223. Internal Transcript of a White House Briefing1

THE PRESIDENT: I don’t know of a better way to wind up a day of delightful legislative work—(Laughter)—than to discuss the Panama Canal Treaty and its implementation.

I would like to start out and say a few words as President and then call on Secretary Alexander to follow me and then General McAuliffe and then Ambassador Ambler Moss. And following those brief explanations of what issues are involved, to spend the time we have available, I am at your disposal to answer questions that you might have about this very important issue.

I appreciate you coming over. I know it has been a hard and long day for you. But there is really no issue that you will address this year that is more difficult or more important than to pass reasonable legislation to implement the treaty. The instruments of ratification went into effect the first day of April. And, as you know, the Panama Canal Zone will come under Panamanian jurisdiction as Panamanian territory on the first day of October. This has already been written into the treaty which is now law. It has been ratified, after a treaty was negotiated for 14 years or more by me and, I think, three other Presidents. And this is an accepted fact that on the first day of October, the Panama Canal Zone will become Panamanian territory under Panamanian jurisdiction.

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The responsibility that we share now, the House, Senate and the President, is to draft and to pass legislation to implement a treaty that is in existence. We have the right under the treaty, carefully negotiated, to operate and defend the canal itself through the year 2000. And after that time, our country has the right to continue to defend the canal fairly much as we see fit.

The most crucial element of the transition period for the next 20 or so years is to make sure that the canal is operating effectively, efficiently, that it is not in danger of interruption, and that we evolve over that period of time an even stronger sense of partnership and sharing with Panama.

As you know, we have for many years, many decades, many generations, shared with Panamanian workers there the responsibility for the effective maintenance and operation of the canal itself. And we built into the treaties the proposition that during this transition period, we would continue to work to operate the canal in harmony with one another.

I think there has been evolved in the last year or more a mutual respect for one another between ourselves and the people of Panama. There were sharp divisions and concerns raised during the intensely debated treaty ratification time. And I think the exchange of documents when I went to Panama,2 the visits by General Torrijos up here,3 Congressional delegations, particularly a large number of Senators—I think almost half the Senate went to Panama to discuss with the leaders there and examine the canal installations and also to discuss future employment and retirement benefits with the American workers, primarily, but also Panamanian workers, to set a basis for proper relationships that are very crucial.4

I think that all of the military leaders who testified in meetings like these, which were numerous, with the Members of the Senate, or with the public throughout the Nation, indicated accurately that a major factor in the peaceful operation of the canal itself was harmonious relationships with the Panamanians. And that is what we have achieved, and that is what we hope to maintain.

I believe that it is important to recognize that you and I have a responsibility to carry out a solemn commitment of the United States of America. Our word of honor is at stake. There have been promises made by the Panamanians and by us. The legal binding promises are spelled out in the technical language in the general terms of the treaty. [Page 534] But there is a general tone and spirit of the treaties that were evolved after difficult negotiations and when commitments were made on both sides.

We have an obligation to meet those commitments. We, in addition, have negotiated with the American employees there. There are certain employment rights, salary levels, retirement terms, benefits after retirement on which the successful operation of the Panama Canal depends. And the good will of the U.S. and Panamanian workers who maintain and operate the canal is a very important element in its proper operation.

Any defaulting on the treaty terms and the commitments that have been made would, I think, create serious problems for our country, not only in the violation of a respected nation’s word of honor, but also possible labor unrest or even potential violence that might interrupt the operation of the canal.

East Coast oil deliveries from Alaska are dependent upon normal, uninterrupted traffic to the Canal. American shippers, shipping lines, Gulf Coast ports, consumers, farmers and others all depend upon the proper operation of the Panama Canal.

I think it is very important also for us to recognize the need to meet our responsibilities with adequate defense of the Canal itself. The expenses that accrue to our government primarily relate to workers’ benefits of all kinds, which I have just described, and the proper deployment and equipping of American military personnel to be sustained there through the year 2000 to guarantee the safety of the Canal operation itself.

I recognize perhaps even more vividly than anyone in this room the political consequences of the consummation of the Panama Canal Treaty. When we started our final stage of negotiation, only eight percent of the American people favored the Panama Canal Treaties in any form. About 39 Members of the Senate had signed a resolution the year before I became President, committing themselves not to ratify any Panama Canal Treaty. But as the public became aware of the terms of the Treaty and the connotations of it and the consequences of rejection, the benefits of completion of the Treaty terms, a substantial majority approved of the Treaty provided we had the right after the year 2000 to defend the Canal and provided during the rest of this century, for the next 20 years, we had the right both to defend and operate the Canal.

