95th Congress COMMITTEE PKINT PANAMA CANAL TREATIES [United States Senate Debate] 1977-78 PREPARED BY THE SUBCOMMITTEE ON SEPARATION OF POWERS OF THE COMMITTEE ON THE JUDICIARY UNITED STATES SENATE PART 1 JANUARY 12, 1977 THRU FEBRUARY 24, 1978 Printed for the use of the Committee on the Judiciary 95th Congress COMMITTEE PRINT PANAMA CANAL TREATIES [United States Senate Debate] 1977-78 PREPARED BY THE SUBCOMMITTEE ON SEPAEATION OF POWERS OF THE COMMITTEE ON THE JUDICIARY UNITED STATES SENATE PART 1 JANUARY 12, 1977 THRU FEBRUARY 24, 1978 Printed for the use of the Committee on the Judiciary U.S. GOVERNMENT PRINTING OFFICE 29-400 WASHINGTON : 1978 For sale by the Superintendent of Documents, U.S. Government Printing Office Washington, D.C. 20402 COMMITTEE ON THE JUDICIARY JAMES O. EASTLAND, Mississippi, Chairman EDWARD M. KENNEDY, Massachusetts STROM THURMOND, South Carolina BIRCH BAYH, Indiana CHARLES McC. MATHIAS, Jr., Maryland ROBERT C. BYRD, West Virginia WILLIAM L. SCOTT, Virginia JAMES ABOUREZK, South Dakota PAUL LAXALT, Nevada JAMES B. ALLEN, • Alabama ORRIN G. HATCH, Utah JOSEPH R. BIDEN, Jr., Delaware MALCOLM WALLOP, Wyoming JOHN C. CULVER, Iowa HOWARD M. METZENBAUM, Ohio DENNIS DeCONCINI, Arizona PAUL G. HATFIELD, Montana Francis C. Rosenberger, Chief Counsel and Staff Director Subcommittee on Separation of Powers JAMES B. ALLEN, 1 Alabama, Chairman ROBERT C. BYRD, West Virginia ORRIN G. HATCH, Utah JAMES O. EASTLAND, Mississippi WILLIAM L. SCOTT, Virginia Quentin Crommelin, Jr., Chief Counsel and Staff Director Dr. James McClellan, Minority Counsel Paul Guller, Editorial Director Melinda Neese, Chief Clerk Ann Sauer, Assistant Clerk Deirdre Houchins, Research Assistant 'Senator James B. Allen died June 1, 1978. His widow, Maryon, was appointed to his office and subsequently to the chairmanship of Separation of Powers Subcommittee, Committee on the Judiciary on July 27, 1978. (II) LETTER OF TRANSMITTAL U.S. Senate, Committee on the Judiciary, Subcommittee on Separation of Powers, Washington, D.C., December 1, 1978. Hon. James O. Eastland, Chairman, Committee on the Judiciary, U.S. Senate, Washington, D.C. Dear Mr. Chairman: At the direction of the late chairman of the Subcommittee on Separation of Powers, Senator James B. Allen of Alabama, I respectfully submit on behalf of the subcommittee the following three-volume compilation of Panama Canal Treaty debates and related material consolidated from the records of the 95th Congress. As you particularly know through your close friendship with the late Senator, our chairman felt very strongly that the debate of these treaties was perhaps the most significant national decision facing our country during this decade, and he expended great personal energy and thought during consideration of all aspects of the pro- posed cession of the Canal Zone to the Republic of Panama. In directing this consolidation of the Senate debate, Senator Allen hoped to provide a single, major source document for future research by historians and for convenient use by the Congress in the continu- ing review of this issue — a review which will undoubtedly be re- sumed in the immediate future in connection with proposed legislation to authorize and implement the treaties. In my judgment, this work will well serve that intended purpose and will prove valuable to future generations in enabling an accurate understand- ing of what actually transpired during this important time in the history of the United States and of the U.S. Senate. With kindest regards, I am Very respectfully, Quentin Crommelin, Jr., Chief Counsel and Staff Director, Subcommittee on Separation of Powers. (iii) CONTENTS BILLS, RESOLUTIONS, AMENDMENTS, AND RESERVATIONS Amendents: Pa g e 1 (Dole) 229 2 (Dole) 229 3 (Dole) 229 4 (Dole) 230 5 (Dole) 230 6 (Dole) 230 7 (Dole) 532 8 (Dole) 532 10 (Dole) 760 11 (Dole) 760 12 (Dole) 760 13(Bentsen) 764 14(Bentsen) 765 15 (Dole) 902 16 (Hatch) 906 17(Hollings) 912 18 (Hatch) 945 19 (Hatch) 975 20 (Robert Byrd) 1029 21 (Robert Byrd) 1029 28 (Scott) 1389 29 (Scott) 1389 30 (Stevens) 1299 31 (DeConcini) 1391 32 (DeConcini) 1392 33 (Allen) 1575 35 (Hatch) 1660 36 (Hatch) 1660 37 (Hatch) 1660 38 (Hatch) 1660 39 (Hatch) 1660 40 (Allen) 1739 41 (Bartlett) 1739 42 (Hatch) 1866 43 (Bartlett) 1866 Reservations: l(Dole) 230 2 (Dole) 230 3 (Bartlett) 1866 4 (Bartlett) 1869 S. 1444, a bill to provide that the U.S. Canal Zone shall be represented by a Delegate to the House of Representatives 44 S. Res. 268 233 Amendment incorporating in article IV of the Neutrality Treaty the rights of defense set forth in Carter-Torrijos joint statement 1545 VI STATEMENTS Page Adams, Hon. Brock, Secretary of Transportation 296 Ahumada, Labor Minister 310 Alexander, Hon. Clifford L., Secretary of the Army 282 Allen, Senator James B 138, 329, 853 Aragon, Mrs. Rose Marie, Panamanian Committee for Human Rights 476 Arias, Dr. Arnulfo, last constitutional President of the Republic of Panama 630 Barletta, Minister Nicolas Ardito 177 Barletta, Dr. Nicolas Ardito, Planning Minister 309 Bartell, Robert M., Liberty Lobby 457 Baugher, Peter Vincent, Ripon Society 879 Bauman, Hon. Robert E 888 Baxter, Richard R., Harvard University 801 Bell, Hon. Griffin B., Attorney General, Department of Justice 276 Bendetsen, Karl R., former Under Secretary of the Army and Chairman of the Panama Canal Company 687 Berger, Raoul, professor (constitutional expert) 666, 907 Bethancourt, Escobar 307, 414, 596 Boehm, Kenneth, Young Americans for Freedom 475 Brandes, Ely M., International Research Association 821 Brown, Gen. George S., USAF, Chairman, Joint Chiefs of Staff 261 Brown, Hon. Harold, Secretary of Defense 259 Bunker, Hon. Ellsworth 246 Byrd, Senator Robert C 765, 938 Canal Zone Citizen Representatives 427 Case, Senator Clifford P 1121 Casey, Howard F., Deputy Assistant Secretary for Maritime Affairs, Commerce Department 302 Christopher, Hon. Warren, Deputy Secretary of State 737 Compilation of statements on treaties by U.S. military leaders 1857 Cooper, Richard N., Under Secretary of State for Economic Affairs 298 Corrada, Hon. Baltasar, Puerto Rico 339 Crowe, Guthrie, Federal district court judge for the Canal Zone (25 years) 648 Davids, Jules, Georgetown University 787 Dole, Senator Robert 373 Dominguez, Jorge I., professor, Center for International Affairs, Harvard University 436 Dozer, Donald Marquand, professor, University of California 440 Eisenmann, Richard, Panamanian Committee for Human Rights 480 Fabrega, negotiator 314 Falk, Richard, Princeton University 796 Fish, Hamilton, former Congressman from New York 520 Flood, Congressman Daniel J 336 Fraser, Congressman Donald M 392 Gerber, Martin, United Auto Workers 494 Geyelin, Henry R., Council of the Americas 824 Goldwater, Senator Barry M 734 Graham, Alfred J., Canal Zone Central Labor Union & Metal Trades Council . 499 Gravel, Senator Mike 358 Griffin, Donald G., Transportation Association of America 828 Griffin, Senator Robert P 932, 990 Hansell, Herbert J., legal advisor, Department of State 279 Hansen, Senator Clifford P 587 Harman, Phillip, Canal Zone Non-Profit Public Information Corp 447 Hatfield, Backgrounder: The Panama Canal 46 Helms, Senator Jesse 382 Hollings, Senator Ernest F 215 Hughson, Patrick N., Association of American Chambers of Commerce in Latin America 825 Humphrey, Senator Hubert H 1589 Jackson, Rev. Jesse L., Operation PUSH 886 Jarmin, Gary L., The American Conservative Union 509 Jones, Col. Phelps, U.S. Army (retired), Veterans of Foreign Wars 553 Jordan, Hon. William, Ambassador to Panama 987 VII Page Jorden, Hon. William J., U.S. Ambassador to Panama 287 Kirkland, Lane, AFL-CIO 493 Kissinger, Henry A., former Secretary of State 537 Krol, John Cardinal, Archbishop of Philadelphia 468 Laxalt, Senator Paul 367 Leopold, Rivhard W., Northwestern University 793 Leggett, Congressman Robert L 396 Levinson, Morris, Synagogue Council of America 471 Linowitz, Hon. Sol M 243 Lioeanjie, Rene C, Central and South America National Maritime Union 506 Lodge, Hon. Henry Cabot 1663 Lopez, Franklin Delano, Puerto Rico Democratic Party 454 Lowenthal, Dr. Abraham F., Woodrow Wilson Center 436 McAuliffe, Lt. Gen. D. P., Commander in Chief, U.S. Southern Command 262 McCullough, David, author 785 McDonald, Hon. Larry P 393 McGrath, Archbishop Marcos, of Panama 1935 Miller, Donald E., prof., Church of the Brethren 473 Milnor, Maj. Gen. J., U.S. Army (Reserves), Reserve Officer Association 549 Milstein, Seymour, United Brands Co 844 Moore, John Norton, University of Virginia 810 Moorer, Adm. Thomas H., U.S. Navy (retired) 421, 927 Moorer, Adm. Thomas H 87 Morison, Elting, Massachusetts Institute of Technology 792 Mott, Dr. George Fox, Mott Research Group 868 Murphy, Congressman John M 385 Oliver, Covey T., University of Pennsylvania 815 Parfitt, H. R., U.S. Governor of the Canal Zone 283 Pollak, Dean Louis, University of Pennsylvania 919 Porteil-Vila, Dr. Herminio, American Security Council 517 Remarks of Hon. Angier Biddle Duke to graduates of the Ravenscroft School in Raleigh, N.C 56 Revilla, Foreign Minister Gonzalez 306 Reynolds, James J., American Institute of Merchant Shipping 836 Riggs, Leland L., Jr., retired special agent in charge, the Drug Enforcement Administration 1644 Rogers, Hon. William D., Committee of Americans for the Canal Treaties 877 Royo, Education Minister 313 Rudd, Hon. Eldon 868 Ruggiero, Frank D., AMVETS 548 Rusk, Dean, former Secretary of State 535 Schlafly, John Fred, American Council for World Freedom 506 Schmitt, Senator Harrison H 775 Scott, Senator William L 378 Report of Senator William L. Scott of Virginia on Panama Canal trip 70 Sheffey, Col. John P., National Association for Uniformed Services 892 Shore, Melvin, American Association of Port Authorities 839 Small, Dennis, U.S. Labor Party 485 Smith, Robert Charles, American Legion 541 "Soviet Threat to the Panama Canal," address by Ambassador Spruille Braden . 31 Solomon, Hon. Anthony M., Under Secretary of the Treasury for Monetary Affairs 300 Stratton, Congressman Samuel S 333 Tambs, Lewis, professor, Arizona State University 443 Tausch, Egon Richard, U.S. Industrial Council 895 Taylor, Gen. Maxwell D., U.S. Army (retired) 425 Thompson, Dr. William P., National Council of Churches 466 Thurmond, Senator Strom 326, 592 Torrijos, General 316 A position paper, presented by U.S. Civic Councils to the House 81 Vance, Hon. Cyrus R., Secretary of State 240 Wasylik, Dr. John, Veterans of Foreign Wars 555 Wayne, John, actor 603 Williams, Capt. J. R., Panama Canal Pilots' Association 503 Zumwalt, Adm. Elmo R., Jr., U.S. Navy (retired) 420 VIII ARTICLES AND EDITORIALS Page "The Panama Canal — Columbian Discusses Its Operation", by John A. Mitch- ell, State, Columbia, S.C 1 "Canal's Gaillard Cut Is Named For Army Engineer From S.C", by John A. Mitchell 3 "Carter Confidant Is Ruled Subject To Conflict Curbs", by Morton Mintz, Washington Post 15 "Report Could Upset Panama Talks", by Jack Anderson and Les Whitten 16 "Panama Plans Intense Publicity Effort To Push New Treaty", by Don Ober- dorfer, Washington Post 18 "Panama Canal Vital to U.S. Interests", by Hanson W. Baldwin, Waterbury Sunday Republican 20 "Decision on Canal's Future at Hand", by Hanson W. Baldwin, Waterbury Sunday Republican 22 "Britain Once Ruled Sea and So Must Approve Panama Transfer", by Desmond Wettern, London Daily Telegraph 24 Hay-Pauncefote Treaty 25 "Panama Has Reaped Huge Benefits from the Canal", by Reed Irvine, Accuracy in Media, New York Times 28 "Dredging in the Panama Canal", by Maj. Robert L. Herndon, Corps of Engineers, U.S. Army 37 Letter to the Editor, Christian Science Monitor, from Donald M. Dozer, professor, University of California 41 "Canal Talks: Back To Bargaining", Christian Science Monitor 42 "Defense Department Calls Canal 'Defensible' ", by Virginia Prewett, Hemi- sphere Hotline Report 54 "A Panama Summary", by John J. Kern, the Military Engineer 72 "Panama Canal Giveaway Violates Constitution", by Orrin G. Hatch, Conser- tive Digest 98 "In National Public Opinion Referendum U.S. Public Closely Divided on Panama Treaty; 39 Percent Approve; 46 Percent Disapprove", by George Gallup 101 "The Canal Terms, Argued From Different Premises", by Paul B. Ryan, New York Times 122 "The Case Against the Canal Treaties", by Philip Crane, Washington Post . 123 "The Alternative to the Carter Proposals", by Jesse Helms, Washington Post . 125 "Out on a Limb", by Tom Wicker, New York Times 142 "The Panama Canal: Sovereignty and Security", by Hanson W. Baldwin, AEI Defense Review 180 "Using the Chiefs", editorial, Army Times 203 "Guantanamo Surrender Next", by John Chamberlain, Jacksonville (Fla.) Times-Union 206 "Communists Welcome Panama Canal Treaty", by Henry J. Taylor 231 "Conservation Support", by Emmett B. Ford, Jr., Washington Post 249 "Panama Canal Issue", Cleveland Press; response by Reed I. Irvine 291 "Senate Remains Skeptical About Panama Canal Treaty", Human Events 356 "U.S., Panama Differences Cited: Canal Treaties Get A Jolt", by John M. Goshko, Washington Post 400 "Dole Says U.S. Cable Shows Differences With Panama on Treaties", by Graham Hovey, New York Times 402 Letter from Dale Bell to Editor Lawrence Brown, Nation's Center News, Buffalo, S. Dak., with response 403 "Canal Toll Plan Sours Lykes Chief— Support for Pact Dropped Because of Toll Increase, by Anita Schrodt, Journal of Commerce 410 "Panama Canal Treaty", editorial, Daily Dispatch, Moline, 111 460 "United States Indicted Brother of Torrijos, Source in Justice Department Says", Washington Star 525 "House Member Charges Narcotics Smuggling Inquiry Touches 'Highest Lev- els' of Panama Government", by Benjamin Welles, New York Times 526 "Panama: Torrijos Returns, Says Nothing Signed in Washington", Foreign Information Broadcast Service 563 "Gen. Omar Torrijos Denies Signing New Canal Pact", Washington Post 563 "Scare Talk and the Canal", by Roger W. Fontaine, Wall Street Journal 574 "Harris Survey: Why Public Rejects the Canal Pact, by Louis Harris, Chicago Tribune 576 "The Panama Canal: Who'll Pay The Freight?", by Joseph S. Helewicz and James A. Fousmaniere, Jr., Baltimore Sun 611 "Panama Can't Operate Canal", by Ron Hendren, Greenville News 619 IX Page "That Troublesome Panama Canal Treaty'*, by Edwin Warner, Time Magazine . 620 "How Canal Treaties Would Benefit Iowa Farmers", by Lauren Soth, Des Moines Register 622 "Canal Treaties Are Enhanced By Information," by George Gallup, Washington Post 631 "Report From Panama: The Americans Who Operate America's Canal", by Egon Tausch, U.S. Industrial Council 636 "Choosing Up Sides On Panama", by Harvey Jacobs, Indianapolis News 657 "The Case For the Panama Treaty", by William F. Buckley, Jr., Washington Star ." 658 "Defense Of The Canal," by Anthony Harrigan 659 "Defending the Canal in the Age of Terrorism", by Arthur S. Collins, Jr., Baltimore Sun 663 "Admiral Opposes Canal Treaties", by Adm. Horacio Rivero, San Diego Even- ing Tribune 684 "We Have Again Studied the Treaty; We Still Say 'No' ", American Legion magazine 743 "Native Son Has Large Stake in Panama Canal Project", by Greg Hageman, New Holstein Reporter (Wis.) 767 "The Panama Canal Treaties— Should the U.S. Ratify Them 9 ", bv Senator Thurmond, The Retired Officer 771 "The Case for Acceptance", by Senator Hubert Humphrey, The Retired Officer . 773 "Threatened by the Treaties Panama's Blacks: A U.S. Responsibility", by Steve C. Ropp, New Leader magazine 783 "Canal Treaties Gain Support in State Poll", by Mervin D. Field, Los Angeles Times 852 "Why We Must Keep the Canal", by M. Northrup Buechner, American Security Council's Washington Report 915 "The Canal: A Rampart ", by John Davis Lodge, New York Times 947 "American Benevolence in Panama", letter by Martin D. Tullai, Baltimore Sun 1030 "Panama Canal Treaties: Answering Questions on Main Street America, by Donald E. Messer, Christian Century 1198 "U.S. Public Opinion Shifts to Support of Panama Treaties", by George Gallup . 1256 Letter to the editor of the Huntsville News (Ala.) by Kenneth N. K. Able 1574 "Moscow's Helping Hands", Time Magazine 1625 "UPI Investigation of Drug Trafficking in Panama", by Nichols Daniloff and Cheryl Arvidson (3 parts) ,. 1646 "The Secret War Against Dope", by Andrew Tully, (Chapter 10 of booki 1654 "Communist Cuba to Back Panama", Diario Las Americas, Miami, Florida 1661 "The Panama Bug-Out", by Jenkin Lloyd Jones, Los Angeles Times 1872 "Panama Invites Probe by OAS Rights Group", bv Lewis H. Diuguid 1937 "Senate Should Ratify Treaties", Argus-Leader, Sioux Falls, S. Dak 1988 "Remember Panama?", Washington Post 1989 "Violation of Human Rights and Civil Liberties in Panama", by Dr. Gustave Anguizola, prepared for the Council for International Security 1993 "A Situation Report and Position Paper by U.S. Civic Councils, Canal Zone" ... 2001 CORRESPONDENCE AND MEMORANDUMS Letter to President Carter from four former Chiefs of Naval Operations on the strategic value of the Panama Canal 60 Reply of Secretary of State John Hay to Senor de Obaldia, Oct. 24, 1904 147 Letter to Senator Allen from J. P. Willis, Sr., historical background 295 Letter to President Carter from Senator Jesse Helms, urging Mr. Escobar to appear before congressional committees to explain understanding of treaties.. 414 Letter to Senator Jesse Helms from James C. Luitweiler, former Secretary of the Joint United States- Republic of Panama Land Commission 677 Letter to Forbes Magazine from Senator Dole, citing problems if the canal were closed 741 Letter to the Organization of American States from the International League for Human Rights 745 Letter to President Carter from David McCullough (author of "The Path Between The Seas") 755 Letter to Senator Stone from Cyrus R. Vance, U.S. financial obligation under proposed treaty 946 Letter to Cyrus Vance from Senator Mathias, also detailed response to ques- tions raised about the treaty 1013 Letter to Senator Baker from NAACP in response to report of discrimination.. 1027 Page Memorandum: Raoul Berger's response to Dean Pollak's paper 1032 Letter to the Drug Enforcement Administration from Senator Dole inquiring of alleged involvement in drug-trafficking by Gen. Omar Torrijos, with response 1425 Letter House Speaker and Senate Leader from Congress George Hansen, concerning H. Con. Res. 347 1445 Cosponsors 1448 Letter to Senator Church from Harold Brown, Cyrus Vance, and Clifford L. Alexander, Jr., about financial viability of the canal, with enclosures 1477 Exchange of letters between Senator Sparkman and the State Department, dealing with the legal authority for the appointment of Mr. Linowitz as Ambassador, and with conflict-of-interest question 1618 Letter to Senator Helms from George J. Eder, on the meaning of "neutrality".. 1691 Letter to Senator Case from Herbert J. Hansell, State Department, concerning police authority of the United States under the proposed treaty 1872 Letter to Senator Sparkman from Gen. M. B. Ridgway, with supporting statement 1973 Letter to the Comptroller General from Senator Domenici, concerned that the proposed treaty does not assure sufficient revenue to run the canal 2013 CHARTS AND TABLES Total excavation of the Panama Canal, including construction, maintenance, and auxiliary 38 Comparative survey of freedom— table of nations 92 Approve or disapprove Panama Canal Treaty, Gallup poll 102 Major trade routes in Panama Canal traffic: 1975 269 Panama Canal traffic by commodities, 1975 269 Effect of 50 percent tolls increase on commodity movements through Panama Canal in 1985 270 Rearrangement of sources and markets resulting from 50 percent tolls increase. 271 Division of commodities from Panama Canal to Suez or Cape of Good Hope resulting from 50-percent increase in Panama Canal tolls, 1985 271 Cargo diversions involving voyages of decreased length via Suez Canal or Cape of Good Hope 271 Diversion of cargo to Far East Minibridge by 50-percent increase in Panama Canal tolls, 1985 272 Distance Yokohama to New York on all-water routes via Panama Canal 272 The Panama Canal — commercial ocean traffic 297 U.S. oceanborne cargo through Panama Canal 297 Major trade routes in canal traffic 298 Increase in ship size 298 Future traffic predictions also suggest canal reaching capacity— projected canal transits 298 Transportation alternatives Alaskan crude west coast surplus, January 1977 .. 367 Sea-level canal savings 367 U.S. bank claims on Panama 607, 710-715 Intersea usage share assignments 779 Intersea initial Board of Governors 781 Preliminary estimate of Panama Canal cost for fiscal 1978 832 Estimate of Panama Canal toll burden on U.S. economy 833 Impact of TAA recommendations on toll-increase needs, fiscal 1979 833 Panama Canal costs: first year operation under 1977 treaty compared to 1978 budget 974 Summary of unexpected costs 1173 A comparison of U.S. interests with our present status and with the goal of the treaties 1206 Effect of treaty-imposed changes on fiscal year 1979 President's budget 1246 Services and force by citizenship 1248 Personnel compensation by citizenship 1249 New book value of facilities and equipment 1250 Military Sealift Command traffic distribution 1301 List of major U.S. concessions to Panama 1367 Loans approved by the World Bank, International Finance Corp., Inter- Ameri- can Development Bank, Export-Import Bank, and AID 1386 Loans approved by private banks 1387 Total payments as a result of the 1903 Treaty 1605 XI Page Illustrations of potential Panama Canal operating deficits 1811 Estimated value of assets transferred to Panama by 2000 A.D 1813 Potential cost to United States for items not covered by Panama Canal tolls until 2000 A.D 1814 Original cost value of the Panama Canal enterprise 1836 Book value of the Panama Canal enterprise 1836 Acquisition and improvement costs of military facilities to be turned over to Panama 1837 Replacement value of canal operations 1837 Possible direct cost to United States 1837 Payments to Panama out of toll increases 1838 MISCELLANEOUS Biographic data of the Honorable Sol M. Linowitz 9 Republic of Panama 10-year Eurodollar loan 10 Budget policy for 1977 (Panama) 11 Economic study of the state of the Panamanian economy and projections for its future 12 Isthmian Canal Convention, November 18, 1903 75, 1269 Text of Panama Canal treaties 102, 1065 The Treaty Power and Congressional Power in Conflict: Cession of U.S. Property in the Canal Zone to Panama, research by Kenneth Merin, legisla- tive attorney, American Law Division , Library of Congress 1 60 U.S commercial bank loans to the Government of Panama, research by David Hoyt, analyst in banking and capital markets, Library of Congress 254 Dole: "Confidential" cable proves Panama Canal Treaty flawed. And cable to Secretary of State 341 "Panamanian Negotiator Denies U.S. Right to Intervention" (television report in Panama City) 412 Poll: 97 percent say don't give control of canal to Panama 561 Statement of understanding from White House 562 Telegram to commanders from General Jones 568 309 generals, admirals against Panama Canal treaties, ROA survey shows 578 Questions and answers on the Panama Canal treaties plebiscite 661 List of members of the Committee of Americans for the Canal Treaties, Inc .... 680 Study by the Senate Republican policy committee 717 Transportation Association of America board of directors 834 Resolution from the Georgia House of Representatives 848 Spanish text analysis of treaty, prepared by Sylvia Costellanos, Senate steering committee 861, 1730 Distinctions between treaty amendments, reservations, and understandings, prepared by the Senate steering committee 935 Treaty ratification provisions of the Panamanian Constitution 937 Two resolutions passed by the National Black Caucus 958 Study by W. M. Whitman, special consultant to the House Committee on Merchant Marine and Fisheries, projected deficiencies in the canal operating costs under the new treaty 966 Economic and financial implications of the new Panama Canal treaties, eco- nomic data from Department of State 975 Parliamentary inquiries of Senator Allen as to Senate procedure for considera- tion of Panama Canal treaties 1025 Excerpts from the report of the Committee on Foreign Relations on the Panama Canal treaties 1083 Communist support in Panama for canal treaties, supplied by the State Department 1139 The Trilateral Commission 1520 Analysis and comparison of Department of State draft of the treaty dated July 11 1637 Overview of the Narcotics Problem in Panama, excerpts from report of Com- mittee on Merchant Marine and Fisheries 1657 Protocol Agreement of 1914 1685 Treaty provisions relevant to narcotics trafficking issues 1728 Study on Panama Canal financial data, by Committee on Armed Services 1809 Memorandum commenting on staff study by Cyrus Vance .. 1814 Freedom House urges approval of canal treaties despite Panama's "deplorable" human rights record 1932 COLLOQUY Page Abourezk, James (Democrat of South Dakota) 235 Allen, James B. (Democrat of Alabama) 121-122, 126-127, 129, 138, 168-177, 200-204, 208-214, 238-239, 251-254, 264-276, 293-295, 343-347, 350-356, 415-419, 462-466, 523-525, 564-568, 570-574, 615-619, 623-629, 633-636, 641-645, 666, 681-684, 687, 860-861, 959-960, 1025, 1041-1051, 1053-1056, 1059, 1197-1198, 1267-1268, 1275, 1284-1286, 1339-1340, 1535-1544, 1546-1548, 1550-1578, 1604-1607, 1660, 1665-1666, 1672, 1677-1683, 1685, 1688-1696, 1701-1702, 1742-1758, 1846-1854, 1879-1880, 1885, 1892-1894, 1925-1932, 1937-1949, 1953, 1981-1983, 1990-1992, 2001, 2004-2005, 2008-2011, 2014-2023 Baker, Howard H., Jr. (Republican of Tennessee) 350-351, 351, 528-529, 734, 959-960, 1026-1027, 1038-1040, 1046-1047, 1050-1051, 1057-1058, 1254-1257, 1284-1298, 1426-1427, 1429-1431, 1438, 1440, 1666-1667, 1702-1703 Bartlett, Dewey F. (Republican of Oklahoma) 1739-1740, 1796-1797, 1822-1826, 1828-1841, 1866-1871 Bayh, Birch (Democrat of Indiana) 657, 1434-1439, 1668, 1670, 1672-1673, 1954-1963 Bellmon, Henry (Republican of Oklahoma) 1052 Bentsen, Lloyd (Democrat of Texas) 1789 Brooke, Edward W. (Republican of Massachusetts) 1705-1717 Byrd, Harry F., Jr. (Independent of Virginia) 128-129, 132-138, 179-180, 231, 306, 342, 356, 405-407, 460, 927, 949-950, 1053, 1716-1717, 1817-1821, 1824-1825 Byrd, Robert C. (Democrat of West Virginia) 128-131, 202, 225, 233-235, 237-238, 407, 529, 603, 629, 641, 938, 944, 950-952, 957, 959, 1027-1029, 1038-1041, 1045-1059, 1186, 1191-1192, 1195-1198, 1251-1263, 1265-1269, 1275-1284, 1292, 1298, 1393, 1400, 1 102-1419, 1429, 1431, 1433-1434, 1438-1439, 1443-1445, 1517, 1536-1537, 1590, 1599, 1602-1612, 1665-1666, 1668-1669, 1696-1697, 1699-1705, 1878-1879, 1948, 2014-2019, 2021-2023 Cannon, Howard W. (Democrat of Nevada) 977-982, 1052, 1056, 1204 Case, Clifford P. (Republican of New Jersey) 1052, 1115-1121, 1266, 1332-1334, 1427-1428, 1431, 1871 Chafee, John H. (Republican of Rhode Island) 101, 225, 1705, 1715, 1881-1903, 1905 Church, Frank (Democrat of Idaho) 1052, 1116-1120, 1133-1337, 1146-1151, 1161, 1276-1278, 1338-1340, 1351-1358, 1405-1406, 1455-1477, 1481, 1541-1542, 1544, 1546-1547, 1550-1552, 1562-1563, 1577-1578, 1685-1690, 1704, 1786-1787, 1789, 1795, 1854-1858, 1890-1891, 1972-1973, 1975-1977, 1979-1980 Clark, Dick (Democrat of Iowa) 919, 1133, 1192-1196, 1500-1517 Cranston, Alan (Democrat of California) 141-142, 178-179, 214-215, 236-239, 248-249, 492, 620, 630-631, 645-647, 660-661, 678-680, 754-755, 765, 848, 852, 913, 1186-1188, 1704, 2019, 2023 Culver, John C. (Democrat of Iowa) 622 Curtis, Carl T. (Republican of Nebraska) 717, 1543-1544, 1568-1573, 1790-1795, 1970-1972, 1990-1991 Danforth, John C. (Republican of Missouri) 1133, 1325-1331, 1334-1336 DeConcini, Dennis (Democrat of Arizona) 1390-1392, 1918 Dole, Robert (Republican of Kansas) 220-229, 348-350, 408-409, 411-412, 527-529, 530-532, 629, 746-748, 759-764, 900-902, 933-935, 952-954, 1053, 1176-1186, 1255, 1297-1298, 1408-1411, 1419-1434, 1436-1437, 1439-1441, 1444, 1662-1663, 1676-1677, 1709-1711 (XII) XIII Page Domenici, Pete V. (Republican of New Mexico) 2011-2013 Ford, Wendell H. (Democrat of Kentucky) 648, 1716-1717 Garn, Jake (Republican of Utah) 96-97, 1149-1151, 1364-1366, 1480-1495, 1670, 1949-1955, 1957-1969, 1975-1977, 1990, 1992, 2004 Glenn, John (Democrat of Ohio) 951, 1517-1518 Goldwater, Barry (Republican of Arizona) 736, 1385-1386, 1393-1402, 1430-1432, 1439, 1482, 1486, 1488-1491, 1520, 1661, 1668, 1799-1805, 1872-1873, 1924-1927 Gravel, Mike (Democrat of Alaska) 1278, 1285-1286, 1306, 1346-1366, 1677-1678, 1889-1890, 1892, 1894-1895, 1899-1901, 1903-1932, 1937-1954 Griffin, Robert P. (Republican of Michigan) 932, 990, 1005, 1051, 1122-1133, 1137-1139, 1141-1142, 1307-1308, 1326-1328, 1336-1337, 1339, 1400-1401, 1544, 1548-1550, 1552, 1555, 1611-1618, 1623, 1666-1670, 1674-1675, 1892 Hansen, Clifford P. (Republican of Wyoming) 629, 636, 1841-1846 Hatch, Orrin G. (Republican of Utah 529-530, 770-771, 782-783, 847, 853, 902-906, 915, 944-945, 961-966, 1029-1032, 1176-1177, 1260-1263, 1266, 1305, 1308-1338, 1406-1407, 1411-1413, 1415-1417, 1441-1444, 1637, 1660, 1772-1784, 1905-1919 Hatfield, Mark O. (Republican of Oregon) 46 Hayakawa, S. I. (Republican of California) 1769-1773, 1775-1776 Heinz, H. John, III (Republican of Pennsylvania) 1705 Helms, Jesse (Republican of North Carolina) 4-8, 20, 24, 28, 30-31, 36-37, 41, 43-44, 54-54, 59-68, 119-120, 412-414, 610-611, 676, 954-957, 1053, 1163-1174, 1204-1205, 1261-1262, 1321-1322, 1366-1368, 1638-1644, 1696-1697, 1705, 1711-1712, 1714-1730, 1824, 1904-1905, 1922-1924 Hodges, Kaneaster, Jr. (Democrat of Arkansas) 1599-1602 Hollings, Ernest F. (Democrat of South Carolina) 912, 1161-1163, 1738-1739, 1748-1752, 1755, 1758-1769 Huddleston, Walter D. (Democrat of Kentucky) 235, 1053, 1414, 1419, 1445, 1464-1465 Humphrey, Hubert H. (Democrat of Minnesota) 662-663, 748-754 Humphrey, Muriel (Democrat of Minnesota) 1875-1881 Javits, Jacob K. (Republican of New York) 1188-1192, 1296-1297, 1428-1429, 1666, 1670-1671, 1712-1714, 1905 Johnston J. Bennett (Democrat of Louisiana) 2005-2011 Kennedy, Edward M. (Democrat of Massachusetts) 736, 957-958, 1663 Laxalt, Paul (Republican of Nevada) 1052, 1142-1149, 1151-1163, 1176-1177, 1196, 1258-1260, 1268, 1277-1278, 1280-1286, 1295, 1356-1358, 1457-1464, 1479-1480, 1487, 1495, 1673-1674, 1744-1747, 1754-1756, 1821-1822, 1826, 1856-1857, 1881, 1883-1889, 1896-1904, 1931 Leahy, Patrick J. (Democrat of Vermont) 942-944, 1052, 1670-1672, 1819-1824, 1943-1948 Lugar, Richard G. (Republican of Indiana) 1053, 1323-1325 Mathias, Charles McC, Jr. (Republican of Maryland) 291, 1013-1014, 1714-1715 Matsunaga, Spark M. (Democrat of Hawaii) 1462-1463, 1590-1597, 1602, 1921-1922, 1924-1926 McClure, James A. (Republican of Idaho) 407-408, 741, 1518-1520, 1666. 