Is Panama Worth the Agony?

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What a difference five years can make. In 1984, when Panama staged its last presidential election, the exercise in democracy proved a thuggish sham. Tabulation sheets vanished, vote counting was suspiciously slow, and when citizens stormed the streets in protest, soldiers fired on the crowds with rifles. Through it all, the U.S. remained silent. Five months later, as protesters chanted, "Fraud! Fraud!," Panama inaugurated Nicolas Ardito Barletta, the candidate favored by Manuel Antonio Noriega -- and the man, many Panamanians charged, handpicked by then U.S. Secretary of State George Shultz.

True, the blatancy of the fraud was more pronounced this time around, but the greater change was the startling shift in the U.S. response. Then, as now, the continued security of the Panama Canal was the centerpiece of relations between the U.S. and Panama. Yet in 1984 the Reagan Administration did not regard U.S. interests as threatened by the challenge to Panamanian democracy. So why is Washington so obsessed now about democracy in a country barely larger than West Virginia? And why is it apoplectic about the ouster of a dictator whom it comfortably did business with for many years? The answers rest less with quantifiable strategic and economic interests than with U.S. credibility and prestige.

For decades, the operation of the Panama Canal has dominated relations between Panama and the U.S. However, strategically and economically, the canal is no longer the vital crossroad it once was. Since World War II, the U.S. has developed fleets in both the Atlantic and Pacific as well as major ports on both coasts. Today U.S. military vessels make only about 30 trips a year through the canal; the Navy's largest carriers are too big for the locks. "It's only useful now to do some rearranging of the fleet in preparation for war," says Ambler Moss, a former U.S. Ambassador to Panama. "It's not vital enough to the national interest to fall on your own sword."

While the canal remains an important artery for commerce, it accounts for only about 5% of seaborne world trade, a figure that has held steady for the past 16 years. New pipelines, including one that cuts through Panama, have stolen much of the oil trade, and air freight and sea-to-rail transport compete for canal business, particularly consumer goods that are moved in containers. Still, the canal remains competitive in the movement of bulk cargoes, such as wheat and coal. Last year traffic through the canal reached almost 156.5 million tons of cargo, the second highest load in canal history. The U.S., the canal's largest user, sends 13.7% of its international seabound trade through the canal. Japan, the second largest user, relies heavily on the canal for food imports. A shipment of grain from the U.S., for instance, would take about 20 days longer if it had to be rerouted. Even so, traffic may peter out as trade vessels get larger; already a sizable portion of cargo ships cannot fit through the canal.