¹ See O'Donnell, Guillermo, Modernization and Bureaucratic Authoritarianism: Studies South American Politics, Institute of International Studies, Politics of Modernization Series, no. 9 (Berkeley:University of California, 1973Google Scholar); and Collier, David, ed., The New Authoritarianism in Latin America (Princeton:Princeton University Press, 1979Google Scholar).

² Wiarda, Howard J., “Toward a Framework for the Study of Political Change in the Iberic-American Tradition: The Corporative Model,” World Politics 25 (January 1973CrossRefGoogle Scholar); and Newton, Ronald C., “On Functional Groups, ‘Fragmentation,’ and ‘Pluralism’ in Latin American Society,” Hispanic American Historical Review 50 (February 1970CrossRefGoogle Scholar).

³ O'Donnell (fn. 1), 62.

⁴ The most extensive treatment of reactionary despotism as a Latin American regime type is Baloyra, Enrique, El Salvador in Transition (Chapel Hill:University of North Carolina Press, 1982Google Scholar).

⁵ Stepan, Alfred, “State Power and the Strength of Civil Society in the Southern Cone of Latin America,” in Evans, Peter, Rueschemeyer, Dietrich, and Skocpol, Theda, eds., Bringing the State Back In (New York:Cambridge University Press, 1985), 317CrossRefGoogle Scholar. The exceptions to this rule of relatively high regime autonomy from civil society are the so-called “reactionary despotisms” that emerged during the 1970s in the Central American countries of Guatemala and El Salvador. Ibid., 101–2.

⁶ Ibid., 318.

⁷ For a revealing study of Peru, where readmission began in 1974, see Cleaves, Peter S. and Pease García, Henry, “State Autonomy and Military Policy Making,” in Lowenthal, Abraham F. and Fitch, J. Samuel, eds., Armies and Politics in Latin America (New York:Holmes and Meier, 1986Google Scholar).

⁸ For an excellent summary, see Hamilton, Nora, The Limits of State Autonomy: Post-Revolutionary Mexico (Princeton:Princeton University Press, 1982), 281Google Scholar–86.

⁹ The number of employees of the central government and of autonomous/semiautonomous institutions grew from 57,998 in 1971 to 148,693 in 1986. From 1980 to 1986, it increased by more than 40,000. Situacíon Social, Estadísticas de Trabajo, Año 1975 (Panama City:Contraloría de la República, Dirección de Estadística y Censo, 1976), 62Google Scholar; Panamá en Cifras, Años 1973–1977, 167; Panamá en Cifras, Años 1980–1984, 257; Panamá en Cifras, Años 1982–1986, 285. On the relative loss of regime autonomy during the 1970s vis-à-vis the civilian elite and labor sector, see Sharon Phillipps, Labor and Politics in Panama (Boulder, Colo.: West-view Press, 1991).

¹⁰ Accounts of developments during the Noriega years (1983–89) can be found in Dinges, John, Our Man in Panama (New York:Random House, 1990Google Scholar); Kempe, Frederick, Divorcing the Dictator (New York:G. B. Putnam's Sons, 1990Google Scholar); Scranton, Margaret E., The Noriega Years: U.S.-Panamanian Relations, 1981–1990 (Boulder, Colo.:Lynne Rienner, 1991Google Scholar); Koster, R. M. and Sánchez, Guillermo, In the Time of the Tyrants (New York:W. W. Norton, 1990Google Scholar); and Buckley, Kevin, Panama: The Whole Story (New York:Simon and Schuster, 1991Google Scholar).

¹¹ Academic observers who use intraelite factionalism to explain the origins and growth of regime autonomy include Stepan, Alfred, The State and Society: Peru in Comparative Perspective (Princeton:Princeton University Press, 1982Google Scholar); and Hamilton (fn. 8).

¹² These divisions were between a minority element in the Liberal Party that wished to gradually move the state in a more developmental direction (in tune with programs of the Alliance for Progress) and a more traditionally oriented element of the party that did not. The latter threw its support behind populist presidential candidate Arnulfo Arias, thus ensuring both his victory at the polls and a subsequent military coup. Panamanian scholar Ricuarte Soler argues that this split in the oligarchy allowed the state to acquire a certain degree of relative autonomy vis-à-vis the dominant class. Interview with Ricuarte Soler in Tareas 33 (September–November 1975).

¹³ Stallings, Barbara, “International Lending and the Relative Autonomy of the State: A Case Study of Twentieth-Century Peru,” Politics and Society 14 (Fall 1985CrossRefGoogle Scholar).

