NCPA - National Center for Policy Analysis

Panama Hand-Off Looming

July 13, 1997

In less than thirty months, the Panama Canal will cease to be an agency of the U.S. government and become a purely Panamanian possession. On Dec. 31, 1999, the final provisions of the Panama Canal treaties -- signed by President Jimmy Carter -- will go into effect.

  • Last year, more than 13,700 ships, carrying 198 million tons of cargo, paid $486 million in canal tolls.
  • Some 92 percent of the workforce of 9,800 is already Panamanian -- including two-thirds of the pilots who guide the ships through the 50-mile waterway.
  • Although the transition involving operations is already well along, shipping companies are worried that Panama will decide to divert canal revenue for its own use and that the Canal Authority will be politicized.
  • Other concerns involve a possible rise in corruption, nepotism and sudden swings in policy.

Some of the questions remaining involve whether the U.S. should be asked to retain a military presence in the canal zone, and how to value the 569 square miles and 7,000 buildings the U.S. is handing over. Local officials are nervous about losing the $200 million the U.S. military presence contributes every year to the Panamanian economy.

A recent poll revealed that 75 percent of Panamanians want Americans to stay in the country -- but only if we are prepared to pay to do so.

Source: Larry Rohter, "Hand-off in Panama: Hong Kong Was Just a Rehearsal," New York Times, July 13, 1997.


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