Panama Canal: Changing of the Guard

By Carter, Tom | The World and I, October 1999 | Go to article overview

Panama Canal: Changing of the Guard

Carter, Tom, The World and I

Sometime in mid-December, in a ceremony that probably will occur on the back terrace of the elegant and imposing Panama Canal Commission building in Balboa Heights, the American flag will come down.

If past ceremonies are a guide, a white symbolic key will be passed and, for the first time, all of Panama's territory, including the 600- plus square miles of the Panama Canal Zone, will be held by Panamanians.

The ceremony was to have been held December 31, but foreign dignitaries were begging off, saying they had to be in their own countries for the millennium celebrations.

U.S. and Panamanian government offices alike display makeshift wall calendars counting the days. But as many questions as answers remain regarding the future of Panama and its namesake canal.

Almost everyone agrees the United States has been a good--even excellent--steward of the 50-mile-long canal and the 10-mile-wide strip of pristine rain forest slicing through the middle of the Panamanian isthmus. But the canal will be under Panamanian management in just months.

Panama is working overtime to assuage investor and international anxiety. The message to the world is: "Relax. Panama can run the canal, it will be properly maintained, the environment will be cared for, the democracy is stable, and foreign investments are safe."

"The Panama Canal is and always will be important for Panama and for the rest of humanity," Panamanian President Ernesto Perez Balladares said in a speech in Mexico in September.

"On midday December 31, 1999, the canal will be entirely Panamanian. The military bases on our territory will only be a memory. The canal will be neutral, and ... Panama will fulfill its historical responsibility."


But Panama's democracy, while genuine and vibrant, is barely 10 years old. There are concerns, not entirely unfounded, that some brand of personality cult or military dictatorship could reemerge.

Polls indicate that up to 70 percent of Panamanians would like to see some sort of continued U.S. presence.

"Panama is not yet capable of handling the canal," said Dalinda Hernandez, a housewife shopping in the cereal aisle of Reys grocery store. "It is my children's future, and I'm not sure 'the transfer' is to the benefit of Panama. The way the United States has handled it was the best way."

Even some politicians publicly agree, despite a risk of being labeled antinationalist.

"Can we administer and run the canal? Absolutely," said Mayin Correa, the popular mayor of Panama City and vice presidential candidate in the elections earlier this year. "Are we capable of managing the millions of dollars' worth of assets being turned over to Panama? No. There is too much corruption."

Yet Panamanian and U.S. officials both describe the transition from U.S. to Panamanian ownership as "seamless."

For 10 years, the canal has been run by Panamanians. Today, about 93 percent of the 9,000 canal employees are Panamanian, including the top administrators.

"There is no lack of technical or managerial expertise to operate and maintain the canal when Panama takes over," Joseph Cornelison, deputy administrator of the Panama Canal, told businessmen in a recent speech in Washington.

While the canal has been a U.S. government-owned, not-for-profit utility, the Panamanians will run it as a government-owned business, free to borrow capital for expansion and raise tolls as warranted.

There will be some downsizing, and there is considerable concern about the impact that will have on Panama's workforce, which already suffers from an unemployment rate of 13 percent.

Panama is expected to lose about $330 million a year that U.S. military personnel would have spent on maids, gardeners, and drivers and in other areas of the Panamanian economy--totaling an estimated 16,000 jobs.

All the Panamanian employees of the military commissaries, for example, soon will be looking for work. …

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