We gave estimates of the cost of workers’ benefits and defense primarily to the Senate in the early stages of the canal debate last year, as $350 million over the next 20 years, roughly 10 years. We didn’t know what premises would be finally written into the implement legis[Page 535]lation after the final ratification. Of course, we didn’t have time to do accurate projections not knowing the final terms of the legislation.

Our latest estimates by the Defense Department are $870 million.5 The Office of Management and Budget have fairly well confirmed these figures. Their figures came out on the same premises to amount to about $850 million, only $20 million difference.

I would say over the next 20, 21 years, the average cost per year will be about $42 million. As you know, payments to Panama come out of toll fees and I believe that I can assure you that these figures are accurate to the best of our ability to estimate.

There have been wild exaggerations of cost, including all the toll fees and so forth, much higher than this. If we take a period, say, ten years before the termination of our responsibility, the year 1990, and begin to phase down the cost of maintaining our troops at a rate of about three percent per year, which is a reasonable assumption, but it is one we have not yet assumed, then the total cost would be about $350 million.

But our presumption in reaching the $870 million figure is that we would sustain the present level of American troops adequately deployed and adequately equipped right up to the last day we are responsible for the defense of the Canal.

These terms, I think, are fair to our country. I think there are great benefits to be derived from the Treaties themselves. We are obligated, I think, to act in good faith with Panama. I would say that there has been some expression of concern in the House, to answer the last question that I know about, concerning the human rights status as it exists in Panama.

I think Ambassador Moss would agree and General McAuliffe would agree—they live there—that there have been dramatic improvements in Panama in the last year and a half. General Torrijos has stepped down; a genuine civilian government has been chosen. Panama has signed the Inter-American Human Rights Convention.6

We have seen Panama move toward freedom of the press. The political exiles from Panama have been invited to return and there has been a general improvement there all around.

It is not perfect. They don’t measure up yet to American standards, but the objective analysts who have been in Panama would agree, I think, with what I have just described to you.

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I, as President, want to ask you, without any timidity, to help us evolve within the House an acceptable implementation bill to carry out the terms and the spirit of the treaties that we have negotiated and which the Senate has confirmed and which are now U.S. law and international law.

I think Jack Murphy, Ed Derwinski, David Bowen represent three Members of the House who have shown tremendous courage, as have the numerous groups in the Senate. All three of these men, as you know, were opposed to the treaty. They did not want to see the Panama Canal Treaties signed. But I think they have studied the issue and now see that legislation is necessary to carry out the commitment that our Nation has made and to fulfill an oath that you and I both took that we would uphold the U.S. law.

I have to say that there are some elements within the bill which Jack Murphy is sponsoring that I don’t agree with completely. But I think it is an excellent effort and shows great courage on his part, and I want to thank him for it.

I think now I will call on the Secretary of the Army to say a few words and then our Ambassador and then General McAuliffe and then we will open the session for questions.

[Omitted here are remarks by Alexander, McAuliffe and Moss.]

QUESTION: Mr. President, I believe you mentioned in your remarks that the $870 million that you estimate it will cost us now, I believe you said all that would come out in toll fees. Is that correct?

THE PRESIDENT: No. Any payments to Panama will come out of toll fees. The $870 million is designed basically for workers benefits, retirement benefits for our workers, payments to them of an increased nature and the sustaining of our military presence to defend the Canal.

The original estimate that was made to the Senate during the early days of the debate was $350 million, before we knew the terms of the legislation and how long all our personnel would stay there and so forth. We have assumed in the $870 million figure that we will maintain the present level of military personnel up to the last day we are in Panama. If we are getting along well with Panama under the military leadership, which will be General McAuliffe’s successor, and, say, in 1990 we start phasing down costs at three percent a year, letting Panama join with us on a cooperative basis, then it will work out to about $350 million.

But we are talking about sustaining our military presence up to the last day of 1999. Under those circumstances, we would pay about $42 million a year, which works out roughly to $870 million. That is for our workers and for our defense capability.

QUESTION: Do they make a contributing factor out of the Canal tolls also? Do they pay anything?

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THE PRESIDENT: Panama has the smallest military force in Central America except Costa Rica, which doesn’t have any military force. And as General McAuliffe said, it is primarily a police force. They have a very tiny National Guard. They are cooperating—and one of the setbacks that we have had was action taken by the House to wipe out a $5 million loan to Panama to let them improve their military, a tiny amount, as you know, to let them join in with the defense. But in kind of a lashing out at Panama to show something, we eliminated that FMS loan to Panama.

But we would expect over the next 20 years, slowly but surely Panama will build up their military capability. But in this century, we are directly charged with the primary defense of the Canal. And following the year 2000, we have the right to defend the Canal if in the President’s judgment, as Commander-in-Chief, the Panamanians are not defending it adequately.

