PANAMA CANAL SERIES

QUESTIONS AND ANSWERS TO THE U.S. DEPARTMENT OF STATE

(By Donald M. Dozer, Professor of Latin American History and Inter-American Relations, University of California, Santa Barbara, 1977)

Question 1. Has the United States been sovereign over the Canal Zone since 1903?

Answer. Yes.

Title to what is called the Canal Zone passed in 1903 from Colombia to the newly formed Republic of Panama by an act of secession. The new Republic of Panama was recognized by President Theodore Roosevelt. A treaty, the HayBunau Varilla or Isthmian Canal Convention, was then concluded with Panama ceding the Canal Zone to the United States and was duly ratified.

This Isthmian Canal Convention granted to the United States "in perpetuity" a strip of territory crossing the isthmus in which the United States could exercise "all the rights, power and authority . . . which it would possesss and exercise if it were the sovereign of the territory . . . to the entire exclusion of the exercise by the Republic of Panama of any such sovereign rights, power or authority." For this grant of sovereignty "in perpetuity" the United States paid Panama the full purchase price of $10,000,000 and later indemnified the owners of the land by purchasing it from them, thus acquiring ownership of the land of the Canal Zone in fee simple. The United States also was given the right of eminent domain in the Republic, that is, the right to condemn and expropriate land outside the Zone needed for the construction, maintenance, operation, sanitation, and protection of the Canal. It also agreed to guarantee and maintain the independence of Panama.

This Isthmian Canal Convention did not in any way establish a leasehold position for the Zone, nor qualify its status as a legally purchased territory of the United States. The word lease which appeared in the draft convention was replaced by the word grants (conceder in Spanish) upon the insistence of Secretary of State John Hay and Senate leaders who would have to defend the treaty in the Senate. Contrary to interpretations of the treaty by State Department personnel since 1946 the word lease no where appears in the treaty as defining the relationship of the Zone to the United States. Nor did the treaty establish a rental relationship between the United States and the Zone. "Compensation" was the word used in defining the annual obligation of $250,000 which the United States assumed when it took over the assets of the Panama Railroad. This was the compensation which the Railroad had formerly paid to the government of Colombia.

The wording of the treaty of 1903, therefore, and the intent of the high contracting parties establishes that Panama granted exclusive sovereignty over the Canal Zone to the United States. The treaty was immediately accepted and ratified without change by the Provisional Government of Panama in December 1903 and by the Constitutional Government of Panama in February 1904 even before it received the approval and consent of the United States Senate. The articles of the treaty granting exclusive sovereign rights, power and authority over the Zone to the United States have never been modified in any subsequent treaty between the two nations, nor in any interpretation thereof by the courts. The character of this transfer of the Zone to the United States as a purchase or cession has been clearly recognized in subsequent agreements and acts. In an agreement signed by General George W. Davis, Governor of the Canal Zone, and Tomás Arias, Secretary of State of Panama in June 1904, defining the boundary of the United States Zone Panama further recognized the Zone as "territory ceded to the Government of the United States" by the treaty of the previous year. The National Assembly of Panama used the same word "ceded” in referring to the Zone in Law No. 88 of July 1904, and it was also used by the courts of Panama in defining the status of the Zone, thus establishing a unanimous consensus of the executive, the legislative, and the judicial branches of the Panamanian government.

To the later Panamanian objection that the treaty gave the United States only specific rights for the construction, maintenance, operation, sanitation and protection of a Canal, Hay replied in a letter to the Panamanian minister to the United States, J. D. de Obaldia, in October 1904, that the above words did not

constitute "a limitation on the grant," as Panama argued, but were rather a "declaration of the inducement prompting the Republic of Panama to make the grant." Hay's interpretation is based on the historical reasons which prompted Panama to cede the Canal Zone to the United States. He therefore properly insisted that Panama had transferred to the United States "the ordinary powers of sovereignty" over the Zone and had accordingly forfeited "any right to challenge such exercise of sovereignty" by the United States. Whereas the French Canal Company, a private company, had undertaken to dig the transisthmian canal under a mere concession from the Colombian government, the United States would use public funds in completing the canal. Congress could not appropriate funds raised by imposing taxes on United States citizens for construction of a work "of such stupendous magnitude and world-wide importance as the Isthmian Canal" except "in territory subject to the national sovereignty." (Foreign Relations of the United States, 1904n pp. 613–630.)

