Is there really an official definition of a historical figure? One that applies to people that are still alive? I'm honestly curious about this.
You seem to be more educated on this matter than I am, so I'm willing to give you the benefit of the doubt. If it is okay, I'm not sure I think it should be. All I know is that if I had an obvious, physically detailed and explicitly named representation in a work of fiction in which I had no part, I wouldn't be happy at all.
I'm going off of what I remember, so don't take me as an expert. Anyway, it's a murky ground, but "leader of a nation" is a pretty clear example. Presidents, current and past, are portrayed in media all of the time. If the Simpsons can have Bill Clinton appear in an episode made during his presidency and say, "Well, I'm a pretty lousy President," you know the boundaries are pretty loose. For a more current example, there's stuff like 2016: Obama's America, which directly depicts the current President and makes claims about him, his upbringing, and his ideology (basically all negative), and all without legal repercussion.
To follow what Hells Malice said, once you enter the public sphere of leadership, you're pretty much a public figure.
Also, you have to remember that while America has libel and slander laws, we're not big on really enforcing them. The libel/slander has to be especially flagrant for it to hold a chance in court.
I don't know the exact wording of the law here, so maybe there's some rule or specific piece of text I'm missing. All in all, though, I'm inclined to say that Noriega doesn't have any standing here. All in all, I'm sure he knows that, too. He's just going for the publicity at this point, and if that means hopping on the back of a two year old game, well, then that's what he's going to do.
IMHO, they should just settle for an apology and go with a fictional name. It's not like they've researched anything on the guy aside perhaps wikipedia, so it's not like it's a stance worth defending.
...Except that much of the game is set in Panama during his rule and the United States' invasion of Panama, where he was a prominent, significant figure. It'd be nonsensical for him to not be represented in some way, especially with a made up character placed alongside all of the other historical figures present in the series.