532. Minutes of an NSC Review Group Meeting1 2

[Page 1]


  • Panama Canal (NSSM 86)


  • Chairman—Henry A. Kissinger
  • State
    • Richard F. Pedersen
    • —Donald McHenry
    • —Robert Hurwitch
    • —Miriam C. Camps
  • Defense—G. Warren Nutter
  • Dept. of Army—David H. Ward
  • CIA—R. Jack Smith
  • JCS—LTG F.T. Unger
  • OEP—Stephen A. Loftus
  • USIAFrank Shakespeare
  • WH—Daniel W. Hofgren
  • Mr. John Sheffey (Representative of Amb. Robert Anderson)
  • NSC Staff—
    • Viron P. Vaky
    • Richard T. Kennedy
    • Jeanne W. Davis


It was decided that:

1. Mr. Hurwitch, in consultation with Mr. Vaky and Mr. Cargo’s staff, will prepare a memorandum for the President which would:

state the preference for going for a comprehensive treaty renegotiation;
spell out the choices for such a negotiation:
  • —start with the 1967 drafts;
  • —start with those elements of the 1967 drafts which we consider still valid; or
  • —isolate those principles in the 1967 drafts to which we are committed (or which we consider non-negotiable) plus such additional points as may now be desired: e.g., the Army’s suggestion for a flexible position on sovereignty, opening of certain areas to Panamanian control and avoidance of a definite reversion date.
include discussion of the timing, suggesting preliminary talks with formal negotiations to begin after the US elections and after the Canal Commission’s recommendations have been formally transmitted to the President on December 1.

2. Once this has been prepared, it will be considered, possibly in another Review Group session, or less formally, and readied for presentation to the President.

[Page 2]

Mr. Kissinger outlined the two major questions at issue, on the assumption that we could not avoid talking to the Panamanians:

(1) Should we attempt to negotiate an interim arrangement for the Panama Canal or should we go for a comprehensive renegotiation of the treaties;

(2) If we choose a comprehensive revision, should we stick with the 1967 drafts, or a modified version of the 1967 drafts or start from scratch. He asked if this were a fair statement of the issues and all agreed. On the issue of an interim arrangement or a comprehensive treaty, he understood that the Army prefers an interim arrangement.

Mr. Ward said the Army view had evolved since the paper was written and that Option A as presently stated was narrower than the course actually preferred by the Army. They would prefer an arrangement which would avoid a reversion date and would reserve for the US certain aspects of sovereignty thought necessary to maintain control.

Dr. Kissinger asked how this would differ from a comprehensive renegotiation.

Mr. Ward replied that they considered it more comprehensive than Option A but not as comprehensive as Option B.

Dr. Kissinger said, in view of the Army position, that the question appeared to be not that of an interim arrangement versus a comprehensive renegotiation, but the degree to which the 1967 treaties would be used as a basis for negotiation. He noted that an agreement without a reversion date would be a fairly major revision.

Mr. Ward agreed.

Dr. Kissinger asked if anyone now were in favor of an interim arrangement.

Mr. Nutter circulated an Army paper setting forth an Option B1 which they did not consider went as far as the 1967 treaty.

Mr. Ward commented that Option A would be better than nothing as a fallback position.

General Unger said that, since we are not entirely clear on what Torrijos wants, we should retain the flexibility to revert to Option A if negotiations with Torrijos so indicate.

Mr. Pedersen agreed this was a good point. He thought we should go for Option B but retain flexibility.

[Page 3]

Dr. Kissinger saw two separate problems:

(1) If we should go for a comprehensive treaty and find out that Torrijos would not agree, would we then try for an interim arrangement, or

(2) are we prepared to say that the only thing we will discuss is a comprehensive agreement?

He did not consider Option A as a fall-back position—it was either all we were prepared to do or it would be the preferred course. He asked if, under an interim arrangement, we would not give away almost everything that we would be prepared to give in a comprehensive renegotiation. What would be left for us to bargain with?

Mr. Ward thought questions of sovereignty and control could be broken down to some 15 to 30 points. We could give on some and not on others.

Dr. Kissinger remarked that he had always thought sovereignty was indivisible.

Mr. Ward replied that in the 1967 draft Panama had agreed to certain derogations of sovereignty which would, in effect, divide sovereignty.

