Senator HAYAKAWA. You are quite right, sir.

Senator ALLEN. So it is conceivable that even though you do support the concept of a renegotiation of the treaty, the product and the method by which the product is achieved might be of such a nature and of such provisions that you could not support it; is that right? Senator HAYAKAWA. That is correct, sir.

Senator ALLEN. Do you feel that any agreement that is reached in the form of a treaty should be subjected also to congressional approval as distinguished from the treaty approval by the Senate, as is required by article IV, section 3 of the Constitution?

Senator HAYAKAWA. I am not fully clear on the legal requirements there. Does that not revolve on whether or not it is interpreted that the Panama Canal Zone is U.S. territory? If it is, obviously a vote of Congress has got to be done. If not, then it is a matter of a treaty. That particular issue has not been resolved, as I understand it.

Senator ALLEN. Do you feel that your requirements for cooperation with the Congress might well include the requirement that the entire Congress pass on the question before it does become a fait accompli?

Senator HAYAKAWA. It is the practice, under the Constitution, of treaties with foreign nations to be confirmed by a two-thirds majority of the Senate.

Senator ALLEN. Yes.

Senator HAYAKAWA. I think that there is no particular reason in this case to depart from that practice if indeed we decide to go that direction. If there is something wrong with the treaty, we can vote against it. But I do not see that we need to change our methods of how to confirm a foreign treaty for the purposes of this particular treaty.

Senator ALLEN. The Constitution, of course, as you know and as you have cited, requires that the Congress must dispose of the property of the United States. If the Congress is not called upon to give its approval by statute, would that be cooperation with the Congress to the extent that you are going to require, in order to be in favor of such a treaty?

Senator HAYAKAWA. Yes; it would have to be. That is, as I stated in my prepared remarks, there is a legal question which I will not try to solve, as to whether the Canal Zone is indeed our property.

Senator ALLEN. If it is our property, then it ought to be conveyed by Congress; is that right?

Senator HAYAKAWA. Yes; indeed.

Senator ALLEN. Thank you very much.

Senator Hatch?

Senator HATCH. Senator, I appreciate your statement and your usual discerning viewpoints concerning the Panama Canal. One factor that you did leave out in the history-I am sure that was by oversight is that in 1912, a Democratic administration was trying to make an issue of the matter with former President Theodore Roosevelt. Twenty-five million dollars was paid to Colombia as a result of what happened in the initial treaty involving the canal.

You would agree with me, would you not, that the original $10 million paid to the Republic of Panama and then the $25 million, if they

were based upon the present worth dollars, would be a high amount of money and many, many millions of dollars?

Senator HAYAKAWA. Yes.

Senator HATCH. We had people here last week who may well be for the treaty, but who made it very clear that they thought those payments were wholly fair and adequate for the day and age in which they were made.

am wondering whether the issue of sovereignty that you have raised is quite as important as some seem to believe. It is important, but it may not be the argument that you may think that it is. I think everybody would agree that the Canal Zone is U.S. territory. What is sovereignty? We can talk about de jure sovereignty or de facto sovereignty. De jure sovereignty is the authority to change the fundamental laws. De facto would be that power which has the power to change the fundamental laws.

By these general principles of international law, I wonder if it is not clear that the United States acts as both de jure and de facto sovereign over the Panama Canal. If there is a residual sovereignty question-and I question whether there is—it remains a theoretical question. You might help us with that as time goes on and get some consideration as to those distinctions between de jure and de facto. But I think you have hit the nail on the head. Since we do have sovereignty and own the territory, then we should have the approval of both Houses of Congress as well as a treaty ratified by a two-thirds vote of the Senate. I think that is a very important point being brought out by these particular hearings.

You have contributed to this, and I personally appreciate it.
Senator HAYAKAWA. Thank you.

Senator ALLEN. I have one further question referring to your statement in jest that, "We stole the canal fair and square, we should keep it." Well, actually, if we stole it from anybody, it was from Colombia, was it not, rather than from Panama? Is not that historical fact? Senator HAYAKAWA. That is an important consideration. I had not thought of that. It was not Panama we stole it from.

