U.S. and Hong Kong (1999)

THE WHITE HOUSE
Office of the Press Secretary

August 12, 1999

PRESS BRIEFING BY BARRY TOIV AND DAVID LEAVY

The Briefing Room

12:57 P.M. EDT

[ ...Intervening Text... ]

Q: What about the sale of the Panama Canal?

TOIV: Panama Canal. David, you want to get right up there and --

LEAVY: Okay. The United States is satisfied our interests will be protected after the canal is turned over this December. We have seen no capability on the part of the PRC to disrupt the canal's operations. I just mentioned the so-called Neutrality Act, provides a guarantee for the security of the canal and that a law was passed to implement the Hong Kong-based firms who were in question, and part of that implementing law are provisions that insures that no vessel -- that the canal will remain open to vessels of all nations.

Q: Whose law is that?

LEAVY: My understanding is that the contract -- Panama's contract with the Hong Kong-based firm to operate the two ports of the canal was passed into law in January 1997, and that law contains the provision --

Q: Panamanian law?

LEAVY: Yes. Let me check on that, but that's my --

Q: Any bid on this before we let the Chinese have it?

LEAVY: Well, it's two -- they're Hong Kong-based firms. I believe we did bid on that. I believe there actually were some questions about the bidding. But we protested that and our team has been aware of the issue and looked into it, and as I said earlier, we're satisfied that our interests will be protected.

Q: Is the U.S. and American vessels -- are they guaranteed access and transit through the canal?

LEAVY: Yes, they are. There's the so-called Neutrality Treaty which provides for the security of the canal and the law that governed the contract of these two Hong Kong-based firms have a provision that allows all vessels from all nations to pass through.

I would also just note, too, that the container -- the firms are container shipping firms, and while they have ports on both ends of the canal, they're not the only ones, they don't have a monopoly or --

Q: What about -- there was another issue raised, and that was intelligence matters. Will this give the PRC an added ability to monitor shipping that goes through the canal?

LEAVY: I don't want to comment specifically on intelligence matters, Alec, though just to say that our national security team has looked into the matter and we're confident that our interests will be protected and guaranteed.

Q: What do you mean by no capability?

Q: David, does this company have ties to the Chinese military?

LEAVY: I don't know if -- I know it's a Hong Kong-based company, but I'm not sure what, if any, ties they have to the PLA.

Q: When does all this happen now?

LEAVY: The actual official transfer I believe is in early December of this year. There will be a transfer, a ceremony. I'm not sure when the actual company contract goes into effect, but there will be a big ceremony in Panama this December to actually commemorate the official transfer.

Q: And the U.S. actually approved of this?

LEAVY: This was an open commercial contract. U.S. firms bid on it, the Panamanian government --

Q: What, they bid too low?

LEAVY: This was several years ago, so I don't have the exact specifics of the bidding process here. But there actually -- there were some questions just about the transparency of the bidding process. We raised our concerns at the time, but subsequently our team has looked into it and we feel that our interests will be protected.

And I would just note, too, that we've seen no capability on the part of the PRC, which is a heavy user of the canal, to disrupt its operations. So I would caution people not to get too alarmed over this issue.

Q: You may think so, but it was very, very important in World War II. It might not be important in the next war, but I cannot understand how we could relinquish all of our interests in the canal. Well, you don't seem concerned.

LEAVY: Helen, it's not relinquishing our interests at all in the canal. It's been a policy of this government for almost two decades now, to transfer authority of the canal back to the Panamanians. We've worked closely to ensure that that's done consistent with our interests. We're confident that it will be -- these are commercial contracts for port container processing. This company does not have a monopoly over that. We've looked into it. We think --

Q: They control both ends of the canal.

LEAVY: They control ports on both ends, but they're not the only ports, they're not the only shipping container company, so I think our commercial interests will be able to be protected and won't be a problem.

Q: And on what do you base your confidence --

LEAVY: Well, again, as I said, our team looked into this, analyzed it and made a judgment, and we're satisfied that our interests will be protected both in terms of national security and commercial.

