PANAMA: NEW GENERATION OF ARNULFISTA VISIONARIES

C O N F I D E N T I A L SECTION 01 OF 03 PANAMA 002694

SIPDIS


SENSITIVE


DEPT. FOR WHA/CEN
SOUTHCOM ALSO FOR POLAD


E.O. 12958: DECL: 10/21/2014
TAGS: PGOV PINR PREL PM POLITICS FOREIGN POLICY
SUBJECT: PANAMA: NEW GENERATION OF ARNULFISTA VISIONARIES
FACES MONUMENTAL CHALLENGE


REF: PANAMA 2641


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


SUMMARY: FROM LOSERS TO CONCERTED OPPOSITION
--------------


1. (C) The strong push to reform the Arnulfista Party (PA)
after its May 2004 electoral defeat (see reftel) raises
questions about why it occurred, who can repair the damage,
what are the PA's long-term prospects, and what it all means
for the USG. Most observers blame Mireya Moscoso and her
close associates for her failed leadership of the party.
Emerging PA leaders include erstwhile Moscoso collaborators
who are riding the fence as well as vehement anti-Moscoso
elements who will accept nothing less than her immediate
resignation from the PA presidency. The PA's ability to
field a successful 2009 presidential candidate and regain
lost ground in the Legislative Assembly hangs in the balance.
The future prospects of Panamanian democracy also may hang
in the balance, as the Arnulfistas are the only party
currently capable of mustering enough strength to effectively
oppose President Torrijos' stronger-than-ever Democratic
Revolutionary Party (PRD). Alternatively, if the Arnulfistas
fail, the PRD could become a ruling-party dynasty reminiscent
of Mexico's PRI. Although it is too early to make such a
prediction, Panamanian and U.S. interests will be better
served by a viable opposition that can check any excesses of
the governing party.


WHENCE THE FALL?
--------------


2. (SBU) The Arnulfista Party (PA),officially recognized by
the Electoral Tribunal in October 1991, builds on the
political and ideological legacy of its namesake,
thrice-deposed President Arnulfo Arias Madrid. Arias's widow
is Mireya Moscoso, President of the Arnulfista Party (until
January 2006),who accompanied Arias into exile in 1968 and
learned politics from him. At its inception, the PA had
strong pull with anti-PRD voters, creating the potential for
new coalitions that would easily have accounted for more than
half of the electorate. Prompted by recent memories of
Panama's 21-year dictatorship, many Panamanians rejected what
had been the political vehicle of Omar Torrijos and Manuel
Noriega. Arnulfo Arias himself was a powerful symbol.
Deposed by the October 11, 1968 coup that initiated the
dictatorship and "robbed" by an electoral fraud in his 1984
bid for the Presidency, for decades he remained Panama's most
popular politician even during the dozen odd years he spent
in U.S. exile. At its creation, the PA attempted to reunite
the members of its precursor, the populist Panamenista Party,
which had lost much of its impetus due to dictatorship-era
repression.



3. (C) Rifts within the Arnulfista Party revolve around its
direction under Mireya Moscoso's leadership (and whether it
has deviated from its so-called ideological roots). Frequent
complaints include heavy-handed top-down management,
undemocratic selection of party officials and candidates, and
the corrupt image of the party's top leaders. During the
2004 campaign, Moscoso went as far as to claim legal
ownership of Arias's image to inhibit former President and
Arnulfista Guillermo Endara (a friend and confidant of
Arnulfo Arias) from using photos and films of him with Arias
to win traditional PA votes. Endara, together with Moscoso
critics within the PA, wrested credibility (and many votes)
from the party and its 2004 presidential candidate, Jose
Miguel Aleman, who was unable to distance himself from
Moscoso.



4. (SBU) The PA, even counting its allies from the 2004
election (MOLIRENA and PLN),is at statistical disadvantage
compared to President Torrijos' Democratic Revolutionary
Party (PRD). As of 09/30/2004, a snapshot of membership in
Panama's seven legally constituted parties (about half of all
registered voters) is:


Democratic Revolutionary Party (PRD) 428,575
Arnulfista Party (PA) 175,835
Natl. Liberal Republican Movement (MOLIRENA) 99,029
National Liberal Party (PLN) 75,373
Solidarity Party (PS) 70,710
Democratic Change Party (CD) 54,966
Popular Party (PP) 49,735
-------------- --------------
TOTAL 954,223


Between January 2004 (the peak of the campaign) and September
2004 (Torrijos' inauguration),Arnulfista Party membership
dropped 9%, as the party lost over 17,000 members (many of
them defecting to ex-PA leader Endara). (Only four thousand
left the PRD in the same period.)


WHO CAN PICK UP THE PIECES?
--------------


5. (SBU) Several emerging leaders have proposed fresh ideas
to counteract the ill effects of the PA's lost credibility
and waning membership. All of them have previous campaign
experience. All but one have previously worked in the public
sector. One sits on the PA Board of Directors that has been
so harshly criticized. Another was expelled from the PA in
1999, but maintains family connections on the inside.


UP-AND-COMERS -- THE VARELAS
--------------


6. (C) The well-regarded Varela brothers are working
together to reform the Arnulfista Party from inside and out.
The Arnulfista Party expelled Juan Carlos for supporting the
1999 presidential campaign of Moscoso's competitor, banker
Alberto Vallarino. (NOTE: PA bylaws bar someone who has been
expelled from the party from returning, but Varela would be
free to return if the party changed its name as proposed.
(See Reftel.) END NOTE.) Juan Carlos's brother Jose Luis
("Popi") was re-elected to a second term in the Legislative
Assembly with the Arnulfista Party in May 2004. Juan Carlos
and Jose Luis are two of four sons of Luis Jose Varela Sr.
The family owns one of Panama's biggest liquor distilleries
and distributors, Varela Hermanos, S.A. Juan Carlos manages
liquor distribution while a third brother, Luis Jose Jr.,
manages production.


