Newspaper article The Christian Science Monitor

US, Panama Spar over Aid Pact

Newspaper article The Christian Science Monitor

US, Panama Spar over Aid Pact

Article excerpt

PANAMA is resisting United States pressure to sign a pact aimed at tracking drug lords, saying it threatens the country's vast offshore banking center. But much more than bank secrecy and national pride are at stake.

While Panama balks, the US is blocking release of millions of dollars that the US-backed government needs to rebuild in the wake of December's US invasion and its attendant destruction.

"I don't like these conditions ... and the president (Guillermo Endara Galimany) doesn't like them either," says Panamanian Foreign Minister Julio Linares, referring to US conditions holding up economic aid. "But you can be sure I'm not going to sign a pact which destroys the financial or banking centers."

The US State Department proposed the Mutual Legal Assistance Agreement shortly after the invasion. It would allow both governments to share information and evidence to hunt criminals. Though aimed at drug investigations, it also covers other crimes.

Under Gen. Manuel Noriega's corrupt regime, drug barons stashed fortunes in Panamanian banks, taking advantage of secrecy laws. But Panama says its reputation as a drug haven was always exaggerated because of General Noriega's notoriety. Since the invasion, Panama has defied US efforts to modify bank rules, saying its laws are adequate to stop money laundering.

US negotiators refuse to discuss details of the pact or points of disagreement while talks are under way. But privately, both sides are fuming. The two nations differ on crimes to target, how much US aid is at stake, and who is negotiating the pact for Panama.

Both nations recently initialed a draft accord that Panama does not consider binding. But Panama renewed talks after the pact was leaked to the press and roundly criticized. Panama's Chamber of Commerce and Banking Association warned Mr. Linares last month it would hurt Panama's service economy and its stature as a world banking center.

Panama's Foreign Ministry shares those worries.

"In the US, there are crimes - above all, tax and stock crimes - which don't exist here," says Julio Berrios, director of treaty affairs. …

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