437. Memorandum From the President’s Special Assistant (Rostow) to President Johnson1

Mr. President:

Bob Anderson called me this afternoon to tell me the following:

  • —The negotiation is now at the wire.2 He hopes to wind it up at a meeting starting at 10:00 a.m. tomorrow with Panamanian negotiators.
  • —On the gut issue of financing, they will keep the 90¢ toll, which leaves 25¢ left over above costs. He would first propose a division of 17¢ for Panama; 8¢ for the U.S. His fallback is 20¢ for Panama, 5¢ for the U.S. This means that Panamanians might fetch up with between $15 and $20 million a year, depending on traffic. This compares with the $80 million a year they sought.
  • —We would permit Panamanian jurisdiction over certain criminal cases in the Zone for personnel not associated with the Canal; tourists, etc.
  • —The lock canal treaty would terminate in the year 2000 except if we were actually in the process of building a new sea-level canal at that time, in which case the treaty would run on to the year 2010.
  • —The treaty governing the sea-level canal would run 60 years from the time it became operational.
  • —Compensation to be paid Panama under a sea-level canal treaty would be decided at the time of the financing and in the light of the financing method. (Bob Anderson cleared this position, which varied from his initial instructions, with Bob McNamara and Covey Oliver.)
  • —We will give up to the Panamanians certain territories which we have agreed with the JCS; but two antenna fields would have to be moved at some future time, involving an estimated cost of $6 million.
  • —We would also surrender an area in which we have military quarters, which are desirable but not necessary to the defense arrangements.
  • —We would surrender some piers for which they would be able to earn some money.
  • —We would surrender one area containing houses now occupied by Panamanians, on the stipulation that the occupants would keep their present houses.
  • —The Panamanians will accept without change a standard status forces agreement, approved by the JCS.

As noted, the only variation from instructions which have been cleared with you and on the Hill, is the question of a compensation formula for the sea-level canal. Although Bob McNamara gave his assent, there appears to be some concern among the military that ambiguity about the compensation formula will weaken our option on the sea-level canal and might leave us at the turn of the century without military base rights.3 I am now checking into the seriousness of this point. You may wish to talk directly tonight with Bob Anderson about it.

Finally, Bob Anderson notes that we have come to a strategic psychological moment. He thinks he can clinch the deal tomorrow; and that the deal is viable on the Hill. He cannot vouch for its viability in Panamanian politics.

If he gets your go ahead, they will make a firm decision tomorrow morning that they have a treaty and then take a few days getting the details on paper.

I recommend that you talk to Bob Anderson this evening, directly.4

  1. Source: Johnson Library, National Security File, Country File, Panama, Vol. IX, Memoranda and Miscellaneous. No classification marking. There is an indication on the memorandum that Johnson saw it.
  2. On May 31 Rusk sent the President a memorandum on the status of the negotiations. Rostow transmitted it to the President with the observation: “The remaining hurdle is the price tag—but that’s not exactly trivial!” (Both ibid.)
  3. A June 10 memorandum from Sayre to Rusk reported on this problem: “Anderson talked twice to General Wheeler and with Secretary Resor on the JCS and Army problems on the sea level canal compensation provisions. Wheeler’s preoccupations relate to the period after the lock canal terminates. They are (1) continued neutrality of the canal, (2) access and transit for U.S. warships, etc., and (3) defense of the canal.” (National Archives and Records Administration, RG 59, ARA Files: Lot File 72 D 33, Entry 5396, Panama)
  4. The President’s Daily Diary indicates that Johnson commented on Rostow’s recommendation that the President speak to Anderson: “I’ll have to do that tonight—which I’ll do.” There is no indication in the Daily Diary that the President spoke to Anderson, nor has any other record of such a conversation been found. (Johnson Library)