million in real values of 1977, that is, corrected against any inflation that may occur during that period. The mean of this gradually increasing sum gives us the average amount of $80 million. This income is itemized as follows: $0.30 for each ton of cargo that transits the canal. According to traffic projections through the canal, this means an average income of $55 million per year which in the first year will amount to about $42 million, to reach $70 million by the end of the century.

The second item of this round sum is $20 million per year, of which $10 million is guaranteed each year, the rest depending upon the level of income of the Panama Canal Company in that year. If in 1 year the second half of the $20 million cannot be covered, the deficit caused would be covered in the subsequent years to maintain the $20 million per year payment. And a third item of approximately $5 million per year of income will come from several businesses and operations being transferred to the national government, such as ports, railroads, sale of fuel, repair of ships and so forth. Therefore the total sum of $80 million is composed of these three items that I just discussed.

Another aspect gleaned from the canal operation is the transference to Panama-as Edwin Fabrega will explain shortly-of buildings and infrastructure for a current value of $82 million. Aside from this aspect, which is what Panama would derive from the operation of physical assets which currently exist in the Canal Zone, there is a parallel and corollary package of economic cooperation. This package reaches an amount of $345 million, above all, within the next 5 years, and is itemized as follows: loans from the Export-Import Bank up to the amount of $200 million in the next 5 years; loans for the construction of housing guaranteed by AID up to $75 million in the next 5 years; loans guaranteed by a U.S. agency called OPIT for $20 million for Cofina, our development bank, and other loans and equipment, principally military equipment, for the amount of $50 million in the next 10 years.

In short, all these elements of economic benefits which I have mentioned in structures, payments and loans for development will in 23 years amount to the sum of $2.262 billion. This is compared to what Panama would receive under the current treaty during the same period, which would be the ridiculous amount of $52 million. This, then, is the difference between what this treaty means as far as economic benefits and what Panama would receive under the current treaty. Aside from the foregoing, it must be emphasized that all the rest of the existing structures in the Canal Zone, that is, the canal itself and the rest of the civilian and military installations, will be returned to Panama, free of charge, on 31 December 1999. And these structures have an approximate value of $3 billion currently. Aside from this, we must also point out that Panama will receive from the company that operates the canal the amount of $10 million per year, also with inflationary correction, to cover the cost of the public services which Panama will administer in the exercise of its jurisdiction in the zone area, for these services which are generated by reason of the existence and operation of the Panama Canal. Therefore, lending these services will cost nothing to the national treasury.

In brief, what is the significance of these figures? We can say that in the next few years, the next 3 or 4 years, the amount of annuity alone, without taking into consideration the economic cooperation, is 19 percent of the national government's budget, that is, it is a considerable increase, one-fifth. It is 25 percent of the operational expenses of the current budget and is 15 percent of the program of investments of the public sector. As the national government's intention for the time being is to devote the majority of these resources to solving the problems of our nation, the problems of our people through its investment program, we have to take into consideration that this amount-the annuity only, which in the first few years will be approximately $65 million per year-means at least 15 percent more for the program of investments being carried out by the country. This amount can become a figure of more impact through financing which can be negotiated on the basis of this income. We can also say-as another manner of illustrating what these figures mean, because they are so large that one often does not see them in real terms-that this means considerably speeding up the program of investments which we are developing. All of us here are aware that during the past year we have had to reduce investment in order to face the serious economic crisis which the country and the world have been experiencing. We will now once again be able to accelerate the program of housing construction for the

people at reasonable prices, generating employment for all this accumulation of public investments.

It will be possible to take advantage of the important opportunities for national development which we have, opening up all our resources throughout the national territory. And we will therefore enter, through this aspect together with all the others already mentioned, a stage of enormous creativity and national realization in the next few years through the results that have been attained.

Having responded with dignity during the last 2 years, withstanding the sacrifice that we have had to accept for the recession, we now find ourselves facing the possibility of entering a path of great economic activity, of growth in production and of distribution of the benefits of that growth to all the people throughout the national territory. In this respect I honestly and firmly believe-and I do not believe I am using superlatives-that Panama, with the united revolutionary effort of growth and distribution, with the participation of all our people and with this complement which we have obtained, may become an example among Third World countries as to how development within our historical and geographic reality with justice and with the participation of the entire people can be achieved.