QUESTION: Mr. President,

If I could follow on, on the question of how much the increased tolls are going to cost us for the payments to Panama, I have had some expression of concern by shipping people in New York City that the increases in the tolls that are contemplated in essence are going to make competitive trans-continental land shipments and, thus, hurt the ports initially in the Gulf and later on, as the tolls go up, along the East Coast, including New York City. I was wondering if you could tell me what increases in the tolls are contemplated and whether your Administration has done any analysis of what the effects of these will be on the Atlantic and Gulf ports?

THE PRESIDENT: We made projections during the Senate debate but let me refer to the Ambassador and Secretary to give you a more accurate answer because I have not kept up with it that much.

AMBASSADOR MOSS: Perhaps Secretary Alexander can elaborate on this, too, but under the Administration bill, I understand the Canal company would only be required to raise tolls by 11 percent. This is better than our estimates last year and in fact in 1977 when the treaties were concluded, when sensitivity studies indicated that Canal traffic could reasonably bear an increase of anywhere up to, let’s say, 30 percent. Now, there is the question, of course, of how much the traffic should bear, how much the total traffic should bear, and how much the taxpayers should bear additionally to that.

For instance, in Chairman Murphy’s bill, the interest payments which are presently made to the U.S. Treasury, which have been made for the past 30 years to the U.S. Treasury, would be continued, and [Page 538] that would require a total increase of slightly over 21 percent. Again, well below the figures that we talked about during the negotiations.

There have been, of course, other proposals to add in other treaty costs, or extra treaty costs—for instance, some of the early retirement benefits that can be given to our workers—and they were put under the tolls rather than borne by direct appropriations, that would rise a little further.

So you start off with kind of a floor, basic treaty, direct treaty related costs, which would cause a toll rise of 14 percent, but then there are, of course, a certain number of add-ons which would represent other funding which could be taken out of the total revenues, if that were the decision of Congress in the implementing legislation.

THE PRESIDENT: That toll fee setting would remain with us.

SECRETARY ALEXANDER: There have only been two recent increases in the tolls in the entire history of the canal. They were 19 and 20 percent.

Actually, business has continued to rise, the feasibility studies were, as indicated by Ambler Moss, that you could go in the range of the 30 percent area without having a substantial effect on traffic. When you get too much beyond that, it could be—

QUESTION: Mr. President, I would like to know, is there any provision for repayment to this country for transfer of property such as the railroad or buildings that will eventually take place in Panama, presently owned by the canal company?

SECRETARY ALEXANDER: There is no provision for payment by Panama for the transfer of the railroad, which will take place on treaty day.

The provision within the treaty is that the railroad will be transferred without change. It does not at any point establish a certain dollar value for any of the lines or any of the property transferred. For a property not specifically covered by the treaty, if the Panamanians want to have it, they pay the fair market value for it; for example, typewriters.

QUESTION: Anything basically attached to the land will remain?


THE PRESIDENT: Will remain there, in Panama.


QUESTION: Mr. President, prior to the ratification of the treaty, the anti-American forces within Latin America, especially Central America, use the presence of the United States in order to inflame the anti-American sentiment.

What has been the impact of the signing and ratification of the treaty on the anti-American movement, especially in Central America and in the Caribbean?

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THE PRESIDENT: I have been to a number of Latin American countries, Bill, and my wife has visited seven of them—seven different countries. I have met in Panama with the leaders of some of the key nations—Venezuela, Mexico, Costa Rica, Colombia.7 There has been an outpouring of appreciation and an easing of tension and animosity against our country that has been truly remarkable.

It is hard for us as Americans to understand the deep sense that existed in many very friendly Latin American countries that we were still a colonial power. I think that all of the military even agreed, the Joint Chiefs of Staff were unanimous—I won’t try to speak for General McAuliffe. He is here to speak for himself.

But we all felt that the Panamanian government, their limited national guard in spite of extremely inflammatory statements made during the Senate debate—Torrijos was their chosen leader—was frequently referred to as a tinhorn dictator; racist statements were made against the Panamanians themselves, allegations that they were sub-human or were literally incapable of learning how to operate a valve on the canal or repair the canal.

The Panamanians listened to these debates with the same degree of intensity that we watched and listened to the Watergate hearings during their most interesting moments.

But in spite of all that, the Panamanian government acted with great sensitivity and the people of Panama showed great restraint.

I am not going to get into the argument that we suffered through for six or eight months last year about whether or not we could have defended the Panama Canal if there was an outpouring among the Panamanian people to try to damage it or sabotage it.

