Out of Panama

By James Kitfield

May 1, 1996

Decay can descend suddenly in Panama. The eight-month rainy season brings 200 inches of rainfall and anything that is not protected by constant polish and sweat is soon claimed by the jungle. U.S. military planners watched the process with their own eyes at Coco Solo on the Atlantic side of the isthmus, a once attractive complex of administrative buildings and troops barracks with freshly painted walls and red-shingled roofs. Transferred to the Panamanian government in 1991, Coco Solo began to rot almost as soon as the air conditioning was turned off. Before long, looters had stripped the buildings bare of even plumbing and wiring.

Today, Coco Solo is an overgrown squatters camp. It stands as a metaphor for all that could still go wrong as the Pentagon's U.S. Southern Command (SouthCom) attempts to transfer 10 major military installations to Panama by Dec. 31, 1999, under the Panama Canal Treaty while simultaneously shifting its operations to Miami. Given that the canal remains an economic crossroads vital to this increasingly important trading region, SouthCom's delicate balancing act has international implications.

"There's no doubt that the entire region is watching Panama very closely, and we all want to see a smooth, professional transition of the canal and bases," says a Clinton Administration official. "If we don't achieve that, the failure will reflect badly not only on Panama, but also on the United States."

The daunting management challenge facing SouthCom-a combination of base closures, unit redeployments and the relocation of a major command headquarters-is complicated by the sensitive politics involved. U.S. officials insist that, barring a reversal of position by the Panamanian government, the last U.S. soldier will turn the lights out in Panama by midnight at the turn of the century. There is considerable sentiment in both Panama and the United States, however, for a continued U.S. military presence beyond 2000.

"There is a sort of dance going on here, with the smaller country waiting for the larger country to ask it to dance. For the sake of its dignity, no Panamanian government wants to be seen as asking America to stay," says Mark Falcoff, author of the book Searching for Panama (Center for Strategic and International Studies, 1993) and a fellow at the American Enterprise Institute, a conservative think tank.

"There's no doubt, however, that there's been a sea change in Panamanian attitudes. A generation ago, they were threatening to blow the canal up if they didn't get a treaty, and now they don't want the Americans to leave," Falcoff says.

Second Thoughts

Ever since Panama declared its independence from Colombia in 1903 and signed a canal treaty with the United States 15 days later, the two countries have had a close, though sometimes contentious, relationship. Under the 1903 treaty, the United States retained sovereign control over a 10-mile buffer zone around the canal. Inside the "Canal Zone," the American flag flew and a U.S.-administered government ruled. Over the years, the arrangement increasingly stirred nationalist sentiment in Panama.

The issue of sovereignty was settled in 1977 when President Carter and Panamanian leader Gen. Omar Torrijos signed the Panama Canal Treaty, which ceded control of the Canal Zone to Panama and called for the withdrawal of all U.S. forces and the transfer of canal operations by 2000.

The orderly transfer and phased military withdrawal envisioned in 1977, however, was derailed by increasingly acrimonious relations during the rule of Panamanian strongman Gen. Manuel Noriega in the 1980s. After a crippling U.S. economic embargo failed to dislodge Noriega, who had been indicted in the United States on federal drug charges, the American military intervened in 1989 during Operation Just Cause.

After the smoke cleared and Noriega was taken into U.S. custody, officials confronted a nascent democracy and key ally that needed years of support in rebuilding. "From the treaty signing in 1977 to the last gasps of the military government in 1989, we witnessed a decade of deterioration in official Panamanian institutions," says Fernando Eleta, deputy chief of mission in the Panamanian Embassy in Washington. "Those were largely lost years."

Now, with only three and a half years remaining before the deadline for U.S. withdrawal, there is widespread concern that the Panamanian government is unprepared to take control of the U.S. facilities. Many Panamanians are also rethinking the wisdom of a complete U.S. military withdrawal. A recent public opinion poll published in the Panamanian newspaper La Prensa, for instance, showed that 71 percent of those surveyed agreed that the country won't be able to create work for those left jobless by the withdrawal of the remaining 7,500 U.S. troops, a major concern in a country with 16 percent unemployment. Fully 80 percent of Panamanians feared the reverted military bases would become political booty.

