Panama: Crisis Over the Canal

On a sunny day last week, a group of American teen-agers marched up and raised a U.S. flag over their high school at Balboa in the Panama Canal Zone.

It seemed an everyday thing to do. But in the Canal Zone, what flag to fly where is a passionate issue—and a symbol of a bitter dispute between the U.S. and the tiny Republic of Panama. So high is the feeling between Panamanians and the Zone's 36,000 U.S. residents that Canal Zone Governor Major General Robert J. Fleming Jr. decided to fly both Panamanian and U.S. flags at 17 carefully selected locations. Elsewhere—including the schools —no flags at all would fly.

But now the Stars and Stripes were unfurled at Balboa (see map). Before long, a crowd of 150 Panamanian high school students appeared carrying Panama's national emblem. At that point, say U.S. officials, "there was no more trouble than you'd expect at a Yale-Princeton football game." The students were told to go home and headed peacefully back across the line. But there a mob was ready and waiting —older men, this time, including Castroites and ultranationalists, and armed with guns and Molotov cocktails. A cry went up that the Panamanian flag had been trampled by Americans—and the U.S. was plunged into the gravest crisis in Latin American relations since the Bay of Pigs invasion.

Viva Fidel! Led by men wearing red T shirts and howling Viva Fidel!, raging mobs set fire to the Braniff and Pan American Airways buildings, the Sears Roebuck store and a Goodyear Rubber plant. The USIS office was destroyed. In the city of Colón, 38 miles away, another well-coordinated riot erupted. Along the border, Zone police tried to disperse the crowds with tear gas, fired in the air, at last lowered their aim. General Andrew P. O'Meara, commander of the U.S. Southern Command, sent Army troops to the border. Snipers from the Panamanian side started picking off the G.I.s. Six soldiers near the Tivoli Guest House were seriously wounded before U.S. sharpshooters silenced the snipers. At no time, said the Army, did U.S. troops move into Panama territory.

An immediate appeal for order by President Roberto F. Chiari, 58, Panama's usually sensible businessman-President, might have helped the situation. But Panama's national election is May 10, and though Chiari cannot run again, anything temperate regarding the Canal would ruin his party's chances. In his presidential palace, Chiari fired off angry cables. He charged the U.S. with "unprovoked armed attack." In a wire to the Organization of American States, he announced that he was breaking diplomatic relations with the U.S., demanded an emergency session of the U.N. Security Council, where Panama's representative accused the U.S. of "bloody aggression."