Canal Hitch

When President Johnson announced last December that the U.S. would dig a new sea-level canal connecting the Atlantic and Pacific, the obvious location seemed to be Panama, probably 125 miles southeast of the old canal.

Last week a U.S. delegation led by Assistant Secretary of State Thomas C. Mann returned from preliminary talks with the Panamanians, and the report was discouraging. As one U.S. spokesman put it: "Our Government will never build the new canal where it would mean 50 more years of conflict."

Genuine Service. The U.S. is prepared to spend up to $2 billion on the project. It does not demand absolute sovereignty, will welcome international or inter-American administration of the waterway. For its money, the U.S. will insist that the canal be a genuine public service to the world, operated, as is the present canal, on the basis of guaranteed access without discrimination for all nations at fixed, reasonable rates. Panama would profit from a major share of the tolls and a powerful voice in the administration, to say nothing of greater trade, tourism, and a dozen other benefits. But Panamanians do not quite see it that way.

Panama's nationalists have long been rabidly convinced that the U.S. reaps enormous profits from the old canal. The facts: toll rates have not been raised since 1914; the canal grossed $68 million last year, barely enough to cover expenses; in 50 years, the U.S. has not yet amortized the $380 million original cost. Nevertheless, the nationalists view the present canal as a Panamanian "natural resource," and that attitude guides even such able men as President Marco Robles and Foreign Minister Fernando Eleta. Their position, at least as an opening gambit: they will agree to a new canal only if the U.S. eventually turns it over to Panama, to be run as a profit-earning toll road, charging as much as the traffic will bear.

Moral Responsibility. Moreover, the Panamanians insist that no matter what happens with the new canal, the U.S. has a "moral and legal responsibility" to continue operating the old canal. Said one perplexed U.S. official: "First they make an issue over the U.S. not having 'sovereignty in perpetuity' over the canal. Then, after all the talk of getting rid of us, they say that we are morally obligated to remain in Panama under the 'perpetuity' clause to keep the canal going as a business operation for the Panamanians. Now that is an absurd contradiction."

The U.S. is anxious to get on with the project. The old canal will be swamped by traffic within 35 years, and a new route must be chosen soon. Out side of Panama, there are two possible routes under consideration: one through Costa Rica and Nicaragua; the other through Colombia. In the preliminary talks, the top men in Nicaragua and Costa Rica, as well as Colombia's Guillermo Leon Valencia, were anxious to negotiate. The U.S. is not presenting Panama with any ultimatums, but it hopes that the country will soon decide where its true interests lie.

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