1675-1676 McGovern, George (Democrat of South Dakota) 403, 1198, 1962, 1967-1973, 1975, 1977-1988, 1991-1992 Mclntyre, Thomas J. (Democrat of New Hampshire) 1052 Melcher, John (Democrat of Montana) 1697 Moynihan, Daniel Patrick (Democrat of New York) 902, 1133, 1767-1768, 1771-1774, 1784-1799 Muskie, Edmund S. (Democrat of Maine) 102, 1133 Pearson, James B. (Republican of Kansas) 983-987 Pell, Claiborne (Democrat of Rhode Island) 56 Percy, Charles H. (Republican of Illinois) 849-852, 1265-1266, 1306-1308, 1539-1540, 1597-1599, 1604-1605 Proxmire, William (Democrat of Wisconsin) 605-607, 708, 715-716, 766-767 Riegle, Donald W., Jr. (Democrat of Michigan) 1956, 1963-1967 XIV Page Sarbanes, Paul S. (Democrat of Maryland) 1052, 1136-1137, 1139-1142, 1174, 1177, 1263, 1293-1294, 1311, 1332, 1334, 1365, 1385, 1416-1417, 1432-1433, 1460-1462, 1469, 1489-1491, 1496-1500, 1553-1555, 1564-1565, 1589, 1597, 1612-1618, 1631-1637, 1693, 1697-1698, 1715-1716, 1773-1774, 1828-1831, 1879-1881, 1888-1889, 1891-1892 Schmitt, Harrison H. (Republican of New Mexico) 775, 1451-1455, 1542, 1562-1563 Scott, William L. (Republican of Virginia) 69-70, 144-147, 168, 171-173, 568-569, 743, 1054, 1151-1152, 1251-1252, 1254, 1623-1632, 1634-1637, 1696, 1699, 1702 Sparkman, John (Democrat of Alabama) 212-214, 240, 259, 276, 296, 326, 358, 419-420, 436, 466, 492, 532-535, 595, 785, 820-821, 868, 975, 1051-1052, 1059-1065, 1263-1265, 1431-1432, 1575-1576 Stennis, John C. (Democrat of Mississippi) 1805-1809, 1817-1818, 1821-1822 Stevens, Ted (Republican of Alaska) 130-132, 238-239, 1047, 1298-1305, 1704, 1826-1828 Stevenson, Adlai E. (Democrat of Illinois) 1387-1389 Stone, Richard (Democrat of Florida) 744-746, 945-946 Talmadge, Herman E. (Democrat of Georgia) 848 Thurmond, Strom (Republican of South Carolina) 1, 16, 18, 90-91, 94-96, 205, 235, 340, 342, 400, 409-410, 529, 560-562, 574, 577-578, 586-587, 619, 659, 947, 1051-1052, 1328, 1338, 1340-1346 Tower, John (Republican of Texas) 748 Wallop, Malcolm (Republican of Wyoming) 902 Weicker, Lowell P. Jr. (Republican of Connecticut) 1577-1589 NINETY-FIFTH CONGRESS FIRST SESSION [From the Congressional Record— Senate, Jan. 12, 1977] THE PANAMA CANAL Mr. Thurmond. Mr. President, on November 21, 1976, John A. titchell, business editor of the State, Columbia, S.C., wrote a very iteresting and informative article on the Panama Canal. The Mitchell article provides an excellent background for under- banding the recent problems in Panama. He has also written a ompanion article which appears in the same edition of the State ntitled, "Canal's Gaillard Cut Is Named for Army Engineer From Jouth Carolina," which gives the historical background of the Gail- ard Cut. Both of these articles are very informative and exceedingly well vritten. It is my feeling that the Panama Canal issue is one of the nost important issues before the American public. The article by John A. Mitchell, in which he interviews Hugh M. Chapman, a member of the Board of Directors of the Panama Canal Company, and chairman of the board of the Citizens and Southern National Bank of South Carolina, is an excellent piece which I would com- mend to all my colleagues in the Senate. Mr. President, in order to share the article on the Panama Canal and its operation, as well as the historical article on the Gaillard Cut, with my colleagues, I ask unanimous consent that they be printed in the Record. There being no objection, the articles were ordered to be printed in the Record, as follows: The Panama Canal — Columbian Discusses Its Operation (By John A. Mitchell) Little, if any, change in the operation of the Panama Canal is likely under the (Jimmy) Carter administration, according to a member of the corporate board of directors of the Panama Canal Co., which runs the business side of the canal. "Carter the candidate is not Carter the President, and we're not sure he'll be much different (from past Presidents)," Hugh M. Chapman, chairman of The Citi- zens & Southern National Bank of S.C. and a member of the canal company board since last May, told The State. "However, I might not be on the board after next Jan. 20 (inauguration date for Carter)," Chapman said. The 11 directors serve at the pleasure of the secretary of the Army and "In effect, that's at the pleasure of the President, who appoints the secretary," he said. The unique company was set up to run a government-owned facility, the Panama Canal, as if it were a private business and the board reports to the sole stockholder, the secretary of the Army. Although the governor of the Canal Zone — an Army major general assigned for a four-year term — is ex-officio president of the Panama Canal Co., the business oper- ation of the canal is entirely separate from the civil government of the zone, and both are separate from the administration of the Army base in the zone, Chapman said. The board "tries to run the canal like a business and at least break even," Chapman said, but that the company has had a deficit for the past few years. For fiscal 1975, the company had a net loss of $8.9 million, down a little from the net loss of $11.8 million for fiscal 1974. (1) 29.400 0-78-2 The company foots the bill for all operations in the Canal Zone, pays interest charges on the U.S. investment— $14.8 million in fiscal 1975— and repays the U.S. Treasury the net cost of civil government, including health and medical services — $23.55 million in fiscal 1975. The operation doesn't cost the U.S. taxpayer anything and Chapman says the board wants to keep it that way. There was a toll increase in 1974 — first since 1914 — and another is likely to go into effect soon as a result of toll hearings held by the board in August, Chapman said. Opposition to the toll hikes comes from the shipping lines, but "65 per cent of the ships using the canal are under foreign flags and they should pay, not the U.S. taxpayer," he said. The company itself runs one ship, carrying mostly government cargo and some government personnel, between New Orleans and Panama. "This is a tie and a lifeline to our personnel there," Chapman said. Until 1961 the company operated the Panama Line, which had several 10,000-ton ocean liners carrying government and commercial cargo and passengers between New York City and Panama. It was phased out after President Eisenhower in 1960 ordered the line to stop competing with private ships. "Our job is primarily maintaining the locks and seeing that ships move efficiently through the canal," Chapman said. Basic design and operation haven't changed since the canal opened, Chapman said, although some sections have been widened to allow passage of larger ships and more two-way traffic. There has been some trouble with Panama, mostly because of the dictator (Gen. Omar Torrijos), Chapman said, but the board "is not the party that negotiates treaties. However, the Secretary of State does keep us informed on the progress of such negotiations." In the original treaty, signed 1903, the Republic of Panama granted the U.S. "in perpetuity the use, occupation and control" of the Canal Zone and the right to act as if it were sovereign' in the zone, and that is what Panama primarily objects to now, Chapman said. "They want an expiration date on the treaty," he said. (In 1974 Secretary of State Henry Kissinger signed an agreement to guide negotiation of a new treaty that would eventually return the Panama Canal to Panama.) Chapman said a treaty could be negotiated "without giving up our solid rights" and that this would not be the first time the 1903 treaty had been amended. Article II of the 1903 treaty was modified in part by a 1936 treaty between Panama and the U.S. but did not change the basic rights granted the U.S., he said. "It's not a natural resource. It's an engineering marvel that we built on land we bought and paid for," he said. Under the 1903 treaty, the U.S. guaranteed Panama's independence (from Colom- bia) and paid her $10 million. In 1904, the U.S. bought the French Canal Co.'s rights and properties for $40 million and began construction. The idea of Panama Canal goes back to 1524, when Charles V of Spain ordered the first survey of a proposed route. The French Canal Co., headed by Ferdinand DeLesseps, builder of the Suez Canal, began the effort in 1880 to build the waterway across Panama and tried for 20 years but didn't make it. The U.S. Army Engineers began work on the Panama Canal in 1904 and it was completed and opened by late 1913 at a cost of about $387 million. The purpose was to aid U.S. defense and to expedite world shipping. "Since then, our people have poured millions back into Panama," Chapman said. In addition to the country of Panama getting revenue from the canal, a number of Panamanians are employed in the operation, he said. In fiscal 1975 $83,685,357 was paid to 8,549 non-U.S. citizens working in the Canal Zone. The 2,236 U.S. citizens employed there got $75,645,086. The canal was opened to commercial traffic in August, 1914, when the SS Ancon made the first official ocean-to-ocean transit. In 1974 there were 15,269 transits and the ships paid $121,319,791 in tolls and toll credits. The pre-World War II traffic peak was 7,479 vessels in 1939. The largest toll, $49,208.04, was paid by the Tokio Express in November, 1974, and the smallest, 36 cents, was paid by the adventurer Richard Halliburton for swim- ming the canal in 1928. The tolls are cheaper than sailing the vessels around the tip of South America, Chapman said. Panama Canal traffic picked up somewhat while the Suez Canal was closed, following the 6^day Israeli-Arab War in 1967, but declined when the Suez Canal re- opened last year, he said, because a lot of shippers from northern Europe like to go through the Mediterranean Sea, the Suez and around India to reach Far East destinations like Japan. This also contributes to competitive toll pricing, he said. In negotiating a Panama Canal treaty, a changing world and national interests must be considered, he said. Current treaty negotiations began under the late President Johnson. "Most people don't realize that it's not a natural asset," Chapman said. "It takes precise engineering to make it work, not only the locks but also in piloting ships through, for if one ran aground, it would delay all." South American economic problems, with resulting unrest and strife, as well as massive unemployment in Panama under its dictator, have contributed to the situation, he said. "We understand and sympathize with these problems, but we shouldn't give up what is ours," Chapman said. "The issue becomes the canal itself, and we've got to have qualified people to run it and keep it open." Canal's Gaillard Cut Is Named For Army Engineer From S.C. (By John A. Mitchell) The deepest canal cut in the world is named for a South Carolinian who super- vised the slash through the Continental Divide, where the Panama Canal passes between banks exceeding 300 feet in height in some areas. Originally the Culebra Cut, this section was renamed the Gaillard Cut in 1915 after Col. David DuBose Gaillard, who was born at Spring Grove Plantation in 1859 near the Clarendon County Town of Remini. In 1928, a bronze plaque, 8 by 10 feet and weighing 1,200 pounds, was erected high on the rock face of Contractor's Hill, overlooking the cut, in Col. GaUlard's honor. Gaillard attended Mount Zion Academy in Winnsboro and took the examination for an appointment to West Point while a clerk in the store of J. Fleming McMaster there, where he started work at 14. Although he won, there was some question about his appointment because it was from Sumter County and he lived in Winnsboro (Fairfield County). However, Secre- tary of War Robert T. Lincoln ruled that a son under 21 was considered a resident of the place where his father lived (Sumter County) and Gaillard got the appoint- ment. He was graduated from West Point in 1884 and assigned to the U.S. Army Engineering Corps. Gaillard was a lieutenant colonel when he was appointed a member of the Isthmian Canal Commission and made a director of the Panama Railroad in March, 1907. He was supervisory engineer in charge of dredging the harbors, building break- waters and all excavation except that which had to do with lock and dam construc- tion. In July, 1908, he was made division engineer of the Central Division, which included the "famous and terribly difficult ' Culebra Cut, which was plagued by numerous mud and land slides. When he took over, he cut the cost of moving dirt so that it would cover the extra work caused by the slides, and still had a surplus when the work was finished. Average cost of moving dirt was $1.50 a cubic yard during the 12 months before he took over, and Gaillard cut that to 47 cents a cubic yard. "Engineers say it will go into history as one of the great labors of the age. Gaillard made his way fighting. Literally he was forced to shackle the feet of the mountains. He did it and the chains is for all time," according to accounts in a book written by Helen K. Henning. The jungle took its toll on Gaillard and in July, 1913, he was stricken with a severe illness brought on by overwork and the trying weather of tropical Panama, the book says. He was unconscious when President Woodrow Wilson pressed the button on Oct. 10, 1913, to blow up the dam at Gamboa, letting the waters of the Atlantic into the cut to merge with the waters of the Pacific. Gaillard, who was made a full colonel by act of Congress while he was ill, died Dec. 5, 1913, 26 days after the canal opened. "Colonel Gaillard was the real builder of the canal * * *" the book says, and few will disagree. [From the Congressional Record— Senate, Feb. 22, 1977] SOL LINOWITZ: BANKER AND TREATY NEGOTIATOR— A CONFLICT? Mr. Helms. Mr. President, I am greatly concerned that Mr. Sol Linowitz, who is presently in Panama as a chief conegotiator of the proposed new Panama Canal treaty, is, at the same time, a director of Marine Midland Banks, Inc., and Pan American Airways, Inc. Both of these institutions have a direct financial interest in the support of the Torrijos dictatorship in Panama because of their activities there and their need to curry favor with the Panamanian Government. Indeed, Marine Midland has made risky loans direct- ly to the Republic of Panama. The proposed treaty, a treaty which Mr. Linowitz has long advo- cated, would give away billions of dollars of the American taxpay- ers' investment in the Canal Zone, vastly increase payments to the Republic of Panama, and strengthen the Torrijos regime, which is tottering both financially and politically. There is no indication that Mr. Linowitz, who was not confirmed by the Senate, has taken steps to avoid the appearance of conflict of interest by resigning his directorships or private business associ- ations. Until this matter is clarified, Mr. Linowitz should step aside; he may already have irrevocably tainted any treaty which is the product of his negotiations. Mr. President, allow me to go into detail on these issues. For the past week, a U.S. negotiating team has been in the Republic of Panama for the purpose of negotiating a new treaty regarding the Panama Canal. The conegotiators at the head of that team are Ambassador-at-Large Ellsworth Bunker, a career ambas- sador, and Ambassador Sol Linowitz, a businessman and lawyer sworn in on February 9 as special representative of the President, with the personal rank of ambassador. The nomination of Mr. Linowitz was not presented to the Senate for advise and consent. I am informed by the Department of State that it is not the custom to seek advise and consent on appoint- ments which are expected to be of less than 6 month's duration. The administration is of the opinion that the new treaty will be completed in less than 6 months. Thus the Senate has not had the opportunity to investigate Mr. Linowitz' suitability for the post, nor to inquire into what many would judge to be, on the face of it, a gross impropriety and conflict of interest. It is a case which hardly seems suited to our post- Watergate morality. According to the best information which I have been able to find, Mr. Linowitz sits on the board of directors of two large corpora- tions which have a compelling financial interest in the outcome of events in Panama. There is no indication that he has resigned from these boards. Indeed, press accounts from the period before he was sworn in quote Mr. Linowitz as saying that he would not take the job if he had to give up his private business associations. Biographic data furnished last week by the Department of State indicates that he is presently a member of both these boards. And both institutions have informed me that he is presently a member of their boards. Mr. President, I ask unanimous consent that the biographic data furnished by the State Department be printed in the Record at the conclusion of my remarks. The Vice President. Without objection, it is so ordered. (See exhibit 1.) Mr. Helms. Mr. President, the two corporations are Pan Ameri- can World Airways, and Marine Midland Banks, Inc. Pan American, of course, has an office in Panama, and uses Panama City as a convenient midway stop on its Carribean and South American flights. It is of both logistical and financial inter- est to Pan American to maintain landing rights in Panama, which is seeking to develop its tourist business further. The Marine Midland connection, however, is far more immedi- ate. Mr. Linowitz serves not only on the board of directors of Marine Midland Banks, but also on its executive committee. And Marine Midland has, over the past few years, participated in a number of loans to the Government of Panama's dictator, Omar Torrijos. Because commercial banks regard such information as proprietary information, I have been unable to document complete- ly the extent of Marine Midland's participation and financial expo- sure in Panama. But I have found an advertisement from the Wall Street Journal of November 20, 1973, announcing a loan of $115,000,000 to the Republic of Panama consummated on October 19, 1973. I am told that there are other such loans. Perhaps Mr. Linowitz could give the details. In the usual format of such advertisements, the amount of expo- sure of each participating bank is not listed. However, Marine Midland is listed as a participant, along with Chase Manhattan, Bankers Trust, First National City Bank, First National Bank of Chicago, and others. Mr. President, I ask unanimous consent that the advertisement from the Wall Street Journal of November 20, 1973, be printed in the Record at the conclusion of my remarks. The Vice President. Without objection, it is so ordered. (See exhibit 2.) Mr. Helms. Mr. President, the mere fact of the existence of Marine Midland's financial commitment to the Government of Panama would be sufficient to question the propriety of a man who sits on Marine Midland's executive committee participating in the negotiations. It is unfortunate that the Senate had no opportunity to question Mr. Linowitz. But when one inquires into the actual situation in Panama, far deeper questions arise. For the fact is that the Panamanian Government is presently in a deep financial crisis as a result of its own mismanagement, and the international banking community has grave doubts whether the outstanding indebtedness incurred by Torrijos can be paid. Moreover, if the Torrijos government fails because of its financial crisis, it could well mean the end of the bankers' paradise created by Torrijos which provides the United States and other banks with a haven for international financial transactions outside the United States. 6 To be brief, Mr. President, when Omar Torrijos took over Panama in a military coup, he reorganized the banking laws of the country in 1970, following the advice of the New York banking community. The new laws were so favorable that the banking industry in Panama went through a startling expansion from what was then a few banks with assets of a few millions of dollars, serving only Panama's small economy. Today, only 6 years later, there are 73 banks in Panama, with assets of $8.6 billion, involved in transactions throughout the world. In Panama, such transac- tions are free of taxation and enjoy other advantages. A banking office in Panama is like the flag of convenience which Panama offers to the world merchant marine. Needless to say, Mr. President, Marine Midland is among those banks which take advantage of those transactions with an office in Panama. It is inconceivable, Mr. President, that the longevity of the regime of the dictator who set up this bankers' paradise is a matter of some concern to the executive committee of Marine Midland Banks, and to their colleagues in associated banking institutions? Of course, even in a paradise, there have been some drawbacks. The principal drawback has been the insatiable appetite of the Torrijos regime for money. The indebtedness of the Republic of Panama has risen from some $167 million when Torrijos took over to an estimated $1.5 billion today. Not all of that is from commer- cial banks, of course. A great deal is from bilateral and multilater- al lending institutions. Again it is difficult to obtain accurate fig- ures for the current year. But the most recently available statistics from the World Bank show that at the beginning of 1975, commer- cial banks provided half the lending. Moreover, a document leaked recently from Panama's Depart- ment of Planning, states that debt service alone will take 39 per- cent of Panama's budget in 1977 — versus 7 percent in the United States — that the deficit alone may be as high as $139 million and that to refinance loans falling due, combined with the deficit, will require $324 million this year. The key paragraph in the memoran- dum states, in translation: We feel it will be extremely difficult to syndicate loans with the commercial banks in the amounts previously mentioned, taking into account that during the present fiscal period we must contract for a total of B/323.6 million ($323.6 million) with those sources, who in turn have become more demanding each time that an accord has to be finalized. Besides the relation between servicing the debt and current revenues of between 38.9% and 39% suggest a deteriorated capacity to service this debt and thus will increase the risk as realized by the lending institu- tions. The financial crisis in Panama has been aggravated by govern- mental intervention into the economy with counterproductive measures, such as minimum wages, rent control, and price sup- ports, all of which have priced Panama's exports out of the world market. A confidential memorandum sent to the Department of State by the U.S. Embassy in Panama last October had this to say: Economic conditions in Panama worsened steadily during the 1976 first half. There were decreases from a year ago in key indicators * * * overall growth is likely to be near zero for 1976. Moreover, even the extraordinary upsurge of Panama's world- wide indebtedness has failed to prop up a sagging and mismanaged economy. The confidential State Department memo points out that the increase in foreign loans has made matters worse, not better: Increased external financial flows per se, regardless of concessionality, permit Panama to defer grappling with the core problem of low productivity until a later date when the problem will probably have worsened, unless such financing bears specifically on some aspect of costs. Indeed, much of the capital inflow of the past three years has aggravated Panama's economic malaise by exacerbating its debt service burden without enhancing overall productivity. Mr. President, I ask unanimous consent that a translation of the memorandum from the Ministry of Planning of Panama and a copy of the State Department memorandum of October 26, 1976, be printed in the Record at the conclusion of my remarks. The Vice President. Without objection, it is so ordered. (See exhibits 3 and 4.) Mr. Helms. Mr. President, the interest of Marine Midland goes beyond the normal proprietary interest which a lending institution has in a loan it has extended. The series of loans from private banks has been used to prop up an incompetent dictatorial regime; the regime for its part has returned the favor by providing a haven for the banks to expand their international operations. But the whole mutual arrangement depends upon the personal favor of the dictator who has complete control, General Torrijos. If Torrijos falls, no one can tell what kind of a government will follow. But the banks have just about reached the limit in the amount of credit they can extend. New sources of funding the Torrijos govern- ment must be found if the present beneficial environment for the bank is to continue. The treaty negotiations have been talking about a $40 million annual payment from the United States to Panama under the new treaty. Mr. President, is it beyond reason that the members of the banking fraternity involved in Panama are looking to the proposed surrender of U.S. sovereignty and territory in the Canal Zone as a way of propping up the Torrijos regime and providing increased revenues to his government? Is it not fair to ask whether the short range interests of those financial institutions might not be subor- dinated to the long-term interests of the United States? I have many friends in the banking industry, and was closely associated for a time with the industry in my State, and I am not trying to impugn their motives. But in international situations, it is no easy matter to separate personal interests and national inter- ests, and to make objective judgments. For example, I think that anyone who thinks that the best way to assure stability in Panama is to give away the Panama Canal is making a disastrous mistake. Similarly, anyone who thinks we can defend the Panama Canal if we only have a status-of-forces treaty with Panama is making a big mistake. Moreover, anyone who thinks that appeasement of a left-wing dictator will provide a base for enduring relations with Panama is making a terrible mistake. But these are judgments that will ultimately come to the Con- gress of the United States for debate. Meanwhile, it seems to me that it is a grave error to have a banker who is in bed with Torrijos 8 negotiate the proposed treaty. I regret that Mr. Linowitz' nomina- tion bypassed the usual path of advise and consent in the Senate. Had Mr. Linowitz' nomination come before the Senate, there would have been the opportunity to question Mr. Linowitz about 18 U.S.C. 208, which says in part: Whoever, being an officer or employee of the executive branch of the United States Government, of any independent agency of the United States, or of the District of Columbia, including a special government employee, participates person- ally and substantially as a government officer or employee, through decision, ap- proval, disapproval, recommendations, the rendering of advice, investigation, or otherwise, in a judicial or other proceeding, application, request for a ruling or other determination, contract, claim, controversy, charge, accusation, arrest, or other particular matter in which, to his knowledge, he, his spouse, minor child, partner, organization in which he is serving as officer, director, trustee, partner, or employee, or any person, or organization with whom he is negotiating or has any arrangement concerning prospective employment, has a financial interest — Shall be fined not more than $10,000 or imprisoned not more than two years, or both. Had such questioning been possible, perhaps the Nation would have learned what steps Mr. Linowitz intended to take to avoid a conflict of interest, or the appearance of conflict of interest, as the case may be. He certainly is an employee, or a special employee; he is participating personally and substantially; he is making deci- sions and recommendations and rendering advice; it is a particular matter in which an organization of which he is a director has a financial interest — in fact two organizations of which he is a direc- tor. The American people deserve to know how he will avoid a conflict. It is worth pointing out that only a week ago, U.S. Attorney General Griffin B. Bell quite properly informed Mr. Charles Kirbo, the close friend and confidant of the President, that he would be classified as a "special employee" of the government whenever he gave advice to the President — even though he was receiving no compensation from the Government. General Bell's opinion was that the conflict-of-interest statutes prohibited Mr. Kirbo, as a "special employee", from giving advice to the President on any matter in which he had a financial interest. If this is true of Mr. Kirbo, who is not even officially employed by the Government, is it not proper to ask whether it applies to Mr. Linowitz, who has been sworn in as an ambassador and "spe- cial representative" of the President? Mr. President, until these matters are resolved, it is inappropri- ate for Mr. Linowitz to participate in the negotiations. Indeed, because of press reports that substantive progress has been made during the past week toward a treaty draft, it could well be that any treaty draft ultimately produced, even if Mr. Linowitz resigns, will be fatally flawed. A controversial treaty that has the appear- ance of being tainted by special interests does not deserve the consideration of the Senate. Mr. Linowitz should voluntarily stand aside, and offer an explanation to the American people and the Congress. Mr. President, I ask unanimous consent that an article from the Washington Post, "Carter Confidant Is Ruled Subject to Conflict Curbs," of February 15, 1977, be printed in the Record. The Vice President. Without objection, it is so ordered. (See exhibit 5.) 9 Exhibit 1 Biographic Data: The Honorable Sol M. Linowttz Age: 62, b. Trenton, N.J. Marital Status: Married; four daughters (Mrs. Kenneth Mozersky, Mrs. Gabriel Gerstenblith, Jan, Ronni). Senior Partner of the international law firm of Coudert Brothers, One Farragut Square South, Washington, D.C. 20006; 200 Park Avenue, New York, N.Y. 10017. Co-Chairman (formerly Chairman), National Urban Coalition. President, Federal City Council. Chairman, National Council of Foreign Policy Association. Chairman, Commission on U.S.-Latin American Relations. Chairman of the Board, Jewish Theological Seminary of America. Board of Directors, Time, Inc. (also Chairman of Audit Committee). Board of Directors, Pan American World Airways (also member of Executive Committee). Board of Directors, Marine Midland Banks, Inc. (also member of Executive Com- mittee). Board of Trustees, Mutual Life Insurance Company of New York. Board of Trustees, Center for Inter- American Relations. Board of Directors, International Executive Service Corps. National Commission on Critical Choices for Americans. Council on Foreign Relations. National Board on Graduate Education. FELLOW American Academy of Arts and Sciences. Royal Society of Arts. PREVIOUS POSITIONS U.S. Ambassador to the Organization of American States (Nov. 1966-May 1969). U.S. Representative to the Later-American Committee of the Alliance for Progress (Nov. 1966-May 1969). Chairman of the Board, Xerox Corporation; previously Chairman of Executive Committee and General Counsel (1955-1966). Senior Partner, Harris, Beach, Wilcox, Dale and Linowitz (Rochester, New York, 1958-1966). Chairman, National Committee for International Development (1964-1966). Vice Chairman, J. F. Kennedy Center for the Performing Arts (1965-1970). Chairman, State Department Advisory Committee on International Organizations (1963-1966). Assistant General Counsel, Office of Price Administration (1942-1944). Lieutenant, U.S. Naval Reserve (1944-1946). educational A.B. Degree (1935): Hamilton College (Salutatorian); Phi Beta Kappa; Delta Sigma Rho; Phi Delta Epsilom. J.D. Degree (1938): Cornell Law School (Editor in Chief, Cornell Law Quarterly; Phi Kappa Phi; Order of Coif). HONORARY DOCTORATE DEGREES (LL.D. AND L.H.D.) Allegheny College. American University. Amherst College. Babson Institute. Bucknell University. Colgate University. Curry College. Elmira College. Ithaca College. Marietta College. Notre Dame University. Oberlin College. Pratt Institute. 10 Roosevelt University. St. John Fisher College. St. Lawrence University. Syracuse University. University of Judaism. University of Michigan. University of Missouri. Washington University. Wooster College. Yeshiva University. Cornell University. Hamilton College. The Johns Hopkins University. The American Assembly. The Salk Institute. TRUSTEE Exhibit 2 Republic of Panama: $115,000,000 (Ten Year Eurodollar Loan) Managed by Citicorp International Bank Limited, Dillon, Read & Co. Inc., Smith, Barney & Co. Incorporated, and Banco National de Panama. And provided by — Asia Pacific Corporation Ltd. Banco de Santander Y Panama. Bank of America NT & SA. San Francisco, California. Bank of Montreal. The Bank of Nova Scotia. The Bank of Tokyo, Ltd. Bankers Trust Company. Banque Ameribas. Banque Nationale de Paris The Chase Manhattan Bank, N.A. Citicorp International Bank Limited. Compagnie Luxembourgeoise. De Banques A. Dresdner Bank Group. The First National Bank of Boston. Panama Branch The First National Bank of Chicago. First National City Bank. The Fuji Bank, Limited. The Industrial Bank of Japan Limited. Interunion-Banque. Lloyds & Bolsa International Bank Limited. London & Continental Bankers Limited. The Long-Term Credit Bank of Japan Limited. Marine Midland Bank New York. The Mitsui Trust and Banking Company Limited. National and Grindlays Bank Limited. Republic National Bank of Dallas. Rothschild Intercontintal Bank Limited. The Roal Bank of Canada. Security Pacific National Bank. The Sumitomo Bank, Ltd. The Tokai Bank, Limited. Toronto Dominion Bank. Agent: First National City Bank. October 19, 1973. 