Foreign Relations of the United States, 1969–1976, Volume E–10, Documents on American Republics, 1969–1972

556. Memorandum From the Executive Secretary of the Department of State (Eliot) to the President’s Assistant for National Security Affairs (Kissinger)¹ ²

Washington, November 23, 1971

SUBJECT:

• Status of Panama Canal Treaty Negotiations

Negotiators from the US and Panama, after five months of meetings in Washington, have explored all the major issues involved in negotiation of a new treaty and have begun the drafting of treaty articles. Tentative agreement has been reached on a number of articles of secondary importance, including an article defining the general rights of the US to operate the canal. Intensive negotiations are proceeding in a business-like and constructive atmosphere.

Agreement has not yet been reached on the major issues. The US has given Panama a brief listing of its position on these issues (attached) and the Panamanian negotiators have discussed this list with their senior officials in Panama. The US positions are within the guidance laid down by the President in NSDM 115 of June 24, 1971 and NSDM 131 of September 13, 1971, and the US negotiators will continue on the basis of these instructions.

The status of these key issues follows:

1. Duration—Panama has not specifically commented on the US requirement that the treaty contain a duration formula giving the US control of the operation and defense of the canal for at least 50 years plus about 50 more years if the US constructs additional canal capacity and that the treaty provide for a post-termination joint guarantee of uninterrupted operation.

2. Expansion of Canal Capacity—Panama has not taken a definite position but appears to accept the US position that the treaty gives the US a clear right either to build a sea-level canal or to construct third locks and that Panama should reserve the necessary right of way for a sea-level canal.

3. Jurisdiction—The US is pressing for retention of police authority for 15 years with the right to maintain adequate security guards thereafter; Panama wants a shorter period of US control. The US is also seeking to retain jurisdiction for substantial periods over crimes against canal security and shipping and over crimes by Americans, as well as authority to control and make rules regarding navigation in the canal for the life of the treaty; these issues remain to be fully explored and resolved.

4. Land Areas—The US has agreed to turn over to Panama certain land and water areas not essential to the operation and defense of the canal and is insisting that the US must retain the right to decide on use of land to be retained in the canal area. Commercial activities now being carried on by the US will he turned over to private enterprise under safeguards retained by the US. Panama would like to have more land and water returned to it and to have freer use of land remaining in the canal area.

5. Compensation—The US has tentatively agreed to compensation at an annual level of about $20–25 million based on canal revenues, with the US retaining the right to set tolls subject to review by Congress. Panama has not stated its position but clearly would like substantially larger compensation.

6. Defense—Panama has not stated its position on the draft defense and status of forces articles we have given them. Panama agrees that the US forces should have the necessary rights to defend the canal but will probably try to whittle down some of the rights the US has requested.

7. Other Issues—A number of other issues, such as the definition of the neutrality of the canal, the scope of the treaty’s arbitration provision, taxation of the income of canal employees and contractors, and wage levels for canal employees, remain to be resolved.

US negotiating positions are being coordinated by the State and Dense Departments. Consultation is being carried on regularly with key members of the Congress.

Theodore L. Eliot, Jr.

1. Source: National Archives, RG 59, Central Files 1970–73, POL PAN–US. Confidential. Drafted on November 20 by Hurwitch and Finn; cleared by Mundt, Pringle, and Hurwitch. Attached but not published is a position paper entitled “U.S. Position on Treaty Issues,” dated November 19.
2. Eliot provided a status report on five months of meetings between Panamanian and United States officials. He explained that, although agreement was not reached on major issues, tentative understandings had been reached on a number of articles of secondary importance.