United States Department of State Washington D C 20520 20370 April 25 1989 GElGRD'l 'NODI S MEMORANDUM FOR BRENT SCOWCROFT THE WHITE HOUSE Subject Panama Policy Attached herewith is a draft policy paper developed in response to recent tasking by the Deputies Committee The paper was prepared by a small team consisting of representatives from your staff CIA JCS OSD ISA and State Policy Coordinating Committee The paper has not been formally cleared by an agency Stapleton Roy cutive Secretary Attachment Draft Policy Paper c u SP- NODIS DECL OADR DECLASSIFIED PER E O 13526 aocs o S-'f- Hf a Tab A ECONOMIC STATISTICS FOR PANAMA Economy 1987 1988 Real GDP growth % 0 4 -20 0 Labor Force 000's 770 5 800 0 11 6 23 0 Unemployment % Gross Income Flows to Panama 560 5 565 4 From the Canal Area # million Includes@ $80 million annually in Canal Treaty payments Panama-u s Trade 1987 $ million Panama exports to U S 342 7 U S exports to Panama 741 6 Panama Canal 1979 1987 1988 1989 Oceangoing Transits 13 056 12 228 12 394 12 000 Tolls Revenue $ million 209 5 331 0 340 5 342 0 Panamanian Employees as% of PCC workforce 1989 estimate 69% 85% Tab B CURRENT COMPOSITION OF THE PANAMA DEFENSE FORCES ESTIMATED TOTAL PDF STRENGTH 15 400 Military zone personnel 3 100 --Public order police units outside Panama City Police 4 250 --Police in Panama City includes 1 450 civilians Staff elements 3 700 --Non-combat troops includes 860 civilians Tactical combat-related units 4 350 --Includes 270 civilians --6 rifle companies --2 infantry battalions --100 Special Forces Noriega bodyguards and anti-terrorist unit --2 MP companies --Medic l and combat engineering units --350 Navy personnel --450 Air Force personnel -eOMFI 1'f3N'3 IAL DECL OADR DECLASSIFIED PER E O 13526 ooS- 6'f5tf•M isl Tab D U S ECONOMIC SANCTIONS Chronology 1987 July USG freezes economic and military aid to Government of Panama Dec Panama ousts USAID Mission Congress bars assistance to Panama suspends Panama's sugar quota mandates votes against Panama in International Financial Institutions e g IDB IMF IBRD bars other USG trade assistance e g EXIM OPIC to Panama 1988 March President Reagan decertifies Panama as a nation cooperating fully with USG against narcotics President Delvalle uses U S courts to freeze Government of Panama assets in U S banks President Reagan orders suspension of CBI and GSP trade preferences for Panama and orders canal Treaty payments to be paid into escrow based on request from President Delvalle April President Reagan invokes IEEPA to block GOP assets in US and prohibit payments to the regime Sept Congress reaffirms ban on assistance to Noriega regime 1989 April President Bush extends IEEPA for one year IEEPA International Economic Emergency Powers Act Blocks GOP assets in US Prohibits USG agencies US firms and other US persons from making wide variety of payments to the Noriega regime Prohibited payments are to be deposited to escrow accounts at New York Federal Reserve Bank or after obtaining a Treasury license firms may self-escrow the funds DECLASSIFIED PER E O 13526 - J « s- - 'fSl f - t1 f 't a 1a -2as of April 1989 USG sanctions Funds withheld from Noriega regime since 3 88 Funds escrowed in Federal Reserve bank GOP funds in commercial banks Estimate of Petro Terminal funds Rough estimate of funds owed by other firms Total estimate 120 4 29 2 42 20 211 6 million million million million million Blocked Acc No 1 funds withdrawn by Arnb Sosa Total $8 8 million Federal Reserve escrow accounts As of April 1989 funds in the three Federal Reserve escrow accounts totalled about $120 million Account No 1 Account No 2 Account No 3 $1 9M $5 lM $113 4M GOP funds for Sosa Funds paid by US firms Funds paid by USG agencies Total funds denied the Noriega regime by USG sanctions likely amount to well over $200 million Exemptions exist to allow U S firms to continue operations but U S business community now pushing for further exemptions or lifting sanctions entirely A major effort to have the sanctions lifted ·or modified can be expected after the May 7 election Wjthout a change US firms may start to leave Panama Regime efforts to collect revenue by coercing U S firms to evade the sanctions continue and have likely become more successful in recent months Firms support USG policy goals but in absence of policy progress are more willing to challenge IEEPA in court USG agencies face pressure from Panamanian employees whose assets and health benefits have been put at risk by Noriega's response to sanctions COWFIBEN IAL -3Economy -- Panama's ecQnomic problems predate the political crisis and U S economic measures The IEEPA sanctions are not a trade embargo but are aimed at denying resources to the regime ' -- Business confidence very low no recovery likely until political crisis is resolved -- Recession started with 1987 political crisis growth