In less than three months the Panama Canal will no longer be under the control of the United States. The transfer will occur at noon on Dec. 31, 1999. Up to now the transition process to Panamanian control has gone quite well. There are, however, some contentious issues to which neither government has really paid much attention. At the same time, the positives have also been under- reported¬if even reported at all.

The transition process is to be "seamless." In other words, a ship transiting the Canal just before noon on Dec. 31, 1999. will notice no difference from a ship entering the Canal after noon. The binational board of Americas and Panamanians has worked well together. Improvements are under way which will make the Canal even more efficient and modern. For example, a satellite tracking system to increase the number of ships capable of transiting the Canal has been installed. New hydraulic equipment has been installed at the locks and new engines now pull the ships through each of the three sets of locks. There is little doubt that the Canal's management is prepared to handle the 14,000 ships crossing the Isthmus each year.

While the positives are clear, some negatives lurk ominously in the background. On a recent visit to the United States, Panamanian President Mireya Moscoso called on the United States to decontaminate areas used by our military in Panama. Unexploded munitions remain on firing ranges and the testing of agent orange in Panama has been criticized in the Panamanian press.

In addition, Colombian guerrillas continue to make use of Panamanian territory to hide from the Colombian armed forces. Hundreds of Panamanians have been driven from their homes through those incursions. Coupled with the removal of all US forces by the transfer date, the stability of Panama is at risk as well as the ability for the United States to operate surveillance and interdiction of drug movements from Colombia. Up to now, talks for a continued US military presence in Panama have failed.

Another potentially mischieveous event was the taking over of ports at each end of the Canal by the Chinese. They obtained the rights, according to the US Ambassador to Panama, in a highly "unorthodox" procedure. Some US officials fear an even larger Chinese involvement in Panama. Could the Chinese get involved in operation of the Canal?

The only way for that to happen would be to have Panama ask the Chinese to participate in the construction of a larger set of locks at the Canal. Enlarging the Canal has been on the table for a number of years. It may well come down to a question of whether the Clinton administration can focus long enough on Panama to have the United States assist in enlarging the Canal. In return, the United States should demand the right to position US military forces in Panama.

Such an arrangement would be good for the US and Panama. It would be a clear sign for world shipping that the Panama Canal will be a viable entity well into the next century.