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Panama: can either side afford unrest?

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There's a slow-motion Russian roulette being played out in Panama. Eight weeks of political unrest - much of it in the form of short business strikes and partial economic boycotts - have begun to threaten the vital economic interests of both the government and its business-led opposition. But the question remains: which side will give way first?

The answer hinges, analysts say, largely on two factors:

First, whether the government continues responding with short-term political measures that could hasten an economic collapse.

Second, whether the Civic Crusade - an opposition group headed by businessmen and lawyers - can afford to escalate its economic battle against the government led by military strong man Gen. Manuel Antonio Noriega.

``Can they keep on having ever-increasing strikes if they are the ones who suffer the most?'' asks one diplomat, noting that the falling profits and productivity of private businesses has hurt them more than the government. ``Then again, what other weapon do they have?''

Most analysts feel that the middle-class leaders will never risk a full-scale economic shutdown. Not only do they lack a clear, charismatic leader who could rouse the masses in support of such a sacrifice. But if a longer strike fizzled out, the Crusade's momentum and credibility would be endangered.

Crusade leaders insist that eventually the economic stakes must be raised. ``It's a bitter pill,'' says one banker, ``but we have to swallow it.''

So far the government has been able to deflect - even defy - the economic pressure. As the crisis has continued, General Noriega has reportedly taken economic decisions more into his own hands, often disregarding the proposals of official economic advisers. Says one disgruntled government economist: ``When it comes to times like these, they [Noriega and his general staff] stick to themselves.''

The result, according to sources close to the government, has been policies based less on long-term planning than on snuffing social unrest. Noriega has stopped pursuing the belt tightening reforms required by the World Bank and other international creditors to service Panama's $5-billion foreign debt, one of the highest per capita in the world.

A draft report of the government's economic program released in mid-July outlined a populist plan for retaining the political support of the people. The government has already lowered the price of chicken, eggs, and cheap cuts of pork. Analysts also point to the estimated $3 million that went to carnival-like counterdemonstrations last week.

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