This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L SECTION 01 OF 03 PANAMA 001818 
 
SIPDIS 
 
DEPARTMENT FOR WHA/CEN 
SOUTHCOM ALSO FOR POLAD 
 
E.O. 12958: DECL: 08/23/2015 
TAGS: PGOV PREL PM POL FOREIGN POL
SUBJECT: PANAMA FOREIGN MINISTRY ADVISOR NILS CASTRO ON 
CUBA, VENEZUELA AND UN SECURITY COUNCIL ENLARGEMENT 
 
REF: A. 04 PANAMA 2152 
 
     ¶B. 04 PANAMA 2176 
     ¶C. PANAMA 1377 
     ¶D. PANAMA 1496 
 
Classified By: Charge Luis Arreaga for reasons 1.4 (b) & (d). 
 
Summary 
-------- 

¶1. (C) On August 22, PolOff met with senior MFA advisor Nils 
Castro, former Ambassador to Mexico, to discuss GOP's August 
20 re-establishment of full diplomatic relations with Cuba 
and GOP objectives in its petroleum negotiations with 
Venezuela.  Castro, who recently spent two days in Caracas 
with GOV officials, said Panama had no hidden agenda in 
normalizing relations with Cuba, and that Fidel Castro still 
appeared to harbor considerable resentment toward Panama for 
the August 2004 Moscoso administration release of Luis Posada 
Carriles (see reftels A and B).  He said GOP wants to be 
prepared for any transition should Fidel Castro become 
physically unable to govern, which the GOP thinks is likely 
in the short-term.  Nils Castro said GOP and GOV are still 
not "clicking" on the central issue, petroleum, in Panama's 
attempt to re-negotiate the Caracas Energy Accord, but that 
he expected a signed agreement by the first week of 
September.  Castro also suggested that GOP support for the 
G-4 proposal on UN reform is tied to GOP interest in 
improving maritime relations with Japan.  End Summary. 
 
On Cuba 
------- 

¶2. (U) On August 20, a picture appeared of Panamanian 
President Martin Torrijos, sandwiched between a beaming 
Venezuelan President Hugo Chavez and an austere Cuban 
President Fidel Castro as he presided over the signing (by 
GOP Vice-Foreign Minister Ricardo Duran and Cuban Foreign 
Minister Felipe Perez Roque) of diplomatic notes exchanged in 
an "act of reconciliation" to re-establish full diplomatic 
relations between Cuba and Panama.  The signing took place on 
the fringes of a graduation of more than 40 poor and 
indigenous Panamanian medical students in a group of several 
hundred graduating from the medical university.  Panama's 
delegation also included Health Minister Dr. Camilo Alleyne, 
Minister of Government and Justice (MOGJ) Hector Aleman and 
Director General of the Institutional Protection Service 
(SPI) Lionel Solis.  Representatives from CARICOM states were 
also present at the graduation and signing ceremonies. 
 
¶3. (C) According to Nils Castro, who was part of the advance 
team to Havana, the Cuban dip note contained accusatory 
language toward GOP regarding the release of Posada Carriles. 
 Panamanian newspaper La Prensa reported that both parties 
affirmed sovereignty and non-interference in internal state 
affairs.  Nils Castro downplayed the failure of GOP First 
Vice-President and Foreign Minister Samuel Lewis Navarro to 
attend the signing, saying he was still in travel status 
after completing his trip to Japan.  Nils Castro also took 
pains to downplay the published photo that shows Chavez, 
Torrijos, and Fidel Castro looking on as Duran and Perez sign 
the document.  Commenting that Chavez "had nothing to do with 
the agreement," Nils Castro reported that the GOP delegation 
had not expected Chavez to appear in the photo, but that 
Fidel Castro pulled Chavez into the center of the action 
while other CARICOM representatives looked on from the 
sidelines.  Castro said Fidel Castro flaunted his close 
relationship with Chavez to the GOP delegation throughout the 
event.  SPI Director Lionel Solis related one telling 
anecdote of the day's events, describing how the GOP 
delegation had not been invited to the celebratory lunch set 
to take place before the signing of the dip. notes.  When GOC 
protocol discovered they had arranged for both the lunch and 
the signing to take place in the same building, they invited 
the GOP delegation but sat them at the far end of the banquet 
table from Fidel Castro and Chavez.  Fidel "was not going to 
celebrate our relationship" with the act of reconciliation, 
said Nils Castro. 
 
