Soviet agents on the other is said to be growing rapidly at CIA headquarters in Langley.

When Torrijos came to Washington last month to sign the Panama treaty, his principal press aide-travelling on a Panamanian diplomatic passport-was the well-known Cuban propagandist and secret agent, the Colombian-born novelist, Gabriel Garcia Marquez. And on his return to Panama from the triumphant visit to our seat of government, the first person to receive greetings from Torrijos, via aircraft radio, was none other than Fidel Castro.

Thus the most baffling question confronting future historians trying to explain the Canal giveaway will be: Who did want it? We know the Torrojis clique will reap a windfall of benefits, but keeping our eye for the moment on our side, the real question is: Cui bono? Who shall profit?

That there is a real mystery here, a set of unanswered questions lurking beneath the surface, was already adumbrated by Admiral Thomas H. Moorer, who, in the course of his testimony, demanded to know what will happen to the "Two thousand per cent increase over the $2.3 million she (Panama) received last year as income from the Canal? To me that appears to be a fantastic amount for a country with a population not much larger than Detroit. Where will the money go?"

A substantial share of the money is earmarked, of course, to the U.S. and international banks who have loaned Panama disproportionately large sums in recent years and now, in order to recover their outlay and profits, cheer on the Canal giveaway. But beyond this adroit arrangement to lure U.S. taxpayers into indemnifying the mortgage-holders of the profligate Panamanian regime, I expect that future observers desirous of solving the Panama puzzle will begin by looking deeply into the hidden connections between the world of international banking and certain small countries such as Panama.

They will find that in the mid-1970's multinational mega-banking went through some extraordinary changes which the American public barely noticed. International banking grew from a trickle into a great subterranean river. In 1960, only eight U.S. banks had overseas branches, with assets of $3.5 billion. By June 1976 more than 100 U.S. banks had offices abroad, with assets totaling an incredible $181 billion-over 26 per cent of total American bank assets! In fact, for the dozen or so largest American banks, overseas operations became more important and profitable than domestic activities. In 1975, foreign financial ventures accounted for 56 percent of the Chase Manhattan's total earnings. At Citicorp, the foreign share was even larger: a full 70 per cent of total earnings. (International Debt, the Banks, and U.S. Foreign Policy, a Staff Report prepared for the Senate Foreign Relations Subcommittee on Foreign Economic Policy, August, 1977.)

The boom in offshore banking has been little short of miraculous. From 1970 through 1975 the overseas earnings of the 13 largest U.S. multinational banks shot up precipitously, from $177 million to $836 million. To appreciate this spectacular growth figure, we need only recall that during the same period the domestic earnings of the same financial group rose by less than $50 million.

And how was this stupendous upsurge in volume and banking profits attained by the giant U.S. banks? By expanding operations in the traditional centers in world finance Zurich, Paris or London? No, not at all; so-called "offshore money centers" account for most of the boom-remote, tropical enclaves such as the Cayman Island and the Bahamas * and Panama.

What are offshore money centers? They are tolerant, insouciant sovereignties which are nice to banks. They ignore such common corollaries to banking as audits, supervision, taxation or oversight. What is known among financiers as the "regulatory climate" is always sunny for big banks in these nations. There are no reserve requirements and no demand for banks to disclose anything about their daily activities; in fact, some such countries have inaugurated very strict secrecy laws making it a crime for anyone to disclose what goes on in the banking world. There is no obligatory record-keeping, no prying by central bankers; in fact, once a bank sets up shop in such a protected environment, it is pretty much free to do as it pleases.

The major U.S. banks have been quick to perceive the extraordinary advantages of this sort of setup. By January 1975 there were 124 U.S. branch banks in the Bahamas and on the Cayman Islands-a remarkable number, if we recall that there are only 112 such branches in all of Europe! More than 300 U.S. and European banks have been chartered in the Caymans alone since 1970. And Panama is a close third, moving up fast: more than 110 banks chartered since 1973, more than 90 U.S. branch banks of recent establishment.

Why do the giant banks of New York, London and Paris require such far-flung branches? Most of them are only brass-plate" operations, with a nameplate on the

door and a single receptionist holding the fort behind it. But on paper-when it comes to bookkeeping-these one-room branch banks are mighty finance centers. For the intricacies of international mega-finance allow the giant multinational banks to make deals in the tens of millions of dollars-deals which take place between the head offices of banks in, say New York and Paris-and then to book off" these deals via their offshore branches, thereby effectively exempting them from regulation, audits and oversight.

