Missing the Real Noriega Story
Exclusive: The mainstream media’s obituaries for Gen. Manuel Noriega missed the
real story: the U.S. government’s rank hypocrisy in justifying a bloody invasion
that deepened Panama’s role in the drug trade, explains Jonathan Marshall.
By Jonathan Marshall
The death of former Panamanian strongman Manuel Noriega on May 29 elicited few
if any tears. But it should have sparked more reflection in the United States on
his ugly history of service to the CIA, the hypocrisy of Washington’s sudden
discovery of his abuses once Noriega became an unreliable ally against the
Nicaraguan Sandinistas, and the George H.W. Bush administration’s bloody and
illegal invasion of Panama in December 1989.
In fairness, many progressives and mainstream journalists have called attention
to this troublesome history over the years. But few have dared to question the
nearly universal condemnation of Noriega as a protector of international drug
traffickers. That incendiary claim — first broadcast loudly by the unlikely trio
of right-wing Sen. Jesse Helms, R-North Carolina; liberal Sen. John Kerry, DMassachusetts; and investigative journalist Seymour Hersh — galvanized the
American public to support his ouster.
After the U.S. invasion, which killed hundreds of Panamanians and 23 U.S.
soldiers, Noriega was arrested on Jan. 3, 1990 by armed U.S. drug agents.
President George H. W. Bush declared 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.” U.S. Ambassador Deane Hinton called the
invasion “the biggest drug bust in history.”
Convicted in 1992 on eight felony counts following what officials called the
“trial of the century,” Noriega was sentenced to 40 years in jail. Although
released early from U.S. incarceration, he spent the rest of his life in French
and Panamanian prisons.
The resulting publicity created lasting myths about Noriega and drugs.
Journalists who should know better have described Noriega as “one of the world’s
biggest drug kingpins,” to quote Time magazine.
In fact, Louis Kellner, the
U.S. attorney who oversaw his Miami indictment and trial admitted, “Noriega was
never a major player in the drug war.”
Indeed, at worst, he was a small fry compared to the military rulers of
Honduras, whose epic protection of the cocaine trade was tolerated by Washington
in return for using that country as a staging base for Contra operations against
the Sandinista-led government of Nicaragua in the 1980s.
Deeply Flawed Trial
A few close observers of the long, expensive, and controversial trial believe it
failed to prove Noriega’s guilt at all.
David Adams, who covered it extensively for the London Independent, said the
government’s case was “marred by incompetent witnesses, false testimony, and
poor presentation.”
Newsday’s Peter Eisner quoted Judge William Hoeveler, who presided over the
trial, as saying “the outcome could have been different” if Noriega had been
better represented.
Although the government put more than two dozen people on the stand, their
testimony was not always relevant or credible.
Paul Rothstein, Georgetown University law professor and former chairman of the
American Bar Association’s criminal evidence committee, said of the government’s
witnesses, “What promised to be the trumpeting of elephants turned out to be the
whimperings of mice.”
Big-time drug bosses enjoyed great rewards for telling the jury what the
government wanted. Observed reporter Glenn Garvin, “To convict Noriega, the
strike force had to make a flurry of deals with other accused narcotraffickers,
bargaining a collective 1,435 years in prison down to 81.”
The fierce Noriega critic R. M. Kostner declared, “The prosecution was shameless
in its bribery of witnesses. What co-defendants got for flipping made me
sometimes wish that I had been indicted. The proceedings were almost totally
politicized. It was clear long before they opened that, regardless of evidence,
Noriega could not possibly be acquitted – a very sad thing for the United
States.”
Other witnesses who never took the stand contradicted the government’s case
years later. Retired Medellin cocaine lord Juan David Ochoa claimed in an
interview with Frontline that “at no moment did [Noriega] protect us. . . . As
far as I know he had nothing to do with the drug trade.”
Greg Passic, former head of financial operations for the DEA, said, “The
Colombians I talked to in the drug transportation business said they didn’t deal
with Noriega at all. To deal with him you would just have to pay him more money.
They didn’t need it. It would be expensive.”
In fact, DEA officials repeatedly lauded Noriega’s cooperation with their antidrug investigations, both in public letters of support and in private. Recalled
Duane Clarridge, former head of Latin America operations for the CIA, “The DEA
had told us that they were getting great support in Panama, and from Noriega in
particular, in interdicting drugs.”
