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Admiral Thomas H. Moorer, USN (RET.) 
before the 
Senate Foreign Relations Committee 
June 16, 1998
Mr. Chairman, Senator Biden, and distinguished members of the Senate Foreign Relations Committee, ladies and gentlemen:

I am indeed honored today and grateful to you for this opportunity to testify before your important committee on behalf of the defense of our great country.

In the old days, this testimony would have been given more appropriately before a Senate Armed Services Committee, as was the case in 1978, when I testified so earnestly on behalf of the security of our Nation with regard to the Panama Canal Treaty.

Today, 20 years later, there have been many changes in our country and around the world: the Soviet Union has been dismantled as we knew it; the Berlin Wall is down; and the Cold War is supposedly over. But is our Nation now safe from harm?

Mr. Chairman, I maintain that the status of our military readiness is at an all-time low as regards our ability to defend our country, and at an all-time high as regards the threat to our national security, especially in our own hemisphere.

Despite the fact that we have engaged in more so-called "contingency" military operations than under any previous administration in the history of our Nation, our military forces have suffered 14 consecutive cuts in the defense budget, invalidating the long-standing policy of our country to be able to win in two major regional contingencies simultaneously. According to the distinguished Chairman of the House National Security Committee, the honorable Floyd Spence of South Carolina, it is doubtful that we could win even one major contingency at this point. The United States Marine Corps. by its own admission, are prepared and trained to fight one -- not two, but one -- major contingency at the present time.

Let me state here, for the record, the actual approximate figures obtained recently on specific cuts which greatly endanger our Nation:

The total decline in overall services during the period 1993 to 1999 is 15.3 percent; that is, $267.4 billion in '93 and $257.2 billion now. To keep pace with inflation and to maintain the status quo prior to '93, however, $303 billion would have been required; thus, the actual cut, in real terms, is not a mere $10 billion, but approximately $36 billion.

Of this, the Army was cut 14.2 percent, from $74.3 billion in '93 to $63.8 billion in '99; the Department of the Navy, which includes the Marine Corps, suffered a similar cut of 14.1 percent, down from $94.7 billion to $81.3 billion in '99; and the Air Force is weathering a 14.4 percent cut, down from $89.5 billion in '93 to $76.6 billion in '99.

In overall manpower, active duty military personnel suffered a 17.8 percent cut, down from 1,776,000 in '93 to 1,459,000, despite the many so-called military contingencies and peacekeeping operations around the globe.

As an example, we are spending $2.5 billion yearly in Bosnia alone, and are still presently heavily engaged in Southwestern Iraq. We are accepting military commitments, one after another while simultaneously disarming America. In one high-ranking Pentagon officer's opinion, a gentleman who prefers to remain anonymous for obvious reasons, we will be involved in another "peace-keeping" operation very, very shortly, that being Kosovo. This additional engagement of U.S. forces, according to this very reliable source, appears imminent.

Mr. Chairman and members of the Committee, I state these facts and figures not so much for your information, but for those who need to be reminded that we are on what I consider to be a collision course with disaster in the very near future.

Today, I specifically want to speak about the Panama Canal Treaty and the very real mess in which we find ourselves in our own hemisphere regarding a canal this distinguished body has relinquished to the authorities in that country, effective, at the latest, within the year 2000.

It might have sounded like a good idea at the time, but it wasn't. Many members of this distinguished body agreed with me; indeed, Senator Harry F. Byrd, Jr. of Virginia, on 31 January 1978, inserted into the Congressional Record my remarks made on that same date to the Senate Armed Services Committee, including a letter from me and other military officers to the President, in which we expressed deep concern about Panama. Ironically, 20 years ago, we were in better shape militarily overall.

Today, unfortunately, the fears and concerns of those of us who have had military experience over a great number of years in a great many different situations, have been absolutely confirmed. In 1978, I, along with Admirals Robert Carney, George Anderson, and Arleigh Burke, pleaded with the President not to give away the Panama Canal. Our pleas, along with those of many still serving in this body, went unheeded.

Most of the time, it is gratifying to be proved correct in one's views; however, this time, I can't state strongly enough that I wish we had been dead wrong, and that the President and his supporters had been right. This is absolutely not the case.

Much has been in the press lately about so-called White House scandals, rumors of obstruction of justice, and daily commentary on the President's personal lifestyle. I can't say that these matters don't concern me at all, but they pale in comparison to my main concern, which is, now, as in the past, the secit ty of our country and the ability of this great Nation to defend itself.

So, regardless of the press reports which sell TV programs, magazines, newspapers, and which fuel the gossip mills throughout the country, we are really missing the point if we don't concentrate on the security aspects of the actions, or inactions, of this administration, and the consequences that will surely follow.

