Cablegate: Panama: Implications of the Torrijos Victory For

Published: Fri 7 May 2004 08:27 PM
This record is a partial extract of the original cable. The full text of the original cable is not available.
E C R E T SECTION 01 OF 03 PANAMA 001116
E.O. 12958: DECL: 05/04/2014
1. (C) Martin Torrijos, a 40-year-old politician with little
national policy experience, scored a crushing electoral
victory on May 2, while his Democratic Revolutionary Party
(PRD) is positioned to control Panama's unicameral
legislature. After it takes office on September 1, the new
government's foreign policy will focus on relations with the
United States and Colombia, the Torrijos campaign has told
us, and on maintaining, if not improving, the excellent
cooperation we now enjoy with the government of Panama (GOP)
on security and law enforcement matters. Senior campaign
officials have strongly suggested that Torrijos will take
into account maintaining good bilateral cooperation in mind
when making key appointments. The PRD and Torrijos probably
are closest to our views on trade and investment among
Panama's political parties, and Torrijos likely will send
observers to the next bilateral Free Trade Agreement (FTA)
round. The decade-long, $8-10 billion Canal expansion
project, which will soon become a priority for the new
government, has already heavily involved the U.S. Army Corps
of Engineers in concept-design planning and will likely offer
sizable commercial prospects for U.S. firms. The GOP no
doubt will ask U.S. "advice" to secure financing from
commercial lenders. We doubt that a Torrijos government will
prove more congenial to our positions on Cuba or Israel in
the United Nations than prior Panamanian governments have
been. Nonetheless, we hope to maintain positive momentum in
our overall relationship with the new government. Embassy
plans frequent meetings with transition team officials in
coming months. End Summary.
An Eye on Key Appointments
2. (C) Winning 47% of the vote in Panama's May 2 national
election, while his PRD appears to have won a majority of the
78 seats in Panama's unicameral legislature, Martin Torrijos
proved his mastery of the Panama political scene and claimed
a strong mandate to govern. Torrijos, an unknown quantity in
governing style and substance, has emphasized an interest in
issues -- law enforcement, security, trade and investment --
that we share. We have every reason to believe that Torrijos
will prove responsive to our attention to key appointments,
especially in security and foreign policy. (Comment: We have
made clear to Torrijos that the appointment of certain
Noriega and Perez Balladares-era officials to sensitive
positions could cause problems in our bilateral relations.
Transition team officials understand that and pledged to
avoid such appointments. End Comment.) The evidence is
growing that the so-called "Friends of Martin" -- a high
proportion of whom are Texas A grads -- will dominate
ministerial positions. A Texas Aggie collective in power in
Panama will offer an obvious Texas connection for Washington.
Law Enforcement and Security Policy
3. (C) We expect to maintain or improve the already
extraordinary level of access and cooperation we now enjoy
with Panamanian officials on law enforcement and security
policy. The transition team has assured us that, if there is
a change in the level of cooperation, it will be a change for
the better. We are currently assessing how to mitigate
slowdowns in the first few months of the new administration
due to transitions and learning curves. In coming weeks and
months, we plan to enhance and exploit our excellent contacts
with Torrijos officials and to give the transition team as
much detailed knowledge of our programs and policy priorities
as is practicable. Our core country team group charted
Embassy's approach to the new government in an internal
strategy meeting on May 7.
4. (C) Some of our current Pol-Mil arrangements with the GOP
are based on informal and ad-hoc understandings, which we
will have to explain at length during the transition period.
The PRD harbors a relatively large number of skilled maritime
lawyers, who can be expected to place a premium on those
issues, which include the Proliferation Security Initiative
(PSI - due to be signed in Washington on May 12), High Seas
Crimes, seafarer identification, etc. We also have briefed
the transition team on USG concerns regarding the Colon free
trade zone.
