China's latin american moves: a legitimate concern?

A Brief Assessment by Dr. H.P. Laughlin Riordan Roett, director of the Western Hemisphere Program at Johns Hopkins University, recently said that China’s growing influence in the control of the Panama Canal was not really a “legitimate concern.”

“I think that, given globalization and internationalization of world trade and commerce, the Chinese are playing a very important role in the region,” he stated. Of course, one can hope Beijing’s interests remain purely economic, but as Benjamin Franklin observed: “He who lives on hope will die fasting.”

Today, thanks to Panamanian Public Law No. 5, a company owned by Hong Kong mogul Li Ka-shing, who enjoys cozy ties to China’s communist party leadership, has near sovereign control over the two strategic choke points of our hemisphere’s most important waterway, through which passes 15 percent of all goods entering or leaving the United States, including 40 percent of U.S. grain exports and about 670,000 barrels of oil per day.

Ka-shing’s Panama Ports Company (PPC) commands the facilities at each end of the canal, Cristobal on the Atlantic and Balboa on the Pacific, under a 25-year lease with an automatic 25-year renewal option. PPC also has a 15-year option to develop installations on Diablo and Telfers islands, thus increasing PPC’s influence – and China’s – over the Canal Zone.

Most significantly, PPC has the right “to cede or transfer all or part of the rights and obligations arising from [this contract] or from the activities derived from said contract” to any third party, provided that party makes the minimal effort to register as a Panamanian corporation.

Yes, a Chinese-backed company is free to just hand over rights to anyone, such as Iran, North Korea, France or another nation that could be hostile or predatory towards U.S. interests. Ship pilots, access to docks, use of facilities, can all be denied with a nod from Beijing. To consolidate this foothold, the People’s Republic of China has launched an “immigration invasion” of Panama. There are over 200,000 Chinese living in Panama, a country of just 2.9 million people, making it Central America’s largest Chinese community. And roughly two-thirds
of the Chinese are estimated to be illegal immigrants. They have bought key businesses as well as established their own schools, newspapers and Latin America’s only Chinese-language radio station. Even the notorious Triad gangs are flexing their muscles there.

China is using its financial and economic clout to pressure Panama to switch its loyalties from long-time ally Taiwan. Should Panama defect to Beijing, Taiwan’s other Central American allies, including Nicaragua and Costa Rica, would likely follow, starting a new game of dominoes south of our border.

More than a century ago, President Rutherford B. Hayes recognized the practical wisdom of a canal on the Panamanian isthmus under American control. Replace “European power” with “foreign power,” and Hayes’ words are as apt and sensible today as they were prescient then: The policy of this country is a canal under American control. The United States cannot consent to the surrender of this control to any European power.... The capital invested by corporations or citizens of other countries in such an enterprise must in a great degree look for protection to one or more of the great powers of the world. No European power can intervene for such protection without adopting measures on this continent, which the United States would deem wholly inadmissible....

In other words, geopolitical realities are like nature – both abhor a vacuum. Hayes knew then, and it’s as true today, that a Transamerica canal must fall into a great power’s orbit, either for financing or protection. No Central American country has the wherewithal to assume the job.

So as the U.S. abdicates the role, another major power will snatch the mantle of authority. China is moving rapidly to fill this void with money and markets, not just in Panama, but throughout Latin America and the Caribbean. The political and economic relations China began in the late 1990s with nations as diverse as Panama, Cuba, Brazil, Peru and Venezuela has earned the totalitarian Beijing regime observer status in the Organization of American States, which had been known for its emphasis on democratic governments.

In addition to sending Chinese military advisors and trainers to assist Venezuela’s saber-rattling leftist-populist strongman Hugo Chavez, in March 1999 Chinese intelligence experts began operating a joint intelligence spy and warfare center with Cuba. Chinese experts have since been intercepting U.S. telephone conversations and Internet data from a new cyber-warfare complex near Bejucal, some 20 miles south of Havana.

“The role of China in the region could complicate U.S. efforts to control illegal
immigration, weapons shipments, the drug trade and money laundering,” reports the Asian Wall Street Journal, “because China is cooperating with Latin countries not especially friendly toward those efforts. Some of these nations may try to use the Chinese alternative to challenge U.S. hegemony… Given China’s view of liberty, this cannot be a positive development for the Americas.”

This is not merely the changing of the guard at the Panama Canal, but the harbinger of catastrophe, creating a highly destabilizing, volatile situation in our front yard. China pursuing its own agenda in this hemisphere must inevitably lead to confrontation with the U.S. – either directly, as in a “Panama missile crisis” showdown over Taiwan, or, more likely, through a stranglehold on trade passing through the canal that would deal a crippling blow to our economy.

As Hayes foresaw, much like James Monroe before him, such interference on this continent is “wholly inadmissible.” And unlike Prof. Roett, I’d say it was indeed a pretty legitimate cause for concern.

Dr. H.P. Laughlin, a U.S. Navy veteran who served in both the Atlantic and Pacific theaters during World War II and holds doctorates from five leading institutions, is chairman of the American Defense Center, a national nonprofit organization located in Frederick, Md., which conducts independent research and analysis on issues of defense, national security and foreign policy.