![[CRS Issue Brief for Congress]](iblogo.gif)
CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS
Looking ahead, U.S. policymakers face the important issue of the future U.S. military role in Panama beyond the end of 1999, when Panama assumes control of the Canal. On September 6, 1995, President Clinton and Panamanian President Ernesto Perez Balladares met in Washington and announced that the United States and Panama would begin informal discussions to determine if there was mutual interest in the United States maintaining a military presence in Panama beyond the end of 1999. Initial talks were scheduled for late November 1995, but were postponed and have not yet been rescheduled. As of October 1996, there were about 6,800 U.S. troops in Panama, stationed on 7 major military installations, with the primary purpose of providing for the defense of the Canal. According to the Department of Defense, plans for the drawdown of U.S. troops calls for 5,600 troops on five major defense sites by the end of FY1998, in accordance with the U.S. commitment under the Panama Canal Treaties to withdraw U.S. forces by the end of the decade. Congress has gone on record twice in previous sessions favoring negotiations to consider a continued U.S. presence in Panama beyond 1999, and on September 5, 1996, the Senate again approved a resolution, S.Con.Res. 14 (Helms), calling on the President to negotiate a new base rights agreement with Panama.
With regard to the future operation of the Canal, some Members have expressed concern about helping to bring about a smooth transfer of power when Panama assumes control of the Canal at the end of the century. In April 1994, President Clinton submitted recommendations to changes to the Panama Canal Commission (PCC) in order to facilitate and encourage the operation of the Canal through an autonomous entity under the government of Panama when it assumes control of the Canal. On February 10, 1996, President Clinton signed into law the FY1996 defense authorization bill (P.L. 104-106, S. 1124) that includes provisions amending the Panama Canal Act of 1979 in line with the President's recommendations. Further action was taken in the FY1997 defense authorization (P.L. 104-201, H.R. 3230) signed into law September 23, 1996, which includes provisions giving the PCC greater autonomy to facilitate the transition of the Canal to Panamanian control in 1999.
On October 10, 1996, the Department of State appointed John Negroponte (former U.S. Ambassador to Honduras, the Philippines, and Mexico) as Special Coordinator on the issue of a continued U.S. military presence in Panama.
In mid-November 1996, Panamanian officials stated that the bases issue was not on the negotiation table, and President Perez Balladares announced that Panama would begin the 21st century "without the presence of foreign military bases" (Miami Herald, November 19, 1996). Subsequently, the U.S. Embassy issued a statement that the United States continues "to be ready to begin exploratory talks." Back in September 1995, President Clinton and President Perez Balladares met in Washington and announced that the United States and Panama would begin informal discussions to determine if there was mutual interest in the United States maintaining a military presence in Panama beyond the end of 1999. Initial talks were supposed to be held in late November 1995, but were postponed and have not been rescheduled. Panama maintains that a base agreement is only possible if there is some type of economic compensation for the use of the facilities. The United States has repeatedly maintained that it would not pay for the use of the bases.
At this juncture, it appears that the focus has shifted to a potential U.S. contribution to a proposed multilateral counternarcotics center in Panama. In early July 1996, President Perez Balladares had announced that Panama would be willing to allow the United States to use Howard Air Force Base, at no cost, as an international drug interdiction center. He stated that Panama would "provide the facility free of charge as part of our contribution to the drug war." U.S. officials have indicated that the United States is interested in a military component at the proposed antidrug center. Some Panamanian opponents of the proposed center argue that it is a facade to continue a U.S. military presence in Panama.
The December 1989 U.S. military intervention was the culmination of two and a half years of strong U.S. pressure against the de facto political rule of General Manuel Antonio Noriega, commander of the Panama Defense Forces (PDF). President Bush ordered U.S. forces into combat on December 20, 1989 for four reasons: "to safeguard the lives of Americans, to defend democracy in Panama, to combat drug trafficking, and to protect the integrity of the Panama Canal Treaty." A new Panamanian government was installed headed by Guillermo Endara, who was widely believed to have won the May 1989 elections by a 3-1 margin. On January 3, 1990, General Noriega, who had taken refuge at the Vatican Embassy, turned himself over to U.S. officials, whereupon he was arrested by members of the U.S. Drug Enforcement Administration and brought to the United States to stand trial on drug trafficking charges. After this, President Bush announced that all four objectives of the U.S intervention had been accomplished. (After a seven-month trial, on April 9, 1992, Noriega was convicted on 8 out of 10 drug trafficking counts in U.S. Federal court in Miami, and on July 10, 1992, he was sentenced to 40 years in prison. In March 1996, Noriega's attorneys appealed to U.S. Federal court for a new trial, alleging that a witness against Noriega had received $1.25 million to testify against him, but the request for a new trial was denied.)
Seven years after the U.S. military intervention, Panama has made notable economic and political progress, with abundant U.S. assistance and cooperation, but the country still faces critical challenges. The economy has rebounded, but critics maintain that the recovery has not trickled down to the nation's poorer classes. Under the Endara government, a new civilian Public Force replaced Noriega's Panama Defense Forces (PDF), but the demilitarization process was difficult, with some police and former PDF members at times plotting to destabilize, if not overthrow, the government. Panama cooperates closely with the United States on counter-narcotics measures, but the nation remains a major narcotics money laundering and illicit drug transshipment center. The government generally respects human rights, but, as noted by the State Department in its human rights report for 1995, principal human rights problems are: prolonged pretrial detention; an inefficient and often corrupt criminal justice system, and overcrowded, decrepit prisons.
