Future of the Panama Canal

7 December 1999
Washington, D.C.

On Pearl Harbor Day, one week before today’s official ceremony marking the United States’ relinquishing of the Panama Canal, the Center for Security Policy convened its latest High-Level Roundtable Discussion to address what comes next. This Roundtable, entitled “After the Hand-over: the Future of the Panama Canal and U.S. Hemispheric Interests,” provided an indispensable guide to the strategic challenges to American interests and security now arising in much of the Western Hemisphere — challenges that will likely be exacerbated by the loss of U.S. bases, training and intelligence capabilities and the capacity to provide physical security for Panama and the Canal, and by extension, the region.

More than 100 experienced national security practitioners, retired senior military officers, former Members of Congress, congressional aides and members of the press participated in this Roundtable. Highlights of the remarks made by the Lead Discussants and other participants in the course of this extraordinary three-and-a-half hour conversation included the following:

Overviews

The stage was set by former House Rules Committee Chairman Gerald Solomon and Admiral Leon ‘Bud’ Edney (USN, Ret.), former Supreme Allied Commander Atlantic. Rep. Solomon provided an excellent summary of how the United States came to be a party to the 1977 treaties relinquishing control over the Panama Canal and how the intervening years have proven the critics of those treaties to be right.

Rep. Solomon also read a letter prepared for the Roundtable by former Senator Paul Laxalt, leader in the Senate of the opponents to the Panama Canal Treaties. Sen. Laxalt expressed the view that, had he and his colleagues known then what is now known about the hemispheric context and Communist Chinese penetration of the Canal Zone (among other places in the region), there would almost certainly have been the votes needed to reject that accord.

Admiral Edney decried the “benign neglect” with which successive U.S. administrations have treated the Western hemisphere, giving rise to a situation in which it is too late to reconsider the wisdom of relinquishing the Canal. He also expressed grave concern at the present Administration’s failure to apply the basic tenets of the Monroe Doctrine with respect to China’s ominous and growing involvement in our backyard.

As Admiral Edney pointed out:

• “We [have] neglected to apply the basic tenets of the Monroe Doctrine, which goes back to the fundamental history and security interests of the United States in this hemisphere….We’ve ignored that, because if anyone believes that the Hutchison Whampoa Company is like any other Western…operation and does not have a direct security interest and intelligence-gathering interest to the People’s Liberation Army and the Chinese government, they are sadly mistaken and naive.”

• “Dependable access to the Panama Canal is essential to the hemispheric national security and economic needs of the United States.”

• “We are also being naive if we believe the assurances of the current political announcements coming out of Washington that say that the only non-democratic [government] in the hemisphere is Cuba. If you consider that Haiti is a democracy — and all those other southern and Central American countries that are struggling with improvements — are consolidated democracies which includes a free press, balanced security interests and which includes a financial rectitude, and viable parties — then you look at the world through much more rose-colored glasses than I do.”

• “As always, we have the right to go back in, but…it’s easier to get out than it is to get back in. And I view this kind of event which has been going on…since 1977 and now is going to be finally accomplished on the 31st of December, as a sad day for the United States of America.”

• Admiral Edney also warned about the decision effectively to halt the use of the live-fire training range on the island of Vieques near Puerto Rico. He observed that, without access to that unique facility, the Navy will have no need for the near-by Roosevelt Roads naval base, giving rise to a likely withdrawal from the latter.

In addition, the Roundtable benefitted from written inputs by two of the Nation’s most eminent security policy practitioners. Former Secretary of Defense Caspar Weinberger observed:

“In the context of a general ongoing Chinese shift toward more outward-looking activities and in keeping with their three millennia of statecraft, it is not logical to assume that they would pass up a chance to acquire a major foothold in one of the world’s three major naval choke-points — especially if it can be done with little cost or risk. It suits their diplomatic, economic, military and intelligence interests, just as such a capability in potentially unfriendly hands can be a threat to ours.”

In a letter to the Senate’s President pro tem, Senator Strom Thurmond, publicly released at the Roundtable, former Chairman of the Joint Chiefs of Staff Admiral Thomas Moorer rebutted the proposition that the 1977 treaties mitigate security concerns arising from the Chinese or others’ ability to interfere with Canal operations:

“Right of passage in an emergency is too time sensitive for Panamanian court action or administrative rulings by Panamanian bureaucrats when the safety and effectiveness of our forward deployed units are threatened. Further, with the current departure of our forces it may be only a short period of time before that vacuum is filled by hostile foreign troops which could, in turn, make any current plan, law or treaty ineffective. With U.S. forces no longer present, the likelihood of damage by terrorists or similar catastrophes that could put the Canal out of commission is increased.”

