Talks on Noriega Ouster Collapse : U.S. Cuts Off Negotiations, Vows to Keep Pressure on Panamanian

The Reagan Administration angrily broke off negotiations with Gen. Manuel A. Noriega on Wednesday, admitting failure in its attempt to talk the Panamanian strongman into relinquishing power but vowing to continue diplomatic, economic and, perhaps, new types of pressure to drive him out of his nation.

Secretary of State George P. Shultz announced that Noriega had balked at a deal--which had been accepted by his representatives--that would have required him to step down in August in exchange for dismissal of American drug-trafficking charges against him. It also would have allowed his handpicked president, Manuel Solis Palma, to remain in power.

“No further negotiations are contemplated,” Shultz said. “All proposals addressed during these negotiations have been withdrawn. No offers remain on the table.”

Economic Sanctions Remain

Shultz, who delayed his departure for the Moscow summit meeting by about eight hours to direct the last gasp of the negotiations with Noriega, said the United States will continue its economic sanctions against Panama and will take other steps--which he refused to spell out--”to get Noriega out of power and out of Panama.”

Shultz refused to say whether military steps are contemplated, but another senior official said that a U.S.-backed coup within the Panamanian military is a possibility.

Law enforcement officials and hard-line members of Congress hailed the collapse of the deal, which they had denounced as too generous to Noriega. Panamanian opposition leaders, who had long complained that the plan would allow Noriega to hold onto power from behind the scenes, reluctantly accepted the Administration’s position Tuesday night only to see it collapse less than 24 hours later.

Saved Bush From Dilemma

The end of the talks saved Vice President George Bush from an embarrassing dilemma that would have forced him to choose between appearing disloyal to the Administration or appearing soft on drugs. Bush has made it clear that he opposed dropping the drug-trafficking indictments that were brought against Noriega in Florida, but he has been reluctant to attack the Administration.

President Reagan, arriving in Helsinki, Finland, on his way to his Moscow summit meeting with Soviet leader Mikhail S. Gorbachev, said that he did not feel weakened in any way by the U.S. failure to remove Noriega from office.

“It seemed for a time as if he (Noriega) had some plan . . . but he changed his mind about that,” Reagan said.

U.S. officials apparently believed Tuesday night that Noriega would accept the U.S. proposal. The State Department arranged to receive a direct broadcast of Radio Panama’s main early morning newscast, apparently believing that Noriega’s acceptance of the plan would be announced at that time. State Department officials also solicited approval of the deal from Panamanian exile leaders in Washington.

When the plan began to go sour Wednesday morning, Michael G. Kozak, the chief American negotiator, continued his talks in Panama City, hoping to put it back on track. U.S. officials said the talks finally broke off at about 1 p.m. PDT. Shultz made his announcement less than an hour later.

Feared Loss of Power

Shultz said Noriega apparently rejected the deal his negotiators had accepted because he was unable to face giving up power. Undersecretary of State Michael H. Armacost said Noriega also may have been intimidated by mid-level military officers concerned that he would damage the army as an institution by dealing with the United States. Noriega is head of the Panama Defense Forces.

Armacost said that Noriega “intimated some anxiety that the majors and captains within the armed forces might take strong action against him, had he gone through with this.”

In his press briefing, Armacost spelled out the details of the proposed deal, in effect confirming reports that had come earlier from sources who requested anonymity.

Armacost said the deal called for the United States first to lift its economic sanctions against Panama. Under those measures, the Administration had curbed the flow of funds into Panama’s dollar-based economy and blocked tax payments to Noriega’s government by many U.S. firms.

Then Noriega would deliver a speech, announcing that he would retire as Panama’s military chief on Aug. 12, the fifth anniversary of his assumption of the post. At the same time, he would ask the Panamanian legislature to limit the terms of military chiefs to five years, retroactive to Aug. 12, 1983, to eliminate any legal basis for him to regain power.

Armacost said the plan called for Noriega to leave Panama on Aug. 12 and to remain out of the country until after elections next May, except for a brief Christmas visit.

As soon as Noriega left the country, drug-trafficking charges pending against him in Miami and Tampa, Fla., would have been dropped, Armacost said.

Drug Charges Intact

His rejection of the deal leaves the criminal charges intact. However, there apparently is no way to prosecute Noriega as long as he remains in Panama. The United States has an extradition treaty with Panama, but it does not cover Panamanian citizens.

Nevertheless, Robert Merkle, U.S. attorney in Tampa, said: “I’m obviously gratified that charges remain in place against Noriega. . . . If that matter (a diplomatic deal) is no longer on the table, I look forward to the legal course of events being carried out routinely and prosecuting him (Noriega) for the crimes with which he is charged. It just looks like the sun’s coming out here for a change.”

Some hard-liners, meanwhile, have suggested kidnaping Noriega. According to well-informed sources, Shultz and Elliott Abrams, assistant secretary of state for Latin America, briefly supported such an option but agreed to try for a negotiated settlement after Reagan rejected the use of American troops.

Republicans Jubilant

Republicans on Capitol Hill were jubilant at the turn of events.

Senate Republican leader Bob Dole of Kansas said: “I can’t help but welcome this announcement. It seemed to me . . . that not only were we going the ‘extra mile’ to win Noriega’s departure, we have been going too many ‘extra miles.’

“Sending Noriega off into retirement with a legal ‘golden parachute,’ by dropping those indictments, would have been the wrong step at the wrong time and would have sent the wrong message,” Dole added.

Sen. Phil Gramm (R-Tex.), said: “I’m delighted. I don’t think we should have ever been negotiating with Noriega. . . . As a nation, we have broader interests than just trying to find a negotiated settlement with him. We should be keeping the pressure on him now.”

Sen. Alfonse M. D’Amato (R-N.Y.), a leading critic of the Administration’s strategy, said he hopes that the Administration now will consider tougher, direct action.

“He really wasn’t going to give up power, and we should have known that,” D’Amato said. “We shouldn’t have foreclosed the use of military power to solve this problem. . . . We shouldn’t say we won’t use force.”

Force Not Ruled Out

At his news conference, Shultz refused to rule out the use of force. But he implied that the United States would try diplomatic and economic measures first.

“We will keep our present posture in place, and we will continue to work various options, especially in coordination with other countries of the hemisphere,” Shultz said.

He said that Noriega is supported by Nicaragua and Cuba but that “in general, in Latin America, there is a surge of democracy, and people want to see freedom and they recognize that this (removal of Noriega) is very much in their interests.”

“They also recognize, as we all do, the seriousness of involvement with drugs, and the higher it goes in a country, the more serious it is,” Shultz said. “So all of these things factor into a set of attitudes throughout the hemisphere that will make themselves felt--and I don’t have any doubt about it.”

Times staff writers Eric Lichtblau, Josh Getlin and Don Shannon contributed to this story.