The future of the U.S. military presence in Panama beyond the end of the decade is an issue which could be influenced by Panama's progress in these areas as well as many other factors. Most importantly, these include: the perceived importance of the U.S. bases for defending the Canal, contributing to U.S. military activities in other parts of Latin America, or providing unique U.S. military training opportunities; and the overall cutback of U.S. military forces in light of the end of the Cold War (including U.S. base closures and the associated economic costs for the U.S. economy). Congress has already gone on record calling for negotiations to consider a base rights agreement to maintain troops in Panama beyond the end of 1999. Opinion polls have shown that a majority of Panamanians would like to see a continued U.S. military presence.
On May 8, 1994, Panamanians went to the polls to vote in presidential and legislative elections which observers have called the freest in almost three decades. The results of the presidential race confirmed what opinion polls had been saying in the months leading up to the elections. Ernesto Perez Balladares, candidate of the former pro-Noriega Democratic Revolutionary Party (PRD) who led a coalition known as "United People" (consisting of the PRD, the Labor Party (Pala), and the Liberal Republican Party (PLR)) won the election with 33% of the vote. Secretary of State Warren Christopher expressed U.S. satisfaction that the elections were conducted freely and fairly, and indicated that the United States would work closely with the new government to ensure a smooth transfer of the Panama Canal to Panamanian control by the end of the century. Perez Balladares was inaugurated on September 1, 1994.
Placing a surprisingly strong second, with 29% of the vote, was Arnulfist Party (PA) candidate Mireya Moscoso de Gruber (widow of former president Arnulfo Arias) who headed a coalition known as the "Democratic Alliance." Internationally known salsa singer Ruben Blades, candidate of the Papa Egoro party, placed a disappointing third, with just over 17% of the vote. In 1993, Blades had topped public opinion polls of presidential hopefuls, but had dropped to second in 1994 polls. In fourth place, with between 16-17% of the vote, was former Controller General Ruben Dario Carles, candidate of an electoral coalition dubbed "Change 94." Three other candidates each received 2% or less of the total vote.
In the electoral race, Perez Balladares campaigned as a populist and advocated greater social spending and greater attention to the poor. He stressed the need for addressing unemployment, which he termed Panama's fundamental problem. Perez Balladares severely criticized the Endara government for corruption, while weathering attempts to portray him as having been closely associated to General Noriega. (Perez Balladares served as campaign manager during the 1989 elections for candidate Carlos Duque, which the Noriega regime had tried to impose through fraud.) Instead, Perez Balladares focussed on the PRD's ties to the populist policies of Gen. Omar Torrijos, Panama's military leader who died in a plane crash in 1981. While some Panamanians remained wary of the PRD's return to political power, fearing that it could signify a return to the authoritarianism and corruption that characterized the government during Noriega's de facto rule, Perez Balladares has worked to ease fears by promises to fight narcotics trafficking and maintain civilian leadership for the nation's security forces.
In the elections for 72 members of the Legislative Assembly (71 elected plus one so-called "Lone Ranger" seat for parties retaining their legal status, but having no candidate elected) Perez Balladares' United People coalition won 33 seats (PRD 30, PLR 2, Pala 1). The new Solidarity Party, which won 4 Assembly seats, officially supported the Perez Balladares' coalition during the first year of the Perez Balladares government, thus giving the ruling coalition a total of 37 seats, a one seat majority. In early September 1995, however, the Solidarity Party withdrew from its official support of the government coalition, and indicated that it would vote independently although not necessarily in opposition to the ruling coalition. With regard to opposition parties, Moscoso de Gruber's Democratic Alliance won 20 seats, while the Change '94 alliance won 8 Assembly seats Ruben Blades' Papa Egoro party won 6 seats, while the Christian Democrats were dealt a resounding defeat, winning just 1 seat, down from 28 won in the 1989 elections.
During his first year, President Perez Balladares focussed on efforts to modernize the Panamanian economy, including the passage of laws for tax reform, education reform, and labor reform. However, the government's efforts to enact labor reforms -- designed to make labor legislation more flexible in order to attack foreign investment and increase employment -- met with significant resistance. On August 4, 1995, thousands of Panamanian workers representing a federation (SUNTRACS) of 49 unions went on strike to protest changes in the labor law. The strikers blocked streets and clashed with riot police; as a result, four people died and more than 300 strikers were arrested. At the outset, President Perez Balladares commented that the strikers had no popular support, and vowed that the labor changes would be enacted. The strike and protests continued, however, with support from an additional 94 labor unions. As a result, President Balladares announced on August 10 that his government was prepared to made modifications to the proposed reform. The Legislative Assembly subsequently approved the labor reform on August 12 with the modification, and the workers strike was called off.
In congressional testimony in March 1995, the Clinton Administration described U.S. relations with the Perez Balladares government as "quite positive," with Panama helping the United States on important foreign policy matters, including providing a safehaven for Cuban migrants and accepting Haitian military ruler General Cedras for asylum in October 1994. The Administration also cited the Perez Balladares government's full cooperation with the United States on counternarcotics issues, noting the government "has moved quickly to set up an institutional framework within which money laundering can be detected and prosecuted."
