[Congressional Record Volume 145, Number 132 (Monday, October 4, 1999)]
[Senate]
[Pages S11848-S11851]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            THE PANAMA CANAL

  Mr. SMITH of New Hampshire. Mr. President, there are a lot of things 
going on in the world. Sometimes there is so much going on that we 
forget some of the more important things. What I would like to do is to 
remind my colleagues and the American people that, as of today, there 
are 88 more days before the United States of America loses its right to 
the Panama Canal.
  It is also interesting to point out that these little flags on this 
chart--in case someone may not know what they are--are Communist 
Chinese flags. So I am going to place another one over October 4 and 
note that in 88 days the Chinese Communists are going to have control 
over both ends of the Panama Canal.
  It is amazing to me that in the Presidential debates--not formal 
debates but in the discussions of Presidential politics--we did not 
even hear anything about this. Yet here we are, the nation that is 
probably the largest threat to the United States of America is now 
going to control the Panama Canal and not a whimper comes from this 
administration.
  So I am going to be on the floor of the Senate almost every day I 
can--at least every day that is a business day--to remind the American 
people and the administration that we are now going to allow the 
Communist Chinese flag to be hoisted over that canal, which we once 
controlled, which we, unfortunately, gave away during the Carter 
administration.
  The Panama Canal Treaty requires the U.S., by the date of December 
31, 1999, to relinquish its bases in Panama.
  The Panama Canal--a monument to American engineering, American 
construction, American ingenuity--is among the world's most strategic 
waterways and remains critical to U.S. trade and national security.
  In case anybody is interested, the United States has invested $32 
billion of taxpayer dollars in that canal since its inception. It 
remains a critical artery for our Navy and Merchant Marine, with an 
estimated 200 Navy passages a year going through that canal.
  On December 31, the Communist Chinese flag will control both ends of 
that canal.
  Mr. President, 15 to 20 percent of total U.S. exports and imports 
transit

[[Page S11849]]

the canal, including approximately 40 percent of all grain exports.
  Before the canal was constructed, the voyage around Cape Horn 
required 4 or 5 months. The Colombian Government was assessing 
differential duties which made transisthmian travel prohibitive, even 
under ordinary circumstances.
  Traveling the United States from coast to coast took 8 or 9 months 
and sometimes fighting Indians. That was how long ago. Today, that 
canal saves 8,000 miles and 2 weeks over the Cape Horn route.
  Public opinion in the United States towards construction of a canal 
was galvanized by the voyage of the battleship U.S.S. Oregon from the 
Pacific around Cape Horn, joining Admiral Sampson's fleet in battle 
against the Spanish fleet of Cuba in 1898. The Oregon arrived just in 
time to engage in the last naval battle of the Spanish-American War, 
the Battle of Santiago.
  In Teddy Roosevelt's first message to Congress, he described the 
canal as the path to a global destiny for the United States and said:

       No single great work which remains to be undertaken on this 
     continent is of such consequence to the American people [as 
     the Panama Canal].

  In 1918, Teddy Roosevelt warned against internationalism of the 
canal:

       . . . we will protect it, and we will not permit our 
     enemies to use it in war. In time of peace, all nations shall 
     use it alike, but in time of war our interest at once becomes 
     dominant.

  There has been lots of talk about the potential perils of Y2K, which 
is also going to take place on January 1 or at the end of this year. 
For me, the complete transfer of the Panama Canal by December 31 is the 
biggest Y2K challenge facing America, and the clock is ticking. There 
is the countdown--88 days until we lose not only the canal but the 
access, coming in and out of that canal.
  This August, President Clinton awarded former President Jimmy Carter 
the Presidential Medal of Freedom. Now the Carter foreign policy 
legacy, the giveaway of the Panama Canal and normalized relations with 
the Communist People's Republic of China, has come full circle with 
ominous consequences.
  Panama City's deputy mayor, Augusto Diaz, states:

       If Red China gets control of the canal, it will get control 
     of the government. . . . The Panama Canal is essential to 
     China . . . if they control the Panama Canal, they control at 
     least one-third of world shipping.

  Already the PRC is the largest goods provider into Panama's free 
zone, at $2 billion a year. The People's Republic of China is the 
largest user of the canal, after the United States and Japan, with more 
than 200 COSCO ships alone transiting the waterway annually.
  The United States has already shut down its strategic Howard Air 
Force Base. Howard Air Force Base has also served as the hub of 
counternarcotics operations with 2,000 drug interdiction flights a 
year. By the approaching deadline, we will also have given up in Panama 
Rodman Naval Station, the Fort Sherman Jungle Operations Training 
Center, and other important facilities.
  The Clinton administration was supposed to be working towards 
negotiating an arrangement with Panama that would have allowed for a 
counterdrug center, but even that option has fallen apart. In 
September, the administration announced the collapse of 2 years of 
talks on a multinational counternarcotics center.
  More than 2 decades ago, then-Chairman of the Joint Chiefs of Staff, 
Admiral Thomas Moorer warned the Senate Foreign Relations Committee 
that the U.S. withdrawal from Panama would occasion a dangerous vacuum 
that could be filled by hostile interests. His comments were very 
prophetic.

