PANAMA'S CSS NATIONAL DIALOGUE INCHES FORWARD,

UNCLAS SECTION 01 OF 02 PANAMA 001589

SIPDIS

SENSITIVE

DEPARTMENT FOR WHA/CEN
SOUTHCOM ALSO FOR POLAD

E.O. 12958: N/A
TAGS: PGOV PREL ECON PM POLITICS FOREIGN POLICY
SUBJECT: PANAMA'S CSS NATIONAL DIALOGUE INCHES FORWARD,
TORRIJOS'S POPULARITY OFF ROCK BOTTOM BUT NO DEAL IS IN
SIGHT

REF: A. PANAMA 1184


B. PANAMA 1377

C. PANAMA 1415

SUMMARY
--------------

1. (SBU) Four weeks into the 90-day National Dialogue on
Social Security (CSS) Reform (reftels A and B),negotiations
have produced few results other than threats of more strikes
and demonstrations. The National Front for the Defense of
CSS (FRENADESO) is promising to demonstrate on July 28, in
line with the beginning of the Caribbean Summit hosted by
Panama, and the SUNTRACS construction union already has
announced a strike to begin October 6, the day after the
Dialogue is set to end. Participants in the GOP-sponsored
Dialogue, which include labor and civil society groups, have
expressed doubt about the sustainability of the talks.
Confirming GOP fears that their agenda is solely political,
FRENADESO and SUNTRACS have successfully blocked productive
negotiation thus far, insisting on their maximum programs.
The GOP has begun to negotiate outside of the Dialogue with
moderate labor groups such as teachers and doctors, but lacks
a plan "B" in the event that negotiations fail. A successful
conclusion to the 90-day talks seems unlikely. End Summary.

FRENADESO Loses Ground but Holds Talks at Bay
--------------

2. (SBU) The GOP is counting on its ability to reach separate
deals with teachers and physicians, who, it rightly reckons,
have little in common with blue collar construction unions.
Thirteen groups are represented in the Dialogue, now
finishing its fourth week, with the Catholic Church as
"guarantor" of any agreement reached. Teachers unions, which
allied themselves with FRENADESO during the initial May-June
strikes, now can negotiate with the government as individual
members at bargaining the table. The teachers seem to have
shed their direct links to FRENADESO as FRENADESO continues
to create delays in the negotiating process. Evidence of any
actual progress toward a deal, however, is scanty.

Is the Pot Calling the Kettle...
--------------

3. (SBU) Facing an October 5 deadline, the discussions have
not moved beyond Article 1 of the 180-article law. In one of
the few advances made in the talks, participants created
commissions on finance, pension, and health management to
discuss CSS administration, with a report due within 30 days.
FRENADESO spokesman Andres Rodriguez accused the GOP and
private sector of intentionally delaying discussions on the
most controversial topics, such as retirement age and
contribution quotas, so that the 90-day period would pass
without those issues being touched upon or modified. Labor
Minister Reynaldo Rivera, the GOP's sole representative at
the talks, responded by pointing out that FRENADESO had not
presented any concrete proposals. In the same week,
FRENADESO also lost its bid to discuss CSS without reference
to the Law 17 reform bill. (Note: Law 17 is the CSS reform
package that National Assembly passed and subsequently
suspended so that the National Dialogue could move forward.
FRENADESO had refused to negotiate at the Dialogue unless the
law was officially suspended. End Note).

GOP Machinations: No Plan B
--------------

4. (SBU) On July 26, twenty-nine civil society organizations
made a public statement addressed to the Dialogue's thirteen
sectors to set aside "personal, sectorial, ideological and
political interests" so that the Dialogue could move forward.
They also published a full-page communiqu to the nation a
day later that asked Panamanian society to hold responsible
those who create instability and obstacles to dialogue.


5. (SBU) Minister of Government and Justice (MOGJ) Hector
Aleman on July 21 told Pol Specialist that he had already
begun private negotiations with the teachers' and doctors'
unions. His job is to find non-radical groups to negotiate
with and to isolate the radicals. According to Aleman, the
GOP believes SUNTRACS will not accept any solution to CSS
reforms. When asked what the GOP would do if the deadline
passes without an agreement, Aleman only responded: "We are
working hard to prevent that from happening." In a separate
conversation, Comptroller General Dani Kuzniecky expressed
disappointment that Cabinet meetings and government
committees were not discussing the National Dialogue at all.
Kuzniecky said that the GOP had no plan "B" if the talks
fail.

Comment: Out of the Frying Pan into the Fire
--------------

6. (SBU) High public expectations for a National
Dialogue-negotiated resolution to CSS reform with buy-in from
all sectors will only create more trouble for the GOP if it
is caught holding the bag should negotiations fail.
According to a recent La Prensa poll, 62% of Panamanians hope
that the Dialogue will come up with proposals to save CSS.
On the other hand, public support for the National Dialogue
also indicates that FRENADESO's stalling will not win public
support. The pendulum, at least for now, has swung toward
the government: in early July, President Torrijos's approval
rating moved up to 39%, from a crushingly low, CSS-related
24% in June (reftel C).

DANILOWICZ