11 Exhibit 3 Memorandum To Eng. Demetrio B. Lakas, President of the Republic, Presidency of the Republic. From Nicolas Ardito Barletta, Planification Minister. Matter Financial perspectives for 1977. The purpose of this Memorandum is to call attention to the financial basis upon which will be defined the budget policy of 1977 thus permitting to show the perti- nent limitations that are being detected in this year's budget. (a) The current revenues should increase between B/ 43.6 million and B/ 44.2 million with respect to this year's revised income figures thus reaching totals of B/ 339.7 million or B/ 333.3 million; dependent on whether or not there is a recuper- ation in the economic activity during the last six months of this year. (b) The increase in current revenues assumes an economic upturn of 3% and an inflation rate of 5% throughout 1976. (c) It also assumes a B/ 21.0 million package increase of taxes which should not interfere significantly in the desired economic recuperation process. (d) The technical group involved in this evaluation has concluded that the follow- ing are the tributary measures that would fill the above requirements: A consumer tax designed in such a manner as to minimize its effect on prices and on lower income groups. This type of taxation tends to divert private expenditure towards investments, thus stimulating economic development. Reform import duties in order to replace specific value taxes by value added duties. This measure will adjust the increase of tax income to the increased cost of imported goods, and will thus help to stimulate internal production. Limit the tax deduction permitted on interest paid for mortgage loans used to buy homes for one's personal use. Consolidate the progressive tax structure for corporations into one tax rate in order to avoid the use of numerous companies to lower the effective tax rate. (e) At the same time, operational expenses are estimated to increase from between B/ 50.3 million and B/ 50.7 million and will reach totals of B/ 340.6 million or B/ 341.0 million, depending on how the economy is reactivated during the second semester of this year. (f) The fact that the increase in revenues will be inferior to the increase in expenses suggest that there will virtually be no new resources to augment the coverage of public services. (g) The significance of the rigidity to which the new budget elaboration will be subjected will be understood when one observes that only B/ 3.1 million will correspond to net reincorporations of previously frozen expenditures, while the remaining B/ 47.2 million correspond to commitments of an obligatory nature. (h) These commitments of an obligatory nature can be broken down in the following manner: (1) From between B/ 42.3 million to B/ 42.7 million for servicing the foreign debt which will increase from between B/ 87.5 million to B/ 129.8 million or B/ 130.2 million in 1977, depending on whether or not the economy recuperates during the last semester. Interest will increase from between B/ 24.8 million or B/ 25.2 million, depending on the above observation, while the amortizations will be increased by B/ 17.5 million. Due to the tendency required to service the foreign debt, its ratio in respect to current revenue increases from 29.6% to between 38.2% and 39.0% which significantly deteriorates our capacity for further indebtedness. (2) B/ 2.3 million of the amortization of salaries are for: Education — B/ 1.4 million. Health— 0.4 million. Housing — 0.1 million. Other institutions — 0.4 million. (3) B/ 1.3 million of current transferences which reflects the increase in subsidy to the National University, the payment of Balboa notes subscribed to BID and the increased consumption of water. (4) E/ 0.4 million in salary increases to: Health— 0.3 million. Government and Justice, Labor . Presidency — 0.1 million. (5) B/ 0.3 million for the XIII the month of public functionaries. (6) B/ 0.2 million for inclusion in the MIDA budget for personnel frozen in its investment portion of said budget and for the hiring of new auditors for the Finance Ministry. 12 (7) B/ 0.4 million in order to bolster the supply budget of the Health Ministry and other compulsory expenditures. (i) Since, for the above reasons, all other expenses must be maintained at the budgeted fiscal 1976 level, it is convenient to eliminate from the budgeting process all programmed budgeting meetings in order that the respective institutions and our analyst can dedicate the most amount of their time possible to formulate, evaluate and turn in punctually their budget by program. (j) As to the Central Government contribution towards the public investment program, we calculate that it will be B/ 78.0 million which represents an increase of B/ 18.0 million over the B/ 60.0 million that is estimated will have been contributed this year. (k) As a result, the global deficit will be between B/ 131.9 million and B/ 138.7 million, depending on how well the economy recuperates during the second semes- ter. 0) To finance this deficit we will require B/ 15.6 million from the Venezuelan Investment Fund, B/ 5.0 million in Internal Bonds, and from B/ 111.3 million to B/ 118.7 million from the private banks. (m) Thus, the amounts that must be financed as well as the amounts that must be obtained, create very concrete problems which in turn reiterate the need to increase expenses and investments only in those areas of an obligatory nature and to dedicate the most of time possible to the conscientious elaboration of a budget by programs in order to execute the largest possible amount of services required by our society with the scarce resources that are available. (n) On the one side, the required new financing of between B/ 131.9 million and B/ 138.7 million implies that there will be pressure on the liquidity and solvency of the National Bank which must provide the Central Government the monetary resources while the 3 previously mentioned financial operations can be formalized, all of which should take at least four months. During this period, the National Bank will have to recur to its lines of credit as well as to its internal reserves which have been practically saturated during the present year by having to finance the global deficit of B/ 99.3 million which in turn is between B/ 32.6 million and B/ 39.4 million less than what has been estimated for 1977. (n) On the other hand, we feel it will be extremely difficult to syndicate loans with the commercial banks in the amounts previously mentioned, taking into ac- count that during the present fiscal period we must contract for a total of B/323.6 million with those sources, who in turn have become more demanding each time that an accord has to be finalized. Besides, the relation between servicing the debt and current revenues of between 38.9% and 39% suggest a deteriorated capacity to service this debt and thus will increase the risk as realized by the lending institu- tions. (o) In short, 1977 lines up as extremely delicate due as much to current expenses increasing more than current revenues, as well as to the amount and structure of the new financing that must be contracted which reaches the limits available to the Nation as such. (p) As a result of the above, I respectfully request your backing in eliminating the budgeting meetings and in demanding from the institutions that they pay the most attention to formulating and elaborating a budget by program. Also, I ratify the need for you to back the approval and execution of the taxing measures that we have presented for your consideration, once that we have finalized the pertinent studies. With by highest consideration and appreciation. Exhibit 4 (Sent by United States Embassy in Panama to the State Department on Oct. 26th, 1976) Tags: ECON, EFIN. Subject: Panama's Recession Is Structural — A Result of Low Productivity. 1. This message is part of a continuing series of mission economic studies of the State of the Panamanian economy and projections for its future. 2. Summary: Panama's recession, which deepened during the first half of 1976, is either cyclical nor primarily a product of economic conditions outside Panama. In our view the economy is floundering mainly because its high cost output is not competitive in the world market and few opportunities exist for available private investment. To establish a basis for renewed subtainable growth will require actions 13 that lead to lower costs and improved productivity. These could include easing the labor code, reducing subsidies, boosting domestic savings, and directing resource flows more toward the international service sector where Panama has natural advantages, however, most such actions would cut back social benefits granted to the working classes under the "revolution", and might not be politically acceptable under the present government, inflows of foreign capital have not been getting at the core problem of high costs Qow productivity). Lack of access to relevant Canal Zone sites is delaying GOP development of infrastructure which is prerequisite to the growth of various commercial services industries by the Panamanian private sector. End summary. 3. Economic conditions in Panama worsened steadily during the 1976 first half. There were decreases from a year ago in key indicators — manufacturing, construc- tion, external trade, unemployment, (increase), and sales to the Canal Zone (see reftel), overall growth is likely to be near zero for 1976. 4. Failure of the economy to respond to a variety of stimulants indicates that the recession is more than a cyclical maladjustment. Credit has remained relatively plentiful, with preferential rates available from the government for both agricultur- al and industrial projects. There are tax subsidies for new exports, and tax benefits for reinvested profits. No basic changes have been made in the "rules of the game" under which business operates, such as the labor code or tax laws, since before the onset of recession, in fact, the GOP in recent months has actively sought by various direct means to improve the business climate. A large boost in 1975 public sector spending had little effect on either private investment or aggregate demand. 5. Also, Panamanian economic problems do not seem to be caused primarily by worldwide economic trends or world trade. In contrast to Panama's continuing decline, other developing countries (LDC's) have been experiencing a quickening economic tempo so far this year in response to rapid recovery by the industrialized countries, plus some correction of structural maladjustments, LDC exports have been generally increasing as a part of the marked improvement in 1976 first half world trade (plus 10 percent) while the value of Panamanian exports remained at its 1975 level (excluding an abnormal decline in petroleum products exports), changes in Panama's economy also differed from the worldwide pattern both during the 1974-75 world recession and the years immediately preceding it. Despite sharp 1974-75 recession among the industrialized countries (zero growth), LDCs' gross domestic product (GDP) increased 5.5 percent in 1974 and 1.7 percent in 1975. Growth had begun tapering off in 1971 whereas during 1971-73 the rest of the world including Latin America experienced unprecedented boom. 6. Private investment in Panama reached a peak in 1971. Growth in manufactur- ing began to fall off in 1971 with a decline in the number of attractive import substitution possibilities, little increase has subsequently taken place in the volume of manufactured exports, output of both construction materials and intermediate goods stopped expending in 1973. Expansion of construction activity began slowing in 1972 and has actually been declining since 1974. Imposition of rent controls in 1973 brought private investment in low cost housing to a standstill. On the other hand, growth of the important services sector remained near 8 percent annually through 1974 (plus 3 percent in 1975) due in part to the major expansion of the foreign banking sector since 1971, growth in agricultural output has remained sluggish since 1970 at about 3 percent annually, much slower than during the 1960's. 7. Panama's basic economic weakness in our view and the reason behind current stagnation is its non-competitiveness in the world market — a structural problem involving primarily high cost production (coupled with a lack of resources) in both agriculture and industry. The export potential for Panamanian agriculture is ex- tremely limited at present, the main exports, bananas, is in the hands of foreign plantation operators, and has probably reached its peak in an increasingly competi- tive world market. In general, land is of poor quality and farm labor costs are high— the $3 per day minimum wage is estimated to be at least double the rate anywhere else in Central America. The government encourages high cost produc- tion, including rice, the principal crop, by subsidizing producers through support prices typically set above the world market. Thus, Panama cannot profitably export major crops such as rice and corn and is further precluded from developing any profitable export potential for various lesser crops by the small domestic market base in Panama. Accessible forests have been cut over and there is little potential for meat exports while access to the U.S. market is restricted. Panama's sugar industry is likewise non-competitive due to high costs of both cane production and refining operations. 14 8. As with agriculture, Panama's manufacturing industry currently has little export or overall growth potential because of high production costs coupled with a dearth of natural resources (copper deposits have not yet been determined to be economically exploitable). Minimum wages and the general wage and benefit struc- ture in Panama are estimated to be the highest in Central America and among the highest in all Latin America. Higher wages and benefits in the Canal Zone exert upward pressure on wages in the republic as employers compete for the generally better qualified workers attracted by Zone wages. The dominance of the service sector in Panama's central urban areas with its higher skill levels also creates upward pressure on the entire wage and benefit structure. Employee benefits under Panamas labor code add to direct employment costs. The code exerts indirect pressures on costs through subsidies such as firing restrictions imposed on employ- ers and, by strengthening the trade union movement, bolsters the trend toward costlier contract settlements. High labor costs encourage the substitution of capital for labor, thus boosting structural unemployment throughout the economy. Also, relative capital costs — mostly foreign sourced — are likely to rise as Panama's al- ready high debt service burden worsens and the economic outlook for other LDCs improves relative to Panama. 9. Establishing the basis for renewed growth and improved economic well being that can be sustained will require actions that lead to a lower cost structure. One widely discussed possibility is an easing of the labor code, although its real impact on costs remains uncertain (it did not bring on recession although it may have stood in the way of needed private sector adjustments). Changes probably would not induce an immediate surge of private investment, however, the business community has made clear its conviction that changes are essential, giving them an additional psychological importance that bears importantly on the general investment climate. Changes might be a convincing sign of GOP concern over the private sector's economic plight. 10. Appropriate belt tightening also could include lowering subsidies as well as the wage/benefit structure to reduce relative production costs, and increasing per- sonal taxes to curb consumption (particularly imports) and expand domestic savings. These effects are usually achieved indirectly by currency devaluation. Since Pana- ma's currency is the U.S. dollar, such actions must be taken directly, in addition, resources may need to be more heavily concentrated in the internationally-based services sector where Panama has more natural advantages, with proportionately less in agriculture and the non-productive social sectors. 11. Comments: (A) Panama's high wages, subsidies, and consumer imports — together with a mod- erate tax burden and little public saving — permit a standard of living which no longer appears to be supportable by Panama's inefficient domestic production. (B) Increased external financial flows per se, regardless of concessionality, permit Panama to defer grappling with the core problem of low productivity until a later date when the problem will probably have worsened, unless such financing bears specifically on some aspect of costs. Indeed, much of the capital inflow of the past three years has aggravated Panama's economic malaise by exacerbating its debt service burden without enhancing overall productivity. Moreover, total inflows greatly exceeded the current account deficity of Panama's balance of payments, resulting in large negative "errors and omissions" (around $100 million annually) most of which probably represented outflows of domestically-owned capital. (C) The types of actions mentioned above for addressing Panama's high cost structure run headlong into the "revolution" — the social and economic benefits granted to the urban and rural working classes over the past eight years which would need to be reversed in party in short, the "revolution" has collided with growth and one or the other must yield, whether or not actions of sufficient scope to be economically meaningful along the above lines are politically possible for the present government is questionable. (D) Panama's best economic prospects lie in the development of its potential as a sub for servicing international commerce, various aspects of cargo handling are an essential part of the picture. Thus, the GOP has a valid case in urging early access to relevant canal zone sites needed to develop the infrastructure on which growth of various transport, storage and other commercial services. 15 Exhibit 5 [From the Washington Post] Carter Confidant Is Ruled Subject To Conflict Curbs (By Morton Mintz) Seattle, February 14. — Attorney General Griffin B. Bell said today that presiden- tial confidant Charles Kirbo is subject to federal conflict-of-interest laws because under a strict, 14-year-old statute, he is a "special employee" of the government. Kirbo "is a special employee every time he advises the President," Bell told a news conference here, where he is attending the American Bar Association's winter meeting. No one can give the government advice "as a friend," Bell said; in this context, "there's no such thing as a friend." Bell also said it makes no difference under the statute that Kirbo, a partner in King and Spalding, the Atlanta law firm Bell left to become Attorney General, is not paid for advising President Carter. Bell said he told Kirbo last November that he is in special-employee status, which prevents him from advising Carter or anyone else in government about any matter m which he or the law firm has a financial interest. So far as is known, no friend of a past President who has provided unpaid advice in the White House has been formally classified as a special employee. The statute making such an employee subject to the conflict-of-interest laws took effect in January, 1963, during the Kennedy administration. Charles G. (Bebe) Rebozo, for example, was a close confidant of President Nixon, but was not known to have been classified as a special employee. In Atlanta, Kirbo confirmed to reporters that he is in special-employee status, although he collects neither a possible $100-a-day consultant's fee nor expenses when he comes to Washington. When he comes to the White House, he said, he tries to help Carter carry out his campaign commitments and proposals, although at times he simply listens to the President. The primary restraint of his special-employee status, he said, is that "you can't give any advice on any matter you have an interest in." Bell, responding to reporters' questions, said that to avoid any possible conflict from arising out of his former partnership in King and Spalding he will, within a few days, provide Justice Department officials with a list of all of the law firm's clients. He said reporters will be able to see the list, which includes numerous large corporations. Bell, who met with reporters after speaking briefly to the ABA's House of Dele- gates, said that Carter soon will issue an executive order creating commissions to propose candidates, on the basis of merit, for vacancies on U.S. courts of appeals. Bell said the order will allow the commissions to propose their own candidates, rather than be bound to names submitted by senators from affected states. The number of vacancies shortly will reach six. For each one, a commission will propose five names to the President, who will choose one for final nomination to the Senate. Each affected state will be represented on the commissions, each of which will have 11 members. Some members will be laymen. Bell said that the draft White House order does not prohibit judges from being members, but that he doesn't know if Carter will agree with a suggestion for inclusion of judges that was made to the ABA Sunday by Chief Justice Warren E. Burger. All told, there will be 13 commissions — one for each of nine circuits, and two each for the huge fifth and ninth circuits in the South and Far West. In his talk to the House of Delegates, Bell pleaded for a delay until the August meeting of the ABA's policy-making body on pending resolution to overhaul the federal grand jury system. By August, Bell said, he will have completed a review of the proposals. One of them would allow counsel to accompany witnesses in the grand jury room. At least tentatively, Bell said, he feels that this proposal would convert grand iury proceed- ings into secret trials, with the result that prosecutors would try to bypass grand juries and file charges by themselves. 16 PANAMA CANAL NEGOTIATIONS Mr. Thurmond. Mr. President, a column appeared Saturday, February 19, 1977, in the Washington Post written by Jack Ander- son and Les Whitten entitled "Report Could Upset Panama Talks." The column refers to a report prepared by Representative John M. Murphy, Democrat, of New York, about torture and murder of opponents in Panama of the current military dictator, Omar Torri- jos. As I have warned in the past, the United States is making a serious mistake by attempting to negotiate a treaty on the Canal with a government which was not freely chosen by the people of Panama. Further, this particular government has denied its citizens many of the basic political and human rights promoted by President Carter. By negotiating a treaty with Torrijos the Carter administration is giving more power to the current Panamanian government which Congressman Murphy's report claims has tortured and mur- dered up to 32 political opponents. Mr. President, I ask unanimous consent that this article be print- ed in the Record. There being no objection, the article was ordered to be printed in the Record, as follows: Report Could Upset Panama Talks (By Jack Anderson and Les Whitten) The United States must soon decide whether to give up the Panama Canal Zone, a colonial strip that is offensive to all Latin America. We warned on Nov. 20, citing secret intelligence reports, that the canal issue was a "ticking time bomb" about to explode. President Carter gave it top priority after he took charge of foreign affairs. He dispatched a crack negotiating team, headed by the veteran diplomat Ellsworth Bunker, to Panama this week. Its secret instructions are to seek a reasonable formula that will permit the United States to relinquish sovereignty over this strip of Panamanian territory. But there are some flies in the diplomatic ointment. Ominous cracks have ap- peared, for example, in the Panamanian economy. Dictators habitually try to divert public attention from their domestic failures by stirring up emotional issues. There is concern that Panama's military dictator, Omar Torrijos, might forego a reason- able settlement and use the canal as a political issue. Carter, for his part, has pledged to restore morality to U.S. foreign policy and to take a stand against nations that abuse human rights. He has just received a confidential report from Rep. John M. Murphy (D-N.Y.) about torture under Torri- jos. Murphy pointedly urged the President not to surrender the Panama Canal until the allegations have been cleared up. The disturbing report, written and translated in Panama under extreme duress, was smuggled out of the country. Some of its allegations have been confirmed by diplomatic sources. The report charges that Torrijos' political opponents have been shot, drowned, beaten, sexually abused and electrically shocked. It names 32 persons who allegedly have been murdered by the Torrijos government. For example, a Roman Catholic priest, Hector Gallegos, was arrested by the Panamanian National Guard in June, 1971. He had been organizing agricultural cooperatives in his impoverished parish. Apparently he found himself working against the interests of some local relatives of the Panamanian dictator. Diplomatic sources confirm that Gallegos has not been heard from since. "The usual pattern," states the report, "is that a person is arrested without a warrant and without accusation, and then the authorities deny any knowledge of 17 their whereabouts. Sometimes the victim is released after questioning or torture or both, and sometimes nothing more is heard about the victim." The state police seldom allow relatives to claim the victims' abused bodies. But the report alleges that four bodies— those of student Marlene Mendizabal, student Dorita Moreno, lawyer Ruben Miro and Eduardo White — were recovered and showed evidence of torture. There are no individual rights in Panama, where, the report alleges "the unwar- ranted search of homes by the military police is an everyday happening." The report includes affidavits and details about the torture that is inflicted. It also charges, as we reported in 1973, that members of Torrijos' family are involved in international narcotics smuggling. The allegations could upset the delicate negotiations for a new Panama Canal treaty. Footnote: A Panamanian embassy spokesman said the charges were fabricated by American opponents of a new canal treaty and Panamanian opponents of the Torrijos regime. He invited us to visit Panama to see whether there is torture, an invitation we will be happy to accept if we can be guaranteed access, unannounced, to any prisons we wish to inspect, without government escort. Only proven terror- ists, agitators and subversives have been exiled rather than being jailed, said the spokesman. 29-400 0-78-3 18 [From the Congressional Record— Senate, Mar. 25, 1977] NEW PANAMA CANAL TREATY Mr. Thurmond. Mr. President, the March 24, 1977, edition of the Washington Post contained an article by Don Oberdorfer entitled, "Panama Plans Intense Publicity Effort To Push New Treaty." This article points out that Panama has hired an American public relations firm to mount a drive within the United States to back a new Panama Canal Treaty. I am deeply concerned that there is a strong move to win the American people to support any new treaty without regard to whether or not it is in the best interest of this country. Mr. President, I ask unanimous consent that this article be print- ed in the Record. There being no objection, the article was ordered to be printed in the Record, as follows: Panama Plans Intense Publicity Effort To Push New Treaty (By Don Oberdorfer) Panama has hired former presidential campaign aides of Sen. Barry Goldwater (R-Ariz.) and Sen. Hubert H. Humphrey (D-Minn.) to plan and execute a nationwide public relations drive backing a new Panama Canal treaty. The contract between Panama's United Nations Mission and Public Affairs Ana- lysts, a New York firm, became effective in January. F. Clifton White, who was the architect of Goldwater's 1964 bid for the White House, is president of the firm. Joseph Napolitan, who was the Humphrey campaign's media director in 1968 and has worked on many other political drives, is chief executive officer. Former Demo- cratic National Chairman Lawrence F. O'Brien is an owner of the firm, though not active on a day-to-day basis. Napolitan, in a telephone interview, estimated that Public Affairs Analysts would charge Panama $150,000 to $200,000 for its services over the first six months. He said the firm will send pro-treaty information to some 6,000 influential politicians, journalists, academicians and business people as well as monitor the activities of groups opposing a canal treaty. He said the firm will not engage in lobbying or 'propaganda" activities. Panama's new public relations advisers represent only one facet of growing activi- ty by groups on all sides of the canal issue, which may well become one of the major political controversies of 1977. The Carter administration is seeking to conclude negotiations with Panama on a new treaty by this summer, hoping for Senate ratification before 1978, a congressional election year in which the controversial treaty could become an issue. Senate Democratic Whip Alan Cranston (Calif.) has been quietly conducting a headcount since Carter identified the canal treaty as a high-priority matter in a talk with legislators before Inauguration Day. Cranston said yesterday that 22 to 25 senators are "apt to be negative" to a new treaty, 38 senators are "firmly for a sensible treaty" and up to 20 more senators appear amendable to consideration of a new treaty, with the positions of the rest unknown. Sen. Strom Thurmond (R-S.C.) last year mustered 38 senators on an anti-treaty resolution. This is more than the one-third of the Senate, which can block* ratifica- tion of a treaty by a two-thirds vote. Cranston's figures show improved chances for treaty ratification, but a tough political battle likely, is still likely. Congressional sides report continuing heavy mail on the Panama Canal treaty issue, mostly from groups opposing what they maintain is a U.S. "giveaway." Some of the mail is generated by conservative publications, such as headlined articles in the current issues of Liberty Lobby's "Spotlight" and National States Rights Party's Thunderbolt" attaching a new canal treaty. The Council of the Americas, made up of 220 major U.S. corporations with investments in Latin America, asked each senator in a Jan. 28 letter to reject any resolution that would block negotiations for a new canal treaty. The letter, signed by council president Henry R. Geyelin, said successful solution of U.S.-Panamanian differences would have "a very positive impact" on U.S. relations with Latin Amer- 19 The council has established a "work group" of senior executives from 45 corpora- tions to counter opposition to a canal treaty. Officials said an initial budget of $31,000 for year's work has been far exceeded by actual operations, including publication and distribution to 6,000 people of a 36-page pamphlet on the arguments for and against a new treaty. The council's research arm has compiled a list of 20 organizations that have taken anti-treaty positions, ranging from the American Legion and Veterans of Foreign Wars to the Canal Zone Police Lodge. Among the active anti-treaty groups are: Task Force on the Panama Canal, a project of the American Council for World Freedom, a Washington-based conservative group. In a fund-raising letter for the project last September, council president Fred Schlafly claimed his organization in 1975 "spent just under $100,000 to stay the surrender of the Panama Canal." Committee on Latin American Policy, a previously independent conservative group that last year because an "autonomous" division of the John Birch Society. It recently sent out an appeal for funds featuring a five-page pamphlet titled, "Who Owns the Panama Canal Anyhow?" Canal Zone Non-Profit Public Information Corp. whose director of public informa- tion is Phillip Harman, a tireless anti-treaty figure who calls himself "the grandson- in-law of the founder of the Republic of Panama." Harman in 1953 married a granddaughter of Jose Aranga, a member of the junta that established the first Panamanian government. U.S. officials expect perhaps the most important sales campaign of all to be launched within a month or two, if negotiations with Panama proceed favorably. President Carter has committed himself in private to a major drive backing the new treaty, including a televised "fireside chat" devoted to the issue. 