PANAMA: POLITICAL ANALYST WARNS OF ROUGH

S E C R E T PANAMA 000330

NOFORN
SIPDIS

E.O. 12958: DNG: CO 04/21/2019
TAGS: ECON PGOV PM PREL
SUBJECT: PANAMA: POLITICAL ANALYST WARNS OF ROUGH
POST-ELECTION PERIOD

Classified By: Classified by: Ambassador Barbara J. Stephenson for reas
ons 1.4(b) and (d).

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Summary
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1. (S//NF) Ruling Revolutionary Democratic Party (PRD)
leaders expect Alliance for Change presidential candidate
Ricardo Martinelli to win the May 3 presidential election,
pro-PRD political commentator Jose Blandon, Sr. told POLOFFs
on April 20.

--The Torrijos administration's own internal PRD polls showed
that Martinelli might win by as much as fifteen points--an
unprecedented margin--over the PRD presidential candidate
Balbina Herrera and secure more than fifty percent of the
presidential vote for the first time in Panama, Blandon
explained.
--Furthermore, Blandon said that polling at the circuit and
precinct level indicated that the PRD would lose control of
the National Assembly. Some PRD National Assembly Deputies
such as former National Assembly President Pedro Miguel
Gonzalez and Majority Leader Leandro Avila who were believed
to have had safe seats would be defeated; "They have tough
races that are too close to call and the momentum seems to be
with the opposition," Blandon explained.
--Blandon also commented that if Martinelli won and if his
alliance took control of the National Assembly, President
Martin Torrijos would face an extraordinarily difficult
political situation both inside the PRD and the National
Assembly for the duration of the transition period that would
culminate with the July 1 inauguration of Martinelli.
--A Martinelli victory would also present major challenges
for Martinelli's alliance partner, the Panamenista Party, as
this party that was accustomed to top billing grappled with
its second string status.

A Martinelli victory has the potential to be a seismic event
that will realign the tectonic plates that compose Panama's
political geology. Panama faces the prospects on July 1 of a
Martinelli force that is striving to find its sea legs while
Panama's major political parties- the PRD and the Panamenista
Party- struggle to re-orient themselves to the new political
reality. The Torrijos Administration's final weeks in office
may present the best opportunity to grapple with tough
bilateral issues, most notably the U.S.-Panama Free Trade
Agreement (FTA),as it may be up to a year before a
Martinelli Administration would even have the capacity to do
so itself. End summary.


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PRD Expects Opposition Victory
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2. (S//NF) "Martinelli will win the May 3 presidential
election, and possibly by as much as fifteen points over
Balbina Herrera, which would be a historic accomplishment for
Panamanian politics," pro-PRD political commentator Jose
Blandon, Sr. told political officers during lunch on April

20. Blandon added that for the first time in Panamanian
history, Panama might elect its President with more than
fifty percent of the vote. (Note: In Panama, the candidate
who receives the most votes wins an election; there are no
provisions for subsequent rounds of voting in the quest for
fifty percent plus one majorities.) He commented that
internal PRD polls foreshadowed a bleak picture for Panama's
largest party as the PRD expected to lose the presidency and
would likely lose control of the National Assembly. He
predicted that the "pendular effect" in Panama--in which the
PRD and the opposition (read: Panamenista) party alternated
control of the executive every five years--would hold true
this year.


3. (S//NF) Blandon explained that in-fighting within the
ruling PRD had prompted several internal divisions and
factions that had complicated the PRD's ability to advance a
unified campaign to support PRD presidential candidate
Balbina Herrera. Furthermore, Blandon asserted that these
factional and internal divisions affected National Assembly
races and even local contests. Positioning themselves for
the most advantageous position in the party after the May 3
general elections, PRD VP candidate Juan Carlos Navarro had,
for example, allied with former President Ernesto "El Toro"

Perez Balladares, standard bearer of the party's right wing,
and was attempting to draw centrist party members toward him
and away from President Torrijos and First VP and FM (and
Navarro's cousin) Samuel Lewis. President Torrijos and his
centrist followers, particuarly Lewis, constituted the PRD's
moderate center. (Note: Later the same day in a radio
interview in a response to a question about his post-July 1
plans, Lewis said he planned to return to his businesses and
to lay the ground work for a political future, remarks widely
interpreted as the first sign that he plans to run for
president in 2014). Even the left-leaning Tendency
(Tendencia) faction of the PRD had been split, Blandon said,
between followers of National Assembly Deputy Hector Aleman
and of Herrera.


