Created: 4/1/1984

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The Role o( the Dcfenic Forces

Tho Arias

Military Options To Undermin* ihe Electoral

Restraints on ihe

ANNEX: Key Fisurei in (he



We bclirvc that therectter-than-even chance that Panama's first presidential election iiears will br held as sclieduleday. It is our judgment, however, that lite Defense Forces will take whatever steps it deems necessary to-ptoted-^lH^ominance of that instirulion and that the military almost certainly will not permit another presidency by longtime opposition fieure Arnulfo Arias

Seven presidential slate* will be represented in the balloting, but the main competition will be between Arias and government candidate Nicolas Darletta. The military's anxiety over Ariai's-desire lo limit its power and prerogatives pives his candidacy and possible election an inherently destabilizing quality^

Should the presidential race be close. Defense Forces Commander Manuel Antonio Noriega is unlikely to intervene overtly but will attempt to influence (he balloting through financial and propaganda means Moreover, we expect thai government officials will be using their extensive resources to manipulate the electoral machinery to increase the vote for Barletta

Noriega is sensitive to the negative ramifications of any blatant interruption of the political process. These would include undermining th( country's growing political role in the Central American area, damaging its currently amicable relations with the United States, and jeopardizing its efforts to attract increased foreign loans andto offset Panama's economic problems^

Shouldyear-old Arias pull embarrassingly ahead of Barletta. however, we believe the military probably will move to postpone the election. Inealth of reliable intelligence indicates that neither Noriega nor the military institution would tolerate an Arias presidency, and we see no constraints that would effectivelyoup against the Defense Forces' longtime antagonist should that be consideredove to oust Arias most likely would come after the election, but before the inauguration scheduled forctober!

Although an Arias presidency would pose no direct threat to USin Panama, we believe that should Arias remain in office hiswould be characterized by constant tension with the military which,inimum, wouldlimate of instability eventuallyto US-Panamanian relations.1




The death of Omar TorrirOJlane crash it.1 lerioujlv comhe transitionopularly elecled civilian government in Panama. Torrijos believed lhal the restoration ofovern-merit would Justify the Defense Forces' lone-term role In politics while preserving its future influence in decision ma kins; He therefore expected lo guide the nationeriod wherein the military would gradually relai lis formal Isold on power. The loss of Torrijos's dominating and stabilizing political hand lefl the military'] role in this political transition in doubt.

ncer'.ainty, the i

i Sincefforts by the Panamanian De-lense Forces Itlimate suitablemooth transition have been characterized by continuedmeddling with cMlian government institutions. The most visible manifestation of this interference has been ihe military-inspired resignations of two Pana-presidents in tbe lastonths.)indicated that then February President de la Espriclla wasesult of his refusal to support Defense Forces Commander Manuel Antonio Noriega's personal choice for president,World Bank official Nicolas Barlelta. Meanwhile, Noriega must deal wiih interim President Illueca. who has strong leftist viewsropensity for taking stands at variance with official policy.)

gainst this backdrop nf uncertainty, thepolitical strength of principal opposition candidate and longtime foe of the military. Arnulfo Arias, has further clouded the presidential contest. Noriega has been unable toolitical accommodation with Arias, and their relationship is likely to be increasingly antagonistic as theay presidential elcc-

apt:: . "

Election Stokes

4 The election ha) important domestic, regional, and economic ramifications for Panama whichargue against military disruption of the politicaluccessful contest in May wouldivilian head of government for Ihe firsl limehus completing the transition initiated byMoreover, the Panamanian leadership appears increasingly lo reltsh its perceived, newfound political role in the region and therefore would be chagrined bv any appearance of domestic miribiliu ^|