¹⁴ By 1980, Panama's total outstanding external debt was approximately $3 billion. Inter-American Development Bank, Economic and Social Progress in Latin America: 1989 Report (Washington, D.C.:Inter-American Development Bank, 1989), 503Google Scholar.

¹⁵ For a more detailed discussion of these factors that tend to stabilize Panama's economy, see Ropp, Steve C., “Leadership and Political Transformation: Two Levels of Regime Crisis,” in Ropp, Steve C. and Morris, James A., eds., Central America: Crisis and Adaptation (Albuquerque:University of New Mexico Press, 1984), 236Google Scholar–39.

¹⁶ Many definitions of corruption have a pronounced Western bias. To avoid this problem, I propose a strictly legalistic one. Corruption is “the illegal use of public office to extract resources for private purposes or purposes that do not benefit the society as a whole.” Other definitions can be found in Theobald, Robin, Corruption, Development and Underdevelopment (Durham, N.C.:Duke University Press, 1990), 1–8CrossRefGoogle Scholar.

¹⁷ The state, as defined by Max Weber and others, is a broad political entity composed of the civilian and military bureaucracies and their leadership. The regime is the temporary configuration of political leaders that sits atop and guides the state at any particular point in time. See Weber, , “Politics as a Vocation,” in Gerth, Hans and Mills, C. Wright, eds., From Max Weber (New York:Oxford University Press, 1958), 77–78Google Scholar.

¹⁸ The two best sources on the growth and evolution of the Panamanian state are Materno Vásquez, Juan, Teoría del estado panameño (Panama City:Ediciones Olga Elena, 1980Google Scholar); and Torres, Miguel, La contrucción del sector público en Panamá (1903–1955) (San José, Costa Rica:Institute Centroamericano de Administración pública, 1982Google Scholar).

¹⁹ The definitive work on the attitudes and worldview of Panama's urban commercial elite is Ricuarte Soler, Formas ideológicas de la nación Panameña (San José, Costa Rica:Editorial Universitaria Centroamericana, 1972Google Scholar).

²⁰ Materno Vasquez (fn. 18), 16–22.

21 Ibid., 84.

22 Dirección de Estadística y Censo, Contraloría de la República, Situatión Económica: Hacienda Pública y Finanzas-Año 1976 (Panama City: Government of Panama, 1978), 1Google Scholar.

23 Meditz, Sandra M. and Hanratty, Dennis M., eds., Panama: A Country Study (Washington, D.C.: Federal Research Division, U.S. Library of Congress, 1989), 137Google Scholar.

24 The Panamanian government did begin to extract more resources in the form of taxes during the latter half of the 1970s as private investment declined and the economy began to falter. Current revenues had risen to twenty percent of gross domestic product by 1980. Inter-American Development Bank, Economic and Social Progress in Latin America: 1982 Report (Washington, D.C., 1982), 362Google Scholar.

25 Nyrop, Richard, ed., Panama: A Country Study (Washington, D.C.: U.S. Government Printing Office, 1981), 100Google Scholar.

26 Ya (June 1980), 7.

27 Rothbard, Murray N., “The Treaty That Wall Street Wrote,” Inquiry 1 (December 5, 1977), 9–14Google Scholar.

28 For example, Panama received some $200 million in new loans from the Export-Import Bank prior to ratification of the treaties. The author was told at the time by a high official of the bank that these loans to Panama were not being granted for the publicly stated reason that business was expected to improve following treaty ratification; they were granted simply because officials from the Carter administration had come to the bank to request such funds. Privileged interview, Albuquerque, New Mexico, September 7, 1978. Analyses of the bargaining matrix for negotiation of the 1978 treaties can be found in LaFeber, Walter, The Panama Canal: The Crisis in Historical Perspective (New York: Oxford University Press, 1978)Google Scholar; Furlong, William L. and Scranton, Margaret E., The Dynamics of Foreign Policy Maying: The President, the Congress, and the Panama Canal Treaties (Boulder, Colo.: Westview Press, 1984)Google Scholar; and Jorden, William J., Panama Odyssey (Austin: University of Texas Press, 1984)Google Scholar.

29 Stallings (fn. 13), 261.

30 Between 1968 and 1978, Latin America received 42 percent of its external credit from private sources, while Panama received 56 percent. Inter-American Development Bank, Economic and Social Development Department, Letter of January 2, 1990; and Stallings (fn. 13), 278.

31 See Herrera, Margarita, Arce, Marta, and Castillo, Mayra, Los sectores populares y el proletariado (Panama City: Centro de Estudios y Acción Social, 1979), 46Google Scholar. This study would define members of the “popular bureaucracy” as all public employees earning less than $3,600 per year. In 1975, there were more public employees in this lowest wage category than there were in the same category within the private sector.