More than a year after the U.S. invasion, when it was absolutely impolitic to
voice such sentiments, one “federal drug enforcement source” told a reporter,
“Noriega was helping us, not ten percent, not twenty percent of the time, but in
every instance we asked him to do so, one-hundred percent of the time. . . .
These were key operations . . . that struck at both the Cali and Medellin
cartels.”
Even the U.S. ambassador to Panama in the final years of Noriega’s rule, Arthur
H. Davis Jr., said in an oral history interview, “all I know is that, all the
time I was there, Noriega . . . cooperated one hundred percent with our people.
Anytime we had a ship that we wanted to be interdicted on the high seas and we
asked permission, they gave permission. . . . Anytime there was some prominent
drug man coming up and we knew about it, Noriega would help us with it. And when
we found out about things, the [Panamanian Defense Forces] would go over there
and round them up and turn them over to us.”
Turning Against Noriega
One of the high points of Noriega’s cooperation was Operation Pisces, a threeyear undercover probe that culminated in 1987. Attorney General Edwin Meese
called it “nothing less than the largest and most successful undercover
investigation in federal drug law enforcement history.”
Among those indicted were Medellin Cartel kingpins Pablo Escobar and Fabio
Ochoa. Panama made 40 arrests and seized $12 million from accounts in 18 local
banks. Said one U.S. prosecutor who helped direct the case, “The Panamanian
officials we were dealing with were sincerely cooperative. . . . They could have
breached security, and they didn’t.”
The operation may have pleased the DEA, but it angered the country’s financial
elite, who directly profited from money laundering. One local banker warned,
“this could end the Panamanian banking system, because people will no longer
believe they can count on bank secrecy.”
Within two months, spooked investors withdrew up to $4 billion of the country’s
$39 billion in bank deposits, triggering the most serious banking crisis in
Panama’s history.
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.” The demonstrations
organized that summer by Panama’s business elite — and Noriega’s heavy-handed
response to them — triggered his eventual slide from power
The bankers were joined by angry cartel leaders, who viewed Noriega as an
“obstacle to the functioning” of their money laundering operations in Panama, in
the words of drug policy expert Rensellaer Lee.
A lawyer for the bosses of the Cali Cartel complained that his clients were
“frustrated by the problems” Noriega created for them in Panama.
Cali leaders later got their revenge when they paid $1.25 million to bribe a
drug trafficker to become a key witness against Noriega in his Miami trial. In
exchange for the testimony, eager U.S. prosecutors agreed to cut nine years off
the sentence of an unrelated Cali trafficker — brother of one of that cartel’s
senior leaders.
When Noriega’s defense team cried foul, a federal appeals court declined to
order a new trial, but criticized the government for appearing “to have treaded
close to the line of willful blindness” in its eagerness to win a conviction.
Medellin leaders were just as unhappy with Noriega as those in Cali. A pilot for
one of the biggest Medellin smugglers described Pablo Escobar’s reaction after
Noriega approved a raid on one of his cocaine labs 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.”’
It would be foolish to assert that Noriega, alone among all leaders in Central
America, kept his hands clean of drugs. But much of his personal fortune is
easily accounted for from other sources, such as the sale of Panamanian
passports on the black market.
Whatever Noriega’s involvement with drug traffickers, as I have shown elsewhere,
the Bush administration displayed unbelievable cynicism when, even before his
capture, it swore in a new president of Panama who had sat on the board of one
of the most notorious drug-money-laundering banks in the country. His attorney
general, who unfroze the bank accounts of Cali traffickers, later became legal
counsel for the Cali Cartel’s top smuggler in Panama.
Following Noriega’s ouster, not surprisingly, cocaine trafficking began surging
in the country. A year and a half after his 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.”
Today, though, all that is forgotten, along with the questionable course of
justice during Noriega’s trial. Noriega, even in death, deserves no eulogies,
but he does deserve a more balanced judgment of history.
Jonathan Marshall is a regular contributor to ConsortiumNews.com.
Unjust Aftermath: Post-Noriega Panama
Special Report: 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.
By Jonathan Marshall
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 MedellÃn 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]
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 MedellÃn 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 threeyear 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 MedellÃn 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 MedellÃn 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 ArÃas Calderón
[xxxiii]
privately bristled at Washington’s proposals.
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 RodrÃguez, 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 MedellÃn 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
[xlix]
there’s a fight against drug trafficking.”
