215. Memorandum From Secretary of State Vance to President Carter1


  • Congressional Strategy for Panama Canal Implementing Legislation

Status of the Panama Legislation

Yesterday the House Merchant Marine and Fisheries Committee completed its mark-up of the implementing legislation introduced by Jack Murphy. A number of issues raising treaty violation questions were resolved favorably, albeit by narrow margins. Some were not, however, and will have to be dealt with in other forums.

The Post Office and Civil Service Committee and the Judiciary Committee have already marked up, having treated such issues as employee benefits and the immigration provision. The House Foreign Affairs Committee will mark up on April 5. The House Rules Committee will resolve differences among the four committees on return from Easter recess April 22. House floor action is not likely before early May. The Senate will probably not consider the legislation until the House acts.

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During mark-up, the Merchant Marine Committee adopted favorable positions on the following issues:

—It dropped the objectionable Murphy bill provision that no payments could be made to Panama so long as the Canal Commission asserted that a plausible U.S. expropriation claim was outstanding.

—It deleted the provision that Panama’s representatives on the board of the Commission would be subject to prosecution under U.S. bribery and conflict of interest laws.

—It provided for monthly payments to Panama. Murphy had previously proposed quarterly payments.

—It restored as separate binational entities the Joint Commission on the Environment and the Diplomatic Consultative Committee.

—It eliminated the requirement that the tolls base should include amortization costs (although it retained the requirement that interest payments and early retirement payments would continue in the tolls base).

Issues which were not resolved favorably in the Merchant Marine mark-up include:

—The bill provides that in wartime or national emergency the President would be authorized to displace the Commission with a U.S. military officer.

—The Bauman-sponsored provision requiring that all costs of treaty implementation (including DOD costs until the year 2000) would be paid out of Commission profits before Panama could receive its “contingency” payment under Article XIII (4) (c) of the Treaty remains in the bill. This provision would insure that Panama would never receive this payment.

—The bill now authorizes only those transfers of property which are required upon the entry into force of the treaty; all subsequent transfers must be approved by Congress. This approach reflects the view prevalent in the House that legislation is necessary to transfer U.S. property.

Apart from the foregoing issues raised by the Merchant Marine Committee’s mark-up, there are important differences between Merchant Marine and Post Office on employee issues. Generally the Post Office Committee has sought to reduce canal employee benefits to general Federal employee levels. If enacted, such provisions could cause a strike or slowdown. Merchant Marine has resisted any substantial watering down of the Administration’s commitment to Canal employees.

House Strategy

Congressman David Bowen is planning to offer an amendment in the House Foreign Affairs Committee (HFAC) that would replace the [Page 515] provision authorizing the President to displace the Commission by a U.S. military officer in wartime. While we do not have the exact text of this amendment, we believe it will be acceptable and that it has an excellent chance of approval by the HFAC.

The “contingency payment” and “property transfer” issues are potentially more serious and must be resolved satisfactorily during the legislative process. At this stage, we do not have the strength to obtain corrections on the floor of the House.

The “contingency payment” issue is highly volatile politically since it relates to the costs of treaty implementation. Murphy and his committee do not feel that it would be possible to pass a bill on the House floor which, by implication, could be read as allowing profits for Panama while the American taxpayer foots the bill for costs associated with the transfer of the Panama Canal to Panama. We concur in this assessment and feel that the best chance to change this apparent treaty violation is in the Senate.

The “property transfer” issue may conceivably be properly resolved on the House floor, but only if our lobbying efforts succeed in raising the level of support for the implementing legislation generally and if the House leadership actively seeks to convince Members that subsequent votes on the transfer of property to Panama would be politically undesirable. In any event, as noted below, we believe the Senate will insist on a resolution of the “property transfer” issue that we will be able to accept.

Finally, we will be working with Tip O’Neill and the Rules Committee in an effort to sustain Merchant Marine’s position on the employee benefits issue.

Senate Strategy

Senators are not anxious to confront Panama Canal matters again, and there will almost surely be no move to mark-up the legislation until the House has acted. On the other hand, the Senate will be more sensitive to possible treaty violation issues than the House, which accepts no responsibility for ratification.

The Armed Services Committee will have primary jurisdiction over this legislation in the Senate. Senator Stennis was an opponent of the Canal treaties, but we have had informal contacts with his staff and feel that he will be helpful. Other committees which will likely share jurisdiction with Armed Services are Foreign Relations, Governmental Affairs, Judiciary, and Commerce, Science and Transportation. These committees will apparently play a minor role.

It will be important to make an early effort to alert Stennis to the two issues likely to be outstanding after House action, namely the “property transfer” and “contingency payment” issues. After House [Page 516] action, we believe it may be desirable to ask you to discuss this with Stennis. We expect him to uphold the Senate position that the treaty is self-executing in transferring property, but we would want to work with him on a compromise which would permit the House to preserve its formal legal position that transfers of U.S. property cannot be made without legislative authority.2

The “contingency payment” issue will be more difficult because the $870 million we now estimate as the cost of treaty implementation is considerably higher than that estimated during the treaty debate in the Senate. Nevertheless, we have already undertaken a public affairs campaign to demonstrate that our current estimate of the cost is commensurate with the benefits. With an intensive DOD lobbying effort, we feel that Stennis’ Committee will support our position.3


In sum, we believe the bill as it emerges from the House may well contain unacceptable provisions. We estimate our chances of eliminating such provisions in the Senate, and subsequently in conference, as reasonably good.

Warren and I will work closely with Frank Moore and Bob Beckel to try to achieve acceptable legislation which will not be seen as inconsistent with our Treaty obligations.

We are also studying ways to handle the situation if Congress does not produce acceptable legislation. We will be ready to report to you if legislative developments make it likely that this contingency will occur.

  1. Source: Carter Library, Papers of Walter F. Mondale, Box 65, Foreign Countries—Panama Canal 1979. No classification marking. Carter initialed the top-right corner of the memorandum and wrote: “cc Cy What happens with no legislation?” The memorandum, with Carter’s comments, was forwarded to Vance under an April 5 covering memorandum from Hutcheson. (Ibid.) According to an April 9 memorandum from Oxman to Popper, an undated memorandum entitled, “What Happens if There is no Panama Canal Implementing Legislation,” was sent to the White House on April 7. (National Archives, RG 59, Office of the Deputy Secretary, Records of Warren Christopher, 1977–1980, Box 57, Panama Canal)
  2. Carter wrote in the left margin: “Cy, I think you & Harold should talk to Stennis right away—I’ll do it later.”
  3. Carter wrote in the left margin: “$870 mil seems excessive to me. I’ve told OMB/DOD/NSC to try to hold it down.”