In June of 1992, right before President George H.W. Bush’s scheduled visit, a group of Panamanian thugs ambushed an American Humvee north of Panama City, killing a U.S. soldier. Among the murderers, according to a U.S. indictment, was a man named Pedro Miguel González. Over the weekend, González became leader of the Panamanian National Assembly.

His election comes at a time when Panama’s center-left Democratic Revolutionary Party (PRD) is torn between its moderate wing and a more radical bloc associated with jailed dictator Manuel Noriega, who led Panama until his ouster by U.S. troops in 1989. According to Otto Reich, who served as a senior diplomat for Latin America under Presidents Ronald Reagan and George W. Bush, González “belongs to the Noriega faction.” Reich says the PRD radicals consider Panama’s current president, Martín Torrijos, also of the PRD, to be “too moderate” and “too pro-U.S.” If the name sounds familiar, that’s because Martín’s father was the late Omar Torrijos, Panama’s erstwhile military ruler.

For Panamanians, the timing of González’s elevation could not be worse. Congress is now mulling the U.S.-Panama free trade agreement, signed in June, which Panamanians broadly support. But Democratic House leaders are demanding that Panama first amend its domestic laws before the FTA is approved. Having González installed as Assembly leader will only harm the country’s image.

González, of course, maintains his innocence in the 1992 murder case. In 1997 a Panamanian court acquitted him. But as Reich points out, senior U.S. officials believe that the trial was “a sham.” The State Department is now aghast at his political ascendance.

In an official statement, Deputy Spokesman Tom Casey said that Foggy Bottom was “deeply disappointed” with the choice:

“González and others have been indicted in the United States on charges including first degree murder, conspiracy to murder, and attempted murder of a U.S. national in the killing of U.S. Army Sergeant Zak Hernandez-Laporte and the attempted murder of U.S. Army Sergeant Ronald T. Marshall in an assault near Chilibre on June 10, 1992. There is an outstanding arrest warrant for González. The United States wants those responsible for the murder of Sergeant Zak Hernandez-Laporte and the attempted murder of Sergeant Ronald Marshall to face justice.”

Panama is currently experiencing a tremendous economic boom. (“It looks like Dubai,” says Reich.) Thus far, Torrijos has pursued responsible policies to sustain the boom and has eschewed the radical line promoted by Venezuela’s Hugo Chávez. He has shown that Washington need not fear center-left Latin leaders, provided they uphold democracy and free markets. Even though corruption persists, as the Economist noted in July, “Mr. Torrijos’s government has a cleaner record than its predecessors,” and has also “been rather more effective than its predecessors.”

But the election of González is a big setback. “The U.S. sees this as very, very worrisome,” Reich says.