Panama Canal Going To China

John A. Quayle blueoval at SGI.NET
Sun Nov 28 23:02:08 MST 1999

  P H Y L L I S   S C H L A F L Y   R E P O R T  - November 1999 (Part 1)

        Red China: Gatekeeper of the Panama Canal

Jimmy Carter never would have been able to ram through his two
treaties giving away our Panama Canal if the Senate in 1978 could
have looked into the future and known that, when the U.S. Flag is
lowered on December 31, 1999, Red China would become its
gatekeeper. But that's what's scheduled to happen unless Congress
takes immediate action to prevent it.

Don't expect the Clinton Administration to interfere with China's
stunning beachhead in the Western Hemisphere. Clinton is
hopelessly indebted to the Chinese and their allies in Indonesia for
financing his presidential elections in 1992 and 1996.

China didn't need to send an invading army. Because of what is
euphemistically called "free trade," China has plenty of cash to buy
and bribe its way into our domain.

Communist China is the greatest national security threat to America
today and in the foreseeable future. At a major meeting in Beijing in
1994, China designated the United States as its primary global rival.
China is rapidly building a modern war machine with 18 long-range
and 140 intermediate and medium range missiles. It's based on
espionage, theft, trade deals that include technology transfers, and
cash provided by a $60 billion-a-year favorable balance of trade.

Every month, China collects up to $6 billion in U.S. cash by selling
its slave-labor products to Americans, but China buys only $1 billion
worth of U.S. goods. The Chinese pocket the $5 billion a month
difference and use it to build their military-industrial complex.

In order to cash in on the cash-rich Chinese, Panama manipulated
the bidding process, holding repeated rounds of bids, for leases for
the U.S.-built ports of Cristobal on the Atlantic end of the canal and
Balboa on the Pacific end. The 50-year leases were awarded to a
Chinese Hong Kong corporation named Hutchison Whampoa
operating under the name Hutchison Port Holdings.

Hutchison Whampoa had come in only fourth in the bidding, after the
Japanese firm Kawasaki/I.T.S., the U.S. firm Bechtel, and the
Panamanian American company M.I.T. For exclusive control of the
two ports, Hutchison Whampoa agreed to pay $22.5 million a year
plus what one Panamanian called "bucket loads of money" under the
table, and Panama's Law No. 5 was passed on January 16, 1997 to
confirm the deal.

Law No. 5 blatantly violates the Panama Canal Neutrality Treaty,
Article V, which stipulated that only Panama is allowed in defense
sites. By giving Hutchison "priority" for its business operations, Law
No. 5, Art. 2.11d, also violates the treaty's Article VI, which
guaranteed "expedited" and "head of line" passage for U.S. warships.

Art. 2.10c of Law No. 5 gives Hutchison Whampoa the "right" to
operate piloting services, tugs and work boats, which translates into
control of all the Canal's pilots. Art. 2.10e grants the "right" to control
the roads to strategic areas of the Canal, and Art. 2.12a grants
priority to all piers, including private piers.

Art. 2.8 gives Hutchison Whampoa the right to "transfer contract
rights" to any third party "registered" in Panama. Those rights could
be transferred to China, or even Cuba, Iraq, Iran, Libya or North

The Hutchison leases even violate Panama's own constitution, Art.
274, which requires a plebiscite on Canal matters. None was held.
Law No. 5, Art. 2.1, also grants "first option" to Hutchison Whampoa
to take over the U.S. Rodman Naval Station, the Pacific deep-draft
port facility capable of handling any warship. The Chinese will then
have the power to exclude U.S. warships while admitting Communist

The billionaire chairman of Hutchison Whampoa, Li Ka-shing, was a
business and political buddy of the late Deng Xiaoping and now has
the same close relationship with both Jiang Zemin and the Riady
financial empire of Indonesia. No doubt that's why he controls most of
China's commercial ports and seaborne trade as well as most of the
dock space in Hong Kong.

Li was China's chief agent in facilitating China's smooth takeover of
Hong Kong in 1997. Hutchison Whampoa partnered in several
enterprises with China Ocean Shipping Company (COSCO), which is
directly controlled by the People's Liberation Army, and served as a
middleman in China's deals with the U.S. firms Hughes and Loral.

The Carter-Torrijos Treaties, bad as they were, gave the United
States the right to defend the Panama Canal militarily. The Chinese
leases, however, will make it impossible to do this without directly
confronting the Chinese Communist regime.

In 1996, when China was "testing" missiles to scare Taiwan before
its election, the United States sent warships to the area and China
responded by impudently threatening to "rain down fire" on Los
Angeles from its China-based ICBMs. Would Communist China do
the same if it bases its shorter-range missiles in Panama?

