The night Gen. Manuel Antonio Noriega gave himself up, they danced and waved Panamanian flags in the streets and hailed the American invaders as heroes.
"Democracia!" people shouted at the top of their lungs.But a year after the spectacular U.S. invasion that ousted Noriega, Panama's euphoria has faded. What remains is a deeply troubled place, still heavily dependent on American troops for its stability.
The economy has improved little by little, but paradoxically, people's frustrations seem to rise apace. In large part, the problem may be that the invasion sent hopes soaring so unrealistically high that disillusionment was inevitable.
"The mentality was that everything would be solved overnight by the invasion," said Ebrahim Azbat, the new civilian police chief. "There's a Latin tradition of a god or a patriarch or a caudillo who comes to unite everyone and make everything better. But nobody's talking about hard work, discipline and sweat."
There is also a nearly universal feeling that the United States has reneged on its promises to resurrect Panama's ailing economy with an ambitious "nation-building" campaign. An aid package, originally promised at $1 billion, was reduced to $500 million, then to $420 million, of which less than $120 million has actually arrived.
Said an American adviser here, "What we've done is like giving two pints of blood to someone that needs five."
Indeed, Panama's problems have continued to mount in the year since a large U.S. invasion force struck at Noriega's army in the early hours of Dec. 20:
-A jobless rate of a quarter to a third of the work force has stirred social protest and marches in the street.
-Bickering and nepotism have undercut the credibility of the U.S.-installed civilian government. At a cabinet meeting this fall, President Guillermo Endara had to step in to stop his vice president, Guillermo Ford, from manhandling the foreign minister, Julio Linares.
-An 11,000-strong military, stripped of its arms and perks but not of its thirst for power, is a looming menace to stability but not to the street criminals who have turned Panama's cities into armed camps.
The crime wave has sparked a national fixation with guns that is so widespread the attorney general proudly shows off his gold-plated Uzi to visitors. The deputy housing minister tried to foil a recent bank heist with a pistol he happened to be packing at the time.
-The network of shadowy businesses that stood for fast money during Noriega's regime - supersecret banks, hidden ownership of corporations and a thriving drug trade - still exists. Businessmen say Panama remains a first-rate tax haven.
"Sometimes I feel embarrassed about the way we make money - that mostly it's in helping people avoid other countries' laws," said a leading Panamanian businessman. "For many generations it's been a service country-ever since the 16th century when it was a transshipment point for money looted from Peru's Indians."
-Police say the Colombian drug cartels may have set up a cocaine-producing plant in the jungle province of Darien, which borders Colombia.
"This country is still sick," said police chief Azbat. But "after 21 years of dictatorship, you can't suddenly become a believer in democratic institutions."
If democracy is winning any converts in the sprawling slum of ticky-tack houses and shacks known as San Miguelito, the process is a slow one.
San Miguelito, on the outskirts of Panama City, was built in the late 1960s and '70s when Gen. Omar Torrijos ruled the country. One neighborhood is named Torrijos-Carter after the Panamanian leader and the U.S. president who signed the Panama Canal Treaties, which will give the waterway to Panama by the end of this decade.
When U.S. troops invaded Panama last year, rockets and tracer bullets rained on San Miguelito, which sits between two hilltop military bases. Nineteen people died that night in the neighborhood, some of them in their homes.
The Rev. Reynaldo Jesus Karamanites, a Roman Catholic priest in San Miguelito, says the United States has not paid the debt it incurred in the invasion.
The first U.S. soldiers who came after the fighting searched house-to-house for weapons. After that, the priest said, "on two or three occasions I saw a few American troops working in the garbage dump. . . . If you call that help, they helped. More than that I haven't seen."
In Karamanites' parish, known as Samaria, where 30,000 people live, the social problems are breeding as quickly as the tropical mosquitoes. The problems predate the invasion, but the priest is irked that the Americans have done nothing to deal with them.
The kids hang out on the street; alcoholism and drug abuse are widespread; crime statistics, says Karamanites, are anybody's guess, since many people do not bother reporting incidents to the Panamanian police.
The police - composed of members of Noriega's disbanded army but wearing new khaki uniforms - are a demoralized force that have lost most of their top officers to purges, most of their perks to efficiency drives, most of their weapons to American troops.
But the key problem in San Miguelito, as in all of Panama, is unemployment. Nationwide, the jobless rate is variously listed at 25 percent to 35 percent, with a like number of people underemployed. Economists estimate that fewer than half of all Panamanians hold full-time jobs.
The government, under pressure from international lenders to streamline its payroll, has fired 10,000 public employees, adding to the unemployment problem. While Panama's economy is projected to grow at 5 percent to 7 percent this year, the expansion is not translating as quickly into new jobs.
Joblessness and the discredited police force have fueled a crime wave in the cities that has forced shopkeepers and restaurateurs, department store managers and nightclub owners to hire shotgun-toting security guards.
Part of the problem, say many Panamanians, is the government.
In the parlor outside Endara's office hangs an enormous photograph of former president Arnulfo Arias. He was Endara's political mentor, and the current president is bound to mention this at least once in any conversation. Endara's party, the Arnulfistas, is named for Arias.
Arias was the last democratically elected president of Panama. He served for 11 days in 1968 before he was overthrown by Torrijos in a military coup. Before that he was elected president twice and deposed, in 1941 and 1951.
A sympathizer with the Nazis during World War II, Arias espoused policies that granted whites favorable treatment in a nation where, now, nearly 90 percent are black or of mixed racial origin.
Endara appears to be following the elitist policies of his mentor. In his cabinet, just one member, the secretary of education, is dark-skinned, a fact that is not lost on many working-class Panamanians.
Endara insists that race is not a factor in his government appointments. "I don't feel high class, and most of my government is not high class," he said.."
For many Panamanians, however, the Endara government represents a return to power of the rabi blancos - "white tails" - who were deposed by Torrijos in 1968. Although Endara received a large majority of the popular vote in the May 1989 elections aborted by Noriega, the president has plummeted in the polls since he was installed in office on the night of the U.S. invasion.
Many Panamanians are beginning to doubt that Endara's government will be able to complete its five-year term. Some say outright that his government might fall if Noriega returns for trial.