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 000234 
 
SIPDIS 
 
DEPARTMENT FOR WHA/CEN/PIERCE 
SOUTHCOM ALSO FOR POLAD 
VANCOUVER FOR CG ARREAGA 
 
E.O. 12958: DECL: 11/24/2014 
TAGS: PREL PGOV SNAR MARR PINS ENRG EPET PM VZ POL CHIEF
SUBJECT: PANAMANIANS PONDER BOLIVARIAN CIRCLES AND 
VENEZUELAN INFLUENCE IN DOMESTIC AFFAIRS 
 
REF: A. 04 PANAMA 2452 
     ¶B. 04 PANAMA 2937 
     ¶C. 04 PANAMA 2661 
     ¶D. 04 PANAMA 2176 
 
Classified By: Ambassador Linda E. Watt for reasons 1.4 (b) and (d). 
 
SUMMARY 
------- 

¶1.  (C) Despite recent press reports and speculation about 
Venezuelan-inspired Bolivarian Circles in Panama, threatening 
language from Venezuelan president Chavez that Venezuelan 
"terrorists" are using Panama as a base, and Panama-Venezuela 
discussions about oil and other commercial links (to be 
reported Septel), ordinary Panamanians do not believe 
Chavez's mischief-making could imperil Panama's domestic 
stability.  While popular consensus derides his Bolivarian 
Circles as toothless, high GOP officials are less sanguine. 
Minister of the Presidency Ubaldino Real recently shared his 
fears with the Ambassador that the GOP's upcoming reform 
proposals (especially on social security or CSS) and 
long-standing public discontent with social and economic 
inequality, poverty, stagnant living standards, and 
underemployment could provide tinder for extremist groups to 
exploit.  Embassy believes that Chavez has little support in 
Panama, but a prolonged crisis (such as violent protests over 
social security reform) could provide the Bolivarian Circles 
(in alliance with small but well-trained Panamanian leftist 
groups) with an opening to cause problems for the Torrijos 
government.  End Summary. 
 
Bolivarian Circles in Panama 
--------------------------- 

¶2.  (C) A December 13, 2004 article in La Prensa, the largest 
circulation Panamanian daily, posited the presence of up to 
10 apparently subversive Bolivarian Circles in Panama, with 
nominal allegiance to and apparently linked financially with 
Hugo Chavez's "Bolivarian Revolution." (See Reftel)  (Note: 
Venezuelan defense attach Javier Gamboa, who departed Panama 
about five months ago, reportedly bragged about being a 
proponent of the Circles.  According to unconfirmed reports, 
the Circles began in Panama several years ago.)  The La 
Prensa article identified former El Siglo newspaper co-owner 
Angel Padilla Beliz and Panamanian lawyer Fernan Casis as 
Circle leaders but gave no hint about the extent of the 
group's membership or influence. 
 
Potential Trouble? 
------------------ 

¶3.  (C) Most Panamanian government (GOP) officials and 
ordinary Panamanian citizens discount the ability of the 
Bolivarian Circles to influence domestic politics and widely 
deride Venezuelan president Hugo Chavez as a "loco" and a 
"payaso" (clown), but top policy makers are not as sure.  On 
Jan. 18, Minister of the Presidency Ubaldino Real told 
Ambassador Watt that the GOP is worried about Chavez's 
potential to stir up trouble, especially when the GOP unveils 
its social security reform proposals (expected before the end 
of March).  Real underscored that the Torrijos 
Administration's economic and social policies are designed to 
support democracy and stability by fighting the poverty and 
hopelessness that are now facts of life for 40% of the 
Panamanian population.  Nonetheless, Real and his colleagues 
are acutely aware that underlying popular discontent over 
economic inequality could make fertile ground for Panamanian 
leftist groups seeking to stir up trouble.  (Note: DAO Panama 
will report GOP views regarding Bolivarian Circles and 
Venezuelan influence in Panama via Septel.  The uprising in 
Bocas del Toro in October 2004 is an example of local unrest 
that the Circles could exploit.  See Reftel C.  End Note.) 
 
Lawmakers Downplay Bolivarian Potential 
--------------------------------------- 

¶4.  (C) Several prominent Panamanian legislators rejected any 
notion that Bolivarian Circles could cause harm in Panama. 
One legislator noted that the Circles are small, ineffectual, 
lack cohesion, and have no popular support.  Another 
legislator agreed that Panamanian union leaders may be 
receiving Venezuelan money, but argued that did not matter 
much because those union leaders would oppose the Social 
Security reforms regardless of any encouragement from 
Venezuela. 
 