Critics of the treaty cite the clause in Article III giving the United States authority in the Zones as "if it were the sovereign of the territory," but other clauses in this same article and other articles of the treaty grant to the United States such complete authority in the Zone "in perpetuity" as to leave no doubts as to United States sovereignty over it. Further proof of the completeness and finality of the cession is furnished by the fact that the Isthmian Canal Convention, like the treaty of 1803 with France selling the Louisiana territory to the United States, the Gadsden treaty of 1853 with Mexico selling the southern portions of New Mexico and Arizona to the United States, and the treaty of 1867 with Russia selling Alaska to the United States, contains no provision for renegotiation. The transfer of all these purchased territories was intended to be and must still be considered to have been "in perpetuity."

The treaty of 1903 complied with the international commitments of the United States in the Hay-Pauncefote treaty of 1901 and with the statutory requirements of the Spooner Act of 1902. The latter directed the president to proceed with the construction of an isthmian canal only if he could obtain "perpetual control" and jurisdiction over a Canal Zone in Central America. The treaty with Panama embodying the words "grants . . . in perpetuity . . . to the entire exclusion of the exercise by the Republic of Panama of any such sovereign rights, power and authority," also met the requirements of the executive branch of the government. And in 1907 the treaty was interpreted by the Supreme Court in Wilson v. Shaw as having "ceded" title over the Canal Zone to the United States. The decision was reaffirmed by the Supreme Court as recently as 1972 when it denied certiorari to the United States Court of Appeals, 5th Circuit, in the case of United States v. Husband [Roach], holding that the Canal Zone is "unincorporated territory of the United States" over which Congress exercises "complete and plenary authority." (406 U.S. 935).

Question 2. Does the theory of titular or residual sovereignty have any validity at law.

Answer. No.

The theory of titular sovereignty grew out of the Taft agreement of 1904. Taft explained this theory as requiring that if the United States ever decided to abandon the Canal Zone it would relinquish it only to Panama, by whom it had been ceded to the United States, and to no other nation. But when testifying before the Senate Committee on Interoceanic Canals in 1906 Taft expressed satisfaction with the grant of exclusive United States sovereignty over the Zone to the entire exclusion of the exercise of such sovereignty by Panama and he explained that he had advanced this theory of titular sovereignty in order to appease the sensibilities of the Spanish or Latin mind, poetic and sentimental, enjoying the intellectual refinements, and dwelling much on names and forms."

Later as president of the United States Taft made an address in Panama City in which he declared: "We are here to construct, maintain, operate and defend a world canal which runs through the heart of your country, and you have given us the necessary sovereignty and jurisdiction over the part of your country occupied by that canal to enable us to do this effectively." Still later, in 1930, when Taft was Chief Justice of the Supreme Court he had an opportunity to rule on the theory of titular sovereignty in the case of Luckenbach S.S. Co., v. United States, but instead he upheld the decision of the Court in Wilson v. Shaw. This theory of titular sovereignty has also been used, and distorted, by administrations in Washington since 1946 to show Panama's continuing sov

ereignty over the Zone, and it has encouraged Panamanian, nationalists to make extreme demands upon the United States and to take violent action against it. Because of the exaggerated importance given to it by both Panamanians and the State Department in Washington as justification for the current negotiations over the disposition of the Canal Zone this theory must be officially denounced and repudiated.

The State Department has attempted to justify this theory of titular sovereignty on the basis of the precedents of (1) the lease of naval bases in China by France, Germany, and Russia in the latter part of the nineteenth century, (2) the Guantánamo base of the United States in Cuba, and (3) United States exercise of jurisdiction over certain Japanese islands from the end of World War II until 1971. (S. Morey Bell, Minister and Deputy United States Negotiator, Department of State, to Congressman Gene Snyder of Kentucky, December 12, 1975.)

But in the first case, the naval bases of France, Germany, and Russia in China were clearly designated as leases, whereas, as noted above, the Canal Zone was granted to the United States in perpetuity and is in fact United States territory. The case of Guantánamo offers on analogy, for it is a United States base in a foreign country which the United States explicitly uses on a rental basis. Moreover, in the treaty of 1903 with Cuba, unlike the treaty of the same year with Panama, the United States recognized the continuance of the ultimate sovereignty of the Republic of Cuba over the Guantánamo base. The example of the Ryuku and Daito islands is not comparable, for these Japanese islands were taken only temporarily under the jurisdiction of the United States as the victor over Japan in World War II, whereas the Canal Zone was a clean territorial purchase "in perpetuity."

These examples are self-serving attempts by the State Department to deceive and dispossess the American people of constitutionally purchased territory of the United States. The negotiating position of the State Department since 1965 is not that of the United States. It is in contempt of the Supreme Court of the United States and is not authorized by Congress, as required by Article 4, Section 3, paragraph 2 of the Constitution, which gives Congress "power to dispose of and make all needful rules and regulations respecting the territory or other property belonging to the United States."

