20. Briefing Memorandum From Ambassador at Large (Bunker) and Panama Canal Treaty Co-Negotiator (Linowitz) to Secretary of State Vance1


We have just returned from nine days of talks with Panama’s negotiators. As specified by the Policy Review Committee on January 272 and the President on February 11,3 the objective of these talks was to explore informally whether Panama would be willing to satisfy fundamental United States requirements in the event that the United States were to accept a treaty termination date of December 31, 1999.

Through this process, we hoped:

—to reach informal agreement with Panama on the possible outlines of a treaty package, or

—to identify clearly Panama’s position on unresolved issues so that the President and the Policy Review Committee might judge accurately the remaining distance between our positions and make appropriate decisions.

In any event, we hoped to place the United States in a posture with respect to the negotiations which would be perceived as reasonable and fully supportable in the international community.

As we have pressed forward to complete the conceptual framework for a new treaty arrangement, Panama has presented a hard response. While it is too early to draw a firm judgment as to the reason for Panama’s action, our preliminary assessment is that it is a negotiating tactic. We recognize that it could also be:

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—a reflection of Torrijos’ widely-reported indecisiveness and/or unpredictability;4 or

—a more fundamental judgment on Panama’s part that it cannot afford politically to accept the compromises we judge necessary in order to protect our interests.

During our eleven meetings with Panama’s senior delegates,5 we explored in depth the three key and related issues of treaty duration, neutrality and post-treaty defense arrangements. Other members of the United States Delegation considered more technical issues such as the identification of lands and waters needed to operate and defend the Canal and the form of the entity that will operate the Canal.

In the course of our discussions, we indicated to Panama that we were willing to explore all other issues informally on an assumption of a termination date for the treaty of December 31, 1999. In that context, we presented an initial proposal on the two remaining key issues—neutrality and post-treaty defense—with these features:

—a separate neutrality treaty with no termination date in which Panama and the United States jointly would agree to establish and maintain a regime of neutrality in order that the Canal remain permanently secure, and free and open to all world shipping.

—an addendum to that treaty containing a United States interpretation of it as providing a basis for the United States to take unilateral action, if necessary, to protect the Canal’s neutrality even after the termination of United States control of canal operation.

—a mutual agreement to conclude, before the basic treaty’s expiration, an agreement to facilitate United States participation in post-treaty Canal defense.

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Panama declined to accept our proposal on the contention that it violated Panama’s sovereignty and gave the United States a special responsibility for the Canal in perpetuity.

Panama’s negotiators subsequently suggested that we attempt to accommodate our mutual concerns by separating clearly the arrangements for the Canal’s neutrality and post-treaty security. In response, we offered for exploration a two-point formula. First, Panama would guarantee to the United States the Canal’s permanent neutrality. Second, the United States and Panama would conclude, prior to treaty termination, a mutual security agreement to become effective upon termination of the basic treaty.

Panama accepted the first element of our formula, but proposed that our mutual security agreement be modified to include:

—a specific limitation to threats from third countries;

—a fixed termination date; and

—an assurance that there would be no United States military presence in Panama after 1999.

We felt these modifications, taken together, essentially vitiated the formula in terms of the protection of long term United States security interests in the Canal and of the acceptance of the overall treaty package by the Congress and the American people. Therefore, we proposed that Panama reconsider, as an alternative, the initial United States proposal on these key issues with the deletion of the addendum asserting the unilateral United States interpretation of the neutrality agreement as providing a basis for unilateral action in the post-treaty period. (We did not suggest that this deletion would change our interpretation of the provision to authorize such action.)

At this point in the talks we described the three necessary elements of any treaty arrangement:

—that the United States could not accept a date for Canal operation earlier than the year 2000;

—that a termination date of December 31, 1999 for United States Canal defense could be acceptable only in the context of the fulfillment of basic U.S. requirements on the other outstanding issues; and

—that the United States would require a continuing arrangement which it would use as a basis for protecting the Canal against a threat to its security from any source (read: Panama).

