PANAMA LEGISLATIVE UPDATE: NEW BALLGAME ON

C O N F I D E N T I A L SECTION 01 OF 03 PANAMA 001224

SIPDIS


SENSITIVE


DEPT. FOR WHA/CEN/BRIGHAM


E.O. 12958: DECL: 05/17/2014
TAGS: PGOV PREL PINR PM POLITICS FOREIGN POLICY
SUBJECT: PANAMA LEGISLATIVE UPDATE: NEW BALLGAME ON
SEPTEMBER 1


REF: PANAMA 1047


Classified By: DCM Christopher J. McMullen for reasons 1.4 (b) & (d)


SUMMARY: Expect little until September 1
--------------


1. (SBU) Panamanians (current legislators included) are so
focused on what will happen after September 1 that they
appear to have forgotten entirely that the current Assembly
session will continue until the end of May. The Democratic
Revolutionary Party (PRD),Panama's largest and best
organized party, whose candidate Martin Torrijos won the
presidency by a commanding margin, is poised to control
Panama's 78-member unicameral legislature that will assume
office on September 1. PRD legislators won 41 seats,
securing a massive advantage over the second-largest block,
the Arnulfista Party's 17 legislators. All seven legally
recognized political parties won at least one seat and enough
votes to survive as parties. Alliances to defeat future PRD
legislative initiatives would require opposition legislators
to "convert" PRD renegades as well as join forces with each
other, both unlikely events. End Summary.


Out-going legislators slump
--------------


2. (C) Despite bickering over constitutional reform, Embassy
expects little substantive progress in the legislative branch
before the new Assembly gets to work on September 1. The
outgoing losers, who constitute a high proportion of the
current Assembly, just don't have the political will to push
things through. Media reports highlight legislators' failure
to attend sessions for the past several months. Assembly
President Jacobo Salas closed the Assembly weeks before
Panama's May 2 elections to allow incumbents and staff, who
had thrown their hats in the ring, to run their campaigns.
Salas ordered extra hours in May and early June to make up
for lost time, but the Assembly has not gathered a quorum (at
least 50%) during several days that it was supposed to be in
session.


Winners and Losers
--------------


3. (SBU) The clearest winner in the May 2 elections was the
PRD, which increased its number of seats in the Assembly from
34 to 41, and the Solidarity Party, whose share of the
Assembly increased from 4 to 9. Despite their alliance with
the PRD, the Popular Party (PP) lost big, maintaining only
one of its five current legislative seats (that of Second
Vice President-elect Ruben Arosemena). Analysts have
suggested that the PRD-PP alliance accentuated the existing
cleavage within the PP (formerly the staunchly anti-PRD
Christian Democratic Party),which began during the Endara
Administration (1989-94) with a dispute between Endara and
his First Vice President Ricardo Arias Calderon. Indeed,
three incumbent PP legislators jumped ship to the Arnulfistas
for their re-election bid and two won. Though not as
severely as in the presidential race, the Arnulfistas lost
ground in the legislature, with their share of the Assembly
falling from 19 to 17 legislators. The Arnulfistas owe
several "wins" to incumbents who defected from other parties
like Juan Carlos Varela (PP),Enrique Garrido (PP),Carlos
Afu (PRD),and Sergio Galvez (Democratic Change Party).



4. (SBU) The most likely composition of the Legislative
Assembly that will begin work on September 1 (subject to the
resolution of formal challenges to results, which must be
submitted by Friday May 13 at the latest) is:


PARTY # Legislators
-------------- --------------
Democratic Revolutionary Party (PRD) 41
Arnulfista Party (PA) 17
Solidarity Party (PS) 9
Natl. Liberal Republican Movement (MOLIRENA) 4
National Liberal Party (PLN) 3
Democratic Change Party (CD) 3
Popular Party (PP) 1


Prospects before May 31
--------------


5. (C) Embassy is following two issues of interest to the
USG in the current legislature. First, the Ministry of
Foreign Relations still has to present the Palermo Convention
to the Assembly for ratification, to which there does not
appear to be any strong opposition. Second, the Legislative
Assembly will need to consider an amendment to the organic
law of the Interoceanic Regional Authority (ARI) to permit
non-commercial organizations to purchase reverted land in
installments. Successful passage of such an amendment will
determine whether Florida State University (FSU) can afford
to keep its Panama campus and might close a long-standing
dispute between ARI and FSU.



