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Peter F. Romero Acting Assistant Secretary Bureau of Western Hemisphere Affairs On-The-Record Briefing on the Handover of the Panama Canal Washington, DC, December 6, 1999

MR. REEKER:   Good afternoon and welcome to the State Department. As you know, President Clinton has announced that former President Carter and Secretary of State Albright will lead the U.S. delegation at the December 14th ceremony to mark the handover of the Panama Canal. This afternoon, we are very pleased to have Acting Assistant Secretary of State for Western Hemisphere Affairs Peter Romero with us to give you, in fact, an on-the-record briefing on that trip and handover. So this can be on the record quoting the Assistant Secretary.

He is here to answer questions only about this trip, about the trip to Panama, and the transfer of the Canal and, as you know, at 1:00 there will be the regular briefing with Deputy Spokesman Jim Foley.

So let me, without further ado, turn it over to Assistant Secretary Romero.

ASSISTANT SECRETARY ROMERO:   Thank you very much. It is indeed a pleasure to be here to talk a little bit about what is and is not happening on December 14th. There seems to be a little bit of ambiguity that we are turning over the Canal early on December 14th. That is not the case. We will wait until December 31st at noon. That's what the treaty provides and that's what we will do.

What will happen, or what is planned for December 14th, is something a little bit different in that because of availability issues and because of Y2K and those sorts of things, it was decided that there would be the major symbolic turnover of the Canal on the 14th. This would involve heads of state, foreign ministers, involvement of most if not all of the countries of the hemisphere, and that is what Secretary Albright along with past President Jimmy Carter will be attending. They will be leading our delegation. I will be going with them, as well as others. The White House is still putting together a list.

Suffice it to say, though, that this is the beginning and the end in many ways. It is the end, or will mark the end, of the Panama Canal Treaty. It marks the beginning of what used to be called or still is called the Panama Canal Commission to the Panama Canal Authority, basically run by Panamanians. It is the culmination, in many ways, of 20 years of preparing the Panamanians to run the Canal.

In essence, what we have is approximately 96% of the workforce is Panamanian. There are members of upper management that are U.S., and most of those members will be taken into the new PCA. But it is the culmination, as I mentioned, of not just running the Canal on a daily basis but actually maintaining the Canal in good working order and putting maintenance ahead on a five-year plan so that when we do turn the Canal over the locks and other kinds of gear that operate the Canal will be maintained for approximately 5 years in advance when we turn it over.

In many, many ways, it represents a big historic change. When we built the Canal and began to operate it almost 100 years ago, we were a very uncertain emerging world power and facing a lot of threats, not just around the world but in our hemisphere. Most of the nations in the area were undemocratic. In fact, when the treaty was signed in 1980, most of the attendees from Latin America that attended that ceremony were from countries that did not have democratically elected leaders.

There has been a lot that has happened to the hemisphere since then, more than just elections, but a summit process, a shared vision of the future and democracy, in fact, is very much in the center of that vision. And we will have a celebration of the hemisphere and we, as a mature power, as a confident power, are turning over -- complying with our commitments and turning over the Canal and the facilities to a Panamanian Government that has already demonstrated its ability to run and maintain the Canal.

We believe that this is very much a hemispheric celebration. There will be, as I mentioned, representatives from most governments in the hemisphere there, and the Secretary of State, for one, is very much looking forward to her participation.

QUESTION:   Peter, could I ask about concerns over unexploded ordnance? There are some who say there are a lot of unexploded ordnance being left behind. Also, do you know how many military personnel are still left now three weeks before the actual transfer?

ASSISTANT SECRETARY ROMERO:   On the first question, there is reference to the ranges, and let me first explain that the ranges constitute between 2-3% of the whole territory or the whole land area that will be turned back to Panama. So we're not talking about a huge chunk of land -- 2-3%.

The treaty specified that the ranges should be cleaned up as much as practicable. And I'm not even sure that that's a word in English, but we took it to mean that the ranges should be cleaned up as much as could be done with other things in mind, particularly issues related to safety and environment and that sort of thing.

It was never anticipated, even though there was a cleanup, that it was never anticipated that these areas would be sites for hotels or other major installations. These are areas adjacent to the Canal that, quite frankly, should be left the way they are for environmental and safety purposes. And that's essentially where we've left it. We have done a cleanup and we think that we've complied with our treaty obligations.