Mr. Vaky commented that some types of interim arrangement would give up some of our counters, and asked how valuable are our chips?

Mr. Kissinger asked what we would get from an interim arrangement. Mr. Vaky replied that we would keep the Panamanians quiet.

Mr. Kissinger asked if an interim arrangement would involve no reciprocal arrangement on Panama’s part.

Mr. Ward replied that certain elements of the control relationship could be advantageous to both sides. He thought an interim arrangement could be presented as a first step, with an agreement to examine the issue again in 5 to 10 years.

Mr. Hurwitch said this would not wash with the Panamanians because of the history of the issue and the pressures on and from Torrijos. He agreed that we had no clear idea as to what Torrijos wanted and that, indeed, Torrijos’ ideas may not be viable in his own country. He noted Torrijos had little government experience and that he was opposed by some traditional elements in Panama. He thought we could not talk about now-and-10-years-from-now in view of the history of the Canal issue since 1903.

[Page 4]

Mr. Kissinger asked if all Panamanian Governments would not have the same deficiencies so far as negotiating a treaty was concerned.

Mr. Hurwitch agreed, saying he had not intended to imply that Torrijos could not negotiate an agreement because of the instability of his own government. He thought, rather, that the substance of the issues did not support the “now and later” plan.

Mr. Ward commented that while Torrijos wants something now, he may be willing to settle for less than everything.

Mr. Hurwitch thought we would find this out in the negotiations.

Mr. Shakespeare asked about timing.

Mr. Hurwitch replied that Torrijos approached us in January and is anxious to get moving.

Mr. Shakespeare noted the U.S. Congressional elections in November and the report due to the President from the Panama Canal Commission in June. He asked if we should not wait for this June report.

Mr. Vaky replied that the Commission report was in fact not due to the President until December.

Mr. Sheffey said that the Commission yesterday had agreed on its findings which would be the substance of the report to the President on December 1. The Commission will recommend a sea-level canal on Route 10, with the actual decision to construct such a canal to be postponed until there is clearer evidence of need. It was thought that the present Canal capacity might be sufficient for the balance of the 20th century. The sea-level canal would be operated in conjunction with the existing canal, with the right to close and reopen the existing canal as required. A 15-year construction time was seen for a sea-level canal.

Mr. Kissinger asked if this would require a new canal zone.

Mr. Sheffey said it would. They would plan to merge the existing zone and a new zone and to operate both as a canal complex. He thought little additional land would be required.

Mr. Vaky noted that these findings will be submitted in December as recommendations to the President.

Mr. Kissinger asked why the delay in submitting the recommendations to the President if the substance has already been determined.

[Page 5]

Mr. Sheffey replied that there were several studies still underway including an ecology study and a cost study and that extensive government staffing of the recommendations would be required. He agreed, however, that this would not affect the conclusions of the Commission’s report. He also said that the Commission would recommend indefinite US control of the canal.

(Mr. Kissinger was called away from the meeting.)

Mr. Nutter asked if Torrijos might stand to gain personally by getting something from the U.S.

Mr. Hurwitch agreed this was an element in Torrijos’ thinking but was not particularly significant.

Mr. Shakespeare asked General Unger to explain the military necessity for the Canal since it could not handle aircraft carriers.

General Unger replied that the Canal was necessary both for trade and for movement of the fleet even without carriers.

Mr. Sheffey added that the Canal was extremely important for logistical support of the fleet in the Pacific as well as for the actual movement of ships. The proposed sea-level canal would handle aircraft carriers and would be more easily defensible. He also thought the Canal took on new importance in the light of recent Soviet fleet activities. He pointed out that the Canal now carried some 80 percent of the trade of the west coast countries of Latin America.

Mr. Vaky asked what was meant by indefinite control as recommended by the Commission.

Mr. Sheffey replied the Commission meant effective control of operations and unimpaired defense well into the 21st Century.

Mr. Hurwitch said one reason for this control was economic—such control was the best way to ensure that the US gets back its investment.

Mr. Sheffey added that Congress would not authorize the money for the canal without amortization. He stressed they were speaking of control of management, not territory. The Commission believed that 60 years after completion of the canal would be the minimum.

Mr. Vaky asked if any other formula could be evolved to satisfy our economic interests. He asked if the need for control were based on something other than amortization.