A key issue facing U.S. policymakers is whether or not the United States should negotiate a base rights agreement with Panama to allow U.S. forces to remain beyond the end of the century. Under the terms of the Panama Canal Treaties, U.S. forces are to withdraw by the end of 1999, unless an agreement is reached to continue their presence, and Panama will assume responsibility for defending as well as operating the Canal. Nevertheless, in exercising their responsibilities to maintain the regime of neutrality (keeping the canal secure and open to all nations), both the United States and Panama, will each independently have the right to use military force to reopen the canal or restore its operations.
Current Presence and Role. As of October 1996, there were about 6,800 U.S. troops in Panama (down from 10,000 in 1993), stationed on 7 major military installations -- Fort Sherman, Fort Clayton, Albrook Air Force Station, Rodman Naval Station, Howard Air Force Base, Fort Kobbe, and Galeta Island. Two other major installations, Fort Davis and Fort Espinar were returned to Panamanian control in early September 1995. And on October 1, 1996, Fort Amador, a U.S. facility at the Pacific entrance to the Canal, was returned to Panamanian control. According to the Department of Defense (DOD), plans for the drawdown of U.S. troops calls for 5,600 troops on five major defense sites by the end of Fiscal Year 1998. The major part of the remaining U.S. forces will be consolidated at Howard Air Force Base, Rodman Naval Station, and Fort Kobbe at the Pacific entrance to the Canal with a small force to be consolidated on the Atlantic side until the withdrawal is complete in 1999.
U.S. military forces in Panama have several functions. The primary purpose of the troops is to provide for the defense of the Panama Canal, as set forth in the Panama Canal Treaties, until December 31, 1999. Another function served by the presence of the U.S. military in Panama stems from its responsibility for activities throughout Latin America. Panama serves as the headquarters of the U.S. Southern Command (SOUTHCOM), a unified command responsible for all U.S. military operations south of Mexico. In March 1995, President Clinton announced that SOUTHCOM headquarters, located at Quarry Heights, would be moved to Miami, a move that would begin within 6 months and would be completed by June 1998. Reportedly the move will take place ahead of schedule, by September 1997.
U.S. bases in Panama also support assistance to Latin American nations combatting drug trafficking, such as aerial reconnaissance and counter-narcotics training. According to DOD, Howard Air Force Base provides secure staging for detection, monitoring, and intelligence collecting assets. DOD also maintains that Panama provides unique opportunities and facilities for military training, including the Jungle Operations Training Center at Fort Sherman and the Navy Small Craft Instruction and Technical Training School. In addition, U.S. facilities in Panama were also used for another role from September 1994 until February 1995, when they were used to house for Cubans transferred from U.S. camps at Guantanamo Bay, Cuba. Panama had agreed to allow up to 10,000 Cubans fleeing their island nation to be housed on the U.S. military bases for a period not to exceed six months.
Into the Next Century. An important long-term issue for U.S. policymakers is the role of the U.S. military in Panama beyond the 1990s. Some observers, both in the United States and Panama, have called for future negotiations for U.S. bases and facilities to remain after the end of 1999.
In 1995, Panama and the United States agreed to begin informal discussions on the future of U.S. bases in Panama, but the talks were postponed in November, and have not yet been rescheduled. On September 6, 1995, President Clinton and President Perez Balladares met in Washington and announced that the two countries would begin informal discussions to determine if there was mutual interest in the United States maintaining a military presence in Panama beyond the end of 1999. Initial talks were supposed to be held November 30 - December 1, 1995, but were postponed indefinitely. Observers maintain that Panama asked for the postponement in order to build domestic political support for maintaining U.S. bases. While a majority of Panamanians support a continued U.S. military presence, Panamanian opponents have been vocal and have staged protests at various junctures.
Another factor in the postponement of the talks was Panama's desire for economic compensation for the use of the bases. U.S. officials have indicated that they will not pay for the use of the bases. When the talks were postponed on November 23, 1995, President Perez Balladares stated: "For the time being, and as long as the position that there will be no economic compensation for Panama prevails, I do not foresee a resumption in the immediate future" (Foreign Broadcast Information Service). On April 23, 1996, Perez Balladares stated that his government, which he said was working under the assumption that they will be no bases after 1999, would not ask the United States to start the talks. In mid-November 1996, Panamanian officials stated that the bases issue was not on the negotiation table, and President Perez Balladares announced that Panama would begin the 21st century "without the presence of foreign military bases." (Miami Herald, November 19, 1996)
On the U.S. side, some U.S. officials seemed optimistic about a continued U.S. military presence in Panama. In early June 1996, Gen. John Sheehan, head of the United States Atlantic Command, stated that he expected about 4,000 U.S. troops would remain in Panama after the end of 1999. On October 10, 1996, the Department of State appointed John Negroponte (former U.S. Ambassador to Honduras, the Philippines, and Mexico) as Special Coordinator on the issue of a continued U.S. military presence in Panama. In late November 1996 (after Panamanian officials had stated that the bases issues was off the table) the U.S. Embassy issued a statement that the United States continues "to be ready to begin exploratory talks."
At this juncture, it appears that the focus has shifted to a potential U.S. contribution to a proposed multilateral counternarcotics center in Panama. In early July 1996, President Perez Balladares had announced that Panama would be willing to allow the United States to use Howard Air Force Base, at no cost, as an international drug interdiction center. He stated that Panama would "provide the facility free of charge as part of our contribution to the drug war." The President indicated that Panama was waiting for a U.S. response to work out details on the number of aircraft and military troops that would be needed. Preliminary discussion between the two countries reportedly have taken place on the drug center. U.S. officials have indicated that the United States is interested in a military component at the proposed antidrug center. Some Panamanian opponents argue that the center is a facade to continue a U.S. military presence in Panama.
