By Jonathan Marshall. This article was first published on Consortium News.
Twenty-four years ago, the United States invaded Panama to capture Gen. Manuel Noriega on drug charges. Operation Just Cause promised the country a new day free of dictatorship and drug-tainted corruption, but it didn’t work out that way, as Jonathan Marshall describes.
Operation Just Cause, the invasion of Panama in December 1989, marked a critical turning point in U.S. foreign and military policy. As the first large commitment of U.S. armed forces after the Vietnam debacle, it set the stage for the massive intervention in the Persian Gulf region a year later.[i] It also represented a dramatic escalation in Washington’s “war on drugs,” turning a mostly rhetorical metaphor into bloody reality.[ii]
Many accounts have chronicled the war of nerves leading up to the invasion. Only a handful, on the other hand, have covered the aftermath, particularly with respect to drugs.[iii] Reporters who came to Panama with the troops soon returned home when the brief excitement was over. Attention turned to Noriega’s historic trial and conviction in Miami for conspiring to aid the Medellín Cartel and its criminal allies. For much of the media, and even for most scholars, Panama without Noriega was just another Central American backwater.[iv]
Gen. Manuel Noriega is escorted onto a U.S. Air Force aircraft by agents from the U.S. Drug Enforcement Agency after his arrest on Jan. 1, 1990. (U.S. military photo)
But a close look at the evolution of Panama’s connection to the drug trade in the immediate years after Noriega sheds light on several important questions. Does the public rationale for the invasion hold up to historical scrutiny? Did the Bush administration’s policies in the aftermath of Noriega’s ouster comport any better than earlier U.S. support for Noriega with its expressed commitment to fighting drugs by any and all means necessary? Finally, does the militant strategy of neutralizing drug “kingpins” appreciably affect the flow of narcotics to the United States?
It will surprise few students of the drug trade that Noriega’s downfall, like that of many bigger traffickers before and after, did nothing to hold back the rising tide of cocaine that flowed north from the Andean nations. What may be more surprising was Washington’s willingness to replace Noriega with civilian leaders who had an unambiguous (if not technically criminal) record of serving Colombia’s biggest drug lords by protecting their secret financial assets in Panamanian banks.
Key members of the new government had in the 1980s worked for dirty banks that Noriega, in a remarkable display of cooperation with U.S. law enforcement, actually closed down or put at risk. Some evidence suggests, in fact, that Washington’s new allies had opposed Noriega as much for his crackdown on drug money laundering as for his violations of democratic and human rights.
Needless to say, this framing is entirely at odds with the official version of events, which served to justify Washington’s reversal of policy toward Noriega. This article suggests that the war on drugs was a secondary policy priority even in the one theater where the United States resorted to a major show of force in its name.
The Noriega Legacy
To better understand the stance of Panama’s post-invasion government toward drug-related crimes, it pays to reexamine some of the widely ignored or forgotten clashes between the Noriega regime and the major Colombian “cartels.”[v] So great was their animosity that some notorious drug traffickers were actually pleased to see Noriega ousted — and likely also pleased by Washington’s choice of his successors.
Noriega played a double game, apparently protecting some favored smugglers while earning Washington’s gratitude for helping the Drug Enforcement Administration (DEA) target the vital financial infrastructure of the major drug cartels.[vi] This was a matter of the highest importance to U.S. law enforcement.
As the House Committee on Foreign Affairs noted in 1985, “With more than one hundred banks, the U.S. dollar as the national currency, and strict bank secrecy laws, Panama is an ideal haven for laundering narcotics money. Unlimited amounts of money may be brought into and out of the country with no reporting requirements, and money laundering is not a crime.”[vii] A study by the U.S. Treasury estimated that nearly a billion dollars a year in drug cash flowed each year between Miami and Panama.[viii]
In a landmark case in 1985, Noriega permitted the closure of First Interamericas Bank, owned by one of the leaders of the Cali Cartel who was fighting extradition from Spain on drug charges in the United States. The bank laundered tens of millions of dollars for the Medellín Cartel as well.[ix] As we will see, several leading members of the post-Noriega government sat on the bank’s board of directors.
One of the high points of Noriega’s cooperation was Operation Pisces, a three-year undercover probe that Attorney General Edwin Meese called “the largest and most successful undercover investigation in federal drug law enforcement history.” Among those indicted were Medellín Cartel kingpins Pablo Escobar and Fabio Ochoa.[x] Panama contributed 40 arrests and seized $12 million from accounts in 18 local banks.[xi]
These money laundering cases garnered Noriega numerous friends in the DEA, but cost him important allies at home. Indeed, these local antagonists played a critical role in fomenting domestic opposition to Noriega’s rule. The reason was simple: Panama’s financial services sector accounted for about a tenth of the country’s gross domestic product and employed more than 8,000 people. They formed what the Wall Street Journal called “the nucleus of a thriving middle class.”[xii]
Noriega threatened this politically powerful sector when he opened negotiations with Washington in 1984 over a Mutual Legal Assistance Treaty that would make it easier for U.S. authorities to request privileged financial information in criminal cases.
“The negotiations, and the publication of the draft treaty in early 1985, caused squeals of indignant protest from the opposition, many of whose most prominent members were bankers,” noted John Dinges, one of Noriega’s biographers. “La Prensa, in banner headlines, said the proposed law put ‘at grave risk’ the secrecy ‘that is considered the pillar on which the International Financial Center of Panama rests.’”[xiii]
The opposition protested even louder when Panama’s legislative assembly finally passed a law to crack down on money laundering in December 1986.[xiv] A few months later Panama’s attorney general ordered the seizure of 52 accounts at 18 Panamanian banks as part of Operation Pisces — and threatened uncooperative bank managers with arrest.[xv] One local banker warned, “this could end the Panamanian banking system, because people will no longer believe they can count on bank secrecy.”[xvi]
Within two months, spooked investors withdrew as much as $4 billion of the country’s $39 billion in bank deposits. Newsday reported that Panama’s cooperation with the DEA in Operation Pisces had “sparked the most serious banking crisis in Panama’s history,” creating the greatest single “threat to military strongman Gen. Manuel A. Noriega.”
A Western diplomat said of Noriega, “The bankers can bring him down. They are complaining in Washington and they’ve got a lot of clout.” Opposition leader Ricardo Arias Calderón (the country’s future vice president) spoke for that powerful lobby when he declared, “I believe the continuation in power of General Noriega is a danger to the Panamanian economy.”[xvii]
The demonstrations organized that summer by Panama’s business elite — with wide popular support and reflecting many grievances beyond financial secrecy issues — began his long slide from power.[xviii]
Major cartel leaders also wanted Noriega ousted, viewing him as an “obstacle to the functioning” of their money laundering operations in Panama.[xix] A lawyer for the bosses of the Cali Cartel complained that his clients were “frustrated by the problems” Noriega created for them in Panama.[xx]
Cali leaders later got their revenge when they provided $1.25 million to bribe a trafficker associated with the Medellín cartel to become a key witness against Noriega in his Miami trial.[xxi]
Noriega might have survived for many more years had he not been caught up in the anti-crack hysteria stoked by the U.S. media in mid-1980s.[xxii] This public alarm was channeled against Noriega by an unlikely pair of allies on the Senate Foreign Relations Committee: the right-wing Sen. Jesse Helms, who deplored Noriega’s cozy relations with Cuba and plans to take control of the canal, and the liberal Sen. John Kerry, who relished exposing the hypocrisy of the Reagan administration’s war on drugs.[xxiii]
Testimony against Noriega before that committee convinced reporters and the general public of his guilt. With each juicy revelation, Noriega turned increasingly from an administration asset into a liability. His 1988 indictments in Miami and Tampa sealed Noriega’s fate. They silenced most of his remaining allies in the Pentagon and CIA and all but forced presidential candidate George Bush — who had been Noriega’s paymaster while director of the CIA — to demand that Noriega leave power.[xxiv]
The Latin strongman’s cocky and bombastic refusal posed an intolerable challenge to the administration’s authority and credibility, a miscalculation that cost both his career and his freedom.