[Page 6]

General Unger replied that we needed it to ensure mobility of the fleet.

Mr. Vaky asked if we could not secure that privilege without having control.

General Unger agreed possibly we could.

Mrs. Camps asked why the Commission had decided on 60 years—why not perpetuity?

Mr. Sheffey commented Ambassador Anderson thought that any treaty which did not ensure such control would not be ratified by the Congress.

Mr. Hurwitch agreed that, during the 1967 negotiations, Amb. Anderson had kept in close touch with the Senate and was convinced that he could not get support from the Senate or the JCS unless certain control aspects were held to be non-negotiable.

Mr. Vaky asked how we would square the 60-year control requirement with the reversion date.

General Unger commented that the Army proposal would eliminate a specific reversion date.

Mr. Ward added that the duration would be tied to the economic utility and the defense significance of the Canal.

Mr. Vaky said that, if what is required to satisfy the Congress does not satisfy the Panamanians, then we must find a balance between them. He asked if the 1967 drafts were the right balance. He commented that we have a different Panama now, not committed to the 1967 drafts. He thought for this reason we might examine other formulations. He asked if the real reason for requiring control is to get the treaty through the Senate.

General Unger replied that this was related to other elements such as fleet movement.

Mr. Ward added that the operation of the canal was expensive and complicated; it can be easily destroyed or could be closed as the Suez Canal was now closed.

Mr. Shakespeare pointed out that the Suez situation was not comparable. There was a common assumption, when the Suez Canal was nationalized in the 50’s, that the Egyptians would not be able to operate the Canal. However, they did operate the Canal and well, until it was closed by the 1967 war.

Mr. Nutter pointed out, however, that Egypt still can decide who goes through the Canal.

[Page 7]

Mr. Shakespeare noted that we were then talking of political factors rather than technical competence in determining the usefulness of the Canal.

Mr. Vaky thought the Paper’s proposed revisions move toward a harder position than the 1967 treaties. He noted particularly doing away with the reversion date of 2000.

Mr. Hurwitch replied that, on the other hand, it makes the date of 2067 more firm.

Mr. Vaky noted also that, since the Commission had decided definitely on Route 10, this would require additional defense rights with control of more territory—a larger area than the 1967 treaties.

Mr. Hurwitch replied that, in compensation for larger territory, we would remove Panamanian uncertainty about the route of the sea-level canal.

Mr. Pedersen commented that we would be extending the duration of our control in return for an assurance to the Panamanians that they would get a sea-level canal in their country.

Mr. Vaky thought we should, however, think about the reaction of the Panamanians if we now offered a less attractive package than the 1967 treaties.

Mr. Loftus noted that our control involves the right to stage operations from the Canal, and asked for the rationale.

Mr. Hurwitch replied this is required for our role in hemispheric defense and because Panama is the site of the US Southern Command.

Mr. Vaky asked why this needed to be in the treaty.

(Mr. Kissinger returned to the meeting.)

Mr. Kissinger noted that if the President accepts the Commission’s recommendation made on December 1, we would in any event need to negotiate a new treaty after that date. He thought the question is whether we should go for a stop-gap arrangement from now to December 1 or start now to try to negotiate a new treaty.

[Page 8]

Mr. Hurwitch thought the issue was between a stop-gap arrangement, or an attempt to get certain rights and options now for a sea-level canal.

Mr. Kissinger asked if these could be wrapped together.

Mr. Hurwitch thought it might be difficult to negotiate a “commitment” to build a canal. He thought we could, however, negotiate for options and rights, leaving open the question of when we choose to exercise the option.

Mr. Kissinger asked if we should try to get an option without knowing what our rights would be.

Mr. Hurwitch replied that we would not be committed to exercising that option.

Mr. Kissinger remarked that under these circumstances the Commission report would not make any difference.

Mr. Pedersen replied that Option B had been based on the expectation of the Commission’s findings.

Mr. Vaky thought it would be possible to negotiate an option defining rights and terms and then leave it to us to determine the timing.

Mr. Kissinger asked if we worked out such terms, would this not then freeze the relationship if we should decide to build a new canal. He thought we would need an idea of what we wanted in a permanent arrangement if we attempted to negotiate an option. Under this reasoning, he asked if Option A were not, indeed, now a fall-back position.

