October 6, 1999
Panama rejects fears of Chinese-dominated canal

                  PANAMA CITY (Reuters) -- The Panama Canal administration on
                  Wednesday dismissed the fears of some U.S. conservatives that the Panama
                  Canal will fall under Chinese influence when it reverts to Panama at year's

                  "Concerns about the Chinese taking control of the canal are completely
                  unfounded and based on a misunderstanding," Joseph Cornelison, deputy
                  administrator of the Panama Canal Commission (PCC), told Reuters.

                  Cornelison's comments came in response to the delivery of a petition with
                  250,000 signatures to Congress on Tuesday that called on U.S. President
                  Bill Clinton to revoke a 1977 treaty ceding U.S. control of the Panama
                  Canal to Panama on Dec. 31.

                  Representative Bob Barr, a Republican from Georgia who presented the
                  appeal to Congress, repeated concerns expressed by Senate Majority
                  Leader Trent Lott, a Mississippi Republican, in a letter to the U.S. defence
                  secretary in August that canal security was "threatened" by Chinese

                  In 1997, the Hong Kong-based shipping company Hutchison Whampoa,
                  which controls 10 percent of global maritime container traffic, acquired port
                  operations at Balboa and Cristobal, on the Pacific and Atlantic approaches
                  to the Panama Canal.

                  Sen. Lott has argued that the proximity of Hutchison's operations to the
                  canal's entrance would place U.S. naval ships "at the mercy of
                  Chinese-controlled pilots."

                  But Cornelison disputed this.

                  "While the ports are near the entrance to the canal, they are not the entrance
                  of the canal," he said. "The PCC controls what ships go into the ports and
                  not the other way round. Ships cannot enter canal waters until the PCC
                  assigns a pilot."

                  The PCC, which operates as an agency of the U.S. federal government, will
                  be replaced by the Panama Canal Authority (PCA) after the handover. The
                  PCA will be run as a nonpolitical state entity, sheltered by the Panamanian Constitution.

                  Hutchison Whampoa issued a communique in August denying that there
                  were any mainland Chinese interests in the company's Panamanian
                  subsidiary, the Panama Ports Company, or that company chairman Li
                  Ka-shing had "any connection whatsoever with the People's Liberation
                  Army," as Lott maintained.

                  Last week, Pentagon officials dismissed concerns for the security of the
                  waterway after it passes to Panamanian control.

                  "We have nothing to indicate that the Chinese have the slightest desire to
                  somehow control the Panama Canal," Rear Admiral Craig Quigley told
                  reporters on Sept. 28.

                     Copyright 1999 Reuters.