U.S. Marines during a jungle patrol in Fort Howard, Panama, in June. The Marines will provide security during the transfer.

By Steve Nettleton
CNN Interactive

(CNN) -- For proud Panamanians and nostalgic U.S. expatriates, it will be a moment of profound symbolism.

At the stroke of noon, December 31, the United States will surrender its sovereignty over a canal it mightily forged between the Pacific and Atlantic oceans nearly a century ago -- a canal that came to represent U.S. ingenuity and willpower.

A fully Panamanian administration, appointed by the government of Panama, will then eagerly assume control of the strategic waterway that annually ushers some 14,000 vessels (4 percent of the world's maritime commerce) from sea to sea.

But other than a change in stewardship, and perhaps more Spanish and less English spoken in canal affairs, Panamanian officials say little will change.

NARRATIVE   • Strategic: A century's journey in Panama   • History: Troubled passageway   • Operations: Transfer heavy on symbolism, light on change   • Politics: Canal return a mixed blessing?   • Interview: Historian David McCullough   • Security: Colombia boils

"People will see the same ships going from one ocean to another ocean. The same locks, the same system, the same operations in general are going to be the same," said Jaime Bocanegra, transition manager under the outgoing, U.S.-led Panama Canal Commission (PCC).

Tolls will not increase, at least for the time being, and much of the Panamanian staff of the PCC will remain on the job, including the canal's administrator, Alberto Aleman Zubieta, whose appointment has been extended until 2005.

Some in Washington, however, are reluctant to let go.

	VIDEO
Tom Haynes reports on the engineering feat of building the Panama Canal. Real 28K 80K Windows Media 28K 80K

The transfer alarms U.S. conservatives who fear that the canal -- which handles more than 15 percent of U.S. imports and exports and cuts sailing time from New York to San Francisco by two weeks -- could soon come under the influence of unfriendly nations or succumb to regional unrest.

They are particularly concerned that Panama awarded contracts to a subsidiary of a Hong Kong-based conglomerate to manage two ports at either end of the canal, as well as gave the company an option to develop a former U.S naval station at Rodman Point, near the Pacific port of Balboa.

"That contract will lead, without doubt, eventually to the domination of Panama and the Panama Canal by Beijing. And Beijing is not a friend of the United States of America," charged California Rep. Dana Rohrabacher in an October hearing by the Senate Armed Services Committee on the security of the canal.

A car carrier passes though Gatun Locks

Republicans contend the company, Hutchison Whampoa Ltd., has close ties to the Chinese government and the Chinese military. The company strongly denies this, and the U.S. State Department says it has found no evidence of connections between Hutchison Whampoa and Beijing.

Panama Canal authorities insist the port contract gives Hutchison Whampoa no control whatsoever over canal operations, nor any power to disrupt navigation of the canal.

"There can be no reasonable doubt that it is the PCA [Panama Canal Authority] and the PCA alone which will possess and exercise all authority over the operation of the waterway," Aleman said before the Senate panel. "Neither Hutchison nor any other entity has been or will be empowered to interfere in any way with that operation."

"It's not like the Communists are coming," Maritime Operations Director Jorge L. Quijano said in an interview with CNN Interactive. "It's more of a totally commercial outfit that saw the opportunity here to develop a port that was underestimated."

Skeptics of the arrangement remain unconvinced.

"The physical presence of a company in a very strategic, commanding position with respect to the operations of the canal, and with respect to the conveyance of containers back and forth across the isthmus, [is a right that carries with it] at least the possibility of some disruption of ... keeping the canal open," Caspar Weinberger, who was President Ronald Reagan's defense secretary, told the Senate hearing.

The United States does retain some privileges. Its warships have the right to cut ahead of commercial vessels passing through the canal, and the U.S. military is bound by treaty to defend Panama if asked.

If all goes according to plan, most workers directly involved with the canal will remain on the job, keeping things running as usual

Canal officials are disappointed so much attention has been given to the port contracts. They prefer to focus on what they say is the most important aspect of the transfer: transforming the Panama Canal into a money-making enterprise.

"The end of the treaties will definitely allow us to get involved in more commercial activities," Quijano said. "In the 22 years under the treaty, we've been hindered from getting involved in some of the more natural [business] activities" the canal offers.

The Panama Canal Authority already has eliminated some 1,000 jobs, many of which were either mandated by treaties with Washington or necessary to provide housing and services to the large U.S. staff whose members used to live in Panama.

The canal administration has invested nearly $1 billion to widening and modernizing the canal to increase capacity by 20 percent. It is also looking into selling hydro- and thermoelectric power generated by the canal's locks and dams. The canal system produces more than 500 gigawatts of electricity a year, Quijano said, but only consumes 25 percent of it. Until now, it has been barred from selling the excess power by the non-profit-minded U.S.-led administration.

Canal officials are also considering building a larger set of locks to handle the massive container ships that cannot navigate the waterway, though costs for such an endeavor could be prohibitive.

Keeping the canal viable and profitable will become their top priority, canal officials pledge.

"We are looking at these things," Bocanegra said. "We are looking at ways of increasing and prolonging the life of the canal for the next perhaps 50, 100 years."