Question 3. Is there any justification for renegotiating the Isthmian Canal Convention of 1903?

Answer. No.

Defenders of the surrender policy allege that the claims of United States sovereignty over the Canal Zone were tainted from the beginning because Theodore Roosevelt stretched out the hand of fellowship and consecrated the right of Panama to reassert its independence from Colombia. The Isthmian Canal Convention, they insist, was therefore concluded under duress in an era of imperialism which has now passed. Their feelings of guilt over Roosevelt's "gunboat diplomacy" and their current abhorrence of imperialism in their opinion justify the retrocession of the Canal Zone and the Canal to Panama as penance for guilt. Besides, they dolefully predict that if the United States does not capitulate to the demands of the Panamanian administration of General Omar Torrijos for surrender of the Canal Zone it will provoke guerrilla warfare against the Zone, precipitate further temper tantrums by Panamanian nationalists, and cause such aggravated hostility from other Latin American countries as to force the United States entirely out of the canal business in Central America.

The facts are that the Panamanian independence movement was conceived, planned, and executed by Panamanians, and it succeeded through the assistance of the chief engineer of De Lesseps' Old Panama Canal Company, Philippe Bunau-Varilla, who performed services for Panama comparable to Lafayette's contribution to the independence of the United States. The Panamanian patriots themselves prevented the transport of Colombian troops across the isthmus from Colón through their control of the Panama Railroad then owned by the New Panama Canal Company. As permitted by international law, the Theodore Roosevelt administration dispatched warships to the scene of the Panamanian revolution in November 1903 for the protection of the lives and property of United States citizens and to protect freedom of transit across the Isthmus of Panama as required by Article 35 of the treaty of 1846 with New Granada (Colombia).

Although they were not obliged to fire a shot for this purpose the presence of this United States military force in Panamanian waters undoubtedly exerted a moral influence in preserving the peace, preventing bloodshed, and thereby contributing to the success of the Panamanian independence movement.

Panamanian patriots, who had been working for independence for many years, found in Colombia's rejection of the Hay-Herrán canal treaty in early 1903 a stroke of fortune. Colombia's action blocked Panama's hopes for the selection by the United States of a Panama route, instead of the Nicaraguan-Costa Rican route for a transisthmian canal. The new Provisional Government realized that only the United States had the facilities to complete this gigantic project. United States isthmian canal policy from the time of President Grant had been an American canal on American soil under American control. The provisional government of Panama therefore promptly and duly accredited Bunau-Varilla as Envoy Extraordinary and Minister Plenipotentiary with full powers for political and financial negotiations to sign a canal treaty satisfactory to the United States. By the treaty which he signed with Secretary of State Hay, Panama gained a guaranty of its independence by the United States and the assurance that the isthmian canal would be built adjoining its territory rather than by the Nicaraguan-Costa Rican route. The start of construction work on the Canal in 1904 marked the beginning of a new era of unprecedented prosperity for Panama. Except for a few Panamanian extremists, the new Panama nursed no grudges against the United States for enabling it to become an entrepôt of international commerce. The aggrieved nation was Colombia, and in 1922 the United States indemnified her for "the political events in Panama in November 1903" in the amount of $25,000,000. By the Thomson-Urrutia treaty between the two nations Colombia recognized that "title" to the "interoceanic Canal and the Panama Railway... is now vested entirely and absolutely in the United States of America without any incumbrances or indemnities whatever."

Those who argue that the United States possesses only limited rights and not sovereign status in the Canal Zone point to Hay's admission to the Senate Committee on Foreign Relations that the treaty was "vastly advantageous to the United States and, we must confess, not so advantageous to Panama." But Hay's purpose in this statement was to present the treaty in a favorable light to the Senate so that he would not have to make further demands upon Panama and perhaps be obliged to reopen negotiations. Does any treaty ever produce equal benefits for all signatories? The United States with its greater wealth, maritime commerce, and productive capacity was and has continued to be much more capable of deriving advantage from the Canal, but over the 62 years of the Canal's operation Panama also has gained enormous benefits from it and has emerged as the nation with the highest standard of living in all of Central America and one of the highest in Latin America.

