The Panama Canal, the path between the seas that became an emotional wall between the United States and much of Latin America, ceased to be a major political issue when the Carter-Torrijos treaties went into effect on Oct. 1, 1979. Or so it seemed until recently.
Less than two years after the Panamanian flag was raised on Ancon Hill in the old Canal Zone, U.S. and Panamanian officials fear that the canal again will become a focus of deep concern if not outright confrontation.
Gen. Omar Torrijos is dead and Jimmy Carter is no longer president. An uncertain Panamanian government is squared off against the newly conservative U.S. government led by people who never favored the treaties to begin with.
U.S. Public Law 96-70, the legislation covering implementation of the treaties, has fostered thousands of formal complaints from Panama. As it comes up for review and revision in October, frictions could grow worse and the bitter old issues of colonialism could once again come to the forefront of U.S.-Panama relations.
Signs of strain are already showing. As recently as last month the seemingly simple question of when the Canal Commission would appoint a Panamanian to head its public affairs office provoked bitter attacks in the local press and a brief but ugly rock-throwing incident outside the canal administration building.
Both leftist and conservative opponents of Torrijos' still-shaken successors are questioning anew the validity of the plebiscite that ratified the treaties in Panama, claiming that more ballots were cast than there were voters in the country.
Meanwhile there is concern among some Panamanians that by the time they have complete control of the canal in the year 2000 it will be used for little more than banana boats.
"I would not say that it would be obsolete," said Fernando Manfredo, the Panamanian deputy administrator of the canal, "but my forecast is that the canal will have lost a lot of its importance."
The major question of the moment, however, is what will happen to the implementing legislation. Passed by Congress in 1979 after a bitter fight, the law undermined what both the Carter administration and Panama regarded as the spirit of the treaties.
Its particulars tend to be highly technical and the irritations they provoke here, taken one by one, could be regarded as trivial. Taken together, however, they represent what many Panamanians consider an affront to the sovereignty they sought so long and thought they had won.
For instance, the Carter administration and Panama believed, according to sources from both sides of the negotiating table, that the canal would be run by a government corporation with a high degree of autonomy. Instead, Public Law 96-70 made the Canal Commission an appropriated funds agency answerable to four congressional committees for every major expenditure, even though its budget depends on its own revenues rather than U.S. taxes.
"If I could sort of oversimplify," said U.S. Canal Administrator Dennis P. McAuliffe, a former general, "President Aristides Royo himself has stated that the law itself is contrary to the spirit of the treaty and several of its provisions are in violation of the treaty itself. Therefore when the commission fulfills certain provisions of the law, it is their opinion that we are violating the treaty.
"I think very candid talks are needed by our new administration in Washington and the Panamanian government on these questions," McAuliffe continued. "I would like to see some arrangement made that would persuade the Panamanian government to cease and desist from this constant criticism which I think can do a lot of harm.
"It could get worse," the administrator concluded. "I think it is highly likely that the changes in the law recommended by the administration in Washington will fall short of Panamanian aspirations. They would like to see a gutting of that law and I don't think you'll see that taking place."
The issue is coming up now because a 30-month transition period is ending and at least minimal legislation is needed to replace the nearly expired Canal Zone Code, work out details concerning the dissolution of the Canal Zone police force and other adminstrative matters. The law also provides for the U.S. president to recommend necessary adjustments in the basic implementation law on the basis of two years' practical experience.
"The question," said Manfredo, "is how far the administration will go now in presenting the changes to a Congress which is very conservative. The second question is how prepared the Congress will be to accept changes in that legislation."
Manfredo cited the example of provisions in the current law for the U.S. president to make regulations many Panamanians consider a function of their own government. Thus far those authorities -- "wisely," in Manfredo's opinion -- have never been used. But he fears that a conservative Congress might now decide to incorporate the regulations directly into the law.
In that case, Manfredo said, "Panamanians will feel so disappointed, so frustrated, that we are going to go back to like the old days. But, more than going back, I think it will be worse now because Panama has so many expectations."
The uncertainty rampant in Panama's domestic politics after Torrijos' death in a July 31 plane crash further complicates matters.
"I hope and I'm almost sure that President Royo will be able to develop enough leadership to control the people of Panama the way that Gen. Torrijos did it in the past," said Manfredo. "We still do not know. It was Torrijos who had that charisma and leadership enabling him to tell people to wait and they waited."
Government officials and diplomats here see little profit for Royo at the moment in provoking a confrontation, but they fear that Washington might force him into such a situation.
Royo, appointed president by Torrijos in 1978, has made several formal complaints to the United States about the legislation, beginning in July 1979. He is widely expected to take them before the United Nations when he adresses the General Assembly at the end of September.
Despite the potential turmoil seething around it, the canal itself continues to function smoothly.
In a few minutes at the spectacular Miraflores locks, surrounded by their dramatic blend of Victorian grace and engineering grandeur, a visitor can watch half a dozen merchant ships rising toward Gatun Lake or moving down toward the Pacific. The number of ships and total tonnage traversing the canal has increased steadily since a couple of months after the treaties went into effect. Several capital improvements have been made and more are planned, to be paid out of canal revenues.
Yet recent economic and technological developments are rapidly stealing away the canal's preeminence in commercial shipping.
McAuliffe estimates that all current and planned improvements in the canal will only satisfy demand for another 10 years.
Meanwhile alternatives to the canal are cropping up all over the place. Economies of scale make it as cheap or cheaper for large ships to round South America or take the Suez Canal on many routes, even though they are thousands of miles longer, rather than use smaller vessels capable of fitting through the Panama Canal's locks.
A Mexican "land bridge" should be in full operation by next year in the Isthmus of Tehuantepec, although Panama Canal officials estimate that additional expenses and logistical problems with its ship-to-land-to-ship container traffic will discourage regular users of the canal from switching to Mexico.
A greater threat to canal revenues is an oil pipeline being built here in Panama. It is due to start operation in February 1983, and Manfredo estimates it will virtually eliminate the transport of Alaska North Shore oil through the canal. About 10 percent of the canal's transits are now made by vessels carrying Alaskan oil. The loss in revenues, according to Manfredo, could be more than $40 million a year.
While the current canal will probably retain its importance for military vessels and the shipping of perishable goods such as bananas and other fruits, Manfredo said, a new set of larger locks or a whole new sea-level canal without any locks at all will have to be built if Panama is to remain the central crossroads of world shipping. These are projects that require millions of dollars worth of study and could cost hundreds of millions more to build.
Panama obviously does not have that kind of money, and although Japan, the second largest user of the canal after the United States, has expressed interest in such projects, it is basically up to Washington to start the digging, or at least the studying.
"There is a treaty commitment to make a feasibility study, but it doesn't set any time limit," said Manfredo. "It says when both countries consider it necessary. Nothing has been done to that effect."