The Endara Government
On Jan. 3, 1990, with the surrender of Noriega to armed DEA agents, President George H. W. Bush declared that his mission to safeguard American lives, restore democracy, protect the canal, and “bring Noriega to justice” had been fully accomplished.
Although many governments in Latin America and abroad decried the violation of Panama’s sovereignty, Bush asserted that Noriega’s “apprehension and return to the United States should send a clear signal that the United States is serious in its determination that those charged with promoting the distribution of drugs cannot escape the scrutiny of justice.”[xxv] U.S. Ambassador Deane Hinton bluntly called the invasion “the biggest drug bust in history.”[xxvi]
Two weeks earlier, as U.S. troops were just beginning their assault, the Bush administration swore in the new government of Panama at Fort Clayton.[xxvii] Its pro-U.S. leaders — President Guillermo Endara and Vice Presidents Ricardo Arias Calderón and Guillermo Ford — had won a popular vote the previous May as heads of the Democratic Opposition Civic Alliance, which enjoyed strong backing from Panama’s financial sector.
However, Noriega’s electoral commission annulled their victory, based in part on public disclosure that the Bush administration had covertly earmarked more than $10 million to bankroll Endara’s ticket.[xxviii] Compounding that embarrassment was the arrest in Georgia, on cocaine conspiracy and money laundering charges, of the CIA’s bagman, a wealthy Panamanian businessman and close friend of Endara, just one month before the election.[xxix] A pro-Noriega newspaper trumpeted the headline, “Cocaine Cash Pays for the Opposition Campaign.”[xxx]
Operation Just Cause finally gave Endara and his running mates — who had been physically attacked by Noriega’s paramilitary “Dignity Battalions” after the May election — their long awaited revenge. But the sweet taste quickly vanished. With Noriega gone, they faced a host of overwhelming challenges, including restarting an economy shattered by economic sanctions, capital flight, war damage, and a more than a billion dollars’ worth of damage from post-conflict looting.[xxxi] To rebuild, Endara needed Washington to provide generous financial assistance.
The Bush administration lost no time trying to help. As part of its overall public relations campaign to justify the war, the administration praised Panama’s new civilian government as a clean break from the past. With the war barely over, Justice Department officials lauded “attempts” by Panamanian officials to freeze hundreds of bank accounts suspected of links to drug trafficking.[xxxii]
American officials said they “hoped” Panama would now rescind some of its strict bank secrecy measures, but carefully disclaimed any intent to “impose a bunch of stuff” on the occupied country.
The Panamanian side did remarkably little to encourage those hopes, however. A senior aide to President Endara said cagily, “it’s too early to say what we’re going to do,” and Vice President and Minister of Justice Ricardo Arías Calderón privately bristled at Washington’s proposals.[xxxiii]
The president of the country’s banking association insisted, “Anything we do to affect confidentiality of the system would destroy the banking center. … They want us to simply open our books and we cannot let them do that. We think we have enough safeguards now to prevent money laundering.”[xxxiv]
Vice President Ford also maintained that Panama had sufficient controls on money laundering in place.[xxxv] He was understandably touchy. The pro-Noriega press had previously trumpeted the fact that Ford was a co-founder — with Carlos Rodriguez Fernandez-Miranda, who became Endara’s ambassador to the United States — of Miami’s Dadeland Bank, which was part-owned by a Panamanian who laundered tens of millions of dollars for a leading Cuban-American marijuana smuggler.[xxxvi]
Ford’s younger brother, Henry, had provided personal protection services in Panama for Ramón Milian Rodríguez, an infamous courier of drug cash arrested by U.S. authorities in 1983 based on investigative leads from Noriega’s detectives. Ford said he never questioned the source of Milian’s cash.[xxxvii]
Still, President Bush continued to endorse Panama’s anti-drug efforts, citing them as one justification for his request to Congress for $1 billion in aid to rebuild the shattered country. Vice President Dan Quayle held a joint press conference with President Endara to announce plans for anti-drug cooperation, declaring that the new government’s attitude toward the drug war had undergone a “tremendous change” since Noriega’s ouster.[xxxviii]
But their fine spirit of cooperation faded quickly when President Endara opined that his country’s banking laws needed only “minor changes.” Panama’s Controller General, Ruben Carles, chimed in, “We don’t have to change our whole legal system because of drugs.”
One frustrated U.S. official warned that Panama’s failure to cooperate “will lead to a very difficult situation.” He explained: “If Congress says the Panamanians aren’t doing what they’re supposed to be doing, there isn’t going to be any more aid.”[xxxix]
Having paid little attention to postwar planning, the Bush administration was unprepared after Operation Just Cause to help sincere Panamanians fight money laundering. “We weren’t entirely blameless ourselves,” admitted Greg Passic, former head of financial operations for the DEA.
No one in the administration had bothered to decide which of several competing agencies would take charge of investigating money laundering in Panama after the invasion. Eventually, DEA and CIA got the nod. “It took six months before we got a team down there to deal with the problem,” Passic said. “We were slow to respond when Panamanians were willing to help us out.”[xl]
With the money laundering controversy bubbling into public view, a few U.S. reporters began taking note of the curious background of Panama’s new leaders.[xli] Of particular note was the remarkable rise to power of individuals linked to First Interamericas Bank, a major repository of Cali and Medellín cash until the Noriega regime shut it down in 1985.
As the Boston Globe reported, the bank’s former directors included the country’s new attorney general, Rogelio Cruz; the new Treasury Minister, Mario Galindo; and the new president of the Supreme Court, Carlos Lucas Lopez. All of them denied wrongdoing.
“These damn fools got hooked in these transactions innocently,” said Controller General Carles. Former finance minister Ernesto Perez Balladares was less reassuring: “There is not a bank or a banker in Panama who hasn’t accepted deposits from a dubious source. Everybody does it.” Or as Vice President Ford put it, “If you want a perfect government, you’ve come to the wrong country.”[xlii]
The next day the New York Times cited concerns by DEA and the Justice Department that “the business connections and friendships” of Panama’s leaders “make it difficult to believe that any real crackdown against money laundering is likely,” adding:
“Many senior leaders in the Government, while never accused of money laundering, have had strong ties to corrupt banks. Several of the banks have been indicted for money laundering or been shut because of pressure from the United States. … President Endara has for years been a director of Banco Interocenico de Panama, one of the two dozen Panamanian banks named in a case based on a Federal Bureau of Investigation case code-named Cashweb/Expressway.
“F.B.I. agents posing as money launderers were given large amounts of cash in that case by Colombians in the United States who instructed them to transfer the funds to these 24 banks.”[xliii]
The White House, for its part, said nothing to embarrass its protégés — or tarnish the myth of Operation Just Cause. President Bush on March 1 again certified that Panama was “taking adequate steps” to fight the twin evils of drug trafficking and money laundering, making it possible to lift trade sanctions.[xliv] Bush invited Endara a few months later to the White House to sign drug enforcement agreements permitting U.S. military personnel, including Coast Guard, to board Panamanian ships and enter the country’s territorial waters on anti-drug missions.
