U.S. BLAMES PANAMA FOR DEADLOCK ON DRUGS BASE

WASHINGTON (Reuters) -- The United States on Monday blamed the Panamanian
government for deadlock in negotiations over a Panama Canal base to fight
the drug trade, but said it had not abandoned all hope of an agreement.

In the meantime it is looking at sites in other countries, State Department
spokesman James Rubin said, confirming reports from Panama City at the
weekend.

The argument is over the length of an agreement that would allow 2,000 U.S.
troops to stay in Panama beyond the end of 1999, the date set in a 1977
treaty for Panama to assume full control of the canal.

The Panamanian government has said it will not offer more than four years
but the center wants longer.

Rubin said: ``In light of progressive alterations in the Panamanian
position introduced in recent months, these talks have reached an impasse.

``Given the importance to the United States and other governments in the
region attached to counter-narcotics operations, we have decided to begin
to pursue alternative arrangements in consultation with other interested
governments for conducting such activities in the future.''

Rubin declined to name the countries but the United States has said
possible locations include Honduras, Ecuador or a site inside the United
States, probably in Florida.

``This doesn't mean that these negotiations won't ever yield success, but
it means the prospects are not good, and therefore, we need to be able to
be making alternative arrangements,'' the spokesman added.

Panama and the United States have been negotiating for more than two years
to turn Howard Air Force Base, which is located inside the zone surrounding
the Panama Canal, into a regional center to fight drug trafficking.

Under the original proposal, the $60 million center would house more than
2,000 U.S. soldiers in charge of counter-narcotics flights and intelligence
gathering operations. Other nations would supply money and troops.

Panama has long been a home for U.S. military power. The Canal Zone,
controlled by the United States since 1903, was home to thousands of troops
and at least 10 military bases at its peak. It also was the site of the
U.S. Southern Command, military headquarters for
operations in Latin America.

Checked-by: (Joel W. Johnson)