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C O N F I D E N T I A L PANAMA 001029 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR WHA/CEN, SOUTHCOM FOR POLAD 
 
E.O. 12958: DECL: 06/01/2016 
TAGS: PGOV PREL PINR ETRD KPAO PM VE CU
SUBJECT: PRD FORCES TORRIJOS TO GIVE GROUND 
 
REF: A. PANAMA 0919 
     ¶B. PANAMA 0866 
 
Classified By: AMBASSADOR WILLIAM A. EATON FOR REASONS 1.4(B) AND (D) 
 
SUMMARY AND ANALYSIS 
--------------------- 
¶1.  (C) President Torrijos's attention -- to the exclusion of 
virtually all else -- is consumed by political maneuvering 
within his party, the PRD, and the approaching must-win Canal 
expansion referendum (probably in October 2006). Torrijos has 
tried to sell Canal expansion as a non-political "matter of 
state," but despite the lofty rhetoric the referendum on the 
proposed $5.25-billion decade-long project (Reftel B) in fact 
is an irreplaceable political vehicle for Torrijos to ensure 
the victory of the ruling Democratic Revolutionary Party 
(PRD) in the 2009 election and to guarantee, if possible, the 
presidential aspirations of VP/Foreign Minister Samuel Lewis 
Navarro, his widely presumed choice to be his successor. 
Winning the referendum will position Torrijos to do both. 
 
Canal Referendum as Political Vehicle 
------------------------------------- 
¶2.  (C) With his experience in diplomacy, politics, and 
international business, Lewis would be a good choice for 
president of Panama.  But Lewis has two significant drawbacks 
-- (1) he is not popular within the PRD, which sees him, 
correctly, as an outsider, and (2) he lacks a political base 
outside the political and economic elite of Panama.  Thus, 
his future depends largely on Torrijos's political strength 
and commitment to him.  Torrijos's need to placate internal 
PRD opinion and interests (while defeating the internal PRD 
machinations of former president Perez Balladares) prior to 
the referendum vote explain the perceived change in the GOP's 
political trajectory and recent unsettling actions, such as a 
left-ish steps in its foreign policy, the April 28 naming of 
Noriega-era Dignity Battalion organizer Benjamin Colamarco as 
Public Works Minister, the GOP's all-but-evaporated political 
will to conclude a bilateral FTA. Political expediency also 
intensifies the PRD's penchant for non-transparency, its 
intolerance for criticism and use of its power to bully and 
control the media.  Basically, the PRD is focused on getting 
reelected,  maximizing its share of revenue and its hold on 
power. 
 
Limits to "Annoying" Behavior 
----------------------------- 
¶3.  (C) Ironically, the president's decision to stand by 
Lewis, who like Torrijos is more pro-U.S. than the PRD old 
guard, is pushing Torrijos farther to the left.  The PRD is 
Panama's largest, most experienced, best organized party. 
Many PRDistas want to found a multi-term electoral dynasty (a 
la Mexico's PRI) that will win election after election far 
into the future.  But old guard PRD elements -- at base 
skeptical toward the pro-U.S. "tilt" of the Torrijos 
technocrats -- feel let down by what it sees as the failure 
of Torrijos and Lewis to deliver political benefits for the 
party.  Torrijos's need to shore up his position within the 
PRD means that the United States could increasingly witness 
"annoying" behavior from the GOP, while at the same time 
maintaining its pro-U.S. tilt. 
 
Effects on U.S. Interests 
------------------------- 
¶4.  (C) Core issues in U.S.-Panama relations have not been 
affected.  For example, the GOP's cooperation on security and 
anti-narcotics matters continues to be excellent.  We 
seriously doubt that the GOP is about to go "off the deep 
end," for instance, in its relations with Venezuela.  The GOP 
has no plausible "Venezuela card" to play.  More worrying are 
clear signs of official corruption (to be reported septel) 
and defacto limits on press freedoms.  Judicial reform has 
made little progress.  Virtually no senior official has been 
investigated or gone to jail.  Nor, aside from handouts, has 
the GOP acted aggressively to reduce poverty and income 
inequality, aside from its overheated hype of Canal 
expansion, which it claims will create up to 250,000 jobs 
(two for every unemployed Panamanian) and cut poverty rolls 
by 150,000 by 2025.  The shared interests and history which 
have bound Panama and the United States for the past century 
-- namely the Canal, investment (which is increasing), and 
interpersonal relations, not to mention "residential tourism" 
-- will continue to define the relationship. End Summary and 
Analysis. 
 
