PANAMA POST: THE PANAMA WATCHERS' SPECIAL EDITION,

S E C R E T PANAMA 000324

SIPDIS

NOFORN
SIPDIS

E.O. 12958: DNG: CO 04/25/2033
TAGS: PGOV PREL PM
SUBJECT: PANAMA POST: THE PANAMA WATCHERS' SPECIAL EDITION,
9TH EDITION, VOLUME II

Classified By: POLCOUNS Brian R. Naranjo. Reasons: 1.4 (B),
(C),and
(D).

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Summary
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1. (S/NF) The April 18 to 25 visit by two seasoned USG
Panama watchers provided a welcome opportunity to do a "deep
dive" on Panama's domestic political scene. Meeting with
political leaders and advisors from across the political
spectrum, these analysts not only had an opportunity to
ascertain the veracity of the Panama Post's senior editor,
but also to get some first hand experience with key movers
and shakers on Panama's political scene. In this edition, we
recap these meetings as well as share additional political
developments:

-- Democratic Change President and presidential contender
Ricardo Martinelli "plummeted in the polls," governing
Revolutionary Democratic Party (PRD) presidential nomination
candidate Balbina Herrera takes lead;
-- Panamenista presidential nomination candidates Alberto
Vallarino and Juan Carlos Varela are each fully confident of
a primary victory -- somebody's wrong;
-- PRD presidential nomination candidates Balbina Herrera and
Juan Carlos Navarro relieved that PRD primary to be held
August 17;
-- Newly elected governing PRD National Executive Committee
(CEN) Fifth Sub-Secretary Rod Diaz dishes on possible
Torrijos political musings;
-- Consensus is that National Assembly President Pedro Miguel
Gonzalez (PMG),still wanted on a federal indictment for the
1992 murder of a U.S. serviceman, will not run for
re-election;
-- PRD Women's leader nervous about Herrera; and
-- PRD National Assembly Deputy explains how he is financing
his campaign.

End summary.

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New Poll: Herrera Takes Lead, Martinelli Trails
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2. (C) CD President and presidential candidate Ricardo
Martinelli "plummeted in the polls," falling by six points,
Martinelli political advisor Jimmy Papadimitriu told POLCOUNS
on April 17. Gleeful on April 17 at the polling results to
be published, the normally laconic PRD National Assembly
Deputy and close Herrera confidant Hector Aleman said, "It's
Balbina's time. She's the leader for this moment in history.
People are looking for a leader who can bring opportunity to
those who have not benefited socially or economically from
Panama's growth to date."


3. (U) Sure enough, published partially on April 21 in
Panama City broadsheet daily La Prensa, Dichter and Neira's
poll showed PRD presidential nomination candidate Balbina
Herrera jumping by 3.5 percent to 25.1 percent in April from
21.6 percent in February. Over the same two month period,
Martinelli fell 4.8 percent from 26.3 percent in February to
20.3 percent in April. PRD presidential nomination candidate
Juan Carlos Navarro essentially remained static -- 13.3
percent in February and 13.2 percent in April. Both
Panamenista presidential nomination candidates Alberto
Vallarino and Juan Carlos Navarro hit 6.5 percent in April
rising 0.7 percent and 1.3 percent respectably over their
February poll numbers. Moral Vanguard of the Nation (VMP)
presidential candidate -- and former president -- Guillermo
Endara tanked falling from 7.1 percent in February to 1.6
percent in April. Similarly, meager support for possible PRD
presidential nomination candidate -- and former president --
Ernesto "El Toro" Perez Balladares evaporated as he slid from
2.8 percent support in February to 0.0 percent in April.


4. (C) "Not good news," Papadimitriu said of the poll on
April 18, "but at least it makes Martinelli listen."
Subsequently on April 19, Papadimitriu said that the
Martinelli campaign would "go dark" for at least a week.
"I'll pull together the surrogates to try to get them under
control," Papadimitriu said after POLCOUNS asked about CD
SecGen Ricardo Quijano's assertion to the press that
Martinelli would not accept less than top billing in an
opposition alliance. "It's too early to be talking about
that. We need to show that we are different and new.
Alliance talk and blather on radio and TV does not help."
Martinelli announced to the press on April 21 that his formal
campaign launch was set for May 10.


