US embassy cable - 05PANAMA1205

C O N F I D E N T I A L SECTION 01 OF 02 PANAMA 001205 
 
SIPDIS 
 
DEPARTMENT FOR WHA/CCA AND WHA/CEN 
SOUTHCOM ALSO FOR POLAD 
VANCOUVER FOR CG ARREAGA 
 
E.O. 12958: DECL: 01/15/2015 
TAGS: ETRD, ETTC, PGOV, PM, PREL, POLITICS & FOREIGN POLICY 
SUBJECT: PANAMA AND CUBA: NSC-DIRECTED REVIEW REGARDING 
SUSPENSION OF TITLE III OF THE LIBERTAD ACT 
 
REF: A. STATE 96300 
 
     B. 04 PANAMA 02943 
     C. PANAMA 089 
     D. PANAMA 1184 
     E. PANAMA 629 
     F. 04 PANAMA 2524 
 
Classified By: Acting DCM Jon Danilowicz for Reasons 1.4 (b) & (d) 
 
1. (SBU) Embassy Panama offers the following information and 
analysis in response to Reftel A tasking. 
 
CUBA AND PANAMANIAN POLITICS 
 
2. (C) Currently GOP and Cuba maintain only consular 
relations.  Full diplomatic relations between the GOP and 
Cuba have not been reestablished since Cuba broke off 
relations in August 2004.  Cuba's move was prompted by the 
August 25, 2004 pardoning by out-going Panamanian President 
Mireya Moscoso of four anti-Castro Cubans convicted for 
conspiracy, possession of explosives, and endangering public 
security in connection to an alleged plot to assassinate 
Cuban President Fidel Castro (Reftel B).  Panamanian 
President Martin Torrijos entered office on September 1, 2004 
pledging to improve relations with Cuba, but since that time 
has focused little attention on Cuba since the December 2, 
2004 re-opening of Cuba's consulate in Panama City. 
 
3. (C) Whether President Torrijos plans to take active steps 
to restore full diplomatic relations with Cuba remains to be 
seen.  Since taking office, Torrijos has focused largely on 
his ambitious domestic agenda.  In 2005, the Torrijos 
administration has pushed through the National Assembly 
sweeping and unpopular reforms of the tax and social security 
systems (Reftels C and D); is preparing for the referendum on 
Canal expansion slated for the end of the year; and has taken 
steps to building closer security cooperation with the USG. 
The Torrijos administration has also been plagued with a 
crisis of public confidence in the Supreme Court resulting in 
the formation by Torrijos of a Justice Commission in February 
2005 to explore the possibilities of reforms (Reftel E). 
Torrijos's primary objectives on the domestic agenda will be 
completed by the end of 2005 or early 2006. 
 
4. (C) In a June 3 conversation with PolOff, MFA Office 
Director of Human Rights and Labor Janio Tunion confirmed 
that the MFA had no active engagement with the GOC. 
 
5. (SBU) Panama has routinely supported initiatives in 
multilateral fora to promote human rights or to condemn 
abuses worldwide.  In the last six months, individual GOP 
representatives have expressed general concerns about human 
rights abuses in Cuba; however, in the recent past the GOP 
has not publicly criticized Cuba for human rights abuses. 
Panama has consistently joined its neighbors in the region by 
following majority decisions on sensitive Cuba issues in 
multilateral fora. 
 
CUBA AND THE PANAMANIAN ECONOMY 
 
6. (U) Merchandise trade with Cuba is not important for 
Panama. According to official figures, Panama's 2003 
bilateral trade with Cuba was less than $1 million. 
 
7. (U) However, Cuba's principal economic connection with 
Panama is its use of the Colon Free Zone (CFZ, technically 
outside of the Customs territory of Panama) where it is a 
large customer (Reftel F).  In 2003, Cuba bought $208 
million worth of merchandise through the CFZ where 
financingis relatively easy to obtain.  This amount 
is roughly 4.5% of CFZ re-exports.  Cuba also sold 
$5 million to the CFZ. (Note: more updated figures for 
bilateral trade or trade through the CFZ are not yet 
available.  End Note). 
 
8. (SBU) As Post reported in reftels F and B, during late 
2004 overdue Cuban accounts receivable probably well 
exceeded $200 million.  Panamanian CFZ companies holding 
these large debts believe they have an interest to restrain 
local criticism of GOC policies, if only to ensure 
continued payments and stave off a Cuban default. 
Following the late August 2004 break of diplomatic 
relations between the two countries, CFZ merchants 
immediately protested, fearing Cuba might retaliate by not 
paying outstanding debts. 
 
9. (C) Post has not been able to identify Panamanian 
investments in Cuba.  The GOP does not maintain such data. 
Anecdotally, we hear that such investment is minimal, in 
part out of fear that the GOC would muscle them out if the 
potential business turned out to be profitable. 
DANILOWICZ