BY GLENN GARVIN
The Clinton administration has quietly decided to throw in $160
million cash when
it turns over the Panama Canal to the Panamanian government at the end of the
year, a decision that has led some alarmed political leaders in both countries to
predict a wild spending spree.
The money is earmarked for long-term improvements to the canal,
officials fear that Panamanian President Mireya Moscoso's government -- short on
cash because its populist economic policies have made international loans hard
to come by -- may divert the money to social programs.
``If that money is handed over, unencumbered, to the Panamanian
will represent a tremendous temptation,'' said Ricardo Arias Calderon, head of
Panama's Christian Democratic Party.
The decision to give the Panamanians the money, which is held
in a U.S.
Treasury account intended to fund long-term improvements to the canal, has
stirred anger on Capitol Hill, where legislators see it as not only a giveaway but a
violation of congressional authority over spending.
``Look, it's one thing if I buy a used car, to give me the gas
that's in the tank,''
said a staff member who works for Sen. Jesse Helms, R-N.C. ``It's another thing
altogether to let me siphon from the tank of the previous owner's car.''
Helms hasn't even been able to make the Clinton administration
admit it plans to
hand over the money, staff members said. An Aug. 2 letter from the senator to
Defense Secretary William Cohen, asking for a list of ``properties, equipment or
archives which will be turned over to Panama,'' has gone unanswered.
Nor was it easy for The Herald to find administration officials
willing to discuss the
money. Phone calls to the office of Army Secretary Louis Caldera, the senior
American official on the Panama Canal Commission, were not returned. Nor were
calls to the National Security Council, the organization that congressional staffers
say is behind the decision to give Panama the money.
But an administration official familiar with U.S. law on the Panama
asked that his name not be used, confirmed to The Herald that the $160 million
account will be part of the assets delivered to Panama on Dec. 31. The official
called the decision ``both legally defensible and smart policy.''
``The important thing is that this not be misunderstood as some
generosity by the United States,'' the official said. ``There are no U.S. taxpayer
funds involved in this at all.''
The $160 million came from a toll increase levied by the Panama
Commission in 1997 to pay for modernization and improvements to the canal,
including widening some narrow portions to permit two-way traffic.
``The idea was to show that the United States is aggressively
improving the canal,'' the official said, ``so that at end of the day, should Panama
have problems, the Panamanians could not come back and say the U.S. just sat
on its thumbs and let the canal go to pieces.''
Some of the improvements are already under way, while others have
yet to begin,
the official said. By giving Panama the money to underwrite the projects, he
added, ``we are locking in an aggressive maintenance and modernization
But, the official admitted, once the Panamanians have the money,
they can use it
for anything they want. Nonetheless, he predicted it would be difficult for them to
spend it on anything besides canal improvements without triggering a revolt by
``The toll increase wasn't popular, because toll increases never
are,'' the official
said. The Panamanian government ``knows the reaction from the shippers will be
strong if they try to use the money for anything but the canal. . . . It will be in their
self-interest to do what they basically said they were going to do.''
The Panamanians themselves -- including political allies of Moscoso,
president -- are not so sanguine. Moscoso's plans to raise protectionist
agricultural tariffs and end privatizations have made it nearly impossible for the
Panamanian government to borrow money from international financial institutions
like the World Bank, they say, leaving the president with little cash to pursue the
extensive social programs she has promised.
The government's financial problems are so acute that Moscoso
proposed changes in Panamanian law to permit her to dip into the capital of a
$1.3 billion fund endowed by previous privatizations, instead of spending just the
interest it generates.
``They have no funds for regular investments that the government
has to make in
education and health and roads and the like,'' said Arias Calderon, whose
Christian Democrats are part of Moscoso's ruling coalition in Congress. ``Under
these circumstances, if the government gets its hands on any money, it will
probably be spent on social programs.''
Copyright 1999 Miami Herald