Referendum: Be All and End All 
------------------------------ 
¶5.  (C) The GOP's overriding priority since late winter is a 
"yes" vote in the as-yet-unscheduled Canal referendum, by 
whatever means necessary.  The Torrijos government's 
unwillingness so far to take any political risk in concluding 
a bilateral FTA and the near-collapse of talks in January 
2006 marked the end of what could be called its "Gringo 
Track" and the start of a realignment that tilt more toward 
the PRD old guard.  Torrijos is doing what he thinks he must 
to preserve an unchangeable hold on the PRD, to win the 
referendum vote, and to position Samuel Lewis as the PRD's 
presidential candidate in 2009. 
 
Panama Reaches Out to Cuba 
-------------------------- 
¶6.  (C) As part of Torrijos's political balancing act, Panama 
has undertaken efforts to strengthen relations with Cuba. 
Torrijos has visited Havana twice since taking office. 
Increasing numbers of GOP officials, most recently by Vice 
President/Foreign Minister Samuel Lewis, (former MOGJ) Hector 
Aleman, Health Minister Camilo Alleyne, National Assembly 
President Elias Castillo, and Panama City Mayor (and 2009 
Presidential hopeful) Juan Carlos Navarro.  The GOP has 
eagerly backed the Cuban-Venezuelan Operacion Milagro and 
dropped visa restrictions on Cuban diplomats.  On another 
front, the GOP only recently has apparently backed off its 
hinted support for Venezuela's bid for a UNSC seat next fall. 
 The GOP also stymied U.S. intelligence-gathering efforts by 
preventing Emboffs from interviewing two Spanish citizens, 
one of them a U.S. dual-citizen, who allegedly were kidnapped 
and released by the FARC.  Most recently, Panama voted for 
Cuba, Venezuela, and the PRC,s entry into the UN Human 
Rights Council. 
 
FTA in the Deep Freeze 
---------------------- 
¶7.  (C) The GOP's January 2006 collapse of political will to 
conclude a bilateral FTA is a signpost of the change. Despite 
agreeing on 90-95% of the text after nine rounds of talks, 
the GOP-proposed bilateral Free Trade Agreement is in 
suspended animation, a disappointing outcome for a GOP which 
supposedly took office with strong free-trade credentials. 
VP Lewis told the Ambassador that the FTA is no longer on his 
"to do" list and that he no longer mentions it in Cabinet 
meetings because it merely serves as an excuse for his 
colleagues "to beat him up."  Prolonged inaction on the FTA 
could kill what was an important bilateral agenda item, given 
the looming June 30, 2007, expiry date for "fast track" trade 
negotiating authority, not to mention a new U.S. Congress due 
to take office in January 2007 that may well be less 
favorable to free trade. 
 
"Gringo Track" Sputters 
------------------------- 
¶8.  (C) The blow-up of the ninth round of bilateral FTA 
negotiations in January 2006 (during which Agriculture 
Minister Cortizo flamboyantly resigned) marked a political 
weakening of VP/Foreign Minister Samuel Lewis within the 
ruling PRD and a setback of the GOP's "Gringo track," which 
focused on political benefits to be had from the bilateral 
relationship.  The GOP apparently had convinced itself that 
President Bush's November 2005 visit to Panama signaled the 
USG's willingness to bypass USTR's objections to Panama's 
discriminatory sanitary and phytosanitary (SPS) regulations 
in favor of a "political" solution.  Another disappointment 
has been the lack of rapid tangible progress on the GOP's 
proposed "strategic alliance" with the U.S., centering on the 
Panama Secure Trade and Transportation Initiative (PST&TI). 
 
