Foreign Relations of the United States, 1955–1957, American Republics: Central and South America, Volume VII

142. Memorandum From the Acting Officer in Charge of Central American and Panama Affairs (Sowash) to the Deputy Assistant Secretary of State for Inter-American Affairs (Rubottom)¹

Washington, July 31, 1956.

SUBJECT

• Effect of the Suez Situation on Our Position in Panama

There can be no doubt that Egypt’s seizure of the Suez Canal² could have important repercussions upon our own position on the Isthmus of Panama. The Panamanians, unable or unwilling to see beyond the superficial analogies between the two situations, have made no secret of the fact that they follow with keen interest the developments at Suez. The Government of Panama unquestionably looks to the day when it will be able in one way or another to emulate the recent action of Egypt. There is quiet talk from time to time in even responsible circles in Panama of eventual nationalization or internationalization of the Panama Canal. Within the last few months an ex-Foreign Minister, who has always shown himself to be friendly toward the United States, remarked to our Ambassador that “Now Egypt has her canal and we shall someday have ours.”

Unable to challenge our position in the Canal Zone by threat of force, the Panamanians instead have concentrated their efforts upon a gradual and insidious undermining of and encroachment upon our treaty rights in the Zone. This drive has been accelerating in the past two decades. Under the leadership of Dr. Ricardo Alfaro³ the Panamanians have evolved a forced and distorted interpretation of the existing treaties between the United States and Panama which runs counter to the position of this Government with respect to its treaty rights. Panama’s thesis would restrict the exclusive jurisdiction claimed and exercised by the United States in the Canal Zone under Article III of the 1903 Treaty to the five fields of the construction, operation, maintenance, sanitation, and protection of the Canal, leaving to Panama the right to the present exercise of sovereign rights in all other fields of activity in the Zone. The United States position is that, in accordance with Article III of the 1903 Treaty, she has all the rights which she would possess and exercise in the Zone if she were sovereign to the entire exclusion of the exercise of such rights by Panama, except insofar as such rights have been ceded back to Panama by the United States. This basic difference in interpretation of the 1903 Treaty by the two Governments underlies many of the problems that arise in their relations. The Panamanian thesis of course has strong emotional and nationalistic appeal in Panama and no government there probably would ever now dare abandon it, even if it wanted to. The United States on its part is equally wedded to its interpretation which it honestly believes to be the only one of which the clear language of the treaties is susceptible.

Pursuant to its thesis, the Government of Panama repeatedly endeavors to assert and exercise jurisdiction in the Zone in such diverse fields as labor, documentation of ships, and taxation. This Government, vigilant against such attempts, has consistently refused to countenance the exercise by Panama of jurisdiction in the Zone, except in those instances authorized by specific treaty provision, and all such attempts on the part of Panama have been vigorously protested by formal note. Such notes are usually not answered by the Government of Panama. The issue is constantly in the background in our relationships with Panama.

The Panamanians’ present stratagem appears to be to create as many precedents as possible in support of their contention. During the 18 months of negotiations which led to the agreements signed with Panama in January 1955 many of the Panamanian proposals were predicated on the Panamanian thesis and, while dealing with seemingly insignificant matters, had to be rejected forthright by this Government since their accommodation would have encroached upon our treaty rights with consequent impairment of our fundamental position on the Isthmus. At several points of deadlock in the negotiations, the Panamanian negotiators openly threatened to carry the jurisdictional issue to the Permanent Court of International Justice if satisfactory solutions were not achieved on some of their complaints.

Knowing with what thoroughness and care the Government of Panama will scrutinize every possible precedent in support of their aspirations ultimately to obtain control of the Panama Canal, it behooves this Government, in the decisions which now confront it as a result of the recent developments in the Suez, constantly to bear in mind the possible repercussions which decisions with respect thereto may have upon our own position on the Isthmus of Panama. This applies equally to any press statements by officials of this Government with respect to the Suez crisis. I earnestly recommend that this aspect of the matter be brought to the attention of the Secretary, the Under Secretary, and Assistant Secretary Rountree⁴ in order that appropriate steps may be taken to insure that ARA is kept informed regarding Departmental policies and decisions concerning developments in the Suez. This is important in order that this Government avoid being placed in a position of adopting contrary positions with respect to the two areas which might be used as a lever against us at a later date by Panama in contesting our complete unilateral jurisdiction and control of the Panama Canal Zone. Such an arrangement was effected in 1953 during the tripartite talks on the Suez Canal. The attached proposed memorandum is designed for this purpose.⁵

For your further information there is attached a copy of a memorandum prepared in 1952 by Miss Whiteman of L/ARA on the comparative legal position of the Suez Canal and of the Panama Canal.⁶

1. Source: Department of State, Central Files, 919.7301/7–3156. Confidential. Transmitted through Acting Deputy Director of MID Hoyt.
2. On July 26 Egyptian President Gamal Abdel Nasser announced that he had signed into law a Presidential decree nationalizing the Suez Canal Company.
3. Former President of Panama and member of the Panamanian Foreign Relations Council.
4. William M. Rountree, Assistant Secretary of State for Near Eastern, South Asian, and African Affairs.
5. This proposed memorandum was addressed from Rubottom to Secretary Dulles and Under Secretary Hoover. It was not attached to the source text. (Department of State, ARA Files: Lot 60 D 667, Panama 1956—Suez) The memorandum briefly discussed the relationship between developments in Panama and the Suez Canal crisis, recommending that ARA be kept informed in advance of Departmental policies, decisions, and statements with respect to Suez in order that precedents not be set or statements made which might be used to the disadvantage of the United States at a later date by Panama. It was apparently not sent forward. A handwritten note on the memorandum by Fisher Howe reads as follows: “Believe this matter was taken care of at a meeting with Mr. Hoover.”
6. Not found attached. (Ibid.)