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C O N F I D E N T I A L PANAMA 000680 
 
SIPDIS 
 
E.O. 12958: DECL: 10/01/2020 
TAGS: PGOV PREL PINR PM
SUBJECT: PRD IN CRISIS 
 
Classified By: Ambassador Barbara J. Stephenson for reason 1.4 b and d. 
 
Summary 
-------- 
¶1. (C) After suffering a humiliating electoral defeat in the 
May presidential elections, leaders of the Revolutionary 
Democratic Party (PRD) have been publicly lambasting one 
another and fighting for control of the party amidst serious 
corruption allegations.  President Martinelli, like a shark 
smelling blood, has moved swiftly and strongly to highlight, 
and in some cases pressure the Attorney General to prosecute 
alleged corruption in previous PRD governments, telling his 
inner circle that he would like to destroy the PRD and govern 
without a strong opposition.  However, the dissolution of the 
PRD could have long-lasting negative consequences for Panama, 
by eliminating both a moderating voice for the left and a 
strong check-and-balance on Martinelli's power.  We are 
encouraged by recent reports that the PRD is re-writing its 
statutes and plans to elect a new slate of party officials in 
early 2010.  We continue to tell our interlocutors that our 
vision of Panama as a secure, stable country includes strong 
democratic institutions such as responsible political 
parties.  End summary. 
 
A Brief History of the PRD 
-------------------------- 
¶2. (SBU) The Democratic Revolutionary Party (PRD) of Panama 
was created in 1979 by General Omar Torrijos as the civilian 
political wing of the Panama Defense Forces (PDF), which held 
de-facto political power at the time.  Reflecting Gen. 
Torrijos' governing style, the PRD embraced an eclectic set 
of ideological positions running from the socialist left to 
the nationalist right. Part of the Communist Party joined the 
PRD and formed the "La Tendencia" faction.  This group was 
the incubator of many of today's PRD leaders, including the 
party's losing candidate in the recent Panamanian 
presidential elections, Balbina Herrera. 
 
¶3. (SBU) Due to its associations with the disgraced military, 
the PRD was close to death in the aftermath of the U.S. 
invasion of Panama in 1989. Ernesto Perez Balladares, a 
former Finance Minister under Gen. Torrijos who exiled 
himself during the Noriega years, was able to rebuild the 
party by re-casting it as the party of Omar Torrijos, not 
Manuel Noriega. His investment in time and money in 
rebuilding the party were rewarded when he won the 
Presidency, and the PRD won control of the National Assembly, 
in 1994.  Near the end of his term in 1999, his efforts to 
pass a constitutional referendum granting him the right to 
run for immediate re-election were defeated in a national 
referendum by a margin of 2 to 1.  Perez Balladares 
subsequently lost control of the PRD to Martin Torrijos, son 
of Omar Torrijos. 
 
¶4. (SBU) In the 1999 elections, Martin Torrijos lost the 
presidency to Mireya Moscoso of the rival Panamenista Party. 
The PRD was able to control the National Assembly for a 
period of two years, however, giving the party tremendous 
leverage over the government.  In 2002, two related major 
corruption scandals became public. One involved the alleged 
bribery of a few PRD Deputies by the Moscoso government to 
get the extra votes needed for the Assembly to approve two of 
Moscoso's Supreme Court nominees, Winston Spadafora and 
Alberto Cigarruista. This deal was allegedly cut by the PRD 
deputies themselves, leading Balbina Herrera to publicly 
accuse PRD Deputy Carlos "Tito" Afu on January 9 2002, of 
having accepted a $1 million bribe. Several days later Afu 
appeared on television dramatically waving $6,000 dollars 
around and announcing that the entire PRD legislative block 
had been bribed to approve a contract in favor of the CEMIS 
corporation, and that party leaders Martin Torrijos and 
Balbina Herrera had organized it, and received much larger 
bribes. The two cases, which were seemingly unrelated, were 
merged into one case, and then frozen by the Supreme Court 
for alleged prosecutorial defects. It is generally assumed 
that the fusing of the cases tied the fate of the PRD and the 
Panamenistas together, and formed the basis of a political 
agreement to bury the two cases. 
 