QUESTION:   If I could follow up on his question because there seems to be some misunderstanding or some confusion over what the President told -- President Clinton told Mireya Moscoso when she was here. It seems that he may have -- according to a Panamanian version, he may have said that although the US has done what it could, it would still continue to see if there is anything left undone. In other words, he left open the possibility in the minds of some Panamanian officials that this is not a closed chapter.

ASSISTANT SECRETARY ROMERO:   Henry, I was in that same meeting and I can tell you that what was said by the President was that, apart from issues related to the treaty and our obligations, obligations to which we have complied, that he would be willing to take a look at what further assistance to secure the areas that the Panamanians may need. And that was basically the gist of the conversation as it related to that.

QUESTION:  Why isn't the President representing the U.S. in this ceremony?

ASSISTANT SECRETARY ROMERO:   I can only -- I have no idea what went into the Presidential decision one way or the other to go or not. I think that the President did make a statement related to that and we can make the statement available to all of you. All I can tell you is that the Secretary of State is exceedingly pleased to lead this delegation, looking very much forward to it, and any questions that you might have about why the President is going or not going you'll have to refer to the White House.

QUESTION:   On the 31st is there something mechanical or physical that happens? I mean, something as prosaic as a set of keys or some sort of set of controls or administrative buttons that have to be pushed to make this happen, or is it really all just kind of automated at this point, merely the matter of a signing of a piece of paper?

ASSISTANT SECRETARY ROMERO:   I think it's pretty automated. On the 31st at noon there will be a ceremony in the Canal Zone. The head of our delegation will be the chairman of the PCC, the Panama Canal Commission, which will be basically going out of business on that date. Luis Caldera, the Secretary of the Army.

There will be ceremonies, but I don't think there will be actual keys changing hands or anything like that. If you've ever been to the locks, there are none necessary. It's pretty remarkable in its simplicity and, I think largely as a result of the fact that the Panamanians are already running it that they've already got whatever keys they need to run it.

QUESTION:   Did the Department recommend that the President go?

ASSISTANT SECRETARY ROMERO:   The Department recommended that the President go. I think there were members of his staff that recommended. The deliberations and the final analysis, I can't tell you who was on what side of what issue but I can reinforce the message that the Secretary of State, who I speak for, is exceedingly pleased to be going and leading the delegation.

QUESTION:   I just want to go back to the question of US military presence there, what kind of number there is. I had seen something like 1,000 troops remaining. I'm wondering, will they go out on the 31st at noon?

And on that same note, the head of Southern Command has testified several times on the Hill about his concerns that once the U.S. military presence is no longer there that the local police will just not be able to control incursions of Colombian guerrillas and rebels. I don't know if you can get into that, but I would like to hear what you think.

ASSISTANT SECRETARY ROMERO:   In terms of U.S. troop strength, I know -- John, how many are left?

STATE DEPARTMENT OFFICIAL:   It's 120 right now, and they'll all be gone on December 31st.

ASSISTANT SECRETARY ROMERO:   There you go -- 120 and they'll all be gone on December 31st, or in the afternoon of December 31st at least.

In terms of what constitutes a threat as far as we are concerned to the Canal, we believe that while a threat by irregular groups in Colombia is a threat to the adjoining area on the Panamanian side, in this case the Darien, that it doesn't necessarily threaten the Canal or its installations or even the capital.

We know that Colombian guerrillas have operated in that area and disregarded Panama's borders for many, many years. This is nothing new. There doesn't seem to be much movement one way or the other. There is a huge swatch of land called the Darien which is virtually impregnable, and the Colombians in security talks that we have held over the last couple of weeks have expressed their unease with the continuance of that presence of guerrilla and paramilitary groups in that area. And we have agreed to continue to talk and to consult and to see how we might be able to help them strengthen their capacity to deal with it. But we've had the intelligence community look at it and there is no threat that we see as constituted by irregular forces, whether they be guerrillas or paramilitaries in the Darien at this time.

QUESTION:   Could you go into the economics of it? Does any money change hands on or before the 31st? And, as it now operates, is the Canal a money-making machine?

ASSISTANT SECRETARY ROMERO:   The United States has run the Canal historically in the same way that we run public utilities here -- not to lose money, but not necessarily to make a lot of money and to put whatever profits you do have back into improvements in the Canal itself. And we have done that through the years and I think if any of you have ever had a chance to see the Canal and the surrounding areas, it's absolutely remarkable how good shape this Canal is in after almost a hundred years, largely because of the care that we've taken with it.

