U.S. military officials said Friday they will leave behind unexploded bombs buried in the jungles of the Panama Canal Zone when the United States concludes its 90-year military presence in Panama next year.

The issue emerged as a source of conflict between the United States and Panama after the two sides failed Thursday to reach an agreement that would have extended the U.S. presence here with 2,000 troops into the next millennium.The United States is to hand over the famous Central American waterway to Panama on Dec. 31, 1999.

"Certainly there will be some areas with unexploded ordnance, but we are recommending that these places be restricted for limited use, as there is a great potential for injury out there," Lt. Col. Byron Connover, spokesman for U.S. forces in Panama, told Reuters.

The Panama Canal Zone, a swath of land governed by the United States that runs through the middle of Panama on both sides of the 51-mile-long Panama Canal, was home to 12 military bases and as many as 12,000 troops at its peak.

U.S. troops used some areas as testing zones for weapons.

A 1977 treaty outlines every aspect of the handover of the canal, including the surrounding areas, and states that the United States must clean its bases of dangerous material using any "viable means."

The United States and Panama had been negotiating terms for a multinational anti-drug base in the canal zone that would have ensured a continued U.S. military presence in the canal zone after the handover.