Q: David, you said no capability on the part of the PRC to disrupt. How do you know they have no capability, and can you put this in the context of the question I asked yesterday, the very bellicose statements by the Chinese Defense Minister threatening a high-tech war with the United States?

LEAVY: Well, I wouldn't link the two here. The issue about the commercial viability of the canal and the transfer has been an issue that we've been dealing with literally for years. The Chinese are a major user of the canal as are we, as are other countries. There are significant legal provisions built into the transfer to make sure that all vessels will be able to transfer in. Again, these companies do not have a monopoly over the port container issue.

Q: How many others have control?

LEAVY: Let me check on that. The people I checked with today were pretty confident that our interests -- again, both commercial and security -- will be protected here.

Q: Are U.S. soldiers out of the canal zone by the end of the year?

LEAVY: I don't know. We had Howard Air Force Base in Panama. I know that we're closing down. I don't know, Mike, what, if any U.S. personnel -- they're all checked out --

Q: Senator Lott said you've given away the farm on this. He wrote a letter to Secretary Cohen. Is Cohen responding to that, or how do you answer him?

LEAVY: I'm not aware the letter has been received. Again, our folks are well aware of this issue. This has literally been something that's been in the works for years. We've looked into it, and everyone seems pretty confident that -- Q It seems to me that we have really missed the ball on this, because the Panama Canal Commission has been warning and warning the U.S. that this was about to happen. And it seems that we would want to keep our stake in this canal that we built.

LEAVY: I think our stake in the canal is preserved, Helen. Again, we have legal remedies for the commercial transport. Our national security team feels confident that our security interests are protected, so I don't think that we're losing or damaging any --

Q: I don't know what you base your confidence on.

LEAVY: This is an issue that comes as no surprise. We've looked closely at it, and our team feels pretty confident.

Q: And did the U.S. conclude that the bidding process was fair?

LEAVY: I think there were some concerns back in '97. I believe the actual bidding -- that the bidding process wasn't as transparent as we would have liked. We protested that to the Panamanians.

Q: And what came of it?

LEAVY: I'm not aware of any actual remedy that was changed, but our protests were noted. I mean, the contract went forward to the Hong Kong-based company, so I don't think there's any --

Q: Do you know at what level the U.S. will be represented at the transfer ceremony in December?

LEAVY: No. No, I don't think that decision's been made.

Q: David, one more. In 1956, the British and French went to war over the Suez Canal, when the Egyptians nationalized it. What's going to happen if --

LEAVY: Well, I think we're sort of talking past each other a little bit. Let me just take one or two more on this and let's move on. This isn't -- the Canal's not being nationalized by the PRC. This is a private company that has several contracts to work out of the canal in terms of shipping containers of commercial products. We bid on that contract --

Q: How many private companies does the PRC have?

LEAVY: Well, I can't confirm any specific PRC or PLA links to these companies. But let me just say, as I've said many times so far, is that these are private companies. We've got legal remedies. Our interests, both commercial and security, will be protected. Okay? Last one on this.

Q: Kind of a related issue. There's also these reports that the PRC is refurbishing a former Soviet listening post in Cuba. Are you at all concerned that the PRC is heightening its presence in the Western hemisphere somehow?

LEAVY: I'm not aware of that specific report, Alex, and no one's informed me of any heightened state of alert.

Q: No, no. Are you concerned that the PRC is moving as a more aggressive presence in the Western hemisphere?

LEAVY: Not that I'm aware of, no.

[ ...Intervening Text... ]

Q: While you're at it, do you have any details on the New Zealand trip, other than what you put out yesterday on the trip --

LEAVY: No, but we'll try to do a pre-trip briefing for you guys before you leave. It's going to be a little bit awkward because we have the Labor Day and then I think you guys leave the next day or the day after, so we're going to try to cram a briefing in between there and we'll put out a press schedule at some point, but --

Q: Do you when he's meeting with the Chinese Prime Minister -- is that part of --

LEAVY: I have no announcements today on that.

[ ...Intervening Text... ]

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