UNSC PM
    SUBJECT: PANAMA:  SCENESETTER FOR PRESIDENT TORRIJOS'
    FEBRUARY 14-16 VISIT TO WASHINGTON

    REF: A. (A) PANAMA 61

         ¶B. (B) PANAMA 72
         ¶C. (C) PANAMA 85
         ¶D. (D) PANAMA 112
         ¶E. (E) PANAMA 147
         ¶F. (F) PANAMA 148

    Classified By: Ambassador William A. Eaton.  Reasons:  1.4 (a), (b) and
     (d)

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

    ¶1.  (C) Panamanian President Martin Torrijos will visit
    Washington February 14-16 for a meetings with the President
    and the Secretary of Defense, outreach to the AFL/CIO,
    business leaders, and the Hill to lobby for adoption of the
    U.S.-Panama Trade Promotion Agreement (TPA). Indeed,
    advancing the TPA will top Torrijos' agenda in Washington.
    Equally high on Torrijos' agenda will be promoting expansion
    of the Panama Canal -- both the opportunities this enormous
    construction project will offer and the eventual enhanced
    benefits for international commerce that it will entail.
    Torrijos will also likely seek to discuss a number of
    regional issues including Nicaragua, Venezuela, Colombia, and
    Cuba and may brief a Panamanian proposal for an add-on
    activity for the PANAMAX 2007 multilateral military exercise
    scheduled for September.  Torrijos may feel compelled -- by
    either political or press attention -- to raise Panama's
    request to extradite ex-general Manuel Noriega and Panama's
    claim that the U.S. has not completed its promised clean-up
    of unexploded ordnance (UXO) on former U.S. military ranges
    in Panama.  Finally, Torrijos may seek to appeal significant
    cuts in U.S. assistance to Panama that are anticipated in the
    future.  End summary.

    --------- ---------------------------------
    Torrijos:  Politically Confident and Strong
    --------- ---------------------------------

    ¶2.  (C) Washington will receive a very confident Torrijos who
    enjoys the strongest political standing of his tenure and who
    is looking toward a bright future for Panama.  (In addition
    to First Lady Vivian de Torrijos, 1st VP and FM Samuel Lewis
    and Minister of Trade and Industry Alejandro Ferrer will
    accompany Torrijos to Washington.)  Over the past four
    months, he has chalked up two major victories:  winning a
    referendum in October 2006 that authorizes the USD 5.25
    billion expansion of the Panama Canal and completing
    negotiation of the U.S.-Panama Trade Promotion Agreement
    (TPA).  Torrijos is soaring in the polls, enjoying
    astronomically high general approval ratings of over seventy
    percent.  For 2007, Torrijos has laid out an aggressive
    governing agenda  (REFTEL A) -- public transportation reform,
    healthcare reform, judicial reform, and education reform --
    that will put him in direct conflict with entrenched
    interests, particularly unions.  While he has made
    significant advancements in enhancing the safety of public
    buses, Torrijos efforts to achieve broader judicial reform by
    calling a special session of the National Assembly have
    bogged down, even requiring that he extend the length of the
    special session.

    ¶3.  (C) Torrijos' Revolutionary Democratic Party (PRD)
    dominates the political landscape and governmental
    institutions and faces a fractured opposition.  This summer
    Torrijos will need to focus more time and energy on what is
    shaping up to be a bruising internal PRD fight for control of
    the party and its nominee for the 2009 presidential
    elections.  Torrijos, who is also the PRD Secretary General,
    is putting Housing Minister Balbina Herrera forward to be PRD
    President running her against former President Ernesto "El

    Toro" Perez Balladares.  Perez Balladares, 1st VP and FM
    Samuel Lewis, and Panama City Mayor Juan Carlos Navarro are
    all vying to be the PRD's presidential candidate.  Torrijos
    hopes to navigate this summer's PRD political schedule to
    secure the presidential nomination for Lewis while
    maintaining a unified PRD.  The frayed opposition is
    salivating at the prospect of a brutal fight inside the PRD
    that might split the PRD and open political space for the
    opposition.  Though he made some progress fulfilling his
    campaign pledge to put Panama's financial house in order,
    Torrijos has made few inroads fulfilling his "zero
    corruption" pledge and only some progress in creating more
    employment.  Corruption remains endemic and, and employment
    remains the most important issue in the minds of voters.  We
    should urge the GOP to accelerate its fight against
    corruption, particularly through prosecutions.

