US embassy cable - 04PANAMA452

C O N F I D E N T I A L SECTION 01 OF 03 PANAMA 000452 
 
SIPDIS 
 
 
E.O. 12958: DECL: 02/25/2014 
TAGS: PREL, ETRD, EWWT, SNAR, PM, ECONOMIC AFFAIRS 
SUBJECT: CODEL WELLER UNDERSCORES GOOD RELATIONSHIP WITH 
PANAMA 
 
 
Classified By: Ambassador Linda Watt for Reasons 1.5 (b) and (d). 
 
 
1.  (U) Summary:  Codel Weller,s February 19-22 visit to 
Panama underscored our strong friendship and high level of 
bilateral cooperation with GoP interlocutors, who included 
President Moscoso, FM Arias, National Security Advisor 
Jarvis, and VM for Foreign Trade Adames.  Congressman Weller 
expressed appreciation for GoP support on Iraq, 
counter-terrorism, counter-narcotics, Canal management, and 
added his strong backing for achieving a fair and balanced 
outcome during upcoming FTA negotiations.   President Moscoso 
stressed that the US can "always count on us" and encouraged 
completing FTA negotiations prior to her Administration 
leaving office on September 1.  She also voiced support for 
Panama,s designation as a distant foreign port under the 
Passenger Vessel Services Act (PVSA).  On the FTA, Moscoso 
noted that, with the exception of a few agricultural-sub 
sectors, most private business firmly supports the FTA. 
Regarding the upcoming May 2 national elections, Moscoso 
assured that they would be open, transparent, and democratic. 
 The Codel also attended a dinner hosted by the Ambassador 
with business and political leaders and visited the Panama 
Canal Authority, Smithsonian Tropical Research Institute 
facilities, and the Manzanillo International Terminal (the 
largest container port in Latin America).  Codel Weller 
included Congressman Jerry Weller (R- Ill), Congressman 
Collin Peterson (D- Minn), and Ted Brennan (Western 
Hemisphere Subcommittee, Majority Staff).  End Summary. 
 
 
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Meeting w/ President Moscoso and FM Arias: 
"You Can Always Count on Us" 
------------------------------------------ 
 
 
2.  (SBU) Congressman Weller opened the February 19 meeting 
by noting that Panama has been a "great friend" to the US and 
thanked President Moscoso and FM Arias for Panama,s support 
in joining the Coalition of the Willing, signing an Article 
98 agreement, cooperating on regional security and 
counter-terrorism, and assisting in the capture last month of 
Colombian drug-kingpin Montoya.  He added that he shares a 
strong belief in free trade and that the U.S. wants a fair 
and balanced outcome for both countries from the upcoming 
negotiations.  President Moscoso praised the bilateral 
relationship calling the U.S. akin to the "father Panama grew 
up with."  She added that in recent years the relationship 
has evolved and normalized.  She noted that cooperation has 
been excellent on security matters and on counter-terrorism. 
The GOP is taking all prudent measures to bolster Canal 
security.  She added the US "can always count on us." 
 
 
3.  (U) Moscoso said the Canal,s increased revenues (a 
portion of which are transferred to the GoP) have permitted 
increased spending on hospitals, housing and education.   She 
said that the Panama Canal Authority (ACP) will finish a 
study on Canal expansion in June 2004 regarding a project to 
build a third-set of locks, and the GoP would subsequently 
hold a national referendum on the issue sometime afterwards. 
(Note: realistically the referendum will not likely take 
place before late 2004.)  The $ 4-9 billion dollar project 
will create jobs and participation will be open to US 
companies. 
 
 
4.  (U) Turning to the upcoming FTA negotiations, Moscoso 
said that she would like to conclude negotiations "even if 
she does not sign the accord" before leaving office September 
1.  She is pleased that the U.S. is thinking about Panama as 
an FTA partner and that the vast majority of Panama,s 
private sector supports the negotiation.  She noted sensitive 
areas for Panama are agriculture sub-sectors such as pork, 
chicken, beef, and rice.  FM Arias added -- for Congressman 
Peterson,s benefit -- that Panama has a small sugar 
industry, most of which is for domestic consumption. 
 
