US embassy cable - 04PANAMA748

UNCLAS SECTION 01 OF 03 PANAMA 000748 
 
SIPDIS 
 
 
STATE PLEASE PASS DHS - AMB. ARCOS 
 
 
E.O. 12958: N/A 
TAGS: EWWT, PTER, ETRD, PM, ECONOMIC AFFAIRS 
SUBJECT: DHS AMBASSADOR ARCOS PRESSES MARITIME SECURITY 
AGENDA IN PANAMA 
 
1.  Summary:  During a March 23-24 visit to Panama, 
Ambassador Cresencio Arcos, Director for International 
Affairs at the U.S. Department of Homeland Security pressed 
the USG agenda on maritime security.  At a meeting with 
Panama's Minister of Government and Justice (MOGJ), Arnulfo 
Escalona, the Minister discussed the GoP's bilateral security 
agenda with the USG and broader national policies, including 
Panama's desire to be a Container Security Initiative (CSI) 
country.  Arcos emphasized the need to stamp out corruption 
to aid in getting CSI.  Escalona reaffirmed the GoP's close 
and continuing relationship with the United States and 
updated Arcos on Panama's efforts to comply with other USG 
and international security initiatives.  Arcos later 
delivered a speech at a broadly attended dinner in which he 
urged companies from the Colon Free Zone--the world's second 
largest--to take a leading role in financial and maritime 
security.  He also visited Panama's key cargo and passenger 
port facilities, and held an interview with a leading local 
newspaper.  End Summary. 
 
 
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Meeting with the Minister of Government and Justice 
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2.  On March 23, Ambassador Arcos, accompanied by the DCM and 
Econoff, met with MOGJ Escalona.  Also attending were GoP 
Public Security and National Defense Council (Consejo) 
Executive Secretary Ramiro Jarvis, National Police (PNP) 
Director Carlos Bares, Maritime Authority (AMP) Director 
Bertilda Garcia, and AMP Deputy Director Capt. Luis Perez 
Salamero.  Ambassador Arcos opened by noting that the 
landscape of terrorism was rapidly changing, and that 
governments had to work aggressively to adapt and remain 
innovative to be one step ahead of terrorists.  He thanked 
the GoP for its continued support in this effort.  Minister 
Escalona replied that Panama was and would remain a strong 
partner to the United States in the aviation and maritime 
security arenas, and this was the policy of the entire 
Moscoso administration.  To that end, there were two agendas 
that the GoP followed--the specific U.S.-Panama bilateral 
relationship and a general GoP security agenda. 
 
 
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The Container Security Initiative: a GoP Priority 
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3.  In the bilateral arena, he said, the GoP was making every 
effort to become a Container Security Initiative country.  He 
pointed to the extensive GoP support of a January 14-21 CSI 
technical visit by DHS officials, and noted that the GoP was 
still waiting for a formal report from that visit to 
implement further improvements and move forward.  He queried 
on the status of the proposed Declaration of Principles (DoP) 
for CSI, saying, "Tell me where to sign."  (Note: The draft 
agreement has been with DHS headquarters since March 1.  Our 
GoP interlocutors continue to press for a DoP status update 
at every opportunity.  End Note.)  He observed that Panama's 
law for privatization of ports hadn't contemplated security 
oversight, and in essence, the GoP had given up this control 
to the operators when the port concessions were granted to 
private companies.  He said the GoP deemed CSI as key to 
regain effective sovereignty over the ports as well as 
strengthening GoP institutions and offering a competitive 
advantage to Panama,s maritime industry. 
 
 
4.  Ambassador Arcos replied Panama was a truly changed 
place.  He observed that the USG and GoP were much more than 
just friendly nations, but had a healthy, cooperative 
relationship.  He said it was clear that Panama understood 
its role as a strategically critical country, especially with 
the new threat of terrorism.  Given that 60% of world GDP is 
in the Pacific basin, with all projections indicating an 
increase, Panama's strategic importance could only grow. 
Arcos mentioned that 20 countries are CSI certified and that 
DHS is now looking at the second tier of developing nations, 
of which Panama was included.  Arcos said that the USG was 
considering many issues for including a country in CSI, but 
emphasized that "port integrity" that kept out corruption was 
a major factor.  CSI involved much more that signing 
documents, he stressed. 
 
 
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Other USG initiatives also highlighted: TECI, EXBS, PSI 
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5.  Escalona said that a GoP inter-agency working group was 
reviewing Panamanian law to determine compliance with the 
Department of Commerce,s Trans-shipment Export Control 
Initiative (TECI) and the Department of State's Export 
Control and Related Border Security Assistance (EXBS) 
program.  He said the working group was to present a law 
proposal to the Legislative Assembly before the summer that 
would greatly improve the GoP's control of dual use items 
entering, leaving and transiting Panama.  Escalona added that 
the GoP was reviewing ways to sign a Proliferation Security 
Initiative (PSI) boarding agreement with the USG, and that it 
was beginning to focus on cruise ship security, given the 
rapid increase of port calls in the past two years, and asked 
for our assistance to train Panamanian officials in this 
area. (Note:  The Embassy is currently working with GoP 
entities to address this endeavor.  End note.) 
 