The Joint Chiefs thought we would have had a very serious problem of defending it and would have required perhaps several hundred thousand more troops to enter into combat to do so. But I think there has been a remarkable change in attitude toward the United States of both friendly and previously unfriendly nations because we signed these treaties and we have carried out our agreements under the treaties as best we could, with the exchange of documents and the attitude we have assumed.

If there has been any sense of animosity since then, I have not heard about it. Maybe Ambassador Moss or General McAuliffe, who live there, could correct me if I am wrong.

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GENERAL McAULIFFE: No, you are absolutely correct, Mr. President. I would like to say something with respect to these elements in Central America.

I do have occasion to visit those countries primarily, of course, to talk to the military leaders. But I do keep track of it.

I will say briefly that the United States’ action in ratifying the treaty has taken the wind out of the sails of a lot of those anti-U.S. elements. They don’t love us for that. But nevertheless, it has denied them a weapon that they had previously.

Let me just say categorically to another comment, Mr. President, that I have supported the treaties and the concept of the treaties since I first assumed that command.

I was appointed to the command by President Ford. My first tour as a Unified Commander was up about two years ago. President Carter reappointed me. If I didn’t agree with the treaties that would have been an ideal time for me to retire. But I chose to stay on.

THE PRESIDENT: I think the military, so far as I know, the military was unanimous in believing this was a good move.

I never heard any adverse reaction among active military persons.

QUESTION: I would like to follow up again on the scenario, if Congress does not approve implementing legislation—what would the direct result be in Panama and what would the indirect result be in terms of our relationship with Latin American countries?

THE PRESIDENT: Let me repeat what I said earlier, and then let the Secretary and the Ambassador respond more fully.

The treaty instruments were exchanged, went into effect the first day of April. The Panama Canal Zone comes under Panamanian jurisdiction on the first day of October, no matter what action the House or Senate might take now.

The treaty, as you know, under our Constitution is, the supreme law of the land just like a bill that is passed.

The Secretary has outlined things that could not happen if we did not pass implementing legislation. There is some doubt about whether we could operate the Canal at all. We would have no authority, for instance, to take care of personnel problems, to continue to employ them, to pay retirement benefits.

It would be doubtful unless the Congress would pass some kind of legislation that we could continue to operate military installations there. And the adverse effect on Panama, I think, would be profoundly damaging.

But let me turn to, the specific answer, over to the Secretary and then to the Ambassador and let General McAuliffe follow up because [Page 541] I want this to be very accurate. In fact, any time I make a statement because I haven’t been involved in it for six or eight months that is incorrect, I hope you will all feel free to correct me. Is that clear?

SECRETARY ALEXANDER: Certainly, what you stated is completely accurate about all the personnel problems that would flow. Another set of problems is related to the transfer of people to run the hospitals, and run the schools. This could not take place. The setting of tolls could not take place. An increase in tolls would be necessary under any conditions, some have estimated 14—whatever percent, whatever one wants to put on the top. That could not take place.

It is questionable what authority the people who are working there would have because the entity known as the Panama Canal Company cannot operate in Panama as of October 1st. That is a fact.

So how something could continue to function as the operating entity for the canal is a very serious question. Now what would continue, there are some elements of the Panama Canal Government that continue for a 30-month transitional period, like the police and so forth, but they, too, must be placed within a new organizational entity. But many activities would just plain stop.

THE PRESIDENT: We have about 3,000 employees there who are presently U.S. citizens living under U.S. jurisdiction. And what their rights would be, absent implementing legislation, would be very doubtful. I don’t think the courts have ruled on it yet, but they might become U.S. Government employees without rights. These matters have not been addressed, and the consequences are so profound, it is almost impossible to assess how serious those consequences would be.

Ambassador, add anything you want.

AMBASSADOR MOSS: I want to add one more point to that. I think certainly the Secretary has addressed very fully the organizational problems we have had. General McAuliffe and I live down there and spent an awful lot of time talking to the U.S. citizens. I can tell you, too, we have a very severe morale problem. In fact, I think we have one already because the U.S. citizens who work down there really expect certain things to happen under the treaty, not only their status in a foreign country, but also the conditions of their employment, their labor organization, this kind of thing. And I can honestly report to you that the U.S. citizens in the Canal Zone almost unanimously opposed the treaties, there is no doubt about that. But they are almost equally unanimously in favor of this implementing legislation.

They want to stay there, they love their work, have a high esprit de corps, want to live in Panama. But they want promises fulfilled, want their status defined, want their way of life to continue, want the quality of life to continue as much in the same way as it is now [Page 542] as humanly possible. And sometimes psychologically, they have a tendency to feel Washington—and they don’t distinguish much between the Legislative and Executive Branches—is out to undercut them or take away the things they were promised.

