3. Paper Prepared in the Department of State1
Washington, January 21, 1977
[Omitted here is the table of contents.]
POLICY REVIEW MEMORANDUM: PANAMA
I. CURRENT SITUATION
Our basic national interest in Panama is that the Canal remain efficient,
secure, neutral, and continuously open to all world shipping at
reasonable tolls. The present Canal has served us well over the years,
and is still a “major” defense asset which enhances U.S. capability for timely reinforcement of
U.S. Forces and flexibility in
deployment (Tab 1, Strategic Importance of Canal).2
[Page 5]
While its near-term economic value may be enhanced by the requirement to
transport Alaskan oil to the Gulf Coast, it is now an aging utility of
declining commercial value. Of total tonnage that transits the Canal,
about 44% originates in, and 22% is destined for, U.S. ports. These figures represent 16% of
total U.S. export and import tonnage.
More than 30% of Panama’s foreign exchange earnings and 13% of its
GNP are attributed to the presence
of the Canal.
Alternatives to the Canal have emerged—use of super tankers, land bridge,
pipelines. After 63 years of operation, the Canal’s strategic
significance has diminished, while its potential as a source of conflict
has increased. Moreover, it is the intelligence community’s estimate
that while delay in a treaty invites violence against the Canal, it
would also endanger Torrijos’
position.3
Therefore both Panama and the United States have incentives to negotiate
seriously and quickly.
The Panama Canal Company and Canal Zone Government are independent
financially self-supporting agencies of the United States Government.
The Secretary of the Army acts as the direct representative of the
President in supervising the operation of these agencies. (For further
data concerning the Canal and Zone, see Tab 2.)4
Our central objective over the past 12 years has been to protect our
national interest by negotiating a new treaty with Panama that would
eliminate what have been viewed as anachronistic “colonial” aspects of
our presence in Panama without endangering the continuing operation,
safety and availability of the Canal. Any agreement must be acceptable
to Panama, the Congress, the Federal agencies involved and the American
public.
Our negotiators believe that we can, with continued effort, shortly be
within reach of a treaty with Panama that will meet these requirements,
provided that both sides are willing to make compromises on certain
issues. Though we differ over questions related to the exercise of
sovereignty, particularly over the nature and duration of the United
States defense role, Panama’s national interest in an open, efficient
and safe canal is similar to ours. The Torrijos Government is—in comparison to any successor
government conceivable now—one from which we can get more of what we
want and one with which we have the best chance of negotiating a lasting
treaty (National Intelligence Estimate [NIE] Summary, Tab 3).5
[Page 6]
Much progress has been made since 1974 including agreement to cede legal
jurisdiction over the present Canal Zone to Panama and to increase
Panamanian participation in the operation of the Canal while retaining a
primary U.S. operation and defense role.
The negotiations have, however, been essentially stalled since February
1976. The major issues that remain to be resolved include treaty
duration (which is particularly important to Panama), and post-treaty
defense rights and neutrality (which are particularly important to the
U.S.). Other politically sensitive
issues include employee benefits (which affect some 3,800 U.S. citizen employees) and United States
use of the lands and waters of the Canal Zone during the treaty period
on which positive movement has been made during the past year on an
informal and “what if” basis.
Once our negotiators reach agreement in principle on the main treaty
issues, they can begin to draft the actual treaty—a process that has not
yet commenced.
It should be emphasized that domestic politics in both countries have
added greatly to the numerous problems inherent in this complex
negotiation; they affect—sometimes unpredictably—many individual issues,
as well as the pace and conduct of the negotiations and their public
presentation in both Panama and the U.S.
(Tab 4, Major Forces Involved).6
The negotiation of a new Canal treaty, moreover, is not a purely
bilateral issue. Panama has elicited broad expressions of support from
individual countries, the United Nations, the OAS and in the non-aligned movement of developing
countries.
While Panama probably overemphasizes the value of international support
at the negotiating table, a breakdown of the negotiations would gravely
burden our policies throughout this Hemisphere, where the talks are
generally viewed as a practical test of U.S. credibility. Conversely, to many Latin American
countries the Canal is even more important commercially than it is to
the United States. Those countries are supportive of a Canal treaty that
will insure continuous effective operation and defense of the Canal.
In sum, the successful conclusion of a new treaty that would protect our
basic national interests in the Canal would do more than remove a source
of tension and potential bloodshed: it would strengthen the reputation
of the United States as a force for creative world leadership.
[Page 7]
II. BACKGROUND
A. Negotiating History
The commitment to negotiate a new treaty to replace the Hay-Bunau-Varilla
Treaty of 1903—which gave the United States the rights to construct,
operate, maintain and defend a canal across Panama in perpetuity—was
made publicly in 1964 by President Johnson after consulting with former
Presidents Truman and Eisenhower.7
Three draft treaties were initialled in 19678
but never signed by either country. The 1971–72 negotiations ended in a
stalemate which led to a United Nations Security Council meeting in
Panama in 1973, where the United States was forced to exercise its right
of veto.9
In February 1974 the Secretary of State and the Panamanian Foreign
Minister signed a Joint Statement containing eight principles (Tab 5) to
guide the formulation of a new treaty.10 These principles stipulate essentially
that:
—the new treaty will be for a fixed term;
—Panama will grant the United States the rights and use of lands
necessary to operate and defend the Canal during the treaty’s
lifetime;
—the United States will return to Panama jurisdiction over all of its
territory (the Canal Zone) and provide for increased Panamanian
participation in the operation of the Canal.
B. Negotiating Approach and Guidance
Ambassador Ellsworth Bunker was
appointed Chief U.S. Negotiator in late
1973. Bunker’s approach, which
was fully coordinated between the Departments of State and Defense, was
to attempt to satisfy Panamanian aspirations for full sovereignty over
all of its territory, while ensuring that the U.S. would maintain primary responsibility for the
operation and defense of the Canal during the treaty’s lifetime.
[Page 8]
Presidential Guidance is contained in NSDMs 302, 131 and 115 (Tab 6).11 It should be noted that these NSDMs were written to address individual
treaty questions at particular moments in the negotiations. They are
not, therefore, all inclusive. The main issues treated in the NSDMs concern duration, jurisdiction,
lands and waters, expansion and post-treaty guarantees.
Within the framework of this guidance, Ambassador Bunker was able to negotiate three
conceptual agreements with Panama in November 1974. These are:
—Threshold Agreement on Protection and Defense of the Canal. This
would give the United States primary responsibility for the
protection and defense of the Canal during the lifetime of the
treaty. Panama would participate in Canal protection. Panama and the
United States would retain unilateral rights to take action
necessary to protect and defend the Canal. Both parties committed
themselves to maintain the permanent neutrality of the waterway.
—Threshold Agreement on Increasing Panamanian Participation in the
Administration of the Canal. Panama agreed that the United States
would have the primary responsibility for the operation of the Canal
during the term of the treaty. Panamanian citizens would have
growing participation in all levels of employment and in the
formulation of overall policy concerning Canal operation.