¶5. (SBU) This scandal was only one of many that affected the 
Moscoso administration, however, and in 2004 a frustrated 
public elected Martin Torrijos as President with 47% of votes 
cast, while the PRD also won a majority in the National 
Assembly. Though Torrijos finished his term this year with 
relatively high approval rates of  50%, and oversaw an 
unprecedented period of economic growth, the PRD was 
resoundingly defeated by Ricardo Martinelli on May 3, with 
Herrera receiving fewer votes than the party's inscribed 
membership. The defeat has been blamed on many factors, 
including Herrera's high negative ratings and a grueling 
primary process that began in 2008 and revealed a strong 
personal animosity between Herrera and Juan Carlos Navarro, 
leading to a split party after a very close finish in the 
primary election.  Following her devastating defeat, Herrera 
refused to congratulate Martinelli, immediately declared 
herself the leader of the opposition and the 2014 candidate, 
and, in a speech to her supporters, implied that the U.S. 
Embassy had conspired to defeat the PRD.  She also claimed 
that Torrijos, in his capacity as Secretary General of the 
party, did not do enough to help her win. Several PRD 
contacts have told EMBOFFs that they are relieved Herrera did 
not win, given how badly she behaved in defeat. 
 
¶6. (SBU) Following the election defeat, influential PRD 
members began calling publicly for the resignation of the 
entire executive board of the party, the Centro Ejecutivo 
Nacional (CEN).  Of its nine members, only Juan Carlos 
Navarro has publicly stated that he is willing to give up his 
seat - but that is generally considered to be a ploy, since 
he is not in the majority of the CEN, and has not hidden his 
ambition to be the next PRD presidential candidate.   The CEN 
is dominated by allies of Martin Torrijos and Herrera, who 
have joined ranks to defend their control of the party, 
though they are not believed to be close political allies. 
What brought them back together was their desire to maintain 
control of the CEN, and the revival of the CEMIS scandal. 
Perez Balladares, seeing a chance to regain control of the 
party he lost in 1999, released tapes of several PRD members, 
including Afu, discussing the CEMIS case, and the high 
profile roles of Torrijos and Herrera in great detail. Under 
this pressure, and additional pressure from President 
Martinelli (septel), the Supreme Court voted on July 22 to 
reopen the case. No definitive ruling has yet been made, 
leading to speculation that the case may yet be mothballed 
once again. Nonetheless, the revival of the case has cast a 
long shadow on the credibility of the current PRD leadership. 
 
¶7.  (SBU)  However, things have not gone well for Perez 
Balladares either. The Panama City daily La Prensa broke a 
story recently that detailed Perez Balladares' personal 
enrichment from sweetheart deals to privatize casinos, and 
published evidence all the way down to signed checks by Perez 
Balladares. La Prensa Executive Director Fernando Berguido 
told the Ambassador August 25 that Martinelli himself had 
leaked the material to him, ending speculation that Torrijos 
had leaked it to retaliate. 
 
Rising from the Ashes 
--------------------- 
¶8. (C) National Assembly Deputies from ruling coalition 
parties Democratic Change (Martinelli's Cambio 
Democratico--CD), Panamanian (VP/FM Varela's Panamenistas), 
and the Patriotic Union (Union Patriotica--UP) have told 
emboffs not to be deceived by the seeming chaos within the 
PRD.  They said the PRD has always been a resilient party 
which reaches far and wide through Panamanian society with a 
very disciplined and activist membership base.  There is 
nothing like a common enemy to reunite a divided family, and 
the governing parties could already see PRD ranks circling 
the wagons to mount a unified opposition against Martinelli. 
For example, the PRD is already putting out concerted 
messaging such as "the government's anti-corruption moves are 
nothing but a political show."  CD deputies admitted 
Martinelli would like to see the PRD splinter and disappear 
as a counter to his own political power and popularity. 
Those same deputies opined that would be bad outcome for 
Panama, because Martinelli without a strong opposition could 
be dangerous. 
 
