Panama has recalled its ambassador from Havana after Cuba threatened to sever diplomatic ties over a possible pardon for jailed anti-Castro activists.
President Moscoso, flanked by Foreign Minister Harmodio Arias
Panamanian President Mireya Moscoso said Cuba's threat was intolerable.
Cuba has claimed Panama intended to pardon four men it accuses of planning to assassinate President Fidel Castro.
Panama says it has yet to decide the fate of the Cuban exiles it convicted this year of falsifying documents and threatening public security.
The men were arrested in Panama in November 2000, after the Cuban leader alleged there was a plot to kill him at a summit there.
Panamanian courts later ruled there was not enough evidence to accuse the men of attempted murder.
Explosives were found in a case, but the anti-Castro activists denied plotting to kill the Cuban leader.
The defendants said they were in Panama to help a Cuban general who had supposedly planned to seek political asylum.
The Cuban government also recently alleged the convicted men were planning to flee from their Panamanian prison and said it would hold the Moscoso government responsible if this happened.
Earlier this year, it criticised as too lenient the four-to-eight year sentences imposed on the men.
Cuba had tried to extradite four of the Cuban exiles, including the alleged ringleader, Luis Posada Carriles, who has been wanted by Havana for many years.
He is accused of a string of offences, including an attack on a Cuban passenger plane which crashed off the coast of Barbados in 1976.