—Threshold Agreement on Jurisdiction and Rights of Use. It was agreed
that jurisdiction over the Canal Zone would return to Panama during
a three-year transition period. Panama would confer upon the United
States, the use of the areas which are necessary for the specific
purposes of the operation, maintenance, protection and defense of
the Canal. The specific lands and waters areas would be determined
during the treaty negotiations.
In March 1975 Bunker also obtained
Panama’s agreement to a draft Status of Forces Agreement granting to
United States military forces stationed in Panama standard military
privileges and immunities (Tab 8).12
C. Areas of Disagreement with Panama
The major issues of disagreement are: (1) treaty duration; and (2) Canal
neutrality and United States post-treaty defense rights:
—Duration. Panama believes this to be the key
remaining issue. It has consistently, vigorously and publicly
maintained that December 31, 1999, is the latest possible date for
treaty termination. Its position
[Page 9]
appears fixed. The United States agreed basically with that date
only as it applies to the termination of United States control over
Canal operation. As provided in NSDM 302, we have insisted on a 40-year duration for
United States defense rights (Paragraph B, Tab 9).
—Neutrality Guarantees and Post-Treaty Defense
Arrangements. We have proposed that Panama and the United
States guarantee the neutrality of the Canal jointly and that there
be a post-treaty agreement on joint defense. Panama agrees in
principle that the Canal should be permanently open on a
nondiscriminatory basis to all world shipping. Panama, sensitive to
the “perpetuity” implications of this formula, wants UN members to guarantee the Canal’s
neutrality after the treaty’s termination (Paragraphs C and D, Tab
9).
—In addition, there are other areas of disagreement with Panama. They
are:
—The lands and waters in the present Canal Zone, use of which will be
required by the U.S. for the
operation, maintenance, defense and protection of the Canal
(Paragraph E, Tab 9).
—The privileges and immunities to be accorded U.S. employees of the entity (a very sensitive point
for the “Zonians”) (Paragraph F, Tab 9).
—The nature and structure of the Canal entity (Paragraph G, Tab
9).
—The financial benefits which Panama would receive under the new
treaty which involves the question of whether appropriated funds or
only Canal earnings should be used for compensation (Paragraph H,
Tab 9).
—Expansion (Paragraph I, Tab 9).
D.
U.S. Options on Major Issues
Duration, neutrality and post-treaty arrangements are closely related and
are the major issues in the negotiations. This inter-relationship makes
these issues somewhat complex but also offers opportunities for
negotiation of compromise formulas that will meet essential United
States security interests while being consistent with Panamanian
concerns and domestic pressures. It is important to keep in mind that on
these issues tradeoffs which are mutually perceived to protect each
party’s basic interests could provide the basis for a final
agreement.
Panama has flatly rejected the duration position (December 31, 1999, for
operation and 40 years for defense) presented by the United States
negotiators. Informally, the Panamanian negotiators have emphasized,
however, that if we could terminate both operation and defense rights
(including military presence) by 2000, it could then be “flexible”
concerning new arrangements for protecting United States security
interests beyond the year 2000. Panama has not offered a formula for
such arrangements.
Our options on the duration for U.S.
control of Canal operation are: (1) hold with 1999; (2) go to 20 years
as provided in existing guidance; or (3) choose some slightly earlier
date (Tab 9A, Discussion).
On duration for defense, we can hold at 40 years with several sub-options
or choose a shorter period down to the year 2000.
[Page 10]
Panama’s willingness to accept a given period for duration of U.S. defense rights under a new treaty is
contingent at least in part on the type of military presence or rights
which the U.S. would be authorized to
maintain after Panama assumes full control of the Canal’s operation. The
options that may be acceptable from the point of view of our defense
needs range from (a) a full military presence such as we now maintain to
(b) a token presence for the purpose of maintaining a logistics base to
(c) no presence but a right to return to protect the Canal. There has
been no decision within the Government on whether it is necessary to
keep troops and bases in Panama after our operation rights terminate in
order to protect U.S. security interests
(Tab 9B, Discussion). The uniformed services have not yet identified the
level of residual military presence or the type of formal arrangements
with Panama necessary to reasonably assure the Canal’s defense in the
post-treaty period.
Regarding the closely related questions of neutrality and post-treaty
arrangements, Defense and State agree that the U.S. wants solid assurance (after our operational rights
terminate) that the Canal will be kept open permanently and on a
nondiscriminatory basis to world shipping and to U.S. military and commercial vessels.
The two Departments also agree that we could further the objective of
assuring access by inserting a clause in the neutrality agreement
guaranteeing that the waterway will be open on a nondiscriminatory basis
to ships of all nations—a provision to which Panama has not objected.
The issue is what states should be the guarantors and what provisions if
any need to be included to make that abstract neutrality effective.
There is general Defense agreement that several options are open for
attaining the guarantee of neutrality and to make clear that U.S. interest in the Canal is not
diminished. One way to achieve this objective would be to provide for a
continuing right for the U.S. to take
such action unilaterally in Panama after the year 2000 as the U.S. (by itself) determined was necessary
to protect our interests in the Canal. (This was the formal Defense
position under the prior Administration.) Another way of meeting this
objective—which is also consistent with the Defense position—would be a
formal “agreement to agree” on a post-treaty defense arrangement.
Obviously, this “agreement to agree” could take varied forms—e.g., a
mutual security agreement separate from but coordinated with the Canal
treaty.
State is convinced that Panama would never accept an explicit perpetual
U.S. right of unilateral
intervention. State further believes that if we were to agree to a
treaty ending in 2000, Panama might accept a mechanism whereby Panama
and the United States jointly guaranteed in the neutrality treaty
(perhaps joined by others, such as
[Page 11]
other Latins) that the waterway will always be open and neutral.
State’s reasoning is that if Panama ever closed the Canal to U.S. shipping, we could move to counter
that threat unilaterally whatever the treaty formula. Defense believes a
formal legal provision concerning post-treaty defense is important both
in itself and from the point of view of ratification. State and Defense
agree that some provision in the treaty, or a unilateral U.S. declaration relating to a U.S. role in post-treaty defense or
insuring the Canal’s neutrality, would be useful in the ratification
process and would establish a basis for U.S. action if it were to become necessary.
Our options on a neutrality guarantee are:
(a) joint U.S.-Panama guarantee with
explicit right of intervention*;13
(b) joint U.S.-Panama guarantee*;14
(c) a guarantee joined by some other countries;
(d) a unilateral U.S. guarantee; or
(e) no external guarantee, with Panama promising to operate the Canal on
a neutral and nondiscriminatory basis.
Our options on post-treaty defense arrangements involve three areas:
(a) U.S. presence
(1) full presence similar to current forces
(2) token forces
(3) logistical base
(4) no presence
(b) U.S.-Panama defense agreement
(1) continuous U.S. defense role until
agreement reached on different role
(2) agreement to agree with continuation of treaty regime if no agreement
reached
(3) agreement to agree without continuation of treaty regime if no
agreement reached
(4) agreement to negotiate without continuation of treaty regime if no
agreement reached
(5) no provision for continuing U.S.
role
[Page 12]
(c) U.S. defense rights
(1) explicit Panamanian agreement to U.S.
right to intervene
(2) unilateral U.S. declaration of
intention to act if necessary to protect interests
(3) silence: U.S. reliance on Panama’s
realization of U.S. capability to
intervene.
