Papal Envoy OKs U.S. Army Rescue if Hostages Taken : Panama: An American commander and the Vatican’s nuncio reportedly discussed memo granting limited authority to enter the embassy.

The Vatican’s representative in Panama City has granted authority to the U.S. Army to free any embassy employees who might be taken hostage by former Panamanian dictator Manuel A. Noriega or others who have taken refuge in the Vatican’s embassy there, according to a document obtained by The Times.

One U.S. official interpreted the authorization as an invitation to the U.S. military to seize Noriega, who took refuge in the embassy on Christmas Eve. Another official, however, said: “It doesn’t mean we can just walk in any time we want.”

The document declares:

“In the case that the suscriber (apparently a reference to the memo’s author) or any member of the personnel of this Embassy be taken as hostage by any person or group of persons, I hereby authorize the United States of America Army to take all the steps that it may deem necessary to set the hostages free.

“Any harm to the hostages must be avoided.”

The memorandum was addressed “to whom it may concern” and was signed by Archbishop Jose Sebastian Laboa, the papal nuncio in Panama City. It is dated Dec. 26, two days after Noriega, accompanied by several loyalists, took refuge in the embassy after the Dec. 20 invasion of Panama by U.S. forces.

The authenticity of the letter and its contents were confirmed by three senior Bush Administration officials. A State Department spokesman refused to confirm or deny the existence of such an authorization. An Administration official, however, said that the State Department learned of the memorandum for the first time Wednesday night and added that officials there reacted with shock at the document’s contents.

Administration officials said that, when Noriega took refuge in the mission, the United States warned that it could not be responsible for the safety of the mission’s employees. That might have led Laboa to provide the advance authorization for U.S. action.

A senior U.S. government official declared that the memorandum could also be used as rationale for the Army to seize Noriega.

“You don’t go in unless they invite you in,” he said, “and this sounds like an invitation.”

Several U.S. officials said that Gen. Maxwell Thurman, commander of the U.S. Southern Command, which has overseen the American military operation in Panama, apparently discussed the writing of such a memo with Laboa before the envoy wrote it. The memo was dated Tuesday, the day the ambassador talked at length with Thurman in front of the embassy.

Several of the Noriega loyalists at the papal embassy brought their families with them, according to U.S. officials. In addition, four Basque terrorists, deported from Spain to Panama in 1987 and fearing for their freedom, took refuge in the mission on the day of the U.S. invasion.

U.S. sources said that officials of the mission took the firearms of the Noriega loyalists when they were admitted. But a senior U.S. government official added: “You can’t be sure they’ve given them all up.”

According to one Administration official, Laboa raised with U.S. officials as early as Christmas Day the possibility that a hostage situation was in progress or could develop. Laboa reportedly said that he would want the United States to attempt a rescue if such a hostage-taking were confirmed.

American military officials were concerned that Laboa’s oral expression of his wishes would not constitute sufficient authority for action by U.S. forces and asked him to put his wishes in writing.

“It doesn’t look good going up against the Catholic Church,” said a government official in Washington. “It looks great, though, to come to its rescue.”

As the diplomatic mission of the Vatican, the “apostolic nunciature” is considered under international law to be the territory of a sovereign entity. Without a formal “invitation” to U.S. forces to intervene, any action by U.S. forces would be a clear contravention of international law, officials said.

“It’s not carte blanche,” said one Administration official. “The language is pretty specific. It doesn’t mean we can just walk in any time we want.”

A second Administration official took pains to distinguish between Laboa’s written “authority” and the necessary presidential authority that U.S. forces would need to make a rescue attempt.

“That’s not authority,” the official said. “It’s a lot less than meets the eye.”

The official said there are no grounds for concluding that a hostage-taking incident already has occurred and added that neither a hostage seizure nor a U.S. rescue is a “likely outcome.”

“But he (Noriega) might do something stupid,” the official said. “And we’re prepared for everything.”

While officials denied that U.S. military authorities dictated the contents of Laboa’s memorandum, they said U.S. officials were eager to have Laboa’s wishes recorded.

“If I were he, and I were the slightest bit worried I might be taken hostage and that at that time it would be too late, I would set it to writing, too,” one official said.

Another senior government official, however, said Thurman is likely to have encouraged Laboa to offer the United States a formal invitation to intervene. Such an action could produce one of the goals of the U.S. invasion--the capture of Noriega.

“I know Thurman is impatient and would like to do something about the situation at the embassy,” the official said. “He is a devout Catholic, and he finds the situation very troubling.”

American tanks and troops had the Vatican’s embassy in Panama City surrounded Wednesday as the U.S. operation entered its eighth day. Government officials in Washington acknowledged that the encirclement might raise pressure on Noriega and his loyalists and provoke the hostage-taking that could lead to a U.S. rescue attempt.

“It’s kind of confining,” said one official. “He’s not allowed to communicate, although he can see that whatever he had is slowly but surely crumbling. He could become fairly desperate.”

One Administration official said the U.S. forces surrounding the embassy would be careful not to provoke a hostage-taking. At the same time, officials said that it still is not clear how the U.S. forces surrounding the nunciature would know whether hostages had been taken.

“They may have worked out some signals,” said one official, who added jokingly, “Maybe if you see all the shades go down, you’ll know.”

There is only one recent precedent for a country to storm the diplomatic mission of another nation in an attempt to free hostages. In May, 1980, British commandos mounted a rescue attempt on Iran’s embassy in London, where Iranians held 20 hostages.

In that case, Abolhassan Bani-Sadr, then president of Iran, requested Britain’s help in freeing the hostages. In a letter of thanks following the commando raid, Bani-Sadr observed that “each and every government (must) look after the safety of diplomats on their territory.”

Times staff writers Jack Nelson and Robin Wright contributed to this story.

CLEANUP ESTIMATE:Panama says it will take $600 million to rebuild. A5

NEW PLEA FOR NORIEGA

President Endara urges the Vatican to turn him out. A6

THE PANAMA STORY The Quest for Noriega

The Vatican said it will not turn deposed dictator Manuel A. Noriega, who has taken refuge in its embassy in Panama City, over to the United States. However, the Vatican’s representative in Panama City has granted authority to the U.S. Army to free any embassy employee taken hostage by Noriega.

President Bush, still hoping to change Pope John Paul II’s mind, may send a special envoy to Rome to argue the case.

Panama’s new president, Guillermo Endara, demanded that the Vatican revoke the sanctuary given Noriega in the papal embassy.

Reconstruction

The Endara government estimated that damage from the U.S. invasion and the looting that followed will total $600 million.

The Money Trail

U.S. authorities turned over $5 million to Panama from one of several bundles of cash that American soldiers found in Noriega’s headquarters. Also, France froze Noriega deposits in French banks totaling between $3.4 million and $4.3 million. Washington filed similar requests with Switzerland, Luxembourg and Britain.