LABOR MINISTER AHUMADA

Panama City Domestic Service in Spanish 1537 GMT 19 Aug 77 PA, [Speech by Labor and Social Welfare Minister Adolfo Ahumada at the meeting of Assembly of Corregimiento Representatives at Justo Arosemena Palace in Panama City-live]

[Text] President Lakas, General Torrijos, Commander Garcia, assembly president, representatives, government officials, gentlemen:

The agreements in principle reached between Panama and the United States, especially during the efforts made last week and which are continuing this week in the drafting stage, contain what we consider to be a clear and categorical program of the country's decolonization from a military standpoint. They contain the program which marks the beginning of the end of the country's military occupation by foreign forces. This is important because up to now, contrary to the will of the Panamanian people and government, our country has been virtually occupied by an overwhelming number of foreign forces in comparison to our nation's military forces. The agreement in principle thus means that from the moment the canal treaty goes into effect there will be substantial reductions in U.S. military forces in our country until 2400 on 31 December 1999.

In this respect there are various problems and theories which have been debated. Those who will oppose any treaty regardless of whether it is a good one, such as this one, believe that the agreement in principle legalizes U.S. military forces in Panama. Consequently, to them, any treaty which directly or indirectly has any reference recognizing in any way the existence of any military base in Panama is a bad treaty. They argue that the joint defense of the Panama Canal agreed in principle is a step backwards and not a step forward in our country's final goal for its liberation. This theory basically considers that in matters of international policy, in regaining its international personality, and on sovereignty, jurisdiction and liberation, Panama must follow the line historically taken by an ostrich-in other words, it should hide its head underground so as not to see what is going on in the rest of the world. U.S. military installations in our country, objectively and independently of our will, exist and operate against our will.

In the face of this reality, there were only two alternatives: Either you conduct negotiations to have these military installations slowly disappear by 31 December 1999, the date when all these military installations will be finally liquidated, or simply, according to international law and the views of great authors and essayists, be satisfied with saying that those installations are illegal and for that reason they will automatically and by the very will of the United States, disappear. These latter views are images of a historic nature which the Panamanian people cannot accept because they are deceiving attitudes which prolong the problem instead of solving it. [Applause.]

For this reason Panama and the United States have reached an agreement of a military nature, which in first place accepts the role of the United States in the protection and defense of the canal. Panama's participation will increase greatly from the date the treaty goes into effect, while U.S. participation will decrease until the date the treaty ends.

But this responsibility for protecting and defending the canal-which is shared with Panama in a combined military board which must submit consultations and

coordinate actions for Panama's increasing participation according to equal [paritaria] representation between Panama and the United States-is properly established in the agreements which have been approved.

What does this mean? It means that now, at this moment, the U.S. military force is operating freely, according to its own creed and beliefs, according to its own criteria, whatever they may be, but, according to the agreement or principles, that military presence is solely and exclusively for the protection and defense of the canal and not to attack any country or to interfere in the problems of other countries. [Applause.]

This military force must be harnessed by some sort of legal or political restraint, which will define its extent of legal activity in Panama. Therefore, the broad range of action without limitations will be, according to the agreement in principle, subject to rules and very definite laws and regulations that the two countries have agreed upon. Additionally, these are not final-not in their wording or application-because they may be revised every 2 years.

This agreement is known as the statute on armed forces in Panama [estatuto de fuerza armadas en Panama]. It establishes that at the defense sites that will remain, in the military complexes that will remain—and Fabrega is going to explain how and which ones are involved-out of the 14 bases we now have, four will remain and they will gradually disappear by the year 1999. [Applause.]

These defense sites, which will not be islands cut off from the national scene and from the country's juridical and political systems, will be separate in as much as the treaty provisions provide that no soldier of any rank can directly or indirectly interfere politically or in any other manner in the affairs of this country. To us this is an extraordinary step forward for the consolidation of our freedom as a country that will now be truly sovereign and independent. [Applause.]

Therefore, these defense sites will also be subject to Panamanian jurisdiction. There will be no separate juridical arrangement there; we are now going to make four small zones out of the Canal Zone. Panamanian law will apply there also, and if a Panamanian who works there or goes there breaks the law in any way, he will be judged by Panamanian authorities and not by a U.S. military court. Nevertheless, since this is an objective and serious report, information that is commensurate with this act must be provided, and some things must be said, because not everything in the treaty is beautiful. The treaty also has things which are not liked by neither you, nor us the government, but, since it is not a capitulation by Panama to the United States, but a negotiation, the treaty obviously will have some things we would prefer were not in it. But its essence, that which gives it its essential character, leads us to feel that it is an instrument of liberation.