III. ISSUES—NEXT STEP
The discussion in this section assumes that the new Administration wishes
to have a new treaty rapidly and, therefore, addresses how to resume the
negotiations and carry them forward at a satisfactory pace to their
completion. Another issue—Congressional concern—will be addressed
later.
Option I—Start with a Formal Offer
Negotiations would be resumed only after inter-agency agreement had been
reached on instructions regarding major outstanding issues. The
instructions would involve the fixing of negotiating positions on these
issues and would identify a range of choices for each.
Option II—Informal Exploration
At Presidential direction the U.S. would
resume negotiations promptly and seek through informal exploration with
Panama to fill remaining U.S. needs in
exchange for U.S. acceptance of the year
2000 as the duration of a new treaty. Having first obtained—in lieu of
formal guidance—an informal understanding with the President on the
limits of his flexibility, the Chief Negotiator also would be empowered
to address other options (trade-offs) on a “what if” basis if they
emerge from the discussions. Following the talks with Panama, our
negotiators would then report back to the President with a draft
“conceptual agreement” and recommendations for such changes as may be
necessary in Presidential instructions.
Discussion of Options
Option I would provide the new Administration an opportunity to examine
in depth the status of the negotiations and reach a coordinated position
on the major outstanding issues. It would provide clear guidance on how
and at what pace to proceed. At the same time it could facilitate
coordinated efforts to gain support for a treaty with the public and
Congress. However, the time involved in early resolution of intra-USG differences would substantially delay
resumption of negotiations. Such a delay could prevent us from reaching
agreement with Panama and gaining Congressional acceptance of a treaty
this year. Failure to resume the negotiations within a few weeks
following the inauguration
[Page 13]
could
also be interpreted by our Congressional opponents, Panama and probably
the nations of this hemisphere as a signal that the new Administration
lacks commitment to move rapidly toward a new treaty.
Option II would allow early resumption of the negotiations and would
provide the negotiators with broad flexibility to probe for the basis of
agreement with Panama without requiring a time-consuming prior review of
U.S. positions. By providing an
early positive signal as to our intent, Option II would assure Latin
America and the Third World of our interest in speedily resolving the
issue. The first step under this option would be an initial airing of
inter-agency views through discussion of an options paper culminating in
an NSC meeting and an understanding
between the President and the Chief Negotiator on the limits of U.S. proposals. The negotiators would then
meet with their Panamanian counterparts for exploratory discussions. The
improved understanding of possible alternatives resulting from these
early discussions would then allow the different USG agencies to surface the issues more
clearly for prompt Presidential decision.
Option II could permit the initialing of a “conceptual agreement” with
Panama by mid-March and presentation of a draft treaty to the President
for final concurrence by June 15. Formal treaty signing could occur by
July 1 and presentation to the Senate could follow by as early as August
1 (an early submission would be broadly advantageous to permit
ratification prior to the 1978 elections).
Implementing Actions Needed by Option I
—Develop a USG position on all
outstanding issues; subsequently, issue instructing NSDM. If this option is selected, see
Tab 9 for a discussion of the major unresolved treaty issues
together with their related options.
—Explain to Panama that the new Administration will require some time
to formulate new positions.
—Take the necessary steps to obtain public support for a treaty (Tab
10).
Implementing Actions Needed by Option II
—Instruct the negotiators after prompt inter-agency coordination and
early NSC consideration to explore
informally Panama’s willingness to accept our needs on all
oustanding issues in the event we were to accede to the year 2000 as
the date of the treaty’s termination. Empower the negotiators to
address other options (tradeoffs) on a “what if” basis if they
emerge from the discussions.
—Take the necessary steps to obtain public support for a treaty (Tab
10).
There are two matters which will require early attention, whatever the
option selected.
[Page 14]
The first concerns Congressional relations and the negative impact from a
possible reintroduction in the Senate of the Thurmond Resolution opposing the
treaty negotiations.15 While there is
almost no possibility that such a resolution would be adopted, it could
be a liability for the success of the negotiations and the treaty effort
if it were to attract the sponsorship of something approaching a
blocking third of the Senate membership. Sponsorship would tend to
commit Senators and make it more difficult for them to support a treaty
when one is submitted to the Senate. There is a danger that a number of
Senators might sign the resolution without fully appreciating the depth
of the Administration’s commitment to a new treaty effort—or the dangers
to our interests in the Canal from failure to have a new treaty. It
would be highly desirable to communicate the Administration’s views to
individual Senators and to urge them not to pre-judge the treaty
issue.
The second matter which will require attention concerns interagency
coordination. Until now the negotiators have relied on ordinary
interagency coordination procedures supplemented by the efforts of the
State-Defense Support Group, which has functioned as a negotiators’
“think-tank”. This group regularly drafts informal papers which, if
approved by the negotiators, are then introduced into the formal
interdepartmental clearance process.
State believes that it is likely that this procedure will not fully serve
the Administration’s purposes once the negotiating process is resumed
and efforts are accelerated in pursuit of an early treaty. It is State’s
view that a mechanism must be established which will permit rapid
coordination of negotiating issues. Accordingly, State
believes that it would be highly desirable to establish an
interagency committee under the chairmanship of the Under Secretary of
State for Political Affairs. The members of this committee, which would
function below the level of the Policy Review Group, would be fully
empowered to speak for their agencies in addressing rapidly the
negotiators’ requests for Executive Branch guidance. The Committee would
include representatives from State, Defense, NSC, Secretary of the Army, and Treasury and (when
appropriate) Labor, Commerce, Transportation, Justice, CIA, OMB
and the Civil Service Commission. Defense
believes that except for the most unusual circumstances, the
coordination authority available to the negotiators and the existing
Washington interagency mechanism will be more than adequate for issues
not requiring higher level
[Page 15]
decision. Issues involving other agencies/departments of the Executive
Branch will be complex in nature and necessarily require thorough
analysis to insure that irrevocable mistakes are not permitted, through
haste, to become part of a major new treaty. When interagency issues are
identified, the appropriate agency should be tasked to respond to
State/Defense request for coordination. Defense suggests that standby
representatives of agencies listed above be identified early on, and if
a full interagency committee effort should be required at some future
date, the committee be chaired by a designated member of the NSC staff.
Tab 1—Strategic Importance of the Panama Canal
Tab 2—Description of Canal operations
Tab 3—NIE Summary
Tab 4—The Forces Involved in the U.S. and
Panama
Tab 5—Joint Statement of Principles
Tab 6—NSDM 302, 131 and 115
Tab 7—Threshold Agreements
Tab 8—SOFA (Summary)
Tab 9—Major Unresolved Treaty Issues
Tab 10—Steps to Obtain Public Support for a Treaty.
Tab 9
Major Unresolved Treaty Issues16
Washington, undated
MAJOR UNRESOLVED TREATY ISSUES
The following issues deal with the substance of the negotiations.
