U.S. Hopes to Prod Panama, Peru Regimes Toward Free Elections, Civilian Leadership

September 25, 2007

WASHINGTON- The U.S. is mounting a counteroffensive against the military juntas that within the past fortnight have overthrown two elected Latin American governments- in Panama and Peru.

There won't be any U.S. attempt, however, to reinstall in office either deposed Panamanian President Arnulfo Arias or ousted Peruvian President Fernando Belaunde Terry. Instead, the U.S. intent to shove the two military regimes toward new free elections, and thus with "reasonable speed" revive constitutional rule under fresh civilian leadership.

Officials here contend this country has powerful economic leverage in both situations, and is willing to use it. Through quiet diplomacy, the juntas are rapidly being made aware of this intent.

The Panamanian government is heavily dependent on various U.S. payments, notably from Panama Canal tolls; the next annual toll payment of $1.9 million is due in January. In addition, Panama's economy is heavily dependent on U.S. Canal Zone purchases of such native products as meat and beer. In Peru, the U.S. figures it "may have even greater leverage," as that country's large external debt is in critical need of refinancing.

Washington was breathing easier yesterday, after a weekend during which it was feared the U.S. might soon be involved in actual fighting in Panama. When he was overturned Friday night by the national guard, President Arias was granted sanctuary n the Canal Zone. It was in that sanctuary, apparently, that he taped an appeal-broadcast Sunday by clandestine radio-for citizens to "take up arms" and do battle in the streets.

Mr. Arias has in the past been credited with a real capacity to stir the impoverished city people of Panama to angry mob action. If large-scale fighting had developed, it could have spilled across the open borders of the Canal Zone. As Secretary of State Rusk was already on record as denouncing the coup d'etat, it would then have been difficult for the U.S. to remain idle-watching the national guard bloodily suppress a popular uprising-especially so when the U.S. armed forces at hand in the zone, about 12,000 men, so greatly outnumber the 4,800 in the Panamanian national guard.

But no immediate massive uprising occurred, and by late yesterday U.S. officials had decided it probably wasn't going to happen. They seemed a little surprised by this apathy, in view of the recent electoral majority by which Mr. Arias won office. "Maybe it was the rainy weather over the weekend," one of them mused; "at any rate, the dangerous moment seems to have passed."

Though Washington certainly won't be in any rush to grant formal recognition to the Panamanian junta headed by Col. Jose Pinilla and Col. Bolivar Urrutia, a certain unofficial sympathy with the national guard chieftains is evident here. The view is that their coup wasn't the fruit of prolonged plotting, but was improvised suddenly-apparently in genuine alarm that President Arias was moving to erode the independent strength of the guard and to create a rival armed group: A partisan "militia." Credence is given to reports that Mr. Arias had actually begun building arms caches for his own private army.

Thus few tears were being shed here yesterday for the ousted president. And another reason the U.S. would be glad to escape any military intervention in his favor is that it would arouse a storm of protest elsewhere in Latin America. The Latin lands -even the devotedly democratic ones-have a phobia against U.S. armed intervention.

Today the State Department is likely to announce it is "suspending" diplomatic relations with Panama, but in practice the U.S. won't feel at all inhibited about getting in contact with junta leaders and dickering about the directions of their policy. The thrust of the American argument will be that the national guard should display moderation and regard for human rights while it rules, and should move in orderly fashion toward new elections.

All such U.S. pressure will be keyed to consultations with other Latin nations. "We're the giant; we have to be careful where we put our feet," remarks one official. The U.S. has major business of its own pending with Panama- such as getting a right-of-way to build a new sea-level canal-and it must make it clear that any application of economic pressure isn't concerned with that.

Peru May Feel U.S. Pressure

In Peru, however, the Americans do feel obliged to apply pressure to protect direct U.S. interests-as well as to press for moves toward restoration of constitutional government. As one pretext for seizing power, the military group headed by Maj. Gen. Juan Velasco has attacked a major American oil investment in Peru-taking over oil fields, refining and other facilities of International Petroleum Corp., a subsidiary of Standard Oil Co. (New Jersey).

Officials here stress that an Act of Congress (the so-called Hickenlooper Amendment) requires them to take forceful reprisal in cases of expropriation without compensation. This means not only that Peru is threatened with loss of its Alliance-for-Progress aid from the U.S. but with being cut out of its quota for sugar sales in the U.S. market.

Just the sugar loss would deprive Peru of about $42 million a year in hard currency earnings, and ruin its credit rating all around the world for vital imports. Peru at present is peculiarly susceptible to such pressure, because just when the junta took over, negotiations were well advanced for a crucial "debt rollover" which would involve big U.S. private bank credits, new arrangements with the International Monetary Fund, and fresh assistance from the U.S. Agency for International Development.

Through informal contracts, the Peruvian military regime has already felt the U.S. pressure, and apparently been jolted by it. Some U.S. experts are confidently predicting "a satisfactory settlement" of the oil dispute.

Tags: coup response, Elections, US role, Arnulfo Arias, Belaunde Terry

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