By Serge F. Kovaleski
                  Washington Post Foreign Service
                  Wednesday, December 15, 1999; Page A01

                  PANAMA CITY, Dec. 14—With the words, "It is yours," former
                  president Jimmy Carter symbolically turned over the Panama Canal to
                  Panama at a ceremony here today, marking the end of American control of
                  the 51-mile waterway that for nearly a century represented the projection
                  of U.S. power in Latin America.

                  Although the United States will not relinquish ownership of the canal
                  officially until Dec. 31, today's ceremony was scheduled to avoid any
                  conflicts with millennium activities. It was the culmination of the transfer
                  launched by Carter in 1977 with the signing of the Panama Canal Treaties.

                  "Today we come together with mutual respect to acknowledge without
                  question the complete sovereignty of Panama," Carter, who represented
                  the United States, told a gathering of dignitaries at the canal's Miraflores
                  Locks that included six Latin American presidents and King Juan Carlos of
                  Spain.

                  The festivities were overshadowed by the absence of President Clinton
                  and Secretary of State Madeleine K. Albright, both of whom stayed away
                  from a ceremony that focused attention on the turnover of the strategic
                  waterway--a move that remains highly unpopular among American
                  conservatives.

                  Speaking under a light rain, Carter said the original canal accords signed at
                  the birth of Panama as an independent country in 1903 were unjust and
                  that the United States "did not understand clearly enough that the
                  arrangement defined a certain element of colonialism."

                  Panamanian President Mireya Moscoso heralded Panama's assumption of
                  the canal "trophy" as a consolidation of her country's sovereignty. She went
                  out of her way to reassure other countries and international shippers that
                  the interoceanic waterway, which is transited by 14,000 vessels a year,
                  would be well maintained and improved under Panamanian control and run
                  under a "code of ethics."

                  "Our final objective is to guarantee safe, efficient and uninterrupted
                  operation of the canal to satisfy our customers and to benefit our country,"
                  she said.

                  The 29-member U.S. delegation was headed by Carter, who signed the
                  treaties with Panamanian leader Gen. Omar Torrijos to hand over the
                  canal, as well as 360,240 acres of land. The agreements, which also called
                  for the eventual withdrawal of all U.S. troops from Panama, were
                  unpopular in the United States but were ratified by a one-vote margin in
                  the Senate in September 1978.

                  Clinton has not said why he opted to skip today's ceremonies, but the
                  White House denied that U.S. conservative opposition to the transfer
                  played a part in the president's decision. "This decision is not made based
                  on the politics," White House spokesman Joe Lockhart told reporters in
                  Washington.

                  Albright was to have represented the United States but remained in
                  Washington because of the start of peace talks Wednesday between Israel
                  and Syria.

                  U.S. conservatives have criticized the handover of the canal--which cost
                  the United States more than $350 million and 5,600 lives to complete in
                  1914--saying Panama has no army and that the canal's security could be
                  vulnerable to left-wing rebels in neighboring Colombia who have launched
                  incursions into southern Panama. This concern was highlighted on Sunday,
                  when hundreds of rebels attacked a Colombian navy base on the Pacific
                  coast 15 miles from the border with Panama, killing at least 34 marines,
                  one policeman and a civilian.

                  Critics also have contended that China is seeking to control the waterway
                  through the Hong Kong-based Hutchison Whampoa Ltd., which operates
                  cargo terminals at both ends--assertions that the White House and the
                  Pentagon have dismissed. Others have expressed concern that the canal
                  may be mismanaged and fall into decline, becoming a vehicle for corruption
                  and patronage.

                  The Panamanian government has undertaken several measures to insulate
                  the canal from such abuses, including a 1994 constitutional amendment
                  making the Panama Canal Authority an autonomous body.

                  Carter addressed the treaties' critics in his remarks today. "In my country
                  and in this one there were demagogues who exaggerated problems and
                  spoke about catastrophic events. There are still some in my country
                  spreading false stories about security of the canal," Carter said, standing in
                  front of a line of large container ships.

                  The transfer treaty permits U.S. intervention if the canal's neutrality is
                  threatened. In a statement in Washington, Clinton expressed "a continuing
                  commitment" to the canal's security and a determination that the waterway
                  will remain open.

                  The transfer of the canal, as well as surrounding properties and a number
                  of military bases, will give this country of 2.8 million people full sovereignty
                  over all its territory for the first time since the United States helped it win
                  independence from Colombia in 1903.

                  Noting how the United States has operated the canal in what amounted to
                  "state socialism," Carter said Panama now faces the challenge of bringing
                  free enterprise to the waterway and running it on a for-profit basis. "It is
                  yours," a smiling Moscoso recalled Carter telling her today after they
                  signed a document marking the transfer.

                  The ceremony was full of fanfare as Carter, Moscoso and the other
                  dignitaries were brought ashore at the locks on the Pacific Ocean side of
                  the canal aboard a "mule," a large engine on railroad tracks that tows ships
                  into the locks. Rows of flags flapped in the breeze as a marching band
                  played.

                  The United States, which is the largest customer of the canal, is expected
                  to keep a close eye on the operation and security of the waterway, which
                  provides a vital commercial link between the Pacific Ocean and the
                  Caribbean. With all but a handful of U.S. troops gone from Panama--there
                  were about 10,000 here when the treaties were signed--increased drug
                  trafficking has been a major U.S. concern. The Pentagon has transferred
                  the headquarters of its Southern Command from Panama to Miami.

                  Last year, Washington and the administration of former Panamanian
                  president Ernesto Perez Balladares failed to reach an agreement that would
                  have allowed the United States to maintain a regional anti-drug center here.
                  Moscoso does not seem keen on the idea either.

                  The handover has been smooth for the most part, largely because
                  Panamanians have been operating the canal for years. Its administration
                  has been Panamanian for the last 10 years, and more than 70 percent of
                  the canal's managers are Panamanian, as are the overwhelming majority of
                  its floating equipment operators.

                  The canal, which is Panama's top economic resource after the Colon
                  free-trade zone on the Caribbean, is being turned over to Panama in good
                  operating and financial condition. Several modernization projects are also
                  underway. These initiatives, costing about $1 billion, include the widening
                  of the Gaillard Cut, the narrowest part of the canal, so it will be able to
                  accommodate two-way traffic.

                  At least for the time being, shipping industry officials expressed confidence
                  in Panama's ability to run the canal as well as, if not better than, the United
                  States, but they stressed the need to enforce the laws designed to ensure
                  the canal's autonomy.

                  "The transfer is just a change of flag for us; we do not see any reasons for
                  concern," said Jurgen Dorfmeier, president of Boyd Steamship Corp., a
                  major shipping agent here. "If the canal closes tomorrow, the shipping
                  industry will continue to live, but the canal is all that Panama basically has,
                  along with the free-trade zone. And one thing is for sure: Panamanians are
                  not suicidal."
 

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