They should be examined with the understanding that:
—except for lands and waters, our perception of specific
Panamanian views is clouded by the pause in the negotiations
which has existed since February 1976. Exploration of the issues
with Panama will give a clearer focus as to what is, and what is
not, negotiable;
—a seriatim review—in which each issue and the options for
dealing with it are considered in isolation—leaves out certain
considerations which need to be taken into account in devising
an overall treaty package that meets U.S. interests. Some interests are more important
than others. In addition, the issues are interrelated and
trade-offs
[Page 16]
among them
are possible, so that the selection of an option under one issue
may depend in part on what option is chosen under another
related issue.
—the negotiability of an option relating to a specific issue may
be affected by the nature of our positions on other issues. For
example, so called “hard” positions on some issues might be
acceptable to Panama in exchange for a concessionary U.S. position on others. Therefore,
a preferable approach to the issuance of negotiating guidance
would be to identify preferred and
fallback positions wherever possible.
A. ISSUE—Duration of U.S. Control of Canal Operation
Definition
This issue involves determining duration of effective U.S. control of canal operations.
Background
Presidential guidance (NSDM
302)17 requires that the U.S. obtain the rights to operate the
Canal for a period not to terminate before December 31, 1999. As a
fallback negotiators are authorized to offer a reduction of the
duration of operation to a period of not less than 20 years. The
Panamanian position is that U.S.
operation rights shall terminate by the year 2000. The most recent
U.S. offer was 20 years for
U.S. Canal operation rights if
Panama would accept 40 years for U.S. Canal defense duration. Earlier the U.S. had offered to end Canal operation
by the year 2000. It should be noted that the new treaty’s duration
applicable to operation-related rights might exceed the duration of
U.S. control over Canal
operation. This possibility is discussed further under the issue of
the nature of the Canal entity.
Options
Option I. U.S. Canal operation rights will end by December 31,
1999.
Option II. U.S. Canal operation rights will end in 20 years.
Option III. U.S. Canal operation rights will extend for some period
of less than 20 years.
Discussion
We have omitted any options which would call for a duration in excess
of our current guidance because selection of such options would
preclude any possibility of agreement with Panama. The three options
identified all appear acceptable to Panama. On the other hand, the
briefer the time period included in the three options, the more
likely it will encounter opposition from the Congress and the
public.
[Page 17]
Guidance Changes Needed
Option I. No change needed.
Option II. No change needed.
Option III. Would require a change in
Presidential guidance to permit agreement on a period of less than
20 years.
B. ISSUE—Duration of U.S. Canal Defense Rights
Definition
This issue involves determining the duration of U.S. Canal defense rights.
Background
Presidential guidance requires the negotiators to obtain a U.S. right for unilateral defense of
the Canal and Canal areas for a period of (NSDM 302) not less than 50 years with a fallback of not
less than 40 years. Panama’s position is that U.S. defense rights must terminate no
later than December 31, 1999. Panama has rejected the U.S. negotiators’ November 1975 offer
of 40 years for defense.
Options
Option I. Defense duration for 40 years.
Option II. Canal defense rights for 40 years
with full military presence through 1999; residual military presence
with limited combat forces in Panama for the balance of the 40
years.
Option III. Canal defense rights for 40
years. Full military presence through 1999; residual military
presence without combat forces present in Panama for the balance of
the 40 years.
Option IV. Canal defense rights for 40 years.
Full military presence through 1999; no U.S. military presence in Panama for the balance of the
40 years.
Option V. Canal defense rights and full
military presence through 1999 with reliance thereafter on separate
post-treaty defense and/or neutrality arrangements.
Discussion
We have omitted any options which would call for a duration in excess
of our current offer to Panama (40 years) because selection of such
an option would preclude any possibility of agreement with
Panama.
Panama has “definitively” rejected Option I and indicated strong
opposition to Options II, III and IV. Conceivably Panama would
accept some limited period for U.S.
defense rights beyond the year 2000, but the cost to the U.S. could be unacceptable in terms of
less than satisfac
[Page 18]
tory
neutrality or post-treaty defense arrangements. On the other hand,
Option V could meet Panama’s main political concern that the treaty
terminate by 2000 while guaranteeing that there would be a mutually
satisfactory post-treaty defense and/or neutrality agreement. If
Option V were selected, Defense believes a strong post-treaty
defense arrangement would be essential to safeguard U.S. interests in the Canal. State
believes that a neutrality agreement would be an adequate basis for
further U.S. action.
Each of these options would encounter some resistance in Congress and
with the public. However, this opposition will be based more on the
general idea of “surrender” or “give away” than upon the adequacy of
a particular duration proposal. The shorter the term of U.S. defense rights, the greater will
be the U.S. concern. However, under
Option V independent arrangements would be provided to protect
long-term U.S. security
interests.
Guidance Changes Needed
Option I. No change to current Presidential
guidance required.
Option II. No change to current Presidential
guidance required.
Option III. No change to current Presidential
guidance required.
Option IV. No change to current Presidential
guidance required.
Option V. Instruct the U.S. negotiators to obtain a treaty
with a termination date of not earlier than 1999, on the condition
that separate post-treaty arrangements can be negotiated which will
adequately protect U.S. security
interests in the Canal.
C. ISSUE—Permanent Neutrality Guarantee
Definition.
This issue involves determining the best means for guaranteeing the
permanent neutrality of the canal.
Background.
Presidential guidance (NSDM
115)18 requires the negotiators to
seek a joint U.S. Panamanian
guarantee that the canal will be open to all world shipping without
discrimination (at reasonable tolls). Panama has not opposed the
concept of the canal’s permanent neutrality but has been unwilling
to accept any special role in perpetuity for the U.S. in ensuring neutrality. Panama has
indicated that it would enter into a neutrality agreement, either
without a U.S. neutrality guarantee
or with a guarantee to which any country could adhere.
[Page 19]
Options.
There are five options, all of which would be in the context of a
permanent agreement which would establish the rules of neutrality
for the operation of the canal:
Option I. A permanent joint U.S.-Panamanian guarantee of the
canal’s neutrality which would contain a provision that each party
could take whatever action it deems appropriate, including military
action, to counter a threat to the neutrality or security of the
canal.
Option II. A permanent joint U.S.-Panamanian guarantee to each other
in broad, general language that the canal will be operated in
accordance with neutrality rules specified in the treaty, but with
no specific reference in the treaty to military action.
Option III. Same as Option II, but with a
formal declaration by the U.S. which
Panama agrees not to challenge, that the U.S. interprets the general guarantee language to
encompass military action if necessary.
Option IV. A neutrality treaty which would be
multilateral and would contain a provision obligating all signatory
states to guarantee to each other that the canal would be operated
forever in accordance with the neutrality rules specified in the
treaty. The signatories could be limited specifically to a small
number of invited states, to states party to the Rio Pact,19 or opened to any state desiring to sign under
United Nation auspices.
Option V. A bilateral neutrality treaty which
would not contain any provision obligating
the U.S. to guarantee operation of
the canal in accordance with the neutrality rules set out in the
treaty, but would create only an obligation by Panama to the United
States to operate the canal forever in accordance with the
neutrality rules.
Discussion of Options.