only 0 4% 1988 GDP growth was -20% 1987 GDP Major economic decline continues outlook dismal Unemployment more than doubled in 1988 to 23% Food supplies appear adequate but agricultural credit tight Canal operating normally Pipeline transshipments of Alaska oil flow dropped 18% in 1988 Fiscal Situation Economic decline and sanctions cut regime revenues by 50% Regime is having hard time making salary and bonus payments but regime technocrats are creative and have adapted quickly to exigencies -- Regime slashed outlays to try to cover salaries and minimal operating expenses Regime has quietly trimmed bloated public sector payrolls Broader cutbacks have long been rumored may be implemented after May 7 election Ability to provide essential public services education health care is visibly deteriorating as is the quality of the services provided Maintenance of public facilities roads traffic signals appears to have virtually ceased Sanctions alone will not cause Noriega's ouster Panama's external debt is now over $4 billion Regime is in default or in arrears to commercial banks by about $400 million to International Financial Institutions by over $300 million and to bilateral creditors Tab E GlJCRrl'P EXDIS U S ELECTORAL SUPPORT ACTIVITIES Background Noriega knows of U S interest in exposing electoral fraud and suspects substantial U S support to the opposition In order to limit damage from exposure of a stolen election he is taking active measure to prevent independent observers and journalists from going to Panama He has taken control of all hotel and rental car reservations refused to issue visas to a number of potential Venezuelan observers and is toying with a variety of press restrictions On April 18 his regime announced that U S citizens would require visas from his consulates to enter Panama Requests for visas will be carefully scrutinized we expect visas for observers and journalists will be denied Observer Effort The Department of State is encouraging and assisting a number of observer missions from the U S The main effort is focused on the observer mission from-the National Republican and Democratic Institutes which is being funded through USAID They are moving ahead with their plans but may suspend their effort if Noriega's restrictions become severe enough Small observer missions are also being mounted by others • We are als6 encouraging Congressional observer missions We hope to see the formation of a bipartisan Congressional delegation and have designated a senior officer to coordinate with congress on this Congressman Richardson of New Mexico is heading up a small independent observer group the American Conservative Union which has primarily been interested in the Canal Treaties and includes a number of Congressmen is forming another group in response to our invitation from the opposition We have been encouraging friends and allies around the world to play an active role in support of the elections In Europe delegations are planned by the Christian Democratic International the Liberal International the European Parliament and the Italian Christian Democratic Party we expect a large additional number - perhaps as many as 70 - from Latin America and Europe in response to invitations issued by the Panamanian opposition There is some interest in Japan and the Phillipines in sending small observer missions - ECft 'f EXDI S DECL OADR DECLASSIFIED PER E O 13526 ocr- J'fsi -Ml -t- l a rz •i CJiUi T EXDI S -2- Assuming that all potential observers are able to enter Panama we currently expect the total number to be about 150 more than sufficient to certify regime fraud Further significant restrictions by t e Noriega regime particularly restrictions on visa issuance and admission into Panama at ports of entry would severely inhibit the observer effort and exposure of fraud Media The Department of State and USIA have mounted a concerted effort to focus press attention on the elections An Interagency Task Force has prepared briefing materials for journalists and observers and talking points for use by senior USG officials in discussions with the press foreign leaders and others USIS and VOA will set up a temporary operation in Panama to assist the media Key Next Steps As Of April 25 --Release of a Presidential statement encouraging free elections clarifying the U S position in the event of fraud reiterating the policy of no accommodation with a Noriega regime --Demarche to American Asian and European democracies asking that they issue similiar statements support a significant international observer presence react publicly and strongly in the event of fraud We are asking a number of governments to press the regime on the matter of visa issuance --Ask Presidents Ford and Carter to head the NRI NDI observer mission --Include prominent Administration and private sector representatives in the