AS WE'VE seen in the case of both Panama and Iraq, today's high-tech warfare speeds up the resolution of conflict to the point where the fighting may end before many people can even locate the foes on a map. Since scrutiny is difficult in the heat of battle, the best we can hope for is to take stock after the fact.

In the case of Panama, as a General Accounting Office report released last week indicated, the struggle to cleanup the country's role as the Western Hemisphere's leading center for drug trafficking and money laundering is just beginning: Since the December 1989 invasion, Panama's flow of drugs and drug profits has increased dramatically.

At the outset of the Panama invasion, President Bush outlined four relatively clear goals for the action: "bring Gen. Manual Noriega to justice," "protect American lives," "protect the canal" and "restore democracy." One may argue that there were other goals as well, such as the desire to show force.

Of these goals, the most crucial was democratization, since it is the key to avoiding further invasions and protecting lives and the canal in the long run. But reforming Panama is also a long-term proposition. Today it remains a shaky democracy at best, a venal, class-ridden society with fundamental economic troubles. The 12,000 U.S. troops stationed there were probably among the few in the world who knew they would not have to serve in Iraq; Panama's Endara government would not last one day without them.

As for the first goal, bringing Noriega to justice, the general now sits in a cell at the Miami Corrections Center; his trial has been rescheduled to begin Sept. 3 and will last at least six months. Whatever the outcome, President Guillermo Endara's government has requested his extradition on other charges. At this point Noriega's walking free also seems unlikely. He faces two separate indictments in Miami and Tampa, and the prosecutorial resources arrayed against him include a half-dozen federal prosecutors and many others from U.S. Customs, the Drug Enforcement Administration (DEA), the IRS and the FBI. Deals have been cut with more than a dozen leading traffickers and launderers to testify against him -- as one FBI agent commented recently, "There's been a fire sale on plea bargains down here -- a lot of dealers will go home early."

Noriega's attorneys argue that all this has not really brought their client "to justice." They complain about his unusual arrest, the aggressive plea bargains, the taping of his prison phone calls and the freezing of his bank deposits for months. Anyone familiar with the brutal practices of Noriega's own criminal investigators, the DENI, has a hard time feeling sorry for him -- and despite the freeze, his Miami attorneys were actually paid quite well, getting at least $800,000 from the Panama National Bank at Noriega's direction as early as 1988.

But trying Noriega is turning out to be one of the most costly prosecutions in American history, and law enforcement agents are beginning to wonder whether the game is worth the candle. "The U.S. didn't intend to arrest him," says a senior DEA agent. "We weren't even informed until the invasion was on -- that's why there was all the sloppy investigative work down there."

"At most this guy provided money laundering and other services to the cartel," says another senior agent who is an expert on the Colombian cartel. "Compared with other traffickers or even other corrupt officials in Mexico and Pakistan, Noriega was pretty ordinary -- you're talking at most a couple tons of cocaine. Some guys move that every month."

Some officials' enthusiasm is further dimmed by the revelation of embarassing snafus -- such as the loss of Noriega's bank records while in the possession of a DEA agent in transit from Miami to Washington.

Worst of all, Panama is up to many of its same old trafficking tricks -- partly because of Noriega's overthrow. A law enforcement agent who worked on the attack on Mafia control of drugs in New York in the 1970s suggests that as a useful analogy -- by removing the Mafia's monopoly it simply opened the door to new entrants. In general, as the GAO report concluded, Panama's involvement in drug trafficking and money laundering have flourished since Noriega's departure. In particular:

In December 1990 one of drug trafficker Pablo Escobar's key lieutenants, Juan Nassar David of Baranquilla, "ripped off" his boss for 2,000 kilos and went into hiding. Where did he go? Right to Panama City, under the noses of the Judicial Police, whose chief until April, Leslie Loisa, used to be second in command of Noriega's DENI. Another leading trafficker, Juan Ramon Prado Bullago -- alias the Galician, or Sito Minanco -- one of the cartel's key people in Spain, has also frequented Panama recently.

Panama's money-laundering center has recovered briskly -- its several hundred lawyers and bankers are among the few groups in the economy that are unambigiously better off. As one lawyer now says, "Noriega was bad for business -- no one wanted to bring dollars here anymore." Fueled by returning domestic flight capital and drug money, bank deposits are now close to $21 billion, compared with their 1989 low of $8.5 billion. The demand for shell companies, used as "fronts" for dubious activities all over the world, fell from 1,500 a month in 1986 to only 800 a month in late 1989, but it is now back to more than 1,300 a month.

Major banks are also still taking in laundry. In late 1990 Deutsche Sudamerikanishe, a German bank, was processing up to $1 million a day of dubious deposits, and the Endara government froze several dozen of its accounts. In May 1990, another leading bank transferred a suspicious $200 million in one fell swoop to the Cayman Islands. At least a half dozen Panama banks are now being investigated by U.S. prosecutors for money laundering.

