I will continue my review of these principles, and I expect to authorize
the completion of the formal treaty drafting.
This is a difficult political question, and I need your help during the
coming weeks.
I am convinced that the treaties are essential to ensure the continued
effective use of the Canal for American commercial and security
needs.
You can call us directly with specific questions, but in the meantime I
am enclosing for your use a short summary of the agreement in
principle.
Enclosure
Summary of the Agreement in Principle2
Washington, undated
Defense and National Security
Under the new treaties the U.S. will
be able to guarantee the security and defense of the Panama
Canal:
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—The U.S. will have the permanent
right to defend the neutrality of the Canal from any threat, for
an indefinite period;
—U.S. warships will have the
permanent right to transit the Canal expeditiously and without
conditions, for an indefinite period;
—For the rest of the century, U.S. military forces will have the primary
responsibility to protect and defend the Canal; the Government
of Panama guarantees the U.S.
the right to station troops in Panama and to use all lands and
waters necessary for the Canal’s defense.
Canal Operations
The United States will maintain control over all lands, waters and
installations—including military bases—necessary to manage, operate,
and defend the Canal. A new agency of the U.S. Government will operate the Canal. This agency,
which replaces the Panama Canal Company, will assure United States
control of Canal operations for the rest of the century. The Canal
will be open to all shipping on a non-discriminatory basis.
On the effective date of the treaty, Panama will assume general
territorial jurisdiction over the present Canal Zone, and may use
portions of the area not needed for the operation and defense of the
Canal. At the end of 1999, Panama will assume control of the Canal
operations.
Economic Factors
Difficult financial negotiations have produced a fair and equitable
package, which will not involve any Congressional appropriations.
Panama will receive exclusively from Canal revenues:
—a share in tolls—30 cents per Panama Canal ton;
—$10 million per year from toll revenues;
—up to an additional $10 million per year only if Canal traffic
and revenues permit.
In addition, the United States has pledged its best efforts, outside
the treaty, to arrange for an economic program of loans, loan
guarantees and credits:
—up to $200 million in Export-Import Bank credits;
—up to $75 million in AID
housing guarantees;
—a $20 million Overseas Private Investment Corporation (OPIC) loan guarantee.
This 5-year package will contain standard “Buy American” provisions
that will greatly benefit U.S.
businesses which invest in and sell goods and services to
Panama.
Rights of U.S. Employees
All U.S. civilians currently employed
in the Canal can continue in United States Government jobs until
retirement. They will enjoy the rights and guarantees extended to
all U.S. Government employees
overseas.
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New Sea-Level Canal
The agreement envisions the possibility of building a new sea-level
canal. The U.S. and Panama will
jointly study its feasibility. If they agree that such a canal is
desirable, they will negotiate the terms for its construction.
Treaties
There will be two treaties: (1) a treaty guaranteeing the permanent
neutrality of the Canal, and (2) a basic treaty governing the
operation and defense of the Canal through December 31, 1999.