Mr. Ward replied that Option A would be useful if the President wished to wait for a year or two to study a sea-level canal.

Mr. Kissinger asked if we were under great pressure from the Panamanians.

Mr. Ward replied that we were, and that it was getting worse all the time.

Mr. Vaky asked if we know what Torrijos thinks today about a treaty.

Mr. Pedersen asked what the Panamanians want. Conversely, is what we want negotiable from their point of view?

Mr. Ward said we had various informal indications of what the Panamanians want. They had articulated their position in various ways and were gauging our reaction.

[Page 9]

Mr. Hurwitch minimized the significance of these informal contacts and thought the only way to find out what the Panamanians want is to get down to serious talks.

Mr. Kissinger expressed the consensus of the group as (1) we would go for a comprehensive treaty negotiation with the understanding that if, for tactical reasons, we thought an interim arrangement was the best route, we would keep that flexibility; that an interim arrangement was not preferred but should be kept as a fall-back; (2) we should determine whether to stick with the 1967 treaties or go for certain improvements.

Mr. Hurwitch saw three major revisions that we desired:

(1) we should ask for control and defense rights until the middle of the 21st Century, which was a hardening of our position from the 1967 drafts which provided for an end of control by 2000;

(2) we would decide on Route 10 for a sea-level canal and would ask for definitive rights; this would be an advantage to Panama over the 1967 treaty since it would remove their uncertainty as to the route of a sea-level canal;

(3) we would also provide for rights to augment the lock canal instead of building a sea-level canal if we choose to.

Mr. Vaky pointed out that the IG paper did not vet these desired revisions. He thought the parameters and objectives of our negotiating position would need to be thoroughly studied and be presented in terms of options for the President to decide. He asked why we now desired control into the 21st century.

Mr. Hurwitch replied that Amb. Anderson had determined from his talks with the Senate and the JCS that he could not get support for a treaty unless it guaranteed US control of any inter-Isthmian waterway for 100 years. If we decided to give up perpetuity we could not do it for a short term. He thought this duration was salable to Panama in 1967 and was necessary to insure US public support.

Mr. Vaky asked if Panama would not want maximum sovereignty with minimum time.

Mr. Shakespeare agreed that the Panamanians would undoubtedly start with the 1967 treaties as their minimum position.

Mr. Hurwitch replied it was difficult to know how much weight to give Torrijos’ views, e.g., on duration of US control. He thought Torrijos might have a different set of values, and the question was whether his values would endure.

[Page 10]

Mr. Shakespeare asked if the State Department was worried that the Torrijos government was not a constitutional government.

Mr. Hurwitch replied that Torrijos planned a plebiscite.

Mr. Pedersen commented that Torrijos was asking for “talks”, not negotiations. He thought we could have a feeling-out period.

Mr. Vaky asked how we would proceed in such a feeling-out session. Would there be an agenda?

Mr. Hurwitch said they had considered the possibility of going into such sessions with no position, but considered this unrealistic and unwise, given the history of the issue. He thought it was important to have some sort of guideline for such talks, possibly a broad agenda with some specifics. He thought Torrijos might not want an agenda.

Mr. Kissinger asked, on the assumption that we will go the treaty route, if any agency was unhappy with the 1967 drafts.

Mr. Ward commented that the Army was critical of the arrangement for a 5 to 4 Board of Directors which gave Panama no real control. He thought we might, in fact, give them some control over certain operations of the canal. Since the Panamanians had never accepted the 1967 drafts (nor had our Congress) we might wish to harden our position—or at least we might approach the negotiations without too much commitment to the ’67 drafts.

Mr. Kissinger asked if we would, however, start on the basis of the ’67 drafts.

Mr. Hurwitch thought that we could lay out the ’67 drafts, ask the Panamanians what they think about them, and discuss our problems on that basis.

Mr. Ward added that, in this way, we could possibly back away from the 1967 reversion date.

Mr. Kissinger asked when these talks would start.

Mr. Hurwitch replied that Torrijos had asked us for such talks more than a month ago.

Mr. Vaky asked if we could go into such talks without committing ourselves to the ’67 drafts as a departure point.

[Page 11]

Mr. Hurwitch thought we could. He noted that Option B was written before the idea of talks other than negotiations had been developed. He thought we had to start somewhere and that we might examine what the ’67 drafts mean to us both now.

