VZCZCXYZ0017
RR RUEHWEB

DE RUEHZP #0543/01 0832035
ZNR UUUUU ZZH
R 242035Z MAR 06
FM AMEMBASSY PANAMA
TO RUEHC/SECSTATE WASHDC 7687
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEHBO/AMEMBASSY BOGOTA 2228
RUEHQT/AMEMBASSY QUITO 0854
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHDC
RHMFISS/JOINT STAFF WASHINGTON DC
RUEKJCS/OSD WASHDC
RHMFISS/CDR USSOUTHCOM MIAMI FL//J5/J2/POLAD//

...UNCLAS PANAMA 000543 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR WHA/CEN TOM PIERCE 
SOUTHCOM ALSO FOR POLAD 
 
E.O. 12958: N/A 
TAGS: ELAB ETRD PGOV PM PREL
SUBJECT: PANAMA BANANA WORKERS END STRIKE AT COSTA RICAN 
BORDER 
 
 
 ------- 
  SUMMARY 
  ------- 
¶1.  (SBU) In response to mediation and a grant from Minister 
of Labor Reynaldo Rivera, banana workers ended a peaceful 
strike March 18 that closed the Panama-Costa Rica border for 
three days.  The laborers from Cooperativa de Servicios 
Multiples de Puerto Armuelles (Coosemupar) blocked trucks and 
buses trying to cross the Panamanian-Costa Rican border at 
Paso Canoas and also erected barriers to stop traffic to the 
port city of Puerto Armuelees.  Racked with a reported debt 
of $30 million, Coosemupar is unable to meet its most recent 
payroll or pay its required year-end worker bonuses. 
Coosemupar which is owned by the banana workers, purchased 
banana plantations from Chiquita Brands in 2003 for $20 
million borrowed from the publicly owned Panamanian National 
Bank but the business is unprofitable.  On March 20 the 
Government of Panama (GOP) approved an unconditional $850,000 
"subsidy" (or grant) to banana growers in the Chiriqui region 
that borders Costa Rica but the long-term viability of the 
banana plantations and the wisdom of this subsidy is 
doubtful.  End summary. 
 
----------------------------------------- 
Hard Times for Banana Growers and Pickers 
----------------------------------------- 
¶2.  (SBU) Although agriculture constitutes only 6% of 
Panama's GDP, 21% of the work force is employed in harvesting 
and processing crops.  Bananas, along with sugar and coffee, 
are among Panama's most important agricultural products. 
However, the banana business has fallen on hard times.  In 
January 2001, after 70 years of continuous operations, 
Chiquita Brands stopped doing business in Puerto Armuelles. 
Unions had refused Chiquita's request that workers boost 
product quality by reducing damage to bananas during 
harvesting and packaging.  At the same time, a worldwide glut 
of bananas led to depressed prices.  The resulting operating 
losses led Chiquita to close its plant in Puerto Armuelles. 
As the economy of the town suffered, the population fell from 
46,000 in 1990 to less than 20,000 today. 
 
------------------------ 
2003: Cooperative Formed 
------------------------ 
¶3.  (SBU)  In 2003 local workers formed the cooperative 
Coosemupar and purchased the Chiquita plantations with a $20 
million loan from Panama's publicly owned national bank. 
Chiquita retained the exclusive right to purchase the bananas 
grown on their former plantations.  Although the cooperative 
is owned by its 2800 workers, the Chiriqui Land Company 
Workers Union (Sitrachilco) continues to operate and make 
demands against the cooperative and the GOP.  (Comment: The 
workers are really striking against a business they own.  In 
a further distortion of logic, Coosemupar looks to the GOP as 
the guarantor of the loans used to establish the cooperative. 
 End comment.)  In recent years, Ecuador has emerged as a 
large producer of bananas, further contributing to low prices 
throughout the world.  The European Union's tariff on 
Panamanian bananas further constricts sales.  The banana 
business in Chiriqui loses money and probably will continue 
to do so in the future.  Many Panamanians, uneasy about using 
public funds to support the banana workers, openly ask why 
they will not move to the provincial capital of David or 
other towns which offer more job opportunities and are 
experiencing a building boom fueled by retirees from America, 
Canada, and Europe. 
 
----------------------- 
Union Tactics Effective 
----------------------- 
¶4.  (SBU)  Sitrachilco's decision to close the Panama-Costa 
Rican border and impede traffic in Chiriqui was effective 
since many people throughout the region are traveling to 
David to attend an annual fair.  Hundreds of trucks, some 
carrying live animals and fresh fruit, were backed up on both 
sides of the border.  Bus passengers had to get off one bus, 
walk several hundred yards across the border, and then board 
another to continue their journeys.  Sitrachilco has 
experience in causing disruptions.  During the years when 
Chiquita operated the banana plantations in Chiriqui, the 
 
union gained a reputation for striking at crucial moments of 
harvesting and processing bananas to drive home its demands. 
For many years the tactics worked and the workers received 
benefits that included company-built housing and schools. 
When the banana business became less profitable in 2000, 
Chiquita chose to end its operations in Puerto Armuelles. 
 
----------------------- 
Comment: Short Term Fix 
----------------------- 
¶5.  (SBU)  The GOP appears to be afraid of the union and has 
no plan for dealing with the long-term industry decline the 
banana workers face.  DCM and ConOff visited the area during 
the strike and reported that police dressed in riot gear 
stood by and took no action against the strikers.  The 
$850,000 GOP grant may allow Coosemupar to pay its workers 
for a missed pay period but payments of this type by the GOP 
are not sustainable.  Unfortunately, the GOP's willingness to 
reward the banana strikers with $850,000 merely reinforces 
the perception that blockading highways is the way to get 
one's grievances addressed.  And when Coosemupar burns 
through the $850,000 "subsidy," which won't take long, it 
will be back asking the GOP for more.  The cooperative still 
is unable to pay off the $20 million loan from the Panamanian 
National Bank, a $3 million loan due to Chiquita, and $5 
million owed to other businesses.  Coosemupar also owes $2.5 
million in contributions to Panama's social security system. 
The banana industry in Panama is in a long term decline 
caused by stiffer competition from Ecuador and EU tariffs 
which favor producers from former European colonies in Africa 
and the Caribbean. 
 
EATON