U.S. Steps Up Economic Pressure on Noriega

Launching an economic war of attrition against military strongman Manuel A. Noriega, Panama’s ousted president won legal control of one of his government’s U.S. bank accounts Wednesday, and the Reagan Administration moved to put rent payments for the Panama Canal in escrow.

The joint action by the State Department and deposed President Eric A. Delvalle was aimed at forcing Noriega from office by squeezing Panama’s cash flow to the point where the military-dominated regime cannot issue paychecks or pay bills, officials said.

Administration officials believe that the Noriega regime has only $30 million in central bank reserves to meet a weekly government payroll of about $15 million, one knowledgeable U.S. official said Wednesday. A freeze on bank transfers and payments from the United States, by far Panama’s largest financial partner, could devastate the government’s budget.

“The officers’ corps is sticking with Noriega now, but we’ll see how they feel when their paychecks don’t come through,” one U.S. official said.

In New York, Delvalle’s representatives won a U.S. District Court order barring one major holder of Panama government investments, Republic Bank of New York, from transferring those funds to the Noriega regime. Delvalle’s ambassador to the United States, Juan B. Sosa, said that similar actions against at least four other U.S. banks are planned.

Late Wednesday, Republic Bank bowed to Delvalle’s demands by transferring its Panamanian government accounts to the Federal Reserve Bank of New York, and the court order was lifted.

A Fed spokesman said the Federal Reserve branch will disburse the funds only to officials certified by the State Department as acting for the government of Panama. Secretary of State George P. Shultz, with President Reagan in Brussels, signed documents Wednesday recognizing Delvalle as the legitimate president of Panama, sources said, and the Federal Reserve is to receive the forms today.

In Washington, Assistant Secretary of State Elliott Abrams said the Administration will comply with a request from Delvalle to put U.S. payments for the use of the Panama Canal into an escrow account instead of sending them to Noriega’s regime.

“If he (Delvalle) tells us he doesn’t want that money going to Noriega, then we’re not going to give it to Noriega,” Abrams said in a television interview.

Abrams and other officials said the United States is required to continue paying the rent under the 1978 Panama Canal Treaties, which transfer control over the U.S.-built strategic waterway to Panama in the year 2000.

A rent payment of about $7 million was due to be made next week, but legal arguments for withholding the money from Noriega are now nearing State Department approval. Officials said that the details of where the payment will go have not been worked out.

Diplomats Decertified

In related actions Wednesday, the State Department “decertified” 17 Panamanian diplomats who declared themselves loyal to Noriega instead of Delvalle.

Administration officials met at the Pentagon to review the status of 10,000 U.S. troops and 20,000 military dependents in Panama. Most are assigned to defend the canal or to serve the headquarters of the U.S. Southern Command, which runs U.S. military operations in Latin America.

A Pentagon spokesman said no decision has been made to withdraw U.S. dependents from Panama and that there has been no Noriega threat to U.S. facilities there.

Members of Congress who had talked about introducing legislation to require a U.S. trade embargo on Panama delayed the move, apparently on Administration advice.

Administration officials expect Delvalle’s supporters, led by former Ambassador Gabriel Lewis, to seek court orders seizing other Panamanian government assets in this country. The Administration will support the claims, “but we may be limited by law in the amount of help that we can actually give them in pursuing other assets,” said one official.

Much of Panama’s government income comes from abroad, in the form of payments for use of the canal and fees for the registration of ships and corporations, which are often paid into accounts in the United States.

Other governments might react to such pressure by simply printing more of their own currency and paying their debts at the cost of domestic inflation. But Panama uses the U.S. dollar as its currency and thus cannot easily increase its money supply without turning to the United States.

The Washington attorney for Delvalle’s U.S. backers, William Rogers, said Wednesday that a freeze on Panama’s U.S. assets would effectively deprive Noriega of access to U.S. dollars worldwide.

Rogers, a former assistant secretary of state for Latin America affairs, said the United States “is so overwhelmingly the dominant center for Panama financial matters that I seriously doubt the whole rest of the world accounts for more than 10%” of Panama’s overseas investments.

Less Than $50 Million

Analysts have estimated that the Panamanian government holds less than $50 million in assets in the United States. Republic Bank refused Wednesday to say how much money was transferred to the New York Fed.

Delvalle’s supporters plan to seek similar restraining orders against Irving Bank, Marine Midland Bank and Bankers Trust Co. of New York and the Bank of Boston, Rogers said.

Delvalle dismissed Noriega as commander of the Panamanian military last week after the general was indicted in Florida on drug-trafficking charges. But Noriega reacted by convening Panama’s National Assembly, whose majority belongs to the pro-military party, and the assembly then voted to dismiss Delvalle as president, an action that Delvalle and the United States contend was illegal.

Times staff writer Michael Hiltzik in New York contributed to this story.