Church Joins Noriega Foes, Urges Reforms

Panama’s powerful Roman Catholic Church joined opponents of army strongman Manuel A. Noriega on Wednesday, declaring that it is imperative to restore civilian rule, human rights and a free press.

Speaking less than 24 hours after riot troops clubbed and tear-gassed protesters who were seeking the ouster of Gen. Noriega, Archbishop Marcos McGrath decried efforts by the regime to “manipulate the noble sentiment of love of country” with scare tactics involving the Panama Canal and threats of foreign intervention.

The archbishop previously sought to remain impartial in the national movement for the ouster of Noriega, whom the United States and the Panamanian opposition have accused of narcotics-related corruption.

Signed by 20 Clerics

On Wednesday, however, McGrath read a statement signed Tuesday by 20 leading Catholic clerics that, without naming Noriega directly, clearly calls for his departure. It stresses the need for “full and effective subordination of military forces to civilian authority.”

The statement listed four other “imperative” steps necessary to solve the troubled country’s political and financial crisis. They are “strict observance of constitutional rules,” the holding of “national elections deserving of the credibility of all voters,” the “restoration of human and civil rights” and “reopening of all communications media.”

Under attack at home and abroad after his indictment by two U.S. federal grand juries on narcotics and money-laundering charges, Noriega last month deposed Eric A. Delvalle, the civilian president who tried to fire him, and shut down independent newspapers and broadcast stations.

The belated but firm stand of the church was the latest in a series of setbacks for the Noriega regime.

Protests spearheaded by a coalition of business and professional groups called the Civic Crusade, including a general strike and street demonstrations, have attracted thousands of people to the anti-Noriega movement during the last two weeks.

Probably more damaging has been a U.S.-engineered cash crisis that forced banks to close and left rich and poor alike short of dollars--the Panamanian currency--to buy necessities such as food when merchants stopped accepting impossible-to-cash checks and credit cards.

In a move that one banker dismissed as a cosmetic attempt to make people think the banks are returning to normal activity, the country’s rule-making Banking Commission on Wednesday told the financial institutions to reopen--but only to receive deposits, make inter-bank transactions and import dollars from the United States. No withdrawals or check cashing will be permitted.

Dominated by Government

The Banking Commission, dominated by representatives of the government, declared a bank holiday last Friday after most banks had closed their doors voluntarily because they were running out of cash as depositors clamored for withdrawals. Financial sources said the commission acted only after the National Bank of Panama, the government-run institution that acts as the country’s central bank, also ran low on dollars.

In Washington, the Reagan Administration was preparing a package of additional economic sanctions to increase the pressure on Noriega’s regime, but officials said a U.S. trade embargo is unlikely.

The Administration, which continues to recognize ousted president Delvalle, has already tentatively decided to put its payments for use of the Panama Canal into an escrow account under Delvalle’s control, officials said. The United States pays about $80 million per year for the canal’s operations, and a $6.5-million payment is due next Tuesday.

At a White House meeting scheduled for today, the Administration will consider additional measures, including expelling Panama from the Caribbean Basin Initiative and reducing U.S. use of the oil pipeline that crosses Panama. The initiative provides trade advantages to Caribbean countries that export goods to the United States.

Envoy Urges Embargo

Delvalle’s ambassador to the United States renewed his call for a complete U.S. trade embargo against Panama.

“We are calling on the Administration to move immediately to have a trade embargo as added pressure on Noriega’s regime,” Ambassador Juan B. Sosa said.

He said a trade embargo would “limit the goods that can be shipped to Panama or from Panama, so it is an added step in the paralyzation of the country.”

“I believe we are on the verge of a historic moment, of seeing a dictatorship fall through peaceful means,” he said.

But later, after a meeting with Reagan Administration officials, another leading Delvalle supporter said a trade embargo is unlikely.

“I think the President is coming tomorrow with economic sanctions” instead of a trade embargo, former Panamanian Ambassador Gabriel Lewis said.

He said he understood that the Administration will tighten “the financial squeeze. . . . There are still some loopholes such as the sending of money by private banks. I think the President will come up with a lot of sanctions that would close those loopholes, more or less.”

“We don’t need a trade embargo because in Panama the dollar is the currency,” Lewis added. “The banks are not open because they don’t have any dollars to deal with.”

Concern About Treaties

State Department officials said the Administration has been cautious about a trade embargo because of concerns that it might be ineffective and could violate the Panama Canal treaties by blocking the delivery of supplies and equipment needed to operate the strategic waterway.

Panamanian sources said the National Bank was forced to use most of its remaining cash reserves Tuesday to pay retirees and social security recipients who joined the anti-Noriega forces and demonstrated loudly when they could not cash their twice-monthly government checks Monday.

Today, the cash-poor government bank faces a biweekly, $7-million military payroll, which financial sources say it lacks the cash to meet. Few here are willing to speculate whether soldiers forced to accept uncashable checks will rebel against their leaders, but a leading politician said, “They’ll probably remain loyal until their families are hungry.”

Noting that the payroll for 145,000 other government employees is due next Monday, the politician added, “Maybe they (the soldiers) won’t be so willing to go out and hit people on the head when the public workers riot over their own missed payday.”

Although there was an air of tension Wednesday, with riot troops patrolling some streets, there was no repetition of Tuesday’s hit-and-run clashes between barricade-burning protesters and police.

Most of the leadership of the anti-Noriega Civic Crusade, many of whom are leading businessmen and directors of the Chamber of Commerce, instead attended a glossy international trade fair at the city’s convention center called, with unintended irony, “Expo Comer” ( comer means “to eat”).

Times staff writer Doyle McManus in Washington contributed to this article.