114. Memorandum From Ambassador at Large Bunker to the Assistant Secretary of State for Inter-American Affairs (Rogers)1

U.S.-PANAMA CANAL TREATY NEGOTIATIONS:

February 1976 Negotiating Round

We returned to Washington Sunday night from 14 days of talks on Contadora. Our negotiating purposes this time were to consolidate the progress from the December round, and to probe Panama’s position on various issues so as to narrow the gaps between us.

The round was fruitful. But we are still some time away from being able to report to the President that, with certain specific changes in guidance, the conceptual basis for a treaty is at hand.

During the round I met with Tack five times—twice formally with our full teams in attendance and three times privately. At his request, however, all but two of the ten formal meetings were without the Chief Negotiators in attendance. (Tack, we were told privately, would be too impatient to address the remaining issues except in broad conceptual terms. With him in attendance the Panamanian team would be too inhibited to address the issues in detail.) I agreed to the procedure but stressed that I did not wish to establish a precedent. Minister Bell presided for our side, Gonzalez-Revilla for Panama’s.

The discussions were freer ranging than ever before. Both sides conveyed to each other their concerns, needs and realities. Early in the talks we explained that we were past the stage where we could make major breakthroughs using present guidelines and positions. We explored, without commitment, possible solutions on a “what if” and [Page 305]ad referendum basis. We stressed that we were not making proposals, but merely attempting to find formulae which could be considered after we returned to Washington.

Principal topics of discussion concerned the issues of lands and waters, duration, the Canal entity and civilian employees.

On the lands and waters issue, we made satisfactory progress both at the Negotiator and working group levels. Both sides have agreed to approach the lands and waters issue as a process of reduction, over time, of the area comprising the Canal Zone, but have not agreed yet on a paper describing this process. The Panamanians substantially changed their position by accepting the idea of using a “Spanish bases” type formula to place military family housing and the Empire and Sherman training areas under the SOFA. After Panama put its revised position on a large scale map, Tom Dolvin committed us to responding at the next session with a revised map of the US position. Hopefully, this will narrow the gap further.

We probed hardest on the duration issue. Panama “definitively rejected” our “20–40” formula, and proposed, instead, that:

—in 1990 it would assume control of the operation of the Canal;

—in 1999 the presence of US military forces in Panama would end; and

—in 2005, the US responsibility for the protection and defense of the Canal would end.

We countered with a series of “what if” questions concerning a modified “20–40” formula that would provide for:

—the elimination of combat forces when we transfer responsibility for the Canal to Panama; and

—the retention of US defense rights plus a manned US logistics base for an additional 20 years.

At our final meeting the Panamanians pressed us to convert our duration formula into precise dates, but we declined. They indicated that their previous offer exceeded their guidance and that they could not agree to any formula which involved any type of US presence after the year 2000. However, when our team further pursued the matter of a logistics base, the Panamanians declined to rule out future discussion along the lines of the US suggestion.

Our talks on the nature of the new Canal Entity were useful, if inconclusive. While avoiding examination of the functions that the Entity should have, we explored the possibility of jointly creating it by treaty in a manner that would allow direct Congressional control. While a solution has eluded us so far, several of the Panamanians, including two of their most influential members, made efforts to find a formula that would satisfy us and ease their political problem. [Page 306]Throughout the discussions we impressed upon the Panamanians the high importance that the US Congress will place upon the nature of the Canal Entity, and the unlikelihood that the Congress would accept any dimunition of its powers concerning the Entity.

A fourth issue which drew attention concerned civilian employees. Early in the round the Panamanians proposed that they accept our position on arbitration if we, in turn, would accept their position on Canal employees—that is, respect for employee labor gains, but without SOFA benefits (e.g., immunity for official duty acts, commissary privileges, etc.) Our team rejected this proposal. We tried, however, to explore the issue in detail, and presented orally a list of benefits drawn from those provided in the SOFA. But Panama refused to enter into a detailed discussion.

Turning to unilateral actions, President Lakas raised with me and Morey—and subsequently Tack raised—the desirability of the US releasing to Panama, by executive agreement and before the treaty enters into effect, selected Canal Zone sites for Panamanian commercial development. They want:

—the Navy pipeline;

—Las Bocas drydock;

—a part of Balboa port for loading/unloading vessels

—portions of Albrook “recently vacated and . . . at present unused;” and

—the Coco Solo port/wharf area.

Since I had prior Defense clearance on the pipeline I indicated that we were prepared to discuss its use by Panama, and proposed that the action be referred to the recently authorized Joint Committee on Commercial Activities. We are moving carefully, however, on the other items in the Panamanian proposal. Both sides have felt constraints which in the past have prevented agreement on similar proposals.

As for next steps, we will be focussing with Defense on the key issues of duration, neutrality, the functions of the Entity and lands and waters. We ended our talks with the Panamanians on Sunday without agreeing on a definite date for a new round but with the understanding that both sides needed to assess the results of this round and prepare carefully for the next. That will take some weeks of effort.

I will be sending a shorter summary to the Secretary and shall provide you a copy.2

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The minutes of the negotiating sessions are attached. You may want to scan some of them to obtain a sensation of how they went. 3

Ellsworth Bunker 4
  1. Source: National Archives, RG 59, Inter-American Country Files, Lot 92D281, Box 2, Panama Canal Neg Corres, Jan–July 1976. Secret. Drafted on February 26 by Wyrough; cleared by Bell, Dolvin, and Kozak.
  2. In a March 1 briefing memorandum to Kissinger, Bunker provided a summary of the negotiations. (Ibid.)
  3. Not attached, but copies are in the National Archives, RG 84, Lot 81F1, American Embassy, Panama, Panama Canal Treaty Negotiation Files, Box 126, Binders February 1976.
  4. Printed from a copy that indicates Bunker signed the original.