PANAMA AND CUBA: NSC-DIRECTED REVIEW REGARDING

C O N F I D E N T I A L SECTION 01 OF 02 PANAMA 001205

SIPDIS

DEPARTMENT FOR WHA/CCA AND WHA/CEN
SOUTHCOM ALSO FOR POLAD
VANCOUVER FOR CG ARREAGA

E.O. 12958: DECL: 01/15/2015
TAGS: ETRD ETTC PGOV PM PREL POLITICS FOREIGN POLICY
SUBJECT: PANAMA AND CUBA: NSC-DIRECTED REVIEW REGARDING
SUSPENSION OF TITLE III OF THE LIBERTAD ACT

REF: A. STATE 96300


B. 04 PANAMA 02943

C. PANAMA 089

D. PANAMA 1184

E. PANAMA 629

F. 04 PANAMA 2524

Classified By: Acting DCM Jon Danilowicz for Reasons 1.4 (b) & (d)


1. (SBU) Embassy Panama offers the following information and
analysis in response to Reftel A tasking.

CUBA AND PANAMANIAN POLITICS


2. (C) Currently GOP and Cuba maintain only consular
relations. Full diplomatic relations between the GOP and
Cuba have not been reestablished since Cuba broke off
relations in August 2004. Cuba's move was prompted by the
August 25, 2004 pardoning by out-going Panamanian President
Mireya Moscoso of four anti-Castro Cubans convicted for
conspiracy, possession of explosives, and endangering public
security in connection to an alleged plot to assassinate
Cuban President Fidel Castro (Reftel B). Panamanian
President Martin Torrijos entered office on September 1, 2004
pledging to improve relations with Cuba, but since that time
has focused little attention on Cuba since the December 2,
2004 re-opening of Cuba's consulate in Panama City.


3. (C) Whether President Torrijos plans to take active steps
to restore full diplomatic relations with Cuba remains to be
seen. Since taking office, Torrijos has focused largely on
his ambitious domestic agenda. In 2005, the Torrijos
administration has pushed through the National Assembly
sweeping and unpopular reforms of the tax and social security
systems (Reftels C and D); is preparing for the referendum on
Canal expansion slated for the end of the year; and has taken
steps to building closer security cooperation with the USG.
The Torrijos administration has also been plagued with a
crisis of public confidence in the Supreme Court resulting in
the formation by Torrijos of a Justice Commission in February
2005 to explore the possibilities of reforms (Reftel E).
Torrijos's primary objectives on the domestic agenda will be
completed by the end of 2005 or early 2006.


4. (C) In a June 3 conversation with PolOff, MFA Office
Director of Human Rights and Labor Janio Tunion confirmed
that the MFA had no active engagement with the GOC.


5. (SBU) Panama has routinely supported initiatives in
multilateral fora to promote human rights or to condemn
abuses worldwide. In the last six months, individual GOP
representatives have expressed general concerns about human
rights abuses in Cuba; however, in the recent past the GOP
has not publicly criticized Cuba for human rights abuses.
Panama has consistently joined its neighbors in the region by
following majority decisions on sensitive Cuba issues in
multilateral fora.

CUBA AND THE PANAMANIAN ECONOMY


6. (U) Merchandise trade with Cuba is not important for
Panama. According to official figures, Panama's 2003
bilateral trade with Cuba was less than $1 million.


7. (U) However, Cuba's principal economic connection with
Panama is its use of the Colon Free Zone (CFZ, technically
outside of the Customs territory of Panama) where it is a
large customer (Reftel F). In 2003, Cuba bought $208
million worth of merchandise through the CFZ where
financingis relatively easy to obtain. This amount
is roughly 4.5% of CFZ re-exports. Cuba also sold
$5 million to the CFZ. (Note: more updated figures for
bilateral trade or trade through the CFZ are not yet
available. End Note).


8. (SBU) As Post reported in reftels F and B, during late
2004 overdue Cuban accounts receivable probably well
exceeded $200 million. Panamanian CFZ companies holding
these large debts believe they have an interest to restrain
local criticism of GOC policies, if only to ensure
continued payments and stave off a Cuban default.
Following the late August 2004 break of diplomatic
relations between the two countries, CFZ merchants
immediately protested, fearing Cuba might retaliate by not
paying outstanding debts.


9. (C) Post has not been able to identify Panamanian
investments in Cuba. The GOP does not maintain such data.
Anecdotally, we hear that such investment is minimal, in
part out of fear that the GOC would muscle them out if the
potential business turned out to be profitable.
DANILOWICZ