20 [From the Congressional Record— Senate, Mar. 29, 1977] U.S. CANAL ZONE AND PANAMA CANAL: CONTROL WITHOUT SOVEREIGNTY IS DOUBLE-SPEAK Mr. Helms. Mr. President, as Members of Congress are becoming increasingly aware, the question of the continued sovereign control by the United States of the U.S. owned Canal Zone and Panama Canal has become a matter of both national and international interest. One feature of this interest has been the publication of perceptive articles by eminent authorities, among them Hanson W. Baldwin, a distinguished military historian, outstanding strategist, and former military editor of the New York Times. In the first of a recent series of two articles in a Waterbury, Conn., newspaper, he stresses the strategic value of the Panama Canal, emphasizes the Caribbean-Gulf of Mexico as our "soft under- belly," and refutes some of the current criticisms of the canal's "continuing and far-reaching importance" to the United States. In the second article of this series, Mr. Baldwin condemns the 1974 Kissinger-Tack "agreement of principles" under which the current diplomatic negotiations for a new Panama Canal Treaty are being negotiated, emphasizes some of the ruthless violations of human rights by "neo-Marxist dictatorship" of Panama, describes Panamanian threats of violence as "overdrawn," asks whether it is more important to avoid "confrontation and condemnation" than to "retain control of the canal," and concludes that "if we refuse to defend highly important or vital interests merely to avoid the blackmail threat of violence we are finished before the crisis erupts." Mr. President, the United States is a great and powerful Nation and Panama is small and weak. What is needed in the current Isthmian situation is a combination of courage and caution, be- cause surrender of U.S. sovereignty over the Canal Zone means loss of control over the Panama Canal. As Mr. Baldwin says, "con- trol without sovereignty is double-speak." Mr. President, as the two indicated articles by Mr. Baldwin should be of unusual interest to all Members of Congress and the Nation at large, I ask unanimous consent to have them printed in the Record. There being no objection, the articles were ordered to be printed in the Record, as follows: [The Waterbury Sunday Republican, Feb. 6, 1977] Panama Canal Vital to U.S. Interests (By Hanson W. Baldwin) The future of what should be America's "Mare Nostrum" — the Caribbean Sea- Gulf of Mexico— will be profoundly affected by one of the first crucial foreign policy decisions of the Carter Administration. That issue is the Panama Canal— its security and control, and its sovereignty. Not since Fidel Castro took over Cuba and established a Russian-supported and Russian-armed Communist bastion within 60 miles of our shores has there been any foreign policy issue so close to home and so important to basic American political and strategic positions as the current and long-continuing negotiations with the Republic of Panama about a new Canal treaty. The terms of such a treaty will have significance that will extend far beyond the operation of the canal, the status of the narrow strip of land around it — the Canal 21 Zone (until now considered U.S. sovereign territory), or its effects upon Panama itself or other Latin-American nations. The ultimate stakes could well be control of a vital sea area — all of that vast, island-dotted watery space to our south across which most of the main north-south, east-west air and sea trade routes of the Western Hemisphere flow. Not since the Monroe Doctrine was first enunciated 150 years ago has there been such a major threat to its validity as there is today. Ever since Castro came to power, the Doctrine has been more honored in the breach than in the observance. Soviet MIGs flying from Cuban fields, Soviet submarines calling at Russian-built Cuban bases, Cuban troops armed with Russian weapons, transported by Russian planes to African Angola, and Russian-trained Cuban guerrillas, infiltrators, agents provocateurs, and "training" and "aid" missions in various Latin-American coun- tries, including Panama, Guyana, Jamaica and Puerto Rico are all signs of a spreading infection. The area that Alfred Thayer Mahan and all succeeding generations of strategists have considered in the vital interest of the United States to control is now often laced by the vapor trails of Russian jets or the unseen passage of Soviet submarines. IMPORTANT FOR TRADE There is no doubt about it; the Monroe Doctrine today is in considerable peril. The Caribbean Sea-Gulf of Mexico is an area of tremendous geographical and economic, and hence of strategic, importance to the United States. Across its waters, or through its skies flows a very sizable portion of the lifeblood of U.S. industry and commerce — coffee and manganese from Brazil, bananas and tropical fruits from Central America and the islands; copper from Peru and Chile; bauxite from Jamaica and Surinam; oil from Venezuela. Some 13 major global trade routes funnel through the Canal. About 16.8 per cent of U.S. trade passes through the Canal and it has been estimated that of all cargoes transiting Panama in ships of all flags, some 70 per cent is bound to or from U.S. ports. The Canal-Caribbean-Gulf area provides access by sea and air to our vital Gulf Coast ports and the increasingly important off-shore oil and gas fields in the Gulf, to the mighty Mississippi, jugular vein of the nation, and to the "soft underbelly" — the very soft underbelly — of the United States. The present-day military importance of the Canal is too often dismissed. Two principal criticisms of its alleged lack of utility are made: It could, it is said, be instantly destroyed in a nuclear war, and its locks are not wide enough to accommo- date "modern" vessels. Both statements are false, irrelevant or over-simplified. In a nuclear war, the Canal and for that matter, many other areas in the United States and overseas would simply have no relevance, either as targets or as positive military assets. But the Canal does have major and continued importance in non-nuclear conflicts or confrontations, which are, by far, the most likely contingencies of tomorrow. During the Cuban missile crisis, Marines and supplies from the West Coast were ferried through the Canal to the Caribbean; if they had had to pass around Cape Horn they would never have arrived in time to influence the outcome. During the Vietnam War, one-third of all sea-borne cargoes bound for Vietnam transited the Canal, after loading at Gulf or Atlantic ports. ADEQUATE FOR NAVY Today, with our Navy greatly reduced in numbers, we face the same situation we did before World War II— a one-ocean fleet with two-ocean responsibilities. Contrary to impression, every vessel of the United States Navy, except for 13 first-line aircraft carriers, can transit the Canal, including all our missile-firing and attack submarines, all our anti-submarine and escort forces, our amphibious vessels and our support and supply craft— a factor of great importance when a crisis is brewing. There has long been, moreover a once-started, but still dormant plan to build, within the present zone a third set of locks (or a sea-level Canal), wider than the 110-foot width of the present locks and possibly of greater depth, which would accommodate, at some future time, when and if traffic needs demand it, not only the world's largest naval vessels, but some of the huge ore carriers and supertank- ers. Contrary, therefore, to popular impression, the Canal does have continuing and far-reaching importance to the United States. And the new Panama Canal Treaty, at least in the terms in which it is being discussed, would be bound to have major 22 political, strategic and psychological effects upon the entire Caribbean Sea-Gulf of Mexico area and upon our relations with Latin America. This is because, for the first time since the Panama Canal was built in the early part of this century by U.S. engineers and with U.S. money and the Canal Zone was bought outright with taxes provided by U.S. citizens, we propose to transfer sover- eignty over the Canal and the Zone to Panama in the biggest "give-away" in our history. The basic treaty — the Isthmian Canal Convention of 1903 — explicitly ceded a 10 mile strip of territory across the isthmus from the new Republic of Panama to the United States, "in perpetuity." The treaty provided that in the Zone, the United States would exercise "all the rights, power and authority * * * which it would possess and exercise if it were the sovereign of the territory ... to the entire exclusion of the exercise by the Republic of Panama of any such sovereign rights, power or authority." This fundamental provision, which ceded full sovereignty over the Canal and the Canal Zone to the United States (an interpretation which has been twice supported by the U.S. Supreme Court and was, initially, fully accepted by Panama) still stands, although other provisions of the original treaty have been revised or modi- fied many times, always at the expense of the American taxpayer and for the benefit, not of the United States — but of Panama. [From the Waterbury Sunday Republican, Feb. 20, 1977] Decision on Canal's Future at Hand (By Hanson W. Baldwin) We have now reached, because of the "waffling" of past administrations and long continued concessions, a point-of-no-return, when we must put up or shut up. In 1974 Henry Kissinger unwisely signed a "statement of principles" to govern negotiations for a new Panama Canal zone treaty. Kissinger agreed that the concept of perpetuity should be eliminated and, in effect, that the new treaty should end — after a fixed but undecided period of time (the year 2000 is generally mentioned) — U.S. sovereignty and control over the Canal and the Zone. Ever since, negotiations with Panama have been conducted — despite strong and strengthening protests in Congress and among many sections of U.S. public opin- ion — within the framework of these limitations. After a virtual hiatus most of last year because of the presidential campaign and the interjection of the Canal issue into it, the negotiations are to resume momentar- ily under the auspices of a new administration. Our protagonist, however, is still the same radical demagogic dictator, who has ruled Panama's 1.5 million people for the past eight years. Omar Torrijos seized power in a coup and has retained it by armed force (the support of the Panamanian National Guard, the only military-police power in the country) and by the bland promises of pie-in-the-sky — ultimate sovereignty over the Canal and the Zone. He has not hesitated to rule roughshod; he has exiled some dissident business men, completely controls a fully censored press and he has outlawed all political opposition. His government has become a kind of neo-Marxist dictatorship, not only in its domestic policies, but in its close and cordial relation- ships with Castro and Moscow. Only one party — Torrijos' "Peoples Party"— is per- mitted; there are numerous known communists among its leaders. Torrijos has staked his political future on taking over the Canal and he may well have unleashed forces he cannot control. His bargaining style continues in the Latin Political tradition of making Uncle Sam a whipping boy; it is a mixture of open threat and nationalistic bluster. But what he considers his aces in the hole are the prediction — indeed the promise — that unless a treaty ceding ultimate sovereignty to Panama is concluded this year, the United States will face armed confrontation (i.e. rioting mobs, terrorist and sabotage activity, guerrilla war, even a kind of low-key Panamanian "Vietnam"); and we shall also face the united condemnation of all the Latin-American nations. Both threats are, in my view, overdrawn — particularly the latter. But the ques- tion still remains: Is it more important to avoid confrontation and condemnation than it is to retain control of the Canal, a security asset of tremendous importance in its own right but of even greater significance to the future of that vital area— the Caribbean Sea-Gulf of Mexico? 23 DISASTROUS CONSEQUENCES The psychological and political consequences of the abandonment of sovereignty by the United States in the Zone — in the face of repeated threats by a minor dictator openly backed by Castro and Russian communism— to our naval base at Guantanamo Bay, Cuba, to other U.S. base rights overseas and to our strategic position in the Caribbean could be disastrous. The questions that would inevitably be asked are: Is the United States a paper tiger? Where, after Vietnam and Angola and now, Panama, would we draw the line, if not at our own back door? It is certainly true that rioting mobs tomorrow, as in the past, are an ever present possibility in Panama; Latin volatility and Communist provocateurs, aided by trained Cuban infiltrators, insure that. Sabotage and terrorism, if supported by Cuba and/or Russia, could become serious; some bombing incidents involving the automobiles of Zone residents who oppose the transfer of sovereignty have already occurred. But serious sabotage of the Canal itself, even if it could be accomplished, would be an irrational act. For Panama, it would kill the goose that laid the golden egg. A large-scale guerrilla war, another Vietnam, is highly unlikely. We want no more Vietnams, but surely Panama does not want a Central American Vietnam either, and the great majority of Panamanians are not the dedicated and disciplined fanatics that we faced in the jungles of Southeast Asia. In any case, if we are to avoid confrontation all over the world by concession and retreat, if we refuse to defend highly important or vital interests merely to avoid the blackmail threat of violence we are finished before the crisis erupts. RISK IS NECESSARY As to Latin-America, we must risk its rath. But it will be far from unanimous — no matter what some Latin American spokesman say, pro forma, for public consump- tion. Fundamentally the nations of Latin- America and the Southern Hemisphere have always respected strength. Many of them are highly dependent on the water- way, and some of them, quite satisfied with the low rates and efficiency of American operation of the Canal, mistrust the probable instability and uncertainty of Pana- manian rule. There is, too, very considerable uneasiness about Communist influence in Panama and the close ties Torrijos has established with Castro. The memories of Angola and the fears of Russian imperialism within the Western Hemisphere are vivid. During last Fall's political campaign, both President Ford and Jimmy Carter avoided the real issue in the Panama negotiations which is the question of U.S. sovereignty and the security of our "soft underbelly." Neither of them referred to the major problem of the Canal issue — the strategic importance of the Caribbean, and both of them said they would maintain "control" of the Canal. The exact words of now President Carter, which are today most germane, were: "I would never give up complete control or practical control of the Panama Canal Zone. But I would continue to negotiate with the Panamanians." In other words have your cake and eat it, too. Give up sovereignty, perhaps, but maintain security and control. It's a nice trick, if you can do it. We lost our great airfield in Libya and our entire military investment there after a change of regime. We were denied overflight or refueling bases during the last Mid-East war, even by our allies. After the Cyprus crisis both Turkey and Greece either limited U.S. operations at our bases in those countries or closed them down. Sovereignty means control. Control without sovereignty is double-speak. 24 [From the Congressional Record— Senate, Apr. 4, 1977] PANAMA CANAL: BRITISH PRESS ALERT TO DISREGARD OF THE 1901 HAY-PAUNCEFOTE TREATY Mr. Helms. Mr. President, during the last decade, various Mem- bers of the Congress have repeatedly stressed that one of the principal treaties governing the operation of the Panama Canal is the 1901 Hay-Pauncefote Treaty with Great Britain, which applied the rules for the Suez Canal to the Panama Canal. The projected surrender of U.S. sovereignty over the Canal Zone is an obvious disregard of this treaty, the principles of which have been accepted by canal users and strictly observed by the United States. So far as can be ascertained, no effort has been made to secure the approval of the British Government, which is one of the largest users of the Panama Canal with a total .of 1,148 transits out of 13,786 oceangoing transits during fiscal year 1975. In fact, rela- tively recent efforts by serious students of the canal problem to obtain information from State Department sources revealed that its responsible officials knew nothing about the Hay-Pauncefote Treaty until alerted to its existence by being questioned. In the United Kingdom the situation is different, for an impor- tant London newspaper is alert to the canal subject now being debated in the United States. It has stressed that — American plans to transfer sovereignty of the Panama Canal to Panama * * * will have to be approved by the British Government. Mr. President, the failure of the State Department to take up this matter with the British Government as a party to the Hay- Pauncefote Treaty is indeed difficult to comprehend. The Panama Canal and its protective frame of the Canal Zone is not a shopping center convenient for use as a diplomatic plaything but one of the greatest works of man that serves the shipping of the entire world. The surrender of its sovereign control by the United States would probably be followed by worldwide consequences of malign charac- ter, especially for Latin American nations dependent upon it. Mr. President, in order that the Congress, especially the Senate, may be fully informed, I ask unanimous consent that the article from the Daily Telegraph and the text of the 1901 Hay-Pauncefote Treaty K j printed in the Record. There being no objection, the material was ordered to be printed in the Record, as follows: [From the London Daily Telegraph, Mar. 3, 1977] Britain Once Ruled Sea and so Must Approve Panama Transfer (By Desmond Wettern) American plans to transfer sovereignty of the Panama Canal to Panama, which the Carter Administration intends to effect soon to rid America of the last vestiges of "colonialism," will have to be approved by the British Government. This results from Britannia having once ruled the waves — or at least having had the world's largest merchant navy. The matter was decided in 1901. The Hay-Pauncefote Treaty of that year requires that Britain be consulted before there is a change in the control of the Canal. The treaty was signed on Nov. 18, 1901, by the British Ambassador in Washing- ton, Lord Pauncefote, and the American Secretary of State, John Hay. 25 It superseded the earlier Clayton-Bulwer Treaty of 1850 and provided for unhin- dered passage of the Panama Canal, when it was completed by the shipping of all nations. OBJECTION UNLIKELY It also gave the United States Government the "exclusive right for the regulation and management of the canal" and stipulated that "no change of territorial sover- eignty or of the international relation of the country or countries traversed by the before-mentioned canal shall affect the general principle of neutralisation or the obligation of the High Contracting Parties (Britain and America) under the present Treaty." Although this would seem to preclude any loop-hole for the Americans to transfer the Canal's sovereignty to another power, the Foreign and Commonwealth Office is reserving its position. From a legal point of view the British Government is unlikely to object to any transfer of sovereignty though, at least concerning the treaty provisions, Whitehall's acquiesence would seem to be based on turning a blind eye rather than a close interpretation of the Treaty's five articles. Britain's involvement in the Treaty derives from the days when it was Govern- ment policv to ensure free navigation around the world for the benefit of the British Merchant Navy, then easily the world's largest. The Americans alone are entitled to "maintain such military police along the canal as may be necessary to protect it against lawlessness and disorder." British shipping is now a close second to that of America in the use of the Canal. In 1973-74, the last year for which figures are available, 1,258 British merchant ships went through the Canal carrying 13,800,000 long tons of cargo compared to 1,322 American ships carrying 10,500,000 long tons. The biggest users were Liberia, with 1,798 transits, and Japan with 1,348. Russian use amounted to only 242 transits involving 1,500,000 long tons of cargo. BANKING INTERESTS The use of the Panama Canal by British warships is now small. In 1976 a task group of some nine ships used it returning from a nine-month series of exercises and visits east of Suez, but since then no British warship has navigated the canal either way, I understand. Apart from political considerations the Carter Administration is also believed to be under pressure from American banking interests to hand the canal over to Panama. ACCESS TO PROFITS American and international banks, including the London branch of Chase Man- hattan, are believed to have lent the Left-wing regime of President Torrijos of Panama large sums and are anxious to obtain interest on their loans. It is felt that interest payment will be possible only if Panama has access to profits from canal dues. British banks believed to have provided loans include the Orion Bank, William Brandts' and Son and Lloyds, and Bolsa International. [Appendix C] Treaty Between the United States and Great Britain to Facilitate the Construction of a Shif Canal (Hay-Pauncefote Treaty) 1 [Signed at Washington, November 18, 1901; ratification advised by the United States Senate, December 16, 1901; ratified by the President, December 26, 1901; ratified by Great Britain, January 20, 1902; ratifications exchanged at Washington, February 21, 1902; proclaimed at Washington, February 22, 1902.] [Articles] I. Convention of April 19, 1850. II. Construction of canal. 1 Manuscript, United States Department of State, Archives, Treaty Series, No. 401. Also S. Doc No. 474 (63d Cong., 2d Sess.), pp. 292-94; W. M. Malloy, op. cit, I, 782-84 (US). III. Rules of neutralization. IV. Change of sovereignty. V. Ratification.] The United States of America and His Majesty Edward the Seventh, of the United Kingdom of Great Britain and Ireland, and of the British Dominions beyond the Seas, King and Emperor of India, being desirous to facilitate the construction of a ship canal to connect the Atlantic and Pacific Oceans, by whatever route may be considered expedient, and to that end to remove any objection which may arise out of the Convention of the 19th April, 1850, commonly called the Clayton-Bulwer Treaty, to the construction of such canal under the auspices of the Government of the United States, without impairing the "general principle" of neutralization estab- lished in Article VIII of that Convention, have for that purpose appointed as their Plenipotentiaries: The President of the United States, John Hay, Secretary of State of the United States of America; And His Majesty Edward the Seventh, of the United Kingdom of Great Britain and Ireland, and of the British Dominions beyond the Seas, King, and Emperor of India, the Right Honourable Lord Pauncefote, G.C.B., G.C.M.G., His Majesty's Am- bassador Extraordinary and Plenipotentiary to the United States; Who, having communicated to each other their full powers which were found to be in due and proper form, have agreed upon the following Articles: — ARTICLE I The High Contracting Parties agree that the present Treaty shall supersede the aforementioned Convention of the 19th April, 1850. article n It is agreed that the canal may be constructed under the auspices of the Govern- ment of the United States, either directly at its own cost, or by gift or loan of money to individuals or Corporations, or through subscription to or purchase of stock or shares, and that, subject to the provisions of the present Treaty, the said Govern- ment shall have and enjoy all the rights incident to such construction, as well as the exclusive right of providing for the regulation and management of the canal. ARTICLE m The United States adopts, as the basis of the neutralization of such ship canal, the following Rules, substantially as embodied in the Convention of Constantinople, signed the 28th of October, 1888, for the free navigation of the Suez Canal, that is to say: 1. The canal shall be free and open to the vessels of commerce and of war of all nations observing these Rules, on terms of entire equality, so that there shall be no discrimination against any such nation, or its citizens or subjects, in respect of the conditions or charges of traffic, or otherwise. Such conditions and charges of traffic shall be just and equitable. 2. The canal shall never be blockaded, nor shall any right of war be exercised nor any act of hostility be committed within it. The United States, however, shall be at liberty to maintain such military police along the canal as may be necessary to protect it against lawlessness and disorder. 3. Vessels of war of a belligerent shall not revictual nor take any stores in the canal except so far as may be strictly necessary; and the transit of such vessels through the canal shall be effected with the least possible delay in accordance with the Regulations in force, and with only such intermission as may result from the necessities of the service. Prizes shall be in all respects subject to the same Rules as vessels of war of the belligerents. 4. No belligerent shall embark or disembark troops, munitions of war, or warlike materials in the canal, except in case of accidental hindrance of the transit, and in such case the transit shall be resumed with all possible dispatch. 5. The provisions of this Article shall apply to waters adjacent to the canal, within 3 marine miles of either end. Vessels of war of a belligerent shall not remain in such waters longer than twenty-four hours at any one time, except in case of distress, and in such case shall depart as soon as possible; but a vessel of war of one belligerent shall not depart within twenty-four hours from the departure of a vessel of war of the other belligerent. 6. The plant, establishments, buildings, and all works necessary to the construc- tion, maintenance, and operation of the canal shall be deemed to be part thereof, for the purposes of this Treaty, and in time of war, as in time of peace, shall enjoy 27 complete immunity from attack or injury by belligerents, and from acts calculated to impair their usefulness as part of the canal. ARTICLE IV It is agreed that no change of territorial sovereignty or of the international relations of the country or countries traversed by the before-mentioned canal shall affect the general principle of neutralization or the obligation of the High Contract- ing Parties under the present Treaty. article v The present Treaty shall be ratified by the President of the United States, by and with the advice and consent of the Senate thereof, and by His Britannic Majesty; and the ratifications shall be exchanged at Washington or at London at the earliest possible time within six months from the date hereof. In faith whereof the respective Plenipotentiaries have signed this Treaty and thereunto affixed their seals. Done in duplicate at Washington, the 18th day of November, in the year of Our Lord one thousand nine hundred and one. John Hay. Pauncefote. 28 [From the Congressional Record— Senate, Apr. 5, 1977] ACCURACY IN MEDIA CORRECTS NEW YORK TIMES ON PANAMA CANAL Mr. Helms. Mr. President, there is a great deal of misinforma- tion going around about the role of the United States in creating and developing the Panama Canal. There appears to be an orga- nized effort to convince the American people that there was some- thing shameful and dishonorable about our actions, which we have to remedy today by surrendering our rights, property, and sover- eignty in the Canal Zone. Typical of such deliberate misinformation is the recent statement in a New York Times editorial which said, in reference to the canal: We stole it and removed the mcriminating evidence from the history books. Nothing could be further from the truth, as the unbiased work of many distinguished historians can attest. The New York Times has no right to make such a demagogic assertion if it wishes to main- tain itself as a respectable purveyor of journalism. Mr. Reed Irvine, chairman of Accuracy in Media, Inc., has taken the Times to task in a letter published on its editorial page today. Mr. Irvine patiently recounts the basic international structure that supported our role in creating the canal, and effectively rebuts the absurd contention of the Times. Mr. Irvine is to be congratulated for once again forcing the media to correct its inaccuracies, particu- larly when such inaccuracies can have a pernicious effect on public opinion and public policy. Mr. President, I ask unanimous consent that Mr. Irvine's letter from the New York Times of April 5, 1977, be printed in the record at the conclusion of my remarks. There being no objection, the letter was ordered to be printed in the Record, as follows: Panama Has Reaped Huge Benefits From the Canal To the Editor: In discussing the Panama Canal, a recent Times editorial said: "We stole it and removed the incriminating evidence from the history books." The Panama Canal was built by the U.S. at a cost of $375 million. It obviously was not stolen. Perhaps your editorial writer meant to say that the 10-mile-wide strip of territory through which the canal was built was stolen. But that too is false. From whom was it stolen? Panama? Colombia? Individual landowners? The U.S. paid Panama $10 million for the rights to the zone. We paid nearly $5 million to individual landowners for title to their property in the zone. We paid $25 million to Colombia in satisfaction of its claims. In addition, we paid $40 million to the French canal company for its concession and equipment. Some theft! The U.S. has been charged with having helped Panama gain its independence from Colombia. If true, would that be theft? Panama had legitimate claims to independence. Panama had revolted and won its complete independence as early as 1840. It was induced to join the Confederation of New Granada subsequently. The constitution provided that Panama would retain its sovereignty and right to secede. This right was taken away when a new constitution was proclaimed in 1885. Panama contended that it was still a sovereign state temporarily under another government under duress. Panama's declaration of independence in 1903 charged that Colombia had treated the isthmus as a colony, milking it of revenue and not building a single bridge, a single road, a single college or any public building. If it is alleged that the U.S. imposed the Hay-Bunau-Varilla treaty on Panama against the will of the people, you have to believe that the people of Panama were not eager to have the canal built through their territory. Without the canal, the isthmus would have been relegated to the status of permanent backwater. There was a real possibility that the canal would go to Nicaragua. A bill passed both houses of Congress in 1902 providing for the construction of the canal through Nicaragua if the necessary right could not be obtained for the isthmian canal. Was it robbery to insist on terms that provided for the security of the huge investment the U.S. proposed to make? The alternative was to carry out the requirements of the Spooner Act and arrange to build the canal through Nicaragua. That would have cost the Panamanians dearly, and they knew it. Panama has reaped huge benefits from the canal. Payments by the Canal Compa- ny to Panamanian citizens are around $100 million a year. Panama has also received about $300 million in aid from the U.S. in the past 22 years. All this has helped to give it one of the highest per capita incomes in Latin America. Reed Irvine, Chairman, Accuracy in Media, Inc. Washington, March 29, 1977. [From the Congressional Record— Senate, Apr. 6, 1977] AMBASSADOR SPRUILLE BRADEN'S PERCEPTIVE ANALYSIS OF UNITED STATES-LATIN AMERICAN RELATIONS Mr. Helms. Mr. President, Ambassador Spruille Braden is America's foremost senior diplomat. His public career spans more than four decades; and that followed many years of success in the private sector. Ambassador Braden's accomplishments are legion. He has done more than any living American to improving relations between our neighbors in Latin America and the United States. As Assistant Secretary of State for American Republic Affairs, as Ambassador to Argentina and Cuba, as a resident of Chile — in so many capacities — he has gained a first-hand working knowledge of Latin America. He knows the people, their individual national heritages, the issues that unite them — as well as divide them. He has negotiated with them. His success with the negotiations that ended the Chaco War is well known, to cite only one example. He knows Latin America in all of its diversity, its cultural rich- ness, and its potential. Knowing Ambassador Braden's background and his continuing interest in United States-Latin American relations, I was interest- ed to read recently his speech to the Belair Council of the Navy League of the U.S.A. I want to share this perceptive analysis of a number of current areas of interest in United States-Latin Ameri- can relations with my colleagues. Ambassador Braden points out four major critical areas in the Western Hemisphere. The first is Argentina, which exemplifies, Ambassador Braden points out, How a superior, educated, wealthy and religious nation, possessing virtue and great mental and physical assets, for over three decades has suffered a deluge of evils as her government sank into the depths of degradation, corruption, venality and irresponsibility. Murder, torture, kidnapping, terrorism and guerrilla warfare ensued. But Ambassador Braden sees hope for Argentina under its new government. I note a recent Time magazine assessment of the Argentine Government's first year in power. On the whole, Time seems to feel that stability is returning to the country. From my own visits there, both during the Peron government, and during the new government's administration, I am inclined to agree that Argentina is on the road to recovery. But dangers still abound, as Ambassador Braden so ably shows. Another critical area that Ambassador Braden mentions is Chile. In Chile, the situation deteriorated much further than in Argenti- na, as the Ambassador points out: Unfortunately, the Chileans, overly confident in their dedication to democracy, credulously did not awaken to the threat of communism and loss of freedom until their backs were against the wall. But now, the Ambassador continues. Despite the catastrophic economic and social results of the Marxist regime, the Chilean people have tightened their belts and are repairing the damage. Their record on "human rights" is now better than the majority of the countries in the United Nations who accuse them. 31 Putting the issue into a proper perspective, Ambassador Braden states that: On reflection, we must see that Chile and Argentina are major battlegrounds between East and West, between the forces of communism and freedom. The Ambassador is correct, of course. Too often, I am afraid, we overlook this simple but irrefutable fact. Ambassador Braden names Cuba and the Panama Canal as two other areas of Hemispheric concern. "Cuba as a full-fledged Soviet satellite and Soviet-occupied fortress, is a major danger to the United States," he says, pointing also to Cuba's intervention in Africa as a blatant act against the interests of the free world. Regarding the Panama Canal, Ambassador Braden reminds us that: Our sovereignty and ownership of the Canal Zone in perpetuity twice has been reaffirmed by U.S. Supreme Court decisions, by many leading Panamanian states- men, Presidents and Ministers, as well as by lower U.S. Courts. Mr. President, there is much more important information in this excellent statement of Ambassador Braden. So that Senators may have the benefit of Ambassador Braden's years of experience, I ask unanimous consent that his speech before the Belair Council of the Navy League, entitled "Soviet Threat to the Panama Canal," be printed in the Record. There being no objection, the speech was ordered to be printed in the Record, as follows: Soviet Threat to the Panama Canal (Address by Ambassador Spruille Braden) It is an honor to be invited by Mr. David Gill Evans, President of the Belair Council of the Navy League of U.S.A. to address this distinguished and knowledge- able audience. I am grateful indeed, just as I am proud of life membership in the Belair Council of the Navy League of the U.S.A. During many years of an active life throughout the Americas, I have accumulated many convictions and I hope perspicacity, in keeping with the old Spanish saying: "The devil knows more by reason of his age, than because he is a demon". One of my strongest persuasions is that the greatest threat to "our civilization" is a world-wide breakdown in morality. This we witness in and out of government penetrating every strata of society. I further believe that the most widely destructive of all immoralities is that centered in and emanating from Moscow. Vide: (1) The unending and outrageous cruelties perpetrated on the Russian people, as described by Solzhenitsyn; (2) The so-called "liberation" movements propagated everywhere by Soviet agents, foreign Communists and misguided dupes; (3) Russian ambitions for world hegemony. The Soviet already is progressing by strides in its plans to convert the American republics into a conglomeration of satellite and slave states. Today I shall summarize only the four most critical areas in the Western Hemi- sphere. First: Argentina exemplifies how a superior, educated, wealthy and religious nation, possessing virtue and great mental and physical assets for over three dec- ades has suffered a deluge of evils as her government sank into the depths of degradation, corruption, venality and irresponsibility. Murder, torture, kidnapping, terrorism and guerrilla warfare ensued. The cause of all this was the breakdown in morality and Communist infiltration. As far back as 1945, when I served as Ambassador in Buenos Aires, the then vice president and dictator, Peron, while pretending opposition to Communists, actually was intriguing closely with them; they had replaced the Nazis in his esteem. 