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

22. Memorandum of Conversation¹

Washington, March 1, 1977, 2:30 p.m.

SUBJECT

• The Panama Canal Negotiations

PARTICIPANTS

• Defense

  • Dr. Harold Brown, Secretary of Defense
  • Mr. Charles W. Duncan, Jr., Deputy Secretary of Defense
  • Mr. Eugene V. McAuliffe, Assistant Secretary of Defense for ISA
  • Mr. Walter Slocombe, Deputy Assistant Secretary of Defense for ISA
  • Mr. Clifford L. Alexander, Jr., Secretary of the Army
  • Mr. Charles R. Ford, Acting Assistant Secretary of the Army for Civil Works
  • General Welborn G. Dolvin, Deputy Negotiator from DOD for the Panama Canal Negotiations
  • R. Adm. M. S. Holcomb, Military Assistant to Secretary of Defense
  • General George S. Brown, USAF, Chairman, Joint Chiefs of Staff
  • Lt. Gen. William Y. Smith, Assistant to Chairman, JCS
  • General Walter T. Kerwin, Jr., Vice Chief of Staff of the Army, JCS
  • Admiral James L. Holloway III, Chief of Naval Operations, JCS
  • General William V. McBride, Vice Chief of Staff of the Air Force, JCS
  • General David C. Jones, Chief of Staff of the Air Force, JCS
  • General Louis H. Wilson, Commandant of Marine Corps, JCS
  • Lt. Gen. Ray B. Sitton, Director, Joint Staff, OJCS

• State

  • Ellsworth Bunker, Ambassador at Large
  • Sol M. Linowitz, Co-Negotiator, Panama Canal Treaty
  • Richard C. Barkley, Executive Assistant to Ambassador Bunker
  • Ambler H. Moss, Jr., Special Assistant to Ambassador Linowitz

Prior to the start of the session, General Brown, with reference to a recent Jack Anderson column,² remarked that Ambassador Bunker apparently should get rid of his tie and go on a binge with Torrijos if he wants to get a treaty. Ambassador Bunker responded that a recent Time Magazine article was proof that he never wore a tie while negotiating.³ He added that Torrijos’ life style was well known, even Romulo Escobar left the negotiations for an entire day to accompany Torrijos to Colombia to see the President of Colombia and reportedly one of Torrijos’ girlfriends.

General Brown explained to Ambassador Linowitz that he and Deputy Secretary Clements had made a trip to Panama in 1975 to explain to Torrijos that some delay would be needed in the negotiations due to the upcoming Presidential campaign and emphasized at that time the need to keep the lid on all anti-American activities.⁴ He said that Torrijos understood the situation completely and despite considerable pressure kept his word. He said shortly following the recent election he received a letter from Torrijos⁵ indicating that the way was now clear for conclusion of the negotiations and General Brown responded to that letter⁶ to the effect that he was prepared to do all he could to keep his side of the bargain by supporting a fair treaty if one could be concluded.

At General Brown’s request, Ambassador Bunker began the formal discussion by explaining that the recent session was not designed to negotiate but rather to explore the prospects for getting a treaty with Panama. The Negotiators specifically wished to respond to a Panamanian proposal of last October⁷ and to find out what Panama would be prepared to do to meet US needs in exchange for US acceptance of the year 2000. He said the object was to get a clear understanding of Panamanian positions on the issues and hopefully to come back with a firm idea of what it would take to get a treaty. Although we didn’t get all of the answers we wished we do have some idea of what the Panamanian positions are. During the round we strongly emphasized that we were not prepared to go under the year 2000, that we could accept the year 2000 only if our needs in other areas were met and that we must have a treaty acceptable to the Congress. Ambassador Bunker explained that the negotiations were complicated by the fact that Panama’s expectations regarding the round had been inflated as a result of several remarks made by the new Administration regarding the US desire to secure a treaty promptly. He said when the US made its initial presentation Panama was surprised by the firmness of our positions and reacted negatively to them. He said that when we began to develop formulas on neutrality and post-treaty defense however the Panamanians calmed down and began generally to negotiate seriously. He said the Panamanians thought we had hardened our positions which in some respects was true. We had for example tightened up our needs in the area of lands and waters and had indicated that because of changes in the operating costs of the canal the amount of compensation that could be derived from tolls had been recalculated downwards. Ambassador Bunker explained that the initial neutrality position we put forward called for a joint guarantee in the post-treaty period along with a unilateral interpretation of US rights under that guarantee. Panama objected to what it considered the perpetuity aspects of the proposal and also insisted that any security arrangement could only concern threats to the canal by “third countries.” Subsequently we put forward a number of other neutrality and security proposals all of which Panama found unacceptable. In response they made several proposals which we found unacceptable. At the conclusion of the round they asked us to pass a letter to the President from Torrijos which stated that Panama did not believe the United States was “in the mood” to get a treaty. Ambassador Bunker said that his assessment was that Panama was testing the firmness of the new Administration in this initial round.⁸ He emphasized that this was in our view simply a tactical move and did not at all imply that the talks are at an impasse. He said that in his view we should not be in a hurry to return to Panama at this time but should be prepared to respond when appropriate. He further indicated that the United States would be briefing some of the other Latin American countries on the status of the negotiations.⁹ In that regard he said it was important in his view that we should be in a defensible position regarding our negotiating proposals with the rest of the Hemisphere.