The Roundtable next focused on three subjects: 1) The Strategic Environment — Ominous Developments in the Hemisphere; 2) The Abiding Strategic, Military and Economic Importance of the Panama Canal to the United States; and 3) Is China an Emerging Threat to the Canal — and to Hemispheric Security More Generally?

Strategic Environment

This first section featured lead discussants: Dr. J. Michael Waller, Vice President, American Foreign Policy Council; Dr. Norman Bailey, former Senior Director, International Economic Affairs, National Security Council; Tomas Cabal, journalist and professor, University of Panama; and Dr. Constantine Menges, former Senior Director for Latin America, National Security Council.

Among the topics discussed in this section were: the instability in Columbia, which is facing challenges from three armed groups; the growing authoritarianism, leftist radicalism and anti-Americanism of Venezuelan President Chavez; the increasingly warm entente between China and Cuba; escalating economic difficulties and rampant corruption in Mexico and Ecuador; and drug-, arms- and alien-smuggling by the PRC, the Russian mafia, the made-over KGB and other parties in the region. Of particular note were the following:

Dr. J. Michael Waller

• “General Charles Wilhelm, who is the Commander-in-Chief of U.S. Southern Command, is constantly telling anyone who will listen that our intelligence, surveillance, and reconnaissance capabilities and assets in the region are terribly eroded — in some places virtually completely eroded. We have extremely limited resources, yet more problems and more duties than ever before.”

• “The first [problem], obviously, is Panama and the whole question of what are the Chinese companies involved with Panama. When you figure that the Senate Majority Leader, Trent Lott, takes a personal interest in the story, has the Senate Armed Services Committee hold a hearing on this exact question, and then won’t invite a single expert witness on China or the Chinese military or Chinese enterprises and treats it as a Latin America event….[and] after four hours of testimony, Senator Bob Smith asked each of the administration witnesses, as well as the head of the Panama Canal Commission, the American deputy head of the Commission, a State Department official, and the Assistant Secretary of Defense for SOLIC and said, ‘what do you know about Chinese companies and their service in the interest of the Chinese military,’ and all of them said they didn’t know, yet all had just been testifying for four hours on the fact that this company, Hutchison Whampoa presented no threat at all.”

• “The problem is a lot larger than Panama [insofar as] you have a lot of these small island republics in the Caribbean becoming independent little narco-states of their own, where they have banking secrecy laws, where you can buy passports. You have all these Ukrainians and Russians running around with Dominican or St. Lucia passports. You have even some countries where we’re running our new counter-drug operations out of which have huge drug operations of their own, particularly in the Netherlands Antilles.”

• “And you have Cuba, which has not only been allowing certain types of trafficking to be run through Cuba as a transshipment point, and has not only allowed the Russians to upgrade their electronic intelligence facilities, but is also allowing Russia to begin flying Tupalev 160 strategic nuclear bombers in and out of there again. [Havana] has brought the Chinese in now to set up at least two electronic intelligence facilities of their own, as well, on their territory.”

• “Now, I’d like to comment a little bit on Colombia….First of all, they seem to be losing…the drug war down there, both the opium poppies and the coca….You have a very high morale, very aggressive, very professional, very honest, and very trusted police force there….Now, the goal, obviously, is to help the army do the same thing. But the Colombians are being hamstrung for a couple of things. First, lack of commitment of the United States to make fighting the drug war a priority. We send down antiquated equipment, completely insufficient equipment with insufficient quantities or with, in the case of the Blackhawks, insufficient or nonexistent spare parts….

“But also, we have encouraged them to get into this peace process with the guerillas. There are two Marxist guerilla groups, the FARC and the ELN. They’re both Marxist. The FARC is mostly rural-based, but with the peace process, the Colombians, with U.S. cajoling, have given them a demilitarized zone about the size of Switzerland, which they’re using not only to regroup and to resupply and to build themselves up and probably to launch attacks on Bogota….Also, they’re inviting in foreign investments. And who are the foreign investors they’re bringing in? The Iranians.”

