COLUMN ONE : An Uneasy Passage in Panama : New leader assures the world that his nation will be ready to take over the canal as deadline nears. But many residents see stability and profits leaving with U.S. troops.

You would think Jasmine Nelson, a Panamanian law student, would have more reasons than most people to want to see an end to 90 years of U.S. domination of her country.

After all, U.S. firepower destroyed her neighborhood during the 1989 invasion that ousted Gen. Manuel A. Noriega. She spent her formative years schooled in the anti-imperialist rhetoric of the 1980s. She believes that the Panama Canal ought to be run by Panamanians and that U.S. military installations that control her country’s midsection are an affront to national sovereignty.

But she says she wants to be realistic.

“If the gringos go, there goes our economic stability,” she says. “Without the dollar, we are nothing. We don’t want the gringos to go.”

For years, Panamanians dreamed of the day they would take charge of the canal and the acres of U.S.-controlled real estate attached to it. As the deadline for the hand-over inches closer, however, they are racked with doubts and fears about whether they are ready--and whether perhaps they are losing more than they are gaining.

The election last month of a president whose government will handle most of the transition has focused new attention on Panama’s spotty preparations to receive the canal and the network of U.S. military bases built along it.

President-elect Ernesto Perez Balladares promises a smooth transfer at century’s close. But his words have yet to calm the uncertainty, which in many ways highlights the longstanding ambivalence Panamanians have felt toward the United States and toward their own sense of national identity.

Created as a nation so the canal could be built, Panama faces daunting questions about whether it can operate the waterway efficiently and properly develop the accompanying 500 square miles of land. And the departure of U.S. troops attached to the Panama-based U.S. Southern Command will mean a huge loss of income and jobs.

Under 1977 treaties, the United States must hand over the canal and all property by Dec. 31, 1999; and all troops--which until last week numbered close to 10,000--must leave by that date.

Governments until now have done little to get Panama ready.

Although the date for concluding the transfer may seem far off, the prerequisite changes are monumental. Only recently has the pace of both the turnover and the preparations quickened: A government commission has finally drafted a plan for the canal’s future operation, and an autonomous agency is entertaining development projects for the land that is coming under Panamanian control.

As the first contingent of U.S. troops began pulling out Friday, senior U.S. officers said they hope that the withdrawal of the 193rd Infantry Brigade will force Panamanians to overcome their doubts and realize that the United States is serious about leaving.

The issue of Panama’s readiness weighs heavily on governments such as Japan, whose trade relies on transit through the canal, and on the multibillion-dollar shipping industry.

Yet for thousands of workers who depend on the canal and the military bases, there are much more basic questions about jobs and livelihoods. Panama is home to multiple generations of both Panamanians and Americans whose lives are intertwined with the canal, and the world they have known is ending.

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Beverly and Joe Wood are part of the dwindling community of Americans connected to the canal. Once called “Zonians,” the Americans had numbered more than 4,000, but now there are fewer than 800. As the canal is transferred to Panamanian control, Americans are being phased out of the operation, and the Woods must leave their home next year.

Second-generation canal employees, the Woods had what they considered ideal lives, serving their country, serving the world and residing in paradise. They were born here and met, married and had children in the territory once known as the Panama Canal Zone--a strip of land around the waterway that was physically part of Panama but that administratively belonged to the United States.

It was a separate and privileged world of neat clapboard homes and manicured lawns lined with palm trees and orchids. The Zonians had their own schools, stores and hospitals--a last bastion of U.S. colonialism that is fading.

The Woods, in essence, must find a new country.

“The whites who were in South Africa, the British who were in India . . . they probably had similar feelings,” Joe Wood said, seated on the couch in his home in Balboa, once a part of the Zone off limits to Panamanians without special permits. “Our home is gone. Our kids can’t come back. It’s a wonderful life that is coming to an end.”

The Zone was a country within a country, comfortable and insular to the Zonians inside but bitterly resented by Panamanians on the outside, who saw it as an affront to self-rule and self-respect.

