(SANITIZED)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80B01676R000400080020-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 7
• Document Creation Date: December 19, 2016
• Document Release Date: November 14, 2006
• Sequence Number: 20
• Publication Date: May 7, 1964
• Content Type: LETTER

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UNCLASSIFIED CONFIDENTIAL SECRET
CENTRAL INTELLIGENCE AGENCY
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7 May 1964
fhs Honorable W. A re arrimaaA;
Under Secretary of State for oliticai Affairs
W aahtnon 23., D. C.
Dear Governor Harrtm4
Attached for your info;
Memosandurn pertainin
last rar,
Faithfully your.,
/s/ Marshall S. Carter
Marshall S. Garter
Lieutenant General, USA
Acting Director
Attachment: OCI Memo, The Panamanian Situation dtd 7 May OqI No. 1572/64
xsc Originals also to: The Honorable Robert F. Kenny/fi! k'
The Attorney General . r
cc: 'ER
DD/I
Mr. Knoche
a an Intelligence
ar stuzarrariaes tho explosive
d the rsa cans for concern.
Agency for International Development
The Honorable David E. Bell,Administrator
The White House
The Honorable Michael Forrestal /
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ML I
OCI No. 1572/64
CENTRAL INTELLIGENCE AGENCY
Office of Current Intelligence
7 May 1964
1. There are two basic and related factors in
the current situation in Panama which could with
little warning erupt into violence much more damaging
to US interests even than the riots of last January.
These factors are the increasing fragility of the
social order in Panama and the very strong national
concensus that has developed in Panama demanding a
basic revision of the Canal arrangements with the US.
These two factors are related because the latter is
being exploited in an effort to divert public atten-
tion from the former. Whatever the outcome of next
Sunday's elections, these explosive factors will re-
main--unless election violence provides the spark
that sets off the highly combustible situation.
2. The entrenched oligarchy that has dominated
the political and economic life of the country since
independence is probably as rotten as any in this
hemisphere. Panamanian presidents, though often de-
scribed as "relatively" honest personally, are
characteristically placed in power for the prime
purpose of protecting the interests of the oligar-
chy; corruption and chicanery of all sorts is ac-
cepted as a matter of course within the government
and presidents are too controlled by their backers
to change this system. There is little hope for any
significant progress in any field in Panama while
this group remains in power.
3. In recent years, and especially during the
past several months, there has been noticeable growth
in popular resentment against the oligarchy. It is
now widespread especially among the lower economic
classes in the country. This is part of the basis
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for the political strength of the front-running presi-
dential candidate, Arnulfo Arias, who is basing his
campaign on opposition to the oligarchy. It is prob-
lematical whether Arias would take any effective ac-
tion to reduce the power of the oligarchy if he is
permitted to become president, but his campaigning
has focused popular attention on this issue and has
further aroused the fears of the oligarchs, who are
pulling out all stops in a desperate effort to defeat
him.
4. The oligarchy--and with it those upper class
Panamanians linked to it--is frightened. Rumors of
an impending general uprising in Panama City against
the oligarchy periodically arise. US Ambassador
Vaughn recently reported that he could not discount
this possibility,
reported as montli a m em=
bers o the oligarchy are buying substantial quan-
tities of weapons and developing plans to defend
their homes against mob attacks. Many of them, he
reports, have sent their families to their country
homes or abroad.
5. In their desperation to maintain their
threatened hold on power, the politicians of the
oligarchy have formed seemingly incongruous alli-
ances with extreme leftists and Communists. The
latter, who seem to recognize that they stand to
gain from the continuation for a while longer of
the decaying power structure, perform useful services
for the oligarchy. They control a certain number
of votes and many of them are effective agitators
and campaigners. For instance, the rabble rousing
pro-Castro deputy in the National Assembly, Thelma
King, is running for reelection on the ticket of
a party supporting one of the oligarchy's two presi-
dential candidates. Another example is the recent
deal between presidential candidate Marco Robles
and pro-Castro Socialist party leader Carlos Ivan
Zuniga, who is running for deputy in Chiriqui Prov-
ince. Robles is believed to have supplied Zuniga
with campaign money in return for the latter's
agreement to launch a strong campaign against
Arnulfo Arias. Thus both Robles and Zuniga hope to
strengthen their chances in the Chiriqui, Arnulfo
Arias' home province.
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6. Perhaps even more dangerous than these
tactical alliances which the oligarchy has resorted
to for shortrange advantage is the presence of
assorted leftist opportunists and extremists in
many second-echelon jobs throughout the bureaucracy
and in public information media. These people, few
of whom can be definitively identified as Communists,
are nevertheless amenable to Communist and pro-
Castro influence. They are already on the fringes
of power, strategically situated in the event of the
collapse of the old order. Men in this category
have risen to new positions of influence since the
January riots and President Chiari has given some
of them direct responsibility in carrying on current
negotiations with the United States.
7. It is in this context that the very strong
national concensus insisting on basic changes in the
US Canal arrangements takes on added importance.
The mood of angry nationalism that swept the country
earlier this year is still very near the surface
and the Canal issue is the one issue that draws to-
gether all Panamanians of all socio-economic classes.
The politicians of the oligarchy, who have long been
adroit in diverting popular resentments away from
themselves and against the United States, still
find this issue a most useful one in their attempts
to strengthen their threatened positions of power.
The Canal issue is also a most promising issue for
the radical leftists who have already enhanced their
influence and secured positions of potential power
through their shrewd manipulation of the fears of
the oligarchy.
8. To summarize, it seems evident that all the
elements for a serious explosion very damaging to US
security interests in the Canal Zone are currently
present. It is impossible to estimate what form
this potential explosion might take, or its timing.
It could occur in connection with next Sunday?s
election, or anytime between then and inauguration
day next October. Through some fortuitous and
still undiscernible set of circumstances it may
never occur. But as of this writing the situation
looks most ominous.
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