Sinophobia: Reds seen under Panama Canal bed

As the time approaches for the United States to hand over the Panama Canal to the Panamanians, right-wing Republicans are warning that communist China will gain strategically as a result. Bouts of Sinophobia have been a recurring theme in U.S. political history ever since the gold rushes of the last century. The Jakarta Post's Asia correspondent Harvey Stockwin examines the latest one.

HONG KONG (JP): As right-wing Republicans look for Chinese Reds under the bed of the Panama Canal, there is an increasing danger of irrational Sinophobia intruding into the extended U.S. presidential campaign, and also into Sino-American relations.

President Bill Clinton may have inadvertently increased the Republican Sinophobia by talking as if communist China will be running the Panama Canal after the United States hands it over to Panama on Dec. 31. But his administration refuses to attend a House sub-committee as it seeks to create paranoia over Panama.

The Republic of Panama does not recognize China. It retains diplomatic relations with Taiwan. The irrationality of the latest American bout of Sinophobia arises from wild speculation (including the introduction of Chinese nuclear weapons into Panama) which is based on the alleged activities of Hong Kong's best known and second richest entrepreneur, Li Ka-shing.

Li is famed in Hong Kong as the best example of the rags-to- riches success story which the free-wheeling territory has produced. He came here 50 years ago with nothing, started his career selling plastic flowers, quickly became one of Hong Kong's leading property developers, and has since risen to be a multi- billionaire presiding over a far-flung business empire.

His empire ranges from a supermarket chain in Hong Kong, to high-rise apartment buildings in Vancouver, Canada, to the running of the Felixstowe container port on England's East Anglian coast -- and a host of other often lucrative businesses in between. Li started Star satellite television in Asia, before selling it at a great profit to Rupert Murdoch. When Li was in charge of Star it broadcast BBC television news to China. When Murdoch took over, he stopped Star's BBC transmissions in an abject effort to please China.

Li long ago took control of a former British conglomerate in Hong Kong called Hutchison Whampoa. One of Hutchison's many business lines is the running of container ports, as at Felixstowe. Hutchison tendered for, and won, a 25-year contract to develop and run container ports at each end of the Panama Canal.

Panama Ports, a subsidiary firm of Hutchison's, has been set up. It is developing one container port at Balboa near the Pacific entrance to the Panama Canal, and another at Cristobal near the Atlantic end. Li is reportedly considering building a cruise ship terminal at Cristobal. He has just been refused permission to erect a cruise terminal in the North Point district of Hong Kong island.

The ports adjacent to the Panama Canal have nothing to do with the actual running of the Canal itself. That task, as from Dec. 31, 1999, will be undertaken by the Panama Canal Authority. Many, probably most, of Hutchison's Panama Ports executives are British, a reminder that Li's business empire is cosmopolitan not merely in its extent, but also in its employment policies.

Li's Panama investments are the ones which have given rise to the current Sinophobia in the United States. Increasingly, over the last few months, voices from the Republican right have voiced fears that Li is mounting a take-over of the canal itself on behalf of the Chinese communists.

As long ago as last August, Senate Majority leader Trent Lott wrote to Secretary of Defense William Cohen, arguing that "U.S. naval ships will be at the mercy of Chinese-controlled pilots and could even be denied passage through the canal by Hutchison, an arm of the People's Liberation Army (PLA)."

Presidential candidate Steve Forbes has argued that having a Chinese company managing both ends of the canal is "simply unacceptable to American security."

Republican Congressman Dana Rohrabacher earlier told a Senate hearing that he believed Li was a member of the inner circle of the Chinese leadership.

Late in November, former chairman of the Joint Chiefs of Staff Admiral Thomas Moorer further upped the ante at a press conference sponsored by the John Birch society. Moorer, after describing China's alleged success in making its nuclear missiles more mobile, maintained that "we have a situation where the Chinese are in a position today to secrete these kinds of missiles into Panama as a launching pad for missiles to attack the United States."

Moorer bemoaned the fact that "no one seems to get exercised over that and the media does not even mention (it)." He insisted that the Chinese threat "is more difficult to handle" than the Cuban missile crisis was.

The only reason for getting "exercised" over all these allegations is that they are all so blatantly absurd.

Panama Ports operates outside the canal and has nothing to do with the actual running of it. Then there are Li's British managers in the container terminals. As the London Financial Times tartly observed: "They are not the type most observers would typically consider to be pawns of communist China."

Undoubtedly Li has his contacts with Chinese communist firms, as do all American businesses operating in Hong Kong. Given the extent of the PLA business empire (before President Jiang Zemin ordered the military to divest themselves of their holdings), it is likely that Li must have had some contacts with it, as would many leading American banks and corporations in Hong Kong.

But to suggest that Li is working hand-in-glove with the PLA, is part of the Chinese leadership, and is conspiring to rain nuclear missiles on the United States is patently ridiculous. Li hasn't spent a lifetime creating a multinational global conglomerate only to destroy it in one moment of political madness. Currently, one of Li's main business advisers is the leading U.S. merchant bank Goldman Sachs, an outfit not generally recognized as a communist-front organization.

Unfortunately President Clinton himself carelessly reinforced suspicions of a Chinese takeover of the Panama Canal, even as he tried to dismiss the controversy.

Clinton was asked on Nov. 30 whether he was worried about the Chinese controlling the canal, to which he replied: "I think the Chinese will in fact be bending over backward to make sure that they run it in a competent and able and fair manner...they will want to demonstrate to a distant part of the world that they can be a responsible partner. I would be very surprised if any adverse consequences flowed from the Chinese running the canal."

Once again demonstrating the poor grasp of foreign policy nuances that has been a characteristic of his administration, Clinton failed to make a necessary distinction between port and canal, or between Li Ka-shing's Hong Kong-based empire and Chinese communism. He may have further fueled Sinophobia as a consequence.

Clinton's remarks brought Li into the fray as the magnate tartly asserted that "We cannot possibly control the canal... we are running a container port business which has nothing to do with the operation of the Panama Canal...We are not even the largest operator in Panama, compared with some of the American and Taiwan operators."

Already it seems unlikely that this categorical denial will end the current emotional bout of U.S. Sinophobia.

As a prelude to that debate, the monetary policy subcommittee of the House Banking and Financial Services Committee began hearings Dec. 7 under the chairmanship of Republican Spencer Bachus of Alabama. "We need to fully comprehend the heightened risks and threats as a result of the withdrawal of our forces," Bachus said.

At the hearing, which representatives of various Clinton Administration departments declined to attend, members of the Alabama company which tried but failed to win the lease for running the container ports claimed that Panama tilted the tendering process in favor of Li's Hutchison.

Congressman Rohrbacher told the sub-committee that Hutchison was a "front for Beijing's intelligence agencies" and warned that "if we do nothing, within a decade a communist Chinese regime that hates democracy and sees America as its primary enemy...will dominate the tiny country of Panama and the Panama Canal".

Meanwhile former Defense Secretary Caspar Weinberger has become the latest leading conservative to add to the growing Sinophobia over Panama. Weinberger maintained that China had established a beachhead in Panama via Hutchison Whampoa, adding 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 or risk."

Far more illogical would be for the United States to avoid a sensible discussion of Sino-American differences in favor of a worst-case Sinophobic scenario. Eighty-three congressmen are due to move a motion in January asking the Clinton Administration to prevent the Panama Canal from falling under Chinese control.