A year ago today the red, white and blue flag of Panama was raised for the first time over the Panama Canal.
There were major fears at the time and there have been minor frictions since, but the first 12 months of the 20-year transition from United States to Panamanian control over the waterway suggest that the Carter administration decision to turn over the canal may be one of the most successful diplomatic moves made here since President Theodore Roosevelt built the waterway nearly 70 years ago.
"The canal is one of the happy stories in the vale of tears of central America," said one U.S. Embassy spokesman. "Here in Panama over the last two years the atmosphere has gone from one of high tension to, if not friendship, well, something better than it was."
As a potential blasting cap in the explosive world of U.S.-Latin American relations the canal as an issue has been amost totally defused, and as a functioning path between the seas it is now operating as smoothly as at any time in its history.
During the negotiations for the canal treaties that were signed Sept. 7, 1977, and the lengthy fight to ratify them in the U.S. Senate -- where they passed by a single vote -- there were persistent worries that the regime of Gen. Omar Torrijos had moved too close to Cuba and socialism for the United States to risk placing such a strategic waterway in Panama's hands.
But over the last year many U.S. analysts have concluded what some believed all along, that Torrijos was mainly interested in using the Cuban threat as a lever to get the treaties he wanted. Now that he has them, the analysts say, the "real" relationship between Panama and the United States is coming into focus.
Torrijos and the government of his protege, President Aristides Royo, have put considerable distance between themselves and the leftist activities they once cultivated. "The Communist influence in Panama seems to be at its lowest point in years," said one ranking U.S. diplomat.
Since the ratification of the treaties, Torrijos has openly opposed initiatives of Cuban President Fidel Castro within the nonaligned movement.
The Panamanian strongman has continued to support Nicaragua's Sandinista regime, but so does the United States. When Washington desparately needed a place to send the shah of Iran in December, Panama was virtually the only country in the world both willing and able to accept him. Torrijos denounced the Soviet invasion of Afghanistan and boycotted the Moscow Olympics this summer.
"Before the treaties," said one experienced U.S. official, "Torrijos could never have done anything like that. But the word went out from on high that the Americans weren't the bad guys anymore."
Businessmen here have noted, meanwhile, a decided growth of support for the private sector by the Panamanian government.
A key question a year ago was whether the canal could continue functioning at all during the complex period of transition from U.S. to Panamanian control.
Perhaps as reflection of this lack of confidence on the part of the world shipping industry, traffic through the canal declined dramatically through December.
Since the first of the year, however, as its operations continued to prove efficient, the canal has handled more ships on the average and received more revenues than it has at any other point in its history. An average of 39 ships a day are now passing through its locks. Tolls have been raised 29.3 percent and income has gone up from $210 million in 1979 to a projected $294 million in 1980.
There are problems.
Many are related to the implementation legislation passed by the U.S. Congress just before the canal was turned over last year.
President Royo has called some of the stipulations violations of the treaty. U.S. officials acknowledge that they have caused some difficulty but say that technically the terms of the legislation do not in fact breach the original agreement.
The U.S. law gave the new Panama Canal Commission with its five U.S. and four Panamanian members less budgetary flexibility and less autonomous power over the canals than had been anticipated during the treaty negotiations.
In effect, as the Panamanians see it, the U.S. president still has virtually complete control over the commission until 1990. While this has not been a problem for Panama under the Carter administration, Panamanian officials are worried that a hostile U.S. president could greatly compromise what has thus far been a smooth transition.
Another point of friction is the substantial difference between the pay scales received by both Panamanian and American employees of the old Panama Canal Company, who still are paid U.S. wages, and those who have been hired by the new commission since Oct. 1 of last year and receive lower Panamanian wages for similar work.
Both Panamanian and U.S. officials here emphasize, however, the many things that have not happened. The predicted exodus of U.S. employees vital to the management of the canal has not taken place. There has been no noticeable friction with the Panamanian police who now jointly patrol the former canal zone with U.S. security forces. The ability to defend the canal remains unimpaired.
"We have proven that we have a capacity for accepting responsibility," said Fernando Manfredo, the Panamanian deputy commissioner of the canal.
Charles A. Schmitz, special assistant to the U.S. ambassador for treaty implementation, summed up the current feeling about the treaty's success. "There is a case where the U.S. properly identified where its interests were and where they were not," said Schmitz. "Its interests were in keeping the canal open for world commerce and keeping it neutral and defendable. Its interests were not in running a 500-square-mile colony inside somebody else's nation." Schmitz smiled, "And it is working."