398. Special National Intelligence Estimate1

SNIE 84–64


The Problem

To examine the situation and short run prospects in Panama, with particular emphasis on the Castro-Communist threat.


The process of political change in Panama, where the uneasy rule of the elite was being challenged by a variety of extreme nationalists, has been accelerated by the canal crisis. With general elections scheduled for 10 May, political maneuvering is in full swing. All the candidates are virtually compelled to take a strong nationalistic stand. Candidates and party alignments are still likely to be changed. The power struggle may not be resolved at the ballot box; any of the principal candidates might resort to a coup rather than accept defeat. A new government might feel more able to compromise on the canal issue, although it would first try to consolidate its control of the government apparatus.
The Communists and Castroists, riding the current wave of rabid nationalism, have made substantial gains. They have established effective cooperation with each other, have expanded and improved their organizations, and have increased their influence with nationalists both in and out of government. We do not believe that they are strong enough at this stage to carry out a coup by themselves. We believe [Page 845] that in the immediate future they will concentrate on working with radical nationalist elements to undermine the already weakened rule of the traditional oligarchy. They will also seek to keep the canal issue alive and unresolved.
One durable result of the crisis is this: from a negligible factor in Panamanian life, the Communists and the Castroists have become a significant one. Their short run prospects have been sharply improved, and the longer the treaty issue remains agitated, the more lasting their gains are likely to be. Even if their strength and influence should diminish, the heightened level of nationalism will persist, and will confront the US with a succession of difficulties.

[Omitted here are sections I. “The Political Framework,” II. “The Canal Issue,” and III. “Riots and Their Aftermath.”]

IV. The May Elections

The approach of the presidential election makes it extraordinarily difficult for the Chiari government, or any political group, to take a moderate stand on the canal issue. With extreme nationalism in the ascendant, each candidate will be judged by his position on this issue, and the campaign will have a high content of Yankee-phobia.
The Contenders. There are, at this stage, seven presidential candidates.2 (Chiari cannot succeed himself.) There is strong pressure within the oligarchy to have the two conservative coalitions agree on a single unity candidate, but thus far neither candidate has been willing to withdraw. Of these currently running only four are of consequence.
Marco Robles is a member of the conservative National Liberal Party and the candidate of the parties in Chiari’s governing coalition. [2 lines of source text not declassified] In effect, he will be largely judged by Chiari’s success or failure.
Juan de Arco Galindo is a member of the conservative National Patriotic Coalition and candidate of the Opposition Alliance (OA).[1 line of source text not declassified] The OA, like most Panamanian coalitions, is an amalgam of personalistic parties, and some of its leaders are unsavory opportunists. Galindo’s main problem will be to keep the OA together.
Arnulfo Arias is leader and candidate of the nationalistic Panamenista Party. [7 lines of source text not declassified] Some opinion holds that Arnulfo may have come to the conclusion that accommodation with the US is a necessity. [2 lines of source text not declassified]
Miguel Moreno, the candidate of the small ultranationalist National Reformist Party, is also supported by a diversity of other elements. He himself has frequently expressed violently anti-US views, and the vigor with which he has recently presented Panama’s case before the OAS has made him a national figure. He still has little chance of election as the nominee of a minor party, but key members of the oligarchy may decide that his current popularity would make him a strong unity candidate. In this capacity, he would probably have the backing of Colonel Bolivar Vallarino, commander of the National Guard, with whom he has long had close personal ties. Moreover, some of the Communist leaders see in him a way to supplant the oligarchy by a transition government which could pave the way for a “socialist revolution.” [less than 1 line of source text not declassified] Moreno also happens to be the only important candidate that the PdP has much hope of influencing.
The Election Outlook. Political forces in the country are still shifting and are likely to keep on doing so throughout the campaign. If an honest election were held with the present party line-up, Arnulfo would probably win against the divided oligarchy. We believe the chances are better than even, however, that the oligarchy will close ranks around a unity candidate, perhaps Moreno or Robles. In this event, the election would probably be close. The oligarchy controls the National Electoral Board which supervises the counting of votes and arbitrates voting disputes, and this could be decisive in a close election.