Norman Bailey

• “Just a very few words about Ecuador. To start out with, Ecuador is in the process of disintegration — socially, politically, and economically, having suffered through El Nino and the drop in oil prices, but particularly a series of governments which can only be described as an amalgamation of the Three Stooges and the Marx Brothers put together.

“The result of that has been a situation at the present time in Ecuador where the country is…totally bankrupt, where everyone is at everyone else’s throat, where the government has no authority and no control over much of anything. The armed forces have recently been making some not terribly subtle statements about how awful the civilians are running things, and I don’t think it’s out of the question, although I’m certainly not predicting it…that there will be some kind of (probably somewhat disguised) military coup in Ecuador.”

• “The Venezuelan situation is extremely volatile and extremely dangerous. You have a former coup leader who’s been elected president of Venezuela. This is a man who is following through on the plan that he developed through many years of conspiratorial activities, and during his time in jail….Mr. Chavez is deadly serious about what he intends to do with Venezuela, and anyone who is still under any illusions as to what he has in mind can only be described as a complete and utter fool, not to put a fine point on it. What he does have in mind is to become a civilian dictator with the support, not only the support of the armed forces, but with the military in many of the most important positions in the country.

“As far as the United States is concerned, there are many dangers to that situation. The most dangerous of all is the fact that as a result of [Chavez’s] total mismanagement and likely future worse management of the economic situation, petroleum production in Venezuela is likely to peak and decline, whereas it should have, if properly managed, continued to increase and Venezuela, depending on which month you’re talking about, is either the first or second petroleum supplier to the United States.”

• “[Chavez] also is very actively interfering in his neighbors’ business. He has reawakened the boundary dispute with Guyana on one border and he has actively interfered in the so-called peace process in Colombia, interestingly enough, on the side of the guerillas. He was stationed on the border during a substantial period of his military career and he established excellent relations with the Colombian guerillas and he maintains those relations. And he and Fidel Castro have every intention of being involved in the so-called peace process, and in the case of Castro, of course, with the agreement and at the request of the Colombian president, about which more later.”

• “The Colombian situation is one of extreme danger and instability. You have five different armed forces fighting each other for control of the national territory. Some comments have been already made about the situation. The aspect that I would most like to comment on is the fact that the border with Panama is totally uncontrolled. Panama has absolutely no capacity whatsoever to control their own border with Colombia. The guerillas of the FARC and the ELN and the paramilitary forces go in and out of Panama at will.”

• “The more serious aspect of it is the fact that there is no security in the Canal area. Once the American forces have evacuated and most of them are gone already and they’ll all be gone by the end of this month, the security situation in the Canal Zone is absolutely nonexistent….There is no security. The possibility of sabotage on the part of Colombian groups, on the part, for that matter, of any other kind of terrorist group and so on, are enormous and would be extremely easy to carry out.”

Tomas Cabal

• “The increasing presence of Red China and their companies, which in the long run, may provide a threat to the geopolitical interests of Panama and the United States.”

• “I do think that there still is a window of opportunity which has been presented by the current administration’s opening negotiations of a wide security agreement with the Republic of Panama. As part of that negotiation, the government has already set aside portions of Howard Air Force Base, Rodman Naval Station, the communications center at Curacao, and facilities on the Atlantic side of Fort Davis and at the general training school at Fort Sherman.”

• “There is also a possibility that Panama can extend either forward operating landing rights for American aircraft or simply to reach a new agreement to utilize Howard Air Force Base for American aircraft. It seems to me ironic that the Clinton administration will be spending $100 million to upgrade an Ecuadorian air base…and they’re also negotiating with the governments of Curacao and Aruba to secure landing rights. When you add those figures to the increased fuel bill [entailed in] operating AWACS aircraft out of Key West, then one fails to understand why the Clinton administration could not agree that some type of economic package could have been signed and secured with the Panamanian government.”

Constantine Menges

• “The situation that I think is emerging now is a new constellation of threat that involves: the Castro regime, as always, using its covert resources through its intelligence service and its long-established connections in the region; the emerging radical military dictatorship in Venezuela; and then, with its large checkbook and political influence operations, Communist China is moving into the region both in the Panama Canal zone — having through corrupt means won that contract to manage the ports….I think this context of simultaneous threat is something that requires thought and action.”

