418. Telegram From the Embassy in Panama to the Department of State 1

251. Subject: Current Assessment of US–Panama Relations.

With advent Robles government we find our position here greatly improved in several respects:

1.
We are now dealing with a more responsible Panamanian Government which is determined tackle number Panama's chronic problems with courage and vigor. For example, it is already moving forward with realistic plan for development of country's interior, something US has long advocated. It has pledged itself to thorough tax and budgetary reform in accordance with Alliance for Progress precepts and Robles has so committed himself to US in detail and in writing. More importantly, he has already undertaken some measures along these lines with sufficient signs of meaning business that he has raised real crisis of anguish from traditional vested interests, including some of his own political supporters.
2.
We can communicate sensibly and candidly with Robles government.
3.
Robles has pledged himself to firm stand against Communist agitation, in welcome contrast to his predecessor, and his past conduct as Minister of Government and Justice gives credence to his present statements of intent.
4.
Both publicly and privately Robles has indicated willingness negotiate sea-level canal treaty with US and his FonMin has indicated willingness negotiate military base rights.

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Thus on whole we have in Robles and his government something far better, from point of view US interests, than might have been hoped for under circumstances—stagnant state of Panamanian economy; four years of drifting and corruption under Chiari; acute, universal, and long-standing Panamanian dissatisfaction with arrangements governing Panama Canal; and still fresh memory of events of January 1964 which saw our bilateral relations plummet to their lowest point in history and caused US to be charged with aggression before UN and OAS.

All this looks good and I believe there is much on plus side of ledger, much more perhaps than we had any right to expect. I am persuaded, however, that these circumstances do no more than provide US with brief breathing spell and do not in any way eliminate severe problems which face us as result profound and continuing Panamanian dissatisfaction with existing treaty arrangements governing present canal. They provide us time to find solutions to our present problems, although they perhaps provide us time to find solutions.

We cannot realistically expect Robles to be satisfied with mere talk about future canal or even with negotiation of liberal arrangements providing for new canal. Pressures are increasing for changes, here and now, with regard to present canal. Robles will not be able to ignore them. Neither will we.

I share Governor Fleming's great concern, as reflected in minutes of Panama Review Committee meetings and in his own reporting to Washington, over adverse image which Panama Canal (and therefore US) enjoys here. I am constrained to add, however, that I do not believe it can be improved without actual changes in practice, most probably including changes in law and treaty structure, we are not going to solve our problems by better or more accurate or more extensive public relations measures.

I submit following propositions as guides to policy formulation for next few weeks and months:

1.

Whatever we propose do about sea-level canal, we must prepare ourselves for substantial early adjustments in present arrangements. In my judgment these should include (a) increased annuity (b) greater direct Panamanian participation in commercial activities in Canal Zone (c) agreement to further symbols of Panamanian sovereignty such as issue of Panamanian stamps in Canal Zone and requirements for merchant vessels to fly Panamanian flag as well as US flag during transit of canal and (d) some formula which would put terminus (10 years? 15 years? Opening of sea-level canal?) on our present perpetual rights in Canal Zone.

Elusive problem of sovereignty, which is what sticks most in Panamanian craw, would not be eliminated by any of above and might, in [Page 881]long run, be increased. I think we would however alleviate problem for short run which is presumably all we need.

2.
Panama remains small, immature, backward country trying to deal with world's most powerful nation. Fact that Panamanians have not yet, so far as I am aware, produced coherent bill of particulars in forum of special ambassadors will not relieve US of burden of producing sensible proposal. We are not thereby relieved of our basic problem of engendering healthful political atmosphere of partnership, in absence of which we will have only unpersuasive legalisms and physical force to protect our vital interests.
3.
Next January 9 is date of crucial importance. If Robles is unable by then to point to substantial concrete progress in negotiations with US he will be faced with severe internal pressures which will put great strain on his ability to control situation, could result in fall of his government, and could lead to assumption of power by extremist regime of either right or left and in any event will sorely tempt him deflect these internal pressures onto US. Neither alternative appears helpful to say the least. (One possible device to relieve situation might be state visit by Robles to Washington in, say, December, but here again there would have to be more than eyewash.)

I recognize there are two fundamental questions which my argument raises and which deserve answer. First is why should we give away quids without, apparently, exacting equivalent quos? Answer lies, I believe, in fact that only real quo of lasting value to us here is responsible stable Panamanian Government and society which can and will work with US in enduring partnership solidly based in political reality. Robles has it in his power to give us such quo provided we protect him by actions which make clear that we are sympathetic to Panamanian aspirations and are prepared to go long way to meet them, in short that to cooperate with US is compatible with Panamanian pride. I am convinced that if we are forthcoming Panama will also be forthcoming, at least to far greater degree than if, as in the past, we hold back and force Panama to wring reluctant conessions from us in atmosphere of acrimonious and niggardly bargaining.

Secondly, why should we give anything away until we have nailed down all future guarantees we need? Answer is that we do not have luxury of time and Panama simply will not play this game anyway. One sure way to prevent our getting arrangements we want for future canal is totally to resist Panamanian efforts to modernize present arrangements. We should not underestimate Panama's capacity to cut off its nose to spite our face.

Vaughn
  1. Source: National Archives and Records Administration, RG 59, Central Files 1964–66, POL PAN–US. Secret. Repeated to Governor of the Canal Zone, USCINCSO, and CIA.