VZCZCXYZ0018
RR RUEHWEB

DE RUEHZP #0001 0081724
ZNY CCCCC ZZH
R 081719Z JAN 10
FM AMEMBASSY PANAMA
TO RUEHC/SECSTATE WASHDC 0288
INFO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHZP/AMEMBASSY PANAMA
RULSJGA/DEPT OF TRANSPORTATION WASHINGTON DC
RUMIESS/SOUTHCOM IESS MIAMI FL

C O N F I D E N T I A L PANAMA 000001

SENSITIVE
SIPDIS

E.O. 12958: DECL: 2020/01/08
TAGS: ECON PGOV EWWT EINV PM
SUBJECT: Senior GOP Officials Express Doubts About Contractor for
Panama Canal Locks

REF: 2009 PANAMA 0550

CLASSIFIED BY: Stephenson, Ambassador; REASON: 1.4(B), (D)

¶1. (C) Senior GOP Officials have expressed doubts to the Embassy
and to members of a visiting U.S. Congressional delegation about
the ability of the GUPC Consortium led by Spanish and Italian firms
Sacyr and Impregilo to carry out the work on the expansion of the
Panama Canal.

¶2. (C) At a December 29 lunch with the Ambassador, Vice
President/Foreign Minister Juan Carlos Varela expressed serious
concerns about GUPC, raising the topic by saying dramatically, "The
Canal expansion project is a disaster." He described the companies
that are leading the consortium as being in deep financial trouble
and expressed his dismay that the same companies that cannot do the
Canal expansion are now trying to win the bid for the Panama City
Metro project. "In two or three years," he continued, "it will be
obvious this was all a failure." (Note: VP Varela is sensitive to
possible failures with the Canal Expansion and Metro Projects,
because his aspiration to be elected President in 2014 is currently
highly dependent on a successful on-time completion of the
projects. End Note.)

¶3. (C) Varela again voiced his concerns on January 3 in a
conversation with DCM and visiting CODEL member U.S. Rep. Pedro
Pierluisi of Puerto Rico. Varela told Pierluisi that the
consortium was "very weak" and he had "real doubts" about their
ability to perform. Separately, Varela said to DCM, "You don't
mess around with something as important as the Canal. When one of
the bidders makes a bid that is a billion dollars below the next
competitor, then something is seriously wrong. Of course I hope
for the best, but I'm afraid that Alberto [Canal administrator
Alberto Aleman] has made a big mistake." See reftel.

¶4. (C) President Martinelli expressed similar doubts in a
conversation with Ambassador on the margins of a GOP presentation
to the CODEL on January 4. When the Ambassador asked how he
thought the Canal expansion project was going, Martinelli grimaced
and indicated he was a bit worried. He said that he feared that
Canal Administrator Aleman might have tipped the bid toward the
consortium that included CUSA, which is run by his cousin Rogelio
Aleman.

¶5. (C) Comment: While we at the embassy have heard rumblings of
tussles within the winning consortium as the lead contractor tries
to squeeze subcontractors to bring costs down to the low winning
bid, we have not thought the expansion project to be in any real
trouble. Certainly Canal Administrator Aleman remains very upbeat
about the project, both in public and in private, and we have
always regarded him as a highly capable manager with unimpeachable
integrity. Given that the Vice President is now raising his
concerns with visiting Codels, however, we though it best to let
Washington know that there are concerns and there may possibly be
real trouble. Post provided relentless advocacy for the Bechtel
bid on the Canal expansion and understands through our continuing
close contacts with Bechtel that they, with their reputation for
coming in to clean up messes, are keeping a close eye on how the
project is advancing (or not). End comment.
STEPHENSON