US embassy cable - 04PANAMA2530

C O N F I D E N T I A L SECTION 01 OF 05 PANAMA 002530 
 
SIPDIS 
 
 
DEPARTMENT FOR WHA/CEN 
SOUTHCOM ALSO FOR POLAD 
 
 
E.O. 12958: DECL: 01/26/2014 
TAGS: PREL, PGOV, ETRD, ENRG, SNAR, PM, POL CHIEF 
SUBJECT: PANAMA'S NEW GOVERNMENT IN PRODUCTIVE TALKS WITH 
DAS FISK -- BUT ILEA IS "NO GO" 
 
Classified By: AMBASSADOR LINDA WATT FOR REASONS 1.4 (B) AND (D). 
 
 
SUMMARY 
------- 
1.  (C) WHA Deputy Assistant Secretary Dan Fisk's October 5-7 
meetings with President Torrijos and key cabinet officials 
brought friendly and productive exchanges on security and law 
enforcement cooperation; foreign policy; economic and trade 
policy; and good governance/anti-corruption.  DAS Fisk 
emphasized that the USG wants to continue close collaboration 
with Panama on security matters, especially on transnational 
crime and emerging regional threats, such as gangs.  DAS Fisk 
spent October 6 near the Colombian border touring Panama's 
Darien province with Ambassador Watt and Panama National 
Police (PNP) Chief Gustavo Perez (to be reported septel) and 
attended a dinner with Panamanian business leaders. 
 
 
2.  (C) DAS Fisk's meetings with President Martin Torrijos, 
Foreign Minister Samuel Lewis, Minister of the Presidency 
Ubaldino Real, Minister of Commerce and Industries Alejandro 
Ferrer, and Minister of Government and Justice Aleman touched 
on the following issues: 
 
 
-(security) proposals to centralize public forces, form a 
specialized police border unit, found a maritime 
academy/training center, and establish an International Law 
Enforcement Academy (ILEA) in Panama; 
 
 
-(foreign policy) Haiti, Colombia, and Venezuela; 
 
 
-(economic and trade policy) bilateral Free Trade Agreement, 
Free Trade Area of the Americas (FTAA), Canal expansion, and 
enhancing Panama's comparative advantage as a trade 
crossroads; 
 
 
-(anti-corruption and good governance) Aleman/Portillo 
corruption cases and a soon-to-be-named anti-corruption 
commission. 
 
 
In an October 7 meeting, FM Lewis told DAS Fisk that the GOP 
had decided to turn down the USG's proposal to base an ILEA 
for Latin America in Panama, for fear that it would attract 
too much political heat. 
 
 
End Summary. 
 
 
-------------------------------------------- 
President Torrijos Outlines Ambitious Agenda 
-------------------------------------------- 
 
 
3.  (C) At an October 5 luncheon with DAS Fisk and other 
participants attending a U.S. Embassy Panama-hosted Central 
America chiefs of mission conference, President Torrijos 
discussed his government's ambitious agenda.  Torrijos, 
accompanied by his ministers of foreign affairs (Samuel Lewis 
Navarro), trade (Alejandro Ferrer), and the presidency 
(Ulbadino Real), noted that his government plans to pursue an 
integrated strategy aimed at combating corruption, 
establishing clear rules of the game and enhancing 
transparency in order to attract greater domestic and foreign 
investment, which will in turn generate employment and reduce 
poverty. 
 
 
4.  (C) Torrijos said his government seeks to capitalize on 
Panama's comparative advantage as a strategic crossroads for 
commerce.  Thus, a central component of his government's 
strategy is the expansion and modernization of the Canal, 
along with the development of Panama's seaport and airport 
facilities, which serve as critical regional hubs. 
Elaborating on Canal expansion, Torrijos and his ministers 
explained that this 10-to-12-year modernization project would 
cost an estimated $5 billion, which would likely be funded 
through a combination of Canal revenues (which are robust and 
rising), new user fees for major shipping companies, and 
bridge loans to finance any gaps. 
 
