EMBASSY PANAMA SHARPENS ITS FOCUS ON SECURITY,

O N F I D E N T I A L PANAMA 001116

SIPDIS

SIPDIS

E.O. 12958: DECL: 06/09/2016
TAGS: KSPR EAID AMGT PINS KTAO
SUBJECT: EMBASSY PANAMA SHARPENS ITS FOCUS ON SECURITY,
DEMOCRACY AND POVERTY

REF: A. A. PANAMA 01029

B. B. PANAMA 000897

C. C. PANAMA 00919

D. D. PANAMA 000676

Classified By: Classified by Amb. William A. Eaton for reasons 1.4(b) a
nd (d)



1. (C) SUMMARY: Country team met off-site to assess the
status of U.S./Panama bilateral relations, review our
priorities and ensure the correct alignment of USG activities
and resources. Participants reached consensus that USG
interests were best served by focusing on three strategic
areas: security, democracy, and poverty. GOP cooperation on
cananl security, law enforcement, and third border priorities
remains high. Although Panama is committed to democracy,
country team remains concerned about corruption, lack of
transparency, weak rule of law and press manipulation as well
as increased interaction with Cuba and Venezuela. While
Panama's macroeconomic indicators (real growth, trade,
investment, fiscal performance, and per capita income) are
strong, a stubborn poverty rate of 40% and vast income
disparities leave significant portions of the population
vulnerable to anti-capitalist and anti-democratic ideology
popular in the region. Country team identified key
priorities for each strategic area. On the security area,
our medium term objectives are to increase USG presence in
the Darien and support the development of a competent border
patrol and coast guard. On democracy, we will remain
actively engaged in countering corruption and shoring up the
rule of law and freedom of the press. Country team will
increase its vigilance of GOP actions that could ultimately
affect our interests (e.g. closer relations with Cuba and
Venezuela). On poverty, we will leverage our dwindling
assistance budget through partnerships with NGOs, the private
sector, international institutions and the Panamanians to
promote free trade, and access to opportunity as well as
programs that address the needs of the poor. To win hearts
and minds, each strategic area will be accompanied by an
aggressive public diplomacy program which raises the
visibility of the generosity of the people of the United
States and focuses on the personal angle for the average
Panamanian. The off-site also identified the importance of
internal communications and cooperation in order to act
cohesively as one USG. END SUMMARY.

--------------
SECURITY
--------------

2. (C) Country team reviewed our security programs and
concluded that U.S. law enforcement, security and military
agencies conduct operations unimpeded and receive excellent
cooperation from the GOP. Our agencies are focused on
deepening existing programs (counter-narcotics, money
laundering, international crime, terrorism finance, and
institution building). Country team agreed that the biggest
concern remains the ungoverned Darien region bordering
Colombia and the Colon Free Zone as a center for money
laundering and other illegal activities. Noting the GOP's
sensitivities about projecting an image of being too close to
the USG on security matters, public outreach regarding U.S.
security assistance will remain focused on the humanitarian
aspects of DoD and law enforcement activities.


3. (C) Comment: This level of cooperation is expected to
continue as long as the target of investigation by U.S. law
enforcement and military remains primarily non-Panamanian and
specifically not any alleged illicit activities of President
Torrijos or his administration.

--------------
DEMOCRACY
--------------


4. (C) Country team believes it is in the U.S. interest to
maintain and strengthen democratic institutions. Panama's
democratic development is hindered by a constitution that
concentrates power in the executive branch, and weak
legislature and judiciary branches. The political class sees
public service as a vehicle to exercise influence and self
enrichment. Combined with a weak press and significant
poverty, Panama's democracy remains vulnerable to a
charismatic, anti-capitalist candidate. Country team also
noted a series a GOP steps contrary to U.S. interests, such
as a lack of cooperation on the Colastra kidnappings (Ref A),

overt pursuit of closer diplomatic ties to Cuba (Ref B),the
appointment of many Noriega-era officials, including one that
critized President Bush on the eve of his November visit,
(Refs B&C),and the denial of due process to a major U.S.
investor (Ref D).

5.(C) In response to these changes, country team will
redouble its vigilance of GOP activities, engage the GOP to
express out displeasure, deepen our relationship with
oppositon parties and all factions within the PRD, and remain
vocal in our support for transparency and judicial reform.

--------------
POVERTY
--------------


6. (C) Country team believes the stubborness of poverty in a
country with strong macroeconomic performance remains a
threat to its economic and political stability. Massive
flows of foreign direct investment from the U.S., Canada,
Europe and Asia and a building boom contrast quite starkly
with an overall 40% poverty rate and vast income disparities.
Twenty percent of Panamanians control two thirds of the
country's wealth, while the bottom 20 percent control only
1.5 percent of wealth. With wages stagnant, the strong
affinity of many Panamanians for a welfare state makes Panama
vulnerable to the rise of populist demagogues.


7. (C) With traditional USG aid to the region declining,
country team will promote prosperity through free trade
advocacy and the leveraging of our resources in support of
partnerships with the private sector, NGOs and international
institutions aimed at providing more employment opportunities
and addressing Panama's poverty issues. Country team will
focus its activities on education, small business
development, and self-help.

--------------
PUBLIC OUTREACH
--------------


8. (C) Our public diplomacy objective is to remain Panama's
partner of choice and to maintain our "special" relationship.
The U.S. enjoys a 90% approval rating among Panamanians.
While increasing interaction with Cuba, Venezuela and/or
Bolivia is worrisome, the U.S. remains the "incumbent" in
Panama with deep cultural and family ties between the two
countries. Privately, focusing our resources on security,
democracy and poverty while publicly leveraging our
humanitarian impact can counter these influences without
allowing them to change our main game. We will package USG
programs in Panama to emphasize the personal angle to the
average Panamanian and expand our outreach to include radio,
tabloids, television and other media that reach the majority
of Panamanians in rural and marginal urban areas. To ensure
maximum impact and consistency, country team will develop
carefully targeted messages that the entire country team will
deliver. We will also leverage important visitors to help us
deliver those messages.
EATON