US SHOULD WORK WITH PANAMA ON CANAL ISSUES

US SHOULD WORK WITH PANAMA ON CANAL ISSUES

In fewer than 10 weeks the United States will honor its Panamanian treaty commitments by terminating its military presence and transferring the Panama Canal to the government of Panama.

With close to 70 percent of all cargo transiting the canal destined to or coming from the United States, the isthmus waterway does have a direct economic impact on the American economy.For example, some 20 percent of all bread-basket grain exports use the canal on the way to Russia and Asia. No other economically competitive routes are currently available for that grain.

In addition to grain, phosphates, fresh fruits and vegetables, automobiles, petroleum products and container cargo of all descriptions utilize the canal in the flow of world commerce. Clearly, what happens at the canal and in Panama is important to the United States and its economy.

The most significant event taking place at the canal today is the transition to Panamanian control. That process was stalled during the years Gen. Manuel Noriega was in power, but has been moving quite well since the dictator's ouster.

Competent Panamanian management is in place and modernization programs designed to increase the canal's capacity are well under way.

In fact, some $1 billion will have been spent between 1997 and 2002 to widen the Gaillaird Cut, install hydraulic equipment at the locks, purchase new engines to pull ships through the locks, and use a satellite tracking system to better space ships passing through the waterway.

Additionally, new sources of water have been identified, thus assuring that an increase in traffic can be accommodated in the future.

With all of those positives, what possibly could be any threat for the future? To begin with, we need only to look at the southern border of Panama and the incursions by Colombian guerrillas - action that has already displaced hundreds of Panamanian families.

Tied directly to Colombian drug traffic, the guerrilla activities pose a real concern to thoughtful Panamanians. The absence of a U.S. military presence after Dec. 31, 1999, does leave Panama more vulnerable.

Another concern relates to the current tensions between Panama and the United States over unexploded munitions on U.S. military firing ranges and experimentation with the defoliant known as Agent Orange during the Vietnam era. Mireya Moscoso, the president of Panama, has called for the United States to remove all contaminants. Negotiations have not been going well.

Finally, there is the issue of whether the canal should be enlarged and how to pay for it. With construction estimates ranging from $5 billion to $8 billion, the interest alone would be more than current canal revenue.

Panama will require outside financial assistance to complete any significant enlargement project. In the early 1990s, there was speculation that Japan, an important user of the canal, might be willing to assist Panama. With the declining Japanese economy, that possibility was erased.

Today, there is conjecture that China, which already is in possession of port facilities at each end of the canal through Hutchinson Whampoa, a Hong Kong company, might be positioning itself to play a role in Panama.

All of the speculation and conjecture would immediately evaporate if the United States would assert some leadership and work with Panama on solutions to some of those issues.

I believe that Panama would be more than willing to listen to a proposition that would include the United States providing financial support for the canal's enlargement in return for the stationing of military units to aid in drug surveillance and interdiction.

Easing trade barriers is another area where cooperation could be mutually beneficial.

In addition, the negotiations might consider creating an international presence on the Board of Directors of the Panamanian entity responsible for canal operations. Such a move would be legal under Panama's Constitution and would be a welcome sign of stability for world shipping interests.