Panama Update Archives
Number 26, April 1999The leaders of the Panama Canal pilots association generated a political firestorm in December when they charged that the deterioration of worker conditions on the canal so threaten the canal's security that the United States might invoke the Neutrality Treaty's provision for intervention to protect canal operations. President Pérez Balladares called the pilots' statement "anti-patriotic." The Panama Canal Commission, the U.S. federal agency that governs the canal until the end of this year, entered arbitration with the pilots to reach a settlement. Journalist Rafael Pérez Jaramillo explores the roots of the controversy in the following article that appeared in El Panamá América on January 14.Will the United States leave Panama on December 31? Yes, it has made sure that when Panama assumes control of the canal in 2000, the canal will be operated under U.S. parameters. Changes in labor relations undertaken on the eve of the transfer date awaken these suspicions.
"Why now, with only a few months before the Canal Treaty ends, are they bringing in changes that affect labor relations?" asks a canal pilot worried by dismissals and threats of privatization hanging over the canal. At its extreme this situation could lead to intervention, according to the 1977 Neutrality Treaty, which has no end date and allows military action by the United States before and after the year 2000, should canal operations be in danger.
It seems that much of what is happening all began with the constitutional amendment, approved with contested reservations, on November 24, 1994. The enacting legislation for the amendment adopts a temporary provision that "the Canal Authority [the new Panamanian agency that assumes control of the canal] will incorporate into its organization the administrative and operative structure existing in the Panama Canal Commission on December 31, 1999." This includes its "existing norms, regulations and existing labor agreements, until they are modified according to the law."
"How can you put into the Panamanian Constitution that all the laws, regulations and everything of December 31, 1999 will apply to the Canal Authority?" asks Ricord, adding that "the Constitution itself is ignoring Panamanian sovereignty."
The day the legislative assembly approved the amendment, Roberto Arosemena Jaén said it was an attempt to make constitutional "U.S. legislation governing the canal" on December 31, the same day as Panamanian law is to take effect. Others warned in 1994 that in the time remaining before the transfer, the rules of the game might change. One of those voices was former canal administrator Fernando Manfredo.
Manfredo says that the United States "is making changes to Law 96-70 [the United States' enacting legislation for the 1977 Canal Treaty] to make the canal function like a private company. The Board of Directors, whose majority is North American, is being given enormous powers that will allow them to change existing rules and regulations, including for personnel."
Captain London Rankin, vice-president of the Panama Canal Pilots Association, said the Canal Commission continues to introduce changes to its organizational structure that have affected and will keep affecting the labor force. An example is the "Man Power" study, which "defined the number of workers necessary for the [canal's] operation." As a result of the study, Rankin says, "workers have been fired." All temporary workers would be fired in March, he claimed.
Professor Ricord explains that only the canal's accounting department knows exactly how many of these "temporary employees" there are. The number ranges from 800 to 1,200. Ricord points that the announcement that these temporary workers would be fired was made by the current administration, "which is still a U.S. administration until the last day of the year."
A Private Canal?
Although the Panamanian government has denied that it seeks to privatize the canal, it has sent some suspicious signals. Several months ago, a Canal Authority director, Moisés Mizrachi, mentioned that "every job is on the line," and that "no one is secure here," opening wounds that have still not healed.
Another aspect of the issue is that a percentage of the Panama Canal's income will be administered by private banks, according to statements by Jorge Ritter, who is both Foreign Minister and Minister of Canal Affairs.
Ricord and the Canal Pilots Association also point out that the Canal Authority law opens the door to the privatization of services and work performed for the Canal Authority. Law 19 of June 1997 establishes that "the Authority may delegate to third parties totally or partially the execution and discharge of certain works or services in conformity with this law and regulations."
For Rankin, what is going on in the canal administration is a change of focus from one of "service" to one of "business." That is why there is an attempt to cut operational costs, like any other business in the world, in order to maximize profits.
According to Orlando Rebolledo, treasurer of the Panama Canal Pilots Branch, the management seems to have discovered in the last year that there were many employees, and they think that many fewer can carry out the same work.
"That affects the people who stay," he says, and cites an example. "Before there were four pilots on each Panamax ship [the largest kind to fit through the canal], then they were reduced to three, now there are two, and the Commission proposes there be only one." [The canal administration agreed in February not to reduce the number of pilots per ship.] This, he says, translates to more work for each employee and less security for the canal and its users, who were paying for high service - the four pilots - and now pay the same (or more: tolls rose a few months ago) for fewer pilots.
"Internal Panamanian considerations"
This is where the issue of ship security comes in. Rankin explained that with the broadening of Culebra Cut [the canal's narrowest passage], supposedly to ease the transit of Panamax vessels, "the Commission washes its hands of accidents except those with more than a million dollars of damage. If a ship owner has a less serious accident caused by a pilot's mistake or equipment failure, "who will pay for those damages?" asks Rankin.
When the late General Omar Torrijos signed the Neutrality Treaty, he was aware that he was putting his seal on a pact that would allow the use of military force by the United States in Panama if, according to him, the waterway was not administered wisely by future generations. The intervention clause accepted by Torrijos, which puts conditions on the turnover of the canal to Panama on December 31, 1999, together with new U.S. legislation, lead to the belief that the canal being transferred to Panama will be made to order for the United States.
In August, 1993, then U.S. Ambassador Deane Hinton said that "if any military threat to the canal should arise, the Neutrality Treaty guarantees our right to defend the waterway," but he added that "today such a threat seems to be a remote contingency."
Then what might threaten the canal? Hinton answered: "The threats, if they should exist, would appear to come mostly from internal Panamanian considerations such as... an inadequate response by the canal administration to the competitive challenges that arise from technological or other changes."