VZCZCXYZ0000
RR RUEHWEB

DE RUEHZP #0795/01 2961745
ZNR UUUUU ZZH
R 231745Z OCT 09
FM AMEMBASSY PANAMA
TO RUEHC/SECSTATE WASHDC 0011
INFO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS PANAMA 000795 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EINV PM PGOV USTR
SUBJECT: Panama's National Assembly Debating Property Law 
 
REF: 2009 PANAMA 657 
 
SUMMARY 
 
 
 
¶1. (SBU) American citizens in Panama reacted strongly to proposed 
legislation that would change the rules for recognizing rights of 
possession.  As currently worded and depending upon possible 
implementation, domestic and foreign holders of rights of 
possession may have to pay the government for their right of 
possession, even though the current holder already paid the 
previous holder for the right of possession.  Post is actively 
engaging the Government of Panama (GOP) to protect the property 
rights of American citizens. 
 
 
 
WHO OWNS THE LAND IN PANAMA? 
 
 
 
¶2. (U)  Approximately one-third of all land in Panama is titled and 
the majority of that land is in or near Panama City.  The rest of 
the land is owned by the government, but natural or juridical 
persons can purchase a locally approved right of possession or a 
cabinet approved concession to the government owned land.   A right 
of possession is bought and sold in a similar way to titled land, 
but the right of possession is easily challenged by others who 
believe they have a right of possession to the same land.  Due to 
the frequently corrupt actions of the local officials in charge of 
rights of possession and a weak judiciary (ranked 103 out of 133 
countries on judicial independence for the 2009-2010 Global 
Economic Forum's  Global Competitiveness Report), the rights of 
possession system and an associated path to title rights of 
possession is widely recognized as broken. 
 
 
 
PROPOSED LEGISLATION 
 
 
 
¶3. (U) The Martinelli Administration proposed a new law for 
recognizing rights of possession and titling coastal land. 
(Coastal rights of possession fall under a separate legal and 
regulatory framework than non-coastal land.)  The legislation, 
proposed Law 71 of 2009, would mandate holders of a right of 
possession for coastal lands to pay the government for the right of 
possession at a to-be-proposed fixed price and change the process 
for titling a right of possession.  The alleged motivation for the 
new law is to raise more revenue and to punish land speculators 
that obtained rights of possession in non-legal manners.  The 
legislation was extensively modified during the first National 
Assembly debate on October 15.  The second of three required 
National Assembly debates is expected early in the week of October 
¶26. 
 
 
 
AMERICAN CITIZEN REACTION 
 
 
 
¶4. (SBU) Many in the American community in Panama reacted angrily 
and quickly to the legislation.  For the past week, the Embassy 
received approximately a dozen inquiries per day from Americans 
concerned about their property rights.  The core argument is that 
Americans were encouraged by the GOP to invest and live/retire in 
Panama.  Now the GOP wants them to pay again for their land (the 
right of possession) and is changing the rules on how to title the 
land.  In addition, the path to titled land is through a corruption 
ridden bureaucracy that reportedly only titled twelve properties in 
¶2008.  Combined with the weak judiciary, many Americans are feeling 
ripped off.  The intensity of feelings will be largely decided by 
the price per hectare demanded by the government.  One price 
circulating in the National Assembly has a $100 fee per hectare for 
natural persons and up to $5,000 per hectare for juridical persons. 
However, a leaked Ministry of Finance figure is $40,000 per 
hectare.  The divergence in proposed price is causing much of the 
anxiety. 
 
 
 
¶5. (SBU) Besides contacting the Embassy, the American community is 
organizing in some locations and many are directly contacting the 
GOP.  A fund raising campaign to hire a Panamanian lobbyist started 
in Bocas del Toro - a group of Caribbean islands with significant 
 
numbers of Americans who hold rights of possession.  One American 
told econoff that she sent emails about the proposed legislation to 
all her Members of Congress, President Obama, Secretary Clinton, 
and Members of Congress who voiced support for the United 
States-Panama Free Trade Agreement (FTA).  We do not anticipate she 
was the only American citizen to reach out to U.S. politicians. 
 
 
 
¶6. (U) The Panamanian reaction is also intense.  The leading 
Panamanian business and environmental organizations sent a letter 
to President Martinelli in opposition to the proposed legislation 
and there have been several articles in the leading Panamanian 
newspapers questioning the proposed law. 
 
 
 
EMBASSY ACTIONS 
 
 
 
¶7. (SBU) We have informed senior GOP leadership of the reaction of 
the American community in Panama after the first debate and 
requested a GOP POC for American citizens to contact.  On October 
23, the Ambassador will discuss proposed Law 71 with VP Varela, 
noting that American citizen reaction to the proposed legislation 
risks adding a further complication to the passage of the FTA and 
may spawn arbitration cases out of the United States Bilateral 
Investment Treaty.  A public statement expressing concern over 
proposed Law 71 will be considered if the reaction from the 
American community grows and if the legislative process does not 
correct aspects of the legislation that affect American citizens. 
A stronger warning on purchasing property in Panama has been added 
to the draft Country Specific Information Sheet, now awaiting 
clearance in DC. 
 
 
 
¶8. (SBU)  Embassy engagement with the National Assembly is planned. 
Econoff scheduled a meeting with the Deputy Blandon, National 
Assembly sponsor of the legislation and President of the National 
Assembly Housing Committee.  Poloffs will inform other influential 
Deputies of the effect of proposed Law 71 on Panama and American 
citizens. 
 
 
 
COMMENT 
 
 
 
¶9. (SBU)  Proposed Law 71 is adding to the general impression of a 
decline in the reputation of Panama as a safe country to make 
investments  Manzanillo International Terminal, a $500 million port 
investment, and AES, who will shortly have a $900 million 
cumulative investment in Panamanian hydro-electric generation 
plants, have recently had their concession unilaterally changed by 
the GOP.  See ref A. 
STEPHENSON