US embassy cable - 05PANAMA1415

C O N F I D E N T I A L SECTION 01 OF 02 PANAMA 001415 
 
SIPDIS 
 
DEPARTMENT FOR WHA/CEN 
SOUTHCOM ALSO FOR POLAD 
VANCOUVER FOR CG ARREAGA 
 
E.O. 12958: DECL: 07/01/2015 
TAGS: PGOV, PREL, ECON, PM, POLITICS & FOREIGN POLICY 
SUBJECT: PANAMA PRESIDENT TORRIJOS'S POPULARITY NOSE-DIVES 
 
REF: A. PANAMA 1377 
 
     B. PANAMA 0629 
 
Classified By: Ambassador Linda E. Watt for reasons 1.4 (b) & (d). 
 
SUMMARY AND COMMENT 
-------------------- 
1. (C) Panama President Martin Torrijos's popularity 
plummeted in the wake of the June 1 passage of the Social 
Security (CSS) reform package pushed through the National 
Assembly by his Democratic Revolutionary Party (PRD).  Less 
than one in four Panamanians now believe that Torrijos is 
doing an adequate job as president, down from 80% when he 
took office ten months ago.  In response to six weeks of 
unwavering labor pressure, Torrijos suspended implementation 
of the reforms on June 22 in favor of a 90-day National 
Dialogue (reftel A).  When that move failed to bring 
FRENADESSO (National Front for Defense of Social Security) 
and SUNTRACS (Sole National Union for Construction and 
Related Industry) to the bargaining table, and after a 
surprise intervention by the Catholic Church, on June 27 
Torrijos suspended the law for 90 days.  Although many 
observers credit Torrijos with making a politically astute 
decision to back down, his new-found willingness to negotiate 
the controversial CSS reforms has not yet improved his public 
image.  Instead, to many he appears weak and indecisive, as 
he did when he delayed making a decision on Supreme Court 
reforms in March with the creation of a 180-day Justice 
Commission (reftel B).  The challenge for Torrijos is to find 
a way to regain the political initiative and recoup the 
credibility he has lost with the Panamanian people.  End 
Summary and Comment. 
 
Torrijos's Popularity Sinking Fast 
---------------------------------- 
2. (SBU) Public opinion polls continue to show a steep slide 
in the president's popularity.  According to Dichter and 
Neira/Latin Research Network, a 34 percentage-point drop in 
popularity coincided with the passage of CSS reforms in the 
beginning of June.  From October 2004 to June 2005, President 
Torrijos's approval rating has dropped from 80% to 24%.  In 
March 2005, his post-fiscal reform approval rating in the 
midst of the Supreme Court crisis held at 58%.  CSS reforms 
have been enormously unpopular, with more than 80% unhappy 
that the reforms were passed in a rush and at midnight.  When 
asked whether the reforms positively or negatively affected 
the public's view of the president, 86% responded that they 
negatively affected the public's view. 
 
3. (SBU) When President Torrijos announced May 18 reforms to 
the CSS law (Law 17), he knew that his proposals would draw 
criticism.  Faced with a collapsing pension and medical 
system, his approach called for all sectors to give up 
something.  "Shared sacrifice" was his motto, hoping to get 
popular support for longer periods of payroll contributions, 
increased worker and employer contributions and later 
retirement ages.  To shorten the period of unrest, the 
president rushed the legislation through the legislature, 
completing passage in just 10 days. 
 
4. (SBU) Popular unrest, however, did not die down and 
opposition groups, students, labor unions, even the Catholic 
Church, took aim at the government for failure to consult the 
population on such an important and sweeping reform proposal. 
 For six weeks, civil protests against Law 17, including 
demonstrations throughout the country, caused massive traffic 
delays and business closures at a substantial cost to the 
country's economy.  When Torrijos appeared uncompromising in 
the face of popular rejection of Law 17, Archbishop Jose 
Dimas Cedeno gained influence by pushing dialogue, compromise 
and unity. 
 
Too Little, Too Late? 
--------------------- 
5. (SBU) Editorial opinion and comment in the media have been 
generally critical of the government for its initial failure 
to consult and its slow response to a burgeoning problem of 
public security.  At the same time, media did not withhold 
criticism of the more radical sectors of the protest 
movement, faulting them for violent tactics and intransigence 
in the discussions.  Although most observers believe it was 
the right move, Torrijos's offer to consult after the fact 
has also drawn criticism for the half-hearted manner in which 
he approached it.  Also, Torrijos can still reactivate the 
current law, with no additional changes, after the 90-day 
period of National Dialogue is over, or whenever he wants. 
For their parts, FRENADESSO and SUNTRACS apparently plan to 
push for their maximum program, as suggested by their 
continued refusal to come to the table until the suspension 
of Law 17 is published in the National Gazette, Panama's 
equivalent of the Congressional Record. 
 
The Catholic Church Enters the Fray 
----------------------------------- 
6. (SBU) Torrijos's June 22 and June 27 announcements 
regarding CSS suspensions were both precipitated by public 
pressure brought to bear by the Catholic Church, particularly 
by Archbishop Jose Dimas Cedeno.  Cedeno has consistently 
increased his influence making policy statements regarding 
the need for dialogue, compromise and unity.  The Episcopal 
Conference, Ecumenical Committee and the Council of 
Pastors/Rectors all attempted to play the role of mediator 
during the unrest.  Eleven days after workers in the 
construction, health and education sectors went on strike, 
the Panamanian Episcopal Conference called on all parties to 
open venues for dialogue.  On June 14, under growing pressure 
from the Catholic community and for fear of an economic 
standstill due to the strike, Torrijos proposed that all 
sectors involved, including the Episcopal Conference, become 
involved in a national dialogue.  On June 21, in its most 
influential move, the Church asked for suspension of the law. 
 Archbishop Cedeno requested publicly that Torrijos suspend 
CSS reforms. 
 
Comment 
------- 
7. (C) Though unions such as FRENADESSO and SUNTRACS, who 
many suspect of having ulterior political ambitions, do not 
enjoy wide popular support for their negotiating tactics, 
they have also not alienated the populace.  Many sectors of 
society believe they have legitimate concerns about CSS 
reforms that have not been addressed by the GOP.  Torrijos's 
challenge will be to convince middle class and professional 
Panamanians--represented by the teachers and physicians--that 
they have few interests in common with the SUNTRACS radicals, 
whom Torrijos needs to isolate.  On the other hand, 
Torrijos's popular decline is not without a price.  His loss 
of popularity may damage his administration's capacity to 
successfully pursue other policy goals.  For example, 
according to La Estrella de Panama, support for Canal 
expansion has dropped 10 percentage points from 72% to 62% 
since the beginning of CSS reforms.  A failure by Torrijos to 
successfully bring this chapter to a close on his terms 
already has delayed the holding of a referendum on Canal 
expansion at least until March 2006. 
 
WATT