5esire lo maintain an Image o: stability ii largely driven in economic lonsidcralions When compared to Iu neighbors. Panama's economy has remained generally sound over (iv last fewresult of its Urge offshore banking community ofnstitutions. Ne-ertlieless. official Panamanianindicate that live country movct! deeper into recession3ercent decline in real CDP. The current government of caretaker Presidentlready operating underandated austerity meaiurei Any Indiscriminate Interruption of the political process could hurt the country's standing with international lending Institutions and further impair iu ability to cope wlih mounting economic difficulties.^

US Interests

anama remains vital lo US security interests because of ihe Canal, shipping Operations linked to Ii, and.esser degree, (he opening3 of the trartsisthmtan oil pipeline In western Panama. It is also the headquarters of the US Southern Command, the major US military pretence in Latin America While the Canal historically has been the cause of strong Panamanian resentment against Withington. bilateral relations have continued lo improve since ihe treaties negotiated by Toniioi went Into effectwith the United Stales ate currently better than at any time in iccent history. Panamanian leaden apparently realiie thailose working relationship with the United Stiles will becomeimportant ai Panama prepares to assume full responsibility for the security and defense of the Canal at the end of the cent myo if the insurgent threat grows in the re;ion^|

he commingling of interests has been especially pronounced in growing military cooperation- Since becoming head of the Defense Forces tnoriega has been particularly receptive to USand administrative needs. Pecent asreemenouccessor lo Ihe US Army School of the Americas, provide leaseback arrangements for housing


by (He US Southern Command, and supnor. stepped-up cooperation in the conduct ofr* cites and operations Panamatees iu economicintinuc.-i> lied loiied Statu, as reflected bv Hi recent signim-ilateral trade agreement and ill endorsement of ihe Caribbean Dasiri economic recovery^

isruption of the Panamanian political Irani)-lion may nni directly threaten these imoorlanl link between Panama and the United Slates.ailed Panamanian electoral process would undercut US eflorliortray continued progress toward de-mocratiiation in llic region We alio believe that sucheventuality would be eiploited bv Cuba and Nicaragua for anti-US propaganda purposes throuch-oul ihe Caribbean, while in Panama the Cubans probably would use ihe periodailed election lo tale advantage o! MM among leftist studeri Eroupi and liy to direct it against Ibe United States and US Interests In Parurru Cuba'stensive political and commercial intereiti in Panama.probably wouldoncerted effort to undermine the government Nevertheless, we believe Havana would view the situation primarily as an opportunity lo exploit Panamanian nationalism and foment Panamanian-US tensions^0JBJ^

The Election

lhat the election pioceeds as6 May.niens will be eligiblea president Iwo vice presidents,even diflerent electoral slates made up ofpolitical partiei are represented onwith the president and other winnerssimple pluralities The presidentialbe in October with the victor serving ar*Iayoral and municipal elections will be held on


hist) turnout accorded last year"sreferendum subtests lhat Interest in thiswill be strong. Thc country! lastlook placeean ago, and almostlectorate have never cast ballots (or ais difficult to estimate current voter patternsbut we believe thatoercent ofvoters will eierctsc their Iranchise. Personsold and over are eligibleote, andbelieve lhat this untested youth vote will play

a significant tote in determining the eventual

Potentiol for Fraud

Electoralin3 by both opposition andpartydesigned in preven: fraud. Many o( the Code'srticlesintended to eliminate irregularities, and still penalties arc prescribed for offenders, including iail terms and large fines for those caught selling their vole-ottngby secrel ballot, validated through 'meerprinting Finally, iht Electoral Tribunal may declare thenull andwhole or in(he reQulremenls of the Cwleor the election results arc compromised!^^

lthough ihe code will make il difficult to rig ihe vote on any "massive scale, wc believe thaiofficials will use their eilensive resources lo manipulate the electori! vwc for the official candidatil

Major Condldoiei

omiilutional and electoral reforms over the past year appear lo have been largely intended lo convince iteptics of the military'% intention lo support honest elections. In ihis, ihe Defenseontest between the relativelydemocratically inclined opposition partiesovernment-backed candidate. In out judgment, the mililary would have been satisfied wilh whichever candidate won, thus guaranteeing Its institutional health while earning il high marks al home and abroad