Mr. Chairman, I have been honored to serve as this Nation's Commander in Chief of the Pacific Fleet; Commander in Chief, Atlantic and Atlantic Fleet; Chief of Naval Operations, and Chairman, Joint Chiefs of Staff. I truly can't remember a time when I have been more concerned about the security of our country.

Perhaps you think that remark strange, with the history of World Wars I and II, the Korean War and the Vietnam War. But it is a statement I'll stand behind for the following reasons:

Since 1812, no war has been fought against a foreign enemy on American soil. That was a very long time ago. I'm an old sailor now. But I know trouble when I see it, and Mr. Chairman and distinguished members of this committee, I see big trouble in Panama--trouble that could evolve quickly into a conflict in our own hemisphere with world-wide implications.

Mr. Chairman, I speak of the transfer of the Panama Canal to the Panamanian government under the circumstances which now exist. Perhaps some of you will say, "that's old news. We know how you feel about that, Admiral." But there's far more going on there than meets the eye.

A company called Panama Ports Company, S.A., affiliated with Hutchison Whampoa, Ltd. through its owner, Mr. Li Ka-Shing, currently maintains control of four of the Panama Canal's major ports.

Now, Panama Ports Company is 10 percent owned by China Resources Enterprises, the commercial arm of China's Ministry of Trade and Economic Cooperation.

On July 16, 1997, Senator Fred Thompson was quoted by the South China Morning Post as stating that China Resources was, quote, "an agent of espionage--economic, military and political--for China." unquote.

Further, this same newspaper article said ihat China Resources, quote, "has solid relations with the Lippo Group. In 1992, it acquired 50 percent of the Hong Kong Chinese Bank, which is also 50 percent owned by Lippo, and sold its stake to its listed arm, China Resources Enterprise, last month." unquote.

True, Hutchison-Whampoa Ltd. is listed on the London Stock Exchange. What does that mean? Not a thing; many companies in the United States, in the past, were perfectly legitimate companies, although funded by the Mafia. A stock exchange listing is inconsequential and no a reliable reference.

Hutchison-Whampoa controls countless ports around the world. My specific concern is that this company is controlled by the Communist Chinese. And they have virtually accomplished, without a single shot being fired, a stronghold on the Panama Canal, something which took our country so many years to accomplish--the building and control of the Panama Canal, along with military and commercial access in our own hemisphere.

This stronghold of power has been almost completely accomplished through something called "Law No. 5" which provides inter alia, the following:

1. Responsibility for hiring new pilots for the Canal. (Pilots have complete control of all ships passing through the Canal);

2. Assumes control over critical Atlantic/Pacific 6 anchorages, including a monopoly on the Pacific side when Rodman Naval Base is vacated next year. (Note: According to "Law No. 5," effective March 1, 1997, Hutchison has the right to demand possession of Rodman);

3. Authority to control the order of ships utilizing the entrance to the Canal on the Pacific side, and also the right to deny ships access to the ports and entrances of the Canal if they are deemed to be interfering with Hutchison's business--in direct violation of the 1977 Panama Canal Treaty which guarantees passage for the United States Navy;

4. The right to unilaterally transfer its rights to a third party--any company or nation of their choosing;

5. Certain public roads become private, cutting off strategic areas of the Canal;

6. Included in the deal with Hutchison is U.S. Naval Station Rodman; a portion of U.S. Air Station Albrook; Diablo; Balboa, a Pacific U.S.-built port; Cristobal, an Atlantic U.S. built port; the island of Telfers, which is strategically located adjacent to Galeta island, a critical communications center. I am told that Telfers island is the future home of the Chinese-planned export zone called, "The Great Wall of China project."

7. A clause was inserted at the end of "Law No. 5" which states that if a conflict between provisions of the law and provisions of the Canal treaty occur, the canal treaty prevails. Of course, point number 7's clause is meaningless if the U.S. Government doesn't act now.

In my testimony before the Senate Armed Services Committee in 1978, I stated:

... the defense and use of the Panama Canal is wrapped inextricably with the overall global strategy of the United States and the security of the free world. I submit that if the United States opts to turn over full responsibility for the maintenance and operation of such an important waterway to a very small, resource-poor and unstable country as Panama and then withdraws all U.S. presence, a vacuum will be created which will quickly be filled by proxy or directly by the Soviet Union, as is their practice at every opportunity. Also noteworthy is the fact that in July of last year, a Soviet Commission visited Panama, seeking port and airport concessions and offering economic assistance.

The Soviet Union's thinking and conclusions about the Canal, and their approach to gain control of this important, strategically situated waterway, was not lost on the Chinese Communists. They have replicated the Soviet Union's intent to the letter-quickly, silently, and successfully.

