December 10, 1999


It was, of course, to be expected that many conservatives would be outraged by the imminent reversion of the Panama Canal to the Panamanians: for years, they have been screaming about it, warning that if we didn't hold on to that relic of Teddy Roosevelt's "big stick" belligerence all would be lost. In the wake of the end of the cold war, however, it was easy to ignore them: after all, with the Soviets gone, who or what could pose a danger to the U.S. in our own hemisphere? Would Fidel Castro suddenly launch an invasion, or somehow provoke a Commie revolution in Panama, and stage a takeover of the strategic waterway? Not bloody likely. But now, it seems, as the date for the official transfer approaches, there is a new outcry on the right that points not to the Fidelistas, but to an even more distant and improbable plotter – the Chinese!


As the last major Commies on earth, albeit in name only, the Chinese have taken the place of the Soviets in right-wing demonology: what "the Kremlin" conjured in the conservative imagination, circa 1964, has now been replaced by "Beijing" – or, "the butchers of Beijing," if you're into alliteration. But in a post-Communist world, with no credible military threat to the U.S., the effect of the old hyperbole is more comedic than dramatic, as was underscored in the headline of an Associated Press story on the controversy: "Weinberger Says China Eyes Panama."


Panama? But of course – why didn't I think of that? It's a perfectly obvious connection to make: after all, Beijing is less than 3,000 miles away from Panama City. Never mind all that speculation about a possible Chinese invasion of Taiwan – that's just a feint. The real plan of the People's Liberation Army is not to cross the Straits of Taiwan, but to hop, skip, and jump clear across the Pacific Ocean and take the Panama Canal. Pretty diabolical, eh?


Weinberger is quoted as saying that it would be "illogical" for China to "pass up a chance to acquire a major foothold in one of the world's three major choke points – especially if it can be done with little cost and no risk." The Associated Press story from which this quote is taken, while identifying the canal as one of the chokepoints, did not enlighten us on the other two. But no matter: the point is that, if the world is going to have chokepoints, Washington's hands must be clasped firmly around them. And that about sums up the Weinberger Doctrine for the post-cold war world – we must grab the whole world by its collective throat.


Weinberger and his cohorts on the neoconservative right are up in arms over the fact that the restoration of Panamanian sovereignty coincides with the privatization of the canal's management – and the contract has been awarded to the Hong Kong-based Hutchison Whampoa, Ltd., which will manage the ports at both ends of the canal. An Alabama-based company, which lost out to Hutchison, complains that the Panamanians treated them unfairly, and "tilted" the rules to discriminate against them; Republican politicians (and even, sadly, Pat Buchanan) have used the Hong Kong connection to push one of the most ludicrous theories ever cooked up anywhere: that the Chinese are engaged in an elaborate ruse to somehow "subvert" not only the canal but all of Central and South America!


When the perfervid fantasies of the Hate China crowd collide with reality, the result is uproarious: witness the exasperated reaction of John Meridith, Hutchison Whampoa's managing director, who declared to the Washington Post from his London office that the campaign linking his company to the Chinese military is "driving me completely nuts." In that case, poor Meridith will have much in common with his accusers. For the mundane reality of Hutchison's Panamanian operation is that, out of 500 employees, a grand total of zero are Chinese: 97 percent are Panamanian. So much for the Yellow Peril raising its head in Central America. "We are a commercial enterprise that is accountable to our stockholders,'' Mr. Meredith protested, but the normally pro-business conservatives weren't about to let facts get in the way of ideology: committed to the Yellow Peril in the Americas thesis, otherwise reasonable people are now convinced that it won't be long before Red Chinese are pouring over the Rio Grande and infiltrating the U.S.


Think about it: no matter how gastronomically challenged your little one-horse town may be, it is sure to have Chinese take-out. Now just why do you suppose that is?


It is pathetic to realize that some Republican politicians have jumped on this ludicrous bandwagon, along with some right-wing pundits: not surprisingly, the Washington Times, the voice of the Reverend Sun Myung Moon, is leading the journalistic pack. This eye-rolling performance is yet more proof – if any were needed – that the conservative wing of the Republican Party has a real knack for setting itself up for defeat. Whoever asked the President at his recent press conference about the Hutchison Whampoa brouhaha did the White House a big favor. For it gave Clinton the opportunity to shoot down his opponents with a simple recitation of the facts. Hutchison Whampoa, Clinton patiently explained, was granted the concession to unload cargo from ships in port: "They also do this in three or four ports in Great Britain. It's one of the biggest companies in the world that does this. The managing director is British. Most of the employees will be Panamanian."


Is Britain in imminent danger of a Chinese Communist takeover? From what Anthony Lewis has to say about Tony Blair's civil liberties record, that would seem redundant.


The idea of a Chinese plot to take over the Panama Canal is not a subject that I would normally deal with in this column: the theory, on its face, is far too improbable to take seriously, no matter how many people believe it. I determined not to write about it, and dismissed it from my mind, in spite of the outcry on the right – on the general theory that I have the right to spare myself something – until the other day, when I came across a posting on – announcing that none other than Rep. Ron Paul (R-Texas) had introduced legislation to block the transfer of the canal!


What? How could a man who has been the most steadfast congressional noninterventionist of all times, an intelligent man, and, most of all, a great friend and supporter of the late Prof. Murray N. Rothbard, fall for such arrant nonsense as the Weinberger-Yellow Peril in the Americas scenario? Good lord, I thought, my heart sinking, I guess I'll have to write about this after all!


