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FM AMEMBASSY PANAMA
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RHMFISS/CDR USSOUTHCOM MIAMI FL
RUEAIIA/CIA WASHDC
RHMFISS/DEPT OF JUSTICE WASHINGTON DC
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RHMFISS/JOINT STAFF WASHINGTON DC
RHEHAAA/NSC WASHDC
RUEKJCS/SECDEF WASHDC

S E C R E T PANAMA 000336 
 
SIPDIS 
 
NOFORN 
SIPDIS 
 
FROM THE AMBASSADOR FOR THE PRESIDENT 
 
E.O. 12958: DECL: 04/28/2018 
TAGS: PGOV PREL SNAR PTER ETRD ECON KCRM MASS MARR
MOPS, PM 
SUBJECT: PANAMA:  SCENESETTER FOR PRESIDENT'S MEETING WITH 
PANAMANIAN PRESIDENT TORRIJOS 
 
Classified By: Ambassador William A. Eaton.  Reasons:  1.4 (b), (c), an 
d (d). 
 
------- 
Summary 
------- 
 
¶1. (C) President Martin Torrijos will meet with you on May 6 
at the White House in the hopes of revitalizing his 
administration's initiatives in which our bilateral 
relationship plays a significant role.  Panama's primary 
season is now in full swing, Torrijos cannot run for 
re-election, and Panama's general elections will be held on 
May 3, 2009.  U.S. ratification of the U.S.-Panama Trade 
Promotion Agreement (TPA) will top Torrijos' agenda, though 
he will also be looking for assistance in advancing his 
social agenda.  The U.S. should take advantage of this 
meeting to: underscore our desire to see Panama's next 
elections strengthen its democracy, reiterate our commitment 
to ratify and implement the TPA, and to address security 
issues, particularly the recent kidnapping of a U.S. citizen 
who was kidnapped by criminal elements associated with the 
Revolutionary Armed Forces of Colombia (FARC).  Torrijos last 
met with you on February 16 in the Oval Office. 
 
------------------------ 
Panama's Political Scene 
------------------------ 
 
¶2. (C) Torrijos is constitutionally prohibited from running 
for re-election in May 2009 (though he may run again after a 
10-year absence from the presidential palace).  These 
elections will lead to the fifth peaceful, democratic 
transition since democracy was restored in 1989 in the wake 
of OPERATION JUST CAUSE.  Though he himself cannot run, 
Torrijos and the Revolutionary Democratic Party (PRD) are 
striving to break the pendulum effect in Panamanian politics 
that, since Noriega was removed from power, has replaced the 
governing party with the opposition in each of the past four 
elections.  Torrijos, who recently won re-election as PRD 
Secretary General, has set as his core political goal 
 
SIPDIS 
securing the election of the PRD candidate so as to ensure 
the continuity of his reformist policies.  These elections, 
however, are unique in that neither the governing PRD nor the 
opposition has an obvious successor to assume leadership. 
¶3. (C) The PRD has scheduled its primary for August 17, and 
two PRD candidates -- Panama City Mayor Juan Carlos Nvarro 
and former Minister of Housing Balbina Herrera -- have 
already officially launched their campaigns for the party's 
presidential nomination.  (Other minor contenders may declare 
their candidacies but, at this time, would have little chance 
of defeating either Herrera or Navarro.)  Navarro, a centrist 
member of the PRD, draws his support primarily from Panama 
City, has worked assiduously for years to cultivate Panama's 
interior and to build a nationwide political machine, and is 
stronger among professionals, businessmen, and elites. 
Herrera, a member of the PRD's left-wing "Tendency 
(Tendencia)" faction, was Torrijos' Minister of Housing until 
April 27, lacks a structured campaign apparatus, and is very 
popular with working class and poor Panamanians.  In the 
1980s, Herrera was Noriega's Mayor in San Miguelito, Panama's 
second largest municipality located on the outskirts of 
Panama City.  In 1992, Herrera organized demonstrations 
against your father during his first visit to Panama 
following OPERATION JUST CAUSE.  Torrijos has not endorsed 
either candidate and is unlikely to do so any time soon. 
 
