Foreign Relations of the United States, 1958–1960, Volume V, Microfiche Supplement, American Republics

PM–37. Memorandum from the Assistant Secretary of State for Inter-American Affairs (Rubottom) to the Secretary of State¹

Washington, March 29, 1960

SUBJECT

• PANAMA - Policy Recommendations for Discussion with Secretary of the Army Brucker.

You attended a meeting at the White House on March 21, together with Mr. Merchant and me, on the subject of short-range policy changes to be implemented by the Canal Zone Government/Panama Canal Company in the Canal Zone. Secretary Brucker and Assistant Secretary Roderick presented a 10-point program of proposed action (Tab A)² which seemed to be satisfactory to the President and he suggested that the Company should move ahead with the proposals (Tab B).

You mentioned to the President that the Department had made a careful long-range analysis of the problems attendant on United States-Panama relations and that, after consultation with Mr. Brucker you would like to come back to the President with further recommendations. I recommend that in a meeting, to be scheduled for the near future with Secretary Brucker, attended by you, or Mr. Merchant if you should find it more convenient, you support wholeheartedly the 10-point program of the Army and that you urge its implementation be commenced as soon as it is practicable to do so, with a further recommendation that the benefits be spaced so as to achieve maximum effect.³

ARA believes that while the Department of the Army proposals are excellent measures and will, no doubt, help to improve further our relations with Panama, which presently appear to be on the mend, there are additional short-range changes which should be raised in the projected meeting with Secretary Brucker for discussion and decision to be presented as joint recommendations to the President.

These measures, as described in Stage I of the S/P Study on Panama (PPS-1960-1, March 14, 1960, Tab B)⁴ include the following:

1. Next Appointment to the Board of Directors of the Panama Canal Company should be a State Department Representative

The memorandum from the White House dated February 16, 1960 (Tab C)⁵ recommends that until there is a vacancy, a representative of the Department of State should attend the meetings as an observer. Mr. Merchant is suggested as State’s representative on the Board.

It is believed advisable to have the Department represented on the Board, where its director would be in a position to influence decisions which affect United States relations with Panama. The State member would, in effect, be a voting political advisor to the Board. Rather than burden the Under Secretary for Political Affairs or the Assistant Secretary of State for Inter-American Affairs with this responsibility, it is suggested that the Deputy Assistant Secretary of State for Inter-American Affairs might be named. In view of a larger role envisioned, for the Ambassador, it is not considered appropriate that he serve on the board.⁶

It is recommended that you seek Secretary Brucker’s concurrence that a joint State/Army recommendation be made along these lines to the President.⁷

2. Civilian Governor of the Canal Zone

The February 16 memorandum suggests that the next Governor of the Canal Zone, to be appointed in May of this year, “be a different man from the President of the Panama Canal Company and a civilian selected partly for qualities of tact and diplomacy”. He should sit with the Board of Directors of the Panama Canal Company, the memorandum adds.

The United States military plays a triple role in the Zone and vis-a-vis Panama: it supplies the governor of the Zone, manages the Panama Canal Company, and protects the Canal. The Corps of Engineers, which has a brilliant record in operating the Canal, has traditionally furnished the governor, who by statute serves also as ex officio president of the Company. There seems to be no compelling reason today, as opposed to the conditions of 1903, 1917, or 1941, why the Canal Zone should be under a military governor.

The presence of foreign military government is offensive to peoples who consider the governed territory to be their own. A military organization operates on the basis of command rather than persuasion. Military officers grow accustomed to obedience, and are concerned primarily with matters of their internal command rather than with those of external interests. Accordingly, a military command is seldom an instrument for civil administration under which civilians and foreigners can comfortably live or work.

An individual commander may avoid arbitrariness but his military status projects to foreign peoples more of an aura of colonialism than would adhere to a civilian. The Panamanian press campaign against the “military mentality” of the present governor suggests that the Panamanians would welcome civilian governance of the Zone.

It is believed that the Zone’s government should be civilianized by the appointment of a capable civilian governor. He should in his dual role as governor of the Zone and president of the Company be responsible to the Ambassador on all matters affecting the Republic.

