sw/t ; i - iw Current Policy No. 1226 Michael G. Kozak & Panama Canal: The Strategic Dimension United States Department of State Bureau of Public Affairs Washington, D.C. Following is a statement by Michael G. Kozak, Deputy Assistant Secretary for Inter-American Affairs, before the Sub- committee on Panama Canal and Outer Continental Shelf of the House Commit- tee on Merchant Marine and Fisheries, Washington, D.C, November 2, 1989. I am pleased to appear before you today and welcome the opportunity to review the role of the Panama Canal from a re- gional and global strategic perspective. My colleagues from the Department of Defense and the Panama Canal Com- mission have discussed the canal's im- portance from the perspectives of na- tional defense and economic value. As the State Department's representative, I will approach the question of the canal's strategic role and value from a broad foreign policy perspective. The State Department's Perspective Noting that the last major discussion of this topic occurred during the debates over the Panama Canal Treaties 10 years ago, the Chairman [Roy Dyson] has wisely provided an opportunity to review the canal's strategic role and value in light of the changes which have occurred over the past decade. From the Department of State's perspective, three basic considerations affect our view of the canal's strategic role and value. First, the United States has a broad national interest in continued commer- cial and military use of the canal into the 21st century and a permanent re- sponsibility for the canal's security and neutrality. We have successfully oper- ated the canal for 75 years for our bene- fit and for that of international com- merce. While the canal is no longer crucial to U.S. military strategy or to the U.S. economy as it was some dec- ades ago, it still serves important U.S. military and economic interests. Thus, we want to see efficient canal service continued. Second, although — as I have noted — the canal's importance for the U.S. economy is less than it once was, it continues to play a critical role in the economies of other countries in the Western Hemisphere and a vital role in global maritime trade. Uninterrupted access to a safe and efficient Panama Canal is an important element of eco- nomic and political stability for coun- tries like Chile and Ecuador and con- tributes to the overall stability and prosperity of world trade. We want to see that stability protected. Third, the steps we have taken over the past decade to adapt the methods for operating and defending the canal to the modern world have not taken place in a vacuum. Instead, they have occurred within the context of a world- wide demand for democracy and self- determination, including the Western Hemisphere. Throughout the hemi- sphere we are witnessing increasing popular insistence on freedom from ar- bitrary or authoritarian rule, on protec- tion for basic human rights and civil lib- erties, and on progress toward open po- litical and economic systems. Nowhere has the desire for democracy and self- determination posed a greater challenge for U.S. policy than in Panama. The Primary Goal: Safety and Efficiency A primary and historical goal of U.S. policy with respect to Panama is to ensure that the canal continues to oper- ate without interruption, safely and efficiently, and that it remains acces- sible to the United States and to all other trading nations under conditions of neutrality. This is a goal and an in- terest that the United States and the Republic of Panama have in common, as the Panama Canal Treaties reflect. In- deed, one of the best guarantees we have of responsible Panamanian policy toward the canal is the fact that the safe, efficient, and neutral administra- tion of the canal is manifestly crucial to the national interest of Panama. We must recognize, however, that Panama's ability to responsibly pursue its own in- terest — and hence the long-term future of the canal — cannot be assured in the context of political instability. In sum, protection of the interests of the United States and of world commerce in a safe, efficient, and neutral Panama Canal requires two basic things. First, that responsibility for canal management, operation, and security be in accord with the will of the Panamanian people. Second, that the Panamanian system develop in such a manner that the will of the Panamanian people can be accu- rately expressed and implemented by the government of that country. How have we met these responsi- bilities over the past decade? Where are we today, and what does the next decade hold? The New Treaty Relationship The United States entered into a treaty relationship with the newly independ- ent Republic of Panama in 1903 which gave the United States in perpetuity ex- traordinary sovereign-like powers in Panamanian territory to build and oper- ate the Panama CanaL Soon thereafter, the United States found it necessary to face up to the first of the requirements I mentioned — that responsibility for the management, operation, and defense of the canal be conducted in accordance with the will of the Panamanian people. Practical adjustments in the way the United States exercised its rights were made under the so-called Taft agree- ment to address the sensitivities of the Panamanian people concerning sover- eignty. Further adjustments were made by formal treaty modifications in 1936 and 1955. And in 1965, President Johnson agreed to a complete renegotia- tion of the treaty relationship, which culminated in the 1977 Panama Canal Treaties. These treaties — which were approved by plebiscite in Panama — largely met the longstanding demands of Panamanians across the political spectrum to eliminate the sovereign and perpetual character of U.S. rights in Panama. At the same time, they sought to protect U.S. interests by granting the United States — for the remainder of this century — the functional rights nec- essary to operate the canal and our military bases in Panama. In a broad sense, they were modeled on the mod- ern base rights treaties and agreements the United States has with other na- tions throughout the world. U.S. inter- ests after the year 2000 were to be pro- tected by the Neutrality Treaty, which establishes the basic terms for opera- tion of the canal on a neutral, nondis- criminatory