Congress has gone on record twice in previous sessions favoring negotiations to consider a continued U.S. presence in Panama beyond the end of 1999, and in the 104th Congress the Senate approved a nonbinding resolution on the issue. In 1991, Congress enacted legislation (P.L. 102-190, Section 3505) expressing the sense of Congress that the President should begin negotiations with Panama to consider whether the two nations should allow the permanent stationing of U.S. forces in Panama past 1999. Twelve years earlier, Congress had approved the Panama Canal Act of 1979 (P.L.96-70, Section 1111) which states that "it is the sense of the Congress that the best interests of the United States require that the President enter into negotiations" with Panama "for the purpose of arranging for the stationing of United States military forces after the termination of the Panama Canal Treaty." And on September 5, 1996, the Senate approved S.Con.Res. 14, expressing the sense of Congress that the President should negotiate a new base rights agreement with Panama, while consulting with Congress regarding any bilateral negotiations that take place.
Factors Influencing U.S. Policymakers. There are several factors which could influence the U.S. decision of whether to negotiate a base rights agreement with Panama. One of the most important is the perceived importance of the U.S. military presence in Panama for defending the Canal or for carrying out other U.S. military activities in Latin America, such as drug monitoring and interdiction. Could these U.S. military functions be carried out as effectively from bases located in the United States or from another Latin American or Caribbean location? Would there be increased budgetary costs of carrying out these functions from the United States? A second important factor is the overall cutback of U.S. military forces in post-Cold War era. Related to this are domestic concerns about U.S. base closures and the associated costs to the U.S. economy, which raise the question of whether the United States should support bases in Panama when U.S. bases might effectively perform the same functions. A third factor is the potential cost of compensating Panama for continued use of the bases. Given U.S. budgetary constraints, would taxpayers' monies be better spent on domestic concerns?
A fourth set of factors that could influence U.S. policymakers relates to Panama's political stability and economic recovery. Most significant is Panama's progress in building an apolitical civilian police force, one that will not threaten democratic rule, and will not in any way threaten the operation of the Canal. Also important is Panama's commitment and capability to combat drug trafficking. Will Panama be able to prevent the Canal from bring used as a conduit for drug traffickers? Even more fundamental questions are whether Panama desires a continued U.S. military presence, and what would be the political and economic effects on Panama from a continued U.S. military presence. Would a continued U.S. military presence help ensure political stability in Panama, or would it foster resentment and anti-American sentiment?
Panamanian Views. Public opinion polls in Panama cite overwhelming support for a continued U.S. military presence. For example, a June 1996 poll found that 75% of Panamanians believe that some U.S. military bases should remain after the end of 1999. As President-elect, Perez Balladares made statements suggesting that his government would be open to a proposal from the United States, but also stated that there was no justification for U.S. bases in Panama from the purpose of protecting the Canal, and that any agreement would have to be subjected to a referendum. According to Perez Balladares, "we Panamanians do not see any reason, from a military standpoint, for there to be bases in Panama, at least not with the justifications used in the past. If there is any other reason for a small or medium-sized U.S. military presence in Panama, the United States would have to say what it is and propose it to the Panamanians." (Foreign Broadcast Information Service, Daily Report, Latin America, May 16, 1994) As already noted, Presidents Clinton and Perez Balladares agreed in September 1995 for exploratory talks on a U.S. military presence beyond 1999. The talks had been planned for late November 1995, but were called off and have not been rescheduled.
Some observers maintain that Panama has to be concerned with other nations' views of its legitimacy and its independence from the United States. Some Panamanian politicians maintain that while they do not oppose a continued U.S. military presence, they believe that Panama should focus on preparations for taking over the Canal's operation and for handling the territories and structures that will be turned over to Panama according to the treaties.
Others, however, would welcome the beginning of such base negotiations, and argue that many Panamanians favor a permanent U.S. presence because of jobs and income associated with the U.S. military facilities. Some 6,000 Panamanians work directly for the U.S. military, while thousands of others provide a variety of services to the U.S. military community. The bases reportedly bring in about $360 million annually to the Panamanian economy, directly and indirectly.
Still other Panamanians oppose a U.S. military presence beyond the end of 1999. Some argue that only with the U.S. military out of the country will Panama be able to break the dependent relationship it has with the United States and recover its own national identity. Others maintain that Panamanian use of the bases and their extensive infrastructure could be a great economic boom that could overcome the loss of income from the departure of the U.S. forces.
Panama's Planning for Reverted Properties. While the debate on the future of the bases continues, the Panamanian government has been taking measures to deal with the properties being returned to Panama. (Some 77,000 acres and 4,000 buildings and other facilities will revert to Panamanian control.) On June 19, 1995, former Panamanian President Nicolas Ardito Barletta was sworn in as the second administrator of the Interoceanic Regional Authority (ARI), a body established in 1993 to handle the planning, promotion, and administration of reverted property. Barletta set as one of his immediate priorities plans for an industrial park to be established at Fort Davis, which was returned to Panamanian control, along with Fort Espinar, on September 2, 1995. Another priority was to prepare for the return of Fort Amador, which reverted to Panamanian control in October 1996. Plans for Fort Amador have focussed on its potential for tourism, with the Panamanian government having signed letters of intent for the construction of hotels, restaurants, and shopping centers.
