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

36. Memorandum From the Panama Canal Treaty Co-Negotiator (Linowitz) to Ambassador at Large (Bunker)¹

Washington, May 9, 1977

SUBJECT

• Panama Canal Negotiations

Based on the discussion with the Panamanian Negotiators this morning² and our subsequent conversation we have tentatively agreed the following steps might be taken preparatory to our meeting with the Panamanians Tuesday³ afternoon:

With respect to neutrality I will be prepared to indicate to the Panamanian Negotiators that we are proceeding on the assumption that the language proposed in March on this issue is acceptable to them but that they have put forward interpretations of this language which they regard as important to meet their own requirements. By the same token it is important that they understand our need to interpret the language to meet our own requirements in this country and to assure requisite approval by the President and the Congress.

With this in mind therefore we want to be able to interpret the neutrality agreement as follows:

1. The United States is committing itself together with Panama to the maintenance of a regime of neutrality for the canal. Under this commitment the United States must be in a position to take such steps as may be necessary to assure that the neutrality of the canal is maintained against a threat or attack from any source.⁴

I would then go on to say we hope that Panama would find this acceptable and would understand the reason for our requirement. In connection with the endorsement by an international body, I would point out that we are agreed that such international endorsement would be appropriate and desirable but that in our mutual interest it would be better to have the OAS—a regional body under the United Nations—providing for such endorsement by the OAS member countries rather than by the larger and more complex United Nations groups.

2. With respect to the entity we would indicate our mutual agreement that the entity would be devoted to the operation of the canal and not to commercial activities and that the issue is simply how to delineate on a mutually agreeable basis the functions entailed in such operation.

We envisage, as we pointed out, a Department of Defense agency—the Corps of Engineers or another—which would have operating responsibilities. The Joint Advisory Board to be established would be able to deal with policy matters affecting operation and we would be willing to propose a Panamanian be named as chairman of the advisory board.

As to the functions to be performed by the entity we should be able to put before the Panamanians the appendix which lists all of the functions presently performed by the Canal Company and by asterisks indicates those mutually agreed which are to be retained by the canal operators, those to be performed by military authorities, and those to be performed by the Government of Panama.⁵

With respect to employees, instead of referring to SOFA rights we should turn over to the Panamanians the list of employee rights as set forth in the appendix so there will be a clear understanding of precisely what we have in mind.

3. Lands and Waters. If Alexander has approved the lands and waters presentation of General Dolvin then this should be available to be disclosed to Panama at the most propitious time. It may well be that this should not be done until after the President returns from Europe⁶ so that it will appear to have been directed by our “highest authorities.” If the Panamanians press for earlier discussion of this issue we should continue to point out that it will require the determination on the highest level and that meanwhile we should continue to try to dispose of the other issues.

If we are able to make progress along these lines then at some point it might be desirable to propose that groups of the delegations undertake to work separately on some of the aspects. For example General Dolvin and Fabrega might be asked to deal with functions and later lands and waters assuming requisite Alexander approval. Dick Wyrough and a Panamanian designee could be asked to deal with the employee rights aspects. Perhaps other areas for such separate treatment might develop during the course of the negotiations.

Clearly the object ought to be to make progress in every area where there seems to be room for movement—including economic benefits. On this point it becomes ever more important that we have a full analysis and report on the kind of annual payment which is feasible under anticipated canal operations, the toll increase which would be practical and acceptable and the alternative proposals which could be put forward for consideration by the Panamanians on this issue. I would think that Morey Bell and a Panamanian representative could be asked to serve as a subcommittee to deal with this issue.

1. Source: National Archives, RG 59, Official and Personal Files of Ambassador at Large Ellsworth Bunker, Lot 78D300, Box 8, Chron Jan-June 1977. No classification marking.
2. A summary of the first session of the May round of negotiations and the Panamanian response to Bunker’s opening remarks is in the Department of State, American Embassy Panama, Panama Canal Treaty Negotiation Files, 1964–1977, Lot 81F1, Box 128, POL 33.3.2—Canal Treaty negotiations April-July 1977.
3. May 10.
4. Bunker placed a checkmark next to this sentence in the left margin.
5. Bunker placed a checkmark next to this sentence in the left margin.
6. Carter traveled to London and Newcastle from May 5–10 to attend the Economic Summit Meeting and to address the NATO Ministers meeting. On May 9, he traveled to Geneva to meet with Presidents Furgler and Assad.