China will be able to ship its shorter-range missiles across the
Pacific, unload them at Balboa, and conceal them in warehouses
until the time is ripe. If Congress doesn't act immediately, we are
heading for a Panama Missile Crisis like the Cuban Missile Crisis of

Panama Law Number 5:


   Panama — the Biggest Blast of Y2K

While many Americans are making party plans to celebrate Y2K on
New Year's Eve, Panamanian officials are lobbying to get President
Clinton or Vice President Gore to attend their unique Y2K revelry.
That's the day when the U.S. flag over the Panama Canal will be
lowered for the last time as we abandon ownership of one of the most
valuable pieces of real estate in the world.

It was the Carter-Torrijos Panama Treaties of 1978 that put December
31, 1999 in the history books as the date when the Panamanians
take over our Canal.

Rumors have been floating that the Panamanians have also invited
Fidel Castro to attend. It would be fitting that he join the merrymaking
because it was Castro who thumbed his nose at the Monroe
Doctrine when he allowed Soviet missiles to be stationed in Cuba in

The Monroe Doctrine enunciated the U.S. policy that it is
"dangerous to our peace and safety" for any foreign power to extend
its system to the Western Hemisphere. In 1962 we were worried
about Communist Russia's nuclear missiles deployed to Cuba; in
1999 we face the possibility that Communist China may put its
nuclear missiles in Panama for a possible blackmail threat about

This danger comes from the fact that Panama has granted a Chinese
Communist "front" 50-year leases to occupy the U.S.-built ports of
Cristobal on the Atlantic end of the canal and Balboa on the Pacific

Rather than addressing the real arguments, Clinton had his
spokesman Joe Lockhart call these concerns "silly stuff" and had an
unnamed White House official assert that the Chinese corporation
holding the leases "is a legitimate company." But, as the Cox Report
showed, the Chinese have totally integrated military and industrial
operations under policies of the late Deng Xiaoping.

Immense pressures are working to close our eyes to the national
security danger from the Panama-China leases. Clinton doesn't dare
to upset the Chinese with whom he has suspect political and
financial ties, and too many senior Republicans are committed to the
fantasy that China is just a trading partner, not a potential enemy.

Here are some constructive steps we can take.

1) Renounce or renegotiate the Panama Canal Treaties in light of new
evidence that the United States and Panama did not ratify the same
text. The DeConcini Reservation, which was added to get the treaty
through the Senate, gave us the unilateral right to intervene in
Panama if we believe the Canal is threatened.

Carter hid from the American people the fact that Panama ratified the
treaty without our reservation. Panama's version contains a
three-paragraph counter-reservation, never submitted to the U.S.
Senate, that requires Panama's "cooperation" before we try to defend
the Canal. Another reason to renounce the treaty is that Panama's
Law No. 5 violates the Panama Canal treaties over and over again.

2) Demand that Panama nullify the lease agreements granted to the
Chinese and initiate a new bidding process that is open and fair. No
one should be bound by the current agreements because the
process was corrupt and discriminatory against a U.S. company.

3) Exercise our rights under the 1978 Panama treaties to protect and
defend the Canal beyond the year 2000. Halt any more transfers of
U.S. military installations, including Howard Air Force Base, the
most important U.S. base south of the Rio Grande; Rodman Naval
Station, a deep-draft port capable of logistic support for any warship;
and Fort Sherman, our only base specializing in jungle warfare and
survivor training.

Depending on Panama to defend the Canal against China's
aggressive acts, or against the Colombian drug cartel, is a bad joke.
Panama has no army, navy or air force, and the country's police are
completely unable to defend the canal against sabotage or terrorism
by narcotics-funded forces coming in from Colombia.

Former Chairman of the Joint Chiefs Admiral Thomas Moorer told the
U.S. Senate that "we are on what I consider to be a collision course
with disaster in the very near future. . . . I truly can't remember a time
when I have been more concerned about the security of the country."
(Testimony to the Senate Foreign Relations Committee, June 16,

Panama has a new government and frequent polls show that a
majority of Panamanians support a continued U.S. military presence.
Time is running out to do something to stop Communist China from
establishing its threatening beachhead in the Western Hemisphere.

National Security Alert!   On December 31, 1999,
Communist China is scheduled to take over a strategic beachhead
in the Western Hemisphere — a port at each end of our Panama
Canal. We cannot allow this to happen!  To avoid a possible
disaster, please sign our petition urging Congress to act now!

Eagle Forum's online version of this report:

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