711F.1914/12–2346: Telegram
The Ambassador in Panama (Hines) to the Secretary of State
us urgent
[Received December 24—3 a.m.]
770. Reference Department’s telegram 621, December 21. General Crittenberger and I met with Acting Foreign Minister Sucre and Minister of Public Works Vallarino from four to six this afternoon. General Mathewson Chief of Staff for the Commanding General, Mario de Diego First Secretary of Foreign Office and Collins were present at the conference.
In compliance with Department’s instruction I informed Sucre that I was handing him a draft of a proposed defense sites agreement, that the United States hoped for an early solution of the question and that the United States wished to know what formula was to be followed to arrive at an early settlement satisfactory to both Governments. Sucre and Vallarino both mentioned the Panamanian position but both were careful to stress that no material abandonment, not even for five [Page 1139] minutes, of the sites now held by the United States was desired by Panama. After considerable discussion on this point it was finally agreed that negotiations based upon the draft presented would proceed on the understanding that once an agreement was reached then the question of the termination of the 1942 agreement, possible with the announcement that presently occupied sites were to be returned but immediately reoccupied, would be discussed and settled. Some plan whereby an announcement of return of sites after the new agreement has been settled will be made effective as of the very moment that the new agreement comes into force can in my opinion be worked out. General Crittenberger concurs in this opinion. This question is no longer an important one, provided the Panamanians stick to the position taken this afternoon. It appears now that no interim agreement will be needed and Sucre and Vallarino fully realize army cannot be put in position of illegally occupying sites.
Next point discussed involved Annex A of the list of actual sites wanted. Sucre wanted to know exactly what the United States needed and General Crittenberger after pointing out that the requirements for defense purposes had been carefully outlined to the Cabinet and President Jiménez several months ago at a conference in the Presidencia, agreed to present Annex A tomorrow to the Panamanians on the understanding that it be treated top secret.
Minister Vallarino then asked what was going to be done about the “needs of Panama”. I thereupon informed the Panamanians that I had come to the conference prepared to hand them a draft of a proposed defense sites agreement. Sucre insisted, however, that I agree to make note of the following “needs” for immediate consideration: (1) the return of Paitilla Point; (2) guarantee to Panama of a permanent market for Panamanian agricultural goods in the Canal Zone; (3) construction of a concrete highway to the Costa Rican border; (4) construction of concrete highway from Colón to Porto Bello 20 miles; (5) construction of a concrete highway from Campana to Puerto Cruces 10 miles; (6) granting of a $25 million loan; and (7) turning over to Panama of the naval hospital near Cativa. Points (4) and (5) are new but point (7) was discussed and abandoned about 10 months ago. Both Sucre and Vallarino made it very clear that they were prepared to bargain for the defense sites agreement and they intimated that if United States showed herself ready to meet Panama’s terms even part way the defense sites agreement would be soon signed. General Crittenberger and I made no comments, but I said that I would transmit their views to Department.
General Crittenberger pointed out after the conference that at no time had the Panamanians mentioned the joint trusteeship scheme or an interim agreement thus indicating little or no liaison between [Page 1140] Alfaro and Sucre. Vallarino was present at conference as President Jiménez’s personal representative and I am convinced that every effort will be made to make some progress before Alfaro returns. Although no time was set for a new conference it was agreed that the Panamanians would call next conference when they had studied the draft and annex but Sucre and Vallarino both stressed that they would welcome hearing our early reaction to their “needs”.