U. This strategy became unraveled asUirke-clccted, lhike-deposed Arias entered the race Inat Ihe head of his Authentic Panamcaista Party. He toon began to attract significant support. Including that Irorn the well-organized Christian Democrats and (he National Republican Liberal Movement.esult, thc Arias-led coalition presents the regime with its most lerioui challenge in the lastears. Although his strength In (lie polls has not been testedlias is the only presidential candidateroven ability to attract votes. He alsoimilar ability to generate animosity from the military, however, which fears his desire to limit its power. These lean have led to his ouster ai President on three occasions by the officer corps. lie lodge lhat an Arias presidency poses no direct threat to US interests in Panama. Should he remain in office, however, we believe thai his tenure

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be characterized bv comtanl tension with the mililan which, in turn, wouldlimate ol instability eventually delrimenlal to us-panamanian relationv^pH

he advanced age and failing health o( the former head of stale raises additional doubts about how long arias would remain in office. if he were lo die or become unable to continue the election cam paign. lint vice prei.dcr.tial nominee carlos rodn-fuet probably would succeed him as head of the democratic opposition alii) the presidency or win the election in his own right, we believe he probably would piove acceptable both lo noriega and lo the general

ike rodriguei. ihe government coalition'snicolas barletta,ormer resident of the united slates and is friendly to washington. wearlelta victory would be characteriied by continuing strong relations with the united slates, support for us policv in central america and the caribbean, and generally conservative economic poli-ciei reminiscent of the de la eipriella government

]barlelta'i close (fcj ties to the international banking community made him an calremely attractive candidate to noriega and.


othereaders.ife an.ttoui that I'anama garner greater foreign investment and conceisiunal - WM

IT. Darletu, however,ough election light against Arias, who remainsot! popular political fiiture and niw name recognition it far greater. In addition. Darletta't abilities atunityhit economic credentialt andforsuspect. His nominalion bv the ruling Democratic He-cJutionary Partv (PltD) in late February, for example, received onlyupport from the party's influentiale Leaders of the Liberal Republican, and Laborhave wmed withUDorm the prugovernment National Democratichave eipresscdover Datlelu'i chances ol defeating the charts'

If- The electoral pictun is further clouded bv retired Ceneral Paredet. who heads the Third Force ticket of the Popular Nationalistess political fortunes evaporated shortly after he relm-Quished command of the Defente Forces to Noriega inoriega and Ihe Ceneral Staff Quickly abandoned Parcdes when it became apparent that his erratic campaign was attracting little support and, more significantly, lhat he planned to limit the mill-tary's power upon assuming Ihe peesidencv. "Despite hit political difficulties,elieve thai Paredci'i disassociation from the military, widespreadamong voters, and the youth-oriented policies of his party will siphon votes away from both of the major candidates on election daj "

the Role of the Defense Fo*<et

e believe Noriega has come lo accept in large measure the Tor nm precept lhat Panama's long-term interests demand evolution toward an elected civilian government. Under Tonijos, the military would have reverted to its more traditional role of guarantor of the peace at It graduallv guided the countryystem in which political legitimacy would be gained through open elections. In addition, Noriega and other military leaden are equally aware lhat local leftists would be likely loerversion of the electoral processetrayal of irwljurno^and so tempt them towardm oust; it ions

Noriega has generally adhered to Torrijos'swishes by attempting to rnodeiniie andilitary foice lhat can both shield Panama against Central American unrest and assume its responsibility for defense of the Canalhe passage of Lawast September, for example,road legal base on which the Defense Forces can grow over

_the years In meet ill increated responsibilities. Al-inough willing iti accept some minor changes in thc law to silence cooosilion complaints. Noriegaould react negatively to any serious challenge to the legislation, which he sect at protection against future meddling bv civilians in military .jfliLM^B

