Charles R. Smith is a noted investigative journalist. For over 20 years, Smith has covered areas of national security and information warfare. He frequently appears on national television for the Fox network and is a popular guest on radio shows all over America. More ↓Less ↑
Amid widespread concerns and administration denials following
President Clinton’s surprise admission that Communist China soon will be
“running the (Panama) Canal,” a previously unreported secret
congressional investigation reveals that America will soon face a new
“dirty” war in Panama involving China, Cuba and Russia.
Speaking on the imminent transfer of the canal to the government of
Panama, per the controversial 1978 Carter-Torrijos treaties, Clinton
said last week, “I think the Chinese will in fact be bending over
backwards to make sure that they run it in a competent and able and fair
manner. … And I would be very surprised if any adverse consequences
flowed from the Chinese running the canal.”
Immediately following the president’s statement on Panama,
congressional concern became riveted on a Chinese company called
Hutchison Whampoa, which won the contract to operate ports at both ends
of the vital canal. Why the concern?
“The president has explicitly acknowledged what we’ve been saying all
along,” said Rep. Bob Barr, R-Ga. “The unilateral U.S. withdrawal from
Panama has created a vacuum which the Chinese have eagerly filled.”
But Asian billionaire Li Ka-Shing openly refuted suggestions that his
company, Hutchison Whampoa, would control the Panama Canal for Communist
“We are not even the largest operator in Panama, compared with some
of the Americans and Taiwan operators,” said Li in a Dec. 1 South China
Morning Post article titled “Li denies controlling Panama Canal.”
“We are running a container port business which has nothing to do
with the operation of the Panama Canal,” stated Li.
White House National Security Council spokesman David Leavy concurred
with Li, stating, “Responsibility for operation of the canal following
the transfer will rest solely with the government of Panama. The
company in question will have no control over, or role in, the operation
of the canal.”
Nevertheless, sounding the alarm was Adm. Thomas Moorer,
who warned recently that, with the U.S. military presence gone after
Dec. 31, a corrupt and defenseless Panama could well become a Chinese missile base, as Cuba was for the Soviets a generation ago.
White House spokesman Joe Lockhart dismissed the analysis of the former chairman
of the Joint Chiefs of Staff as “the kind of silly stuff you hear from time to time.”
Yet, according to congressional investigator Al Santoli, national
security advisor to Rep. Dana Rohrabacher, R-Calif., the greatest danger
is not likely to be Chinese missiles in Panama. Rather, the most likely
threat comes from a “dirty,” unconventional form of warfare, which the
Chinese will wage in the region — by supporting mercenaries, drug
cartels, crime lords and hard-core revolutionaries throughout Central
In May 1999, Santoli led a delegation of congressional investigators
on a special trip to Panama. The congressional delegation included Jim
Doran, Asia and Pacific specialist from the Senate Foreign Relations
Committee and Dr. Michael Waller, vice president of the American Foreign
The investigative team’s report, “The Panama Canal in Transition:
Threats to U.S. Security and China’s Growing Role In Latin America,”
shows that an old Cold War alliance of China, Russia and Cuba is
responsible for the new troubles south of the U.S. border.
Chinese and Russian organized crime
For instance, the investigation uncovered evidence of Chinese
espionage in the canal.
“The unofficial representative of the People’s Republic of China
(PRC) is believed to be a senior intelligence officer who operates out
of an office on the top floor of a bank building in Panama City, with a
staff of 14 assistants,” states the congressional report.
“Ironically,” wrote the investigators, “the day that the delegation
arrived in Panama, a week after the closure of the U.S.
counter-narcotics center at Howard Air Base, heavily-armed Colombian
narco-terrorist forces operating on Panamanian soil, dressed in full
combat gear, were interviewed on national television.
“Chinese organized crime operations are active in drugs, guns and
illegal alien smuggling in Panama, and the Russian Mafia is known to be
supplying weapons to Colombian narco-terrorist forces,” the
congressional investigators said. “The war in neighboring Colombia
against well-armed narco-terrorist forces, with a history of ties to
Cuba, is escalating and threatens to spread throughout the region.”
This new “dirty war” with China is by no means expected to be limited
to traditional combat. According to the congressional investigators,
Chinese intelligence officers often use their checkbook as a weapon of
“economic” war — buying off corrupt officials and eager business
“The Panamanian government has an ongoing reputation for corruption
and mismanagement,” states the report. In fact, says the congressional
report, the Chinese came to control the vital waterway through crooked
“By most accounts, an unfair and corrupt contractual bidding process,
which was protested by the U.S. ambassador to Panama, enabled the
Chinese Hutchison Whampoa company to outmaneuver American and Japanese
companies for the long-term lease on the Canal ports.”
