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I. CONCLUSIONS

The following conclusions emerge from our trip:

1. If a new treaty is not negotiated, American interests in the Canal will be jeopardized.

The choice for the United States on the Panama Canal issue is not the choice between a new treaty and the present treaty, but a choice between a new treaty and what will happen if we fail to achieve a new treaty.

A new treaty is the most practical way of protecting American interests. The greatest danger to the national interests of the United States would be a continuation of the present treaty. If there is no new treaty, we run grave risks, including damage to the Canal or even closure of it and harm to broad American political and economic interests.

2. A new treaty arrangement between the United States and Panama for the defense and operation of the Panama Canal is required if the United States is to have good relations in Latin America since Latin American countries see a new treaty as a test of our attitudes toward the entire hemisphere.

Americans make a grave mistake if they see the Canal as only a problem between the United States and Panama.

3. A new treaty is also required for the continued operation of an open, safe, efficient Canal.

If a new treaty is not negotiated, we can reasonably expect both a deterioration of our relations throughout the hemisphere and real dangers to the continuous operation of the Canal.

4. The timing of the negotiations is very important.

Most Panamanian officials appear willing to differentiate between concluding negotiations for a draft treaty and ratification of that treaty in the U.S. Senate and the holding of a referendum in Panama on it.

While they may be willing to wait until after the American elections for the presentation to the Congress of a draft treaty, they are less willing to accept long delays in trying to reach agreement on a draft treaty. The more we delay or attempt to frustrate negotiations for a treaty, the greater the likelihood that negotiations will stall and that the parties on both sides will be forced into extreme statements which will make the situation more dangerous and the issues more difficult to resolve.

5. A treaty which is mutually beneficial for the United States and for Panama should include the following elements:

(a) It should replace the existing 1903 treaty with a new relationship which:

(1) Gives the United States primary responsibility for the defense and the operation of the Canal for an extended period during which Panamanians will play an increasing role in the operation and, eventually, the defense of the Canal;

(2) Insures the continuation of an open, efficient, and secure Canal which is available for the trade and commerce of all states; and

(3) Gives Panama its appropriate political, economic, and jurisdictional role in what is now the Panama Canal Zone.

(b) A new treaty should guarantee for American residents of the Canal Zone and employees of the Panama Canal Company job security for their working lifetimes and normal benefits thereafter. A treaty should also seek to offer Canal Zone residents a lifestyle comparable to, in as many respects as possible, their current life situation in a region now totally under U.S. jurisdiction.

(c) It should acknowledge Panamanian jurisdiction in the Canal Zone (although for the duration of the treaty, it would guarantee and specify the right of the United States to use lands, water, and airspace which may be necessary for the defense and operation of the Panama Canal).

(d) It should provide Panama with a just and equitable share of the benefits derived from the operation of the Canal and any auxiliary services.

(e) It should also provide adequate authorities and procedures for making improvements on the Canal, and for determining tolls. It is assumed tolls may increase substantially in the coming years, reflecting inflation, increased operation expenses, and abnormally low tolls in the recent past.

6. While the Panama Canal is not as important strategically as it once was, it remains a valuable economic and military asset to the United States.

During the Vietnam war, it served as an important logistical artery. Many of the defense functions currently performed in the Canal Zone, however, could either be performed efficiently and effectively elsewhere, or be eliminated or consolidated.

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