    ---------------------- ------------------------------
    Strong Economic Grown, but High Poverty Rates Persist
    ---------------------- ------------------------------

    ¶4.  (C) Strong growth in trade, maritime and banking
    services, and construction continue to drive an economic boom
    that has pushed Panama's USD 15 billion economy to current
    annual growth of about 8 percent.  Although official
    unemployment has dipped to 8.6 percent (down from previous
    levels of 12 to 14 percent), most job creation remains
    outside the formal economy.  Moreover, despite impressive
    economic growth, Panama's poverty level stubbornly persists
    at nearly  40 percent and income disparities remain among the
    region's worst.

    ¶5.  (C)  The Torrijos Administration hopes that sustained
    growth resulting from the Panama Canal expansion project and
    the prospective U.S.-Panama TPA will push Panama forward into
    "first world" status.  However, neither the Canal expansion
    nor the TPA is a panacea, as Panama's advancement remains
    hindered by public institutions (e.g., ministries, regulatory
    agencies, courts, political parties, schools, healthcare
    systems) that remain weak and in need of significant reform.
    Torrijos pushed through tough fiscal and social security
    reforms during his first two years that have already
    delivered results.  We should encourage Torrijos to build on
    his popular support and solid economic track record by
    pressing forward with the tough institutional reforms and
    anti-corruption efforts needed to ensure that Panama's
    economic gains translate into meaningful reductions in
    poverty and improved income distribution.

    -------------------------------------
    Panama Seeks to Build Support for TPA
    -------------------------------------

    ¶6.  (SBU) Torrijos closed 2006 on a high note with the
    December 19 conclusion of the TPA negotiations with USTR.
    Minister of Trade Alejandro Ferrer, who will accompany
    Torrijos to Washington, has built broad support for the TPA
    among Panamanian producer groups.  As a result, the GOP is
    confident that the pact will be ratified by Panama's National
    Assembly, as TPA opponents have so far gained little
    traction.  In addition to solidifying domestic support for
    the TPA, the GOP is working to build bipartisan support for
    the pact on the Hill.  We should stress that the GOP's strict
    follow-through on related commitments, particularly the
    bilateral agreement on sanitary and phytosanitary measures is
    vital to enhancing the TPA's prospects for Congressional
    approval.

    --------------------------------------
    Panama Engaged Globally and Regionally
    --------------------------------------

    ¶7.  (C) Panama's election to the UN Security Council (UNSC)
    and hosting of the Organization of American States General
    Assembly (OASGA) in June have not only elevated Panama's
    international profile, but also validated Torrijos' foreign
    policy aimed at sustaining friendly relations with all
    nations, particularly its hemispheric neighbors.  Having
    emerged only in late 2006 as the Hemisphere's consensus
    candidate to break the deadlock between Venezuela and
    Guatemala, Panama was not initially prepared for the
    responsibility of UNSC membership, but now has its UNSC team
    in place and is gradually learning the ropes.  Panama
    supported adoption of a resolution on Burma (blocked by
    Chinese and Russian vetoes), chairs UNSC's Counterterrorism
    Committee, and is striving to play a constructive role on
    renewal of the MINUSTAH peacekeeping operation (PKO) for
    Haiti by urging Beijing and Taipei to refrain allowing their
    conflict to have a deleterious effect on this essential PKO.
    Panama has also counseled Haiti to avoid antagonizing
    Beijing.  Panama, inclined to run for the center and to find
    the emerging consensus, will be nervous about staking out
    clear positions that put its ability to be everybody's friend
    at risk.  Panama will host the OASGA on the thirtieth
    anniversary of the signing of the Panama Canal Treaties at
    OAS headquarters in Washington and has made hemispheric
    energy security a centerpiece of this OASGA's agenda.
    Regionally, Panama has positioned itself to be an
    intermediary capable of talking to all sides.

    ¶8.  (C) Torrijos will raise a number of regional issues
    (REFTEL E) during his visit and is likely to be eager to
    serve as an intermediary for the U.S.:

    -- Venezuela:  When the UNSC elections deadlocked between
    Guatemala and Venezuela, Panama was one of the few countries
    in the hemisphere capable of bridging this polarizing divide
    and uniting the hemisphere behind its candidacy.  Torrijos
    visited Guatemala in November to thank President Berger for
    stepping aside and plans to travel to Venezuela to pay his
    respects to Chavez for doing the same.  Torrijos recently
    sent emissaries to Caracas to try to finalize a date for his
    on-again/off-again visit, and Torrijos's visit to Caracas is
    now scheduled for March 2, Lewis told Ambassador on Feburary
    ¶5.  Lewis has voiced serious concerns about Chavez's threat
    to independent media and to expropriate strategic industries
    and companies.  Should Torrijos visit Caracas, we should
    underscore that Torrijos cannot remain silent on Chavez's
    continued undermining of democratic norms and accumulation
    and exercise of authoritarian powers.

