The Acting Secretary of State to the Secretary of Defense ( Forrestal )


Dear Mr. Secretary: It is important that an immediate decision be reached as to whether the interests of the armed forces of the United States would be adversely affected if the Trans-Isthmian Highway were to be turned over to Panama for maintenance. If it is deemed advisable that this Government continue to retain the Trans-Isthmian Highway with the concurrent responsibility of full maintenance, it would be expected that the Army would make appropriate funds available now to the Public Roads Administration for this work as it has done in the past, or would instruct its forces in Panama to continue this work. The cost of maintenance on this Highway for the current fiscal year is estimated by the Public Roads Administration to be approximately $210,000.

On the other hand, if this Government decides to relinquish the Highway to Panama it will be necessary that the Panamanian Government be so notified at least thirty days in advance of any change of the present arrangement. Provided this alternative is chosen, it should be borne in mind that if the armed forces of the United States continue to use the Trans-Isthmian Highway frequently and periodically, this Government will still be obligated to pay Panama one-third of the total annual maintenance cost in accordance with paragraph 5 of the General Relations Agreement signed between the United States and Panama on May 18, 1942.1

By way of background, you may recall that the United States constructed the Trans-Isthmian Highway at its own expense and subsequently has been exclusively responsible for its upkeep. This obligation was assumed under the provisions of both Article VIII of the [Page 695] Defense Sites Agreement of 19422 and under the provisions of paragraph 5 of the General Relations Agreement of the same date. From the ‘copies of these agreements which are enclosed it will be noted that the language of the aforementioned provisions is practically identical.

The problem which now confronts this Government is set forth in considerable detail in the Department’s telegram no. 405 of May 29, 1948 to Panama and in the Embassy’s reply despatch no. 379 of June 17, 1948, copies of which are also transmitted herewith.3 Although the Department considers that the Defense Sites Agreement was abrogated by notes exchanged on February 16 and 19, 1948 between the United States and Panama,4 there has been no change in the applicability of paragraph 5 of the General Relations Agreement which stands as a current commitment to Panama.

While funds provided by the Army to the Public Roads Administration for maintenance of the Trans-Isthmian Highway were exhausted as of June 30, 1948, the Public Roads Administration has consented temporarily, pending a decision on this matter, to continue its operations in Panama on a reduced scale but in a manner adequate to keep the Highway in necessary repair.

I am informed that among the various interested United States departments and agencies there is apparently unanimous agreement that Panama has neither the technical ability nor budgetary stability required to assume responsibility for the maintenance of this highway in first-class condition. In this connection, the tactical value of first-class maintenance of this road to the United States is a question to be answered primarily by the armed forces.

In view of the need for continuing full scale maintenance operations on the Trans-Isthmian Highway if the United States is to continue its present responsibility and in view of the necessity for advising Panama immediately if the status of our obligations is to be changed, I should be greatly benefited by as prompt a reply to this communication as may be possible.

Faithfully yours,

Robert A. Lovett
  1. Department of State Executive Agreement Series No. 452, or 59 Stat. (pt. 2) 1289.
  2. Department of State Executive Agreement Series No. 359, or 57 Stat. 1232.
  3. Neither printed.
  4. For Ambassador Hines’ note 566 of February 16, see p. 664. February 19 note not printed.