A third agreement concerned the regulation of precursor chemicals. In a plea for Congress to lift aid restrictions, Bush said, “We must help ensure that unfulfilled expectations do not weaken foundations of democracy so recently restored.”[xlv] In early July, Congress finally came through with about $200 million in aid—mainly earmarked for foreign debt repayment rather than reconstruction.[xlvi]
Ironically, Panama’s economic misery and the government’s severely limited resources were stimulating a resurgence of drug trafficking in the country. The New York Times reported that “illegal drug shipments through the rough Panamanian hinterlands and through the capital are, if anything, more open and abundant than before.”
Said one foreign diplomat, “The Government is just outmanned, outgunned and outmaneuvered.”[xlvii] The demoralized head of Panama’s drug police lamented, “There are hundreds of isolated beaches, farms and uninhabited islands being used by traffickers as safehouses for drugs, and we have only a 40-man force to fight them.”[xlviii]
Panama’s meager forces still managed to seize four tons of cocaine in just the first nine months of 1990, a third more than in the previous year. U.S. officials were more alarmed than impressed, however.
“If you are seizing this much with a . . . small, untrained narcotics force, the conclusion’s got to be there’s probably a lot that nobody’s getting,” said Ambassador Hinton. The chief of Panama’s anti-narcotics police said traffickers were flocking to his country because “they think it’s safer to put (drugs) in Panama, where they know there’s a reorganization process, than in Colombia where there’s a fight against drug trafficking.”[xlix]
Serious disarray in Panama’s law enforcement ranks made matters worse. Attorney General Rogelio Cruz fired one special prosecutor who accused the head of the corrupt Judicial Technical Police of involvement in a kidnap-murder plot involving millions of dollars in drug profits. (The same prosecutor also accused Cruz himself of improper dealings with the violent Medellín kingpin José Gonzalo Rodriguez Gacha.)[l]
Then a dozen major drug traffickers, including a Calí-based smuggler arrested with 800 pounds of cocaine, managed to escape from Panama’s jails, evidently with official help.[li] Later that summer, in a span of just two weeks, the government fired two successive heads of the National Police.[lii]
The Endara government also embarrassed when Panama’s El Siglo newspaper published a long article, from DEA sources, on President Endara’s close ties to Banco Interoceánico de Panama, an institution implicated in money laundering. (The bank issued a vigorous rebuttal in La Prensa and filed a libel suit claiming that it was the victim of attempted extortion by El Siglo.)[liii]
North Americans subsequently learned from the Baltimore Sun that Endara effectively owned two percent of the bank’s stock through a family trust. According to the paper, Attorney General Rogelio Cruz had dismissed warnings by the DEA back in January 1990 that Medellín drug lord Rodriguez Gacha had deposited more than $12 million in the bank shortly before the invasion.
Said Mayin Correa, a popular journalist and mayor of Panama City, “It is a pity that we fought so hard to get rid of a corrupt, narco dictatorship and now we find the same things are happening again.”[liv]
How much did Endara know, and when did he know it? His claims of ignorance did not convince one U.S. reporter writing in 1991: “At the time of the alleged money laundering, Endara served in the sensitive post of secretary of the board of directors. With enormous fiduciary responsibilities, it was his job to attend, participate in, and record all high-level management meetings. When most Panamanian banks had stopped making any large cash loans, Interbanco showered several million dollars in loans on its preferred customer, Celso Fernandez Espina, to buy a Panamanian hotel.
“Spanish drug investigators have directly linked Espina to both the Cali and Medellin cartels. Endara has publicly claimed that he had no knowledge of the activities of the bank’s individuals clients. ‘How can he not know where [. . . ] the bank’s money is going when he’s secretary of the board,’ asks one midlevel bank manager. ‘Especially considering the bank’s total declared capital was only $10 million.’
“U.S. ambassador Deane Hinton says, ‘I’m personally convinced Endara is an honest man.’ . . . But even Hinton’s own staff is incredulous, creating a deep rift inside the embassy. ‘Just how long can Endara play dumb?’ asks a dissident U.S. official. ‘Evidence is sufficiently strong so that a broad sector of the business elite no longer believes his denials.’”[lv]
Endara’s defenders and even impartial observers accused the Bush administration of leaking damaging stories to pressure Panama’s leaders into signing a legal assistance treaty.
As one Panamanian academic told a reporter, “Just as your government knew about Noriega’s drug dealing and kept quiet so long as he was politically useful, Washington also knew about the new government’s connections for years but supported them anyway. And now when it needs to turn up the pressure to get [the banking agreement] signed, the embassy starts to let the cat out of the bag. As you can understand, this tends to make us Panamanians just a little bit cynical about your intentions here.”[lvi]
Relations between the two countries had sunk remarkably far only a few short months after their celebration of a victory for democracy and the rule of law. The United States now demanded that its interests trump democracy in Panama, while Panama’s leaders refused to become enforcers of North American laws.
One U.S. Senate staffer said bluntly, “It’s time for our Panamanian friends to realize that we did not remove Noriega so that the same conditions could prevail.” Witnesses in Panama reported public shouting matches between Ambassador Hinton and Foreign Minister Linares.”[lvii]
Hinton responded that “some Panamanians are very emotional people” who ignore the facts and “have an emotional reaction that the big gringos are imposing this.” He added, “If these people had been smart, they would have settled this a long time ago” and collected “a lot of money” in the form of U.S. aid.[lviii]
Endara lashed back at his critics. He filed a slander complaint against a local newspaper columnist who had dared to write about the president’s ties to Banco Interoceánico. Attorney General Cruz then ordered the journalist’s arrest for “crimes of calumny and insult.” This provocation triggered demonstrations and protests against Endara by many Panamanian journalists, including the prominent anti-Noriega publisher of La Prensa.[lix]
In an attempt at damage limitation, Panama’s national banking commission appointed a trustee to take over management of Interbanco at the end of October 1990. The commission said the bank suffered “some liquidity deficiencies” but claimed the institution was untainted by money laundering. The intervention was the first by the commission since 1985, when it shut down First Interamericas Bank.[lx]
Meanwhile, the war of words continued, with President Endara telling the Wall Street Journal in December 1990, “We are not going to plunge a knife into our banking system even if the U.S. stands on its head and jumps up and down.”[lxi] U.S. officials, in turn, said off the record they believed their counterparts in Panama were covering up for dirty banks they had been associated with as lawyers or directors.[lxii] Privately they advised President Endara that one of Panama’s main treaty negotiators was implicated in a $1 million money-laundering investigation.[lxiii]
The State Department’s narcotics bureau reported early in 1991 that Panama was still awash in cocaine. While praising the Endara government for taking “a strong and vocal stance against the illegal drug trade,” the report also noted Washington’s “concern” over reports of official corruption in Panama and its “great concern” over the failure to conclude a mutual legal assistance agreement.
“The Endara government has a mixed record on combatting money laundering,” the report observed. “. . . Despite the removal of the Noriega regime, the money laundering infrastructure remains largely in place, and credible reports indicate that some banks in Panama and the Colon Free Zone continue to accept large cash deposits and launder drug money.”