In the first place, Mr. Chairman, Law No. 5 is illegal. It runs counter to the so-called treaty entered into by this country with Panama, calling for a neutrality provision. I say "so-called treaty," because the treaty was never signed by Panama. I have been acquainted with President Lacas, who held office at the time, and seen him several times and he assured me that he was never asked to sign the treaty and he never did sign the treaty. It was signed by Torrijos, who was one of the renegades of the Panamanian operation.

Under Panamanian law, a treaty cannot be simply entered into by its governing body; a plebiscite must be held so that the Panamanian people can voice their approval or disapproval with a vote. No such plebiscite has ever been held.

Additionally, the bid process for port control in the Canal Zone has been flawed. That's a nice way to put it. Bechtel, for instance, reportedly won the bid on four occasions, but the bids were set aside. We now know why. Bechtel bid $2 million yearly; Hutchison-Whampoa bid $22 million yearly, beating out Bechtel on the last "bid process" by a whopping $20 million yearly.

So the Panamanian authorities receive $22 million each year from Hutchison-Whampoa, a known Communist Chinese-controlled company, in their 25-year agreement, renewable for an additional 25 years, for a total of 50 years. Mr. Chairman, 50 years is a long time. And $22 million a year is a lot of money.

If that's not news enough, the so-called Law No. 5 provides that Panama can assign its rights under this agreement with no further ado. This assignment, Mr. Chairman, could be given to Cuba, the actual Communist Chinese government, Libya, Iraq, Iran, or any other stated opponent of the United States, including rogue states who sponsor terrorism and who have nuclear bombs aimed at this country right now. For instance, I believe the Communist Chinese have 13 such missiles aimed at our country presently.

I don't know who has the most money, but it would probably be difficult to outbid the Red Chinese, with $45 billion in holdings, although Saddam Hussein might attempt to give them a run for their money, literally. One thing is obvious: as in most places in the world, money talks. That is absolutely a fact in Panama, Mr. Chairman.

As an individual who has laid his life on the line for our country for many years, and led numerous others into battle who paid the ultimate price, I, for one, cannot understand why our government has passively permitted this "Law 5" to happen, thereby endangering our security interests in this hemisphere.

In a staff report to your committee in February of last year, Mr. Chairman, it was stated:

"In September 1995, Presidents Clinton and Balladares formally announced that the U.S. and Panamanian Governments would begin exploratory talks on maintaining a U.S. military presence in Panama. Fifteen months passed and no exploratory negotiations transpired.

"Instead, in November 1996, President Balladares announced to a young, left-wing faction of the Democratic Revolutionary Party (PRD) --the political party which was founded by General Omar Torrijos and later backed General Manuel Noriega [of drug and prison fame], that there would be no U.S. forces in Panama beyond the year 2000."

Thus, the provision in the permanent neutrality treaty with the Panama Canal, if agreed upon by both countries, was completely ignored, to the detriment of the security of this Nation. I find this truly unbelievable.

All ports in the Panama Canal are of strong strategic importance to this country, Mr. Chairman. But the most important U.S. military installation there is Howard Air Force Base, located on the west coast of the Canal, on the Pacific side, which has the aircraft-capable airfield for conducting U.S. military or oversight operations. In 1994 alone, the U.S. military spent more than $4 billion in repairs and improvements at Howard. In a recent poll, 70 percent of the Panamanian people expressed a desire to have some kind of continuing U.S. presence in the Canal Zone after the year 2000. They, apparently more than we, understand the implications of the security and absolute necessity of the Canal in war time, as well as in peace time.

For instance, the Canal is the only viable way to transport oil to the Gulf of Mexico and East Coast from the West. And in every military conflict--past, present or future--control of the canal has and will remain an absolutely essential factor.

Additionally, in either the Pacific or the Atlantic, the United States must be able to utilize the Canal freely and without constraint to transport heavy armor, food, supplies and troops.

The recent refusal of some of the Arab states, including at least one which has already been attacked by Saddam Hussein, to permit U.S. landings and take-offs from their soil should make it very clear that we cannot depend upon the good grace of other "friendly" nations in time of conflict necessary to preserve world peace.

And the very recent nuclear tests in Pakistan and India should contribute to our concern. Due to our vulnerability to incoming nuclear missiles this was an ideal time for the President to voice his support for the rapid development of an anti-missile missile system.

This brings us to the Multicultural Counterdrug Center, known as MCC, as a potential framework for the continued United States presence in Panama.

This proposal is so far-fetched as to prove not only dangerous but embarrassing as a truly viable solution. We've seen the drug problem in Colombia and Mexico expand into disastrous proportions. Even with a limited U.S. presence in the Canal, we could only hope to stand by and watch.