 
5.  (U) Moscoso assured the Codel that the upcoming May 2 
national elections would be "open, transparent, and democracy 
will be respected."  She stressed that Panama had endured 21 
years of dictatorship and knows how important it is to get 
this right.  Congressman Weller noted that democracy is a 
fragile institution and that the U.S. is willing to work with 
Panama to strengthen democratic institutions. 
 
 
6.  (SBU) Congressman Peterson said Panama,s desire to be 
designated a "distant foreign port" under the Passenger 
Vessel Services Act would be a difficult issue for the House 
Transportation Committee's Chairman Young.  FM Arias said he 
understood there was a way to bring this change about on the 
basis of executive branch authority.  Peterson cautioned that 
some in Congress might still try to block any such effort, 
but volunteered to talk with Young.   Arias explained that 
U.S. companies also see the re-designation as a way to 
increase business and that he will try to see Young when he 
visits Washington in March. 
 
 
7.  (SBU) On other security issues, Moscoso added that Panama 
is ready to implement the IMO,s ISPS code by the July 1 
deadline, but that it needs help obtaining x-ray equipment to 
inspect containers.  (Note: Moscoso appeared to be confusing 
ISPS implementation with the USG,s Container Security 
Initiative (CSI) program.)  She noted that Panama has also 
taken substantial measures during her administration to 
strengthen its anti-money laundering regime and in stopping 
drug transits.  Weller concluded by thanking Moscoso and 
Arias for the long and special relationship the US and Panama 
have enjoyed. 
 
 
--------------------------------------------- --------- 
Meeting with National Security Director, Ramiro Jarvis 
--------------------------------------------- --------- 
 
 
8.  (C) Codel Weller met with Ramiro Jarvis, Executive 
Secretary of the Public Security and National Defense 
 
SIPDIS 
Council, on Feb. 19.  Congressman Weller thanked Jarvis for 
Panama,s strong security cooperation with the United States, 
especially in the areas of counterterrorism and money 
laundering.  The discussion focused upon three themes: anti- 
security threats to the Panama Canal, terrorist activity in 
Panama, and regional cooperation. 
 
 
9.  (C) Jarvis noted that the 9/11 attacks caused Panama to 
change its perspective on Canal security, and that the GoP is 
continuously looking to enhance its capabilities to counter 
any potential threat.  He expressed gratitude to the USG for 
its role in providing equipment, training, and information. 
This collaboration has contributed to the strengthening of 
Panama,s borders and its ability to quickly respond to any 
situation.  He stated that the GoP evaluates every vessel 
that transits the canal, assigns it a threat level, and 
searches those considered suspicious.  Jarvis added that 
Panama has adapted a global view regarding its approach to 
national security.  In addition to the Container Security 
Initiative, Panama would like to sign the Proliferation 
Security Initiative with the United States before the end of 
the Moscoso administration.  He further stated that any USG 
assistance aimed at strengthening GoP immigration and customs 
organizations would be greatly appreciated. 
 
 
10.  (C) Regarding possible terrorist activities in Panama, 
Jarvis affirmed that the GoP has not/not identified any 
specific terrorist financial activity in Panama, adding that 
the UAF, Panama,s Financial Intelligence Unit (FIU), closely 
monitors the issue.  He noted Panama had recently made 
improvements to its anti-money laundering regime.  Responding 
to Congressman Peterson,s question on possible mainland 
Chinese encroachment into Panama, Jarvis responded that the 
main interest of China is to diminish Taiwan,s influence in 
Panama.  China's interests in Panama are commercial, he said. 
 Panama has not/not seen any indication of suspicious Chinese 
activities/penetration.  Congressman Weller stated that 
international cooperation amongst countries was imperative to 
stopping terrorists and their networks.  Jarvis concurred and 
explained that while Muslim communities in Panama and the 
region are well connected, Panama has not/not identified any 
abnormal activity.  He added that the GoP completes, with USG 
assistance, a strict identification check on selected 
individuals and foreign nationals coming to Panama and if 
there is any information regarding possible terrorist links, 
the GOP denies the visa. 
 