This affects the morale very deeply. Their morale normally on the job is very high. We would like to see it stay that way because it is a very direct factor in how well the canal operates in adverse circumstances.

Mr. [unclear] raised the point, too, about how the Latin American countries would see the implementing legislation. I want to point out the canal is terribly important to us because about 7 percent of our international maritime commerce flows through the canal. But it is even more important to some Latin American countries. The West Coast countries of Latin America—Chile, Ecuador, Peru—in each of those cases, over 35 percent of their goods flow through the canal, 25 percent of Columbia, even though it is on two oceans.

One of the reasons these countries were outspokenly in support of the treaties was not to be so much anti-American and beat up on the United States, but in their own economic interests, because they felt this was the best way to see their interests preserved. I think a lot of them would view the failure of implementing legislation, or for that matter anything which threatened to disturb the perfect functioning of the canal, as being something which hit them very hard economically and would make a great impact on Latin America, great negative impact, not simply in political ways, but economically it is their lifes’ blood and they would depend very much on that. I think that is something we have to bear in mind.

QUESTION: Mr. President, I understand that over 60 years ago, we were charging for passage through the canal $1.25 a ton. And now, four wars and 60-some odd years later, we are only charging pennies more. I am troubled if these figures are correct, as to why we can’t make the canal pay for itself and why we can’t raise those $42 million a year out of tolls so it doesn’t cost the American taxpayer.

We know that it is a 9,000-mile trek to go around South America, and with fuel costs and crude costs and shipping costs, certainly there is still a great saving on the part of our country as well as other nations of the world if we charged just a fair rate.

SECRETARY ALEXANDER: You are certainly accurate in your statements about the dollars per ton that are charged. The only two raises in tolls have come within the last four or five years, and they have been 19 to 20 percent. One could question whether the canal was run like a good business for many years, there is no question about that. But some facts should be pointed out. Since 1951, the U.S. Treasury has received $317 million in interest payments. And that is out of [Page 543] international toll payments. Since 1951, the capital improvements have been some $377 million, again out of tolls.

Our feasibility studies indicate that there might be a search for alternate routes for the transportation of goods if one went beyond the raising of tolls in and around—I am not precise on this; somebody can correct me—around thirtyish percent. And as you raise it even higher, you eventually reach the point where you lose traffic faster than you gain revenue. We would not want to have a toll, obviously, that is any more than the traffic can bear. But the assumption is that with inflation and running it more as a business should be run, that in the future, you are going to have to raise tolls some more.

Therefore, that potential way of transporting goods has to stay competitive. So we don’t want to see tolls go so high that you eliminate the capacity to provide coming revenue.

QUESTION: But in terms of world inflation, the tolls are a pittance in terms of what they should be. We have no money for countercyclical funds, urban aid and other programs, yet we spend millions of dollars down in Panama. It is hard to explain to my people back home why we can’t have some urban help for the needy, handicapped, senior citizens, underprivileged, yet we are spending $42 million helping the manufacturers of the world.

These tolls are very low and certainly from an admitted business viewpoint, an abomination.

SECRETARY ALEXANDER: The $42 million are not going to the people of Panama. The payments to Panama all come from international shipping. $42 million, which is, again a high side estimate—it is $277 million for five years, that is the best we can get a handle on—go to many of our defense needs, which we would construe to be in our national interests. Obviously there are other defense needs that are made around the world.

The rest of the estimates, to make it 870 million, are out-years after the year 1984 that may or may not come to pass, depending on what assumptions you make on force levels. But those $42 million aren’t being transferred from the American taxpayer to the Panamanian government, not at all.

QUESTION: I realize that. I just wonder if they can defray our costs.

THE PRESIDENT: When you look at the size of the defense budget, $42 million sounds like a lot of money, perhaps to a peanut farmer, perhaps to someone in New Jersey. But compared to the total defense budget, it is a relatively small amount. And, of course, one of the insistent demands on the part of the American people, the Senate and myself, was that we retain the right to defend the canal.

I think the Panamanians would have been very eager to take over the canal earlier, without giving us a permanent right to defend it and [Page 544] therefore to arrange to pay for the defense of it themselves, as they will be after the year 2000. But I think that was not only a right but a duty and a privilege, in a way, for us to maintain a military presence in Panama.

We not only keep the canal open and secure during this 20-year transition period, but we have a military presence there in the central part of Latin America which can be also beneficial to us.

