Washington- Six months ago,the United States and Panama seemed headed for
an agreement that would enable the Pentagon to maintain troops in that
country after the Panama Canal reverts to local control at the end of the
century.

But now, with time running short and the talks at an impasse, there is a
strong possibility that the American presence will disappear as of the Dec.
31, 19999, canal transfer date. On Tuesday, Senate Foreign Relations
Committee Chairman Jesse Helms, R-N.C., blamed Panama for the impasse.

The Panama Canal treaties mandate an end to the U.S. troop presence unless
agreement is reached on other arrangements. For the past two years, the two
sides have been negotiating a compromise under which perhaps 2,000 U.S.
troops would be permitted to remain as part of a hemisphere-wide center to
combat narcotics trafficking.

Such a center would permit the United States to continue counternarcotics
operations close to the major sources of cocaine trafficking. For Panama, a
continued American presence would mean additional millions of dollars
pouring into the Panamanian economy each year and would reassure foreign
investors.

But the optimism of December has faded. Panama believes the American
presence should be largely limited to activities related to the
multinational center. The United States wants to retain other functions,
including search and rescue operations, training flights, humanitarian
relief and logistical support beyond Panama's borders.

U.S. officials say it would not be cost-effective for the United States to
maintain the anti-drug center if it were barred from carrying out the other
jobs. But Panama sees that as an invitation to political conflict.

Helms, speaking at a Senate Foreign Relations Committee hearing, said the
agreement has been scuttled by Panamanian efforts to impose " dramatic
limitations on the size, scope and duration of the U.S. presence."

Until the treaty was ratified 19 years ago, Panamanians were increasingly
restive about the U.S.-controlled, 500-square-mile enclave cut through the
heart of the Central American riots claimed the lives of more than 20
Panamanians. Many Panamanians felt that the country could not claim true
independence as long as the Americans were around.

American officials cite polls that show broad popular support for allowing
the U.S. troops to remain. The officials attribute the negotiating impasse
to a small group of nationalists.

Panamanian Ambassador Eloy Alfaro said opposition to the U.S. proposals
transcends party politics. As for the polls, he said, support for the
center is fragile and could turn around quickly.