5. (C) Meanwhile, Navarro attempted to spin the results by
asserting that he was running much closer to Herrera among
PRD party members. Separately, Navarro supporter National
Assembly Deputy Miguel "Mickey" Aleman, who represents the
voter rich municipality of San Miguelito just outside Panama
City, told the Panama Post on April 18, "Our internal polls
show that in San Miguelito across all parties Balbina is
beating Navarro 3 to 1, but within the party Balbina leads
Navarro by 2 to 1." Navarro needed to bring those numbers
down to even in San Miguelito if he was to be a viable
candidate nationally against Herrera.


6. (C) Comment: Perhaps most interestingly, the number of
respondents who did not know or did not respond nearly
doubled from 13.4 percent in February to 24.7 percent in
April. Many political observers had previously predicted
that formal campaign launches would result in more undecided
voters making their minds up and declaring support for
individual candidates. Instead, quite the opposite has
happened: not only have voters remained on the fence, but it
appears that many have joined them. Unhappy with the results
of the poll, some political surrogates sought to impugn the
poll by suggesting that Herrera had a business relationship
with Dichter and Neira that skewed the results. Don't
believe the hype: Dichter and Neira remains the most serious
and independent pollster in Panama, and it is not suprising
that Herrera, or any other serious politician, had a business
relationship with this outfit. Last February, when
Martinelli still held a commanding lead, the rumor was flying
around that since Martinelli used Dichter and Neira for
consumer polls for his Super99 supermarket chain that
Martinelli's lead was suspect. Valiantly, Navarro strove to
assert that his own private polls of PRD faithful showed him
leading Herrera by a "short margin," as described by Navarro
aide Ivan Gonzalez to our itinerant analysts on April 17.
Repeated requests to see Navarro's internal polling have
fallen on deaf ears. "

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"I'm winning." "No, I'm winning" Vallarino and Varela
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7. (C) Panamenista presidential nomination candidate Juan
Carlos Varela's advisors Meliton Arrocha and his brother Jose
Luis "Popi" Varela asserted on April 15 that Varela was
handily leading in the Panamenista internal race. Similarly,
fellow Panamenista contender Alberto Vallarino asserted on
April 17 that he was handily leading in this internal race.
While Varela focused on trying to build the "framework" for
an alliance by sitting down with Patriotic Union (UP)'s Billy
Ford on April 15, Vallarino asserted that supporters of
also-ran Panamenista presidential nomination candidate Marco
Ameglio were migrating his way and that it would not be
possible to form an alliance until after the July 6
Panamenista primary.


8. (C) Comment: Obviously, somebody is wrong. The Panama
Post simply does not know whether it is Varela or Vallarino.
Neither seems to be conducting any serious internal party
polling -- indeed both argue that it is impossible to poll
Panamenistas accurately given their aversion to declaring to
pollsters their party affiliation, an aversion allegedly
ingrained by years of opposition to military dictatorship and
the PRD. Unfortunately, the Dichter and Neira sheds no light
in its nationwide poll either. The Panama Post will continue
to try to unravel this mystery.

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PRD Primary: August 17
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9. (C) The PRD CEN had decided informally that its primary
would be held on August 17, PRD CEN members Rod Diaz, Hector
Aleman, and Elias Castillo all separately confirmed. Navarro
political advisor Ivan Gonzalez and Herrera political ally
Hector Aleman separately expressed their relief that an
August date had been chosen as neither wanted a long,
expensive, and drawn-out internal campaign. Rumors that the
primary might be pushed off until October had caused
significant anxiety in both camps.


