Bush Cuts Panama Ties as Noriega Ally Takes Office : U.S. Vows to Tighten Funds Hold

The United States today cut diplomatic ties with the new Panamanian government backed by Manuel A. Noriega, branding it an outlaw regime and vowing to tighten the financial screws on it.

“The United States will not recognize any government installed by Gen. Noriega. Our ambassador will not return and we will not have any diplomatic contact with the Noriega regime,” President Bush said in a statement.

Bush made the announcement in Washington as Francisco Rodriguez was sworn in as provisional president in Panama City.

By citing “the outlaw Noriega regime,” Bush summoned up one of the dominant phrases used by U.S. diplomats to describe how the Noriega government would be treated if the military leader refused to leave by today.

Noriega, indicted on drug-trafficking charges in Florida 18 months ago, is also accused by the State Department of giving haven in the past to drug dealers from other Latin American countries.

Bush said the United States will take other steps, “including the tightening of measures to deprive the illegal regime of funds that belong to the Panamanian people . . . and to counter the threat posed by Gen. Noriega’s support for drug trafficking and other forms of subversion.”

Expects Support

The President did not specify what financial actions the United States will take against Panama but said he is confident that other countries would take similar measures to support human rights, democracy and self-determination and to fight drug trafficking.

Until today, Washington had recognized the government of President Eric Delvalle even though he had been removed from power in a February, 1988, coup and had been living in the United States.

Delvalle, respecting the limits of his constitutional mandate, closed the Panamanian Embassy in Washington Thursday, handing it and more than $300 million in Panamanian assets over to the United States for safekeeping.

The winners of May 7 elections had been scheduled to take power Sept. 1, but the Noriega-controlled government annulled the elections after reports of a sweeping victory by opposition presidential candidate Guillermo Endara.

“On May 7, the people of Panama, by an overwhelming margin of votes, braved repression, intimidation and fraud to choose democracy over dictatorship. . . . But this act of self-determination was brutally repressed before the eyes of the entire world,” Bush said.

Lacks Legitimacy

“Panama is, therefore, as of this date without any legitimate government,” the President said.

Administration officials have said Washington, despite breaking relations, will keep open the U.S. Embassy in Panama, where the U.S. Southern Command is located.

If the break in relations continues, it will block the United States from taking crucial action called for in the Panama Canal treaties. Under the treaty, which calls for the United States to hand over the canal to Panama by the end of the century, the U.S. Senate must approve a Panamanian-appointed administrator for the canal by the end of 1989.