¶4. (C) Herrera currently leads the national polls.  A few 
short weeks after her campaign launch, Herrera toppled 
Democratic Change (CD) presidential candidate Ricardo 
Martinelli from the lead that he had sustained in the polls 
for over two years.  According to one poll, Herrera leads 
Martinelli by ten points (28 percent vs. 18 percent), though 
a second poll over roughly same period gave Herrera only a 
1.3 point lead (21.6 vs. 20.3).  Inside the PRD, Herrera 
appears to hold a commanding lead over Navarro leading him 
25.1 percent to 13.2 in one poll and 45 percent to 31 percent 
in another poll.  Significant numbers of undecided voters, 
however, still remain on the sidelines.  This year's PRD 
 
primary is likely to be more bruising, more costly, and more 
likely to leave behind bitterness that could complicate 
efforts to unify the party for the general elections. 
 
¶5. (C) The opposition panorama remains murky. The largest 
opposition party, the Panamenista Party, will hold its 
primaries on July 6 and its two leading candidates remain 
deadlocked.  CD's Martinelli remains at the top of the polls 
in the opposition, but is currently alone and at the helm of 
his untested political machine, one of the newest parties in 
Panama.  Efforts to form opposition alliances have been for 
naught to date as smaller parties refrain from aligning with 
either the eventual Panamenista nominee or Martinelli. 
Torrijos' PRD presently confronts a divided opposition.  The 
U.S. is not taking sides in the upcoming elections, but 
rather is underscoring the need for free, fair, and 
transparent elections that further strengthen Panama's 
democracy. 
 
--------------------------- 
TPA to Top Torrijos' Agenda 
--------------------------- 
 
¶6. (C) Undoubtedly, Torrijos will raise U.S. ratification of 
the bilateral U.S.-Panama Trade Promotion Agreement (TPA). 
In the wake of the September 1, 2007 election as National 
Assembly President of Pedro Miguel Gonzalez (PMG), who is 
under U.S. federal indictment for the 1992 murder of a U.S. 
serviceman, the prospects for rapid U.S. congressional 
approval eroded significantly.  (Panama National Assembly 
ratified the treaty by a wide 58-3 margin in July 2007.) 
Today, the  Embassy is hearing from high-level PRD contacts 
that PMG will not/not run for re-election on September 1, but 
rather will step down.  Were PMG to step aside, a significant 
irritant to U.S. congressional approval would be removed. 
Torrijos will assure you that PMG will not run for reelection 
and that were he to attempt to run for reelection that he 
would be defeated.  In striving to assure you that PMG no 
longer presents an obstacle to TPA ratification, Torrijos 
will likely press for Panama's TPA to jump the queue and be 
presented to the U.S. Congress for approval.  The Embassy has 
consistently reiterated that, given the Administration's 
policy of submitting the trade agreements to Congress in the 
order in which they were signed, there was little chance of 
putting the Panama deal ahead of Colombia in the queue.  At 
this stage, as the PRD is striving to show PMG the door, it 
would be best to not comment publicly on PMG's re-election, 
but rather to simply comment that the U.S. and Panama remain 
committed to implementing this important bilateral trade 
agreement. 
 
--------------------------------- 
Canal Expansion Project Continues 
--------------------------------- 
 
¶7. (C) The U.S. has applauded Panama's leadership in 
expanding the vital Panama Canal to ensure its continued 
ability to handle ever greater traffic and commerce.  In 
September 2007, the Panama Canal Authority (ACP) formally 
launched the USD 5.25 billion expansion project, which is 
planned for completion in 2014.  U.S. firms have thus far 
competed successfully for expansion-related work, including a 
seven-year project management deal won last August by 
Denver-based engineering firm, CH2M Hill.  Four consortia are 
currently bidding for an estimated USD 3 billion design/build 
contract for the construction of the Canal's new, much larger 
locks.  One consortium is U.S.-led (Bechtel), while the other 
three consortia have minority U.S. participation.  Bids are 
due in October, after which the ACP expects to decide the 
winning consortium by the end of December 2008.  Our 
expectation is that U.S. supplies and services in support of 
the canal expansion would receive full and fair 
consideration, regardless of the winning consortium for the 
construction of the new locks. 
 