The differences among the five options are significant more in terms
of political pressures and posturing than in terms of strict legal
benefits. Any of them would legally bind Panama to keep the canal
neutral. None of them would provide the U.S. with an independent legal right to act with force
to remedy a violation of this obligation by Panama. This is so
because of restraints on the unilateral use of force to settle
disputes (even obvious violations of clear legal rights) in the
UN and OAS Charters. Therefore, the important factors in
considering these Options are their initial political acceptability
and the strength of the political justification they would provide
for any necessary future U.S.
military actions.
[Page 20]
Option I presumably would be attractive to much of the Congress and
the public, since it would be a very specific formulation of what
the United States can do to protect its security interest in the
canal forever. On the other hand, a growing segment of the Congress
and the public might believe that such a provision is an extension
of a colonial relationship and would therefore be harmful to
long-term U.S. interests in the
canal and elsewhere and likely to engender opposition from within
Panama—opposition in which many countries of the world would support
Panama.
Even though most uses of force in Panama against Panama’s will would
violate the UN and OAS Charters and provoke considerable
international criticism, circumstances could develop in which the
President felt compelled to act with force. In such a case, it could
prove very helpful to our justification for so acting if we had the
language suggested in Option I to cite.
However, in State’s view, Panama could never accept such a U.S. right and might even be inclined
to question the good faith of the United States in proposing it.
Also, it would be contrary to our interest to present this Option
unless we were reasonably sure that Panama would accept it. Were
Panama to reject it, the negotiating record would show we had wanted
an explicit intervention right, but had been unable to obtain it.
Thereafter, we would have even more difficulty in arguing that the
broad and very general neutrality guarantee provision we finally got
was intended to mean that the U.S.
could take any action it deemed appropriate, including intervention,
to ensure the neutrality of the canal.
Defense believes that, packaged appropriately with careful drafting,
this Option may be acceptable to Panama. Its proposal and rejection
would not make appreciably more difficult any argument that we had
an intervention right without specific use-of-force language to
cite.
Option II, while imposing an obligation on Panama to keep the canal
neutral, would probably be less attractive to the Congress and
U.S. public because it would not
provide as strong a political justification for any U.S. military action as Option I. This
option would communicate our commitment to the permanent neutrality
of the canal without stating explicitly that we would take measures,
against Panama’s will, to see that the canal’s neutrality is
maintained. State believes that Option II would provide almost as
much protection for our long-term interests as Option I and could be
sold to the Congress and the public on this basis. The Department of
Defense believes that this Option would encounter stiff opposition
on the Hill. There is a good chance that Panama ultimately would
accept a skillfully worded formulation of Option II as part of an
overall package satisfactory to Panama on the duration issue.
[Page 21]
Option III is very similar in all respects but form to Option I.
Option IV would add other nations as guarantors to the Option II
formulation. Although this option has the advantage of probable
acceptability to Panama, it has the disadvantage of encumbering
U.S. unilateral actions to
protect the canal’s neutrality.
Option V has already been proposed by Panama. It is less attractive
as a basis for future political justification of U.S. action than the other Options and
thus less attractive to Congress and the public. So although its
strictly legal effects would not be significantly different from
that of the other options, it probably would have to be coupled with
other post-treaty defense arrangements to satisfy the public and
Congress of our ability to protect our long-term security
interests.
Guidance Changes Needed
Option I. Current guidance neither requires
nor precludes this option.
Option II. No change required. This option is
required, as a minimum, by present guidance.
Option III. No change required.
Option IV. Presidential guidance would have
to be changed to authorize a multilateral guarantee.
Option V. Provide authority to agree to a
bilateral neutrality treaty which would rely upon a unilateral
Panamanian obligation to the U.S. to
guarantee the canal’s neutrality.
D. ISSUE—Post-Treaty Defense Arrangements
Definition.
This issue involves the nature of U.S. rights to continue to participate in canal defense
subsequent to the terminating of the treaty.
Background.
Current Presidential guidance (NSDM
302) tasks the negotiators with making efforts to obtain a right in
principle for the United States to participate in post-treaty canal
defense, including a limited military presence. The U.S. negotiators proposed to Panama in
November 1975, a modified U.S.
position on post-treaty defense; namely, an agreement to negotiate
in good faith prior to the treaty termination concerning post-treaty
defense rights. Panama has not officially responded.20 However, its
publicly stated position has been that all U.S. defense commitments must terminate by the year
2000.
[Page 22]
Options.
Option I. Panama would agree in the treaty to
a right in principle for the U.S. to
participate in canal defense, with a limited military presence
following the termination of the treaty. However, the U.S. defense rights in the treaty would
not terminate until agreement was reached on the U.S. role following termination.
Option II. Panama would agree in the treaty
to a right in principle for the U.S.
to participate in canal defense, with a limited military presence,
following termination of the treaty.
Option III. Panama would agree in the treaty
to a right in principle for the U.S.
to participate in canal defense, without a military presence in
Panama following termination of the treaty.
Option IV. Panama would agree to negotiate
with the U.S., in good faith, before
treaty termination, on a role for the U.S. in post-treaty canal defense.
Option V. Panama and the U.S. would agree to the terms for a
separate, periodically renewable mutual security agreement to become
effective upon termination of the canal treaty.
Option VI. The U.S. would make a unilateral declaration or treaty
reservation, of its intent to ensure the security of the canal.
Panama would either not respond or would issue a statement of
no-objection.
Discussion.
Option I is, in essence, a defense right in perpetuity. Thus this
option would be subject to considerations similar to those expressed
under Neutrality Option I. This position provides the U.S. with the strongest assurance of a
post-treaty defense capability.
Option II was presented to Panama in September of 1975.21 Because
of Panama’s strenuous objection to it as “perpetuity”, it was later
withdrawn. However, it is only an “agreement to agree” and might be
acceptable ultimately to Panama in the context of an acceptable
duration proposal particularly if the element of military presence
were eliminated. It would have some attraction for the Congress and
public opinion because it would show Panama has agreed in principle
to our continued involvement in canal defense beyond the term of the
treaty.
Option III is similar to Option II with the modification that the
U.S. participation in canal
defense would be without a military presence in Panama. While
preferable to no post-treaty defense arrangements, this option is
not favored over Option I since lack of forces in place
significantly complicates any U.S.
exercise of its defense role.
Option IV would not commit Panama to anything other than good faith
negotiation on a U.S. post-treaty
defense role. Thus, it would not
[Page 23]
of itself protect U.S. long-term security interests or be of more than
some slight psychological value in convincing the Congress and the
public of our ability to protect those long-term interests. Its
value, however, might be in making it easier politically for Panama
to agree to a continuing U.S.
defense role at the time the treaty terminates.
Option V would affirm that Panama would be an ally of the United
States beyond the treaty period. It would also demonstrate our
continuing commitment to ensure the security of the canal. The
psychological effect of Panama’s commitment to remain our ally would
be significant to Congress and to the public.
Under Option VI Panama would not be agreeing to any U.S. action, but the public and
Congress would be somewhat reassured by our declaration of intent to
take necessary action to protect our interests. This, however, is
not as protective to our security interests as a mutual security
agreement would be because it does not demonstrate that Panama would
be a continuing ally of the U.S. and
could be countered at any time by a declaration from Panama that it
must consent in advance to U.S.
action.
