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. ﻿" (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