Shipping Firms Concerned About Canal Administration After 2000

WHILE Panamanian officials express confidence in their country's ability to operate the Panama Canal after the year 2000, the shipping industry remains skeptical.

A government commission recently recommended establishing an independent agency to administer the canal, but shippers note that President Guillermo Endara sent the politically sensitive issue to another committee for further discussion.

Mr. Endara is caught between critics who see the canal as a natural resource to be exploited for the benefit of Panamanians and a sensitive shipping industry concerned about any change in the canal's operation.

Under the Panama Canal Treaty of 1977, total control of the canal and its revenues will revert to Panama in 2000. Earlier this year a special Panamanian government commission issued an interim report calling for an "autonomous administrative agency, independent of partisan politics" to administer the canal.

But by referring the issue back for review, Endara may have deferred any final government decision until after he leaves office in 1994.

Ernest Corado, president of the American Institute of Merchant Shipping that represents major United States flag carriers, says "I don't think Panama will put in sufficient money to maintain the canal.... It'll operate for a while and then fall apart."

To allay such concerns, Rep. Jack Fields (R) of Texas earlier this year introduced a bill aimed at reorganizing the Panama Canal Commission, the US-run organization administering the canal.

The original version of HR 1558 "set a precedent to the Panamanians that the canal should be operated just like the St. Lawrence Seaway," Mr. Fields says. The Fields bill eliminates the US Secretary of the Army as the chair of the canal commission, an effort to encourage Panamanian civilian control after 2000.

The US shipping industry and the Panamanian government supported the bill, but the Bush administration opposed portions of it. An amended bill passed the House last month, allowing the Secretary of the Army to continue as chair and calling for further study of the commission's future operation.

FOR some Panamanians, the issue of canal administration goes far beyond who chairs the governing board. Roberto Mendez, an economics professor at the University of Panama, considers the canal a natural resource that should benefit Panama's poor. He points out that the canal last year generated $374 million from tolls, while 40 to 50 percent of Panamanians live in poverty.

"Toll rates are kept at very low levels," says Mr. Mendez, and should be increased. Revenues could "help the country solve many of its social problems."

A toll hike "would be disastrous," responds Jurgen Dorfmeier, president of Boyd Steamship Corporation, a Panama City shipping agent. Suppliers currently ship many commodities by container across the US almost as inexpensively as going through the canal, Mr. Dorfmeier says. If the Panama raises tolls too high, shippers would avoid the canal altogether, he says.

Many critics in the shipping industry are concerned the government won't adequately maintain the canal. They cite problems with the Panama City Port and canal railroad that the US turned over to Panama in 1977.

"The port is in terrible shape," Dorfmeier says. Currently all port revenues go to the government. Administrators must then ask for money to do maintenance and repair.

"It is very difficult for the port administration to get the funds from the central government to do even the bare necessities," Dorfmeier says.

If Panamanians treat the canal as a cash cow after 2000, he says, the government is unlikely to invest in needed maintenance.

Richard Wainio, director of the canal's Office of Executive Planning, says it's unfair to judge the Panamanian government based on the port and railroad. Those "were turned over to the Panamanians literally in one day," says Mr. Wainio, and many skilled workers and managers didn't stay on the job.

Both the US and Panamanian governments have learned from that experience, says Wainio, and the US is training Panamanians to run the canal. Currently, 87 percent of canal workers and 39 percent of managers are Panamanian.