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DE RUEHZP #1592/01 2692348
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FM AMEMBASSY PANAMA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1217
RUEAIIA/CIA WASHDC IMMEDIATE
RHEHAAA/NSC WASHDC IMMEDIATE
RUCPDOC/DEPT OF COMMERCE WASHDC IMMEDIATE
RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
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C O N F I D E N T I A L PANAMA 001592 
 
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 Q BASTIAN 
 
E.O. 12958: DECL: 09/25/2017 
TAGS: ETRD ECON PREL PGOV PM
SUBJECT: BUSINESS LEADERS DESPAIR OVER PMG'S EFFECT ON TPA 
 
 
Classified By: Ambassador William A. Eaton - Reasons 1.5(b and d) 
 
¶1.  (C) Summary: Panamanian business leaders are increasingly glum 
about the country's prospects for securing Trade Promotion Agreement 
(TPA) ratification in the U.S. owing to Pedro Miguel Gonzalez's (PMG's) 
September 1 elevation to PanamaQs National Assembly presidency.  In 
their meetings with several U.S. congressmen in Washington last week, 
they came away with the clear impression that the TPA would not advance 
in Congress so long as PMG remains in place. Private sector figures and 
politicos have sought to blame President Martin Torrijos and Vice 
President/Foreign Minister Samuel Lewis Navarro for their "failed 
leadership" that gave rise to PMG and his potential impact on the TPA. 
Relentless media coverage of the issue has further aggravated 
Panamanian despair over the inevitable clash between PMG and the TPA. 
Meanwhile, Post hears that PMG is trying to pitch the line that 
regardless what happens to the TPA, it has nothing to do with his 
ascension to the National Assembly presidency.  His departure appears 
highly unlikely.  End summary. 
 
Business Leaders Bemoan PMG Effect on TPA 
----------------------------------------- 
 
¶2. (C) On September 24, PanamaQs American Chamber of Commerce President 
Carlos Urriola gave board members of the U.S.-Panama Association (USPA) 
a sobering read-out of his trip last week to Washington, DC to lobby 
for the U.S.-Panama TPA.  Together with other members of the American 
Chambers of Commerce of Latin America (ACCLA), Urriola met with several 
House members, including Reps. Sander Levin, Gregory Meeks, 
Joe Crowley, Xavier Becerra, and others.  He said that the members were 
clearly perturbed by PMG's September 1 elevation to Panama's National 
Assembly presidency and that their basic message to ACCLA was that the 
Panama TPA would not go forward so long as PMG remained in place. 
Urriola said one member warned, "If Lou Dobbs puts this (PMG) issue out 
over CNN, this TPA won't be dead.  It'll be buried." 
 
¶3.  (C) Urriola said that Rep. Crowley appeared to waver in his support 
for the TPA precisely because of PMG.  He added that Crowley told the 
entire ACCLA group that he and other members were concerned about the 
lack of "rule of law" in Panama and how PMG's "impunity" casts doubt on 
how U.S. investors might fare with Panama's corrupt judiciary. 
(Comment: Panama's notoriously corrupt judicial system has long posed a 
problem for foreign investors faced with arbitrary and capricious 
proceedings.  Even if the PRD's manipulation of PMG's 1997 trial 
ultimately boomerangs to dash Panamanian hopes for a TPA with their 
biggest trade partner, it is unclear whether this would be enough to 
finally prompt PanamaQs elites to embrace meaningful judicial reform. 
End comment.) 
 
¶4.  (C) Urriola added that Rep. Sander Levin appeared unmoved by 
arguments that failing to approve the TPA could embolden Venezuelan 
President Hugo Chavez.  "Levin said he was bored with the Chavez 
argument and wanted us to discuss the PMG issue directly, not in terms 
of the Chavez threat," according to Urriola. 
 
¶5.  (C) Other USPA members bemoaned the GOP's "stupidity" and "failure 
of leadership" in allowing PMGQs rise to potentially torpedo the TPA. 
Eloy Alfaro, former Panamanian Ambassador to the U.S., criticized 
President Martin Torrijos and Vice President/Foreign Minister Samuel 
Lewis Navarro for their public support for PMG.  Alfaro suggested that 
Panama's chief executive had aggravated the "negative signals" sent to 
the U.S. by the National Assembly.  He also discounted continued 
displays of support for the TPA by Bush Administration officials, 
noting that the U.S. Congress would "make its own decisions."  Alfaro 
observed that the views of congressmen could easily harden, noting that 
some continue to repeat the decade-old canard about the GOP having 
supposedly given the Chinese control over the Panama Canal. (Comment: 
Alfaro is a political ally of Torrijos' political enemy, former 
President Ernesto Perez Balladares, and is ostensibly interested in 
discrediting the Torrijos administration. End Comment.) 
 
