426. Memorandum From Secretary of State Rusk to President Johnson 1

SUBJECT

  • Panama—Canal Negotiations

Secretary McNamara, Ambassador Anderson and I are scheduled to meet with you at twelve noon Wednesday June 23 to discuss the status of Canal negotiations with Panama.2 The principal subject for discussion and decision will be a proposed new arrangement for joint United States-Panamanian operation of the present Canal.

Discussion:

Agreement has now been reached by the United States and Panamanian Special Representatives to negotiate, separately but concurrently, (1) base rights and status of forces agreements, (2) a new treaty to replace the 1903 Treaty and (3) a sea level canal treaty and to submit [Page 904]them as a package to the legislative authorities of both countries. I am informed that the Panamanian negotiators accept willingly that the United States should have responsibility for protection of the Canal and the ultimate say in the operation and maintenance of the Canal; they have, however, taken a firm position that Panama should share in the activities of the Canal Zone Government as well as the Panama Canal Company. A decision is therefore required whether the United States can agree to joint management and, if so, what form such an arrangement should take.

State and Army have studied this question and believe that a formula for joint management which will protect the United States objective of retaining ultimate, unimpaired control can be devised. There is enclosed a paper entitled “Possible Elements of a Joint Panama Canal Authority” drawn up by State, Army and Ambassador John N. Irwin II, which sets forth the outlines of such a formula.3 This paper is limited to the concept for a joint authority. It is also contemplated that the treaty will contain a separate provision empowering the President of the United States to take such action as he deems necessary to assure continued effective operation of the Canal under adverse conditions.

Consideration has been given to providing for participation by Panama on the Board of Directors of the present Panama Canal Company. This course, which also accepts the concept of joint administration, would be difficult to negotiate, would probably never be entirely acceptable to Panama, and would not offer the political advantages of a clean break with the past and a fresh new start with Panama. I believe an entirely new approach might also be easier to take to Congress.

Recommendation:

That decision in this matter be deferred pending full discussion with Ambassador Anderson on Wednesday.

Dean Rusk
  1. Source: Johnson Library, National Security File, Country File, Panama, Inter-Oceanic/Panama Canal Negotiations, Vol. I. Confidential.
  2. According to the President’s Daily Diary, the meeting with the President was held between 12:30 and 1 p.m. on June 23. (Johnson Library) William Jordan briefly covers this meeting in Panama Odyssey. (p. 109)
  3. Attached but not printed.