A civilian governor should not report to the Department of the Army but to the Department of State or to the White House through the Department. It is our understanding that the appointment of a civilian governor could be effected by the President, subject to confirmation by the Senate, without further legislation.

It is our Legal Advisor’s opinion that there is no legal impediment to naming a civilian governor but the statutes call for the governor and the president of the Panama Canal Company to be the same person (Tab D).⁸ Mr. Brucker, in a discussion with Mr. Merchant, indicated his view that by statute the governor and the president of the Company must be an (Army) engineer.

In the event a civilian governor, reporting to the president through the State Department or directly to the Department, is named, it would be desirable to have the stock of the Panama Canal Company transferred to the Secretary of State. At present, the President has delegated the Secretary of the Army on sole stockholder.⁹

It is recommended that you seek Secretary Brucker’s concurrence that such a joint recommendation be made to the President.¹⁰

3. Primacy of United States Ambassador over the Canal Zone.

The termination of military administration of the Zone is directly related to the question of United States representation in the Republic of Panama. Part of the Canal problem is that the governor of the Zone (president of the Company) is responsible to the Secretary of the Army, and that CINCARIB is responsible to the JOS, notwithstanding that a wide variety of decisions made by each affect Panama and Panamanians in some way.

The coordination of the actions of the governor (president) and CINCARIB with those of the Ambassador now depends solely on the working relationship and goodwill existing between the three men. It would be prudent to assure a greater degree of formalized coordination by establishing the primacy of the Ambassador.

It is not recommended that CINCARIB’s Panama responsibilities be affected except in regard to the primacy of the Ambassador on all matters affecting¹¹ United States relations with Panama. This, in addition to the appointment of a civilian governor responsible to the Ambassador, would simplify the problem of coordination and reduce the military and “colonial” coloration of the Zone.¹²

It is recommended that you seek Secretary Brucker’s concurrence that Executive Order 10575 be recognized as applicable to the Canal Zone vis-a-vis the Republic of Panama as it is elsewhere in the conduct of United States foreign relations.¹³

The appointment of a State Department representative to the Canal Company Board, the appointment of a civilian governor and the establishment of the primacy of the Ambassador would have two immediate effects: It would (a) “civilianize” the Panama Canal Company and (b) supplant the present primacy of the Department of the Army by elevating the Department of State to new responsibilities vis-a-vis the Zone and the Canal.

Civilianization of the Company would still permit the special competence of the Corps of Engineers vis-a-vis the Canal to be available to the civilian management.

The result of appointing a civilian governor would be to reduce the role of the Department of the Army in the Zone to that of furnishing technical acceptance in the operation of the Canal and of maintaining a security force.

4. [illegible in the original]

It is believed that the forthcoming meeting with Secretary Brucker would be the appropriate time to raise once again the Panamanian request that the United States fly its flag in the Zone.

As you will remember, a decision on the request of November 25 has been delayed on a result of Congressional opposition. However, Governor Potter’s precedent of March 1 in displaying ceremonial Panamanian flags received no unfavorable comment from Congress, which leads to the belief some of the “sting” of this issue may have been drawn.

The House Foreign Affairs Committee as yet has not made public its attitude toward flying the Panamanian flag. Moreover, it is understood that the Senate Foreign Relations Committee does not intend to take action on the flag issue.

It would appear that a sounding might be taken of Congressional attitudes toward our unilateral display of the Panamanian flag toward the end of the present session, in order to determine the feasibility of action by the Executive Branch following the adjournment. ARA feels that Representative [illegible in the original] may be having second thoughts on his action to halt our flying of the Panamanian flag in the Zone, and I believe the action of Governor Potter on March 1 clearly shows a significant recession from the Pentagon’s earlier position.¹⁴

It is recommended that you explore with Secretary Brucker the possibility of the Pentagon joining with State in recommending to the President that he approve in principle our regular display of the Panamanian flag in the Zone under conditions that are mutually acceptable to the Departments.¹⁵

5. Policy Decision on Isthmian Sea Level Canal

The Panama Canal Company study (now on the process), which is due to be presented to a Cabinet meeting in May of this year, calls for a successor sea level Canal to replace the Panama Canal to be completed by 1980. Since construction is estimated at approximately ten years, the United States Government must during the 1960s build the politico-psychological atmosphere requisite for successfully negotiating a sea level Canal across Panamanian territory—the present preferred site.