• “Colonel Chavez has had a life-long history of activism on the radical left….Reliable reports indicate that he lived for a time with the Colombian communist guerillas in Colombia; in 1996, Chavez was engaged in smuggling weapons of the Venezuelan armed forces to the Colombian guerillas. And in his established political movement and in his campaign for the presidency in 1998, he received extensive support, financial and otherwise, from Saddam Hussein and the regime in Libya.”

• “And, in fact, having taken office as president in February 1999, Colonel Chavez has, in my judgment, essentially acted time after time contrary to the existing constitution of Venezuela….He has also established his control over the armed forces, bringing back to the military the people who were his fellow coup- plotters, the officers. They’re now in charge of the military, the intelligence services, the national guard. He has established parallel military committees in 16 of the 22 states of Venezuela that have, in fact, taken over the governmental functions of the elected governors of the states.”

• “Chavez has gone to China. He has gone to Cuba on November 18 and told Castro once again that he is ‘with Castro.’ ‘Castro is not alone.’ He will lead the Venezuelan people to ‘the same sea as Castro has led the Cuban people….’ And we see a situation where this regime, in my view, will, once the dictatorship is consolidated there, it is still not too late.”

• “We see a situation where, in my view, Colombia is very fragile. It is a country in which the Communists can come to power either through power-sharing, the false kind of political settlement that was attempted in the 1980s, or through a victory leading to a collapse of the armed forces and taking power more or less in the Vietnam scenario or the China 1949 scenario. It is in a very fragile situation. Castro hopes to use Colonel Chavez as his ostensible neutral intermediary to try to persuade the Colombian president to accept conditions politically that would lead to the end of democracy in Colombia and to the victory of the communists.”

Discussion

• “There are people in this Administration who have told me, very high level, that the canal is going to be closed”

• “All polls indicate that over 76 percent of the Panamanian people welcome a continued military presence of the United States in Panama.”

• “The new Foreign Minister of Panama, Aleman, said, under no circumstances would the American military be permitted to return to Panama.”

• The Clinton Administration made no real effort to pursue negotiations with the Panamanians to permit the U.S. to maintain a military presence in Panama.

• It is offensive to the people of Panama than neither President Clinton nor Vice President Gore [nor even Secretary of State Albright] will be present for the hand-over ceremony.

The Continuing Importance of the Panama Canal

The Symposium next moved onto its discussion of “The Abiding Strategic, Military and Economic Importance of the Panama Canal to the United States” with Lead Ddiscussants: Vice Admiral James Perkins (USN Ret.), former Deputy Commander-in-Chief , U.S. Southern Command, and former Commander, Military Sealift Command; and Lieutenant General Gordon Sumner (Ret.), former Chairman, Inter-American Defense Board.

These distinguished former military officers and other knowledgeable participants confirmed that U.S. economic and military interests would be seriously and adversely affected should the Nation be denied the use of the Canal for a protracted period of time — or even a relatively short period at a strategically inopportune juncture. The following comments were of particular interest:

Admiral Perkins

• “[The United States] spends millions of dollars in places [whose names] end in “stan” and we spend so little time, effort and money in our own hemisphere from a military standpoint.”

• “Day-to-day, pound-for-pound, I think we get more bang for the buck as Americans from the mentoring and the training and the example that these young men and women provide to the Latin American militaries than any other place in the world.”

• “Civilian control of the military is not a proud tradition in that part of the world, and I think the example that our sailors and soldiers and airmen and Marines and Coast Guardsmen provide on a day-to-day basis is absolutely essential to continuing the process of civilian control of the military in Latin America, which is doing pretty well in some places, not doing so well in others. It’s a tenuous sort of day-to-day thing.”

• “[The United States relies on] the Military Sealift Command in time of war or national emergency to deploy the force by sea. Ninety-five percent of the stuff that went to the Gulf went on a ship….and I think that’s become more and more important as we pull back from Germany and from Europe and from other places and become, in fact, a continental army.”

• “From my perspective as a Military Sealift commander, clearly, there are other ways of getting to places besides going through the Panama Canal — but it takes longer and it’s harder. So [as] we look very closely at the Panama Canal, we’re concerned as it evolved toward the 31st of December this year.”