 
5.  (C) Torrijos underscored the importance of cultivating 
closer relations with the United States, pointing to our 
mutual economic and security goals.  In this context, Trade 
Minister Ferrer stressed the importance of reaching a free 
trade agreement (FTA), ideally by early December.  He noted 
that the GOP seeks an FTA that takes into account Panama's 
sensitive agricultural sector.  Ferrer pointed out that seven 
or eight key agricultural products generate significant 
employment in Panama's impoverished rural areas (where he 
cited an estimated 70% of the population lives in poverty). 
Minister of the Presidency Real highlighted the serious 
security implications of this issue, observing that a restive 
rural sector could threaten domestic stability.  In this 
regard, Torrijos added that while Canal expansion would 
attract important ancillary service sector businesses, it 
would not generate significant employment for Panama's 
working classes.  (Comment: Construction during the 
decade-long project is expected to generate considerable 
well-paid temporary employment.  End Comment.) 
 
 
6.  (C) On foreign policy, Torrijos said Panama is 
reassessing its relations in the region, including the issue 
of integration with other Central American countries. 
Torrijos said his government is currently considering a more 
realistic approach to regional issues that would stress 
shared interests -- such as cooperation on common customs and 
transportation policies -- rather than a top-down approach 
focused on political integration, which he averred had been 
undermined by intractable problems within Parlacen. 
 
 
--------------------------------------------- ------- 
Aleman/Portillo, Security, Free Trade, Zak Hernandez 
--------------------------------------------- ------- 
 
 
7.  (C) In a pull-aside following lunch, DAS Fisk told 
Torrijos that the USG looks forward to developing an even 
closer relationship with Panama based on a broader range of 
issues.  For example, the USG seeks Panama's cooperation in 
the corruption case involving former Nicaraguan President 
Aleman as well as in any cases which develop involving former 
Guatemalan President Portillo.  Fisk noted that the USG does 
not want to interfere in the judicial aspects of these cases 
but views them as important precedents that would send a 
strong message throughout the region.  In response, Torrijos 
pledged Panama's cooperation but noted that returning 
Aleman's ill-gotten money to the Nicaraguan government is 
complicated because the GOP and Panamanian banks are 
navigating uncharted legal waters.  Nonetheless, Torrijos 
suggested that the Nicaraguan Attorney General send a formal 
request seeking the repatriation of Aleman's accounts in 
Panamanian banks.  Torrijos stressed that the GON needs to 
state explicitly in its request that these accounts belong to 
the Nicaraguan government. 
 
 
8.  (C) Fisk underscored that the USG would like to enhance 
security and law enforcement cooperation with Panama.  He 
also urged Panama to think more expansively about its role in 
the region and to play a more prominent role in discussions 
of security issues.  Fisk noted that Panama could help other 
Central American countries whose military establishments 
remain mired in outdated Cold War thinking.  Panama, 
unburdened by a military, could help re-focus other Central 
American countries on current challenges such as gangs and 
transnational threats. 
 
 
9.  (C) Turning to trade, Fisk noted that President Bush 
remains committed to pursuing a vigorous free trade policy in 
the hemisphere, including the conclusion of an FTAA. 
Torrijos agreed with Fisk's assessment that the FTAA has more 
life to it than some countries in the region are willing to 
acknowledge. 
 
 
10.  (C) In closing, Fisk stressed the importance that the 
USG attaches to the GOP pursuing legal measures to achieve 
justice in the case of U.S. serviceman Cpl. Zak Hernandez, 
who was murdered while stationed in Panama in 1991.  Fisk 
said this issue would remain a bilateral irritant unless the 
GOP pursued effective legal measures against those 
responsible for Hernandez's murder.  (Note: Former Panamanian 
President Perez Balladares stage-managed the acquittal of PRD 
legislator Pedro Miguel Gonzalez, who is wanted by U.S. 
authorities for his role in the Hernandez murder.  End Note.) 
 
 
--------------------------------------------- ------------- 
Meeting With Foreign Minister Focuses on Regional Security 
--------------------------------------------- ------------- 
 
 
11.  (C) In a detailed October 7 discussion, FM Lewis told 
DAS Fisk and Ambassador Watt that President Torrijos had 
decided not to accept the USG's proposal to establish an ILEA 
in Panama because it could generate unwelcome political heat 
at a moment when the GOP must husband its political capital 
before taking potentially unpopular decisions to reform 
Panama's Social Security Fund and making budget and personnel 
cuts.  (Note: Also, the GOP plans to ask voters to approve a 
referendum on Canal expansion during 2005.  End Note.) 
 
