II. RECOMMENDATIONS

1. The debate over a new treaty in the United States should concentrate on what is at stake for the United States.

Many opponents of a treaty focus largely on debatable legal aspects of the issue, claiming the Panama Canal is sovereign U.S. territory, just like Alaska or other parts of the United States. In fact, the United States has neither ownership nor sovereignty in the Panama Canal. Rather, the 1903 treaty gave us rights. Those rights are in jeopardy now because over the last several decades Panamanians have increasingly objected to their country being cut in half by a strip of land where Americans have exclusive rights and where American law rules.

It is not difficult to imagine how Americans would feel if the United States were forced to tolerate the existence of a 10-mile-wide strip of land on each side of the Mississippi River which was under the jurisdiction of a foreign power. We would not tolerate such a partition and neither will the Panamanians continue to accept it.

Sovereignty and ownership are not at stake for us in the Panama Canal. We have never had either. The only sure course to preserve rights in the Canal Zone is to work with the Panamanians to negotiate a new system of relationships which can allow for the continued efficient and secure operations of the Canal. The present treaty does not insure either a safe or a secure Canal, given Panamanian opposition to the present treaty.

2. While it may not be possible to reach agreement on all substantive issues in a new treaty before the 1976 elections, earnest negotiations should continue in an effort to resolve the major outstanding issues and reach agreement on a draft treaty.

Such a course is preferable to waiting and drifting. The real question is whether Panamanians, who are being provoked by anti-American groups, will patiently await the results of our elections and subsequent ratification of a treaty.

3. Supporters of a new treaty must work to educate the American people and Members of Congress about the need for it.

To date, most of the discussion has come from opponents to a new treaty who wish to preserve the 1903 treaty and the rights they feel were guaranteed by it.

Three groups must be particularly active in support of a new treaty: (a) The executive branch-particularly the State Department, Defense Department, and the White House-must work to present the merits of a new treaty. Spokesmen of all three groups should leave adequate time to discuss the proposed treaty both before the Congress and the American people.

(b) Members of Congress who support a new treaty need to explain to their colleagues the importance of concluding a new treaty and to indicate why a treaty is needed.

(c) Other Americans, especially those with important business interests in Panama and Latin America, who see the need

(3)

for a mutually beneficial treaty, must become better organized, better led, and more vocal. The recent resolution of the U.S. Chamber of Commerce supporting a treaty should be reinforced by a campaign among those in Congress supportive of the American business community's interests. Such an effort should focus on why a treaty is in our political and economic interest.

4. Over the coming months the U.S. military command in the Canal, SOUTHCOM, should intensify efforts to consolidate and streamline operations and facilities in the Canal Zone.

Many of the present facilities have marginal utility for our current purposes. The Commandant of SOUTHCOM and the Governor of the Canal Zone have begun a process of trying to remove irritants in dealings between Americans and Panamanians in the Canal Zone. These efforts should continue and be expanded in the coming months, as we attempt to move closer to reaching an agreement on a draft treaty.

5. Members of Congress should examine this issue carefully and consider visiting the Republic of Panama and talking with Panamanian officials and Americans working in Panama.

A treaty must be considered by the Senate and both Houses of Congress will be asked to approve implementing legislation. Visits to the Republic of Panama and to the Canal Zone offer an excellent opportunity for members to educate themselves on an important foreign policy issue confronting this country. We suggest that such visits include talks in the Canal Zone with American officials and in Panama with American Embassy officials, Panamanians, and American businessmen who live and do business in Panama.

6. Members of Congress should be aware that their comments on the Canal are closely followed and widely reported in the Panamanian press.

We are persuaded that it would be wise to refrain from statements and actions in the next several months that might prejudice negotiations and even hamper the ability of our negotiators to insure that our best interests are preserved in any new draft treaty.

Both Houses of Congress will have ample time to take action on this issue after the provisions of a draft treaty are presented to them for consideration. To seek to prevent a draft treaty from even being submitted to Congress serves no useful purpose and can only harm our national interest.

III. FINDINGS

WHY A NEW PANAMA CANAL TREATY IS NECESSARY

In 1903, the United States and the Republic of Panama signed the Hay-Bunau-Varilla Treaty which granted the United States a strip of land 10-miles wide and 50-miles long for the purpose of constructing, operating, maintaining, and defending a Canal between the Atlantic and Pacific Oceans and which gave the United States rights as "if it were the sovereign" in perpetuity on Panamanian soil.

Today that treaty and the relationship that it produced is over 72 years old. The treaty led to an engineering miracle, which has served the United States and Panama well; it also led to an American governmental presence on Panamanian territory which now causes serious offense to Panamanians.

While some Americans argue that the 1903 treaty has served the test of time and there are no good reasons to replace it, the terms of the 1903 accord do not reflect the major changes that have occurred in Panama, the United States and the world. In the 1970's no nation can continue to accept a treaty which permits the exercise of extensive extraterritorial rights in "perpetuity." We cannot expect Panama to continue to accept what no other state will accept. The reasons for increasing Panamanian opposition to the present treaty are apparent and understandable.

There are several reasons for negotiating a new treaty. Among the more important are:

(a) In order for the United States to protect and promote its only crucial national interest in Panama-an open, efficient, and secure Canal-a new treaty is necessary, in part because of the united position of the Panamanians and in part because if we want a secure access to the Canal, we need a cooperative arrangement with Panama.