Incredibly, Paul not only swallows the serio-comic argument that a Hong Kong-based company is necessarily a "security risk" to the United States – in which case, most of San Francisco is now owned outright by the "Red" Chinese – but his resolution calls for the reassertion of US sovereignty over the Canal Zone. Calling the legality of the 1977 treaty into question, and citing "a cost of approximately $439 million, and another $450 million" spent on maintenance annually, Paul even goes on to claim that the loss of "more than 5,000 lives" during "the American era of construction of the Panama Canal" gives us the right to raise the Stars & Stripes.


To anyone familiar with the history of Panama, the story of how the country came into being and the canal came to be built is a classic example of gunboat diplomacy in action. Formerly a part of Colombia, and with no real regional, ethnic, religious, or cultural differences from the rest of the country, the only aspect of Panama that was at all distinctive was that it included the narrowest section of the Central American isthmus – and thus the logical site for a canal. The concession to build such a canal had been granted to a French company by the Colombian government, which proved not up to the task, and went bankrupt. The U.S. government offered to pay the French Panama Canal Company $40 million for the concession, but the Colombian government stepped in and demanded its cut: $10 million. President Teddy Roosevelt went ballistic, and declared that this was an attempted "holdup." But the fact is that the $10 million to Colombia would have come out of the $40 million destined for the French company. TR then engineered a phony "revolution," directed from Washington and carried out by employees of the American-owned railroads; American warships prevented the Colombian government from taking effective action to put down the "revolution."


As it turned out, after the "revolution," $40 million (shelled out by U.S. taxpayers) flowed into the coffers of the French company: except it wasn't French anymore. As Murray N. Rothbard pointed out in the December 5, 1977 issue of Inquiry, the now defunct weekly put out by the Cato Institute:

"its shares had been secretly bought u shortly before by a syndicate of Wall Street bankers, headed by J. P. Morgan and Company. The syndicate hired the eminent Wall Street lawyer, William Nelson Cromwell, to get the American money, and it was Cromwell, sitting in the White House itself, who wrote TR's dispatches and orders, and engineered the entire operation. After the syndicate got the $40 million, they were able to sell their shares to the U.S. government for twice what they had paid."


The chief beneficiary of this largess was Teddy Roosevelt's brother-in-law, Douglas E. Robinson, a member of the new syndicate that now owned the formerly "French" Panama Canal Company. Aside from falling directly in Robinson's pocket, the bulk of the $40 million shelled out by American taxpayers flowed into Robinson's New York real estate firm.


During the debate over the 1977 treaty, Senator S. I. Hayakawa declared of the Canal Zone that "we stole it fair and square." The idiosyncratic Republican Senator from California was known for his cryptic aphorisms and his enthusiasm for General Semantics, as well as for having famously been caught napping during Senate sessions – and all these factors may have contributed to this oddly counterintuitive sound-bite. Hayakawa's remark aptly sums up the general consensus of the "save the Panama Canal" crowd, as least as it applies to outright militarists such as Weinberger and the neoconservative worshippers at the altar of Morgan tool Teddy Roosevelt. But surely this sordid history is enough to make a staunch libertarian, such as Ron Paul, think twice about his resolution. The money paid out for the maintenance of the Canal Zone, including the costs of stationing troops and public administration, was a subsidy to the big New York banks that benefited from the creation of the "republic" of Panama to begin with. If the U.S. government is looking for reimbursement of its substantial investment, then why not look to the financial interests who reaped enormous profits from U.S. intervention?


I am, frankly, shocked that Paul would raise the question of the lives lost during the building of the Canal: given the history of the Canal Company, and the fact that the whole project was made possible by US government action (in the form of military action) and subsidies (in the form of the bailout of the "French" company), just who is responsible for those deaths? Just ask yourself who profited from these deaths, and you have the answer to this question.


The story of what happened to Panama is not new: we see it, today, being reenacted in the Caucasus, as the oil companies and their political flunkies grow fat on US government subsidies: yesterday it was the Panama Canal, today it is the Transcaucasian oil pipeline, recently announced at the Istanbul OSCE conference. The basic strategy of the big banks and other investors, hungry for government-guaranteed profits, has not altered one iota. First, create instability, perhaps a secessionist movement that will succeed – with a little help from its overseas "friends" – in setting up a "republic." They used to call them "banana republics," but now that the focus has shifted to the steppes of Central Asia they are calling them "Islamic republics" – but, no matter. It is all the same thing.


A tiny "republic" in the middle of Central Asia, totally dependent on oil wealth for state revenues, and linked to the big oil companies and their subsidiaries and dependents economically and politically – this is the vision of the transnationals and they are working day and night to achieve it. Georgia, Azerbaijan, and several other Caucasian "nations" that litter the landscape of what had been the southern frontier of the old Russian empire – all are potential Panamas, eagerly awaiting infusions of U.S. tax dollars. It is a vision that, rhetoric about "democracy" and "human rights" aside, has been unchanged since 1903, when Teddy's big stick swung into action in Panama. Ron Paul has long been one of my heroes, and I wouldn't bother singling him out if I didn't know that we share the same dedication to peace, liberty, and the foreign policy of the Founders. As noninterventionists, not a few of them conservatives, oppose the new policy of gunboat diplomacy in which the U.S. purports to defend its alleged "interests" around the world, it behooves them to remember the lessons of history – but first they have to get their facts straight.

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Justin Raimondo is the editorial director of He is also the author of Reclaiming the American Right: The Lost Legacy of the Conservative Movement (with an Introduction by Patrick J. Buchanan), (1993), and Into the Bosnian Quagmire: The Case Against U.S. Intervention in the Balkans (1996). He is an Adjunct Scholar with the Ludwig von Mises Institute, in Auburn, Alabama, a Senior Fellow at the Center for Libertarian Studies, and writes frequently for Chronicles: A Magazine of American Culture. He is the author of An Enemy of the State: The Life of Murray N. Rothbard (forthcoming from Prometheus Books).

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