lose all interest in or control over the Panama Canal at the end of this century.

The subcommittee assumes that the final report of the AtlanticPacific Interoceanic Canal Study Commission will treat all aspects of the justification for construction of a sea-level canal. In the meantime, however, on the basis of information furnished to date, it is the view of the subcommittee (the chairman and ranking minority member) that further discussions with Panama should not be based on an assumption that Congerss will authorize construction of a sea-level canal.

NICARAGUA AS A POSSIBLE NEW CANAL SITE

One of the sites for a new canal included in the investigation of the Study Commission is the Republic of Nicaragua. Originally considered as a preferred site for a canal before construction in Panama was authorized in 1902. Nicaragua has continued to receive serious study as the site for any new canal. In 1914, the United States and Nicaragua concluded a treaty in which Nicaragua granted the United States exclusive rights to construct a canal across the Republic.1 That treaty would be abrogated under the provisions of a convention signed by the United States and Nicaragua on July 14, 1970.19

In 1929, Congress authorized an investigation for the purpose of revising and bringing up to date the report of the Isthmian Canal Commission with respect to the practicability, advantages, and cost of construction of a canal across Nicaragua.20

In the study of possible routes for a new canal made pursuant to the act of December 28, 1945, Nicaragua was one of the routes considered and included in the 1947 report of the study."

22

The Nicaragua route was also included in the study by the Board of Consultants appointed by this committee in 1960, and was included as one of the possible sites for a new canal to be studied by the Interoceanic Canal Study Commission.

#153. The House Subcommittee Report of 1970 on Panama Canal Problems and the 1967 Treaties*

PROBLEMS CONCERNING THE PANAMA CANAL

The purpose of this report is to present a review of the activities. of the Subcommittee on Panama Canal during the 91st Congress. The report also affords the subcommittee (subcommittee chairman and ranking minority member) the opportunity to give its (their) views on such important matters as the draft treaties and the negotiations related thereto, as well as providing the means to make available the 1967 draft treaties and other pertinent documents that heretofore I have not been readily available and not collected in one place.

The subcommittee work must be considered against the background of affairs affecting the Panama Canal such as the abortive 1967 draft treaties, the study of the Atlantic-Pacific Interoceanic Canal Study Commission with respect to the feasibility of a new sea level canal, the Terminal Lake-Third Locks Plan (for the major operational improvement and increase of capacity of the canal), and the question of tolls with respect to the lock canal treaty and the sea level canal treaty.

2

The concept of the construction of a new canal raises the associated problems of nuclear excavation, the impact of the transit of the Northwest Passage by the tanker, Manhattan, and the ecological, political, and economic ramifications of digging a new canal. Underlying all these canal-associated problems are considerations of foreign policy, finance, defense, shipping, engineering, and the restive Republic of Panama.

BACKGROUND 3

In order to promote better understanding and to bring the activities. of the Panama Canal Subcommittee into sharp focus with the complex issues involved, it is necessary to set out some of the history and background of these problems, especially with respect to the draft treaty negotiations, the sea level canal studies, their relationship, and canal capacity, projects and tolls.

The act of September 22, 1964 (Public Law 88-609; 78 Stat. 990) provided for a commission of five members to study the feasibility, methods of construction, location, and cost of a sea level canal between the Atlantic and Pacific Oceans. As amended in 1968 (Public Law 90-359; 82 Stat. 249) the act requires annual progress reports to the Congress as well as a final report by December 1, 1970. Such interim reports have been submitted, the latest being the Sixth Annual Report of the Commission, dated July 31, 1970. This concept includes provisions for the

(a) Elimination of the bottleneck Pedro Miguel locks.

(b) Consolidation of all Pacific locks south of Miraflores.

(c) Raising the Gatun Lake water level to its optimum height (about 92 feet).

(d) Construction of one set of larger locks.

(e) Creation of the Pacific end of the canal of a summit-level terminal lake anchorage for use as a Pacific reservoir to correspond with the layout at the Atlantic end to permit uninterrupted operation of the Pacific locks during fog periods.

The history of the search for a passage between the Atlantic and Pacific Oceans and early proposals for construction of a transisthmian canal which culminated in the French venture in the 19th century is avail able in a number of authoritative books and publications. DuVal: "Cadiz to Cathay". Stanford University Press (1940); Mack: “The Land Divided", Knopf (1944); 11. Rept. 2218, 88th Cong., p. 3 et seq.