 
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International Ship and Port Security (ISPS) Code 
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6.  AMP's Salamero noted that the AMP was charged with 
International Ship and Port Facility Security (ISPS) code 
implementation for Panama.  Beginning April 15 he said, the 
AMP would begin to review port security plans for Panama's 
major ports, including the Panama Canal.  He added that 5500 
Panama-flagged ships are subject to ISPS review.  Of those, 
the three GoP-designated Recognized Security Organizations 
(RSO's) had approved 2200 security plans for ships and 
another 800 are in the pipeline.  He opined that Panama was 
well ahead of other maritime states in its ISPS 
implementation.  Arcos reiterated the importance of ISPS 
compliance, and noted that the July 1 deadline for 
implementation was very firm.  Salamero responded that for 
this very reason, the GoP was requiring all Panama-flagged 
vessels to turn in their ship security plans by May 1 to 
avoid a bottleneck just before July.  Arcos noted that the 
movement of people across borders is a challenge, and alluded 
to the USVISIT program, which will include biometrics for 
passports.  He urged the GoP to apply similar standards to 
mariner documents. 
 
 
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Airport Security, Borders, and Migration 
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7.  Escalona then moved to the general GoP security agenda, 
saying that the GoP viewed the June 2003 semi-privatization 
of the Tocumen International airport as a positive move to 
strengthen security, as it would allow the airport to 
undertake a $50 million renovation that would include 
significant security upgrades, including suggestions made by 
a March 10-17 Transportation Security Agency (TSA) team.  He 
noted that the GoP was working to strengthen its border 
security by taking a strong stand against the Colombian FARC 
in the Darien region. He said the GoP had regained control of 
the Darien, professionalizing and increasing the PNP forces 
there to keep the FARC from using the Darien as a safe haven. 
 Escalona added that the GoP coordinated closely with 
Colombian counterparts to repatriate refugees as humanely as 
possible, and was working hard to address narcotrafficking. 
He said that USG support, such as a recent $1 million 
allocation to help maintain the National Air Service's 
helicopters, was integral in all these efforts and greatly 
appreciated.  Escalona finished by saying that the GoP was 
revising its migration policy, including a census of illegal 
immigrants in Panama, passing laws to stop child pornography 
and clamping down on prostitution abuses--this latter 
initiative to address concerns about trafficking in persons. 
 
 
8.  In a press conference following the meeting, Ambassador 
Arcos emphasized the positive relationship between the two 
countries, noting it was a solid based on which to build to 
confront threats.  He added that Panama and the Canal were 
strategically important, and underlined the importance of 
striking a balance between security and open commerce. 
 
 
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Speech to the Users Association of the Colon Free Zone 
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9.  Immediately after, Ambassador Arcos addressed the Colon 
Free Zone (CFZ) Users Association, which represents the 
majority of companies present in the world,s second largest 
free zone, on the topic of the new security stance of the 
United States and its implications for Panama.  He noted that 
Latin America was much affected by changes in U.S. security 
and gave an overview of DHS operations.  He observed that 13% 
of U.S. maritime commerce passes through the Panama Canal, 
and lauded the GoP's counterdrug cooperation.  He noted that 
the recently announced U.S-Panama Free Trade Agreement 
negotiations would enhance respect for the rule of law in 
Panama and would ensure strong and accountable institutions 
of government.  He exhorted the CFZ to be a global standard 
bearer in the areas of financial and transportation security. 
 
 
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Review of the Canal and Ports, PVSA, CSI Redux 
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10.  On March 24, Ambassador Arcos participated in an 
overflight of the Panama Canal and its installations. 
Afterwards he visited Atlantic-side ports including Panama 
Ports Company,s Cristobal passenger and cargo installations, 
the Colon 2000 passenger terminal, and the U.S.-owned 
Manzanillo International Terminal (MIT) for cargo.  Upon 
return to Panama City, Ambassador Arcos also visited the Fort 
Amador cruise ship, hotel, and shopping complex.  MIT 
managers noted that while the privatized ports in Panama were 
prepared to shoulder the costs of CSI implementation, it was 
important to keep in mind that only 70,000 containers that 
were transshipped (off-loaded and then onloaded again) in 
Panama actually were destined for the United States, and of 
those, more than 80% originated from CSI-certified ports.  In 
addition, they observed that Panama was the country of origin 
of perhaps only 20,000 more containers.  Ambassador Arcos 
reiterated that CSI considers many factors, not just 
container volumes, and highlighted the need to stamp out 
corruption to maintain port security integrity.  The cruise 
ship terminal operators expressed their interest in Panama,s 
designation as a distant foreign port under the Passenger 
Vessels Services Act (PVSA), claiming that the designation 
could significantly increase the number of port calls to 
Panama and thus significantly benefit the tourism sector. 
Arcos replied that the Department of Commerce continues to 
analyze the economic impact of the change and that the USG 
would consider options soon. 
 
 
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Interview with El Panama America Newspaper 
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11.  Though Ambassador Arcos discussed the broad maritime 
agenda in a one-on-one interview with El Panama America, a 
leading Panamanian daily, the published article focused 
entirely on the background of the CSI program and Panama,s 
potential to be included.  The article noted that Arcos had 
visited Panama,s key ports and his observation that there is 
no set timetable for CSI implementation for Panama. 
 
 
12.  Ambassador Arcos did not have the opportunity to clear 
this cable. 
MCMULLEN