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C O N F I D E N T I A L PANAMA 000726 
 
SIPDIS 
 
E.O. 12958: DECL: 09/02/2018 
TAGS: PREL PGOV SNAR KCRM KDEM ETRD ECON PINR PM
SUBJECT: SCENESETTER:  PANAMANIAN PRESIDENT TORRIJOS 
SEPTEMBER VISIT TO WASHINGTON 
 
REF: A. (A) PANAMA 704 
     ¶B. (B) PANAMA 714 
     ¶C. (C) PANAMA 725 
 
Classified By: Ambassador Barbara J. Stephenson. 
Reasons:  1.4 (b), (c) and (d) 
 
------- 
Summary 
------- 
 
¶1. (C) Panamanian President Martin Torrijos will visit 
Washington in mid-September for meetings with the Secretary 
of State and the President.  These meetings will take place 
about ten days after the ruling Revolutionary Democratic 
Party (PRD) will have selected its presidential candidate. 
The PRD primary on September 7 will close Panama's primary 
season, and the country will turn its attention to general 
elections scheduled for May 3, 2009 to not only elect 
Torrijos' successor but also to fill every elected seat in 
Panama.  Likely to be Torrijos' last one-on-one meeting with 
the President, this visit provides an excellent opportunity 
to review the state of the U.S.-Panamanian bilateral 
relationship with an eye to consolidating our achievements. 
Furthermore, in meeting Ambassador to receive her credentials 
on August 6, Torrijos shared his desire to take the bilateral 
relationship to the next level, a view he subsequently 
reiterated to Senator Hagel on August 27. 
 
¶2. (C) We expect Torrijos to detail how his Administration 
has laid the groundwork for Panama to take off on a 
trajectory to establish itself as a First World nation by 
continuing Panama's prosperity and democracy and, in 
particular, attacking the conditions that leave 37 percent of 
Panamanians in poverty.  First VP and FM Samuel Lewis, who 
will accompany Torrijos, previewed for Ambassador on August 
29 that Torrijos would ask the President to submit the 
U.S.-Panama Trade Promotion Agreement (TPA) to Congress 
before his term expires, even if the Colombia TPA has not 
been approved; we do not believe that Torrijos will make a 
public appeal to jump the queue, something Ambassador and 
EMBOFFs have counseled against. 
 
¶3. (C) Security cooperation should figure prominently in the 
discussion between the two presidents, but Torrijos may not 
raise the issue; we should.  The U.S. and Panama mutually 
benefit from a broad, extensive, and mutually beneficial 
security cooperation relationship (REFTEL A).  That security 
relationship, however, has come under renewed scrutiny as 
Panamanians wrestle with a "militarization" debate. 
Torrijos, likely to be defensive on his security reform 
efforts, needs to hear that the U.S. highly values its 
security cooperation with Panama, believes that this aspect 
of our broader relationship can be taken to a higher level. 
However, we should avoid giving blanket USG approval for his 
security reform plan.  Torrijos should be encouraged to 
anchor his security reform process in democracy, respect for 
human rights, and the broadest possible basis of political 
support he can muster.  How Torrijos and his administration 
manage their security reform process will determine the 
degree to which we can transform our security cooperation 
(REFTEL C).  Thankfully, Panama's most pressing emerging 
security threat -- the FARC presence -- is manageable if it 
is met with a calibrated, coordinated, and concentrated 
effort to strengthen governability in Panama's Darien 
province that abuts Colombia.  END SUMMARY 
 
---------------------------- 
Panama is Ready for Take-Off 
---------------------------- 
 
¶4. (C) Panamanian President Torrijos is rightfully very proud 
of his record of achievement at putting Panama's house in 
order to prepare for take-off on a trajectory that will take 
Panama to First World status.  The President will hear from 
Torrijos how he reversed a grim fiscal situation (a budget 
 
deficit of 5.4 percent of GDP in 2004), re-vamped Panama's 
tax structure and increased collection, and produced fiscal 
surpluses since 2006.  Additional, Torrijos will explain how 
he took on Panama's insolvent social security system (Caja de 
Seguro Social) and assured its short-term solvency.  Having 
put Panama on firm financial footing, Torrijos next secured 
popular approval via national referendum in October 2006 to 
expand the Panama Canal by constructing a third set of locks 
that will not only be able to handle significantly larger 
ships but that will also double the canal's cargo capacity. 
"American ports need to start getting ready -- some already 
are -- to handle larger ships and more traffic," Torrijos has 
told Ambassador.  "The canal expansion will strengthen the 
strategic relationship between Panama and the U.S."  Finally, 
Torrijos pushed through the U.S.-Panama Trade Promotion 
Agreement (TPA), overcoming opposition within his own party 
and protectionist sectors, and firmly committed Panama to 
global leadership to foster free trade and integration. 
"These steps were essential to giving Panama the capacity to 
tackle the economic disparities and rid Panama of poverty," 
First VP and FM Samuel Lewis told Ambassador on August 29. 
"The next administration will have the tools and resources to 
address the plight of the 37 percent of Panamanians who today 
live in poverty."  Today, the Torrijos Administration has a 
newly heightened sense of urgency to implement programs and 
put in place structures to channel resources and political 
attention to meeting major challenges in education, 
healthcare, judicial reform, law enforcement, and welfare. 
Torrijos recently distributed to all his ministers and other 
key GOP leader count-down clocks that tick off the time that 
remains until he steps down from office on July 1, 2008. 
 
