VZCZCXYZ0000
RR RUEHWEB

DE RUEHZP #1305/01 2142118
ZNY CCCCC ZZH
R 022118Z AUG 07
FM AMEMBASSY PANAMA
TO RUEHC/SECSTATE WASHDC 0921
INFO RHMFISS/COMDT COGARD WASHINGTON DC
RUEAUSA/DEPT OF HHS WASHDC
RULSDMK/DEPT OF TRANSPORTATION WASHDC
RHMFISS/JOINT STAFF WASHINGTON DC
RUMIAAA/HQ USSOUTHCOM MIAMI FL
RUEKJCS/SECDEF WASHDC
RHEHAAA/WHITE HOUSE WASHDC
RUEAIIA/CIA WASHDC

O N F I D E N T I A L PANAMA 001305 
 
SIPDIS 
 
SIPDIS 
 
FOR STATE WHA/CEN - FEELEY 
FOR STATE WHA/CEN - TELLO 
FOR COAST GUARD RDML SALERNO 
 
E.O. 12958: DECL: 08/01/2015 
TAGS: ECON ETRD PM
SUBJECT: PANAMA CANAL AUTHORITY SEEKS TO KEEP COAST GUARD 
BILLET 
 
Classified By: Charge Luis Arreaga for reasons 1.4(b) and (d). 
 
¶1. (SBU) SUMMARY.  On July 26, 2007, Panama Canal Authority 
(ACP) Administrator Alberto Aleman Zubieta told the 
Ambassador that he would like to keep the U.S. Coast Guard 
(USCG) billet (CGB) embedded with the Panama Canal Authority 
(ACP).  He added that the ACP would continue to benefit from 
the continuing relationship, especially in light of the canal 
expnsion challenges ahead.  However, he explained that he 
could not renew the contract because the USCG increased the 
FY08 cost by $63,000, which exceeds the amount approved by 
the ACP Board of Directors when the contract was originally 
executed.  Aleman noted that continuing the billet at a 
higher price would require a renegotiation of the terms of 
the contract, a process that would involve the Board and the 
Foreign Ministry. This could open the issue to a new dynamic 
and possible opposition from those who question the wisdom of 
having a U.S. armed forces official embedded in the ACP.  END 
SUMMARY. 
 
--------------------------------------------- 
USCG billet a remnant from the canal handover 
--------------------------------------------- 
 
¶2. (SBU) The USCG has maintained a billet with the ACP since 
the USG handover of the Panama Canal on December 31, 1999. 
The billet was established partly to reassure the maritime 
community that a trusted U.S. institution would be involved 
in the maritime security of the canal.  The ACP agreed to 
cover the costs a USCG Captain stationed in Panama and 
working at the ACP on safety and security matters.  The CGB 
operates pursuant to a multiyear contract with annual 
renewals by the ACP.  The next scheduled renewal is September 
30, 2007. The incumbent s currently assigned to the CGB until 
summer, 2008. 
 
¶3. (SBU) During FY 2007, the costs were approximately 
$180,000.  For FY 2008, the costs increased by approximately 
$63,000 to $243,000.  We understand that the increase was 
principally owed to the front loading of certain retirement 
benefits, plus a small inflation adjustment. 
 
------------------------------------------ 
ACP Administrator wants to keep the billet 
------------------------------------------ 
 
¶4. (SBU) On July 26, 2007, Aleman told the Ambassador that he 
does not have the authority to renew the contract for the CGB 
for FY 2008 at the new price. Under ACP rules, he would have 
to submit for approval a newly negotiated contract to the ACP 
Board of Directors and eventually to the Foreign Ministry. If 
on the other hand, the price remained unchanged, he would 
have the authority to extend it another year, as he has been 
doing for the last few years. 
 
¶5. (SBU) Aleman said he would like to keep the billet at the 
ACP because it has been beneficial to the canal. He 
acknowledged that in recent months the billet had been in a 
state of "limbo" owing to the ACP's reorganization undertaken 
to meet the challenges of the upcoming canal expansion.  He 
now believes the CGB is correctly placed within the ACP 
Operations Division (the largest and arguably most important) 
and they are now willing to give the incumbent a far more 
substantive role than in recent months. 
 
