PANAMANIANS PONDER BOLIVARIAN CIRCLES AND

C O N F I D E N T I A L SECTION 01 OF 03 PANAMA 000234

SIPDIS

DEPARTMENT FOR WHA/CEN/PIERCE
SOUTHCOM ALSO FOR POLAD
VANCOUVER FOR CG ARREAGA

E.O. 12958: DECL: 11/24/2014
TAGS: PREL PGOV SNAR MARR PINS ENRG EPET PM VZ POL CHIEF
SUBJECT: PANAMANIANS PONDER BOLIVARIAN CIRCLES AND
VENEZUELAN INFLUENCE IN DOMESTIC AFFAIRS

REF: A. 04 PANAMA 2452

B. 04 PANAMA 2937

C. 04 PANAMA 2661

D. 04 PANAMA 2176

Classified By: Ambassador Linda E. Watt for reasons 1.4 (b) and (d).

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


1. (C) Despite recent press reports and speculation about
Venezuelan-inspired Bolivarian Circles in Panama, threatening
language from Venezuelan president Chavez that Venezuelan
"terrorists" are using Panama as a base, and Panama-Venezuela
discussions about oil and other commercial links (to be
reported Septel),ordinary Panamanians do not believe
Chavez's mischief-making could imperil Panama's domestic
stability. While popular consensus derides his Bolivarian
Circles as toothless, high GOP officials are less sanguine.
Minister of the Presidency Ubaldino Real recently shared his
fears with the Ambassador that the GOP's upcoming reform
proposals (especially on social security or CSS) and
long-standing public discontent with social and economic
inequality, poverty, stagnant living standards, and
underemployment could provide tinder for extremist groups to
exploit. Embassy believes that Chavez has little support in
Panama, but a prolonged crisis (such as violent protests over
social security reform) could provide the Bolivarian Circles
(in alliance with small but well-trained Panamanian leftist
groups) with an opening to cause problems for the Torrijos
government. End Summary.

Bolivarian Circles in Panama
--------------


2. (C) A December 13, 2004 article in La Prensa, the largest
circulation Panamanian daily, posited the presence of up to
10 apparently subversive Bolivarian Circles in Panama, with
nominal allegiance to and apparently linked financially with
Hugo Chavez's "Bolivarian Revolution." (See Reftel) (Note:
Venezuelan defense attach Javier Gamboa, who departed Panama
about five months ago, reportedly bragged about being a
proponent of the Circles. According to unconfirmed reports,
the Circles began in Panama several years ago.) The La
Prensa article identified former El Siglo newspaper co-owner
Angel Padilla Beliz and Panamanian lawyer Fernan Casis as
Circle leaders but gave no hint about the extent of the
group's membership or influence.

Potential Trouble?
--------------


3. (C) Most Panamanian government (GOP) officials and
ordinary Panamanian citizens discount the ability of the
Bolivarian Circles to influence domestic politics and widely
deride Venezuelan president Hugo Chavez as a "loco" and a
"payaso" (clown),but top policy makers are not as sure. On
Jan. 18, Minister of the Presidency Ubaldino Real told
Ambassador Watt that the GOP is worried about Chavez's
potential to stir up trouble, especially when the GOP unveils
its social security reform proposals (expected before the end
of March). Real underscored that the Torrijos
Administration's economic and social policies are designed to
support democracy and stability by fighting the poverty and
hopelessness that are now facts of life for 40% of the
Panamanian population. Nonetheless, Real and his colleagues
are acutely aware that underlying popular discontent over
economic inequality could make fertile ground for Panamanian
leftist groups seeking to stir up trouble. (Note: DAO Panama
will report GOP views regarding Bolivarian Circles and
Venezuelan influence in Panama via Septel. The uprising in
Bocas del Toro in October 2004 is an example of local unrest
that the Circles could exploit. See Reftel C. End Note.)

Lawmakers Downplay Bolivarian Potential
--------------


4. (C) Several prominent Panamanian legislators rejected any
notion that Bolivarian Circles could cause harm in Panama.
One legislator noted that the Circles are small, ineffectual,
lack cohesion, and have no popular support. Another
legislator agreed that Panamanian union leaders may be
receiving Venezuelan money, but argued that did not matter
much because those union leaders would oppose the Social
Security reforms regardless of any encouragement from
Venezuela.

