U.S. OFFICIAL SAYS COUNTERDRUG CENTER TALKS WITH PANAMA ARE AT 'IMPASSE'

Negotiations between the United States and Panama over the possibility of
creating a "multinational counternarcotics center" in Panama City that
would house 2,000 or more U.S. forces have reached an "impasse," and
prospects are not good the talks will result in a new agreement, a
spokesman for the National Security Council told Inside the Pentagon this
week.

If a new agreement is not reached, all U.S. military forces must vacate
facilities in Panama by Dec. 31, 1999, under the terms of the 1978 Panama
Canal Treaty.

Although the United States remains interested in creating an MCC, changes
in the Panamanian position in ongoing talks since last December -- when the
two nations had struck an agreement in principle -- have introduced what
appear to be insurmountable challenges for the negotiations, NSC spokesman
P.J. Crowley said July 13. Crowley would not elaborate on the changes the
United States has seen in the Panamanian position.

Inside the Pentagon has reported that several issues continue to divide the
two sides. Perhaps chief among the sticking points is the U.S. insistence
that any forces remaining in Panama continue to have a multimission
capability. In addition to undertaking the counterdrug mission at the
proposed center, the Pentagon would like to continue using the facilities
at what is now Howard Air Force Base to conduct exercises, provide
logistics support to forces enroute to the region, and undertake other
humanitarian or civic assistance missions.

But Panamanian leaders -- sensitive to the appearance that they may be
simply extending U.S. basing rights in the Central American nation -- have
insisted either the United States pay Panama for continued access to
facilities there, or limit the mission of its forces solely to the
counternarcotics goals of the new MCC (ITP, May 7, p1).

Other issues have remained problematic as well, though to a lesser degree.
U.S. officials remain concerned about whether the two sides can bridge
differences over the proposed duration of the agreement, and about
providing for continued "quality of life" for U.S. forces.

Following a meeting of top U.S. Cabinet officials on this issue last week,
national security advisor Samuel Berger decided to give Panama a final
opportunity to revive negotiations before the United States pulls out of
the talks, Inside the Pentagon reported July 9. Much as the Joint Chiefs of
Staff concluded in May, President Clinton's key Cabinet members agreed
continued access to the Howard AFB facilities would be desirable but not
essential (ITP, May 21, p1).

At press time last week, Berger was deliberating with his NSC counterparts
over the wording of the message to be conveyed directly to Panama, and was
preparing a press statement on the matter for Clinton's approval (ITP, July
9, p1).

On July 10, Secretary of State Madeleine Albright telephoned her
counterpart in Panama, Foreign Minister Ricardo Alberto Arias, and
summarized the newly formulated U.S. position, namely that the talks must
draw to a close unless significant headway is made in the near term,
according to key officials.

One source said no specific date was given by which the United States will
quit the talks, though. Crowley, the NSC spokesman, similarly commented he
was unaware of any such deadline for progress in the negotiations.

In addition, the NSC decided last week not to issue a press release after
all, but instead to give its spokesman press guidance he may use in
answering media questions.

When asked to describe the status of the negotiations, Crowley said the
talks are continuing, although no date has been set for the next meeting
between envoy Thomas McNamara and his Panamanian counterpart. Indeed, with
the prospects for reaching an agreement deteriorating, Crowley confirmed
the U.S. government is beginning to pursue the possibility of alternative
agreements with other Latin American nations for the creation of an MCC
based elsewhere.

Asked whether an MCC would be the central focus of U.S. talks with other
nations, or if instead a multimission basing opportunity would be sought,
Crowley said the United States remains interested in an MCC and exercising
a multimission capability in another host nation has yet to be discussed.
Officials familiar with the talks say potential alternative sites include
Venezuela, Bolivia and Peru.

One task emerging from the "principals committee" meeting held July 7 was
for the Pentagon to draw up a list of actions the United States could take
to signal to Panama its intent to remove all U.S. forces by the end of
1999. Among the items the Joint Staff has proposed are:

Notifying Panamanian vendors the United States would end its contracts with
them;

Notifying civilian personnel in Panama their employment would be terminated;

Ceasing law enforcement training for Panamanian officials;

Publishing unit withdrawals;

Stopping the procurement of Panamanian products;

Visibly moving heavy equipment out of U.S. bases from Panamanian ports; and

Undertaking a public affairs campaign to make clear the schedule for
withdrawal.

Calling these measures evidence of a "tough-love strategy," one U.S.
official questioned whether the NSC was serious about pulling out of the
talks because they were not meeting U.S. interests, or if instead the
leaders were still wedded to the idea of keeping forces in Panama and are
merely "posturing" to gain Panamanian concessions.

"Why do we care about whether Panama sees a demonstration of 'zero presence
intent' if we really do want to turn away and not look back?" said this
official. The source noted that many of the actions on the Joint Staff list
have already been taken by U.S. Southern Command, but so far have not
resulted in significant movement by Panama toward the U.S. negotiating
position.

- -- Elaine M. Grossman

Checked-by: Mike Gogulski