It cited evidence that Colombian traffickers were moving tens of millions of dollars a year through Panama’s banks.[lxiv] A Justice Department official lamented that Panama was now “less able to deal with narcotics trafficking than it was under Noriega.”[lxv] A gram of top-quality cocaine in Panama cost only $2 on the street, down from $35 under Noriega.[lxvi]
At the beginning of April 1991, the head of the Democratic Revolutionary Party, a center-left party associated with Noriega, cited a DEA court affidavit in a Miami cocaine smuggling case against Cuban exiles Augusto Guillermo Falcón and Salvador Magluta — said to be the largest in U.S. history — to accuse President Endara’s law firm of associating with money launderers.
The affidavit named six shell companies used by Falcón and Magluta to launder their drug profits through Panamanian banks and buy property in the Miami area; all employed Endara as treasurer and his other two law partners as director-president and secretary. Endara said he was unaware of the true owners of those corporations, and handled all their business through a Miami-based friend (who had the misfortune to be murdered by Colombian assassins in 1989).
Diplomats speaking off the record said they did not suspect Endara of “direct involvement” in crimes, but acknowledged that “the revelations do not shed good light on his legal judgment or his choice of friends.” However, the attorney for the two indicted drug smugglers charged that Endara and his law partner Hernán Delgado met directly with his clients and “knew they were dealing with traffickers.”[lxvii]
Endara soon came under attack from his former allies in the Christian Democratic Party as well. Vowing to respond to them “blow by blow,” he provoked a political crisis by firing all five party members from his cabinet. The party’s leaders in turn promised “to bring out in the open the truth” about Endara’s connections to the accused Florida traffickers.[lxviii] Death threats soon forced the DEA agent who swore the affidavit to leave the country.[lxix]
On April 11, 1991, Panama and the United States finally settled on a legal assistance treaty targeting money laundering in drug cases. Although superficially a victory for Washington, the treaty left banks relatively untouched in cases involving tax evasion and other non-drug-related crimes. The agreement also did nothing to lift the veil on shell companies that hid their true owners behind nominees — typically corporate lawyers like Endara and his partners. Nor did the treaty cover deposits via wire and computer transfers.[lxx]
Still, Vice President Ford told reporters the treaty would “send a loud and clear message to the world that in Panama we are not condoning the crime of money laundering and the drugs problem.”[lxxi]
The announcement boosted the reputation of Panama’s government only briefly. The next month, as the head of the Bush administration’s Office of National Drug Control Policy was in Panama to praise the new spirit of collaboration, Panama’s director of Customs came under fire for alleged embezzlement, extortion and tax evasion. He in turn accused his accuser, the agency’s chief of investigations, of trying to block a probe of departmental corruption that had already implicated the chief of the drug squad at Tocumen International Airport for possessing more than a pound of cocaine.
An informant claimed the airport official was merely one of a large number of agents from Customs, Treasury and the Technical Judicial Police who were running hundreds of pounds of cocaine through the facility to the United States on behalf of the Medellín and Calí cartels.[lxxii]
Meanwhile, Panama’s bankers did not let the new legal assistance treaty stand in the way of their profits from the burgeoning cocaine market. “Fueled by returning domestic flight capital and drug money, bank deposits are now close to $21 billion, compared with their 1989 low of $8.5 billion,” reported James Henry in July 1991. “The demand for shell companies, used as ‘fronts’ for dubious activities all over the world, fell from 1,500 a month in 1986 to only 800 a month in late 1989, but it is now back to more than 1,300 a month.”[lxxiii]
Panama’s money laundering now surfaced as a big issue in Europe as well as the United States. Spanish police complained that senior Panamanian government officials had been guilty for months of “covering up the personal assets and business activities” of major Spanish cocaine traffickers who had long been “using Panama as a haven and cover for their activities.”
Attorney General Cruz was said to be notably unresponsive to Spanish requests to examine their local bank accounts. It also emerged that Panama’s chief Interpol liaison had tipped off a notorious Spanish drug lord about the arrival of police from his country, giving him time to hide evidence of his money laundering.[lxxiv]
Panamanian reformers gave vent to frustration and disillusionment over the growth of corruption. Miguel Antonio Bernal, a law professor and activist for human rights and democracy in Panama, charged that in the 18 months since the U.S. invasion, “my country has not taken a single meaningful step toward democracy or order. Under the American-installed government of President Guillermo Endara, Panama is reeling backwards so fast that it is on the verge of disintegrating. Street crime has quadrupled. Murders are up 50 percent. Drugs are more plentiful than ever. . . . Inside government, corruption and nepotism rule.”[lxxv]
As the year ended, one observer of the drug trade reported, “U.S. officials believe as much as half a ton of cocaine still flows daily through Panama, mainly en route to the U.S.”[lxxvi] Spinning the facts, a State Department press release at the end of 1991 nonetheless claimed that “a country which was once our adversary in the war on drugs has now begun helping us defeat this menace.”[lxxvii] Or as Vice President Arias put it, though Panama undoubtedly still had its share of corrupt officials, “nobody can now say that the government is a willing accomplice.”[lxxviii]
That boast must have seemed feeble when several of Panama’s senior drug enforcement officials brought criminal charges against Attorney General Cruz in the fall of 1992 for unfreezing $38 million in bank accounts allegedly used by the Cali cartel to launder drug profits. Panama’s Supreme Court eventually found Cruz guilty of abuse of authority but handed him a mere one-year suspended sentence. He later turned up as legal counsel for the Cali Cartel’s top trafficker in Panama, who smuggled tons of cocaine north to the United States in the post-Noriega era under cover of a fishing fleet.[lxxix]
After all this, even Vice President Arias was too disgusted to defend the regime. “The filthy, polluting waters of drug trafficking and money laundering are still flowing through the country,” he said in early 1993. “This is an enormous pitfall on our road to democracy.” A report by the Panamanian Committee for Human Rights echoed his statement, charging that Panamanian society was now “immersed in a culture of corruption that reaches into the government sector as well as civil society itself.”[lxxx]
Popular depictions of Operation Just Cause at the time resembled some 1950s Westerns, with their depictions of virtuous lawmen bringing murderous villains to justice (usually at the end of a noose, not in an air conditioned jail cell). Just as that era’s audiences left theaters comforted that law and order had been restored to Dodge City, so most North Americans in 1990 likely assumed that President Bush’s timely intervention had saved Panama from the grip of evil drug lords.
But even as the United States was congratulating itself on winning the war on drugs in Panama, cocaine continued pouring through the country toward North America. In retrospect, Just Cause was a hollow victory for law enforcement.
A year and a half after Noriega’s arrest, unnamed “U.S. experts” told Time magazine that “the unexpected result . . . is that the rival Cali cartel established a base in Panama and has since inundated the country — along with Mexico, Guatemala and the Caribbean — with vast quantities of cocaine destined for the U.S. and Europe.”[lxxxi]
The signing of a mutual legal assistance treaty in 1991 solved nothing, either. Nine years later, the G-7 Financial Action Task Force on Money Laundering declared Panama non-cooperative in the fight against money laundering, and the U.S. Treasury Department’s Financial Crimes Enforcement condemned “serious deficiencies” in Panama’s enforcement commitment.[lxxxii]
Panama passed new legislation to avoid being further blacklisted, but to this day it remains a “transshipment crossroads for illicit trafficking,” whose official record is marred by “a weak regulatory framework, the existence of bearer share corporations, a lack of collaboration among government agencies, inconsistent enforcement of laws and regulations, and a weak judicial system susceptible to corruption and favoritism,” in the words of the State Department.[lxxxiii]
This dismal record puts the lie, once again, to the “kingpin” theory of drug crime, popularized by some politicians, law enforcement officials and reporters seeking headlines. Serious law enforcement professionals and students of drug policy know that the arrest of “kingpins” like Noriega creates high drama but never has any lasting effect on the supply of drugs.[lxxxiv]
The world drug market is far too pluralistic to be shut down in the face of strong market demand. To its credit, the DEA itself warned within days of Operation Just Cause against any unrealistic expectation that the change of regime would noticeably curb the drug traffic.