[Laughter.]

Senator HATCH. Panama would not be here if that had not taken place. My point is that we have more than satisfied Colombia in paying $25 million which, if brought to present value, would be literally hundreds of millions of dollars.

Senator ALLEN. I believe history will show that the Senate approved the treaty with Colombia. Colombia did not approve it. Then Panama came into existence. I believe that is the historical fact; is it not? Senator HAYAKAWA. Yes.

Senator ALLEN. Thank you very much. We appreciate your testimony.

Senator HAYAKAWA. Thank you.

Senator ALLEN. Our next witness will be Arnold Nachmanoff, Assistant Secretary of the Treasury for International Development, ac companied by Russell Munk, Assistant General Counsel for International Affairs, Department of the Treasury.

I have just been informed that Secretary Nachmanoff was not able

to come.

Mr. MUNK. That is correct, Senator.

Senator ALLEN. We appreciate your attendance. We appreciate your courtesy in coming before the subcommittee. We look forward to your testimony.

TESTIMONY OF RUSSELL L. MUNK, ASSISTANT GENERAL COUNSEL FOR INTERNATIONAL AFFAIRS, DEPARTMENT OF THE TREASURY, ACCOMPANIED BY RICHARD M. GOODMAN, ATTORNEY-ADVISER, DEPARTMENT OF THE TREASURY

Mr. MUNK. Mr. Chairman, I am happy to have the opportunity this morning to testify before the Subcommittee on Separation of Powers. In your letter inviting a Treasury representative to testify, you expressed concern that the Senate be placed in a position to advise and consent with respect to any financial arrangements with the Government of Panama related to the proposed canal treaty. My statement addresses that concern.

At the outset I want to assure you on three counts:

First, the administration will, as it already has, keep Congress fully informed of the progress of treaty negotiations and any related

matters.

Second, at the time the Senate is asked to act on the treaty, full information on all financial arrangements which have any relation to the treaty negotiations will be given to the Senate so that it can take these arrangements into account in its deliberations.

Third, the discussions with Panamanian representatives concerning financial arrangements in which Treasury representatives have participated have been exploratory in nature. No financial arrangements were offered to Panama in these discussions since the administration has not yet decided which financial arrangements should be proposed in the negotiations.

I would also like to make clear that our Government is not using the World Bank or the Inter-American Development Bank as an agent or go-between in its discussions with the Panamanians concerning financial matters related to the treaty. The World Bank and the IDB are independent international organizations. Any negotiations they have with Panama and any assistance they extend to Panama will not be a part of, or related to, any aspect of the treaty negotiations between the United States and Panamanian Governments.

I should also make clear that overall responsibility for canal treaty negotiations rests with the State Department. At the request of the President and the State Department, Treasury has been involved in certain analyses and very preliminary discussions with representatives of the Panamanian Government concerning possible financial arrangements. Treasury's role is primarily of an advisory nature.

In any event, the administration fully appreciates the necessity of keeping the Congress informed of the progress of the treaty negotiations and any related measures. It has had extensive consultations with Members of Congress on the negotiations, and as soon as types and amounts of financial arrangements are brought into clearer focus we will be consulting with Congress on them.

The Senate will be provided with the details of any and all economic arrangements agreed upon by the U.S. Government and the Panamanian Government when the proposed canal treaty is presented to the Senate for its advice and consent. It is too early to tell whether all such arrangements should be included in the proposed treaty, but, at the very least, the entire Senate and the House will be fully informed of any financial arrangements made in connection with the treaty by the U.S. Government.

The Senate will be able to take those arrangements into consideration when deciding whether or not to give its advice and consent to the ratification of the treaty. Further, any proposed measures which will require implementing legislation would, of course, be subject to congressional review and approval.

