Bid to Oust Noriega Seen Facing Uncertain Future

The rapid escalation of a campaign to shake Gen. Manuel A. Noriega out of power in Panama has prompted foreign and local observers to wonder--and worry--about what comes next.

During the past 11 days, the United States and domestic opponents of the military strongman have made high-risk moves against Noriega, yet he remains defiant. Panama is collapsing perhaps faster than is Noriega, analysts fear.

That, according to diplomatic observers, raises the question of whether the Reagan Administration and foes of the general will take steps to further aggravate the political crisis, risking violence and even armed intervention from the United States, or step back for a time and regroup.

“Right now, no one sees much effect on Noriega,” said a European diplomat here. “There has to be a payoff soon, some sign Gen. Noriega is weakening, or strategy will have to be rethought.”

Carlos de la Lastra, an opposition leader, said: “The problem is, Noriega is the kind of man who will bring the house down around him before he gives up. That makes the future difficult to predict.”

“Things could get nasty here,” said a U.S. banker who was making plans to send his wife out of the country for fear of unrest in the streets.

The latest moves against Noriega began early last month when the Justice Department obtained indictments against him for drug trafficking and related offenses from two federal grand juries in Florida. The period of time since then has been among the most topsy-turvy in Panama’s history.

Eric A. Delvalle, a figurehead president once vilified for weakness, greed and hostility to democratic rule, became--in virtually an instant--the leading figure in resistance to military rule.

Anti-government middle- and upper-class business people, until recently disparaged as passive “BMW revolutionaries,” quickly put together an effective general strike and took to the streets to challenge Noriega directly.

The Reagan Administration, which previously had moved with caution in strategically important Panama, suddenly took actions that rattled two important segments of the Panamanian economy: banking and the formerly sacrosanct Panama Canal.

“I think from now on, we can only expect the unexpected,” a Western European diplomat said.

Focus on Washington

Many Panamanians focus on Washington, long a dominant factor here, for a clue to their country’s fate. It is common to hear calls in Panama for a U.S. invasion to rid the country of Noriega once and for all.

Up to now, the Reagan Administration has discarded the option of invading Panama. The presence of more than 50,000 U.S. citizens living here, many of them family members of American troops stationed here, are considered an impediment to a military solution.

Nonetheless, the United States raised the stakes in Panama last week beyond levels imaginable just a few weeks ago. Washington’s freeze on dollar transfers to the Panamanian government has virtually paralyzed the tiny nation’s economy.

The cutoff created an instant local shortage of dollars, which are legal tender in Panama. Banks are closed and stores and businesses, unable to use checks, accept cash only.

Canal Used as a Weapon

The Reagan Administration also put the operation of the Panama Canal on the firing line by blocking payments of canal fees to the Panamanian government. The canal is operated by the Panama Canal Commission, a joint venture of the two governments with the United States holding the stronger voice. The commission collects the transit fees and in turn pays the government of Panama.

The amount of money involved is not significant: about $7 million a month. But using the canal as a weapon in a political dispute with Panama is unprecedented. It also helps fuel Noriega’s nationalistic assertion that the United States is trying to grab back the canal, which was returned to unchallenged Panamanian sovereignty by treaty in 1979.

“I suspect there are Panamanians who will never forget this action (withholding canal fees),” a Third World diplomat here said.

And an American official within the canal commission said: “The operation of the canal was always thought to be immune from political quarrels, above it all. No more.”

All existing U.S. roles in the operation and defense of the waterway are to end automatically Dec. 31, 1999.

Undesirable Side Effect

U.S. moves in Panama so far have had at least one undesirable side effect. The economic crunch occasioned by the dollar freeze harms business people who form the backbone of opposition to Noriega. Continuing economic pressure weakens them as much as it does the government.

A proposed trade embargo against Panama, talked about in Congress, would further damage the business people, diplomatic observers point out.

“It is a dilemma,” an American official said here. “It would be nice to pick off Noriega surgically. But that hasn’t happened. In a sense, we are tossing in a grenade that may or may not eliminate Noriega, but also perhaps hurt other people.”

The Administration based its freeze on Panamanian dollars and canal payments on recognition of Delvalle as Panama’s real president, a fiction embraced only by Washington among the world’s governments.

Went Into Hiding

Delvalle was deposed Feb. 25 when he tried to fire Noriega as commander of the Panama Defense Forces. He went into hiding while his representatives in Washington began to fight in to block the transfer of money to the government here.

There is much irony in Delvalle’s rise to prominence. While he was president, his critics considered him simply a civilian figurehead for Noriega’s rule. During that time, Delvalle and a group of associates gained control of a television station and a cable TV system.

The Panamanian government now considers Delvalle a traitor, and last week it threatened to confiscate his businesses. His biggest holding is a sugar refinery. His television station is already off the air, and his cable TV system was cut the day after his ouster.

In the United States, Delvalle has become a kind of instant symbol of resistance to Noriega. Many American television commentators refer to “Delvalle forces” in the opposition.

Few in Delvalle’s ‘Forces’

In fact, Delvalle’s “forces” number only a few close associates, and how long he is willing to remain underground remains a mystery. At 51, he has a history of heart disease.

American officials here are wary of putting too much faith in Delvalle’s stamina. “This is a very weak link in the chain,” one U.S. diplomat said.

Nevertheless, the United States is trying to fashion a shadow government around the former figurehead. American diplomats here hope to gather members of Delvalle’s inner circle, the current government and active opposition into a makeshift “cabinet.”

Like Delvalle, such a government would administer nothing but would broaden the basis for Washington’s recognition of an alternative to Noriega.

Leading opponents of Noriega are resisting the call to participate. They do not trust Delvalle.

Lack of Support

“We support Delvalle’s right to fire Noriega but not Delvalle the man,” said Roberto Brenes, a leader of the Civic Crusade, an anti-Noriega alliance of business and industry groups.

The crusade went out on a limb to organize a four-day general commercial and industrial strike that was partially effective in paralyzing commerce in Panama City. Demonstrators also took to the streets for the first time in four months.

The crusade had planned to delay demonstrations until later this month, when they calculated the government might be low on money and be forced lay off government workers. Delvalle’s ouster forced their hand.

The moderate success of the strike has brought demands for more of the same from bolder members of the crusade. The incremental growth of militancy conflicts with the usual image of the crusade as an “army of accountants.”

‘Confronting the Dictator’

“It is time we define ourselves,” said Max Jimenez, an accountant who marched in a small demonstration last week. “We must show ourselves publicly confronting the dictator.”

Noriega’s government has been long on rhetoric and short on action during the crisis. Noriega has appeared at carefully managed rallies where he pumps his fist and vows never to leave his roost as the country’s top military commander.

Rumors abound of dissension in the 15,000-member Defense Forces, but few indications of anti-Noriega sentiment have actually surfaced. Early last week a single military officer resigned: Maj. Moises del Rio, who is a relative of retired Gen. Ruben Dario Paredes, Noriega’s predecessor as Defense Forces commander and a current political rival of the strongman.

The country’s new civilian president, Manuel Solis Palma, does not appear ready or willing to move against Noriega. At a rally in San Miguelito, a working class district of Panama City, he declared: “I am pleased to be walking with him (Noriega), even if he walks in the lead.”