Ambassador Linowitz said he would like to amplify on some of the remarks that Ambassador Bunker made. He pointed out that really for the first time the United States had bitten the bullet on the issues of neutrality and post-treaty defense—issues which had been intentionally avoided in the past. He said it was not surprising that the bargaining was tough on these issues but added that the session was productive in the sense that both sides now have a clearer view of each other’s needs. He emphasized that the atmosphere of the round was one of searching for solutions in an effort to attain the objectives of both sides. He said that he had told Escobar that the United States was disappointed by the apparent lack of movement in the talks but that Escobar responded by saying that in view of the complexity of the problem we should be content in that at least we had made significant progress toward defining the issues involved. Ambassador Linowitz emphasized that we had repeatedly stated that we could accept the year 2000 only if they were prepared to meet us on other issues. He said that the United States side also stressed the need for the United States to be able to take action to defend its security in the canal. He said that while the Panamanian side understood our problem in this regard they would not agree to any US unilateral right of intervention or any arrangement that would be in perpetuity.

Ambassador Linowitz said that we had tried several formulas designed to assure that Panamanian sovereignty remain unimpaired but that US security interests were protected. He said that the United States first presented a position based on the “Brown-Brown” formula which was rejected¹⁰ (see page 5). The second technique which the Panamian side found interesting was that Panama guarantee the neutrality of the canal to the United States with the United States having the right of redress if Panama was unable to abide by its commitment. Surrounding this neutrality formula would be a mutual security arrangement designed to provide for possible threat to or attack on the canal (see page 5). It was clear that the Panamanian side hoped to find some mutually satisfactory resolution of the problem and certainly there was no impasse between the two parties on the issues. The Panamanian side had countered with a variety of techniques such as offering a 1990 duration period but it knew that these tactics were unacceptable to the United States. He emphasized that the heart of the problem was to find some formula which would give us the security we needed without violating Panamian sovereignty.

General Brown said that he continued to favor a joint neutrality guarantee without being specific. He said that inasmuch as we do not know what our needs will be in 35 years there is great advantage in being purposely vague. He also thought it may be harder to negotiate a more specific arrangement. He said in his view the Panamian guarantee to the United States along with a mutual security pact simply would not do the job. He questioned for example whether the United States would be called into a dispute between Colombia and Panama under a mutual security arrangement. He said that with a joint neutrality guarantee the United States would clearly have a right of redress should that neutrality be violated.

Ambassador Linowitz responded that the Panamians had strongly resisted the joint neutrality arrangement. They would agree to an arrangement in which their consent would be needed prior to any US action but we wished to maintain a unilateral right of action. He said that the Panamanians simply could not buy any formula which implied perpetuity. With reference to a neutrality formula he said the United States first suggested language to “establish and maintain” neutrality of the canal appending a unilateral declaration in the treaty of what that meant from the United States viewpoint. When they rejected this proposal we dropped the unilateral declaration aspect but they still found it unacceptable. We tried several other shorter formulas but were unable to resolve the problem. They did accept an arrangement for them to declare the permanent neutrality of the canal and some form of mutual security agreement against attack or a threat to the canal. Our proposal did not specify the source of such attack or threat, but the Panamanians insisted that it be limited to attacks from third parties. We emphasized that we must be able to counter a threat to the canal from whatever source it came but were unable to arrive at an agreement which would be acceptable to us and palatable to Panama.

