September 26, 2007

Securing Panama Canal interests

Massive US-led war games involving 19 nations set out to improve security for this vital waterway.

By John CK Daly for ISN Security Watch (26/09/07)

The US$18 million FA Panamax 2007 military exercises - maneuvers for which the mainstream media's radar barely registered a blip - took place between 29 August and 7 September with the involvement of 19 nations, most of them Latin American. The objective is to ensure joint security over a vital waterway of major strategic interest, especially to the US and China.

Held under the auspices of the US Southern Command, the massive operation involved 30 vessels, 12 aircraft and more than 7,500 personnel from Argentina, Brazil, Chile, Canada, Colombia, Dominican Republic, Ecuador, France, Guatemala, Honduras, Nicaragua, Netherlands, Panama, Peru, the US and Uruguay, with El Salvador, Mexico and Paraguay sending observers.

The exercise was designed to improve terrorist countermeasures to protect the vital waterway. Simulated ground forces participated at the Soto Cano air base in Honduras.

According to the US Southern Command in Miami PANAMAX 2007 "focused on ensuring the security of the Panama Canal from both the Caribbean and Pacific approaches." Commander of the Norfolk-based Second Fleet Vice Admiral Evan Chanik led the exercise.

Deputy commanding general of US Army South, Brigadier General Manuel Ortiz, said in a statement: "This year's Panamax is a truly amazing exercise. This is the largest exercise in the hemisphere."

Participating US warships included the USS Wasp, USS Pearl Harbor, USS Mitscher, USS Samuel B Roberts and USCGC Coast Guard cutter Thetis.

While Panamax has been held annually since 2003, for the first time France sent a vessel to participate, the frigate FS Ventose. Peru contributed the frigate BAP Bolognesi and missile corvette BAP Sanchez Carrion, while Colombia dispatched the ARC Antioquia frigate and ARC Buenaventura supply ship. The Royal Netherlands Navy, home-ported in the Antilles and Curacao, dispatched the HNLMS Van Nes. Chile, one of the three original participants in the exercises since 2003, contributed the frigate CNS Almirante Blanco Encalada and a P-3 ocean surveillance aircraft. Canada sent HMCS Regina along with soldiers to Honduras to participate in simulated security and humanitarian assistance scenarios. The war games emphasized visit, board, search and seizure (VBSS) of targeted vessels, maritime interdiction and flight operations.

Since 2003, foreign participation has steadily grown in Panamax. While during the 2003 exercise vessels from only three nations participated, in 2004 nine nations took part; in 2005, warships from 15 nations participated; and in 2006 18 nations sent maritime units to the exercise. Argentina, Chile, Columbia and Panama based maritime surveillance planes at Tocumen International Airport outside Panama City for the exercise; while naval units were only deployed in the Caribbean and aircraft patrolled both the Caribbean and Pacific coasts.

Panamax 2007 was but one of a number of other collateral exercises, including UNITAS Atlantic off the coast of Argentina, the Teamwork South exercise off the coast of Chile, UNITAS Pacific off the coast of Peru and other bilateral exercises and exchanges.

The Pentagon heavily emphasized the anti-terrorist component of the exercises.

Panamax's scenario involved a possible terrorist attack against the Panama Canal by the fictitious Martyrs Liberation Brigade.

Argentinean navy Captain Orlando Delmiro Miguel, the war games' Maritime Interdiction Operations commander, told reporters that the exercises offered "a wide spectrum of gains, especially the fact that people are training together and improving their ability to respond to a variety of situations. We're looking for conformity within the tactical, technical and professional elements. This exercise allows us to work toward the capability of boarding ships that could be of interest."

The exercise also included a contingent of frogmen from Panama's Servicio Maritimo Nacional carrying out mine clearing operations.

Participants said there were regional benefits to the war games as well. Participating US naval vessels subsequently supported Hurricane Felix disaster relief operations in Nicaragua, airlifting nearly 250 tonnes of relief supplies after the northeastern coast of Nicaragua was decimated by the 4 September category-five storm. Since 2005, US Southern Command has sent US military forces on seven regional disaster relief missions including Guatemala and Nicaragua following Hurricane Stan.

The Panamax 2007 exercise was also an element of a larger US maritime southern initiative, the Partnership of the Americas 2007 six-month naval mission to Latin America and the Caribbean. Beginning in April, a US Navy four-ship naval task force from US Southern Command circumnavigated South America, holding a number of maneuvers with partner nations.

The exercises are hardly risk free. On 14 August 2005, during the Panamax exercises, 30 sailors were offloaded onto Huacha island in Gatun Lake in Colon district during an amphibious counter-terrorist exercise and three Panamanian Servicio Maritimo Nacional sailors drowned.