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Martinelli's Uncertainty as a Leader
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4. (S//NF) "Martinelli's greatest strengths are his
management skills. He knows how to run a smart campaign, but
as President he may make hasty decisions," Blandon commented,
contrasting Martinelli's perceived hands-on, man of action
style with Torrijos' more pensive and deliberate style.
Unlike Torrijos who vacillated while trying to make up his
mind, Blandon said, Martinelli knew how to act decisively but
lacked political experience. Blandon cautioned that
Martinelli's decisionmaking style might hurt him in the end,
especially if he made decisions too quickly about critical
issues such as strengthening Panama's economy during the
global economic downturn. Blandon said that Martinelli's
campaign manager, Jimmy Papadimitriu, might help him to step
back and analyze situations before making rash decisions.
"Jimmy is Martinelli's most influential advisor and the only
one who can talk sense to him and get him to slow down,"
Blandon added. Nonetheless, Panama's next President would
need to address several looming problems such as public
transportation, inadequate healthcare, and a poor education
system. Blandon commented that insecurity was a problem in
Panama, but it has become overemphasized by the local press.


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Difficult Transition Period
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5. (S//NF) Blandon commented that if Martinelli wins the
presidency on May 3, Torrijos would come under immediate
pressure from within the PRD and would face a challenging
transition period. Nonetheless, Blandon said that Martinelli
and Torrijos had an open line of communication, a channel
that would be critical for managing a way ahead through
Panama's two-month transition period from May 3 to July 1.
If the PRD lost both the presidency and a majority in the
National Assembly, Torrijos' days as Secretary General of the
party would be numbered. "He would not survive as Secretary
General of the PRD. Balbina would not last as the party's
President. Basically, election night could be the 'night of
the long knives' in the PRD," according to Blandon.


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Disarray and Challenges in Martinelli's Camp
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6. (S//NF) "A strong Martinelli victory will be like a shock
wave across Panama's political structure," Blandon posited.
While it would touch off an internal power struggle in the
PRD, it was also having an impact on the Panamenista Party,
Panama's largest opposition party. Life-long Panamenista
Party member former President Guillermo Endara had already
bolted the party to establish his own Moral Vanguard of the
Nation (VMP) party, taking with him many old-line
Panamenistas. Former President Mireya Moscoso and her camp
followers had not only been tangling with current Panamenista
Party President and Martinelli VP running mate Juan Carlos
Varela over his efforts to "reform" the party following the
Moscoso years, but were having difficulty fathoming how it
came to be that the "glorious" Panamenista Party accepted
second billing in the Alliance for Change grand opposition
alliance. Finally, Varela and Panamenista Party primary
challenger Alberto Vallarino had only just smoothed over
their differences; "They remain competitors too though."
(Note: Varela is rumored to be penciled in to be FM while

Vallarino may be slotted for Minister of Economy and Finance.)


7. (S//NF) Though Martinelli was shaking the foundations of
Panama's political order, Blandon explained that Martinelli
lacked the personnel and political capability to put in place
a new political structure. The Martinelli administration
would be challenged to manage the competing interests of his
opposition alliance. "It will be at least a year before the
Martinelli Administration is fully operational," Blandon
assessed. "I'm worried about governability as Panama
transitions from one political order to an undefined new
order."

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Navarro's Political Advisor
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8. (S//NF) "The evening of May 3 will be a very interesting
night in the PRD," PRD VP candidate Juan Carlos Navarro's
political advisor Ivan Gonzalez told POLCOUNS on April 22.
While asserting that Herrera still had a chance at winning on
May 3 - "Our tracking polls show us closing the gap. If we
are within 5-6 points by next Wednesday, we can be
competitive," - Gonzalez acknowledged that a PRD victory was
increasingly becoming a long-shot. He also acknowledged that
the PRD would likely lose control of the National Assembly.
Gonzalez confirmed that Navarro was allying himself with
former President Ernesto "El Toro" Perez Balladares and
trying to pull moderates away from Torrijos and Lewis. He
predicted that the Tendency (Tendencia) faction would split
between Aleman and Herrera.


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Comment
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9. (S//NF) Martinelli's likely victory on May 3 is shaping up
to be a seismic event that could cause the tectonic plates of
Panamanian politics to shift dramatically. This seismic
event will set off fissures and after shocks in the two
plates that have dominated Panamanian politics for the past
forty or more years, the PRD and the Panamenista Party. PRD
insiders are clearly preparing for an electoral drubbing and
key party movers and shakers are maneuvering for the best
position possible for the post-May 3 world. While generally
perceived as a pro-PRD analyst, Blandon's assessment of the
impact of a Martinelli victory on Martinelli's alliance
partner is on the mark. Going forward, however, the Torrijos
Administration, until its final day in office on June 30,
will be the most viable partner for advancing key U.S.
interests, such as the bilateral Free Trade Agreement (FTA).
The new era of Panamanian politics that will open on July 1
will be characterized by a new Martinelli force striving to
find its sea legs while two powerful forces with deep roots
in Panamanian politics -- the PRD and the Panamenista Party
-- will be looking for their bearings too.
STEPHENSON