• “…The counter-drug effort that was mounted out of Panama was significant. Howard Air Force Base, a piece of it in airborne surveillance and interceptors, is absolutely critical. I’m very concerned that the basing arrangements that we’ve ginned up since that time in Ecuador and in the islands are going to be sufficient to pick up the slack.”

• “Plus, another threat to the canal and to Panama itself is the narco-threat. It was clear to me when I was there that the Darien province down on the border with Colombia is full of narco- guerillas. They used to use it for a ‘rest and relaxation (R&R)’ camp at one stage. Without the deterrent factor of U.S. military troops in Panama, one has to wonder, what’s the next logical step? I don’t think it’s necessarily a good one.”

General Gordnon Sumner

• “This country has been focused East versus West….We have strategic myopia when it comes to the Western Hemisphere. The tragedy is that as far as the professional life of a military officer is concerned,, the Western Hemisphere is a backwater. It is a backwater. We have about 1,000 general and flag officers in the Navy, Marine Corps, Air Force, and Army….We have about a dozen out of 1,000 assigned to the Western Hemisphere. That gives you exactly what this country thinks strategically of this hemisphere.”

• “This is a major problem for this country. The last time we went in there, we were on the ground, and I was very much involved with getting Max Thurmond to run that operation. We were on the ground. Wait until we try to go in the next time and the FARC is on the ground, the ELN, the Chinese.”

• “[Former Panamanian Dictator] Omar Torrijos told me…the winds of communism were coming [from the East]. Right now, the winds are blowing from the West, the Chinese winds.

“But we have a strategic problem here that I don’t see anyone in the executive branch of the government dealing with, and very few people in the legislative branch of the government dealing with. History has a way of coming up, and a major power that…does not understand its national interest [is] destined to the ash heap of history.”

Discussion

• Concern was expressed that Russia’s SVR, the successor to the KGB, and Russian organized crime is also exploiting the perceived vacuum of power and growing instability in Latin America. Evidence was cited that Iraq and Iran are doing so, as well.

• “But to offer some thoughts on what can be done on Panama, there’s a newly-elected president….I think the United States Government, members of Congress, could write a letter to the President and perhaps try and get the President to focus on this in a competent way, in spite of his extraordinary comment on November 30, as reported by Reuters, that he thought the Chinese would do a very efficient job in managing the canal (subsequently corrected by the State Department spokesman to indicate that he meant the Panamanians would do an efficient job. But he actually meant the Chinese, because the question was specifically asked him about the Chinese.”

• “If you look at OPEC production, it’s 30 million barrels a day, 15 million of which Chavez and the radicals will control. The price has gone up a large amount, from 12 to 24, since he’s become president. The oil weapon against the industrial democracies, I think, is part of this. Global production is 72 million barrels a day, so there’s enough supply to overcome it in time, if it’s dealt with in time.

“Russia produces seven million barrels a day. So if it adds to the 15 million that the Chavez group will have in OPEC, you’ve got 22 million a day. You actually have a situation in which, at a number of different levels, political [steps], covert action, the oil weapon, the radical entente can start and reinforce and act against the interest of the United States and its major allies, and I think that’s happening.”

• “I think that if leaders in Congress will focus on the Hutchison Whampoa issue in the next week and will make public statements — whether they go to Panama or make them here — it can be an issue in Panama and we can get some traction among those people in Panama who might agree with us….After all, the bribes were not paid to the current administration. And, after all, Ambassador Hughes, Clinton’s own ambassador, called it a corruptly concluded agreement.

“This is the starting point. If we break the dam on this, it paves the way for making progress in other areas. I think we should focus on canceling the Hutchison Whampoa contract. But that will be achieved only if there is some indication from elected officials of the United States Government that there is a concern about it.”

A particularly noteworthy intervention was made by Major General John Thompson (USA), the current Chairman of the Inter-American Defense Board. Speaking in a personal capacity, Gen. Thompson spoke passionately about the need for a greatly increased focus by U.S. executive and legislative branch policy-makers on hemispheric security matters in the wake of the Canal’s handover. Special and urgent attention needs to be paid to the fact that “Important U.S. strategic interests in Colombia are dying the death of 1,000 cuts every day.” According to General Thompson:

• “One of the things that’s very important that this group can do a lot to help is that we can require our political leaders to have a deeper understanding of the tremendous interest that America has in this hemisphere. Indeed, there have been significant changes in the security paradigm. With the end of the Cold War, there are new forces that are unleashed. There are new expectations that people have all over the world, but especially in this hemisphere, and as we have heard ample evidence of today, there are an awful lot of very serious problems, we could almost say conundrums, facing some of the democracies of this hemisphere.”