Congressional observer delegation --Promote high profile visit by Secretary Cheney to U S military installations in Panama1 prior to the election to arouse Noriega's concerns about his personal safety and emphasize U S concern for free elections and the unacceptability of accommodation in the aftermath of a stolen election -Sl ' 1U T EXDI S DECL OADR Tab G -eECRM NODIS OPPORTUNITIES AND VULNERABILITIES --Opportunity new Administration in U S strong public support in U S and Panama for moving decisively against Noriega and Congressional desire to resolve issue could combine to foster bipartisanship renew internal opposition to Noriega in Panama and employ May 7 election as a potential triggering device --Opportunity public support for ·strong anti-drug policy gives Administration a virtually free hand to move against Noriega --Opportunity Noriega's control based on fear and inertia his own pblls reveal almost total lack of support for him and regime 70-80% of Panamanians want him gone if PDF thinking could be shifted he would be isolated in Panama --Opportunity PDF not monolithic and not a happy institution troops' morale suffering from economic pinch possibility of facing off against their own people Cuban-Nicaraguan presence arouses underlying anti-Communist impulses of the institution majority of officer corps fears institutional collapse if Noriega leaves professional soldiers see him as the problem and would prefer a professional military institution --Vulnerability U S policy decision would be implemented largely in the aftermath of a stolen or cancelled election which could produce o· preemptive PDF violence and civil unrest in which the U S community is at risk o more serious PDF harassment-and Treaty violations which render normal Canal SOUTHCOM operations difficult or impossible o negative public reaction to the election outcome which leads to job actions by Panamanian USG employees a commodation of opposititin elements to Noriega and demands for an end to U S sanctions GECRflg J NODIS DECL OADR _DECLASSIFIED PER E O 13526 - OCJS'f-Hl e s EGFH3'f 'NODI S -2- --Vulnerability as shown by the recent arrest of U S citizen Kurt Muse the USG has difficulty at present countering or neutralizing regime efforts to use U S citizens as hostages --Vulnerability USG unpreparedness and continuing exposure to regime pressure means first stage of policy implementation must be devoted to regaining control over security of U S community and USG operations actions will be taken in the full glare of aroused public and Congressional opinion --Vulnerability unresolved conflict within USG prolongs policy paralysis sends mixed signals to PDF and Noriega permits continued erosion of U S Treaty rights leaves USG personnel and operations exposed to regime pressure --Vulnerability failure to resolve the Panama situation by September 1 end of Delvalle's term will confront the Administration with fallout from a perceived foreign policy failure and a renewed fight over the 1977 Panama Canal Treaties with strong negative implications for U S Central America policy and the Administration's general ability to shape U S foreign policy -SECKE'f NODIS DECL OADR Tab H ei lG'R li JiiP NODI S THE CURRENT CRISIS AND THE PANAMA CANAL TREATIES Since the Treaty framework is the bedrock of the U S relationship with Panama the question of whether or how the Treaties might be used to facilitate a resolution of the crisis naturally arises Would U S suspension of Treaty implementation or a threat to abrogate the Treaties provide leverage against the Noriega regime Conversely would vigorous assertion of our Treaty rights better secure our policy Status Report On Treaty Implementation The U S has operated the Canal for a decade under the Treaties and their implementing legislation the Panama Canal Act PL 96-70 Most of the implementation provisions of the 1977 Panama Canal Treaty which require the U S to meet specific objectives by a fixed date have already been met Only two actions remain which must be completed by specific dates --the appointment of a Panamanian citizen to the post of Panama Canal Commission Administrator by January 1 1990 --the transfer of the Canal to Panamanian control and the withdrawal of the U S Forces from Panama by December 31 1999 Planning for the orderly cost-efficient accomplishment of those actions is going forward Voluntary early turnover of some DOD and Panama Canal Commission facilities has also been considered Options U S Suspension of Treaty Implementation U S Abrogation of the 1977 Panama Canal Treaties Vigorous Assertion of U S Treaty Rights ai C Ulr p NODI S DECL OADR DECLASSIFIED PER E O 135 6 00S-·01s' - M '1hs • Sl l9iil l i'il NODI S -2- U S Suspension of Treaty Implementation Pros Would be popular in the U S Entails no short term fiscal costs Sends a signal to Noriega that USG may be