Country Report Panama March 1998 Main report

Political scene: Contract on multilateral anti-drug centre elusive --

After numerous reports that an agreement on the establishment of the multilateral anti-drug centre at the Howards Air Force Base was imminent, it had still not been concluded by the end of 1997, as had been hoped. On January 13th Mr Balladares announced that the first phase of the negotiations with the US had been concluded. The two sides agreed on the principle of a 12-year renewable contract, which would leave 2,000 US soldiers at Howards and yield an expected $200m a year to Panama (which compares with the estimated $350m which the US spent before reversion). However, while the US was apparently prepared to sign a bilateral agreement on these terms, Panama argued that for the centre to be truly multilateral, other parties must sign up. Despite US objections, Mexico, Colombia and Brazil were approached.

If and when a multilateral accord is reached, the proposal will still be subject to public referendum in Panama. This should not be a problem. Public opinion polls show that 66% support a US presence in Panama after 2000 (when reversion is due to be completed) and 63% do not consider the anti-drug centre to have any negative implications for sovereignty.

-- but Panama retains its certification

According to its annual survey, the US administration still considers Panama an important centre for the drug trade because of its attractiveness as a money-laundering destination. However, thanks to the government's anti-drug efforts, and the progress in negotiations for the multilateral anti-drug centre and the banking reform that has now been introduced (see Money and finance), Panama once again received US certification as a partner in the war against drugs.

© 1998 The Economist lntelligence Unit Ltd. All rights reserved
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