    -- Colombia:  Torrijos may request USG assistance managing
    pressure from Colombian President Uribe.  Lewis told
    Ambassador January 30 that Uribe was refusing to take no for
    an answer in response to Uribe's constant pressure to build
    the Pan-American Highway through the Darien and was directly
    linking relief for Panama's Colon Free Zone to progress on
    the highway.

    -- Nicaragua:  Panama has offered to play a role in engaging
    Nicaragua, a role that Torrijos has been willing to take on.

    -- Cuba:  In discussing transition on the island, Panama
    stresses stability over progress towards democracy.  Doubting
    the Cuban people's desire for or ability to take on
    democracy, Torrijos is likely to stress that the Cuban people
    must decide their own future as outside pressure to move
    toward democracy would risk instability.  Panama often points
    to a younger generation of Cuban apparatchik (e.g., Felipe
    Perez Roque) as the kind of people the U.S. should engaging
    to ensure stability and a gradual opening in Cuba in the wake
    of Castro's death.

    -------- -----------------------------
    PANAMAX:  Addressing Terrorist Threats
    -------- -----------------------------

    ¶9.  (C)  Lewis hosted a briefing on January 17 for the
    Ambassador on a Panamanian proposal to expand the annual
    PANAMAX exercises to include a table top exercise to examine
    ways to deal with the asymmetric threats posed by terrorists
    and narcotraffickers to Panama and its canal (REFTEL D).
    SOUTHCOM Commander ADM Stavridis was also briefed on Panama's
    proposals during his January 18-19 visit (REFTEL C).  The
    Panamanians envision an exercise that brings together police,
    intelligence, emergency response, military and other
    capabilities to meet these threats and that includes
    participation from all countries that currently participate
    in PANAMAX.  Panama has laid out an extremely ambitious time
    line aiming to have a multilateral table-top exercise ready
    to go by August 2007.  While managing Panamanian
    expectations, we should nonetheless seek to take advantage of
    Panama's opening to engage more broadly and creatively on
    these security threats as it reflects a growing serious,
    confidence, and maturity in providing for its own security.

    -------------- ------------------------------
    Watch Out For:  Noriega, UXO, U.S. Assistance
    -------------- ------------------------------

    ¶10.  (C) Noriega:  The extradition of Panamanian ex-strongman
    Manuel Noriega, scheduled to be released from U.S. federal
    custody on September 9, 2007, to "face justice in Panama" has
    recently grabbed the headlines in Panama.  While he made
    strong statements insisting Noriega be extradited to Panama,
    1st VP and FM Lewis has also re-stated to Ambassador that
    Panama does not want Noriega back.  Presidential aspirant
    Lewis though will be tempted to grandstand on Noriega to fend
    off opposition attacks and to burnish his image as "new PRD."

    ¶11.  (C) UXO:  No sooner was Torrijos' meeting with the
    President announced, then press reporting began to speculate
    that Torrijos would assert its case that the U.S. had not
    fulfilled its treaty commitments to clean former U.S.
    military ranges of unexploded ordinance.  We have repeatedly
    underscored that the U.S. has fulfilled its treaty
    obligations on this matter and stressed that we consider this
    matter closed.  Likewise, we remind Panama that they rejected
    our offer to help finance the clean-up of San Jose Island,
    for which we have no treaty obligations whatsoever.

    ¶12.  (C)  U.S. Assistance:  Torrijos is aware that U.S.
    assistance to Panama will be significantly reduced in the
    near future.  GOP officials have been especially concerned
    about dramatic reductions in economic development programs.
    Lewis has recently inquired, knowing Panama does not meet the
    requirements of the program, whether Panama could participate
    in the Millennium Challenge process.  Lewis has noted that
    while Panama's high level of per capita GDP disqualifies it,
    Panama continues to face significant poverty and development
    challenges, and would like continued USG support to help
    address these issues.
    Eaton

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