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 MedellÃn kingpin José
Gonzalo Rodriguez Gacha.)[l]
Then a dozen major drug traffickers, including a CalÃ-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
[lii]
government fired two successive heads of the National Police.
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 MedellÃn 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
[lxi]
banking system even if the U.S. stands on its head and jumps up and down.”
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
[lxiii]
investigation.
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
[lxvi]
the street, down from $35 under Noriega.
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 directorpresident 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 MedellÃn and Calà 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
[lxxvii]
menace.”
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]
Conclusion
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 moneylaundering 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 (MedellÃn Cartel),
and of Gilberto RodrÃguez Orejuela and José Santacruz Londoño (Calà 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 MedellÃn 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 MedellÃn 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-fr
ee-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).
Behind Colin Powell’s Legend: Panama War
From the Archive: Though largely forgotten, the brief U.S. invasion of Panama in
1989 established key precedents that would reappear in later conflicts from the
Persian Gulf and Kosovo to Afghanistan and Iraq policies shaped, in part, by
Gen. Colin Powell, as Robert Parry and Norman Solomon wrote in 1996.
By Robert Parry and Norman Solomon (Originally published in 1996)
From the Vietnam War and the Iran-Contra scandal, Colin Powell had learned the
hard lessons of waging modern warfare. Combat was now only a modest part of the
mix, exceeded by a larger dose of politics and an even-bigger part, P.R.
As for combat, Powell’s bitter Vietnam experience had taught him one overriding
military principle, a rule that might be summarized as: “it’s better to win than
to lose.” The Powell Doctrine of overwhelming force would follow.
But Powell also understood that warfare, as waged by the United States in the
late 20th Century, no longer conformed to the famous dictum: diplomacy by other
means. War had become the violent outgrowth of the political/media gamesmanship
that was played along the Potomac. In an age when the best-known journalists
were TV pundits, diplomacy was too grand a word for the spasms of war fever that
would occasionally grip the capital.
“Once you’ve got all the forces moving and everything’s being taken care of by
the commanders,” Powell advised other senior officers at the National Defense
University in 1989, “turn your attention to television because you can win the
battle [and] lose the war if you don’t handle the story right.”
In other words, the fickle political mood of Washington could decide the outcome
of conflicts and of careers, so it was a military imperative to cultivate the
opinions of the media elite. “A great deal of my time is spent sensing that
political environment,” Powell explained.
Powell’s commitment to winning in “that political environment” had transformed
the general into a very tough Washington “player,” albeit one with a friendly
smile and an easygoing manner. Powell counted among his most valued contacts
many of the top journalists in Washington.
As Ronald Reagan’s last national security adviser, Powell was highly regarded as
an expert spinner who successfully limited the damage from the Iran-Contra
scandal in 1987-88. He could wow reporters in White House background briefings
or schmoose their bureau chiefs over lunch at the nearby Maison Blanche
restaurant.
Yet, at the start of George Bush’s presidency, Powell wanted a respite from
Washington and got it by assuming command of Forces Command at Fort McPherson,
Georgia. That posting also earned the general his fourth star. But his sojourn
into the regular Army would be brief, again. Behind the scenes, the Bush
presidency was hurtling toward another confrontation with a Third World country,
this time Panama.
Gathering Storm
On June 21, 1989, in secret, the Justice Department promulgated an extraordinary
legal opinion, asserting the president’s right to order the capture of fugitives
from U.S. laws even if they were living in foreign countries, even if the arrest
meant ignoring extradition treaties and international law. The opinion had
specific relevance to U.S.-Panamanian relations because a federal grand jury in
Florida had indicted Panama’s military leader, Gen. Manuel Noriega, on drugtrafficking charges.
By August, Bush and his defense secretary, Dick Cheney, were urging Powell to
return to Washington where he would become the first black chairman of the Joint
Chiefs of Staff. On his first day on that new job — Oct. 2, 1989 — Powell joined
debates about whether to intervene in support of a home-grown Panamanian coup
attempt aimed at ousting Noriega.
“The whole affair sounded like amateur night,” Powell wrote in his memoirs, My
American Journey. “Cheney, [Gen. Max] Thurman and I … agreed that the United
States should not get involved.” Bush went along with his military advisers —
and with only minimal U.S. help, the coup failed. Noriega promptly executed the
plot’s organizer.
In the wake of the coup attempt, Bush came under fierce criticism in the news
media and in Congress. TV’s armchair-warrior pundits had a field day mocking
Bush’s supposed timidity. Rep. David McCurdy, D-Oklahoma, spoke for many when he
declared: “There’s a resurgence of the wimp factor.”
