THROUGHOUT THE 1988 presidential campaign, Michael Dukakis has been attempting to link George Bush to Panama's Gen. Manuel Antonio Noriega -- a longtime CIA contact who has been indicted in the United States on drug-trafficking charges. To Dukakis, the Panamanian general is a study in Reagan administration hypocrisy: While White House spokesmen deliver a barrage of anti-drug messages, other agencies of the government are doing business with drug dealers.

But the problem is broader and more difficult than Dukakis suggests. The fact is that Noriega is merely the latest of a series of reprehensible characters who have used -- and have been used by -- the U.S. government in the netherworlds of intelligence and drug enforcement.

A close look at a series of supposedly friendly countries -- Mexico, Panama, Colombia, Peru, Bolivia, Chile, the Bahamas, Thailand, Pakistan -- should make Americans face the lies, delusions and wishful thinking that have characterized two decades of our war on drugs.

The reality, as one veteran Drug Enforcement Administration agent puts it, is that "there are a lot of Noriegas out there." They may not be as notorious or as powerful as the Panamanian dictator, but they can sell what the narcotraficantes want: sanctuary. They regularly countermand the orders of presidents, pervert judicial systems and sabotage diplomatic accords.

Not long ago, DEA chief Jack Lawn received a cable from an agent in Asia. "Police corruption is endemic," the agent wrote. "Money buys anything . . . . {Officials are involved in} the transportation of large shipments of narcotics. {They} warn the traffickers prior to {police} raids. The most common practice among police, prosecutors and judges is the buy-out . . . . Reports are changed, evidence tampered with." Lawn read the cable at a meeting of DEA officials stationed around the world. "Raise your hand if this describes your area," he said. Every hand in the room went up.

The extent of U.S. involvement with nasty characters in "friendly" countries was highlighted three years ago by the killing of Kiki Camarena, a DEA agent in Mexico. At the time of his brutal murder in 1985, Camarena was investigating widespread collusion between Mexican drug traffickers and Mexican officials. Exactly what happened to Camarena remains a mystery, but the available evidence suggests that a number of Mexican policemen participated in his kidnapping, torture and interrogation and that other Mexican officials destroyed evidence, helped drug kingpins flee and intimidated witnesses. President Reagan, however, has refused to consider sanctions against Mexico. His inaction has convinced many U.S. law officers that the administration places less value on the life of a front-line agent than on preserving the political status quo.

The ugly secrets that boiled to the surface after Camarena's death have been unsettling for American policymakers. They raise disturbing questions about the value of a policy that relies on untrustworthy allies. Other voices are asking the questions Camarena asked, not only about the extent of official complicity in drug trafficking in Mexico but about high-level corruption -- and U.S. knowledge of that corruption -- in other supposedly friendly Third World governments.

Since the 1920s, it has been an article of faith within the American government that the best place to attack the drug problem is outside U.S. borders. "Going to the source" has been advertised as a clean, rational, cost-effective alternative to rigorous border controls, massive arrests of drug users or wholesale arrests of drug dealers.

The flaw in this strategy is that most marijuana, coca and opium comes from the Third World, where traffickers find it easy to exploit political chaos, corruption and poverty. In too many cases, American officials -- from the DEA, the Customs Service, the CIA, the State Department's Office of International Narcotics Matters, and the Agency for International Development -- have to pin their hopes on officials who take bribes, torture prisoners, terrorize innocent people or use information gained from contacts with the United States to extort criminal organizations.

The American penchant for pushing the drug problem abroad, onto weaker shoulders, explains why presidents from Richard Nixon to Ronald Reagan have made speeches, launched task forces, appointed commissions, convened conferences, signed treaties and dispensed reports -- yet dead bodies litter the landscape in 1988, and the drug warlords are stronger than ever. Measures to reduce demand for drugs at home, such as education and treatment, have been neglected. Meanwhile, Congress, the State Department and the DEA have tried to cajole, pay or pressure foreign leaders into dispatching armies of braceros into the wilderness to eradicate the only source of income for hundreds of thousands of peasants. Reagan and his national-security officials have singled out Nicaragua, Cuba, Iran, Soviet-occuped Afghanistan and Syria as facilitators of the drug trade. Heroin, cocaine and marijuana are indeed smuggled through those nations, but professional lawmen say that the true hotbeds of drug-trafficking are the non-communist Latin and Asian nations.