basis and gives the United States the right and responsibility to take necessary action to protect the se- curity of the canal and the regime of neutrality. The treaties of 1977 have worked well in the sense of achieving their in- tended purpose of removing the Pan- ama Canal as an object of political con- flict in Panama and between Panama and the United States. Perhaps the greatest demonstration of this conclu- sion is the fact that throughout the re- cent political crisis in Panama, General Noriega has been singularly unsuccess- ful in his efforts to use the canal issue to rally nationalistic and hemispheric support. In essence, since the treaties the canal has become a "nonissue" in Panama and in Latin America. Progress toward meeting the second requirement I mentioned — the develop- ment of a stable internal system reflecting the will of the Panamanian people — has been woefully inadequate during the past decade, however. By 1979, the United States was on the verge of implementing a treaty which had taken almost 14 years to ne- gotiate and prepare for implementation. At that time, both the executive branch and the Congress recognized that democracy was an essential element of political stability on the isthmus and had received commitments from Gen- eral Torrijos to open up the Panama- nian political system. When the treaties entered into force on October 1, 1979, political exiles had been allowed to return and political par- ties and opposition media had become active. Our canal policy, our support for the treaties, and our support for democ- racy in Panama were thus proceeding in tandem as the new treaty relationship was inaugurated. Implementation of the new treaty relationship proceeded without serious setback or disruption from the treaties' entry into force in October 1979 until General Noriega's seizure of the govern- ment in February 1988. During the ini- tial transition period, a historic transfer of authority took place on schedule and without incident as Panama assumed the governmental functions formerly ex- ercised by the Canal Zone Government. The joint bodies established by the treaty began to resolve problems and plan for canal defense. The Panama Canal Commission did an exceptional job of increasing Panamanian participa- tion throughout the canal work force while maintaining the canal's efficiency and commercial competitiveness. The United States and Panama continued to conclude a number of important treaty- related agreements, such as that which established (with Japan) a commission to conduct a feasibility study of alterna- tives or possible modifications to the ex- isting canal system. Certainly, there were problems and areas of difficulty, but on balance the implementation process was on track and was serving the interests of both the United States and Panama. On the political scene, the death of General Torrijos in 1981 left a vacuum. The Torrijos dominance of the political scene since 1968 was due as much to his populist political skills as to his com- mand of the military. No other officer had this combination of skills, and the subsequent maneuvering among senior military commanders for control of the Panama Defense Forces (PDF) further weakened the political role of the mili- tary. Although the military continued to dominate the government, their con- trol was increasingly based on a heavy- handed manipulation rather than any semblance of genuine political popular- ity. Through newly legalized political parties and a lively media presence, the opposition offered a civilian alternative to military rule and increasingly at- tacked the government for corruption and abuses of privilege and power. A number of events during the early and mid-1980s — a 1984 presidential election clouded by charges of fraud, the 1985 murder of opposition activist Hugo Spadafora, the forced resignations of three presidents, rumors of drug traf- ficking, and charges of assassination, corruption, and vote fraud made against Noriega by the former PDF Deputy Commander in 1987 — showed that de- mocracy would face severe tests. Never- theless, opponents of military rule con- tinued to gain strength, broadened their demands, and refused to give way before an upward spiral of intimidation and repression. L ertainly, there was evidence that a political transition to civilian, democratic government would be neither quick nor painless, but there was no doubt that such a political tran- sition had begun. The Force of Democracy at Work I would note that throughout the period of the 1980s another force was at work — not just in Panama but through- out the region. That is the force of democracy. When I joined the U.S. Government 18 years ago, you could count on one hand the number of democracies in Latin America. Now you can count the dictatorships with perhaps a finger or two to spare. This transformation did not just happen. First and foremost, it is the product of a change in the intel- lectual climate in Latin America and the courage of the peooles of the region. People have come to realize that the man on the white horse offering easy solutions to all their problems in return for absolute power is no solution at all. Dictatorships of both the right and the left have demonstrably failed to meet the needs of their people. And the people of Latin America — both in and out of uniform — have demonstrated the courage and the resolve necessary to a successful struggle to institutionalize democracy in their nations. But while the Latin peoples deserve the credit for the historical transition to democracy that has occurred over the past decade, the United States has not been a silent bystander. Successive U.S. Administrations and the Congress have given active encouragement and support to the forces struggling for democracy in the region. This approach not only reflects basic U.S. values but fundamental U.S. inter- ests. Gone are the days when respon- sible U.S. officials might argue that a dictatorship — even a dictatorship closely aligned to U.S. policy in certain areas — could provide the long-term sta- bility vital to securing U.S. interests in the region. Instead, I believe, a consen- sus has developed across the U.S. politi- cal spectrum that the only means to achieve long-term stability is through the development of democratic proc- esses