¶9. (C) Perhaps Martinelli overplayed his hand by pressuring 
the A/G to arrest former education minister Belgis Castro as 
part of a corruption investigation.  In the unwritten rules 
governing Panamanian politics, that is simply not done.  It 
may have spooked the PRD into feeling persecuted, and served 
as a wake-up call that Martinelli's threats to help the party 
self-destruct were not idle ones.  PRD deputies told emboffs 
September 8 that they had full confidence the party would 
rise from the ashes with new leadership and new energy. 
Martin Torrijos recently reached out to Ernesto Perez 
Balladares (media reports say at the behest of Balbina 
Herrera and Juan Carlos Navarro) to ask for a truce so the 
party can reorganize; the two of them have led the party for 
the past twenty years.  Party Vice President Elias Castillo 
said the PRD would write new statutes by December and elect a 
new CEN in the first quarter of 2010.  He blamed much of the 
in-fighting on members posturing for leadership positions 
within the party.  Deputy Crecencia Prado, who represents the 
Ngobe Bugle indigenous area, claimed the PRD membership base 
in the countryside was fed up with the party leaders' public 
squabbling, and were demanding more representation in the 
party power structures. 
 
¶10. (C) The PRD deputies pointed out that the party's 
situation after the 1989 invasion to oust Noriega was much 
worse than it is now; they were so stigmatized they had to 
meet in hiding.  Yet the party bounced back.  They are 
certain  the PRD will rebound now as well.  They plan to 
examine every action of the Martinelli government and 
publicly chastise every misstep, so they can retake the 
presidency in 2014. 
 
Comment: Why Should We Care About the PRD? 
------------------------------------------ 

¶11. (C) The continued existence of a responsible opposition 
party is an important counter-balance to Martinelli's 
increasingly Presidentialist rule (septel).  Our long-term 
interest lies in developing democratic institutions - 
including political parties - to ensure a Panama that is 
secure, stable, prosperous and capable of effectively 
administering the Panama Canal. The PRD, Panama's largest and 
most disciplined political party, serves as a means of 
legitimate, if imperfect, access to the political process for 
a large part of Panama's population that still struggles with 
economic and social difficulties. The alternative could be a 
more extreme and polarizing leftist movement that sees the 
U.S. as an imperial power. 
 
¶12. (C) The post-election disputes that currently embroil the 
PRD are partially the result of strong personality conflicts 
among the leadership in the wake of a devastating loss mixed 
with the corrosive effects of endemic Panamanian political 
corruption.  However, the PRD's problems are also the result 
of the inherently wide ideological span of the party - from 
the socialist "Tendencia" to the center-right pro-business 
and transactional moderates. It is precisely the function 
that the PRD performs in pulling these disparate groups 
together that is valuable.  As a moderator of extreme left 
views and a legitimate outlet of popular socialist opinion, 
the PRD plays a vital role in making Panamanian politics work. 
 
¶13. (C) As the drama plays out, we will be encouraging our 
PRD interlocutors to move towards our vision of a mature 
party that serves as a check and balance - albeit with more 
transparency and honesty than it has previously displayed. 
We are reaching out to PRD members to counter their 
perception that the U.S. Embassy supported the 
Martinelli-Varela ticket and now stands blindly behind the 
new government (a perception that Martinelli has actively 
fueled).  We are passing our own concerted message that, 
rather than disintegrate in reaction to the rise of a new 
caudillo in Panama, we hope to see the PRD survive and 
continue to act as a responsible moderator of leftist 
political sentiment in Panama. 
 
 
 
 
STEPHENSON