• “I don’t know how many of you read an article about four weeks ago in the Washington Times written by Bobby Charles….But Bobby’s article expressed his deeply-felt disappointment and frustration over Congress’ inability to come to grips with important American strategic interests in Colombia and to take bipartisan action to help a country, a longstanding, albeit imperfect, democracy that Colombia is who is dying the death of 1,000 cuts almost every day while her great friend, the United States, sits by shaking our head, spending more energy discussing the imperfections that exist in Colombia than doing anything of the many things that are within our power to do something about.

“Colombians are not asking Americans to die for them. They were terribly embarrassed that five Americans died several weeks ago in a tragic aviation accident. They don’t want our soldiers to come to die for Colombia. But they do need help.”

• “In the past, not only have we not helped the Colombians help themselves, we have refused them access to materials that they wanted to buy from us when they were in much better economic condition. And they’re still desperately trying to get materials from us. Many of us here should be doing a better job of advocating their interest.”

• “We [‘Cold Warriors’] still believe that there are people out there who mean us ill. I find many of my friends in this town amused when I suggest that there are people who are waging psychological warfare against our society and against the other democracies of this hemisphere. I absolutely know that that is true, but I don’t think it’s politically correct to talk like that today.”

Is China an Emerging Threat?

The final segment of the CSP Roundtable dealt with the topic “Is China an Emerging Threat to the Canal — and to Hemispheric Security More Generally?” It featured as Lead Discussants: Al Santoli, the editor of the American Foreign Policy Council’s China Reform Monitor and congressional investigator; Roger Robinson, former Senior Director of International Economic Affairs, National Security Council; and Dr. Richard Fisher, Office of Rep. Chris Cox. Among the important interventions offered in this section was a contribution by Edward Timberlake, co-author with William Triplett of the best-selling books Year of the Rat and the newly released Red Dragon Rising.

During this section the Roundtable heard additional, compelling evidence of: China’s cooperation with Cuba in areas of intelligence; the PRC’s willingness to use “engineer battalions” to introduce military personnel into the Western Hemisphere under the guise of infrastructure construction; Beijing’s use of military-to-military ties with Ecuador to acquire “aggressor” training for the People’s Liberation Army to defeat the tactics and weapon systems the United States has employed and has shared with its allies; the PLA and other Chinese entities’ increasing exploitation of American debt and equities markets to raise large sums of money for activities — whether in Venezuela, Sudan, Iraq or elsewhere — that are highly inimical to U.S. interests; and Chinese attempts to penetrate, corrupt or otherwise undermine democratic processes in the hemisphere. Among the most noteworthy points were the following:

Al Santoli

• “[There] is a Chinese-language publication produced by the People’s Liberation Army early this year called Unconventional Warfare, written by two strategists who are colonels in the PLA. Since this book has come out, it’s gotten some attention in terms of their concepts of asymmetrical warfare, non-conventional warfare, which is the way that they’re studying the Gulf War and studying what we have done in Kosovo and other places. [Their focus is on] how to defeat the United States. Myself being a part-time martial artist and understanding some of the general concepts of how you take down a bigger opponent, you a) look for their weaknesses and b) you try to defeat them with their own strength.

• “And so what I see the Chinese doing now in Panama is a microcosm of this, is a triangulation of the United States — a triangulation involving: ports (Bahamas and Panama’s Colon grigiop, which are the two major ports in the Southern hemisphere, very closely tied to our economy; Vancouver, above us on the coast, as well as setting up shop throughout Canada. And this is one of the things that has shocked Canadian security officials, is the extent that Li Ka-shing, Henry Fox, Stanley Ho, and some of the others who are tied into the Riadys and the CPP group in Thailand, all of whom are Chuchao Chinese.“

• “[In the] November 2, 1999 [editions of] the Hong Kong Ming Pao Chinese language newspaper was a story where they were citing Chinese military sources about how the PLA navy is now refitting COSCO ships for, specifically, they went into in the outset of the story, warfare against Taiwan. (We know that COSCO is the merchant marine, besides the chief merchant fleet, it’s also the merchant marine for the PLA.) In this particular article, they went into detail of how these COSCO ships are being refitted for the event of an invasion of Taiwan.

