VZCZCXYZ0000
RR RUEHWEB

DE RUEHZP #1649/01 2361501
ZNY CCCCC ZZH
R 241501Z AUG 06
FM AMEMBASSY PANAMA
TO RUEHC/SECSTATE WASHDC 8816
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RHEHNSC/NSC WASHDC
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHDC
RHMFISS/JOINT STAFF WASHINGTON DC
RUEKJCS/OSD WASHDC
RHMFISS/CDR USSOUTHCOM MIAMI FL
RUCPDOC/DEPT OF COMMERCE WASHDC

C O N F I D E N T I A L PANAMA 001649

SIPDIS

SIPDIS

DEPARTMENT FOR WHA KIRSTEN MADISON; WHA/CEN; SOUTHCOM ALSO
FOR POLAD; NSC FOR DAN FISK

E.O. 12958: DECL: 08/24/2016
TAGS: PGOV ECON EWWT ETRD PREL PM
SUBJECT: CANAL EXPANSION REFERENDUM:  INDECISION GROWS,
"YES" LEAD SHRINKS

REF: PANAMA 001411

Classified By: AMBASSADOR WILLIAM A. EATON FOR REASON 1.4D

-------
Summary
-------

¶1. (C) The undecided vote for the October 22 Panama Canal
expansion referendum has grown about five points to 28.5
percent in the last two months at the expense of both the
&yes8 and the &no8 votes, according to a recent Dichter
and Neira poll.  Embassy interlocutors cite lack of
confidence in the government as the most common reason for
this growing indecision.  While most Embassy contacts agree
the referendum will pass, the GOP hopes its proposed national
dialogue on a national development plan will take political
oxygen away from the "no" campaign and bolster support for
the &yes8 vote.  President Torrijos asked the UN
Development Programme (UNDP) to moderate this national
dialogue on August 16.  Post will report SEPTEL on future
developments of this dialogue.  End summary.

--------------------------------------------- ----------
Panamanians Increasingly Uncertain About Expansion Plan
--------------------------------------------- ----------

¶2.  (SBU) With two months to go before the October 22 Canal
expansion referendum, the Dichter and Neira poll shows that
more voters are undecided.  This indecision comes at the
expense of both &yes8 and &no8 votes.  Some 54.4 percent
of respondents favored the referendum, 17.1 percent opposed
it, and 28.5 percent were undecided.  (Note:  Dichter and
Neira's August 4-6 poll interviewed 1,200 respondents and has
an estimated margin of error of 2.9 percent.  End Note.)  By
contrast, Dichter and Neira's June poll revealed 57.9 percent
in support, 19.8 percent against, and 22.3 percent undecided.

------------------------
The Opposition Organizes
------------------------

¶3.  (SBU) On August 7, the Electoral Tribunal (TE) announced
the registration of seven groups that oppose expansion of the
Canal; one additional group was registered in the following
days.  To date, only two groups supporting the Canal
expansion have been recognized.  The majority of the
opposition groups appear to be nothing more than malcontents
with a website.  Two of the groups, however, have fairly
large followings and the ability to mobilize voters.  The
National Front for the Defense of Economic and Social Rights
(FRENADESO) and the Social Security Employees, Association
(AECSS) ) central to the demonstrations last summer against
Torrijos, social security reforms ) have once again taken
up the banner of protest.  A third opposition group formed
last March, the Alternative Political Force (FPA), is a
populist group, closely affiliated with Chavez,s Bolivarian
movement.  Former Social Security Fund Director General (CSS)
and FRENADESO advisor Juan Jovane characterized this
Bolivarian group as little more than a few university
professors without any significant following, noting that the
days of such &vanguard8 movements had long passed.  Despite
the GOP's and Panama Canal Authority's (ACP) public relations
efforts, these groups have capitalized on distrust of the GOP
and lack of progress on other issues to gain traction with
voters.  Labor groups, particularly those groups associated
with FRENADESO, in the run up to the October 22 referendum
see an opportunity to advance their labor demands.  Jovane
confirmed, &Now is not a bad time to negotiate.8  Indeed,
several political observers have told Emboffs that the GOP
intended to do whatever it took in the run up to the
referendum to avoid problems.  Dr. Carlos Abadia, the Vice
President of a &yes8 group and a physician at the CSS, told
PolChief that labor groups have been losing support and have
needed to radicalize in order to mobilize people.