The payments, retirement benefits and pay scales and so forth, of our workers, were negotiated with equal difficulty as we experienced in negotiating with the Panamanians in turning over the canal and the operation of it. Our same negotiators, some of who are here tonight, met with the labor leaders and met with individual American citizens to make sure that after the canal did go over to Panama, that their rights for retirement benefits and so forth were not interrupted. That is where some of that money goes out to. It is a little more expensive to phase out with early retirement and so forth. That is where some of it comes from.

I can’t deny there could be an approach which was not written into the treaty and so forth that we would take all the canal tolls and pay for our military presence there. I don’t think that would be fair and it would be in violation of international practice.

QUESTION: Mr. President, General McAuliffe talked about the gradual transition to build up the Panamanian forces to where they would be able to protect or defend the canal.

In light of the fact—what is the population of Panama, a million and a quarter?

GENERAL McAULIFFE: About 1.7 million.

QUESTION: So that is about the size of the State of [Georgia], as far as population is concerned.

THE PRESIDENT: A very fine size.

QUESTION: A very fine size, yes. (Laughter)

I won’t argue that point, Mr. President. But to support on their economy and through that time, do you really believe that you are going to get an adequate force, considering as a military man, what military presence will be necessary there as an adequate force for whatever eventuality, that the Panamanians will, in fact, be able—through their economy and their numbers—to come up with an adequate force by the year 2000 or will they, in fact, at that point do somewhat as the Philippines and suggest maybe they would like to have us stay on?

Would you like to respond to that?

GENERAL McAULIFFE: First of all, I did say, and I do believe that Panama should and does intend to restructure its forces. It is now three-quarters police and about one-quarter a tactical type of force.

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QUESTION: It is not even equivalent of what we would have as a national guard, though, is it?

GENERAL McAULIFFE: No. It has very, very minimal military or defense capabilities. But I see them restructuring this force and I see them making a very modest enlargement of the force in order to create, perhaps a couple of battalions, by when is anyone’s guess, 1990—you know, quite a bit down the road.

They certainly are not in a position now economically to do any expansion. They are in the position to do a little bit of restructuring so as to dedicate perhaps some symbolic units to canal defense, starting this October, and then gradually to enlarge upon that.

As far as what might happen out at the end of the treaty period, many of us have speculated that depending on the attitudes of the United States Government, the Panamanian government, and the situation in Central America on or about the year 2000, I think it is entirely possible that the Panamanian government at that time, might ask the United States to retain a small military presence there after the year 2000.

But that is sheer speculation. We have to plan on what is said in the treaty, and that is, that by the year 2000 we will turn over the last remaining military bases and other property that we would have in that canal area and withdraw our forces.

Then the full impact of the neutrality treaty comes to bear, as the President indicated, wherein we would perhaps not have forces there but would be permitted to take such actions as would be necessary to maintain neutrality and our continued use of the canal thereafter.

QUESTION: But would that preclude a United States military presence thereafter?

GENERAL McAULIFFE: The treaty, as it is written now, would preclude it. In order for forces to stay after the year 2000, some other type of bilateral agreement would have to be reached.

QUESTION: We would have to negotiate similar as we have done with the NATO powers to come in or with the Philippines or whatever—


QUESTION:—under that mutual bilateral agreement and do you feel then on top of that, that is wise for our national security or the relationships in the western hemisphere that the United States have a military presence in Panama thereafter?

GENERAL McAULIFFE: I think it is very important for the United States to have military forces in Panama, not only for canal defense but as a deterrent to perhaps possible or potential hostile actions or elements in that area. They do provide an element of stability within [Page 546] the country of Panama and within the region. I think that so long as we have forces in Panama, they serve as a deterrent to a possible predatory nation thinking about coming in and taking advantage of the situation in Panama.

That is down to the year 2000. As I said, it is very difficult to predict what would be the requirement of the situation beyond that. And I think we just have to—our successors will have to see.

QUESTION: But my question was related as to whether we feel our position was to try to negotiate at that point a bilateral agreement for presence.

THE PRESIDENT: I will say this: In the latter part of the Senate debate on the treaty, I would have stolen $10 from Amy’s piggy bank and paid the Panamanians to say you could stay after the year 2000 with just one batallion of American troops. I don’t know what is going to happen. I think it primarily depends on our relationship with Panama. If you don’t mind my being critical, you know, Panama is our friend. They are our neighbor. They are symbolic in many ways to the other Latin American countries [and] the Caribbean countries, as a test of how the United States is going to implement our professed commitment to basic human rights, a powerful nation in every sense of the word, how do we deal with a small nation that has been heavily dependent upon us and which has negotiated in good faith under the most difficult of circumstances to work out an agreement that is mutually satisfactory.