As DEA's Jack Lawn once put it, "The problem isn't our enemies. It's our friends." Among them:

Mexico. Three years after the Camarena case cast a spotlight on Mexican corruption, DEA agents have documented incidents in which police commanders and state officials in league with traffickers have ordered the torture and dismemberment of rivals and suspected informers. The agents say that police officers have yanked off their victims' fingers one by one, have nearly drowned victims by holding their heads in filthy toilet bowls and have injected chili-oil-laced mineral water up their noses. A number of victims, including at least one DEA informant, have been found with ice-pick holes in their bodies, evidence of the torture called "bone-tickling." Sometimes, body parts have been sawed off.

"Corruption has penetrated all levels of the Mexican government," according to one senior DEA official. "It's lateral, it's horizontal, and it's total."

Colombia. Colombian officials at the highest level have proved dedicated and able allies of U.S. agents. But the traffickers have managed to buy off or terrify officials in crucial positions. A few months ago, according to DEA agents, Colombian military officials discovered that a colonel in charge of military intelligence about the Medellin cartel was tipping off Medellin leaders to impending army and police raids. The colonel was fired -- but not prosecuted.

Panama. The Noriega story illustrates a favorite DEA maxim: A pact with the devil is better than no pact at all. Noriega's unsavory reputation has been well-known to U.S. law enforcement agents since the early 1970s. When it became clear that Noriega was in power to stay after the death of Omar Torrijos, DEA officials decided to cultivate him, just as the CIA had done when Noriega was chief of Panamanian intelligence. Noriega obliged his DEA contacts by summarily deporting a number of accused drug traffickers to the United States, allowing DEA agents to operate undercover in Panama, permitting U.S. authorities to board thousands of Panamanian-flag vessels and passing along some useful tips. Possibly, DEA agents acknowledge, some of Noriega's actions were motivated by the desire to hurt traffickers who were competing with those he protected.

Chile. Few of DEA's allies are priests and social workers. Frequently they are drug traffickers themselves, and sometimes they are simply repressive leaders busting traffickers for their own reasons. In the early 1970s, Chilean dictator Gen. Augusto Pinochet was a close friend of the United States. At the time, traffickers were shipping French Connection heroin and Latin cocaine through Chile. After Pinochet's forces ousted and killed Marxist President Salvador Allende in September 1973, DEA agent George Frangullie warned Pinochet that the communists might use heroin money to unseat him; he advised Pinochet to treat the traffickers as a national-security threat and deport them without going through extradition proceedings. Pinochet bought the idea. The Chilean police rounded up 21 men indicted in New York for heroin trafficking, marched them into aircraft chartered by DEA and sent them on their way. The defendants argued that they were kidnapped and had been given no due process at all; the courts upheld the legality of Frangullie's methods.

Haiti. DEA agents based in Haiti are currently attempting to counter Colombian traffickers who are pouring into the country to take advantage of the prevailing poverty and the political anarchy that has prevailed in Haiti all year. The disorder has affected the U.S. anti-drug program there as well. When Gen. Henri Namphy overthrew Haiti's fledgling civilian government in June, the State Department cut off all non-humanitarian assistance to the regime. When Namphy's government promised to cooperate in anti-drug efforts, DEA officials urged State not to apply the aid cutoff to anti-narcotics funds. The fact is, the Haitian drug-enforcement squad has two jeeps and five radios, all donated by the United States, and desperately needs a communications system and helicopters to move to the provinces, which are becoming Colombian trafficking strongholds. But State Department officials dare not supply the equipment because it could be used against Haitian citizens or even to run drugs.