  In 1996, while China was illegally secreting millions of dollars 
through conduits into the Clinton reelection coffers, it is alleged 
that it was simultaneously funneling cash to the Panamanian politicians 
to ensure that Chinese front companies would control the Panama Canal.
  When is America going to wake up? When are the American people going 
to wake up?
  Hutchison Whampoa, a Hong Kong company controlled by Chinese 
operatives, will lease the U.S.-built port facilities at Balboa, which 
handle ocean commerce on the Pacific side, and Cristobal, which handle 
commerce on the Atlantic side. A Hong Kong company will control--
remember, Hong Kong is now part of the PRC. Its chairman is Li Ka-
shing, who has close ties to the Chinese Communist leaders and a de 
facto working relationship with the People's Liberation Army. Li is a 
board member of the Chinese Government's primary investment entity, 
CITIC, China International Trust & Investment Corporation, run by PLA 
arms trafficker and smuggler Wang Jun. That is the Hong Kong company 
that will control this canal in 88 days.
  Insight magazine published an article maintaining that Li serves as a 
middleman for PLA business operations, including financing some of the 
controversial Hughes and Loral deals which transferred weapons 
technology to the PRC. He has also been an ally of Indonesia's Riady 
family and the Lippo Group, so deeply implicated in the illegal 
Chinese/Clinton fundraising scandal.
  Hutchison Whampoa's subsidiary runs the Panama Ports Company which is 
10-percent owned by Chinese Resources Enterprise. CRE was identified by 
the Senate Governmental Affairs Committee as a vehicle for espionage--
economic, political, and military--for China. Does anybody care? One of 
the favorite expressions among preachers is: Hello. Does anybody care? 
Is anybody listening? This is Communist China in the Panama Canal that 
we built, that we maintained, for $32 billion. Not a whimper. Nobody is 
talking about it, let alone doing anything about it. Nobody cares. 
Where is the administration?
  In addition to concerns about Chinese objectives in securing Balboa 
and Cristobal ports, Panama is in the front lines of the U.S. fight 
against narcoterrorism principally exported by the FARC, revolutionary 
armed forces of Colombia, in Colombia. A week after closure of Howard 
Air Force Base, heavily armed FARC members were interviewed in full 
combat regalia on Panamanian television, operating in Panamanian 
territory.
  U.S. Southern Command Chief, General Charles Wilhelm, testifying 
before the Senate Foreign Relations Committee in June, said Panamanian 
security forces were undermanned and ill equipped to deal with growing 
threats from Colombian guerrilla incursions and drug traffickers. 
Colombia is the source of an estimated 80 percent of the world's supply 
of cocaine and the source of 75 percent of heroin seized in the United 
States. The FARC is known to have ties to the Russian mafia. That canal 
will be a great opportunity for them.
  Public opinion polls in Panama indicate that between 70 and 80 
percent of the Panamanian people support an ongoing U.S. security 
presence in their country. Alternative sites for counterdrug 
operations, the so-called FOLs, or forward operating locations, are 
expected to cost hundreds of millions of dollars for infrastructure 
building and fees. We have no assurance that even if we build the 
infrastructure, we can stay in the designated FOLs for any extended 
time.

  Another issue that must be raised is that of the corrupt and unfair 
bidding process surrounding the 25-year-plus leasing arrangement, with 
an option for another 25 years, with Hutchison Whampoa. The then-U.S. 
Ambassador to Panama, William Hughes, protested this corrupt bidding 
process, and American and Japanese firms lost out because of the 
stacked deck. No help from the administration.
  Ambassador Hughes came close to being declared persona non grata for 
protesting the rigged deal 3 years ago. It should be noted that Hughes 
is now parroting the administration's line on Panama and the PRC. 
President Clinton then appointed Robert Pastor, architect of the 1977 
canal surrender. He appointed him, and Pastor's nomination was blocked 
by Foreign Relations Committee Chairman Jesse Helms.
  Six U.S. Senators, in May 1997, charged in a letter to the Federal 
Maritime Commission that there were irregularities in the bidding 
process, which denied U.S. firms an equal right to develop and operate 
terminals in Panama. The Commission acknowledged that the port award 
process was unorthodox and irregular by U.S. standards.
  In 1996, Panama asked a Seattle-based company to withdraw a 
successful bid for Cristobal--a successful bid--