According to Bob Woodward’s book, The Commanders, Powell was stunned. He had
never seen “piling on of this intensity, and across the whole political
spectrum. It was as if there was a lynch mob out there.” Even more unsettling,
Powell saw his own leadership at the JCS jeopardized by Washington’s super-macho
political environment.
Neither Bush nor Powell would make the same mistake again. The two leaders
quickly built up U.S. forces in Panama, as the administration spoiled for a
fight and as Noriega shouted his defiance. During this period, Woodward quoted
Powell as saying, “we have to put a shingle outside our door saying, ‘Superpower
Lives Here’.”
In mid-December 1989, the tensions exploded when four American officers in a car
ran a roadblock near the headquarters of the Panamanian Defense Forces. PDF
troops opened fire, killing one American. Another American officer and his wife
were detained for questioning. After their release, the officer alleged that he
had been kicked in the groin and that his wife had been threatened with rape.
American Honor
When word of this humiliation reached Washington, Bush saw American honor and
his own manhood challenged. He possibly could hear, too, the pundits hooting
about his cowardice if he didn’t act. Powell recognized the need for decisive
action. On Dec. 17, he recommended to Bush that a massive U.S. military force
capture Noriega and destroy the PDF, even though the assault would result in
many civilian casualties and violate international law.
On Bush’s orders, the invasion began on Dec. 20, with Powell and Cheney
monitoring developments at the Pentagon. The high-tech American assault force,
using the F-117 Stealth aircraft for the first time, incinerated the PDF
headquarters and the surrounding civilian neighborhoods. Hundreds of civilians —
some human rights observers would say thousands — perished in the first few
hours of the attack. An estimated 315 Panamanian soldiers also died, as did 23
Americans. But Noriega eluded capture.
Despite that temporary setback, Powell did not forget his own dictum about
putting the best spin on a story. Stepping before cameras at the Pentagon,
Powell declared victory and downplayed the disappointment over Noriega’s
disappearance. “This reign of terror is over,” Powell declared. “We have now
decapitated [Noriega] from the dictatorship of his country.”
In the following days, as U.S. forces hunted for the little dictator, Powell
demonized Noriega over the supposed discovery of drugs and voodoo artifacts in
his safehouse. Powell started calling Noriega “a dope-sniffing, voodoo-loving
thug.” (The white powder in Noriega’s house that was initially called cocaine
would turn out to be tamale flour.) When asked once too often about the failure
to capture Noriega, Powell told the reporter to “stick it.”
The tragedies on the ground in Panama could sometimes be worse. On Dec. 24,
shortly after midnight, a nine-months-pregnant Panamanian woman, Ortila Lopez de
Perea, went into labor. She was helped into the family Volkswagen which was
marked by a white flag. With her husband, her mother-in-law and a neighbor, she
headed to the hospital.
At a U.S. military roadblock on the Transisthmian Highway, the car stopped. The
four Panamanians requested an escort, but were told that one wasn’t necessary.
After being waved through, they drove another 500 yards to a second checkpoint.
But at this spot, the young American troops mistook the speeding Volkswagen for
a hostile vehicle. The soldiers opened up with a 10-second barrage of automatic
rifle fire.
When the shooting stopped, Lopez de Perea and her 25-year-old husband Ismael
were dead. The neighbor was wounded in the stomach. The mother-in-law, though
unhurt, was hysterical. The unborn baby was dead, too.
The U.S. government would acknowledge the facts of the shooting, but refuse any
compensation to the family. The Southern Command concluded that its
investigation had found that the incident “although tragic in nature,
indicate[s] that the U.S. personnel acted within the parameters of the rules of
engagement in effect at that time.”
Noriega Surrenders
On the same day as the tragic shooting, Manuel Noriega finally re-emerged. He
entered the papal nuncio’s residence and sought asylum. The United States,
however, demanded his surrender and bombarded the house with loud rock music. On
Jan. 3, 1990, in full military uniform, Noriega surrendered to U.S. Delta Forces
and was flown in shackles to Miami for prosecution on the drug charges.
With Noriega’s surrender, the Panamanian carnage was over. Two days later, the
victorious Powell flew to Panama to announce that “we gave the country back to
its people.”
