Panama City — At the fragile age of nine months, Panamanian democracy has entered a contest for survival pitted against large foreign debts and the specter of return to overt military rule.

The struggle of Nicolas Ardito Barletta, an economist who is Panama’s first elected president in 16 years, is to guide the country back to solvency through painful measures while also avoiding political violence that could bring the soldiers out of their barracks again.

“The opportunity for democracy has come at a very difficult economic moment, and unless the United States helps, we’re going to go back to military dictatorship,” Ardito Barletta warned in an interview. “The most important thing to strengthen the democratic process is to show we can do something to resolve our economic problems.”

Few doubt Ardito Barletta’s economic ability. But increasingly, friends as well as foes have begun to ask whether he has the political agility to put it into practice.

Ardito Barletta’s task is similar to that faced by other new civilian governments replacing military rule in a trend hailed by the Reagan administration as progress in the effort to restrict Marxist influence in the hemisphere. It also is an early tasting ground for repeated assertions by President Fidel Castro of Cuba that the democratic Latin governments cannot pay their debts to US. Banks without risking violence in the streets.

In some ways, the president seemed an ideal candidate for the challenge of dealing with Panama’s $3.7 billion debt and moving the government out from under military tutelage. Ardito Barletta, 46, earned an economic doctorate at the University of Chicago studying under professor George P. Shultz served as planning minister under the late general Omar Torrijos and was vice president for Latin America at the World Bank until he was called home last year. : Reflecting this experience, Ardito Barletta and President Miguel de la Madrid of Mexico have begun soundings with other Latin leaders to put together a technical proposal aimed at postponing interest payments to U.S. banks, a high Panamanian official aid.

Panama, for example, has found increasing difficulty meeting interest obligations of $400 million per year, which gobble up 35 percent of its export earnings. The proposed breathing spell, although not so designed, would in effect be a response to Castro’s campaign for the debts’ cancellation or assumption by the U.S. government.

At home, dealing with the debt has meant pushing unpopular tax increases and public spending cuts as well as tariff reductions and changes in the country’s stringent labor code that affect some of Ardito Barletta’s constituency.

Article extracted from this publication >>  July 19, 1985