US embassy cable - 05PANAMA2392

C O N F I D E N T I A L SECTION 01 OF 03 PANAMA 002392 
 
SIPDIS 
 
DEPARTMENT FOR WHA/CEN, WHA/CCA, WHA/AND 
SOUTHCOM ALSO FOR POLAD 
 
E.O. 12958: DECL: 12/09/2015 
TAGS: PREL, PGOV, ETRD, PM, POL CHIEF 
SUBJECT: TOUR D'HORIZON WITH PANAMANIAN FOREIGN MINISTER 
 
 
Classified By: Ambassador William A. Eaton for reasons 1.4 (b) and (d) 
 
1.  (C)  SUMMARY:  Over a 3-hour private dinner December 5 at 
the Residence, Ambassador held a wide-ranging discussion with 
Panamanian Foreign Minister (FM) Samuel Lewis Navarro on 
subjects including U.S. concerns about the integrity of the 
Panamanian judicial system (including the recent revocation 
of the U.S. visa of Supreme Court Magistrate Winston 
Spadafora); the urgency (and perhaps last chance) of 
concluding a free-trade agreement at the January 10-12 
meetings in Washington; troubling recent developments that 
could hamper Panama's investment climate; President Torrijos' 
recent trip to Cuba; and upcoming UN issues that we hope 
Panama will support.  END SUMMARY. 
 
Concerns about Panamanian Judiciary 
--------------------------------------------- - 
2.  (C)  FM Lewis expressed to Ambassador Eaton December 5 
President Torrijos' concern that the growing public uproar 
about corruption in the Supreme Court -- exacerbated by the 
recent revocation of Supreme Court Magistrate Winston 
Spadafora's U.S. visa -- could lead to a constitutional 
crisis, pitting the Executive and Legislative Branches of 
government against the Judiciary.  Wringing his hands, Lewis 
repeatedly emphasized that the Executive has no role in 
prosecuting Spadafora and others since the Constitution 
reserves that role for the Legislative Branch, which had 
decided to do nothing.  Lewis self-consciously brushed aside 
Ambassador's rejoinder that the Legislative Branch remains 
under control of the PRD, Torrijos' party.   Lewis added that 
Torrijos plans to name two new well-respected magistrates 
shortly to fill upcoming vacancies.  Torrijos had declined to 
involve civil-society groups in the magistrate selection 
process as recommended by the Comision de Estado Pro Justicia 
that he appointed last spring, saying that the selection 
process is the prerogative of the Executive Branch.  Lewis 
said Torrijos is working with incoming Supreme Court Chief 
Justice Graciela Dixon to pressure at least two more 
resignations from the court, thereby changing the balance of 
power on the court.  (Comment:  Lewis did not name names. 
Also, Lewis's quip about changing the "balance of power" on 
the Court is ambiguous.  End Comment.) 
 
3.  (C)  Ambassador Eaton told Lewis that even though the 
Embassy does not plan to make further public statements about 
Spadafora's visa, we would continue to speak out about the 
corrosive effect corruption and a discredited judiciary have 
on democracy and Panama's investment climate.  The Ambassador 
then gave Lewis a heads-up about a brewing controversy 
involving a U.S. company (Panama Canal Railroad) that had won 
an international arbitration panel,s favorable ruling in a 
$1.3 million dispute with an Israeli communications firm over 
fiber-optic lines.  The Panamanian Supreme Court must 
validate the enforceability of the decision in Panama before 
the company can actually be paid.  However, we have heard 
that one of the magistrates on the Court's 3-judge panel had 
pocketed a draft decision in favor of the award for 3 months 
already, awaiting a change in court membership that might 
shift the balance and overturn the decision.  Panama Canal 
Railroad alleges that this magistrate had accepted a $90,000 
bribe to solidify his support against the U.S. company. 
Ambassador warned that such behavior, if verified, would 
generate vigorous and vocal protests from the embassy, as 
well as prominent mention in the annual investment climate 
report we will issue in January.  Ambassador urged Lewis to 
use whatever influence he had to avoid an incident in which 
Panama was seen as undermining international arbitration 
decisions.  An uncomfortable, agitated and angry Lewis 
gritted his teeth and said, almost to himself, "We've got so 
many bright opportunities for our country on the horizon and 
our own damned citizens are screwing it up."  (Note: 
Ambassador received word two days later that the arbitration 
action had suddenly and miraculously emerged from the Supreme 
Court.  During Ambassador's call of thanks to Lewis December 
7, Lewis mentioned that he had immediately raised this issue 
with Torrijos, who had then launched into action.  Clearly, 
Torrijos has influence over the court, despite his 
protestations to the contrary.) 
 
