PANAMA: REACHING OUT TO ASIAN MISSIONS

C O N F I D E N T I A L PANAMA 001233 SIPDIS SIPDIS DEPARTMENT FOR WHA A/S SHANNON DEPARTMENT FOR WHA/CEN SOUTHCOM ALSO FOR POLAD E.O. 12958: DECL: 06/22/2016 TAGS: OTRA PREL ETRD ECON LA XK CH JA KS SUBJECT: PANAMA: REACHING OUT TO ASIAN MISSIONS REF: STATE 70035 Classified By: AMBASSADOR WILLIAM EATON FOR REASONS 1.4 (B) AND (D). SUMMARY -------------- ¶1. (SBU) Following up on A/S Shannon's visit to Asia, we reached out to our Chinese, Japanese, and South Korean counterparts to discuss issues of common concern in Panama. While the three Asian missions share a strong focus on developing their countries' commercial and business interests in Panama, they differ widely in their connectivity to and understanding of political developments in the country. Embassy will continue to work closely with these countries to explore areas of common interest and cooperation. END SUMMARY. CHINA: OPTIMISTIC AND RISING -------------- ¶2. (C) China's commercial office, while not an official embassy, appears to have close connections to parts of the GOP. At a recent event, the outgoing and incoming MFA Foreign Relations chiefs rushed to greet the new PRC representative, addressing him as "Mr. Ambassador" and conversing tightly huddled for many minutes. The commercial office is well versed on political developments in Panama, with the China-Taiwan recognition issue clearly at the forefront. The PRC representative told us that China will make no trouble over Taiwan unless Taiwan declares independence, which would bring a "disaster." He did not express any particular hope or expectation that the GOP will change its diplomatic alignment away from Taiwan, but ventured that if the current GOP did not recognize China, the next GOP probably would. ¶3. (C) According to the PRC representative, however, China's interest in Panama is overwhelmingly commercial. China, the world's number two user of the Panama Canal, wants political stability in Panama and the region to encourage further development of trade and business ties. Chinese companies are eager to participate in the Canal expansion, and he hinted that discussions on joint Chinese-U.S. ventures are already underway. He said China viewed expansion as essential to its national interest. JAPAN: WATCHFUL OF CHINA AND THE CANAL -------------- ¶4. (C) The Japanese embassy is one of the larger missions in Panama and closely follows a number of issues, closely tied to the concerns identified in reftel. China is a main focus of attention and the embassy is carefully tracking China's growing role in Panama and the region. The Japanese Charge mentioned that China is searching for more resources, particularly food, in the hemisphere and shares Japan's interest in securing the use of the Canal. He concurred with the PRC's sentiment that Panama's diplomatic recognition of China is not far off. In other political matters, the Japanese Charge does not believe political populism can take hold in Panama. He believes that the Panamanian people are pragmatic and Panama would be the last place for populism to rise. ¶5. (C) Panama plays a crucial role for Japanese economic interests, since the country serves as a base for Japanese businesses working in Latin America. Japan's main economic concern is securing the use of the Canal. Japan remains worldwide one of the most popular flags of convenience for international shipping, and the embassy is very interested in issues of ship registry. The Japanese embassy reports no special programs to attract Japanese investment, but mentioned that the Japan Bank of International Cooperation (JBIC) is preparing a public seminar on the Canal expansion project for the Panamanian Foreign Minister's July visit to Japan. ¶6. (SBU) Japan funds two main assistance programs in Panama. It provides $10 million annually to support a technical cooperation project and this year provided $1 million to fund a grass roots development grant. The embassy is also planning a sanitation project for the Bay of Panama through a loan from the JBIC this fiscal year. (Comment: Japan clearly hopes that its assistance also eventually wins Panama's support at the International Whaling Commission for lifting the IWC's 20-year ban on whaling. End Comment.) SOUTH KOREA: MAKING A START IN THE REGION -------------- ¶7. (C) The Korean embassy, with a staff of only four, seems to be poorly informed about political developments in Panama. As compared to elsewhere in the region (see reftel),the Korean embassy in Panama does not work directly with regional groups like the Organization of American States or the Inter-American Development Bank. ¶8. (SBU) Korean companies, especially Samsung and LG, do very well here, using the Colon Free Zone as a hub and distribution point. The Korean embassy reports that it does little to assist Korean companies directly and has no set programs to promote Korean business or investment in Panama. The embassy's interaction with the Korean business community is generally limited to requesting private sponsorship of the embassy's cultural activities and occasionally helping out when Korean companies work with Panamanian counterparts. ¶9. (C) Korean assistance to Panama for this year includes a $2 million e-government grant to the Ministry of Health and $500,000 in electronic enhancements for the Cabinet meeting room at the Presidential palace. The Korean ambassador mentioned that giving aid to the GOP is difficult because the Panamanian agencies cannot produce their own development plans and the Koreans have to hire contractors to do that for the GOP. NEXT STEPS -------------- ¶10. (SBU) China, Japan, and South Korea share many of our interests in Panama and are eager to cooperate with the United States, whom they view as having better access and influence on the GOP. The potential Canal expansion and a stable, investor-friendly business climate are two important areas of mutual interest. Embassy Panama maintains a strong working relationship with its Asian counterparts, and will look for further opportunities to work together to further USG strategic objectives in the region. EATON