Foreign Relations of the United States, 1952–1954, The American Republics, Volume IV

611.19/4–753

Memorandum by the Officer in Charge of Central America and Panama Affairs (Leddy) to the Assistant Secretary of State for Inter-American Affairs (Cabot)

confidential

[Washington,] May 20, 1953.

Subject:

• Panama Negotiations

I. Background and Status

1. The Panamanian Foreign Minister, Señor Guizado, came to Washington on April 3, 1953, to arrange a visit by President Remón to President Eisenhower, “to settle all outstanding problems between the two Governments”. He was received by Secretary Dulles, Under Secretary Smith and Assistant Secretary Cabot, and visited Vice President Nixon and the United States Senate. Mr. Dulles informed him that we are ready at all times to discuss mutual problems but that careful negotiations should precede any visit by President Remón, and that President Eisenhower would not wish to deal with the subjects directly.¹

2. Señor Guizado addressed a note to the Department on April 7, requesting negotiations, and the Department’s reply acceded to this request and indicated negotiations could start in the latter part of June.²

3. The Panamanian request is “to review the entire field of relations between the two Governments arising out of the construction and operation of the Panama Canal”. Four points were mentioned by Panama; although very broad and vague, these appear to have to do with “sharing of profits” from the Canal, elimination of commercial competition from the Zone, increase in the annuity, and elimination of discrimination against Panamanian workers in the Zone. The Panamanians have stopped talking officially about “treaty revision” after the difficulties and delays in such action were brought home to them, although the Panama press still headlines “treaty revision”.

4. Panama has named three negotiators (headed by Ambassador Heurtematte) and two consultants (Ricardo Alfaro and Harmodio Arias) for the negotiations to be held in Washington. We are presently organizing the American negotiating group, which is to be headed by the Assistant Secretary for Inter-American Affairs.

5. An Inter-Departmental Committee, consisting of eight Federal agencies other than State with responsibilities related to the Canal Zone has been organized to prepare the United States position for the negotiations. This Committee will hold its first meeting next week.

II. Problems

1. The principal objective in these negotiations is to remove as far as possible any real grounds for Panamanian complaints, in order to project our relations constructively on as satisfactory a basis as possible. Good relations are considered necessary to the security of the Canal, and to our peaceful and friendly exercise of jurisdiction in the Canal Zone. While Panamanian complaints will perhaps always be endemic, we must in our own self-interest spare no efforts to mitigate or remove them, consistent with the maintenance of our present treaty rights.

2. Our negotiations will be on a firm plane of seeking fair and equitable relations, without relinquishing in any way the exclusive jurisdiction and treaty rights we exercise in the Canal Zone. Many of Panama’s complaints are of long standing and may well merit our unilateral action, without any bargaining; these are, mainly, the issues of “equal pay for equal work” in the treatment of labor, the reduction or elimination of segregation, restrictive measures to combat commissary and PX abuses, and the granting of labor benefits such as social security and retirement to Panamanian workers. In so far as labor treatment is concerned, the greatest number of Panamanians is affected; in so far as alleged commerical competition is concerned, the most influential group of Panamanians, the well-connected merchant class, is most affected. A settlement of these problems would better relations constructively. Such settlement might be worked out with the Armed Forces and with the civilian authorities (the Panama Canal Company and the Canal Zone Government).

3. There are several major issues outstanding with Panama, such as our 1942 commitment to build a tunnel or bridge crossing the Canal and our agreement to move the railway station in Panama City. These and similar issues of long standing may be brought up in the negotiations and if so, we may take the opportunity to dispose of them by some new agreement.

4. We are not in favor of treaty revision as such, and are encouraged that the Panamanians are now talking of reaching agreement through “application and interpretation” of the existing treaties of 1903 and 1936. An increase in the annuity is the only one of the four points listed by the Panamanians which would require an amendment to these treaties. The annuity was established in 1903 at $250,000 in gold, and revalued in 1936 at $430,000, to reflect our 1934 decrease in the gold content of the dollar.

5. We emphasize that Panama’s case is neither unfounded nor, on the other hand, unexaggerated. Our objective is to correct any practices which can be used to incite hostility to the U.S., and to reestablish as far as possible a cordial and effective working relationship, without relinquishing any of our paramount strategic interests in the Zone. The lessons of recent years in Iran and Suez are solid reasons for our constructive efforts.

III. The Negotiations

1. Since treaty revision is not an objective, neither side is naming “plenipotentiaries” and discussions will be primarily exploratory. If a basis for agreement is established, much of this may be carried out by executive action on our part rather than treaty revision. If any treaty is necessary, it will take more time, and the Panamanians are in a hurry.

2. The Panamanian Government is always under political pressure on these issues and the Assembly, which meets again in October, is a forum for opposition demands for action by the Remón Administration. This pressure is real and should not be discounted as mere internal politics, as was seen in the bases setback in 1947. We will therefore endeavor to accelerate negotiations during the summer months, so as to avoid any unnecessary exposure of the Remón Government to apposition attack, Remón being basically friendly to the United States.

3. The Department wishes to keep the Congress informed of developments and will be glad to do so during the course of negotiations, through appearances at this Subcommittee or visits by Departmental officers to the Committee Chairman.

1. A record of this conversation is contained in a memorandum of conversation by Mr. Cabot, dated Apr. 3, 1953 (611.19/4–353).
2. The opening of the negotiations was later postponed until Sept. 10, 1953, primarily as a result of Panamanian Ambassador Heurtematte’s preference for a later date (memorandum by Mr. Sowash, dated June 8, 1953, 611.19/6–853).