Free Trade Agreement 
--------------------------- 
4.  (C)  Ambassador reiterated his urging to Lewis pull out 
all the stops to conclude a free trade agreement during the 
January 10-12 meetings in Washington.  Lewis assured 
Ambassador that Panama was fully prepared to finalize the 
agreement; he hoped, however, that the U.S. shared that 
commitment.  Lewis complained that he perceived a diminished 
resolve in USTR to conclude a free trade agreement with 
Panama, even despite intense supportive lobbying by 
Panamanian officials on the Hill.  Ambassador responded that 
the U.S. still wants a free-trade agreement with Panama. 
However, he said, protracted negotiations with Panama 
inevitably cause some to weigh the respective advantages of 
continuing to use scarce USTR resources on a bilateral free 
trade agreement with a relatively small market like Panama or 
begin to shift those resources to other, larger markets via 
multilateral free-trade agreements. 
 
Torrijos Trip to Cuba 
------------------------- 
5.  (C)  Ambassador expressed disappointment with President 
Torrijos' recent trip to Cuba with a private group to seek 
eye operations for Panamanians.  This appearance of a cozying 
relationship with Castro made it more difficult to enlist 
support from, for example, the Florida delegation on the Hill 
for a bilateral free-trade agreement.  Ambassador added that 
these concerns had been raised with him by senior-level USG 
officials during the recent WHA Chiefs of Mission Conference 
in Washington.  Lewis pshawed, saying he had personally 
culled Florida newspapers and had seen nary a comment about 
the Torrijos trip. 
 
UN Issues 
------------ 
6.  (C)  Ambassador pointed out that there were a number of 
important issues on the table at the United Nations and that 
the U.S. hoped we could count on Panama's support for these 
issues which are of mutual interest.  Those issues include 
support for management reform initiatives, such as creation 
of an independent inspector general and a thorough review of 
mandated programs; solidarity with the U.S. on social issues 
of common interest and concern; and support for efforts to 
promote democracy and human rights.  Lewis agreed that those 
issues are also of interest to Panama, but offered no 
specific pledges of support. 
 
Comment 
----------- 
7.  (C)  The specter of a "constitutional crisis" that Lewis 
and Torrijos fear has been years in the making.  Each of the 
three branches of government finds itself unable to take 
action against corruption but that is not because of some 
Catch 22 or accident.  Essentially Panama has a judicial 
system, corrupt and dysfunctional though it may be, that 
works well for the people in power, protecting members of the 
so-called "political class."  Until it becomes possible to 
prosecute wrongdoers for corruption in Panama -- that is, 
until the people in power admit that they, their family or 
their friends may be prosecuted for crimes that they commit 
-- the threat of such a crisis is very real. 
 
8.  (C) On the Cuba visit, Torrijos's main reason for going 
probably was nervousness about protecting his left flank, 
buttering up Castro to keep Chavez at bay.  If that was the 
motive, it seems to have worked splendidly.  Castro 
apparently quipped that Torrijos reminded him of his father, 
dictator Omar Torrijos, a very high compliment.  The star of 
the deceased Omar Torrijos still is high in Latin America's 
leftist firmament, as he is credited with being the 
nationalist and patriot who drove the gringos from the Canal 
Zone.  Whether Torrijos actually needs protection from Chavez 
is less certain.  GOP officials are nervous about Chavez, 
although the Venezuelan President has little influence in 
Panama or standing among Panamanians. 
 
9.  (C) Despite some difficult topics discussed during the 
dinner, Lewis appeared in good spirits, buoyed by nearly a 
month on the road.  He had been impressed by his trip to 
India and talked extensively about India's model of 
service-oriented foreign trade while focusing its industrial 
sector on the internal market.  He also expressed admiration 
for the seriousness and focus of the leaders at the APEC 
Summit, contrasting it with the fractiousness and 
parochialism at the Summit of the Americas in Mar del Plata. 
"That's why we're pursuing membership in APEC," he said. 
"They understand free trade." 
EATON