Foreign Relations of the United States, 1969–1976, Volume XXII, Panama, 1973–1976

57. Telegram From the Embassy in Panama to the Department of State¹

Panama City, November 7, 1974, 1758Z.

6409. Subject: U.S.-PANAMA TREATY NEGOTIATIONS: Report of Chief Negotiators’ Session October 27–November 7, 1974, Contadora Island, Panama. From Bunker.

I.

Panama has accepted the package proposal I offered on the critical issues of Canal operation, Canal defense, and the exercise of jurisdiction. Accordingly it is reasonable to say that a new treaty is in sight. The parties have agreed to a schedule of negotiation designed to conclude it by next March.²

Whether it will be possible to do so depends on negotiating quickly the next two issues—compensation to Panama and the return of Zone lands to Panama, and then on arriving at a satisfactory formula for handling the final, difficult issues of the treaty’s duration and of an option for expansion of the Canal.

The Panamanians were gratified at the United States proposals which would restore their “sovereignty.” As a result they agreed to language which, in my judgment, would guarantee effective United States control of Canal operation and defense through the treaty’s lifetime.

That is not to say that they did not bargain vigorously, and in some instances I chose to accept their concepts and language in order to secure their commitment to matters of particular concern to the United States. That was also the case with respect to the issue of jurisdictional control. The bargaining process, in fact, benefits the United States. The Panamanians now cannot say that the United States imposed its will upon them.

These proposals are incorporated in three separate “Threshold Agreements”—agreements on concepts to guide the treaty drafting—which the Chief Negotiators have initialed. The texts follow.³ It is of course understood between the parties that “Threshold Agreements” are not immutable. All or parts of them are susceptible to the trade-off process which will inevitably occur toward the end of the negotiation. These agreements constitute the most that the United States can obtain thus far in this give-and-take exercise.

General Torrijos’ comment to me that the Agreements have “broken the back of the treaty problem” may be an overstatement, but I am hopeful it is not.

II.

With respect to a Status of Forces Agreement (SOFA), the Foreign Minister emphasized that Panama has “no serious objection to the substance” of the draft I presented as part of the United States offer (on the understanding it was a preliminary rather than final draft), but does have some difficulty with the “format” and some of the phrasing.⁴ As a result of the Minister’s desire to move quickly, he asked that my Deputy remain on Contadora to work with his counterpart on the document, with instructions to produce a final product ad referendum to the Chief Negotiators within a week. Bell will of course be consulting with me and interested Washington agencies during the process. Attorney-Adviser Kozak will also remain here.

III.

General Torrijos called on me several evenings ago, as a gesture of satisfaction at the United States offer. At that time I advised him of our willingness to consider appointing a distinguished Panamanian citizen as “Counsellor to the President” of the Panama Canal Company,⁵ and to create now a “Working Group” to begin planning for the first stage of Panama’s participation in Canal operation. He expressed considerable satisfaction at these earnests of the United States desire to move quickly toward a new relationship, and I learned subsequently that these unilateral actions occasioned more Panamanian flexibility in negotiating the issue of Canal defense than would otherwise have appeared. I believe that we should now implement the two actions.

IV.

Summarizing what the United States has achieved from the negotiation of the tripartite offer:

1. Panama has agreed that the United States shall have the “primary responsibility,” during the treaty’s lifetime, for both Canal operations and defense.

2. Panama has agreed to grant the basic operating rights the United States requires, including the use of areas, free and unimpeded movement, and rights to guard installations, to control the setting of tolls and the navigation of ships, and to regulate labor relations. They have also agreed to grant the United States rights in separate agreements to provide services such as schools, hospitals and public utilities.

3. Panama has agreed to language which enables the United States to act unilaterally to defend the Canal.

4. Panama has agreed that the United States may retain military activities not related to operation and defense of the Canal.

5. Panama has agreed to a joint commitment to ensure the permanent neutrality of the Canal.

6. Panama has agreed that civilian employees of the Canal Company may be afforded special privileges and immunities for a period to be specified in the treaty. The Minister indicated that these could be substantially similar to those offered to other United States employees under a SOFA.

7. Panama has receded from (a) its position that it should have sole responsibility for “local defense” of the Canal; (b) its insistence that the United States commit itself to progressive dismantling of the physical United States military presence; and (c) its insistence that the United States commit itself explicitly to removing that presence entirely upon the termination of the treaty.

V.

For its part, the United States has agreed to divest itself of the appurtenances of sovereignty which are not required for the discharge of its responsibilities for Canal operation and defense and which Panama has considered to be offensive.

There is to be no “Canal Zone,” nor “Canal Zone Government.” Panama will acquire criminal jurisdiction over its nationals and jurisdiction over private civil matters immediately the treaty enters into force. Within three years thereafter, civilian United States courts will disappear and Panama will acquire general police authority.

In addition the United States has offered Panama meaningful participation—in effect a “partnership”—in Canal operation and defense. Finally the United States has offered to renegotiate the treaty five years before its expiration date, to assure that implementation of the treaty’s provisions is being carried out in ways such that Panama will be capable of assuming responsibility for Canal operation and defense at the end of the treaty period. Both parties also understand that renegotiation would permit discussion of arrangements whereby the United States could assist Panama with some aspects of Canal defense in the post-treaty period.

Following are the texts of the three “Threshold Agreements.”⁶

1. Source: National Archives, RG 84, American Embassy, Panama, Panama Canal Treaty Negotiation Files, Lot 81F1, Box 124, Treaty Negotiations, Nov–Dec 1974. Secret; Immediate; Exdis. Drafted by Bell; approved by Bunker. Repeated Immediate to USCINCSO, Governor Parker, and Quito.
2. In telegram 1963 from Jerusalem, November 8, Kissinger wrote: “I have no problems with trying to complete the treaty by March.” (National Archives, RG 59, Ambassador Bunker’s Correspondence, Lot 78D300, Box 4, Key Documents)
3. Not printed; see footnote 6 below.
4. In a November 2 message to Parker, Koren expressed displeasure with the proposed Status of Forces Agreement (SOFA) and the threshold agreements, stating: “It was our understanding that, in return for making concessions to Panama in connection with jurisdictional matters, the United States would retain in the new treaty the essential provisions to permit it to defend and operate the canal efficiently and effectively while the treaty is in force.” He added, “particularly disturbing is the omission from the ‘threshold agreement on jurisdiction and rights of use’ of the Status of Forces Agreement (SOFA) as a basic element of United States jurisdiction,” and expressed serious concern that U.S. civilian employees were not included. (National Archives, RG 185, Negotiating and Planning Records for 1977, Box 2, Negotiation Talks aka Deputy Negotiator Talks 3–74 to 3–75) Wallace, Swett, and Walton met with Bunker on November 22 to discuss Koren’s concerns. (Washington National Records Center, RG 330, OASD Files, FRC 330–77–0054, Panama 381, July 1975)
5. In a November 4 Memorandum for the Record, Walton summarized Bunker’s October 25 meeting with the Panama Canal Company Board of Directors. (Ford Library, John O. Marsh Files, Box 27, Panama Canal Treaty Negotiations [1])
6. Not found.