"Arregla la Vaina!" 
------------------- 
¶9.  (C) Lewis has been upfront and vocal to Emboffs about the 
personal cost to him of failure in the FTA talks, complaining 
that USG's refusal to make concessions on SPS "was no way to 
treat your friends."  In a March 2006 meeting with POL 
Counselor, Vice Foreign Minister Dickie Duran said Lewis was 
taking heat for the FTA's failure within the PRD because 
Lewis was the one who had sold the FTA internally.  "Arregla 
la vaina" ("fix it!"), PRD opponents told Lewis. "I've never 
seen him so frustrated," Duran said. 
 
Negative PRD Tendencies 
----------------------- 
¶10.  (C) At the same time, negative tendencies latent within 
the ruling PRD, founded as the political vehicle for Panama's 
1968-1989 military dictatorship, increasingly are on display. 
 Torrijos continues to place Noriega-era "dinosaurs" in 
positions of power and influence.  The latest of these 
appointments is newly named Public Affairs Minister Benjamin 
Colamarco, the former leader of the 1987-1989 "Dignity 
Battalions." 
 
No More Consultations 
--------------------- 
¶11.  (C) Before taking office, Torrijos officials were 
careful to consult the Embassy before making appointments 
that might cause controversy or discomfort in Washington. 
However, the Embassy received no advance warning of recent 
appointments, including that of Colamarco perhaps they knew 
our reaction would be unfavorable.  (Comment: The GOP 
continues to apprise us of its thinking on China/Taiwan 
relations and have started a discussion of possible changes 
in the Technical Judicial Police's key partner in our law 
enforcement programs.  End Comment.) 
 
Dissing U.S. Intelligence Priorities 
------------------------------------ 
¶12.  (C) In January, armed men with Colombian accents 
kidnapped Spanish naturapath Jose Vincete Colastra and his 
filmmaker son, Sergio Colastra (a dual-nationality AmCit), 
from a Darien beach, demanded a ransom, and held them for 77 
days.  After their early April release, Panamanian officials 
whisked the two men back to Spain and declared "case closed," 
ignoring repeated Embassy requests to see them and debrief 
them.  Before the Colastras left Panama, they told a resident 
family member that they had been prisoners in a FARC camp 
where they had observed Cubans. 
 
¶13.  (C) Many questions remain unanswered: Did the FARC 
kidnap the Colastras to examine FARC soldiers?  Did Colombian 
criminals kidnap them to "sell" them to the FARC?  Or was it 
a straight ransom operation?  Was ransom paid, and by whom? 
Did the Colastras collaborate in their own kidnapping?  Did 
Havana play a role in their release?  (Comment: Embassy 
opines there may be three reasons for the GOP's behavior: to 
deflect unwelcome attention from its failure to secure Darien 
province; to avoid confrontations with the FARC, a 
long-standing GOP policy; and pressure from the Spanish 
government.  End Comment.) 
 
A Bought Press 
-------------- 
¶14.  (C) Intolerant of criticism, there is evidence that the 
GOP seems willing to muzzle, bribe, and intimidate Panama's 
news media to suppress unflattering or inconvenient 
information.  The GOP accomplishes that by using its 
multi-million dollar advertising budget to reward friendly 
editors and reporters who give favorable coverage.  If that 
doesn't work, the GOP uses threats to 
get its way.  For example, former Deputy Foreign Minister 
Nivia Rossana Castrellon, then-managing editor at El Siglo, 
and two staff reporters lost their jobs immediately after a 
November 14, 2005 story identified by name a member of Martin 
Torrijos's private security detail as a drug trafficker. 
According to Embassy sources, Torrijos's media affairs 
director Jorge Sanchez had called Panamanian news outlets the 
day before to kill the story.  After Castrellon let the story 
run, the Siglo board fired the two reporters, and Castrellon 
resigned in protest.  El Siglo sources claim that the 
reporters' story was based on hearsay and not newsworthy. 
 
