Identifier
Created
Classification
Origin
06PANAMA543
2006-03-24 20:35:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Panama
Cable title:  

PANAMA BANANA WORKERS END STRIKE AT COSTA RICAN

Tags:  ELAB ETRD PGOV PM PREL 
pdf how-to read a cable
VZCZCXYZ0017
RR RUEHWEB

DE RUEHZP #0543/01 0832035
ZNR UUUUU ZZH
R 242035Z MAR 06
FM AMEMBASSY PANAMA
TO RUEHC/SECSTATE WASHDC 7687
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEHBO/AMEMBASSY BOGOTA 2228
RUEHQT/AMEMBASSY QUITO 0854
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHDC
RHMFISS/JOINT STAFF WASHINGTON DC
RUEKJCS/OSD WASHDC
RHMFISS/CDR USSOUTHCOM MIAMI FL//J5/J2/POLAD//
UNCLAS PANAMA 000543 

SIPDIS

SENSITIVE
SIPDIS

DEPARTMENT FOR WHA/CEN TOM PIERCE
SOUTHCOM ALSO FOR POLAD

E.O. 12958: N/A
TAGS: ELAB ETRD PGOV PM PREL
SUBJECT: PANAMA BANANA WORKERS END STRIKE AT COSTA RICAN
BORDER


-------
SUMMARY
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UNCLAS PANAMA 000543

SIPDIS

SENSITIVE
SIPDIS

DEPARTMENT FOR WHA/CEN TOM PIERCE
SOUTHCOM ALSO FOR POLAD

E.O. 12958: N/A
TAGS: ELAB ETRD PGOV PM PREL
SUBJECT: PANAMA BANANA WORKERS END STRIKE AT COSTA RICAN
BORDER


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

1. (SBU) In response to mediation and a grant from Minister
of Labor Reynaldo Rivera, banana workers ended a peaceful
strike March 18 that closed the Panama-Costa Rica border for
three days. The laborers from Cooperativa de Servicios
Multiples de Puerto Armuelles (Coosemupar) blocked trucks and
buses trying to cross the Panamanian-Costa Rican border at
Paso Canoas and also erected barriers to stop traffic to the
port city of Puerto Armuelees. Racked with a reported debt
of $30 million, Coosemupar is unable to meet its most recent
payroll or pay its required year-end worker bonuses.
Coosemupar which is owned by the banana workers, purchased
banana plantations from Chiquita Brands in 2003 for $20
million borrowed from the publicly owned Panamanian National
Bank but the business is unprofitable. On March 20 the
Government of Panama (GOP) approved an unconditional $850,000
"subsidy" (or grant) to banana growers in the Chiriqui region
that borders Costa Rica but the long-term viability of the
banana plantations and the wisdom of this subsidy is
doubtful. End summary.

--------------
Hard Times for Banana Growers and Pickers
--------------

2. (SBU) Although agriculture constitutes only 6% of
Panama's GDP, 21% of the work force is employed in harvesting
and processing crops. Bananas, along with sugar and coffee,
are among Panama's most important agricultural products.
However, the banana business has fallen on hard times. In
January 2001, after 70 years of continuous operations,
Chiquita Brands stopped doing business in Puerto Armuelles.
Unions had refused Chiquita's request that workers boost
product quality by reducing damage to bananas during
harvesting and packaging. At the same time, a worldwide glut
of bananas led to depressed prices. The resulting operating
losses led Chiquita to close its plant in Puerto Armuelles.
As the economy of the town suffered, the population fell from
46,000 in 1990 to less than 20,000 today.

--------------
2003: Cooperative Formed
--------------


3. (SBU) In 2003 local workers formed the cooperative
Coosemupar and purchased the Chiquita plantations with a $20
million loan from Panama's publicly owned national bank.
Chiquita retained the exclusive right to purchase the bananas
grown on their former plantations. Although the cooperative
is owned by its 2800 workers, the Chiriqui Land Company
Workers Union (Sitrachilco) continues to operate and make
demands against the cooperative and the GOP. (Comment: The
workers are really striking against a business they own. In
a further distortion of logic, Coosemupar looks to the GOP as
the guarantor of the loans used to establish the cooperative.
End comment.) In recent years, Ecuador has emerged as a
large producer of bananas, further contributing to low prices
throughout the world. The European Union's tariff on
Panamanian bananas further constricts sales. The banana
business in Chiriqui loses money and probably will continue
to do so in the future. Many Panamanians, uneasy about using
public funds to support the banana workers, openly ask why
they will not move to the provincial capital of David or
other towns which offer more job opportunities and are
experiencing a building boom fueled by retirees from America,
Canada, and Europe.

--------------
Union Tactics Effective
--------------

4. (SBU) Sitrachilco's decision to close the Panama-Costa
Rican border and impede traffic in Chiriqui was effective
since many people throughout the region are traveling to
David to attend an annual fair. Hundreds of trucks, some
carrying live animals and fresh fruit, were backed up on both
sides of the border. Bus passengers had to get off one bus,
walk several hundred yards across the border, and then board
another to continue their journeys. Sitrachilco has
experience in causing disruptions. During the years when
Chiquita operated the banana plantations in Chiriqui, the

union gained a reputation for striking at crucial moments of
harvesting and processing bananas to drive home its demands.
For many years the tactics worked and the workers received
benefits that included company-built housing and schools.
When the banana business became less profitable in 2000,
Chiquita chose to end its operations in Puerto Armuelles.

--------------
Comment: Short Term Fix
--------------

5. (SBU) The GOP appears to be afraid of the union and has
no plan for dealing with the long-term industry decline the
banana workers face. DCM and ConOff visited the area during
the strike and reported that police dressed in riot gear
stood by and took no action against the strikers. The
$850,000 GOP grant may allow Coosemupar to pay its workers
for a missed pay period but payments of this type by the GOP
are not sustainable. Unfortunately, the GOP's willingness to
reward the banana strikers with $850,000 merely reinforces
the perception that blockading highways is the way to get
one's grievances addressed. And when Coosemupar burns
through the $850,000 "subsidy," which won't take long, it
will be back asking the GOP for more. The cooperative still
is unable to pay off the $20 million loan from the Panamanian
National Bank, a $3 million loan due to Chiquita, and $5
million owed to other businesses. Coosemupar also owes $2.5
million in contributions to Panama's social security system.
The banana industry in Panama is in a long term decline
caused by stiffer competition from Ecuador and EU tariffs
which favor producers from former European colonies in Africa
and the Caribbean.

EATON