In his memoirs, Powell noted as downsides to the invasion the fact that the
United Nations and Organization of American States had both censured the United
States. There were also the hundreds of civilian dead. They had been, in effect,
innocent bystanders in the arrest of Manuel Noriega.
“The loss of innocent lives was tragic,” Powell wrote, “but we had made every
effort to hold down casualties on all sides.” Some human rights organizations
would disagree, however, condemning the application of indiscriminate force in
civilian areas.
“Under the Geneva Accords, the attacking party has the obligation to minimize
harm to civilians,” one official at Americas Watch told us. Instead, the
Pentagon had shown “a great preoccupation with minimizing American casualties
because it would not go over politically here to have a large number of U.S.
military deaths.”
But for the Inside-the-Beltway “players,” there was no political price to pay
for excessive violence against Panamanians.
Investigative reporter Robert Parry broke many of the Iran-Contra stories for
The Associated Press and Newsweek in the 1980s. You can buy his new book,
America’s Stolen Narrative, either in print here or as an e-book (from Amazon
and barnesandnoble.com). For a limited time, you also can order Robert Parry’s
trilogy on the Bush Family and its connections to various right-wing operatives
for only $34. The trilogy includes America’s Stolen Narrative. For details on
this offer, click here.
Norman Solomon is co-founder of RootsAction.org and founding director of the
Institute for Public Accuracy. His books include War Made Easy: How Presidents
and Pundits Keep Spinning Us to Death. Information about the documentary based
on the book is at www.WarMadeEasyTheMovie.org.
Contras, Dirty Money and CIA
From the Archive: On Dec. 20, 1989, President George H.W. Bush ordered the
invasion of Panama to arrest Gen. Manuel Noriega on drug charges. The U.S. news
media viewed the assault as a case of Bush seeking justice, but there was a
darker back story of U.S. guilt, as Robert Parry reported in 1997.
By Robert Parry (Originally published in 1997)
On the afternoon of Oct. 2, 1987, John F. Molina, a 46-year-old Cuban with the
look of a Latin Sean Connery, sauntered from the stylish Panama City offices of
the law firm, Sucre y Sucre. Molina and his companion, Enrique Delvalle, had
been clearing up business that they had with lawyers who had created shell
corporations for an arms supply network for the Nicaraguan Contra rebels. The
two men stepped out onto the busy street and climbed into Molina’s red
Mitsubishi four-wheel-drive vehicle.
Without their noticing, a young bushy-haired man with a moustache darted toward
the car. The young man raised a .32-caliber pistol, pointed it at Molina’s head
and fired three times. Molina slumped across the front seat. For a moment,
Delvalle thought Molina was reaching toward the opposite side door. Then,
Delvalle realized that John Molina was dead.
The gunman fled on foot. He was chased and cornered by an armed bystander, and
then was arrested by Panamanian police. In custody, the killer identified
himself as Maximillano Casa Sanchez, a Colombian hit man. Casa Sanchez told
police that Colombian narcotraffickers had sent him to Panama to rub out Molina
over a drug debt.
In the following days, La Republica, a newspaper allied with then-dictator
Manuel Noriega, played up the drug angle — and Molina’s ties to Noriega’s
political enemies in the Cruzada Civilista. The newspaper also noted that in the
1970s, Molina was president of UniBank, or the Union de Bancos, the Panamanian
outpost for the WFC Corp., a shadowy money-laundering network earlier known as
World Finance Corporation and run by Miami-based Cuban-Americans with close ties
to the CIA.
But the Molina case had a more contemporary CIA connection. At the time of his
death, Molina was the financial architect behind a mysterious arms warehouse in
the dusty Honduran town of San Pedro Sula. The warehouse, sometimes called the
Arms Supermarket, was stacked high with millions of dollars in guns and
ammunition earmarked for the Contras. In that operation, Molina had told family
members that he worked for the CIA.
To this day, the mystery of the Arms Supermarket’s money is one of the most
intriguing unanswered questions of the Iran-Contra scandal. But the Molina case
shed new light as well into another dark corner of the Reagan administration’s
Contra war: how, in a variety of cases, the funding for that covert operation
was closely tied not only to guns-for-drugs — as has been alleged for years —
but to the even-murkier world of drug money-laundering.
Since the mid-1980s, drug pilots and other cocaine-cartel operatives have
asserted that Contras assisted in transhipping cocaine to the United States in
exchange for money and guns, or that cartel kingpins contributed cash to the
Contras to curry favor with the Reagan administration.