Since the fall of 1990, there have been several hundred-plus kilo "busts" in Panama. In 1990, about 5,000 kilos were seized by law enforcement, compared with only 2,000 kilos in 1989, and, as the GAO observed, in the first quarter of 1991 cocaine seizures in Panama tripled compared with the previous three months. A few optimists say this is because law enforcement has improved dramatically; most observers believe that the traffic has simply expanded.

Negotiations with the United States over the Mutual Legal Assistance Treaty -- which the United States already has with Switzerland, the Bahamas and the Cayman Islands -- and the "Shipreider Amendment", which would allow the U.S. Coast Guard to conduct joint patrols in Panama's waters, dragged on through all of 1990 and were only concluded last week. This accord will give U.S. drug agents increased access to bank records. However, as the GAO finds, in practice Panama's compliance with currency reporting requirements has been sporadic and the impact of the new treaty is not expected to be any greater than it has been in these other havens. Lawyers and bankers feared they would lose business if the treaty covered such bread-and-butter activities as insider trading and tax evasion, which are not crimes in Panama.

According to Panamanian press accounts and other sources, President Endara and several other leading officials have had ties to traffickers, money launderers and other denizens of the underground economy that are a little closer than arms-length.

For example, Carlos Eletas, a wealthy businessman who was one of the CIA's four main conduits of cash to the Endara campaign in 1989, was arrested in Macon, Ga., in April 1989 on charges of conspiring to import $300 million of cocaine. The indictment was later dismissed, but Eletas never denied that he traveled to Miami and Georgia with two men who later pleaded guilty to conspiring to import narcotics.

Even more embarrassing was the Interbanco case. This Panama City bank was founded in the 1970s by Guillermo Ronderos Duran, a Baranquilla financier with close ties to leading members of the Colombian mafia such as Rodriguez Gacha, Gilberto Rodriguez Orejuela, the Ochoa brothers and Fernandez Espina, a Spaniard at whose Madrid home one of the Ochoas and Orejuela were arrested in November 1984. In the early 1980s, Interbanco was known for handling a lot of cash -- for example, it opened a branch in David just to cater to Cesar Rodriquez, a drug trafficker murdered in 1986. In October 1989, shortly before he was hunted down in Colombia, Gacha transferred $12 million to the bank, $7 million of which was immediately "loaned" to Espina.

Of course, all Panama banks have some odd customers, but this one appears to have been virtually a wholly-owned subsidiary of the cartel. And who was its lawyer, director and board secretary from 1974 on? None other than Endara, Panama's new president.

Endara was in odd company -- other Interbanco board members included Jorge Ritter, Noriega's former foreign minister who has since decamped to Bogota; Rodolfo Chiari, Noriega's interior minister; and Rodolfo Endara, a cousin of the president. Endara was also a board member of Rondero's Pronto Pago S.A., a company that helped finance Noriega during the 1988-89 embargo by discounting his government's scrip for cash.

When this story was first broken in August 1990 by El Siglo, a local newspaper, it blocked an effort by a group led by Carlos Gonzales de la Lastra, the head of the anti-Noriega Civil Crusade, to buy the bank from Ronderos, with Endara as one of the six new investors. As one of these investors told me candidly, "We saw an opportunity to buy it cheap, and it would frankly have been useful to have a bank partly owned by the president." Endara reacted by declaring that he knew nothing about drug money, and that he had resigned from Interbanco's board -- three months earlier. Under pressure to bury the matter, Panama's Banking Commission closed the bank down in October 1990, and the unfortunate journalist who wrote the story was imprisoned by the government for a week.

This was not Endara's only odd customer -- he was also a lawyer for Manuel Contreras, the head of the DINA, Chile's secret police. Endara set up at least six companies and accounts that Contreras used to pay his foreign agents -- including those who were involved in the 1976 murder of Orlando Letelier in Washington. In April 1991, an indictment unsealed in Fort Lauderdale, Fla., disclosed that Endara and his law firm had also set up several companies that were used by two major drug dealers to launder an alleged $2.4 billion of drug profits.

Furthermore, Panama's attorney general, Rogelio Cruz, was also a legal adviser and board secretary for First Interamericas Bank (FIB), a Panama bank that was owned by Orejuela, the Cali drug lord. FIB's activities were so outrageous that Noreiga's government ordered it closed in 1985. In August 1986 Cruz personally saw to it that $7 million of FIB's deposits were returned to Orejuela in Colombia.

Finally, U.S. law enforcement agents say that as of June 1991, a senior official in Panama's Free Zone is still on the take from a major cocaine trafficker. The Free Zone, a duty-free area in the Canal Zone, has long been used as a cover for transshipment and money laundering, and U.S. Customs now has several Canal Zone investigations in progress that involve huge laundering operations. As one senior U.S. law enforcement official said, "The cartel is moving in, and it's business as usual."

So the general may have been brought to justice, but Panama remains on the loose.

James Henry's latest book is "Dirty Laundry," to be published later this year by ALfred A. Knopf.