Secretary Brown asked if the possibility existed that Panama would believe that a fixed termination date for a mutual security treaty would also apply to whatever neutrality provisions may be formulated. Ambassador Linowitz said that the Panamanians understood that these issues were separate and that neutrality would not be abridged by any mutual security arrangement.

General Brown pointed out that there were other sides of the coin. For example, under the third country formula, what if Panama asked for our assistance and we were required to give it. He asked if we had made provision for this eventuality in our discussion of the issues. Ambassador Linowitz pointed out that there was no problem in that regard if the mutual consent of both parties were required. The problem primarily evolved around unilateral actions.

Secretary Brown asked what recourse the United States would have if for example Panama should lease the canal to Cuba. Would we regard that as a threat to the neutrality of the treaty and take action accordingly? Ambassador Linowitz said that no matter who leased the canal the neutrality provisions must be maintained.

Secretary Brown asked what recourse we would have if there were no redress provisions written into the treaty. He thought the original formula, the so-called “Brown-Brown language,” would be much more protective in that regard. Ambassador Linowitz said that it would not legally be more protective. Returning to the example of the Cuban lease of the canal Secretary Brown asked what recourse we would have if Panama disputed our interpretation of a violation of neutrality. He said in his view we should not back off of our insistance on a unilateral right to act. Ambassador Linowitz stressed that the absence of any unilateral declaration on neutrality would in fact not change our interpretation of our ability to act. Secretary Brown said unfortunately without specific language the other side would have equal justification for disputing our interpretation.

General Brown said he personally was less concerned about a post-treaty security pact for in his view the United States will do whatever it feels necessary to guarantee its security depending, of course, on the vigor of US leadership and the depth of American support for such action. He said he was more concerned about securing Congressional ratification of any treaty which didn’t explicitly provide the United States the right to take what action it determined necessary for the security of the canal. He said that in recent days he had made several public appearances in California and found more concern about the question of the Panama Canal than any other foreign policy issue. He said this convinced him that we would have an uphill fight in the Congress on any treaty. He emphasized that the JCS were fully supportive of the President in getting the treaty but must be in a position to testify in good faith to the Congress regarding the security aspects of one. Under the circumstances, therefore, he said he preferred Secretary Brown’s formula, including a unilateral declaration, which in his view would best provide Congress the assurances it needed regarding continued US interests in the canal.

Ambassador Linowitz said that he wished that General Brown and Secretary Brown could see the transcripts of the recent session in Panama¹¹ for they pointed out clearly that the Negotiators had consistently stressed the point that the United States would need some satisfactory security formula for the post-treaty period. He said that in his view the task was to see what could be done imaginatively to resolve the issue in a manner satisfactory both to the United States and Panama. Secretary Brown said that in his view it seemed evident that Panama would not want in any way to recognize any continued US rights following the treaty. He said they must be persuaded that short of some formula in this area it would be impossible to get any treaty through Congress. He thought that the problem may be eased somewhat, however, by the Department of Defense’s belief that it was difficult under the best of circumstances to defend the canal against attack from within Panama. General Brown said that it was true and that the vulnerability of the canal was such that two boys with a dull shovel could cause a landslide forcing canal closure. Secretary Brown asked if there were any other substantive issues remaining to be resolved.

Ambassador Bunker pointed out that we must reach some agreement on the civilian employees and that we still had some problems in the area of lands and waters. He asked General Dolvin to comment on the lands and waters issue.

General Dolvin explained that during the 1976 negotiating round the US team had presented a position on lands and waters to Panama emphasizing that the position had not been officially staffed but represented a joint US-Panamanian effort to come to grips with the complexity of the problem.¹² He said the US position which evolved over the past year attempts to accommodate US defense interests, the requirements for the operation of the canal, as well as Panamanian economic and political needs in the lands and waters area. He pointed out that the Negotiators’ position, as distinguished from the official US position, was based on those lands and waters needed to carry out a combined US-Panama defense of the canal, a principle which had been agreed to by both sides and also had JCS support. He added that while the US position had not been officially staffed it had received numerous comments from the Services, Southcom, the Panama Canal Company, and the Secretary of the Army. He pointed out that the Panamanian response to our proposal had been received during technical discussions in January and during the recently concluded session. He said their January response was generally positive and that the map they presented indicated significant movement toward the US position. During last week’s round, however, he noted that the US presented a somewhat revised position reflecting changes recently received from Southcom, the Governor, the JCS and the Services. He explained that the Panamanians responded to these changes with a document called the “Ten Points” which was billed as both a broad outline, or set of instructions, for continued joint development of the lands and waters issue and as the Panamanian response to our October presentation.¹³ He said with this response in hand the differences between the two positions are clearly defined on the following issues:

Port of Balboa

—The U.S. Negotiators’ position is to retain the port complex—less Pier 18—under entity control. We are willing to contract shoreside services.

