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C O N F I D E N T I A L PANAMA 000284 
 
SIPDIS 
 
SIPDIS 
 
FOR STATE WHA/CEN - TELLO 
 
E.O. 12958: DECL: 04/09/2018 
TAGS: EAID ECON ENRG NAS PM
SUBJECT: PANAMA: U.S. REP. GENE TAYLOR'S MEETING WITH GOP 
VP/FORMIN SAMUEL LEWIS 
 
¶1. (SBU) SUMMARY. On March 24, 2008, U.S. Representative Gene 
Taylor (Mississippi) met GOP Vice President and Foreign 
Minister Samuel Lewis.  During the wide ranging 90-minute 
meeting, they discussed the Panama Canal expansion project, 
Manta relocation, 2009 Panamanian elections, the 
Colombia-Ecuador dispute, crime, Panama's economy, Hugo 
Chavez, and the Latin American Left. 
 
-------------------- 
Meeting Participants 
-------------------- 

¶2. (U) 
USG 
Representative Gene Taylor 
Ambassador William A. Eaton 
Manuel Rubio, notetaker 
 
GOP 
First Vice President and Foreign Minister Samuel Lewis 
Deputy Foreign Minister Ricardo Duran 
Tommy Guardia, notetaker 
 
---------------------- 
Panama Canal Expansion 
---------------------- 
 
¶3. (U) Taylor asked about the financing for the Panama Canal 
expansion project, the status of the bidding on Canal 
expansion contracts and the effect of increasing oil prices 
on Canal traffic. Lewis responded that the Canal expansion 
project would be financed through a combination of cashflow 
from operations and approximately $2.3 billion in debt 
financing.  Lewis said there was "tremendous" interest among 
commercial banks and multilateral agencies, such as the 
Inter-American Development Bank, the Japanese International 
Cooperation Agency, and the European Union.  He noted that 
lenders are attracted by the Canal's guaranteed revenue 
stream and successful history. 
 
¶4. (U) Lewis added that, as the price of oil increases, the 
value of the shortcut offered by the Canal also increases. 
He said the GOP commissioned a study to access the impact 
climate change will have on the Canal and its operations.  He 
said the study will also  quantify the Canal's benefits to 
the environment through lower emissions and fuel costs by 
using the Canal as opposed to longer routes. 
 
--------------------------------------------- -------- 
Moving Manta Operation to Panama - GOP Not Interested 
--------------------------------------------- -------- 
 
¶5. (C) Taylor noted that the Ecuadorian government may not 
extend the U.S. lease on the Manta facility.  Taylor asked if 
the GOP would consider the USG moving part of the Manta 
operations to former Howard airfield outside Panama City or 
to any other facility anywhere in Panama. 
 
¶6. (C) Lewis said there are "slim" chances that the GOP would 
consider such a request anywhere in the country.  He said few 
in Panama would want to re-visit the issue. Lewis said 
opening up a discussion of moving part of the Manta 
operations to Panama would generate unspecified problems. 
Noting shared national security concerns and strong bilateral 
relationship, Lewis said the two countries should focus their 
security efforts on issues they can work jointly. Lewis noted 
that Panama's stability is related to U.S. national security 
since 14% of U.S. maritime trade passes through the Canal and 
the Canal handles more U.S. trade than any single U.S. port. 
 
-------------------- 
Panamanian Elections 
-------------------- 
 
¶7. (SBU) Discussing the 2009 Panamanian elections, Lewis 
noted that the ruling Democratic Revolutionary Party (PRD) 
had two presidential candidates (Panama City Mayor Juan 
Carlos Navarro and Housing Minister Balbina Herrera) and that 
there may no space for additional candidates.  Lewis said the 
PRD primaries would be in September or October, but the date 
would be decided by the PRD leadership.   Lewis said he had 
made no decision on running for President.  Lewis said the 
important thing for the new government would be to continue 
the programs started by the Torrijos Administration. 

------------------- 
Colombia and Panama 
------------------- 
 
¶8. (U) Taylor asked how Panama has avoided the problems 
suffered by Colombia, such as the FARC and high crime, 
especially given their proximity and close ties. 
 
¶9. (C) Lewis said the problems of Colombia are rooted in the 
drug trade, exacerbated by the involvement of an irregular 
army (FARC).  According to Lewis, if the problems were rooted 
in ideology, the government and the FARC could eventually 
come to an arrangement on political representation.  Lewis 
said that, since Colombia is dealing with drug dealers, there 
is nothing to negotiate, so compromise is not possible. Lewis 
said Panama is spared some of these problems because it is 
not a cocaine producing country.  He said the GOP has always 
maintained a strong anti-drug policy. 
 
¶10. (C) Lewis stressed that the GOP and most Panamanians do 
not want the Darien Gap opened.  He said that while the 
Darien Gap makes it harder to control the area, it serves as 
a natural barrier to drug dealers and the FARC, as well as an 
environmental preserve.  Lewis said he has to dance around 
the issue, especially with the Colombians, who he said bring 
up the topic "on a daily basis." 
 