seriously considering Treaty abrogation unless the democratic process is restored Could temporarily quiet domestic criticism and defuse advocates of Treaty abrogation Cons Would at this point be a relatively toothless exercise with little positive effect for USG Panama policy and some deleterious effects on' USG planning for full Treaty implementation U S failure to appoint a Panamanian Administrator would give the Noriega regime grist for its propaganda mill which constantly alleges U S Treaty violations and U S intentions to renege on final transfer of the Canal and would probably stimulate regime-orchestrated demonstrations at PCC facilities Could also have an adverse effect on the PCC work force and public opinion in Panama always sensitive to actions which touch on the Canal and Panamanian sovereignty Comment Suspension of the Treaty-mandated turnover of the Canal whether it equates legally to abrogation or not would generate widespread international condemnation and an anti-U S backlash in Panama - Noriega or no Noriega Unhappiness with Noriega aside it is also an open question whether it is really in the national interest for the U S to continue to be solely responsible for operating the Canal 8B6'Ril'I' NODIS DECL OADR ECK NODIS -3- Suspension of USG planning for full Treaty implementation might be an option However because of the complex planning and budgeting involved shutting down and re-starting the process will be confusing and add expense in the future Moreover since planning is an internal self-imposed function little political gain cogld be obtained from its suspension Abrogation of the 1977 Panama Canal Treaties Pros Shows U S resolve not to transfer the Canal to an undemocratic government controlled by an indicted drug trafficker Could provoke preemptive action by Noriega and PDF against U S interests in Panama Would appease domestic advocates of Treaty abrogation Cons Will not solve Panama's political crisis or the problems between Panama and the U S likely to make resolution of Panama's political problems and resumption of normal relations with the U S difficult perhaps impossible Will not return the parties to the status ante The only rights the U S would have would be those it would be willing to assert by force of arms Could jeopardize U S ability to operate and defend the Canal and protect the U S citizen community in Panama Would by opposed by those in U S who favor a more collegial relationship with Latin America and support the Treaties Would play directly into Noriega's hands by giving him what he has been unable to win on his own an effective issue of Panamanian nationalism vers s U S imperialism which he could use to gain support within Panama and Latin America OOGHB NODIS DECL OADR SBGR6ffi NODIS -4- By increasing long-term uncertainties would negatively affect Canal users and Canal competitiveness Would would make the U S appear to the world as an unreliable Treaty partner Currently 3 nations are parties to the Protocoi to the Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal abrogation would be strongly opposed by these states and others who would fear that the USG had destroyed the international legal regime which ensures the permanent neutrality of the Canal Vigorous Assertion of U S Treaty Rights Pros Puts pressure on Noriega and PDF Improves security situation for U S community May reduce harassment Could dampen domestic criticism of USG policy Would encourage opposition Compliments all policy options Supports U S short ·term objedtives Enhances U S ability· to protect strategic interests Cons Crosses the threshhold of military force Won't work as a bluff must be tied to choice· of a policy option Puts those involved at risk SB0 6T NODIS DECL OADR SJ3CREl P NODIS -5- Could invite a countei-response from Nori ga Offers regime· a possible ptopaganda opportunity Comment Examples of actions the USG •might take to vig_oroLisly as sert its Treaty righis include but are not l ciited to --conducti ng more f reqU ent and higher intensity •icana l defense exercises using U S Forces already in Panama --conducting more·fr quent and higher intensity Canal defense exercises combining U S 'F°'orces ·in· Panama with deployments of addition troops from-the U S - responding to PDF harassment by systematic freedom of movement challenges --closing U S military installations to unimpeded access by the PDF and other Panamanians instituting gate checks documerit inspection vehicle searches for non-u s access to or passage through •USG installations fH lGJ Uil'il NODI S DECL OADR Tab I LIMITED OFFICIAL USE U S PRESENCE IN PANAMA FEBRUARY 1989 U S Southern Command Military and Civilian Employees off-post Dependents off-post Military and Civilian Employees on-post Dependents on-post Number 2701 3000 9281 10 747 Sub-Total 25 729 • II • I Panama Canal Commission Civilian