711F.1914/10–1347: Telegram

The Ambassador in Panamá (Hines) to the Secretary of State

us urgent

596. Embtel 594, October 12.56 Assurances desired by President are textually as follows with Embassy’s comments in parentheses:

Construction within a definite period, at the expense of US, of [Page 924] a concrete highway following a route to be indicated by Panama from a point on the highway to Rio Hato, to the Costa Rican frontier. (If accepted by US agreement should include cancellation of our commitment to build tunnel under Canal. See Embdesp 3550, March 7.57 Route selected would naturally take into account our strategic needs as well as Panamanian political considerations.)
Return without cost to Panama of Pantilla Point and other areas in Taboga which will be determined later. (Covered by Department’s instruction to Wise Jun 24),57
Reiteration of assurances of effective fulfillment of commitments regarding equality of treatment and opportunities for Panamanians in Canal Zone. (Foreign Office believes statement of what has been and is being done in this sense would be sufficient.)
Our conclusion of a bilateral agreement covering the following points: (a) regulations prohibiting the sale, manufacture or importation of alcoholic beverages into Canal Zone, in accordance with stipulations of ex-President Roosevelt’s executive order (Foreign [apparent omission] states EO is no longer in effect, enforcement of its provisions being discretionary with CDC); (b) assurance of a Canal Zone market for products of Panama, under analogous conditions with regard to costs and reasonable comparison in quality. (Although drafting is murky, upon questioning Foreign Office admitted that what is sought amounts to a subsidy, i.e. prices obtaining in domestic US market); (c) prohibition of the sales of civilian goods in Canal Zone post exchanges, to include groups garrisoned in the Isthmus as established in prohibitions contained in Secretary of War’s order of August 15, 1947; (d) limitation of sales in commissaries and post exchanges to merchandise produced or manufactured in US and Panama, (Foreign Office admits point 4 inspired solely by Panama Chamber of Commerce).

Embassy realizes difficulty in giving Panama written assurances regarding points 1 and 2 since both would require Congressional action. No objection, if Department sees fit, to write note covering point 3.

De Diego was informed that consideration of matters so completely extraneous as those included in point 4 would not only cloud and prolong the issue but possibly preclude its favorable conclusion. Hall reminded him that even Alfaro had stated that defense sites negotiations [Page 925] should not be conducted with a view to a quid pro quo but on a much higher ethical level.

I repeat recommendation last paragraph Embtel 594, believing there is still chance of securing Assembly’s approval if President has courage to present our final proposal unchanged.

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