Operacion Milagro 
----------------- 
¶15.  (C) The Torrijos government has extravagantly praised 
and embraced Operacion Milagro ("Operation Miracle"), a 
Cuban-Venezuelan joint venture that flies Panamanian cataract 
patients to Cuba for free "miracle" eye operations.  Milagro 
is very popular among poor Panamanians and Cuba and Venezuela 
have reaped unprecedented public relations gains.  Milagro 
fits in with the PRD's stated aim to make Panama "a friend to 
every nation."  There are unconfirmed reports that the GOP 
has agreed to permit Milagro to open a Panama City office. 
Likewise, the GOP restored a reciprocal agreement that 
dropped visa requirements for Panamanian and Cuban officials. 
 Panamanian ophthalmologists complain that their own free 
cataract operation for poor Panamanians get no attention or 
support from the Panamanian Government.  These 
ophthalmologists also told us that when they attended a 
meeting with Health Minister Camilo Alleyne where they wanted 
to discuss their displeasure with Milagro, he turned the 
meeting over to the Venezuelan ambassador to uncork a long 
political stem-winder, while passing out leaflets on 
"Panama's Bolivarian Revolution."  Alleyne later complained 
to the Ambassador that he had been instructed by the 
Panamanian First Lady and VP Lewis to host this encounter. 
(Comment: The GOP's main motive in supporting Milagro -- 
aside from seeing it as anti-Chavez "insurance" -- is to 
profit from its popularity.  End Comment.) 
 
Growing Indices of Corruption 
----------------------------- 
¶16.  (C) The recent appointment of the Colamarco to be 
Minister of Public Works, where large contracts give enormous 
opportunities for graft, doesn't mesh with the Torrijos 
Administration's pledge of "zero corruption."  In recent 
discussions with Emboff, Comptroller Dani Kuzniecky said he 
had uncovered "plenty" of corrupt practices, saying that GOP 
officials are finding very "clever" ways to cover their 
tracks.  Kuzniecky identified the Maritime Agency (AMP), 
where Torrijos's cousin, former AMP Director Hugo Torrijos, 
is an advisor, as the second-most corrupt GOP agency. 
(Comment: Hugo Torrijos was heavily implicated in the 2003 
PECC scandal, which like most Panamanian scandals produced no 
indictments or arrests.  Martin Torrijos himself is widely 
believed to have accepted a six-figure bribe in the 2002 
CEMIS scandal. End Comment.)  Kuzniecky added that the Panama 
Municipality, run by presidential hopeful Juan Carlos 
Navarro, is the most corrupt part of the government; Cambio 
Democratico head Ricardo Martinelli described Navarro as a 
petty thief.  Martinelli also opined that while the Moscoso 
government stole thousands, the Torrijos government is 
quietly and cleverly stealing millions. 
 
Hector's Hand in the Till 
------------------------- 
¶17.  (C) The Embassy has also heard of corrupt practices 
involving Hector Aleman prior to his stepping down as 
Minister of Government and Justice in late April.  Aleman 
allegedly set up an importing business for Chinese 
motorcycles which he sold to the Panamanian National Police, 
with the connivance of former PNP Director General Gustavo 
Perez.  Secondly, Aleman reportedly operated a catering 
business in Panamanian prisons that sold gourmet food and 
other products to prisoners with the means to pay. 
 
Comment: Is Torrijos Turning Left? 
---------------------------------- 
¶18.  (C) Simply said:  No.  Since 2004, President Torrijos 
has led a government of mainly U.S.-educated technocrats, not 
traditional PRD politicos, but the politically well-connected 
"second tier" GOP officials have worse qualifications and 
backgrounds than the leaders.  Torrijos believes that his 
principal political competition now comes not from the 
hapless, disorganized "opposition" parties but from within 
the PRD.  For reasons of political expediency, Torrijos is 
now starting to bring that second tier to the fore and with 
some of them, their traditional anti-U.S. habits and 
attitudes.  In our view, the changes we have described do not 
amount to a threatening change in ideological direction, but 
they are indeed troublesome and bear keen vigilance.  Our 
challenge will be to support Torrijos and other pro-U.S. 
elements of the PRD, tolerating some annoying flirtations 
with Cuba and Venezuela, while continuing to deliver sharp 
messages, when appropriate, when we see U.S. interests being 
threatened or jeopardized.  End Comment. 
EATON