347. Editorial Note
Documentation on relations between the United States and Panama is being printed in an accompanying microform publication. A narrative summary, based on that documentation, is provided below, along with a purport list of the documents published in the microform supplement. The document numbers cited in the summary correspond to the document numbers in the purport list and the microform supplement.
U.S. relations with Panama during the final 3 years of the Eisenhower administration focused mainly on questions arising out of the administration of the Canal Zone, and upon the larger issue posed by the symbolic, but politically sensitive, question of whether the Panamanian flag should be allowed to fly alongside of the U.S. flag within the Canal Zone. For the Panamanian Government, the flag issue was one of burning domestic importance. There was no question of challenging U.S. control over the territory and operations of the Canal Zone, but there was a strong Panamanian desire to see Panamanian sovereignty over the territory of the Canal Zone recognized by flying the Panamanian flag within the Canal Zone. On November 3 and November 28, 1959, popular frustration over the refusal of the United States to allow the Panamanian flag to be flown in the Canal Zone led to anti-American riots in Panama City. Relations between the United States and Panama remained strained until President Eisenhower authorized the Panamanian flag to be flown alongside of the U.S. flag in the Canal Zone in September 1960.
President Ernesto de la Guardia initiated a series of high-level exchanges on the flag issue in a conversation with Dr. Milton Eisenhower during the visit of President Eisenhower’s brother to Panama in July 1958. (PM–3) In addition to the flag issue, Panamanian officials complained of a number of other irritants relating to the administration of the Panama Canal Zone. In a conversation with Secretary of State Dulles on October 8, 1958, Foreign Minister Miguel J. Moreno argued that the United States was not interpreting the Treaty of Mutual Understanding and Cooperation and the related Memorandum of [Page 909] Understanding, which had been signed on January 25, 1955, in the spirit in which they had been intended. (PM–8; for texts of the treaty and the accompanying memorandum, see Department of State Bulletin, February 7, 1955, pages 238–243) President De la Guardia made a similar complaint in a letter to President Eisenhower on March 7, 1959. (PM–11) The Panamanian complaints alleged that the United States maintained a dual-wage scale in the Canal Zone which discriminated against Panamanian employees, that a number of the best jobs in the Canal Zone were reserved for U.S. citizens under an unnecessarily broad security system, and that Panamanian enterprise suffered from unfair competition from imports of merchandise into the Canal Zone from “third country” sources, and from “luxury items” from abroad sold through Canal Zone sales outlets. In essence, the Panamanian Government felt that the Canal Zone administration discriminated against Panamanians, and that Panama was not profiting from the operations of the canal as it should. The Panamanian Foreign Minister repeated these complaints in July 1959 in rejecting a U.S. aide-mémoire responding to the Panamanian complaints. (PM–18) Foreign Minister Moreno brought the dispute into the open with public statements at Santiago, Chile, in August and in New York in September 1959 charging the United States with noncompliance with its treaty agreements. (PM–25) Meanwhile, the Panamanian Government continued to press for the right to fly the Panamanian flag in the Canal Zone. (PM–24)
The Panamanian complaints engendered a good deal of high-level concern and policy debate in Washington. Panama was of critical strategic importance to the United States because of the canal, and concerns about the political stability of the Panamanian Government were magnified in May 1959 when a group of 80 armed revolutionaries, Cuban led and supported, landed on the north coast of Panama and attempted to overthrow the government. (PM–14) Panamanian concerns and complaints found a sympathetic ear in President Eisenhower, who took a keen and continuing interest in the problems and was inclined throughout the period to accede to most of the Panamanian requests for change. (PM–19, 20, 22, 36) Eisenhower saw little reason to refuse the Panamanian request to have the Panamanian flag fly with the U.S. flag at an appropriate place in the Canal Zone. (PM–26, 49) The President received conflicting advice from his advisers on these questions, however. The Department of State, led by Secretary of State Herter, argued consistently for a more generous interpretation of the terms of the 1955 understandings with Panama, and pointed up the importance of accepting the Panamanian position on the flag issue. (PM–20, 28, 32, 37, 40, 50) Secretary of the Army Wilber M. Brucker, on the other hand, functioned in the capacity of President of the Panama Canal Company and represented the interests [Page 910] of the Canal Zone government. The tenor of his advice to the President was, by and large, to hold the line against the Panamanian demands, most of which the Department of the Army viewed as unwarranted. (PM–20, 29) Brucker was strongly opposed to raising the Panamanian flag in the Canal Zone, which he argued would be viewed as a sign of weakness, and a concession in the direction of eventual Panamanian control of the canal. (PM–39, 52) Brucker pointed to the fact that there was strong support in Congress for his position on the flag issue. (PM–52)
The tensions involved in relations with Panama, which were highlighted in the policy debate, led the Eisenhower administration to reconsider the possibility of building an alternative sea-level canal in a different country. (PM–17, 41, 42, 43) That review again pointed up the fact that an alternative canal was an impractical project. (PM–48) The United States would have to continue to deal with Panama concerning the operation of the strategically important canal. In March 1960, Brucker and Herter moved in the direction of improving relations with Panama by agreeing on a 9-point program to meet most of the Panamanian concerns. (PM–36) President Eisenhower approved that program, and he took the final step necessary toward improved relations when he ordered, in September 1960, that the Panamanian flag be raised alongside the U.S. flag in the Canal Zone. (PM–49, 52, 55, 59) The new Panamanian Government of Dr. Roberto Chiari expressed gratification at President Eisenhower’s decision, and the United States moved to solidify improved relations by reviewing and increasing the package of economic aid available to Panama. (PM–59, 63)