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DE RUEHZP #0337/01 0522150
ZNY SSSSS ZZH
O 212150Z FEB 06
FM AMEMBASSY PANAMA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7440
INFO RUEHBJ/AMEMBASSY BEIJING 0142
RUEHIN/AIT TAIPEI 0107
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHDC
RHMFISS/JOINT STAFF WASHINGTON DC
RUEKJCS/OSD WASHDC
RHMFISS/CDR USSOUTHCOM MIAMI FL//J5/J2/POLAD//

S E C R E T PANAMA 000337 
 
SIPDIS 
 
NOFORN 
SIPDIS 
 
DEPARTMENT ALSO FOR WHA/CEN, WHA/FO, EAP/FO, EAP/CM, EAP/TC 
SOUTHCOM ALSO FOR POLAD 
 
E.O. 12958: DECL: 01/06/2016 
TAGS: PGOV PREL PINR PM SP CH TW HO
SUBJECT: PANAMA -- CHINA RECOGNITION HANDWRITING IS ON THE 
WALL 
 
REF: A. TAIPEI 0427 
 
     ¶B. 05 PANAMA 1948 
     ¶C. STATE 25012 
 
Classified By: DEPUTY CHIEF OF MISSION LUIS ARREAGA FOR REASONS 
1.4 (B) AND (D). 
 
ACTION REQUEST 
--------------- 
¶1.  (U) This message contains an action request.  (See para 
3.) 
 
SUMMARY 
------- 
¶2.  (S/NF) Panamanian presidential advisor Jorge Ritter on 
February 20 detailed Panama's thinking about diplomatic 
recognition of the People's Republic of China (PRC) for DCM, 
which he called a "medium-term" prospect.  Ritter's comments 
followed news reports of the "secret" China-Panama talks in 
Madrid last week.  Although the Panamanian government (GOP) 
believes its long-term interests lie with the PRC, Ritter 
said, it has no desire to jettison Taiwan right away or to 
upset its relations with the United States.  Ritter strongly 
implied that recognition could have to wait at least until 
June 2007 for Congressional action on the still unsigned 
U.S.-Panama Free Trade and an as-yet-to-be-announced 
Panamanian referendum on Canal widening (possibly sometime in 
2006).  POL Counselor also got similar information last week 
from Taiwan Ambassador Hu and former ambassador to the U.S. 
Eloy Alfaro.  End Summary. 
 
Action Request 
-------------- 
¶3.  (S/NF) Ritter explained that the GOP prefers not to act 
on the basis of suppositions of how the USG may or may not 
react to Panama's plans for PRC recognition and requested an 
opportunity to share views.  Embassy notes Reftel C talking 
points for use with the Zelaya government (State 
25012--Honduran Relations with PRC/Taipei) also could be used 
in Panama with the Torrijos government.  Embassy requests 
Department's guidance on the use of Reftel C talking points. 
 
FM Lewis Was In Madrid: The (China) News 
---------------------------------------- 
¶4.  (S/NF) A February 19 China News (Taiwan) story 
(summarized in the February 21 edition of La Prensa Panama's 
leading daily) reported that PRC-Panama talks were held in 
Madrid.  Embassy has confirmed that Vice President/Foreign 
Minister Samuel Lewis headed the GOP delegation, as the story 
asserts.  On February 20, Panamanian presidential advisor 
Jorge Ritter confirmed with DCM that he had taken part in the 
Madrid talks.  The PRC counterpart was an unnamed Deputy 
Foreign Minister with "about 10 years experience in the U.S." 
 
 
Panama Cannot "Ignore" China 
---------------------------- 
¶5.  (S/NF) Ritter made the following points: 
 
-Panama views PRC recognition as a "medium-term" project. 
 
-The GOP has no desire to jettison its relations with Taiwan 
right away or to upset its relations with the United States. 
 
-Panama does not want ill-considered or over-hasty actions to 
derail FTA negotiations with the U.S. or its planned Canal 
referendum. 
 
-Panama cannot ignore the PRC,s growing commercial 
importance and believes its long-term interest lies with 
having diplomatic relations with the PRC. 
 
Meeting With Taiwan Ambassador Hu 
--------------------------------- 
¶6.  (S/NF) In a February 16 meeting, Taiwan Ambassador 
(Toms) Ping-fu Hu confirmed that a PRC-Panama meeting had 
taken place in Madrid during February 14-15 as reported 
Reftel A.  The Panamanian participants included Leonardo Kam 
(Panama's Commercial Representative in Beijing), Jimmy Arias, 
and Jorge Ritter, a former foreign minister under Manual 
Noriega.  (Hu failed to identify VP/FM Samuel Lewis as 
 
leading the GOP delegation.)  The PRC side included eight 
officials -- a deputy minister foreign affairs, an 
agriculture ministry official, and six others, Hu said. 
 