----------------------------------- 
Support for Torrijos' Social Agenda 
----------------------------------- 
 
 
¶8. (C) Torrijos will also seek continued U.S. support to 
advance his social agenda.  While Panama has enjoyed 
phenomenal economic growth in recent years, the rising tide 
has not lifted all boats.  GDP growth has been incredible 
topping 11 percent last year, unemployment has been reduced 
by about half since 2003, and Panama has enjoyed strong 
fiscal performance.  However, some 40 percent of Panamanians 
still live in poverty, and 16 percent live in extreme 
poverty.  In the semi-autonomous indigenous territories 
(comarcas), the poverty rate is over 90 percent.  Torrijos 
remains committed to preparing Panama to compete in a 
globalized economy.  Through his "Network of Opportunities 
(Red de Oportunidades)" and his "Community Development 
Program (Programa de Desarollo Comunitario - PRODEC)," 
Torrijos is striving to share the wealth by linking monetary 
assistance to school attendance and childhood vaccinations in 
the first program and to involve communities in solving their 
own problems by engaging them in the latter program to 
develop infrastructure projects to meet their needs.  The 
First Lady is a strong proponent for improving education and 
promoting greater respect and opportunity for handicapped 
persons as well as other social efforts.  The U.S. has a good 
track record in supporting Torrijos' efforts to build a more 
equitable society in which all Panamanians have an 
opportunity to fully partake in Panama's economic success 
story. 
 
-- American firms - Procter and Gamble, Caterpillar, 
Occidental Petroleum, and Ports America - are all making 
major investments in Panama.  U.S. investors have been 
attracted to Panama's long-term commitment to greater 
transparency and market-friendly policies, and we should 
continue to encourage Torrijos to stay the course on these 
effective policies, particularly in combating corruption that 
remains a serious problem that could undermine Panama's 
investment climate and economic progress. 
 
-- Torrijos is likely to express concerns regarding growing 
inflation and the decline of the U.S. dollar, two phenomena 
that are hitting Panama's dollarized economy hard, most 
notably in the steep increase of the cost of the basic basket 
of goods and the erosion of the purchasing power of the 
average worker. 
 
-- In June 2007, Secretary of Health and Human Services 
Leavitt and Minister of Health Alleyne inaugurated in Panama 
City the Regional Healthcare Training Center (RHTC) to 
provide a forum for training healthcare professionals 
throughout Central America.  The U.S. and Panama are 
committed to the RHTC's long-term success and to encouraging 
private sector support and participation.  You can expect 
that Torrijos will seek more USG financial support for the 
RHTC. 
 
-- In March 2008, Under Secretary of Education Sara Margaret 
Tucker and her counterpart signed a memorandum of 
understanding to promote teacher exchanges.  The Department 
of Education will share information and models for Panama to 
study and frame an exchange program best suited to Panama's 
needs, and the Department of Education stands ready to 
facilitate the identification of state-level partners 
interested in participating in an exchange program with 
Panama. 
 
-- Torrijos may also request U.S. helicopter lift from 
SOUTHCOM to deliver construction materials, equipment, and 
personnel to remote corners of Panama.  While committed to 
facilitating such assistance, we need to tread carefully so 
as to not become involved in political activities in what is 
being an increasingly political period, but, more 
importantly, we need specifics and advance notice to be able 
to extend this kind of assistance.  Periodically, Torrijos 
also raises requests for U.S. military engineering 
assistance, but we have seen few details and no follow-up and 
need to be cautious about remaining politically neutral. 
 
---------------------------- 
Security:  A Growing Concern 
---------------------------- 
 
 
¶9. (C)  The U.S. continues to enjoy outstanding law 
enforcement cooperation with Panama.  In calendar year 2007, 
Panama accounted for close to 60 metric tons of seized 
cocaine, out of roughly 160 tons seized in the hemisphere. 
The U.S. and Panama have established excellent sensitive 
vetted units that have led to numerous arrests and the 
disruption of narco-trafficking operations.  Our judicialized 
phone intercept program (MATADOR) is currently targeting 
close to 200 dirty cellular numbers affiliated with major 
traffickers and/or the Revolutionary Armed Forces of Colombia 
(FARC).  Extraditions of fugitives wanted in the U.S. 
continue apace.  On the negative side, our ability to work 
productively with Panamanian law enforcement and security 
entities is hampered by the lack of Panamanian resources 
destined to those entities.  Our counterparts often depend on 
USG monetary assistance for fuel and other basic operational 
inputs. 
 