The MCC would provide that numerous countries maintain a presence and oversee conditions, allegedly to prevent drug trafficking. Mr. Chairman, this considered option is, in my judgment, not a viable one.

The drug cartels in Colombia, Mexico and elsewhere are already impacting on Panamanians who have been kidnaped near the Colombian border. Some have reportedly been murdered, while others have been returned to their families after ransom money has been paid.

This activity gives us a clue about how this MCC option would work. I believe it simply couldn't. The board of the MCC, which could possibly include representatives from Colombia, Cuba, Libya, Communist China and other unfriendly nations, could even choose the aviators who are permitted to utilize the U.S.-built and maintained runways in the Canal Zone.

We would only be bystanders and witnesses to increased drug trafficking, especially since closed containers marked "humanitarian supplies," for instance, could possibly be transporting heavy drug shipments to further infiltrate the young people of this country. The MCC would simply be another coup for the drug lords.

Reportedly, President Balladares received approximately 30 percent of his campaign funding from the drug cartels, so I don't think he would object. These reports are unconfirmed, but his political statements have been public and are thus verifiable.

In a report on money laundering in Panama, the Honorable Robert Gelbard, Assistant Secretary of State, reportedly stated the $10 billion of the $35 billion in funds that pass through Panama's International Banking Center are drug related. Panama is considered by some to be the Switzerland of Latin America, as the official monetary tender, the Balboa, is equivalent and thus interchangeable with the U.S. dollar.

I commend to the attention of the Congress a bill offered in the First Session of the 105th Congress, formally known as H.R. 2950 and referred to as the "United States-Panama Security Act of 1997." The Honorable Duncan Hunter, Chairman of the House Military Procurement Subcommittee, authored this bill. Although I do not know the status of this bill, Mr. Chairman, it contains provisions which should be of keen interest to all of us interested in national security matters.

Mr. Chairman, our own problems with reports of Chinese money into U.S. elections is disturbing. I am not a politician, Mr. Chairman--I am a sailor. I am too old now to serve on active duty, but I can state to you in no uncertain terms that war is indeed hell. It's bad enough when it's fought on foreign soil, in another hemisphere, away from the uninterrupted lives American citizens.

But the American people would rightfully hold our government responsible if was comes to this hemisphere. Under the present conditions, it's not a matter of it, but when, in my judgment.

How long will it take for us to comprehend that a "politically correct" military is no substitute for a lethal force, capable of handling two major contingencies at once, especially if one of those contingencies is in this hemisphere?

We are not talking here about an ill-funded Nicaraguan effort against the Communists in the late '80's; we are talking about the control of a strategic part of the world in our hemisphere, shortly to be controlled by the largest country on earth, Communist China, financially flush and people-strong with a growing imbalance of men over women.

I am not here to dictate the terms of our foreign policy, Mr. Chairman. But I can tell you honestly and truthfully, with strong conviction, that somebody needs to take a long, hard look at our vulnerability in the Panama Canal Zone.

The Panama Canal give-away in 1978, although worrisome at the time, cannot begin to compare with the problem that we now face. The American people will hold their government responsible, and rightly so, if we don't act now to rectify the rapidly deteriorating condition of an American strategic and globally important part of the world--that small area in our own hemisphere which has already cost the American taxpayers a huge sum and claimed so many American lives to construct and maintain. Lives were also lost when we were forced to intervene during the Noriega regime.

I don't like to offer constructive criticism without a proposed solution, and it is a simple one, in my view: stop the process in Panama now. Don't relinquish another square foot of American bases in Panama unless and until the neutrality agreement already in place is honored by the Panamanian government. The Congress should pressure the administration to get their act together in the Panama Canal Zone.

War, Mr. Chairman, is a terrible thing. I know. Ask anybody that has been there. Demand that the Congress and this Administration protect the American people and our strategic interest in the Panama Canal Zone before we reach that point of no return.

The President is a charming fellow, and this country needs his talents in the Canal Zone to protect American lives and world-wide strategic interests. The security of our Nation, Mr. Chairman, is a precious thing.

I have a great deal of respect for the duly elected officials in this country, the freest place on earth. But we have dropped the ball in the Canal Zone, and the game is almost over. Let us not go into overtime. Let's act now.

Thank you, Mr. Chairman. I appreciate your holding this important hearing, and I thank each member of the committee and staff for your attention to my remarks.

The CHAIRMAN. Admiral, there may be somebody in this broad land who knows more about this situation than you, but I have not met him. Your statement is very excellent and I have a hunch that it is going to be reprinted around the country by people who still have a concern.

Replies of Admiral Thomas H. Moorer, (U.S.N. Ret.) to the Comments of Hon. William Hughes, Ambassador to Panama, Upon Adm. Moorer's Testimony Before the Foreign Relations Committee of the United States Senate

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