PANAMA STILL FAILS TO STEM NARCOTICS TRAFFIC, U.S. REPORT ASSERTS

The Panamanian government has made
little progress this year in its fight against drug trafficking and
money laundering, according to a United States Customs intelligence
report. The report, which is expected to be discussed at a
Congressional hearing on Friday, said Panama continued to be a major
transshipment point for cocaine and increasingly for heroin, which are
smuggled through weakly patrolled borders and ports. The reported
noted that in 1999 drug seizures declined 80 percent from 1998 and no
major drug arrests were made.

A preliminary version of the report, which was provided to a House
subcommittee on criminal justice and drug policy, originally had harsh
words for Panama's law enforcement agencies, saying they were "corrupt
and ill trained" and "overwhelmed" by drug traffickers. The final
version softened that criticism, saying they faced "difficulties
dealing with sophisticated trafficking organizations."

The report said that Panama's sprawling Colon Free Trade Zone was used
by traffickers not only to hide drugs in cargo containers but also to
launder profits. It cited serious security problems at Tocumen
International Airport, where there have been allegations that cargo
and ramp workers are helping to move drug shipments.

Customs officials would not comment on the report, which they said was
classified.

Nevertheless, the report's observations are sure to be used by
Congressional critics and others who have expressed grave concerns
about Panama's inability to secure its border with Colombia less than
six months after the United States withdrew all its troops.

"The situation in Panama has taken a dramatic turn for the worse,"
said Representative John L. Mica, a Florida Republican who is the
subcommittee chairman. "The information we have is pretty damaging,
especially since the United States exited six months ago."

With increased unrest and violence in Colombia, more traffickers have
been seeking a safe haven in Panama. At the same time, the country's
lax banking laws and dollar economy have proved as much of a lure to
them as the high-rise buildings they have settled into.

"It's not all about drugs," a diplomat said.

"The country is built on dodging taxes, dodging bizarre exchange rates
and evading court settlements." He added, "The narcos have grafted
right on." As a result, the diplomat said, efforts to crack down on
money laundering have been unsuccessful.

Part of the problem has been that the government of President Mireya
Moscoso assumed power only last September and is still feeling its
way. Some critics have faulted her for not having enough of a vision
for the country's future and say that she has been more preoccupied
with petty politics and deciding which supporters get which government
posts.

At the same time, her government has been ambivalent about what kind
of relationship it wants with the United States after nearly a century
of American influence on Panamanian affairs. It is also about to sign
a long-awaited national security plan that will, for the first time,
outline its strategy for securing its borders and the canal.