What About the Canal?

At the stroke of noon on Dec. 31, 1999, the U.S. is scheduled to turn over the Panama Canal to Panama forever. When the treaty transferring the waterway was signed in 1977, it was widely denounced in both countries: many Panamanians complained about the protracted timetable, while many Americans, including Ronald Reagan, insisted that the canal should remain in U.S. hands. Today the treaty is again a source of controversy. An embattled General Manuel Antonio Noriega is trying to rally his countrymen by claiming that Washington wants to break the agreement. Meanwhile, some legislators on Capitol Hill are asking whether the U.S. shouldn't keep the canal if in 1999 Panama is still being run by thuggish dictators like Noriega.

Though much of the treaty is sloppily worded, it is unambiguous on one point: the U.S. has no legal option but to surrender the canal. In 1978, when the U.S. Senate approved the document, an amendment was passed that allows the U.S. to take action to ensure that the canal "remains open, neutral, secure and accessible." But what constitutes a threat to the waterway is not specified, and even if U.S. Marines were dispatched to protect the canal after 1999, it would still belong to Panama. The U.S., of course, could unilaterally abrogate the treaty, but at the cost of shredding Washington's reputation for trustworthiness around the world. Asks a foreign observer living in Panama: "What credibility would the U.S. ever have again anywhere in Latin America, or with the Soviets the next time they sit down to talk about missiles?"

In fact, the U.S. has already given up more than 60% of the Canal Area, as the former Canal Zone is called, since 1979. Panama now operates the railway that serves the facility, nearly all the canal watershed, and the ports of Balboa and Cristobal. U.S. officials in Panama give local workers high marks for their ability to handle complex engineering and piloting tasks. But under Noriega many high-level operational posts have been filled by inept cronies. The result has been mismanagement of the railway and poor road maintenance. Panama has imposed a dubious "lights and buoy" fee on ships approaching the canal, although the treaty prohibits such charges. At the rate of 1.25 cents a ton, the levy could raise as much as $2.5 million a year. But the penny-wise move could have pound-foolish results. In retaliation, Washington has threatened to revoke a fee exemption enjoyed by Panamanian ships at U.S. ports. The amount: 50 cents a ton.