Employees in housing areas Dependents in housing areas Civilian Employees outside housing areas Dependents outside housing areas Number 996 2258 56 135 3 445 Sub-Total Other USG Civilian and Military Employees on economy Dependents Sub-Total Number 258 205 463 Non USG Residents Private Sector Employees Host Government Employees Students Missionaries Clergy Dependents Others Number 2040 24 2 45 5911 2250 Sub-Total 10 470 TOTAL U S CITIZENS AND DEPENDENTS IN PANAMA 40 107 LIMITED OFFICIAL USE Tab J JiilGfH PJ NODI S STRATEGIC ALTERNATIVES The strategic alternatives which _follow examine the costs and benefits of the full range of U S policy choices with respect to Panama Accommodation Track Wait Noriega Out non-recognition non-accommodation policy would continue but U S would not take direct action to oust Noriega o Leaves Canal SOUTHCOM operations and some employees vulnerable to continuing regime pressures o Invites regime actions which continue to erode U S Treaty rights o Surrenders initiative to Noriega o Would be deeply discouraging to anti-Noriega forces with increased likelihood that many would seek accommodation with the regime • o Leaves Administration exposed to public an Congressional criticism o Invites Congressional efforts to manag po icy o Undermines credibility of USG ahti-drug policies o Guarantees Congressional crisis over Canal Administrator appointment unless this issue could be firie ssed o Undermines U S policy objectives·i Central America o Postpones resolution of fundamental USG policy conflict with increasing likelihood that policies will be determined by events rather than Administration action o Eliminates risks and costs of direct U S action o Eliminates security risks for those USG personnel who would have to be withdrawn 0l3CRH NODIS DECL OADR DECLASSIFIED PER E O 13526 aoos-o s'I- M ft- f 18 7- eEGRE'¥ 'NODI S -2- Accommodate To Noriega Regime U S would recognize new regime resume official contacts with civilian and military officials end sanctions release frozen assets and Treaty payments and return to the status ante of January 1988 o Release of U S and Panamanian assets could allow Noriega to perpetuate repressive criminal regime o Anti Noriega forces could capitulate or become· radicalized and deeply hostile to U S o Resumption of cooperative Treaty relationship likely to be difficult and could compromise Canal SOUTHCOM ·operations o Would invite Congressional action a d public su port for abrqgation or suspension of 1977 Treaties • o Signals to the Sandinistas C ntral American emocracies and internal opposition that U S is nable to protect its interests Would likely strengthen Sandinista arid FMLN intransigence demoralize democ atic allies -and strengthen rightist militant elements n Central America who argue the u s is an unreliable ally o Compromises regional and hemispheric interests particularly U S policies on democracy human rights drug-trafficking rion-political military · o Does not risk military confrontation with PDF and attendant dangers o Might permit evolutionary change in Panama and eventqal negotiation of Noriega out of power Disengage U S would liquidate USG assets and presence in Panama begin immediate relocation of U S Forces operations consider early transfer of the Canal and expedited reversion of remaining USG areas and installations end all joint defense and law enforcement operations consider breaking diplomatic relations and ieduce Mission to necessary consular functions o Writes off u s interests and objectives ' o 'Not politically acceptable in U S o Compromises U S leadership role global interests and objectives aHGRE'i' NODIS SEGRlsT NODIS -3- Pressures Track Oiganize U S ilitary operation to remove Noriega and neutralize PDF - U S would organ ze and execute a large scale military operation to remove Noriega from power neutralize the PDF until it cquld be reformed and reconstituted under new leadership -and foster democratic transition o Requires major commitment of U S resources including long-term commitment of resources to reform and support the PDF • o Operation has potential to extend over weeks if not months o Assumes U S casualties o U S would be responsible for deciding Noriega's fate --trial in U S with possibility of greymail or no conviction --exile indictments still in force --exile indictments -dropped --exile indictments dropped no extradition --allowe to remain in Panama --does ri t survive operation o U S would have primary responsibility foi PDF during the transitional phase o Would evoke an extremely negative response in Latin America and throughout the Third World perhaps extending to U S allies o Would awaken anti-U S opinion in Pana a and revivify Panamanian dependency complicating efforts to negotiate PDF reform and democratic transition o Would sharply polarize u s domestic opinion provide a range of