[[Page S11850]]

on the grounds that it would give the U.S. firm a monopoly because of 
its existing business in Balboa. In 1997, Panama gave the leasing deal 
to Hutchison Whampoa for both ports. With the introduction of Hutchison 
Whampoa, there follows real concern that Chinese organized criminal 
organizations involved in drug trafficking, guns, and smuggling of 
illegal aliens will ensue. COSCO, mentioned earlier--another Chinese-
run firm that tried to lease the Long Beach Naval Shipyard--owned the 
ship which entered Oakland containing smuggled AK-47s intended for the 
street gangs of Los Angeles. And we almost had that firm in control of 
the Long Beach Naval Shipyard. Two firms with ties to the PLA and the 
Chinese Government were under Federal investigation for the smuggling 
attempt. While the U.S. Government is equipped to deal with this type 
of threat, Panama, with no standing army, is not.

  The United States and Panama have security provisions in existing 
treaties under which we could negotiate joint security initiatives to 
address our common interests.
  Eighty-eight days, Mr. President. Eighty-eight days. That is what we 
have left to get it done.
  The major obstacle appears to be an unwillingness of this 
administration to preserve a presence in Panama and a tendency to 
downplay the significance of Chinese acquisition of the twin ports.
  The 1977 treaty gives the United States the right to defend the 
Panama Canal with military force. The United States attached a 
condition, known as the DeConcini condition, which stated that if the 
canal were closed, or its operations interfered with, the United States 
and Panama would have the right to take steps necessary, including use 
of military force, to reopen the canal or restore operations in the 
canal. This modification was never ratified in Panama and met with 
protest by the Torrijos regime. Panama's version of the treaty denies 
unilateral defense rights to the United States. Some believe that 
Panama and the United States cloaked the differences in order to avoid 
a Senate vote on the issue and a plebiscite in Panama. In fact, the 
Senate turned back a series of amendments that would have required the 
treaties to be renegotiated and resubmitted to the Panamanians for 
another referendum.
  The DeConcini condition, because it was attached to the Neutrality 
Treaty, remains in force permanently. But as former Admiral and Joint 
Chiefs Chairman Thomas Moorer noted, how does the ``right'' to go into 
the canal with force compare to the advantage of defensive bases that 
could prevent the takeover of the canal by an enemy?
  A new Panamanian law gives this company, Hutchison Whampoa, the 
``first option'' to take over the U.S. Naval Station Rodman and other 
sites. Panamanian law also gives the Chinese company the right to pilot 
all vessels transiting the canal. Admiral Moorer warned the Senate last 
year that our Navy vessels could be put at risk since Hutchison Whampoa 
has the right to deny passage to any ship interfering with its 
business, including U.S. Navy ships.
  It is of interest to note a 25-percent leap in immigration to Panama 
from the PRC over the past few years--a 25-percent increase in 
immigration to Panama from the PRC. Beijing has used large-scale 
emigration as the basis for future intelligence recruits, with Panama a 
key target. Stanislav Lunev, a defector and former Soviet military 
intelligence colonel, claimed Chinese intelligence succeeded because of 
their ability to exploit the vast emigration of Chinese to communities 
across the world.
  Eighty-eight more days, Mr. President. Eighty-eight more days.
  The Congressional Research Service's August 1999 Issue Brief on China 
addresses a Chinese immigrant scandal. Panamanian visas were sold for 
as much as $15,000 to Chinese citizens who would fly from Hong Kong to 
Costa Rica, where smugglers would guide them through Central America 
and Mexico into the United States. Then President Balladares fired his 
head of intelligence as a result of the scandal--another issue which 
causes consternation among Americans with regard to Panama's ability to 
deal with its China problem.

