US embassy cable - 04PANAMA1224

C O N F I D E N T I A L SECTION 01 OF 03 PANAMA 001224 
 
SIPDIS 
 
 
SENSITIVE 
 
 
DEPT. FOR WHA/CEN/BRIGHAM 
 
 
E.O. 12958: DECL: 05/17/2014 
TAGS: PGOV, PREL, PINR, PM, POLITICS & FOREIGN POLICY 
SUBJECT: PANAMA LEGISLATIVE UPDATE: NEW BALLGAME ON 
SEPTEMBER 1 
 
 
REF: PANAMA 1047 
 
 
Classified By: DCM Christopher J. McMullen for reasons 1.4 (b) & (d) 
 
 
SUMMARY: Expect little until September 1 
---------------------------------------- 
1.  (SBU) Panamanians (current legislators included) are so 
focused on what will happen after September 1 that they 
appear to have forgotten entirely that the current Assembly 
session will continue until the end of May.  The Democratic 
Revolutionary Party (PRD), Panama's largest and best 
organized party, whose candidate Martin Torrijos won the 
presidency by a commanding margin, is poised to control 
Panama's 78-member unicameral legislature that will assume 
office on September 1.  PRD legislators won 41 seats, 
securing a massive advantage over the second-largest block, 
the Arnulfista Party's 17 legislators.  All seven legally 
recognized political parties won at least one seat and enough 
votes to survive as parties.  Alliances to defeat future PRD 
legislative initiatives would require opposition legislators 
to "convert" PRD renegades as well as join forces with each 
other, both unlikely events.  End Summary. 
 
 
Out-going legislators slump 
--------------------------- 
2.  (C) Despite bickering over constitutional reform, Embassy 
expects little substantive progress in the legislative branch 
before the new Assembly gets to work on September 1.  The 
outgoing losers, who constitute a high proportion of the 
current Assembly, just don't have the political will to push 
things through.  Media reports highlight legislators' failure 
to attend sessions for the past several months.  Assembly 
President Jacobo Salas closed the Assembly weeks before 
Panama's May 2 elections to allow incumbents and staff, who 
had thrown their hats in the ring, to run their campaigns. 
Salas ordered extra hours in May and early June to make up 
for lost time, but the Assembly has not gathered a quorum (at 
least 50%) during several days that it was supposed to be in 
session. 
 
 
Winners and Losers 
------------------ 
3.  (SBU) The clearest winner in the May 2 elections was the 
PRD, which increased its number of seats in the Assembly from 
34 to 41, and the Solidarity Party, whose share of the 
Assembly increased from 4 to 9.  Despite their alliance with 
the PRD, the Popular Party (PP) lost big, maintaining only 
one of its five current legislative seats (that of Second 
Vice President-elect Ruben Arosemena).  Analysts have 
suggested that the PRD-PP alliance accentuated the existing 
cleavage within the PP (formerly the staunchly anti-PRD 
Christian Democratic Party), which began during the Endara 
Administration (1989-94) with a dispute between Endara and 
his First Vice President Ricardo Arias Calderon.  Indeed, 
three incumbent PP legislators jumped ship to the Arnulfistas 
for their re-election bid and two won.  Though not as 
severely as in the presidential race, the Arnulfistas lost 
ground in the legislature, with their share of the Assembly 
falling from 19 to 17 legislators.  The Arnulfistas owe 
several "wins" to incumbents who defected from other parties 
like Juan Carlos Varela (PP), Enrique Garrido (PP), Carlos 
Afu (PRD), and Sergio Galvez (Democratic Change Party). 
 
 
4. (SBU)  The most likely composition of the Legislative 
Assembly that will begin work on September 1 (subject to the 
resolution of formal challenges to results, which must be 
submitted by Friday May 13 at the latest) is: 
 
 
 PARTY                                      # Legislators 
 -----                                      ------------- 
 Democratic Revolutionary Party (PRD)            41 
 Arnulfista Party (PA)                           17 
 Solidarity Party (PS)                            9 
 Natl. Liberal Republican Movement (MOLIRENA)     4 
 National Liberal Party (PLN)                     3 
 Democratic Change Party (CD)                     3 
 Popular Party (PP)                               1 
 
 
Prospects before May 31 
----------------------- 
5.  (C) Embassy is following two issues of interest to the 
USG in the current legislature.  First, the Ministry of 
Foreign Relations still has to present the Palermo Convention 
to the Assembly for ratification, to which there does not 
appear to be any strong opposition.  Second, the Legislative 
Assembly will need to consider an amendment to the organic 
law of the Interoceanic Regional Authority (ARI) to permit 
non-commercial organizations to purchase reverted land in 
installments.  Successful passage of such an amendment will 
determine whether Florida State University (FSU) can afford 
to keep its Panama campus and might close a long-standing 
dispute between ARI and FSU. 
 