U.S. officials have consistently affirmed a commitment to follow through with the Panama Canal Treaty and turn the Canal over to Panama at the end of 1999. At that time, the Panama Canal Treaty terminates and the Panama Canal Commission, the U.S. agency operating the Canal, will be abolished. Under the terms of the Treaty on the Permanent Neutrality and Operation of the Panama Canal, or simply the Neutrality Treaty, Panama will have responsibility for operating and defending the Canal after 1999. Both Panama and the United States, however, in exercising their responsibilities to maintain the regime of neutrality (keeping the Canal secure and open to all nations on equal terms) will each independently have the right to use military force to reopen the Canal or restore its operations.
An important step in the process of transferring operation of the Canal to Panama took place on September 20, 1990, when Panamanian Gilberto Guardia was installed as the new Administrator of the Panama Canal Commission. In October 1995, Guardia announced his intention to resign his position to return to private business, but indicated that he would remain in his job until his successor was appointed. The Panamanian government announced in February 1996 that it would propose the nomination of Alberto Aleman Zubieta to succeed Guardia as PCC Administrator. On June 3, 1996, the Clinton Administration reported the nomination of Aleman Zubieta to the U.S. Senate. The Senate Committee on Armed Services favorably reported the nomination on July 31, 1996, and the full Senate confirmed the nomination on August 2, 1996. Aleman was sworn into office on August 18, 1996.
Since 1993, Panama has taken action relating to its future operation of the Canal. In September 1993, Panamanian President Guillermo Endara called on the Legislative Assembly to approve a constitutional amendment that would create a new Panama Canal Authority (ACP) to operate the Canal after the year 2000. The Legislative Assembly approved the constitutional amendment in late December 1993. In order to become law, the amendment also had to be approved by the next Legislative Assembly, elected in May 1994. This second approval came in late November 1994. The next important step in the transition process is for the Panamanian government to draft and approve a law for the operation of the Panama Canal Authority that will replace the PCC when Panama takes over Canal operations. In August 1996, consultations on the draft law began among political parties and civil organizations. The government of current President Ernesto Perez Balladares has plans to submit the draft law to the Legislative Assembly session that began in September 1996.
Congressional Concerns and Action. In the 102nd Congress, there was concern about helping to bring about a smooth transfer of power when Panama assumes control of the Canal at the end of the century. As a result, Congress approved legislative provisions related to this concern in the defense authorization measure for FY1993 (P.L. 102-484, signed into law October 23, 1992). In the legislation, Congress required three reports relating to the future of the Canal: a presidential study (along with a plan, if warranted and a legislative proposal), due in one year, to see if changes in the structure of the Panama Canal Commission (PCC) are warranted before the termination of the Panama Canal Treaties in order to facilitate and encourage the operation of the Canal through an autonomous entity when Panama assumes control; a report by the General Accounting Office (GAO), due in one year, to see whether fiscal, operation, and management changes are necessary for the PCC to serve as a role model for Panama; and a PCC report, by September 1996, relating to recommendations for establishing a dissolution office to handle U.S. responsibilities and liabilities at the time of the transfer of the Canal to Panama.
The Administration, through the PCC, retained Arthur Andersen and Co. to perform the required study and also retained Weil, Gotshal and Manges to advise the PCC Board of Directors regarding legal and other issues addressed in the study. In November 1993, the GAO issued its required report, which was limited to "evaluating the recommendations and the scope and methodology of Arthur Andersen's study and the recommendations of the PCC Board of Directors."
On April 12, 1994, the Clinton Administration, submitted its recommendations to Congress (House Document 103-233) for changes to the PCC in order to facilitate and encourage the operation of the Canal through an autonomous entity under the government of Panama when Panama assumes control of the Canal in the year 2000. Most significantly, the Administration recommended that the PCC be designated a government corporation with "an organizational structure that allows market responsiveness and operational flexibility." The Administration also recommended: that the PCC Board Members who do not hold full-time U.S. government positions should not be required to be selected from any specified interest group or economic sector; that the Board take steps to strengthen its policy-making role; that the PCC should, after further study, be relieved of statutory or regulatory requirements which are inconsistent with efficient commercial standards of practice; that the requirement that the President approve toll-rate increases be eliminated, with the Board having final authority to change tolls; and that a dissolution fund be established to provide an orderly and funded mechanism to close out U.S. Canal responsibilities.
On February 10, 1996, the President signed into law the FY1996 defense authorization measure (P.L. 104-106, S. 1124), that includes a provision amending the Panama Canal Act of 1979 in line with the President's recommendations. The measures also authorizes PCC expenditures for FY1996.
For FY1997, the authorization for PCC expenditures was included in Title XXXV of H.R. 3230, the defense authorization bill. The bill also includes provisions that would give the PCC greater autonomy to facilitate the transition of the Canal to Panamanian control in December 1999. Both houses approved the conference report to H.R. 3230 in August and September 1996 respectively, and the President signed the measure into law on September 23, 1996 as P.L. 104-201.
For many observers, a critical test for Panama is the establishment of an apolitical public security force that will not constitute a threat to civilian democratic rule. Soon after the U.S. intervention, President Endara announced that Panama's new security force would be a modern police force with minimal military functions.
On February 10, 1990, the new Public Force (PF) was officially established, replacing the old Panama Defense Forces. The President of the Republic was designated the supreme chief of the PF, which includes: a National Police (PNP), the largest component; a National Air Service (replacing the PDF air force); and a National Maritime Service (replacing the PDF navy). Each have separate commands and are under the authority of the Ministry of Government and Justice. In addition to the Public Force, a Judicial Technical Police (PTJ), under the authority of the Office of the Attorney General since early 1992, is responsible for criminal investigations.