The congressional documents listed in appendix I show that throughout the 19th century the United States was exploring the feasibility of construction of a transisthmian canal in Nicaragua or in Panama. After the failure of the French project at the end of the century, the Congress authorized the President to acquire the rights in perpetuity to construet and operate a canal across the Isthmus of Panama (then part of Colombia) or Nicaragua; (Act of June 28, 1902; 32 Stat. 481). In 1903 Panama obtained its independence from Colombia and entered into a treaty with the United States in which Panama granted to the United States in perpetuity the use, occupation and control of the Canal Zone for the construction, operation and protection of a canal and also granted to the United States all the rights, power, and authority within the Canal Zone which the United States would exercise if it were sovereign of the territory to the entire exclusion of the exercise by the Republic of Panama of any such sovereign rights, power or authority. (Convention for the Construction of a Ship Canal, 1903, Artioles II and III.)

96-673 O - 77-88

TREATY NEGOTIATIONS 1964-67

Incident to Panama's continuing demand for the restoration of the rights of sovereignty in the Canal Zone, events ended in rioting and a formal break in diplomatic relations in 1964. When diplomatic elations were resumed, the Presidents of the two countries agreed to appoint special ambassadors for the negotiation of a new treaty Meanwhile, the administration strongly supported legislation for the study of a sea level canal by the Interoceanic Canal Study Commis sion. After this legislation was enacted, President Johnson issued & statement on December 18, 1964, in which he announced that he had reached two decisions, first, that the United States should press forward with plans and preparations for a sea level canal, and second, to propose to Panama the negotiation of an entirely new treaty on the existing Panama Canal. The statement announced that the President had appointed Robert B. Anderson as special ambassador for negotiation of the treaty and subsequently the President also appointed Mr. Anderson as Chairman of the Atlantic-Pacific Interoceanic Canal Study Commission.1

On September 24, 1965, the President issued a progress report on the treaty negotiations. The report stated that the two countries were negotiating three treaties:

1. a new treaty to replace the 1903 treaty and its amendments; 2. a military base rights and status of forces agreement; and 3. a treaty under which a new sea level canal might be built

in Panama.

The statement also said that the new treaty covering the existing canal would abrogate the 1903 treaty and its amendments, effectively recognize Panama's sovereignty over the area of the present Canal Zone, terminate after a specified number of years or on the opening of the sea level canal, whichever occurred first, provide for an appropriate political, economic and social integration of the canal operation area with the rest of Panama, and to insure that the rights and interests of the canal employees are safeguarded.

DRAFT TREATIES OF 1967

On June 26, 1967, it was announced that the negotiating teams of the two countries had reached agreement on the new treaties and that when signed, the treaties would be presented to each country's legislative body for consideration in accordance with their respective constitutional processes.

re

Copies of the draft treaties were not released in the United States, However, in July 1967, copies of what purported to be official texts of the three draft treaties were obtained in Panama by the Chicago Tribune and were published in the Tribune and subsequently printed in the Congressional Record of July 17, 21, and 27, 1967, Copies of the texts published in the Tribune and in the Congressional Record are set out in appendixes IV-VI. The draft treaties encountered strong opposition in Panama and in the United States and they have never been signed.

On October, 1968, the Panama National Guard staged a military coup to oust President Arnulfo Arias who had been duly elected as

The full text of the Dec. 18, 1954, statement is set out in app. II.

Sea app.

for the text of this statement.

"

President and inaugurated on October 1. A military junta took over the Government of Panama and has remained in control since that time. Ultimate authority in the Government appears to be consolidated in Brig. Gen. Omar Torrijos, the Commandant of the National Guard. Although for a period of time after the coup General Torrijos indicated that elections would be held in 1970 to restore constitutional government, recent pronouncements by the general and his Foreign Minister indicate that they regard the present form of dictatorial government more appropriate than constitutional government brought to power by popular elections."

INTERRELATIONSHIP OF TREATY NEGOTIATIONS AND sea level canal

STUDIES

The 1967 draft treaties, the negotiations, and the sea level canal studies are closely related. This is pointed up by the official information pamphlet of the Atlantic-Pacific Interoceanic Canal Study Commission which stresses the nexus between the Commission's studies and the then contemporary treaty negotiations in the following paragraph:

The Interoceanic Canal Study Commission itself has no direct responsibility for the conduct of canal treaty negotiations with countries containing the canal routes under investigation. However, treaty negotiations and the sea-level canal investigation are interrelated; and the various studies in support of the investigation will take into account the terms of the treaties in force at the time study reports are to be rendered. The close coordination of the Canal Commission's investigation with treaty negotiations is facilitated by the dual role of the Honorable Robert B. Anderson as Chairman of the Commission and as Special Representative of the United States for United States and Panama relations and for the treaty negotiations between these countries with respect to a new treaty to replace the Treaty of 1903. In this latter function, Ambassador Anderson's co-negotiator is the Honorable John N. Irwin, II, Special Representative of the United States of America for Interoceanic Canal Negotiations. Together, the two Special Ambassadors are charged with the responsibility for negotiating mutually supporting treaties and agreements for the continued operation of the existing lock canal; for the continued use of military bases in Panama; and for rights to construct and operate a new sea-level canal in each of the countries where routes are surveyed.