—Panama wants the port area to include some surrounding residential areas returned to Panama early in the treaty. They would grant priority use of the port, as well as the right to manage traffic, to the entity.

Entity Housing

—Our position is that all entity housing remain in the canal operating area for the life of the treaty.

—Panama’s position is that entity housing revert to Panama within five years. Their problem is primarily political; they want to break up the US citizen enclaves.

Use Rights—Canal Operation

—Our position gives the canal operator broad rights in the operating area.

—Panama would specifically limit these rights and narrowly define the functions to be performed by the entity.

Panama Railroad

—Our position is to retain the railroad for the life of the treaty.

—Panama’s position is that it revert to Panama early in the treaty.

Albrook East/Pad Area

—Negotiators’ position: revert to Panama early in the treaty.

—Panama’s position: revert to Panama upon entry into force of the treaty.

General Brown asked whether the housing complex was included in the US position. General Dolvin explained that some housing areas which were for Panamanian nationals would be returned but that the housing for US officials would remain under US control, explaining that the Governor felt that such housing was necessary if he was to adequately run the canal. Secretary Alexander asked if this housing was assigned on a seniority basis. General Dolvin said that that was true although to his knowledge few Panamanians resided in those areas. General Brown said that in his view the lands and waters proposal was workable and may be used to our advantage in the negotiations.

Ambassador Linowitz emphasized that there are three major issues in the negotiations. One is how the canal is to be operated including the problem of the entity and the civilian employees. The second was the policies surrounding the canal such as sovereignty, neutrality, and security. And the third was the area of compensation to Panama.

Secretary Alexander asked what type of canal operating entity we had in mind. Ambassador Linowitz responded that Panama wants a joint US-Panamanian entity with a US majority control during the life of the treaty with the board authorized to contract the operation of the canal. He said that Panama did not want total US Government control of such an entity. He said the US position was that a US Government agency must run the canal. Secretary Alexander asked whether Panama clearly understands our position. Ambassador Bunker said that they did.

Secretary Brown asked what would be the next steps in the negotiation.

Ambassador Bunker explained that we had not totally formulated our tactics but believed that we should not be under any pressure to hurry back. He said that we were considering visits to other Latin American countries, particularly those who had written the President on the matter,¹⁴ to explain our position. He said we must make it clear to Panama that they must compromise if we are to get a treaty and that they must bite the bullet on the issue of canal security. General Brown said that someone had made the point the other day that the Latin American countries on the Pacific side should have a voice in the establishment of canal tolls once Panama takes over operational responsibilities. He said he didn’t know how this could be done but that these countries were in tough economic straits without the canal. Ambassador Bunker said that the Negotiators had in the past discussed the idea of trying to include both Colombia and Costa Rica in some form in a neutrality guarantee for the canal. He said there had also been some proposals to include select Latin American countries or other principal canal users, in some form, in the entity, probably as board members.

Ambassador Linowitz said that in his view the Negotiators should be authorized to continue to explore with the Panamanians possible formulas for resolving the remaining issues. He said it was particularly important in his view to develop positions which we can justify to the international community. He said briefing the Latin Americans may serve to put some pressure on Panama although he acknowledged that this was a very sensitive matter and must be handled discreetly. He said clearly that the next moves in the negotiation must have the approval of the President and that it was important to stay alert regarding the right time to continue the negotiations. He said it was clear from the last round that the Panamanians are very emotionally charged on the issue of the canal. For example when they realized that their inflated expectations were unjustified they became despondent and in fact initiated several actions which were counter-productive to their cause. For example they cancelled the scheduled session with the group of visiting Congressmen.¹⁵ He said this emotional attitude indicated insensitivity to US needs but he was confident that in time they would understand that US positions were firm and they must handle them realistically.

Secretary Brown said unfortunately too many countries viewed a commitment to negotiate, such as that given to Panama, as an indication that we intend to give in on issues vital to us. He asked if in the Negotiators’ view further Presidential guidance was needed before the negotiations continued. Ambassador Linowitz said that in his view we had not yet exceeded our current guidance and felt no need for additional instructions until we moved beyond what we presently had.

