A recently declassified U.S. military report "confirms" that Communist China is indeed a threat to the Panama Canal -- an assessment directly contradicting the public testimony given to the Senate by the U.S. military, according to Rep. Bob Barr, R.-Ga.

"This Southern Command intelligence assessment confirms what I and many others have been saying in reaction to the turnover of the Panama Canal on December 31," said Barr in an exclusive WorldNetDaily interview. "Specifically, we have argued that Communist China has gained a foothold in this strategic part of our hemisphere," he said.

On Monday, WorldNetDaily reported

Rep. Bob Barr, R.-Ga.

that Judicial Watch, a legal watchdog group based in Washington, D.C., forced the Clinton administration to release an intelligence report on the Chinese threat to the Panama Canal. The document, titled "Intelligence Assessment," was prepared by the U.S. Southern Command Joint Intelligence Center, and is classified "SECRET//X1."

On Oct. 22, 1999, Gen. Charles E. Wilhelm, USMC, Commander of the Southern Command, testified before the Senate Armed Services Committee on the Panama Canal. Wilhelm's testimony appears to contradict the secret intelligence assessment prepared by his own command.

The "SECRET" U.S. military assessment was prepared on Oct. 26, 1999, four days after Wilhelm's testimony. WorldNetDaily has acquired a copy of the general's statements to the Senate, during which he stated there was no threat from state-sponsored or "transnational" crime against Panama.

"Transnational crime in Panama will likely increase after the U.S. withdraws, but presently, there is no identified threat to Canal operations from transnational criminals," the general stated.

However, according to the secret U.S. Southern Command assessment, the Chinese firm that acquired control of the Canal, "Hutchison Whampoa," is indeed considered a threat.

"Hutchison's containerized shipping facilities in the Panama Canal, as well as the Bahamas, could provide a conduit for illegal shipments of technology or prohibited items from the west to the PRC, or facilitate the movement of arms and other prohibited items into the Americas," warns the report.

In addition, Wilhelm openly stated to the Senate Armed Services Committee, "We are not aware of any current internal or external threat to the Panama Canal, and we have no evidence that it has been targeted by terrorists or foreign governments."

He added, "Potential future external threats could include a hostile foreign power and/or transnational criminal organizations. Cuba and China have strong economic interests in Panama, but do not pose a threat to the security of the Canal at this time."

The Panama Canal

Yet, the secret U.S. Southern Command report noted that Beijing's direct ties to the owner of Hutchison Whampoa does pose a threat to the weak Panamanian economy.

"Hutchison Whampoa's owner, Hong Kong tycoon Li Ka-Shing, has extensive business ties in Beijing and has compelling financial reasons to maintain a good relationship with Beijing. For example, Hutchison Whampoa could threaten to shift some business from Panama to its facilities in the Bahamas, thus giving the company additional leverage over the Panamanian government," states the intelligence report.

On Tuesday, the President called on Congress to act quickly to approve permanent most-favored-nation trading status for China. However, the newly declassified memo is not likely to help convince Congress to pass the legislation quickly. Instead, according to Barr, the memo shows that President Clinton may not be telling the truth about the Chinese threat.

"According to the memo," stated Barr, "Hutchison Whampoa has 'extensive business ties' to Beijing, and could use the leases to give the Chinese 'leverage over the Panamanian government' and 'a conduit for illegal shipments of technology or prohibited items.'"

"These statements appear to contradict other information provided by the administration last year," concluded Barr.

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