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.

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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.

II. RECOMMENDATIONS

1. The debate over a new treaty in the United States should concentrate on what is at stake for the United States.

Many opponents of a treaty focus largely on debatable legal aspects of the issue, claiming the Panama Canal is sovereign U.S. territory, just like Alaska or other parts of the United States. In fact, the United States has neither ownership nor sovereignty in the Panama Canal. Rather, the 1903 treaty gave us rights. Those rights are in jeopardy now because over the last several decades Panamanians have increasingly objected to their country being cut in half by a strip of land where Americans have exclusive rights and where American law rules. It is not difficult to imagine how Americans would feel if the United States were forced to tolerate the existence of a 10-mile-wide strip of land on each side of the Mississippi River which was under the jurisdiction of a foreign power. We would not tolerate such a partition and neither will the Panamanians continue to accept it.

Sovereignty and ownership are not at stake for us in the Panama Canal. We have never had either. The only sure course to preserve rights in the Canal Zone is to work with the Panamanians to negotiate a new system of relationships which can allow for the continued efficient and secure operations of the Canal. The present treaty does not insure either a safe or a secure Canal, given Panamanian opposition to the present treaty.

2. While it may not be possible to reach agreement on all substantive issues in a new treaty before the 1976 elections, earnest negotiations should continue in an effort to resolve the major outstanding issues and reach agreement on a draft treaty.

Such a course is preferable to waiting and drifting. The real question is whether Panamanians, who are being provoked by anti-American groups, will patiently await the results of our elections and subsequent ratification of a treaty.

3. Supporters of a new treaty must work to educate the American people and Members of Congress about the need for it.

To date, most of the discussion has come from opponents to a new treaty who wish to preserve the 1903 treaty and the rights they feel were guaranteed by it.

Three groups must be particularly active in support of a new treaty:

(a) The executive branch-particularly the State Department, Defense Department, and the White House-must work to present the merits of a new treaty. Spokesmen of all three groups should leave adequate time to discuss the proposed treaty both before the Congress and the American people.

(b) Members of Congress who support a new treaty need to explain to their colleagues the importance of concluding a new treaty and to indicate why a treaty is needed.

(c) Other Americans, especially those with important business interests in Panama and Latin America, who see the need

for a mutually beneficial treaty, must become better organized, better led, and more vocal. The recent resolution of the U.S. Chamber of Commerce supporting a treaty should be reinforced by a campaign among those in Congress supportive of the American business community's interests. Such an effort should focus on why a treaty is in our political and economic interest.

4. Over the coming months the U.S. military command in the Canal, SOUTHCOM, should intensify efforts to consolidate and streamline operations and facilities in the Canal Zone.

Many of the present facilities have marginal utility for our current purposes. The Commandant of SOUTHCOM and the Governor of the Canal Zone have begun a process of trying to remove irritants in dealings between Americans and Panamanians in the Canal Zone. These efforts should continue and be expanded in the coming months, as we attempt to move closer to reaching an agreement on a draft treaty.

5. Members of Congress should examine this issue carefully and consider visiting the Republic of Panama and talking with Panamanian officials and Americans working in Panama.

A treaty must be considered by the Senate and both Houses of Congress will be asked to approve implementing legislation. Visits to the Republic of Panama and to the Canal Zone offer an excellent opportunity for members to educate themselves on an important foreign policy issue confronting this country. We suggest that such visits include talks in the Canal Zone with American officials and in Panama with American Embassy officials, Panamanians, and American businessmen who live and do business in Panama.

6. Members of Congress should be aware that their comments on the Canal are closely followed and widely reported in the Panamanian press.

We are persuaded that it would be wise to refrain from statements and actions in the next several months that might prejudice negotiations and even hamper the ability of our negotiators to insure that our best interests are preserved in any new draft treaty.

Both Houses of Congress will have ample time to take action on this issue after the provisions of a draft treaty are presented to them for consideration. To seek to prevent a draft treaty from even being submitted to Congress serves no useful purpose and can only harm our national interest.