opportunities for attacks on Administration o Advances u s interests and objectives fiElGREl'J NODIS DECL OADR JJfJCRB'i' NODI S -4Mount a snatch operation to seize Noriega U S assisted by PDF forces loyal to Delvalle would seize Noriega through a snatch operation in response to-Delvalle request to arrest Noriega U S military forces would block PDF attempts to intervene o Risky and complex possibility of exposure and failure o A sumes poss bility of U S casualties ' j o U S would be primarily responsible for Noriega's fate same choice·s as in preceding alternative o -Ce-rtain to evoke Latin American and international crtt ci m which would be very costly if operation fail dj likely to abate quickly if it succeeded o nom sti6 action would probably depend on success or -failure of th operation o could resuscitate Panamanian dependency although to a lesser degr e th n the pr ceding alternative · 0 Risks to pe·ople ·and property greatly reduce if not eliminated ' o Operational pha e is relatively sh rt o Resorirce requirement smaller t an in preceding alternative o Allows USG agencies to normalize operations relatively quickly o Opens way for negotiated U S -Panamanian· approach to PDF reform and democratic transition Sowev r if action were to occur after a May 7 win by fraud of Noriega's ticket it would not resolve the problems of U S relayions with a regime seen as illegitimate eBCRE'f NODIS DECL OADR @ECHB' IYNODIS -5Organize PDF coup using covert and other means U S would use covert and other means to organize a PDF coup t6 depose Noriega and transfer power within the PDF to anti-Noriega forces o Risky and complex scope of action beyond unilateral U S control high possibility of leakage penetration by Noriega forces o Could degenerate into shoot-out among PDF paramilitary forces with substantial loss of life and property damage o could easily fail or be revealed to Noriega o Assumes possibility of U S casualties o Leaves window for Nociega-directed reprisals hostage-taking o Failure would invite severe repression longterm damage to anti-Noriega forces o Failure would bring international condemnation severe embarrassment to USG o Would evoke less criticism than two preceding alternatives especially if successful o ·PDF would be primarily responsible for Noriega's fate o Noriega could be killed in the attempt with o Does not settle question of what to do if Noriega is extiadited to U S GBCRB NODIS DECL OADR u s blamed 8-SCHJE'l' NODIS -6- Removal of Noriega by credible threat of use of military force U S would make all preparations necessary to make the U S use of force credible while using all appropriate assets to b·ring Noriega to a negotiated departure and stimulate PDF action to remove him o Won't work as a bluff o Will be disr ptive for USG agencies and personnel o Could invite preemptive Noriega retaliation including hostage -taking o Difficult to predict how long it would take to work since U S hasn't put pressure on PDF before don't know how brittle institution may be o U S would have less control over PDF command succession than in preceding alternatives o Opens up possibilities of Sandinista and Cuban · involvement in Panama in defense of Noriega and the Canal o Eliminates major security risks for USG personnel o U S could begin recovering eroded Trea ty· rights o Maximizes subsequent choice of alternatives if PDF doei not act or PDF coup fails o Evidence of U s inser-ting itself as an active player_ will --encourage opposition --open up choices for all Panamanians --unsettle PDF --raise threshdld of uncertainty foi ·Noriega o Could persuade Noriega facing growing pressure from within PDF to negotiate his oui • o Could resolve the Noriega problem throqgh PDF action S JCRMI NODIS DECL OADR Tab K S F'CRET NODIS USG NORIEGA REGIME CONTACTS Since February 29 1987 the U S Embassy in Panama in line with our non-recognition policy has interrupted all formal contact with the Noriega Solis Palma regime On the basis of interagency discussion and agreement all USG agencies operating in Panama were instructed to limit contacts with regime officials or personalities to an absolute minimum When contacts are required to carry out joint responsibilities under the Panama Canal Treaty they are to be conducted in a correct and formal manner Pursuant to interagency guidance U S contacts with the regime have continued at various levels - such ·as the Joint Board Comb i ned Board and Panama Canal Board of Director meetings - but in a sporadic and estranged manner At lower working levels where daily exchanges with technical counterparts are required e g IRHE or the Port Authority SOUTHCOM and PCC contacts continue on a more or less routine basis The Embassy has maintained its boycott of any contact with Noriega regime officials particularly at the Foreign Ministry and political level DEA LEGATT Customs