Panama Leader Rejects U.S. Plan for Asylum

The Reagan Administration broke off an attempt to ease Panamanian strongman Manuel A. Noriega into exile Saturday after Noriega rejected the U.S. offer, Administration officials and Panamanian sources said.

Despite evident problems, however, officials said efforts to win Noriega’s acquiescence to a plan for his departure will continue.

Noriega told two senior State Department officials visiting Panama City that he is willing to step down as the commander of Panama’s armed forces but only if he can stay in the country--and only if the United States drops federal indictments against him, the sources said.

“The only thing that became clear in the talks was that Noriega’s view of reality is way off,” a State Department official said. “He hasn’t reached a solid understanding of the fact that he’s on the way out.”

As a result, officials said, the U.S. envoys broke off their mission and were returning to Washington on Saturday--apparently leaving U.S.-Panamanian relations at a stalemate.

“We haven’t given up,” one official said, “but it looks like it’s going to take a little more time.”

The Administration has been pressing for several months for the ouster of Noriega, Panama’s military strongman since 1983. U.S. officials have accused Noriega of corruption, drug trafficking and secret deals with Cuban President Fidel Castro.

The two U.S. officials, Deputy Asst. Secretary of State William G. Walker and Deputy Legal Adviser Michael G. Kozak, flew secretly to Panama on Thursday at Noriega’s request, sources said.

In a meeting with Noriega on Friday, they reportedly outlined a U.S. offer under which the general would retire from the military and go into exile in Spain or France in exchange for assurances that he would not be extradited to the United States.

“This is as generous as we’re going to get,” an official said.

Spain Offered Asylum

Two federal grand juries in Florida indicted Noriega on drug trafficking and racketeering charges Feb. 5. Spain has publicly offered political asylum to Noriega--a status that would protect him from extradition under Spanish law.

But Noriega dismissed the U.S. offer, officials said, and insisted that he wants to stay in Panama. The general also demanded that the Administration quash the indictments against him as the price for his retirement, one source said.

Administration officials called both demands unacceptable. State Department officials said that Noriega must leave Panama to ensure that he does not continue to exert power informally through his allies in the military. As for the indictments, the Justice Department has strongly objected to dropping the charges against Noriega and only reluctantly agreed to a compromise under which the general could evade extradition.

Walker and Kozak went to Panama with the idea that Noriega was prepared to leave, according to one official, who added: “You might say we were snookered.”

Military Confirms Talks

The Panama Defense Forces, which Noriega heads, confirmed that the strongman met with the two U.S. officials, although they insisted that the talks were held at the request of the State Department.

In a written statement, the Defense Forces said that the American proposals were “unacceptable, inappropriate and anti-Panamanian.”

However, the statement left the door open for new negotiations. “Gen. Noriega and his General Staff reiterate their disposition to . . . sustain all the conversations necessary to resolve problems without any type of prior conditions,” the statement said.

At about the same time that Noriega opened contacts with the State Department, he invited opposition leaders to discuss a different, although not necessarily conflicting, solution to the political crisis in Panama, sources in Panama City said.

A Noriega representative in Washington contacted members here of the Civic Crusade, an anti-Noriega alliance of business and industry leaders, to open talks. Crusade leaders, disillusioned by previous unsuccessful efforts to achieve Noriega’s departure through negotiations, demanded that the strongman send any requests to them through the papal nuncio, the Vatican’s ambassador in Panama City.

Noriega complied, setting out a list of conditions under which he would agree to step down. Among them were freedom to remain in Panama with his wealth intact and an understanding that he could reorganize the Defense Forces, Panama’s sole military and police organization, to his own liking.

Crusade leaders said that such conditions were unacceptable, but they did not break off the contact through the Vatican’s envoy until they learned that Noriega had also been in touch with the State Department.

“We decided he was just throwing out bait to get somebody to bite and then play for time,” said Roberto Aleman, a Crusade official.

The Vatican envoy could not be reached for comment. Sources in Panama City said that he met with Walker and Kozak Friday night at the American Embassy. The U.S. officials also met with Aurelio Barria, a leading member of the Civic Crusade, at the embassy on Saturday.

‘Isn’t a Straight Shooter’

In Washington, Gabriel Lewis, a former Panamanian ambassador to the United States who is now a leader of the exiled opposition to Noriega, said: “The Americans and the Spanish made an extremely generous offer, but Noriega isn’t a straight shooter. He asked the Americans to come to Panama City, but once they were there he announced that he didn’t want to deal with the United States. He said he wanted to deal with the Civic Crusade to save the country . . . but his proposal was totally unacceptable.”

“We aren’t even worrying about Noriega any more,” Lewis declared. “He’s at the end of his rope. He’s either going to accept going into exile or he’s going to leave feet first. One of his own guys in the military is going to get him.”

The Administration offered Noriega a compromise on the federal charges formally lodged against him in the United States because of fears that continued instability in Panama will lead to more violence there and possibly endanger the operations of the Panama Canal.

Economy Crippled

Panama has been in turmoil since the Civic Crusade began agitating for Noriega’s overthrow last June. The Panamanian economy also has been crippled by a series of U.S. sanctions imposed after Noriega deposed his own figurehead civilian president, Eric A. Delvalle.

The sanctions have halted the flow of U.S. dollars into Panama, touching off a sudden shortage of cash that has prompted all local banks to close. Panama uses the American dollar as its national currency.

State Department officials said that they expect Noriega’s regime to face another crisis this week--related to both a general strike called by the civilian opposition and, perhaps more dangerous, the regularly scheduled payday for Panama’s 15,000 military men. It is not certain that the government has enough money to meet the military payroll, they said.

Doyle McManus reported from Washington and Dan Williams from Panama City.