CONTROLLING THE CANAL

December 1999
		Does handing over the Panama Canal pose national security dangers to the United States? William Ratliff of the Hoover Institution at Stanford University and John J. Tierney of The Institute of World Politics in Washington, D.C., respond to your questions.

Forum introduction Is the Panama Canal an American territory? Do Marxist movements in Latin America threaten the security of the canal? Can handing over the canal -- in a spirit of international peace -- increase security in the canal zone? What will the hand-over's economic impact be to Panama? How will the canal be run differently by Panama? Can the U.S. strengthen ties with Panama via free trade relations?   Online Special: The Panama Canal Dec. 13, 1999: An in-depth look at the Panama Canal and U.S. interests. Browse the NewsHour's coverage of Latin America.     The Hoover Institution The Institute of World Politics The Panama Canal Commission The U.S. State Department

Donald O. Cassidy of Premium, KY, asks: The U.S. is obligated to keep its treaty with Panama. Integrity is the best national defense and the U.S will gain more by honoring its word. Prestige and reputation are at stake. Turn over the canal. I spent 18 months there with the U.S. Army -- and saw how the territory in the Panamanian Canal Zone contrasted with impoverishment in the country. Please respond the to economic impact within Panama.   William Ratliff responds: I would say that a powerful and well-trained military with capable political and military leadership is the best national defense. Integrity and predictability are important also for cooperation with allies and respect from adversaries. The economic impact of the withdrawal is of two sorts: the immediate cost to Panamanians of the loss of U.S. dollars and the wide potential costs of having the facility under Panamanian rather than U.S. control. The former is measured in some hundreds of millions of dollars annually and includes both annual U.S. government payments to Panama and business for Panamanians generated by Americans stationed there. That is a significant amount because Panama's national earnings are only about $2.5 billion annually. The land and assorted facilities the U.S. handed over, and the training the U.S. provided for those who will now manage the canal, were a substantial bonus. The second question is whether Panamanians on their own can govern themselves and/or manage the canal according to their own needs and international expectations. Of course they are capable of running the canal, the question is whether the national culture will allow trained professionals, now and in the future, to work honestly and independently to keep the canal functioning as it has in the past. So far there are positive indicators, including the will of many Panamanians to prove they can do it, and negative indicators, mainly the record of Panamanian history. If Panama fails, the people of Panama and the world will pay a heavy price, directly and indirectly. Gen. Wilhelm warns that the most likely threats to the canal are not external but "internal and non-lethal," ranging from corruption to watershed mismanagement. As General Woerner notes, if mismanagement of the canal becomes excessive, the U.S. could interpret that as a threat to the permanent neutrality and operation of the canal and intervene.   John J. Tierney responds: Twenty-nine opinion polls over this decade have revealed a steady 70 to 75 percent of Panamanians in favor of a continued U.S. presence, with most of this due to the economic benefits. You mentioned "impoverishment" in Panama. By what standards and measurements? Certainly not regional. Panama has had a steady higher standard of living than most of its neighbors, due primarily to the Canal and the American presence. Its annual per capita income in 1995 ($2400) was among the highest in the developing world. By all major social indicators -- income, literacy, education, live births, life expectancy, birth rate, etc. -- Panama was closer to upper-class Latin American nations such as Argentina and Uruguay, than to its immediate neighbors. This is not to deny social and economic inequities and the obvious differences between Americans who lived in the Canal Zone and the general Panamanian population. But for many years the United States has been pumping and annual $300 million into the local economy. "Integrity is the best national defense" is a social abstraction, devoid of serious content and satisfying only the soul. Panama has been used to American dollars for most of this century. Now they are not going to get them, and this simple fact alone may spell great trouble for the years ahead.