Talks With U.S. Collapse, Noriega Says

Times Staff Writers

Panamanian leader Manuel A. Noriega said Friday that his negotiations with the United States about his resignation have broken down, while in Washington, the Reagan Administration remains deeply divided over how far to go in making concessions to him.

At the Justice Department, U.S. Attorney Leon Kellner of Miami told reporters that Atty. Gen. Edwin Meese III met with President Reagan on Friday and laid out the arguments against dropping the Florida drug indictments against Noriega. The Administration has said it is considering such an action as part of a "plea bargain" agreement under which Noriega would give up power.

Separately, William von Raab, commissioner of the U.S. Customs Service, which conducted the investigation that led to Noriega's indictment, said Friday that he feels that the Panamanian strongman "should be prosecuted." If the charges were dropped, Von Raab said, "I would be unhappy."

In Panama, Noriega said that no deal has been reached and that talks with the Reagan Administration have collapsed.

"Everything fell apart," he told reporters during a visit to the rural Panamanian town of La Negrita. "As long as the aggression against Panama persists, as long as there are foreign troops on our territory, the dignity of Panama is above all else, without any faltering, without anything else mattering."

White House spokesman Marlin Fitzwater rejected Noriega's claim. He said negotiations between the Reagan Administration and Panama are "continuing," but declined further comment. The talks are being conducted by Michael G. Kozak, a State Department official.

Fitzwater and State Department officials have refused to confirm reports that the outlines of a proposed deal with Noriega include a dismissal of the drug indictments against him. But there were several indications Friday that this is what is under discussion--and that U.S. law enforcement officials are strongly opposed to such an action.

Kellner, who directed the grand jury that brought one of two drug trafficking indictments against Noriega, said Friday that he met with Meese on Thursday and Friday to argue against dropping the charges. Such an action "would send the wrong message to the people of this country," he said.

Kellner said Meese "told me he also opposed" any dismissal of charges and promised to convey this argument to Reagan. A Justice Department official, however, cautioned against drawing the conclusion that Meese would personally urge Reagan not to drop the Noriega indictment.

Von Raab, the chief of the Customs Service, lined up with Kellner.

Although he noted that "you don't win every one" in government, he said dismissing charges would "make my job more difficult if the press and the American public read it as an uneven application of justice."

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