V. The Possibility of a Coup

With Panama in a state of acute tension there is some chance of a coup. It could come from any one of several directions. The oligarchy might seek to forestall an election victory, or a coup, by Arnulfo. Arnulfo might mount a coup himself, fearing that the oligarchy meant by chicanery or violence to keep him from the Presidency. The Communists and Castroists might come to believe that they could use the masses in the streets to nullify the government’s police power and thus seize control with a small number of resolute activists. Such an attempt would, however, mean risking their present assets and their increasing influence. We do not regard the likelihood of a coup as very great at present; it will probably increase, especially in the event of continued economic deterioration. The period between the elections in May and the new President’s assumption of office in October will be a delicate one.
If a coup attempt were launched, the attitude of the Guardia Nacional (GN) would be crucial; indeed, any coup plotters would almost certainly seek to enlist the GN’s support, or to neutralize it. The GN is Panama’s only security force and numbers about 3,500 men. It [Page 847] is a disciplined and fairly competent body, believed to be loyal to its commander, Colonel Bolivar Vallarino. It could probably control minor civil disorders, but in the event of widespread and sustained disturbances it would probably not be capable of maintaining control without substantial outside assistance.
Vallarino has in the past shown himself reluctant to undertake decisive action on his own initiative, except when the interests of the GN were involved. He is bitterly opposed both to Arnulfo and to the Communists, and realizes that he would almost certainly lose his job if either took over. Hence, we believe that Vallarino would oppose a coup attempt by either. He would probably support a coup launched by the oligarchy to prevent Arnulfo’s election; he might even act to prevent Arnulfo from taking office if he were elected.

VI. The Outlook

The Government. The intense and conflicting pressures on Chiari will almost certainly increase. The economic consequences of the impasse will be felt more and more by the Panamanians. To some, especially the oligarchy, this argues for attempts at a settlement with the US. In the minds of most, however, it probably increases anti-US sentiment. The situation is further complicated by the May elections; if Chiari appeared to be settling for something less than a US commitment to write a new canal treaty, the government coalition would almost certainly be defeated in the election—and large-scale rioting might be renewed.
A new Panamanian Government might have stronger mass support and thus more room for maneuver on the canal issue. Its leaders, even if rabidly nationalistic, would no longer be under election pressures, and presumably would have to concern themselves with reversing the process of economic deterioration. However, a new government would be likely to go slow, seeking first to consolidate its control of the governmental apparatus.
The Castroists and the Communists. Although both the Castroists and Communists have made significant gains since the crisis, we do not believe that, at this stage, they are strong enough by themselves to seize power. Nor do we believe that they intend in the immediate future to risk their gains and assets in such an attempt; PdP leaders have expressed concern that the US might directly intervene to prevent or redress a Communist takeover. However, if it appeared that radical nationalists were about to seize power, the Castroists and Communists would probably join them in the hope of securing positions of major influence.
Barring such an opportunity, the short run tactics of the PdP and its sympathizers are to extend their influence, to build up their assets, and to consolidate their gains. They will continue to support the [Page 848] government’s intransigent stand, and they will attempt to exert pressure on the administration to stand firm. At the same time, they will try to undermine the oligarchy, perhaps charging it with plans to betray Panama to the US. They will capitalize on any opportunity to exploit economic dissatisfactions and chronic social inequities. Even the more militant VAN can be expected to adopt similar tactics, at least for the near future.
The crisis has made many Panamanians more receptive to the ultranationalist line advanced by the Castroists and Communists. For some, especially among the lower classes, the oft-repeated charges of Yankee aggression have been proved. Especially during the election period, the Castroists and Communists will continue to profit from the strong nationalistic and anti-US sentiments rampant in Panama, whatever their origin. If and when this chauvinistic fervor diminishes, some reduction of their influence is likely. But it will not vanish away. One durable result of the crisis is this: from a negligible factor in Panamanian life, the Communists and the Castroists have become a significant one. Their short run prospects have been sharply improved, and the longer the treaty issue remains agitated, the more lasting their gains are likely to be. Even if their strength and influence should diminish, the heightened level of nationalism will persist, and will confront the US with a succession of difficulties.
  1. Source: Central Intelligence Agency, Job 79R 01012A, DDI Files, O/DDI Registry. Secret; Controlled Dissem. According to a note on the cover sheet, this estimate was prepared in the Central Intelligence Agency with the participation of the intelligence organizations of the Departments of State and Defense and the National Security Agency. The U.S. Intelligence Board concurred in this estimate on March 11.
  2. See Annex for a complete list of Panama’s political parties and coalitions. [Footnote in the source text. The Annex is attached but not printed.]