As U.S. Leaves the Panama Canal, China Moves In

0 Comments | Insight on the News, April 5, 1999 | by Robert Morton

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 but lost the White House House and, on Sept. 7, 1977, Jimmy Carter signed a treaty with Gen. Omar Torrijos that surrendered 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 U.S. taxpayers' money in a nation with no army or navy. Polls show most Panamanians support continued U.S. military presence. The installations fortify the economy, the native bureaucrats' competence at managing the canal continues to be 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 known as the People's Liberation Army, or PLA. If the United States does not consider the canal a strategic asset, the surviving communist superpower apparently does.

In a deal reported by the Washington Times on March 19, 1997, the Clintonesque government of Panama in effect sold the Chinese the rights to two prime, U.S.-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., or 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, Calif.

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 retired Adm. Thomas H. Moorer, former chairman of the Joint Chiefs of Staff, 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 year 2000 computer crisis. Just how important is the Panama Canal?

Speaking on his car phone after a busy post-impeachment day at the office, Republican Rep. Bob Barr of Georgia, 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.

Barr, who was a schoolboy in Panama and served in the CIA, traveled to Panama last January with retired Army Lt. Gen. Gordon Sumner, a former chairman of the Inter-American Defense Board. At the June 16, 1998, hearing, 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 Congress and especially by the White House.

"We don't have any strategic thinking," says 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 military intelligence officer, Col. Stanislav Lunev. "The Chinese intention to develop oceangoing capabilities for its navy is well-known," he wrote in Insight (see "China's Intelligence Machine," Nov. 17, 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 Bart, who noted that the Chinese also have 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 also were making their way into the coffers of the Democratic Party. And the Democratic National Committee chairman that year was Sen. Chris Dodd of Connecticut, who, along with Jimmy Carter's national security advisor, Robert Pastor, supports the turnover as passionately now as he did in 1977.