Bush Panama Trip Protested; GI Slain : Diplomacy: President will proceed with his visit today and speak at an outdoor rally despite the violence. Soldier in military vehicle is shot by gunmen in a car.

WASHINGTON — A U.S. soldier was killed and another wounded in Panama on Wednesday in violence sparked by anti-American demonstrations demanding that President Bush cancel his visit to that strategically located country.

According to the U.S. Department of Defense and news agency reports from Panama, the soldiers were hit as they rode in a military vehicle near the town of Chilibre, about 30 miles north of Panama City.

It was the first politically motivated killing of an American citizen in Panama in more than two years and occurred the day before the President’s arrival for a six-hour visit on his way to Rio de Janeiro for the Earth Summit.

“Any time an American serviceman is hurt, that’s bad; killed is worse,” Bush told reporters at the White House.

Nevertheless, White House Press Secretary Marlin Fitzwater said the President will go ahead with the visit and with plans to speak at an outdoor rally and meet with government officials today.

Three gunmen in a car opened fire on the soldiers’ vehicle with AK-47 assault rifles, the British news service Reuters reported from Panama City. The soldiers were traveling on the main trans-isthmus highway between Panama City and Colon near the site of a student demonstration against the Bush visit. U.S. forces regularly use the road to travel between bases on both sides of the isthmus.

The driver, whose name was not released by the Pentagon, died of gunshot wounds, and an unidentified serviceman traveling with him was hurt when the vehicle overturned, police reported. The injured soldier was listed in stable condition at a U.S. military hospital in Panama City.

Police said a 12-year-old Panamanian boy passing by was also injured in the attack.

In another incident, radio reports said two U.S. civilians were injured when students in Panama City burned a car outside the University of Panama. About 300 demonstrators marched from the university to a downtown plaza where riot police forced them to disperse by firing tear gas canisters.

Later Wednesday, demonstrators trashed a park where Bush is scheduled to speak today, the Associated Press reported.

After a march with black flags through part of downtown Panama City, several hundred demonstrators gathered at Porras Park. One group set fire to the red, white and blue bunting around a flatbed trailer that was to serve as a platform for the President’s address.

Police unleashed dozens of rounds of tear gas. Several square blocks were filled with the gas and smoke from garbage set alight by protesters, who also kicked over portable toilets and slashed tree branches, which they tossed onto the burning trailer.

AP reporters and photographers saw at least six arrests. Police beat one man with a pistol and were seen dragging people from buildings.

There had already been two days of scattered anti-American demonstrations and attacks. On Sunday, gunmen fired on a guard station at Albrook Air Base without hitting anyone. On Tuesday, demonstrators near the university set up street barricades and smashed the windshields of cars thought to be owned by Americans. Slogans of “Out With Bush” and “No to Gringos and Gringo-Lovers” were sprayed in red paint around the campus.

The demonstrators call the deaths of Panamanians killed in the December, 1989, invasion of their country “genocide.” They complained that the Bush Administration has done little to repair damage during the fighting or help Panama solve its economic problems.

Bush sent 27,000 U.S. troops to Panama 2 1/2 years ago to overturn and arrest former dictator Manuel A. Noriega, the military strongman who ruled the country with an iron fist while profiting from the flow of cocaine from South America to U.S. city streets.

Twenty-three Americans died; estimates of the Panamanian dead, military and civilian, range from 250 to more than 500.

The President’s political strategists had envisioned the stop in Panama as a celebration of Noriega’s overthrow and an antidote to Bush’s plummeting popularity. They had hoped to portray the invasion as a success. But the killing of the soldier stripped most of the luster from today’s visit.

Talking to reporters before the incident, a senior Administration official said that Bush’s primary goal in ordering the invasion was “to safeguard the lives of Americans.”

“The precipitating reasons for (the operation) were a series of assaults on Americans,” he said. “On Dec. 16, a Marine lieutenant was shot to death by the Panamanian Defense Forces, (and) the same day a U.S. Navy lieutenant and his wife were arrested and brutalized and abused.”

Other goals for the invasion, the official said, were to restore democracy to Panama, to stop the transshipment of narcotics through the isthmus and to safeguard the Panama Canal treaties.

“Two and a half years later, every one of those objectives has been realized,” the official asserted.

But Panama today is a classic illustration of the ancient debate over whether a glass is half full or half empty. Conditions are unquestionably better than they were when Noriega was in power, but they are not nearly as good as the White House apparently would like people to think.

Americans are probably safer in Panama today than they were under Noriega and his anti-American “dignity battalions” of irregular troops. But as the killing of the U.S. soldier demonstrates, serious problems remain.

In previous incidents, one soldier was killed and 15 American military personnel injured shortly after the invasion when someone threw a grenade into a Panama City nightclub. One soldier was killed about a year ago, although it is not known whether the attack was politically motivated.

The situation is much the same with the other goals of the 1989 assault.

With Noriega gone, the Panamanian administration of Guillermo Endara, no longer condones--and profits from--narcotics traffic. But the government, installed at the point of American bayonets, seems too weak to stop the flow of drugs. By most indicators, the shipment of cocaine through Panama now exceeds the trade in the Noriega years, at least in part because the dictator controlled the commerce to make sure he got his cut.

Endara was the apparent winner in elections that took place just before the U.S. invasion, but Noriega threw out the results. After U.S. troops ousted Noriega, Endara took the oath of office at an American military base. Although non-government experts do not question his democratic ideals, they say that his government has been ineffective and divided by factionalism. Crime, never much of a problem in Noriega’s police state, has increased sharply.

The senior Administration official who briefed reporters at the White House said that the anti-Bush demonstrations were, themselves, proof of Panama’s democratization.

“Panama is a free country, and you can demonstrate and make your views known and you don’t get your heads beaten as you did under Noriega,” the official said.

But narcotics control, perhaps the issue that most concerns the U.S. government, is a very mixed picture.

Terry McCoy, director of the Center for Latin American Studies at the University of Florida, said: “The government coalition has pretty much fallen apart. The national police (which Noriega controlled) was destroyed and has not been rebuilt.”

Administration officials say that the Endara government is cooperating with Washington in a way that Noriega never did. But even Fitzwater, the White House spokesman, acknowledged that drug trafficking continues to permeate Panamanian society.

State Department figures show that 10 tons of cocaine were seized last year, compared to a little more than four tons in 1990 and less than two tons in 1989, Noriega’s last year in power.

“Narcotics trafficking and drug-money laundering continue to be serious threats to democracy in Panama,” the State Department’s Bureau of International Narcotics Matters wrote in a report earlier this year. “Seizures indicate that the country is a major transshipment point for cocaine destined for the U.S. and Europe.”

In the first year after the invasion, the U.S. government gave Panama $368 million in economic aid. But the senior Administration official said the money was a one-time attempt to aid the economy.

Panama “isn’t really a candidate for U.S. foreign assistance” any longer, he said, because it “is not a poor country by most standards.”