Those charges resurfaced in a 1996 series by Gary Webb of the San Jose MercuryNews, but the Molina case opened a doorway to the other question: how much did
the Contra war benefit from dirty money. [For the latest on the broader issue of
Contra-cocaine trafficking, see Consortiumnews.com’s “New Evidence on ContraCocaine Scandal.”]
Guns & Drugs
The CIA would neither confirm nor deny a relationship with Molina. “This is not
something I can really, really give you a definite answer on,” said CIA
spokesman David Christian. “We just don’t have the resources to check all
inquiries of this sort.”
The Drug Enforcement Administration also failed to respond to repeated requests
about the late John Molina. A senior government official, however, confirmed
that Molina’s name was mentioned in a number of DEA criminal files, including
some cases that were still under investigation in the late 1990s.
U.S. government records also show that the money for the Arms Supermarket’s guns
was always suspect. National Security Council aide Oliver North’s handwritten
notes on July 12, 1985, recounted a warning from one CIA officer in the field
that “$14M [million] to finance came from drugs.”
According to a Contra-supply flow chart that I obtained from Independent Counsel
Lawrence Walsh’s Iran-Contra records at the National Archives, the Arms
Supermarket was part of a complex arms network ultimately reporting to former
CIA officer Felix Rodriguez, an anti-Castro Cuban who used the pseudonym “Max
Gomez.” Through Rodriguez, the arms network connected to the office of then-Vice
President George H.W. Bush.
“The ‘Arms Warehouse’ was started with ‘seed money’ of approximately $14
million, from the CIA,” read the text accompanying the flow chart. “Later, it
was believed that funds relating to narcotics traffic found its way into
inventory in the warehouse.” Although the authorship of the flow chart is
unclear, it matches information supplied to investigators by another Contra arms
broker, Barbara Studley, who worked closely with retired Gen. John K. Singlaub.
In a deposition in a related civil case, Studley testified that “General
Singlaub informed me that he had been briefed by Oliver North that the
Supermarket had been funded by drug money.” Asked if she had heard those
allegations from anyone else, Studley responded, “numerous conversations with
numerous people, … this item came up.”
In a telephone interview, Ronald Martin, the Arms Supermarket’s principal owner,
vehemently denied any drug connection and denounced the charge as a lie spread
by North and other business rivals who wanted to horn in on Contra arms profits.
“All they were trying to do was taint us and push us out of any business that
might be forthcoming,” Martin said. But Martin acknowledged that Molina did
arrange the Arms Supermarket’s money through banks in Panama. Martin also would
not say exactly who put up the money.
Dirty Money
During the official Iran-Contra investigations, these drug suspicions were never
resolved. William Hassler, a lawyer who handled the issue for Independent
Counsel Walsh, explained that the Martin group was not a focus of the IranContra probe. “I’m not sure we considered it a part of our investigation,”
Hassler explained.
So, the suspicions about the Arms Supermarket remained hazy. But Molina’s use of
Panamanian banks as the source of funds for the Contra weapons and his own
connection to the world of drug-money laundering gave a concrete form to the
suspicions for the first time.
But Molina was not alone straddling the money-laundering line. North and others
involved in the Contra operations also crossed into areas of apparent
criminality. Indeed, little-noticed Iran-Contra evidence demonstrated that the
Reagan administration repeatedly turned to criminal money-laundering to finance
Contra activities.
While serving as a key White House national security aide, for instance, North
tapped into a money-laundering network that pulled hundreds of thousands of
dollars in untraceable cash off New York City streets. The cash deliveries were
arranged by Swiss financier Willard Zucker working through a Republic National
Bank officer, named Nan Morabia.
On Zucker’s orders, Morabia tapped into a money-laundering operation controlled
by her husband in New York City. Her husband and son then delivered bags filled
with hundreds of thousands of dollars to North’s operatives in New York hotel
rooms. Sometimes, to cap off these amateurish spy operations, North’s men first
would be required to display matching halves of torn dollar bills.
At the European end of this money-laundering scheme, Zucker made equivalent
transfers from North’s Swiss bank accounts (containing profits from U.S. arms
sales to Iran) into the Swiss accounts of the money-launderers. That way, the
money-launderers could turn their “dirty” money in the United States into
“clean” money in Europe.
Morabia, who was granted immunity from prosecution in exchange for her
cooperation with the Iran-Contra investigation, acknowledged that the so-called
“cash drops” were designed to circumvent federal currency laws. Those antimoney-laundering statutes require federal reporting of any cash transfer of
$10,000 or more into or out of the United States.