In 1992, Panama had been moving to amend its constitution to prohibit the formation of a military force, a measure designed to ensure that another PDF would not be created. However, a November 15, 1992 constitutional reform referendum, which included a ban on the formation of a military, was soundly defeated by almost a 2-1 margin. The defeat of the referendum was viewed as a rejection of the unpopular Endara government.
In 1994, efforts to amend the constitution were successful. In late August, the old Legislative Assembly that had been elected in May 1989 approved a constitutional amendment that would ban the creation of an armed forces. To become law, the amendment had to be approved by the new Assembly elected in May 1994 that convened on September 1. President Perez Balladares supported the amendment, and on October 4, 1994 the newly elected Assembly gave its final approval to the constitutional change, which took effect October 24.
U.S. Policy. The United States has provided significant training and equipment for the Public Force. Most assistance and training has been provided by the Department of Justice's International Criminal Investigations and Training Assistance Program (ICITAP).
In the aftermath of the U.S. intervention, an important congressional concern was the status of Panama's economic recovery. Before the military intervention, the economy had been severely damaged by two years of strong U.S. economic sanctions and economic disruption caused by the political crisis. Gross Domestic Product (GDP) had declined some 25% between 1987 and the end of 1989. The intervention added further to the economic decline. Some sections of Panama City were heavily damaged, leaving thousands homeless, and subsequent looting left businesses with damages in the hundreds of millions.
The Panamanian economy made considerable progress under the Endara government, with real economic growth measured at 4.6% for 1990, 9.3% for 1991, 8% for 1992, 6% for 1993, and 5% in 1994 according to the Department of State. The economy grew an estimated 2.3% in 1995. Nevertheless, critics maintain that Panama's impressive economic growth has only benefitted the middle and upper classes, and that it has not improved the situation of the nation's poorest people. Critics also maintain that the Endara government's inattention to social concerns, particularly unemployment and poverty, exacerbated the plight of Panama's poor. The Perez Balladares government has pledged to combat poverty and address the issue of income disparity. The Department of State's human rights report for 1995 stated that poverty is pervasive with increasing income disparities between rich and poor and continued high unemployment and underemployment, which combined may approach 50%.
U.S. Policy. After the U.S. intervention, the United States provided substantial amounts of assistance to help revive Panama's economy. In 1990, Congress approved two bills making available around $471 million in assistance to Panama, largely for economic recovery and development aid, including law enforcement assistance. As a result of this assistance, Panama was the largest Latin American recipient of foreign aid in FY1990 -- receiving $395 million -- and the fifth largest recipient worldwide. Since then, much smaller amounts of assistance has been provided to Panama. In FY1991, $58 million was provided, but this was the carryover from the money appropriated in FY1990. For FY1992, the United States provided $29.1 million in aid, including $14.5 million in development assistance, and $9.7 million in ESF assistance. For FY1993, almost $10 million was provided, including $6.3 million in development assistance and $2.3 million in ESF assistance. For FY1994, $5.8 million was provided, including $4.3 million in development assistance. For FY1995, $9.6 million was provided, including $2.9 million in development assistance and almost $5 million in ESF. For FY1996, an estimated $7.0 million will be provided, with $3.2 million in development assistance and $2.0 million in ESF. And for FY1997, the Administration has requested almost $4.8 million, including $3.5 million in development assistance.
An important concern for U.S. policymakers has been securing Panamanian cooperation in anti-drug-trafficking and anti-money-laundering measures. Panama is an important drug money laundering center and a drug transhipment point from South America to the U.S. market. The county is also a small-scale producer of coca leaf.
On June 22, 1996, President Perez Balladares acknowledged that accused Cali cartel drug trafficker Jose Castrillon had contributed $51,000 to his 1994 presidential campaign, although the President maintained that he was unaware of where the money came from. Castrillon was arrested in Panama on drug charges in April 1996. The President's acknowledgement, which tarnished his government's image, sparked a broad investigation into the contributions of drug money launderers to a number of politicians.
From 1990 until 1993, under the Endara government, Panama was consistently certified, as required by legislation, as fully cooperating with the United States in the war on drugs. For 1994, however, the Administration did not certify Panama as fully cooperating, because, as the State Department noted, "Panama has cooperated with many U.S. drug control efforts, but has not made sufficient progress on its own to deter money laundering." Instead, the Administration certified Panama based on the vital national interest of the United States (under section 490 (b)(1)(B) of the Foreign Assistance Act of 1961). The Administration maintained the certification on national interest grounds was necessary "in preserving a cooperative relationship to operate the Panama Canal, to carry out effectively the 1977 Panama Canal treaties, and to permit orderly withdrawal of U.S. military forces." The Department of State's April 1994 International Narcotics Control Strategy Report noted that while Panama made progress in some counternarcotics areas during 1993, key action remained incomplete in the critical area of money laundering controls. The report stated that Panamanian agencies with money laundering control responsibilities are ineffective, resources are inadequate, and that money laundering control legislation needs strengthening.
For 1995 and 1996, the Clinton Administration again certified Panama as fully cooperating with the United States on counternarcotics measures. The State Department's March 1996 International Narcotics Control Strategy Report stated that Panama made progress in drug control in 1995, including the passage of money laundering legislation and the arrest of two major money launderers. The report also noted, however, that the Panamanian government has yet to successfully prosecute major money launderers in Panama, to tighten up money laundering controls, or to make functional its new financial analysis unit.