Guidance Changes Needed
Option I. Harden existing Presidential
guidance to indicate clearly that U.S. Canal defense will not terminate until the U.S. and Panama have agreed on a new
role for the U.S. in canal
defense.
Option II. Harden existing Presidential
guidance clearly to require a right in principle for the U.S. to participate in post-treaty
canal defense, with a limited presence.
Option III. Harden existing Presidential
guidance clearly to require a right in principle for the U.S. to participate in post-treaty
canal defense without a U.S.
military presence.
Option IV. No change in guidance needed.
Option V. Present Presidential guidance
allows but does not require this option. Only if Option V is
considered mandatory should guidance be changed to require Panama’s
agreement to the terms of a separate mutual security treaty to be
effective after treaty termination and to run for a specified
period.
Option VI. Present Presidential guidance
allows but does not require this option. Only if Option VI is
considered mandatory should guidance be changed to require Panama’s
agreement not to object to a unilateral U.S. declaration of intent to take any necessary action
to ensure the neutrality of the canal.
E. ISSUE—Lands and Waters
Definition.
The definition of those lands and waters whose use will be required
by the United States to execute its responsibilities for the
operation,
[Page 24]
maintenance,
protection and defense of the canal under the new treaty, and
securing the rights necessary for their use.
Background.
Until December 1975, the United States position on this issue
envisaged relinquishing only those areas of the current Canal Zone
which were of limited value to the United States. The Presidential
guidance contained in NSDM 302
endorsed this approach. The Panamanian position was based upon: (a)
its narrow definition of those areas whose use it considered that
the United States would require for canal operation and defense, as
modified by; (b) its perception of its own requirements in terms of
domestic political acceptability and for purposes of economic
development. The two positions based on these divergent approaches
to the issue resulted in a stalemate. In December 1975, the United
States Negotiators initiated development of a compromise lands and
waters position designed to accommodate the United States’
requirements for operation and defense of the canal in a combined
United States-Panamanian defense arrangement, while taking into
account to the extent possible, Panama’s economic and political
requirements.22
Options.
Option I. Stand fast with existing
guidance.
Option II. Pursue the exploratory approach
used by the negotiators in 1976 on a “what if” basis.23
Discussion of Options
The return of any areas of the present Canal Zone to Panama will
result in some criticism by the Congress and the general public.
However, it is improbable that the degree of such criticism will
relate to the details of what specific areas are relinquished to
Panama and what areas are retained by the United States so long as
these details have the support of all interested agencies of the
Executive Branch.
From the Panamanian standpoint, retention by the United States of the
entire Canal Zone, or of what appeared in Panama to be
overly-substantial parts of it, would mean no agreement. It is now
generally recognized by both State and Defense that agreement with
Panama is therefore not possible on the basis of the lands and
waters position reflected in current Presidential guidance. Option I
is not realistically supported by any interested agency of the
United States Government.
The process of negotiation on this issue has consisted of seeking
both to educate the Panamanian negotiators as to the nature of
United
[Page 25]
States requirements
relating to the operation and defense of the canal, and seeking to
develop a compromise United States position as described above.
State and Defense consider that essential United States interests on
this subject may be achieved through continuing to pursue these
discussions with the Panamanian negotiators. Our objective in doing
so should continue to be to resolve the manifold individual
questions making up this issue in a manner which takes maximum
account of Panama’s requirements while retaining for the United
States the necessary rights to use those specific lands and waters
which will be needed for canal operation and defense under a new
treaty assuming a combined United States-Panamanian defense
arrangement. It should be noted that the Secretary of the Army has
presented a lands-and-waters position which differs in some respects
from the negotiators’ unofficial proposal. These differences are
being considered by the negotiators in the preparation of their
position.
Guidance Changes Needed.
Option I. No guidance change needed.
Option II. Change existing guidance to read
as follows: “Authorize the United States negotiators to continue to
negotiate to obtain appropriate rights to use such lands and waters
areas as may be concurred in by the Department of Defense and State
as the minimum necessary for the operation of the canal and for its
defense under a combined United States–Panamanian defense
arrangement.”
F. ISSUE—Rights, Benefits and Privileges for
United States Citizen Employees of the Canal Entity
Definition.
This issue concerns the rights, benefits and privileges which will be
provided to United States citizen employees of the Canal entity
under a new agreement with the Republic of Panama.
Background.
No direct Presidential guidance exists on this issue. However, the
United States negotiators have sought to achieve rights and
immunities for United States citizen Canal employees equivalent to
those which United States civilian employees of the Armed Forces
receive under the Status of Forces Agreement (SOFA). The Panamanian negotiators
have indicated that Panama attaches importance to agreement on those
benefits necessary to retain a trained Canal work-force, but has
difficulty in accepting certain specific rights which we have sought
for United States citizen employees.
[Page 26]
Options.
Option I. Obtain rights equivalent to those
for civilian employees of the United States Armed Forces under the
Status of Forces Agreement (Summary of SOFA attached at Tab 8).
Option II. Obtain job guarantees and other
privileges approaching those in the SOFA (As identified in the fallback position contained
in the current Defense position on this issue.)
Discussion of Options.
Retention of an adequate United States citizen component of the Canal
work-force is essential until such time as the particular skills
provided by this group are obtainable—as in many cases they
presently are not—in the Panamanian labor market. Our basic
objective on this issue is the provision of rights, privileges and
benefits sufficient to permit the retention and/or recruitment from
the U.S. labor force of the skills
required.
Everyone, including Panamanians, agrees that United States citizen
Canal employees should not suffer economic losses or job insecurity
as a result of a new treaty and that employee rights should be
adequately covered in the treaty. However, there is still a marked
difference in United States and Panamanian perceptions of what, in
specific terms, will be required to achieve our objectives in
relation to Canal operation.
This issue has generated a tremendous emotional charge in the Canal
Zone; Canal employees actively campaigning against a new treaty have
exploited the insecurities of other employees concerning their
uncertainties as to their status under a new treaty. The issue has
therefore assumed additional importance in humanitarian terms and as
a political issue within the United States.
United States labor organizations appear disposed to support an
arrangement which provides normal job guarantees for employees,
without evidencing a particular concern for special status for
U.S. citizens. The U.S. public and Congress would probably
go along with an arrangement which appeared fair to the U.S. citizen employees.
Many of the actions necessary in relation to Canal employees would
fall outside the scope of the treaty as being either within the
competence of the management of the new Canal entity, and/or as
subjects for unilateral resolution by the United States
Government.
Panama’s negotiators have declined to consider outright inclusion of
Canal entity U.S. citizen employees
under the SOFA, but might accept
some modified version of rights analagous to those accorded in the
SOFA if “repackaged.” The
degree to which these rights would approach those under the SOFA will probably be increased
greatly in the event we were to agree to a “favorable” resolution of
the duration issue.