Iran-Contra Independent Counsel Walsh described these “cash drops” in a brief
section of his final report in 1993. Walsh said the cash transfers through
Zucker’s operation totaled $2.7 million.
More Bags of Money
Similarly, Walsh’s probe found that another $467,000 went in bags from Southern
Air Transport’s petty cash fund in Miami to pay salaries and buy gas for North’s
Contra air re-supply operations based at El Salvador’s Ilopango airport. SAT, a
onetime CIA-owned airline, was then reimbursed through money transfers from
North’s Swiss accounts, Walsh report stated.
Again, the cash deliveries flouted federal requirements to report the removal of
more than $10,000 in cash from the United States. But given the strong political
pressures on Walsh to wrap up his long-running investigation and the complexity
of the cases, the independent counsel chose not to prosecute the participants in
the money-laundering schemes. The apparent money-laundering crimes also received
scant media attention.
However, the later discovery of documents gave a more sinister cast to the SATIlopango operation. As North’s pilots were carrying those bags of cash from
Miami, a female FBI informant was alleging, in September 1986, that she had
witnessed cocaine being loaded aboard SAT planes in Barranquilla, Colombia, in
1983 and 1985. The woman, Wanda Palacio, identified a North pilot, Wallace
“Buzz” Sawyer, as one crew member loading drugs onto a Barranquilla flight in
early October 1985.
Ronald Reagan’s Justice Department spurned Palacio’s testimony as lacking
credibility. But Sawyer’s flight logs — recovered after Sawyer was killed in the
crash of an Oliver North supply plane over Nicaragua on Oct. 5, 1986 —
corroborated Palacio’s claim that Sawyer was in Barranquilla in early October
1985 flying an SAT cargo plane. The Palacio allegations suggest that
participants in North’s Contra resupply operations were trafficking in drugs and
possibly using the secret government operation as a cover to “clean” their
money.
The Reagan administration’s collaboration with alleged drug traffickers and
money-launderers also was far from isolated. In 1986, the Reagan administration
paid $806,401 to four companies to supply the Contras with non-lethal aid
despite documentary evidence of drug trafficking by all four companies.
Washington & Traffickers
One of the Contra contractors, a Costa Rican seafood company called Frigorificos
de Punterennas, was created as a cover for drug-money laundering, according to
sworn testimony by two of the firm’s principals, Carlos Soto and Ramon Milian
Rodriguez. Still, in 1986, the State Department put $261,937 into a Frigorificos
bank account controlled by Cuban-American Luis Rodriguez. A year later,
Rodriguez was charged in federal court as a major marijuana smuggler.
The State Department has never explained how the four money-laundering companies
were selected, although Ambassador Robert Duemling who oversaw Contra
“humanitarian” aid recalled that North wanted continuation of “the existing
arrangements of the resistance movement,” the Contras.
Those “existing arrangements” were maintained despite even earlier drug warnings
from some of North’s field operatives. In June 1984, North’s courier, Robert
Owen, passed on information that Cuban-Americans working with the Contras are
“involved in drugs.” Another North aide, Lt. Col. Robert Earl, recalled that in
1986, CIA officers on the ground were worried because these Cubans were kneedeep in “corruption and greed and drugs.”
But the DEA has stated that it has no record that North or his associates passed
on evidence of Contra drug trafficking. Indeed, some DEA officers, including
Celerino Castillo, have claimed that their investigations were undermined by
senior officials in Washington.
In one 1989 memo, Castillo summarized his findings, which implicated a half
dozen pilots and other drug smugglers who were associated with the Contra
network at El Salvador’s Ilopango military airport. In addition, Castillo’s memo
on drug trafficking implicated senior Salvadoran Air Force officers who
protected North’s secret Contra operation and sold fuel to North’s pilots.
Still, the mystery of John Molina’s murder may represent the most provocative
link between the Contra supply operation and drug money-launderers, leaving
behind the question: Was Molina simply a man who knew too much. [For more
details on the CIA-drug connection, see Robert Parry’s Lost History.]
Investigative reporter Robert Parry broke many of the Iran-Contra stories for
The Associated Press and Newsweek in the 1980s. You can buy his new book,
America’s Stolen Narrative, either in print here or as an e-book (from Amazon
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trilogy on the Bush Family and its connections to various right-wing operatives
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