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ment of the United States agrees to pay to the Republic of Panama the sum of ten million dollars ($10,000,000) in gold coin of the United States on the exchange of the ratification of this convention and also an annual payment during the life of this convention of two hundred and fifty thousand dollars ($250,000) in like gold coin, beginning nine years after the date aforesaid.

The provisions of this Article shall be in addition to all other benefits assured to the Republic of Panama under this convention.

But no delay or difference of opinion under this Article or any other provisions of this treaty shall affect or interrupt the full operation and effect of this convention in all other respects.


The joint commission referred to in Article VI shall be established as follow: The President of the United States shall nominate two persons and the President of the Republic of Panama shall nominate two persons and they shall proceed to a decision; but in case of disagreement of the Commission (by reason of their being equally divided in conclusion) an umpire shall be appointed by the two Governments who shall render the decision. In the event of the death, absence, or incapacity of a Commissioner or Umpire, or of his omitting, declining or ceasing to act, his place shall be filled by the appointment of another person in the manner above indicated. All decisions by a majority of the Commission or by the umpire shall be final.


The two Governments shall make adequate provision by future agreement for the pursuit, capture, imprisonment, detention and delivery within said zone and auxiliary lands to the authorities of the Republic of Panama of persons charged with the commitment of crimes, felonies or misdemeanors without said zone and for the pursuit, capture, imprisonment, detention and delivery without said zone to the authorities of the United States of persons charged with the commitment of crimes, felonies and misdemeanors within said zone and auxiliary lands.


The Republic of Panama grants to the United States the use of all the ports of the Republic open to commerce as places of refuge for any vessels employed in the Canal enterprise, and for all vessels passing or bound to pass through the Canal which may be in distress and be driven to seek refuge in said ports. Such vessels shall be exempt from anchorage and tonnage dues on the part of the Republic of Panama.


The Canal, when constructed, and the entrances thereto shall be neutral in perpetuity, and shall be opened upon the terms provided for by Section I of Article three of, and in conformity with all the stipulations of, the treaty entered into by the Governments of the United States and Great Britain on November 18, 1901.


The Government of the Republic of Panama shall have the right to transport over the Canal its vessels and its troops and munitions of war in such vessels at all times without paying charges of any kind. The exemption is to be extended to the auxiliary railway for the transportation of persons in the service of the Republic of Panama, or of the police force charged with the preservation of public order outside of said zone, as well as to their baggage, munitions of war and supplies.


If by virtue of any existing treaty in relation to the territory of the Isthmus of Panama, whereof the obligations shall descend or be assumed by the Republic of Panama, there may be any privilege or concession in favor of the Government or the citizens and subjects of a third power relative to an interoceanic means of communication which in any of its terms may be incompatible with the terms of the present convention, the Republic of Panama agrees to cancel or modify such treaty in due form, for which purpose it shall give to the said third power the requisite notification within the term of four months from the date of the present convention, and in case the existing treaty contains no clause permitting

its modifications or annulment, the Republic of Panama agrees to procure its modification or annulment in such form that there shall not exist any conflict with the stipulations of the present convention.


The rights and privileges granted by the Republic of Panama to the United States in the preceding Articles are understood to be free of all anterior debts, liens, trusts, or liabilities, or concessions or privileges to other Governments, corporations, syndicates or individuals, and consequently, if there should arise any claims on account of the present concessions and privileges or otherwise, the claimants shall resort to the Government of the Republic of Panama and not to the United States for any indemnity or compromise which may be required.


The Republic of Panama renounces and grants to the United States the participation to which it might be entitled in the future earnings of the Canal under Article XV of the Concessionary contract with Lucien N. B. Wyse now owned by the New Panama Canal Company and any and all other rights or claims of a pecuniary nature arising under or relating to said concession, or arising under or relating to the concessions to the Panama Railroad Company or any extension or modification thereof; and it likewise renounces, confirms and grants to the United States, now and hereafter, all the rights and property reserved in the said concessions which otherwise would belong to Panama at or before the expiration of the terms of ninety-nine years of the concessions granted to or held by the above mentioned party and companies, and all right, title and interest which it now has or may hereafter have, in and to the lands, canals, works, property and rights held by the said companies under said concessions or otherwise, and acquired or to be acquired by the United States from or through the New Panama Canal Company, including any property and rights which might or may in the future either by lapse of time, forfeiture or otherwise, revert to the Republic of Panama under any contracts or concessions, with said Wyse, the Universal Panama Canal Company, the Panama Railroad Company and the New Panama Canal Company.