¶4. (C) Nils Castro stated several times that GOP simply 
wanted to normalize relations with Cuba, and implied as many 
times that it had no implications for the GOP relationship 
with the U.S.  He also complained about what he called U.S. 
neglect of Latin America in recent years.  Castro also said 
that Panama could act as a mediator between the U.S. and 
Cuba. He explained that the GOP wanted to move forward with 
normal relations with Cuba (and Venezuela) for two reasons. 
First, stability in external relations would assist the 
Torrijos administration in maintaining domestic support and 
stability as the controversial social security reform talks 
remain unresolved and chip away at Torrijos's popularity (see 
reftel C).  Second, the GOP wants to be well-prepared and 
well-placed for what it sees as the inevitable transition 
from power of Fidel Castro.  Nils Castro observed that Fidel 
Castro "has problems pronouncing words," and that Fidel 
Castro "looks older than he is." 
 
¶5. (C) Nils Castro said ambassadorial announcements would be 
forthcoming soon.  Most likely the current consul general of 
each country's diplomatic mission would be promoted to 
ambassador.  (Comment:  Nils Castro's comment about the 
promotion to ambassador of the respective consuls general 
supports what MFA senior advisor and Panama's first 
Ambassador to Russia Flavio Mendez told PolOff in mid-July. 
Mendez said the GOP would most likely promote career diplomat 
and former Ambassador to Trinidad and Tobago Minister 
Counselor Rolando Barrow from CG to Ambassador to Cuba.  Nils 
Castro and Manuel Solis Palma, Ambassador to Venezuela under 
Noriega and former Education Minister are also possible GOP 
choices.  Cuba's CG in Panama is Carlos Eloy Garcia Trapaga. 
At a September 1 representational event in Panama City, Cuban 
Commercial Consul Ramon E. Perez Soria told PolOff that GOC 
planned to name CG Garcia Ambassador to Panama.  He also said 
GOP would not name their CG in Cuba Ambassador, but bring in 
someone new.  On September 2, GOP released a press statement 
saying they had asked GOC for agrement of their 
Ambassador-designate and would release the name of the 
Ambassador-designate once Cuba gave agrement to the GOP 
candidate.  End Comment.)  Nils Castro said Panama would like 
a "young, energetic" ambassador to represent Panama in Cuba 
due both to the current nature of the relationship and what 
GOP sees as an inevitable transition in the relative 
short-term. 
 
¶6. (C) Panamanian press coverage of the weekend in Havana was 
positive.  La Prensa quoted opposition party Solidaridad 
leader and former Foreign Minister Jose Raul Mulino 
expressing support for Torrijos's step and calling 
re-establishment of relations "positive."  Nils Castro said 
that the Panamanian public generally supports normalized 
relations with Cuba and does not favor strained relations 
with countries like Cuba and Venezuela. 
 
¶7. (C) (Note:  Embassy Defense Attache Office reported 
similar language from Minister of Government and Justice 
Hector Aleman in discussing the weekend's events, suggesting 
that GOP coordinated the message Embassy would receive from 
discussions with GOP officials.  End Note.) 
 
On Venezuela 
------------ 

¶8. (C) Nils Castro called GOP's relationship with Venezuela 
"more important" than its relationship with Cuba.  Currently 
the GOP and GOV are re-negotiating the 2000 Caracas Energy 
Accord which promised help with financing petroleum purchases 
but which lacks implementing language.  Castro led the GOP 
negotiating team on the August 4-5 trip.  Castro made no 
bones about GOP's bottom line with Venezuela: petroleum 
prices.  In the negotiations, according to Castro, progress 
was made on several "social and other" issues tangential to 
the central point of discussion, petroleum. 
 
