Shultz Backs Foes of Panama Regime : Says U.S. Aid Freeze Will Continue as Signal of Pressure on Noriega to Quit

Secretary of State George P. Shultz publicly endorsed Panama’s main opposition movement Thursday and said that the Reagan Administration has decided to continue its freeze on aid to the regime of military strongman Manuel A. Noriega.

“There are real problems in Panama,” Shultz told a news conference. “We want to see in Panama--as elsewhere--an emergence of civilian, democratic control. . . . We see the efforts of the people in the Civic Crusade as making these points.”

The National Civic Crusade, a coalition of business and professional groups that has been pressing for Noriega’s ouster, held a huge demonstration in Panama City on Thursday.

Noriega, the chief of Panama’s Defense Forces, the country’s sole military and police organization, is under investigation by a federal grand jury in Miami for allegedly protecting major drug-trafficking and money-laundering operations in Panama in exchange for a share of their profits.

Charges by Opposition

Panamanian opposition leaders and U.S. officials also have charged that Noriega rigged Panama’s 1984 presidential elections, ordered the 1985 murder of a political adversary and has acted as an intelligence agent for both Cuba and the United States at the same time.

“It’s essential for Panama to have a strong, professional armed force,” Shultz said. “But we believe, as here, the armed forces should be professional and not political.”

State Department officials said that Shultz’s comment was intended as a signal of increased U.S. pressure on Noriega to relinquish power.

“You’re going to hear more protests from us about human rights violations in Panama,” said one official.

Disputed Options

But the officials said that the Administration remains divided over whether to take other action against Noriega. The State Department wants to push harder for Noriega’s ouster, but the Defense Department and CIA defend the general as maintaining stability around U.S. military bases there, which operate under a status of forces agreement reached as part of the Panama Canal Treaties.

President Reagan’s National Security Planning Group agreed at a meeting this week to continue a suspension in U.S. aid to Panama. The aid was halted last month after pro-Noriega demonstrators, including some government officials, attacked the U.S. Embassy in Panama City.

The decision froze what remains of this year’s nearly $26 million in aid for Panama, including $19.3 million in economic aid and more than $6.4 million in military funding. It could not be determined immediately how much had been spent before the freeze.

Pressure Considered

A State Department official said that the Administration is considering putting more pressure on Noriega by opposing further international loans to his regime, but the Pentagon and CIA have blocked any such action for now.

“Some of us can’t understand how the Defense Department can continue defending this guy,” he said. “It’s almost like trading arms for hostages.”

Noriega has denied the charges made against him and has accused the Administration of concocting the reports to foment opposition to his rule.

Administration officials insist that the corruption charges are well-founded but add that investigators are still seeking sufficient corroborating evidence to consider bringing a U.S. indictment against Noriega. Most of the drugs that pass through Panama end up in the United States.

Senators’ Plan

A bipartisan group of senators said they plan to introduce legislation to continue the freeze on foreign aid funds to Panama for another year unless democracy is established in that nation. The sponsors of the bill include Sen. Jesse Helms (R-N.C.), a leading conservative, and Sen. Edward M. Kennedy (D-Mass.), a liberal.

“The purpose of this legislation is to send a message, loud and clear, to all the people of Panama: The government of the United States will have nothing to do with a military dictatorship that clings to power by systematically abusing the human rights of its people,” Kennedy said.

“America is not looking for return of the (Panama) canal . . . but rather that we support the rights of the people for self-determination,” said Sen. Alfonse M. D’Amato (R-N.Y.).

Sen. Alan Cranston (D-Calif.) said he is drafting an amendment to the legislation that would suspend all sugar imports from Panama.