CODEL HOYER EXPRESSES SUPPORT FOR PANAMA FTA;

UNCLAS PANAMA 000341 SENSITIVE SIPDIS WHSC PLEASE PASS TO USTR E.O. 12958: N/A TAGS: ECON EFTA ELAB ETRD OREP OVIP PGOV PM PREL SNAR SUBJECT: CODEL HOYER EXPRESSES SUPPORT FOR PANAMA FTA; LAUDS CLOSE RELATIONSHIP -------------- SUMMARY -------------- ¶1. (SBU) On April 5, the members of Codel Hoyer met with President Martin Torrijos and selected members of his government to discuss continuation of what Majority Leader Hoyer described as an &extraordinarily close8 bilateral relationship, to thank President Torrijos for the cooperation that enhanced this relationship and shepherded accelerated economic growth and better governance before he leaves office on July 1, and to chart out next steps for passage of the U.S.- Panama FTA in Congress. The no coat-no tie, Palm Sunday meeting at the President's Quarry Heights guest house, as opposed to the more formal setting of the Palacio de las Garzas, appeared to reflect the warm relationship enjoyed by this government and members of the delegation, a comfortable majority of whom voiced support for the FTA. &I want to get this done,8 emphasized the Majority Leader. End Summary. ¶2. (SBU) U.S participants included Ambassador Stephenson, Majority Leader Steny Hoyer (D-MD),Rep. Roy Blunt (R-MO), Rep. Lucille Roybal-Allard (D-CA),Rep. Gregory Meeks (D-NY), Rep. Elijah Cummings (D-MD),Rep. Adrian Smith (R-NE),Rep. Gerry Connolly (D-VA),Rep. Debbie Wasserman-Schultz (D-FL), Rep. Aaron Schock (R-lL),and Rep. Norman Dicks (D-WA). Panamanian participants included President Martin Torrijos, First Vice President and Foreign Minister Samuel Lewis Navarro, Minister of Commerce and Industries Gisela de Porras, and Panama's Ambassador to the United States, Frederick Humbert. The Palm Sunday, no coat-no tie, meeting took place at the President's rustically elegant Quarry Heights guest house, the former residence of the Southcom Commander. -------------- NEXT STEPS ON FTA -------------- ¶3. (SBU) The fate of U.S.-Panama Free Trade Agreement, signed in June 2007, emerged as President Torrijos emphasized the need to work together to arrange the timing and sequencing of his push for labor and tax haven reforms desired by members of Congress. He and First Vice President Lewis explained that in order to successfully pass necessary measures in the National Assembly, they first needed an announcement that the FTA would be submitted to Congress. However, &time is short,8 stressed Torrijos, who will leave office on June 30. �A;(Note: his pro-labor Democratic Revolutionary Party also controls the National Assembly; but the May 3 election places every national and local elective seat in contention.) Both Torrijos and Lewis noted that legislation would not pass if perceived by the Panamanian public as an &imposition8 by the United States. ¶4. (SBU) Next, Lewis detailed the specific choreography: an Obama Administration announcement that the FTA would be submitted to Congress followed by legislation on labor * including changing the minimum number of persons necessary to form a union from 40 to 20* and immobilization of bearer shares, the anonymous instruments that facilitate tax evasion and money laundering. (Comment: Immobilization (regulation) of the shares would be a key advance in Panama,s financial transparency; without this measure, a Tax Information Exchange Agreement would have limited effectiveness, as no mechanism would exist to determine the beneficial owners of anonymous bearer shares.) Lewis predicted that lame-duck National Assembly action could be completed by the end of May. In response, Majority Leader (ML) Hoyer noted that a National Assembly vote on the labor and bearer shares issues would be &critical8 after an announcement by President Obama. &I want to get this done,8 the ML continued. However, he cautioned that a vote in the U.S. Congress might not be possible until after President Torrijos leaves office. -------------- BUILDING ON AN EXCELLENT RELATIONSHIP -------------- ¶5. (SBU) Participants spent the larger part of the meeting praising and requesting suggestions for improving the overall bilateral relationship. Majority Leader Hoyer struck this theme in his opening remarks, emphasizing that the United States and Panama enjoy an &extraordinarily close relationship,8 and that &while the FTA is an important part of our partnership, our partnership goes beyond the FTA.8 President Torrijos echoed this sentiment, expressing appreciation for Rep Dicks, remark that the transfer of the Canal was &the right thing to do.8 He also noted that strong relationship between U.S. and Panamanian infrastructure and the breadth of the bilateral relationship that included efforts such as English for Life, a Panamanian program to increase English education in Panama,s primary schools. Rep. Blunt thanked Torrijos for his commitment to capitalism and democracy, his fight against