44. Memorandum From the Panama Negotiations Staff Support Group to the
Deputy U.S. Negotiator (Bell)1
Washington, June 6, 1974.
Panama Negotiations: Subject Matter of First Substantive
Discussions
In accordance with your request, we have considered the relative merits of
beginning substantive talks with (a) the issue of jurisdiction, (b)
questions concerning jurisdiction and United States “use” rights combined,
or (c) the matter of Panamanian participation in the administration of the
Canal by the United States.
[Page 123]
We have concluded that participation should be the first topic for
substantive discussion. The following factors are fundamental of this
conclusion:
1. The primary objective in selecting a topic for the first substantive talks
on major treaty issues is to discuss a subject area which will be mutually
productive and conducive to enhancement of negotiations.
2. The first round of substantive talks will be exploratory in nature, and
will therefore concern basic concepts rather than specific formulae.
3. The possible U.S. positions concerning Panamanian participation reflected
in the attached paper will be approved by the U.S. negotiators after
consultation with the interested agencies and bureaus within the U.S.
Government.2
4. The established style of negotiation does not require that all major
issues identified under a particular principle be addressed together, but
rather will permit issues to be addressed in the order most convenient to
the negotiators. In this regard, it is assumed that the negotiators will not
necessarily exhaust a particular issue (i.e., reach a “threshold agreement”)
before moving to another, but may discuss a number of issues at the
conceptual level before entering into more detailed discussion of any one of
them.
The advantages and disadvantages of the options presented, as we view them,
are as follows:
Option 1: The question of all
aspects relative to jurisdiction.
Advantages
1. Might be possible to separate out for independent discussion any one of
the five basic categories of jurisdiction involved (i.e., criminal, civil,
police, private enterprise and legal rights of US agencies), thus narrowing
the scope of discussion to a manageable level.
2. Might permit the U.S. to demonstrate an accommodating attitude at the
outset of substantive talks on an issue of overriding importance to Panama
and might encourage Panama to reciprocate on other issues of importance to
the U.S.
3. Would constitute a positive response to Panama’s initial statement of
preference for this as the first substantive issue to be addressed.
Disadvantages
1. Would require the expenditure of significant U.S. concessions, without
providing us the opportunity to seek substantive Panamanian concessions in
return.
[Page 124]
2. Would risk the possibility of reaching an impasse at the outset. Might be
faced with previous Panamanian hardline, inflexible positions and therefore
the choice of leaving the issue unresolved in principle (and hanging heavily
over discussions of other issues) or of making unacceptable concessions.
3. Is a very complex issue and has not been recently reviewed. These issues
could be discussed in only the most general and vague way.
4. Even if we attempt to separate out basic categories, Panama may force us
into a discussion of other issues such as lands and facilities.
Option 2: Same as Option 1, but
expand scope of discussion to include the question of the “use” rights
which Panama will confer upon the United States to enable it to carry
out the functions provided for in Principle 6.
Advantages
1. Would permit a balanced discussion of possible trade-offs between matters
of importance to each party.
2. Fairly positive response to Panama’s proposal.
Disadvantages
1. Probably impossible to prepare for in short time frame available (i.e.,
with respect to some complex categories of U.S. rights, notably defense, the
process of identifying our objectives within the U.S. Government may not be
completed for some time. Thus, we would have to limit the discussion of U.S.
rights with the attendant problem of reducing the range of Panamanian
concessions which we could seek in return for U.S. concessions). In any
event, would be a much more complex subject for discussion than either
Option 1 or 3.
2. Possibility of reaching impasse on jurisdiction (see Disadvantages 2–4
under Option 1) with additional disadvantage of drawing U.S. rights into
such a situation.
Option 3: The questions of what form
the administration of the Canal by the United States will take and of
Panama’s participation in it. (Issues 1–4 under Principle 6.)
Advantages
1. Would exploit recent Panamanian expressions of willingness to discuss this
option.
2. Would permit the U.S. to retain the negotiating initiative.
3. Would probably not require such extensive U.S. accommodations as would the
issue of jurisdiction.
4. Absence of previous fixed Panamanian positions on issue might prompt a
flexible approach by Panama.
[Page 125]
5. Could pave the way for a more accommodating Panamanian approach to the
issue of U.S. rights based upon understandings reached concerning the form
and degree of Panamanian participation in the administration of the
Canal.
6. Would serve to draw out Panamanian views on major Canal administration and
participation issues which are essential to developing a comprehensive U.S.
position.
Disadvantages
1. Could risk an impasse due to the lack of information about Panama’s views
on this issue.
2. Might pose difficulty for Panama in discussing this issue in depth.
Attachment3
United States Administration of the Canal and Panamanian
Participation
I. Issues 1 through 4 Under
Principle VI
Issue 1
The question of what form the administration of the Canal by the United
States will take.
Issue 2
The question of how Panama shall begin to participate in the
administration of the Canal.
Issue 3
The question of whether there should be established regular procedures
for consultation between the two parties, with the objective of
implementing the provisions of the treaty relating to Panama’s
participation in the administration of the Canal.
