5. Letter From the Special Representative for Interoceanic Canal Negotiations (Anderson) to President Nixon1

Dear Mr. President:

I last wrote you on March 20, 1972 concerning the negotiations with the Republic of Panama.2

As you know, the meeting of the United Nations Security Council has been scheduled to take place in Panama this month. We will undoubtedly be charged with maintaining a “colonial enclave” within the Republic of Panama based upon our Treaty of 1903 and the subsequent amendments.

I am sure that a great many aspects of the canal treaty negotiations will be discussed at the Security Council meeting either directly or implicitly. Under these circumstances I felt we should advise you of where we stand in the negotiations and what we may look forward to.

During 1972, we repeatedly expressed to Panama our willingness to negotiate, our flexibility, and urged that they respond to our detailed proposals of 1971. Not until December did they do so, and they then delivered an uncompromising statement of position which wiped out almost all of the progress of 1971.3 For your convenience, I am attaching a copy of their December proposals to us; also our reply to Foreign Minister Tack.4

During the year 1972, neither General Torrijos nor Minister Tack, nor the negotiators, evidenced any disposition to compromise our differences. As you will see from their statement in December, they have taken a position far beyond the guidelines within which you have instructed us to negotiate.

At various times during 1972, Ambassador George Bush and I met with Ambassador Boyd and other Latin representatives to the United Nations, endeavoring to point out to them that a meeting of the United Nations Security Council in Panama could very well be detrimental rather than helpful to the negotiating process. This position was not [Page 13] accepted by Ambassador Boyd; hence the scheduled meeting of the United Nations Security Council.

It is quite clear that our current offer is not acceptable to General Torrijos and the Panamanian Government.

The actions of Panama, including their insistence upon a meeting of the United Nations Security Council in Panama and General Torrijos’ expressed desire to negotiate directly with you or your close advisors, indicate a desire for much greater concessions than we have considered it wise to offer or for concessions which do not fall within the terms of your guidelines to the negotiators.

For your information, the essential differences between the formally stated United States and Panamanian positions at this time are as follows:


Panama wants U.S. control of the lock canal to terminate in 1994, about thirty years sooner than you have specified, and it offers no additional duration for the treaty if a sea level canal were built or a third lane of locks were added to the existing canal. It is most unlikely that Panama would accept anything near our proposal of an additional thirty-five years for third locks and forty years for a sea level canal.

The Zone and Canal Operation

Under the Panamanian formula, the Zone would disappear within five years and the only land allotted to the United States would be very limited, non-contiguous, operating and defense areas. The United States could conduct, with some undefined but limited Panamanian participation, the functions strictly necessary for operation of the lock canal. Governmental functions would not be performed by the United States. There would be significantly greater and more high level Panamanian employment in the canal operation.

Flexibility on the Canal Zone and Canal Operations

Our current offer would permit Panama gradually to assume almost all significant governmental functions in the area.

We have repeatedly suggested to Panama that we would be willing to eliminate the Zone as such, change its character, and redesignate it as the Canal Area. We have indicated our willingness to allow Panama, over a period of time, to assume almost all of the significant governmental functions in the area. We have, however, reserved certain rights, which I will outline further in this letter, which we consider important to the control and the defense of the canal throughout the duration of the treaty. These rights on the part of the United States lessen the full and complete exercise of rights of Panama within the area.

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We have a fundamental difference with Panama as to what we need for control and defense. Under their concept, we would have only a small amount of land around each of the operating installations. For the defense of the canal we would be required to have some consultations with Panamanian military forces.

Under our concept for defense, we need to maintain areas of land along the entire length of the canal and to have an absolute right of defense, including the right to restore civil order therein should this be required.

We doubt that any foreign power at the present moment is likely to go in and challenge our rights in the canal, although we should have the necessary rights and defense structure to deal with such a situation. We believe it is much more likely that if any disorders arise they will arise because of radical groups in Panama and not from external powers. We therefore consider it quite necessary that our forces have an unimpaired defense capability.

We also believe it is necessary for us to regulate shipping in the canal, which would preclude Panamanian interference with any transitting vessels.

They would like us to surrender all of the land in the present Canal Zone and they would in turn give us permission as they see fit to use certain portions of the land. On the other hand, we have taken the position that we should retain control of land use in the canal area but by agreement with Panama determine the nature of the uses to which the land is to be put and arrange such uses by a joint commission. Under our current proposal the total area of the canal area would be reduced by about twenty-five percent.

Financial Benefits

While we have not negotiated any specific numbers with the current Panamanian Government, it is obvious that they demand much more than the annual royalty based on tonnage that was offered in the 1967 draft treaty and which is currently offered.

At the present time, we pay to Panama an annual sum of approximately $2 million. If the terms of the 1967 drafts were used, the annual payments to Panama would be approximately $25 million at current traffic rates.


