401. Memorandum From the Under Secretary of State (Ball) to President Kennedy1


  • Panama Canal Policy and Relations with Panama

The NSC Working Group on Panama has completed consideration of our relations with Panama and the related question of the need for a sea-level canal, pursuant to NSAM No. 95.2 The Group recommends that the United States:

Defer any decision and avoid any expressed or implied commitment on a sea-level canal for a period of approximately five years while completing those measures which must precede an informed decision, including:
a research program to determine the feasibility, costs and other factors of nuclear construction methods;
site surveys to determine the feasibility, costs and other factors of alternative canal routes;
economic studies to provide a more complete basis for determining our interest in and requirement for a new canal;
quiet preparations, including talks with Panama, and other interested governments as appropriate, to clarify the terms and conditions of a new treaty; and
studies to clarify the costs and problems of abandonment of the existing Canal, or retention under a new treaty relationship.
Defer any formal treaty negotiations with Panama affecting the present Canal until completion of the foregoing measures.
Contain Panamanian pressures for treaty renegotiation and strive to improve relations with Panama by:
focusing attention on the research and surveys to obtain data for an informed decision on a sea-level canal;
liberal interpretation of existing treaty provisions to satisfy Panamanian aspirations which are reasonable and consistent with the basic interests of the United States, including such unilateral measures as acceding to the Panamanian request for dock facilities in the Zone, and
accelerated assistance through the Alliance for Progress to help Panama improve economic and social conditions and reduce its depend-ence on the Canal.

The basic data and line of reasoning leading to these recommendations are set forth in the Report of the Coordinator, Special Study Group on Panama transmitted here as Enclosure I.3

I believe that these recommendations, properly carried out, can provide a basis for improved relations with Panama. I wish, however, to introduce cautionary notes with regard to two aspects of the recommended actions.

  • First, a decision to undertake the construction of a sea-level canal will depend upon many factors, only one of which is that of the means of construction. There should, therefore, be no relationship openly expressed between Operation Plowshare and the construction of a sea-level canal. We have much to learn about the safety of construction by nuclear means and in the absence of demonstrable proof of its infallibility on a project of this scale we could, by over-emphasizing its potential now—and in the absence of an effective information program—provide a golden opportunity for Soviet propaganda throughout Latin America.
  • Secondly, although the paper correctly recommends deferment of any formal treaty negotiations with Panama for a period up to five years, while we study the need for a new canal, we should not be under any illusions that we can effectively maintain this position over this period. While every effort will be made to maintain our position by exploiting the various proposals outlined in the recommendations, it is doubtful that President Chiari or any chief executive of Panama can long resist normal political pressures to seek renegotiation. The key issue is United States sovereignty over the Canal Zone. Any proposal to abandon our [Page 824] traditional position with regard to sovereignty would obviously have to be preceded by a great deal of careful work with the Congress.

With these caveats, I submit for your consideration, with the recommendation that you sign or approve them, the following three documents required to carry out the recommended courses of action:

NSAM to carry out the policy decision in accordance with the recommendations;4

Suggested letter to President Chiari of Panama, together with copies of his letter of September 8, 1961, and your interim reply of November 2, 1961;5 and

Preliminary guidelines for discussions with President Chiari on the occasion of his proposed visit to the United States.6

George W. Ball
  1. Source: Kennedy Library, National Security Files, Countries Series, Panama, General. Secret. No drafting information appears on the source text. Filed with an April 30 covering memorandum from Deputy Special Assistant for National Security Affairs Carl Kaysen, which commented: “The sum and substance of all this is that we recognize that any firm decision on a second canal cannot be made for as much as five years.”
  2. Document 397.
  3. Not printed. A undated copy is filed with a covering memorandum of March 28 from Muccio to Ball. (Department of State, NSAM Files: Lot 72 D 316, NSAM 95)
  4. See Document 402.
  5. See Document 403 and footnotes 1 and 4032 thereto.
  6. Not printed.