--------------------------------------------- -- 
Torrijos to Ask Privately to Jump the TPA Queue 
--------------------------------------------- -- 
 
¶5. (C) Lewis laid out for Ambassador on August 29 that 
Torrijos would ask the President to submit the U.S.-Panama 
TPA to the U.S. Congress for consideration before his term 
expires, even if the U.S.-Colombia TPA has not yet been 
approved.  Presidential palace foreign affairs advisor Jorge 
Ritter, who will also travel with Torrijos,   reiterated to 
POLCOUNS on September 4 that Torrijos would indeed ask the 
President to jump Panama ahead of Colombia in the TPA queue. 
Panama would most likely push for action on its TPA with the 
U.S. in a lame duck U.S. Congressional session.  Ambassador 
and EMBOFFs have cautioned against going public with this 
request to jump the queue and urged the Torrijos 
Administration to not get in front the President on this 
matter.  Embassy has cautioned against creating unforeseen 
political problems for consideration of the U.S.-Panama trade 
deal.  That Torrijos would consider approaching the President 
with this request underscores Panama's desire to finalize the 
fourth leg of the Torrijos Administration's strategy to ready 
Panama for economic take-off.  In his other activities in 
Washington -- meetings on the Hill, two days of roundtables 
and sessions with trade groups entitled "Panama Forum," press 
availabilities, and interaction with supporters of the trade 
deal -- Torrijos will seek to raise the profile of the 
U.S.-Panama TPA by underscoring its strategic significance 
for the U.S. and Panama.  Furthermore, he will advocate for 
approval of both the Colombia and Panama TPAs to put the U.S. 
relationship with the hemisphere on a firm strategic footing. 
 Torrijos will need to hear clearly from the U.S. regarding 
its strategy to secure Congressional approval, not only of 
the Panama deal, but also of all pending trade deals. 
 
----------------------- 
FARC Threat: Manageable 
----------------------- 
 
¶6. (C)  Lewis told the Ambassador that the FARC threat in the 
Darien was in the process of changing. Lewis said the FARC 
had suffered several major blows since May, including the 
hostage rescue, the deaths of several members of the 
Secretariat, and the capture of the Reyes computers. The real 
 
threat to Panama now is that FARC forces may flow into the 
Darien looking for refuge and supplies and spreading chaos. 
This is an especially serious problem given that the Darien 
is, for the most part, ungoverned space. The fact that the 
FARC have not been more successful up to now in building up 
support in the Darien owes more to strong anti-Colombian 
prejudice in the Darien than to effective GOP policies. Given 
this scenario, Lewis believes the GOP must calibrate its 
response to the FARC, and use more of a soft-power approach, 
concentrating on issues of governability. This includes 
improving the quality of life of local security officers, the 
effectiveness of local government, providing economic 
opportunity for the local population, as well as bolstering 
the capacity of the police. 
 
¶7. (C) Lewis, analysis is right on target. Post believes 
that with limited support from the USG for a comprehensive, 
calibrated approach to the Darien, the GOP will lead the 
effort to strengthen governability in this province that 
borders Panama. Strengthening local government is the area 
where U.S. assistance is likely to be most beneficial. 
Panama,s highly centralized government has failed to 
effectively govern its Darien province for the last one 
hundred years. Based on recent USAID pilot efforts to address 
community needs, now is the time to develop effective local 
government and other structures that can coordinate with the 
central government to improve basic services, education and 
health care. This will assure the support of the local 
population, and the eventual isolation and defeat of the FARC 
in the Darien. USAID has proposals in this area pending 
funding through the Merida Initiative, and Post asks that 
they be given full consideration. Post is also developing an 
interagency Section 1210 Security and Stabilization proposal 
to counter FARC and narcotics trafficking activities in the 
Darien through strengthening local government, enhancing 
border security, reconstruction infrastructure, and 
developing alternative economic activities. 
 
------------------- 
Panama Helps Itself 
------------------- 
 
¶8.  (C)  The last time President Torrijos met with President 
Bush, he asked for USG assistance acquiring helicopters, as 
part of a plan to militarily confront the FARC in the Darien. 
While Post does not believe that this military response is 
now a top priority, we are pleased to report that the GOP is 
taking the initiative on its own to meet its security 
aviation needs. Minister of Government and Justice Daniel 
Delgado told SouthCom Deputy Commander Lt. Gen. Spears August 
21 that the National Assembly had authorized his ministry 
over $40 million to upgrade the equipment of Panama,s Police 
and National Aero-Naval Service (SENAN) currently being 
formed by the merger of its air and maritime services. 
According to Delgado, this includes money for the 
refurbishment of seven Huey helicopters, including pilot 
training and spare parts, in addition to seven patrol boats. 
He said he hoped to have four of the helicopters operational 
by December. Post believes that these helicopters will go a 
long way to meet Panama,s need for multi-mission aircraft, 
and represent a very positive step in upgrading the 
capabilities of its forces. 
 