Darien, Atlantic Coast
5. (C) Torrijos is known to have a more pro-active
attitude toward security on the Darien-Colombian border and
the Atlantic coastal region and has proposed establishing a
greater GOP presence in both regions. The aim is to improve
civilian-police relations in the Darien and to boost security
in both areas. The transition team has told us of plans to
rehabilitate 20-30 WWII-era landing strips on the Atlantic
Coast, along with a shift away from the use of helicopters to
a much greater reliance on cheaper-to-operate single-engine
airplanes. By ensuring security at the landing fields, by
improving communication with remote areas, and with plans to
increase the number of rural teachers and medical personnel,
the transition team hopes the new government will create
goodwill in rural areas and gain an important intelligence
capability and control that is now all but non-existent. The
Atlantic Coast is now in the hands of outlaws, the team has
told us.
Foreign Policy
6. (C) Torrijos has made clear that his foreign policy
priorities are the United States and Colombia, and he has
traveled recently to Bogota to meet president Uribe. (He
traveled to the United States in October as a presidential
candidate to meet with State Department and Pentagon
officials.) One negative item on the agenda with Colombia is
illegal immigration, estimated in excess of 100,000 people.
The transition team believes that ordinary Panamanians are
growing resentful of illegal Colombians because of job
displacement, and team officials have said the new government
will end illegal immigration practices.
UN General Assembly
7. (C) In the UN General Assembly, we expect little change
in Panama's basic voting patterns, which will conform to the
broader NAM trajectory be generally uncongenial with U.S.
positions on Cuba and Israel. Nonetheless, we will work with
the new government to make our case on the importance of UN
voting patterns in our bilateral relations.
No Change in Taiwan-PRC Relations
8. (S/NF) Despite clandestine reporting to the contrary, we
believe that Torrijos will continue Panama's long-standing
official relations with Taiwan, and not with the People's
Republic of China. Torrijos probably accepted campaign
contributions from both sides, and will probably continue
Panama's policy of playing both sides of the fence to extract
maximum advantage.
Canal Expansion
9. (C) The first order of domestic business for the Torrijos
government that concerns U.S. interests is Canal expansion.
Now under active consideration, the Panama Canal Authority
(ACP) is expected to announce its recommendations this summer
for a project that could cost $8-10 billion in borrowed funds
and take a decade to complete. The Torrijos transition team
sees Canal expansion as a motor for job creation and economic
development for 10-15 years. Canal expansion cannot be
postponed if the viability of the all-water route between
East Asia and the eastern U.S. seaboard is to continue, as
the Canal may hit its maximum capacity by 2010. Panama's
constitution requires a referendum to approve a change of
that magnitude in Canal finance, construction, and
operations, which could involve new dams, new lakes, a higher
water level, and displacement of hundreds of people.
Commercial Loans
10. (C) Borrowing for the project is expected to be on
commercial terms, assuming that the ACP and the GOP can
convincingly separate their finances, as the Canal's own cash
flow should cover most of the costs. Local analysts say that
the GOP must first overcome the imposing hurdle of fixing the
growing insolvency of the Social Security fund (CSS), long
overdue for painful and unpopular reform. Doubtless the GOP
eventually will request U.S. "advice" (and support) when
approaching lending institutions.
Commercial Opportunities
11. (C) The U.S. Army Corps of Engineers is assisting the
ACP in an advisory role at present (with the concept/design
of a third set of locks on the Atlantic side) and probably
can expect more future work when/if the project is approved.
The Canal expansion project will offer large opportunities
for U.S. contractors and exporters.
Free Trade Agreement
12. (SBU) The transition team has said that it plans to use
the U.S.-Panama FTA to boost trade, investment, and market
access, but also as a lever to increase transparency and rule
of law, and to push an environmental agenda. Team members
confirmed that president Moscoso invited Torrijos to send
representatives to the bargaining table at the next round.
13. (C) All four of Panama's presidential candidates had
their blemishes, but the Panamanian people gave Torrijos the
largest electoral margin of victory in modern history. They
clearly expect great things from him, an expectation that the
transition team seems to take very seriously. He also was
the most modern and most U.S.-oriented of the candidates.
PRD leaders acknowledge that their party has a lot of baggage
in its past relations with the United States but they insist
that the policies and government appointments will prove that
the "new PRD" is indeed a valuable ally. Assuming no ghosts
from the past get in the way, and he takes concrete measures
early on to convince the electorate that he will run a
considerably more honest government than his predecessors, he
is in a position to accomplish a great deal. As First Vice
President-elect Samuel Lewis Navarro has told us, "We can't
just run a good government... The people are expecting a
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