523. Report Prepared by the Governor of New York (Rockefeller), Albany, August 30, 1969.1 2

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[Omitted here are pages 1–36 of the Report.]

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PANAMA

I met briefly with the members of the Junta, but no substantive discussion was undertaken by them. It was quite clear that they were merely figureheads, and that the Minister of Foreign Relations would deal with the basic issues on behalf of the government.

My first meeting was with Nander Pitty, the Minister of Foreign Relations, and with two highly efficient, young, United States-trained, national planners.

(Our impression was that Panama had the ablest and most knowledgeable, most efficient and dedicated young Cabinet of any country we had visited thus far. We also received a clear impression that the United States sorely needs more politically skillful representatives in Panama -- as this report will develop.)

The following points were made by the Minister:

I. THE PANAMA CANAL

The 1903 revolution by which Panama broke away from Colombia with the assistance of the United States and immediately signed a treaty for the Canal, even before any government had been elected -- ceding the land for the Panama Canal to the United States virtually [Page 3] without compensation -- has been the source of dissatisfaction and frustration ever since among the Panamanian people.

The disproportionate size and power of the United States, as evidenced in Panama, has added to this dissatisfaction.

Panama and Panamanians want greater participation in the Canal as a matter of personal pride and national dignity.

The present Canal arrangement does not lend itself to an appropriate relationship of dignity and mutuality of interest between two sovereign nations. Panama otherwise has a great friendship for the United States and close personal ties.

The 1964 agreement to negotiate without prejudice was a major step forward. Draft papers are now being reviewed and it is the hope of the Minister and his government that final agreement will not be delayed too long.

Panama wants to speed up the conclusion of the negotiations and have a new agreement ratified by a Congress as soon as one is elected.

The Panamanian leaders feel it is essential for the relations between the two countries that there be such visible evidence of action in this direction -- and that major changes are not necessary to come to a satisfactory conclusion.

There are three principal points in relation to this new treaty which are of importance to Panama:

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1. Improved economic value to Panama;

2. Juridical problems relating to the restoration of Panama’s sovereignty, facilitated by the device of a long-term lease; and

3. The psychological impact on the relationship between the two countries, particularly in regard to the dignity and self-respect of the Panamanian people. Left-wing agitators have constantly made an issue of this point, and have been able continuously to stir up anti-American feeling.

The Panamanians also seek changes as to U.S. military bases and training areas in Panama.

The present training area outside of the Canal Zone has two disadvantages from Panama’s point of view: one, it has blocked the normal growth of the community and, two, there is a constant flow of military personnel through heavily populated Panamanian territory, which creates unnecessary friction.

Their suggestion is that a suitable site in Panama, further away from Panama City and the Canal Zone, should be agreed upon.

II. ECONOMIC GROWTH OF PANAMA.

The Minister feels that the growth potential of Panama is equal to that of Puerto Rico. The present growth rate is 8 per [Page 5] cent per year.

The whole economy is built around the Panama Canal. This relates importantly to two factors: one, the flow of dollars from economic activities generated by the Canal itself; and, two, the convenience for the location of industries because of the access to world markets from Panama due to the Canal.

To illustrate, there have been three large economic booms in Panama: The first was related to the construction of the Canal; the second to World War II; and the third, from 1957 to now, followed the revised Canal treaty of 1955.

It is the feeling of the government that a new treaty will sustain that growth and avoid another depression. They have had three depressions: One in 1914, after the Canal was finished; the second in the late 30’s, and the third, post-World War II.

III. PANAMA’S PLUSES.

The Minister feels that the following are the major advantages of Panama:

(a) The Free Trade Zone, which has had a growth of 18 per cent per year since 1957;

(b) Tourism - which has a greater potential growth than has already been achieved;

(c) International Banking - which is established in Panama and which has been a stabilizing factor;

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(d) Export of traditional products from Panama - which has grown at the rate of 15 per cent per year;

(e) Foreign Aid - ($15 to $17 million per year), which has been tremendously helpful;

(f) Industrial potential because of geographic location; and,

(g) Education and attraction of brains because of openness of the country.

