Panama: Passing a Test

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The mob came boiling down Panama City's Avenida Central last week, howling anti-Yanqui slogans on its way to the U.S. Canal Zone. It was the anniversary of the violent riots that killed 21 Panamanians and four U.S. soldiers in January 1964. But this time 100 troopers of Panama's tough Guardia Nacional stood near the zone border. When the riot-minded students and professional leftists came into range, the guardsmen laid down a tear-gas barrage, then expertly dispersed the crowd. Within 45 minutes it was all over, and Panama had passed a milestone of sorts.

In its first real test, the new government of President Marco Aurelio Robles, 59, was strong enough to act shrewdly and firmly against the country's leftists and ultranationalists. For Panama that is a rare quality.

Justice, but Quietly. Mindful that Washington was hardly likely to build a new sea-level canal in Panama if further riots erupted, President Robles took the play into his own hands as the January anniversary approached. After long sessions with his advisers and Guardia Colonel Bolívar Vallarino, he paid solemn homage to the "heroic sacrifice" of the 21 Panamanian "martyrs" (while neglecting to mention that at least nine were killed accidentally by other Panamanians), publicly promised a completely new treaty to replace the hated 1903 pact that gives the U.S. sovereign ty over the Canal Zone. He allowed the agitators to make their speeches, burn a few U.S. flags and stage their parades along carefully prescribed routes. But he warned against violence, and when the boys got out of hand the guardsmen were waiting.

Barring some unforeseen explosion, Robles can now get on with the important business of negotiating a new treaty and getting Panama's economy back in shape. In 1963 Panama had its best year in history; last year, after the riots, was far from good. Some $30 million in capital fled to Switzerland and Nassau, so far has not returned. Zone residents, who once spent $1,600,000 a month in Panama City, are beginning to spend again, but many remain hesitant to shop in town. New foreign investment virtu ally was halted for months following the disorders. The unemployment rate is up to a staggering 25% .

Taxes for All. Peace and stability should help considerably. So should some of Robles' internal reforms. For a starter, Robles intends to do some thing unheard of — collect the country's taxes. A new tax bill, rammed through Congress, has boosted top personal in come taxes to 43%. Old industrial incentive tax exemptions (some as long as 25 years) will be examined, perhaps renegotiated. To make it all harder to swallow—but sounder by half—he appointed as chief tax collector a bright young U.S.-trained economist, Rodrigo Núñez, 29, who immediately sent auditors to check the books of the country's biggest companies.

The tax reform has won Robles important enemies among the same businessmen who actively supported his election. But the betting is that they will reluctantly go along. The alternative, of course, is to play into the hands of the agitators, who were marching around last week passing out left-wing leaflets calling for the overthrow of "the oligarchic government of Robles" and quoting fiery revolutionary slogans by Fidel Castro.