Ihe Arios Ihrecrt

n our rudiment. Noriegas recent apparent faiIure_to_re_ach_an accommodation with Anas con-firms-!heli continuing mutual antipathy. |

rudge that

Ariat as president probably would insitt onsubservience rather than settle fo* aIn which ihe Defense Forcet wouldits hold on power. Thus, fromArias currentlynorthe military institution Itself. The officer corpsconcerned that Arias would move io eliminatesources o( graft. Moreover, they fearonce in powet. will seek retribution forpast abuses. These concerns suggest thatof the Ceneral Staff to proem >ei another^ij^^

0 believe an additional source of concern to the Defense Forces it the current attitude of the moderate opposition, which previously waa willing to cooperateradual transition. In backing Arias, the opposition now appears more wilting to prets thc armed lorces to cede more than symbolic power lo the civilians The removal of President de la Espriclla and Noriega's imposition ofave confirmed(ears that ihe military remains reluctant to lelirtQusSh in hold on power. Should the electioneither postponed or fixed, an increased polarization between these parties and the Defense Forces may result In civil unrest, including work stoppage! and strikes against the government. Meanwhile, Arias and

olher opposition leaders probably believe thai US support for th* development of democracyhe region, ai -ell at Panama'i participallori in the Conl.-dora neeouadom. creates external pressureai-and honest election, is kf)

pposition hope? not withstand inc. f

Indicate that the military will not permit another Anal Presidency

lense Forces Chief of

Operationslias Castillo alio recentlyUS officials In Panama that the Generalatom' against Anasthan suggested that

President lliueca might be replacedrovisional junta-style government that would delay elections for several months. When it occurred, the contest would be limited loonstituent assembly charged only withew constitution Wr believe the opposition would reaet violently toransparent ploy, particularly at the Constitution was revised only

- ^| IB

Noriega has other options, however, including legal maneuvers to delay thease current-Ii pending before ihe Panamanian Supreme Court contends (hat3 Constitution is not valid for procedural reasons If Noriega were intent on doing so. we believe he could prevail on (he Court to uphold the suit and thus have the elections delayed on aFar lest likely, though still possible, would be optionsostponement necessitated byworsening economic situation or the formationew coalition around another business orleader with more popular appeal thana.^ft

Nevertheless. PRO sources claim that Barletta's candidacy is progressing well. Should this be the case.

the Defense Forces probably would let the electtoru run their course.egitimategenerate opposition claims of fraud, the government's eitensive control o' the media would enable it to mute the chargei Meanwhile, we believe Noier. it likelynstruct his senior officer lo fivr clieir full Support tu liarleua Such assistance evidenlli "ill include largely unlimitedfcvcrnn tent-control led press and radio, andith I'm' election day logistics If necessary, gnft-and-ernrstrong-arm tadici probably will In employed tu enhance Barleita's chances for success |

Rettroinit on the Mitilory

t is our judgment thai the Defenseill take whatever steps it deems necessary to protect liic dominance of the military institution. Norieea islo the need of (he government to maintain atacade of legitimacy, however, and he probably will attempt to observe legal niceties where and when he can. For his part, Anas probably hopes lha( hit recent call for International observers to monitor th* election will help dissuade Noriega from postponing the voting or rigging (he process In addition, Panama'i role as host for the Contadora negotiations and (he pressure of other legitimate election processes under way in the region also may aci as constraints, albeit minor onei

2S. Of potentially greater Impact is Panama'ieconomic situation, which has underscored lor government leaden the importance of avoidinglest (he country's reputationegionaland financial center be damaged. In (hit light, we believe the extensive US investment in Panama, as well as Washington's recent role In helping theobtain commercial financing, willactor in any decbion made bv the Defense Forces.Noriega's first lovaltr Is lo the military. Whatever constraints he faces, he is unlikelyoleratefrom Arias or others, either lo his Irmiiution or. at this point,is own


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