GO BACK A STEP on Panama and Gen. Noriega. How did things get so bad? More precisely, how did the Medellin drug cartel get its hooks into the country and the general? In 1983, Gen. Noriega, former chief of intelligence, which gave him his contacts in drug trafficking and enforcing alike, became head of the armed forces, which let him put the whole Panamanian system at the cartel's service. The system included, beyond armed forces protection, Panama's key location astride Latin drug routes to the golden American market, its first-class facilities for importing, storing and transshipping and its modern banking industry. Savor this last: Panama's currency is the dollar, and its 130 banks go essentially unpoliced. Panama is a drug cartel's dream that Gen. Noriega made come true.

But he self-evidently has had help from the military, the ports, the bureaucracy, the banks. In fact, in Panama the cartel has gone far to make a whole country its financing and marketing facility, just as in Colombia it has gone far to make a whole country its production and manufacturing facility and, in Honduras, has essentially set up a branch office.

To gauge the hold the cartel has on Gen. Noriega, it helps to review the tardy but impressive American pressures he has so far successfully survived: unanimous executive/congressional condemnation; loss of military and economic aid, sugar quota, development loans; drug indictments by two grand juries and continuing efforts to pry him out of office. He hangs on. Perhaps he is cocky. Perhaps he doubts the immunity and sanctuary dangled as bait for stepping down would keep the cartel from killing him.

And if he does not step down and let a necessarily arduous process of national cleanup begin? Then to the afflictions of corruption and drugs must be added the potential for an immense crisis over the Panama Canal. On one side is Panama, whose nationalism centers on its treaty-promised regaining of sovereignty over the waterway and whose armed forces have long done the planning for halting canal traffic. On the other is the United States with its thousands of troops stationed at American bases in the Canal Zone, with the DeConcini Reservation to the canal treaties ready as a trigger for unilateral intervention and with mutters about intervention beginning to become audible in Washington.

It is not a certainty that such a confrontation is coming. But unless the parties here and in Panama face up to both the stakes and the rising danger, it could happen.