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C O N F I D E N T I A L PANAMA 000652 
 
SIPDIS 
 
E.O. 12958: DECL: 08/05/2018 
TAGS: PGOV PREL PM
SUBJECT: PANAMA:  A VIEW FROM THE LEFT -- NO PLACE FOR 
ANTI-AMERICANISM 
 
Classified By: POLCOUNS Brian R. Naranjo.  Reason:  1.4 (d) 
 
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Summary 
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¶1. (C) Recent meetings with prominent left wing leaders Juan 
Jovane and Olmedo Beluche focused on the threat to social 
stability posed by rising prices and the surprising small 
impact of the crisis on the political campaign. Jovane 
concluded that the increase in the price of staple goods was 
causing real hardship for people throughout the country, but 
that this would neither effect the elections, nor lead to 
serious street disturbances. Jovane asserted that PRD 
presidential nomination candidate Balbina Herrera would never 
"dare" run against the legacy of Martin Torrijos by running 
on a radical platform. He said the best hope to deal with the 
problem of hunger, would be a national school lunch program, 
modeled on the U.S. system. Beluche, who is trying to 
establish a Bolivarian party in Panama, said that preventing 
parties like his from registering ultimately weakened the 
democratic system in Panama, by allowing the traditional 
parties to become complacent. He noted that there were groups 
like SUNTRACS and FRENADESO that rejected elections and 
preferred to use street violence to push their agenda, and 
suggested they were getting Venezuelan support. While 
expressing his opposition to many American policies, 
including the invasion of Iraq and the support for free 
trade, Beluche noted that anti-Americanism was not an 
effective campaign slogan in Panama, and that no party could 
seriously expect to govern Panama without close ties to the 
U.S.  END SUMMARY 
 
----------------------------- 
Prices of Basic Goods Soaring 
----------------------------- 
 
¶2. (C) University of Panama Professor of Economics and 
left-wing intellectual Juan Jovane told POLOFF and DAO 
analyst on July 22 that Panama's inflation understated the 
social crisis effecting Panama. He said the 9% official 
inflation rate (Note: The official inflation rate is 9.6%. 
End Note) hid critical details like a 50% increase in the 
price of corn oil, a 30% increase in the price of bread and a 
substantially higher increase in the price of milk. These 
increases in food staples, together with the rise in the 
price of gasoline, was putting a huge strain on poor and 
working class Panamanians, who were forced to make dramatic 
choices in their consumption. He blamed the price spike in 
these foods on monopolistic practices by the small number of 
food importers and supermarket owners (Note: Democratic 
Change (CD) presidential candidate Ricardo Martinelli, one of 
the two opposition candidates for President, owns Panama's 
largest supermarket chain Super99, though the retail food 
business is dominated by independently owned "mini-super" 
corner grocery stores. End Note). He criticized the GOP for 
weak enforcement of already weak anti-monopoly laws, and 
compared the GOP unfavorably with the USG on this matter. 
 
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Malnutrition 
------------ 
 
¶3. (C) Jovane quoted a FAO study as stating that 23% of 
Panamanians were malnourished, principally in indigenous 
regions. He criticized the GOP's Compita program that sells 
subsidized food directly to the public, because the program 
was implemented in an erratic manner and inconsistently.  For 
example, trucks of food showed up in different areas at 
irregular intervals. He compared it unfavorably with 
Venezuela's system of government-owned stores in poor 
neighborhoods. He thought the best solution, however, would 
be the establishment of a school lunch program, along the 
lines of what schools in the U.S. do, as this would attack 
the twin problems of malnutrition and scholastic failure. 
 
¶4. (C) Asked about the possibility of increased domestic 
agricultural production, he said it was technically feasible, 
but that the farmers did not want to increase production if 
they were not guaranteed a high price for their crops, having 
learned the lessons of past boom and bust cycles. He said 
expansion of domestic agricultural production would require a 
government price support system, something that would 
represent a radical change from the GOP's recent policy to 
encourage the production of profitable agricultural goods for 
export, and not food staples for domestic consumption. Jovane 
said that a price support program was advisable not only for 
food security purposes, but to help the rural population to 
maintain itself on the land. He said that if there was not an 
active agricultural policy, the expansion of the Canal would 
lead to a massive wave of migration from the countryside into 
the cities, bringing with it massive social disruption. At 
the same time, Jovane noted that turning away from free trade 
on a large scale would be economic suicide for Panama and a 
silly political slogan. 
 
