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

89. Minutes of a Cabinet Meeting¹

Washington, August 29, 1977, 9:05 a.m.

The twenty-fifth meeting of the Cabinet was called to order by the President at 9:05 a.m., Monday, August 29, 1977. All Cabinet members were present except Secretary Bergland, who was represented by Deputy Secretary of Agriculture John White; Secretary Califano, represented by Under Secretary of HEW Hale Champion; and Ambassador Young, represented by his Executive Assistant Anne Forrester Holloway. Other persons present were:

Zbigniew Brzezinski	Bunny Mitchell
Landon Butler	Dick Moe
Alan Campbell	Frank Moore
Doug Costle	Frank Press
Stu Eizenstat	Charles Schultze
Jane Frank	Jay Solomon
Rex Granum	Stansfield Turner
Tim Kraft	Charles Warren
Bob Lipshutz	Jack Watson

The President said that, after fourteen years, treaty negotiations on the Panama Canal have been successfully concluded, and that he has just received the final texts of the treaties. He commended Ambassadors Ellsworth Bunker and Sol Linowitz for a superb job and said that the treaties are very beneficial to the United States. The treaties will be signed on September 7th at the Organization of American States headquarters in Washington; 15 Latin American leaders have already agreed to attend and more are expected to be present. The President said that he will have bilateral discussions with all of the Heads of State attending the signing. He asked Cabinet members for suggestions as to appropriate topics that might be included in the discussions.

The President introduced Ambassadors Bunker and Linowitz and asked them to comment on the treaties:

—Ambassador Bunker said that there are two treaties; a basic treaty which expires December 31, 1999, which gives the United States primary responsibility for operation and defense of the Canal during that time; and a second treaty which guarantees the permanent neutrality of the Canal. Some of the major provisions of the first treaty are:

—That, with the participation of Panama, the United States can use and share all land and water necessary to operate and defend the Canal;

—That the Canal will be operated by a board of nine members—five from the U.S. and four from Panama;

—That the U.S. will administer the Canal operations until 1990 and Panama will do so from 1990 to 1999;

—That no United States bases will be maintained in the area beyond the year 2000;

—That United States employees in the Canal Zone will have rights similar to U.S. employees around the world, as well as the right of early retirement; and

—That United States institutions and organizations will continue to function as they presently do during the term of the treaty and thereafter as other businesses do in Panama.

—Ambassador Linowitz said that the second treaty regarding permanent neutrality gives the United States authority to assure that the Canal will remain open, accessible, secure and efficient.

—Mr. Linowitz said that a third set of issues involves economic arrangements. The Canal Commission agrees to pay 30¢ per Panama Canal ton transiting the Canal, plus a fixed sum of $10 million per year for operation of the Canal and up to an additional $10 million per year if revenues permit. Arrangements have also been agreed to concerning economic progress—up to $300 million in loans and guarantees from the Export/Import Bank and similar institutions, and as much as $50 million in foreign military sales credits over a period of ten years.

—Mr. Linowitz said that there are three additional important points to be made about the treaties:

1. The issue of the Panama Canal does not simply involve the U.S. and Panama; it is an issue which affects the U.S. and all of Latin America. If a confrontation should occur, it would involve the U.S. against all of Latin America. On the other hand, if the issue is handled fairly, it will set an example for all of the third world;

2. Our objective is to assure that the Canal remains open and accessible. The greatest danger to this objective is to continue with an outmoded treaty that is totally unacceptable to Panama;

3. The surest way to achieve that objective is to ratify a treaty which reflects both Panamanian aspirations and U.S. interests.

—The President noted that following the year 2000, United States warships will still have the right of expeditious passage through the Canal. He added that efforts are underway to inform Congress thoroughly about the issues, and that meetings with appropriate groups are being held throughout the country. Former Secretary of State Henry Kissinger and President Ford were thoroughly briefed and have endorsed the treaties. The President specifically asked for the Cabinet’s help in securing ratification of the treaties.

—In answer to a question from the Vice President, Mr. Bunker said that a sea-level canal is being studied jointly with the Panamanians. Under the treaty, the United States has the right to construct such a canal during the term of the treaty with Panamanian consent, and agrees that it will not construct such a sea-level canal in any other country.