Namphy himself was recently ousted by Gen. Prosper Avril, who is saying what the U.S. wants to hear on drug enforcement. But whether Avril will go further to punish corruption and counter the Colombian drug pipeline through Haiti remains an open question. "We have to play the hand that's dealt," says Tom Cash, DEA agent in charge of Miami and the Caribbean.

Though "going to the source" has consistently failed to achieve results, that hasn't stopped Congress from trying to find new ways to punish nations that resist U.S. drug-enforcement efforts. Florida Democratic Rep. Larry Smith argues: "You can't have a mixed message, tell people just stay no to drugs at home and then, on the diplomatic front, turn a blind eye to corruption."

To pressure foreign nations, Smith and other legislators wrote a clause into the 1986 omnibus drug bill that tied U.S. aid, loans and trade preferences to cooperation on the drug issue. It required the president to certify that recipients of aid were "fully cooperative" on drug control. A "decertified" nation would lose half its U.S. economic and military assistance and risk the loss of favorable treatment on imports to the United States. A separate clause aimed at Mexico threatened to withdraw U.S. support for International Development Bank loans.

But the State Department has no intention of using the certification process against friendly governments. "We've cut off aid to Bolivia twice in the decade," said Ann Wrobleski, assistant secretary of state for international narcotics matters. "During that time, the amount of acreage in Bolivia dedicated to coca increased substantially. Did we do the right thing? Yes, we did. Did it have an impact on the drug problem? It probably made it worse."

Some members of Congress attempted to decertify the Bahamas after a number of admitted traffickers claimed that they bribed Prime Minister Lynden Pindling and some of his ministers in the early 1980s. DEA and other executive branch agencies successfully opposed those efforts because Pindling has given Customs and DEA planes access to Bahamian airspace, has permitted a Customs radar balloon to be deployed on Grand Bahama Island and has committed Bahamaian police to participate in a joint U.S.-Bahamian interdiction project.

The decertification battle for Mexico has turned in part on that country's drug-eradication program, in which Mexican government pilots search out and spray herbicides on opium-poppy and marijuana fields . DEA agents monitoring the program, which is funded largely by the United States, have reported that the Mexican pilots deliberately kept them from seeing areas where the big traffickers based their marijuana and opium farms. The Government Accounting Office buttressed these reports.

Since Camarena's death, the U.S. government has given about $60 million in U.S. foreign aid to service a fleet of 80 eradication aircraft. No one seems to know where the money went, but DEA officials say that many of the aircraft are not airworthy. DEA chief Lawn is considering pulling his men out of the program, Operation Vanguard, because of concerns for their safety.

Earlier this year, U.S. Customs Commissioner William von Raab wanted to decertify Mexico. Lawn agreed. State's Wrobleski urged a compromise: a second-class "national security" certification for Mexico. Attorney General Edwin Meese III, supposedly an advocate of tough law enforcement, balked. He professed complete trust in his Mexican counterpart, Attorney General Sergio Garcia Ramirez, and insisted on telling Congress that Mexico was "cooperating fully." Wrobleski yielded, knowing that Reagan would take the attorney general's side in an appeal, but she insisted that the White House accompany the 1988 certification message with a caveat, a sort of unofficial dissent, noting the State Department's view that "Mexico's effort has not kept pace with the increased flow of drugs and is below the level of efficiency and effect of which it is capable."

The Senate ended up agreeing with von Raab and Lawn. Sen. Pete Wilson (R-Calif.) introduced a resolution to disapprove Mexico's certification. "Diplomatic niceties be damned. Let's say it's not good enough, because it's not," he said. To the surprise of nearly everyone, including Wilson, the Senate voted to reject the certification of Mexico by 63 to 27.

