547. Memorandum From the National Security Council Undersecretaries Committee to President Nixon, Washington, June 10, 1971.1 2

[Page 1]

[Omitted here are “I. Background,” and “II. Key Issues.”]

III. RECOMMENDATIONS

State and Defense Department options are identified where their positions differ. The USIA position is attached to this memorandum.

A. The Under Secretaries Committee, while noting that important uncertainties remain, finds that there is a reasonable basis for seeking mutually satisfactory new treaty arrangements with Panama, and recommends that you authorize Ambassador Anderson to enter into negotiations.

Approve
Disapprove

B. The Under Secretaries Committee recommends that you authorize Ambassador Anderson to seek a treaty that would contain the following provisions:

1. DURATION

State Position:

In accordance with your decision of June 5, 1970, Ambassador Anderson should seek as our non-negotiable objective continuance of US control of canal operations and canal defense for an extended period of time, preferably open-ended. However, Ambassador Anderson should be authorized to accept at an appropriate time, if in his judgment it is necessary to ensure the success of the negotiations, a treaty which assures US control of the operations and defense of the lock canal until a sea-level canal is opened or for approximately 50 years, after which time the treaty would continue indefinitely until one or both of the parties terminates the treaty or agrees to negotiate a new treaty after having given at least one year’s notice in writing. Other characteristics of the treaty should include provision for the [Page 2] construction of expanded lock canal capacity or a sea-level canal at the option of the US with extension of US control and defense for a reasonable period thereafter, and open-ended Panamanian guarantees giving access to the canal to all shipping without discrimination--at reasonable tolls--upon reversion to Panama of the lock or sea-level canal, whichever is later.

Approve
Disapprove

Defense Position:

The US negotiating objective should be continuation of control for an open-ended period, unless the US constructs a sea-level canal. In that event termination of all rights regarding the lock canal may occur a reasonable time after completion by the United States of a sea-level canal. If an open-ended treaty is unobtainable, Ambassador Anderson should seek further Presidential guidance before proceeding toward any agreement regarding a fixed term treaty.

Approve
Disapprove

2. JURISDICTION

State First position/Defense position:

Our position at this stage in the negotiations should be to allow US jurisdiction over the Canal Zone to be phased out within a minimum of 20 years (as set forth subsequently in this paper) while protecting non-negotiable rights for US control and defense of the canal for the duration of the treaty by obtaining: appropriate privileges and immunities; status of forces/ base rights agreements; and treaty commitments from Panama that, after receiving full jurisdiction, it would not pass legislation or take other action which would interfere with these non-negotiable rights.

(In the event that Panama will not agree to a minimum 20-year phase-out period for jurisdiction, Defense maintains that Ambassador Anderson should seek further Presidential advice on this issue.)

[Page 3]

State Fallback Position:

Ambassador Anderson should be provided flexibility as regards: (1) the time period for the phase-out of US jurisdiction in the Canal Zone; (2) the specific jurisdictional rights that the US would retain in the phase-out period; and (3) the rights, privileges and immunities that the US would retain for the duration of the treaty after jurisdiction is phased out. The United States position on these matters should be the maximum that Ambassador Anderson can successfully negotiate with the Government of Panama consistent with an orderly transfer of jurisdiction to Panama, effective US control and defense of the canal after such jurisdiction is phased out, and Congressional acceptance.

Approve
Disapprove

CONTROL

(a) The first negotiating objective should be continued exclusive US control of canal operations..

(b) The fallback US position should be an arrangement whereby the US retains control of canal operations with Panamanian participation in the canal organization.

Approve
Disapprove

4. DEFENSE
(a) Canal Defense

Our non-negotiable position should be to gain specific treaty rights to defend the canal unilaterally for the duration of the treaty.

(b) Other Military Activities

As a first position, the incorporation in the treaty, or as a fallback position, inclusion in an accompanying formal agreement, of rights to conduct important military and research activities in the canal areas such as: tropic testing, jungle warfare training, communications, Inter-American Geodetic Survey operations, activities under supervision [text not declassified] schooling of Latin American military [Page 4] personnel, providing support to US and friendly personnel in transit, and operations related to humanitarian purposes and to the OAS and Rio Pact Agreements.

Approve
Disapprove

5. AREAS

(a) Retention and Relinquishment of Areas

No specific areas will be advanced by the US as being available. In response to Panama’s statement as to what areas it wishes to have, we will be as forthcoming as possible in terms of what we regard as essential for the defense and operation of the canal, its supporting facilities, and other agreed upon US Government activities.

Approve
Disapprove

(b) Status of Base/Defense Areas

Defense Position/State First Position:

US bases should be located in the canal area and, under its legal system, but with additional rights of the conventional SOFA type as necessary.

Approve
Disapprove

State fallback position:

There should be distinct canal and defense areas with conventional SOFA arrangements for the defense areas.

Approve
Disapprove.

6. EXPANDED CANAL CAPACITY

a. Third Locks

The US negotiating objective should be to retain the right, without obligation, to add a third lane of locks to the existing canal.

Approve
Disapprove [Page 5] b. Sea-level Canal

The first US negotiating objective should be to obtain definitive rights, without obligation, to construct, operate, and defend a conventionally excavated sea-level canal on Route 10.

Our fallback position should be that, in the even Panama refuses to grant a definitive option for a sea-level canal, we should re-evaluate our position n light of other aspects of the negotiations existing at the time.

Approve
Disapprove

7. ECONOMIC BENEFITS

There should be substantially increased income for Panama from the canal operations, even though this may involve a significant increase in tolls, and from the opening up of commercial opportunities to Panama in the canal area.

Approve
Disapprove

C. The Under Secretaries Committee recommends that Congressional consultations be initiated as soon as possible to test support for a treaty along the lines you approve.

Approve
Disapprove

D. The Under Secretaries Committee recommends that you continue to be closely and periodically informed as to the state of negotiations and Congressional consultations.

Approve
Disapprove
E. The Under Secretaries Committee recommends that you forward to Ambassador Anderson the proposed reply to his letter of April 12, 1971 (attached).

Approve
Disapprove

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[Omitted here are “IV. General Conclusions,” “V. Discussion,” and “VI. Alternative Actions.”]

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, NSC Institutional Files (H-Files), Box H–261, Under Secretaries Committee Memorandum File, Under Secretaries Study Memorandums, U/SM 97–99. Secret; Exdis.
  2. In this 5 page memorandum, the Undersecretaries Committee presented their recommendations for negotiating new Panama Canal treaties. This report identifies those cases in which the recommendations from the Department of State and Defense differ and focuses its analysis on the following issues: the possible duration of a new agreement, jurisdiction, control, and defense over the Canal, canal capacity expansion, and potential economic benefits.