VZCZCXYZ0026
PP RUEHWEB

DE RUEHZP #0788/01 1351738
ZNY CCCCC ZZH
P 151738Z MAY 07
FM AMEMBASSY PANAMA
TO RUEHC/SECSTATE WASHDC PRIORITY 0375
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE PRIORITY
RUEHBO/AMEMBASSY BOGOTA PRIORITY 2582
RUEHBR/AMEMBASSY BRASILIA PRIORITY 0330
RUEHCV/AMEMBASSY CARACAS PRIORITY 1130
RUEHPE/AMEMBASSY LIMA PRIORITY 0692
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEAUSA/DEPT OF HHS WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RHEFDIA/DIA WASHDC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RHMFISS/CDR USSOUTHCOM MIAMI FL PRIORITY
RHMFISS/DEPT OF ENERGY WASHINGTON DC PRIORITY
RHMFISS/JOINT STAFF WASHINGTON DC PRIORITY
RUEKJCS/OSD WASHDC PRIORITY

C O N F I D E N T I A L PANAMA 000788 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR WHA/CEN - TELLO 
ALSO FOR WHA/EPSC - SALAZAR AND MARTILOTTA 
ALSO FOR EB/TPP/BTA - LAMPRON 
STATE PASS USTR FOR SCHWAB, VERONEAU, EISSENSTAT, AND MALITO 
USDOC/MAC FOR GAISFORD 
 
E.O. 12958: DECL: 05/15/2017 
TAGS: ETRD ECON PREL PGOV ENRG UNSC OAS PM
SUBJECT: PANAMA TO NEGROPONTE: WE WELCOME TRADE DEAL, BUT 
NEED EDUCATION AND INSTITUTIONAL REFORMS 
 
 
Classified By: Ambassador William A. Eaton - Reasons 1.4(b and d) 
 
¶1.  (C) Summary.  In separate May 11 encounters with Deputy 
Secretary of State John D. Negroponte, a cross-section of 
Panamanian business, civil society, and media leaders 
welcomed the U.S.-Panama Trade Promotion Agreement (TPA). 
They cautioned, however, that Panama also had to reform its 
educational and judicial systems, among other institutional 
changes, to better use the TPA in addressing Panama's 
persistent poverty and wide income disparities.  End summary. 
 
Roundtable Members Fret Over Poverty & Poor Education 
--------------------------------------------- -------- 
 
¶2.  (U) On May 11, the Deputy Secretary discussed trade and 
development issues with a cross-section of about a dozen 
business and civil society leaders.  Flanked by WHA Assistant 
Secretary Thomas A. Shannon and Ambassador William A. Eaton, 
the Deputy Secretary highlighted the evidence of significant 
growth and change he observed during his earlier stops in 
Colombia, Ecuador, and Peru.  His question about how a TPA 
with the U.S. might affect Panama sparked a 90-minute 
discussion that revealed broad acceptance of free trade, but 
also deep concern that endemic corruption, weak institutions, 
and inadequate education might keep the benefits of Panama's 
trade and economic growth from reaching the nearly 40 percent 
of Panamanians still mired in poverty and those struggling to 
narrow the country's wide income disparities. 
 
¶3.  (C) Former Vice Minister of Foreign Affairs Roxanna 
Castrellon said that, despite Panama's economic boom, many 
Panamanians remained stuck in poverty.  She attributed this 
phenomenon mainly to a continued lack of equal access to 
opportunities.  Castrellon pointed to increased security 
risks, especially in the Darien region bordering Colombia, as 
a result of the limited opportunities offered to many 
Panamanians.  Rosario Aguilar, a longtime aid worker in the 
Darien concurred, noting that most of the youth in Panama's 
largest, sparsely populated province saw few, if any, 
opportunities.  She said that some in the Darien had to 
journey 16 hours by canoe downriver to the nearest market, 
where they might earn $1 per 100 bananas, which wholesalers 
later turn around for $5 per 100.  As a result, she said, 
Darien residents were increasingly vulnerable to the lure of 
"easy money" offered by drug traffickers, despite the risks. 
 
¶4.  (C) Economist Alexis Soto suggested that Panama's 
continued dynamic of "growth without development" resulted 
from the poor linkage of booming economic sectors with 
impoverished communities.  He stressed that Panama had to 
better integrate its agricultural sector with the rest of an 
economy that had been historically driven by the Panama 
Canal.  A one-time TPA skeptic, Soto agreed with the Deputy 
Secretary on the job-creation prospects offered by the TPA. 
He felt that the TPA offered an adequate adjustment period 
for Panama's agricultural sector, but that much more was 
needed to "fully integrate" this sector with the overall 
economy. 
 