“No single event, no matter how significant it is, will result in the immediate impact on availability of drugs in the United States,”’ said Frank Shults, a spokesman for the agency. “There are numerous financial centers throughout the world. Drug traffickers are very flexible in their ability to move their money. They will no doubt exploit whatever markets they are able to.”[lxxxv]
Events in post-Noriega Panama also cast further doubt on the sincerity of the U.S. “war on drugs.” As many critics charged in the late 1980s, Washington’s longstanding support for Noriega exposed the hypocrisy of its anti-drug rhetoric. The yawning gap between words and reality affirmed that drug issues rarely trump other strategic and political interests when it comes to foreign policy.
For the Reagan administration, the future of the Panama Canal and U.S. military bases, the specter of leftist insurgencies in Central America, and regional intelligence operations involving Cuban and other targets were all national security considerations that dominated drug matters until the late 1980s, when a well-organized anti-Noriega lobby took advantage of popular alarm over the crack epidemic to push the drug issue onto center stage.
The Bush administration succeeded in disarming domestic criticism by handcuffing the alleged mastermind of Panama’s drug traffic as the culmination of Operation Just Cause. But as we have seen, once the spotlight receded, the Bush White House embraced the new pro-American government, drug ties and all, as readily as previous administrations had accommodated themselves to Noriega.
Without the glare of political and media attention that forced action against Noriega, the White House shifted its primary focus away from drugs to dramatic events in the former Soviet bloc and the Persian Gulf that strategists deemed far more important to national security.
The steady campaign to pressure the Endara government to sign a mutual legal assistance treaty, fueled in part by Congress, shows that Washington had some genuine interest in Panama’s drug issues. But its interest was ambivalent at best.
Indeed, the Bush administration’s sponsorship of the Endara government was deeply cynical, given how many of its members had long-standing ties to money-laundering banks. These connections were no secret; the administration simply chose to ignore them. Trumping that issue, apparently, was the reliably pro-U.S. cast of the new government, which Washington had every hope would be more pliant than Noriega on a range of issues.
“Did America oust one alleged crony of drug dealers and replace him with another?” An American news magazine finally raised that question two years after Noriega’s ouster. It revealed that the same question had arisen much earlier in Washington: “Before Operation Just Cause in December 1989, a senior U.S. official expressed concern to Endara that some of his business dealings may have involved drugs and that ‘the appearance of any association with drugs would be damaging.’ But this official was satisfied with Endara’s explanations and only in early 1990 did the DEA raise the Falcon-Magluta matter.”[lxxxvi]
U.S support for the Endara government compounded the very cynicism created by Washington’s earlier support for Noriega. Richard Gregorie, the former assistant U.S. attorney who brought the Miami indictment against Noriega, said “Endara might have known, along with half a dozen others” about the true purpose of the Falcon-Magluta shell companies. “But we won’t pursue it because it’s against the dictates of the State Department.”[lxxxvii]
Once installed in power by Washington, Panama’s tainted leaders could not be discredited without discrediting the military operation waged by the Bush administration in the name of justice and democracy.
More haunting than such reactions in the United States, however, was the sense of betrayal felt by many opponents of the Noriega regime who had risked their livelihoods and even their lives for the cause of democracy and the rule of law. As the new government’s shady ties were unveiled, and as it attacked journalists who dared to expose the truth, some of those critics wondered if their righteous cause had been hijacked.
A bitter new joke began making the rounds in Panama, recited by journalists and academics. It said of the Americans, “They took Ali Baba and left us with the 40 thieves.”[lxxxviii]
Jonathan Marshall, an independent scholar, is the author of many articles and books on the international drug traffic, including The Lebanese Connection: Corruption, Civil War, and the International Drug Traffic (Stanford: Stanford University Press, 2012) and, with Peter Dale Scott, Cocaine Politics: Drugs, Armies, and the CIA in Central America (Berkeley: University of California Press, 1991 and 1998). [Marshall thanks John Dinges, William O. Walker III, Peter Dale Scott, and Matthew Pembleton for commenting on an earlier draft of this article.]
[i] As former Secretary of State James Baker observed, “In breaking the mindset of the American people about the use of force in the post-Vietnam era, Panama established an emotional predicate that permitted us to build the public support so essential for the success of Operation Desert Storm some thirteen months later.” James Baker and Thomas DeFrank, The Politics of Diplomacy: Revolution, War and Peace, 1989-1992 (New York: G. P. Putnam’s Sons, 1995), 194; cf. William O. Walker III, National Security and Core Values in American History (New York: Cambridge University Press, 2009), 219. The Panama invasion force totaled almost 28,000 U.S. troops, four times the number deployed in Grenada in 1983.
[ii] The “war on drugs” was anchored in the Reagan administration’s National Security Decision Directive (NSDD) 221, issued in April 1986, which declared drugs a threat to U.S. national security and authorized the U.S. military to provide counter-narcotics training, assistance, and intelligence (http://www.fas.org/irp/offdocs/nsdd/nsdd-221.pdf , accessed May 27, 2013). It was accompanied by militant pronouncements by President Reagan; see William N. Ellwood, Rhetoric in the War on Drugs: The Triumphs and Tragedies of Public Relations (Westport, CT: Greenwood, 1994), 26-32. In August 1989 President Bush approved NSDD 18, which authorized additional military aid and limited counterinsurgency-type operations, and gave the U.S. miliary more legal authority to operate abroad in a law enforcement capacity. See William L. Marcy, The Politics of Cocaine: How U.S. Foreign Policy Has Created a Thriving Drug Industry in Central and South America (Chicago: Lawrence Hill Books, 2010), 136-140.
[iii] Accounts mentioning drug issues in post-Noriega Panama include Luis E. Murillo, The Noriega Mess: The Drugs, the Canal, and Why America Invaded (Berkeley: Video*Books, 1995), 838-841; Christina Jacqueline Johns and P. Ward Johnson, State Crime, the Media, and the Invasion of Panama (Westport, CT: Praeger, 1994), 98-102; The Independent Commission of Inquiry on the U.S. Invasion of Panama, The U.S. Invasion of Panama: The Truth Behind Operation “Just Cause” (Boston: South End Press, 1991), 57-59; and Tom Barry, et al., Inside Panama (Albuquerque: Resource Center Press, 1995), 22. Most histories say little or nothing about these issues, including Robert C. Harding, The History of Panama (Westport CT: Greenwood Press, 2006); Michael Conniff, Panama and the United States: The Forced Alliance (Athens, Georgia: University of Georgia Press, 2001); Orlando J. Pérez, ed., Post-Invasion Panama: The Challenges of Democratization in the New World Order (Lanham, MD: Lexington Books, 2000); Eva Loser, ed., Conflict Resolution and Democratization in Panama; Implications for US Policy (Washington, D.C.: The Center for Strategic and International Studies, 1992); and Richard L. Millett, “The Aftermath of Intervention: Panama 1990,” Journal of Interamerican Studies and World Affairs 32 (Spring 1990), 1-15.