Security Officials Downplay Venezuelan Influence
-------------- ---


5. (C) Recent speculation has focused on the possibility
that Venezuela is gaining influence among the growing number
of Panamanian Public Force (PPF) officers being trained in
Venezuela. Embassy discussions with recently returned
Panamanian National Police (PNP) officers suggest that
exposure to Venezuela has not necessarily increased their
regard for Chavez. Even their Venezuelan instructors
reportedly badmouthed Chavez in front of Panamanian police
officers. One such officer recently told PolOff that a
Venezuelan colonel had called Chavez's Bolivarian Circles
"una locura" (insanity). (Comment: While dozens of PPF
officers have been trained in Venezuela over recent years,
among them eight PNP commissioners or sub-commissioners, the
U.S. and other Latin American countries have historically
exercised greater influence within Panama's security forces.
End Comment.)

Panama Views Venezuela in Economic Terms
--------------


6. (C) Panama and Venezuela have developed a number of new
economic links during the past six months but Panamanian MFA
officials reject the idea that those largely commercial links
could give Venezuela leverage over Panama. Instead, they
portray Venezuela as an "unreliable" partner. (Note: The
incoming Torrijos GOP was not overly concerned when Venezuela
recalled its ambassador following outgoing-President
Moscoso's August 2004 pardon of four anti-Cuban prisoners,
including one, Luis Posada Carriles, who is wanted in
Venezuela for a 1973 attack on a Venezuelan airliner. See
Reftel D. End note.) Since that time, the GOP has joined
the former Group of Three (Venezuela, Colombia and Mexico,)
now G-4, a regional economic and diplomatic bloc. Panama's
decision to join the G-4 reflects a broader strategy to forge
stronger economic and commercial ties in the region. (See
Reftels A and B.)

Oil Pipeline or Pipe Dream?
--------------


7. (C) Panama and Venezuela are exploring the possibility of
sending Venezuelan crude oil through an existing
trans-Isthmus pipeline across Panama to the Pacific for Asian
(mostly Chinese) customers. (Note: Chavez claims that his
purpose in pursuing the project is to diversify his customer
base away from the United States. The economic feasibility
of the project seems less certain, but we leave it to Embassy
Caracas to make that judgment. End note.) While it may be
true, as some have suggested, that the oil pipeline idea is
just a smoke screen to mask Chavez's "true" intention of
using the Bolivarian Circles to destabilize Panama,
Panamanian security officials view the diplomatic discussions
as purely commercial, involving no potential Venezuelan
threat to national security.


8. Panama's MFA Foreign Relations Advisor Nils Castro
believes Venezuela has limited value as a trading partner.
Castro recently told ECON Counselor that Venezuela's sole
value to Panama is its petroleum, as Venezuelan investment in
Panama is relatively small. That attitude has been reflected
in recent Panamanian apathy toward Chavez's tiff with
Colombia.

Comment
--------------


9. (C) Many Panamanians believe that the Torrijos government
is Panama's last hope for a viable democracy. Average
Panamanians view their country as small and weak and its
political elite as venal and indifferent to the country's
problems. The Bolivarian Circle's propaganda could
capitalize on that underlying malaise.


10. (C) Bolivarian circles conceivably could gain momentum
and political influence in the event of a prolonged, general
crisis in Panama. They are currently too inconsequential and
lack the numbers to initiate such a breakdown. More
immediately, the GOP is concerned that Venezuelan money might
fund well-trained Panamanian leftist groups to organize
violent street demonstrations when CSS reforms are announced
(probably in the next month or so). And Chavez may well hope
to bring Panama into his "orbit." While Panama is trying to
forge closer commercial ties with Venezuela and other
countries in the region, GOP officials discount any long-term
convergence of Panamanian and Venezuelan political, economic
or ideological interests, aside from the economic benefits
that the GOP might be able to extract from capital-intensive
GOV energy investments, if they should come about. Indeed,
Chavez's main leverage in Panama is the financial power which
petroleum puts in his hands. (Note: We recently received
unconfirmed reports that Chavez has offered Panama
concessionary prices on oil in return for Panama's support
for Cuba on United Nations votes. End Note.)


11. (C) Chavez is well acquainted with Panama, having spent
18 months here following his release from prison after his
failed 1992 coup, but his influence in Panama is practically
nil. Panamanians widely deride him as a lunatic for his
improbable proposals and claims, for instance, his 2004
suggestion that he would dispatch Venezuelan MIGs to defend
the Panama Canal against terrorists. More recently he has
made veiled threats to Panama, claiming that hundreds of
Venezuelan "terrorists" (including several of his former
political opponents) are using Panama as a base. He implied
that the U.S. doctrine of preemptive war (such as in Iraq)
may also give him the right to launch anti-Chavista attacks
against opponents in Panama or elsewhere.


12. (SBU) Embassy Panama defers to the perspective of
Embassy Caracas on Venezuelan aims in Panama, on oil and
other commercial links, or on the mischief-making potential
of Bolivarian Circles.

WATT