718.1915/762a: Telegram

The Secretary of State to the Chargé in Panama (Munro)

8. You will please present the following note to the Panaman Government and give a copy of it to the President and discuss the matter with him:

I have been instructed by my Government to say that, mindful of its obligation under Article I of the Treaty of 1903 with Panama,68 it has followed closely the course of the direct negotiations between Panama and Costa Rica for the settlement of the boundary dispute between those countries. The views of my Government regarding this matter have been stated in great detail on previous occasions, notably in 192169 and more recently in this Legation’s note of February, [Page 540] 1925,70 so that it does not appear necessary to restate that position now.

In the course of the direct negotiations that have taken place during the last year and a half it appears that Panama made two proposals to Costa Rica during the visit of Señor Casorla71 to Panama. The first proposed a modification of the Loubet Line72 on the Pacific side which would give to Panama a large extent of territory which was determined by President Loubet to belong to Costa Rica and which was recognized by Panama as belonging to Costa Rica in Article I of the Porras-Anderson Treaty of March 17, 1910,73 as well as in a communication from the Legation of Panama at Washington to the Secretary of State of the United States under date of October 20, 1914.74 Costa Rica rejected this proposal as it modified the line already recognized by Panama.

Panama made a further proposal asking an indemnity from Costa Rica for the occurrences of 1921 stating that on this basis it would accept the line fixed by the White Award75 and the Loubet Line on the Pacific but asking that in drawing this line the interest of Panamans living or holding property in that region be protected.

Negotiations were later transferred to Costa Rica and the Government of Costa Rica suggested a line of compensation which would modify the Loubet Line in order to incorporate under Panaman jurisdiction the Panamans living and holding property on the Costa Rican side of the Loubet Line, an equal amount of territory on the Panaman side of that line to be given to Costa Rica. This proposal would not have changed the amount of territory under the jurisdiction of either Government but would incorporate in Panaman territory the Panamans who lived or held property in the region in dispute. This proposal was rejected by Panama.

Costa Rica then made a further proposal on December 17, last, as follows:76

The delimitation of the frontier between Costa Rica and Panama will be made in accordance with the Loubet and White Awards.
Costa Rica will recognize the titles to land issued by the Government of Panama to private persons in the territory which remains under the sovereignty of Costa Rica.
The question whether Costa Rica owes any indemnity whatsoever to Panama for the expenses which the latter Government made in 1921 at the time of the Coto conflict should be submitted to arbitration; and also the question whether Panama is indebted to Costa Rica on account of the expenses which it in turn incurred for the same reason on that date.
On the settlement being made, Panama will return to Costa Rica the arms, boats and flags which were seized by the Panaman forces.
If the Arbitrator should say that it is not Costa Rica but Panama that owes indemnity Costa Rica waives now payment therefor, with the exception of that stipulated in paragraph 4.

It appears that Señor Fabrega asked President Jimenez to promise to find out in May, 1926, whether a treaty could be submitted to the Costa Rican Congress in the terms desired by Panama.77 Señor Fabrega had suggested a line modified somewhat from the first proposal made to Señor Casorla in Panama which contemplated the cession to Panama of territory on the Costa Rican side of the Loubet Line. My Government is advised that after thinking the matter over President Jimenez decided that it would be impossible to arrive at an agreement on this basis. Señor Fabrega then returned to Panama.

From the above it appears that all proposals made have been rejected with the exception of the Costa Rican proposal of December 17, 1925, quoted above, on which the Panaman Government does not appear to have expressed its views. By this proposal Costa Rica appears to have afforded an opportunity for an agreement on the basis of Panama’s second proposal to Señor Casorla. Point 2 of the Costa Rican proposal protects the interests of Panamans living or holding property in that region. On the question of the indemnity asked by Panama for the Coto incident of 1921 Costa Rica in point 3 expresses the readiness to submit to the determination of arbitration the question whether Costa Rica owes an indemnity to Panama or whether Panama owes an indemnity to Costa Rica and in the latter case makes the friendly offer of waiving at the outset any demand for indemnity should the Arbitrator decide that it is Panama and not Costa Rica that should give indemnity.

This proposal seems so eminently fair, reasonable, and conciliatory that my Government feels Panama will desire to accept it. It has accordingly instructed me to request the views of Your Excellency’s Government regarding this proposal and to express the very earnest hope that Panama will avail herself without delay of this amicable means of settling now this long drawn out and bitter controversy which has disturbed the relations of the sister Republics of Panama and Costa Rica for such a long time.

In presenting this note you will please say to the Minister for Foreign Affairs and to the President that this Government has been advised that Costa Rica was willing to make a mutual exchange on the line of compensation proposed to Señor Fabrega and rejected by Panama but that in view of the Loubet Award as recognized by Panama it cannot consent to give up territory without equal territorial compensation.

[Page 542]

In the proposal of December 17, it has gone very far, however, toward meeting Panama’s demands regarding an indemnity. If Panama thinks an indemnity is due it it can sustain its contention before an Arbitrator in the knowledge that should the Arbitrator find, as Costa Rica on its side contends, that it is Panama and not Costa Rica that owes an indemnity Costa Rica will waive any claim for idemnification. The Department does not see how a more conciliatory offer could be made by Costa Rica nor does it perceive how Panama could justify rejecting such an eminently advantageous offer. You may also state that with regard to Point 4 of the Costa Rican proposal you have been advised by your Government that Costa Rica would be willing to withdraw its demand for the return of the launches and also to leave out of the agreement any mention of the war trophies which it is understood Panama wishes to give back to Costa Rica should an arrangement be made, as a spontaneous gesture of friendship. If the Panaman Government will inform this Government that such is its intention no mention of the trophies need be made in the agreement with Costa Rica.

Please endeavor to have the above proposal accepted by Panama and keep Department informed by cable.

  1. Ibid., 1904, p. 543.
  2. See ibid., 1921, vol. i, pp. 175 ff.
  3. See telegram No. 17, Feb. 6, 1925, 3 p.m., to the Minister in Panama, Foreign Relations, 1925, vol. i, p. 474.
  4. Buenaventura Casorla, confidential agent of Costa Rica in Panama.
  5. The text of the Loubet award was printed in Foreign Relations, 1910, p. 786.
  6. Ibid., p. 820.
  7. Ibid., 1914, p. 994.
  8. Ibid., p. 1000.
  9. See telegram No. 54, Dec. 18, 1925, 4 p.m., from the Minister in Costa Rica, ibid., 1925, vol. i, p. 481.
  10. See telegram No. 123, Dec. 27, 1925, from the Chargé in Panama, ibid., p. 482.