THURSDAY, OCTOBER 12th
2:00-5:00 PM FORUM
"United States & Panama - 
A New Relationship After the Canal Transition"

Remarks by Mark Falcoff
Resident Scholar, AEI

I appreciate very much the invitation to be here with you today. It’s good to see so many old friends.

I suppose this is as good a time as any to take stock, nearly after one year after the final transfer of the Canal and its adjoining facilities.

In some ways, of course, any evaluation would have to be premature. I am often asked by people here in the United States how things are going in Panama. So far, so good, I always say.

The Canal itself continues to operate in good order.

The last I heard, Panamanian students were still learning to read with the Roman alphabet rather than Chinese characters.

New investment is going in. There are signs of construction everywhere_.

You have made a new and serious effort to increase your tourist industry. I see advertisements about cruises through the Canal in all the travel magazines. You have an enormous potential in eco-tourism, but so far of course it is not developed,

The country is fundamentally stable and run in a normal fashion.

On the other hand, Panama is still Panama. Which means that the transfer of the Canal has not transformed your country overnight into a prosperous, first-world society.

You still have serious educational deficits.

You still have sharp and growing regional and class disparities—in housing, in medical care, in access to employment.

The issue of corruption, and misuse of public funds, fills Panamanian newspapers almost weekly. Some of these allegations may be nothing more than political pot-shots; others, however, are obviously true and embarrassing.

You have serious challenges in the area of environmental degradation. You are giving attention to improving your future water supply. I hope it will be enough.

You have to navigate along a very narrow ledge between extracting an adequate income from the Canal and rendering alternative routes and methods more attractive to Canal users.

And you have to deal with the fact that—as a country without an army, and also without the presence of a foreign garrison force--you are basically defenseless against an increasingly troublesome southern border.

These were problems last year; it would be astounding if they had all disappeared in nine or ten months’ time. Five years out—if we’re all still here—we can take a more authoritative look at how you’ve done.

My own contribution here, I think, would have to be in the area of U.S.-Panamanian relations.

As many of you know, I have long argued that these would have to be transformed after the departure of the U.S. military. Panama would forfeit its "special relationship" in exchange for full sovereignty over its own territory₁ I have always supported that aspiration. But I do believe that Panamanians should not underestimate the costs of this change to them.

Before the treaties, and even up to the end of last year, it could be said that Panama was a country about two-thirds the size of Mexico in the imagination of U.S. policymakers. It was often the second largest country in Latin America—bigger, by far, than Brazil--in terms of high-level policy time, attention, and priorities. Perhaps at times—when Comrade Fidel was making trouble—it was the third largest. (As you know, for us Cuba is sometimes as big as China.)

You had the largest, best-funded, and most politically influential lobby this town has ever seen—the Pentagon.

By ceasing to provide the United States with base facilities, you have lost that lobby. And you must now provide other incentives to get our attention. You are now competing with other Central American and Caribbean countries. Paradoxically, in becoming more sovereign over your own territory, you have shrunk in size in our imagination and in. your capacity as a small country to leverage assets from us. This is the odd way in which international relations works.

These remarks are relevant, it seems to me, in two areas.

First, the clean-up of the bombing ranges. Let me be quite frank. I do not know who is right on the technical sides of the controversy. You are all familiar with the arguments. I feel sure, however, that your claims will never be the object of a large cash settlement from our Congress, regardless of which party is in control here. Leaving aside the rights and wrongs of the issue, there is simply no incentive for us to provide such a settlement. Had you agreed to a residual presence, however small and however symbolic, I believe you probably would be in a far better position to get cur attention on this issue. But that is yesterday’s news.

I understand from your lawyer here in Washington, who happens to be a friend of mine, that the administration of President Moscoso has abandoned the position of its predecessor, and now seeks only effective clean-up rather than a huge cash settlement. That may indeed yield better results for you. But again, I emphasize that you need to be aware of the new negotiating context_, in which paradoxically, you are much less advantageously positioned.

Second, the Colombian civil war.

Like all of the countries that share a common border with Colombia~ Panama has reason to be concerned about what happens there. And like all of them, you prefer a negotiated peace rater than an escalation of the conflict.

As a country without an army, neutrality is your only defense. But it may not be a sufficient defense for you. We all know what is already happening in your southernmost border.

I can understand the historical reason why you do not wish to have anything to do with the U.S. military, though it does seem to some people in Washington that you rather make a fetish of overnight stays of American officers in downtown hotels in Panama City.

But on the subject of the Colombian civil war, I think there is one point that you—and indeed other Latin American countries, particularly those that border on Colombia – need to understand.

Plan Colombia is not cast in stone. Far from it. If you go back and look at the congressional hearings that preceded the vote on the $1.3 million package, you may be surprised at the reticence and skepticism expressed by members of the House and Senate on both sides of the aisle.

This is not Vietnam. There is no firm consensus in favor of a major U.S. military involvement in Colombia, and if it appears at any time that we are heading down the "slippery slope’ towards a major conflict involving American troops, we will pull back and walk away from the country and the region altogether.

Do not fool yourself into believing that we have to be there, and therefore you can assume any posture you want. You, Ecuador, Venezuela, Brazil, all of you may find yourself alone next door to a major narcostate by the end of the next decade.

Panama and the United States are now living in a period of adjustment after the divorce. Old habits die hard on both sides. The intense relationship lasted too long to evaporate overnight. But as time passes, I expect that we will "normalize" our relations. That means choices for us. But it also means choices for you. I hope you will make the right ones.