  If I could put it bluntly, this administration has dropped the ball 
big time. The House Subcommittee on the Western Hemisphere stated in 
March 1995 that over 80 percent of Panamanians favor some sort of U.S. 
military presence in their country. A September 1997 poll found that 70 
percent believe that some U.S. bases should remain after the end of 
this year.
  Eighty-eight more days.
  More recently, a May 1998 poll showed that 65 percent of Panamanians 
support the concept of a multinational counterdrug center.
  Despite public support--as high as three-fourths of the people in 
Panama wishing for the United States to stay in some capacity--this 
administration appears wedded to an unconditional pullout, an 
unconditional surrender toward a ``cooling off'' period that could 
allow the PRC to consolidate a new strategic toehold in Panama.
  The Panama Canal Treaty was negotiated between President Carter and 
Panamanian dictator Omar Torrijos. It doesn't reflect public opinion in 
Panama. It did not, arguably, reflect public opinion in the United 
States.
  When Operation Just Cause was launched in 1989, following the deaths 
of American soldiers and civilians in Panama, the United States 
intervened to safeguard American lives, to defend democracy in Panama, 
to combat drug trafficking, and to protect the integrity of the Panama 
Canal Treaty. It would be a shame if, because we fail now to protect 
Panama and the common security interests of the United States, to risk 
military intervention in the future.
  Finally, a Pentagon spokesman has dismissed the notion that the 
United States should even worry about Chinese encroachment in Panama. 
Don't worry about it. According to an AP story, Admiral Craig Quigley 
said:

       We have nothing to indicate that the Chinese have the 
     slightest desire to somehow control the Panama Canal. . . . 
     And we don't consider this a security issue at all. It is a 
     business issue.

  Hello. Is anybody listening out there in the administration? What are 
we saying? Eighty-eight more days and they will control both ends of 
it. But, according to Quigley:

       We have nothing to indicate that the Chinese have the 
     slightest desire to somehow control the Panama Canal. . . . 
     And we don't consider this a security issue at all. It is a 
     business issue.

  That is what he says: ``It is a business issue.'' Yes, it is a 
business issue all right--between the Chinese Government and Panama, to 
our detriment. There isn't any private business in China. It is all 
done by the Government. That is business as usual in the Clinton White 
House. This is a serious mistake that will in the future cost us dearly 
in terms of our national security.
  This is the same Red China that has labeled us their ``No. 1 enemy;'' 
the same China that has sought to steal all of our nuclear weapons 
secrets from our DOE labs; the same China that sought to buy the 1996 
Presidential election, and massacred students at Tiananmen Square; the 
same China which has committed genocide in Tibet and which is supplying 
state sponsors of terrorism in Iran, Libya, Syria, and North Korea; the 
same China that has provided missiles and other weapons of mass 
destruction and technology to be sent around the world; the same China 
that threatened a nuclear attack on California and which has implied it 
would use the neutron bomb against Taiwan.
  Here is the flag right here. Eighty-eight more days. In 88 more days, 
it will be hanging on a mast over that canal. That is the flag. That is 
also the flag of a country to which, right here in this Senate, a 
majority of my colleagues, I regret to say, said we should provide 
most-favored-nation status.
  In conclusion, the United States should re-engage the new government 
of Moscoso on the issue of a continued U.S. presence. General 
McCaffrey, the drug czar, has shown a renewed interest on what he now 
calls an emergency situation in Colombia, albeit several years after 
the State Department and the Clinton administration stalled, thwarted, 
and blocked congressional efforts to assist Colombia's antinarcotics 
police in its fight against the FARC.
  Despite these differences over tactics in the drug war, McCaffrey 
stands out in the Clinton administration as someone who cares about the 
drug problem.

[[Page S11851]]

 But this is bigger than drugs. This is drugs--there is no question 
about it--but it is also the national security of the United States.
  We could also urge the new Panamanian Government to conduct a 
referendum on maintaining a U.S. presence. No one is talking to them 
about that. We could urge reopening of the bidding process to be more 
fair and equitable, and to ensure that no hostile powers are permitted 
to bid. We are not doing that either.

  The canal was built at a tremendous expense--$32 billion--and at the 
sacrifice of thousands of American lives. What a pity, the good working 
relationship that has developed between Panama and the United States to 
be lost because of the ineptitude and indifference of people in the 
State Department and the Defense Department of this administration. If 
this administration remains blind to the threat facing Panama, it is 
incumbent upon this Congress to make the case to the American people, 
to the new government in Panama, and to the Panamanian people.
  That is exactly what I intend to do on this floor every day that I 
can get the time and the floor to do it between now and December 31. I 
am going to be posting another flag each day to remind the American 
people that we are getting closer and closer and closer to the People's 
Republic of China--Communist China--controlling both ends of the Panama 
Canal--the country that has trampled the rights of Tibetans, that 
threatened to run over its peaceful protesters with tanks, that has 
stolen our nuclear secrets, that funneled money into our Presidential 
campaigns, and purchased or stolen other targeting devices to target 
our cities, and, frankly, threatened the country of Taiwan, and even 
threatened California if we step in. What do we do on the Senate floor? 
Not only do we let them take the canal, but we also give them most-
favored-nation status.
  At some point, the American people are going to have to wake up. I 
don't know when it is going to be. But I hope it is not too late.
  Mr. President, I yield the floor.

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