32 Simultaneously he, his mistress, later wife, Evita, and his henchmen, enriched themselves on a vast scale. When Peron died, his third wife and heir, Isabelita (a former bar girl) suddenly found herself the nominal head of a government which had fulfilled 85% of the program laid down by Karl Marx and Friedrich Engels. Presently she is imprisoned for stealing public funds. As Argentina was about to fall completely into Communist hands, the armed forces, under General Jorge Rafael Videla (a man of highest character) seized power. They enlisted in their government some patriotic and experienced civilians, such as the new Minister of Economy, Martinez De Hoz. As a result of the military's firmness and courage, Communism, terrorism and corruption gradually are being eradicated. Argentina at long last now may hope eventually to retrieve its old position as a responsible, respected and prosperous nation. Realistic reforms may recapture Argentina's idealism. From 1922 through 1938 I knew Argentina at the apex of its prosperity, political and social well-being. But in 1945, when I returned as Ambassador, I witnessed the beginnings of the decomposition, Communism and its twin, terrorism, later almost leading that pitiable nation into the jaws of destruction. What I saw beginning 30 years ago in Argentina, I now observe starting in the U.S.A. — traditionally cherished ideals are attacked, while disintegrating corruption is tolerated and exotic ideologies are circulated through our schools, the media, and pretty much everywhere. Second: The collapse of Chile into Communism was more precipitous and com- plete than Argentina's; First came the election to power of the Social-Democrats (actually Socialists); four years later they helped the Marxist, Allende, to the Presi- dency, with only a 35 percent constitutional vote. This accession to power with his Socialist-Communist cohorts, was planned, incit- ed and aided by the Soviet Union. Moscow was anxious to create another Commu- nist satellite in Latin America, and in so doing, to obtain a naval base at Talca- huano on Chile's South Pacific coast, just as it had acquired its naval bases, underground submarine pens, missile sites, encampments and other facilities in Cuba. Unfortunately the Chileans, overly confident in their dedication to democracy, credulously did not awaken to the threatening communization and loss of freedom until their backs were against the wall. For more than a year the populace, deceived and helpless, allowed matters to drift. Finally, they were awakened with a bang by the killings and tortures, impris- onments and property confiscations, plus the influx of trained commissaries and guerrillas from the Soviet Union, Cuba and elsewhere, along with shiploads of arms and munitions for the Allendistas, fierce fighting broke out between Communists, both national and foreign, and patriotic Chileans. The first mass protest was staged by women from all walks of life demonstrating in the streets and surrounding the Presidential palace, banging pans and kitchen- ware. Some were arrested; others physically abused. There followed a paralyzing strike by truck drivers. In the nick of time, the military intelligence discovered that Allende and his coconspirators had developed a so-called "Z plan" to assassinate within one week all top military officers and leading citizens. Immediate counter-action was imperative. It was taken and thousands of Commu- nists, guerrillas and criminals were arrested; Allende committed suicide. The new military government had to fight fire with fire. Some ill-treatment even of innocent people, was unavoidable if Chile were to be saved from Moscow-con- trolled communism. Please believe me when I assert that: (1) The only thing the Communists respect or fear is physical force greater than their own. (2) A Communist commitment or pledge is very rarely fulfilled. Chile is the only nation, with scant aid from abroad, which has been able, by the courage and r -orifice of its citizenry, to overthrow a firmly established Communist dictatorship which had seized power nefariously and by trickery. Chile still has to defend her independence from armed Communist bloc attacks from within and without her borders; it also must clear away the lies and deceit disseminated throughout the world, by Communists and too often believed by the guileless. Despite the catastrophic economic and social results of the Marxist regime, the Chilean people have tightened their belts and are repairing the damage. Their record on "human rights" is now better than the majority of countries in the United Nations who accuse them. On reflection, we must see that Chile and Argentina are major battlegrounds between East and West, between the forces of communism and freedom. Third: Cuba, as a full-fledged Soviet satellite and Soviet-occupied fortress, is a major danger to the United States. At Moscow's command, Havana dispatched 15,000 or more troops to fight for communism in Angola, Mozambique, and elsewhere in Africa. The USSR maintains at least 10,000 of its own military, KGB and intelligence services in Cuba. It directs that island's forces, provocateurs and espionage services in and out of Cuba. It operates the missile, naval and submarine bases I have mentioned. Castro first attracted notice as a gangster and murderer. Under his regime, thousands have been tortured and killed, 20,000 to 40,000 political prisoners are suffering or perishing in prisons today. Yet despite all of these horrors and the threat to the U.S.A. from only 90 miles off our shores, there are those high in government, even business, who advocate renew- ing diplomatic relations with Cuba. How blind or callous can they get? Fourth: It suffices to say about Panama that our sovereignty and ownership of the Canal Zone in perpetuity twice has been reaffirmed by U.S. Supreme Court deci- sions, by many leading Panamanian statesmen, presidents and ministers, as well as by lower U.S. courts. As recently as December 17, 1976, District Judge Guthrie F. Crowe stated that he believes the U.S.A. owns the Canal Zone. "I think the United States is the owner of this property by reason of the treaties with Panama and Colombia, payments to the French (Canal Co.) and the creation of the land commis- sion in which people from Panama and the United States functioned as a court with thousands of claimants. (The land) was paid for with United States money." Our title is every bit as secure legally as are our territorial acquisitions from France, Spain, Mexico, Denmark and Russia. The total U.S. investment in Panama is estimated at nearly $7 billion. The arguments by our State Department and its representatives as to why we should negotiate a new treaty ceding our full rights to the Canal and the Zone are largely fallacious in substance and logic. The illegally constituted dictator, Torrijos, threatens that unless we deliver the Panama Canal Zone and operations of the canal to his government within a limited period, we will have to wage another Vietnam war in that area. Castro reportedly has several thousand troops now in Panama, and, of course, could bring back his armies from Africa, already trained in Angola. The State Department and our negotiators supinely agree that Torrijos will precipitate guer- rilla warfare and sabotage. Actually Torrijos fears if we do not sign the new treaty, he will be thrown out of power. In this event, he knows Moscow and Castro could not rescue him. On the other hand, if, with the help of the latter two, he can deliver the canal, even indirectly to the Comintern, he will be assured of his job for life, just as is Castro. We have defended the canal for 70 odd years, through two world wars, countless riots and attempted sabotage. Are we so weak and timid that we must now run away from Torrijos' and Castro's Soviet-inspired threats and blackmail? The real issue for the U.S.A. is not vis-a-vis Panama, but the U.S.S.R. If we lost the Panama Canal Zone to the Soviets, even indirectly, this humiliation would be disastrous indeed. It might well cause our friends and allies, especially in Latin America; to lose all respect for and confidence in us and abandon our leader- ship, in order to play with the Soviet. Everybody wants to be with the winner. The following bits of history are pertinent: A. Phillip II of Spain declared that whoever controls the Caribbean will dominate the western hemisphere. President Jefferson expressed the same thought. Admiral Mahan, one of our greatest strategists, warned that any enemy of the U.S.A. controlling the Caribbean could invade our gulf coast and so proceed up the Missis- sippi Valley to capture the heartland of the United States. B. Lenin listed in sequence the following "musts" for the Soviets to make effective their world dominion: (1) Secure U.S.S.R.'s western borders through absorption or Moscow rule; (2) Communize and control the Far East, especially Southeastern Asia; (3) Proceed similarly in Africa; (4) The same for Latin America; (5) The United States, thus surrounded, would fall like over-ripe fruit. Lenin's successors raised point 6; to build their naval forces to overwhelming strength, accompanied by widely dispersed and fully equipped bases. Their objec- tives include the domination of all sea lanes, passages and routes; among these the Panama Canal is paramount. 29-400 - 78 - t 34 Self-evidently the aforementioned six points are well on the way to successful fruition. The security of Russia's western frontier, including Latvia, Lithuania, Estonia, the Ukraine, and Eastern European countries has been ratified by the Helsinki agreement signed August 1, 1975, by the United States and other western governments. Moscow and Havana jointly have violated the Helsinki Agreement in Angola, Mozambique and elsewhere, Communists have ignored concessions obtained by the free world at Helsinki stipulating greater freedom of movement for western journal- ists and promises to insure human rights throughout the Warsaw Pact Nations. The Soviet Union's hankering to control the Panama Canal Zone was openly stated by Major Sergei Yuworov in an article published in the Soviet military organ "Red Star", reproduced by the Cuban magazine "Bohemia" on March 17, 1957 in respect of the canal: "Due to its privileged location at the juncture between South America and the rest of the continent, including the Canal, which permits U.S.A. warships to operate simultaneously in the Atlantic and Pacific, must for the Soviet Union be considered as a 'priority zone'." He adds that Panama can be attacked from Central America, Colombia or from Cuba, Puerto Rico and other Caribbean islands. He intimates that some or all of these can serve as Soviet naval bases. It is essential for us to remember that for over a quarter of a century, we have been beset by one humiliation after another, each of them contrived, usually fi- nanced, militarily aided and equipped by Moscow. Our major blunders or defeats in policy and/or action were: MacArthur prohibited from crossing the Yalu or bombing the bridge; The inconclusive falsely labeled U.N. action in Korea; Failure to lend help by air to the Hungarian uprising against Russian troops; Non-resistence to the Berlin Wall; No aerial help at the Bay of Pigs; The Cuban missile crisis — tearing up the Monroe Doctrine; Our shameful commitment to Khrushchev neither to invade Cuba nor permit others to do so; The "no-win" war in Vietnam; and The so-called "Paris Peace Treaty with honor," with which North Vietnam never complied. This series of surrenders only become explicable when one reads National Securi- ty Council Report No. 68 (NSC-68) of April 14, 1950, drafted after President Tru- man's orders as a statement of our basic policies with respect to the U.S.S.R. The study, opinions and conclusions of NSC-68 were based on reports from the Secretaries of State and Defense; they also were considered in at least one council meeting by the Secretary of Treasury and the heads of the other three top economic agencies of the Government. The content and portent of this super "top secret" 65-page document has been kept completely unknown to the public, Congress, and even senior Army, Navy and Air Corps officers commanding at the time of the aforelisted humiliations. The "top secret" classification, pursuant to law, terminated in April, 1975. On September 30, 1976, a brilliant journalist, Alice Widener, began publishing her expose and analysis of NSC-68. She sums up its principal aims as follows: 1. "To avoid nuclear war but to accept a Soviet nuclear first strike against us if necessary, hoping to ward it off by building up our own and our allies' military, economic, and social strength as a deterrent. 2. "To confine U.S. military action to strictly limited counter-actions. 3. "To seek co-existence with the Soviet Union in the hope that democracy will win out eventually against dictatorship, that time would be on our side, and that the U.S.S.R. would undergo changes eventually leading to abandonment of its goal of world domination. 4. "To try to contain the expansion of the Soviet Union beyond its territory, but not to do anything directly challenging Soviet prestige. "In conceding Soviet prestige as untouchable, NSC-68 seeks to protect the Soviets from any kind of effective attack — be it military, ideological, or psychological." NSC-68 is a self-contradictory document, at times dove-ish and weak; at others hawkish and vigilant. On the one hand, it accurately sets forth the objectives of the U.S.A. for peace and freedom, as laid down by the Constitution and the Founding Fathers. On the other hand, it describes the fundamental and unchangeable program of the U.S.S.R. as follows: 35 "The design, therefore, calls for the complete subversion or forcible destruction of the machinery of government and structure of society in the countries of the non- Soviet world and their replacement by an apparatus and structure subservient to and controlled from the Kremlin. To that end, Soviet efforts are now directed toward the domination of the Eurasian land mass. The United States, as the principal center of power in the non-Soviet world and the bulwark of opposition to Soviet expansion, is the principal enemy whose integrity and vitality must be subverted or destroyed by one means or another if the Kremlin is to achieve its fundamental design." Later, NSC-68 states: "With particular reference to the United States, the Kremlin's strategic and tactical policy is affected by its estimate that we are not only the greatest immedi- ate obstacle which stands between it and world domination, we are also the only power which could release forces in the free and Soviet worlds which could destroy it. The Kremlin's policy toward us is consequently animated by a peculiarly virulent blend of hatred and fear." NSC-68 continues to characterize all the evils of totalitarian dictatorship and the latter's determination to dominate the world only limited by expediency. It says: "It is estimated that, within the next four years (i.e. from 1950), the U.S.S.R. will attain the capability of seriously damaging vital centers of the United States, provided it strikes a surprise blow and provided further that the blow is opposed by no more effective opposition than we now have programmed." The first time I read NSC-68, 1 said: "In each assumption the authors establish a series of ideals as definite possible objectives to be carried out, then turn around and prove that these ideals are utterly impossible of accomplishment. The ink on NSC-68 was no sooner dry than the outbreak of the Korean war made a mockery of this dogooding optimism." The Comintern's leaders — perhaps due to blood and inheritance — possess a strain of oriental innate cruelty, dishonesty and a shrewd depravity. They follow the precepts of Sun Tzu, who in China 600 to 500 years before Christ, wrote the following in a military textbook: "Undermine the enemy first, then his army will fall to you. Subvert him, attack his morale, strike at his economy, corrupt him, sow internal discord among his leaders; destroy him without fighting him.' This is precisely the formula Moscow successfully has pursued and is directing against the U.S.A. As a result, we are drawing nigh to the finish line. Yet there has been no perceptible inclination by either Democratic or Republican administrations to get rid of the NSC-68 policy recommendations, which so often have imperilled and still are entrapping United States' security with an apparently endless chain of humili- ations. If, due to our innate kindness of spirit and our legions' teachings of peace, we endure and add to the list I have already given you one more humiliation, one more breach of a solemn agreement, one more surrender of our rights and sovereignty under the 1903 treaty with Panama, then indeed the Caribbean, adjoining waters and sea lanes will become part and parcel of a huge Soviet lake. If this happens, we then may have three options: (1) If possible, to rebuild a definitive superiority in military power and defenses. (2) To await a Soviet blackmailing ultimatum for surrender. (3) Nuclear war. May God save us from the last two alternatives. [From the Congressional Record— Senate, Apr. 21, 1977] PANAMA CANAL: EXCAVATION, 1881-1975, STRESSES MAGNITUDE OF MAINTENANCE PROBLEM Mr. Helms. Mr. President, the splendid record of the Panama Canal Company in keeping the Panama Canal open and safe for traffic has caused many Americans to underrate the complexity of the operations involved. Just because the canal has been running smoothly, some advocates of the giveaway of the Panama Canal tend to minimize the skills necessary to keeping the canal open. Such skills include both management skills and technical skills. They involve questions of judgment of experience. For their proper exercise they require independence and freedom from political in- terference. The Panama Canal Company organization has, over the years, created a unique cadre of skilled workers, both United States and Panamanian, who have functioned as a team for the proper operation of the canal. Thus, in attempting to solve the diplomatic issues involved in the treaty negotiations, some critics downplay the fact that the canal organization is an organic unity that could be mortally wounded if the present management is disrupted. Indeed, the attitude of the State Department has already grievously affected the morale of the Canal Company employees. If the mere threat of a giveaway has had a deleterious effect, how much more so would a new manage- ment situation, subject to outside political influence and corrup- tion, affect the canal's operation? Only a major power can guaran- tee that the canal will continue to function efficiently. The problem of maintenance, for example, illustrates only one facet of the complexity of operations. When testifying before a congressional committee during the construction era of the Panama Canal, Chief Engineer George W. Goethals, in response to a Member's question as to when the Panama Canal would be completed, replied, "The canal will never be completed." By this he meant that the time would never come when more work would not be necessary for its efficient mainte- nance, operation, sanitation and protection. The truth of Goethal's statement is well illustrated by the record of the canal's wet excavation. More than twice as much material has been dredged from the canal since 1915 than was excavated during the entire U.S. construction period. Among the problems that require continuous dredging are silt- ing, bank sloughing, erosion, and land slides, all of which reduce channel depths. Siltation is increasing as a result of the urbaniza- tion of parts of the Gatun Lake watershed. In regard to the protection of the crucially important watershed of Gatun Lake, it is interesting that this danger was apparently forseen long ago by Gen. Clarence Edwards, while in command of the U.S. Army on the Isthmus. He actually made the recommenda- tion that the boundaries of the Canal Zone be extended to include that entire watershed of the Chagres River. In the light of later events, it is unfortunate that his recommendations were not fol- lowed. 37 As to slides, it is still possible for such bank disturbances to close the canal. Meeting this danger requires eternal vigilance on the part of canal engineers and geologists, and timely preventive meas- ures. With completion in 1970 of the enlargement of Gaillard Cut from 300 to 500 feet, the summit level channels have a minimum width of 500 feet. This improvement was an important step toward the major modernization of the existing canal as provided in meas- ures now before the Congress under existing treaty provisions and on which over $171,000,000 has already been expended. In a recent article, Maj. Robert L. Herndon, Corps of Engineers, U.S. Army, summarizes the history of excavation in the Panama Canal, 1881-1975, both dry and wet. A reading of his article shows with startling data the magnitude of the "maintenance problem" that only a great and powerful nation can support. It also serves to reveal the naivete of proponents of the giveaway of the Panama Canal to a small, weak country on the verge of a financial collapse. Just as predicted by Colonel Goethals, Major Herndon concludes that in the future the canal will require increased excavation to maintain it as one of the world's safest waterways and to increase its capacity. Mr. President, as the article by Major Herndon is timely as well as illuminating, it should be of interest to all Members of Congress seeking reliable information on the problem of maintenance of the Panama Canal, and I ask unanimous consent that it be printed in the Record. There being no objection, the article was ordered to be printed in the Record, as follows: Dredging in the Panama Canal (By Maj. Robert L. Herndon) The successful completion of the Panama Canal by the United States stands as a milestone of engineering achievement. Yet, the United States engineers did not originate the dream of an interoceanic canal nor did they turn the first shovel towards its construction. The French, under Comte Ferdinand de Lesseps, were the first to excavate along the route of the present canal. In the 22 years the French spent in Panama, they excavated over 78 million cubic yards of earth and rock. As a result of minor alignment changes and the required rehandling of much of the original excavation material, only 30 million cubic yards excavated by the French proved to be useful to the construction of the present canal. It was estimated that 7 million cubic yards of this were removed by French dredges. The two types of dredges used by the French were the ladder, or endless-chain bucket dredge, the the suction dredge. Of the 51 pieces of dredging equipment acquired from the French Company, only seven were rebuilt and placed in service by American forces. All of the rebuilt French dredges survived the American construction period with the exception of a ladder dredge which sank in 1911. AMERICAN CONSTRUCTION DREDGING To the seven rebuilt French dredges, the American construction forces, under Col. George W. Goethals, added 16 dredges and a variety of support equipment. This equipment was divided between the Atlantic and Pacific divisions where all dredg- ing was performed prior to late 1913. On October 10, 1913, President Woodrow Wilson pressed a button installed on his desk at the White House and sent a signal that detonated eight tons of dynamite which breached the Gamboa Dam and flooded the cut through the continental divide. The dredges then entered the cut for the final work phase. By December 1914, a total of 115,720,000 cubic yards of material had been exca- vated by dredges for the construction of the canal. This amounted to approximately 47 percent of the total material excavated by Americans. Over twice as much 59.8 18.3 78.1 8.6 4.4 13.0 121.7 111.3 233.0 190.1 134.0 324.1 13.5 37.2 50.7 .6 459.3 459.9 38 material has been dredged from the Panama Canal since 1915 than was excavated during the entire U.S. construction period. This is attributed to the maintenance dredging required to remove the siltation in the channels, the large slides that still plague the canal, and construction dredging for channel improvement projects. MAINTENANCE DREDGING The Panama Canal requires continuous dredging to maintain the navigable depth. Siltation, bank sloughing, erosion, and landslides all decrease channel depths. An average of 2.25 million cubic yards of material is removed annually to maintain the current bottom elevation. Siltation from the watersheds contiguous to the canal provides the greatest bulk of the material encumbering the channel. Over 5.7 square miles of channels, harbors, and anchorages are subjected to as much as lVfe feet of silt accumulation per year. One foot of siltation over this area amounts to 5.9 million cubic yards of dredge excavation. Siltation is increasing as Panama develops and urbanizes the previously forested areas on the Gatun Lake watershed. Bank erosion is also a major concern due to the erosive action of wakes from larger vessels and the increased hydraulic wash from the tugs that are required to maneu- ver these vessels safely. This will necessitate additional maintenance dredging in the future to maintain the current depth. TABLE 1.-T0TAL EXCAVATION OF THE PANAMA CANAL, INCLUDING CONSTRUCTION, MAINTENANCE, AND AUXILIARY Project Period Dry 1 Wet 2 Total 1 French canal 1881-1903 American canal 1904-7 Do 1908-14 Total construction excavation 1881-1914 Cut widening (300 ft to 500 ft) 1918-70 Maintenance dredging 1915-75 Grand total 1881-1975 204.2 630.5 834.7 1 Excavation times 10 6 yd 3 . 