[Page 27]
Some employees will voluntarily leave their employment before or
immediately after a new treaty enters into force. However, a
combination of adequate actions to allay employee concerns while
treaty negotiations progress, unilateral U.S. Government actions to preserve the employee’s
confidence in his job security, and adequate resolution of the
details of this issue with Panama will probably permit a sufficient
number to adjust to their situation under the new treaty to preserve
our operational objectives in the Canal.
Guidances Changes Needed.
Option I. No change needed.
Option II. No change needed.
G. ISSUE—Nature of Canal Operating Entity
Definition.
This issue involves the nature and structure of the new entity that
will operate the canal for the life of the new treaty.
Background.
Current Presidential guidance directs that effective U.S. control of canal operations (for a
duration of time consistent with guidance) is to be considered
non-negotiable; it provides further that the first negotiating objective should be continued exclusive
U.S. control of canal
operations, and that the fallback
U.S. position should be an
arrangement whereby the U.S. retains
control of canal operations with Panamanian participation in the
canal organization (NSDM 115).
The Panamanian position on this issue is that the new entity be an
international juridical entity, jointly created by means of the
treaty, with U.S. majority control.
Under the Panamanian approach, the existence of the entity would
terminate along with the termination of U.S. control at the end of the treaty. Recent
Panamanian proposals have included the concept of a termination of
U.S. majority control in the
year 1995 with U.S. minority
participation until the end of the treaty, which would be the year
2000.
In the February 1974 Joint Statement of Principles24 and in the November 1974 Threshold Agreements, the
U.S. agreed to the concepts of
participation by Panama, and increasing participation by
Panamanians, in the administration of the canal. In those same
agreements, however, Panama agreed to “grant to the United States”
the rights necessary to operate and maintain the canal for the
duration of the new treaty. Implicit was that a USG agency would exercise these rights
[Page 28]
on behalf of the USG. More recently, Panama has
proposed that the treaty grant the operation-related rights to a
jointly created international juridical entity, as outlined above.
The U.S. negotiators have
consistently maintained that the new entity be a USG agency, but recently have
indicated a willingness to explore the possibility of an
international juridical entity along the lines of OPTION III
below.
Options.
Option I. A USG agency, with Panamanian participation, would
operate the canal until U.S.
operating rights terminate. At the termination of U.S. operating rights, Panama would
assume total responsibility for canal operation.
Option II. A joint U.S.-Panamanian international juridical entity, created
in the treaty, would operate the canal until its operating rights
terminate. The U.S. would enjoy
majority control until the entity’s operating rights terminate. At
that time, Panama would assume total responsibility for canal
operation.
Option III. A joint U.S.-Panamanian international juridical entity, created
in the treaty, would operate the canal until the entity’s operating
rights are terminated. The U.S.
would enjoy majority control until at least a certain date, but
would have a right to a minority participation for a specific time
thereafter. Panama would enjoy minority participation for the
duration of U.S. majority control,
and would have a right to majority control at a certain date
subsequent to the termination of U.S. majority control. Selected user nations would have
minority participation for the entity’s life.
Discussion of Options.
State and Defense both believe that Option I
(USG agency) would lend itself
to the simplest treatment in the treaty and the process of
negotiation. It would also be attractive to Congress, since Congress
would establish the USG agency and
delegate to it the operating rights. Correspondingly, Option I would
also insure Congressional control over the exercise of our
operation-related rights, including the rights to control employee
relations, navigation and tolls, which Panama has already agreed to.
It also would be, however, the most difficult of the three options
for Panama to accept, and is not necessarily the most protective for
our interest of the three options.
State and Defense agree, conversely, that
Option II would be acceptable to Panama, but would be the least
attractive of the three options to Congress.
State and Defense believe that Option III
might be acceptable to Panama if the duration of U.S. minority participation were
relatively short, but likely unacceptable with a long duration of
U.S. minority
[Page 29]
participation, particularly if the
U.S. insisted on the same
duration of U.S. majority control as
under Option I. Panama’s willingness to accept a longer duration of
U.S. minority participation
would be increased if the U.S. would
also be willing to accept a shorter duration of U.S. majority control than is
authorized by current guidance. (A reduced duration is not key to
this option for U.S. majority
control.) Domestic U.S.
acceptability of Option III would be enhanced by a period of U.S. minority participation following
the termination of U.S. majority
control, but would be hampered by any reduction in the period of
U.S. majority control of canal
operations. Further, Option III would give selected user nations
some understanding of the problems of canal management, and their
participation would add a measure of stability to canal operation
over the long term and could have a moderating effect on Panamanian
ambitions to realize excessive profits from canal operations.
Finally, this option would, as a practical matter, allow for the
possibility of Panama’s continuing the entity voluntarily beyond the
termination of the U.S.
right to minority participation, and ideally,
would result in the creation of a permanent entity structure
continued by all interested parties on a voluntary basis
indefinitely.
Guidance changes needed.
Option I. No change in guidance required.
Option II. No change in guidance
required.
Option III. No change in guidance would be
required to authorize the option as stated, but a change in current
guidance on the issue of duration of U.S. control of canal operation would be required in
the event it is considered desirable, as part of this option, to
authorize the negotiators to propose a shorter duration of majority
U.S. control than is presently
authorized in exchange for a longer duration of the U.S. right to minority
participation.
H. ISSUE—Nature and Level of Financial
Benefits
Definition.
This involves determining what financial benefits will accrue to
Panama as a result of a new treaty.
Background.
Existing guidance calls for substantially increased income to Panama
from Canal operations (even though this may involve significant
increases in tolls) and the opening of commercial opportunities to
Panama in the Canal area (NSDM
115). We believe that Panama will expect to receive considerable
compensation under any new treaty arrangements. The issue has not
yet been discussed in any depth in the treaty negotiations, beyond
the tabling by the U.S. in January
1975
[Page 30]
of a proposal for an
annual payment during the life of the treaty based initially on 27
cents per ton of cargo transiting the Canal.25 (This
proposal would have amounted to about $35 million at the 1975
traffic level.) Both sides have agreed that they would reserve
discussion of this issue until all others have been resolved.
Options.
Option I. Substantial payment to Panama to be
financed from tolls and based on volume of traffic in tons
transiting the Canal (current position).
Option II. Payment to Panama from tolls
(reduced below level of Option I) plus additional compensation based
on some combination of the following: economic and security
assistance and/or a fixed annuity, and/or payments for base rights
all to be financed by Congressional appropriations; credit for
USG physical assets transferred
and services provided to Panama (e.g., technical training,
utilities, etc.).
Discussion of Options.
There has been limited study within the USG of the question of financial benefits. Further
immediate review is planned in order to determine specific
compensation packages which might appropriately be proposed in the
negotiations.
Option I, by making Panamanian receipts dependent on the volume of
shipping using the Canal, provides an incentive for Panama to
cooperate in insuring that the Canal operates efficiently and that
maximum traffic is encouraged. Its principal disadvantage is that
the amount generated may be insufficient to meet Panamanian desires.
Further, if Canal revenue were insufficient to cover the payments,
the USG would have to seek
Congressional appropriations in order to meet its obligations to
Panama.
