U.S. to Bar Citizens From Any Dealings With Noriega

The Bush Administration, imposing new sanctions against Panama, has decided to outlaw all financial dealings by U.S. citizens with strongman Manuel A. Noriega, his wife and 32 Panamanian companies in which they own shares, officials said Thursday.

The measure, scheduled to be announced next week, is the first of several new actions planned by U.S. officials to increase pressure on Noriega himself, rather than the Panamanian economy as a whole, the officials said.

They added that the Administration is also moving toward a decision to prohibit Panamanian-registered ships from calling at U.S. ports, an action that would presumably force many vessels to re-register in other countries, depriving Noriega’s government of more revenue. Panama today is one of the world’s major “flags of convenience” for maritime commerce.

The new sanctions come in the wake of a failed coup against Noriega. The Administration was criticized for not sufficiently aiding it.

Any U.S. citizen who deals with Noriega, his wife, his partner or his companies--in any transaction, anywhere in the world--could face fines of up to $500,000 per transaction and up to 12 years in prison.

One aim of the new measures is to feed Noriega’s “paranoia” in a way that could weaken his ability to maintain control over Panama’s military, a senior official said.

“We don’t think he’s sleeping well,” another official said. An abortive coup on Oct. 3, led by disaffected officers who had been close to Noriega, “shows that . . . his institutional base is crumbling beneath his feet,” he added.

Still, some officials concede that the Administration is having a hard time effectively pressuring Noriega. The United States has been trying to force the strongman out of office with financial sanctions for more than two years, but while the measures have brought Panama’s economy to a standstill, they have failed to budge the general.

“We’re looking for all the kinds of pressure we can,” the senior official said. “One of the problems is we’ve done most of the things we can without really hurting the Panamanian people badly. You can put more economic sanctions on, but it really hurts the people. . . . We don’t want to do that.”

The Administration is resorting to a novel twist of law to outlaw all transactions between U.S. citizens and Noriega: It is formally declaring the Panamanian and his wife to be “designated Cuban nationals” under the 26-year-old U.S. trade embargo against Cuba.

U.S. intelligence officials have long charged that Noriega has forged close links with the Communist regime of Fidel Castro, but only recently did State Department officials propose turning that charge against the Panamanian’s personal business holdings.

The Administration also has placed Noriega’s business partner, Carlos Duque, under the embargo, along with 12 firms he is believed to control.

“This has the effect of focusing on Noriega and his cronies in the (Panama Defense Forces),” said an official involved in preparing the new measures. “It is very focused and very tailored.”

Noriega’s companies, which include several import-export firms, are believed to conduct “substantial business” with U.S. firms, another official said, adding: “But it’s not Americans seeking them out. It’s the (Noriega) companies going out into the market, buying electronic goods and, in some cases, shipping them to Cuba. . . . The Americans may not know that Noriega owns shares.”

He said he could not provide an estimate of the volume of business or name any U.S. firms that may have dealt with Noriega-owned concerns.

U.S. officials are compiling lists of other Noriega associates and companies and may place them under the Cuban embargo as well, he said.

The Administration had begun discussing new sanctions against Panama even before the coup attempt, once the Organization of American States decided not to impose multinational measures against the Noriega regime, officials said. But the failure of the Oct. 3 coup, and the widespread criticism of the Administration’s failure to oust Noriega that followed, clearly gave new impetus to the issue.

The United States first imposed sanctions against Panama in mid-1987 and again in December of that year. Additional sanctions were imposed in March, 1988, after two federal grand juries indicted Noriega on drug trafficking charges.

Then-President Ronald Reagan ordered the seizure of Panamanian government assets in the United States and withheld U.S. payments for use of the Panama Canal. Later, the Treasury Department ordered U.S. firms doing business in Panama to stop paying taxes to Noriega’s regime, but the general persuaded them to ignore the order by threatening to jail the companies’ managers.

In a related action, the commander of U.S. troops in Panama has recommended shortening soldiers’ tours of duty to decrease the number of military spouses and children stationed there.

The Pentagon has been gradually withdrawing military families from Panama because of the danger that U.S. dependents could be caught in hostilities. But there are still about 11,000 American dependents in the country, officials said.

“We are reviewing the issue right now of whether or not that (withdrawal) should be accelerated,” White House spokesman Marlin Fitzwater said.

The United States has about 12,500 military personnel in Panama and about 2,700 civilian Defense Department employees.

Times staff writer Melissa Healy contributed to this report.