In summary, I cannot overemphasize the importance the administration places on the Senate's role concerning the treaty. It recognizes that without Senate support the efforts that have been made and will be made to negotiate a mutually satisfactory treaty with the Panamanians will come to naught. The administration has every intention of conducting the negotiations in a manner worthy of the full trust of the Congress.

This concludes my statement. Are there any questions?

Senator ALLEN. I appreciate your fine spirit of cooperation, Mr. Munk. The assurances you give us on three counts are certainly most reassuring.

I note the first of the assurances that you want to give us is that the administration "will, as it already has, keep Congress fully informed of the progress of treaty negotiations and any related matters." Would you then be kind enough to tell us just what progress has been made in the treaty negotiations?

Mr. MUNK. As I also mentioned, the overall responsibility for the treaty negotiations is with the State Department. With respect to the financial arrangements, Treasury has been acting as an adviser. We do not have a final package yet. As of last evening, the package was still being considered. It had not gone to the President. He, of course, will make the final decision on it. I understand that at 9:30 this morning he was meeting with Panamanian negotiators and U.S. Government negotiators. I do not know what was on the agenda, but I do know that the arrangements have not been finalized. I think it would be premature for us to discuss these with Congress before we go further.

Senator ALLEN. About all you are advising us is that you are holding meetings; is that right?

Mr. MUNK. We advise that we are holding meetings. Also in your letter of invitation you asked about the involvement of the international banks.

Senator ALLEN. Yes. These negotiations have been going on way back into the other administration. It seems that no information as far as I know of has been given on the negotiations and how far they have progressed, and what we have offered, and what they have demanded, yet you are going to keep us fully informed of the progress of the treaty negotiations. I do not see that we are being informed of anything, as I say, except of the fact that at certain times certain

meetings are being held. That is about all Congress has been advised of; is it not?

Mr. MUNK. As I said, State is the agency responsible for consultations. I understand that they, in fact, have consulted with 90 Members of the Senate, including certain members of your committee, if not all of them. I do not know for sure.

So, from what I understand, I think State has been consulting extensively, and it intends to continue to do so in the future.

Senator ALLEN. I note that your second assurance, "at the time the Senate is asked to act on the treaty, full information on all financial arrangements which have any relation to the treaty negotiations will be given to the Senate so that it can take these arrangements into account in its deliberations."

That would indicate then that you have no intention of having any action by the other body; is that correct?

Mr. MUNK. We looked at the testimony of Mr. Hansell yesterday. I think we are in general agreement with it. Again, this is primarily a matter for the State Department. In preparing my statement, I noted that your letter talked in terms of a treaty, and focused on the financial arrangements and disclosure that you asked about.

Senator ALLEN. Are the financial arrangements going to be included in the treaty?

Mr. MUNK. We do not yet know what the impact of the financial arrangements will be. We anticipate that probably any financial arrangements directly related to the new relationship with respect to the canal will be included in the treaty. Other arrangements may or may not be included in the treaty.

But they will be on the table, on top of the table, when the treaty is presented for Senate action. If any of the other arrangements made are unsatisfactory to the Senate, then certainly the Senate can take them into account in deciding whether or not to ratify the treaty.

Senator ALLEN. But there is no intention of submitting the treaty to the House for its approval as part of the legislative process in enacting the laws; is that correct?

Mr. MUNK. That is primarily a decision for the State Department. I do not know that the Treasury Department has any thoughts contrary to what State is planning.

Senator ALLEN. This would be a matter to address itself to the executive end of the Senate under the treatymaking power; is that right? Mr. MUNK. Yes.

Senator ALLEN. Have any representatives from the Department of the Treasury or from the International Bank for Reconstruction and Development or any of our other international banks had recent discussions with the Panamanian Minister for Economic Planning? Mr. MUNK. Yes.

Senator ALLEN. Has any other agency of the executive branch had any such discussions?

Mr. MUNK. I should mention that there was an initial meeting, I believe, on the 27th or 28th of June with representatives of the executive agencies. Also attending that meeting, which was a general background briefing on the development situation in Panama, where the U.S. Directors of the International Monetary Fund, the World Bank,