As noted above, in July 1996 the Perez Balladares government raised the possibility of a multilateral counternarcotics center being established at Howard Air Force Base. Panama and the United States reportedly have had preliminary discussions about the center.
Panama has made great progress in restoring functioning political institutions after 21 years of military-controlled government. A critical challenge facing the Perez Balladares government lies in Panama's administration of justice. According to the U.S. Department of State's human rights report for 1995, Panama's "principal human rights abuses continued to be prolonged pretrial detention; an inefficient and often corrupt criminal justice system, undermined by low wages, poor working conditions, and in part by international narcotics traffickers; and overcrowded, decrepit prisons."
For many observers, problems with the administration of justice were highlighted in the September 1993 acquittal of seven former military officials on trial for the 1985 murder of government critic Hugo Spadafora. The verdict prompted demonstrations and some violence.
Subsequent prosecutions vindicated Panama's judicial system in some observers' eyes. On October 20, 1993, Noriega and two former Panamanian military officials were convicted for Spadafora's murder and sentenced to 20 years in prison. On November 21, 1993, three former National Guard officials were convicted for the 1971 murder of Colombian priest Hector Gallego, one of the most infamous crimes that occurred under military rule. On March 2, 1994, Noriega and another officer were convicted for the murder of Major Moises Giroldi who led an unsuccessful coup against Noriega in October 1989; Noriega was subsequently sentenced to 20 years in jail for the offense in October 1994. Most recently, on January 30, 1996, a Panamanian judge sentenced Noriega and three other former military officers to 20 years for the killing of nine Panama Defense Forces officers in October 1989 after a coup attempt; Noriega and the three others had been convicted for the killings in October 1995.
There has been some controversy in Panama over pardoning of military and government officials for abuses under Gen. Noriega's rule. When President Perez Balladares took office in September 1994, he pardoned 222 former government officials and military members, and in September 1995, Vice President Tomas Duque pardoned 130 officials when the President was out of the country. In 1996, the Legislative Assembly began considering a general amnesty that would pardon over 900 people. The amnesty was criticized by Panamanian human rights groups and Amnesty International, and sparked street protests in Panama. As a result of the opposition, the Legislative Assembly postponed debate on the amnesty until September 1996. Some observers believe that the bill is essentially dead because it would not receive enough support to be approved by the required two-thirds of the Assembly.
P.L. 104-106, S. 1124
Authorizes appropriations for FY1996 for military activities of the DOD and other
purposes. Introduced August 7, 1995. Senate passed September 6, 1995, amended,
substituting the language of H.R. 1530 (Division A). House passed January 5, 1996,
substituting the text of H.R. 1530 as contained in H.Rept. 104-406. Conference held
January 18, 1996 and conference report H.Rept. 104-450 filed January 22, 1996. House
agreed to conference January 24, 1996 (287-129); Senate agreed January 26, 1996 (55-
34). Signed into law February 10, 1996. Title XXXV authorizes FY1996 expenditures
for the operation and maintenance of the Panama Canal, and amends the Panama
Canal Act of 1979 to reconstitute the Panama Canal Commission (PCC) as a U.S.
Government corporation.
P.L. 104-201, H.R. 3230
Authorizes appropriations for FY1997 for military activities of the Department of
Defense and for other purposes. H.R. 3230 introduced April 15, 1996. Reported by
House Committee on National Security (H.Rept. 104-563) May 7, 1996. Passed House
(272-153) May 15, 1996. Passed Senate July 10, 1996, substituting the language of S.
1745 amended. Conference report (H.Rept 104-724) filed in House July 30, 1996.
House agreed to conference (285-132) August 1, 1996. Senate agreed to conference (73-
26) September 10, 1996. President signed into law September 23, 1996. Title XXXV
of the law authorizes FY1997 Panama Canal Commission (PCC) expenditures for the
operation, maintenance, improvement, and administration of the Panama Canal, and
also includes provisions that give the PCC greater autonomy to facilitate the transition
of the Canal to Panamanian control in December 1999.
H.Con.Res. 4 (Crane)/H.Con.Res. 9 (Pickett)
Identical resolutions express the sense of the Congress that the President should seek
to negotiate a new base rights agreement with the Government of Panama to permit
the United States Armed Forces to remain in Panama beyond December 31, 1999, and
to permit the United States to act independently to continue to protect the Panama
Canal. Both introduced January 4, 1995; both referred to Committee on International
Relations.
S.Con.Res. 14 (Helms)
Expresses the sense of Congress that the President should negotiate a new base rights
agreement with Panama, while consulting with Congress regarding any bilateral
negotiations that take place. Introduced May 17, 1995. Senate Committee on Foreign
Relations ordered reported December 12, 1995. Senate passed, amended, by unanimous
consent on September 5, 1996. Message on Senate action sent to House September 9,
1996; referred to Committee on International Relations.
CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS
U.S. Congress. House. Committee on International Relations. Subcommittee on the Western Hemisphere. U.S. Strategic Interests in Panama. Hearing, 104th Congress, 1st session. March 9, 1995. Washington, U.S. Print. Off. 1995. 68 p.
