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Getting to Sack the General

For three short hours last February Panamanians celebrated in the streets. I drove through Panama City with a man who had been beaten and imprisoned under the current regime, and had been exiled for ten years in the Seventies by the government of General Torrijos. He was now flying the white flag of Panamanian democracy and honking his horn. Throughout the city people were sounding their horns in the streets, or standing waving white handkerchiefs; white flags were displayed from balconies and buses. It was six PM, February 25, 1988. An hour earlier, President Eric Arturo Delvalle had announced over national television that he had fired the military strong man General Manuel Antonio Noriega. With General Noriega apparently gone, Panamanians’ prayers for democracy seemed about to be answered.

We turned into Fiftieth Street, the traditional gathering place of the Civic Crusade for democracy, the street where the riots designed to oust Noriega had begun last summer. Then we heard shots. There was a smell of tear gas in the evening air. The white flags were hastily pulled in. We drove in silence between the lines of riot police—the self-styled Dobermans—and knew that something had gone wrong. In another hour we learned over foreign television that President Delvalle had failed. The army had rallied to Noriega. Delvalle was soon to go into hiding. The sole opposition newspaper was being occupied by troops. Twenty years of military dictatorship were not about to end. In Panama City that night, the streets were silent and deserted.

Delvalle’s attempt to rid Panama of Noriega was supported, though probably not initiated, by US policy makers. If so, this indicated a shift in US policy. For almost twenty years the United States supported the buildup of the Panamanian Defense Forces to keep Panama under control and to train the local armed forces that are to guard the Panama Canal when it is finally turned over to the Panamanians in the year 2000. In addition, the Reagan administration also used General Noriega to obtain information on Cuban activities in the region and help supply US aid to the Nicaraguan rebels in their war against the Sandinistas. Revelations by Noriega’s close associates to a Miami grand jury and in Senate hearings that Noriega was a major drug trafficker and had been supplying arms and information to both sides in the Nicaraguan conflict as well as in the protracted war in El Salvador seem to have forced the administration to revise its policy. No longer could the Pentagon and the CIA look upon Noriega as a “strategic asset.”

But even if Noriega is finally forced out through US pressure and Panamanian protests, will the armed forces rid themselves of corruption? Will the United States still honor the 1977 canal treaty, and hand over an important international waterway to a country that has become a haven for drug dealing and money laundering? And what is to become of the ten thousand US troops of the Southern Command and their thirty thousand dependents if Panama becomes in effect a hostile power?

To try to answer these questions I went to Panama in February and spoke with, among many others, leaders of the opposition, including Ricardo Arias Calderón, the head of the Christian Democrats, Aurelio Barría and Eduardo Vallarino, leaders of the Civic Crusade, the middle-class group that has mounted protests against Noriega, and Nicolás Ardito Barletta, the former president of Panama, as well as the US chief administrator of the Panama Canal Commission and his Panamanian deputy, and the commander in chief of the US Southern Command.


From its earliest history Panama has been a place of transit. The isthmus may have been part of Colombia in the nineteenth century, but it was connected geopolitically to the United States soon after gold was discovered in California in 1848. To make it easier to travel to the gold fields, New York bankers and merchants built a railroad across the isthmus by 1853; it proved a great financial success until 1869, when the first US transcontinental railroad sharply reduced its traffic. It was not until 1882 that Ferdinand de Lesseps, the French entrepreneur and builder of the Suez Canal, formed a company and began work on a canal. Defeated by disease and mismanagement, de Lesseps abandoned work on the waterway in 1893.

The US undertaking to build a canal was made possible only when Colombia authorized the French Compagnie Nouvelle to sell its rights and properties to the United States in 1903 and granted the United States control of a canal zone from the Atlantic port of Colón to Panama City on the Pacific coast. The treaty signed between the United States and Colombia was, nonetheless, turned down by the Colombian senate. President Theodore Roosevelt, however, was determined to have a canal. Encouraged by a French engineer, Philippe Bunau-Varilla, the inhabitants of Panama declared their independence from Colombia in 1903. It was a virtually bloodless revolution, a kind of opera buffa that included sending the commanders of the Colombian military detachment on a train trip from the Atlantic to the Pacific while they left behind the troops they commanded. It also included the appearance of a US gunship.