The aforesaid rights and property shall be and are free and released from any present or reversionary interest in or claims of Panama and the title of the United States thereto upon consummation of the contemplated purchase by the United States from the New Panama Canal Company, shall be absolute, so far as concerns the Republic of Panama, excepting always the rights of the Republic specifically secured under this treaty.


If it should become necessary at any time to employ armed forces for the safety or protection of the Canal, or of the ships that make use of the same, or the railways and auxiliary works, the United States shall have the right, at all times and in its discretion, to use its police and its land and naval forces or to establish fortifications for these purposes.


No change either in the Government or in the laws and treaties of the Republic of Panama shall, without the consent of the United States, affect any right of the United States under the present convention, or under any treaty stipulation between the two countries that now exists or may hereafter exist touching the subject matter of this convention.

If the Republic of Panama shall hereafter enter as a constituent into any other Government or into any union or confederation of states, so as to merge her sovereignty or independence in such Government, union or confederation, the rights of the United States under this convention shall not be in any respect lessened or impaired.


For the better performance of the engagements of this convention and to the end of the efficient protection of the Canal and the preservation of its neutrality, the Government of the Republic of Panama will sell or lease to the United States

lands adequate and necessary for naval or coaling stations on the Pacific coast and on the western Caribbean coast of the Republic at certain points to be agreed upon with the President of the United States.


This convention when signed by the Plenipotentiaries of the Contracting Parties shall be ratified by the respective Governments and the ratifications shall be exchanged at Washington at the earliest date possible.

In faith whereof the respective Plenipotentiaries have signed the present convention in duplicate and have hereunto affixed their respective seals.

Done at the City of Washington the 18th day of November in the year of our Lord nineteen hundred and three.



And whereas the said Convention has been duly ratified on both parts, and the ratifications of the two governments were exchanged in the City of Washington, on the twenty-sixth day of February, one thousand nine hundred and four;

Now, therefore, be it known that I, Theodore Roosevelt, President of the United States of America, have caused the said Convention to be made public, to the end that the same and every article and clause thereof, may be observed and fulfilled with good faith by the United States and the citizens thereof.

In testimony whereof, I have hereunto set my hand and caused the seal of the United States of America to be affixed.

Done at the City of Washington, this twenty-sixth day of February, in the year of our Lord one thousand nine hundred and four, and of the Independence of the United States the one hundred and twenty-eighth.


By the President:

JOHN HAY, Secretary of State.




[Updated October 14, 1975, Issue Brief No. IB74138]

(By K. Larry Storrs, Foreign Affairs Division, and Barry Sklar, Foreign Affairs Division of the Library of Congress, Congressional Research Service, Major Issues System)

Issue definition

The 1903 Convention for the Construction of a Ship Canal between the United States and Panama granted the United States the right to build, operate, and defend a canal across the Isthmus of Panama and to exercise "in perpetuity" sovereign rights and authority within a specified zone contiguous to the canal. Over the years, Panamanian resentment of what it considers the inequitable terms of the treaty has made the canal issue a major irritant in United StatesPanamanian relations. On December 18, 1964, President Johnson announced the nation's willingness to negotiate new canal treaties to best accommodate both United States and Panamanian interests. The Nixon-Ford administrations have essentially adopted the same policy.

Sentiment in Congress is divided between members who believe that new treaties are essential to the maintenance of good relations with Panama and other Hemisphere nations, sympathetic to the Panamanian cause, and those who oppose any change in the U.S. status in the Canal Zone area on grounds that the rights now retained are essential to national interests. Recent congressional action, however, seems weighted on the "status quo" side.

Background and policy analysis

The strategic geographical location of the Isthmus of Panama, affording the potential of a short-cut route between the Atlantic and Pacific Oceans, generated United States interest in a canal early in the 19th century. During the period, the United States concluded treaties with various nations to secure a U.S. interest in any canal constructed in the area. While the territory of the Isthmus was still a part of Colombia, the United States concluded a treaty with that nation (the Hay-Herran Treaty, signed in January 1903) providing for U.S. construction and operation of a canal across the Isthmus. After Colombia rejected the treaty, the Panamanians, many of whom had long sought an independent Panamanian nation proclaimed their independence (November 3, 1903) with U.S. military forces standing by offshore.