The interrelationship referred to in this statement is apparent from the 1967 draft treaties and the statements made during the period of negotiations. Clearly, at the time negotiations were commenced it was assumed that since the Panama Canal was thought to be inadequate to meet the requirements of commerce it should be replaced; that a sea-level canal was economically feasible because it could be inexpensively built with nuclear excavation methods; that once the sea-level canal was built and operating under the control of the United States, the existing canal and the Canal Zone could be relinquished to Panama; and that in the interim the treaties under which the U.S. built and operated the Panama Canal could be abrogated and a temporary arrangement substituted under which Panama's Sovereignty over the Canal Zone would be recognized but control of operation of the canal wouid remain with the United States until the sea-level canal was built.

General Torrijos' views were expressed in a letter to Senator Kennedy dated May 7, 1970, pub'shed in "El Panama American" on July 1, 1970. Similar sentiments were expressed by the Foreign Minister in a statement at a meeting of the Organization of American States on June 25, 1270. Translations of both door. ments are attached in Epp. VII.

In the view of the subcommittee (subcommittee chairman and ranking minority member), the assumptions underlying the 1967 drafts are not now valid if, indeed, they ever were. Various aspects of the interrelated problems involved in the sea-level canal studies and the treaty negotiations are considered in the following pages of this report, with particular reference to the appropriateness of the provisions of the 1967 drafts in the light of presently known facts.

CURRENT STATUS OF ISSUES

DRAFT TREATIES

On August 5, 1970, the Minister of Foreign Relations sent a letter to our Secretary of State advising that Panama was willing to continue negotiations but that none of the three draft treaties rscommended by the negotiators was satisfactory.

At the time the letter was written to the Secretary of State, Panama's Foreign Office released a 32-page document explaining the reasons for rejection of the 1967 treaty drafts.35 This document analyzed the drafts on the basis of Panama's dissatisfaction with the existing treaty provisions on the following issues:

(1) Perpetuity of U.S. control,

(2) U.S. jurisdiction in the Canal Zone,
(3) Improvements of the Panama Canal,
(4) Military installations and activities,

(5) Insufficiency of direct benefits from the canal,

(6) Insufficiency of indirect benefits from U.S. operations, and (7) Unilateral interpretation of treaties by the United States. In general, this document takes an extreme position which in effect rejects U.S. control of the canal, the right of the United States to maintain military forces on the isthmus, and rejects the management of the canal for the benefit of shipping rather than the enrichment of Panama. Near the end of the document, Panama concludes that the root causes of conflict which have arisen since 1903 by reason of the unilateral interpretation and application of the existing treaties, on the part of the U.S. Government, will continue and will be aggravated in many respects, if the 1967 draft treaties were to be approved by the Republic of Panama.

In addition to the Panamanian inhibitions concerning the draft treaties, several important American objections are noted as follows. Under the existing treaties, the United States has complete control because within the Canal Zone it exercises the rights of sovereignty 36 The 1967 draft treaties recognize the full sovereignty of Panama over the Canal Zone and provide for transfer of the Panama Canal to a joint administration, a new entity composed of members appointed by the Presidents of the Republic of Panama and of the United States. The control over the joint administration would rest

The text of the document was published in La Estrella de Panama, Sept. 5, 1970. A translation is attached in app. IX.

Before the Panama Canal was built, President Rutherford Hayes in a Message to Congress on March 8, 1880, announced the policy that:

"It is the right and duty of the United States to assert and maintain such supervision and authority over any interoceanic canal across the Isthmus that connects North and South America as will protect our na tional interests."

This has been the policy of the United States since the Panama Canal was built, and the subcommittee understands that no change in the policy was intended in the 1967 treaty drafts. However, the 1967 drafts contemplate a change in the method of control that is so drastic and, the subcommittee believes, so unwork. able as to result in the loss of any effective control over the Canal by the United States.