Option II would permit us to offer a larger package of financial
benefits to Panama. This would contribute to facilitating overall
agreement on a new treaty. By offering to Panama, through a variety
of means, U.S. assistance in
integrating the Canal into its economy and furthering its own
development, it would contribute to increased prospects for
long-term Panamanian stability and for providing the secure
environment that is essential to continued efficient operation of
the Canal. It would also enable us to assist Panama in such
activities as preparing the Panamanian armed forces to participate
in defense of the canal, to develop the manpower needed to operate
it, and to help Panama meet the costs of taking over certain
functions (fire, police,
[Page 31]
courts, etc.) as jurisdiction passes early in the new treaty period.
Since Panama, because of its pressing financial problems and high
debt service levels, will find it difficult to find international
lenders for planned projects, Panama would certainly be attracted by
a U.S. package involving investments
in the Canal operation and infrastructure and funds to support a
smooth transition to Panamanian jurisdiction. By helping to provide
the favorable economic climate in Panama that would serve U.S. interests, a well-designed Option
II package presumably could be made acceptable to the Congress in
spite of its inherent preference for an option financed from
tolls.
Many of the items that might be included in this option—such as base
rights payments, economic and security assistance, or an annuity,
would require Congressional appropriations, with consequent
requirement to justify these expenditures to Congress. We anticipate
that Congress might be more resistant to appropriations for general
economic and security assistance than for expenditures that have
some close relation to canal operations, such as aid to help Panama
exploit commercial opportunities in the Zone (e.g., construction of
a container port) or to improve Panamanian military forces to enable
them to contribute to Canal defense. Defense opposes payments for
base rights during the life of a new treaty on the grounds that the
primary function of the bases is canal defense, which is equally of
benefit to Panama and the U.S.
With regard to credit for physical assets, the monetary value of the
package could be substantially increased if these items were
included. However, it is likely that Panama will not attach much
weight to benefits of this sort, since these assets will be
available to Panama under a new treaty in any event.
Guidance Changes Needed.
Option I. No guidance change needed.
Option II. Changes in Presidential guidance
would be proposed as the elements of a package and levels of
financial benefits are developed and refined. Defense believes that
before preparing proposals under this option, Presidential guidance
should be sought on the appropriateness of incorporating elements in
such proposals that would require the use of appropriated funds.
Defense believes that an exceptionally large compensation package to
Panama, as may be envisioned in Option II, could well endanger
Congressional and public acceptance of the treaty.
I. ISSUE—Expansion
Definition.
This issue involves determining the rights the United States should
have in the treaty to expand canal capacity.
[Page 32]
Background.
Current guidance asks the negotiators to obtain an exclusive right,
under terms and conditions set out in the treaty, to expand canal
capacity through addition of a third lane of locks or construction
of a sea-level canal throughout the period of U.S. canal operation with agreements
that (a) the neutrality guarantee will apply to any new canal ever
constructed in Panama; and (b) no third country will ever have
responsibility for operation or defense of a canal within Panama. As
a fallback, duration of the U.S.
right to expand may run for less than the total period of U.S. canal operation with agreement by
Panama that the U.S. will be given a
right of first refusal on any expansion project during the remainder
of the period of U.S. canal
operation (NSDM 302).
The Panamanian position is that the U.S. would have the right, in the treaty, to expand
canal capacity during the first ten years of the duration of this
treaty. Thereafter, during the period of U.S. control of canal operations, both Panama and the
U.S. would have to agree upon
any project for expansion of canal capacity undertaken in
Panama.
Options.
Options I. U.S. would have a detailed and exclusive right to
expand canal capacity, including a commitment by Panama to preserve
in advance the required territorial right of way and to extend the
treaty duration if expansion is undertaken.
Option II. U.S. would have a defined and exclusive right to expand
canal capacity, but without Panama’s agreement (a) on the necessary
land areas in advance; and (b) on extending the duration of the
treaty if expansion is undertaken.
Option III. U.S. would have a detailed and exclusive right for some
period less than full term of U.S.
canal operation, with a U.S. first
refusal right thereafter during term of U.S. canal operation.
Discussion.
The resolution of this issue will not have a significant impact on
U.S. interests as it now does
not appear likely that we will make a decision to expand canal
capacity during the period of U.S.
control of canal operations. Option I would be similar to the rights
the United States would have obtained under the 1967 draft
treaties.26 Panama would object to it
strongly and while it would be particularly attractive to a limited
number of members of Congress and the public, it would be of minor
significance to most of the Congress and the public.
[Page 33]
Option II is the position we currently have tabled with Panama. It
will give us a right definitive enough to allow us to undertake the
addition of a third lane of locks to the present canal should we
decide to do so. This will be attractive to some members of Congress
and the public. Panama’s current position is so close to Option II
that it seems likely Panama would accept this option in the context
of an entire treaty package.
Option III would allow us to agree to Panama’s current position. It
is less attractive to all interests in the U.S. because our rights would be less, but acceptance
of it would not significantly affect our national interest.
Guidance Changes Needed.
Option I. Harden guidance to require
negotiators to obtain Panama’s agreement (a) to preserve a
territorial right-of-way for future U.S. use in contruction of a sea-level canal and (b) to
extend the duration of the treaty if U.S. decides to expand the canal.
Option II. No guidance change necessary.
Option III. No guidance change necessary.
Tab 10
Steps to Obtain Congressional and Public Support
for a Treaty27
Washington, undated
STEPS TO OBTAIN CONGRESSIONAL AND PUBLIC
SUPPORT FOR A TREATY
a. Hold another Presidential meeting with the Congressional
leadership,28 to be attended also by the Secretaries of State
and Defense, the JCS Chairman, and
the U.S. negotiators. The President
would: (a) set forth the status of the negotiations and his plans
for the treaty timetable; (b) seek the Congressional leadership’s
advice on the course to be followed in the negotiations and on a
strategy for winning Congressional approval; and (c) explore how
best to involve members of the Congress in the negotiations.
[Page 34]
b. Issue a Presidential statement, to follow immediately after the
above meeting, setting forth the Administration’s objectives and
commitment to obtaining a new treaty.29
c. Issue Presidential instructions30 directing State, in coordination with Defense and
White House congressional staffs to begin immediate, intensive,
coordinated and continuing consultations with the Congress.
d. Instruct appropriate agencies to begin working promptly to lessen
congressional support, particularly in the Senate, for prospective
anti-treaty initiatives including those designed to cut off funds
for the negotiations.
e. Undertake White House-directed effort to obtain support of
concerned interests groups—veterans organizations, business groups,
labor unions, church groups, Hispanic Americans. Perhaps also the
organization of a national “Citizen’s Committee for a Panama
Treaty”, its membership to be solicited by the White House.31
f. Make follow-up Presidential statements (including a fireside chat)
to inform the public and to build support for the treaty. If an
early fireside chat is decided upon to set a positive public
framework for the negotiations, it should focus more on the U.S. interests and objectives that
would be served by a new treaty, rather than on details that might
weaken our negotiating position or compromise the President.32
g. Undertake private Presidential consultations with selected
department heads and other senior officials to emphasize the
priority attached to the treaty effort and the desire that all
agencies concerned cooperate in the attainment of a new treaty.
