79. Memorandum From the Assistant to the President (Jordan) and William Hyland of the National
Security Council Staff to President Carter
1
Washington, August 9, 1977
SUBJECT
Attached is the background material you requested on the new Panama Canal
Treaty: (1) Basic Elements and (2) Talking Points.
However, the latest report from Panama indicates the negotiations have
slowed down somewhat today and that an announcement that an agreement in
principle has been reached may be delayed for
three or four days.2
The negotiators are encountering some new problems as they examine the
new Panamanian draft of the treaty. We do not yet have a sense of how
serious these problems are. In addition, the military negotiators
working on the land and water issues have encountered minor problems.
Under these circumstances, it would be best to hold off making any
telephone calls until we have further word.
We will send you an update as soon as we talk to Bunker or Linowitz.
Attachment
Basic Framework for a New Panama Canal
Treaty
3
Washington, undated
Basic Framework for a New Panama Canal Treaty
1. Canal defense.
The United States shall have primary responsibility for the Canal’s
defense during the treaty’s term. Panama will participate. A Status
of [Page 247] Forces Agreement
similar to such agreements elsewhere will cover the activities and
presence of our military forces.
2. Canal operation.
The United States shall have responsibility for Canal operations
during the term of the treaty. It shall possess all necessary rights
and shall act through a United States Government agency which will
replace the Panama Canal Company. A policy level board of five
Americans and four Panamanians will serve as the board of directors.
Until 1990, the Canal Administrator will be an American and the
Deputy Administrator a Panamanian. Thereafter, the Administrator
will be Panamanian and the Deputy, American.
3. Canal operating and defense areas.
The Canal Zone will cease to exist at the treaty’s start. The United
States will continue to have access to and the rights to use all
land and water areas and installations necessary for the operation,
maintenance and defense of the Canal during the treaty period.
4. Neutrality.
Panama and the United States will maintain a regime providing for the
permanent neutrality of the Canal including non-discriminatory
access and tolls for merchant and naval vessels of all nations.
United States and Panamanian warships will enjoy expeditious passage
of the Canal at all times. Our freedom of action to maintain the
Canal’s neutrality is not limited by the treaty.
5. Economic arrangements.
During the treaty’s life the United States will make an annual
payment to Panama from toll revenues of 30 cents (to be adjusted
periodically for inflation), per Panama Canal ton transiting the
Canal.
—The United States will also pay Panama a fixed sum of $10 million
per annum, plus an additional $10 million if
Canal revenues permit.
—In addition, the United States will undertake, outside the treaty,
to arrange an economic program of $295 million to be implemented by
separate economic agreements involving loans and guarantees.
6. Sea-level canal.
Panama and the United States commit themselves jointly to study the
feasibility of a sea-level canal and, if they agree that such canal
is necessary, to negotiate mutually agreeable terms for its
construction.
7. Jurisdiction.
Panama will assume general territorial jurisdiction over the present
Canal Zone at the treaty’s start.
8. Duration.
The basic treaty will terminate on December 31, 1999. Our military
presence will cease by the treaty’s end.
[Page 248]
Attachment
Talking Points on Canal Treaty
4
Washington, August 9, 1977
Talking Points on Canal Treaty
We have reached agreement with Panama on the terms of a treaty to
guarantee and modernize the Panama Canal’s role as a neutral
international waterway open to all nations on an equal basis.
—Our main objectives are to keep the Canal open, operating
efficiently, neutral, and open to all ships on a nondiscriminatory
basis. The Canal cannot remain open for long or be operated
efficiently if we do not have the cooperation of the Panamanians
since the Canal is extraordinarily vulnerable. (One person carrying
a suitcase full of dynamite can blow up a lock or a dam and put the
Canal out of business for two years.)
—The 1903 Treaty with Panama no longer reflects the many changes that
have occurred in Panama, the United States, and the World. Today no
nation, including ours, could continue to accept a treaty which
permits the exercise of such extensive extra-territorial rights in
“perpetuity.” Last week, in Bogota, our closest friends in the
hemisphere—the democracies of Venezuela, Costa Rica, Colombia,
Mexico, and Jamaica—issued a Joint Communique urging the United
States and Panama to complete and ratify this new treaty.5
—There are two parts to our agreement: one
deals with the operation, jurisdiction, and defense of the Canal,
and it will remain in effect until the year 2000; the second part
will give us the right to guarantee the neutrality of the Canal
forever. During the 23-year lifetime of the basic Treaty, the United
States will retain the primary rights and responsibilities necessary
to operate and defend the Canal. But we will gradually seek to
increase the role of Panama in both the operation and the defense of
the Canal so that Panama will be ready to shoulder its full
responsibilities after the year 2000. Our job will be to help Panama
become a full partner. The Canal is their most important resource,
and they therefore have a strong incentive to see that it works
well.
—After the year 2000, the United States will not have the
responsibility to directly operate or defend the Canal, but we will
retain the rights to take whatever action is
necessary to guarantee its neutrality.
[Page 249]
—At the Treaty’s start, Panama will obtain jurisdictional rights over the Canal Zone. The United
States will retain rights of criminal jurisdiction for U.S. civilians over a three-year
period, and for our military during the life of the treaty (under a
status of forces agreement, as we have with all our military bases
overseas).
—The Canal will be operated during the
Treaty’s lifetime by an organization in which the United States will
have effective control.
—The United States will continue to have access to all the lands and water areas and defense facilities
necessary for the operation, maintenance, and defense of
the Canal during the treaty period.
—The United States will not have to pay any tax
dollars to Panama. Panama will share in the toll revenues
(30 cents per canal ton, plus $10 million, plus an additional $10
million if revenues permit) and will receive approximately $295
million in loans, guarantees, and Export-Import Bank credits.
—Panama and the United States will jointly study the feasibility of a
sea-level canal, and if they agree that
it is necessary, we will negotiate terms for its construction.
I have no doubts that this treaty will provide for the most effective
defense of the Canal and will further our strategic, commercial,
economic, and moral interests. In addition, I am confident that the
new treaty will lead to closer political and commercial relations
with all Latin American and Caribbean nations.