10. (C) "I do not want to be her campaign manager," Aleman
told the Panama Post on April 17. Herrera though needed to
set up a real campaign organization and build some structure
around here, Aleman said. (Note: Later the same day,
Herrera announced that Hugo Torrijos, President Torrijos'
uncle, would be her campaign manager.) Noting that Torrijos
had "thin skin, like a baby," Aleman acknowledged that one of
the toughest things for Herrera would be campaigning on the
basis of continuity with the PRD's and Torrijos
Administration's initiatives while also differentiating
Herrera from Torrijos. "We'll try to celebrate the good
things while explaining what can be done better and how. We
learned a lot from the 1999 campaign that Torrijos lost in
large part due to El Toro's own inability to suffer
criticism," Aleman asserted. "Balbina will position herself
like Omar Torrijos: 'Neither of the left, nor of the right.'"


11. (C) As for Navarro, Gonzalez said on April 17 that the
mayor was conducting daily focus groups in an effort to fine
tune his message. Also, Gonzalez said that Navarro had not
heard the response from First Lady Vivian Fernandez de
Torrijos regarding Navarro's offer of the vice presidential
slot to her. Desiring Torrijos to show support for Navarro,
Gonzalez said, "Torrijos should do what (former President
Mireya) Moscoso did the other day (declaring her support for
Vallarino). He should openly and publicly support Navarro."


12. (C) Disenchantment with Navarro's tactics also begun to
grow, PRD CEN Fifth Sub-Secretary Rodrigo "Rod" Diaz. "He's
running a very dirty campaign." Navarro's team got caught
supporting a bogus anti-Balbina blog aimed at reminding
voters of her radical past and ties to former dictator Manuel
Noriega. Also, PRD local leaders who signed resolutions
supporting Navarro months ago were displeased at the mayor's
publication of these statements now to indicate broad support
for him as Herrera was not an option at the time the
statements were prepared. Finally, Navarro was believed to
have leaked the story that his cousin, 1st VP and FM Samuel
Lewis, had met with notorious drug trafficker Urrego to
discuss purchasing an island owned by Urrego in an effort to
keep Lewis from seeking the PRD nomination. Additionally,
Navarro was widely believed to have leaked the story of
then-PRD SecGen Martin Torrijos' contract with the government
of the Dominican Republic. Allegedly Navarro sourced the
Urrego story to Torrijos' camp followers and the DR story to
Lewis loyalists.


13. (C) Comment: Navarro's efforts to suffocate Herrera's
campaign in the crib have failed. Herrera -- despite only
minimal media exposure and advertising, no campaign
structure, and limited financial resources -- easily outpaces
Navarro in the polls. Navarro's throw-everything-at-her
strategy may come at a high cost as negative reaction to his
tactics grows within the PRD ranks. A tenacious and
combative politician, Navarro is unlikely to throw the towel
in any time soon. As for Herrera, she can not rest on her
laurels, but must put in place the machinery to sustain her
lead and build upon it. She faces an uphill battle
convincing professionals and elites to place their trust in
her or at least to not actively oppose her. Appointment of
Hugo Torrijos, whose name persistently crops up in public and
in private in connection with shady deals and corrupt
activities, is not a good sign of the kinds of people that
Herrera may wish to empower. Though he wrongly predicted on
April 16 that Herrera would name Mitchell Doens her campaign
advisor, PRD CEN Fifth Sub-Secretary Rodrigo "Rod" Diaz may
be correct that alleged corrupt "deal facilitator" and close
Torrijos confidant Pille Gonzalez would serve as Herrera's
"enforcer" on her campaign.