Mr. Ward added that neither side was bound by the ’67 drafts since they had been repudiated by both sides.

Mr. Kissinger suggested we could say “here are the ’67 drafts—the following points seem reasonable,” etc.

Mr. Pedersen thought we could be at least as flexible as in the SALT talks, asking what were their problems.

Mr. Kissinger agreed that we could indicate that we are not wedded to the ’67 drafts. He asked how we could best get the President to focus on this issue. He suggested that Mr. Hurwitch, with the assistance of Mr. Cargo’s staff and Mr. Vaky, draft a memorandum stating our preference for going for a comprehensive treaty renegotiation and exploring our choices: to start with the ’67 drafts; to start with the principles in the ’67 drafts which we still consider valid, or to scrap the 67 drafts and start afresh.

Mr. Ward thought we might start with a statement of the things we would not give up.

Mr. Kissinger agreed that we should isolate those principles to which we are committed, adding additional ones as necessary, and that we should then put the memo before the President. He thought the backstopping could be done in the Under Secretaries Committee. He thought we should include in the memo to the President the details of some of the principles; the Board of Directors issue and the possibility of some division of sovereignty, etc.

Mr. Hurwitch indicated he would get together the same group that worked on the original paper to prepare this revision.

Mr. Kissinger thought we might have another Review Group meeting, or possibly consider the revision less formally, and then forward it to the President.

Mrs. Camps asked how this should be related to the Commission report.

Mr. Sheffey replied that public disclosure of the Commission’s report could handicap the negotiations.

Mr. Vaky asked why the report could not be presented earlier to the President.

[Page 12]

Mr. Sheffey replied that the cost estimates and the ecology study would not be available until April.

Mr. Kissinger asked what difference this would make—how could public disclosure of the Commission’s report hurt the negotiations?

Mr. Sheffey answered, for example, the Commission report would discuss revenue expectations, and might affect what Panama might ask for by way of revenues.

Mr. Shakespeare commented that he would hate to see the Panama Canal become an issue in the Senatorial campaigns. He thought the December 1 date for delivery of the report to the President provides some justification for keeping the talks in a low key.

Mr. Hurwitch asked if Amb. Anderson had not been successful in keeping the press away from the issue.

Mr. Sheffey agreed that he had, but said that he had been under strong pressures from Senators Thurmond and Russell.

Mr. Kissinger commented that this President was probably in a better position to handle right-wing senators then a Democratic President.

Mr. Nutter agreed with Mr. Shakespeare’s point that we should try to keep actual negotiations from starting until after the elections.

Mr. Ward thought we might quiet the Panamanians by giving them Old France Field now.

Mr. Hurwitch disagreed, saying this would merely whet their appetite. He cited the increased pressure from Torrijos in the last two weeks, noting particularly his demand for extradition of an Arias supporter.

Mr. Pedersen thought the preliminary talks could be continued for some time and we would not have to commence real negotiations until mid-November.

Mr. Kissinger said if we could get the revised paper, we could move to a decision quickly. He thought the question of timing should be included in the paper for the President and agreed that we should probably string out the preliminary talks as long as we can.

Mr. Loftus asked if the views of other Latin American nations were important.

Mr. Hurwitch replied they represented no problem.

[Page 13]

Mr. Shakespeare asked why Canal tolls had not been raised since 1914.

Mr. Sheffey replied there had never been any hope of the tolls paying the canal debt. After World War II the tolls were found sufficient to pay operating costs and interest, and Congress had made a conscious decision to keep them low, thereby foregoing any repayment of the actual debt.

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, NSC Institutional Files (H-Files), Box H–111, SRG Minutes Originals, 1970. Secret. The meeting took place in the White House Situation Room. The participants discussed the January 27 NSC–IG/ARA report. A portion is published as Document 530. According to a March 26 covering letter from Davis to Kissinger, Hurwitch’s memorandum to the President would be submitted by April 3. The memorandum is published as Document 533.
  2. The National Security Council Review Group discussed options presented by the National Security Council Interdepartmental Group for Inter-American Affairs and directed that Deputy Assistant Secretary for Inter-American Affairs Robert Hurwitch prepare a memorandum for President Nixon recommending comprehensive negotiations for new Canal treaties, spell out the choices for the negotiations, and include discussion of the timing.