¶9. (C) Castro said GOP had secured a GOV promise that it 
would not fund Bolivarian Circles in Panama, and that GOP 
Minister of Government and Justice Aleman had found no 
evidence to support direct GOV funding for Bolivarian Circles 
in Panama.  (Note:  this had been reported to Embassy earlier 
by Aleman after a July trip to Venezuela.  See reftel D.  End 
Note.)  The Torrijos administration's efforts to reform 
social security have been successfully frustrated by an 
active and vocal labor movement.  On the rate of exchange for 
petroleum, Castro said there was "a lot of talking, but no 
clicking."  He said he still expected GOP and GOV to sign an 
agreement by the first week of September, but this was not 
consistent with his position that little progress had been 
made on petrol.  He said an agreement came down to politics 
and nothing else. 
 
¶10. (C) GOP's primary concern is skyrocketing domestic fuel 
prices, especially for buses and trains, according to Castro. 
 The issue of rising public transportation costs is a growing 
sore spot for the Torrijos administration.  On August 25, 
transportation groups in the western provinces of Chiriqui 
and Bocas del Toro threatened to strike on September 5, 
complaining that the GOP's 10-cent-per-gallon subsidy is not 
sufficient to bear the costs of rising gas prices.  In 
response, the Cabinet immediately approved an extraordinary 
session of the National Assembly to issue a 60-day extension 
of the diesel fuel subsidy and a 30-day extension of the 
gasoline subsidy.  Castro said the GOP hopes to convince GOV 
to accept an unusual barter arrangement of Panamanian goods 
like chicken, pork, sugar and rice as partial payment for 
reduced petroleum rates.  He also said this was "only a 
dream" at this stage in negotiations.  Ultimately, Castro 
explained, Panama wants credit or an extension in years on 
payment for Venezuelan petroleum. 
 
¶11. (C) Castro said that Chavez only spoke briefly with 
Torrijos at the Havana event and appeared to know very little 
about the petroleum negotiations. 
 
On G-4 
------ 

¶12. (C) When presented with the recent GOP decision to side 
with the G-4 on UN reform, a decision that coincided with 
First Vice-President and FM Lewis's visit to Japan to discuss 
tourism, trade and Canal investment, Castro said only that 
maritime interests with not only Japan but other countries 
were a significant component in foreign policy 
considerations. 

Comment 
------- 

¶13. (C) Domestic stability concerns generated by unrest over 
fiscal reform, social security reform and oil prices are 
pushing GOP to mend fences with Cuba and Venezuela. 
Torrijos, whose Democratic Revolutionary Party controls the 
National Assembly with an absolute majority, hopes to 
supplant a perceived lack of domestic leadership on issues 
ranging from a corrupt Supreme Court to labor strikes that 
unraveled passage of a social security reform bill with 
strengthened multilateral engagement.  (Note:  Panamanian FM 
Lewis and MOGJ Minister Aleman talked with Charge Luis 
Arreaga, and SPI Director Lionel Solis talked to Pol 
Specialist prior to the trip to Havana to explain their 
position and reassure Embassy that they had no ulterior 
motive in seeking re-establishment of relations with Cuba. 
They made it clear they understand USG sensitivity to the 
"act of reconciliation" with Cuba.  In addition, on September 
1, FM Lewis approached Pol Specialist and PolOff after the 
opening of the regular session of Panama's National Assembly. 
 He wanted to be sure the Embassy took note that in President 
Torrijos's address to the Assembly, Torrijos specifically 
mentioned the close, positive relationship Panama had with 
the U.S. and did not mention Cuba or Venezuela.  The U.S. was 
the only country mentioned by President Torrijos in his 
address.  End Note.) 
ARREAGA