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DE RUEHZP #0629/01 0962004
ZNY CCCCC ZZH
O 062004Z APR 06
FM AMEMBASSY PANAMA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7772
INFO RUEAIIA/CIA WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEHBO/AMEMBASSY BOGOTA 2239
RUEHCV/AMEMBASSY CARACAS 0992
RUEHPE/AMEMBASSY LIMA 0616
RUEHME/AMEMBASSY MEXICO 2978
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C O N F I D E N T I A L PANAMA 000629

SIPDIS

SIPDIS

DEPT FOR WHA/CEN - SCHIFFER
ALSO FOR WHA/EPSC - URS, GUMBINER, AND YOUNG
ALSO FOR EB/TPP/BTA - LAMPRON
ALSO FOR EB/TPP/ABT/ATP - SINGER
STATE PASS USTR - SCHWAB AND CROWDER
ALSO PASS USDA/FAS/ITP - SPITZER
USDOC/MAC - GAISFORD

E.O. 12958: DECL: 04/06/2016
TAGS: ETRD EAGR PREL PM
SUBJECT: FORMIN WEIGHS USG DEMARCHE ON VENEZUELA UNSC BID,
VENTS OVER STALLED FTA


Classified By: Ambassador William A. Eaton - Reasons 1.5(b and d)

 ¶1.  (C) On April 5, Ambassador pressed First Vice
President/Foreign Minister Samuel Lewis Navarro (SLN) and
Minister of the Presidency Ubaldino Real on the importance
of Panama's support for Guatemala's UN Security Council
candidacy.  Lewis Navarro revealed that Mexico's FM Derbez
had called him to report that President Bush had expressed
his concern about Panama's non-committal position on the
issue during the Cancun meeting with President Fox and PM
Harper.  Lewis Navarro indicated that the GOP is weighing the
price it would pay for further antagonizing Hugo Chavez.  He
said that, after Panama stood firmly with the U.S. in pushing
for the Free Trade Area of the Americas (FTAA) for all the
right reasons at last November's Summit of the Americas in
Mar del Plata, the GOP has seen Chavez exact his payback by
stepping up his meddling in Panama's internal affairs.

Lack of Progress on FTA
-----------------------

¶2.  (C) Feeling the heat from the U.S. and others in the
region on Venezuela, Lewis Navarro vented the GOP's
frustration at a lack of real progress on U.S.-Panama free
trade negotiations.  He said this represents "one of the
biggest embarrassments" for the Torrijos administration.  He
also felt that it has been a blow to himself and others in
the GOP who had pushed for closer ties to the U.S. and who
have made free trade -- and this FTA -- a cornerstone of the
government's economic agenda and the capstone to the November
visit by President Bush.  Lewis Navarro said he has dropped
the FTA from the list of topics he usually raises in
Torrijos' cabinet meetings, as it opens him up to beatings
from other ministers.  The GOP cannot understand why the USG
appears dismissive of President Torrijos' top priority while,
at the same time, expecting the GOP to accommodate President
Bush's priorities, such as the FTAA and the choice of
Guatemala over Venezuela for UNSC membership.

¶3.  (C) Lewis Navarro characterized USTR's April 4
communication with Trade Minister Ferrer as a "disaster,"
claiming that the U.S. is rejecting some of the GOP's
proposed language on agricultural issues that the GOP took
directly from language proposed last January by USTR and from
U.S. FTAs with Colombia and Panama.  (Chief FTA negotiator
Estif Aparicio later told Econ Chief that the GOP was
"dismayed" at the USG's rejection of language they maintain
USTR had previously proposed on "WTO rights" and had accepted
in FTAs with Colombia and Panama regarding compliance with
OIE norms on BSE, Avian Influenza, and Newcastle Disease.  He
said these were highly sensitive, "bottom line" issues for
the GOP and asked that Washington propose language on these
issues that it might find acceptable, as the GOP is now at a
loss as to what else it can propose.)

¶4.  (C) Ambassador told Lewis Navarro and Real that the USG
is well aware of the GOP's primary concerns on the FTA, but
that the GOP's response to the U.S. proposal on sanitary and
phytosanitary (SPS) issues raised doubts about whether the
GOP is really ready to close the deal.  He stressed that the
USG has not given up on this FTA - despite enormous demands
Washington faces with a multitude of FTAs in the works.  He
emphasized continuing high-level USG commitment to finding a
way forward to conclude an agreement that both sides can
accept.

Comment
-------

¶5.  (C) Lewis Navarro's comments appeared heartfelt and
seemed to reflect his genuine frustration and worry that he
and other Torrijos administration reformers will lose out to
old-guard PRD players within the GOP if they cannot soon
deliver on the FTA.  He was quick to add that, despite the
pressures he is coping with, he was not trying to link the

FTA with the UNSC vote but he was simply sharing the
difficulties he was having in thinking about one issue
without being reminded of the other.
EATON