TRADE MINISTER: BEAT PMG BY RATIFYING THE TPA

C O N F I D E N T I A L PANAMA 001677

SIPDIS

SIPDIS

STATE FOR WHA - A/S SHANNON
ALSO FOR EEB - A/S SULLIVAN AND WHA/EPSC - SHAPIRO
STATE PASS USTR - SCHWAB, VERONEAU, AND EISSENSTAT
USDOC FOR BASTIAN

E.O. 12958: DECL: 10/15/2017
TAGS: ETRD ECON PREL PGOV PM
SUBJECT: TRADE MINISTER: BEAT PMG BY RATIFYING THE TPA


Classified By: Ambassdor William A. Eaton - Reasons 1.5 (b and d)


1. (C) Summary: Trade Minister Alejandro Ferrer cautioned
the U.S. on October 11 to not turn its back on its friends.
He argued that USG ratification of the U.S.-Panama Trade
Promotion Agreement (TPA) would be the best way to beat back
Pedro Miguel Gonzalez (PMG) and others of his ilk in the PRD.
Ferrer is looking for the right moment to depart the
Torrijos administration. Although he may return to private
law practice, he appears increasingly likely to make a run
for political office. Ferrer has flirted with a possible
alliance with his ideological opposite, Torrijos' highly
popular Housing Minister Balbina Herrera. However, it would
be an uneasy alliance and Ferrer would have to overcome his
image as a technocrat linked to Panama's elites. End
summary.

Ferrer: Ratify the TPA to Beat PMG & His Ilk
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2. (C) "If you turn your back on your friends and don't
ratify the TPA, then Pedro Miguel Gonzalez wins," Minister of
Industry & Commerce Alejandro ("Andy") Ferrer told Ambassador
on October 11. Ferrer said that many of the PRD's rank and
file in the National Assembly voted for the TPA because it
was President Torrijos' priority, not out of any conviction
about the importance of free trade. U.S. delay or rejection
of the TPA, he said, would simply empower PMG and others of
his ilk who were never enamored with free trade to begin
with. Ferrer stressed that ratifying the TPA would enable
the U.S. to "lock in" safeguards against GOP backsliding and
boost pressures for market-friendly institutional reforms.


3. (C) Although Ferrer saw no signs of any moves by PMG to
step down, he also cautioned against reading the PRD's
support for PMG as "monolithic." He said a number of PRD
members of the National Assembly (NA) have told him privately
that they realized how badly they erred in elevating PMG and
that they recognize that closer political and commercial ties
with the U.S. are in Panama's best interest. However, since
PMG's September 1 ascension, Ferrer himself has avoided
appearances before the National Assembly. For example,
despite being called before a NA committee to testify on
October 10 on his ministry's budget, Ferrer sent his Vice
Minister in his stead. He said it's his way of expressing
his disgust for their misguided choice of PMG.

Ferrer Mulls Likely Exit . . .
--------------


4. (C) With his former law partners beckoning him to return
to private practice and politicians eyeing him as a potential
candidate, Ferrer said he is looking for "the right moment"
to step down. He said he would likely do so in the next
couple of months and that he was figuring the TPA's fate into
his decision as to when (not if) to resign. Widely regarded
as the GOP's top voice for market-friendly policies, Ferrer
recognized that his exit could worry the private sector and
foreign investors. Knowing that no private sector leader
worth his or her salt would want to join the GOP for
Torrijos' final year, he said he "wakes up at 3 a.m. in cold
sweat" over fears that he could be replaced by a PRD hack who
might undo his pro-trade, pro-market gains. He said he will
likely recommend that Torrijos elevate his Vice Minister,
Carmen Gisela Vergara, to head the ministry. Ferrer called
her "smart, hard-working, and honest," adding that even if
she lacks a deft political touch, he would be available to
her for advice.

. . . and His Political Future
--------------


5. (C) In what might be an unlikely pairing, Balbina
Herrera, Torrijos' highly popular left-wing Minister of
Housing, has actively cultivated Ferrer over the past six
months, inviting him to lunch virtually every week to seek
his "advice and vision" on economic issues. Ferrer said that
she expects the campaigns of PRD presidential hopefuls
VP/Foreign Minister Samuel Lewis Navarro and Panama City
Mayor Juan Carlos Navarro will ultimately fizzle. If so, she
would make her move for the presidency. (To date, Herrera
has not publicly signaled any aspiration for the presidency.)
Ferrer claimed that she had previously seen him as the only
real threat, either from within the PRD (should he register
as a party member - which he is hesitant to do) or as part of
an opposition ticket. She and other PRD hardliners such as
Hector Aleman had previously attacked Ferrer internally to
try to diminish his stature. Failing that, he said, Herrera
now appears interested in attracting him to her ticket,
giving her greater credibility with a skeptical private
sector. Clearly intrigued by this prospect, Ferrer stressed
that he would have to have some long discussions and clear
understandings were he to join someone with whom he
"disagrees on so many things."


6. (C) Regardless of his courtship with Herrera, Ferrer was
certain that if he doesn't make a run for national office in
2009, that he would certainly do so in 2014. He acknowledged
that his image as a technocrat and as free marketer is
unlikely to garner broad popular appeal. But were he to run,
Ferrer said he would want to "speak from the heart" about
Panama's promise and its challenges (e.g., weak
institutions),even if he were to only end up with negligible
support. "I can always go back to my law practice knowing
that I gave it my best shot," he said.

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


7. (C) Ferrer is widely viewed among private sector and
foreign investor contacts as the GOP's best advocate for
market-friendly policies. Any alliance with Balbina Herrera
would be uneasy, at best. Moreover, despite offering "street
cred" on economic and corruption issues, Ferrer would have an
uphill push to overcome his image as a technocrat linked to
Panama's elites. End comment.
EATON