Theodore Roosevelt's statement in his address at Berkeley, California, in March 1911, "I took the isthmus," has also been advanced as a pretext for retroceding the Canal Zone to Panama as restitution. Since Panama offered the Canal Zone as an inducement to the United States to select the Panama route instead of the Nicaraguan route for a transisthmian canal, Roosevelt would have been guilty of gross negligence and liable to condemnation by future generations if he had not taken advantage of the Panamanian offer. At no time since then has there been any public demand or any legislative authorization to retrocede the Canal Zone to Panama or to any other nation. It remains sovereign territory of the United States. As for the Canal itself it was constructed entirely at United States expense and remains United States property in perpetuity. The allegation that the treaty of 1903 must be replaced by a so-called modern treaty because of changed conditions represents an attempt to revive the 19th century concept of a canal built by a concessionaire for a specified period of time at the end of which the canal would become the property of the former sovereign, in this case Colombia. On the contrary, the Panama Canal was built on American soil, with American money, and under American control consistent with the traditional United States isthmian canal policy spanning more than a century and remaining still the law of the land.

Question 4. Has the United States been brought perilously close to a permanent loss of its sovereign position in the Canal Zone by ill-advised and ill-motivated diplomatic and political maneuvers?

Answer. Yes.

Of all the treaties negotiated by the United States with Panama since the treaty of 1903, including those of 1936, 1955, and 1967, none has been negotiated under Congressional authorization. For all these treaties the executive, that is the President and the State Department, have taken the initiative, assumed responsibility, and expected to receive subsequent approval of the Congress.

In the treaty of 1936, at the request of Panama the United States abrogated its guaranty of Panama's independence. It also gave up the right of eminent domain for canal purposes in Panamanian territory outside the Canal Zone. To compensate for the devaluation of the gold dollar the Franklin Roosevelt administration abrogated the gold obligation and replaced it with an annuity of 430,000 balboas. A fourth concession which the United States made to Panama was to abrogate its right to maintain public order in the Panamanian cities Colón and Panama, and, fifth, the United States agreed to furnish Panama with customhouse sites in the United States Zone to enable the Panamanians to utilize the United States ports of Cristóbal and Balboa, which had been constructed at United States expense, because Panama had failed to dredge its own deep-water ports. To protect the United States against further demands, under Secretary of State Sumner Welles, who was one of the United States negotiators, attached to our copy of the treaty a memorandum stating that the Panamanian Foreign Minister, Dr. Ricardo J. Alfaro, and the Panamanian Ambassador had agreed that the new treaty fully met every possible request they might ever make. They therefore renounced further changes. (Spruille Braden, Diplomats and Demagogues, Arlington House, New Rochelle, New York, 1971, p. 399).

Nevertheless, in 1940 when the United States required additional air bases in Panama outside the Zone for the protection of the Canal against air attacks from Nazi commercial airports in Central and South America, Panama held up the United States for more than one billion dollars. After World War II Panama refused to allow further use of these air bases, constructed wholly at United States expense, despite the 1936 treaty. Since then every new concession by the United States to continuing demands of Panamanians has been met by accelerating demands, blackmail, and temper tantrums on their part.

Contrary to the contention of the State Department the status of the United States as sovereign over the Canal Zone was not altered by the treaty of 1936. The phrase "the territory of the Republic of Panama under the jurisdiction of the United States of America," which occurs in Article III, Paragraph 6, of the treaty does not compromise United States sovereignty in the Canal Zone. This interpretation is confirmed by Article XI of the same treaty which stipulates that "the provisions of this Treaty shall not affect the rights and obligation" of either the United States or Panama "under the treaties now in force between the two countries, nor be considered as a limitation, definition, restriction or restrictive interpretation of such rights and obligations."

In 1955 President Dwight D. Eisenhower secured a 15-year renewal of the Rio Hato base for which the United States Department of State agreed to increase the annuity by 1,500,000 balboas, to give Panama certain commercial advantages, to surrender $40 million worth of United States real property in the Panamanian cities of Colón and Panama, and to provide improved employment opportunities for Panamanians in United States Government and Panama Canal positions. In 1960 Eisenhower made a presidential decision authorizing the flying of the Panamanian flag alongside the United States flat at Shaler Triangle in the Zone to give visual evidence of the titular sovereignty of Panama, in violation of the supreme law of the land, namely, the exclusion clause of Article III of the HayBunau Varilla treaty of 1903 and the Gross amendment to the State Department appropriation of 1961 enacted by Congress and signed into law by the President. President Kennedy later authorized the flying of the Panamanian flag at seventeen locations in the Zone. The encouragement thus given to Panamanian nationalists led to the bloody riots of January 1964 and the eventual opening of negotiations between the two governments looking toward the transfer of the Canal Zone to Panamanian sovereignty. These resulted in treaties in 1967 which were unacceptable to Panama, but negotiations were reopened by the Nixon administration in 1971 and still continue.

Control of strategic waterways of the world including the United States Isthmian Canal has been one of the major geopolitical objectives of the Soviet since 1917. This objective was promoted by Alger Hiss when in 1946, with the approval of Secretary of State Dean Acheson, he forwarded to the United Nations the