We send billions of dollars to Israel, to Egypt, tens of millions of dollars to countries like Jordan, Syria, Thailand and so forth. Here is Panama, you know, a neighbor, friend, a partner alongside of us in the wars; they never have abandoned us. It has been difficult for them. And just a few weeks ago when we had proposed, I think a $5 million FMS credit so Panama could borrow some money—it was not a grant—to build up their national guard so they could be more capable, the House cut it off, just wiped out $5 million, a drop in the bucket for you, but symbolically it was a slap in the face to Panama.

You know, we have proven that we are powerful enough to do it. Maybe it helped politically back home to say, “I showed the Panamanians.” But you know, we have got to work with Panama and I don’t believe it is good for us to show that we are powerful enough to punish a little nation just because we disagree with the negotiated treaty that was signed by me and ratified by two-thirds of the Senate.

I would hope that you would take that into consideration.

One of the best ways to defend the Panama Canal is not for us to send 100,000 more troops down there, but to have a friendly relationship with Panama so they will join in with us in a cooperative and [Page 547] friendly spirit to help defend the canal that we and they both want to be kept open.

I know it is a difficult vote. If I was in the House, I would be going through the same difficult decision-making that you are. But I hope that you will recognize that generosity or fairness is a crucial element in foreign diplomacy and help us not to try to punish Panama even though you decide not to vote with implementing legislation. Let’s don’t turn those people against us and make it almost impossible for General McAuliffe and our military troops to defend it.

QUESTION: Mr. President, I certainly support the treaty, but on a certain matter here, for example, it says, “The Panama Canal Treaties provide the United States with the necessary authority at the time of war to defend and secure the canal.” I wonder if you could tell us a little bit about who decides whether it is a war and whether it is the kind of war in which we would move? Suppose it were one of these wars which is kind of hard to decide whether it is a war or revolution?

THE PRESIDENT: The President of the United States decides. If, in his judgment—or perhaps her judgment—at that time the Panama Canal is in danger, if the security is in danger, the United States has a right to take such action as it deems necessary to defend the Panama Canal.

QUESTION: They don’t regard this as an invasion of their sovereignty?

THE PRESIDENT: Not only has Panama agreed with this provision—that was the most difficult single negotiating point—but other nations in that region have also endorsed that principle. And the treaty that is continues after the year 2000 has a multinational protocol throughout which countries like Venezuela, Colombia, Mexico can join with us as signatories to make sure that not only does Panama agree we have a right to defend, but we have a duty to defend. But other nations who would be sensitive also agree to respect the neutrality of the canal; it will be a written, signed international document. And Panama, if they disagree with a judgment made by the President, as Commander-in-Chief, they have to refer to the agreement that the Panama Canal is kept open by unilateral action, if necessary, on the part of the United States.

QUESTION: I support the implementation of the treaty, Mr. President. Even more do I support your conception of what the honor of a great country is in dealing with a smaller country. I think those are words that we must remember.

I would like to ask you about how this new President is installed, if not by election. What is going on by way of their electoral process and governmental change?

[Page 548]

THE PRESIDENT: Let me tell you what I recollect, which is kind of short, and let the Ambassador correct me.

Last August they had an election to choose a General Assembly—I think about 500 members. And then those 500 members chose the President. And I understand that in 1984 there will be direct elections of the President, similar to what we have.

AMBASSADOR MOSS: That is absolutely right.

[Omitted here is a portion of the question and answer session.]

QUESTION: Mr. President, I think that probably the most serious question we are going to have to answer during these entire debates is the question of how much our property is worth there, just as you are talking about, and why we are not going to take that portion of the operation of the canal that is for our additional personnel costs, excluding our military, out of the tolls that Panama is going to get, why we are not going to get them to pay us back for the equipment, for anything that we are leaving for them, to acquire all the properties and pay for our additional costs.

I recognize that would be a very substantial burden to ask them to do, but that is the issue that we are really going to be facing. All these other things we can talk about, but the real issue is whether we are going to, in effect, require that the tolls from Panama to require for the $4 billion worth of whatever our inventory is there.

I think that is the real issue, and I think it is going to be a difficult issue for us to face, because I think the people back home are from concerned about us turning that over without requiring them to pay us for it and at the same time increase their toll payments so substantially.

THE PRESIDENT: Let me give you two quick answers and let the Ambassador follow up. In the first place, we have never claimed sovereignty over the Panama Canal Zone, neither Teddy Roosevelt nor the Supreme Court in, I think, five different rulings, nor anyone else in a position of authority, including no Presidents have ever claimed we had sovereignty over the Canal Zone during the 75 years or so we have used it. It has been Panamanian territory. We have not paid them much rent on it, but we have used it.