"There are those who argue we don't have enough time under the treaty to make productive use of all the U.S. bases, and my government is now conducting internal consultations with various political parties on the subject of a continued U.S. presence," says Ricardo Arias, Panama's ambassador to the United States. Exploratory talks on the issue of a continuing U.S. presence scheduled for last November were postponed, however, until the Panamanian government completes a major economic analysis of the potential impact of a total withdrawal.

"There's no question that there are many fundamental changes occurring in Panama at once-the canal transfer, transfer of the military bases, the whole change in the structure of our economic system and opening markets in the region-and change brings a certain amount of nostalgia for the past," says Arias. "And perhaps anxiety about what the future will bring."

U.S. military officials say they would like to stay after 2000 if the Panamanian government wishes, though at a reduced troop level. What they will not do, however, is agree to pay rent for the bases, as some Panamanians have suggested.

"Our presence in Panama does serve a number of purposes which are enormously beneficial to the region, the United States and to Panama. The challenge will be for the U.S. and Panamanian governments to decide where those interests overlap," says Army Gen. Barry McCaffrey, the recently retired commander in chief of SouthCom who is now the Clinton Administration's "drug czar." "If the decision is made that our interests are compatible, clearly the military could remain at some level beyond 2000. On the other hand, there are no vital national security interests at stake in Panama. We do not have to be here to carry out our responsibilities under the treaty, or to remain engaged in the region."

A Ticking Clock

Only 25 percent of the U.S. military facilities have been turned over to Panama since the canal treaty went into effect in 1979. With just three years remaining to complete the transfer, DoD officials stress the urgency of the situation.

"We want to help Panama any way we can, but the longer they wait to decide, the less flexibility we have. At some point I just have to say, 'Sorry, here are the keys,'" says Air Force Col. Richard O'Connor, director of SouthCom's Center for Treaty Implementation, which is responsible for transferring U.S. facilities. "And whenever I show Panamanians what it's going to look like in three years when there's no U.S. military presence, I hear a collective gasp. It reminds me of that old adage to watch out what you wish for, or you might get it."

According to a number of experts, the Panamanian government got the implied message of Coco Solo. At a ceremony marking the transfer of Fort Davis and Fort Espinar last September, Panamanian President Ernesto Perez Balladares publicly called Coco Solo a "national disgrace." Both Davis and Espinar have been maintained in "mothball" status at a cost of $200,000 a month to the Panamanian government, which includes security against looters, grounds maintenance and air conditioning to fight the pervasive mildew.

Even more importantly, the Panamanian government appointed highly regarded former President Nicolas Barletta to the Interoceanic Regional Authority, the agency charged with promoting commercial reuse of the facilities. Before that, U.S. officials say they were constantly approached by different agencies of the Panamanian government, each laying individual claim to some facility or property.

"All of our experience with the BRAC (Base Realignment and Closure) process indicates that to manage this correctly, we need to hand over facilities to a single agency that has the authority to speak for the community," says O'Connor. "Whenever that authority is fragmented, and people are arguing over what to do with a base, it inevitably goes to seed."

While Panama has had some success in attracting commercial tenants to former U.S. bases, officials concede it will likely take many years to line up investors and resources on a scale that will replace the U.S. military. In the meantime, U.S. officials are doing their best to find new jobs for Panamanian workers on their bases. "The problem is we pay a lot more for lower skilled workers, because our wages are tied to the U.S. civil service," says O'Connor. "The minimum wage in Panama is $1 an hour."

Recently, the Panamanian government asked SouthCom to delay the scheduled transfer of some additional facilities until they learn more from the major economic and employment impact study now under way. The clear implication is that a number of the biggest bases may remain in U.S. hands indefinitely.

"We have to get the facts and discuss in depth the economic implications of a continued U.S. presence among all political parties so we can reach a synthesis of opinion," says Eleta of the Panamanian Embassy. "As you can imagine, the issue of a continued U.S. military presence is contentious, and much more so in Panama than in the United States."

U.S. military planners say the drawdown could logically be halted at around 4,500 troops, the level planned for 1998. At that point, the remaining forces would be centered at three main bases: Howard Air Force Base, the only U.S. military air base in Latin America and the host to more than a thousand flights launched annually against drug traffickers; Fort Clayton, the home of U.S. Army South, which is located near the Panama Canal's Miraflores Locks, gateway to the Pacific Ocean; and a jungle training center on Panama's Atlantic side.