Then the pressure campaign began, and decertification was doomed. The Mexican government lobbied Congress and the press. The Congressional Border Caucus strongly opposed decertification because southwestern commercial interests would be hurt if the action led to trade sanctions and the denial of loans to Mexico. Speaker Jim Wright (D-Tex.) saw to it that decertification resolutions aimed at Mexico and the Bahamas never got to the House floor.

The question of Panama ended much differently, but the result had less to do with drug enforcement than with hemispheric politics. For years, the American government's approach to the problem of corruption in Panama was to ignore it in public and equivocate in private. The Reagan administration, anxious to bless the most superficial forms of "democracy" in Latin America, decided to make the best of the situation there.

In 1988, Assistant Secretary of State Elliott Abrams would insist that the administration had not ignored Noriega's excesses. He assured a House committee that the president's national-security adviser, Adm. John Poindexter, had gone to Panama in December 1985 "to tell Noriega that we could not tolerate what we believed to be the growing, increasing pattern of {Panamanian Defense Forces} corruption, and it had to change." Abrams acknowledged, however, that senior American officials had given Noriega mixed messages or none at all.

State Department officials had arranged, for example, for Noriega to be invited to Washington, where he would receive a stern lecture on corruption from CIA Director William Casey. Abrams would later say that he felt that Casey was the best person to intimidate Noriega into cleaning up his act. Casey did not play, according to Abrams and other officials. He had a friendly chat with Noriega and handed him over to a subordinate, who treated the little general to a pleasant lunch. As those in Abrams' camp told the story, Noriega returned to Panama full of warm feelings about his relationship with the CIA.

Congress went into an uproar when a June 12, 1986 story by Seymour Hersh in The New York Times said that U.S. intelligence agencies had evidence that Noriega was "extensively involved" in drug trafficking, money laundering, selling arms to M-19 and other left-wing guerrillas and trading U.S. intelligence sources and methods to Cuba." The Reagan administration tried to downplay the issue and plug leaks. "We do not consider this kind of public speculation something that would be helpful for us to engage in, considering our broad interests in Panama," James Michel, Abrams's deputy assistant secretary, told a House committee.

What Vice President Bush knew about Noriega and when he knew it eventually became a campaign issue. Bush insisted this year that he did not know that Noriega was supposedly involved in drug trafficking until last Feb. 5 -- the day the general was indicted. Was it possible that Bush, chairman of the administration's South Florida drug task force, had been kept in the dark about the Poindexter mission and the concerns that prompted it? If Bush had been engaged and alert as CIA director in the mid-1970s, why didn't he know that questions had been raised about Noriega's complicity in the drug trade as early as 1972? (After his initial denials were assailed as incredible, Bush "clarified" his stance, claiming he had had general knowledge of the allegations against Noriega but had been unaware of specifics.)

As late as last year, administration officials seemed eager to make excuses for Noriega. The administration certified to Congress that Panama had been "fully cooperative" on drug issues. Associate Attorney General Steven Trott called Panama's performance "superb."

Within a year, the administration had reversed its position and put Panama at the top of the decertification list, mainly because Noriega's status had changed from asset to liability. "We don't know anything today about Tony Noriega that we didn't know a year ago," one senior State Department official acknowledged in March. "What's changed is politics and Panama, not Tony Noriega."

Bush has claimed that the Reagan administration saw to it that Noriega was prosecuted for his alleged crimes. But in fact, federal prosecutors and agents in Miami and Tampa, acting independently, led the investigations that resulted in Noriega's indictment on Feb. 4. White House and State Department officials were briefed on the developing cases but did not instigate them.

The administration eventually mobilized a campaign to force Noriega from office. Belated and heavy-handed, it was a humiliating failure for the Reagan White House. Republican Sen. Alfonse D'Amato of New York summed up the administration's botched policy with a phrase that could apply to the nation's drug war: "What you have here is an administration that has set its hair on fire and is trying to put it out with a hammer."

Elaine Shannon is a reporter in the Washington bureau of Time magazine. This article is adapted from her new book "Desperados," published by Viking.