Shortly before sunrise, some 30 heavily armed security troops rode by truck into the posh residential neighborhood of Altos de Golf. Quickly, the Israeli- trained riot police fanned out in front of a white-walled house. Overhead, two Huey helicopter gunships hovered, soldiers and their machine guns peeking through the open doors. At 5:30 a.m., the first shots rang out.
Bullets flew from both sides of the white wall, turning the suburban street into a war zone. At 6:25, an officer picked up a megaphone and urged surrender. The message was directed at Colonel Roberto Diaz Herrera, Panama's former No. 2 military...