Panamanian Quietly Takes Over Top Canal Job : Treaties: Low-key event is in stark contrast to plans Noriega had for the transfer of power.

The American transfer to Panama of control of the Panama Canal took a quiet but significant step forward Monday when administration of the waterway was turned over to a Panamanian.

With public attention focused on negotiations among the United States, Panama and the Vatican to force former Panamanian dictator Manuel A. Noriega out of the sanctuary of the Vatican’s embassy here, there was no ceremony, not even a public statement, noting the change of administration.

Former Deputy Administrator Fernando Manfredo, now the acting administrator, simply moved down the hall and took over the office used by the former administrator, Dennis P. McAuliffe, an American.

This was a far cry from plans that Noriega had for this day. He had called for a mass demonstration led by his so-called Dignity Battalions, a paramilitary force of “street troops” he had formed to intimidate his political opponents.

Instead, Noriega remained yet another day in the Vatican embassy while efforts went on to satisfy American demands that he be turned over for trial on drug-trafficking and money-laundering charges while finding a way to permit the Vatican to give him up without violating the principle of church sanctuary.

Transfer of the canal administration was mandated by the 1977 Panama Canal Treaties, which turned the canal over to Panama and outlined the process for ultimate transfer of control over the operation and defense of the waterway from the United States to Panama. A second treaty signed at the same time guarantees the “permanent neutrality” of the canal.

According to Treaties

After the treaties were ratified, Panama formally received sovereignty over the canal and all of the adjacent terrority of the former Panama Canal Zone on Oct. 1, 1979.

At noon on Dec. 31, 1999, Panama is to assume full operational control and defense of the 75-year-old waterway. The only U.S. role after that will be as a “guarantor” of the canal’s neutrality.

Under the agreements, Jan. 1 was the date when the administrator had to become a Panamanian. An American must be the new deputy administrator, but the commission itself, a U.S.-chartered corporation, is now under Panama’s control.

The treaties provide that Panama must nominate a permanent administrator, who is subject to confirmation by the U.S. Senate.

Panamanian administrative control comes at a time when the canal is losing money, needs serious renovation and faces a major change in world trade patterns that affects its utility.

Although the waterway is operating currently at near its daily capacity of 42 ships, that reflects the backlog that developed in the wake of the Dec. 20 American invasion, which drove Noriega from power. In recent months, the average daily passage has been about 30 ships.

While the switch went nearly unnoticed here, it was not without controversy and reflects the turmoil that has enveloped Panama since the United States began the effort to oust Noriega.

Manfredo, who is popular with canal employees and is liked by President Bush, moved into the administrator’s office but is only the acting director.

In fact, after eight years as deputy administrator, he will not get the permanent job, according to Panamanian officials, and ultimately will be removed from the commission altogether.

This is a result of internal Panamanian politics. Manfredo originally was a close associate of Omar Torrijos, the military strongman who ran Panama for years before dying in a 1981 plane crash.

As such, Manfredo remains an anathema to the leaders of the new U.S.-installed Panamanian government, even though he was the Bush Administration’s favored candidate for the top canal job. And because an American must be the deputy, Manfredo cannot return to his post as deputy.

Panamanian sources say the permanent administrator will be Carlos Arellano Lennox, a biologist and active member of the Christian Democratic Party, which was suppressed by Torrijos.

Injecting Politics

This has led to criticism that the government of President Guillermo Endara is injecting politics into the canal commission, a charge countered by government officials who point out that Manfredo was once chairman of Torrijos’ Election Commission at a time when it was manipulating votes to ensure the victory of Torrijos’ candidates. Manfredo also was a member of Noriega’s political party in recent times.

Regardless of who is the administrator, the change to a Panamanian mirrors the drastic modifications that have taken place in the canal’s operation since 1977.

Then, there were about 7,500 commission employees, nearly all of them Americans.

As of Sunday, the number of jobs has been cut to about 4,000, with Americans holding only about 900 posts, a figure that will steadily drop to nearly none over the next decade.