32 Meditz and Hanratty (fn. 23), 125–29.

33 Historian Omar Jaén Suárez argues that “contrabanding and smuggling have in Panama such power that we cannot consider it to be a marginal activity practiced by a small group of marginal persons in a clandestine fashion. … Smuggling is a way in which the Creole natives were able to confront the monopoly of the metropole during the 17th and 18th centuries.” La población del Istmo de Panamá del sigh XVI al sigh XX (Panama City: Impresora de la Nación, 1978), 305–7Google Scholar.

34 Privileged interview, Panama City, January 10, 1979.

35 On corruption during the Remón years, see Pippin, Larry LaRae, The Remon Era (Stanford, Calif.: Institute of Hispanic American and Luso-Brazilian Studies, Stanford University, 1964)Google Scholar.

36 One of the most notorious examples of such corruption in the 1970s was Mexico under the leadership of President José López Portillo. On the role of the overdeveloped state, foreign capital, and oil revenues as factors encouraging corruption in the 1970s, see Theobald (fn. 16), 86, 98, and 101.

37 Zona Libre de Colón (Panama City: Focus Públications, 1980), 50–55Google Scholar.

38 For example, a shipment of goods whose true value was $50,000 would be valued at $210,000. With a 33 percent export subsidy, the exporting industrialist would earn a profit of $20,000, no matter what happened to his merchandise once it reached Panama.

39 Muhtar, Ezequiel, La Mordida (Miami, Fla.: Editorial Istmo, 1976), 144–45Google Scholar.

40 Ibid., 227.

41 Privileged interview, Washington, D.C., October 26, 1989. See also Kempe (fn. 10), 56. Kempe says that, during the 1970s, “the profitable prostitution business [in Colón] was run by the National Guard, and Torrijos was the local equivalent of a madame.”

42 Privileged interview, Washington, D.C., October 26, 1989.

43 A typical case of National Guard officers serving as silent partners involved a foreign businessman who began to extract gold and silver from film that he purchased in Panama. When the businessman did not agree to turn over part of the profit to the Guard, his family was threatened. Privileged interview, Washington, D.C., October 26, 1989.

44 Pereira, Renato, Panamá: fuerzas armadas y política (Panama City: Ediciones Nueva Universidad, 1979), 79Google Scholar.

45 Huntington, Samuel P., Political Order in Changing Societies (New Haven: Yale University Press, 1968), 59–71Google Scholar.

46 He does suggest that corruption can facilitate political development along certain dimensions by encouraging the establishment of programmatic political parties and broadening participation. Ibid., 62.

47 The span of control assumed by the Defense Forces in 1983 was truly remarkable. The National Passport Department, although assigned by law to the Ministry of Government and Justice, was controlled by a PDF captain. The Civil Aeronautics Administration, an autonomous agency, was headed by a major. The National Railroads was also headed by a major. “Law Number 20,” September 29, 1983, Gaceta Oficial.

48 Rouquié, Alain, The Military and the State in Latin America (Berkeley: University of California Press, 1987), 126–27Google Scholar.

49 U.S. Congress, Senate, Subcommittee on Terrorism, Narcotics and International Communications of the Senate Foreign Relations Committee, Drugs, Law Enforcement, and Foreign Policy: Panama, Part 2, 100th Congress, 2d sess., 1988, p. 135.

50 At a minimum, the regime had to pay the salaries of the “popular bureaucracy,” estimated by the Reagan administration to be $54–$65 million per month. Noriega tapped most of the illicit sources for such funds. Kempe (fn. 10), 270–72.

51 A good example of this relationship is the one that sugar magnate Eric Arturo Delvalle allegedly had with the military regime. “He kept the family fortune healthy by adhering to the thoroughly Panamanian philosophy of one hand washes the other. His family sugar business depended on the government's allocation of a near monopoly portion of Panama's sugar export quota to the United States. He had no problem with returning the favor by allocating a number of well-paid sinecures to PDF officers and other Noriega cronies.” Dinges (fn. 10), 279.

52 Ibid., 116.

53 Members of the new civilian business class included Gaspar Wittgreen, Carlos Wittgreen, and Alberto Calvo. Allegedly, they were particularly adept at tapping new sources of wealth for the regime such as shipping fees, sale of passports, and military end-user certificates. Kempe (fn. 10), 270–72.

54 Andres Oppenheimer and Sam Dillon, “Businesses Add to Noriega's Clout,” Miami Herald, February 6, 1988, pp. 1A and 20A.

