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 02 PANAMA 002309 
 
SIPDIS 
 
DEPARTMENT FOR WHA/CCA AND WHA/CEN 
SOUTHCOM ALSO FOR POLAD 
 
E.O. 12958: DECL: 01/15/2015 
TAGS: ETRD ETTC PGOV PREL PM CU POLITICS FOREIGN POLICY
SUBJECT: PANAMA AND CUBA: NSC-DIRECTED REVIEW REGARDING 
SUSPENSION OF TITLE III OF THE LIBERTAD ACT 
 
REF: A. STATE 207359 
     ¶B. 04 PANAMA 02943 
     ¶C. PANAMA 1416 
     ¶D. PANAMA 1818 
     ¶E. PANAMA 1205 
     ¶F. 04 PANAMA 2943 
 
Classified By: DCM Luis Arreaga for Reasons 1.4 (b) & (d). 
 
¶1. (SBU) Embassy Panama offers the following information and 
analysis in response to Reftel A tasking. 
 
CUBA AND PANAMANIAN POLITICS 
 
¶2. (C) On August 20, 2005, the GOP and Cuba reestablished 
full diplomatic ties with the signing of diplomatic notes in 
Havana, Cuba (Reftel C).  Prior to the re-establishment of 
full diplomatic ties, the GOP and Cuba had maintained only 
consular relations since August 2004.  Cuba broke off full 
diplomatic relations in August 2004 when, on August 25, 
Panamanian President Mireya Moscoso pardoned four anti-Castro 
Cubans, including Luis Posada Carriles, convicted for 
conspiracy, possession of explosives, and endangering public 
security in connection to an alleged plot to assassinate 
Cuban President Fidel Castro (Reftel B).  Panamanian 
President Martin Torrijos entered office on September 1, 2004 
pledging to improve relations with Cuba, and took steps 
towards that end with the re-establishment of full diplomatic 
relations.  Torrijos' step can be understood in the context 
of his administration's overall outward-reaching regional 
foreign policy designed to promote Panama as a regional 
leader, and designed to compensate for unpopular domestic 
policies.  Senior officials in Panama's MFA have consistently 
explained to Embassy Panama that the GOP's step toward 
reestablishing ties with Cuba was an act of constructive 
engagement. 
 
¶3. (C) In a November 18 conversation with PolOffs, MFA Deputy 
Foreign Policy Director Vladimir Franco said that little had 
changed in the GOP's relationship with Cuba since August 
¶2005.  (Note:  Franco specializes in North American affairs 
and has questionable social ties to Cuban officials in 
Panama.  End note.)  Franco explained that Fidel Castro 
remained only "cordial" with GOP officials, and described the 
relationship as "still having a certain coldness."  On August 
22, senior MFA Advisor Nils Castro explained to PolOff that 
Fidel Castro did not appear ready to forgive the Torrijos 
administration for the Moscoso pardoning of Posada Carriles 
and three others (Reftel D).  Franco said that Fidel Castro 
believed Torrijos, who Franco described as attempting to 
remain neutral on the issue, did not denounce strongly enough 
Moscoso's pardoning of the convicted criminals. He added, 
however, that Cuba's vice president maintained good relations 
with GOP officials with some apparent apprehension of and 
deference to the attitude of "El Jefe."  Since the exchange 
of diplomatic notes leading to re-establishment of full 
diplomatic relations, the two countries had exchanged no 
other high-level delegations, with the exception of the 
recent arrival of Panama's ambassador to Cuba.  Franco said 
it was still unclear how warmly Panama's ambassador would be 
received in Cuba.  (Note:  Cuba's Consul General in Panama 
was promoted to ambassador.  End Note.) 
 
¶4. (C) According to Franco, trade with Cuba and Cuban 
investment in Panama, mainly in the Colon Free Zone, had not 
been negatively affected by the cooling of relations.  Franco 
said the GOP was unhappy with the presence of Cuban 
intelligence in Panama.  Panama continues to send a few dozen 
underprivileged medical students to Cuba for studies, and, 
according to Franco, Venezuela now funded travel to Cuba for 
Panamanians who could not afford cataract eye surgery, which 
was then provided by the Cuban government.  Franco said that 
this did not directly involve the GOP, but was a program 
individual Panamanians could opt to participate in. 
 
¶5. (C) On human rights, Franco said that the GOP did not 
intend to make any formal statements of condemnation 
regarding abuses in Cuba.  He said the GOP did not believe it 
was constructive to belabor Cuba, or other Central American 
countries, over human rights issues.  Franco added that the 
GOP supports Cuba's transition to a democracy, but that the 
GOP preferred to maintain open lines of communication with 
Cuba.  Panama has routinely supported initiatives in 
multilateral fora to promote human rights or to condemn 
abuses worldwide.  In the recent past the GOP has not 
publicly criticized Cuba for human rights abuses.  Panama has 
consistently joined its neighbors in the region by following 
majority decisions on sensitive Cuba issues in multilateral 
fora. 

BILATERAL TRADE WITH CUBA AND INVESTMENT 
 
¶6. (U) Panama's official trade figures suggest that the 
country's trade with Cuba is minuscule.  Panama's exports 
to Cuba typically represent less than 0.5% of total 
exports, while imports from Cuba amount to less than 0.1% 
of Panama's total.  In 2004, Panama exported $730,000 in 
merchandise to Cuba, representing only 0.1% of total 
exports of about $890 million.  Likewise, Panama imported 
only about $449,000 worth of Cuban products, representing 
0.01% of Panama's total imports of nearly $3.6 billion. 
The GOP's preliminary trade figures for January through 
September 2005 show that Panama exported $371,000 in 
products to Cuba.  During the same period, imports from 
Cuba jumped about 20-fold over 2004 levels, rising to more 
than $10 million, which represents about 1.3% of Panama's 
total imports.  This appears to be due primarily to a 
significant increase in imports of raw construction 
materials (i.e., gravel) from Cuba, driven by this year's 
boom in construction in Panama.  Imports of Cuban 
pharmaceutical and tobacco products also saw significant 
increases in 2005. 
 
¶7. (U) Cuba's principal economic connection with Panama 
remains its use of the Colon Free Zone (CFZ, technically 
outside of the Customs territory of Panama) where it is a 
large customer (Reftel E).  From January through September 
2004, Cuba bought $131 million worth of merchandise through 
the CFZ where financing is relatively easy to obtain.  This 
amount is roughly 3.4% of CFZ re-exports.  Cuban exports to 
the CFZ are so minimal that country is not included on the 
CFZ's list of exporting countries.  (Note: more recent 
bilateral trade figures for the CFZ are not yet available. 
End note). 
 
¶8. (SBU) As Post reported previously (Reftels E and F), 
overdue Cuban accounts receivable were estimated to exceed 
$200 million as of late 2004.  Panamanian CFZ companies 
holding these large debts sometimes seek to restrain local 
criticism of GOC policies, as they want to avoid Cuban 
default on these payments. 
 
¶9. (C) Although the GOP does not maintain data on 
Panamanian investments in Cuba, anecdotal reports suggest 
that such investment is minimal.  It is believed that fears 
of a potential GOC takeover of profitable businesses tend 
to chill the enthusiasm of prospective Panamanian investors 
in Cuba. 
 
EATON