¶10. (S/NF)  There has, however, been a recent and disturbing 
up-tick in Revolutionary Armed Forces of Colombia (FARC) 
activity in Panama.  On November 9, armed FARC members were 
captured near Puerto Obaldia.  On January 24, an injured FARC 
squad commander was captured in Panama City.  On February 22, 
a Panamanian National Police (PNP) launch encountered a FARC 
launch in Pina Bay off of La Palma in Panama's Darien 
Province.  Following a brief fire fight, the PNP took into 
custody 6 FARC members who are believed to have been involved 
in illegal narcotics trafficking.  The FARC members continue 
to be in custody in Panama, and indictments in the U.S. are 
likely.  On April 4, a U.S. businessman was kidnapped from 
the upper class Panama City neighborhood of Costa El Este, 
and he is now believed to be held by the FARC in Colombia. 
Unfortunately, several PNP members were implicated in this 
kidnapping.  Finally, on April 25, PNP elements encountered a 
decent-sized FARC detachment south of the Darien town of 
Jaque.  Out-gunned and out-manned, the PNP broke off contact. 
 The situation remains unresolved as of this writing. 
 
¶11. (S/NF)  Grappling with the FARC has been a neuralgic 
issue for Panamanians in general as well as for Torrijos. 
You may hear that the Pina Bay incident was an isolated and 
rare incident.  Similarly, you may hear that it is not clear 
that there are FARC linkages to the kidnapping of the U.S. 
citizen.  Information from various Embassy elements makes the 
FARC tie direct and clear.  USG law enforcement agencies have 
substantial proof and evidence of the FARC's involvement, 
information that has been shared with Panamanian law 
enforcement and intelligence agencies.  The Jaque incident 
makes the FARC's activities in Panama hard to ignore.  The 
FARC uses Panama as a safe haven, a drug transportation 
corridor and to conduct operations.  Panamanians prefer that 
impenetrable jungles of the Darien -- the famous Darien Gap 
-- serve as their best defense from Colombia's illegal 
guerrilla groups.  Ill-prepared to do anything about FARC 
forces operating in Panama, the Torrijos Administration, as 
evinced by its public comments denying a significant FARC 
presence in Panama, has generally been content to co-exist 
with the FARC.  Further complicating the situation is the 
fact that the Torrijos Administration has closed several PNP 
bases in Darien Province transferring their personnel to the 
capital. 
 
¶12.  (S/NF) There may, however, now be an opportunity to 
secure Torrijos' full support for our regional Plan Colombia 
efforts.  At Torrijos' direction, Panamanian law enforcement 
leadership met on April 28 with the Embassy's DEA country 
attache.  In addition to passing the message that Torrijos 
wants to get serious about dealing with the FARC, Panamanian 
law enforcement proposed -- and we have agreed to -- 
establish an investigation/operation coordination center. 
This center would coordinate all intelligence collection 
against the FARC while simultaneously coordinating the 
assembly of case information with the goal of successfully 
prosecuting FARC members in Colombia, Panama, or the U.S. 
Torrijosmay use these latest FARC activities to push for 
donation of U.S. helicopters to augment Panama's anemic air 
defense service. 
 
¶13. (S/NF) As Torrijos and his Administration will need to be 
brought along gradually and carefully on this growing 
security problem, I would recommend that you engage Torrijos 
on the kidnapping of the U.S. citizen and press for greater 
assistance in bringing the perpetrators of this crime to 
justice.  Having wedged open the door for engagement on the 
FARC, the U.S. can then press for a more open and candid 
discussion of the FARC threat and the best ways to meet it. 
 
----------------------------- 
An Ally in International Fora 
----------------------------- 
 
¶14. (C) Panama has been a stalwart partner of the U.S. in 
international fora.  As a non-permanent member of the UN 
Security Council (UNSC), Panama has consistently voted with 
the U.S., including in tough votes on Iran and nuclear 
non-proliferation.  Recently, Panama agreed to take the lead 
on a UNSC resolution concerning Somalia and piracy.  In the 
Organization of American States (OAS), Panama, taking to 
heart the U.S. recommendation to "de-Chavezize the problem, 
crafted a resolution that moved the hemisphere beyond the 
diplomatic incident between Ecuador and Colombia, into which 
Venezuela inserted itself, following Colombia's attack on a 
FARC encampment in Ecuador. 
EATON