IV. PANAMA’S MINUSES.

(a) Explosive problems due to rapid urban growth and the tension in relation to the Canal, importantly growing out of psychological factors and the tremendously sharp contrast of poverty and wealth resulting from slum areas that now surround both the Canal and the military installations.

V. SPECIFIC REQUESTS FOR U.S. COOPERATION.

(a) Transfer of 300 acres from the Canal Zone to Panama for the extension and expansion of the Free Port Area of Colon. This will permit the continued growth and development of trade in the Free Zone which is such a major factor in the strength and vitality and growth of the country as a whole.

(b) Planned program of increased imports from Panama into the United States. The government feels that they can increase [Page 7] their exports from $100 million to an ultimate $200 million a year if the United States develops some form of Western Hemisphere preference.

(c) Panama is now ready to complete the Pan American Highway from Panama City to the Colombian border. It will cost between $90 and $100 million. They would be deeply appreciative if the United States government would provide two-thirds of this money as we have in the countries to the north.

Colombia, as will be mentioned later in this memorandum, is also ready to complete the section from the Panamanian border to connecting highways for a cost of $50 to $60 million.

If this were done in Panama and Colombia, the Pan American Highway would be completed from the United States border in the north to Chile in the south -- and would be a very exciting culmination of 30 years of common effort.

It might well be that the Congress of the United States would consider passage of a special bill (recommended by President Nixon) which would involve $100 million -- two-thirds of the total cost of $150 million for completion of the highway. I think it would receive spectacular attention throughout the Western Hemisphere.

(d) The Panama government would be deeply appreciative if some arrangement could be worked out whereby the U.S. drydocks in Panama, which they say are not used very extensively, could be made available to a Panamanian company for commercial purposes.

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They feel there is a great potential for the future in this connection.

VI. MEETING WITH COLONEL OMAR TORRIJOS.

I had a most interesting private meeting, for over two hours, with Colonel Torrijos. It struck me as significant that he came not to talk of arms, but with a large number of photographs depicting the poverty of Panamanians living in slums adjoining the canal and the bases, as well as those living in the rural areas.

Colonel Torrijos gave every indication of being sincerely and deeply concerned about the future of his people and the urgent need for economic development and social action.

It was clear that he felt the achievement of his goals depended on his ability to work out problems between the United States and Panama, as outlined by the Minister and the Planners.

(I was informed that the Colonel’s brother is a left-wing writer who has spent considerable time in Moscow and that his mother is alleged to be a member of the Communist Party.)

But, I was impressed by the Colonel’s apparent sincerity and concern -- and particularly his desire to stay as head of the National Guard and not become involved personally in politics in any form.

He is very proud of the dedication and ability of the government [Page 9] that he has put together, and he feels that this group can deal with the urgent economic and social problems if the outstanding problems can be worked out with the United States. He made the following points:

(a) That he personally wanted no part of politics, he wants to stay as head of the Guard to preserve peace and tranquility and assure social and economic progress within a framework of close United States - Panama ties.

(b) At the present time, the social tensions are so great and feelings run so high against the Canal Zone and the United States that were it not for the National Guard, the United States would have to have three divisions of U.S. soldiers in the Canal Zone to protect its property and keep the peace.

(c) He is extremely anxious to sign the new Panama Canal Treaty as rapidly as possible in order to remove the psychological tensions and restore a sense of dignity to the people of Panama -- as well as to derive the major economic benefits provided in the new treaty which will be of such importance to the government in carrying out its social programs.

I pointed out that the ratification and implementation of such a treaty is impossible without a duly-elected Congress and therefore I hoped the government would proceed to elections in 1970 as has been publicly indicated.

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The Colonel showed considerable concern at this point and stated that he did not see how they could prepare for elections by 1970.

He said that the United States Ambassador had pushed a member of his Cabinet into making such a statement, but, it was not a reflection of the government’s position. The statement was made by the Cabinet official in question because of his personal ambition to become the candidate for the Presidency, Colonel Torrijos said.

