VZCZCXYZ0009
RR RUEHWEB

DE RUEHZP #1652/01 2362318
ZNY CCCCC ZZH
R 242318Z AUG 06
FM AMEMBASSY PANAMA
TO RUEHC/SECSTATE WASHDC 8822
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHDC
RHMFISS/JOINT STAFF WASHINGTON DC
RUEKJCS/OSD WASHDC
RHMFISS/CDR USSOUTHCOM MIAMI FL
RHEHNSC/NSC WASHDC

C O N F I D E N T I A L PANAMA 001652

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 PREL
SUBJECT: THE RULING PRD: THE CANAL REFERENDUM AND BEYOND


Classified By: DCM LUIS ARREAGA FOR REASON 1.4 (d)

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Summary
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¶1.  (C) The Panama Canal expansion referendum will have
political implications for the Torrijos administration far
beyond the tangible impact of the project itself.  President
Torrijos confronts the referendum from an uncertain position
in his Democratic Revolutionary Party (PRD) and with vocal
opposition from opposition parties and labor unions.  PRD
contacts have told EMBOFFs that Torrijos will use a
successful referendum to bolster his position within the PRD
ahead of the internal party elections in 2007 and the party
primary in 2008 to select the presidential candidate for
¶2009.  Some observers believe that the referendum and
subsequent canal expansion project could propel Torrijos -
who will be in his early fifties when he departs office -
into the PRD's king-maker position for years to come.  End
summary.

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Growing Disillusionment with the Torrijos Administration
--------------------------------------------- -----------
¶2.  (C) More than a vote on expanding the Panama Canal, the
October 22 poll is a referendum on the Torrijos
Administration.  Embassy interlocutors including Vice
President of the Democratic Change Party Roberto Henriquez,
explain that many Panamanians will vote for the referendum
based on what they think of the Torrijos administration, with
little consideration of the issue at hand.  President Martin
Torrijos has banked his entire administration on this
expansion plan, and the outcome of the vote will determine
the course of the rest of his administration as well as the
immediate future of his Democratic Revolutionary Party (PRD).
 The referendum comes two years into an administration in
which political gains have been accompanied with vocal
opposition and great political cost.  Torrijos recognizes the
significance of this initiative for his administration, but
has been criticized for his management of the project by
supporters and opponents of the referendum.

¶3.  (C) Opponents of the Canal referendum including former
Social Security Fund Director General Juan Jovane and
Solidarity Party Secretary General Ricky Fabrega generally
tell EMBOFFs that distrust of the GOP is the primary reason
they oppose the expansion project.  Several traditional PRD
supporters, including two PRD legislators, recently expressed
a more general concern to POLTDYer about a lack of democratic
governance under the Torrijos administration.  PRD Deputy and
incoming legislative majority leader Leandro Avila told
POLTDYer that Panama had a "democratic dictatorship" because
it was personality driven and clientalistic.  He said that
Torrijos did not rely on his advisors to make policy
decisions, but rather listened exclusively to his inner
circle consisting of VP and FM Samuel Lewis, Minister of the
Presidency Ubaldino Real, and Carlos Santiago, a personal
friend with no official position.  PRD CEN board member
Samuel Buitrago said that Torrijos made decisions based on
how he was doing in the most recent polls, rather than
turning to his advisors.  Buitrago and Avila said that
Torrijos was fairly weak within the party and that he would
lose the vote in the PRD CEN for party presidency if it were
held soon.  PRD Deputy Miguel Aleman and Avila further
pointed out that Panamanian deputies were required to vote
along party lines.  Avila said that the legislators are
expected to blindly pass legislation coming from the
Executive.  He further warned POLTDYer that an "imperfect
democracy" in Panama created space for leftist politicians to
gain momentum.  GOP critics such as Jovane have expressed
concern to EMBOFFs over the degree of control the PRD
maintains over all branches of government and the weak and
disorganized state of the opposition parties.

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Torrijos Looking to Consolidate Control
---------------------------------------

¶4.  (C) A successful Canal referendum is an opportunity for
Torrijos to quell critics and solidify his leadership in the
PRD ahead of the 2007 internal elections and 2008 party
primaries.  Torrijos has long touted the Canal expansion
project as a panacea for Panama but has failed to articulate
an agenda beyond the referendum.  Torrijos may look to a
"yes" vote as a mandate to increase his control over the
party ahead of internal party elections scheduled for 2007
and the party primary in 2008.  PRD insiders speculate
various ways that Torrijos could cement his control over the
next two years.  PRD Deputy Miguel Aleman told POLTDYer of
rumors that Torrijos could use a successful Canal referendum
as grounds to seek his own reelection through a separate
referendum.  Buitrago and Avila, meanwhile, told POLTDYer
that Torrijos could push the 2007 internal PRD elections to
2008 to coincide with the PRD party primaries in order to
gain time, strengthen his support within the party, and
minimize the influence of former President Ernesto Perez
Balladares.

¶5.  (C) Political insiders say that Torrijos' goal is to
retain control of the PRD CEN for the remainder of his
administration in order to influence the selection of the
party's next presidential candidate.  He will have to compete
with the political ambitions of former President Ernesto
Perez Balladares and with uncertain support from the CEN
members.  Buitrago told EMBOFFs that the CEN was fairly weak
and that Torrijos preferred to host bilateral meetings with
CEN members because the President would lose the votes if he
put decisions to the full CEN.  Perez Balladares would use a
seat on the board to either launch his own presidential
campaign, or to back a candidate of his choosing - leaving
Torrijos with little control over the party's future.

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Comment
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¶6.  (C) Should the referendum fail - no referendum has ever
succeeded since Panama's return to democracy - Torrijos would
be a lame duck for the next three years and the PRD would
lose significant political clout.  If the referendum succeeds
- most political insiders believe it will by a narrow margin
- Torrijos would face key party votes in 2007 and 2008 from a
stronger position, but would still have to contend with
internal party critics.
EATON