On December 2, 1903, the new Provisional Government of Panama ratified a canal pact titled the Convention for the Construction of a Ship Canal (HayBunau-Varilla Treaty), based substantially on the rejected Hay-Herran Treaty. Its basic provisions (1) granted to the United States "in perpetuity the use, occupation and control" of a specified zone of land through Panamanian territory for the construction, operation, and defense of a ship canal (Article I); (2) afforded the United States "all the rights, power and authority within the . . which the United States would possess 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" (Article III); and (3) provided for payment of U.S. compensation to Panama of an initial $10 million and a yearly annuity (Article XIV).


Since 1903 treaty's inception, Panamanians have charged that its basic terms involve concessions extracted from an immature new republic under the advice and influence of unscrupulous individuals and foreign interests. The principal Panamanian objections are the terms of Articles I and III, which afford the United States full sovereign rights, control, and governmental jurisdiction over

a portion of Panamanian territory for a limitless duration. Other primary objections of Panama include: (1) the size of the U.S. military presence and the existence of U.S. military training facilities located in the Canal Zone; (2) the amount of U.S. annuity to Panama and allegedly inequitable sharing of the economic benefits derived from canal operations, and (3) the amount of land area within the zone unused by the United States but not available for Panamanian use.

The United States, in efforts to improve its treaty relations with Panama, has periodically altered provisions of the 1903 treaty, primarily through two additional treaties of 1936 and 1955; however, the sovereignty principle has remained unchanged. Mounting Panamanian nationalist sentiment over the canal issue erupted in serious demonstrations in 1959 and culminated in the violent anti-United States flag riots of January 1964. The incident precipitated a major diplomatic crisis between the two nations during which Panama broke relations with the United States and put its case before the United Nations and the Organization of American States.

On December 18, 1964, President Johnson announced the U.S. intention to negotiate new treaties with Panama which would abrogate the 1903 treaty, recognize Panamanian sovereignty over the Canal Zone, and end the "in perpetuity" provision, while still retaining "the rights which are necessary for the effective operation and the protection of the canal and the administration of the areas that are necessary for these purposes." Bilateral negotiations began in January 1965, culminating in the joint announcement by the United States and Panama in June 1967 that three new draft treaties had been agreed upon. Action was never taken by either nation, however, attributable in part to the premature publication of the treaty terms in the press (which touched off considerable opposition in both countries), and to the fact that both nations were then involved in major election campaigns. In August 1970, the government of General Omar Torrijos, in power as a result of a military coup in October 1968, formally rejected the draft treaties while indicating willingness to pursue the negotiations.

Talks resumed in June 1971, and on February 7, 1974, Secretary of State Henry Kissinger and Panamanian Foreign Minister Juan Antonio Tack signed a statement of general principles which would serve as guidelines for the new Panama Canal treaties. Principal terms include: (1) elimination of the "in perpetuity" provision of the former treaty, with provision for a fixed termination date; (2) termination of U.S. sovereignty and jurisdiction in the Canal Zone, with the United States granted the rights, facilities, and land necessary for U.S. operation and defense of the canal for the duration of the new treaty; (3) Panamanian participation in the administration and defense of the canal, with provision for the eventual reversion of canal operation and control to Panama upon termination of the new treaty; and (4) a just and equitable sharing of the economic benefits derived from the canal. At the present time, negotiations on the specific terms of the treaty are said to be proceeding satisfactorily.

The basic principles at issue in consideration of new Panama Canal treaties are whether or not the United States should maintain its current status of unlimited sovereignty and full governmental jurisdiction within the Canal Zone, and whether the United States should continue to assume full responsibility for operation and defense of the present canal indefinitely. Since canal negotiations began, U.S. officials have been confident that an accommodation could be reached which would meet the reasonable aspirations of Panama while safeguarding U.S. vital interests in the canal and Canal Zone and in no way weakening the United States posture in the area.

In the view of the United States Government, some members of Congress, and other proponents of new treaties, reaching a reasonable and mutually acceptable accord with Panama on this highly sensitive issue is essential to U.S. foreign policy and security concerns with regard to Panama and to the Latin American region as a whole. They see the issue cast in the context of the changing nature of international political relations wherein the increasing economic and political interdependency of nations is causing the United States and other nations to forge new relationships based on mutual equality, cooperation, and respect. Proponents argue that in today's world the 1903 treaty is an anachronism which will continue to serve as a rallying point for Panamanian and other Latin American nationalist sentiment directed against the United States. In like manner, the treaty provides a ready target for elements hostile to the United States outside the region.

A further factor bearing on the issue of new treaties relates to future U.S. and world commercial interests and to U.S. and allied defense concerns. The

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