As the talks progressed, we continued to encounter an unwillingness by Panama to proceed at this time on the basis of these three elements. The talks concluded February 22 with presentation by Panama of a four-point document and a personal message to the President from General Torrijos. We agreed to present both documents to the President (translations are attached).6

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The negotiating document contains the following elements:

—United States responsibility for Canal operation would end in the year 1990;

—United States military presence and responsibility for Canal defense would end on December 31, 1999;

—current Panama Canal Company employee housing, the Panama Railroad and the ports of Balboa and Cristobal would revert to Panama soon after the entry into force of the treaty;

—a fixed term mutual security treaty would be concluded by 1995 (the treaty would concern threats to the Canal from third countries only and would prohibit a U.S. military presence in Panama); and

—Panama would unilaterally declare to all the world the permanent neutrality of the Canal.

General Torrijos made the following points in his message to President Carter:

—the United States does not appear to be in a frame of mind to sign an agreement that truly eradicates the cause of conflict.

—signing just any treaty would give the impression of a solution, without providing one.

—a treaty which would go beyond the year 2000 in any way would be a trauma for the Panamanian people

—a plebescite could not be held in Panama on a treaty, unless it achieved real gains for Panama.

—Panama could view other treaty issues differently if the United States did not insist upon a military alliance beyond the year 2000. Torrijos said in the message that he willingly presented these thoughts to President Carter because of his belief that the President honestly desires to avoid the use of force in solving our mutual problems. He later added a sentence to the effect that a Canal treaty could be a model for the type of relations which should exist between a large and a small country.

Panama’s presentation of these two documents indicates clearly that it has hardened its negotiating positions. However, the Panamanian negotiators attempted in the final hours of our stay in Panama to soften the negative impact of their position by expressing the hope that we would return soon and stating that we were not so far apart as their presentations might indicate.

In our judgment, Panama is testing the United States under a new President.

If we are correct, we believe our basic strategy for the next few weeks should be one of applying pressure on Panama to be more flexible in the negotiations.

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Specifically we propose to follow a strategy designed:

—to avoid apparent haste in seeking agreement while always demonstrating a willingness to negotiate if the other side is willing to do the same (Panama might interpret a sense of urgency by the United States as a sign of weakness);

—to encourage Panama to perceive that achievement of its aspirations rests in compromise; and

—to solicit advice and support for our position throughout the hemisphere.

  1. Source: National Archives, RG 59, Official and Personal Files of Ambassador at Large Ellsworth Bunker, Lot 78D300, Box 4, Panama Key Documents, 1977. Secret. The report was forwarded to Brzezinski on February 26 under a covering memorandum from Borg. (Ibid.) Brzezinski forwarded the report to Carter in a March 1 memorandum. (Carter Library, National Security Affairs, Brzezinski Material, Country File, Box 60, Panama, 1–10/77)
  2. See Document 8.
  3. See Document 14.
  4. In telegram 829 from Panama City, February 4, Jorden reported on contradictory signals and a “high degree of indecision and caution in the Panamanian Government on key treaty issues.” In particular, Torrijos appeared to be drawing back, cautioning against premature optimism and hardening his stance on post-treaty neutrality guarantees. A senior Panamanian treaty advisor said Torrijos was “personally insecure and often erratic in decision-making.” (Department of State, American Embassy Panama, Panama Canal Treaty Negotiation Files, 1964–1977, Lot 81F1, Box 127, POL 33.3.2) In a February 8 memorandum to Todman, Packman offered various explanations for Torrijos’s public pessimism about the negotiations, concluding that “he has become harshly critical of those who have a different outlook.” (Department of State, Bureau of Inter-American Affairs, Office of the U.S. Permanent Mission to the OAS, Einaudi Country Files, 1977–1989, Lot 91D371, Box 6, Panama 1977)
  5. The memoranda of conversation for the February round of negotiations are in the Department of State, American Embassy Panama, Panama Canal Treaty Negotiation Files, 1964–1977, Lot 81F1, Box 127. In a February 28 memorandum to the Panama Canal Negotiation Working Group, Dolvin provided a summary of the meetings. (Washington National Records Center, OSD Files, FRC: 330–84–0047, Neg Panama & Panama Canal Zone—16 Feb 77–15 Apr 77)
  6. Attached but not printed.