¶4.  (SBU) Opposition leaders ) who themselves are largely
supportive of Canal expansion efforts ) find themselves
boxed in by their rank and file who call for voting "no" on
the referendum.  Newly-elected Panamenista leader Juan Carlos
Varela told Ambassador that his party would not announce its
position on the referendum until September 29 largely to
provide political space for Torrijos to improve the &yes8
vote numbers.  Panamenista legislator Jose Blandon, Jr. told
the DCM that over 80 percent of his party's rank and file
opposed the referendum, and that the party leadership would
be forced to come out against it if things do not change
soon.  Publicly, Varela called on Torrijos to postpone the
referendum.  Union Patriotica leader Ricky Fabrega told
PolChief that his party is afraid of being perceived as
PRD-lite and that while the Canal expansion is a good idea in
theory, he does not personally support the project under PRD
administration.  Celia Moreno, a Partido Popular leader told
Polchief that the opposition parties did not want to derail
the referendum, but rather would like to see it pass by a
small margin in order to prove that they were a viable force.

--------------------------------------------- -------
GOP Hopes National Dialogue May Jumpstart &Yes8 Vote
--------------------------------------------- -------

¶5.  (SBU) Many Embassy interlocutors have complained about
the Torrijos Administration's mismanagement of the &yes8
campaign.  Abadia told Polchief that Panamanians need to have
an emotional relationship to the project, and should feel
like active participants.  Others have characterized the ACP
efforts to promote the &yes8 vote as arrogant,
technocratic, and tone deaf.  Indeed, the leader of "Yes, for
Panama," Felipe Rodriguez, criticized Torrijos' "tight
secrecy (hermetismo)" and the ACP's "cold" and "technocratic"
manner for hindering efforts to promote the "yes" vote.
Supporters and opponents alike criticize the Torrijos
administration for making the Canal expansion a
&political initiative8 rather than a &national project8
that benefits all Panamanians.  Roberto Henriquez, Vice
President of the Democratic Change Party explained to
Polchief that there is a tendency in Panama to use &el voto
castigo" to punish the ruling administration by voting
against something without even considering the issue at hand.
 He says that the &no vote8 is an emotional response based
on a lack of confidence in the capacity of the GOP to manage
the project transparently, and that this could surface on
referendum day.

¶6.  (SBU) On 16 August, Torrijos formally asked the UN
Development Programme (UNDP) to serve as a moderator for a
national development plan.  Whereas he had previously
resisted calls to launch a national dialogue on a national
development plan, faced with eroding poll numbers and a
stagnant campaign, Torrijos appears to have accepted the
necessity of dialogue.  In his public call for a dialogue,
Torrijos explained that the Canal expansion plan is a
well-planned initiative that will improve living conditions
for all Panamanians.  The President urged Panamanians &with
common will and a sense of the country to take advantage of
this opportunity and take the leap into the first world.8
Despite his attempt to alleviate opposition concerns, initial
remarks from opposition leaders revealed a skeptical wait and
see attitude.  FPA leader Beluche immediately called the
effort "insincere" while the Patriotic Union Party is meeting
this week to define its position with regard to the Canal.
Panamanian political experts explained that there was general
consensus across the political spectrum in favor of dialogues
on national development in Panama.

¶7.  (C) Dr. Abadia told PolChief, and other observers have
noted, that the current situation with the Canal referendum
echoes the way President Torrijos (mis)managed the social
security reform last summer.  He explained that FRENADESO
really got started during the CSS reform process due to the
GOP,s failure to dialogue and engage opponents.  It took
months of protests for the President to launch a national
dialogue on the social security reforms, and a watered-down
version of the legislation was implemented nearly six months
later.

-------
Comment
-------

¶8.  (C) Most political spectators agree that the referendum
will probably pass by a narrow margin.  Roberto Henriquez
says that historically 60-65 percent of Panamanians generally
support the idea of expanding the Canal.  This 65 percent is
the ceiling that the GOP could expect to win on the
referendum.  Referenda in Panama have a storied history of
failure; no referendum has been approved since the
restoration of democracy.  Panamanians go to the polls only
every five years and they may take advantage of this unique
interim opportunity to voice general disaproval of the
Torrijos administration.

¶9.  (C) The GOP now faces the challenge of staunching erosion
of its &yes8 base, neutralizing growth of the &no8 vote
by restoring a measure of confidence in its ability to
govern, and growing the participant base through positive
engagement.  Transforming efforts to expand the Canal into a
national project that is linked to a broader development
agenda could help the GOP to reenergize support for the
&yes8 vote.  However, a poorly managed or token effort
could undermine GOP credibility and weaken support for the
expansion.
EATON