For example, if a U.S. soldier commits a misdemeanor within a defense site, he will be tried by the authorities of the military forces themselves. This on the surface appears to be a concession, but it seems to be military practice each time the forces of a country must for some reason move outside their borders. We know, for example, when the Panamanian National Guard had to fulfill such an important peace effort as that in the Middle East, it was obvious that if some National Guardsman committed a criminal act, Panama could not be so naive as to allow this guardsman to be subjected to the rigors of the trial given him, for example, in some of the Arab countries or Israel. Consequently, Panama retained the power to try that guardsman. This is more or less-keeping in mind the differences of the examples-the present case. If that U.S. soldier commits an offense outside the military installation, then he will be tried by Panamanian authorities except if he commits an offense against another soldier, so long as it is a misdemeanor, an offense for which he will be tried by military authorities. But if it is one of the graver crimes which our laws provide for-homicide, for example, or robbery, or rape-and for which there is no bail according to our law, then the competency to try falls within the jurisdiction of the Republic of Panama, even though it is a U.S. soldier. If a U.S. soldier commits an offense against a Panamanian within a military base, then he will also be tried by Panamanian authorities even though he is a U.S. soldier.

And if the Panamanian is the one who commits the offense against the soldier, that Panamanian will also be tried by Panamanian authorities, even though he committed the offense against a U.S. soldier. Consequently, this means that the defense sites which may remain at the outset of the treaty-which, we must learn, are not defense sites in perpetuity because the only perpetuity which may finally remain here is the revolutionary process and its capacity to solve the people's problems. [Applause.] [Ahumada does not finish the sentence.]

On the other hand-Mr. President, will you allow me? I will soon finish. Here's another problem. Up to now the number of U.S. soldiers in Panama has been unlimited. In military terms, this is known as the level of forces [nivel de fuerza]. Others call it force strength [piet de fuerza]. So then, it has been agreed, to avoid the impression-which is real and not imaginary-of an occupied country, an impression resulting from the unlimited presence of U.S. troops around us, that this force level or amount of soldiers will never, never-unless there is a worldwide conflict or an extremely serious, uncontrollable situation, in which case we are not even going to have the resources to be aware of it-the number of U.S. soldiers in Panama can never be greater than the number of troops in the Panama National Guard. Therefore, our capacity for action will not be limited by an overwhelming foreign presence. [Applause.]

Royo mentioned the flags question. In effect, even though it is a case of military sites managed by the United States, the flag flown there will be the Panamanian flag. They can put theirs inside, according to agreements they can do this. This point caused a tremendous bemoaning, but is logical. After all, they are North Americans and it is quite logical for them to struggle to prevent their flag from disappearing completely. But it must go inside. And even when it flies inside, it must be beside the Panamanian flag, and even when it is beside the Panamanian flag, the Panamanian flag must occupy the position of honor.

For those of us who have had an opportunity to discuss these things with the colossus, the work that has been done is cause for extraordinary pride. A great Colombian thinker has said: Extreme modesty is the pride of the hypocritical. Without reaching the execrable levels of pedantry, we believe that General Torrijos and President Lakas' leaderships has been able to produce a good agreement which will place us in a situation to say definitely that we have already begun the stage of military withdrawal from the country. [Applause.]

I will make this clear: The relationship between Panama and the United States from now until 1999 will be a bilateral one. The two countries will participate in the protection and defense of the canal. It will be this way until 1999 when only Panama will be responsible for the defense of the canal.

From now until 1999 there will be a bilateral relationship. Both countries will participate in the protection and defense of the canal until 1999, when Panama alone will defend the canal and when only Panamanian troops-from 31 December 1999 onward-will be allowed anywhere in the Republic of Panama. Only Panamanian troops. And this joint defense, this bilateral participation, will naturally demonstrate that on all fronts Panama is capable of operating this canal, even more efficiently than the United States can, and that this canal will be defended even more efficiently than they can defend it, because in the final analysis the defense of the canal consists of two fundamental factors-one, the capability of the specialized force, and two, the love and faith of the Panamanian people who know that this is their canal and that consequently every Panamanian has to become a defender of this international waterway, which is a part of the country's natural resources. [Applause.]

This is why, in considering a treaty of this nature-and I am not going to talk about the neutrality aspect, which will be discussed by the head of the negotiations team, Dr. Escobar Bethancourt-I will only say that the military ties will end on 31 December 1999.

