Cash Crisis Shuts Banks in Panama : Financial Dilemma Blamed on U.S Economic Pressure

International banks fearing a run on deposits closed their doors Friday and anxious customers lined up outside, demanding their money. The National Bank accused the United States of crippling Panama’s banking.

“No one, not even in his blackest nightmare, could have imagined we’d be in such a state: The banks closed, no money. People are getting desperate,” said national assemblyman Mario de Obaldia. “We can’t go on like this.”

A general strike ended Friday, with opposition leaders saying the financial crisis would continue the pressure on the regime of Gen. Manuel Antonio Noriega.

But Noriega said the U.S. economic pressure had actually helped his cause.


‘Never on Our Knees’

“Thank you, United States, for unifying all Panamanian workers. Here you may find us dead, but never on our knees. Nobody surrenders here,” he told a pro-government rally in Colon, 50 miles north of Panama City.

The National Bank of Panama issued a communique advising local banks that it could not meet their requests for money because U.S. authorities had prevented the shipment of $10 million from the Republic National Bank in New York.

In Washington, the Senate Foreign Relations Committee voted unanimously for a resolution urging the Reagan Administration to end all contact with Noriega and to consider imposing economic sanctions against his government. It did not act on a measure to impose a total trade embargo.


International banks had remained open through the four-day strike, but almost all of them were closed Friday as banking officials feared a run on cash. Long lines formed outside.

Local banks had closed after customers began withdrawing large amounts of money during the week before last after the ouster of President Eric Arturo Delvalle. International banks had limited withdrawals in recent days.

Tried to Fire Noriega

Delvalle was removed from office by the pro-Noriega National Assembly after he tried to fire the general, who is under indictment in Florida on drug-trafficking charges. Noriega is considered the power behind Panama’s civilian government.

“What’s the use of having a piece of paper with your name and an amount on it, when you can’t get it cashed? What we need is money,” said Franklin Iriarte, a retired Panama Canal worker. He waited with other retirees outside Banco General, hoping that the institution would open.

Factories and stores opened Friday, but people appeared to be buying only essentials for fear that the banking crisis would leave them without money.

Aurelio Barria, president of the Panamanian Chamber of Commerce, Industry and Agriculture, told reporters that if the bank problem is not resolved soon, “the results will be devastating.”

“Checks are not clearing, there is no cash, and businesses without currency cannot work, so there will be a de facto strike,” said Barria, a leader of an anti-government coalition that had called the work stoppage.


An attorney for Delvalle said at a news conference Thursday night in Washington that federal courts in New York and Boston have issued temporary restraining orders to prevent withdrawal of government funds deposited in U.S. banks.

“We believe that whatever funds are in those institutions are at this point frozen and cannot be transmitted to the Noriega regime,” the attorney, Daniel Resnick, said.

$10 Million Frozen

The National Bank said local banks should try to obtain dollars wherever they can and bring them into the country. It said Republic authorities advised the bank by telephone that $10 million was frozen by legal action taken on behalf of Delvalle.

Some local banks have branches abroad from which they can get money, bankers said. But others have no deposits outside Panama and would be unlikely to get approval of applications for loans from foreign banks.

Panama’s economic crisis has been growing since last June, when government opponents began seeking the ouster of Noriega.

By the end of last year, Panama had defaulted on loans from the International Monetary Fund, the World Bank and the Inter-American Development Bank. Those institutions have cut off further lending to the nation.

Noriega has blamed the United States for the last nine months of unrest, saying Washington is trying to back out of a treaty requiring it to relinquish control of the Panama Canal by the year 2000.