—Mr. Strauss raised four concerns often expressed by people he talks to, and asked for Mr. Linowitz’s comments on each one:

1. Concern: We are giving away something that we own.

Response: The U.S. has never had sovereignty over the Canal Zone. The original treaty granted us the “right, power and authority as if (we) were the sovereign.” After it was signed, President Taft said that the treaty “seems” to preserve Panamanian sovereignty. There are similar references in subsequent administrations. A 1907 Supreme Court decision, Wilson V. Shaw, did refer to U.S. sovereignty, but a subsequent decision indicated that the U.S. has never been the sovereign.

2. Concern: Why cave in to the threats of a dictator?

Response: We have never been threatened in fourteen years of negotiations. We enter the new treaties because they serve the highest and best interest of the U.S.

3. Concern: Even if the first treaty were unfair to the Panamanians, giving the Canal back to Panama is comparable to giving Alaska back to the Russians.

Response: We purchased Alaska and got the full and complete “rights and appurtenances” to that land. In contrast, we did not take sovereign title to the Panama Canal, and we have been making annual payments for our rights of usage ever since the Canal was built.

4. Concern: What happens if General Torrijos is overthrown and the next leader of Panama repudiates the treaties?

Response: Panama has an excellent record of abiding by the Canal treaty. In any event, the U.S. does not turn over complete control of the Canal for twenty-three years, and if the treaty is abrogated by one party, it will not be binding on the other. Thus, it is clearly in Panama’s interest to adhere to the treaties.

—The Attorney General asked why we would have no U.S. base in Panama after the year 2000. Mr. Linowitz responded that DOD and General George Brown say that such a base is not necessary and might even be counter-productive.

—The President suggested that Cabinet members read The Path Between Two Seas by David McCulloch—an excellent history of the circumstances and events surrounding negotiations of the first Canal treaty.

—Mr. Andrus said that the briefing materials on the treaties recently circulated by the Cabinet Secretary are excellent and should also be distributed to the press.

—The President noted that at the request of several Senators, the White House has invited key delegations from some states to be briefed on the treaties by the Secretary of Defense, Ambassadors Bunker and Linowitz, General George Brown and key White House staff. Last Tuesday,² delegations from Mississippi and Kentucky were at the White House for a briefing, and delegations from Florida and Georgia will be here tomorrow. A briefing is planned for Thursday³ for groups from West Virginia and Arkansas.

—The President said that a vote on the treaties will not be later than February of next year but could come earlier if it appears that we have the necessary votes.

—The President reiterated his commendation and thanks to Ambassadors Bunker and Linowitz for their excellent work.

[Omitted here is information unrelated to Panama.]

4. Mr. Schultze briefly outlined some statistics concerning economic relations between the U.S. and Latin America, all of which underscore the importance of the Panama Canal treaties. United States’ assets in Latin America in 1975 were $68 billion, of which $22 billion was direct investment. That money earns approximately $5 billion per year, and the return increases each year. Approximately $17 billion of goods are directly exported from the U.S. to Latin America each year, with an additional $4 billion in non-tangible exports. Imports from Latin America approximate the same monetary value. Most of the imports are raw materials (e.g., 25% of our steel-making ingredients; 41% of our lead; 17% of our tin; 21% of our copper; and 27% of our non-ferrous metals).

—Mr. Strauss noted that many corporate executives will lend their support to the Panama Canal treaties if only they are asked. He urged Cabinet members to make such calls as much as possible.

—The President said that he intends to hold a fireside chat on the Canal treaties shortly after the signing on September 7th.⁴ He anticipates full-scale media coverage of the signing ceremony.

[Omitted here is information unrelated to Panama.]

—Dr. Brown noted that the Joint Chiefs of Staff met recently to discuss the Panama Canal treaties with 50–60 retired three- and four-star generals or admirals. General George Brown reported to him that a majority who attended feel that we have no choice but to ratify the treaties, and that to do so is in the overall best interests of the U.S. Dr. Brown said that this does not mean that they are happy with the treaty, but rather that they recognize we simply cannot maintain the status quo. Most of the officers briefed can be expected to support the treaty. He noted that General Brown will also meet this week with two of the three living ex-Chairmen of the Joint Chiefs of Staff.

[Omitted here is information unrelated to Panama.]

1. Source: Central Intelligence Agency, Office of the Director of Central Intelligence, Job 80M00165A, Box 23, Folder 3: 468. No classification marking. The meeting ended at 10:54 a.m.
2. August 23.
3. September 1.
4. See footnote 6, Document 99.