55 Kempe (fn. 10), 216.

56 Two of the main leaders of this civilian opposition movement were businessmen who are alleged to have been denied a lucrative housing contract by Noriega in early 1987. Gabriel Lewis Galindo and Roberto Eisenmann apparently wished to construct military housing in the Canal Area that could have been sold for a huge profit when the area was returned to Panama in the year 2000. Both helped to orchestrate the overthrow of Noriega while in exile in the United States. Kempe (fn. 10), 216–17.

57 Small businessmen were not just vulnerable to regime pressures because they were small. While many members of the urban commercial and industrial elite were Hispanic, with deep historical roots in Panama, small businessmen were often post–World War II arrivals from the Levant or other regions of the world. The structure of Panama's contemporary business community is discussed in Hughes, William R. and Quintero, Iván A., Quienes son los dueños de Panamá? (Panama City: Centro de Estudios y Acción Social Panameño, 1987)Google Scholar. For a good sociological study of the historical evolution of the Hispanic urban commercial elite, see Navarro, Alfredo Figueroa, Dominio y sociedad en el Panamá colombiano (1821–1903) (Panama City: Impresora Panamá, S.A., 1978)Google Scholar.

58 Privileged interview, Washington, D.C., October 26, 1989.

59 Díaz Herrera did not, of course, publicly accuse Noriega of failure to equitably distribute the profits derived from corrupt activities, although this had apparently become a major point of disagreement between the two men. Díaz went public with his charges of regime corruption only after Noriega allegedly denied him the lucrative ambassadorship to Japan in exchange for his retirement. Kempe (fn. 10), 210–11.

60 Foreign aid increased from $7.4 million in 1983 to $12 million in 1984 and to $74.5 million in 1985, following the election of Barletta. Scranton (fn. 10).

61 Richardson, Neil R., Foreign Policy and Economic Dependence (Austin: University of Texas Press, 1978), 105Google Scholar.

62 Several good comparative studies are Punch, Maurice, Conduct Unbecoming (New York: Tavistock Públications, 1985)Google Scholar; and Sherman, Lawrence W., Scandal and Reform: Controlling Police Corruption (Berkeley: University of California Press, 1978)Google Scholar.

63 Karen Remmer identifies four types of military authoritarian institutional structures (monarchic, oligarchic, sultanistic, and feudal), and distinguishes between their varying degrees of durability and longevity. , Remmer, Military Rule in Latin America (Boston: Unwin Hyman, 1989), 34–42Google Scholar.

64 On Stroessner, see Lewis, Paul H., Paraguay under Stroessner (Chapel Hill: University of North Carolina Press, 1980)Google Scholar; and Miranda, Carlos R., The Stroessner Era: Authoritarian Rule in Paraguay (Boulder, Colo.: Westview Press, 1990)Google Scholar. For the Duvaliers, see Abbott, Elizabeth, Haiti: The Duvaliers and Their Legacy (New York: McGraw-Hill, 1988)Google Scholar; and Fass, Simon M., Political Economy in Haiti: The Drama of Survival (New Brunswick, N.J.: Transaction Books, 1988)Google Scholar. For the Somozas, see Booth, John A., The End and the Beginning: The Nicaraguan Revolution (Boulder, Colo.: Westview Press, 1982)Google Scholar; and Millett, Richard, Guardians of the Dynasty (Maryknoll, N.Y.: Orbis Books, 1977)Google Scholar.

65 For a sophisticated effort to explain the dynamics of Chile's democratic regime and the ability of its military successor to survive, see Valenzuela, Arturo, “Chile: Origins, Consolidation, and Breakdown of a Democratic Regime,” in Diamond, Larry, Linz, Juan J., and Lipset, Seymour Martin, eds., Democracy in Developing Countries: Latin America (Boulder, Colo.: Lynne Rienner, 1989), 187–96Google Scholar.

66 The parallels with Nicaragua are quite striking with regard to regime maintenance and breakdown as illustrated by the following quotation: “The societal-wide effects of corruption and coercion of Anastasio Somoza Garciá between 1936 ad 1956 were constrained in one sense by the limited capabilities of the state apparatus. … But the growth of the state apparatus after his assassination meant that similar political behavior would have magnified and more generalized consequences. … In short, the somocista dictatorship became less tolerable because of the growing efficiency of the state apparatus as an instrument of graft and coercion.” Stephen M. Gorman, “Social Change and Political Revolution: The Case of Nicaragua,” in Ropp and Morris (fn. 15), 51.

67 There are also some important differences in these three cases. For example, the Somozas appear to have had less opportunity to extract resources from their international economic environment and thus were forced to derive most of their wealth from the domestic economy. During the 1970s, this led to increased tension between the business class and the regime, which eventually contributed to the regime's downfall. Booth (fn. 64), 97–103.