Profile : Panama’s Economy Rests in His Hands : Comptroller Ruben Dario Carles is hated, even dreaded. But his austerity program has led to impressive growth.

The fax machine in Ruben Dario Carles’ 16th-story office overlooking Panama Bay hums constantly. Activity buzzes all around him: In one adjacent room sits an angry group of trash collectors demanding pay raises; in another, aides are launching a government investigation into an arms-smuggling scandal. Later a businessman in need of millions of dollars to develop Panama Canal land will come calling.

And so goes a typical day for Carles, Panama’s comptroller-general and arguably the most powerful man in the country.

Carles controls every penny the Panamanian government spends, and he is just as quick to say “no” to the trash collectors as to businessmen looking for government loans.

Ornery and cantankerous, the 72-year-old Carles is hated, dreaded, sometimes admired and usually regarded as an honest man--but one who would sooner balance a budget than spend money to, say, buy plastic gloves for women who sweep the dirty streets of Panama City.

His power reflects the weakness of a much-criticized president and a scandal-plagued central government and speaks to both the successes and failures of Panama’s economic recovery since the U.S. military ousted Gen. Manuel A. Noriega and installed President Guillermo Endara.

Coming to office in the December, 1989, invasion, the Endara government faced the daunting prospect of rebuilding an economy devastated by military plundering and rampant deficit spending, plus the effects of U.S. sanctions aimed at isolating Noriega. A key architect of the strategy of salvation would be Carles.

“He is the real president of Panama,” said former Vice President Ricardo Arias Calderon.

And Arias Calderon should know, having essentially lost a behind-the-scenes power struggle with Carles. The two fought over the direction of economic policy until Arias Calderon was forced from the vice presidency late last year.

Carles has implemented an austerity program aimed at controlling government spending and paying off part of the huge foreign debt amassed by the military. Under the program, Panama has enjoyed impressive economic growth in the last three years and redeemed itself with international lenders. But austerity has had a high social cost, with unemployment holding steady and poverty on the rise.

Carles’ office also played an important role in the sensitive investigation into a thwarted attempt to smuggle guns purportedly to Bosnia-Herzegovina. The scandal involves Panamanian diplomats and may eventually implicate other officials. Carles’ right-hand man, deputy comptroller Jose Chen Barria, heads the investigation.

A former vice president of Chase Manhattan Bank who is known universally by his nickname “Chinchorro,” Carles often gets the credit for economic growth--and the blame for hardships.

Hardly a week goes by without one protest or another--teachers demanding raises, Colon port workers demanding jobs. And many of the demonstrations end up at Carles’ doorstep. He rarely caves in.

“I was not appointed to say ‘yes,’ ” he said. “I was appointed to run things well. It is very easy to say ‘yes’ if the money is other people’s.”

Carles’ acerbic manner was on display recently when women street cleaners, organized in a group called the Blue Brigade, demanded--and received--an audience with the comptroller-general.

“You are here because today we have democracy,” he told the 10 women seated across a table from him. “You can do whatever you want. You can say whatever you want. You can threaten whatever you want.”

“No,” interjected the group’s leader, Maria Luisa Tunon. “No threats.”

Carles didn’t pause. “You can tell me to stand on my head, and I can tell you to stand on your head, and I’ll say you look fine. That’s democracy. So, what is it you all want?”

“It isn’t what we want, my love,” said Tunon, using a typically Panamanian familiarity. “It’s what we need .”

“Need?” snapped Carles. “Needs have no limits. The needs of some are the luxuries of others. The needs of some are the excesses of others.”

The women were asking for raises to their $175-a-month salaries, plus plastic gloves and garbage bags for their work. Carles took notes but ultimately said there was no money in the budget to oblige them.

To critics and admirers alike, Carles in many ways represents the generation of aristocratic Panamanians who ruled the country before Gen. Omar Torrijos led a populist coup in 1968.

In an interview at his busy office, Carles said he understands the anger and frustration of many Panamanians but that he simply will not, cannot, spend money that the government does not have. He pointed to a bloated bureaucracy that the government inherited from Noriega and complained that military-era labor codes have impeded his efforts to trim government fat. While the number of public employees has decreased, the payroll has increased.

Carles ticked off the accomplishments that he said show how healthy Panama’s economy is: high annual growth, low inflation, regular debt payments, an increase in bank deposits and new investments. Asked about unemployment, he grew exasperated. He moved to his desk and hurled open a fat ledger listing more than 2,000 construction projects and related government contracts, indicating with a sweep of his arm that this is the way to create jobs.

“Never has the government done this much!” he said. “From any possible frame of reference, there are positive indications of development and progress.”

Critics say Carles is not above loosening the purse strings when the beneficiary is an associate. They point to seemingly frivolous government expenditures such as the thousands of dollars spent to send the widow of the founder of Endara’s political party to Spain as a special ambassador to a cultural fair.

“He is seen as a man who is as straight as an arrow,” said Roberto Brenes, an opposition politician and president of the Stock Exchange, “but he has favorites and cronies.”

People such as political foe Arias Calderon fault Carles for the government’s perceived inattention to the poor. According to Arias Calderon, $1.5 billion was budgeted for social programs in the years 1990-92 but only $500 million was spent.

The government “opted to give priority, almost exclusively, to Panama’s financial debt, (neglecting) the social debt,” Arias Calderon said.

Carles’ critics attribute much of this fiscal conservatism to his banker mentality. But his supporters say it is precisely this frugality that is the basis for his success.

“He’s an extraordinary man, one of the stubbornest and one of the ablest men here,” said a senior U.S. official.

“Overall, he’s a major plus for the government. He’s done some stupid things, but he is the kind of guy who gets things done, and he’s a man of principle. I knew he was honest because everybody, without exception, complained about him.”

Even Carles’ admirers say he micro-manages everything, sometimes to the point of paralyzing the normal administration of government.

Carles, for example, was blamed for holding up a $30-billion development project for Panama Canal land because he would not authorize a $2-million loan for start-up expenses for the commission appointed to oversee the project. Businessmen from the commission made personal pleas to Carles in visits to his office.

In another case, he made life and work difficult for the national Election Board by refusing to authorize money for computers.

Carles told the Panama Canal group they didn’t need a government loan because they were “sitting on a gold mine,” according to a person familiar with the conversation.

And asked why he would not authorize the computers for the Election Board, Carles reportedly said: “They can use pencils.”

Biography

* Name: Ruben Dario Carles

* Title: Panama’s Comptroller-General

* Age: 72

* Personal: Studied business administration and economics at Northwestern and Columbia. Vice president at Chase Manhattan Bank for 30 years. Panama’s agriculture minister, 1964-68. Lived in exile during the military governments of Omar Torrijos and Manuel Antonio Noriega. Taught economics in Panamanian and Honduran universities. Married to Querube Solis. They have no children.

* Quote: “I was not appointed to say ‘yes.’ I was appointed to run things well. It is very easy to say ‘yes’ if the money is other people’s.”