Security Officials Downplay Venezuelan Influence 
--------------------------------------------- --- 

¶5.  (C) Recent speculation has focused on the possibility 
that Venezuela is gaining influence among the growing number 
of Panamanian Public Force (PPF) officers being trained in 
Venezuela.  Embassy discussions with recently returned 
Panamanian National Police (PNP) officers suggest that 
exposure to Venezuela has not necessarily increased their 
regard for Chavez.  Even their Venezuelan instructors 
reportedly badmouthed Chavez in front of Panamanian police 
officers.  One such officer recently told PolOff that a 
Venezuelan colonel had called Chavez's Bolivarian Circles 
"una locura" (insanity).  (Comment: While dozens of PPF 
officers have been trained in Venezuela over recent years, 
among them eight PNP commissioners or sub-commissioners, the 
U.S. and other Latin American countries have historically 
exercised greater influence within Panama's security forces. 
End Comment.) 
 
Panama Views Venezuela in Economic Terms 
---------------------------------------- 

¶6.  (C) Panama and Venezuela have developed a number of new 
economic links during the past six months but Panamanian MFA 
officials reject the idea that those largely commercial links 
could give Venezuela leverage over Panama.  Instead, they 
portray Venezuela as an "unreliable" partner.  (Note: The 
incoming Torrijos GOP was not overly concerned when Venezuela 
recalled its ambassador following outgoing-President 
Moscoso's August 2004 pardon of four anti-Cuban prisoners, 
including one, Luis Posada Carriles, who is wanted in 
Venezuela for a 1973 attack on a Venezuelan airliner.  See 
Reftel D.  End note.)  Since that time, the GOP has joined 
the former Group of Three (Venezuela, Colombia and Mexico,) 
now G-4, a regional economic and diplomatic bloc.  Panama's 
decision to join the G-4 reflects a broader strategy to forge 
stronger economic and commercial ties in the region.  (See 
Reftels A and B.) 
 
Oil Pipeline or Pipe Dream? 
------------------------ 

¶7.  (C) Panama and Venezuela are exploring the possibility of 
sending Venezuelan crude oil through an existing 
trans-Isthmus pipeline across Panama to the Pacific for Asian 
(mostly Chinese) customers.  (Note: Chavez claims that his 
purpose in pursuing the project is to diversify his customer 
base away from the United States.  The economic feasibility 
of the project seems less certain, but we leave it to Embassy 
Caracas to make that judgment.  End note.)  While it may be 
true, as some have suggested, that the oil pipeline idea is 
just a smoke screen to mask Chavez's "true" intention of 
using the Bolivarian Circles to destabilize Panama, 
Panamanian security officials view the diplomatic discussions 
as purely commercial, involving no potential Venezuelan 
threat to national security. 
 
¶8.  Panama's MFA Foreign Relations Advisor Nils Castro 
believes Venezuela has limited value as a trading partner. 
Castro recently told ECON Counselor that Venezuela's sole 
value to Panama is its petroleum, as Venezuelan investment in 
Panama is relatively small.  That attitude has been reflected 
in recent Panamanian apathy toward Chavez's tiff with 
Colombia. 
 
Comment 
------- 

¶9.  (C) Many Panamanians believe that the Torrijos government 
is Panama's last hope for a viable democracy.  Average 
Panamanians view their country as small and weak and its 
political elite as venal and indifferent to the country's 
problems.  The Bolivarian Circle's propaganda could 
capitalize on that underlying malaise. 

¶10.  (C) Bolivarian circles conceivably could gain momentum 
and political influence in the event of a prolonged, general 
crisis in Panama.  They are currently too inconsequential and 
lack the numbers to initiate such a breakdown.  More 
immediately, the GOP is concerned that Venezuelan money might 
fund well-trained Panamanian leftist groups to organize 
violent street demonstrations when CSS reforms are announced 
(probably in the next month or so).  And Chavez may well hope 
to bring Panama into his "orbit."  While Panama is trying to 
forge closer commercial ties with Venezuela and other 
countries in the region, GOP officials discount any long-term 
convergence of Panamanian and Venezuelan political, economic 
or ideological interests, aside from the economic benefits 
that the GOP might be able to extract from capital-intensive 
GOV energy investments, if they should come about.  Indeed, 
Chavez's main leverage in Panama is the financial power which 
petroleum puts in his hands.  (Note: We recently received 
unconfirmed reports that Chavez has offered Panama 
concessionary prices on oil in return for Panama's support 
for Cuba on United Nations votes.  End Note.) 
 
¶11.  (C) Chavez is well acquainted with Panama, having spent 
18 months here following his release from prison after his 
failed 1992 coup, but his influence in Panama is practically 
nil.  Panamanians widely deride him as a lunatic for his 
improbable proposals and claims, for instance, his 2004 
suggestion that he would dispatch Venezuelan MIGs to defend 
the Panama Canal against terrorists.  More recently he has 
made veiled threats to Panama, claiming that hundreds of 
Venezuelan "terrorists" (including several of his former 
political opponents) are using Panama as a base.  He implied 
that the U.S. doctrine of preemptive war (such as in Iraq) 
may also give him the right to launch anti-Chavista attacks 
against opponents in Panama or elsewhere. 
 
¶12.  (SBU) Embassy Panama defers to the perspective of 
Embassy Caracas on Venezuelan aims in Panama, on oil and 
other commercial links, or on the mischief-making potential 
of Bolivarian Circles. 
 
WATT