-------------------- 
Economic Risk Factors 
-------------------- 
 
¶5. (C) Jovane said that global economic changes also 
threatened Panama's macroeconomics stability.  He noted that 
the relentless rise in oil prices had raised the price of 
shipping a container from Shanghai to the East Coast of the 
U.S. from $3,000 in 2000 to $8,000 now, and said it could be 
up to $13,000 if oil hits $200 a barrel. He said this could 
effect the revenues from the Canal if it led to changes in 
the global distribution system. He noted that Panama's 
economy had several sectors that generated a great deal of 
revenue -- the Canal, banking and the Colon Free Trade Zone 
--  but created relatively little employment. He described 
the construction sector as the key to social stability, as it 
provided many well paying jobs. He said he was perplexed by 
information he had found on the Banking Supervisor's website, 
indicating a 10% rise in mortgages, but a 30% rise in 
construction loans. He said he did not like any of the 
possible explanations, which ranged from foreign buyers, to 
money laundering. 
 
----------------- 
Politics as Usual 
----------------- 
 
¶6. (C) Jovane said he did not think the social crisis could 
have political repercussions. He said that while people are 
very worried about the price rises, they did not expect any 
solutions from politics or collective action. Rather, 
Panamanians sought individual answers to their problems. As 
proof he pointed to the protests the radical unions 
continually threatened, but never managed to organize due to 
lack of popular support. In discussing the Democratic 
Revolutionary Party (PRD) presidential candidate Balbina 
Herrera, who is perceived by many as a populist leftist, 
Jovane said she could not take a radical attitude towards the 
crisis, because she had been a minister in the present 
government, along with most of the members of the left wing 
"Tendencia" faction in the PRD. He also said she would not 
"dare" to run against Martin Torrijo,s legacy. This last 
point was echoed by University of Panama Sociology Professor 
Olmedo Beluche. Beluche, who was trying to organize a 
Bolivarian party, the Popular Alternative Partido (PAP), told 
POLCOUNS, POLOFF, DAO analyst that the PRD left had been 
completely compromised by their service in the Torrijos 
government, and could not run a credible radical campaign, 
and would not try. He said it was ironic that Martinelli, a 
millionaire, was the presidential candidate with the most 
populist rhetoric. 
 
-------------------------------------- 
High Flood Walls Lead to Bigger Floods 
-------------------------------------- 
 
¶7. (C) Beluche said that he had only gathered 1,000 of the 
60,000 signatures the law required to register a new party. 
(Note:  To form a party, a "party in formation" must collect 
the signatures of 4 percent of the voter rolls from the last 
election, in this 2004.  Furthermore, those signatures must 
be collected from individuals who are not already enrolled 
with an already existing party.) Beluche said that this high 
bar to registering a new party weakened Panamanian democracy, 
since it prevented new voices from emerging that could help 
the system recognize new demands from the people, and new 
solutions. He argued that this eliminated the threat of a 
real democratic challenge to the established parties, and 
that this allowed them to ignore the people and the social 
reality while they fight for the spoils of power. This would 
make a catastrophic collapse of the system more likely in the 
future, Beluche asserted. 
 
-------------------- 
Venezuelan Influence 
-------------------- 
 
¶8.  (C)   Beluche criticized the radical unions FRENADESO and 
SUNTRACS for rejecting electoral participation and instead 
engaging in street protests and violence. He also implied 
that these groups were being financially supported by the 
Government of Venezuela, while denying that he had received 
any money from Venezuela. He said that taking money from 
outside Panama would be unacceptable to nationalistic 
Panamanian voters. Asked about his attitude towards the U.S., 
Beluche said he was very critical of many American policies, 
such as the invasion of Iraq, the promotion of free trade, 
and hostility to Cuba and Venezuela, but he noted that Panama 
had always had a special relationship with the U.S., and that 
anti-Americanism was neither a good campaign tactic in 
Panama, nor a viable governing strategy. He said Panama would 
always need to maintain good relations with the U.S., but not 
subservient relations. He also tempered his hostility to free 
trade by noting that Panama could not turn its back on the 
world. He said that in the unlikely event he were to be in 
power, he would probably press for some nationalizations 
(e.g, electricity, telephones) and for more protection of 
agriculture, but not for a radical change of economic course. 
 
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Comment 
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¶9.  (C)  Jovane and Beluche are seen by Panama's political 
elites as extreme radicals, who espouse a Venezuelan-style 
revolution in Panama. Jovane is in fact a keen observer of 
Panama's economic, social and political reality, whose ideas 
are quite within the realm of reason. School lunch programs 
are widely seen as the best way to tackle hunger, and 
national agricultural policies are hardly radical ideas. Most 
of what he suggests falls into the policy line of the present 
government. At the same time, Beluche's brand of 
Bolivarianism has been largely depleted of its most radical 
elements by the economic and political reality of Panama, 
which make anti-Americanism and anti-trade agendas unpopular, 
as they are seen in Panama to be truly dangerous by the 
majority of voters, and not just by the elites. This alone is 
a powerful antidote to the spread of Bolivarian ideology in 
Panama. 
STEPHENSON