The Panamanians have decided that they will run this as a business and they intend to operate it for profit. We will be, for our part, turning over approximately $160 million that has come from receipts from usage to the Panamanians -- to the new PCA, nor has there been taxpayer dollars in the Canal for a long, long time. Most of the $160 million is spoken for by way of improvements that have been long-planned and underway in Panama to include the widening of the Gaillard Cut to permit two-way traffic in that area and to permit, obviously, more ships to pass in a 24-hour period.

QUESTION:   Mr. Romero, my question is has there been any conversation with the Panamanians in terms of the future -- if the United States is planning to continue perhaps some kind of intelligence or military presence in the area against the narco-traffickers -- to continue to fight narco-traffic?

ASSISTANT SECRETARY ROMERO:   Narco-trafficking in Panama?

QUESTION:   In Panama.

ASSISTANT SECRETARY ROMERO:   I think that there is a good track record and there are very good prospects as it relates to law enforcement generally and counter-narcotics efforts by the Panamanians in particular.

In terms of counter-narcotics, I think that 1998 was a banner year for Panamanian authorities. They captured almost 12 metric tons of cocaine, 16 tons of marijuana, a lesser amount of heroin, most of which comes from Colombia. They are vulnerable to the extent that they are on the isthmus and one of the routes that traffickers use is to go up the isthmus.

We estimate that anywhere between 20-25 metric tons of cocaine pass through, over and around Panama on a yearly basis. Those number fluctuate, but we think that the Panamanians have done a good job and continue to work with us in an evolving situation as it relates to traffickers.

We celebrated on November 23 a series of meetings with the new Panamanian Government. They centered upon law enforcement, security, issues related to economics and trade, and another working group on social issues, social safety net, et cetera. We made very good progress, particularly as it relates to law enforcement and security, and we will continue to meet with the Panamanians in determining what their needs might be and how we might be able to help.

But by no means did I want to leave the impression here that on December 31st at noon when the last of our troops leave we're going to, you know, basically turn off the lights and shut the door and forget about Panama. Quite to the contrary, we've established a very good basis with this new government for cooperation -- deeper, wider cooperation in the years ahead across the whole spectrum of issues that we share.

So in many ways, as I began, it marks an end and a beginning, this is really the beginning, and that is to strengthen and forge a new relationship between our two governments.

QUESTION:   Reaction to critics on the Hill who say the U.S. ought to open negotiations on keeping some sort of military presence there?

ASSISTANT SECRETARY ROMERO:   Well, we've done that and we've been there, and it didn't work. And there was some thought that this new administration in Panama, President Moscoso, would like to reinitiate talks about that. We haven't seen anything on that in a concrete way, and certainly from what we see it looks like the government has kind of backed away from that -- the new government, that is.

We have no plans to reinitiate these talks. We have no plans to establish military bases in Panama. We will comply with our treaty obligations. And in fact, with respect to the facilities that were used in the Canal to reinforce our presence in the hemisphere, particularly as it relates to counter-narcotics flights and that sort of thing, we are making and have been making alternative arrangements for quite some time now in other countries.

QUESTION:   Today's Panama America has a story saying that a rather prestigious law firm that is advising the Panamanian Government, Arnold & Porter, has recommended that Panama -- one of the options would be for Panama to take this issue of the unexploded ordnance to the Organization of American States or the United Nations and maybe even to U.S. Courts.

Do you have any reaction to that?

ASSISTANT SECRETARY ROMERO:   Certainly the Panamanian Government has the right to do all of the things that you enumerated. I don't have a particular reaction. We believe that we've complied with our treaty obligations. We will be turning over a multi-billion dollar asset to the Panamanian Government.

The area of the ranges constitute less than 3% of the total area that we will turn over. That area was never meant to be the site of hotels and other kinds of installations. Quite frankly, in many of the areas they constitute watersheds and wetlands and that sort of thing and probably would be better left the way they are.

But the President did give or make the offer of working with the Panamanians after the turnover, and if there's anything to be looked at by way of the study we'd be happy to consider it. We haven't seen anything on it as yet.

QUESTION:   You said that the Panamanians intended to run it as a business. It would seem that the two main ways of doing this would either be to raise tolls or to skimp on maintenance. Do you have any feelings about this new approach to running the Canal?

ASSISTANT SECRETARY ROMERO:   I don't know if one could automatically draw the conclusion that you skimp on maintenance or you raise tolls. Certainly tolls were raised a couple of years ago significantly and they are more than enough to cover projected projects. Most of the widening of Gaillard Cut will be financed by what's already been spent by way of tolls and usage fees.

