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C O N F I D E N T I A L PANAMA 001532 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR WHA - A/S SHANNON 
ALSO FOR EB - A/S SULLIVAN AND WHA/EPSC - SHAPIRO 
STATE PASS TO USTR - SCHWAB AND VERONEAU 
USDOC - BASTIAN 
 
E.O. 12958: DECL: 09/04/2017 
TAGS: ETRD KPAO PGOV OVIP PM
SUBJECT: GUTIERREZ DELIVERS POSITIVE TPA MESSAGE AND 
CONCERNS ABOUT PMG 
 
REF: PANAMA 1503 
 
Classified By: Ambassador William A. Eaton - Reasons 1.5(b and d) 
 
¶1.  (C) Summary: Commerce Secretary Carlos Gutierrez visited 
Panama September 12-13 with a strong message on the benefits 
of a TPA for Panama and the U.S.  Alluding to Pedro Miguel 
Gonzalez's (PMG's) elevation to National Assembly presidency, 
Secretary Gutierrez also made clear in all his public and 
private statements that a "problem now exists that did not 
exist before," emphasizing that Panama and the U.S. have 
worked "too long and too hard" on the TPA to let any problem 
affect its passage.  Secretary Gutierrez and several 
Congressmen reinforced this message with blunter language in 
private with Torrijos and with top PMG allies.  Secretary 
Gutierrez - in concert with Congress - delivered a message 
that Torrijos needed to hear to strengthen his hand with a 
defiant PMG and PMG's supporters.  The Secretary's message 
needs a bit of time to percolate as we plan next steps. End 
summary. 
 
Gutierrez Delivers Strong TPA Message, But . . . 
--------------------------------------------- --- 
 
¶2.  (SBU) During Secretary Gutierrez's participation in a 
reception with Panamanian business and poltical leaders, a 
visit to the Panama Canal, and a meeting and lunch with 
President Torrijos, he delivered a strong message on the 
benefits of a TPA for Panama and the U.S., highlighted 
Panama's strong economic performance and plans for Canal 
expansion, and underscored our long-standing bilateral ties. 
Without ever once referring to newly elected Panamanian 
National Assembly (NA) President Pedro Miguel Gonzalez (PMG) 
by name, he made clear in all his public and private 
statements and in response to media questions that a "problem 
now exists that did not exist before," emphasizing that 
Panama and the U.S. have worked "too long and too hard" on 
the TPA to let any problem affect its passage. 
 
¶3.  (C) The Torrijos administration had been somewhat 
schizophrenic about the issue.  On the one hand they had 
hoped that the visit would signal "business as usual" on the 
TPA and that the problem would go away.  On the other, they 
knew that such a message would make permanent PMG's elevation 
to the top of the National Assembly, which would be a 
constant reminder of PMG's challenge to Torrijos' authority. 
Thus, close advisors to Torrijos expressed privately their 
relief that Secretary Gutierrez had signaled the potential 
problem PMG poses to TPA ratification.  Private sector 
leaders shared similar fears about a "business as usual" 
visit and worried that PMG's ascendancy signaled a weakening 
of Torrijos and his pro-trade/pro-business wing of the PRD. 
Despite intense efforts by administration and private sector 
leaders to encourage PMG to either not accept the NA 
presidency or to later step down, he refused to do so. 
 
¶4.  (SBU) Since Sept. 1, PMG strengthened his resolve to stay 
in office.  PMG and his allies denied any evidence of adverse 
reaction from the USG vis a vis the TPA that would warrant 
his exit.  Increasingly pessimistic that they could encourage 
PMG to exit for the good of the TPA and the country, GOP and 
private sector leaders felt that their best hope would be an 
unequivocal message from Washington that PMG represents an 
obstacle to the TPA. 
 
¶5.  (SBU) As post expected (reftel), all Panamanian 
electronic and print media hung on Secretary Gutierrez's 
every word and action, resulting in unprecedented coverage 
for an official visit.  They also picked up Senator Baucus' 
Sept. 13 statement, released by his office only to the 
Panamanian press, that PMG represents a "serious impediment" 
to TPA passage.  The media's stories and commentary have 
echoed Secretary Gutierrez's messages, reiterating their 
earlier calls for PMG to step down. 
 
Blunt Message to Torrijos: Lance the PMG Boil Now 
--------------------------------------------- ---- 
 
¶6.  (C) In private September 13 meetings with President 
Martin Torrijos, Commerce Secretary Carlos Gutierrez gave 
Torrijos an even blunter warning that the PMG matter 
"complicates" the Congress' approval process for the 
U.S.-Panama Trade Promotion Agreement (TPA).  Advising 
Torrijos that "time is not your friend" on this one, 
Gutierrez urged him to resolve the issue sooner rather than 
later.  He cautioned that, if left unresolved, PMG's 
continued presence at the Assembly's helm will only aggravate 
growing Congressional concern. 
 
¶7.  (C) A stoic Torrijos acknowledged his need to "manage" 
the situation, but did not commit to any specific action. 
Gutierrez stressed that, with Panama's pro-TPA friends 
beginning to get worried about the Panama deal because of the 
PMG issue, the GOP should recognize that anti-TPA and 
fence-sitting congressmen could use the issue to dodge a 
"yes" vote.  He pointed to earlier public comments by pro-TPA 
Senator Charles Grassley and others, as well as growing 
unhappiness among Congress' Hispanic Caucus members. 
 
