March 11, 1988

The United States has had a long and mutually productive relationship with Panama. The people of the United States consider the people of Panama to be near neighbors and friends. The historic Panama Canal treaties exemplify the close cooperation that has traditionally characterized the friendship between the two countries, which created one of the great engineering works of the human race.

Out of concern for our friendship, we have been saddened and increasingly worried in recent years as Panama's political crisis deepened. Our policy with respect to the situation in Panama is clear: We strongly favor a rapid restoration of democracy and the resumption by the Panamanian Defense Forces of a role consistent with constitutional democracy. In the present circumstances, I believe that General Noriega would best serve his country by complying with the instruction of President Delvalle to relinquish his post. In so doing, General Noriega would contribute very substantially to reducing political tensions and set the stage for a prompt transition to democracy in Panama. Until such a time as democratic government is restored in Panama, the United States cannot proceed on a business-as-usual basis.

Today, therefore, I have taken a number of steps against the illegitimate Noriega regime that will contribute significantly to the goal of a democratic, stable, and prosperous Panama. I have directed that actions be taken to suspend trade preferences available to Panama under the Generalized System of Preferences (GSP) and the Caribbean Basin Initiative.

Further, in keeping with the spirit of our war against drugs, I have ordered that Panama be subject to intensified scrutiny by our Immigration and Customs Services in order to apprehend drug traffickers and money launderers. Moreover, because we recognize President Delvalle as the lawful head of government in Panama, I have directed that all departments and agencies inventory all sources of funds due or payable to the Republic of Panama from the U.S. Government, for purposes of determining those that should be placed in escrow for the Delvalle government on behalf of the Panamanian people.

In that light, I have directed that certain payments due to Panama from the Panama Canal Commission be placed in escrow immediately. This step is in complete compliance with our obligations under the terms of the Panama Canal treaties. I am prepared to take additional steps, if necessary, to deny the transfer of funds to the Noriega regime from other sources in the United States.

We have welcomed the recent statements issued by President Delvalle, the political parties, and the Civilian Crusade of Panama calling for a government of national reconciliation. We support their goal of restoring democratic government and constitutional order. Once Panamanians achieve this goal, the United States is fully prepared to work with the Government of Panama to help quickly restore Panama's economic health. The United States has been, and remains, committed to fulfilling faithfully its obligations under the Panama Canal treaties. We are also prepared to resume our close working relationships with the Panamanian Defense Forces once civilian government and constitutional democracy are reestablished.