General Brown said it looked to him as if on the basis of the last talks we may well need a PRC before we return to the negotiating table. Ambassador Linowitz said that inasmuch as we still do not know what it will take to get a treaty he would recommend holding off on a PRC for the time being. Ambassador Bunker thought that we may well need another session with Panama to find out where we stand before returning to the PRC.

General Brown said that in his view this was a matter that was up to the Secretary of State and the Negotiators.

Mr. Duncan asked when the Negotiators thought the next round would take place.

Ambassador Bunker said he did not know but thought that probably within 3–4 weeks. Ambassador Linowitz added that the next round would depend on what signals we receive from Panama and what public activities Panama undertook.¹⁶

Mr. Duncan said that although he was not an expert in diplomacy he thought that visits to the eight Latin American heads of state might very well be viewed by Panama as overt pressure on them. In view of the delicacy of the situation it may be best simply to respond to the Presidents with a letter instead of a visit. Ambassador Bunker said that President Perez had asked for a briefing and that we are under an obligation to respond to him.¹⁷ He said it is true that the Panamanians in the past had indicated that they would consider a tour of the Latin American countries by the US Negotiators an “unfriendly act.” He said that in his view we should let Panama know what we were doing and explain that we are responding to Latin American desires to understand the United States position on the canal.

Ambassador Linowitz said that such a trip if done right could be very helpful. He noted that several Latin American countries in private did not support many of the Panamanian views and he thought they may be helpful in moving Panama into a more responsive position. He mentioned particularly Venezuela, Colombia, Mexico and Costa Rica in this regard.

In closing General Brown reiterated his view that it was important to get some arrangement to protect the neutrality of the canal. Secretary Brown agreed emphasizing that such an arrangement should include a unilateral right to protect the canal if necessary. Ambassador Bunker commented that no matter what arrangements were made the United States very clearly will do what it felt necessary to protect its interests there.

1. Source: National Archives, RG 59, Official and Personal Files of Ambassador at Large Ellsworth Bunker, Lot 78D300, Box 3, Panama, DOA–DOD, Liaison With. Secret. Drafted by Richard C. Barkley (S/AB) on March 9. The meeting took place at the Department of Defense. Copies were sent to Einaudi, Todman, Luers, Bell, Wyrough, Becker, Chester, Kozak, Bunker and Linowitz.
2. Jack Anderson and Les Whitten reported that Torrijos privately blamed Bunker for the stalemate in negotiations. Torrijos said Bunker “is too old; he’s half deaf, and he wears a tie.” Torrijos “hinted heartily that he might be willing to make a deal with a negotiator who would take off his tie and spend a night on the town with him.” (“Foster Care Programs Criticized, Washington Post, February 23, 1977,” p. C23)
3. A reference to a photograph of Bunker and Linowitz in Panama in which Bunker is not wearing a tie. (“Eupeptic over Progress in Panama,” Time, February 28, 1977, p. 14)
4. See Foreign Relations, 1969–1976, vol. XXII, Panama, 1973–1976, Document 97.
5. The letter, dated December 6, 1976, is in the National Archives, RG 59, Official and Personal Files of Ambassador at Large Ellsworth Bunker, Lot 78D300, Box 3, Panama, DOA–DOD, Liaison With.
6. Brown’s letter, dated December 11, 1976, is in the Washington National Records Center, IA Region Files, 1974–1979: FRC 330–87–0068, 1974–1978 JCS Defense Concepts.
7. See footnote 8, Document 9.
8. See Document 20.
9. See footnote 2, Document 31.
10. Presumably a reference to the neutrality and defense position presented by Secretary Brown and supported by Chairman Brown. See Document 4.
11. See footnote 5, Document 20.
12. See Foreign Relations, 1969–1976, vol. XXII, Panama, 1973–1976, Document 123.
13. For text of the “10 Points” and discussion of the proposal, see the memorandum of conversation of the technical team’s second meeting on February 19 and its enclosures. (Department of State, American Embassy Panama, Panama Canal Treaty Negotiation Files, 1964–1977, Lot 81F1, Box 127, POL 33.3.2/Land and Water Jan-March 1977)
14. See footnote 2, Document 31.
15. See Document 17.
16. The U.S. and Panamanian negotiators next met on March 13 in Washington. See Document 27.
17. See footnote 2, Document 31.