2 Excavation (dredging) times 10 s yd 3 . Much of this maintenance dredging has been necessitated by the infrequent but massive slides in the Gaillard Cut. During construction, landslides were one of the principal concerns of canal officials. There were 22 slides during the dry excavation of the Gaillard Cut ranging in size from 3,300 cubic yards in the Pedro Miguel slide to over 9 million cubic yards in the West Culebra slide. Approximately 25 million cubic yards, or 25 percent of the total removed by steam shovels in the dry from the cut, were excavated from these slides. Since the introduction of water into the Gaillard Cut, 32 slides have occurred, the largest being over 36 million cubic yards in the 1914-1915 East Culebra/Zion Hill slides which completely closed the canal for seven months. Because of the quantity of large boulders and rock in these slides, suction dredges were of little use in excavating the material. Canal authorities anticipated this problem and acquired three 15-cubic-yard dipper dredges in 1914-1915 to excavate the encroaching material. Dipper dredges are still the prima- ry means of removing material from the cut. Slides even today could close the canal. The most recent slide occurred on October 10, 1974, in Culebra Reach— the largest slide in 41 years. Over 600,000 cubic yards of earth and rock were displaced over 200 feet, thus restricting the channel to 300 feet. The Panama Canal dredging fleet immediately began clearing the slide and in 3 weeks had removed over 183,000 cubic yards of material and had cleared the channel prism to a width of 437 feet. Subsequent dredging restored the channel to its full 500-foot width. CANAL IMPROVEMENTS In 1918, only four years after the opening of the Panama Canal, the Dredging Division began widening Gaillard Cut. From 1918 to 1951, the dredges removed 16 million cubic yards of rock and soil in cutting off spits and bends in the cut to assist navigation. After World War II, it became apparent that the 300-foot Gaillard Cut channel would soon become inadequate for the growing volume and size of commer- cial ships. From 1952 to 1970, excavation contractors and the Dredging Division removed 35 million cubicyards of material in widening the 8.5-mile-long Gaillard Cut from 300 to 500 feet. The total program from 1918 to 1970 included removal of 50.7 million cubic yards of material. The Panama Canal Company is presently involved in a channel-deepening pro- gram. In August 1974, the Dredging Division officially reached elevation 40 feet Precise Level Datum (PLD) within the center 300 feet of the channel in the Gaillard Cut and Gatun Lake, which means ships have 45 feet of water with the lake at elevation 85 feet PLD. The Dredging Division then initiated a major dredging program which will lower the channel to elevation 37 feet PLD. This additional 3 feet of depth will allow for silt accumulation and dredging or surveying inaccuracies resulting in less frequent maintenance dredging. It will increase the possibility of allowing deeper drafts for transiting vessels than has been previously acceptable. This additional depth will also provide extra water during the annual dry season for either lockages or the generation of hydroelectric power by permitting Gatun Lake to be drawn down to elevation 80 feet PLD without further restricting drafts on transiting ships. The introduction of large Panamax class ships (so classified because their dimen- sions are the maximum the Panama Canal's locks can accept on routine transits: 950 feet by 106 feet by 40 feet) has accentuated a maneuverability problem as these ships pass through the restricted channels. To increase the safety of these ships, a program has been initiated to improve the conditions which contribute to difficult passage. This involves widening certain confined reaches of the canal and relieving restricted turns, thereby increasing the level of safety for vessels negotiating these turns. The majority of the widening improvements will involve dredging. The most recent widening effort was to improve the San Pablo-Tabernilla Curve. This 67-degree curve is the largest change-of-course turn in the canal. The work involved removing the material from the inside apex of the curve by both suction and dipper dredging which widened the turn to 2,500 feet at the point of intersec- tion. This project was completed in February 1975. Gamboa Reach, presently 500 feet wide, was the second project in the canal- widening safety program. Gamboa Reach, at the north end of the Gaillard Cut, is a meeting point for ships requiring a "clear-cut" transit. A "clear-cut" vessel is of such large size and limited maneuverability to require one-way traffic through the Gaillard Cut. Because of the queuing of these vessels to enter Gaillard Cut and the meeting of vessels at this juncture, the 3.1-mile-long reach is to be flared at both ends to 800 feet and the channel widened to 650 feet. The initial phase of this project is scheduled for accomplishment in late 1976 and the completion of the entire project in 1978. Other projects included in this safety-oriented program are the widening and realigning of Mamei and Bohio Curves. These two areas form the only reverse curves in the Gatun Lake portion of the canal. Maneuverability through these curves is further encumbered by the presence of several small islands adjacent to the channel prism which create complicated hydrodynamic forces on transiting vessels which can cause a vessel to uncontrollably shear across the channel. A study and computer simulation of this confined channel phenomenon are being conducted by the Panama Canal's engineers and consultants from the Swedish State Ship- building Experimental Tank in Goteborg, Sweden. Based on the preliminary find- ings, a tentative design has been prepared for alleviating the major maneuverability encumbrances in Mamei Curve. Improvements on this curve are scheduled for 1979. DREDGED MATERIAL DISPOSAL As material is dredged from the canal, it must be disposed of rapidly and efficient- ly. Positioned throughout the length of the canal are dump areas for the deposition of dredged material. Many of these dumps are located in Gatun Lake, a sufficient distance from the canal prism to preclude resilting of the canal. Several dredge dumps are located on the banks of the canal in diked areas. Due to the accumula- tion of dredged material in these land dumps over the years, the freeboard on the confining dikes has gradually disappeared. As a result, the Panama Canal Company will upgrade and maintain the dikes so that the impoundment of the dredged material will be of sufficient time to allow the solids to precipitate prior to the water overflowing the spillway. The material dredged from Panama Canal waters is uncontaminated by industrial and agricultural pollutants. Therefore, the disposal of the material in land and water dumps has not generated the adverse environmental impact prevalent in other areas of the world. Sixty years of observation plus a recent study by consul- tants on the environmental effects of dredging and disposing of spoil material have 40 indicated that the effects of such operations on this largely man-made environment are benign. DREDGING FLEET In 1913, the Panama Canal's dredging fleet was centralized under one division and headquartered at Paraiso, near Pedro Miguel Locks. In September 1936, the Dredging Division relocated to Gamboa, at the north end of the Gaillard Cut on the east bank of Gatun Lake, in order to have the reserve dredging fleet north of any serious slide that might occur in the Gaillard Cut. Gamboa is the geographic center of the canal and thus the logical center for dredging operations. With the dredging dumps used in dipper dredge operations located in Gatun Lake and the equipment moored at Paraiso, such equipment would have been useless if a slide had interrupt- ed traffic through the cut. The present Panama Canal dredging fleet consists of two large dredges, a clam- shell dredge, and a drill boat. The U.S. Mindi is a cutterhead suction dredge capable of moving 1,200 cubic yards of earth per hour. She is operated an average of eight months each year in maintenance and capital improvement projects. The Mindi is employed primarily in the Gatun Lake channels, the ocean approaches, the harbors and anchorage areas, but is occasionally used to sweep the Gaillard Cut. The Mindi is 295 feet long, 50 feet in beam, and can dig to a 72-foot depth. She was built in 1942 and is scheduled to be repowered with diesel-electric engines and modified with the addition of a ladder pump in 1978. The U.S. Cascadas is a 15-cubic-yard steam-powered dipper dredge with a normal production expectation of 500 cubic yards per hour. The Cascadas was built in 1915 and, despite her age, remains a reliable and productive member of the dredging fleet. She is operated an average of four months each year in dredging blasted rock and earth, primarily from Gaillard Cut. Both of these dredges are operated 24 hours per day, 7 days per week when they are in service. A contract was awarded in 1976 for a new 15-cubic-yard diesel-electric dipper dredge to replace the inoperable and decommissioned dipper dredge U.S. Paraiso which has been out of service since 1971. When the new dredge is delivered in 1977 it will greatly increase the efficiency of operations and provide the Panama Canal with added dredging capability which is critical in clearing slides. It will also provide a back-up dipper dredge for slide clearance, which is required when one dredge is out of service during a major maintenance period. Dipper dredges are dependent upon scows to transport the dredged material from the digging site to the dump area. The Dredging Division operates a fleet of nine 1,000-cubic-yard, bottom-dumping scows. A new series of hydraulic, self-dumping 1,500-cubic-yard scows is scheduled to begin replacing the old scows in 1978. The crane barge/clamshell dredge U.S. Goliath, which is equipped with a IVz- cubic-yard clamshell bucket, was built in 1969 and is the most recent addition to the dredging fleet. She is primarily used for removing large boulders and small shoals in the Gaillard Cut and also provides a floating heavy-lift capability of up to 90 tons. The drill boat U.S. Thor is a diesel, pneumatic-powered drill platform capable of mounting up to four drill towers. The Thor is employed in subaqueous drilling and blasting. Such blast fracturing is required in rock areas in order for the dipper dredge to excavate the material. The explosive currently used in these underwater blasting operations is 60 percent ammonium nitrate gelatin dynamite. Water-gel explosives are being tested to determine if they are adaptable to the underwater blasting operations in the canal. The most efficient and economicalj-ock breakage in the Gaillard Cut is achieved by drilling on 9-foot-by-9-foot centers and using a power factor of 1.5 pounds per cubic yard. Supporting this dredging fleet is a variety of tugs, launches, work floats, and lighter barges. The frequent movements of this support equipment and the continu- ous operations of the dredges and drill boat proceed without interference to transit- ing vessels. CONCLUSION In the future, the Panama Canal will require increased dredging to maintain the channel depth. Additional dredging will be required by the channel-improvement projects necessary to maintain the Panama Canal as one of the world's safest waterways and to increase the canal's capacity. The current dredging fleet has a record of successfully completing such projects. When augmented with a new dipper dredge, the new self-dumping scows, and a repowered and modified suction dredge in 1978, the dredging fleet will increase its efficiency and emergency capability for maintaining one of the most economically critical and militarily strategic water- ways in the Western Hemisphere. 41 [From the Congressional Record— Senate, Apr. 26, 1977] U.S. CANAL ZONE SOVEREIGNTY: CHRISTIAN SCIENCE MONITOR EDITORIAL CONFUSION CLARIFIED Mr. Helms. Mr. President, one of the features in the current massive propaganda campaign to win the support of the American people and Congress to accept the surrender of U.S. sovereign control over the Panama Canal and its protective strip of the Canal Zone has been editorials in some of our leading newspapers based on erroneous information. A recent example was published in the February 15, 1977, issue of the Christian Science Monitor, which supported the State Department's program for giving up the canal but perpetrated a serious error of fact on the legal status of the Canal Zone as an unincorporated territory of the United States. As such, the canal cannot be surrendered without the authorization of Congress (U.S. Constitution, Article IV, section 3, clause 2). Efforts for surrender without such authorization are attempted usurpa- tions of executive authority, which must not be permitted. Fortunately, such editorials as that cited are subject to the scru- tiny of many authorities well informed on canal matters. One of the most outstanding is Dr. Donald M. Dozer, professor of history emeritus of the University of California, Santa Barbara, and an eminent authority on Latin America whose numerous writings are authoritative. In a letter to the editor of the Christian Science Monitor on February 16, 1977, he stresses one major error in the editorial as regards the status of the United States as sovereign over the Canal Zone. As to such status, it should be noted that there was no doubt in the minds of eminent contemporary observers of the early 20th century Isthmian events. The British Ambassador, Lord James Bryce, in 1906 stated that the 1903 Treaty "ceded perpetuity" the Canal Zone to the United States — James Bryce, 'The American Commonwealth," revised edition, page 408. Mr. President, because the letter of Dr. Dozer should be of inter- est to all Members of the Senate at this time when the time for submission of a new canal treaty seems approaching, I ask unani- mous consent for it and the Monitor's editorial to which it refers to be printed in the Record. There being no objection, the material was ordered to be printed in the Record, as follows: Santa Barbara, Calif., February 16, 1977. The Christian Science Monitor, Boston, Mass.: I call attention to a serious error of fact about the legal status of the United States Territory of the Canal Zone in your editorial, "Canal talks: back to bargain- ing," in the Monitor of February 15. A little research in easily accessible source materials would have shown your editorial writer that in Articles II and III of the Hay-Bunau-Varilla treaty of 1903 Panama granted all sovereign rights over the Canal Zone "in perpetuity" to the United States for the price of $10 million to the entire exclusion of the exercise of any such sovereign rights by the Republic of Panama. Since the purchase was a clean bill of sale, the treaty contained no provision for a later renegotiation. So eager was Panama to provide the site for the benefit of her national economy that the Panama National Assembly ratified the treaty before the United States Senate 42 gave its consent. In addition the Panama National Assembly adopted other acts recognizing that they had ceded the Canal Zone to the United States. Both the United States Congress and the Supreme Court have recognized the transfer of the Canal Zone as a cession of sovereign rights to the United States in perpetuity. The leading case is Wilson v. Shaw 104 U.S. 24 (1907) in which the United States Supreme Court held that with the exchange of ratifications of the gurchase treaty of 1903 "ceding" the Canal Zone title to it passed to the United tates. This decision was reaffirmed as recently as 1972 when the Supreme Court denied certiorari in the case of United States v. Husband (R) 406 U.S. 935, 1972. This confirmed the ruling of the United States Circuit Court of Appeals for the Fifth Circuit which ruled that the Canal Zone is unincorporated territory of the United States and as such is subject to the plenary authority of the Congress. Article IV, Section III (2) of the Constitution, specifically gives Congress "power to dispose of and to make all needful rules and regulations respecting the territory and other property belonging to the United States." The status of the United States as sovereign over the Canal Zone has not been altered in any of the provisions of subsequent treaties between the two countries. Sincerely, Donald M. Dozer. [From the Christian Science Monitor, Feb. 15, 1977] Canal Talks: Back To Bargaining A determined and commendable effort to work out a new treaty with Panama, covering the Canal Zone and the interocean waterway, now is getting under way. This represents the Carter administration's first venture into the sphere of interna- tional negotiations, and the new President naturally is anxious to see it succeed. The U.S. team, headed by veteran diplomat Ellsworth Bunker, has been augmented by Washington lawyer Sol M. Linowitz, a man likewise dedicated to achieving a new agreement with Panama. Intermittently since 1964, the quest for an agreement has dragged on, but now Mr. Carter is hoping a new treaty can be completed by this coming June. This may prove optimistic on his part, considering the difficulties still ahead, but at least the mentioning of such a target date lends stimulus and encouragement to the delega- tions to get on with the task. Panama meanwhile has injected a note of uncertainty into the talks by suddenly removing its chief negotiator, Foreign Minister Aquilino Boyd, and replacing him with Nicolas Gonzales Revilla, the young Panamanian Ambassador to the United States, who has not had much direct contact with the discussions hitherto. Two major questions now remain to be ironed out. One is the final termination date for the new treaty, which means the date on which control of the canal and its zone passes to Panama. The two parties are not very far apart on this. The second is more difficult: U.S. access to, and defense of, the waterway once it is under Pana- ma's control. This matter of future American rights in the area inevitably involves an element of national pride on both sides, with resultant domestic political implications. One proposal, by Panama, is that guarantees of access and Canal Zone neutrality ought to be vested in the United Nations, but this may not go down well with the U.S. Senate which must ratify the treaty. Indeed, unless the negotiators are skillful in working out provisions acceptable to both sides, and unless the Carter administration is adept at justifying the settle- ment to the American people, treaty ratification could become a major issue. Lots of hard bargaining plainly looms ahead. Working in favor of a settlement that both capitals can approve, however, is the sheer need to solve the problem. Ambassador Bunker is not alone in believing that a new Panama treaty is imperative if future American relations with Latin America as a whole are to be warm and credible. Moreover, Panama never ceded sovereignty over the Canal Zone, so a mutual arrangement now must be found that enables Panama eventually to resume control, without impairing U.S. strategic interests or Panama's integrity as an independent nation. The temper of the times clearly requires revision of the 1903 pact, and the United States should not shrink from taking the essential steps to bring it about. 43 [From the Congressional Record— Senate, May 3, 1977] STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS By Mr. Helms: S. 1444. A bill to provide that the U.S. Canal Zone shall be represented by a Delegate to the House of Representatives; to the Committee on Armed Services. Mr. Helms. Mr. President, one result of the Panama Canal nego- tiations which some of us have been long predicting is the deterio- ration of the morale of the U.S. workforce in the Canal Zone. We must have U.S. citizens able and willing to fulfill the key positions if we hope to maintain the safety and practical operational capabil- ity of the canal for strategic and commercial maritime traffic. It does us no good to have sovereignty over the canal if we do not have a workforce that is ultimately loyal only to the United States. I regret to say that these predictions are becoming true. At a recent hearing of the House Subcommittee on the Panama Canal, held in the Zone, Canal Zone Gov. Harold R. Parfltt reported as follows: The Panama Canal workforce has always been characterized by a high degree of stability, but in 1976 the resignation rate was 30 percent over the average for the previous 9 years and 57 percent over the average for the previous three years. Prospective employees are wary in seeking employment with the Panama Canal when doubt exists as to the future security and tenure of their positions and the conditions which might prevail under a new treaty. One way which would contribute to a hopeful atmosphere in the Canal Zone, and a greater feeling of security, would be to provide for a nonvoting delegate to the U.S. House of Representatives from the Canal Zone. At the present time, U.S. citizens living in the Canal Zone — some of whom have lived there all their lives — have no representative in Congress to whom they can turn for a prompt hearing of Canal Zone problems. The bill which I am introducing would provide such a representative. The Canal Zone with its various installations and the canal are territory and property of the United States. Congress has always treated it as such and made all needful rules and regulations for the Canal Zone under article IV, section III of the Constitution. Congress has approved a Canal Zone Code, and has passed other legislation affecting the Canal Zone countless times. The U.S. Su- preme Court has upheld this legislation down through the years. There is no reason, therefore, why Congress, by legislation, cannot provide a nonvoting delegate to the House, just as it has done with the District of Columbia, Guam, and the Virgin Islands. At the present time, Congress has provided that the Government of the Canal Zone is headed by the Governors appointed by the President for terms of 4 years, its judicial branch is headed by a U.S. district judge for the Canal Zone. Its legislative branch is the Congress. This government is called upon to perform many duties of the State, city, and county government but has no permanent representative in Congress. The Canal Zone has a land area of 362 square miles. Its popula- tion is 44,198 of whom 39,200 are U.S. citizens. In contrast, the District of Columbia has an area of 61 square miles, and a popula- 44 tion of 756,510; the Virgin Islands have an area of 132 square miles and a population of 62,468; Guam has an area of 209 square miles and a population of 84,996. Only the Canal Zone does not have a nonvoting delegate. The Canal Zone has a strategic importance far greater than either the Virgin Islands or Guam, or even Alaska, or Hawaii, which for many years before becoming States had delegates in the Congress. Citizens living in the zone pay U.S. income taxes— thus creating a situation of taxation without representation. The Congress as the legislature for the Canal Zone faces many problems, some of them intricate. Arriving at wisely reasoned deci- sions requires the continuous presence of an elected delegate from the zone territory, familiar with the problems of its citizens. The bill which I am introducing today is virtually identical with S. 2570 which I introduced in the 94th Congress. It is identical with H.R. 1588, introduced in the House by Congressman Daniel Flood of Pennsylvania, who has long been a champion of the rights of the United States and of U.S. citizens in the zone. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record. There being no objection, the bill was ordered to be printed in the Record, as follows: S. 1444 A bill to provide that the United States Canal Zone shall be represented by a Delegate to the House of Representatives Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, DELEGATE FROM THE CANAL ZONE Section 1. The first section of the Act entitled "An Act to provide that the unincorporated territories of Guam and the Virgin Islands shall each be represented in Congress by a Delegate to the House of Representatives", approved April 10, 1972 (48 U.S.C. 1711), hereinafter in this Act referred to as the Act", is amended by striking out "and the territory of the Virgin Islands" and inserting in lieu thereof the following: ", the territory of the Virgin Islands, and the Canal Zone". ELECTION Sec. 2. Section 2(a) of the Act (48 U.S.C. 1712(a)) is amended— (1) in the first sentence thereof, by inserting "from Guam and the Delegate from the Virgin Islands" immediately after "The Delegate"; (2) by inserting immediately after the first sentence thereof the following new sentence: "The Delegate from the Canal Zone shall be elected by the citizens of the United States residing in the Canal Zone at a general election held in November 1978, pursuant to regulations established under section 4(b), and at a general election every second year thereafter."; and (3) in the second sentence thereof, by striking out "The Delegate" and inserting in lieu thereof "Each Delegate". EUGIBILrrY Sec. 3. Section 3(c) of the Act (48 U.S.C. 1713(c)) is amended by inserting "or possession" immediately after "territory". ELECTION PROCEDURE Sec. 4. Section 4 of the Act (48 U.S.C. 1714) is amended— (1) by inserting "(a)" immediately after "Sec. 4."; (2) by striking out "The legislature of each territory" and inserting in lieu thereof the following: 'The Legislature of Guam and the Legislature of the Virgin Islands"; and (3) by adding at the end thereof the following new subsection: copy oi 1978. Si 45 "(b) The Governor of the Canal Zone shall prescribe regulations for conducting general elections for the office of Delegate from the Canal Zone, and shall submit a such regulations to each House of the Congress not later than January 1, Such regulations shall take effect on March 1, 1978, unless either House of the Congress passes a resolution before such date which specifically disapproves of all or part of such regulations." PRIVILEGES OF DELEGATE Sec. 5. Section 5 of the Act (48 U.S.C. 1715) is amended— (1) by striking out "and the Delegate from the Virgin Islands" and inserting in lieu thereof the following: ", the Delegate from the Virgin Islands, and the Delegate from the Canal Zone"; and (2) by striking out "the Delegate from each territory" and inserting in lieu thereof the following: '^ach Delegate". SPECIAL ELECTION Sec. 6. The Governor of the Canal Zone shall conduct a special election for the office of Delegate from the Canal Zone not later than thirty days after the date of the enactment of this Act. Such Delegate shall be elected by the citizens of the United States residing in the Canal Zone on the date of such special election. The term of such delegate shall commence not later than ten days after the date of such special election and shall end upon the commencement of the term of the person elected Delegate in the general election in 1978. 46 [From the Congressional Record— Senate, May 24, 1977] THE PANAMA CANAL Mr. Hatfield. Mr. President, in a continuing effort to keep Or- egonians apprised of major issues being debated in Congress, I have developed a series of background statements which attempt to objectively review each topic in some detail. Recently we have heard of continuing developments in the negotiations governing a new treaty with Panama over the canal issue. With the idea that it might be of some interest given the timeliness of the subject, I ask unanimous consent that the backgrounder I have just recently completed on the Panama Canal issue be printed in the Record. There being no objection, the backgrounder was ordered to be printed in the Record, as follows: Hatfield Backgrounder: The Panama Canal Few controversies in the history of our country have been as prolonged, complex, or emotional as that surrounding the Panama Canal issue. For over half a century, arguments have raged over the way the U.S. came to build, own and control this unique passage between the seas. Now, as Congress approaches considerations of a new treaty governing the Panama Canal, it is important that concerned citizens be informed of the major issues surrounding this historic controversy. This back- grounder is an effort to review those issues and to lend perspective to the debate over a new Panama Canal treaty. On a cool Washington evening at 6:40 p.m. on November 18, 1903, Secretary of State John Hay took a pen from an inkstand that had belonged to Abraham Lincoln and signed a treaty with the Envoy Extraordinary and Minister Plenipotentiary of the new Republic of Panama. The pact authorized the construction and operation of a most remarkable project — a canal linking the Atlantic and Pacific Oceans to stretch across and intersect the fledgling nation of Panama. The signing of the Hay- Bunau-Varilla treaty was the final act of an extraordinary series of historical events which bear importantly on efforts to negotiate a new treaty. More than anything else, it was the political and diplomatic posture of the United States during this period which has resulted in the Panamanian demands during this century for a new, more equitable treaty. French Panama Canal Co. The U.S. was not the first to attempt to build a passage between the Atlantic and the Pacific. Twenty years earlier the French Panama Canal Company had been organized under the leadership of Ferdinand de Lesseps, known worldwide as the architect of the Suez Canal. After seven years of work, 14,000 workers had dug some eleven miles of canal — half the total necessary — through the Isthmus of Panama, then a part of Colombia. But the company failed in its efforts, after a series of disasters, including outbreaks of malaria, yellow fever, floods, landslides, and finally charges of political corruption and bribery. Financing of the company collapsed. The New Panama Canal Company was formed to liquidate the machinery, build- ings and contracts of its predecessor. By December, 1898, a strong interest had developed in the United States for an interoceanic canal. The Company's directors sought to find a market in the United States for these properties and for the vision of joining the oceans together to facilitate American trade. For the next four years the U.S. Senate deliberated over the route of a new canal. Many thought that the disastrous conditions encountered by the French in the Isthmus of Panama should be avoided at all costs in favor of a new canal through Nicaragua. By the spring of 1901 it appeared that the pro-Nicaraguan forces in the Senate would prevail in the debate. At this point a young Frenchman, Philippe Bunau-Varilla, who had worked as an engineer in the ill-fated French canal effort, became a key figure in the maneuver- ings. Relentless and single-minded, he set about to convince the U.S. that not only was the route through Panama the appropriate one, but that the $40 million worth of abandoned French equipment should be purchased to continue the Panamanian effort. 47 77u? Hay-Herran Treaty On June 19, 1902, a heated debate began in the U.S. Senate over the respective merits of the Panama and Nicaragua routes. Thanks in part to the legislators' concern over volcanic activity in Nicaragua, and in even larger measure to the tireless urging of Bunau-Varilla and his supporters, the Senate approved the Panama route. The action directed President Theodore Roosevelt— a strong advocate of an interoceanic canal — to seek an agreement with Colombia for "perpetual con- trol" of a canal zone in Panama. But Colombia had her own negotiating position. Among other demands, she wanted to lease the zone to the U.S. for one hundred years and to keep a specific acknowledgement of her sovereignty in the area. Moreover, she wanted the canal zone to be neutral, with Colombia responsible for its defense (the U.S. would only be allowed to land troops at Colombia's request). Finally, she sought separate Colombi- an and American courts to deal with Colombians in the zone who violated American laws. On March 17, 1903, the Senate ratified the Hay-Herran Treaty which encom- passed some (but by no means all) of the Colombian demands. The Treaty was soundly condemned in the Colombian Congress as a sellout of Colombian interests. Colombia demanded more money as an initial payment and more rights in the zone. President Roosevelt responded in a heated note to Secretary Hay in the summer of 1903: "Make it as clear as you can to Beaupre (U.S. Minister of Colombia). Those contemptible little creatures in Bogota ought to understand how much they are jeopardizing things and endangering their own future." The Colombian Senate was unintimidated. Calling it a shameful sellout, the Hay- Herran Treaty was rejected on August 12, 1903. Panamanian revolt Although the rejection of the Treaty infuriated Roosevelt, Bunau-Varilla was determined that the prospects for a Panamanian route be kept alive. For the next four months he met with various American leaders, including Roosevelt and Hay. He became convinced that a "revolt" was necessary to break the thin political cord which connected Panama and Colombia — and set out to create one. Some 500 Colombian soldiers stationed on the Isthmus had not been paid in months. For the sum of $100,000 ($200 per soldier), Bunau-Varilla persuaded the military to go along with the planned uprising. On the designated day— November 3, 1903 — insurgents and soldiers declared the revolution in Panama City. While not officially endorsing the coup, U.S. officials had been forewarned. U.S. vessels had been dispatched to the harbor of Col6n. With the guns of the U.S.S. Nashville trained on them from the habor, the remaining loyal Colombian troops withdrew and the bloodless revolt ended with scarcely a shot being fired. Many historians believe that the U.S. cooperation with Bunau-Varilla in initiat- ing the successful secession of Panama from Colombia was in clear and direct violation of the 1846 compact between the U.S. and Colombia. While Roosevelt's part in the revolt is not entirely clear, he later took credit for the coup, asserting that it was a necessary step toward building the canal. The Panamanian flag of independence (sewn together some weeks before by Mme. Bunau-Varilla in High- land Falls, N.Y., with silk purchased at Macy's) was raised in Panama City. The nation of Panama was promptly recognized by the U.S. Immediately thereafter Bunau-Varilla (still in the U.S.) created the title of Envoy Extraordinary, and then assumed it himself. Using his self-conferred title, Bunau-Varilla proceeded to draft the treaty which largely governs the Panama Canal to this day. The terms were essentially those of the Hay-Herran Treaty, which had been flatly rejected by Colombia four months before. The differences were much more beneficial to the U.S. Under the Hay- Bunau-Varilla Treaty of 1903 the size of the Canal Zone was increased by 60 percent, to a width of ten miles. The U.S. was allowed to station armed forces where it wished. To define jurisdiction in the Zone, Bunau-Varilla drafted a simple formu- la: "The Republic of Panama grants to the United States all the rights, power and authority within the zone mentioned . . . which the United States would possess and exercise if it were soverign of the territory ... to the entire exclusion of the exercise by the Republic of Panama of any such sovereign rights, power or authority." With this document, the 12-day-old country of Panama signed away a portion of itself to the United States. No Panamanian was present at the historic moment. The cost to the U.S. was $10 million initially, followed by an annual sum of $250,000. 