The creation of this atmosphere will require that we adopt a new Isthmian canal policy in the near future. S/P has prepared a long-range study (Tab A) which calls for medium and long-range policy changes additional to those mentioned above. At Mr. Merchant’s instigation, the JCB has undertaken to prepare a study of the strategic importance of the present, and future sea level canals, to be ready in about sixty days.

Following presentation of the Canal Company study to the Cabinet, it seems to ARA that the President could be asked to (a) decide in principle to proceed with construction of an Isthmian sea level canal and (b) approve a new long-range Isthmian canal policy which could be discussed with the new Congress.

It would also appear desirable that the Departments of Defense, Army, and State initiate discussions among themselves immediately to resolve such differences as now separate us in a frank and open-minded manner, all parties to recognize that the socio-economic evolution of the Isthmus is upon us for the period being considered.

It is recommended that you explore with Secretary Brucker the possibility of setting up a task group to commence formulation of a joint State/Army policy. [illegible in the original] This group would draft recommendations for ultimate submission to the President for decision. The President would indicate at what time study of a revised policy on the Isthmian Canal and related matters mentioned in this S/F paper would be referred to the National Security Council.¹⁶

1. Source: Department of State, ARA/OAP Files, Lot 63 D 127, “Panama 1960.” Secret. Drafted by Sharp between March 25 and March 28. The source text is an uninitialled carbon copy.
2. Not attached to the source text, but see Document PM–35, footnote 2.
3. According to a handwritten notation on the source text, Secretary of State Herter approved this course of action on April 1.
4. Not attached to the source text.
5. Not attached to the source text.
6. At this point, the following handwritten notation appears on the source text: “(see Mr. Merchant’s comment, Tab F, para. 1).” Apparently Tab F, which is not attached to the source text, was a memorandum dated March 30 from Merchant to Herter, in which Merchant took exception to Rubottom’s recommendation relating to the rank of the State Department’s representative serving on the Board of Directors of the Panama Canal Company. Merchant believed the Under Secretary of State or the Under Secretary for Political Affairs should represent the Department. He maintained that high rank was necessary to make the Department’s influence effective. (719.00/3–3060)
7. According to a handwritten notation on the source text, on April 1 Herter concurred with Merchant’s recommendation regarding the rank of the State Department’s representative.
8. Not attached to the source text, but see Document PM–35, footnote 5.
9. At this point, the following handwritten notation appears on the source text: “(see Mr. Merchant comment, Tab F, para. 4).” Merchant, according to his memorandum of March 30, was uncertain of the soundness of recommending to the President that he transfer the stock of the Panama Canal Company to the Secretary of State. (719.00/3-3060)
10. According to a handwritten notation on the source text, on April 1 Herter disapproved this recommendation and suggested that the Secretary of the Treasury should hold the stock. (719.00/3–3060)
11. At this point, an unknown hand inserted the following in the source text: “the Govt. of.”
12. At this point the following handwritten notation appears on the source text: “(see Mr. Merchant’s comment, Tab F, para. 2).” Merchant, according to his memorandum or March 30, suggested that, in the interest of clarity, the reference to the Ambassador’s responsibility “on all matters affecting United States relations with Panama.” Should be amended to read “. . . United States relations with the Government of Panama.” (719.00/3–3060)
13. According to a handwritten notation on the source text, Herter approved this recommendation on April 1.
14. At this point the following handwritten notation appears on the source text: “(see Mr. Merchant’s comment, Tab F, para. 3).” Merchant, according to his memorandum of March 30, suggested that the flag issue should, for the moment, remain unresolved, but that the precedent of the crossed ceremonial flags should be repeated on every significant Panamanian and United States holiday. [illegible in the original]
15. According to a handwritten notation on the source text, Herter approved Merchant’s suggestion on April 1.
16. According to a handwritten notation on the source text, Herter accepted this recommendation on April 1.