corruption, and his critical role in fighting against drug trafficking. ¶6. (SBU) Turning to the theme of Panama,s brisk economic growth, Rep. Blunt stated that, &I don't know if any other country in the world has changed as much as yours in the past five years, and you don't get credit.8 Hoyer, commenting on the multitude of building cranes, designated Panama as &Dubai West.8 Rep. Dicks noted Seattle-based Stevedoring Services of America's concession to run Panama,s largest single port, Manzanillo International Terminal (MIT),a half- billion dollar investment. He also expressed gratitude at Copa Airlines, recent purchase of 13 Boeing 737 aircraft. Perhaps the most emblematic remark was made by Rep. Schock who noted that there are more Caterpillar D-11 bulldozers in Panama than in any other country in the world. Schock represents Caterpillar's headquarters in Peoria. (Note: Caterpillar recently broke ground on a $30 million training center in the former Howard AB and its equipment is widely used on Canal and infrastructure projects.) -------------- SHARED SECURITY CONCERNS -------------- ¶7. (SBU) In response to questions by the Representatives, President Torrijos and his ministers discussed security and law enforcement concerns. He noted the capture of 400 kilos of cocaine the day before, stating, &the more drugs we stop, the less that gets into our country.8 VP Lewis added that &today we are not just transit, we are victims.8 He elaborated that drug traffickers now pay distributors with drugs, rather than cash, and that this practice has caused local crime rates to increase. Rep. Cummings expressed his concern about the devastating impact of drugs on cities such as Baltimore and praised Panama,s cooperation. Torrijos, responding to Rep. Cummings' query on what other assistance would be helpful, touted Panama,s high amount of drug seizures and efforts at regional cooperation, but lamented 35 recent drug-related assassinations in Panama. He also asked for more intelligence sharing, a few radar installations, and more Coast Guard presence. ¶8. (SBU) Rep. Roybal-Allard also discussed the value of the Coast Guard mission, noting that she is on the appropriations subcommittee the funds that organization. She focused her remarks on the value of youth programs to prevent gang activities and noted a strong correlation between funding alternative venues for vulnerable youth and a decrease in gang presence. President Torrijos embraced this topic, listing several youth initiatives of his government, including 180,000 scholarships, $90 million spent on sports facilities, and the purchase of 40,000 laptops for schools. Ambassador Stephenson stressed robust USG cooperation with Panama in this area by leveraging after school programs of organization such as the Kiwanas, Rotarians, and Lions Clubs. ¶9. (SBU) Torrijos commented on the increasing sophistication of gangs, although noting that they are less a problem in Panama than in the rest of Central America. The President linked his crackdown on pirated CDs as a way to cut off gang revenues, and ML Hoyer noted the necessity of &following the money.8 -------------- PANAMA - "A REAL ECONOMY" -------------- ¶10. (SBU) Following the money lead to renewed conversation on tax havens. Torrijos explained, "We are a services economy, but a real economy. ... There is not a building here with 120 companies. ... Banks here lend money for big projects, and finance trade through the Colon Free Zone distribution center.8 Torrijos also stated that Panama needed a &level playing field on this issue8 and a transition period. Lewis stated that the GOP was looking at ways to regulate bearer shares, and Minister of Commerce and Industries Porras added that her government aimed to ensure that lawyers know the identity of the beneficial owners of the shares. ¶11. (SBU) Other topics included Panama,s implementation of an accusatory system of justice, raised by ML Hoyer. President Torrijos replied that this change may take longer than expected to implement. Rep. Wasserman-Schultz expressed gratitude for Panama,s abstention on two anti- Israel resolutions in the UN, but also requested that Panama abstain on a third resolution on Palestinian rights. VP Lewis noted that Panama examines all resolutions on a case-by-case basis and would like to see resolutions on this topic combined or eliminated, rather than simply rolling over every year. ¶12. (SBU) The visit of Codel Hoyer also included a tour of the Miraflores Locks at the Panama Canal, a briefing on the $5.25 billion Canal expansion project by Administrator Alberto Aleman, and a dinner hosted by President Torrijos that included the majority of Torrijo,s cabinet. During toasts at dinner, Rep. Blunt mentioned that although he and his friend of many years, ML Hoyer, rarely voted the same way on most issues, they both would vote for passage of the U.S.-Panama FTA. STEPHENSON