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..C O N F I D E N T I A L SECTION 01 OF 03 PANAMA 000339 
 
SIPDIS 
 
E.O. 12958: DECL: 03/12/2019 
TAGS: ECON PGOV SOCI PM
SUBJECT: PANAMA: TORRIJOS SOCIAL PROGRAMS TO CONTINUE UNDER 
NEXT ADMINISTRATION 
 
Classified By: Classified by Ambassador Barbara J. Stephenson for reaso 
ns 1.4(b) and (d). 
 
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Summary 
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¶1. (C) Both leading presidential candidates have acknowledged 
the success of some social programs initiated during 
President Martin Torrijos' term, and have agreed to continue 
certain programs after the next administration is sworn in on 
July 1.  Programs earmarked for continuity by ruling 
Revolutionary Democratic Party (PRD) candidate Balbina 
Herrera and Alliance for Change candidate Ricardo Martinelli 
include the Network of Opportunities ("Red de 
Oportunidades"), the Community Development Program (PRODEC), 
and the National Institute of Vocational Training for Human 
Development (INADEH).  Although Torrijos's Agro Compita 
subsidized food program and the recently-inaugurated 
Farmacias Compita subsidized medication program are not 
mentioned in either candidate's government plan, both have 
publicly expressed support for them.  Herrera has run on a 
platform stressing continuity, and she and senior 
administration officials constantly trumpet the PRD's 
hallmark social welfare successes under Torrijos's watch. 
Despite his "change" mantra, Martinelli is keen to piggy-back 
on Torrijos's social successes.  End summary. 
 
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Popular social programs to live on 
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- The Network of Opportunities (Red de Oportunidades) 
 
¶2. (SBU) The Network of Opportunities is a monthly 
conditional monetary transfer program that aims to reduce 
extreme poverty by facilitating access to education and 
healthcare for the poorest Panamanians.  (A December 2008 
report notes that more than 500,000 Panamanians -- out of a 
total population of about 3.3 million -- are "affected by" 
extreme poverty. UN statistics show a 11.7% extreme poverty 
rate.)  Families enrolled in the Network receive a monthly 
stipend upon the conditions that children attend school and 
adults comply with medical appointments.  A December 2008 
report shows that the Network of Opportunities had spent a 
total of $43 million on transfers to a growing number of 
families over two years.  By the end of 2008, 70,599 families 
in 591 of 621 precincts (corregimientos) received transfers, 
which translates to about 400,000 total beneficiaries of the 
program.  Last year the dollar amount of the transfers was 
raised from $35.00 to $50.00 per family per month.  Extreme 
poverty is concentrated in the three indigenous comarcas 
(Ngobe Bugle, Kuna Yala, and Embera Wounaan), where $18 
million of the budget was spent.  The remaining $25 million 
was allotted to the nine provinces that make up the country. 
As Torrijos noted in his March 1 "farewell" address to the 
National Assembly, enrollment into the program continues: 
75,157 families and counting receive the transfer as of March 
¶2009.  Herrera lists raising the number of Network of 
Opportunity beneficiary families to 85,000 in her government 
plan's list of "100 Promises," and specifies expanding the 
program to reach all of the country's poor indigenous 
populations.  She upped the ante in a recent interview by 
saying that she would extend the program to 150,000 families. 
 Martinelli's Government Plan for Change explains that his 
administration would "deepen and improve" the Network of 
Opportunities, independent of the political clientelism that 
he says has marred the program and the Torrijos 
administration. 
 
- The Community Development Program (PRODEC) 
 
¶3. (C) Established in 2006, PRODEC is funded by $50 million 
drawn annually from surplus Canal revenues.  Its more than 
3,000 grassroots infrastructure development projects are 
derived from community input gathered from site visits, or 
"public consultations," sometimes carried out by president 
Torrijos himself.  PRODEC projects are largely aimed at 
improving roads, but also include projects to improve access 
to drinking water, rural electrification, and education 
infrastructure.  Minister of Presidential Goals Luis Blanco, 
the defacto head of PRODEC, met with POLOFF and emphasized 
that although PRODEC has been criticized for moving slowly, 
projects worth about $40 million have been completed.  "The 
problem," Blanco said, "is that the projects need to be 
local, and there's a lack of local capacity to undertake the 
 