It is said that General Torrijos, who is given to immoderate anti-American demagoguery in public, speaks the language of the new international banking system quite ingratiatingly in private. While out of favor with most segments of our government, Torrijos has contrived to establish close relations with a number of multinational finance conglomerates, from whom he has received loans out of all proportion to his regime's known assets. Moreover, Torrijos has converted Panama into a specially protected banking enclave, where dubious deals-especially dicey currency speculation-have found a haven from prying regulators and examiners. Is General Torrijos about to become the beneficiary of the most senseless and ruinous giveaway in our modern history because certain high supporters in the multinational banking world have secretly promoted and advanced his cause? Unless we want to leave the solution of the Panama riddle to the historians of the 21st century, it might be well to take a close look at this question before the Carter Administration's canal transaction becomes the law of the land.

In the light of the many unanswered questions surrounding the Panama Canal question, it is evident that more information is needed. Gentlemen, the American taxpayers deserve and require answers to these questions even if the answers might step on the toes of the special interest groups which have so much at stake in the proposed giveaway, and you must supply these answers.

I therefore recommend and urge that this committee seek the answers to the following questions before any determination is made on the ratification:

1. Have the principal negotiators and official promoters of this deal-Sol Linowitz, Ellsworth Bunker, Cyrus Vance-embroiled themselves in felonious conflicts of interest? Particularly Mr. Linowitz, who is reported to have served as a paid agent for the Torrijos government in late 1973 and early 1974?

2. Who sponsored and paid for the original research and development that went into the draft canal treaty? Is it true that most of this preliminary work was done by a special adviser to Mr. Linowitz, Dr. Robert Pastor, on funds provided by the Rockefeller family holdings?

3. What was the role of the Council on Foreign Relations in drafting and developing the early position papers which led to the canal treaty draft?

4. What is the full truth about the debts owed by Panama to various U.S. and European multinational banks?

5. What is the truth of persistent reports that General Torrijos and his brothers have accumulated a large fortune in their private dealings with multinational banks and in the dope trade? How large is this fortune? Where is it banked? 6. Does the U.S. government possess true data on the volume of transactions by U.S. banks in Panama? If not, is it not true that the real purpose of Panama banking is to frustrate and in effect to nullify the entire U.S. bank regulatory process? In effect, does this not amount to a criminal conspiracy by U.S. banks against the U.S. government, the taxpayers and voters who must, in the final analysis, pay for it?

7. Is it not true that under cover of the concealment afforded by Panama, multinational banks venture into highly hazardous speculative deals, in the safe knowledge that if they incur serious losses, the U.S. taxpayer must foot the bills? 8. Why is the U.S. public not told of the highly incriminating data held in the files of U.S. intelligence and enforcement agencies, particularly the CIA and the DEA, describing the scandalous and criminal narcotics dealings of the Torrijos family? Who has sponsored the coverup of this explosive data, indicating General Torrijos and his brothers have made millions of dollars to corrupt our youth, provide safe haven and diplomatic transport for major international drug smugglers, among them the notorious Rene "Lips" Fluelen?

9. To what extent is the Soviet Bank Narodny involved in Panama, and with which American capitalists? Our newspaper, The Spotlight, has reported this involvement of the Kremlin with U.S. banks and bankers, including Robert Anderson, former Secretary of the Treasury. This matter needs a full airing and the American people should be told the truth about these questionable deals and what threat they may hold for our national security.

10. Obviously, Mr. Chairman, there is a great need for expanded supervision and oversight of the international banking community. We feel the impetus for such an expansion could well originate within this committee and so recommend.

În summary, Mr. Chairman, we applaud the intention of the committee to investigate fully all aspects of the proposed treaties, feeling that such an investigation will lead to an emphatic denial of demands that America willingly sacrifice her national treasure on the altar of Third World opinion.

Mr. Chairman, we know what Panama will gain in profit from the canal. We urge you to ask yourselves what your constituents will profit from giving the canal to Panama... along with a sizable chunk of their tax dollars.

Thank you again for this opportunity to appear today and present our views.

THE PANAMA CANAL AND THE SUEZ CANAL-SOME

SIMILARITIES

Mr. HARRY F. BYRD, JR. Mr. President, an editorial in the October 9 Moline, Ill., Daily Dispatch drew an interesting parallel between the United States relinquishing control over the Panama Canal and the withdrawal of British military forces from the Suez Canal Zone in Egypt in 1956.

Clearly there are differences between the two cases, but there are enough similarities to give pause for thought.

I ask unanimous consent that the text of this editorial be printed in the Record.

There being no objection, the editorial was ordered to be printed in the Record, as follows:

PANAMA CANAL TREATY

There has been expression by some politicians that the United States Senate would, and probably should, act forthwith and without delay in ratifying the Panama Canal treaty. There are some columnists and commentators who are overburdened with dire implications of what will happen if the treaty issue gets involved in the 1978 elections.

We do not share this view that there is need for quick action on the canal issue. Instead, it would be good to take the time to examine all the implications, possible alternatives and options and to review the recent history of another canal.

