209. Memorandum From Madeleine Albright of the National Security Council Staff to the President’s Assistant for National Security Affairs (Brzezinski)1


  • Weekly Legislation Report

[Omitted here is information unrelated to Panama.]

IV. Panama Treaty Enabling Legislation

Chairman Hanley of the House Post Office and Civil Service Committee and Murphy of the House Merchant Marine and Fisheries Committee led separate trips to Panama during the period February 15–25.2 Both committees held hearings in the Canal Zone on specific aspects of implementing legislation. Both trips went well in that most of the Representatives came away with a feeling of the urgency of obtaining legislation which satisfies basic requirements for a smooth treaty implementation. Even some treaty opponents saw that need.

The single fly in the ointment was supplied by Panamanian officials who took positions with the Murphy Committee which were contrary to earlier understandings between our Governments (e.g., they claimed the right to tax retroactively companies in the Zone). This problem resurfaced when Ambassador Ambler Moss was testifying before Mur[Page 505]phy in Washington February 26.3 Murphy and his colleagues asked Ambassador Moss to provide written clarification of these apparent policy differences. Murphy and Bauman warned that unless these apparent differences can be eliminated, there would be no need to proceed with the legislation, since the understanding reflected in the treaties would be unmasked as more apparent than real. Ambassador Moss is confident that the problems can be resolved satisfactorily with Panama.

DOD reports that the Panamanians told Jack Murphy and Members of his Committee that they fully expected the $10 million contingency payment in the treaty to be included in the new toll base and that facilities we turn over to Panama be updated to mint condition even though they have been vacant a considerable time.

Post Office will hold follow-up hearings in mid-March to determine early retirement benefits to Canal employees, which many Members regard as too generous as provided in our bill.

[Omitted here is information unrelated to Panama.]

  1. Source: Carter Library, National Security Affairs, Staff Material, Press and Congressional Relations, Box 1–5, NSC Weekly Legislative Report 3/79. No classification marking. Printed from an unsigned copy.
  2. See footnote 4, Document 206.
  3. In telegram 48826 to Panama City, February 28, the Department reported on Moss’s February 26 testimony before the Panama Canal Subcommittee as well as the committee hearings held in the Canal Zone February 23–24. The areas of perceived misunderstandings between the United States and Panama by Murphy and his colleagues included the $10 million contingency payment in the treaty, the liability of private firms in the Canal Zone for back taxes to Panama and the refurbishment of buildings and facilities prior to the turn over of the canal to Panama. (Washington National Records Center, OSD Files, FRC: 330–80–0024, Panama, Sept 1978–May 1979)