6. (C) PRD sources have told EmbOffs that they are seeking
Arnulfista collaboration to reform the Social Security Fund
(CSS) before September 1, a highly unlikely scenario. Though
the Torrijos team says their plan would allow both sides to
save face while resolving a critical national problem, the
Arnulfistas don't appear to have the backing (or desire) to
take the drastic steps it would require. The CSS cannot
continue to operate with its massive cash flow hemorrhages,
which are eating into its reserves at an alarming rate.
Indeed, only a consensus solution from all political corners
has even a remote chance to be successful; however, President
Moscoso already apparently told Martin Torrijos that her
administration, "just can't do it right now."


What to look for after September 1
--------------


7. (C) When the new PRD-dominated Legislative Assembly goes
to work on September 1, 2004, it will probably begin in
lock-step with the initiatives that President-elect Martin
Torrijos' launches from the executive branch. On the other
hand, the Assembly's committees may well be places where
tensions flare between the PRD "old guard" and new PRD blood
like first-time San Miguelito Legislator-Elect "Mickey"
Aleman (a liquor company executive in his early 30s whose
uncle is Arnulfista Legislator Francisco "Pancho" Aleman).
Intra-PRD competition for the Assembly presidency that the
media has publicized pits youth (Rogelio Paredes from the
working class district of Arraijan just across the Panama
Canal) against experience (Elias Castillo, a longtime public
office-holder who won re-election to his legislative seat
representing middle to upper class San Francisco and Paitilla
suburbs). Hector Aleman, Martin Torrijos' "campaign
coordinator," is another seasoned political veteran
re-elected to the Legislative Assembly who will probably be
recognized for his service to the PRD and could be a
contender for Assembly president.



8. (SBU) Parties other than the PRD will have their hands
full trying to forge alliances inside the Assembly and out.
The Arnulfistas have already announced sweeping reforms of
their Board of Directors and changes to the party bylaws that
would make primaries mandatory. Guillermo Endara has heeded
the Solidarity Party's call to join and strengthen the sudden
beneficiary of a massive electoral subsidy US$3.7M, which he
hopes will present constructive opposition to the PRD. The
two heirs of Panama's "liberal" tradition, the National
Liberal Republican Movement (MOLIRENA) Party and the National
Liberal Party (PLN),have announced that they are discussing
a merger. The PLN barely survived the May 2 elections,
capturing only 1.5% of the presidential vote and 5.23% of the
legislative vote nationwide. A PLN/MOLIRENA merger, would
create a 7-legislator block to reckon with inside the
assembly and allow those previously expelled from MOLIRENA to
return to the flock. (NOTE: The term "liberal" in this case
corresponds to the historical Conservative / Liberal
dichotomy in Colombian politics. End Note.)


COMMENT: Old faces
--------------


9. (C) Several candidates' clear ethical and/or legal
peccadilloes evidently did not trouble the voters who
re-elected them. Analysis reveals that 32 of 59 (54%) of
incumbent legislators won re-election. Of the 27 who didn't
make it, 14 are Arnulfistas, 9 are PRDistas, and one each
were members of the four smaller parties. A May 11 La Prensa
report cites former Supreme Court Justice Edgardo Molina
Mola's understandable disdain for the re-election of two
controversial politicians -- Sergio Galvez and Carlos Afu.
Arnulfista behemoth Galvez, who abandoned CD almost
immediately after it helped him win his seat in 1999, freely
admits that he never attends legislative sessions. He also
continues to deny widespread charges that he sells contraband
rice by using his legislative immunity. Former PRD turned
Arnulfista Afu became (in)famous by waving $6,000 cash in the
air on national TV that he said he received as a bribe from
promoters of the controversial CEMIS project.



10. (C) The PRD was not without their winners of
questionable repute, led by Pedro Miguel Gonzalez, wanted by
U.S. authorities for his role in the 1992 murder of U.S. Army
Sergeant Zak Hernandez. Pedro Miguel's re-election campaign
was rife with irregularities, including allegations of
rampant vote-buying and the alleged participation of
relatives of Erasmo Pinilla, one of Panama's three Electoral
Magistrates, in his campaign. The Electoral Tribunal (ET)
aggressively pursued rumors of irregularities in that
electoral circuit, pre-emptively removing several apparently
biased officials after the Arnulfista party lodged a formal
complaint. Arnulfista Jose "Pepe" Gomez, who lost to
Gonzalez by a very narrow margin, has not lodged a formal
complaint with the ET.



11. (C) An angel compared with Gonzalez is Elias Ariel
Castillo, a PRD legislator who won re-election and seeks to
become Assembly President. Castillo served 17 months hard
time while being investigated for embezzling approximately
US$1 million of government funds to fund 1989 political
campaigns for Manuel Noriega supporters when he was municipal
treasurer of Panama City. He was never convicted of any
crime because the judge dismissed charges against him based
on investigators' failure to follow established procedures.


WATT