------------------------------------- 
Crime in Panama - Mostly Drug Related 
------------------------------------- 
 
¶11. (SBU) Discussing crime in Panama, Lewis said drug 
consumption is a problem and is aggravated by Panama being 
the first stop in the drug transit chain.  Lewis said that 
narcotraffickers pay in drugs.  Accordingly, drug dealers in 
Panama offer drugs cheaply in order to monetize such drugs. 
Lewis noted that with limited resources, Panama seized more 
drugs in 2007 than Mexico and than all of Central America 
combined.  He said the large amount of drug seizures reflects 
the huge amount transiting Panama.  Lewis said he feels that 
the Merida Initiative is very important is addressing the 
drug trade.  He said Panama needs more resources to fight 
narcotrafficking and he hoped Merida would help. 
 
-------------------------------- 
Copper Mines and the Environment 
-------------------------------- 
 
¶12. (SBU) Taylor asked about mining operations in Panama. 
Lewis said Petaquilla, a Canadian firm, had been working a 
cooper mine for 20 years.  The mine was abandoned when copper 
prices collapsed.  Now that prices have rebounded, they were 
looking to re-start activities.  Lewis said the project is 
facing opposition from environmental and civil society 
groups.  Lewis said environmental groups have aligned 
themselves with political groups who have different agendas, 
making compromise very difficult.  He noted that 
environmental groups opposing mining also opposed expansion 
of hydroelectric power.  He said hydroelectric power is the 
key to meeting Panama's energy needs.  He said "water is 
Panama's oil." 
 
--------------------------------------------- -- 
Booming Economy Strains Labor and Energy Supply 
--------------------------------------------- -- 
 
¶13. (U) Taylor asked whether Panama's booming construction 
sector was in a bubble. Lewis said there was some speculation 
in the sector.  However, Lewis said that a study done by a 
local consultant found that most condominium units were being 
purchased by end-users.  Lewis said Americans, Venezuelans 
and Colombians are purchasing these units to live in 
full-time.  He recounted a story of a group of Venezuelan who 
recently purchased 100 condo units not for investment, but to 
occupy.  Lewis said many believed that most condo units would 
be vacant or used only part time; this has not been the case. 
Lewis said the "tremendous" amounts of liquidity in the 
banking sector is also fueling the construction boom as 
financing for construction and purchases has become easier. 
He said prices are still rising. 
 
¶14. (U) Lewis said the electric company assumed a 4% usage 
growth rate. He said the actual electric usage growth rate 
has been 10% in the last 12 months because of new condo 
occupancy.  Lewis said energy demand and supply in Panama are 
almost equal.  Lewis noted that Panama narrowly escaped the 
most crucial time, the recent dry season, without blackouts. 
Lewis said new thermal and hydroelectric plants coming online 
in 2008 and 2009 should be sufficient to meet energy needs. 
 
¶15. (SBU) Lewis said Panama is at full employment. He said 
the 6% still unemployed are essentially unemployable, and the 
challenge for the GOP was to train these people so they can 
find jobs.  Lewis said it is impossible in Panama to find 
construction workers.  Anyone needing a worker has to take 
someone from another project.  Even the sugar workers are 
leaving the industry to work in tourism.  He said this has 
created competition for workers and, as a result, higher 
wages. 
 
¶16. (SBU) Lewis said, however, that inflation (due to higher 
energy costs and declining dollar) was now Panama's greatest 
challenge. He said there are calls for higher minimum wages 
and price freezes.  He said these distortions to the economy 
would be very damaging.  With the election season beginning, 
he said such ideas could gain traction. 
 
----------- 
Hugo Chavez 
----------- 
 
¶17. (C) Lewis said Chavez has been quiet for the last few 
weeks because of the conflict with Colombia.  Lewis said 
Chavez has actually been saying helpful things with respect 
to Colombia.  He attributed this attitude change to Chavez's 
realization he had crossed the line with Colombia.  Lewis 
said Colombia, Ecuador and Venezuela were very close to war. 
He said of the three, the only army capable of fighting was 
the Colombian Army.  He said Chavez realized he would lose 
badly to Colombia.  Lewis said it "is one thing to play with 
the chain, it is another thing to play with the gorilla 
(Colombia)."  Lewis said that Chavez's response to the 
Colombia-Ecuador incident opened the eyes of many in the 
region, including the Cubans.  Lewis said everyone realized 
that Chavez had pushed things too far. When asked by why 
Chavez got involved in the Colombia-Ecuador dispute, Lewis 
said "Chavez is the type of person who would attend a funeral 
and be upset he was not the one in the coffin getting the 
attention".  Lewis said Chavez could not stand not being part 
of the fight. 
 
------------------------------------------ 
Latin American Left and Panama's Challenge 
------------------------------------------ 
 
¶18. (C) Taylor asked by why Panama has not elected a leftist 
populist government.  Lewis said Ecuador, Venezuela, Bolivia, 
and Nicaragua, all had elements of a failed state where 
people are willing to try anything.  Lewis said this 
willingness is a danger to democracy.  People are not blaming 
leaders, but are blaming the system, he said.  In Panama, he 
said, there are still those willing to fight for democracy. 
 
¶19. (U) Rep. Taylor did not clear this cable. 
EATON