Escrow Ordered for $6.5 Million Due to Panama

President Reagan, stepping up U.S. economic pressure on Panama, today ordered that a $6.5-million payment due that country on Tuesday be put into escrow.

The move was part of a series of sanctions designed to weaken Panama’s military-dominated government, which Reagan called “illegitimate,” and to force strongman Manuel Antonio Noriega from power.

Reagan called on Noriega to resign as commander of the Panamanian Defense Forces and said in a statement that the United States can no longer conduct business as usual with Noriega’s government.

Reagan ordered that U.S. government payments due to Panama be held in escrow until constitutional rule is restored in Panama. The payment due Tuesday relates to operations of the Panama Canal.

Other Benefits Withdrawn

Reagan also ordered that the trade benefits Panama receives under a special system set up for Third World countries be withdrawn. Similarly, he suspended Panamanian participation in the Caribbean Basin Initiative, under which some Panamanian products receive duty-free access to U.S. markets.

In addition, Reagan said he has ordered that Panama be subject to intensified scrutiny by U.S. immigration and customs officials.

The purpose of that move, he said, is to “apprehend drug traffickers and money launderers.”

Secretary of State George P. Shultz said there was no need to impose an additional sanction relating to the fees Panama receives from Alaskan oil shipments transferred to U.S. East Coast ports through a Panamanian pipeline.

Shultz told a news conference that those fees have already been frozen based on earlier court action.

‘A Very Strong Word’

Shultz noted that the President’s statement referred to the Panamanian government as “illegitimate.”

“That’s a very strong word,” Shultz said, underscoring the seriousness with which the United States views the situation there.

He accused Noriega of trying to impose a military coup in Panama by deposing President Eric Arturo Delvalle, whom the United States regards as the legitimate constitutional authority.

Under the Caribbean Basin Initiative, Panama and about 20 other countries are eligible to sell most products duty-free to U.S. markets.