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

87. Memorandum of Conversation¹

New York City, August 25, 1977

PARTICIPANTS

• Ambassador Ellsworth Bunker
• Ambassador Sol Linowitz
• Governor Ronald Reagan
• (Present in the room but not participating: Mr. Peter Hanniford, Assistant to Governor Reagan)

I was not in the room where the conversation took place but was able to overhear much of the discussion. As you requested here are my recollections of the session.

Both Ambassadors Bunker and Linowitz made a complete and detailed explanation of how the two new treaties were negotiated and how they would be applied. They furnished the Governor with the State Department Fact Sheet and copies of their testimony before the Merchant Marine and Fisheries Committee on August 17.² Governor Reagan said that he would read the material carefully before making any decisions.

The Governor had a list of questions from which he read. He had obviously done extensive “homework” on the subject. He proceeded to voice his objections to the defense aspects of the new treaties. He said that it would allow even “enemy ships” to use the Canal in time of conflict. The Ambassadors pointed out that the present treaty also grants that right and that Japanese and German ships would have had the right through international law to use the Canal during World War II. The Governor was not aware of this, and he said that based on their explanation of the neutrality treaty he was satisfied that the defense aspects had been covered.

The Governor then went into the sovereignty issue. He said that it was clear to him that the majority of the American people agreed with him that we had sovereignty over the Canal Zone and that the original negotiations begun in 1964 had given up our “hole card” by freely agreeing that we would recognize Panama’s sovereignty over the Canal Zone. Ambassador Linowitz explained again that we do not have sovereignty. Governor Reagan said that the Spooner Act³ clearly stated that the U.S. was sovereign. The Ambassadors responded that this has been reversed on a number of occasions by the Supreme Court.

Governor Reagan said that if we give in to Panama on the sovereignty issue every little country in the world will get the idea that it can get its way by “tweaking our (the U.S.) nose.” He also said it would be a signal to all the world of another U.S. “retreat” under pressure.

Ambassador Linowitz said he wished to make three basic points:

1. This is the first time we got a concession on neutrality in perpetuity out of the Panamanian government.

2. The U.S. has never acted under duress from Panama on a new treaty. We have stated many times that we have the right to maintain the status quo under the 1903 Treaty, but we wished to modernize an out-dated relationship.

3. The favorable reaction of the U.S. to a new treaty will have a highly favorable impact on all of Latin America and the rest of the less-developed world.

The Governor said he did not believe that the rest of Latin America was solidly behind the treaty. The Ambassadors pointed out that we had heard from many Latin American nations that they liked the fact that we would maintain control for the next 23 years, and that they have all expressed their satisfaction with the neutrality treaty in perpetuity.

Ambassador Linowitz then asked the Governor what he would do if he had to make a decision on a new treaty. The Governor said that he had no objection to a revised treaty which would give Panama more income and possibly some more jurisdiction in operation, but he would not give in on sovereignty.

The Governor said he could not understand why we were agreeing to a treaty which gave Panama the Canal, the Canal Zone, and were then paying them large sums of money from a Canal which is not making money. Ambassador Linowitz told the Governor that the U.S. Government had realized more than $642 million in interest payments during the years of the Canal’s operation. What we are proposing to do is pay Panama a fair rent for its territory which we are now getting for approximately $6 per acre—the most valuable piece of land in the country. Reagan said he had no objection to a just compensation.

The Governor said that he feared that a successor government to Torrijos might not abide by the treaty. The Ambassadors told him this would amount to abrogation of a treaty and we would then, of course, take any action we deemed to be necessary to keep the Canal open to world shipping.

Reagan said that he suspected that Communist influence was behind the “give-away”. He said that he had first read of turning the Canal over to Panama in a Communist document in 1932. He said he feared that the Panamanians would nationalize the Canal as Nasser did in Suez. The Ambassadors reminded him that we still have full control for 23 years under the new pact.

The Governor said he understood the problems the Ambassadors had in negotiating because of all of the previous attempts at negotiating a treaty and particularly because they had the issue of “sovereignty” taken away from them as a negotiating tool.

He also said that the treaties described by the Ambassadors represented the best “package” he had heard regarding a new treaty. He indicated that he was still not satisfied but would think about their presentation at length.

Ambassador Linowitz then asked a question which he qualified as being one which the Governor might regard as being out of line. He asked the Governor if his decision would be against a new treaty would he head an organization in opposition to the treaty?

The Governor responded that he had no intention of becoming involved with any organization, but that he would speak his convictions at any time he was given the opportunity. He said he knew of only two formal organizations—one headed by Senator Thurmond and another backing statehood for the Canal Zone sponsored by a Southern California professor.

It was noted by the Ambassadors that the Governor did not bring up the subject of Zonians or Canal Zone employee rights during the meeting.

The three participants agreed that the Ambassadors would tell the press waiting outside the building that the Governor was giving full consideration to the briefing and had had all of his questions answered fully and to his satisfaction (not necessarily his agreement.) The meeting lasted one hour and five minutes. The Ambassadors were quizzed by the press and they stood by their agreement. One reporter asked if they thought they had convinced the Governor and Ambassador Linowitz said they had convinced the Governor to consider their views.

NOTE: Later in the day I called to talk with the Governor’s Public Relations Advisor (Peter Hanniford) and by chance got Reagan himself on the phone. I told him about the press statements made by the Ambassadors and also took the liberty of telling him that you had both been very impressed with his reception of your presentation and his great knowledge on the subject. He said to tell you that he had the highest respect and admiration for both of you and knew that you were doing what you believed to be in the best interests of the country. He said he regretted that he would be on “the other side of the fence” on this issue.⁴

1. Source: Library of Congress, Manuscript Division, Linowitz Papers, Box CL–1, Government Service, Pan. Canal Treaties, Reagan, Ronald, 1977, Aug. Confidential. Drafted by Carl Davis (ARA/PAN) on August 26.
2. See Document 83.
3. The Spooner Act of 1902 authorized President Theodore Roosevelt to purchase rights for the purposes of building the Panama Canal.
4. In an August 25 memorandum, Linowitz requested that Carter call him so he could report on the meeting with Reagan. Carter wrote on the memorandum: “‘Will not lead any opposition’—No group speaks for him—(probably will oppose—once treaty is signed, realizes seriousness of his opposition.)” (Carter Library, Plains Files, President’s Personal Foreign Affairs File, Box 3, Panama Canal, 8/77) On August 26, during a speech to the Young Americans for Freedom, Reagan declared that he did not think the United States should ratify the Panama Canal Treaty. (“Reagan Opposes Ratifying Canal Pact,” Washington Post, August 26, 1977, p. A2)