Issue 4
The question of applying the concept of growth over time to Panama’s
participation in the administration of the Canal with the objective of
its assuming total responsibility for the operation of the Canal upon
the termination of the treaty.
[Page 126]
Current Presidential Guidance
The U.S. negotiators are to seek “an arrangement whereby the U.S. retains
control of canal operations with Panamanian participation in the canal
organization.”
Previous U.S. Positions
A. 1971 Treaty Draft
The 1971 treaty draft permitted the United States to establish a U.S.
Government instrumentality (probably in corporate form) to operate and
maintain the canal and auxiliary works. There was to be a Panamanian
liaison officer to the U.S. instrumentality and there were general
consultation provisions.
B. 1967 Treaty Draft
The 1967 treaty drafts established an “international judicial entity”,
the “joint administration”, which was to operate the canal and
administer the Canal Area. It was to be managed by a board composed of
five members from the United States and four from Panama. It had general
corporate powers and the extraordinary power to adopt a code governing
civil and criminal matters pertaining to the canal.
II. Nature of the
Problem
A. The problem is to guarantee effective U.S. control over canal
operations while incorporating Panamanians into the administration of
the canal.
B. There are two levels of the problem we must consider. First is the
degree of control which the United States must maintain in the overall
policy of canal operations. Second is the extent of Panamanian
participation in the day to day management and operation of the canal.
In pursuing current guidance to retain US control, we are not certain
what Panama desires when it says that it wishes to participate in canal
administration. However it is reasonable that Panama will wish to
participate at both levels. In the past Panama has been primarily
concerned with having the maximum number of Panamanians employed at all
levels of the canal administration. From discussions between the Deputy
Negotiators it is no longer clear that such a quantitative goal remains
paramount. Rather, Panama now appears primarily interested in
“meaningful” participation involving selected functions and
progressively more responsible positions without disturbing effective US
control agreed to in the Statement of Principles.
III. Form of the Canal
Administration
The form of the canal administration is largely a technical matter and is
perhaps better considered after we know Panama’s concerns. [Page 127] Nevertheless if Panama desires
to discuss this matter, we are prepared to begin discussions noting that
there are several possible forms which could accomplish United States’
purposes. Each of these forms is sufficiently flexible to permit
Panamanian participation yet preserving essential control in the United
States. They are:
(a) continuation of present Panama Canal Company
(b) creation of new United States Government corporation
(c) transfer of canal to a civil works function of the United States Army
Corps of Engineers
(d) creation of joint United States-Panamanian government corporation,
with control resting in United States.
The primary purpose of this entity would be to operate and maintain the
canal. However in creating the entity we should be careful to provide in
some way for administering those activities beyond mere operation and
maintenance of the canal (e.g. fire protection, housing, legal systems,
etc.), whether by the canal entity or a separate United States agency.
In this regard, prior Panamanian agreement is needed to confer such
activities on the United States.
IV. Panamanian
Participation
At the policy level, the GOP might seek representation in the entity
which will operate and maintain the canal. The U.S. might agree to have
Panamanians appointed to the Board of Directors, while maintaining a US
majority which ensures US control of the canal’s operation. The U.S.
might also consider other means to allow Panamanian participation in the
canal entity—such as allowing Panama to become a minority
shareholder.
Secondly, we presume Panama will seek to have more of its citizens
employed in all functions and at all levels of canal administration.
Agreement on this form of participation requires considerable Panamanian
understanding of the complexities and restraints which are inherent in
this matter and which involve U.S. citizen employees, their civil
service status and labor unions. For our part, it may be necessary to
give preference to Panamanians for certain jobs. It will probably be
necessary to modify previous practices regarding security positions. In
this regard one feasible and attractive response might be to use the GOP
state employment agency as the primary labor source. This difficult
issue may need to be referred to a joint US-Panamanian committee.
V. Consultations and
Concept of Growing Panamanian Participation over Time
These two issues are very closely related. The mutual goal of the new
concept of growing Panamanian participation is to insure that Panama is
capable of assuming complete canal operation upon termina[Page 128]tion of the new treaty. In keeping with a
concept of responsible partnership both parties should be able to reach
agreement that the need for growing Panamanian participation is a matter
of good management.
Although we do not believe it is practical or desirable to reach
agreement at this point on fixed quotas and timetables, we are prepared
to accept the concept of gradually increasing participation. Perhaps the
best approach is to schedule periodic consultations to insure that
progress is being made toward the goal of full and meaningful
participation by Panamanian nationals. Guided by a clear statement of
intent, these consultations could also consider questions of training
programs, employment practices, promotion and general personnel
policies. There are many forms which the consultations could take. They
could be the responsibility of the legal entity which operates the canal
or carried out separately through any number of possible formats.
Through consultation at the policy level, it might be useful and
desirable to create some type of personnel system at the administrative
level which could contribute to the smooth and gradual integration of
qualified Panamanian nationals into the process of operating the
canal.
