Viewing cable 04PANAMA2694

04PANAMA26942004-11-02 16:50:00 2011-08-30 01:44:00 CONFIDENTIAL//NOFORN Embassy Panama
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021650Z Nov 04
C O N F I D E N T I A L SECTION 01 OF 03 PANAMA 002694 
E.O. 12958: DECL: 10/21/2014 
Classified By: DCM Christopher J. McMullen for Reasons 1.4 (b) & (d) 

¶1.  (C) The strong push to reform the Arnulfista Party (PA) 
after its May 2004 electoral defeat (see reftel) raises 
questions about why it occurred, who can repair the damage, 
what are the PA's long-term prospects, and what it all means 
for the USG.  Most observers blame Mireya Moscoso and her 
close associates for her failed leadership of the party. 
Emerging PA leaders include erstwhile Moscoso collaborators 
who are riding the fence as well as vehement anti-Moscoso 
elements who will accept nothing less than her immediate 
resignation from the PA presidency.  The PA's ability to 
field a successful 2009 presidential candidate and regain 
lost ground in the Legislative Assembly hangs in the balance. 
 The future prospects of Panamanian democracy also may hang 
in the balance, as the Arnulfistas are the only party 
currently capable of mustering enough strength to effectively 
oppose President Torrijos' stronger-than-ever Democratic 
Revolutionary Party (PRD).  Alternatively, if the Arnulfistas 
fail, the PRD could become a ruling-party dynasty reminiscent 
of Mexico's PRI.  Although it is too early to make such a 
prediction, Panamanian and U.S. interests will be better 
served by a viable opposition that can check any excesses of 
the governing party. 

¶2.  (SBU) The Arnulfista Party (PA), officially recognized by 
the Electoral Tribunal in October 1991, builds on the 
political and ideological legacy of its namesake, 
thrice-deposed President Arnulfo Arias Madrid.  Arias's widow 
is Mireya Moscoso, President of the Arnulfista Party (until 
January 2006), who accompanied Arias into exile in 1968 and 
learned politics from him.  At its inception, the PA had 
strong pull with anti-PRD voters, creating the potential for 
new coalitions that would easily have accounted for more than 
half of the electorate.  Prompted by recent memories of 
Panama's 21-year dictatorship, many Panamanians rejected what 
had been the political vehicle of Omar Torrijos and Manuel 
Noriega.  Arnulfo Arias himself was a powerful symbol. 
Deposed by the October 11, 1968 coup that initiated the 
dictatorship and "robbed" by an electoral fraud in his 1984 
bid for the Presidency, for decades he remained Panama's most 
popular politician even during the dozen odd years he spent 
in U.S. exile.  At its creation, the PA attempted to reunite 
the members of its precursor, the populist Panamenista Party, 
which had lost much of its impetus due to dictatorship-era 
¶3.  (C) Rifts within the Arnulfista Party revolve around its 
direction under Mireya Moscoso's leadership (and whether it 
has deviated from its so-called ideological roots).  Frequent 
complaints include heavy-handed top-down management, 
undemocratic selection of party officials and candidates, and 
the corrupt image of the party's top leaders.  During the 
2004 campaign, Moscoso went as far as to claim legal 
ownership of Arias's image to inhibit former President and 
Arnulfista Guillermo Endara (a friend and confidant of 
Arnulfo Arias) from using photos and films of him with Arias 
to win traditional PA votes.  Endara, together with Moscoso 
critics within the PA, wrested credibility (and many votes) 
from the party and its 2004 presidential candidate, Jose 
Miguel Aleman, who was unable to distance himself from 
¶4.  (SBU) The PA, even counting its allies from the 2004 
election (MOLIRENA and PLN), is at statistical disadvantage 
compared to President Torrijos' Democratic Revolutionary 
Party (PRD).  As of 09/30/2004, a snapshot of membership in 
Panama's seven legally constituted parties (about half of all 
registered voters) is: 
Democratic Revolutionary Party (PRD)            428,575 
Arnulfista Party (PA)                           175,835 
Natl. Liberal Republican Movement (MOLIRENA)     99,029 
National Liberal Party (PLN)                     75,373 
Solidarity Party (PS)                            70,710 
Democratic Change Party (CD)                     54,966 
Popular Party (PP)                               49,735 
--------------------------------------------- ---------- 
TOTAL                                           954,223 
Between January 2004 (the peak of the campaign) and September 
2004 (Torrijos' inauguration), Arnulfista Party membership 
dropped 9%, as the party lost over 17,000 members (many of 
them defecting to ex-PA leader Endara).  (Only four thousand 
left the PRD in the same period.) 

¶5.  (SBU)  Several emerging leaders have proposed fresh ideas 
to counteract the ill effects of the PA's lost credibility 
and waning membership.  All of them have previous campaign 
experience.  All but one have previously worked in the public 
sector.  One sits on the PA Board of Directors that has been 
so harshly criticized.  Another was expelled from the PA in 
1999, but maintains family connections on the inside. 

¶6.  (C) The well-regarded Varela brothers are working 
together to reform the Arnulfista Party from inside and out. 
The Arnulfista Party expelled Juan Carlos for supporting the 
1999 presidential campaign of Moscoso's competitor, banker 
Alberto Vallarino. (NOTE: PA bylaws bar someone who has been 
expelled from the party from returning, but Varela would be 
free to return if the party changed its name as proposed. 
(See Reftel.)  END NOTE.)  Juan Carlos's brother Jose Luis 
("Popi") was re-elected to a second term in the Legislative 
Assembly with the Arnulfista Party in May 2004.  Juan Carlos 
and Jose Luis are two of four sons of Luis Jose Varela Sr. 
The family owns one of Panama's biggest liquor distilleries 
and distributors, Varela Hermanos, S.A.  Juan Carlos manages 
liquor distribution while a third brother, Luis Jose Jr., 
manages production. 