Washington immediately recognized the new republic in November 1903, and the following January Roosevelt told Congress that the United States, in the words of David McCullough, “had a mandate from civilization to build the canal.” The people of Panama, TR later said, “rose literally as one man.” (“Yes, and the one man was Roosevelt,” remarked Senator Edward Carmack of Tennessee.) The first canal treaty was signed between Secretary of State John Hay and Bunau-Varilla: no Panamanian signature was deemed necessary. The canal itself was begun soon after and completed on August 15, 1914, and under the terms of the 1903 treaty the United States was granted “in perpetuity” control of the ten-mile-wide Canal Zone. Panama was established as a protectorate of the United States. In return, Panama was to receive an annual annuity.1

From the outset, then, Panama was an anomaly. It was invented because of its geographical position, and the mainstays of its economy have been the employees who built and later maintained the canal and the US military presence there. Today agriculture and industry together contribute at best about 30 percent of the gross domestic product. Until recently, Panama was one of the richest countries in Latin America, with a per capita gross domestic product of $2200 (as of 1985). The distribution of wealth, however, was highly unequal, with 2.1 percent of the national income going to the bottom 20 percent and 17.8 percent to the top 5 percent. Panama’s population is only slightly more than two million, many of whom live in the cities at each end of the canal—Colón on the Atlantic coast (about 60,000) and Panama City on the Pacific (about 400,000). Roughly 70 percent of the population is of mixed Spanish and Indian blood—the so-called mestizos—with the remaining population made up of black, white, Indian, and Asian minorities. As in many other Latin American countries, the business elite is mainly white, while the poorest people tend to be blacks and Indians.

The canal itself not only bound the United States and Panama together but divided the country in two by a zone over which Panama has never had control. The only legal currency is US dollars, known as balboas. Panama can therefore pay neither its public employees nor its debts by printing money. Between 1903 and 1968 Panama had a constitutional system of government, dominated by a commercial oligarchy. During this period, the armed forces were little more than a militarized police force, though they periodically intervened to back presidents who would not challenge their prerogatives. All this changed in 1968 when the charismatic populist leader Colonel Omar Torrijos Herrera and the National Guard overthrew the legally elected president, Arnulfo Arias Madrid.

Arnulfo Arias distrusted the military and seemed likely to curb the growth of military spending, and he was distrusted by the United States. He had been president during the early months of World War II, and, I was told, was seen by Washington at that time as sympathizing with Hitler’s regime, especially the order and discipline the Nazis demanded. Soon after he was elected, Arias insisted that the Caribbean blacks in Panama, who often held British as well as Panamanian passports, learn Spanish. He put pressure on local Chinese businessmen to sell out to native Panamanians as part of an effort to instill a nationalist spirit. He even wanted Panama to have the power to create its own money, an idea he now regrets. “I wanted to make a little Switzerland out of Panama,” he told a friend recently, “but no one told me there were no Swiss here.”

With the war in Europe threatening to spread to the Western hemisphere, the Roosevelt administration was angry at Arias’s refusal to grant US rights to new bases unless Washington paid a high fee for them. The oligarchy of businessmen and landowners was also upset that Arias’s populist policies had displaced them. In 1941, he was briefly overthrown by the military with the tacit encouragement of the United States. Forced out again by the military in 1951 when he started to move against them, he was deposed for the third time in 1968 by Torrijos, this time only ten days after taking office. At eighty-seven, Arnulfo Arias nonetheless remains the most commanding figure in Panamanian politics, and may well be indispensable in any transition to democracy.

Torrijos also portrayed himself as a Panamanian nationalist. The National Guard, which numbered about 6,000 troops when he took power, was made up mostly of blacks or of middle-class mestizos like Torrijos himself, who was the son of a rural schoolteacher. National Guard officers were enthusiastic about “Torrijismo“; they stressed programs to improve conditions in the rural regions and to promote the poorer—especially the black—classes to political power. During Torrijos’s thirteen years as president before he was killed in an air crash in 1981, the National Guard built schools and hospitals, repaired roads and bridges, and constructed low-cost housing for the campesinos who came to the cities; and in these activities the army had both moral and economic support from the United States.

This was the era of the Alliance for Progress, when Washington believed that the armed forces should be encouraged to work among the people, winning “hearts and minds,” in order to forestall Marxist uprisings. Because there was no military academy in Panama, many of the officer class of the military were being trained in the Peruvian military academy, where reform-minded military officers had taken power in the same year as Torrijos.

The economy of Panama was also transformed during the Torrijos years. By instituting strict secrecy laws Panama became an international banking center, and by 1984 134 international banks were domiciled in Panama. The Atlantic port of Colón became the second largest free-trade zone after Hong Kong. And the economy boomed. At the same time, Panama’s substantial borrowing from abroad was used to expand public services such as transport and hospitals as well as for rural development and for urban housing. Two years after Torrijos’s death, the foreign debt stood at $3.4 billion, or 78 percent of GDP, one of the highest per capita debt levels in the world. The high growth of almost 5 percent through 1982 fell off abruptly as the world economy went into a recession. Nonetheless, during the Torrijos years Panama turned into a major international financial center.

  1. 1

    The story of the building of the canal and the events surrounding the 1903 uprising is splendidly told in David McCullough, The Path Between the Seas: The Creation of the Panama Canal, 1870–1914 (Touchstone/Simon and Schuster, 1977), Chapters 1–14; Roosevelt quotation, p. 382.

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