¶8.  (C) Torrijos bristled when several Congressmen 
accompanying Gutierrez pointed to fundamental shortcomings 
with Panama's judiciary as a key part of the PMG problem. 
Representatives Dennis Hastert, David Dreier, and Joe Crowley 
said that the PMG issue highlights Panama's weak rule of law 
and warned that it could have negative consequences for 
foreign investment in Panama.  Hastert stressed that foreign 
investors go where they find stability and rule of law.  He 
said that the PMG matter may cause some to doubt whether 
Panama's legal system will be fair and transparent.  Crowley, 
noting that his District has the second-highest concentration 
of Puerto Rican residents, said that his pro-Panama TPA 
stance would waver if the PMG-Zak Hernandez matter picks up a 
head of steam.  Although members of Congress departed Panama 
with greater concern about the PMG issue's potential impact 
on final TPA passage, they all supported Secretary 
Gutierrez's message.  None indicated that he would now vote 
against the TPA and one s 
tated that he still fully intends to vote for the deal 
despite potential political blowback over PMG. 
 
Meeks and Dreier Work Over PMG Lieutenant 
----------------------------------------- 
 
¶9.  (C) At a lunch for the delegation hosted by Torrijos, 
Reps. Gregory Meeks and David Dreier were seated at the same 
table with Yasir Purcait, the National Assembly's Commerce 
Committee Chairman and the floor manager for PMG's NA 
presidential campaign.  As PMG's emissary to top private 
sector leaders, Purcait had told business leaders that this 
was strictly an issue of Panama's sovereignty and denied that 
PMG would have any effect on the TPA.  In trotting out 
similar arguments with Meeks and Dreier, Purcait also 
defended the adequacy of Panama's 1997 sham trial that 
"exonerated" PMG.  Meeks and Dreier stressed that, regardless 
of arguments about sovereignty or the adequacy of PMG's 
trial, the bottom line is that PMG's presence as NA President 
will affect Congress' outlook on the TPA.  Meeks later told 
Econ Chief that he believed his message "got through" clearly 
to Purcait.  He also felt that Purcait, as a businessman 
himself, might see that his own interests would ultimately be 
best served by PMG's exit. 
 
 
PMG Remains Defiant 
------------------- 
 
¶10.  (U) Despite Gutierrez's crystal clear public and private 
signals regarding PMG's threat to the TPA, PMG remained 
defiant.  In comments to the press on September 13, PMG 
played the "independence" card and said that his yielding to 
USG pressure would be a "setback for the history of this 
nation." 
 
¶11.  (C) On the margins of the Gutierrez-Torrijos bilat, 
First Vice President/Foreign Minister Samuel Lewis Navarro 
told Ambassador that he (Lewis) and Trade Minister Alejandro 
Ferrer met Sept. 12 with PMG to encourage him to step down. 
According to Lewis, PMG called the issue a "tempest in a 
teapot" that the U.S. Congress would not care about.  PMG 
accused Lewis and Ferrer of whipping up local media over the 
past week to further pressure him to step down.  Lewis said 
he urged PMG to consider how his potential impact on the TPA 
could affect Panama for years to come and undoubtedly harm 
PMG's legacy and reputation.  Lewis also said he believed 
that former President Ernesto Perez Ballardares had deployed 
many of his supporters to egg PMG on with his anti-U.S. 
 
rhetoric and defiance as a way to destroy Torrijos' 
authority.  For Torrijos, he said, the rupture with PMG was 
both a personal, as well as political blow, as Torrijos feels 
betrayed by his longtime friend and PRD colleague, PMG. 
 
Comment and Recommendation 
-------------------------- 
 
¶12.  (C) We need to give Secretary Gutierrez's message a few 
days to percolate through the various players in this saga, 
especially within the PRD.  This Sunday is likely to provide 
a window into its most immediate impact when the 300 most 
important members of the PRD (the National Directorate) meet 
to discuss the party's election agenda.  There is little 
doubt that the subtext of the meeting will be Pedro Miguel 
Gonzalez and efforts to close the deep fissures his election 
caused within the party.  Torrijos is clearly nervous that 
his weakened position could worsen. 
 
¶13.  (C) This also gives us time to plot our next moves to 
get the Pedro Miguel problem resolved, before it gets a 
chance to gain traction or significant notice on the Hill. 
Post believes the way ahead requires us to work closely with 
the business sector, civil society, and the Torrijos 
administration, all of whom want PMG to step down.  It is 
particularly important that we continue our efforts to 
strengthen Torrijos' hand.  He and his wing of the PRD share 
our agenda of a secure pragmatic, pro-trade, pro-U.S. Panama. 
 Under his leadership, Panama has been a reliable partner in 
the UN Security Council and in virtually every other major 
issue importance to the U.S.  Torrijos needs and wants the 
TPA as much as we do.  We can ill afford to seriously wound 
Torrijos as he enters his final two years in office. 
 
¶14.  (U) The Commerce delegation departed without the 
opportunity to clear this message. 
EATON