Rioting Shakes Hold of Panama Military Chief

After four years as Panama’s strongman, Gen. Manuel A. Noriega is being seriously challenged by popular unrest over alleged corruption, vote fraud and political murder.

The worst rioting since the military seized power in 1968 has forced him to suspend civil liberties, censor the press and deploy combat troops to help the police make hundreds of arrests.

A six-day national strike withered last week under the crackdown, but not before an unlikely spectrum of Panamanians--business executives, white-collar professionals, Roman Catholic bishops and many of the poor--had rallied behind a National Civic Crusade against military rule.

Defense Forces’ Loyalty

So far, the protests have failed to crack the outward loyalty of the Panama Defense Forces’ 20,000 men to their commander-in-chief and only general. The opposition is largely spontaneous and politically splintered. But criticism from the Reagan Administration has made the civilian government that Noriega controls seem even more isolated and uncertain of its course.

Bankers and government officials said last week that the disorders have weakened Panama’s ability to manage its $5-billion foreign debt, making Noriega more vulnerable to U.S. pressure to withdraw from politics.

The rioting erupted after Col. Roberto Diaz Herrera, ousted as chief of staff in a power struggle, said that he and Noriega had stolen the 1984 election from the opposition candidate. He also accused the general of murdering both the previous strongman, Gen. Omar Torrijos, and Hugo Spadafora, a political enemy.

Noriega dismissed Diaz’s charges as delusions and vowed to stay in command for at least five more years.

Simmering Resentment

Diaz’s allegations uncorked simmering resentment over military control of the country and its economy under a leadership considered to be among the most corrupt in Latin America.

For days, burning roadblocks and bashed cars littered the capital, from its gleaming international banking district to its crowded slums. Pineapples, intended to symbolize the general’s pocked complexion, were hung up around the city with knives stabbed into them. At least two protesters were killed and scores were wounded by police gunfire.

The protests faded, however, leaving many who took part confused and frustrated.

“We might as well crown Noriega emperor and forget it,” said Eloy Alfaro, a lawyer whose hand was broken in a scuffle with the police.

But other Panamanians said they have lost their fear of the general and will mobilize again.

Lurking behind these events is the ghost of Gen. Torrijos. A charismatic officer, Torrijos led a coup in 1968 and became the most popular Panamanian leader of modern times. He borrowed heavily to build schools and houses for the poor and negotiated the 1977 treaties with the United States to get control of the Panama Canal.

His death in a 1981 plane crash--officially ruled an accident--left the country with a leadership void, swollen public payrolls and a big foreign debt.

Although Torrijos took control of Panama from a business elite, businessmen said he made it easy for them to continue profiting under his social revolution.

“After Torrijos, power in the military shifted to men who were far more corrupt,” said Roberto Brenes, publisher of the weekly Financial Gazette and a spokesman for the Civic Crusade’s 35 professional guilds. “They became a uniformed mafia, trying to take over everything.”

Armed Forces’ Interests

The Defense Forces, as an institution, own a television station, three newspapers, a logging firm and an explosives factory. They collect a $2 tax on every package moving through a customs-free zone at Colon, at the northern entrance to the Panama Canal. Through individual officers, they are believed to have an interest in at least half of Panama’s companies and in such rackets as drug trafficking and sales of immigrant visas.

Lacking Torrijos’ charisma, the 5-foot-5-inch Noriega built his power as director of military intelligence in the old national guard, which was renamed the Defense Forces in 1983. The forces are Panama’s sole military and police organization, and Noriega became the commander in 1983.

Since then, he has broadened military authority by creating an advisory body to counsel him on topics ranging from foreign policy to economics. With U.S. aid and a mandate to assume defense of the canal in the year 2000, he has nearly doubled troop strength from 11,000 men with the creation of Panama’s first modern combat battalions.

The 49-year-old general controls the Defense Forces, Diaz asserted, by making his troop commanders “very rich” and delegating little authority. For example, he names civilian President Eric Arturo Delvalle’s important ambassadors and reviews wiretap transcripts.

“His capacity for blackmail is tremendous,” Diaz said.

Special-Label Champagne

Noriega’s tastes appear to exceed his $50,000 annual salary. For his daughter’s wedding next month, he has sent 2,500 invitations, each accompanied by a $30 bottle of special-label French champagne.

Such extravagance irritates Panamanians faced with belt-tightening required by the World Bank as a condition for the second half of a $100-million structural adjustment loan.

Even as they rallied behind Noriega last week, public employee unions controlled by the government demanded scrapping the most controversial requirement imposed by the World Bank, which would raise the retirement age from 55 to 60 and reduce social security benefits.

Bankers say the government needs the loan not only to meet its payroll but to reach an agreement with foreign creditors on rescheduling $1 billion in payments due in 1987-88 and getting $200 million in new loans.

Planning Minister Ricaurte Vasquez said Panama’s “whole refinancing package has been derailed by the political crisis.”

‘A Weaker Government Now’

The Panamanian manager of an American bank said: “After what happened in the streets, there is no way the government can go ahead with the social security reform. You have a weaker government now, regardless of what they say about Noriega winning the first round.”

The same banker said that political uncertainty will make new investment in Panama unlikely before a scheduled May, 1989, presidential election.

Last week, the State Department issued statements calling for “free and untarnished elections” and an “apolitical, professional military” in Panama. The U.S. Embassy suggested privately that Noriega hold the election early.

But government supporters rejected changing the election date, and five opposition parties insisted that only Noriega’s removal could guarantee a fair vote.

‘Democratic Guarantees’ Needed

Ramiro Vasquez, an official of the ruling Democratic Revolutionary Party, admitted in an interview that the government needs to offer “democratic guarantees” and “economic corrections” to regain dwindling popular support.

Publicly, however, Noriega has portrayed the conflict as a “war of classes, of rich against poor.” He says that his predominantly black military is defending popular interests against white “oligarchs” and U.S. conservatives who want to undo the canal treaties.

Seeking to revive the populist appeal of Torrijos, its founder, the ruling party is painting the slogan “Omar Lives--Down With the Whites!” on walls in poor neighborhoods.

While the party still has the support of 150,000 state employees and many rural peasants, the urban poor may be turning against the regime.

“These slogans are just to confuse people,” said Marcos Sanguillen, 48, an auto mechanic in the riot-torn San Miguelito slum of Panama City. “A lot of money has disappeared into corrupt hands.”

Ricardo Arias Calderon, leader of the Christian Democratic Party and the most visible opposition figure, says he expects popular discontent and U.S. pressure to be felt in the 12-man general staff surrounding Noriega, forcing the general to resign in favor of a more moderate officer.

But other politicians believe that within the Defense Forces, Noriega has succeeded in portraying the accusations against him as an attack on the institution.