 
11.  (C) Jarvis continued that regional intelligence 
cooperation is good, especially with  Paraguay, Chile, and 
Argentina.  He elaborated that while arms trafficking has 
increased in the region as a whole, the countries are working 
together to stop it.  As a transit country of weapons, Panama 
continues to work closely with Colombia through a bi-national 
border and maritime security group.  Concerning the Darien 
border, Jarvis stated Panama would like Colombia to (1) 
strengthen the presence of its forces on the border and (2) 
communicate better with Panama.  Jarvis stressed that 
satellite communication and the willingness to exchange 
information are the keys to success.  At the moment, there is 
no means of communication at the border between the 
countries, although communication and coordination between 
Jarvis,s office and the Colombian Embassy in Panama City is 
close.  Ambassador Watt highlighted that the USG is working 
with the GoP to establish a secure communication system that 
is compatible between the two countries. 
 
 
---------------------------------------- 
Meeting with VM for Trade, Romel Adames: 
The FTA: Panama,s Concerns 
---------------------------------------- 
 
 
12.  (SBU) Codel Weller also met with Vice Minister for 
External Trade, Romel Adames, and his advisor, Analisa 
Palacios on Feb. 20.  Adames stressed the importance of 
beginning the FTA negotiations prior to Panama,s May 2 
national elections; "beginning the negotiations in April 
would send the message the FTA is a state project rather than 
a political instrument in Panama."  (Comment: It's really 
just the opposite - the Moscoso Administration's timing 
argument is mostly local politics and trying to gain 
electoral advantage, although we see no downside with 
beginning discussions in April. End Comment.)   Adames stated 
that while there are some agricultural concerns (namely rice, 
onions, potatoes, dairy, and pork), the negotiations will 
also focus on services.  He specifically noted Panama,s 
interest in reducing barriers for Panamanian banks entering 
the US market.  Regarding CAFTA, Adames stated Panama is "not 
uncomfortable with CAFTA as a starting place" for the 
negotiations.  The GoP is currently studying CAFTA, and by 
early March will have a better understanding of what changes 
Panama wants.  Congressman Weller stated that CAFTA,s 
environmental additions would be important for Panama,s 
tourism industry.  Adames agreed and remarked that the 
environment was beginning to be a issue for Panamanians. 
 
 
13.  (SBU) Adames said that Panama views its main competitor 
for the FTAA Secretariat to be Miami.  He shared (protect) 
that Panama plans to offer its Atlapa Convention Center to 
house the Secretariat.  Weller stressed that the FTAA would 
permit the hemisphere to compete with Asia and China; the FTA 
between Panama and the U.S. is a key building block.  Adames 
concurred and called Brazil the region's largest stumbling 
block because of their self-conceived idea of power. 
 
 
14. (SBU) Congressman Weller asked Adames to elaborate on the 
issue of public procurement related to the Canal and whether 
American businesses are competitive in Panama.  Adames 
remarked that, in his opinion, the US initially pursued the 
issue in the wrong forum (read: the WTO,s GPA).  Panama, he 
explained, does not want to activate the Neutrality Treaty 
that permits the US to enter Panama to defend the Canal. 
Consequently, the GoP fears that foreign companies procuring 
in Panama could lead to allegations of active negligence, 
which could activate the treaty.  Panama is not giving 
preference regarding public procurement to countries with an 
FTA with GoP, but the GoP is willing to discuss the issue 
with the US.  (Comment:  While this logic seems convoluted it 
is clear the GoP will be prepared to discuss Canal 
procurement in the context of a bilateral FTA. End Comment.) 
 
 
--------------------------- 
Visit to the Canal and STRI 
--------------------------- 
 
 
15.  (U) Codel Weller also visited the Panama Canal 
Authority's Visitor Center where they met the Canal 
Administrator and received a briefing from Canal officials at 
the Incident Management Center on Canal Security.   The Codel 
also had the opportunity to visit the Smithsonian Tropical 
Research Institute's (STRI)  Galeta Point Laboratory and 
STRI,s Barro Colorado Island facility. 
 
 
16.  (U) Ted Brennan cleared for Codel Weller on paragraphs 
1-7 and 12-16; he did not have the opportunity to clear on 
classified paragraphs 8-11. 
WATT