Foreign Relations of the United States, 1961–1963, Volume XII, American Republics

407. Memorandum of Conversation¹

Panama City, October 12, 1962.

PARTICIPANTS

• President Chiari, Under Secretary Ball,² Foreign Minister Solís, Ambassador Farland

SUBJECT

• U.S.-Panamanian Relations

Under Secretary Ball opened the conversation by referring to certain difficulties being encountered in the discussions between appointed representatives of the two Governments.³ He said that he understood that the heart of these difficulties lay in insistence by the GOP representatives that the fundamental difficulties between Panama and the United States should be resolved immediately by what amounted to renegotiation of the 1903 Treaty. President Kennedy, the Under Secretary declared, had made very clear the U.S. position on this score during the June meeting in Washington; namely, that the United States could not undertake at this time to renegotiate the basic Treaty until studies were completed which would permit the United States to reach decisions regarding the possible need for a new canal. These studies and surveys might require as much as five years to complete. Furthermore, internal problems with respect to the U.S. Congress made it impossible at this time to successfully put through a new treaty in the U.S. Senate.

President Chiari responded that he understood this fully but had not realized the studies and surveys would require this long a period of time. He said he understood completely, however, that the United States must have all the facts at hand before a decision of such transcendental importance to the United States as well as Panama could be made.

President Chiari then went on to express his keen disappointment over the lack of progress and the absence of results to date of the talks between U.S. and GOP representatives. It was absolutely essential, he said, that progress be made on specific matters within the framework of the agreement reached in Washington, as set forth in the joint communique. He had the impression, he said, that the decisions which were being taken in Washington on these matters did not reflect the views of President Kennedy and others at the highest levels of the United States Government who had participated in the June meeting. The Foreign Minister interjected at this point that U.S.-Panamanian relations historically reflected that when discussions were conducted at the highest level between both Governments satisfactory conclusions had always been reached. Conversely, however, when matters were referred to a lower echelon in the United States Government there ensued a lack of progress, further misunderstandings and endless delays. The Foreign Minister also said that the GOP failed to see why matters discussed by the representatives of both Governments could not be mentioned publicly as the talks progressed since, in accordance with the agreement reached in Washington, there was no limitation on the range of subjects which could be brought up by either party.

There then ensued a general discussion of some of the more important matters presently under discussion by the representatives of the two Governments; namely, (1) raising Panamanian flags in the Canal Zone; (2) recognition of Panamanian exequaturs in the Canal Zone; (3) use of Panamanian stamps; and, (4) increased wages and more employment opportunities for Panamanians in the Zone.

Regarding raising Panamanian flags in the Canal Zone, (1) aforesaid, the Under Secretary said he was under the impression that a satisfactory agreement had already been reached on flags. President Chiari replied that there remained the matter of Panamanian flags on military bases and on ships transiting the Canal. He did not pursue the latter point but did go on with respect to the former by expressing his view that the United States could at least agree to flying the Panamanian flag outside the entrance of military bases without in any way affecting adversely its rights or jurisdiction over the bases. President Chiari remarked that all the issues between Panama and the United States had been well known to the United States for years as a result of prior treaty negotiations and he could not understand why it was still necessary for the United States to commit them all to such lengthy study and consideration at this point. It led him to wonder what the United States Government has been doing while it has been studying these matters for well over a year now.

In the matter of exequaturs, (2) aforesaid, Foreign Minister Solís stated that the GOP saw no reason for the USG’s insistence that the word “formal” precede the word “exequatur” in the proposed draft communiqué. He characterized such insistence as unnecessary preoccupation with words and as being too legalistic. He also said that the proposed new language on exequaturs which Ambassador Farland had shown him briefly at the October 10 meeting of the representatives did not meet GOP requirements.

Regarding use of Panamanian stamps and Canal, Zone wages, (3) and (4) aforesaid, Ambassador Farland remarked that the U.S. had a proposal to make on stamps which he hoped the GOP would find acceptable, and gave a brief account of what had already been accomplished by the United States Government in the wage and labor field and commented on some of the improvements under consideration.

President Chiari then moved on to another subject, namely, Panama’s need for additional direct revenue from the Canal operation. The President said that under the Alliance for Progress program Panama was engaging in what were, for Panama, extensive projects of a social nature, such as school construction, establishment of new hospitals and public health centers, all of which placed an increasingly heavy financial burden on Panama to operate and maintain. In addition, the needs and demands of the people for services of this kind were increasing, requiring the commitment of further funds for these unproductive although worthwhile projects. He declared that Panama had increased taxes and had improved greatly its tax collections. Further increases in the tax system were under consideration and would probably be proposed in this session of the National Assembly. However, Panama was rapidly reaching a point where further tax increase would be out of the question and its resources were being strained to the breaking point. In view of this and in view, furthermore, that Panama considered the present payment for Canal rights as unjust and antiquated, the GOP felt that it must insist upon a more just and fair compensation from the United States for the Canal rights. President Chiari said that he hoped the Under Secretary would understand Panama’s problem and that the United States Government would be sympathetic to it.

1. Source: Department of State, Central Files, 611.19/10-1262. Confidential. Drafted by Farland.
2. Ball visited Panama to make an address dedicating a bridge across the Panama Canal and to attend a meeting of the Board of Directors of the Panama Canal Company.
3. The discussions between Ambassador Farland and Governor Fleming and Foreign Minister Solis and former Foreign Minister Fabrega began on July 13. Documentation concerning them is in Department of State, Central File 611.19.