395. Telegram From the U.S. Southern Command to the Department of State 1

SC2024A. For Mann from Cottrell. Following is the way I add up the situation at the present moment:

Heavy pressures on Chiari are increasing daily from business men and publishers to restore relations and arrest the economic decline. Support from this group for standing on principles has vanished in direct proportion to the threat to their pocket books. Their former support is turning rapidly to criticism of Chiari having handled the situation very badly.
Workers in Panama are very concerned as notices of layoffs are received, and their former support for the government is vanishing.
Arnulfo’s star is rising among the workers as a magician who will restore the situation. Thus, Chiari must see that a continued stalemate is working against his administration and against the chances of Robles in the May elections. The oligarchy’s fear of Arnulfo is providing additional political pressure on Chiari for an early settlement.
The forces exerting pressure on Chiari to stand firm are his hard line left advisors, student leaders and Communists, plus possibly Moreno and Boyd with political axes to grind who have nothing to lose and much to gain if they can induce the US to cave on the negotiate point.
I believe the National Guard is capable of controlling any violence instigated by the left and would do so if Chiari moved towards accommodation.
The formula of rioting to attract US attention and extract concessions is an old ploy used successfully in the past. The killing in the January 9–16 affair was an unexpected result brought about by the trained Communist additive to the old recipe. The killings produced a real shock causing Chiari to over react and paint himself into a corner.
I believe Moreno and Boyd were turned loose by Chiari to see how far they could go in pushing the US to accept the Chiari position. This probing ran into a stone wall and I think the realization is now sinking in here that the stalemate can only be broken by a Chiari retreat from his position.
The former violent feelings against Americans, the zone and the US armed forces are receding rapidly in my opinion. Visiting [Page 840] Americans, consular officers and Americans living in Panama City now move freely about the city without molestation or evidence of any apparent hostility on the part of the general population.
In my opinion the Communists made great headway in promoting the riots and during the present stalemate, particularly in strengthening and broadening the base of their organization. However, in the present climate I do not think they yet have the capability of matching or neutralizing the National Guard.

Conclusion: Despite the hazards of political predictions, in my best judgment at this moment, I think the shifting of the balance of forces here indicates a Chiari accommodation and restoration of relations at any time within this month. I do not believe he will sit tight until the May elections much less October. If he were to make this mistake I think he will be removed. Based on my previous experience in Panama during similar but less serious riots I believe that this last tantrum is nearing its end. There may be a coup if Chiari does not move but I do not believe there will be any further rioting against the zone this year. Amen.

  1. Source: National Archives and Records Administration, RG 59, Central Files 1964–66, POL PAN–US. Confidential.