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