As the end of this year gets closer, more people ask me questions about what will happen to the Panama Canal when it is transferred to Panama. While that is a significant question for American shipping interests, there are several other issues which can be of equal or greater importance to the United States.
First, with US military forces leaving Panama, a tremendous vacuum is being created. Beyond the economic concern to Panamanians over the loss of jobs -- some 5 percent of the local economy -- the withdrawal creates three other main challenges.
As the military leaves, Panama has to come to grips with the physical properties being turned over. The record to date has not been good. Many of the structures have become jungle vine infested ruins. Efforts to bring new businesses in to take over the buildings has not been as successful as the Panamanians had hoped. And the involvement of the Chinese in taking over decaying ports at each end of the canal have not ever been on the Clinton administration's radar scope. They have been asleep.
One of the most important roles played by the US military in Panama was drug interdiction and surveillance. With Colombia on the southern border of Panama, it was much easier to monitor Colombian drug lords from sophisticated bases in Panama than from Florida or Caribbean nations. And the warning signs of Colombian guerrilla activities are loud and clear on the border. Hundreds of Panamanians have been forced from their homes by Colombian guerrillas seeking sanctuary in Panama.
Finally, from the military viewpoint, there is the psychological question of how Panama is viewed by the rest of the world without US troops. Almost 80 percent of the Panamanians wanted the troops to remain. There are clear perceptions of stability, at the canal, with a US presence.
At the beginning of September a new president will assume office in Panama. Myerea Moscoso won a great personal election victory back in May. Her challenge will be in the Panamanian National Assembly, a body which currently looks like it will be controlled by the ultra nationalist PRD party, the political home of former dictator Manuel Noriega. As a result, President-elect Moscoso may have little room to seek the retention of some US military presence in Panama.
As for canal operations after Dec. 31, it appears that an old friend of mine from Panama, JJ Vallarino, may become chairman of Panama's Canal Authority. If that is the case, the canal will start the new millennium on a positive note. JJ is an effective and honest businessman who would provide no nonsense leadership to the Panamanian stewardship of the canal.
Whatever the future brings is up to Panama. The canal will be transferred in excellent physical condition with competent managers at all levels. As I have continually said, the key to the canal's future is whether the government of Panama will leave the competent management alone and prevent political interference in the canal's operation.