(b) The Republic of Panama, an important and staunch friend and supporter of the United States, wants a new treaty. Four American Presidents have been on record for 11 years as wanting to conclude a new treaty relationship. Without a new treaty, continued friendship with Panama will not be possible. We will be opting for confrontation with all the risks that course can pose for a safe and open Panama Canal.

(c) The major concern of the Panamanians is an end to the concept of America having rights in "perpetuity" in Panama and U.S. jurisdiction over the Canal Zone. This concern cannot be addressed in any reasonable fashion without a new arrangement. If we choose not to deal with it, we will have a confrontation with Panama. If we continue to insist upon our rights in perpetuity in today's world, we are launched on a dangerous, high-risk course.

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(d) Over the last several months, Panama has obtained important and diversified international support for a new treaty. The strong and unequivocal support of all Latin American nations for Panamanian aspirations, alone, suggests that serious problems in our hemispheric relations will result from a failure to conclude a new treaty. Rejection of a treaty that protects vital U.S. interests will lead to a deterioration of our relations with all Latin American nations.

(e) The United States has a unique opportunity to obtain a treaty on acceptable terms. If this opportunity is lost and the talks falter, there will likely be another wave of anti-Americanism in Panama and resumption of treaty talks, a few years from now, in an atmosphere less favorable to the United States and less conducive to preserving for us the essential that we want, namely responsibility for the operation and defense of the Canal for a specified period of time.

In brief, a treaty which satisfies the legitimate interests of both Panama and the United States is a realistic policy, and signifies a positive step toward a mature relationship between the United States and the countries of Latin America.

WHAT ARE THE CONSEQUENCES IF NEGOTIATIONS FAIL?

The issue before the United States is not between having a new treaty and continuing the present treaty, but rather between negotiations that will lead eventually to a draft treaty and what would be the likely consequences of no new treaty.

The treaty of 1903 gave the United States certain rights, not territory and not sovereignty, in Panama. It is those rights that are the subject of the current negotiations. The current uneven pace of negotiations has, at times, produced a climate between the United States and Panama that could undermine our rights there in the future. If we fail to reach a treaty that will redefine our relationship and rights for the future, we run the risk of a confrontation that can only reinforce distrust and jeopardize our national interests in the Canal.

Such confrontations have occurred in the past because of this issue. They occurred in 1957, 1964, 1975. In 1964, over 20 people died in events relating to Panamanian frustrations over the Canal Zone and its inhabitants. More recently, demonstrations of a large and increasingly vocal student population have become a problem. While the students are not united and they represent political organizations across the entire political spectrum, although mainly on the left side, they are united in the view that a new treaty is necessary now. It is a matter of national pride and dignity to all Panamanians.

While negotiations have been in progress and there is hope that a new treaty is possible, the Government of Panama has been willing to deal with the more outspoken and violent activities of student groups. But as each month passes the Panamanian Government is under increasing pressure to produce tangible signs of progress. If it perceives a complete impasse in the negotiations, the Government might be unwilling to pay the political price for containing demonstrators.

Demonstrations against the United States last occurred in September 1975. At that time students demonstrated against our Embassy and then proceeded to demonstrate outside the Panamanian Foreign Ministry, two easy and natural targets for frustrations over the absence of a treaty.

Although only minor damage was done, the message was clear. If we are unable to draft a mutually acceptable treaty, we run the risk of becoming engulfed in an uncontrollable confrontation between Americans and Panamanians in the Canal Zone. Such a situation could easily produce bloodshed, as it did in 1964. If a confrontation occurs, both Panama and the United States would lose precisely what we both are intent upon preserving an open, secure, and efficient Canal available for the trade and commerce of all states.

WHAT ARE THE PRINCIPAL ISSUES IN DISPUTE IN NEGOTIATIONS FOR A NEW TREATY?

Our discussions with American and Panamanian officials focused in detail on nine specific issues involved in efforts to negotiate a new treaty. On some of these issues, differences between the United States and Panama have been resolved and, on others, intensive negotiating is still needed.

The nine issues are:

1. TIMETABLE FOR THE TREATY

Since 1964, both the United States and the Republic of Panama have been committed to the concept of a new treaty and the necessity of a comprehensive modernization of their relationship. Between 1964 and 1967, three draft treaties were negotiated, but none were ever signed by the parties and no effort was made to seek ratification. In June 1971, another effort to reach a treaty commenced at the request of the Torrijos Government which came to power in 1968. However, a new U.S. treaty offer submitted to Panama in December 1971 was rejected. One year later formal negotiations resumed. Little was accomplished in this new round of talks until after Ambassador Ellsworth Bunker was appointed U.S. negotiator in late 1973. Since then, substantial progress has been made.

A first stage of the negotiations ended in February 1974 when Secretary of State Henry Kissinger went to Panama City to initial with the Panamanian Foreign Minister a set of eight principles which were to serve as guidelines in working out the details of a new treaty.1 The signing of the eight principles had a significant and positive impact on Panama's confidence in this new effort to draft a mutually acceptable treaty. Many Panamanians felt for the first time that they could negotiate on grounds where they knew they would get something new. After the delineation of these principles it was relatively easy for the parties to identify the major issues that would be the subject of detailed negotiations.

1 See appendix, p. 17.