¶6.  (C) Clearly frustrated by PMGQs stubborn refusal to step down for 
the sake of the TPA and the broader national interest, USPA members 
discussed ways they might boost the pressure on PMG to step aside. 
While some called for all business chambers to unite in a nationwide 
campaign aimed at prompting PMG's resignation, others cautioned against 
the potential for such an effort to backfire, further hardening PMG's 
resolve to stay put.  They all agreed, however, that this was 
ultimately a problem that only Panamanians themselves could resolve. 
They also worry that, even if PMG steps down immediately, this 
episode may have done irreversible damage to the TPAQs prospects in 
Congress. 

PRD Members Point Fingers Over PMG Debacle 
------------------------------------------ 
 
¶7.  (C) On September 19, President TorrijosQ private secretary, Leonel 
Solis, told an embassy official that "Martin is the only one to blame 
for this huge mistake" and that Torrijos "never thought that PMG would 
go this far."  He added that he's only seen Torrijos seriously 
concerned about two crises: protests in 2005 against Social Security 
reforms and the PMG matter. 
 
¶8.  (SBU) Sensing the potential political fall-out the PRD could 
suffer from possibly losing the TPA over the PMG issue, Panama City 
Mayor Juan Carlos Navarro openly criticized Vice President/Foreign 
Minister Samuel Lewis on September 14 for allowing the PMG debacle to 
harm Panama's relationship with the U.S.  Lewis retorted that his 
cousin the mayor (and fellow PRD presidential aspirant) should stay 
out of the GOP's diplomacy and attend to the city's trash collection 
problems. 
 
¶9.  (SBU) Former Minister of Government and Justice and current Chair 
of the AssemblyQs Foreign Relations Committee, Hector Aleman, 
explained to DCM that the Pedro Miguel debacle got caught in internal 
PRD politics.  According to him, the National Assembly had a growing 
number of gripes about how Torrijos had sidelined the National 
Assembly and how he had become increasingly dictatorial in his 
treatment of them.  Martin simply sent his edicts to the Assembly and 
expected them to fall in line, which created deep resentment among 
members.  Many in the Assembly saw the Pedro Miguel election as a way 
to get back to Torrijos and to teach him a lesson.  (Comment: Despite 
his professed support for Torrijos, it is well known that Aleman's 
pride had been wounded by his dismissal from the Ministry and he may 
have lent himself to consummation of the September 1 circus that 
elected Gonzalez.  End comment.)   In response to the DCM's admonition 
that the PRD had willingly adopted an unhelpful anti- American speech, 
Aleman explained that it was the only way for them not to be isolated 
politically and that some viewed it as the insurance policy against 
the resignation of Gonzalez.  He predicted that Gonzalez would not 
step down, but expressed concern about the future of the TPA.  He 
predicted dire consequences if the Agreement is not ratified and 
professed a willingness to find a way ahead, short of Gonzalez's 
resignation.  He also conceded that the PRD could lose the 2009 
election if the TPA were not ratified and that he has told this to 
Gonzalez.  Aleman said that Gonzalez had agreed to not make any 
more public anti-American statements. 
 
 
Press Contacts Say PMG Delusional 
--------------------------------- 
 
¶10. (C).  In an off-the-record conversation, three prominent media 
directors and a popular TV journalist related to the Ambassador, DCM 
and PAO their views on PMG based on conversations and interviews that 
have had with him.  The four were unanimous in saying that PMG was 
"delusional," living in his own fantasy world with respect to his 
potential negative impact on the TPA.  PMG refused to acknowledge that 
he would be a factor at all in the congressional deliberations and 
that he could turn out to be the critical factor in a final vote on 
the TPA.  One director noted that PMG accused the Panamanian press, 
especially leading daily QLa Prensa,Q of being in cahoots with the 
Americans in orchestrating an anti-PMG campaign. 
 
Comment 
------- 
 
¶11.  (C) Local media coverage of the "PMG dilemma" has been 
relentless, driven by Panama's internal politics as well as outside 
forces, such as the Puerto Rican Senate's efforts to make an issue of 
PMG.  (Zak Hernandez, whose 1992 ambush slaying was allegedly done by 
PMG, was Puerto Rican.)  Likewise, international media coverage of the 
PMG story in late August/early September has further aggravated the 
private sector's despair and frustration over the inevitable clash 
between PMG and ratification of the TPA. 
 
¶12. (C) Every indication suggests that PMG is convinced his rise will 
not affect the ratification of the TPA.  Post has heard that PMG 
thinks that the U.S. Congress will ratify the TPA because its national 
interest is greater than the complications created by his ascension. 
Post has also heard that PMG thinks that if the TPA is not ratified it 
will be owed to internal political differences in the U.S. over free 
trade and not his ascension.  In any event it looks as if Gonzalez is 
entrenching his position and that he will not leave. 
EATON