U.S. Weighs Softer Line on Panama : Stalled Bid to Oust Noriega May Lead to New ‘Flexibility’

With Panama’s economy a shambles and Gen. Manuel A. Noriega holding tenaciously to power, the United States is being forced to reconsider its hard-line conditions for Noriega’s ouster, U.S. officials here say.

No more than two weeks ago, the officials described the goals of American pressure on Panama as getting Noriega “out of uniform and out of the hemisphere.”

Now, the goal is expressed vaguely: “All options are on the table,” said a knowledgeable U.S. official here.

Another U.S. official, while rejecting the conclusion that Washington’s stance is softening, admitted that “flexibility” may be needed to resolve the political crisis. “We might have to accept less than what we wanted,” the source said.

U.S. Official Holds Talks

The rethinking of U.S. policy comes in the wake of a secret visit here April 16 by Michael G. Kozak, a State Department deputy legal adviser. Kozak met with Noriega at least once. State Department officials are under orders not to say anything about the content or results of the meeting.

In Washington, State Department officials would say only that “the official line has not changed. Noriega still has to go.”

But just when, where and how Noriega might go are the questions. Although officials here and in Washington are unwilling to discuss specific U.S. concessions that might be made, the possibilities are said to include dropping drug trafficking charges against Noriega and permitting him to remain in or near Panama after leaving power.

Since January, the Reagan Administration has adopted a series of measures to drive Noriega out of power while offering him safe asylum in Spain.

In late March, President Reagan said that exile for Noriega in the Dominican Republic was “not far enough” from Panama, and top U.S. officials explained that Europe was considered a safer distance, to keep Noriega from meddling in Panamanian politics.

No Easing of Pressures

American officials in Panama City cautioned that a new look at conditions for Noriega’s exit does not mean that pressures on the military strongman are soon to be eased. “Money is not going to suddenly start flowing in here,” one U.S. official said.

Nonetheless, the measures taken so far to drive Noriega out of power are increasingly being seen as more destructive to the country as a whole than to the general. On Friday, Panama’s Roman Catholic bishops called for the United States to lift economic sanctions, which include the blocking of dollars to Panama at the request of deposed President Eric A. Delvalle. The sanctions “are a threat to the life of the people,” the bishops said in a pastoral letter. Panama uses the U.S. dollar as its currency.

Although weeks of American pressure has fallen short of dislodging Noriega, it has brought several undesirable side effects.

U.S. officials and opposition leaders have concluded that U.S. drug smuggling charges brought earlier this year against Noriega hardened the general’s determination to stay in Panama, where he is protected by a 15,000-member army.

Within the U.S. Embassy here, the decision to publicize the charges is the subject of second-guessing. Some U.S. officials argue that the charges should have been kept secret in hopes that Noriega could be persuaded to go quietly.

Economic pressure mounted by the Reagan Administration on Panama since February weakened foes of Noriega as much as Noriega’s government. Besides keeping dollars out of Panama, the Administration has forbidden American companies to pay taxes to the Noriega regime, has cut off all economic aid and withheld payments of fees from the operation of the Panama Canal.

It sometimes seems that almost every Panamanian except Noriega is on the move. Businessmen are closing up shop, laying off workers and sending their families abroad. The poor are migrating back to the countryside, where at least food is readily available.

Growing Impatience With U.S.

At one point, Delvalle, who is still recognized by the United States as Panama’s president, threatened to quit because the measures taken in his name had brought Panama--rather than Noriega--to its knees. The Catholic bishops’ call for suspension of the U.S. sanctions caps the growing impatience with American policy over the past month.

In a report released Saturday, anti-Noriega economists estimated that since February, industrial activity in Panama is off by 60%, retail sales are virtually paralyzed and supplies of basic goods like gasoline are rapidly drying up.

The economists called for creation of a transitional government but stopped short of calling for Noriega to step down. Private businessmen have led the opposition against Noriega.

U.S. officials admit that they were unprepared for the possibility that the economy would collapse well before Noriega leaves. “It is now clear that the people in power in Panama are willing to let the country fall into ruins before giving up,” a U.S. official said.

Commented opposition leader Roberto Brenes: “The U.S. is now in the position of having burned down the house to get the thief out.”

A recent dispatch of U.S. troops to Panama led to a number of unexpected developments. A Marine sentry was accidentally shot and killed by members of his own squad while trying to defend against alleged intruders at a U.S. military base near the Panama Canal. Subsequent reports of sightings of infiltrators were hazy and inconclusive. Noriega’s propaganda machine had a field day, ridiculing American troops for shooting at swaying palm trees.

Panama’s domestic opposition has receded into the background. A general strike faltered early in April, and there have been almost no street demonstrations since.

Fissures within the opposition are evident. Some leaders are calling for U.S. military action to dislodge Noriega. Others reject it.

Followers of Arnulfo Arias, the aging patriarch of Panamanian politics, have been flirting with Noriega about reaching a separate peace. The trade-off, his supporters say, would be the elevation of Arias to president in return for the popular support that only he among Panamanian politicians could generate for a continued military role in politics.

Noriega himself has been acting as if he were running for office. Government-operated television shows him inaugurating public works in the countryside, always in the company of flag-waving supporters.

Recently, he has sent out emissaries to talk to his foes, opposition leaders say.

There are rumors that he will set a date for retirement, so long as he is permitted to stay in Panama, but the date seems always to recede into the future.