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PRD CEN Newcomer Dishes
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14. (C) Possibly presaging a growing bandwagon effect, newly
elected PRD CEN Fifth Sub-Secretary Rodrigo "Rod" Diaz
asserted on April 16 that increasingly PRD leaders,
including himself, were supporting Herrera's presidential
run. Diaz asserted that Torrijos sought to maintain the
"third candidate option" (most likely Lewis) to maintain
leverage over Herrera and Navarro in an effort to keep the
PRD internal campaign civil. He also suggested that Torrijos
could "disqualify" Navarro by simply stepping aside for a
brief period giving Lewis presidential powers temporarily.
Under Panama's constitution, Diaz explained, Navarro, a
"first order relative" (a first cousin) of Lewis, would be
prohibited from seeking election for ten years. Finally,
Diaz asserted that Torrijos was prepared to act "decisively"
to quell any Navarro-Herrera bickering that got out of hand.


15. (C) "I'll be focusing on the PRD's youth activities,"
Diaz said. Panama City Councilman Carlos Perez-Herrera would
be the PRD Youth Secretary. "We're going to facilitate a
comprehensive youth outreach effort to develop platform
issues for the eventual presidential candidate." Also, Diaz
said he would be launching a "Vision of Omar" effort to
inculcate PRD youth in the ideology of the party's founder.
(Note: Diaz did not clarify how this effort would address
the Noriega period, other than to say that it was an
"aberration.") As part of this effort, Diaz said he
purchased the entire 18,000 photo collection of pictures
taken by a Mexican photographer of Omar Torrijos. "We'll use
these photos to try to re-introduce and explain the legacy of
Omar and what he means for PRD Youth."


16. (C) Finally, Diaz asserted that Torrijos would eventually
back Herrera, but not before ensuring that there would be
"continuity in the cabinet" to ensure that programs and
initiatives initiated by Torrijos would continue to be
carried out. For example, Diaz said that the USG should
expect to see names like Alejandro "Andy" Ferrer, who
recently resigned as Minister of Commerce and Industry,
return to an Herrera cabinet. Reviewing a list of names
Herrera has floated as cabinet prospects, Diaz dismissed them
all.


17. (C) Comment: Diaz, a close ally of Torrijos and Lewis,
is clearly moving to back Herrera. While the ideas and ploys
offered by Diaz strike the Panama Post as fanciful, they may
shed some light on Torrijos' Walter Mitty-esque daydreaming.
An indecisive leader who prefers to ponder and allow
political developments to evolve in his direction, it is
difficult to see Torrijos trying to force a third candidate
(indeed, the prospect has little credibility on the street)
or to be able to enforce a "continuity in the cabinet" pact
with Herrera. Herrera grows stronger by the day while
Torrijos enters the doldrums of his lame duck period.

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PMG Will Not Run for Re-election
--------------


18. (C) The consensus view of the Panama Post's interlocutors
over the past week to ten days was that National Assembly
President -- and U.S. fugitive under indictment in connection
with the 1992 murder of a U.S. serviceman -- Pedro Miguel
Gonzalez (PMG) would not/not run for re-election as the
legislature's president. Separately, three PRD CEN members
-- Diaz, Aleman, and National Assembly Deputy (and PMG's
predecessor) Elias Castillo -- all confirmed that CEN
members, including PMG, discussed PMG's re-election and
concurred that PMG should not/not run again. Panamenista
National Assembly Deputy Francisco "Pancho" Aleman,
Vallarino's campaign manager, stated that he believed that
PMG would not run again, but rather would focus on his
re-election for his National Assembly seat. Vallarino was
dismissive of the whole matter commenting that he "did not
care" if the U.S.-Panama Trade Promotion Agreement (TPA)
moved forward. "It's not good for Panama, so who cares if
Pedro Miguel runs or does not run for re-election," Vallarino
said. Varel-istas, Arrocha and "Popi" Varela said they
believed PMG would stay away from re-election, and Navarro's
aide Gonzalez said he believed PMG would not run.
Additionally Castillo told POLOFF that he would run for Mayor
of Panama in part to keep PMG out of that race.


19. (C) Comment: The Panama Post is heartened by the news
that PMG is not going to run for re-election, but we are not
prepared to place bets that PMG will not once again run for
and win the legislatures presidency. We will continue to
monitor.