48 The energetic Frenchman, Bunau-Varilla, had realized his dream. A passage between the oceans would be finished at last. But the manner in which the U.S. gained rights to the Panama Canal under the treaty remains one of the great controversies— and dramas — of U.S. history. Negotiations Given the questionable circumstances surrounding the establishment of the Canal Zone, it is not surprising that the Panamanians have been seeking a new treaty. In 1936 and again in 1955 the U.S. agreed to revise the agreement, increasing Pana- ma's annual fee and relinquishing the right of the U.S. to intervene in the internal affairs of Panama. These revisions, however, did not remove Panama's most fundamental objection to the 1903 treaty — its allowance for the U.S. to exercise power as "if it were sover- eign" over some 500 square miles of Panamanian territory. Dissatisfaction with the present situation erupted in demonstrations in 1959. Again in 1964 riots broke out in Panama in which three United States servicemen and 21 Panamanians were killed. Negotiations toward a new Panama treaty begin in January, 1965, and have continued under Presidents Johnson, Nixon, Ford and Carter with little progress thus far. In February, 1974, Secretary of State Kissinger and Foreign Minister Tack of Panama signed a statement of principle which provides the basis for the present negotiations. REASONS FOR NEGOTIATIONS Panama's interests Panamanians view the 1903 treaty as an anachronism — one of the last vestiges of U.S. "gunboat diplomacy" and colonialism. Their main objections to the 1903 treaty are as follows: The U.S. exercises power as "if it were sovereign" over the most valuable section of Panamanian territory. The U.S. maintains a full-fledged government in the Zone including its own police force, courts and jails to enforce U.S. laws on Panamanian as well as U.S. citizens. The Zone divides the country in half, seriously hindering Panama's urban and economic growth. Panama has no voice in the operation of the Canal and does not receive an equitable share of the economic benefits from the Canal operations. The U.S. continues to maintain a formidable military presence in the Zone. The U.S. controls all facilities servicing Panama's deep water ports and limits Panamanian participation in commercial enterprises in the Zone. U.S. interests The goals of the U.S. in the negotiations are to develop a new treaty relationship with Panama which would: Provide a long-range assurance of a secure, efficient canal that is open to world shipping without discrimination. Reduce sources of friction between the U.S. and Panama over past policies. Clearly show to the rest of Latin America U.S. interest in cooperation rather than confrontation in solving differences of opinion which affect U.S.-Latin American relations. STATUS OF NEGOTIATIONS The U.S. and Panamanian negotiations have reached agreement on three main points. As described by Ambassador Ellsworth Bunker, the chief U.S. negotiator, the provisions agreed upon are: (1) Jurisdiction over the Canal Zone will pass to Panama through an agreed transition, with the United States returning the right to use those areas necessary for the operation, maintenance and defense of the Canal; (2) Operation of the Canal during the duration of the treaty will be primarily the responsibility of the United States — with growing participation by Panamanians at all levels in the day-to-day operations of the Canal in order to prepare for Panama's assumption of this responsibility at the time the treaty terminates; (3) Defense of the Canal will be primarily the responsibility of the U.S. during the life of the treaty, with Panama granting "use rights" for this purpose and with Panamanian participation in accordance with its capabilities. Details have yet to be worked out on numerous unresolved issues: (1) The duration of the treaty, which the Panamanians have been unwilling to extend beyond the year 2000; 49 (2) The amount of economic benefit to be derived by Panama; (3) The right of the U.S. to expand the size of the Canal in the future if it wishes to do so; (4) A formula acceptable to both Panama and the U.S. concerning the ongoing neutrality of the Canal after the treaty ends; and (5) The size and location of the land and water areas needed for defense and operation of the Canal. MAJOR ISSUES If these issues could have been resolved easily, a new treaty would have been signed long ago. But strong arguments can be made on both sides on a number of points. The economic issues The Panama Canal has long been of great value to U.S. commerce and is a vital artery for world trade. In recent years about 17% of all U.S. export and import ocean-going business have used the Canal. Of the total cargo tonnage transiting the Canal each year, about 35% goes to, or comes from, ports in the U.S. The Canal is even more important to the commerce of Panama and other Latin American nations. More than 30% of Panama's foreign exchange earnings and 13% of its Gross National Product are attributed today to the Canal. More than 50% of the foreign trade of Nicaragua, El Salvador and Ecuador moves through the Canal. In recent years, however, the share of Panama's GNP attributable directly or indirectly to the Canal has slightly diminished as other sectors of Panama's econo- my have expanded. At one time, for example, over one-third of Panama's GNP was derived from the Canal. While the Canal continues to be an important avenue of international trade, two factors may affect the future importance of the Canal for world trade. First, tolls for the use of the Canal must be increased in the future for the waterway to continue to be economically viable. Tolls were little changed until 1974 when they were increased 20%. It is expected they will have to be increased again in the years ahead, thus making the Canal less competitive with other international trading routes, such as transcontinental railroad shipments. The second factor affecting the future economic importance of the Canal is the increasing size of ships. Neither supertankers nor large container ships can present- ly use the Canal. As a result, the Canal may become less important in recent years as the trend in larger shipping continues. It is clear for the present, however, that any prolonged disruption in Canal traffic would cause serious disruption in world trade and would be a serious economic blow to Panama. Opponents Critics of a new treaty claim that the best way to insure the continued economic importance of the Canal is for the U.S. to maintain its control over the waterway. The U.S. should begin a modernization program to expand the Canal, thus increas- ing the economic benefits. Opponents go on to point out that the Canal is a highly sophisticated operation which requires U.S. technological expertise. It can never be adequately maintained by a small, underdeveloped country with few technical experts and inadequate financial competence. Nor could Panama undertake the task of modernizing the Canal, opponents claim. Left to control the Canal, Panama would probably be forced to increase tolls, thus driving away carriers by making alternative world routes more feasible. Bankruptcy and political unrest would follow. According to oppo- nents, a Canal closure would have serious repercussions on various sectors of the U.S. economy, such as the coal industry in West Virginia or the grain belt in the Midwest. Proponents Those who advocate a new treaty point to a recent report indicating that only 1 percent of the U.S. GNP passes through the Canal. Moreover, a Library of Congress study states that "Many alternative trade routes exist for the most important commodities, and more would become economically competitive if the Canal were closed." Proponents of a new treaty claim that continued U.S. dominance over the Canal will not insure long-term economic stability. On the contrary, if the U.S. insists on maintaining the status quo it runs the risk of creating increased political discontent in the region. This could result in damage to, or the closing of, the Canal. A cooperative management of the Canal, resulting from a new treaty, would best 50 assure the continuing economic stability of the waterway and at the same time neutralize present resentment in Panama over U.S. dominance in the region. Advocates also point out that Panamanians already comprise more than 80 per- cent of the employees of the U.S.-owned Panama Canal Company (which has the responsibility to operate the Canal). While only a small number of these individuals are presently in management positions, after a period of U.S. training Panamanians will be able to share more equally in the technical burden of operating the Canal. By being reasonable, proponents claim, a new treaty can symbolize a new economic partnership between the U.S. and Panama which insures world carriers of an open, neutral Canal for many years. The legal issues Ever since the signing of the 1903 treaty, questions have arisen over the rights the U.S. is entitled to exercise within the Canal Zone. Some have attempted to compare U.S. interests in the Zone with our historical claims to Alaska and the Louisiana Purchase. The debate over the question of U.S. sovereignty has become more pronounced as the final outline of a new treaty becomes clearer. Opponents Critics of present negotiations argue that the Canal Zone and the Canal itself are legally acquired territory, paid for and developed by the United States. With the 1903 treaty and the payment of $10 million, the U.S. replaced Panama "in perpetu- ity" as sovereign in the Zone. Both the 1936 and 1955 treaties reaffirm this U.S. control over the Zone. Moreover, opponents claim, conveying rights to the Canal to Panama would be comparable to returning Alaska to Russia or the Louisiana Purchase to France. Indeed, U.S. courts have held on a number of occasions that the Canal is U.S. territory. In the 1907 case of Wilson v. Shaw, for example, the Supreme Court of the U.S. said: "It is hypercritical to contend that the title of the United States to the Canal Zone is imperfect and that the territory described does not belong to this nation because of the omission of some of the technical terms used in the ordinary conveyances of real estate." Proponents Advocates of a new treaty strongly disagree with this view. They believe that a careful reading of the 1903 treaty reveals that the U.S. clearly does not have sovereignty over the Panama Canal. The $10 million payment was not for the purchase of the Canal Zone, but in compensation for rights, power, and authority the U.S. would exercise there. Moreover, the 1903 treaty is clearly different from the conveyance of the Louisiana Purchase or the buying of Alaska because in the Canal Zone the U.S. acts under the treaty only as "if it were sovereign." If the U.S. were sovereign, advocates point out, anyone born in the Zone, regard- less of the nationality of his or her parents, would be an American citizen. But persons born in the Zone of Panamanian parents are considered by our government to be Panamanians, not Americans. If the U.S. were sovereign, moreover, the American flag alone would fly in the Zone, and the Canal Zone would have dele- gates in the U.S. Congress. But our flag flies along with the Panamanian flag in the Zone, and there is no representation in Congress. As for legal precedents, advocates point to other court decisions which make indefinite the question of ownership and sovereignty. For example, in Luckenbach Steamship Co. v. United States the Zone's ports are considered foreign ports for the purposes of transportation of the mail. And in a 1948 case (Vermily Brown v. Connell) the Supreme Court referred to the Zone as "admittedly territory over which we do not have sovereignty." The strategic defense issues The Panama Canal has long been considered by military experts as strategically important to the U.S. because of our dependence on the sea for large-scale logistical support. It has been used effectively for the rapid shifting on military forces and supplies between the oceans. The Canal, in short, has provided flexibility to our defense operations in the past. The Canal's strategic importance has diminished, however, with the advent of aircraft carriers and nuclear submarines which are too large to use the waterway. In addition, the Canal's vulnerability to attack is one reason that U.S. policy planners have come to prefere alternative routes for the movement of military forces and equipment. There is today in Panama an American military force of about 22,000 persons, including dependents. They are there to carry out the U.S. responsibility under the 51 1903 treaty to defend the Canal. The actual combat and support forces total about 9,400. For the use of 14 military bases in the Zone, the U.S. pays Panama $1.9 million annually. By comparison, we pay $20 million annually for three bases in Spain. Opponents Those opposed to a new treaty believe strongly that the only way to insure that the Canal remains open to international traffic is for the U.S. to retain responsibili- ty for the defense of the Canal. They argue that the continuing importance of the Canal to U.S. interests is too vital to be left in the hands of the Panamanians. History has shown time and again, they point out, the importance of flexibility in military maneuvers, and the Canal provides such versatility. In addition to such logistical considerations, the U.S. presence in the Canal serves as a strategic deter- rent to increasing Communist influence in Latin America and as a stabilizing factor for pro-U.S. governments in the region. Moreover, opponents add, Panama's small National Guard is totally incapable of defending the Canal from attack. Some opponents also assert that the present Panamanian regime of General Omar Torrijos is a Communist-oriented government dominated by leftist radicals and influenced by Castro's Cuba. Panama is a land of endless political intrigue and turmoil. To convey rights and defense of the strategic Canal — the "jugular vein of the Americas" — to an unstable, undemocratic government would be the height of folly, according to treaty critics. Proponents Those advocating a new treaty dismiss these arguments as holdovers of the "gunboat diplomacy" mentality. They claim the Canal is clearly not as strategically important as it once was. According to them, three factors remain the key to understanding the Canal's diminished importance: (1) It is extremely vulnerable to attack, not only by the sophisticated power of modern weaponry, but by a few skilled saboteurs as well. (2) The U.S. now relies less on naval mobility and more on fleets operating independently in the Atlantic and Pacific Oceans. (3) The inability of large aircraft carriers and nuclear submarines — the backbone of our oceanic defenses — to transit the Canal. Proponents point to Defense Department estimates that 100,000 U.S. troops and intense logistical support would be necessary to defend the 50-mile long Canal from direct attack. This commitment would have to be continuous— and would cost many billions of dollars. They add that because of the Canal's vulnerability to attack, alternative military routes have long since been established in the event of hostil- ities. As for the political leanings of the Torrijos government, proponents disagree that the present government is Communistic. They point to the fact that no responsible U.S. official either in the Department of State or the Department of Defense have said that Torrijos is a Communist. The present government is strongly nationalistic and comprises a number of political elements of both the left and the right. Indeed, proponents point out, Panama encourages a thriving private sector in the local economy. Advocates believe that the Canal issue transcends the ideologies of Pana- manian governments. All past governments, be they military or civilian, have made clear their dissatisfaction with the treaty. A new treaty with Panama, emphasizing shared responsibilities over defense of the Canal, is the surest way of removing the major issue being exploited by the Communists, proponents argue, thus strengthen- ing U.S.-Latin American relations generally. CONCLUSION In recent years, the Panama Canal issue has unfortunately been a victim of oversimplified logic. Opponents of the present negotiations decry the "give-away" of the Panama Canal while others in Latin America threaten violence to destroy this last vestige of American imperialism. Nationalistic emotions on both sides have been overheated and exploited for political reasons. The resulting delay in negotia- tions has seriously threatened the shaping of a workable compromise which would protect interests of both the U.S. and Panama. The choice for the U.S. is not between a new treaty and the status quo. The choice is between bringing the concessions extracted from Panama in 1903 into line with modern realities, or facing some unsettling and possibly violent alternatives. Those who oppose a new treaty must then be asked to be held accountable for the possible radicalization of Panamanians and indeed other Latin American nations. Those opposed to a new treaty must be willing to commit potentially 100,000 troops and tens of billions of dollars to Panama indefinitely, in order to protect the Canal 52 from hostile elements in that region of the world. Those opposed to a new treaty must be prepared to deal with the growing estrangement of Latin American nations from an intransigent U.S. government — which encourages national independence on the one hand and vet stubbornly refuses to foster such independence in the case of Panama. Those who oppose the new treaty must ask themselves why they are unwilling to consider compromising with one of America's strongest historical allies in Latin America, and they must be held responsible if that alliance is broken by our inability to deal fairly with a former friend. We live in a far different world than that of Teddy Roosevelt and Philippe Bunau- Varilla. As we approach the final decades of the 20th century the last of the major colonial empires — that of Portugal in Africa — has now been dismantled. As our industrial base has expanded, we have become more dependent on raw materials from other nations of the world and on constructive relationships which insure peace and guarantee the free flow of trade. We have become more dependent on alliances, and— in a nuclear age — less able to use the threat of force. In this modern age the 1903 treaty is an anachronism — a relic from a strangely attractive, yet vastly more simple, age. But a new treaty, properly drafted, will not exclude the U.S. from operation or defense of the Canal. On the contrary, I believe it will help to insure an open, neutral Canal for many years into the future. Both the U.S. and Panama have a great deal at stake in the negotiations which are now being conducted. Both parties have an essential interest in keeping the Canal open. Both parties would clearly be hurt if the Canal were closed. The present negotiations are a test of whether two nations can work as partners in an enterprise of great importance to each of them. If we ignore the opportunity for cooperative change, or if we simply oppose a new treaty through neglect of the facts, our future relations with Panama will become vastly more forbidding and complex. But if we grasp this opportunity for constructive change we can both protect our vital interests in the Canal and strengthen our political and diplomatic influence with the emerging nations of Latin America for decades into the future. 53 [From the Congressional Record— Senate, May 27, 1977] THE PANAMA CANAL CAN BE DEFENDED Mr. Helms. Mr. President, the U.S. Department of State has been carrying on an extensive propaganda campaign asserting that the Panama Canal is indefensible. The purpose of this campaign is to frighten U.S. citizens into supporting the surrender of our sover- eignty and rights in the Canal Zone. The tactics of the State Department are deplorable, especially inasmuch as the canal has been successfully defended throughout many wars. For example, during World War II, the Nazi govern- ment had spread its influence in many countries in Latin America, and its spies and operatives moved freely throughout the hemi- sphere. Yet proper precautions were taken in the Canal Zone, and the attempts at sabotage were thwarted. There is no doubt today among the military men with whom I have talked that the canal can be defended successfully if the proper steps are taken. The canal is protected against nuclear attack by the same nuclear umbrella that protects our entire Nation; guerrilla attacks and rioting require only certain precau- tions and preparations of which we are fully capable. Now the U.S. Defense Department has confirmed what has been known all along. The canal can be defended. In a statement to Virginia Prewett, one of the most knowledgeable and experienced reporters we have reporting on the Latin American scene, the Defense Department confirmed not only that we could defend the canal, but also that we are better prepared to do so today than we were in 1964 when Communist-inspired riots broke out. In her "Hemisphere Hotline" released today, May 27, Miss Prewett reports: Acting on a leak, Virginia Prewett last week formally asked the Defense Depart- ment to confirm or deny a report that U.S. forces there, commanded by Lt. Gen. Dennis McAuliffe, can indeed defend the Zone and Waterway from "guerrillas" and/or "rioters erupting into the Zone." After due consultation with the powers- that-be, the official spokesman told Prewett that Gen. McAuliffe's command indeed can and will do just that. A hint at the Pentagon shift came when Gen. McAuliffe, in a recent interview in Mexico, was asked about the Canal's defensibility. He replied that his 193rd Brigade in the Zone, some 7,000 men, are better trained and equipped than U.S. forces there in 1964 at the time of outbursts in the area. And that they can defend the Zone and waterway from any attack. Mr. President, Virginia Prewett also points out in her "Hotline" that another dubious treaty rationale put forward by U.S. officials has also been weakened — and this time by the Panamanian dicta- tor, General Torrijos himself. The State Department has been claiming that the new treaty is needed because "all of Latin Amer- ica" is demanding that the canal be handed over to Panama. Mr. President, I know from my own personal experience in Latin America, and my private conversations with Presidents and foreign ministers of some of the most important countries in the southern continent that most of Latin America definitely opposes handing over the canal to a weak country like Panama. The idea that South America wants us out of the Canal Zone is a myth manufactured in the State Department. 54 But now, as Virginia Prewett points out, Torrijos himself has admitted that he is under pressure from South American govern- ments that think the United States is giving away too much to him. Indeed, he is supported only by Mexico, Costa Rica, Colombia, and Venezuela — and incidentally, the last three have a special client status because of treaties with Panama by which they hope to get favorable concessions if Panama is given the canal. Mr. President, since Miss Prewett's entire report contains many interesting details about the situation in Panama, I ask unanimous consent that it be printed in the Record. There being no objection, the report was ordered to be printed in the Record, as follows: [From Hemisphere Hotline Report] Defense Department Calls Canal "Defensible" Washington, D.C.— The Pentagon— which would have to have had approval from the Carter White House to do so, is reversing a long-standing State Department argument for a concessionary new Panama Canal treaty. The Department of De- fense nowadays is quietly saying that the U.S. military can indeed defend the Canal and Zone against any attack. Apparently, it has occurred to somebody in the administration that if Pres. Carter gets a new treaty including the U.S. right-to-defend, as he promised in his cam- paign, it should not be said U.S. forces are unable to defend the Canal. Henry Kissinger in 1975 got the Ford White House to make the Pentagon go along fuzzily with the State Department's opposite contention. Acting on a leak, Virginia Prewett last week formally asked the Defense Depart- ment to confirm or deny a report that U.S. forces there, commanded by Lt. Gen. Dennis McAuliffe, can indeed defend the Zone and waterway from "guerrillas" and/ or "rioters erupting into the Zone." After due consultation with the powers-that-be, the official spokesman told Prewett that Gen. McAuliffe's command indeed can and will do just that. A hint at the Pentagon shift came when Gen. McAuliffe, in a recent interview in Mexico, was asked about the Canal's defensibility. He replied that his 193rd Brigade in the Zone, some 7,000 men, are better trained and equipped than U.S. forces there in 1964 at the time of outbursts in the area. And that they can defend the Zone and waterway from any attack. Torrijos' personal Canal Treaty negotiator, Panama's Romulo Bethancourt, as- sailed Gen. McAuliffe, saying he had contradicted a 1976 stance of U.S. Joint Chiefs Chairman Gen. George S. Brown. In Hill testimony then, Brown had inferred grave perils from guerrillas or mobs. But last week, exclusively, the DOD spokesman cheerfully told Prewett that McAuliffe's statement does not "run counter" to Gen. Brown's stance. As a by- product, the DOD destroys State's main rationale for making the new treaty. Panama Strongman Omar Torrijos has threatened in many ways and on many occasions that if he doesn't get the treaty he wants, guerrillas or direct attack (which he himself might lead) will overwhelm the Zone. He threatened violence recently in his own interview in Mexico. Kissinger put pressure on the White House to get Gen. Brown to head a very high-level U.S. mission to Panama in September 1975 to shore up the then-teetering Torrijos. From then on, State's thesis of Canal indefensibility had at least implied Pentagon concurrence. TORRIJOS AND THE BANKERS Prewett has also learned the following from a source many times proved reliable: Torrijos is heavily trying the patience of the big U.S. banking interests that have given major private-sector support for the Kissinger-type treaty. Torrijos, it is learned, must have around $65 million in new foreign loans by June 1, else important payrolls may go unpaid. Big New York banks already much exposed in Panama will arrange a package of some $300 million to pay debt service, with some money in an early installment for payroll purposes, it is learned. That is, if Torrijos will sign the kind of treaty he is now being offered. 55 That treaty, it has been understood from the time Carter took office, must allow the U.S. to play a continuing defense role in Panama — to "guarantee the Canal's neutrality" for as long as the waterway has a useful life. Carter named Amb. Sol M. Linowitz, energetic spokesman for the New York banks' point of view, as co-negotiator on a Kissinger-type treaty. After he began negotiating, it was pointed out that Linowitz held two highjx>sts with the Marine Midland Bank of New York, which has made loans to the Torrijos regime. Under fire for a conflict of interests, Linowitz resigned the bank posts. But the New York banking community in effect has in Linowitz a representative of their viewpoint on the present negotiating team. Ironically, a charge made by the pro-treaty camp is that the old treaty, made in the early 1900's, was too strongly influenced by U.S. financial interests. ANOTHER TREATY RATIONALE WEAKENS Another oft-heard rationale for concessions to Torrijos has been materially weak- ened by the Panamanian strongman himself. In an interview with several foreign women journalists, Torrijos, expansive and indiscreet, confessed that only four Latin American presidents are willing to go to bat for him. (They are those of Mexico, Costa Rica, Colombia and Venezuela.) He said that "rightist" South American governments think the U.S. is giving away too much to him — and that under their pressure, he will allow the U.S. a continuing right to intervene for defense "against third nations". He said, however, he would never sign a "written" agreement to allow U.S. intervention "in Panama" — presum- ably against rioters or guerrillas, his repeated threat. Torrijos' group has frantically tried, without success, to deny he ever made the statements. The Hotline has reported for some ten months that Torrijos was losing, and now has lost, most of Latin America's support. The State Department, in reference to Torrijos' admission that he now has real support from only four neighbor regimes, said that all Latin American governments are "on the record" as favoring the new treaty — at least "publicly". So much for the second rationale for the Kissinger-type Canal treaty. Torrijos' indiscretions to the lady reporters is of a piece with other private admissions and boasts his group has made on informal occasions, such as cocktail parties. When Rep. Robert Dornan (R, Cal.) was in Panama with a House Subcom- mittee earlier this year, a Torrijos official at a party boasted that when they get the Canal, they can "make a big profit" with preferential toll charges. If Japan ships Toyotas to New Orleans, the ship carrying them may pay very high, was the example. Russia and Cuba might get much better rates. Such concerns are hardly ever broached in the U.S. national press, though Wash- ington Post editorialists now admit that 48 "hard" votes in the Senate oppose the treaty. But protreaty legislators and their staff members are concerned. Delta Lines Pres. J. W. Clark told the Institute on Foreign Transportation and Port Operations in New Orleans May 6 that "Communist shipping has become a real threat to U.S. flag lines and our Western trading partners. "Their prime target seems to be the lucrative U.S. trades. Insidious rate-cutting practices, on a non-commercial basis, prompted even the chairman of the U.S. Federal Maritime Commission to initially endorse . . . giving the Communists rate advantages as a lesser evil to 'confrontation' between governments . . . Private steamship lines alone can hardly stand up to state-owned, politically motivated, raw maritime power." Russia and Communist China each have 100 ships under Panamanian registry, Capt. Clark said. 56 [From the Congressional Record— Senate, June 22, 1977] REMARKS OF THE HONORABLE ANGIER BIDDLE DUKE ON THE PANAMA CANAL TREATY Mr. Pell. Mr. President on June 11, former Ambassador Angier Biddle Duke delivered the commencement address to the 1977 graduates of the Ravenscroft School in Raleigh, N.C. Ambassador Duke chose as his subject the Panama Canal negotiations and expressed his hope that, just as young people started us on the road out of Vietnam, so also would today's young people help crystallize national opinion in favor of a new Panama Canal treaty. Ambassador Duke correctly recognizes the Panama Canal issue as a hemisphere-wide issue, not simply a bilateral matter with a small nation. Ambassador Duke, who served as Consul in Argenti- na and as Ambassador to El Salvador, knows Latin America ex- tremely well and has done a great service in putting the canal issue in its proper perspective. I commend it to my colleagues and ask unanimous consent that the full text of Ambassador Duke's address be printed in the Record. There being no objection, the commencement address was or- dered to be printed in the Record, as follows: Remarks of the. Honorable Angier Biddle Duke Thank you very much for that warm and friendly introduction. It is great to be back in North Carolina where my roots are and from whence many good memories have derived. When I was a boy every summer was spent with my grandparents in Durham and I still have so many friends and relatives in this state that this wonderful occasion is less like a visit than a homecoming. Now as to memories, I can clearly recollect my own graduation day, from St. Paul's School in Concord, New Hampshire. I remember the dress my mother wore, the fact that I had on a white stiff collar and the school tie; but for the life of me I cannot recall who the commencement speaker was, nor a word of what he had to say. So I am comfortable with you, members of the Ravenscroft graduating class, in the sure knowledge that both the speaker and his message are an acceptable and forgettable part of the background noises as the gears of your life are shifted today. I will try to keep you awake, and with that object in mind, I would like to share with you a concern of mine that within a matter of days will become an issue for our Congress and President to debate and decide. The outcome will affect your lives. Furthermore, the involvement of your generation may well be a determining factor in what evolves. It was the young people who started us on the road out of Vietnam; I am hopeful that the young today will help crystallize national opinion on the subject of" the Panama Canal. Now that the negotiations for a reasonable treaty with Panama over the future of the Canal are on the threshold of a successful conclusion, we are entering the critical period of Congressional consideration and decision. It would be tragic if at this very moment of breakthrough in achieving an equitable solution to this danger- ous problem, there would be miscalculation as to where our true national interests lie. As one who has been stationed in two Latin American posts, I was not surprised by Alan Reedy's May 22nd dispatch to the New York Times from Mexico City when he wrote that guerrilla wars in Central America owe much "to the unwillingness of ultraconservative and military oligarchies to contemplate even partial social reform." Similarly, there is danger here in the United States that we may short- sightedly permit our own ultraconservatives to determine what our policy is to be, thus foreclosing the golden opportunity for a fresh start in relations with our Latin and Caribbean neighbors. Upon this resolution of the Panamanian issue hinges the fate of our inter-American policy. Virtually every nation in the Americans and in the OAS supports the Panama- nian government's position. In vetoing the U.N. Security Council resolution support- ing Panama, the United States stood alone in the Hemisphere. It is time we appreciated that the waterway is much more a hemispheric rather than solely a 57 U.S. resource. Nine Latin nations depend more heavily for their ocean cargo trans- portation on the Canal than we do: El Salvador, Nicaragua, Ecuador, Peru, Chile, Colombia, Guatemala, Panama and Costa Rica. It is fair to state that most, if not all, U.S. companies that do business in Latin America want to see the Canal issue resolved. They realize that their trade and investment infrastructure all over the Southern continent would be seriously men- aced by our failure to come to terms on this issue. Henry Geyelin, President of the Council of the Americas, based in New York, has stated that 'a renegotiation of the treaty is the best way to create a more favorable investment climate.' On the other hand, we ought not to exaggerate the economic importance of Canal traffic, when it directly affects less than one percent of the U.S. gross national product. About one-tenth of all our exports and imports transit the isthmus. Less than four percent of the tonnage carried in U.S. intercoastal trade goes through the Canal, compared with 50 percent in 1924. More and more world traffic has been diverted from the facility, whose locks can accommodate neither supertankers nor giant container ships. The Canal's 1976 deficit was $8 million. It has been losing money since 1973. In the light of these facts, it would do injury to our larger interests if we narrowed our policy to considerations of Canal revenues. From the standpoint of professional military people, those who are responsible for our defense, know what is involved. On a recent visit to the Canal Zone, General George S. Brown, Chairman of the Joint Chiefs, emphasized the Defense Depart- ment s commitment to working out a new treaty. In this era of missiles and briefcase bombs, our strategy must reckon with "worst case" possibilities based on the Canal's nonavailability. The Pentagon recognizes that the Canal is vulnerable to sabotage by a single guerrilla with a few sticks of dynamite. Loss of one sluiceway could drain Gatun Lake, requiring two years to refill it. Since the start of World War II we have maintained virtually two separate navies in the Atlantic and the Pacific. 