maintain working level lia i on but hav b ee • st cted to est r t contacts tn o_we s - - - oss1ble1 level bl l ------ I-n t h-e- i_m_p l-e_m_e_n t_a_t 1-o_n_ o_f ---o-u_r_n_o_n___r_e_c_o_g_n_1 -- -t 1_0_n_ _ ___ ---- ---- - ----policy lia i son between law enforcement agencies and the regime continues to be the USG's Achilles heel since the Department of Justice continues to obtain whatever help possible on drug questions from the PDF so as to avoid any criticism on their anti-drug efforts while Noriega gets propaganda mileage from any contact or cooperation c 1 NODIS DECL OADR DECLASSIFIED IN PART PER E O 13526 ooS-OClS 'I-Ml 1 al Tab L OECRE' e NODIS THE DILEMMA OF THE INDICTMENTS The indictments against Noriega were obtained without allowing foreign policy and other concerns to be addressed by State and Intelligence Agencies The question of the role of the indictments remains a central issue in the formulation of U S policy decisions on Panama Possible options to deal with the indictment question are o Make sustained effort to pursue indictments and prosecution --To pursue the indictments and prosecution we would have to be prepared to go after Noriega either by executing a snatch operation or supporting a PDF exiles operation Both of these scenarios would involve authorization by President Delvalle to give the operation legitimacy --Going after Noriega would lend sustantial credibility to the seriousness of the Administration's· war on drugs --To pursue Noriega's prosecution we must be prepared to accept casualties in carrying out the arrest operation We must also be prepared to confront a greyrnail defense by Noriega if he is brought to trial and the possiblity that sensitive intelligence material and operations could be cdmpromised o Leave indictments standing but do not pursue --The option of_ not pursing th indictments would be predicated on a negotiated agreement that he depart power and leave Panama for an agreed period Noriega would have to be convinced that if he were to retire to an agreed country Spain for example we would not seek extradition There would be congres ional and public criticism but we believe it would be manageable· --The most serious drawback to this option is that Noriega having seen the problems that followed Ferdinand Marcos after his departure will not be satisfied with being allowed to go into exile without U S assurances on the indictments During the May 1988 negotiations he said that dropping the indictments was the bottom line for any deal He is probably even more inflexible on this issue now GE CRE'f NODIS DECL OADR DECLASSIFIED PER E O 13526 aoos oqGLJ-Mf Sl 1 17 13 SECRE NODIS -2- o Drop the indictments --Quashing the indictments would be predicated on a negotiated arrangement possibly following the outline of the agreement reached in the Kozak Noriega talks of May 1988 While this is the minimum required for any arrangement dealing with Noriega's departure from Panama and power he has seen that DEA continues to initiate new indictments against Panamanians Quashing the current indictments may not be enough at this point --In agreeing to drop the indictments the administration would face a firestorm in the Congress and domestic public opinion This would also undeimine the Administration's credibility with regard to its drug policy -fiECRE NODIS Tab M BECR E'f NODIS INVENTORY OF PROTECTIVE ACTIONS No matter what the final policy choice the U S must act to reduce the continuing exposure of the U S community and the vulnerability of USG operations in Panama Such actions also represent tactical opportunities to regain the political and operational initiative from Noriega counter domestic public criticism and pursue an active rather than a reactive policy in Panama Improve security for U S citizen community --Accelerate and complete U S Forces Reduction of Off-Post Personnel --Reduce U S Mission to mission essential personnel --Prohibit travel of non-Command-sponsored dependents to Panama --Encourage use of PCC voluntary departure program --Reassert U S Treaty rights aiming especially to end PDF challenges to U S right to unimpeded freedom of movement --Review and test key elements of U S Mission's Emergency and Evacuation Plan --Promote and publicize visits to USG facilities operations by senior Administration officials and members of Congress Reduce vulnerability of USG operations --Close U S military installations and Canal operating areas to unimpeded access by PDF and other Panamanians require gate checks document inspections and vehicle searches prior to entry or transit --Review current definition of Canal defense in light of changed circumstances and to include protection of Canal workforce --End USG reliance on local transportation i e rental vehicles public transportation -SEGRE NODIS DECL OADR DECLASSIFIED PER E O 13526 ooS-- OCfStf-Mf 11- ' l 18