“However, deeper into the story that goes into how Haifeng container ships are being reequipped to stay within the merchant fleet, but at the same time to be able to conduct military operations, such as sealing off the sea, fighting submarines, controlling air space, mine-laying and mine-sweeping, and monitoring missions, for example, blockade warfare and information warfare, using counter-electronics and other means.”

• “Li Ka-shing and Hutchison are directly involved with COSCO, not only in our own hemisphere. COSCO is a big user of the Panama Canal with or without Hutchison, but they are partners with Hutchison, but also North Korea. Li Ka-shing and Hutchison have the only outside foreign port holdings in North Korea, and tell me if anybody in this room would think the North Koreans would have somebody hold the ports if they were not part of the Chinese communist government and closely connected to the Chinese military.”

• “If we go to war with China over Taiwan, in our hemisphere, if they want to block our shipping, our supplies, or just to create financial [and] economic warfare, they are in position to do so. And the maintenance of the canal and their port facilities on that canal, in tandem with their control of Freeport, Bahamas, as well as Vancouver ports, as well as COSCO activities up and down our coast, is a strategic advantage for the Chinese.”

Roger Robinson

• “China, as many of you know, is in a kind of energy crisis itself….they are net importers today of about 1.5 million to 2 million barrels per day. By 2009, that number is expected, very conservatively, to grow to 11 million barrels a day. So they really are scouring the earth for oil, and not surprisingly, they have decided to forego what’s called the Japan model in the oil business, particularly for large importers.”

“In doing so, it really means that they’re not going to rely on world market mechanisms. They’re not going to buy their oil on the spot market, for example. They don’t trust it. They want what MIT Professor Dan Fine…calls “flagship assets” to secure physical product. It’s the old fashioned way. The dirt and the oil in the ground is what they have in mind.”

• “Now, prior to coming to this subject, we’ve been sort of following China National Petroleum Corporation, particularly in other areas of concern from a national security perspective, the most immediate being the Sudan….Well, it turns out that China National Petroleum, just to give you an example, because I think it’s relevant to the Venezuela case, has put about $1.5 billion to $2 billion in Sudan, so far. They’re planning to ramp up to $5 billion.”

• “The Chinese government with its flagship China National Petroleum [has] a flag asset putting down concrete stakes. Now, just to give you a sense of where else they’re hanging their hat: They have about $1.4 billion in Iraq, all primed and ready to go the first day that the sanctions are lifted, which, of course, they’re working daily to do against Saddam Hussein. And they’re also involved in a trans-Iranian pipeline. In other words, they find out where we can’t be and they march in there, sometimes with conventional weapons, not to mention a fat wallet, in places like Sudan, and with more exotic weaponry, components for weapons of mass destruction and ballistic missile delivery systems and the like [on offer] for their Iranian and Iraqi partners.”

• “Not surprisingly, they warmed up to the Chavez idea in a very profound and quick way. Thus far, China Petroleum has put in some $750 million…into Venezuela. They’ve already been awarded some of the highest quality blocks (as they’re referred to) of offshore oil deposits. And just two months ago, when the first Venezuelan oil arrived in Beijing, it wasn’t some quiet, discrete event that you’d [expect from] a commercial venture. [Rather], it was greeted with almost a state visit, I mean, major fanfare. And that was, of course, about the time that Chavez showed up in Beijing to identify himself with the Maoist revolution — just as he did so in the case of Havana more recently.”

• “Now, the tragic part about this is that the U.S. investor community may be providing multi-billion-dollar support for China Petroleum’s consolidation of its activity in Venezuela, not to mention the new signals intelligence listening post in Cuba and their other hemispheric penetrations with an announced listing on the New York Stock Exchange in January or February of this year with an initial public offering estimated between $5 and $10 billion. The best number I have is $8 billion, which would make it by far the largest IPO in New York Stock Exchange history, led by one of the premier U.S. investment banks in this country and involving almost all of the others because of the size of the offering.”