¶7.  (C) Marco (DOB: 28 FEB 1961) and Francisco (DOB: 21 JAN 
1954) Ameglio are dynamic leaders who have consistently 
worked in unison.  Francisco has now willingly taken a back 
seat to Marco, a legislator during fifteen years (1989-2004) 
who was President of the Legislative Assembly at age 30 
(1991-92) and ran for Mayor of Panama City in May 2004.  A 
testament to his popularity with urban voters, Electoral 
Tribunal statistics show that Marco Ameglio won more votes in 
his mayoral bid from Panama City voters (100,322) than Aleman 
won in his presidential bid in the entire province of Panama 
(83,680).  Marco's current aspiration appears to be securing 
the 2009 PA nomination for president and beginning to 
campaign ASAP.  Marco, who was a pre-candidate for the 
party's 2004 presidential nomination, has not forgiven 
Moscoso for orchestrating his embarrassing loss during the 
June 2003 PA nominating convention from which Jose Miguel 
Aleman emerged victorious. 

¶8.  (C) Jose Isabel Blandon Figueroa (DOB: 07 JUL 1968), a 
legislator since 1999, is often considered the unofficial 
spokesman for the Arnulfista Party and continually appears in 
the media.  He became famous when dictator Manuel Noriega had 
him arrested and held hostage in 1989 after his father (Jose 
Isabel Blandon Sr.) testified against Noriega in the United 
States.  A lawyer by profession, Blandon's legislative 
initiatives tend to be progressive, and well seated in 
existing constitutional and legal frameworks.  Like his 
father, Blandon is a clever strategist who ably manipulates 
the political atmosphere to achieve his desired results.  PA 
opponents view most Blandon initiatives with suspicion, 
looking for the hidden agenda.  For instance, Blandon 
challenged President Torrijos to live up to his "zero 
corruption" campaign pledge when presenting a laudable 
package of reforms based on model legislation posted on 
Transparency International's website.  Among other things, 
the proposed reforms would de-criminalize libel, protect 
whistleblowers, and codify conflicts of interests, but most 
have not prospered, offering Blandon ammunition to attack the 
PRD.  (See Septel.) 


¶9. (C) Even during Carlos Raul Piad's time as campaign 
manager for Jose Miguel Aleman in the May 2004 election, his 
frustration with President Moscoso's "caudillista" ways 
became evident.  Piad, forced by his position on the PA Board 
to remain neutral, recently told us, "We need to make changes 
soon, but the Varelas and the Ameglios are being too 
aggressive and that could end up hurting us."  As Secretary 
General of the Arnulfista Party (the same position that 
President Torrijos holds in the PRD) Piad should have 
controlled the PA's operations, but Moscoso countermanded him 
on numerous occasions, undermining credibility with the party 
masses that he had cultivated since her 1994 electoral loss. 
Carlos Raul Piad saw firsthand how Aleman's inability to 
distance himself from Moscoso doomed his campaign to failure. 
 Also, Piad would have been aware of Moscoso's rumored 
betrayal of Aleman by channeling away campaign funds she had 
promised to him to other candidates like Legislator Pacifico 
Escalona, the brother of her paramour.  Piad's management and 
leadership credentials are beyond question, given his 1987 
American University finance degree, twelve years managing the 
family business, and four years managing the state-owned Caja 
de Ahorros savings bank.  His ability to maintain a 
leadership position within the PA may well be a determining 
factor in its success in the 2009 general election. 
--------------------------------------------- -------------- 

¶10.  (C) The Arnulfista Party is in no danger of disappearing 
as a political force, but internal bickering is distracting 
it from strengthening the party and recruiting new members. 
(Ironically, many observers point out that the PA probably 
has a more capable cadre of young leaders than the PRD, which 
relies on a highly disciplined but mediocre cadre of 
mid-level leaders.)  No one can predict exactly what will 
come of the Arnulfista Party, but Panama's recent electoral 
history yields a critical lesson.  Panama's 1999 and 2004 
presidential winners were its 1994 and 1999 presidential 
losers, respectively.  In both cases, they began a new 
campaign immediately after losing the first.  So far, none of 
the losing candidates  (Guillermo Endara, Ricardo Martinelli, 
or Jose Miguel Aleman) looks capable of winning in 2009. 
Also, the PA's prospects will improve once Mireya Moscoso is 
no longer party president. 
¶11.  (C) Until the Martin Torrijos administration, USG 
relations have tended to be more amicable with non-PRD 
governments.  Unlike the PRD administration of Ernesto Perez 
Balladares (1994-99), which exploited latent anti-Americanism 
left over from Operation Just Cause and a continued U.S. 
military presence in Panama to its political advantage, the 
Torrijos administration has taken a decidedly pro-USG 
posture, offering to expand and improve bilateral relations. 
Barring a crippling outcome from an expected PRD internal 
battle between pro-Martin Torrijos forces and marginalized 
old guard elements (a fight that Torrijos and those close to 
him hope to put off until internal 2006 Board elections) the 
PRD's size advantage and recent electoral performance may 
well propel it to another win in 2009.  Given the centripetal 
tendencies now affecting the PRD's opponents, the Arnulfistas 
face an uphill fight to form an effective anti-PRD coalition. 
 But forming such a coalition is their only chance for a 
strong 2009 showing.  For the USG, building on the commercial 
and cultural ties between the U.S. and Panama toward a more 
mature bilateral relationship across party lines is the best 
way to ensure continued cooperation with whoever emerges 
victorious.  In this sense, we share the same interest of 
Panamanians who want to maintain a truly competitive 
political process in which no single party dominates the