Bio Note 
-------- 
¶7.  (C/NF) Ritter is an "informal" (unpaid) advisor and 
speechwriter to President Torrijos.  Arias, who owns a home 
in Madrid, is a wealthy upper-class lawyer and a newcomer to 
the Torrijos inner-circle. The youngest brother of Ricardo 
Arias Caldern (who was vice president in 1990-91 following 
Operation Just Cause, a founder of the Christian Democratic 
party, and an anti-military activist, now a Torrijos 
confidant), Arias's growing influence with Torrijos has been 
noted with disdain by PRD "regulars."  Ambassador Hu was 
formerly ambassador to El Salvador and has a daughter who was 
born in Panama in the 1980s. 
 
Taiwan Panama Relations "Still On Hold 
-------------------------------------- 
¶8.  (S/NF) Hu confirmed that despite the apparent "positive" 
signals of last September (Reftel B: 04 Panama 1948--Panama 
Turning Toward Taiwan), Taiwan's relationship with Panama 
still is on hold.  "Normal development aid" is frozen and, 
contrary to expectation, no budget information has been 
exchanged for planning purposes, Hu said, although Taiwan's 
15 development volunteers continue to work in the Panamanian 
countryside as before.  Hu said he has met with President 
Torrijos rarely but more frequently with Vice 
President/Foreign Minister Lewis.  Hu typically meets Lewis 
at his private office, to avoid the "prying" eyes of foreign 
ministry functionaries, particularly Daro Chir.  Chir 
opened Panama's commercial development office in Beijing some 
years ago and is known to favor the PRC over Taiwan, Hu said. 
 
Is Money No Object? 
------------------- 
¶9.  (S/NF) The February 14-15 Madrid meeting continued 
negotiations about Panamanian diplomatic recognition of the 
PRC, which had ended unsuccessfully last summer, Hu 
explained.  For the Panamanians, it is a matter of money, Hu 
claimed.  Hu said the current offer before the Panamanians is 
a $150 million in development assistance, investments (such 
as a former Howard air base), and purchase of agricultural 
exports (principally bananas).  Hu confirmed that many in the 
ruling Democratic Revolutionary Party (PRD) favor a switch to 
China. 
 
"Boosting Democracy" 
-------------------- 
¶10.  (S/NF) Hu covered familiar ground, asserting that Taiwan 
and the United States share interests in "fighting 
communism," boosting democracy, and minimizing Chinese 
influence in the Western hemisphere.  He also alleged that 
the PRC is eager to become involved in Panama's upcoming 
Canal expansion project and wants to use equipment left over 
from Three Gorges Dam construction.  Taiwan's "democratic 
example" and its "efforts to reduce poverty" in Central 
America are important to advancing democracy in the region, 
he said. 
 
Finding the Right Moment 
------------------------ 
¶11.  (S/NF) Hu said that the "results" of the February 14-15 
meeting might not be known for at least six months. Even 
then, the Panamanian government could well conclude that the 
moment for a dramatic switch in relations is not favorable, 
given that bilateral negotiations for a U.S.-Panama Free 
Trade Agreement may produce a text that the Congress will 
have to consider before trade negotiating authority expires 
in June 2007. 
 
China Winds Are "Less Strong" 
----------------------------- 
¶12.  (S/NF) In a February 17 meeting, former Panamanian 
ambassador to the United States Eloy Alfaro told POL 
Counselor that he believes that the Panamanian winds blowing 
in favor of China recognition are less strong than they were 
a year or six months ago.  Alfaro said the earlier 
discussions he heard were couched in principle, revolving 
around Panama being seen as a "serious" country, not how to 
extract maximum benefits from both sides.  Alfaro said 
"certainly nothing will happen before the Canal referendum" 
(possibly will be held in 2006) or before the U.S. Congress 
decides one way or the other on the still-unsigned FTA, 
possibly by June 2007. 
 
Consensus Still Elusive 
----------------------- 
¶13.  (S/NF) For the foreseeable future, Taiwan's relations 
with Panama seem to be stuck in limbo, but a consensus for 
changing Panama's diplomatic representation to favor the PRC 
has not gathered momentum, Alfaro said.  (Note: Alfaro also 
is a member of Panama's foreign affairs advisory council and 
the Panama Canal Authority (ACP) board, End Note.) 
 
Comment 
------- 
¶14.  (S/NF) After meetings between FM Lewis and Secretary 
Rice and Presidents Bush and Torrijos, at which the "China 
question" was raised, it is somewhat curious that the GOP 
wants to hear the U.S. position spelled out once again.  A 
Panamanian wish not to be seen as "rocking the boat" is at 
play here, and political nervousness at undertaking a major 
departure from Panamanian diplomatic tradition.  Taiwan by 
all accounts considers Panama (see Reftel A), along with the 
Holy See, to be its principal remaining diplomatic 
relationship, and fears that a Panamanian switch could 
unloose a "domino effect" in Central America and the 
Caribbean, which could leave it all but bereft of 
international diplomatic links. 
 
EATON