Richard Fisher

• “My conclusion, based on my own review of developments and the facts as they stand, is that there is nothing phony about China’s interests south of our border and we have every reason to be wary, if not scared. This is a serious undertaking on the part of the People’s Republic of China. I am very thankful for Al Santoli’s expansive and round explanation of how the unofficial and the underworlds of the Chinas collude and combine with the open and the business world to advance the interests of the PRC, and Roger’s eloquent explanation of the paramount economic interests that we must never forget.”

• “China is pursuing their own interests, and they are preparing, not just south of our border but around the world, for the day — sooner, they hope, rather than later — [when] China will be exercising power, political power, military, economic power, on a par with our own, if not beyond. I am almost certain that this is not an immediate goal, it’s a medium-term goal, possibly by the year 2030, 2050, to be as influential in our hemisphere potentially as we are today. I point to activities that are already underway as signs to me, as demonstrations to me that this process is continuing apace and accelerating.”

• “I also look to the accelerating level of People’s Liberation Army diplomacy in our hemisphere. I think it’s instructive, it may be obvious or simplistic, but the PLA’s power position within the People’s Republic automatically creates an affinity with militaries in our hemisphere that also have a tradition of political involvement and political activity.

“My cursory review of the FBIS files of the last year lead me to conclude that, roughly, PLA delegations [and] South American and Central American delegations have had contacts that would roughly cover 80 percent of the countries south of our border. There’s a lot there for the PLA to work for and many reasons for the PLA to want to expand these relationships.”

• “[For example,] ten years ago, Brazil and China entered into a codevelopment enterprise to build an earth resources satellite, the CBERS, China-Brazil Earth Resource Satellite. It had a long gestation period. It had some financial difficulties. But on this past October 14, the satellite was launched successfully. [True,] it supplies low-resolution imagery best mainly for following vegetation in agriculture matters, but this is just the beginning. China has benefitted from some technology that only Brazil could acquire, and where could this go?

“Well, if you look at the globe, Brazil is almost on a polar opposite position from the PRC. In order to be supporting a robust civil and military space presence, China needs to establish a global ground- tracking network. There have been reports that Brazil is considering cooperation with China in this area. China already has a ground tracking station in Tarawa….But Brazil, Tarawa, Pakistan, a few places in Africa, and voila, China has a global space tracking network, and in a few years, when China has its own one meter or better imaging and radar satellites, it can then begin to [employ] in the same kind of strategic information that we’ve been trafficking in for years to our own benefit. China will play that same game to its benefit south of our border.”

Discussion

• “Many people in the government, in the Panamanian government, believe that, somehow, you need to play the game of pitting the Taiwanese against Communist China in an effort to get much more resources. However, as one of the government’s advisors told me one time, the problem with Red China is that they don’t seem willing or able to come up with anything in exchange for this diplomatic recognition.”

• “However, what we’re noticing now is that, apparently, in conversations with the Chinese, they have told the government of Panama that, if there is a switch in allegiance (i.e., in effect, if they abandon Taipei)…then hundreds of millions of dollars needed by the current Panamanian administration will be forthcoming (not necessarily through the Chinese government directly, but through their international corporations).”

While no effort was made to reach a formal consensus among the Roundtable’s participants, the President of the Center for Security Policy, Frank J. Gaffney, Jr., who chaired the session summarized the points that seemed to enjoy broad support. These included the following:

• “I’ve been impressed by the description of how serious the problem is in our hemisphere. Even as of this morning, when I was writing about it, I think I hadn’t fully appreciated just how much the peril to American interests, certainly over the medium, if not the nearer, term are, not only in Panama, but in Venezuela and Colombia, and obviously in Cuba”

• “We’ve had several good suggestions made as to things that can be done now, first and foremost, I gather, being challenging Hutchison Whampoa’s corrupt transactions; assuring that American companies can get access to some of the bases that are up for grabs now, as well, hopefully, as Balboa and Christobo; developing Congressional interest in and support for finding ways to effect these kind of turnarounds; and also for helping Colombia and for dissuading the countries of the region from accepting what seems to be the open invitation of the Chinese corps of engineers to come in and build infrastructure for them.”

• “And not least, of course, I think the point that was made several times in the course of the day, that there’s an awful lot riding on what happens in Venezuela over the next few weeks. It does seem to me it bears considerable attention and creative thought to think about how, without becoming involved unhelpfully in the internal political affairs of a country, the common interest in having democracy survive the present crisis in Venezuela does seem to me to be generally viewed here as something we ought to be giving serious attention and thought to.”