[iv] John Lindsay Poland makes much the same point about the media in Emperors in the Jungle: The Hidden History of the U.S. in Panama (Duke University Press, 2003), 122. That said, there were many important exceptions, and I am grateful to the diligent reporters whose work I cite.
[v] I use the term “cartel” loosely, as it has been by the Drug Enforcement Administration (DEA) and the media, to refer to close associates of Pablo Escobar, the Ochoa family, and José Gonzalo Rodriguez Gacha (Medellín Cartel), and of Gilberto Rodríguez Orejuela and José Santacruz Londoño (Calí Cartel). The global drug trade has never resembled a true economic cartel.
[vi] Steve Albert, The Case Against the General (New York: Charles Scribner’s Sons, 1993), 348. Copies of official letters from the Reagan administration thanking Noriega for his cooperation were published by his regime in Panama: 16 Years of Struggle Against Drug Traffic (Panama: Editora Renovacion, 1988).
[vii] Feb. 1985 staff report, quoted in Albert, The Case Against the General, 13.
[viii] U.S. Congress, House of Representatives, Select Committee on Narcotics Abuse and Control, hearing, U.S. Foreign Policy and International Narcotics Control–Part II (Washington: U.S. Government Printing Office, 1988), 11, 31.
[ix] Miami Herald, 13 March 1985; Robert E. Powis, The Money Launderers: Lessons From the Drug Wars – How Billions of Illegal Dollars Are Washed Through Banks & Businesses (Chicago: Probus, 1992), 121; Reuters, 11 Feb. 1992; Albert, The Case Against the General, 368; Ron Chepesiuk, The Bullet or the Bribe: Taking Down Colombia’s Cali Drug Cartel (Westport: Greenwood, 2003), 104.
[x] “Drugs: Hooking Some Big Fish,” Time, 18 May 1987; Sun-Sentinel (South Florida), 7 May 1987; Houston Chronicle, 7 May 1987; Los Angeles Times, 7 May 1987 and 1 Oct. 1987.
[xi] Los Angeles Times, 2 April 1988; House Committee on Appropriations, Subcommittee, hearings, Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations for 1989, Part 6, 20. For more on Panama’s cooperation, see Los Angeles Times, 7 May 1987, and John Dinges, Our Man in Panama (New York: Random House, 1990), 257.
[xii] Wall Street Journal, 7 Aug. 1987.
[xiii] Dinges, Our Man in Panama, 203.
[xiv] Latin America Weekly Report, 8 Jan. 1987; Inforpress Centroamericana, 21 May 1987.
[xv] Latin America Regional Report, 11 June 1987.
[xvi] Inforpress Centroamericana, 21 May 1987.
[xvii] Los Angeles Times, 1 July 1987 (reprinting Newsday); Wall Street Journal, 7 Aug. 1987; New York Times, 10 Aug. 1987; Bogota Intravision Television, 31 July 1987.
[xviii] Buckley, Panama, 78-101; Frederick Kempe, Divorcing the Dictator: America’s Bungled Affair With Noriega (New York: G.P. Putnam’s Sons, 1990), 213-26; Dinges, Our Man in Panama, 262-270. The protests were motivated by a variety of genuine concerns, from Noriega’s rigging of elections to his suspected role in the murder of political opponent Hugo Spadafora. Drawing support for various sectors of society, they were organized by leaders of the business and financial community under the umbrella of the National Civic Crusade, which was headquartered at the Chamber of Commerce. See ACAN-EFE, 15 June 1987; Central America Report, 19 June 1987. Noriega reacted by declaring a state of emergency, suspending portions of the constitution, imposing press censorship, and using force against rioters. See Miami Herald, 21 June 1987; Insight, 13 July 1987.
[xix] Rensellaer Lee, The White Labyrinth: Cocaine and Political Power (New Brunswick: Transaction, 1989), 183.
[xx] Kempe, Divorcing the Dictator, 3-4.
[xxi] In exchange for the testimony, eager U.S. prosecutors even agreed to cut nine years off the sentence of an unrelated Cali trafficker—brother of one of that cartel’s senior leaders. See Washington Post, 4 and 48 Nov. 1995, and 5 March 1996; St. Petersburg Times, 10 March 1996; Associated Press, 27 March 1996; “Too Good a Deal? The Noriega Case,” Economist, 9 March 1996; William C. Rempel, At The Devil’s Table: The Untold Story of the Insider Who Brought Down the Cali Cartel (New York: Random House, 2011), 67-70. Although a federal appeals court declined to order a new trial for Noriega, it criticized the government for appearing “to have treaded close to the line of willful blindness” in its eagerness to win a conviction. See United States of America v. Manuel Antonio Noriega, cases 92-4687 and 96-4471, U.S. Court of Appeals, Eleventh Circuit, 7 July 1997. For other doubts about the testimony of Ricardo Bilonick, see Newsday, 14 Feb. 1992.
As for the Medellín cartel, a pilot for one of its bigger smugglers, Carlos Lehder, recalled, “Carlos never liked Noriega. He never trusted this guy.” The same witness described Pablo Escobar’s reaction after Noriega approved the raid on a cocaine lab in May 1984: “He was just really out of whack with Noriega. He was like, ‘This guy is dead. No matter what, he is dead.’” See Frontline interview with Fernando Arenas (2000), in http://www.pbs.org/wgbh/pages/frontline/shows/drugs/interviews/arenas.html (accessed 3 March 2012).
[xxii] Jonathan Easley, “The Day the Drug War Really Started,” Salon.com, 19 June 2011 at http://www.salon.com/2011/06/19/len_bias_cocaine_tragedy_still_affecting_us_drug_law/ (accessed 4 March 2012); Marcy, The Politics of Cocaine, 84-6. Within two years, almost half of Americans surveyed in a New York Times/CBS News poll ranked drug trafficking as the most important international problem (Reuters, 10 April 1988). By late 1989, Americans surveyed by Gallup cited drugs as “the most important problem facing this country today” by a full ten-percentage-point margin. See Michael R. Hathaway, “The Role of Drugs in the U.S. Panamanian Relationship,” in Bruce W. Watson and Peter G. Tsouras, eds., Operation Just Cause: The U.S. Intervention in Panama (Boulder, Colorado: Westview Press, 1991), 36.
[xxiii] Kempe, Divorcing the Dictator, 176-177.
[xxiv] On Bush’s domestic political calculus, see Steve C. Ropp, “The Bush Administration and the Invasion of Panama: Explaining the Choice and Timing of the Military Option,” in John D. Martz, ed., United States Policy in Latin America (Lincoln, Nebraska: University of Nebraska Press, 1995), 92; Richard L. Millett, “Panama and Haiti,” in Jeremy R. Azrael and Emil A. Payin, eds., U.S. and Russian Policymaking With Respect to the Use of Force (Santa Monica: RAND, 1996), 158-159; and Frederick Kempe, “The Panama Debacle,” in Loser, ed., Conflict Resolution and Democratization in Panama, 2-3, 14.
[xxv] New York Times, 4 Jan. 1990. The United Nations General Assembly voted 75 to 20 to condemn the invasion. The Mexican government stated, “The fight against international crimes cannot be a motive for intervention in a sovereign nation.” See Alan R. Goldman and E. Maria Biggers, “The International Implications,” in Watson and Tsouras, eds., Operation Just Cause, 182; cf. Margaret Scranton, The Noriega Years: U.S.-Panamanian Relations, 1981-1990 (Boulder, Colorado: Lynne Rienner, 1991), 207-208.