The Chinese military connection
Hutchison Whampoa’s role in the canal, although praised by President
Clinton, has caused widespread alarm. Controlled by Chinese billionaire
Li Ka-Shing, Hutchison Whampoa was previously denied access to the port
of Long Beach due to national security concerns expressed in Congress.
Indeed, Li Ka-Shing’s association with the Chinese army intelligence
machine is well documented. Li was recently described by William
Triplett, co-author of “Red Dragon Rising”, as “the banker” for the
“Li Ka-Shing is to the Chinese Army intelligence HQ what Howard
Hughes was for the CIA,” said Triplett.
Li Ka-Shing’s closest tie to Beijing also happens to be his global
business partner. The national flag shipping carrier for Communist
China — the Chinese Ocean Shipping Company, better known as COSCO –
has an exclusive contract with Li Ka-Shing’s Hutchison Whampoa.
But, according to the House Task Force on Terrorism and
Unconventional Warfare, President Clinton is withholding important
information about the Chinese Ocean Shipping Company from the public.
“Although presented as a commercial entity, COSCO is actually an arm
of the Chinese military establishment. The Clinton administration has
determined that additional information concerning COSCO that appears in
the Select Committee’s classified Final Report cannot be made public,”
states a 1998 special report written by the congressional task force.
But why would the House Task Force on “Terrorism” investigate a
Chinese shipping company?
In June 1998, U.S. intelligence agencies tracked a Chinese
Ocean Shipping Company ship carrying weapons materials and electronics
destined for Pakistan’s major nuclear weapons laboratory. The COSCO arms
shipment included special metals and electronics used in the production
of Chinese designed anti-tank missiles made by the A.Q. Khan Research
Laboratories — the same facility that produces nuclear weapons for
COSCO delivers Chinese weapons exported to the Middle East. In
February 1997, the U.S. Naval Institute Proceedings magazine published
aerial photos of five new Chinese-built Houdong-class patrol boats,
armed with C.802 missiles, being transferred to Iran. The five patrol
boats were on the deck of the COSCO freighter Guang Zhou as it sailed
into gulf waters.
Earlier this year the Hong Kong Ming Pao newspaper reported
the Chinese navy is refitting COSCO merchant ships for use in war. COSCO
container ships can be used for both sea and ground operations, ferrying
troops and armored vehicles to launch attacks or land on beachheads.
Chinese military officers told Ming Pao that some merchant ships are
being fitted with large caliber artillery and multi-barrel rocket
launchers, medium- and small-caliber anti-aircraft guns and guided
In 1996, Poly Technologies Corporation executive Robert Ma
allegedly conspired with China North Industries (NORINCO) representative
Richard Chen to import 2,000 AK-47 fully automatic machine guns into the
U.S. Customs agents, posing as Miami drug smugglers, offered to
buy the Chinese machine guns. According to the 100-page federal
indictment from one of the key undercover agents, Chen and Ma had to
call back to the Chinese army headquarters in Beijing in order to obtain
the weapons. The Customs agent’s deposition stated that Chen and Ma had
difficulty in getting the “barrels” because they required “higher-level
The machine guns were to be transferred to the Long Beach port in
California on board the COSCO ship, the “Princess Bride,” according to a
1996 document obtained by a federal lawsuit from the U.S. Commerce
Department. However, a leak from the State Department alerted the
company, which then canceled the delivery. The weapons finally were
confiscated from onboard a COSCO ship after being illegally sent to the
U.S. port of Los Angeles.
“According to Defense Department intelligence officials COSCO
operates a fleet of ELINT (electronic intelligence) trawlers for the PRC
government,” says an untitled Commerce Department report. “When China
delivers missiles or chemical agents to the Middle East, specially
outfitted COSCO ships deliver them.”
Clinton with Chinese machine gun honcho
President Clinton’s role in all this was highlighted by a 1996 White
House visit of Wang Jun, Chairman of Poly Technologies, the Chinese
machine gun manufacturer. On Feb. 6, 1996, Bill Clinton met in the
White House with Wang Jun, along with convicted Democratic National
Committee donor Charlie Trie and then-Commerce Secretary Ron Brown.
Only a few months after the meeting with Clinton, Poly Technologies
executive Robert Ma was arrested for the smuggling incident in Los
Angeles. Although Ma has not been prosecuted and he has since fled to
China, President Clinton has made no public statement to press Beijing
for his return.
Clinton’s public statement of confidence in China’s control of the
canal — “They’ll want to demonstrate to a distant part of the world
that they can be a responsible partner,” the president said — just
confirms the seriousness of the threat, says Barr.
“In light of the President’s formal acknowledgment that the Communist
Chinese will be ‘running the canal,’ those of us who care about
protecting this strategic asset should be emboldened in our campaign to
take action to do so,” said Barr.
“The President’s statement underscores the need for Congress to step
in and take action to counter this now-confirmed Chinese threat,” he