¶6. (SBU) Aleman noted that the ACP had considered several 
mechanisms for getting USCG expertise such as contracting 
USCG on an as needed consulting basis from staff based at the 
Embassy or USCG facilities in Miami or Puerto Rico.  However, 
they had reached the conclusion that it would be best for a 
billet to be embedded in the ACP to get the most out of it. 
Aleman acknowledged that the USG may have other ideas about 
the ACP/USCG relationship and that he is willing to consider 
them. 
 
-------------------------------- 
USCG billet serving U.S.interest 
-------------------------------- 
 
¶7. (SBU) Post defers to Washington agencies the discussion on 
the technical and budgetary merits of continuing the 
ACP-funded billet.  Nonetheless, Post would like to offer a 
perspective on the broader context surrounding the issue. 
 
--------------------------------------------- -------------- 
Canal expansion offers opportunities for deeper cooperation 
--------------------------------------------- -------------- 
 
¶8.  (SBU) The $5.25 billion canal expansion project will 
require 7,000 to 9,000 additional workers and tax the ACP's 
management.  Given the ACP,s willingness to keep the billet 
and to give it a substantive role, there may be opportunities 
to for the incumbent to provide valuable safety and security 
advise during the expansion project.  The CGB would provide 
an additional layer of review to ensure the ACP, along with 
the private sector contractors (who may or may be fully 
versed in the unique safety and security issues related to 
the canal), safety and security issues are properly 
addressed.  If such issues are not properly addressed during 
the construction phase, remediation may be extremely 
difficult or impossible. 
 
--------------------------------------------- ---------- 
More traffic will bring greater risks to U.S. interests 
--------------------------------------------- ---------- 
 
¶9. (SBU) With the ever increasing amount of traffic 
transiting the canal (over 14,000 transits in 2006 and a 4% 
increase in transit through the second quarter of 2007), the 
safety and security of the canal is more important than 
ever.  With approximately two-thirds of the cargo transiting 
the canal arriving at or departing from a U.S. port, the 
importance of the canal's safety and security to the U.S. 
economy is greater than ever.  The CGB serves a strategic 
purpose in providing continuous ACP and USG coordination on 
safety and security matters.  The CGB provides an immediate 
and direct point of contact, particularly crucial in the 
event of any natural or man-made disasters striking the canal. 
 
--------------------------------------------- -------- 
Billet serves as the USG,s eyes and ears in the canal 
--------------------------------------------- -------- 
 
¶9. (C) The CGB serves as the eyes and ears of the USG within 
the ACP.  The CGB would allow the USG to have real time 
assessment not only of the safety and security matters 
affecting the canal, but the progress of the expansion 
project, the influence of other governments on the ACP, and 
the operational and management challenges faced by the ACP. 
The value of this arrangement has been recognized by other 
governments.  We heard from ACP sources that the French had 
protested about the presence of USCG officer in the bowels of 
the ACP. 
 
¶10. (SBU) The completion of the ACP organizational 
restructuring has resulted in placing the CGB within the ACP 
operational structure.  The assignment of the CGB to the 
Operations Division eliminates some of the ambiguity of the 
CGB function and would allow for a more efficient use of its 
expertise.  The current assignment ends a long period of when 
the CGB was, in Aleman's words, 
in "limbo". 
 
-------------------------------------- 
Other arrangements seem less efficient 
-------------------------------------- 
 
¶11. (SBU) It is not clear whether a Coast Guard consulting 
arrangement with the ACP would be inadequate to serve U.S. 
and ACP needs.  By definition a consulting arrangement would 
be a project specific, time specific assignment.  A 
consulting arrangement would eliminate the daily contact with 
the ACP and endangers the institutional memory between the 
USG and ACP.  Additionally, a consulting arrangement risks 
having the Coast Guard relationship with the ACP being 
usurped by other national maritime agencies or various 
private consulting firms. 
 
¶12. (SBU) Transferring the functions of the CGB to Post is 
not feasible because Post does not have the expertise to 
 
assess or respond to ACP safety and security issues.  Also, 
the current Coast Guard Attache at Post devotes a 
significant time to drug enforcement matters.  Such 
individual would not have the time or resources to address 
the ACP matters. 
 
¶13. (SBU) Between the time the current CGB contract possibly 
is terminated and the time a new consulting arrangement could 
be negotiated and approved by the ACP Board, a significant 
time gap could occur.  The longer this time gap persist, the 
less likely an arrangement between the Coast Guard and the 
ACP would be concluded.  There is a risk that inertia will 
allow the process to stall. 
Arreaga