Only Schools Stay Closed in Panama City : Banks, Offices Reopen; Strongman’s Future Remains in Doubt

The government of Panama kept schools closed Monday but otherwise, Panama City returned to normal as both sides in the country’s political conflict took stock of the last month’s turmoil.

Shortly after midnight, the Panama Defense Forces retired from the streets of the city where they had been guarding against a recurrence of last Friday’s powerful anti-government demonstrations. Banks and government offices were reopened.

Opposition leaders estimated that about 300 demonstrators had been arrested when the Defense Forces blocked marchers from congregating in Panama City’s financial district Friday. Several protesters suffered birdshot wounds and bruises from clubbing.

The demonstrators are demanding the ouster of Panama’s de facto ruler, Brig. Gen. Manuel A. Noriega.

No talks between the government and its opponents took place Monday as a stalemate over Noriega’s future continued. The government said that his status as head of the Defense Forces is not negotiable.

Noriega Just Smiles

Noriega himself, during a brief appearance at the Presidential Palace in the old port district, appeared confident. As he left a meeting with President Eric A. Delvalle, the nominal civilian head of state, Noriega smiled and mockingly waved a white handkerchief at reporters. White is the color of the protesters, and Noriega’s troops have been smashing the windshields of motorists waving white flags or hankies.

Government supporters seem to think that Noriega’s opponents are on the run.

“This is the first time that these people have spent the night in jail,” said Escolastico Calvo, who manages government-owned newspapers in Panama City. “I am sure it was a frightening experience.”

He suggested that if the appearance of riot policemen, the use of tear gas and the arrests prove insufficient to scare off the opposition, the government can turn to economic pressure such as expelling dissident businessmen from the government-controlled free export zone in the Caribbean port of Colon.

“Much of the opposition has economic interests to protect,” Calvo added.

Doesn’t Want the Publicity

Despite the displays of confidence, the military made at least one effort to limit the bad publicity resulting from Friday’s arrests. Soldiers prohibited reporters from talking to six university students who have taken refuge on the grounds of the Vatican embassy here. The students chained themselves together and say that they will not leave until the government releases prisoners taken during the protests.

The acting archbishop of Panama, Msgr. Marcos McGrath, called the government’s crackdown on demonstrations “unnecessary.”

For their part, members of the National Civic Crusade, which is made up of more than 100 business and professional groups and is the leading opposition force, said that the breakup of Friday’s demonstration strengthened their campaign.

“People are a lot angrier now,” said Raul Mendez, a vice president of the Panama Chamber of Commerce, one of the leading member organizations.

He added that the coalition is considering using economic weapons of its own, including the closing of businesses during at least part of one day this week. Coalition leaders have scheduled a sidewalk demonstration today, in which they have called on Panama City residents to wave white flags at 4 p.m.

The protests have been the strongest in 19 years of Panamanian military rule. The Reagan Administration has called for a return to full civilian rule but has not joined the opposition in demanding Noriega’s ouster.

The United States operates the Panama Canal here, which by treaty is under Panamanian sovereignty. The United States will turn over full control and defense of the canal to Panama in the year 2000.

U.S. Rejects Accusation

In Washington, meanwhile, State Department spokesman Charles Redman rejected an assertion by Panama’s special envoy, Aquilino Boyd, that the U.S. Senate has encouraged political violence and rebellion in his country, Reuters news agency reported.

“We would disagree with his observation that somehow we had done something to encourage violence and rebellion,” Redman said.

Boyd, who came here a week ago in an effort to improve badly damaged U.S.-Panamanian relations, said in a Washington Post article Monday that “by coddling an opposition that seeks power more than it seeks democracy, and by taking actions that offend Panama’s dignity, the U.S. Senate is encouraging rebellion and violence.”

Blames Senate

Boyd specifically blamed the Senate for a resolution calling for Noriega’s ouster while authorities investigate charges that he was involved in political corruption and murder.

But Redman said that the first violence resulting from recent political protests had occurred before the resolution was adopted June 26. He also accused the government of using the resolution to stir up anti-American sentiment, culminating in a violent attack on the U.S. Embassy in Panama City on July 1.