We then discussed at great length the whole problem of organizing political parties and holding elections in order to establish a Constitutional government.

The Colonel, in my opinion, sincerely indicated his desire to restore the legitimacy of the government as rapidly as possible, but stated he could not allow the country to go back into the hands of the oligarchy which had run Panama for generations for its own benefit and without concern for the needs of the people.

In fact, he stated that he had already been offered bribes of $5 million for special-interest arrangements and concessions for Panama businessmen.

He further stated that he was going to keep the government honest, that they are cleaning up corruption, and that in the interest of his country and his people he could not tolerate the return of the old group to power.

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Colonel Torrijos does not see how they can organize politically throughout the country sufficiently by next year to have elections that would prevent the old group from coming in, as they have in the past, through buying the votes for the Congress and for the Presidency. (He says they have been known to pay as high as $10 a vote.) The old group has the money whereas his group does not have the money or the organization to undertake such an election.

Therefore, if they have an election and the other group wins by fraudulent means, he would have to depose them by force, which he does not want to do because he thinks this would create the wrong image for the country and would be a disaster.

For this reason, it is obvious why he is so bitter against the United States Ambassador, who, unfortunately, keeps embarrassing the Panamanian government by making public statements on this subject.

I discussed with the Colonel at considerable length how one went about political organization at the grass roots and suggested that it should be possible for him, directly or through intermediaries, to work out the possibility of a transition government with a small group of strong, patriotic leaders of the opposition who would understand the problems of the country and the need for normalizing political conditions in Panama. He was very interested in this possibility but stated that (1) [Page 12] neither he nor his people had any experience in political organization, (2) nor did he think there was leadership among the oligarchy willing to take a broad and constructive point of view in regard to cooperation for a transition period.

The Colonel expressed what seemed to me to be sincere appreciation, but stated frankly that he urgently needed help in this area.

He suggested that were there an Ambassador representing the United States who understood the problem -- as well as the political problems as we had been discussing them -- that it could be tremendously helpful in realizing these goals.

He mentioned a young man who had been head of the Peace Corps for five years and had gone back to Washington, whom he said had won the confidence of the people of Panama and whom he felt would make an outstanding Ambassador.

The Colonel said that what he thought he would do would be to come to the United States within the next couple of months in order to talk further with me about his problems. He wants to talk especially about the creation of political organizations that would permit truly democratic elections because, he said, there was no one he could talk to in Panama either that he trusted or who understood the problem.

I told the Colonel I would be very glad to do anything I could to help him, and that I would raise these questions with you, Mr. President.

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There is no question that Colonel Torrijos is a strong man and that he is young, attractive, and well-meaning, but with very little experience in this area. I am convinced he does not want a military dictatorship, but he finds himself in the dilemma of having an outstanding group, ready to go on economic and social problems, but without a legitimate government that will make it possible.

It would be my suggestion that you select as Ambassador to Panama an individual who understands the Latin temperament and has had broad experience in the United States both in politics and in government. We need a man who could go to Panama and, with real tact and ability, help them through this transition period. This is of vital importance to the United States, because of the need for a new canal and because they really are on a tinder box at the present time. Until the new Panama Canal Treaty is signed, there is grave danger of a blow-up which could have the most unfortunate repercussions throughout Central and South America.

As you will recall, our visit to Panama concluded the first leg of the mission’s travels to Latin America.

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[Omitted here is the remainder of the Report.]

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 802, Country Files, Latin America, Latin America General, Rockefeller, Report on Conversations with Latin American Leaders, May–July, 1969. Confidential; Personal. Nixon dispatched Rockefeller to Latin America to confer with leaders in the region.
  2. In this 12 page report, Rockefeller discussed his meeting with the Minister of Foreign Relations and recounted his meeting with President Torrijos. Rockefeller concluded that the Panamanian Government had very young, able, Cabinet leadership, and that Torrijos wanted to sign a new set of Panama Canal Treaties. Rockefeller also stated that the United States needed more politically skillful representatives in the nation.