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Who needs the Panama Canal?

by Robert Morton
Special to World

In 1976, Ronald Reagan mobilized his conservative base and almost defeated Gerald Ford for the Republican presidential nomination by campaigning to retain U.S. sovereignty over the Panama Canal. Ford won the nomination, lost the White House and on Sept. 7, 1977, Jimmy Carter signed a treaty with Gen. Omar Torrijos surrendering the canal to Panama on Dec. 31 of this year.

The United States gained the goodwill of a leftist dictator and lost a prime geopolitical asset – one built and maintained with tens of billions of taxpayers' money in a nation with no army or navy. Polls show most Panamanians support continued American military presence. The installations fortify the economy, the native bureaucrats' competence at managing the canal is suspect, and the local police are no match for the narco-terrorists operating with impunity in neighboring Colombia where schoolchildren are taught that Panama is really Colombia. But does anyone really care about the Panama Canal?

No one, it would seem, except Communist China's Military Industrial Complex, otherwise know as the People's Liberation Army (PLA). If the United States does not consider the canal a strategic asset, the surviving communist superpower apparently does.

In a deal reported by this newspaper on March 19, 1997, the Clintonesque government of Panama in effect sold the Chinese rights to two prime, American-built port facilities which flank the canal zone both to the east and the west. The 50-year contract awarded Balboa, on the Pacific side, and Cristobal, on the Atlantic side, to a giant Hong Kong shipping firm, Hutchison Whampoa, Ltd. By any analysis this company, headed by Li Kashing is an interesting operation:

  • Hutchison has worked closely with the China Ocean Shipping Co. (COSCO) on shipping deals in Asia even before Hong Kong reverted to Beijing's control in 1997. COSCO, you may remember, is the PLA-controlled company that almost succeeded in gaining control of the abandoned naval station at Long Beach California.
  • Li Kashing has served on the board of directors of China International Trust and Investment Corp., a PLA-affiliated giant run by Wang Jun whose name may ring a bell. Yes, the very same Wang Jun enjoyed coffee at the White House in exchange for a modest donation to the Clinton-Gore 1996 slush fund.

As Adm. Thomas H. Moorer, USN (Ret.) testified before the Senate Foreign Relations Committee on June 16, 1998, "My specific concern is that this company is controlled by the Communist Chinese. And they have virtually accomplished, without a single shot being fired, a stronghold on the Panama Canal, something which took our country so many years to accomplish."

Not to worry, the spin goes. This is 1999. The Soviet Union is dead, Russia is bankrupt, the really big ships can't fit in the canal anyway, and we could always seize control in wartime.

As the clock ticks down to Dec. 31, 1999, there is no anxiety like that engendered by the Y2K computer crisis. Just how important is the Panama Canal?

Speaking on his car phone after a busy post-impeachment day at the office, U.S. Rep. Bob Barr, R-Ga., was emphatic.

"I think the geopolitical significance of the Panama Canal in 1999 is the same as it has been for the past 85 years – critical." The new Chinese presence there only adds to its significance, he said.

Mr. Barr who was a schoolboy in Panama and served in the CIA, traveled to Panama last January with Lt. Gen. Gordon Sumner, (U.S. Army, Ret.) a former chairman of the Inter-American Defense Board. At the June 16 hearing, Mr. Barr testified on the importance of a continuing U.S. presence to offset the narco-terrorist threat in a region for which Panama serves as a transportation and geographic nexus. He laments the lack of interest in the issue by the U.S. congress and especially by the White House.

"We don't have any strategic thinking," says Gen. Sumner. "There is no long-term vision. Whatever you think of Henry Kissinger, he had a strategic vision."

The Chinese certainly have "strategic vision," according to former Soviet GRU officer, Col. Stanislav Lunev. "The Chinese intention to develop ocean-going capabilities for its navy is well-known," he wrote in an article for Insight magazine in November 1997. "This is the reason that Chinese entrepreneurs are actively in the market for abandoned port facilities in strategic locations."

"They take a long view of history," says Mr. Barr who noted that the Chinese have also been quietly increasing their presence in Cuba.

Shortly after President Clinton announced the departure of the U.S. military from Panama, the Bank of China extended a 15-year, $120 million loan to Panama at a 3 percent interest rate. Nice.

This was during the 1996 U.S. presidential campaign, incidentally, when boatloads of Chinese money were also making their way into the coffers of the Democratic Party. And the DNC chairman that year was Connecticut Sen. Chris Dodd who along with Jimmy Carter's National Security Advisor, Robert Pastor, supports the turnover as passionately now as they did in 1977.

So when several American companies including Bechtel International tendered bids in the neighborhood of $2 million for leases on the strategic ports at Balboa and Cristobal, Panamanian President Ernesto "Toro" Balladares secretly changed the rules of the bidding process and accepted Hutchison Whampoa offer for $22.2 million a year.

Well, if the White House was for sale, why not the Panama Canal?

The fine print in the China-Panama deal should outrage any competent commander in chief.

Panama's Law No. 5 was a secret provision, passed by the legislative assembly on Jan. 16, 1997 that may have violated both the 1977 Panama Canal treaties and the Panamanian constitution. Among other things Law No. 5 provided Hutchison Whampoa:

  • "First option" to take over the U.S. Rodman naval station;
  • "Rights" to operate piloting and tug boat services for the canal and private roads near the two ports;
  • Authority in the words of Adm. Moorer's testimony "to deny ships access to the ports and entrances of the canal if they are deemed to be interfering with Hutchison's business – in direct violation of the 1977 Panama Canal Treaty which guarantees expeditious passage for the United States Navy."

"What the hell are we doing?" asks former Reagan administration official Martin Anderson, now at the Hoover Institution. Good question. Another good question is "what are the Chinese doing?" But that is none of our business, Janet Reno has ruled.

Robert Morton is managing editor of the National Weekly Edition of The Washington Times in which this column was first published in the March 1-8 edition. He is also a media fellow at the Hoover Institution.