Panama says no to U.S. military base

PANAMA CITY (Reuters) - Panama has ruled out hosting a U.S. military base to replace one in Ecuador which is being reclaimed by the Quito government, a senior Panamanian official said on Friday.

Panama -- along with Peru and Colombia -- had been tipped as a possible site to replace the Manta air base in western Ecuador, a key strategic asset in Washington's campaign to stop Latin American cocaine from reaching the United States.

Ecuadorean President Rafael Correa, a close ally of Venezuela's Hugo Chavez, has vowed to cut off his arm before allowing Washington to retain the base when the current lease runs out in 2009.

The U.S. military has said it would like to find another site to retain counter-narcotics capabilities.

Panama's Justice Minister Daniel Delgado said his country's often turbulent history with the United States made the establishment of new bases impossible.

"There will be neither bases nor installations (in Panama)," Delgado told Reuters.

Although Panama has close ties with the United States, the Central American country has enjoyed full sovereignty only since Washington handed over control of the U.S.-built Panama Canal and its surrounding land and military bases at the end of 1999.

Panama's strategic location and the U.S. military infrastructure left after the canal handover means it would be an attractive replacement for Manta, military analysts say.

U.S. anti-drug officials estimate that 80 percent of the cocaine that reaches the United States from South America passes through Panama's Atlantic and Pacific waters.

Panama, which disbanded its army after the fall of military dictator Manuel Noriega in 1989, recently announced it would reform its security services to boost anti-drug efforts and is looking for U.S. funding to combat smugglers.

(Reporting by Andrew Beatty; Editing by John O'Callaghan)