PANAMA: Omar v. the Canal Zone

They have taken down the 9-ft-high chain-link fence between Panama City's Legislative Palace and the adjacent Canal Zone—a fence that Panamanian newspapers like to compare to the Berlin Wall. In the palace itself they have built a false floor and then erected an exact replica of the U.N. Security Council conference table in New York. The only difference is that the legs are wooden instead of steel. "We don't have any steel industry here," explained the Panamanian official in charge of the affair.

Now that these exercises of optical illusion have been completed, the U.N. is ready for one of its more unusual feats of legerdemain, a full-dress, seven-day Security Council meeting this week in Panama City. The meeting almost certainly will be used to air a variety of Latin American grievances, such as Argentina's demand for the Falkland Islands and Guatemala's demand for British Honduras. But the noisiest grievances will presumably come from the host. Panamanian Strongman Omar Torrijos calls the Canal Zone "a tumor that must go through the operating room."

Indeed, after nine years of negotiations, the U.S. and Panama are still as far apart in their views on a new Canal treaty as they were at the time of the bloody anti-American riots of 1964. Torrijos is demanding a treaty that grants full and immediate jurisdiction over the Canal Zone; the U.S. proposes to grant partial or gradual jurisdiction over a period of 35 years. Panama wants the U.S. Southern Command (eleven bases, 12,000 troops) dismantled, claiming that the U.S. has no treaty right to station armed forces in the Canal Zone in peacetime. Actually, the original 1903 treaty provides for U.S. defense of the Canal in both peace and wartime; Washington has proposed a joint defense agreement.

Panama is also seeking increased traffic payments in proportion to all the economic benefits that the U.S. and other nations derive from the Canal's geographic location (a saving of $8.5 billion projected for this decade, according to a recent U.N. study). Washington has agreed to increase the current $1.8 million annual payment (a bargain negotiated in 1914) to about $25 million a year. Panama rejected this offer.

There is no question that Panama needs added revenue. In the four years since Torrijos' military junta seized power, government indebtedness has doubled to $320 million, and simply servicing the debt takes 30% of the budget. Meanwhile, there has been almost no industrial investment in four years, and a severe drought has forced once self-sufficient Panamanians to import rice.

Much of Panama's economic mess is attributable to Torrijos. A mercurial figure of 43, Torrijos has muzzled the press and banned all political parties. Though he allows a figurehead President to sign decrees, he has had himself invested as "maximum leader of the revolution" for another six years. A much ballyhooed scheme to grow sugar cane in the Veraguas province of west-central Panama has failed miserably because the land there is too dry for sugar production. On the other hand, a new labor code that increases workers' benefits has elevated costs and lowered productivity to such an extent that some industrial firms may be threatened with bankruptcy.