Many Zonians never bothered to learn Spanish. Some were viewed as bumpkins or pampered snobs. Laws discriminating against blacks were maintained well into the 1970s. Panamanians could not drive in the Zone without a special driver’s license.

“It would be as if you were in L.A. and to use the Santa Monica Freeway you had to go to the Japanese Consulate to ask for a permit,” said Panamanian sociologist Marco Gandasegui. “You’d wonder why. After a generation, that creates resentment.”

Today’s uncertainties fly in the face of the long-held Panamanian aspiration of taking control of the country’s most valuable national resource. Gandasegui and other sociologists say many of the doubts expressed spring from a “culture of dependency” that the U.S. presence caused.

The Zone officially was dissolved as one of the first steps of the 1977 treaties. Now called the Panama Canal Area, parts still belong to the United States, but it no longer has a separate U.S. governor or U.S. police force. Traffic signs are in Spanish and English. Some signs announce gasoline stations or stores that are “Open to the General Public.”

Eighty-eight percent of the canal’s employees are now Panamanian, and in 1990 a Panamanian for the first time became administrator of the Panama Canal Commission, the U.S. federal agency that manages the 51-mile sea passage.

Under the treaties, the commission will cease to exist and land totaling 17% of national territory will revert to Panama as the U.S. Southern Command and its troops withdraw. Some estimates value the land--which includes hundreds of vintage 1940s buildings and a corridor of triple-canopy jungle of exotic birds, big cats and lemurs--at $30 billion, if developed wisely. Most of what has been transferred has been badly neglected.

What Panama loses, at least in the short term, is $300 million to $400 million in annual income and at least 4,000 well-paying jobs.

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Luis Salazar has spent 21 years collecting the trash and repairing the plumbing at Ft. Davis and Ft. Espinar on the Atlantic end of the canal, near the city of Colon. Like many Panamanians, he has little faith that the country’s traditionally corrupt government can be trusted to administer the canal and the potential windfall from the land grants.

“They (government leaders) want more and more and more, and then they can’t handle the burden,” he said of the haphazard land acquisition. “Instead of moving forward, we are just falling behind.”

Standing at Ft. Espinar, Salazar looked with disgust at the row of three-story barracks that once housed American troops, then Noriega’s army, but that have remained empty for years. Since being turned over to the Panamanian government, the buildings have fallen into woeful disrepair.

Nearby is the original School of the Americas, the U.S. military’s controversial training center for Latin armies for decades until its transfer to Ft. Benning, Ga., in 1984. The school was the center of a U.S. hemispherical military strategy aimed at fighting communism. The once-imposing building is a shambles; scavengers have chipped away the marble walls, and granite columns lie toppled on the ground, which is overgrown with willows and weeds.

Upkeep for the 10 bases still under U.S. control costs the American government $80 million a year. If structures are not maintained in the humid tropics, they are rapidly lost to the jungle. Panamanian officials contend they can’t afford to pay for the maintenance.

“If they (the Panamanian government) can’t take care of basic problems like garbage collection, how on earth can they take care of huge properties and the canal?” said Ray Bishop, former head of the union that represents Panamanian workers on the bases.

Bishop, a Panamanian whose grandparents came here from Jamaica to work on the canal, is lobbying Washington to renegotiate the transfer treaties. What most worries him is that the Panamanian elite will be the sole benefactors of the canal and properties, dividing the spoils among themselves. Until now, lucrative work on the bases gave people such as Bishop a middle-class status otherwise unattainable.

A Panamanian working on the bases earns an average of $1,200 a month, Bishop said. Similar jobs in Panama pay about $200 a month.

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When the United States finished construction of its canal in 1914, the waterway was hailed as one of the most spectacular engineering achievements of all time. To connect the Atlantic and Pacific oceans, about 75,000 men and women labored for 10 years, dredging and damming rivers, erecting locks and slicing through the Continental Divide.

The estimated 14,000 ships and vessels that cross the canal annually are lifted from sea level about 85 feet by three sets of locks. Remarkably, much of the equipment is original: 80-year-old, seven-story miter gates open and close the locks with apparent ease; 80-year-old bull wheels crank in place to fill the lock chambers with water.