If the question of a continued troop presence is not answered soon, however, U.S. military officials caution that the decision may be made for them. "We're hoping that whatever the governments decide, they at least make a decision-in-principal in the next six months," says O'Connor. "Because right now SouthCom's budget for the year 2000 is showing goose eggs. We'll have virtually no money." Given constrained budgets and a major base closing effort, he notes, there is tremendous pressure to see the withdrawal through.

Miami Bound

U.S. officials stress that regardless of the outcome of talks on the troop issue, the 770-person headquarters for SouthCom will move out of its present facility at Panama City's Quarry Heights next year.

SouthCom planners began their search for a new home two years ago and quickly narrowed the candidates to six major contenders: Tampa, Miami, New Orleans, Houston, Puerto Rico and Washington, D.C. In the end, Pentagon officials decided on Miami, a city that is increasingly seen as the gateway to Latin America.

"The mission linkages in Miami were incredible, because more than 85 percent of flights from Latin America come through the Miami hub, almost one-third of Latin American trade is brokered there, and all the countries in our area of operations have embassies in Miami," says Army Col. James Dries, SouthCom's command engineer, who is coordinating the move. "We'll be able to capture those folks as they pass through, which was something that doesn't happen in Panama. We always had to convince them to make a special trip to see us in the past."

Miami also boasts a number of other attributes in its favor. There are five universities and two major research centers that specialize in Latin America and the Caribbean; a strong presence by federal agencies with ties to SouthCom, including the Drug Enforcement Agency, the U.S. Customs Service, the Immigration and Naturalization Service and the Coast Guard; military facilities, including a Base Exchange Mart at the Homestead Air Reserve Center; and an abundance of housing.

Intangible factors also worked in the city's favor. "Whenever we sat down with military people who were living in Miami for their reaction, it was always positive," says Dries, who notes that military recruiters traditionally do well in the area. "There was a feeling of strong support for the military in the community."

According to Dries, the challenge of trying to move a geographic command's headquarters while juggling continuing operations was unprecedented. "No one could recall ever moving a CINC's [commander-in-chief] headquarters before, but we canvassed other agencies who had made major moves, and visited a number of locations that had been involved in a relocation [as part of the base closure and realignment process] to find out what they learned from the experience," he says.

Because there are no operating military bases in the immediate Miami area, SouthCom officials were planning to choose a commercial site sometime in March. Given changes in technology, they say, a military headquarters can rely on alarm systems for security rather than walls and fences.

By far the greatest hurdle to picking up and moving a major command headquarters, according to Dries, is reconstructing an elaborate command-and-control system. "That's easily been the toughest challenge, because a CINC's headquarters has a very high degree of complexity and integration in its C4I [command, control, communications, computers and intelligence] system, all of it affected by multiple layers of classification," says Dries, who counted more than 50 individual C4I systems which will have to be integrated in the new facility. "Because we've known since 1977 that we were leaving Panama, we had also made only minimal investments in communications infrastructure, and there were a lot of Band-Aid fixes in our systems. Now we'll try to make a major upgrade of our technology."

An Emerging Powerhouse

Despite being the smallest of DoD's five geographic commands (there are more DoD civilians in Japan than permanently stationed U.S. troops in Latin America), SouthCom oversaw the deployment of more than 52,000 U.S.-based troops to Central and South America last year in a series of military, engineering, counter-drug and humanitarian exercises and operations.

Future deployments may be even more extensive. In a surprise move last February, the Pentagon announced that in addition to Central and South America, SouthCom will be given responsibility for the entire Caribbean Sea and Gulf of Mexico, an area carved out of the Atlantic Command's area of operations. That will leave one military commander, experts say, unencumbered by concerns about local Panamanian politics, looking south from Miami toward one of the most vital trading regions in the world.

Latin America is clearly emerging as an economic powerhouse, a point highlighted during Secretary of State Warren Christopher's tour of the region in February. U.S. trade with Latin America totaled $92 billion in 1994, only slightly less than trade with Europe. And U.S. exports to Latin America grew an average rate of 21 percent annually from 1987 to 1993, roughly twice the growth rate of exports to the European Union.

"There's a new paradigm at play in Latin America," says McCaffrey. "We've created 800,000 U.S. jobs in the last five years because of increased trade with the region. A million Brazilian tourists visited our country last year, and we import more oil from Venezuela than Saudi Arabia. Numbers like that suggest to me that the future of our grandchildren will be closely tied up in this hemisphere. Our economic and political fortunes will largely be shaped here over the next 25 years."


By James Kitfield

May 1, 1996

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