[xxvi] San Francisco Chronicle, 16 July 1991.
[xxvii] U.S.-Panama statement, AP, 20 Dec. 1989.
[xxviii] AP, 23 April 1989 and 11 May 1989; Charles D. Ameringer, Political Parties of the Americas, 1980s to 1990s: Canada, Latin America, and the West Indies (Westport, CT: Greenwood, 1992), 478. Based on Panama’s estimated population of 2.4 million in 1989, proportionate campaign funding in the United States would have exceeded $1 billion.
[xxix] On the arrest of Carlos Eleta Almaran as part of a $300 million conspiracy to import cocaine, see Atlanta Journal, 7, 8, 11, 12, and 13 April 1989. On the CIA’s operation using Eleta, see New York Times, 14 Jan. 1990. Federal prosecutors dropped the charges against Eleta soon after Noriega’s ouster (Atlanta Journal, 2 and 23 Feb. 1990).
[xxx] Reuters, 9 April 1989.
[xxxi] Buckley, Panama, 241; St. Louis Post-Dispatch, 1 May 1990; Boston Globe, 11 July 1990. The looting resulted in part from the Bush administration’s dismissive attitude toward post-war planning, which foreshadowed the chaos unleashed by Operation Iraqi Freedom in 2003. On the planning debacle, see Richard H. Shultz, Jr., In the Aftermath of War: U.S. Support for Reconstruction and Nation-building in Panama Following Just Cause (Maxwell Air Force Base, AL: Air University Press, 1993), 3, 16-21, 28, 63, 70; and Thomas Donnelly, Margaret Roth, and Caleb Baker, Operation Just Cause: The Storming of Panama (New York: Lexington Books, 1991), 375-379.
[xxxii] Wall Street Journal, 3 Jan. 1990. Attorney General Rogelio Cruz subsequently froze some 200 accounts, but all were associated with colleagues of Noriega. See Miami Herald, 18 Jan. 1990.
[xxxiii] New York Times, 11 Jan. 1990; Los Angeles Times, 11 Jan. 1990; La Prensa, 11 Jan. 1990.
[xxxiv] Houston Chronicle, 11 Jan. 1990.
[xxxv] Associated Press, 11 Jan. 1990; see also Miami Herald, 18 Jan. 1990.
[xxxvi] Wall Street Journal, 17 April 1986; Miami Herald, 6 Aug. 1984; The Panama News, 20 March 2011; interview with U.S. prosecutor David Cassidy, 7 Aug. 1987; interview with Roberto Eisenmann, 21 Sept. 1987. There is no evidence that Ford or Rodriguez knew of this money laundering, and neither faced criminal charges for it.
[xxxvii] Miami Herald, 5 and 6 Jan. 1990 and 13 Feb. 1990. Despite the embarrassment of these connections, money laundering was not yet a federal crime in the United States in the early 1980s, much less in Panama.
[xxxviii] Dow Jones, 26 Jan. 1990; Houston Chronicle, 30 Jan. 1990.
[xxxix] Los Angeles Times, 1 Feb. 1990.
[xl] Interview with Greg Passic, 13 April 2012.
[xli] Among the first such accounts appeared in Oakland Tribune, 5 and 22 Jan. 1990.
[xlii] Boston Globe, Feb. 5, 1990. The president of First Interamericas Bank was Jaime Arias Calderón, brother of Edara’s First Vice President (La Republica, 5 Dec. 1988).
[xliii] New York Times, 6 Feb. 1990. Endara called the article “very unfair” and said that although he had been a member of the board of directors of Banco Interoceánico since 1972, he had no operational capacity and was not connected “to any misdeed and much less (to) drugs.” ACAN-EFE, 16 Feb. 1990. Endara resigned from the board on 31 May 1990 (El Panama America, 26 Oct. 1990).
[xliv] Tulsa World, 2 March 1990.
[xlv] St. Louis Post-Dispatch, 1 May 1990; ACAN-EFE, 19 June 1990. Only a week after championing Panama’s fragile democracy, the Bush administration was said to be “turning to Guatemala’s military to promote economic and political stability” while giving a cold shoulder to its civilian government. The CIA was reported to be “trying to take over the drug war” by subsidizing army intelligence—the same institution that was Noriega’s stepping stone to power—even though the military was implicated in drug trafficking and linked to death squads. One European diplomat said with no apparent irony, “they [the United States] are turning to the military as the only institution capable of keeping this place from becoming another Panama.” Los Angeles Times, 7 May 1990.
[xlvi] Boston Globe, 11 July 1990.
[xlvii] New York Times, 21 Aug. 1990.
[xlviii] Chicago Tribune, 17 Feb. 1991.
[xlix] Christian Science Monitor, 11 Oct. 1990.
[l] El Siglo,10 May 1990; La Prensa, 10 June 1990. On the corruption of Panama’s Judicial Technical Police rank and file, see Boston Globe, 18 Dec. 1990. The director of the force, Captain Leslie Loiza, complained that “rotten apples remain in the institution” and said that he was prevented by law from investigating Cruz’s alleged links to the Cali cartel. See El Diario Independiente, 28 Feb. 1991. The next year, Attorney General Cruz allegedly blocked an attempt to fire 16 members of the police force for ties to drug traffickers (Washington Post, 28 Nov. 1992; La Prensa, 18 Nov. 1992).
[li] Chicago Tribune,7 Oct. 1990; Critica Libre, 27 June 1990. For later prison breaks by leading operatives of the Medellín Cartel, see DPA [German Press Agency], 22 Feb. 1991.
[lii] Reuters, 6 Sept. 1990.
[liii] El Siglo, 23 Aug. 1990; La Prensa, 9 Oct. 1990.
[liv] Baltimore Sun, 23 Oct. 1990; Independent, 24 Oct. 1990; Latin American Weekly Report, 8 Nov. 1990. The DEA’s Greg Passic confirmed that he briefed Cruz about Rodriguez Gacha’s bank accounts, based on information captured by Colombian police, to no avail (Passic interview, 13 April 2012). Endara said his holdings in the bank amounted to only two shares worth $200, not two percent as reported. See Circuito RPC Television (Panama City), 25 Oct. 1990.
[lv] Marc Cooper, “Same As It Ever Was,” Village Voice, 28 May 1991. Fernandez Espina denied any impropriety in the $3 million loan that one of his hotels received from Interbanco. See his letter to the Washington Post, 12 Aug. 1991.
[lvi] Cooper “Same as it Ever Was.” For similar statements by the president of Panama’s National Bar Association, see El Panama America, 26 Oct. 1990.
[lvii] Baltimore Sun, 28 Oct. 1990. See also New York Times, 22 Oct. 1990; Christian Science Monitor, 20 Nov. 1990. One European diplomat called those outbursts “maybe the best show in town. It’s like unexpectedly walking in on a married couple in the middle of a fight over sex. You know it’s rude to stay but you just can’t leave.” Los Angeles Times, 27 Dec. 1990.
[lviii] San Diego Union-Tribune, 30 Nov. 1990.
[lix] Reuters, 6 Nov. 1990; El Siglo, 6, 7 and 9 Nov. 1990; Critica Libre, 7 Nov. 1990; El Panama America, 7 Nov. 1990; La Prensa, 7 Nov. 1990.