THE AMEGLIO BROTHERS
--------------


7. (C) Marco (DOB: 28 FEB 1961) and Francisco (DOB: 21 JAN
1954) Ameglio are dynamic leaders who have consistently
worked in unison. Francisco has now willingly taken a back
seat to Marco, a legislator during fifteen years (1989-2004)
who was President of the Legislative Assembly at age 30
(1991-92) and ran for Mayor of Panama City in May 2004. A
testament to his popularity with urban voters, Electoral
Tribunal statistics show that Marco Ameglio won more votes in
his mayoral bid from Panama City voters (100,322) than Aleman
won in his presidential bid in the entire province of Panama
(83,680). Marco's current aspiration appears to be securing
the 2009 PA nomination for president and beginning to
campaign ASAP. Marco, who was a pre-candidate for the
party's 2004 presidential nomination, has not forgiven
Moscoso for orchestrating his embarrassing loss during the
June 2003 PA nominating convention from which Jose Miguel
Aleman emerged victorious.


LEGISLATOR JOSE BLANDON
--------------


8. (C) Jose Isabel Blandon Figueroa (DOB: 07 JUL 1968),a
legislator since 1999, is often considered the unofficial
spokesman for the Arnulfista Party and continually appears in
the media. He became famous when dictator Manuel Noriega had
him arrested and held hostage in 1989 after his father (Jose
Isabel Blandon Sr.) testified against Noriega in the United
States. A lawyer by profession, Blandon's legislative
initiatives tend to be progressive, and well seated in
existing constitutional and legal frameworks. Like his
father, Blandon is a clever strategist who ably manipulates
the political atmosphere to achieve his desired results. PA
opponents view most Blandon initiatives with suspicion,
looking for the hidden agenda. For instance, Blandon
challenged President Torrijos to live up to his "zero
corruption" campaign pledge when presenting a laudable
package of reforms based on model legislation posted on
Transparency International's website. Among other things,
the proposed reforms would de-criminalize libel, protect
whistleblowers, and codify conflicts of interests, but most
have not prospered, offering Blandon ammunition to attack the
PRD. (See Septel.)

PA SECRETARY GENERAL CARLOS RAUL PIAD
--------------


9. (C) Even during Carlos Raul Piad's time as campaign
manager for Jose Miguel Aleman in the May 2004 election, his
frustration with President Moscoso's "caudillista" ways
became evident. Piad, forced by his position on the PA Board
to remain neutral, recently told us, "We need to make changes
soon, but the Varelas and the Ameglios are being too
aggressive and that could end up hurting us." As Secretary
General of the Arnulfista Party (the same position that
President Torrijos holds in the PRD) Piad should have
controlled the PA's operations, but Moscoso countermanded him
on numerous occasions, undermining credibility with the party
masses that he had cultivated since her 1994 electoral loss.
Carlos Raul Piad saw firsthand how Aleman's inability to
distance himself from Moscoso doomed his campaign to failure.
Also, Piad would have been aware of Moscoso's rumored
betrayal of Aleman by channeling away campaign funds she had
promised to him to other candidates like Legislator Pacifico
Escalona, the brother of her paramour. Piad's management and
leadership credentials are beyond question, given his 1987
American University finance degree, twelve years managing the
family business, and four years managing the state-owned Caja
de Ahorros savings bank. His ability to maintain a
leadership position within the PA may well be a determining
factor in its success in the 2009 general election.


COMMENT: WHAT COMES NEXT AND WHAT DOES IT MEAN FOR THE USG?
-------------- --------------


10. (C) The Arnulfista Party is in no danger of disappearing
as a political force, but internal bickering is distracting
it from strengthening the party and recruiting new members.
(Ironically, many observers point out that the PA probably
has a more capable cadre of young leaders than the PRD, which
relies on a highly disciplined but mediocre cadre of
mid-level leaders.) No one can predict exactly what will
come of the Arnulfista Party, but Panama's recent electoral
history yields a critical lesson. Panama's 1999 and 2004
presidential winners were its 1994 and 1999 presidential
losers, respectively. In both cases, they began a new
campaign immediately after losing the first. So far, none of
the losing candidates (Guillermo Endara, Ricardo Martinelli,
or Jose Miguel Aleman) looks capable of winning in 2009.
Also, the PA's prospects will improve once Mireya Moscoso is
no longer party president.



11. (C) Until the Martin Torrijos administration, USG
relations have tended to be more amicable with non-PRD
governments. Unlike the PRD administration of Ernesto Perez
Balladares (1994-99),which exploited latent anti-Americanism
left over from Operation Just Cause and a continued U.S.
military presence in Panama to its political advantage, the
Torrijos administration has taken a decidedly pro-USG
posture, offering to expand and improve bilateral relations.
Barring a crippling outcome from an expected PRD internal
battle between pro-Martin Torrijos forces and marginalized
old guard elements (a fight that Torrijos and those close to
him hope to put off until internal 2006 Board elections) the
PRD's size advantage and recent electoral performance may
well propel it to another win in 2009. Given the centripetal
tendencies now affecting the PRD's opponents, the Arnulfistas
face an uphill fight to form an effective anti-PRD coalition.
But forming such a coalition is their only chance for a
strong 2009 showing. For the USG, building on the commercial
and cultural ties between the U.S. and Panama toward a more
mature bilateral relationship across party lines is the best
way to ensure continued cooperation with whoever emerges
victorious. In this sense, we share the same interest of
Panamanians who want to maintain a truly competitive
political process in which no single party dominates the
system.


WATT