 
12.  (C) Lewis also was cautious when DAS Fisk proposed 
establishing a Coast Guard international training facility in 
Panama.  He explained that the GOP currently is studying an 
unrelated Texas A&M University proposal for a maritime 
institute in Panama to train merchant seamen and to undertake 
related initiatives.  Although the two ideas are dissimilar, 
Lewis proposed exploring whether the Coast Guard might want 
to participate under the (civilian) umbrella of Texas A&M. 
(Note: Torrijos and Minister of the Presidency Ubaldino Real 
are Texas A&M graduates.)  The Texas A&M proposal would not 
need approval by the Legislative Assembly, Lewis noted. 
Panama is keen to greatly increase employment opportunities 
for Panamanians aboard Panamanian-flagged vessels, Lewis 
said, but currently lacks the means to train them. 
 
 
13.  (C) DAS Fisk said the USG is pleased by the high level 
of cooperation it enjoys with Panama on security issues. 
Many of the same transnational crime and security concerns 
affect all of Central America, such as drugs and undocumented 
immigrants (which flow north toward the United States) and 
arms (which flow south toward Colombia).  The USG would like 
to see greatly improved cooperation among Central American 
nations on all aspects of regional security and transnational 
crime that affect the entire region.  As an example, Fisk 
pointed out that drug running pilots often fly directly over 
the borders of two countries, confident that each country's 
air authorities will be reluctant to chase an airplane that 
may move into the other country's airspace.  The same problem 
obtains on the sea.  A welter of bilateral problems and 
inhibitions is getting in the way, Fisk said. 
 
 
14.  (C) Panama wants to "play a role," Lewis said, promising 
to raise those topics at a meeting of Central American 
nations in El Salvador during the week of October 11-15.  The 
region probably should concentrate on improving, customs, 
roads, electricity transmission, and security.  Panama will 
host a Caribbean summit in July 2005, Lewis said, adding that 
Caribbean nations are interested in concluding a multilateral 
shipboarding agreement, which would accord with Fisk's 
suggestion. 
 
 
------------------------ 
Colombia-Venezuela-Haiti 
------------------------ 
 
 
15.  (C) Lewis said that President Torrijos would go to 
Colombia to attend a November 1 three-way 
Colombia-Venezuela-Panama summit with presidents Uribe and 
Chavez.  The meeting would discuss Chevron proposals to 
integrate Colombian and Venezuelan natural gas fields and 
possibly build a gas pipeline to Panama.  Lewis noted 
estimates of up to 300,000 Colombians living in Panama, 
mostly illegally.  On Haiti, Lewis said Panama was interested 
in contributing where it could, such as helping to organize 
the electoral process, using resources of Panama's highly 
respected Electoral Tribunal. 
 
 
------------------------------- 
Meeting with MOGJ Hector Aleman 
------------------------------- 
 
 
16.  (C) At an October 5 meeting that the Ambassador 
attended, Minister of Government and Justice Aleman told DAS 
Fisk that the GOP is determined to establish a stronger 
official and police presence in the Darien border region with 
Colombia.  Panama's most ethnically diverse province, the 
Darien is beset by land disputes between settlers from other 
Panamanian provinces, Afro-Panamanians, and indigenous 
groups, Aleman explained.  Aleman said the GOP is giving 
serious thought to proposals to create a specialized police 
border unit with a new law to clearly codify its mission and 
to staff it with more police than are now assigned to duty 
there.  (Note: At present approximately two companies -- 
about 150 effectives -- of militarized police in the Darien. 
End Note.)  The GOP's aim is to take back areas now 
controlled by criminals and guerrillas and to improve 
security for the population, as well as to interdict flows of 
weapons, narcotics, and undocumented aliens.  Increasing 
numbers of undocumented Ecuadorians, Peruvians, and Chinese 
are using the Darien and Panama to head north toward the 
United States. 
 