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PRD Women's Leader Nervous About Herrera
--------------


20. (C) PRD member and the head of the inter-party Forum of
Women in Political Parties Irasema de Ahumada expressed her
"deep concern" to the Panama Post about what was going on in
the PRD and "what could happen in Panama." "I don't like
either one of our current candidates (Herrera or Navarro).
They are both the same type of politician: they talk a lot,
make a lot of promises, but have no substance," she
explained. "I support Navarro because he is my boss and I
would be fired if I didn't, but at least I know that he is
not getting money from Chavez. What is going to happen if
Balbina wins?" De Ahumada asserted that it was "widely known
at all levels in the party" that candidates who support
Herrera would receive money that originated with pro-Chavez
Panamanian Ambassador to Venezuela Ballesteros and that was
channeled through Hector Aleman. "Please pass on to the
Ambassador that many PRD members are concerned," De Ahumada
said. She added that most party members were not leftist or
anti-American.


21. (C) Turning to "consular commissions," De Ahumada stated
that now that former Minister of the Presidency Ubaldino Real
had left government, Rod Diaz was responsible for divvying up
the "consular commissions" that Panamanian Consul Generals
sent back to Panama City. (Note: Under Panamanian law and
regulation, Consul Generals are entitled to ten percent of
the consular fees collected by their missions. There is a
long tradition by Panamanian Presidents of requesting a cut
of this entitlement in exchange for having been named to
these lucrative positions.) Allegedly, Diaz writes checks
for PRD campaigns off an account at Banvivienda that is part
of the Grupo Mundial conglomerate of which Diaz is CEO.


22. (C) De Ahumada asserted that the Cuban Embassy was
playing a key role in facilitating communication between
members of the PRD's left-wing "Tendency (Tendencia)"
faction, who were not on speaking terms, and the Venezuelan
government for financial support. De Ahumada referred to
this policy as "triangulation." Allegedly, the Cubans were
capitalizing on their long-standing ties with various
"Tendency" PRD members. De Ahumada added that she had run
into a Cuban Embassy officer at the grocery story. She
stated that this Cuban official, believing De Ahumada to be
an Herrera supporter, said, "We have to support the (female)
comrade because she is the one who can break the ties to the
oligarchy.


23. (C) Comment: Rumors of Venezuelan money making its way
into Herrera's pockets have been rampant in recent weeks in
Panama City. As of yet, the Panama Post has no confirmable
reports. The most common rumor has been that Herrera ally
Hector Aleman enters into oil deals with Venezuelan
counterparts and then re-directs a portion of the profits to
Herrera. The new twist in the rumor is that the Panamanian
Ambassador in Caracas, a known Chavez sympathizer, is
channeling Venezuelan money to Herrera. Despite the absence
of proof, Panama's chattering class and elite are convinced
that a Venezuela-Herrera tie is a financial reality. For his
party, Hector Aleman asserted he was not receiving or passing
Venezuelan money, asking rhetorically, "They think I'm more
leftist than Chavez. How am I supposed to fight this rumor?
Balbina doesn't need Chavez's money; she's already leading
the polls." The Panama Post will continue to monitor this
issue.

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Financing one PRD National Assembly Deputy's Campaign
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24. (C) "I should be spending around USD 80,000 between now
and August to win for re-election in the PRD primary," PRD
National Assembly Deputy Miguel "Mickey" Aleman told the
Panama Post's correspondent on April 18. PRD CEN Member "Rod
Diaz gave me USD 10,000 already and promised me USD 20-30,000
more. My uncle is giving me another USD 20,000 and bought me
a sound van." Through the Social Investment Fund (FIS),a
pool of money controlled by the Ministry of the Presidency,
"Torrijos is giving me around USD 5,000 in T-shirts and
caps." Asked was it not illegal to redirect FIS monies for
partisan political purposes, Aleman said, "The bill will show
that they were for 'sports uniforms.' Don't think that I am
the only one getting this kind of help. Many others are too."
EATON