December 14, 1999

U.S. prepares to hand over Panama Canal after 85 years

Clinton skips ceremony; Carter leads U.S. delegation

                  PANAMA CITY (CNN) -- After 85 years and amid a last-minute flurry of
                  objections from some lawmakers, the United States on Tuesday will
                  ceremonially hand over the Panama Canal to Panama.

                  The United States will be represented by a delegation of Cabinet officials and
                  former President Jimmy Carter, who signed the 1977 agreement turning the
                  waterway over to Panama. Though the ceremony takes place Tuesday, the
                  canal -- a pulse point of world trade and one of the century's greatest feats of
                  engineering -- won't officially become Panamanian property until December 31.

                  Carter is scheduled to join Panama's President Mireya Moscoso, King Juan
                  Carlos of Spain and other world leaders in the ceremony. But notably absent
                  from the event will be U.S. President Bill Clinton.

                  The canal was a symbol of the American emergence as a world power at
                  the turn of the century. The United States backed the revolt that separated
                  Panama from Colombia in 1903; built the canal, which was completed in
                  1914; and assumed control of the strip of land surrounding it from the
                  Caribbean to the Pacific.

                  The United States has cast a long shadow over Panamanian life since the
                  country's birth, occasionally intervening in its internal affairs -- as in 1989,
                  when U.S. troops deposed Panamanian strongman Manuel Noriega.
                  American control of the economic -- and literal -- heart of Panama was a
                  source nearly constant and sometimes violent resentment by Panamanians.

                  But many of the country's most prominent officials -- Clinton and Secretary
                  of State Madeleine Albright, particularly -- will skip the event.

                  Besides Carter, the U.S. delegation includes two Cabinet members,
                  Transportation Secretary Rodney Slater and Commerce Secretary William
                  Daley. Clinton declined because of a scheduling conflict, while Albright will
                  miss the event to prepare for Israeli-Syrian peace talks this week in

                  Clinton's absence means "the United States lost an opportunity to look
                  good," Panama's foreign minister, Jose Miguel Aleman, said Monday.

                  "Panamanians will greet Carter warmly. He is a great friend," Aleman
                  said Monday. "We are not disappointed because Clinton and
                  Albright are not coming. We areplanning a big celebration. It is their
                  loss if they do not come."

                  But he added, "The feeling I have gotten from the other members of the
                  other countries is that they are disappointed and perplexed."

                  Historian David McCullough compared the absence of high- level, serving
                  U.S. officials at the event to "dropping the key in the box and slipping away
                  in the night."

                  "It's a mistake and a great shame," McCullough said.

                 An engineering marvel, an economic engine

                  The 1977 treaties cede the 50-mile long canal and the surrounding Canal
                  Zone to Panama. Leaving means closing U.S. military bases, which will cost
                 Panamanians 18,000 jobs.

                  When opened, the passage cut the sailing time from New York to San
                  Francisco in half. About 14,000 ships pass through the canal every year,
                  steered by Panamanian or U.S. pilots. Shipping companies pay $540 million
                  in tolls annually -- and that concerns some observers, who fear Panamanian
                  leaders may not be able to resist the temptation to turn the waterway into a
                  cash cow and a source of patronage.

                  "The shipping community wants to have some comfort that the transfer will
                  be a seamless one and that Panamanian authorities have seized their
                  responsibility to run the canal in a professional way," said William O'Neill,
                  secretary-general of the International Maritime Organization.

                  Moscoso's government has promised to keep partisan politics out of canal
                  business. The canal will be run by the Canal Authority, created by agreement
                  among all Panamanian parties.

                  Since the 20-year process began, the number of Panamanians employed by
                  the canal has grown to nearly all the 8,000 employees needed to run the

                  "We have shown throughout the years that Panamanians can operate the
                  canal efficiently," Aleman said.

                 U.S. critics warn of Chinese influence

                  U.S. military planners long considered the canal a strategic point. That has
                  fueled last-ditch opposition to the handover among American conservatives,
                  who never liked the idea in the first place. Now, some of them are warning
                  that the waterway will fall under communist Chinese control after U.S.
                  involvement ends.

                  Critics like Rep. Dana Rohrabacher, R-California, say Hong Kong-based
                  Hutchison Whampoa's port concession at both ends of the channel means
                  China can gain control over the canal.

                  "If we do nothing, Mr. Chairman, within a decade, the communist Chinese
                  regime ... will dominate the tiny country of Panama, and will control the
                  Panama Canal," Rohrabacher said. "We cannot afford that to happen. This
                  is not in the interest of the United States, and it would be a severe
                  compromise of our national security."

                  Panamanian officials and canal managers say that's untrue.

                  But Hutchison Whampoa is a publicly traded company that runs 17 port
                  facilities, including Britain's three largest. Its top manager in Panama is
                  British; his deputy is American, and none of the company's 500 employees
                  in Panama is Chinese.

                  "They have no control over the Panama Canal," said Jorge Quijano, director
                  of maritime operations for the Panama Canal Commission. "They need our
                  pilots to get through our channels to get to their ports."

                    Correspondent Martin Savidge and The Associated Press contributed to this report.