Foreign Relations of the United States, 1964–1968, Volume XXXI, South and Central America; Mexico

431. Memorandum From Secretary of State Rusk to President Johnson¹

Washington, July 25, 1966.

SUBJECT

• Panama

You are scheduled to meet on Tuesday, July 26, 1966 at 6:00 p.m. with the principal officials concerned to discuss Panama.²

Background

The IRG/ARA met on July 21, 1966 to review United States policy toward Panama in the light of the status of the treaty negotiations and the current political situation in Panama.³ The Special National Intelligence Estimate (Enclosure 5) was also considered. Specific subjects discussed were: (1) prospects for the successful conclusion of new treaties with Panama (Enclosure 1), (2) the possible need for a contingency plan for use if the treaty negotiations reach an impasse, (3) short-range actions in the economic and social field which might be taken by the United States to improve the atmosphere in Panama for the treaty negotiations (Enclosure 2), (4) actions which might be taken to assist Panama to develop and carry out a program of long-range economic and social development (Enclosure 3), and (5) Panama’s request for expanded United States direct assistance to its National Guard to improve its capability to maintain internal order (Enclosure 4).⁴

IRG/ARA Conclusions

The following conclusions were reached by the IRG/ARA:

1. That we continue our present policy of endeavoring to negotiate expeditiously new canal treaties with the Robles Government.

2. That a special Inter-Departmental Working Group be formed to develop by September 6, 1966 a contingency plan for use should treaty negotiations reach an impasse within the next six months.

3. That we press forward with the GOP to develop and carry out an urban impact program.

4. That we impress upon the GOP the urgent need to draw up a long-term economic development plan to fit into the anticipated new treaty arrangements; that we seek the establishment by Panama of a Development Authority for this purpose; and that we offer our assistance and cooperation in this undertaking.

5. That we meet the GOP’s request for grant aid to expand the National Guard.

Issues for Decision

1. Urban Impact Program

A decision is needed regarding the priority this program should receive, considering the FY 1967 AID funds available and the competing demands of other areas.

2. Long-Range Economic Development Plan

Assuming that the GOP will be receptive to United States proposals for formulating a long-range economic development plan and establishing a Development Authority, a decision is needed on whether specific assurances can be given to the GOP that expanded financial and technical resources will be made available to the Development Authority to implement the plan.

3. Darien Gap

The proposal to complete the Darien portion of the Pan American Highway which you mentioned in your April 15, 1966 speech in Mexico has relevance to Panama’s long-range development. A decision on this matter which is being requested separately would assist in formulating a long-range development plan for Panama.

4. Assistance to National Guard

The IRG/ARA has agreed that in spite of the political risks involved the United States should finance the new 500 man addition to the Guard and the salaries of the 500 men added in 1965. This assistance would be made through a general budgetary support grant which would be made in such a way as to involve the least possible political risk. Your approval is requested of the course of action agreed upon by the IRG/ARA.

Dean Rusk

1. Source: National Archives and Records Administration, RG 59, Central Files 1964–66, POL PAN–US. Secret. Drafted by Clark and cleared by Gordon.
2. The meeting was held in the Cabinet Room at the White House. Johnson participated in the meeting between 6:43 and 7:35 p.m. (Johnson Library, President’s Daily Diary)
3. A summary record of the IRG/ARA meeting is in the National Archives and Records Administration, RG 59, ARA/IG Files: Lot 70 D 122, IRG/ARA Action Memos, 1968.
4. Enclosure 1, Status of Treaty Negotiations; enclosure 2, Urban Impact and Development Loan Program for Panama, FY 1967; enclosure 3, New Development Authority for Panama; and enclosure 4, Grant Aid for National Guard, are attached but not printed. Enclosure 5, SNIE 84–66, is Document 430.