An article on the Panama Canal published in the Business Outlook section Jan. 9 contained an inaccurate figure on the number of U.S. warships that have used the canal between 1971 and 1975. According to the U.S. Navy, a total of 298 warships transited the canal in that period.
A ship using the Panama Canal instead of rounding Cape Horn saves 10 times its toll, 8,000 miles of wear and tear and 30 days time, according to the Panama Canal Co. Still, the price of wheat from an East Coast U.S. port is the same in Japan whether it comes via Panama or Tierra del Fuego.
This seeming paradox is one aspect of the confused debate over the real economic value of the Panama Canal to the United States, to Latin America and to world trade in general. In the controversy over ongoing renegotiating of the 1903 Canal Treaty, carefully chosen statistics have been mustered to support both the view that the Canal is obsolete and the view that it remains crucial to world economic stability and to U.S. defense.
Consensus seems to rest with the verdict that, while the Canal may be obsolescent with regard to coldly calculated U.S. economic interests, it will remain important to other countries for some time to come and could be modified to accommodate the changing nature of world shipping, given enough political interest.
When the Canal was begun in 1903, the locks seemed wastefully huge at 1,000 feet by 110 feet. Today, there are 1,300 vessels too big to pass, and another 400 that can't make it fully loaded. The big ships, of course, include the supertankers that gradually are taking over much of what has been the canal's biggest customer: bulk cargo.
Bulk loads of grain, coal, scrap metal and phosphane have for years made up 75 per cent of the passages between the eastern United States and Asia that are almost half of all Canal traffic. An increasing numbers of firms are finding that the economies of supertanker speed and tonnage enable them to round the Horn and still deliver such cargo in Japan at competitive prices.
Largely for this reason, Canal offices think, passages through the Canal have declined from their 1955 peak of 14,500 per year to 12,157 in fiscal 1976. In word terms, the Canal carries only 5 per cent of total bulk tonnage, 1 per cent of world dollar value, and the figure is going down.
The figures on U.S. use of the Canal are the ones most susceptible to manipulation. Only 10 per cent of 1975 Canal crossings were by U.S. flagships, Canal attackers say, down 400 transits from 1970 levels. But the U.S. merchant fleet is notoriously small, only 3 per cent of world tonnage. This is because U.S. shippers routinely use "convenience flags" such as Liberia and Panama itself, which have more liberal shipping laws.
In fact, 70 per cent of all Canal traffic is bound to or from U.S. ports. Phillip Harman, of a conservative Washington-based Canal Zone information organization, said Canal closure would mean $583 million a year in import costs to U.S. consumers.
Still, that is just $2 a person a year, and everyone involved in the treaty talks has sworn to keep the canal open. In overall figures, Canal traffic carries 13 per cent of all U.S. imports and only 5.3 per cent of its exports, for a total impact on the economy of less than 1 per cent of the gross national product.
Even Defense Department use is much less than it used to be. The Canal carried 24 million tons of military supplies between the oceans during World War II, but now the two-ocean fleet and the increased size of U.S. warships has bumped America to 19th on the list of military users in terms of displacement tonnage, tied with the People's Republic of China and behind such naval powers as Turkey and Sweden.
Only 12 U.S. warships went through between 1971 and 1975, all patrol gunboats of 225 tons each. All 13 U.S. attack carries are too big to use the Canal at all, while Tarawa-class amphibious assault vessels can make it only if their outside catwalks and antennae are removed, according to the Center for Defense Information in Washington. Military sources say the Canal would become useful only if the fleet on one side or the other had two alerts to to deal with at once.
If the Canal itself is of potential defense usefulness only, the Canal Zone in which it lies is vastly more important economically. Only 4.4 per cent of the Zone is actually devoted to Canal uses, but 85 per cent of its 553 square miles is under military control. If the total U.S. investment in building and maintaining the Canal over the years has been about $100 million, the military investment has been roughly $5.3 billion.
That has financed 13 military bases housing about 9,500 troops and the headquarters of the U.S. Southern Command. None of them is involved in actually guarding the Canal, because its jungle corners make it all but indefensible.
Instead, their spillover spending, the jobs the bases provide to Panamanians, the food and other services they purchase, Canal tourism and the annual indemnity payment, make up 16 per cent of the Republic of Panama's gross national product. Panama itself gets nothing from the ships that go through.
This is among the things that galls the Panamanians. A total of 460,000 ships with two billion tons of cargo have passed since the Canal opened in 1914, at an average toll of $7,175.
Panama engineer Francisco Morales told an engineers' conference there in May that tolls raised only twice since 1914 have saved world shipping $7 billion in that time, $4.6 billion of it benefiting ships bound to or from U.S. ports.
"We've been subsidizing world commerce with these tolls," said Panama negotiator Carlos Lopez Guevara in a recent interview.
Panamanians openly say they will raise the tariff once they control the waterway, citing an alleged study that showed tolls could quintuple and still be competitive. The prospect worries many Latin American nations.
The Ecuadorean government last month prostested a U.S. decision to allow the second fare increase of 19.5 per cent on grounds it would have "negative effects" on Ecuador's economy. The tiny Andean country ships all its bananas and crude oil, its principal exports, through the Canal to consumers in the Caribbean and the United States. Similarly, Peru sends an estimated 40 per cent of its fishmeal and copper exports to East Coast ports through the Canal.
Colombia is studying the possibility of connecting two meandering rivers that run along its coast, one emptying into the Pacific and the other into the Atlantic, in order to create its own canal.
President Anastasio sSomoza of Nicaragua has suggested that another canal might be built profitably through his country, while talk of a sea-level canal that would not need locks already has produced an outcry from conservationists concerned over what inter-ocean mingling might means to acquatic life.
All these possibilities are in early talking stages only. Other discussions center on the chances of enlarging the existing locks or constructing a third, larger set alongside. All the choices will remain in limbo, however, until the political future of the Canal is decided, and there is no indication when that will be.