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C O N F I D E N T I A L PANAMA 001233

SIPDIS

SIPDIS

DEPARTMENT FOR WHA A/S SHANNON
DEPARTMENT FOR WHA/CEN
SOUTHCOM ALSO FOR POLAD

E.O. 12958: DECL: 06/22/2016
TAGS: OTRA PREL ETRD ECON LA XK CH JA KS
SUBJECT: PANAMA: REACHING OUT TO ASIAN MISSIONS

REF: STATE 70035

Classified By: AMBASSADOR WILLIAM EATON FOR REASONS 1.4 (B) AND (D).

SUMMARY
-------

¶1.  (SBU) Following up on A/S Shannon's visit to Asia, we
reached out to our Chinese, Japanese, and South Korean
counterparts to discuss issues of common concern in Panama.
While the three Asian missions share a strong focus on
developing their countries' commercial and business interests
in Panama, they differ widely in their connectivity to and
understanding of political developments in the country.
Embassy will continue to work closely with these countries to
explore areas of common interest and cooperation.  END
SUMMARY.

CHINA: OPTIMISTIC AND RISING
----------------------------

¶2.  (C) China's commercial office, while not an official
embassy, appears to have close connections to parts of the
GOP.  At a recent event, the outgoing and incoming MFA
Foreign Relations chiefs rushed to greet the new PRC
representative, addressing him as "Mr. Ambassador" and
conversing tightly huddled for many minutes.  The commercial
office is well versed on political developments in Panama,
with the China-Taiwan recognition issue clearly at the
forefront.  The PRC representative told us that China will
make no trouble over Taiwan unless Taiwan declares
independence, which would bring a "disaster."  He did not
express any particular hope or expectation that the GOP will
change its diplomatic alignment away from Taiwan, but
ventured that if the current GOP did not recognize China, the
next GOP probably would.

¶3.  (C) According to the PRC representative, however, China's
interest in Panama is overwhelmingly commercial.  China, the
world's number two user of the Panama Canal, wants political
stability in Panama and the region to encourage further
development of trade and business ties.  Chinese companies
are eager to participate in the Canal expansion, and he
hinted that discussions on joint Chinese-U.S. ventures are
already underway.  He said China viewed expansion as
essential to its national interest.

JAPAN: WATCHFUL OF CHINA AND THE CANAL
--------------------------------------
¶4.  (C) The Japanese embassy is one of the larger missions in
Panama and closely follows a number of issues, closely tied
to the concerns identified in reftel.  China is a main focus
of attention and the embassy is carefully tracking China's
growing role in Panama and the region.  The Japanese Charge
mentioned that China is searching for more resources,
particularly food, in the hemisphere and shares Japan's
interest in securing the use of the Canal.  He concurred with
the PRC's sentiment that Panama's diplomatic recognition of
China is not far off.  In other political matters, the
Japanese Charge does not believe political populism can take
hold in Panama.  He believes that the Panamanian people are
pragmatic and Panama would be the last place for populism to
rise.

¶5.  (C) Panama plays a crucial role for Japanese economic
interests, since the country serves as a base for Japanese
businesses working in Latin America.  Japan's main economic
concern is securing the use of the Canal.  Japan remains
worldwide one of the most popular flags of convenience for
international shipping, and the embassy is very interested in
issues of ship registry.  The Japanese embassy reports no
special programs to attract Japanese investment, but
mentioned that the Japan Bank of International Cooperation
(JBIC) is preparing a public seminar on the Canal expansion
project for the Panamanian Foreign Minister's July visit to
Japan.

¶6.  (SBU) Japan funds two main assistance programs in Panama.
 It provides $10 million annually to support a technical
cooperation project and this year provided $1 million to fund
a grass roots development grant.  The embassy is also
planning a sanitation project for the Bay of Panama through a
loan from the JBIC this fiscal year.  (Comment: Japan clearly
hopes that its assistance also eventually wins Panama's
support at the International Whaling Commission for lifting
the IWC's 20-year ban on whaling.  End Comment.)

SOUTH KOREA: MAKING A START IN THE REGION
-----------------------------------------

¶7.  (C) The Korean embassy, with a staff of only four, seems
to be poorly informed about political developments in Panama.
 As compared to elsewhere in the region (see reftel), the
Korean embassy in Panama does not work directly with regional
groups like the Organization of American States or the
Inter-American Development Bank.

¶8.  (SBU) Korean companies, especially Samsung and LG, do
very well here, using the Colon Free Zone as a hub and
distribution point.  The Korean embassy reports that it does
little to assist Korean companies directly and has no set
programs to promote Korean business or investment in Panama.

The embassy's interaction with the Korean business community
is generally limited to requesting private sponsorship of the
embassy's cultural activities and occasionally helping out
when Korean companies work with Panamanian counterparts.

¶9.  (C) Korean assistance to Panama for this year includes a
$2 million e-government grant to the Ministry of Health and
$500,000 in electronic enhancements for the Cabinet meeting
room at the Presidential palace.  The Korean ambassador
mentioned that giving aid to the GOP is difficult because the
Panamanian agencies cannot produce their own development
plans and the Koreans have to hire contractors to do that for
the GOP.

NEXT STEPS
----------

¶10.  (SBU) China, Japan, and South Korea share many of our
interests in Panama and are eager to cooperate with the
United States, whom they view as having better access and
influence on the GOP.  The potential Canal expansion and a
stable, investor-friendly business climate are two important
areas of mutual interest.  Embassy Panama maintains a strong
working relationship with its Asian counterparts, and will
look for further opportunities to work together to further
USG strategic objectives in the region.

EATON