Panama wishes to reduce the United States military presence in the canal area, have SOUTHCOM removed, and limit United States military activities strictly to canal defense.

As I have indicated above, Panama wants full responsibility for the protection of the canal area from civil disorders and a significant [Page 15] role in the defense of the canal from outside military attack. I have already outlined to you our thoughts on this subject.


Panama does not reject the idea of a sea level canal or a third lane of locks for the existing canal. They do insist, however, that our right to build a sea level canal or third locks would lapse after five years, which is much too early for it to be of any value to us. Nor have they given us a clear idea of their terms for a new sea level canal.

In sum, it is evident that there is a large gap between our two positions. Certain additional concessions could be made without appreciably affecting control and defense of the canal or changing our chances of Congressional approval, but I am afraid they would not do much to close the gap.

To satisfy Panama at this time it appears that we would be required to move fairly close to Panama’s position.

Should we do so, this would mean the termination of the United States presence in the early part of the 21st century and would certainly deny us a sufficient period to cover the cost of expanding canal capacity, whether by third locks or by building a sea level canal.

I know, Sir, that you are aware of the problem of Congressional approval. Today it is serious even at the present level of concessions. If we were to go far enough to satisfy Panama, it might become impossible to secure Senate approval of the treaty.

General Torrijos has acknowledged to me and others that it would be most difficult to close the gap at this time. He is under the impression that if Panama continues its agitation the United States will move toward his position regarding the treaty.

He seems to be under the impression that we, as negotiators, take a much harder line than other of your advisors and has therefore, on occasions in the past, suggested meeting with others than the negotiators.

My own feeling is that he is not really prepared to discuss specific items or to negotiate with regard to specific positions, but rather with a very broad brush would propose to eliminate most of the American presence and be enabled to say to his country that he had completely abrogated the provisions of the 1903 Treaty.

It seems to me that we have the following options:

1. We can continue to hope that a general treaty will be written encompassing the changes which we believe should be made in our relationships under the Treaty of 1903 and in accordance with the guidelines which you have given us or which you elect to give us in the future.

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This general treaty would also include our rights concerning a new sealevel canal or the construction of third locks for canal expansion. Such a treaty should as well define our military rights in the canal area.

It would seem to me that there is little hope for believing that this could be accomplished in the near future unless we move very substantially from our position toward the Panamanian position.

2. We could decide that there is little immediate hope of a comprehensive treaty and therefore elect to give to Panama various rights and properties in order to maintain a more harmonious relationship and blunt the thrust of criticism of our posture in Panama. We would be giving up some of our bargaining points, but we would have many left and if we are not going to have a completely comprehensive treaty this is not a disadvantage.

We could, for example, return certain lands and installations largely unused by the United States but vital to Panama’s urban expansion.

It could be desirable to allow Panamanian commercial development and activity in certain parts of the canal area free of the United States Minimum Wage Law.

We could make changes in jurisdiction and significantly lessen the police and juridical presence of the United States in the area.

These changes would require hard work in Congress but are probably overdue in the sense that they are of small significance to us and could be very helpful in our posture in Latin America.

3. Negotiations should continue under any of the two choices above simply because I believe it is in our national interest to indicate that we do not want to be looked upon as trying to maintain what could be regarded as a “colonial enclave” in another country.

All of the problems of change in the area are complicated. It would be my recommendation, Mr. President, that after the Security Council meeting I should meet with the members of the Under Secretaries Committee to evaluate the situation and, if the Committee agrees that negotiations are not likely to bear fruit in the near future, we develop a program for legislative and other forms of action in regard to the canal operation.

Ambassador Ward and I continue to consult regularly with the Departments of State and Defense, and their representatives are already aware of our views as expressed in this letter. Moreover, I am sending a copy to Deputy Secretary Rush for the National Security Council Under Secretaries Committee.

Ambassador Ward and I also continue to consult regularly with members of the Congress on an informal basis in pursuance of your request.

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We would be most pleased to have any further guidance that you deem appropriate at this time.

I am, with great respect,

Robert B. Anderson5
  1. Source: National Archives, RG 59, Ambassador Bunker’s Correspondence, Lot 78D300, Box 1, Nixon-Anderson Correspondence. Confidential.
  2. Anderson’s March 20, 1972, letter was forwarded to Nixon under a March 28 covering memorandum from Haig. (National Archives, Nixon Presidential Materials, NSC Files, Box 791, Country Files, Latin America, Panama, Vol. 3, January 1972–August 1974)
  3. See footnote 2, Document 1.
  4. Neither is attached. Regarding the December negotiations, see footnote 4, Document 2. Anderson’s reply to the December proposals is dated February 23; see footnote 2, Document 10.
  5. Anderson signed “Bob” above this typed signature.