Foreign Relations of the United States, 1977–1980, Volume XXIX, Panama

210. Memorandum From the Acting Chief of the Latin America Division, Central Intelligence Agency ([name not declassified]) to the Department of Defense Representative for Panama Canal Treaty Affairs (Dolvin)¹

Washington, March 19, 1979

SUBJECT

• Forwarding of Intelligence Report Concerning Panama Canal Treaty Implementation Negotiations

Following is the text of an intelligence report [1 line not declassified] from a sensitive source concerning Panamanian Government intentions on Panama Canal Treaty Implementation negotiations. The information has also been made available to General McAuliffe and Governor Parfitt, as well as Embassy Principal Officers in Panama City and the Director, INR.

“SUBJECT: Panamanian Government Intentions on Panama Canal Treaty Implementation Negotiations (DOI: 9 March 1979)

SOURCE: [3 lines not declassified]

1. On 9 March 1979, the principal Panamanian Government officials involved in implementation of the Panama Canal Treaty met at the Presidencia and decided to take a hard line with the United States to obtain more benefits for Panama under the treaties. Those present at the meeting were President Aristides Royo, Finance Minister Ernesto Perez Balladares, Panama Canal Authority (PCA) Director Gabriel Lewis Galindo, PCA Deputy Director Eduardo Tejeira, PCA Advisor Fernando Manfredo, and Panamanian Ambassador to Washington Carlos Lopez Guevara.

2. Although Lewis was the principal protagonist for a tough line with the United States on Treaty Implementation, this posture was also championed by Royo. Both Royo and Lewis said that the only way that the Americans will accept Panamanian demands is to treat them tough and keep strong pressure on them. Further, the best proof of the correctness of this hard line strategy was that National Guard Commander General Omar Torrijos Herrera used it successfully during the Treaty Negotiations which gave Panama such favorable results. (Source Comment: It is believed that this group would not be taking such a hard line policy unless encouraged to do so by General Torrijos.)

3. On specific issues, the group advocated maintaining a strong position with the United States on the right of Panama to tax retroactively the earnings of companies now operating in the Canal Zone. They also agreed to require that the United States rehabilitate the landing field and houses at Coco Solo as well as all equipment and properties that are to be turned over to Panama on 1 October 1979. The group also decided to demand that the Panama Canal Commission, which will function from 1 October 1979 to 2000, pay all the expenses until 2000 for maintenance of the Canal Zone lands and properties which revert to Panama. Lewis also suggested that the United States should be charged for the use of water from the Chagres River which has been used for 75 years to operate the Canal locks.

4. The only dissenting voice in the group was Lopez Guevara, who said that such hard line tactics, while successful during the Treaty Negotiations, would not work today because of the Treaty Implementation opposition which already exists in the United States Congress and that Panama should be working with rather than against the United States. He considers the attitude taken by Royo and Lewis to be ultimately bad for Panama.”

[name not declassified]

1. Source: Washington National Records Center, OSD Files, FRC: 330–87–0068, 1977–1979 Govern of Panama Treaty Views—Implementing Legislation. Secret; Noforn.