U.S. Congress. House. Committee on Merchant Marine and Fisheries. Subcommittee on Coast Guard and Navigation. Panama Canal Commission Authorization, Fiscal Year 1995. Hearing, 103rd Congress, 2nd session. March 1, 1994. Washington, U.S. Govt. Print. Off. 1994. 43 p. Serial No. 103-84
U.S. Congress. House. Committee on Merchant Marine and Fisheries. Recommendations for Changes to the Panama Canal Commission. Message from the President of the United States. 103rd Congress, 2nd session. April 12, 1994. Washington, U.S. Govt. Print. Off., 1994. 7 p. House Document 103-233
U.S. Congress. Senate. Committee on Foreign Relations. Subcommittee on Terrorism, Narcotics and International Operations. Recent Developments in Transnational Crime Affecting U.S Law Enforcement and Foreign Policy; Mutual Legal Assistance Treaty in Criminal Matters with Panama, Treaty Doc. 102-15; and 1994 International Narcotics Control Strategy Report. Hearings, 103d Congress, 2nd session. April 20 and 21, 1994. Washington, U.S. Govt. Print. Off., 1994. 190 p. S. Hrg. 103-606
08/02/96 ---The U.S. Senate confirmed the nomination of Aleman Zubieta as Panama Canal Commission Administrator.
02/08/96 ---The Panamanian government announced that it would propose the nomination of Alberto Aleman Zubieta as Panama Canal Commission Administrator to succeed Gilberto Guardia.
09/06/95 ---President Clinton and President Perez Balladares met in Washington and announced that the United States and Panama would begin informal discussions to determine if there was mutual interest in the United States maintaining a military presence in Panama beyond the end of 1999.
08/04/95 ---Thousands of striking Panamanian workers, protesting the government's attempt to make labor legislation more flexible in order to attract foreign investment, blocked streets and clashed with riot police. Four people died and more than 300 strikers were arrested.
02/18/95 ---The remaining 8,000 Cubans housed at U.S. camps in Panama were transferred to U.S. camps at Guantanamo Bay, Cuba.
12/07/94 ---On Dec.7-8, 230 U.S. soldiers were injured in a riot by more than 1,000 Cubans protesting the slow pace of transfers from the camps to the United States and other countries.
09/04/94 ---Panama signed an agreement with the United States to house up to 10,000 Cubans at U.S. military facilities in Panama. The agreement is for a sixmonth period.
09/01/94 ---Perez Balladares was inaugurated President.
05/08/94 ---Ernesto Perez Balladares of the Democratic Revolutionary Party (PRD) was elected President, winning 33% of the vote among seven candidates.
09/20/93 ---The trilateral Commission for the Study of Alternatives to the Panama Canal issued a long-anticipated report, which rejected sea-level canal alternatives, but recommended that a high rise third set of locks should be considered to handle demand after the year 2020.
04/24/93 ---Press reports claim that a failed bombing by a member of Panama's police force was part of a conspiracy to assassinate Endara.
11/15/92 ---In a national referendum, Panamanians rejected a package of constitutional reforms, by almost a 2-1 margin, that included a permanent military ban.
06/11/92 ---President Bush's planned address in a public plaza in Panama City was disrupted when Panamanian police fired tear gas to break up a protest.
06/10/92 ---A U.S. soldier was shot and killed and another was wounded near the town of Chilibre, 30 miles north of Panama City. Protests against President Bush's impending visit turned violent in Panama City with police dispersing protestors with tear gas. (On January 26, 1995, Pedro Miguel Gonzalez, believed by U.S. officials to be responsible for the killing, turned himself in to Panamanian authorities.)
04/09/92 ---Noriega was convicted on 8 out of 10 drug trafficking counts in U.S. Federal court in Miami. Sentencing was scheduled for July 1992.
02/07/92 ---Panamanian police officials reportedly uncovered a plot to assassinate President Endara and kidnap other government officials.
04/11/91 ---Panama and the United States signed a Mutual Legal Assistance Treaty designed to improve cooperation in investigating money laundering and drug crimes.
04/08/91 ---President Endara ousted the Christian Democratic Party (PDC) from the ruling government coalition, sacking five ministers and breaking the fragile coalition that had ruled since late 1989.
01/27/91 ---In elections for 9 Legislative Assembly seats, former pro-Noriega coalition parties captured 5 seats, whereas the ruling coalition won 4.
12/5/90 ---A rebellion of around 100 police members, led by former police chief Col. Eduardo Herrera, was suppressed by around 500 U.S. troops whose assistance had been requested by the Endara government.
09/20/90 ---Panamanian Gilberto Guardia Fabrega was sworn in as Administrator of the Panama Canal Commission.
03/02/90 ---One U.S. serviceman was killed and 15 others were wounded along with 12 Panamanians in a grenade attack on a disco in Panama City.
12/20/89 ---President Bush ordered U.S. forces into combat "to safeguard the lives of Americans, to defend democracy in Panama, to combat drug trafficking, and to protect the integrity of the Panama Canal Treaty"; Guillermo Endara, Ricardo Arias Calderon, and Guillermo "Billy" Ford, widely believed to have won the national elections of May 1989, were installed as Panama's new President and Vice Presidents, respectively.
U.S. General Accounting Office. Aid to Panama, improving the criminal justice system. [Washington] May 1992 GAO/NSIAD-92-147.
-----Panama Canal Commission, Assessment of Proposal for Organizational and Management Change. [Washington] November 1993. GAO/NSIAD-94-50.
-----U.S. efforts to spur Panama's economy through cash transfers. [Washington] May 1993. GAO/NSIAD-93-56.
CRS Reports
CRS Report 91-784. Panama and the future of the U.S. military bases: An examination of Panamanian views, by Mark P. Sullivan.