The age of the equipment dramatizes how important maintenance is to the continued function of the canal, and the maintenance test is where Panama has failed. In addition to the barracks, the most notorious example is the Panama Canal railway.

Reverted to Panama’s control in 1979, the railway’s payroll doubled almost overnight while service declined. For upkeep, the Americans had paid machete crews to cut the tropical grass; the Panamanians simply burned the grass, which gradually weakened the rails. Today, much of the train system’s rusted wagon cars lie in heaps good for little more than scrap metal.

Similar examples of mismanagement are easy to find. Engine-repair and bunkering industries shut down when transferred to Panama’s control. Many of the canal houses that reverted to Panama were awarded on a somewhat questionable basis, often going to Noriega’s mistresses or cronies.

Joaquin J. Vallarino, one of Panama’s richest men and head of the presidential commission assigned to draft a transition plan for the canal, acknowledged that doubts about Panama are justified.

“Many things were done badly . . . (on) both sides,” Vallarino said. “The Panamanians themselves have doubts. They are frightened. But it is perfectly within the capacity of Panamanians (to manage the canal), as long as it is not politicized.”

Valuable time was lost, he said, because of the tensions between the Noriega regime and the Americans. And Panama was not prepared to begin absorbing land until now. A new 99-page plan released last month finally lays the groundwork for canal transition.

But in the May presidential election, voters restored Noriega’s old political party to power just four years after it was dumped in disgrace after the U.S. invasion. The new government takes office in September and will rule until September, 1999.

As its current standard-bearer, Perez Balladares swears the party has been cured of its Noriega past. The smooth transfer of the canal will be completed on schedule, he promised.

“On Dec. 31, 1999, we and the (Americans) will have a party, and the rest of the world won’t even notice there was a transition,” Perez Balladares said.

In fact, the transfer is fraught with complex problems. Because the canal is run by a U.S. federal agency, its employees are civil servants with pay scales and merit systems that do not exist under Panamanian law. If the canal operation were to be brought under Panama’s normal government structure, it could be bogged in the same bureaucracy that cripples much of the state. Panama will have to rewrite its constitution to adjust for these changes.

Another fear is that Panamanian officials, who will be under enormous financial pressure, will be tempted to raise the tolls for passage through the canal. Experts familiar with the canal’s operation say that increasing tolls by more than 10% or 15% could make alternative routes more affordable and more appealing.

“The customers are the Toyotas and the Mitsubishis and the Philips of the world,” said Courtney E. Prisk, an American management consultant. “They can afford to say: ‘I’m tired of dealing with Panama. Dig me another canal. Or put a railroad through Nicaragua.’ The Panamanians have to understand that the canal is a revenue source only as long as it is managed like a mature industry and not a growth industry. It cannot be seen as a cash cow.”

The canal has already lost some of its importance to the United States. Half of the cargo that once passed through en route for the U.S. East Coast now arrives at West Coast ports and crosses over land. And 6% of ships afloat today simply do not fit in the canal.

Still, traffic has grown steadily, if slowly, over the years, and a boom in trade between the Pacific Rim and the markets of eastern South America and the west coast of Africa is expected to sustain demand for the canal.

Panama has not yet drawn up plans for the development of the land it is receiving, although the new Regional Interoceanic Authority in April chose a firm to detail a master plan. The idea that is mentioned with the most enthusiasm involves converting Ft. Amador, a picturesque peninsula at the Pacific mouth of the canal, into a world-class tourist resort.

The site is beautiful, with a view of the Bridge of the Americas, and the goal is to capture income from the many cruise ships that cross the canal but never deposit their tourists on Panamanian soil.

“This is Panama’s historical moment,” said Margaret E. Scranton, a University of Arkansas political scientist and a Panama expert. “Panama must rise to the occasion. If they botch this, they will never forgive themselves, and the world community will never forgive them. The Panama Canal will become an interesting historical artifact, like the pyramids, like the dinosaurs.”