With the Dictator Disabled, Panama Looks to Rebuild

Transforming the defense forces, restoring the economy are government's immediate tasks

AS the pursuit of Gen. Manuel Antonio Noriega turned on Monday from a military manhunt into a delicate diplomatic dance, the new civilian government was turning its attention to the difficult task of rebuilding the heavily damaged country. At press time, General Noriega was holed up in the Vatican's Papal Nuncio here, surrounded by United States troops, who in turn were backed by hundreds of curious - and sometimes furious - Panamanian bystanders.

The former strongman, wanted in the US since February 1988 on drug trafficking charges, found himself stripped of all power. At press time, no decision on his fate had been made.

Cuba seemed to be the only third country willing to accept him, though US officials said that such a solution would be unacceptable.

With fighting largely ended since Noriega sought refuge Sunday afternoon, Panamanians have been able to evaluate just how extensive the destruction has been - and how far they must go before becoming a self-sustaining nation.

``We're in such a furor over Noriega's ouster that we haven't realized the huge loss,'' says Marco Fern'andez, an economic consultant here.

The Dec. 20 US invasion pinpointed and destroyed half a dozen bases of the Panamanian Defense Forces (PDF) loyal to Noriega. One flurry of aerial bombings flattened and gutted several city blocks around the military headquarters.

But it was the looting - not the shooting - that lead to the biggest losses in Panama City and throughout the provinces.

``Once the Americans arrived, there was no security in the streets,'' says one prominent Panamanian lawyer, who asked not to be identified.

``The US was looking for Noriega and didn't worry about the streets, so everyone took advantage. It was shameful.''

The looting began hours after the invasion, with poor gangs breaking into food and electronic stores. Christmas ``shoppers'' snatched up anything they could find.

Even as late as Monday, a couple walked away from a store with two pink plastic strollers and a blond doll - the perfect Christmas gifts for their children. They hadn't paid for the toys.

In Anton, a town about 130 miles from Panama City, one woman walked up to US soldiers to complain about vandals who had stolen her sewage system.

In several wealthier areas of Panama City, gun-toting citizens fill the gap left by the PDF police, who fled the invasion, and the US military police, who are primarily concerned with traffic control.

The Former National Bank director, Luis Alberto Arias, says he spent the first three nights after the invasion began protecting his neighborhood from looters with a hunting rifle fitted with a telescope.

``It was the first time I ever used it,'' says Mr. Arias, pointing the rifle toward the Papal Nuncio's residence 11 stories below. He looked briefly through the scope at Noriega's sanctuary, and then placed the rifle carefully under his bed.

Citizen watchdogs are popping up all over the country. At the US-controlled PDF base in Santiago on Sunday, a steady stream of defeated troops and members of Noriega's personal ``Dignity Battalions'' turned in their weapons at the front gate.

For some civilians, that was not enough. They presented US soldiers with lists of people suspected of keeping arms in their houses.

The civilian government intends to convert the 15,000-strong PDF into a ``Public Force'' less than half that size. The aim is apparently to emulate Costa Rica, which has no military.

Such a transformation would be a quick reversal for a society that has lived under virtual military rule for 21 years.

``The great cancer of our country has been militarism - and that is now eradicated,'' says Rodrigo Miranda, a conservative leader in Chiriqu'i Province.

``The number of deaths ... is painful. But in exchange, the defense forces are defeated. If that weren't the case, another Noriega might have been able to rise.''

The newly announced leaders of the public force - Col. Roberto Armijo and Lt. Col. Eduardo Herrera - have already begun to train the new inductees, who are pulled from the ranks of the PDF.

But looting is much more than a public security problem. It has also compounded Panama's economic crisis.

Mr. Fern'andez, the economic consultant, calculates that the looting and bombings cost Panama a combined total of $1 billion - or one quarter of the country's annual gross domestic product.

The raiding of December stockpiles will force some businesses to close and send thousands of Panamanians to the unemployment lines.

That, Fern'andez says, will only aggravate an economy that already suffers from 20 percent unemployment and two straight years of extreme negative growth.

Nevertheless, the government of President Guillermo Endara has a singular advantage: the blessing of the US government.

Already, $400 million dollars of frozen Panamanian assets have been released. And undoubtedly, more emergency funds will be sent soon to extricate Panama from its 2-1/2 year crisis.

``We are going to need lots of external help to get out of this mess'' says Mr. Arias, the banker.

``But we can restructure our economy very quickly, because it is a well-located service economy. All we need is to reestablish confidence.''

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