A vital waterway
Ninety-three years after its construction, the Panama Canal remains the Western Hemisphere's most vital waterway, shaving nearly 8,000 miles off ships' Pacific-Atlantic transit, allowing them to avoid the storm-laden Straits of Magellan and the Drake Passage off Argentina's southern coast. The Panama Canal represents the culmination of a centuries-old dream, having first been suggested in 1523 by Holy Roman Emperor Charles V.

More than 14,000 ships annually, or about 40 per day, transit the canal. According to Panama Canal Administration head Alberto Aleman, tonnage transiting the canal has risen steadily, increasing from 230 million tonnes in 2000 to nearly 300 million in 2006.

For the past eight years, the Panama Canal has been completely under Panamanian sovereignty. Ironically, during the 1970s the greatest threats to the canal's security came from the Panamanian government. During the 1960s and 1970s, Panamanians demonstrated in protests over US sovereignty, while then-Panamanian president Omar Torrijos, stymied during the initial negotiations, threatened to blow up the canal if the US did not leave. On 7 September 1977, Torrijos and then-US president Jimmy Carter signed treaties beginning the process of a 20-year phase-out of US military forces and the transfer of all US the military bases and the Panama Canal to Panama by 31 December 1999.

Since Panama received control over the canal, income generated by the waterway has increased from US$769 million in 2000 to an estimated US$1.765 billion expected for the 2007 fiscal year, which ends on 30 September.

The increased tariff revenues will come in handy as on 3 September Panama began the waterway's biggest expansion since it opened in 1914. The project will add a new set of locks to the existing two, which will allow two-way traffic through the waterway at an estimated cost of US$5.25 billion, with completion by 2015.

The improvements are expected to double the 50-mile canal's capacity by accommodating larger ships and almost doubling the tonnage that can transit the channel - a prime concern to US and Chinese exporters. About two-thirds of the cargo transiting the canal is headed to or from the US, while China is the Panama Canal's second-largest user. The Panama Canal Authority will borrow up to US$2.3 billion between 2009 and 2011 to help finance the project, while also increasing transit tolls an average of 3.5 percent a year.

The stark reality for Panamanian officials in Panama City is that without improvements made to the waterway, the canal risked steadily losing business to other maritime alternatives. The Panama Canal is currently restricted to ships of up to 65,000 tonnes, known in maritime circles as Panamax-size vessels. Passage restrictions now frequently produce lengthy queues of up to 100 merchantmen outside the canal's Atlantic and Pacific entrances waiting to make the nine-hour passage.

While the waterway now moves 5 percent of the world's cargo by tonnage volume, maritime analysts estimated that by 2011 the Panama Canal would be forced to turn away an anticipated 37 per cent of the world's container ships, which have steadily increased in size over the past 15 years. Since 1995 the volume of container shipping has tripled and since 2001 risen more than 50 percent. Maritime analysts now estimate that containerized cargo accounts for over 70 percent of international maritime trade, producing in 2006 almost 346,000 container shipments daily, a figure estimated by 2014 to exceed 600,000.

The rising maritime traffic will increasingly focus the security attention of both the US and China, currently the two largest users of the canal, on the vital waterway.

Strategic interests
Nearly a decade ago, Chinese and US strategic interests over the Panama Canal indirectly clashed. In 1999, before the handover, the government of Panama held an international tender to negotiate a 25-year contract for operation of the canal's container shipping ports at its Atlantic and Pacific outlets. Panama signed with the Panama Ports Company, a subsidiary of the Chinese Hong Kong-based firm Hutchinson Whampoa Ltd., a Fortune 500 company and one of the largest Hong Kong stock exchange listings, owned by China's richest man Li Ka Sing.

Congressional Republicans attempted to use this negotiation to try and block implementation of the Canal Treaty, arguing that Hutchinson Whampoa Ltd. might be covertly used by Beijing to influence canal security. The tactic failed, however.

The reality, however, is that the US has an overwhelming preponderance of military and naval power in the region and still maintains the ability to intervene if it feels its interests are threatened.

It did so in 1989, when Washington sent 27,000 troops into Panama to arrest president General Manuel Noriega after two US grand juries indicted him for racketeering, drug trafficking and money-laundering. Furthermore, US warships have retained their historic right of precedence of passage in time of war.

The focus of the annual Panamax exercises is increasingly on potential terrorist threats to the Panama Canal, with this year's fictitious Martyrs Liberation Brigade having heavily religious, possibly Islamic overtones.

Since 9/11, Washington's self-proclaimed war on terror has seen the dispatch of US and coalition forces to both Afghanistan and Iraq, while China devotes its energy towards combating separatists in its troubled western Xinjiang province, giving both countries despite their differences a common goal of combating Islamic radicalism.

Accordingly, it is not inconceivable that at some point in the near future Chinese warships may join their inter-American partners to ensure the security of the waterway, which is increasingly vital to Beijing's rising economy.

Dr John C K Daly is a Washington DC-based consultant and an adjunct scholar at the Middle East Institute.

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