Obviously, the price for passage that the Panamanians set will be their decision to make, although there is reference in the neutrality treaty that will remain in force in perpetuity that tolls need to be reasonable. So I think probably there needs to be an appreciation that tolls be reasonable, prudent, et cetera.

QUESTION:   Peter, an entire generation of Americans has grown up without any knowledge or memory of what happened in the '70s. Could you illuminate us on why the United States is turning over this prized asset?

ASSISTANT SECRETARY ROMERO:   For a variety of reasons -- very good question -- but for a variety of reasons. The U.S. Government and, at the time, the Senate decided that turning over these assets and turning over this area back to Panamanian control was the right thing to do.

Certainly when you go to Panama you get a very clear sense that the Panamanians are very appreciative of the sensitivity, but not just the Panamanians. We really can't forget that. This is an act that is projected in many, many ways in the most positive sense throughout all of Latin America. It's giving back territory that essentially was viewed by many as having been taken away from Panama and, by extension, Latin America years ago.

It demonstrates confidence in the Panamanians. It has U.S. troops pulling out and I think probably the pullout of those troops was overdue. And more than anything, it represents the law. Once the treaty was ratified and then subsequently signed, it became a matter of law and we intend to comply fully with our obligations in that.

QUESTION:   I was hoping to -- just back to the issue of maintenance again -- the two other ports, Cristobal and Balboa, I mean, there's been -- things seemed to have changed there in the last few years in terms of the level of maintenance and -- (inaudible) -- reverted. I just wanted to ask a follow-up on that.

And then also I'm wondering if you could just clarify -- under this separate treaty of neutrality, my understanding is that U.S. warships -- will they still have whatever this right is to go to the head of the line once everything has been turned over or is that going to change in some way?

ASSISTANT SECRETARY ROMERO:   To take the second question, yes, they will have preference when needed to go to the head of the line, so to speak -- to gain preferential passage. And that's in the neutrality treaty, as far as my understanding of it is.

Let me just get back to, for one second, the issue that George raised and that is why are we doing this anyway. And I think to understand the importance for Panamanians and for Latin Americans generally, the Panama Canal and the territories that were occupied on both sides -- both banks of the Canal, if you will -- were seen by many Panamanians as an affront to their national sovereignty and their integrity and self-respect.

If you could be analogous, it would be like a foreign power occupying the Mississippi River and ten miles on both sides in perpetuity and us having to be in a position to either accept it or not, but not to be able to do anything about it. And I think the time was long overdue, particularly in the last couple of years, to turn it over.

And quite frankly, we have prepared to 20 years for this event. It's not like we're just throwing things together. We have worked with Panama in every single respect to ensure that there is a seamless transition of this Canal.

And, I'm sorry, your first question had to do with the ports and the degradation of the ports?

QUESTION:   I was just suggesting that if they're going to make money perhaps one of the areas they'll skimp -- and it seems to have been the case in these two other areas that have already reverted -- the other two areas, Cristobal, and they're just not what they used to be.

ASSISTANT SECRETARY ROMERO:   We've heard allegations from some of the folks -- some of the crew members that have gone -- that there has been an increase of an excessive amount of paperwork with respect to transiting the Canal. We're looking into that, and this is the first I've heard about a degradation in terms of those ports.

QUESTION:   One more, please. Could you talk a little bit about what the U.S. Government's assessment is today of the strategic or military importance of this Canal? I mean, it isn't the Mississippi; it doesn't connect to oceans. What's your assessment of the strategic loss, if any, of losing sovereignty over this canal?

ASSISTANT SECRETARY ROMERO:   I use the analogy of the Mississippi River just to make a point, and the point was not the importance of the waterway as much as the Mississippi River essentially bisecting the United States and how this feels to be Panamanian and to know that most Panamanians have never even been inside the Canal Zone ever, okay. And for them, this is like claiming new land.

In terms of the Canal itself and the commercial aspect, about 16% of our trade transits the Canal to and from the United States. It's set to about 16%. I think that we are still the largest user by far, but there are other countries, Latin countries in particular, that use the Canal for a greater proportion of their trade than we do, but by volume we're the largest user.

It is important. We have all kinds of other alternatives to the Canal, particularly railroad as it relates to east-west or west-east transit. It's not absolutely critical for us the way it was but, quite frankly, it's important. And we believe that the efficient running of the Canal is a national security concern and we'll maintain it that way.

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