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EO 12635Executive OrderReagan · R Quiet signal

Executive Order 12635

Prohibiting certain transactions with respect to Panama

This executive order freezes all Panamanian government assets in the U.S. and prohibits financial transfers to the Noriega/Solis regime, redirecting payments to a Federal Reserve account held for the Panamanian people. It was issued under the International Emergency Economic Powers Act to support the internationally recognized Delvalle government and pressure Noriega's de facto rule.

53 FR 12134
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Impact dates

  1. Regulations to be issued pursuant to this Order (no fixed deadline specified)

  2. Order takes effect at 4:00 p.m. EDT; asset freeze and payment prohibitions begin

Key directives

  • Block all property and interests in property of Government of Panama in U.S. jurisdiction (Section 1)
  • Prohibit direct/indirect payments or transfers to Noriega/Solis regime from U.S. or by U.S. persons in Panama (Section 2)
  • Redirect all owed payments to Federal Reserve Bank of New York account for benefit of Panamanian people (Section 2)
  • Exempt transactions authorized by State-certified recognized government representative (Section 3)
  • Exclude private Panamanian assets and non-regime remittances from sanctions (Section 4)
  • Delegate implementation authority to Treasury Secretary in consultation with State Secretary (Section 6)

Who is ordered

Timeline

Immediate

  • Asset freeze takes effect at 4:00 p.m. EDT April 8, 1988
  • All payments to Government of Panama redirected to Federal Reserve Bank of New York account
  • Prohibition on transfers to Noriega/Solis regime by U.S. persons and controlled entities

Near term (90d)

  • Treasury/State Department regulations to implement and clarify exemptions
  • Certification by Secretary of State of recognized Panamanian government representative for authorized transactions

Long term

  • Ongoing economic pressure campaign against Noriega regime
  • Potential evolution based on political situation in Panama and regulatory adjustments

Risks & tensions

  • Vague timing for implementing regulations creates compliance uncertainty for financial institutions
  • Dual government recognition problem—State Department certification process for Delvalle representative may face practical obstacles given Noriega's de facto control
  • Risk of overreach harming ordinary Panamanians despite Section 4 carveout; enforcement boundary between 'regime' and 'government' entities is fact-dependent
  • Potential conflict with international banking obligations and correspondent banking relationships
Executive Order 12635: Prohibiting certain transactions with respect to Panama · Executive Orders