59. Memorandum From Secretary of State Vance to President Carter 1

[Omitted here is information unrelated to Panama.]

2. Meeting with Messrs. Bunker and Linowitz: I met today with Messrs. Bunker and Linowitz to discuss the current state of the Canal discussions which resume on Monday.2 Since the last meeting of the negotiators there have been meetings between the Panamanian experts and a group of experts on our side (which include Dick Cooper, Tony Solomon and Ted Van Dyke of AID), to discuss questions relating to possible economic assistance.3 Our people will complete their analysis this week. The big issue which is now being raised is the Panamanian demand for payments related to our use of military bases during the term of the Canal treaty, i.e., from the date of approval of the treaty until the year 2000. I told Ellsworth and Sol that this would raise very difficult problems with the Congress and we would want to consider any suggestions which they might have only in light of an overall assessment of the total economic consequences of the new Canal agreement.4 I asked them to put together a paper on this next week and said that [Page 204] we put this into the NSC so that you will have a chance to take a look at the facts and get our recommendations.5

[Omitted here is information unrelated to Panama.]

  1. Source: Carter Library, National Security Affairs, Brzezinski Material, Subject Files, Box 18, Evening Reports (State), 7/77. Secret. Carter initialed the memorandum and wrote: “Cy.”
  2. July 11.
  3. No record of meeting minutes has been found. See footnotes 7 and 10, Document 58.
  4. Carter wrote in the left margin: “This will make Congress approval almost impossible.”
  5. See Document 69.