and institutions. Where democ- racy is established, transfers of power occur periodically through peaceful, orderly processes and not through coups or social convulsions. And while civil liberties and free elections do not al- ways guarantee that the government in power will follow responsible economic, social, or foreign policies, they do guar- antee that a government that fails to do so will be brought up short by its own constituents. In sum, in my judgment, the fundamental interests of the other nations of this hemisphere and our own interests are sufficiently congruent and sufficiently evident to the people of our respective nations that our interests will be well served if we are dealing with governments that genuinely reflect the will of their people. Nowhere is this more evident than in Panama. Panama's Political Crisis Clearly, the political crisis in Panama which began in the summer of 1987 has severely strained our ability to work with Panama on matters of mutual in- terest, including the canal relationship. But neither the United States nor the treaties themselves have become the is- sue. Despite a constant stream of disin- formation and unsubstantiated charges about U.S. "treaty violations," the re- gime has been careful not to attack or disown the treaties. Despite efforts to paint the internal crisis as a product of a "liberation" struggle against "U.S. im- perialism," the Panamanian people look to the United States as their friend and ally in their struggle for democracy. Polls taken at the time of the May 7 election are revealing. Over 80% of Panamanians blamed Noriega and his cronies for the crisis in the country. Less than 5% blamed the United States — and this after a year in which General Noriega totally controlled the media. Despite regime efforts to change U.S. nonrecognition policy by har- assing U.S. and Panamanian employees of the U.S. forces and the Panama Ca- nal Commission, Noriega has seemingly sought to avoid a direct threat to the canal or a direct challenge to the proper exercise of U.S. rights. Nevertheless, it becomes clearer each day that Noriega's continuation in power is a threat not only to the interests and freedom of his own people, but also to the canal. The longer the crisis persists the more diffi- cult it will be for the canal to avoid a variety of additional costs. And as this subcommittee well knows, it will be the canal's users who ultimately must face the burden of bearing these costs. The challenge to U.S. policy in Pan- ama has been and remains Noriega's re- fusal to allow the democratic process to go forward. Our response to develop- ments there has been measured and appropriate. As the President an- nounced last May, the United States will continue to support multilateral diplomatic efforts designed to bring about a democratic transition in Pan- ama. The United States will continue to assert and defend with U.S. military forces our rights under the Canal Trea- ties, and will take the necessary steps to protect U.S. lives. We will neither recognize nor accommodate with any regime dominated by General Noriega. In sum, the President's policy of support for a return of democracy re- quires that Noriega must leave power as a necessary first step in a resolution of Panama's internal crisis. We will continue to support and work closely with the democratic opposition and con- tinue to seek every possible means of bringing political, economic, and diplo- matic pressure to bear on Noriega and his dwindling group of loyalists. We have been resolute, and we must continue to be so. The Panama Canal Commission and its work force as well as the other U.S. Government personnel in Panama — both U.S. and Panamanian citizens — have made extraordinary sac- rifices to keep the canal and other U.S. activities operating safely and effi- ciently under trying circumstances. They have and deserve our admiration and appreciation for their contribution to securing the long-term future of de- mocracy in Panama and of the canal. These two elements are indissolubly linked, because in a world of rising democratic expectations, a political sys- tem other than a functioning democracy cannot provide the political stability and the economic strength which is in- dispensable for the canal's continuing safe and efficient operation. Make no mistake. The interest of the United States is not in installing a particular individual or party in power in Panama. To do so would only sow the seeds of a new crisis in the future. Our interest lies in the institutionaliza- tion of a democratic process that will ensure that successive Panamanian governments truly reflect the will of the Panamanian people. In essence, we want representative governments that we can work with, not narrowly based governments that the Panamanian people will be compelled to work against. The nature of the U.S. interest in the canal has been changing for a long time. Nevertheless, we believe in the canal's continuing importance for the United States, for Panama, and for world commerce. In this context, it is essential that Panama set its house in order. A decade ago the Panamanian people achieved their long-sought goal of perfecting their sovereign right to order governmental affairs in their own territory free of foreign constraints. Now they are engaged in a much more fundamental struggle, a struggle to per- fect their sovereign right to choose their own government through democratic processes. They have had the understanding and support of the United States both in their struggle for sovereignty and their struggle for democracy. We are confident that they will triumph. And we are confident that when they succeed in establishing an authen- tic democracy, the manifest interests of the Panamanian people will lead their government to work responsibly with the United States and other user na- tions to protect our common interests in the safe, efficient operation of the canal into the next century. ■ Published by the United States Department of State • Bureau of Public Affairs • Office of Public Communication • Editorial Division Washington, D.C. • November 1989 Editor. Sharon R. Haynes • This material is in the public domain and may be reprinted without permission; citation of this source is appreciated. 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