At this moment I recall a statement I recently read in an international report published in Panama, a statement which was very sad and painful to me. Two Panamanians by birth-according to the Panamanian constitution a person cannot lose his nationality-made a statement that they are not interested in the canal, that they are concerned only about the Torrijos dictatorship and that if the treaty is signed, it would be between the United States and Torrijos, but not between the United States and the Panamanian people. With a problem as large as this one, so large that people set aside their political attitudes, it is not a matter of what you or I think or what political leanings, crusade or ideology one advocates but of whether or not one loves one's country. At such a time, when a problem arises that is above domestic disputes. when Panamanian nationality and the state and the elimination of a state within a state are at stake, these Panamanians made this statement. It was a sad and depressing comment that could cause pessimism among those who are not politically aware.

The truth is that when I gained political awareness at an early age, I began to understand that in the political dictionary of all countries, including ours, there is one clear and precise word to describe this type of action and position. That

word is treason. This is so because, in any effort to inflict temporary wounds of a political nature, such people do not hesitate to grab a poisoned knife and thrust it into the loving heart of the fatherland! Thank you.

EDUCATION MINISTER ROYO

Panama City Domestic Service in Spanish 1540 GMT 19 Aug 77 PA.

[Speech by Panamanian Education Minister Aristides Royo to Assembly of Corregimiento Representatives at Justo Arosemena Palace in Panama City on 19 August-live]

[Excerpts.] Mr. President, Mr. General, Mr. President of the Assembly, Mr. Vice President, second commander in chief, fellow government officials, members of the staff, honorable representatives:

The subject of the duration of the treaty is related to the subject of abrogation. The 1977 treaty points out that this treaty supersedes all the other agreements that Panama has signed with the United States.

This means that the 1903 Hay-Bunau-Varilla Treaty, the 1936 and the 1955 treaties and all the annexes, exchanges of notes and any other documents in conflict with the present treaty are abrogated. This treaty will have an approximate duration of 23 years. It will expire on 31 December 1999 at 12:00 o'clock [as heard].

This treaty clearly establishes the principle of nonintervention. Neither U.S. civilians nor U.S. military forces will have the right to intervene in the domestic affairs of Panama or to participate in Panamanian political affairs.

Regarding the operation of the canal, there will no longer be a governorship in the Canal Zone. There will no longer be a governor of what? [applause] There will no longer be a Panama Canal Company in the form it has been operating up to now. There will be other organizations which will be explained immediately. The United States has primary responsibility for the administration of the canal until 31 December 1999. Panama will have a continuously increasing participation in the administration of the canal while U.S. participation will decrease, as will be explained later together with the employment policy aspect.

However, they will have primary responsbility [until 31 December 1999] in line with the Tack-Kissinger agreement.

This does not mean-and we want to use this opportunity to make this clear— that foreigners working in the canal will be persecuted or dismissed. There will be no Belgian Congo here. There will not be an Algerian case here to expel the French. Those persons who have been working in the Canal Zone for years will be able to remain at their jobs. However, they have an obligation. In the first 5 years after the treaty goes into effect, they are under the obligation of reducing the foreign labor force by 20 percent.

Lies have been reported, lies to the effect that all those who have been working in the present Canal Zone will be dismissed. We can tell them-making use of this opportunity-to rest assured and to sleep well, because although we had a 9 January of 1964 here, and despite all the interventions we have suffered, this is not a vindictive country.

Finally, we would like to refer to a point which is perhaps more important from an emotional, rather than a practical, point of view. This is the problem of the flags.

It is said that the flag problem is what caused the events of 1964, but this is not true. What caused it was the symbolic problem. The flag problem was a real one. It involved the recovery of our sovereignty in the Canal Zone.

Regarding the flags, here has also been an important recovery: Throughout all the territory that now constitutes the Canal Zone, excluding the office of the Canal Commission-with only this exception-only the Panamanian flag will fly on the flagpoles. [Applause.]

NEGOTIATOR FABREGA ON LAND RECOVERY

Panama City Domestic Service in Spanish 1622 GMT 19 Aug 77 PA. [Speech by Panamanian negotiator Edwin Fabrega to Assembly of Corregimiento Representatives at Justo Arosemena Palace in Panama City-live]

[Excerpts.] Half of Fort Amador will revert to Panama with all the corresponding installations on the 1st day of the treaty, as well as the islands of Naos, Perico and Flamenco. [applause.] From the Bridge of the Americas you see all the installations of the fuel tanks, of the Port of Balboa, and which extend to