US embassy cable - 05PANAMA1779

UNCLAS SECTION 01 OF 02 PANAMA 001779 
 
SIPDIS 
 
DEPARTMENT FOR WHA/CEN 
SOUTHCOM ALSO FOR POLAD 
 
E.O. 12958: N/A 
TAGS: PGOV, PREL, PM, LABOR, HUMAN RIGHTS,POLMIL 
SUBJECT: TORRIJOS CONFIDANT:  JUDICIAL REFORM "NOT A 
PRIORITY," CSS TALKS "GOING NOWHERE" 
 
 
SUMMARY 
-------- 
 
1.  (SBU)  In an August 3 meeting with PolOffs, Institutional 
Protection Service (SPI, the Presidential body guard) Chief 
Leonel Solis, and close confidant of President Martin 
Torrijos, described the current national dialogue on social 
security as "going nowhere" and reform of Panama's judicial 
system and Supreme Court as "not a priority" at this time. 
Solis - literally and figuratively the Palace Guard - is a 
Torrijos loyalist and a troubleshooter.  Newly tapped to lead 
the GOP's intelligence apparatus (the Consejo Nacional), 
Solis downplayed the GOP's problems on corruption, the social 
security crisis, judicial reform, and the expansion of the 
Panama Canal.  Solis was either wearing his "game-face" 
throughout the conversation or the Torrijos government has no 
plan or sense of urgency to resolve its current problems. 
End summary. 
 
Long Relationship, Direct Presidential Access 
--------------------------------------------- 
 
2.  (SBU)  On August 3, Solis spoke at length about his 
long-standing relationship with the Torrijos family.  With 
his appointment as Consejo chief, he will trade his office at 
the Presidential Palace for an office fifteen minutes away in 
Quarry Heights.  A lawyer by profession and a longtime member 
of the ruling Democratic Revolutionary Party (PRD), Solis 
worked under Torrijos during the PRD administration of 
Ernesto Perez Balladares (1994-1999) when Torrijos was Vice 
Minister of Government and Justice.  At that time, Solis 
served as Director of Land Transit and also as Director of 
Public Security.  Solis has direct access to Torrijos.  When 
Solis speaks, more often than not, he is telling it like 
Torrijos sees it.  (Comment: The past relationship between 
Torrijos and former President Perez Balladares is now marked 
by a serious rift.) 
 
The PRD: a house divided ? 
-------------------------- 
 
3.  (SBU)  When asked about Perez Balladares recent 
announcement that he would run for the post of PRD General 
Secretary in 2007, Solis said he was unconcerned.  "He will 
 
SIPDIS 
be your problem, not ours," he said.  (Comment: Perez 
Balladares - whose U.S. visa was revoked for alien smuggling 
- is constitutionally eligible to run for President again in 
2009.)  Solis also claimed that newspaper reports of hundreds 
of people attending the PRD meeting where Perez Balladares 
made his announcement were exaggerated.  (Comment: Perez 
Balladares, who could use his position as PRD Secretary 
General to further discredit Torrijos and block any reform 
attempts in Panama's National Assembly, clearly wants to be 
President again.  In 1998, while president he proposed an 
amendment to the constitution that would have allowed him to 
run for a second term but it was soundly defeated.  End 
comment.) 
 
 
Social Security Crisis Brewing - Again 
-------------------------------------- 
 
4.  (SBU)  Solis described President Torrijos's active 
involvement in the social security reform issue.  Torrijos 
views the need to reform Panama's creaking, near bankrupt 
social security (CSS) system as a state issue and not a 
political issue, Solis said.  For that reason, the president 
has involved himself deeply in the details and is adamant 
about wanting a long-term fix.  Torrijos helped develop the 
180-point package of changes to be phased in over ten years 
that was passed as Law 17 and later suspended.  The reforms 
would make the system financially viable for the next forty 
years.  Describing the Torrijos vision of social security 
reforms, Solis said, "We could have achieved a political 
solution good for five years but this isn't the President's 
goal."  (Note: The National Assembly approved the package of 
reforms on June 1, but five weeks of strikes and 
demonstrations by teachers, construction workers, doctors and 
technicians led Torrijos to suspend the law and hold a 90-day 
National Dialogue (mesa de dialogo).  As of August 24, the 
mesa has reviewed only 38 of the 180 articles in the reform 
package.  If the mesa cannot review the entire package and 
suggest changes prior to early October, the existing 
legislation presumably will take effect.) 
5.  (SBU)  Solis has little regard for the mesa de dialogo 
and believes it will accomplish nothing.  When asked what 
will happen if the dialogue ends in early October without a 
full resolution, he said he believes the controversy will 
simply quiet down and go away and that any future strikes or 
demonstrations will be small.  (Comment: The Torrijos 
government underestimated the degree of hostile public 
reaction when the reforms were initially passed by the 
National Assembly in May.  The GOP could also extend the 
dialogue period in an attempt to build national consensus on 
social security reform.  End comment.) 
 
Judicial Reform Proposals Due in September 
------------------------------------------ 
 
6.  (SBU)  When Pol Counselor asked Solis about reforming 
Panama's Supreme Court, he became defensive and bluntly 
retorted that the U.S. Supreme Court has been politicized and 
has the same problem as Panama's court.  He also said 
judicial reform is "not a priority" because of the GOP's 
focus on the social security dialogue.  In his opinion, the 
Supreme Court is a problem that needs "a generation to fix." 
Solis also called judicial reform "a delicate issue" and 
counseled that Panama must avoid making sweeping, extra-legal 
judicial changes which have destabilized other countries in 
the region such as Ecuador.  Solis fears unilateral changes 
in the judicial system might undermine the legitimacy of the 
government.  Torrijos appointed a State Justice Commission in 
March following wide spread reports of corruption in Panama's 
Supreme Court.  The commission is due to report their 
recommendations for judicial reform in late September. 
"Ultimately the solution to judicial reform will come from 
the commission's recommendations," Solis said. 
 
Comment: What's the Plan? 
------------------------- 
 
7.  (SBU)  With four years remaining in office, the Torrijos 
administration needs to regain momentum to carry out its 
campaign pledges to root out corruption and foster economic 
growth.  While the GOP has acted to improve transparency, it 
has done little about Supreme Court reform, or prosecuting 
officials from the previous Moscoso government on corruption 
charges.  Unemployment remains at 12%, underemployment, also 
a chronic problem, is approximately 20-25%, and about 40% of 
the population lives in poverty.  The public perceives that 
Torrijos is not living up to his promises.  If a plan exists 
to move forward on the major issues of the day such as social 
security and judicial reform, the government has not said 
what it is.  One obvious possible stimulus to Panama's 
economy and the Torrijos Presidency is Canal expansion but 
this is another project which Solis says is on hold.  The 
project requires approval by a national referendum and the 
GOP wants to delay a vote on the issue to improve its chances 
of passing.  Martin Torrijos needs to take some actions to 
improve the life of the average Panamanian or he risks being 
remembered as a great campaigner who accomplished little. 
 
 
ARREAGA