PANAMA 00000339  002 OF 003 
 
 
projects -- it is one thing to do a project here in the 
capital, but another in the rural areas.  We want to bring 
infrastructure as well as employment to the lesser-served 
areas, but it is hard sometimes to find local people 
qualified to do the work."  This, according to Blanco, 
explains why PRODEC has completed only 581 of the over 3,000 
approved projects, and has spent only a portion of the $200 
million in its budget.  Despite these difficulties, Blanco 
emphasized that PRODEC is geared toward helping each 
corregimiento in the country equally.  Herrera's government 
plan is mum on PRODEC, but as it is a PRD-originated program 
Herrera would be unlikely to alter it as president. 
Martinelli proposes that "in addition to PRODEC's $50 
million, a fund be created from Canal revenues to improve the 
country's water access, with an emphasis on marginalized 
populations." 
 
- The National Institute of Vocational Training for Human 
Development (INADEH) 
 
¶4. (SBU) INADEH is a government-sponsored job skills training 
program that provides classes to any Panamanian free of 
charge.  In 2008 INADEH invested $92 million on its training 
programs, and in February INADEH held a ceremony to mark the 
500,000th training certificate earned by an INADEH 
participant.  INADEH has facilities throughout the country, 
and courses run the gamut -- from cooking to literacy to 
electronics -- but the Torrijos and the GOP put special 
emphasis on training in heavy-machinery operation to assist 
the Canal expansion effort.  Herrera's governing plan 
includes a nod to "intensify" INADEH training programs to 
help generate employment; Martinelli's government plan 
discusses expanding INADEH to include administration and 
language training to improve human capital in the tourism 
sector, and a "corrections plan" aimed at assisting the 
reinsertion of criminals into society. 
 
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On board with Compita 
--------------------- 
 
¶5. (SBU) Two government-sponsored programs under the 
"Compita" moniker make necessities available to poorer 
Panamanians at low prices.  The GOP's Agricultural Marketing 
Institute purchases in bulk basic food products such as rice, 
lentils, flour, coffee, and oil and re-sells them to 
consumers under the Agro Compita brand at prices as much as 
30% lower than the market price.  The program was launched in 
the fall of 2007 to counter rising food prices and inflation. 
 Agro Compita "Econo-packs" containing a variety of food 
staples sell for $9.45, and are available at periodic 
"Producer Fairs" throughout the country.  Organizations can 
also make large requests for packs (e.g. to hand out to 
employees) via telephone.  Three "Farmacias Compita," 
Ministry of Health-operated pharmacies, opened earlier this 
year to provide reduced-price medications to low-income 
Panamanians.  Two pharmacies are in metro Panama City and 
together serve over 500,000 residents according to media 
reports.  The third pharmacy is located in San Miguelito, a 
largely poor district outside the capital.  Detractors call 
the program an election-year ploy designed to generate 
support for Torrijos's ruling Revolutionary Democratic Party 
(PRD).  Herrera has praised and voiced support for the 
Compita programs; although they are not mentioned in his 
government plan, Martinelli has said publicly that he would 
continue the two Compita programs. 
 
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Comment 
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¶6. (C) Legacy-minded Torrijos administration officials tend 
to trot out in speeches and publications the updated numbers 
of families enrolled in the Network of Opportunities, or 
workers trained at INADEH as examples of positive social 
welfare initiatives.  As the election approaches, the GOP has 
continued to trumpet its social development successes in an 
attempt to rally flagging public support for Herrera and the 
PRD.  It is also no secret that Torrijos has his eye on 
running for president when he is next eligible in 2019.  He 
views these social programs as an important part of his 
legacy and the recipients of the programs as core 
PRD-supporters down the road. 
 
¶7. (C) But both Martinelli and Herrera are making grand 
social development promises.  Martinelli is signaling that 
 
PANAMA 00000339  003 OF 003 
 
 
his "change" agenda does not necessarily extend to some of 
Torrijos's high-profile social development initiatives; but 
delivering on the "change" mantra while simultaneously 
keeping the current administration's popular programs up and 
running may be a challenge.  If Martinelli wins, he is 
expected to replace the vast majority of the 15,000 PRD 
government workers with loyalists from the five parties that 
make up the Alliance for Change.  But Post has not seen 
signals that the Martinelli camp is making preparations to 
fully assume the responsibility of governing the country and 
administering the social programs.  The extent to which these 
programs have been institutionalized after only a few years 
in operation is unclear, but a disruption in service 
provision due to bureaucratic and leadership changes could be 
a serious gaffe for the new president. 
STEPHENSON