 
6.  (C) PRD sources have told EmbOffs that they are seeking 
Arnulfista collaboration to reform the Social Security Fund 
(CSS) before September 1, a highly unlikely scenario.  Though 
the Torrijos team says their plan would allow both sides to 
save face while resolving a critical national problem, the 
Arnulfistas don't appear to have the backing (or desire) to 
take the drastic steps it would require.  The CSS cannot 
continue to operate with its massive cash flow hemorrhages, 
which are eating into its reserves at an alarming rate. 
Indeed, only a consensus solution from all political corners 
has even a remote chance to be successful; however, President 
Moscoso already apparently told Martin Torrijos that her 
administration, "just can't do it right now." 
 
 
What to look for after September 1 
---------------------------------- 
7.  (C) When the new PRD-dominated Legislative Assembly goes 
to work on September 1, 2004, it will probably begin in 
lock-step with the initiatives that President-elect Martin 
Torrijos' launches from the executive branch.  On the other 
hand, the Assembly's committees may well be places where 
tensions flare between the PRD "old guard" and new PRD blood 
like first-time San Miguelito Legislator-Elect "Mickey" 
Aleman (a liquor company executive in his early 30s whose 
uncle is Arnulfista Legislator Francisco "Pancho" Aleman). 
Intra-PRD competition for the Assembly presidency that the 
media has publicized pits youth (Rogelio Paredes from the 
working class district of Arraijan just across the Panama 
Canal) against experience (Elias Castillo, a longtime public 
office-holder who won re-election to his legislative seat 
representing middle to upper class San Francisco and Paitilla 
suburbs).  Hector Aleman, Martin Torrijos' "campaign 
coordinator," is another seasoned political veteran 
re-elected to the Legislative Assembly who will probably be 
recognized for his service to the PRD and could be a 
contender for Assembly president. 
 
 
8.  (SBU) Parties other than the PRD will have their hands 
full trying to forge alliances inside the Assembly and out. 
The Arnulfistas have already announced sweeping reforms of 
their Board of Directors and changes to the party bylaws that 
would make primaries mandatory.  Guillermo Endara has heeded 
the Solidarity Party's call to join and strengthen the sudden 
beneficiary of a massive electoral subsidy US$3.7M, which he 
hopes will present constructive opposition to the PRD.  The 
two heirs of Panama's "liberal" tradition, the National 
Liberal Republican Movement (MOLIRENA) Party and the National 
Liberal Party (PLN), have announced that they are discussing 
a merger.  The PLN barely survived the May 2 elections, 
capturing only 1.5% of the presidential vote and 5.23% of the 
legislative vote nationwide.  A PLN/MOLIRENA merger, would 
create a 7-legislator block to reckon with inside the 
assembly and allow those previously expelled from MOLIRENA to 
return to the flock.  (NOTE: The term "liberal" in this case 
corresponds to the historical Conservative / Liberal 
dichotomy in Colombian politics.  End Note.) 
 
 
COMMENT: Old faces 
------------------ 
9.  (C) Several candidates' clear ethical and/or legal 
peccadilloes evidently did not trouble the voters who 
re-elected them.  Analysis reveals that 32 of 59 (54%) of 
incumbent legislators won re-election.  Of the 27 who didn't 
make it, 14 are Arnulfistas, 9 are PRDistas, and one each 
were members of the four smaller parties.  A May 11 La Prensa 
report cites former Supreme Court Justice Edgardo Molina 
Mola's understandable disdain for the re-election of two 
controversial politicians -- Sergio Galvez and Carlos Afu. 
Arnulfista behemoth Galvez, who abandoned CD almost 
immediately after it helped him win his seat in 1999, freely 
admits that he never attends legislative sessions.  He also 
continues to deny widespread charges that he sells contraband 
rice by using his legislative immunity.  Former PRD turned 
Arnulfista Afu became (in)famous by waving $6,000 cash in the 
air on national TV that he said he received as a bribe from 
promoters of the controversial CEMIS project. 
 
 
10.  (C) The PRD was not without their winners of 
questionable repute, led by Pedro Miguel Gonzalez, wanted by 
U.S. authorities for his role in the 1992 murder of U.S. Army 
Sergeant Zak Hernandez.  Pedro Miguel's re-election campaign 
was rife with irregularities, including allegations of 
rampant vote-buying and the alleged participation of 
relatives of Erasmo Pinilla, one of Panama's three Electoral 
Magistrates, in his campaign.  The Electoral Tribunal (ET) 
aggressively pursued rumors of irregularities in that 
electoral circuit, pre-emptively removing several apparently 
biased officials after the Arnulfista party lodged a formal 
complaint.  Arnulfista Jose "Pepe" Gomez, who lost to 
Gonzalez by a very narrow margin, has not lodged a formal 
complaint with the ET. 
 
 
11.  (C) An angel compared with Gonzalez is Elias Ariel 
Castillo, a PRD legislator who won re-election and seeks to 
become Assembly President.  Castillo served 17 months hard 
time while being investigated for embezzling approximately 
US$1 million of government funds to fund 1989 political 
campaigns for Manuel Noriega supporters when he was municipal 
treasurer of Panama City.  He was never convicted of any 
crime because the judge dismissed charges against him based 
on investigators' failure to follow established procedures. 
 
 
WATT