FORT DAVIS, PANAMA
IN what may mark the beginning of the end for American armed forces around the Panama Canal, the United States Southern Command has officially handed back the first two bases to the government of Panama.
All US military personnel must leave by Dec. 31, 1999, when Panama assumes control of the entire Canal Zone under treaties signed in 1977. Fort Davis and Fort Gulick were handed back this past weekend, the first major reversions of a four-year, wind-down plan.
Many here are now wondering if the US military will continue its presence in Panama after that time. Doubts increased after local newspapers reported that Gen. Barry McCaffrey, commander in chief of the US Southern Command, wrote an article in the Pentagon magazine, Inside the Pentagon, in which he mentioned the advantages of keeping a ''minimum force'' in Panama.
General McCaffrey's ''minimum force'' would involve the US keeping a few of the bases earmarked for reversion, such as Howard Air Force Base, Fort Clayton (the current headquarters of the US Southern Command), and Quarry Heights, an intelligence post used in many operations in the region.
''It is clear that one of the great threats to the region, both to South, Central, and North America, is the threat of drugs,'' said McCaffrey in a press conference after the base-transfer ceremony. In his article, McCaffrey also cited ''the defense of the canal'' as an important reason for a continued military presence, despite the canal's decreasing strategic importance.
Not everyone in the Pentagon agrees with McCaffrey. Other high-ranking officers have stated that the bases in Panama are no longer of great strategic importance and are costly in these days of budget belt-tightening. ''The mission of [the Southern Command] was in the era of the cold war. That was done, and now it's time to return home,'' stated John Pike, an analyst at the Washington-based Federation of American Scientists in the Inside the Pentagon article.
Panamanians are divided on the issue. For some, the bases are a symbol of US control and manipulation of their country. Others benefit from the millions of dollars that flow into Panama through the bases and are campaigning for them to remain. The administration of President Ernesto Perez Balladares remains pragmatic about the issue, aware that 3 percent of Panama's GDP is drawn from contracts with the American military. President Balladares will discuss the future of the bases with President Clinton during a visit to Washington tomorrow.
''In a few days it will be 18 years since the  treaty. For those Panamanians who were not born when the treaty was signed, this day they can witness one of the most important reversions of this transition,'' President Balladares said in a speech at the ceremony.
The return of Forts Davis and Gulick has been welcomed by Taiwan, which plans to invest millions of dollars in the former bases, creating a 30-factory industrial complex. The factories should be completed by 1996 and are expected to create 20,000 jobs, taking advantage of Panama's cheap labor, recently slackened labor code, and favorable tax arrangements.
Fort Davis, which opened in 1919, saw much activity during World War II, housing 67,000 troops at its peak in 1942.