 
17.  (C) The challenge to improve security extends as well to 
sea and air.  Panama has more seacoast to defend than land. 
Vast stretches of coast are currently unpatrolled as are 
Panama's offshore islands.  What Panama needs is a real Coast 
Guard, instead of an understaffed National Maritime Service 
(SMN) which lacks a clear mission, Aleman said.  The National 
Air Service (SAN) also lacks capability and a clear mission. 
Radar operators daily track unidentified, illegal flights in 
Panama's airspace but the SAN lacks the means to intercept 
them.  That's very frustrating, Aleman said. 
 
 
18.  (C) Under the previous GOP, the Panamanian National 
Police (PNP) was king, the Ambassador said, and got the 
lion's share of resources, crowding out the SMN and SAN.  DAS 
Fisk said Washington had understood, apparently incorrectly, 
that the PNP also had air and sea capabilities.  (Comment: 
The PNP does have helicopters and several "brown water" 
patrol vessels.  End Comment.) 
 
 
19.  (C) Shifting to personal security, Aleman outlined an 
ambitious-sounding plan to convert Panama's prisons to 
resocialization enterprises.  He pledged "equal 
applicability" of the law to all Panamanians.  Gangs in 
Panama are far from reaching Salvadoran or Guatemalan 
proportions, Aleman continued.  Even so, MOGJ has identified 
102 separate gang entities in Panama which as yet have no 
great criminality but "if we don't act now, we'll be in 
trouble."  The PNP has no specific unit to deal with gangs or 
child criminals, for example. 
 
 
--------------------------------------------- -------- 
Meeting with Minister of the Presidency Ubaldino Real 
--------------------------------------------- -------- 
 
 
20.  (C) At an October 7 meeting with Ambassador Watt, MOP 
Real told DAS Fisk that he is deeply involved in the new 
GOP's efforts to enforce a "zero tolerance" anti-corruption 
policy.  President Torrijos plans to unveil the GOP's new 
Anti-Corruption Commission on October 18.  Confronting 
corruption means forcing cultural change in Panama, Real 
said.  People need to be educated on public sector ethics, 
for example, not to use publicly funded cars, telephones, or 
office supplies for private use.  Meanwhile, the government 
must lead by example and bring wrongdoers to justice. 
Prosecuting a "big fish" would make an especially big 
impression.  On the other hand, the GOP must be careful to 
follow the rule of law and avoid a "lynch mob" mentality.  We 
want to accuse wrongdoers of breaking the law, Real said, but 
we also will have to prove it.  We must proceed step by step. 
 
 
21.  (C) DAS Fisk told Real that Washington had "great 
expectations" for the Torrijos government's "forward-looking" 
agenda and on anti-corruption.  It makes sense that the 
government proceed carefully to avoid "tying itself into 
knots" while pursuing a corruption case.  He agreed that 
fostering a "culture of lawfulness" would be important for 
success and also praised the GOP for cooperating in 
investigating Panamanian bank accounts allegedly belonging to 
former Nicaraguan President Aleman.  This government is not 
the old PRD, Real said, adding that he welcomed constructive 
criticism.  Change needs time.  How could the previous 
government leave us with such a mess? he asked rhetorically, 
adding that the new GOP wants to start changing popular 
attitudes and practices toward corruption now, so that the 
next government will not inherit such large difficulties. 
 
 
22.  (SBU) At an October 6 dinner with Panamanian business 
leaders, DAS Fisk reviewed regional problems and USG 
approaches, especially regarding free trade (CAFTA) and 
security cooperation.  In general, U.S. policy has had major 
success in Central America during the past two decades, he 
said, but inequality of opportunity remains a problem. 
Collusion between business and government is unfairly 
stacking the economic deck in favor of a small number of 
privileged insiders.  Central America, Panama included, will 
need to open and democratize its economic structure to ensure 
participation by all.  Why is it that Central American 
immigrants in the United States can be highly successful as 
entrepreneurs while they seem stifled at home? he asked 
rhetorically.  Several participants spoke of the need for a 
greatly improved education system, as many Panamanians who 
complete formal public schooling find themselves woefully 
unprepared for workplace realities. 
 
 
23.  (U)  This message has been cleared by DAS Fisk. 
 
 
MINIMIZE CONSIDERED 
 
 
WATT