As the Secretary pointed out, we have derived since 1957, as so-called interest payments on our original investment, over $317 million which has come up here and gone into the United States Treasury. I think that was fair. I think that we benefited, I think that Panama benefited. It was not a favor done by either person, by either nation.

To answer your question, if we could have written the treaty unilaterally without negotiating it with Panama, a sovereign nation, we could have made any demand we chose. We could have confiscated all the tolls, figured out how much all of our buildings cost, made Panama pay for it and not given them anything.

[Page 549]

But we negotiated with them over 14 years, beginning with Lyndon Johnson—I am the fourth President—in a quid pro quo relationship, where both countries ostensibly, and I think actually, derived benefit. The treaty does not call for Panama to pay us for those facilities out of tolls. It specifically prescribes what we have outlined to you tonight. And we are now living under an agreement signed by me, ratified by the Senate, which does not call for Panama to pay for those facilities that we are turning over to them.

We can’t renegotiate the treaty. We can’t reject it under international law or under United States law. I am sworn to uphold the U.S. law, U.S. Constitution, just like you are. And there is no way for us to undo the treaty that we have ratified.

If we discovered at this point that we had made a serious mistake, because of a major oversight, or if the Panama Government had been overthrown by a radical communist dictator, instead of being taken over by a democratically-chosen, friendly President, we still are bound to carry out the terms of the treaty.

We can’t undo the treaty. It has already gone into effect. So to raise this question now, why don’t they pay us for it, that was not the agreement we reached. We signed the agreement just like a contract to sell land.

If you bought a piece of farmland for $400 an acre and you discovered oil on it, the former owner couldn’t come back and say, “It is worth $100,000 an acre. I want my land back.” The same thing is basically the question you are asking. You have to be fair with the people once you traded with them. That is what we did. We traded with them, signed the document. I think it was fair and is fair the way it has been worked out.

AMBASSADOR MOSS: Let me add that on the Panamanian side, of course, there was tremendous opposition to the treaties for almost the equal and opposite reason there was opposition here. The Panamanian people, many of them, thought their country had given away too much and in fact they should have gotten a better economic bargain.

They pointed out over the years we paid $2.3 million for the use of about 600 square miles of territory, some of their best real estate, and it works out to about $6.00 an acre a year. And at the present, we are paying ourselves $20 million a year interest payment and they are only getting 2.3 million. Their economy benefits enormously from the canal, but still when they consider that they look around the world and see what we pay for military base rights in Spain, Turkey, Philippines, and we are keeping our bases for the next 20 years without any quid pro quo for the bases, a lot of Panamanians have criticized their own government for not driving a harder bargain.

[Page 550]

These negotiations were genuine arms length negotiations, tough negotiations, and as the President said, it is the way the bargain finally came out. I think the proof of the fact it is a fair bargain is the fact it did generate so much heat in both countries for the equal and opposite reasons.

QUESTION: Mr. President, what you are saying, as I understand it, is we can’t re-open the treaty negotiations, which I think we all understand, that we either have got to take and accept one way or the other, or reject, what you have proposed here as far as what you have already obligated to the President as soon as it is ratified. Is that about it?

THE PRESIDENT: Yes, except I would say that Jack Murphy’s bill, which we are supporting and hope will not be modified, is not exactly what we want. If I were writing the bill myself, I would write it differently. I think that Jack’s bill is not quite fair enough to Panama, and I think it borders on violating the spirit of the agreement that I negotiated.

But we are supporting it, and I think that Jack and Ed Derwinski and others are very courageously supporting it. But we can’t violate our word of honor, we can’t violate the law of the land, which is the treaty. And I would hope you all would support the implementing legislation, including the spirit in which the treaty was negotiated, although you might find some loophole in the treaty that you could take advantage of if you wanted to abuse Panama.

The last point is if the House does not act favorably and pass legislation, then we are faced with a serious debacle the first of October, because the whole thing goes to Panama, they have jurisdiction over it, and we don’t have any mechanism by which we can continue to operate.

QUESTION: Regardless of what we do. Right?

THE PRESIDENT: Regardless of what we do.

I want to thank you all for being so patient.

  1. Source: National Archives, RG 59, Files of Assistant Secretary J. Brian Atwood, Subject Files and Chrons. 1977/78/79/80, Lot 81D115, Box 2, Panama Implementing Legislation. No classification marking. A handwritten note reads: “Treat as Classified.” The briefing of approximately 100 Members of the House of Representatives took place in the East Room at the White House. All brackets except those that indicate omitted text are in the original.
  2. See Documents 183 and 185.
  3. See Documents 102 and 113.
  4. See Document 129 and footnote 2, Document 130.
  5. See Documents 222.
  6. See footnote 3, Document 102.
  7. See Document 183.