For some years prior to 1956 there had been agitation in Egypt (just as there has been in Panama) for the withdrawal of British military forces from the Suez Canal Zone in Egypt. The Suez was owned by an international company, primarily owned by the British and French, with the British in actual charge of canal operation and security.

Convinced it was doing the "right thing" as it shed its colonial empire, the British evacuated its military forces from the Suez and Egyptian territory on June 18, 1956. But if there was a tear in the British eye there was also a secure feeling that the canal would continue to be operated as an international waterway and Britain's great contribution to international commerce would continue. Even though the Egyptian flag now flew on the staff where the Union Jack had been, the canal was secure, wasn't it?

It wasn't. On July 26, 1958 Egyptian President Gamal Abdel Nasser shocked the British and French, and most of the rest of the world, by nationalizing the Suez Canal.

No longer was it an international waterway, owned by an international company: It was Nasser's ditch and he would say which nation's ships could use the canal and what the terms would be. It was international blackmail under the guise of "national destiny." (Nasser was a dictator who led his country into close ties with the Soviet Union. Gen. Omar Torrijos, the Panamanian chief of state, has been described by William F. Buckley Jr., who supports treaty ratification, as a "leftleaning, demogogic tyrant.")

After several months of fruitless negotiations Britain and France determined to reoccupy the Suez, and on Oct. 31, 1956, they launched air attacks against the Egyptian forces opposing their return. (Sen. Dole has released a classified document which reveals there is no provision for U.S. reoccupation of a crisis situation.)

Under pressure from the United States, which supported a UN measure which condemned the British and French_action, the invasion and attempt to reoccupy were aborted. But by that time the Suez Canal was blocked by sunken and scuttled ships. It remained that way for 19 years. Governments came and went in the nations involved, Nasser passed from the scene and Egypt eventually broke its ties with the Russians. Early in this decade negotiations for reopening the canal were resumed with the United States playing a helpful role and finally, on June 5, 1975, the Suez was reopened to the world's commerce. But for 19 years any arguments about who owned or controlled the Suez were academic, it was unusable anyway. Is there a parallel between what happened in the Suez and what could happen with the Panama Canal? Is there a lesson to be learned? We think there is. Let us not enter into this agreement with some vague faith that all will be well or with some conscious-salving feeling that we are righting a sin of our colonial past. If the Sepate ratifies the treaty let it do so with its eyes open to all the implications and possibilities and alert to the best interests of the United States.

[From the Congressional Record-Senate, Oct. 12, 1977]

PANAMA CANAL TREATIES-NO. 15

Mr. ALLEN. Mr. President, this is the 15th speech I have made on the Senate floor in opposition to the Panama Canal Treaties. I do not believe that in the course of my remarks I have been redundant, because there are so many defects in the treaties that I have been able to point out something new in each of the speeches I have made.

Mr. President, during my testimony in opposition to the Panama Canal Treaties before the Senate Committee on Foreign Relations, one of the distinguished members of the committee, Senator Sarbanes, raised an issue to which I have since given considerable study. The distinguished Senator inquired whether Panama could now grant to a third country the right to construct a canal between the Caribbean and the Pacific through the territory of Panama, excluding obviously the United States territory comprising the Canal Zone. I did not then know the answer to the distinguished Senator's inquiry, although I did indicate that to the best of my knowledge, the treaty of 1903 did contain some provision affecting the ability of Panama to grant a canal concession to a government other than the United States. Having since looked into the matter, I can now report that under article V of the treaty of 1903, the United States has already in perpetuity a monopoly on any interoceanic canal construction across Panama, either inside or outside the Canal Zone.

Mr. President, the Department of State has repeatedly touted the brilliance of our negotiators in securing from the Panamanians an alleged agreement not to construct any new canal in the territory of Panama without the consent of the United States, at least not until after the year 1999. This so-called major diplomatic coup is embodied in article XII, paragraph 2 of the canal treaty wherein appears the following:

The United States of America and the Republic of Panama agree on the following: (a) No new interoceanic canal shall be constructed in the territory of the Republic of Panama during the duration of this Treaty, except in accordance with the provisions of this Treaty, or as the two Parties may otherwise agree;

That is in the proposed new treaty. I find this provision ambiguous, but the Department of State asserts that our negotiators obtained this so-called concession from the Panamanians in return for our incredible agreement not even to negotiate with a third state for the construction of a new interoceanic canal anywhere in the Western Hemisphere without express Panamanian consent. In other words, Mr. President, the Department of State asserts that the quid pro quo for our agreement not to construct any new canal except in Panama without the consent of the Panamanian dictator-the quid pro quo for that incredible concession is, or purports to be, this clause I have just quoted, which allegedly would prevent the Panamanians from constructing a canal with Soviet assistance or the assistance of some other unfriendly government.

But, Mr. President, the United States already, in perpetuity, can prevent any third nation from constructing a new canal in the territory of Panama. So we have gained absolutely nothing from