[lx] ACAN-EFE, 31 Oct 1990; La Prensa, 8 Nov. 1990; Latin American Weekly Report, 15 Nov. and 6 Dec. 1990. Following an investigation, the commission decided to liquidate the bank. See Independent, 27 Dec. 1990.
[lxi] Wall Street Journal, 19 Dec. 1990. Endara and other critics of the treaty insisted they supported cracking down on drug money laundering but not on tax evasion or insider trading. See La Prensa, 30 Oct. 1990; El Diario Independente, 2 Nov. 1990; La Prensa, 8 Nov. 1990.
[lxii] New York Times, 11 Feb. 1991.
[lxiii] Independent, 8 May 1991. Foreign Ministry legal adviser Julio Berrios resigned in April, just as the treaty was finally being signed.
[lxiv] U.S. Department of State, Bureau of International Narcotics Matters, International Narcotics Control Strategy Report, March 1991, 171-172, 372-373. The General Accounting Office came to many of the same conclusions a few months later, citing the informed opinion of one DEA agent that “trafficking may have doubled since Operation Just Cause.” U.S. General Accounting Office, Report to the Chairman, Select Committee on Narcotics Abuse and Control, House of Representatives, “The War on Drugs: Narcotics Control Efforts in Panama,” GAO/NSIAD-91-233, July 1991.
[lxv] Washington Post, 18 April 1991.
[lxvi] Chicago Tribune, 25 April 1991.
[lxvii] Prosecutors in the Miami case accused Falcón and Magluta of importing 75 tons of cocaine and earning more than $2 billion. The lawyer for the two accused, Frank Rubino, also represented Manuel Noriega at the time and thus had reason to disparage Endara. See Circuito RPC Television (Panama City), 4 April 1991; El Siglo, 5 April 1991; La Estrella de Panama, 7 April 1991; San Francisco Examiner, 9 April 1991; San Francisco Chronicle, 24 Dec. 1991; Linda Robinson, “The Panama Connection,” U.S. News and World Report, 9 Dec. 1991, 37-40; Jim DeFede, “Falcon and Magluta,” Miami New Times, 12 Feb. 1992. According to one account, the confidential DEA affidavit was leaked not by the U.S. embassy, but by the office of the attorney general in Panama. See El Panama America, 9 April 1991. Zealous DEA officers later reportedly detained and questioned Endara’s law partner, Hernán Delgado, at Howard Air Force Base, until Ambassador Hinton intervened on his behalf. See El Clarin Nacional, 5 Sept. 1991.
[lxviii] El Siglo, 5 April 1991; DPA, 12 April 1991.
[lxix] El Siglo, 11 April 1990; San Francisco Chronicle, 24 Dec. 1991.
[lxx] Reuters , 11 April 1991; Associated Press, 2 April 1991; New York Times, 3 April 1991; Los Angeles Times, 28 April 1991.
[lxxi] Reuters, 11 April 1991. For details of the pact, see “Treaty with U.S. signed as laundering increases again,” Money Laundering Alert, 2 (June 1991), 7. Ironically, Sen. Jesse Helms held up ratification of the treaty in the U.S. Senate for more than two-and-a-half years, asserting that it would give corrupt Panamanian officials the right to see confidential U.S. documents (San Francisco Chronicle, 5 Feb. 1994).
[lxxii] Chicago Tribune, 26 May 1991.
[lxxiii] James Henry, “Panama: Dirty Business as Usual,” Washington Post, 28 July 1991.
[lxxiv] Diario 16 (Madrid), 18 and 19 Aug. 1991; El Siglo, 23 May 1991.
[lxxv] Miguel Antonio Bernal, “Panama After the Fall is a State of Turmoil,” San Francisco Chronicle, 20 July 1991.
[lxxvi] Kenneth Sharpe, “U.S. Losing the Drug War in Panama,” Chicago Tribune, 19 Dec. 1991. Although that estimate was likely inflated, in July 1992 U.S. customs seized 5.3 tons of cocaine that had been packed in Panama (Dallas Morning News, 28 Oct. 1992). Panamanian police confiscated some 20 tons of cocaine in 1992, several times the total for all the 1980s (AP, 1 Feb. 1993).
[lxxvii] 26 Dec. 1991 press release, cited in Los Angeles Times, 12 June 1992.
[lxxviii] San Diego Union-Tribune , 12 April 1992.
[lxxix] Agence France Presse, 24 Dec. 1992; Washington Post, 28 Nov. 1992; El Siglo, 12 and 31 Oct. 1992, 5 and 9 Nov. 1992, and 24 April 1996; El Panama America, 1 Nov. 1992; La Prensa, 8 Nov. 1992; Reuters, 28 Oct. 1993; Wall Street Journal, 10 July 1997; U.S. Department of State, Bureau of International Narcotics Matters, International Narcotics Control Strategy Report, April 1993, at http://dosfan.lib.uic.edu/ERC/law/INC/1993/03.html (accessed March 14, 2012). Other officials who came under investigation after Cruz for drug-related crimes included the director of Panama’s police academy (La Prensa, 15 April 1993) and the former head of Panama’s Customs bureau, who was accused of stealing $1.8 million in seized drug cash (Washington Post, 20 Sept. 1993).
[lxxx] Associated Press, 1 Feb. 1993.
[lxxxi] Cathy Booth, “Day of Reckoning,” Time, 26 Aug. 1991, 18.
[lxxxii] Department of Treasury, Financial Crimes Enforcement Network, “Transactions Involving Panama,” Advisory 23, July 2000, at http://www.fincen.gov/news_room/rp/advisory/html/advis23.html (accessed June 22, 2013).
[lxxxiii] Quotes from Department of State, Bureau for International Narcotics and Law Enforcement Affairs, International Narcotics Control Strategy Report, March 2013, volumes I and II (http://www.state.gov/j/inl/rls/nrcrpt/2013/vol1/204051.htm#Panama and http://www.state.gov/j/inl/rls/nrcrpt/2013/vol2/204067.htm#Panama (accessed 22 June 2013). On corruption during the period 2004 to 2011, see Carrie Burggraf, “The U.S. Whitewashes Panama’s Fatal Flaws to Champion Their Free Trade Agreement,” 25 Aug. 2011, at http://www.coha.org/the-u-s-whitewashes-panamas-fatal-flaws-to-champion-their-free-trade-agreement/ (accessed 20 June 2012). For a compilation of recent news stories about Panama’s booming drug trade, visit http://www.panama-guide.com/index.php?topic=drugs.
[lxxxiv] See, for example, Michael Kenney, From Pablo to Osama: Trafficking and Terrorist Networks, Government Bureaucracies and Competitive Adaptation (University Park, PA: Penn State Press, 2007), 88-90.
[lxxxv] Seattle Times, 9 Jan. 1990.
[lxxxvi] Robinson, “The Panama Connection,” 38. On U.S. pre-invasion concerns about Attorney General Cruz, see Washington Post, 2 Nov. 1992.
[lxxxvii] Robinson, “The Panama Connection,” 40.
[lxxxviii] For examples, see Agence France-Presse, 26 Aug. 1991; San Francisco Chronicle, 24 Dec. 1991; Alma Guillermoprieto, “Letter from Panama,” New Yorker, 17 Aug. 1992, 62; Los Angeles Times, 18 Oct. 1993. In the film version of John Le Carre’s novel The Tailor of Panama, Harry Pendel says, “When Bush came in and removed Ali Baba he left the 40 thieves” See http://www.imdb.com/title/tt0236784/quotes (accessed 17 March 2012).