¶5.  (C) Business leaders such as AmCham President Carlos 
Urriola, CONEP ("Chamber of Chambers") President Jose Javier 
Rivera, and retail & finance executive Felix Maduro each 
stressed Panama's lack of skilled labor as a critical barrier 
to ensuring that the TPA delivered results.  They said that 
Panamanian employers stood ready to hire thousands of 
additional employees, but could not find nearly enough 
qualified workers.  As a result, they worried about the need 
to bring in foreign workers, e.g., for the maritime sector 
(Panama Canal expansion), which could cause serious social 
problems. 
 
¶6.  (C) Others, such as law professor Miguel Antonio Bernal 
and Transparency International's Executive Director Angelica 
Maytin, pointed to corruption and weak rule of law as the 
primary impediments to Panama's development.  Bernal welcomed 
the TPA, but warned that the country would not advance amid 
the GOP's erosion of civil liberties, rampant corruption in 
the judiciary, and the "virtual return" of ex-dictator Manuel 
Noriega in the form of former Noriega allies who now held 
some key GOP posts.  Likewise, Gertrudes Sires, who leads an 
indigenous women's association in a Ngobe Bugle comarca (akin 
to an Indian reservation) said that corruption at local 
levels prevented wealth from reaching the base of Panamanian 
society.  She called for greater capacity building for 
indigenous women to better serve as watchdogs over 
expenditures for local development programs in their 
communities. 
 
¶7.  (C) Agricultural exporter Francisco Atunez bemoaned the 
existence of poverty and starvation in a country that enjoys 
enormous natural wealth.  Environmental activist Raisa 
Banfield concurred, illustrating the point with a Panamanian 
fairy tale about a small cockroach that found a dollar bill, 
but did not have a clue about what to do with it. 
Panamanians, she said, did not yet know the rich biodiversity 
the country had and, as a result, had not developed anything 
resembling an integral plan for sustainable development. 
 
Top Opinion Leaders Focus on "Institutionality" 
--------------------------------------------- -- 
 
¶8.  (C) The Deputy Secretary's two-hour dinner with a smaller 
slice of business, civil society, and media opinion leaders 
revealed a similar consensus that corruption and weak 
institutions could hinder Panama's gains from a TPA with the 
U.S.  Alfredo Castillero Hoyos, a former Foreign Ministry 
official and UNDP consultant, typified the group's welcoming 
of the TPA, but with the caveat that deep institutional 
reforms would be needed before the deal could have its 
desired impact for ordinary Panamanians.  He pointed to the 
GOP's rejection of bad news, such as a recent UNDP report on 
starvation in the Darien, as indicative of the government's 
unwillingness to meet its institutional challenges 
forthrightly.  Former OAS Ambassador and current U.S.-Panama 
Association President Enrique de Obarrio noted that this 
concern prompted Panama's leading association of business 
executives to focus its May 16-18 annual conference on the 
country's lack of "institutionality."  Magaly Castillo, 
leader of a top judicial reform advocacy group ("Alianza 
Ciudadana Pro Justicia") stressed that stronger rule of law 
was a must to advance Panama's development. 
 
¶9.  (C) Others, such as ex-Panama Chamber of Commerce 
President Diego Eleta, worried that a drift in USG focus on 
Latin America and/or failure to ratify free trade deals with 
Colombia, Peru, and Panama would further embolden those who 
advocate populist and/or authoritarian approaches to 
addressing the region's development needs.  Eleta welcomed 
the Deputy Secretary's visit to the region as an encouraging 
sign of stronger U.S. engagement. 
 
¶10.  (C) Several participants pointed to the persistence of 
poverty in the Darien region as a key worry and as emblematic 
of Panama's development challenges.  Lawyer and former WTO 
Ambassador Carlos Ernesto Gonzales stressed that "it is up to 
us" to solve Panama's poverty problems.  He said that the 
GOP, by creating indigenous comarcas over the past few 
decades, effectively condemned indigenous groups to perpetual 
extreme poverty, as they could not usefully capitalize on 
commonly held comarca lands.  While noting the importance of 
education, "Panama America" newspaper executive Guido 
Rodriguez and others suggested that the Darien was unlikely 
 
to see any change until Panamanians figured out how to 
integrate it with the rest of the country.  (Gonzales noted 
wryly that the Spanish, despite establishing their first 
foothold in the hemisphere in Panama, were never able to 
control the Darien.)  Meanwhile,  a GOP and UNDP effort to 
promote a "national dialog" toward creating a national 
development plan was, according to de Obarrio, "going nowhere 
fast." 
 
¶11.  (U) This message was cleared by the Deputy Secretary's 
delegation. 
EATON