202. Memorandum of Conversation1
SUBJECT
- Panama
PARTICIPANTS
- Gabriel Lewis, Ambassador-at-Large, Panama
- Robert Pastor, NSC Staff Member
Lewis gave me a detailed briefing on recent political and economic developments in Panama. He is convinced that Royo is not only getting used to being President, but also is determined to build an independent political base and take charge of the Panamanian Government. Secondly, Royo apparently realizes the difficult economic state Panama [Page 491] is currently in, and intends to throw his full weight behind the business community, abandoning whatever leftist supporters he once had. Examples of this include various recommendations which Royo has accepted from Lewis on establishing business advisory committees. Royo has also agreed to appoint a number of people which Lewis has recommended. Thirdly, Royo is determined to appoint the best people to high governmental positions even when that means the firing of Torrijos’ relatives. For example, Royo has fired Hugo Torrijos as Director of the Casinos, and has appointed Sosa to clean up the operation there. He has also refused to appoint Torrijos’ brother to be Ambassador to Spain and instead will be sending Jaime Ingram, Head of the Cultural Department in Panama and a famous pianist. Torrijos has apparently acquiesced in all of these actions.
Lewis has become very close to Royo, and has been asked to advise him on almost a daily basis. He said that he would not have accepted this position, which he does without remuneration, unless he was convinced that Royo could be a good President. (Comment: A more accurate description, in my opinion, is that Lewis would not have accepted the position unless he could have a lot of influence on Royo’s actions, which he apparently has had.)
Lewis has come to the U.S. this time for three reasons. First, he has come to describe what Royo stands for and what he intends to do. He has already spoken to Hamilton Jordan and Frank Moore. Secondly, he wanted to explore the possibilities of a State visit by Royo. Thirdly, he wanted to ask Hamilton, who knows the Saudis as well as he knows the Panamanians, to recommend to them that they invest their money in Panama’s international banks. He believes that Panama’s international requirements for investment are enormous, and that Saudi money will be essential.
I was very frank with Lewis. I told him that he has got a long way to go before the idea of a Royo State visit is even conceivable to us. I said that at this time, Panama is identified with the Sandinistas, Royo is seen as a puppet of Torrijos and a leftist, and the primary U.S.-Panamanian issue on our agenda—implementing legislation—is in jeopardy because of these two points. I told him that Royo needs to establish his credentials as someone who is pro-business, is in charge, and has a clear and fiscally sound economic policy. Furthermore, Royo needs to show the world that the Panamanians are not consorting with the Sandinistas. Until these points are clearly demonstrated to the American people, it would be difficult for the U.S. Government to consider encouraging the Saudis to put their money in Panama, and it would be inconceivable to consider a State visit. Moreover, I suggested that he discourage Royo from thinking about quick-fix, international cures to their internal economic problems. The real answers must come from internal policies by Panama.
[Page 492]After some give-and-take, we talked about a three-step process. First, the Panamanians consider a high-level trip to Saudi Arabia for the principal purpose of explaining to the Saudis where Panama is on the map, as well as the fact that Panama is a banking center. Secondly, Royo needs to do a number of things in Panama which show the new direction he is heading, and then he can demonstrate his new image in the U.S. by a private visit to New York and Washington to meet with the U.S. business community. Finally, if these conditions were met, I told him that we would consider endorsing Panama’s request for Saudi investment. As regards a State visit, we would consider it at that time. I was in short very noncommittal.
Lewis will now seek an invitation from the Saudi Government for a high-level delegation to visit there.
- Source: Carter Library, National Security Affairs, Brzezinski Material, Brzezinski Office File, Box 38, Country Chron., Panama, 7–12/78. Confidential. The meeting took place in Room 392 of the Old Executive Office Building. Pastor forwarded this memorandum to Brzezinski and Aaron under a November 2 covering memorandum. Brzezinski placed a checkmark and wrote “good” on the covering memorandum. (Ibid.)↩