Dark Clouds, Bright Beginnings

Peril and promise face a newly inaugurated President

As thousands of cheering spectators crowded outside Panama City's Atlapa convention center, and dozens of dignitaries from the U.S., Western Europe and Latin America smiled approvingly inside the hall, Nicolas (Nicky) Ardito Barletta was installed as Panama's 21st President. Secretary of State George Shultz, on the second stop of his Central American tour, hailed the new leader as "a longtime and respected friend," and the swearing in as "a new opportunity for progress." That it was: Ardito Barletta's inauguration marked Panama's return to civilian government after 16 years of direct and indirect military rule.

Despite the day's display of high spirits, however, there is an undercurrent of restlessness in the traditionally volatile country. Unless Ardito Barletta can somehow subdue it, that sour mood could undermine his new presidency. Said General Manuel Antonio Noriega, the power ful head of Panama's 14,000-member National Defense Forces: "I see very big and dark clouds on the horizon."

One cloud appeared the day before the inauguration ceremony. About 1,000 demonstrators chanting "Fraud! Fraud!" staged a late-night protest in Panama City's Cathedral Plaza. The demonstrators were backers of Ardito Barletta's venerable populist rival in last May's presidential election, Arnulfo Arias Madrid, 83. Arias lost the election by a mere 1,713 of the 640,000 votes cast, prompting widespread accusations of fraud. Said Winston Robles, editor of the opposition daily La Prensa: "The main problem for Nicky is one of legitimacy."

That issue has plagued Ardito Barletta's candidacy from the beginning. A slender, bespectacled former Panamanian Planning Minister and vice president of the World Bank, he was picked as a presidential nominee by Panama's military chieftains, led by Noriega, shortly before their constitutionally mandated "retreat" from politics this year. Ardito Barletta's ascendancy is resented even by some members of his Revolutionary Democratic Party. Nonetheless, he has achieved grudging acceptance, largely because of fear that the military may decide to retake power.

Another cloud on the horizon is the economy. Industrial output is stagnant. Unemployment hovers around 14% nationwide and runs as high as 40% in some places. Foreign debt has risen to $3.4 billion, and export revenues (primarily from bananas, shrimp and light manufacturing) are falling. Panama is not benefiting much from the country's famous waterway, which was transferred to joint U.S.Panamanian administration under the 1977 Panama Canal treaties. The Big Ditch, historically a not-for-profit concern, last year showed an operating loss of $4 million, reflecting a worldwide shipping slump. One of Ardito Barletta's first unpleasant chores will be a round of belt tightening prescribed by the International Monetary Fund. The measures include a removal of food subsidies, which will send prices skyward and may provoke further street disturbances.

Ardito Barletta's advantage may be that the restless mood in Panama also extends to the military. Many junior officers are said to be upset by the corruption endemic in the upper ranks. The peculation stems from military involvement in everything from Panama's legalized gambling to kickbacks involving government agencies. Thus some Panamanians feel that Ardito Barletta might be able to counter the inevitable loss of popular support during his austerity drive by launching an anticorruption campaign.

But for the moment, the President seems intent on proceeding cautiously. Just before his inauguration, Ardito Barletta told TIME that he intends to form a government of "national conciliation" including opposition members. He hopes to stimulate economic growth by offering incentives to Panamanian businesses and to foreign investors. The new President also insists that he will punish corrupt public officials, whatever their rank. Says he: "The first year will be difficult because it will require a change in attitudes, a lot of honesty with the people and a good deal of participation by everyone." And, perhaps, considerable luck.