--------------------------------------------- ------------- 
Anchoring Security Reforms in Democracy Key to Cooperation 
--------------------------------------------- ------------- 
 
¶9. (C) Security cooperation should figure prominently in the 
discussion between the two presidents, though it is uncertain 
whether Torrijos himself, wounded by his own mishandling of 
Panama's "militarization" debate, will raise the matter. 
Torrijos is likely to defend his enactment, by executive fiat 
and without robust consultation, a series of security reform 
laws that have raised the specter in the minds of many 
Panamanians that Torrijos wishes to "militarize" Panama, 
something that was constitutionally outlawed after the U.S. 
removed former strongman Manuel Noriega from power in 
December 1989.  Torrijos has essentially told Ambassador that 
these security reforms are too important to be left to the 
democratic process. Unfortunately, Torrijos' mismanagement of 
the security debate has unleashed a political dynamic that 
imperils his own security reform effort and threatens to 
strain our bilateral security relationship as critics -- that 
they conflate with the controversial reforms -- take aim at 
essential U.S. security activities in Panama. 
 
¶10. (C) Fortunately though, Panama's most pressing emerging 
security threat -- the growing FARC presence and activity in 
Panama -- is manageable if it is met now with a calibrated, 
coordinated, and concentrated effort to strengthen 
governability in Panama's Darien province that abuts 
Colombia.  The U.S. needs to foster partnership with Panama 
to assist the GOP to strengthen governability in Panama's 
remote border region with Colombia.  SOUTHCOM currently has a 
12-person Army Joint Planning and Assitance Team (JPAT) 
imbedded with the Frontier Force providing training and 
assistance.  To assist Panama in this endeavor, Torrijos 
needs to understand that how he manages this critical debate 
will determine the degree to which the U.S. can partner with 
Panama on vital security cooperation.  We should encourage 
Torrijos to ensure that security reform efforts are anchored 
in democracy and respect for human rights.  At the GOP's 
request, SOUTHCOM is actively assisting in the establishment 
of a human rights office in Panama's Ministry of Government 
and Justice (MOGJ) along with human rights training at all 
levels of the MOGJ and Panama's public forces. 
 
--------------------------------------------- ------- 
Skeptical About "Alliance for Growth and Prosperity" 
--------------------------------------------- ------- 
 
¶11. (C) Torrijos is eager to join the President on September 
24 in a meeting New York City on the margins of the UN 
General Assembly with leaders from other countries that have 
signed trade deals with the U.S.  While it was "a great idea 
to meet," Lewis told visiting Acting A/S for International 
Organization Affairs Brian Hook on August 27, "It would be 
counterproductive to deploy the 'Alliance for Prosperity and 
Growth' banner."  Lewis explained that such a formalized 
effort could "actually be a drag on efforts to promote free 
trade."  Though supportive of free trade, Lewis said such an 
endeavor could politicize and create an ideological struggle 
over free trade. 
 
--------------------------------------- 
Securing Panama's Recognition of Kosovo 
--------------------------------------- 
 
¶12. (C) Panama has been dithering for months over granting 
recognition to Kosovo.  The question is not "if" Panama will 
recognize Kosovo, but rather when and how.  In the face of 
dogged and multi-level Embassy approaches, the GOP has 
repeatedly provided different stories regarding how and when 
it will recognize Kosovo.  Shortly after Kosovo declared its 
independence, Panama told the U.S. it would recognize Kosovo, 
"soon, but after the Europeans."  Subsequently, Panama said 
it was working to organize a block of Central American 
countries to jointly recognize Kosovo, though it does not 
appear that Panama put much diplomatic energy into this 
effort.  Then Panama said it wanted to follow the "larger 
countries like Mexico, Brazil or Colombia" in its 
recognition.  Now that Colombia has recognized, Panama has 
indicated that it will do so once Panama leaves the UN 
Security Council on December 31. 
 
--------------------------------------------- ---------- 
ICE Raid Ensnares 50 Illegal Panamanians in Mississippi 
--------------------------------------------- ---------- 
 
¶13. (C) On August 25, U.S. Immigration and Customs 
Enforcement (ICE) agents executed a federal criminal search 
warrant at Howard Industries, an electric transformer 
 
manufacturing facility in Mississippi, for evidence relating 
to aggravated identity theft, fraudulent use of social 
security numbers and other crimes and a civil search warrant 
for individuals illegally in the U.S.  Of the 595 illegal 
aliens who were arrested, some 50 were Panamanians.  Noting 
that Panama was not a significant source country for illegal 
immigration to the U.S., Lewis explained to Ambassador on 
September 4 that Panama wanted to defuse this matter by 
facilitating the voluntary return of the Panamanians to 
Panama.  Lewis said the MFA was sending additional personnel 
to bolster its consular staff in the U.S. as they dealt with 
this challenge.  Each individual arrested will need to have 
their cases reviewed as some may be entitled to immigration 
benefits.  We are coordinating closely with the GOP to manage 
public relations. 
STEPHENSON