24 U.S. aircraft carriers are too big to go through the Canal. Nuclear submarines can use it, but must surface when doing so. Ought we not have learned from Vietnam that we can protect the Canal only if the Panamanian people accept our presence there? They would if the issue is defused with an agreement that both nations can feel is acceptable to their inter- ests. To protect the Canal's operations against a hostile countryside, according to Helen C. Low of the Overseas Development Council, "would call for a fortress regime which would itself rapidly become untenable." The point is that there is more likelihood of cointinuing passage in a friendly environment than under conditions of a growing state of siege. I am sure that the visceral opposition to any change in Canal Zone arrangements ignores military, political and economic realities of American self-interest. Governor Reagan's position has been that we own the Canal: "We bought it, we paid for it, we built it, and we intend to keep it." These views convey the hard line advanced by U.S. citizens who reside in the Zone. Their lobby got 37 Senators (enough to prevent ratification of any treaty, even though some are no longer in the Senate) to co- sponsor a 1974 resolution, and win passage by 264 members of the House, for an amendment that would have withheld funds from an official negotiating team in 1975. U.S. Canal Zone citizens have every right to be heard, but at this impasse in our hemispheric relations, they are our colonials who must not be allowed power of decision over the fortunes of the entire nation. For the first time in a decade of drift, a solution is at hand. As I see it, those of us who support President Carter and believe that through this hard-won treaty he can demonstrate to all Latin American countries that mutually beneficial partnerships are possible, should do what we personally can to assure chances for ratification. I hope you in North Carolina will do what you can to support ratification; and I assure you that it will make a difference if you let your Senators know how you stand. It is in the kind of commitment to such issues as this that determines the personality of a generation. How will yours be classified? As I look out over those of you gathered here to graduate, I wonder how many of you would call yourselves cynics — how many idealists, and how many a confusing mixture of both. I say confusing mixture, but for all I know that may describe the realists among you. As you probably already learned— there is a time for both attitudes: a time to question, punch holes and challenge ideas — I trust you will do that on the Canal issue — and, there is a time to believe, take that leap of faith and trust in others. For many years, esoteric concepts of cynicism and idealism were the privileged postures of the skeptical but hopeful teens. But no more. Those postures have been 58 transformed into applied attitudes to the harsh and unavoidable realities of life which are introduced to students such as yourselves through creative new curricula, community service programs, work opportunities and the media. No longer are you simply shown the problems and told that you will be responsible for the shaping of a new world order * * * just as soon as you get through algebra and French! You are engaged right now. You have been given the tools necessary to recognize problems, but, more importantly, you have been encouraged to have the guts to imagine solutions; to dare to change; to create an alternative. It takes curiosity to open your eyes; application and discipline to learn; tenacity and perseverance to live what you believe; imagination to see past your own secure vision and a sense of humor to put it all into perspective. It is now when you feel most keenly and painfully the need to do something — to have an impact on problems that you see; to get involved and feel that you are doing something meaningful with your life. On the other hand, it is also now when you feel the most overwhelmed by the magnitude and diversity of the world's problems and resort to withdrawal and apathy. It is now that you need encourage- ment, reinforcement and enlightenment as you find your way through this most confusing age in which you are growing, an age of dreams and hovering disillusion- ment. If you value yourself and believe you have something of importance to give others, then you will persist and strengthen your beliefs and values. So much emphasis has been placed on "independence" in this country lately that has had the effect of virtually celebrating loneliness and isolation. The great cry goes out: "I don't want to get involved.' For reasons of career and convenience many have opted not to engage or commit themselves and instead tend to accept what may come their way with no strings attached. "Not getting involved may solve the problem of immediate present time, but it will do little to enrich the quality of your lives, enhance your own growth or contribute to a better world around you. In many ways, you are a part of the flipside of the sixties and early seventies, when the liberal arts phenomenon gripped the college along with a heavy dose of student involvement in politics and the running of their own campus community. The ingredients were creative curricula, social conscience, political indignation, radical outbursts, free love and free pot. Everyone wanted to be heard and everyone had something to say. Campuses buzzed with talk, ideas, emotions. Students spent hour upon hour sharing concepts, testing each other's views and listening. Some of it was nonsense. Some of it meaningful. The liberal arts experience was heralded on the campus greens even more than in the actual Art History or literature classes themselves. The more traditional professions of banking, law and party politics smacked of the "war-making" establishment, so English, Sociology, Psychology and Religion were the majors of the day. Today, the secure professions are once more in demand and students seem to know from their first semester what they want to do and how they will major. Surely the uncertainty of changing world economics plays a part in this shift as well as a slight perspective on the casualties of the sixties; the liberal arts unem- ployed; the communal disasters; the burnt-out druggies; the war that went on anyway * * * You are indeed the flipside but I would make one suggestion — strike a balance. Set your sights for specific achievement goals but do not neglect time wellspent sharing ideas, learning about others, listening to the human voice as well as the click of the computer. Do not be tempted to measure yourself by grades alone but by the quality and sincerity of your striving. Be a critic or a cynic when it comes to pat ideas and learning by imitation. Be the idealist when only that mysterious act of faith in the human spirit will enable you to reach out your hand again and again in the face of rejection. [From the Congressional Record— Senate, June 30, 1977] FORMER CHIEFS OF NAVAL OPERATIONS ASK PRESIDENT TO RETAIN SOVEREIGNTY IN PANAMA CANAL ZONE Mr. Helms. Mr. President, the post of Chief of Naval Operations is one of the most critical in our Defense Establishment. Those who hold that post must be responsible for the combined operations of all our fleets. They must be men of extensive knowledge, both in strategy and operations; and they must have wide experience in sea command. In recent history, that post has been held by men of particular distinction and decisive judgment. The post of Chief of Naval Operations is indeed the highest naval position in our services. From its vantage point, the CNO must face the practical problems of strategy — the logistics of moving fleet and supply vessels, the problems of time and distance, and the strategic value of sea lanes and narrow waterways. That is why the advice given by a CNO has particular value when it concerns the Panama Canal. Mr. President, four distinguished former Chiefs of Naval Oper- ations have written to the President offering their combined judg- ment on the strategic value of the Panama Canal. In a period when armchair diplomats and guilt-burdened journalists are pronouncing the canal undefendable and of no strategic value, the voices of these distinguished public servants, who have given their lives and careers to the defense of our Nation, rise together to attest to the value — even the ever-increasing value — of the canal to the defense of this Nation and the free world. The four distinguished naval men are the following: Adm. Robert B. Carney, Adm. George Anderson, Adm. Arleigh Burke, and Adm. Thomas H. Moorer. Their terms of service cover the years 1953-55, 1955-61, 1961-63, and 1967-69. Admiral Moorer, of course, also served as Chairman of the Joint Chiefs of Staff from 1970 to 1974, and is at present the director of the Center for Strategic and International Studies of Georgetown University. This period of service lasting over 20 years covers one of the most important in our history, including two wars and times of peace. We have no reservior of experience and judgment concern- ing naval strategy more valuable to us than this group of men. This is what they say about the canal: Contrary to what we read about the declining strategic and economic value of the Canal, the truth is that this interoceanic waterway is as important, if not more so, to the United States than ever. The CNO's then go on to discuss the canal in the light of their experience in World War II, Korea, Vietnam, and the Cuban mis- sile crisis. Moreover, they point out the importance of retaining sovereignty: Sovereignty and jurisdiction over the Canal Zone and Canal offer the opportunity to use the waterway or to deny its use to others in wartime. This authority was especially helpful during World War II and also Vietnam. Under the control of a potential adversary, the Panama Canal would become an immediate crucial problem and prove a serious weakness in the over-all U.S. defense capability, with enormous potential consequences for evil. 60 The CNO's conclusion is especially important: The Panama Canal represents a vital portion of our U.S. naval and maritime assets, all of which are absolutely essential for free world security. It is our consid- ered individual and combined judgment that you should instruct our negotiators to retain full sovereign control for the United States over both the Panama Canal and its protective frame, the U.S. Canal Zone as provided in the existing treaty. Mr. President, this letter by the former CNO's was transmitted to the President by four members of this distinguished body, who have also given their wholehearted endorsement to it. The Senator from North Carolina had the honor of joining with the most capa- ble and distinguished chairman of the Appropriations Committee, Mr. McClellan, with the distinguished ranking minority member of the Judiciary Committee, Mr. Thurmond, and with my distin- guished colleague on the Armed Services Committee, Mr. Byrd of Virginia. The letters have been brought to the personal attention of the President. Mr. President, I ask unanimous consent that the letter of the former CNO's to the President, and the transmittal letter from the aforementioned Members of this body be printed in the Record. There being no objection, the letters were ordered to be printed in the Record, as follows: Washington, D.C., June 15, 1977. The President, The White House, Washington, D.C. Dear Mr. President: We are enclosing a most important letter from four former Chiefs of Naval Operations who give their combined judgment on the strategic value of the Panama Canal to the United States. We think you will agree that these four men are among the greatest living naval strategists today, both in terms of experience and judgment. Their letter concludes: "It is our considered individual and combined judgment that you should instruct our negotiators to retain full sovereign control for the United States over both the Panama Canal and its protective frame, the U.S. Canal Zone as provided in the existing treaty." We concur in their judgment and trust you will find such action wholly consistent with our national interest and will act accordingly. Sincerely, Strom Thurmond, Jesse Helms, John L. McClellan, Harry F. Byrd, Jr., U.S. Senators. June 8, 1977. The President, The White House, Washington, D.C. Dear Mr. President: As former Chiefs of Naval Operations, fleet commanders and Naval Advisers to previous Presidents, we believe we have an obligation to you and the nation to offer our combined judgment on the strategic value of the Panama Canal to the United States. Contrary to what we read about the declining strategic and economic value of the Canal, the truth is that this inter-oceanic waterway is as important, if not more so, to the United States than ever. The Panama Canal enables the United States to transfer its naval forces and commercial units from ocean to ocean as the need arises. This capability is increasingly important now in view of the reduced size of the U.S. Atlantic and Pacific fleets. We recognize that the Navy's largest aircraft carriers and some of the world's supertankers are too wide to transit the Canal as it exists today. The supertankers 61 represent but a small percentage of the world's commercial fleets. From a strategic viewpoint, the Navy's largest carriers can be wisely positioned as pressures and tensions build in any kind of a short-range, limited situation. Meanwhile, the hundreds of combatants, from submarines to cruisers, can be funneled through the transit as can the vital fleet train needed to sustain the combatants. In the years ahead as carriers become smaller or as the Canal is modernized, this problem will no longer exist. Our experience has been that as each crisis developed during our active service — World War II, Korea, Vietnam and the Cuban missile crisis — the value of the Canal was forcefully emphasized by emergency transits of our naval units and massive logistic support for the Armed Forces. The Canal provided operational flexibility and rapid mobility. In addition, there are the psychological advantages of this power potential. As Commander-in-Chief, you will find the ownership and sovereign con- trol of the Canal indispensable during periods of tension and conflict. As long as most of the world's combatant and commercial tonnage can transit through the Canal, it offers inestimable strategic advantages to the United States, giving us maximum strength at minimum cost. Moreover, sovereignty and jurisdic- tion over the Canal Zone and Canal offer the opportunity to use the waterway or to deny its use to others in wartime. This authority was especially helpful during World War II and also Vietnam. Under the control of a potential adversary, the Panama Canal would become an immediate crucial problem and prove a serious weakness in the over-all U.S. defense capability, with enormous potential conse- quences for evil. Mr. President, you have become our leader at a time when the adequacy or our naval capabilities is being seriously challenged. The existing maritime threat to us is compounded by the possibility that the Canal under Panamanian sovereignty could be neutralized or lost, depending on that government's relationship with other nations. We note that the present Panamanian government has close ties with the present Cuban government which in turn is closely tied to the Soviet Union. Loss of the Panama Canal, which would be a serious set-back in war, would contribute to the encirclement of the U.S. by hostile naval forces, and threaten our ability to survive. For meeting the current situation, you have the well-known precedent of former distinguished Secretary of State Qater Chief Justice) Charles Evans Hughes, who, when faced with a comparable situation in 1923, declared to the Panamanian government that it was an "absolute futility" for it "to expect an American admin- istration, no matter what it was, any President or any Secretary of State, ever to surrender any part of (the) rights which the United States had acquired under the Treaty of 1903, (H. Doc. No. 474, 89th Congress, p. 154). We recognize that a certain amount of social unrest is generated by the contrast in living standards between Zonians and Panamanians living nearby. Bilateral programs are recommended to upgrade Panamanian boundary areas. Canal modern- ization, once U.S. sovereignty is guaranteed, might benefit the entire Panamanian economy, and especially those areas near the U.S. Zone. The Panama Canal represents a vital portion of our U.S. naval and maritime assets, all of which are absolutely essential for free world security. It is our consid- ered individual and combined judgment that you should instruct our negotiators to retain full sovereign control for the United States over both the Panama Canal and its protective frame, the U.S. Canal Zone as provided in the existing treaty. Very respectfully, Robert B. Carney, George Anderson, Arleigh A. Burke, Thomas H. Moorer. 62 [From the Congressional Record— Senate, July 26, 1977] ARTICLE IV, SECTION 3, RESTRAINS U.S. NEGOTIATIONS ON PANAMA CANAL Mr. Helms. Mr. President, the issue of the Panama Canal is one of great complexity. Factors involved include international rela- tions, defense, commerce, and both international and national stra- tegic goals. But the fundamental issue is the important issue: whether the dismemberment of the integrity of U.S. territory can be initiated by the executive branch without the consent of Con- The framers of the Constitution wisely gave to "the Congress" the "power to dispose of and make all needful rules and regula- tions respecting the territory or other property belonging to the United States/ in article IV, section 3. I say "wisely," because there is no issue more sacred and important to the people of a nation than the territory of the nation itself. We all know that the idea of a nation is not necessarily defined by geography; yet the concept of the freedom and independence of nations is virtually identified with specific boundaries that can be defended against attacks of violence and other derogations of integrity. Such is the doctrine of national sovereignty, that is, the posses- sion of supreme and independent political authority. An attack upon a nation's sovereignty, whether it is a military attack or merely an erosion of authority, is an attack upon the very exis- tence of the nation to whatever degree. Therefore, whenever pro- posals arise to alter national boundaries, the people themselves must be involved to the maximum degree provided by the constitu- tional processes. If a nation is conquered in battle, then boundary changes can and have been imposed without the consent of the people; but a nation that is free and independent cannot permit such an imposi- tion either by force or threat of force. The people rightly view such attempts with suspicion and hostility. I think that it is highly significant that, in the case of the Canal Zone, the overwhelming proportion of the American people are steadfastly opposed to giving up ownership and control of the Panama Canal. AMERICAN PEOPLE OPPOSED Moreover, the opposition is steadily rising. The respected polling organization, Opinion Research Corp., of Princeton, N.J., took a nationwide poll a few weeks ago for the Institute of American Relations. This poll showed 78 percent of the scientific sample opposed to the giveaway. The same poll 1 year ago showed only 75 percent opposed, and 2 years ago, only 68 percent. This is a statisti- cally significant increase, and parallels the increasing public awareness of the proposed giveaway as indicated in the same poll. This is not to say that national boundaries are immutable. Con- ceivably, there are times when the boundaries can be extended or diminished in the national interest. Yet the issue is so important that one man, the President of the United States, should not take upon himself the responsibility of initiating it. It is particularly important that the disposition of U.S. territory originate in Con- 63 gress, not in the Executive, because the interests of all the States are affected. The checks and balances which are built into the congressional system — the compromise between representation of States, and representation of population, the varying terms of office and political accountability, the interplay of political parties and philosophical coalitions — all serve to insure that a national consensus is achieved and that proper compromises are effected where necessary. THE CONGRESS HAS POWER This is why article IV, section 3, says that "the Congress" shall have power to dispose of territory belonging to the United States. "The Congress," needless to say, includes both Houses. This is not a matter for the Executive to initiate or to decide, or even for the Executive with the consent of the Senate alone. For the disposition of territory and property belonging to the United States is fundamentally a domestic matter, not primarily a matter of foreign relations. In a secondary sense, it is obvious that the territory, when disposed of, will devolve upon a foreign nation. But until it is disposed of, it remains domestic territory, and Con- gress retains not only the power to dispose of it, but also the power to make all needful rules and regulations respecting it. Indeed, Congress functions both in theory and practice as the legislature for unincorporated territories. In this case, clearly, Congress has continually acted as the legislature for the Canal Zone. This fact is very important when viewed in the light of article IV, section 3, the first paragraph, which immediately precedes the language we have been discussing. This states that — No new state shall be formed or erected within the jurisdiction of any other state; nor any state be formed by the junction of two or more states, or parts of states, without the consent of the legislatures of the states concerned. In that sentence, the Constitution is protecting the integrity of State boundaries by forbidding changes without the consent of the legislatures involved. In the next sentence, which is the basis of this hearing, the framers applied the same principle, by analogy, to unincorporated territories. The boundaries of such territories cannot be altered or diminished, or, in the ultimate, disposed of, without the consent of the legislature involved, that is to say, Congress. There is an obvious parallelism between the treatment of States and of territories, adapted to the specific conditions of each. In short, article IV, section 3 is a limitation on the treaty-making power of the President. It is, of course, true that article II, section 2, says that the President "shall have power, by and with the advice and consent of the Senate, to make treaties, provided two- thirds of the Senators present concur." But that sentence cannot be read in a vacuum. No one imagines, for example, that the Presi- dent has the power to enter into a treaty, even with the consent of the Senate, which would abridge freedom of speech, freedom of religion, or any other aspect of the Bill of Rights. It is not enough to say that the Senate would never consent; the President has a sworn duty to uphold the Constitution in all of its parts. He does not have the authority to negotiate away part of it in the hope he can induce the Senate to go along. 64 NEGOTIATIONS ABRIDGE CONGRESSIONAL POWER In the same manner, the President may not enter into negotia- tions that abridge the powers of the Congress. It is not just the outcome that abridges the powers of Congress; it is the very fact of entering into negotiations on matters within the powers of Con- gress that is an infringement on congressional authority. Any at- tempt to initiate the disposition of U.S. territory and property by the executive branch, without prior authorization, is a usurpation of power. Why is it a usurpation? It is a usurpation, because the executive branch is acting on a domestic matter without congressional au- thorization. It is a usurpation, because the territory itself and the sovereignty over it would necessarily devolve upon the ratification of the treaty itself without the concurrence of the House. The House may be called upon to pass enabling legislation after the treaty is ratified; but the House would be constrained to act within the terms of the treaty. A fundamental principle which has been assumed in the negotiations is the abrogation of the 1903 treaty with its grant of sovereign powers. But sovereignty itself is a property right, and falls within the power of Congress in article IV, section 3. If a treaty were ratified by the Senate before the House acted, the House would have no opportunity to act on this tran- scendent question. It would be faced with an accomplished fact. And even if the question were put to the House before the treaty were ratified by the Senate, the House would still be constrained by the overhanging treaty question. And indeed, the House could very well turn down the enabling legislation, or portions of it, only to find their action overridden by the passage of the treaty in the Senate. Treaties ordinarily contain portions which are self-executing and portions which are not self-executing. The House would not be able to act on any item that is self-executing; and some of the funda- mental issues might be considered self-executing. The House clear- ly would have its article IV, section 3 powers abridged; and of course if one House suffers, the whole Congress suffers in its pres- tige and authority. The Senate cannot smugly stand on its ratifica- tion power and imagine that its overall authority will not be dero- gated. TREATY RATIFICATION DIFFERS FROM LEGISLATIVE POWER Moreover, even the Senate itself will have the fullness of its article IV, section 3 powers abridged, if it chooses to rely solely on its article II, section ratification power. For the ratification power is fundamentally different from the legislative power in article IV. It should be obvious that ratification is after the fact; the terms have been established; no fundamental changes are possible in a practical sense. Slight modifications, such as reservations or under- standings, may be attached, but the effect of these in international law is dubious. The only real alternative is complete rejection, which could have severe international repercussions. The Senate could very well find itself debating to determine the lesser of two evils, neither of which represent the best interests of the United States. 65 But if the disposition of U.S. territory and property is treated as a legislative matter under article IV, then Congress itself sets the basic principles of negotiation. It gives the Executive guidelines as to what is acceptable. It strengthens the hands of the negotiators, since the opposite parties would know the limits of the negotiable items. And if the negotiators are not able to get a detailed agree- ment within the terms laid down, then they can return to Congress to seek appropriate legislation to enlarge their mandate. Moreover, the full play of the committee system can be brought into effect. If only a treaty is to be considered, only the Committee on Foreign Relations has jurisdiction. While I am sure that the distinguished members of that committee are experts in foreign affairs by virtue of their experience, the disposition of property, as I have already pointed out, is fundamentally a domestic matter, not a matter for foreign relations. The jurisdiction over the Canal Zone is split between the Commerce Committee and the Armed Services Committee. The Senators on those committees would not be able to bring their special expertise to bear on the markup and reporting process. The predominant concerns affecting the disposi- tion of U.S. property would be those concerns relating to foreign affairs, and there would be no forum for the fundamental domestic concerns to receive committee review and to affect the final prod- uct reported to the floor. It is clear, therefore, that the ratification process is no substitute for the legislative process, even so far as the powers of the Senate itself are concerned. The ratification process is a rubberstamp which can be given or withheld; the legislative process is the full- ness of congressional power, allowing both Senate and House to work their separate and collective wills on shaping and developing the terms of any disposition of U.S. territory and property. CANAL ZONE U.S. TERRITORY Mr. President, there is no doubt but that the Canal Zone is unincorporated territory of the United States. Our instruments under international law have given us the rights of a sovereign; and of course, our domestic law has always treated the Canal Zone as U.S. territory, a fact established by the U.S. Supreme Court as early as 1907, and reaffirmed many times, including as recently as 1971 when the Court let stand a lower court decision based on the 1907 case. Some have pointed to discrepancies between the way laws affect the 50 States and the way they affect the Canal Zone, as though to imply that the zone is something less than U.S. territory. But the fact is that Congress itself is the author of those discrepancies, using its authority to make all needful rules and regulations for the territory under article IV, section 3. Moreover, the fact that the zone is and always has been a U.S. Government reservation means that special circumstances apply. The fact that certain dis- crepancies exist enhances the power of Congress, because it shows that Congress is exercising the fullness of its article IV power. Indeed, such minor discrepancies strengthen, rather than diminish, the status of the Canal Zone as article IV territory. 29-*00 0-78-6 It is clear, therefore, that the President and the Secretary of State are bound by oath under article VI, section 3 of the Constitu- tion and the laws of the land, as interpreted by the U.S. Supreme Court. It should be unnecessary to make such a statement, but for 12 years the executive branch has been acting as though the power to conduct international relations superceded its obligations under domestic law. PRESIDENT JOHNSON ACKNOWLEDGED U.S. SOVEREIGNTY On September 24, 1965, President Johnson announced that the Treaty of 1903 would be abrogated and that negotiations would begin on new treaties. That in itself was an unauthorized usurpa- tion of power. Congress had in no way provided authority by legis- lation or by resolution which would allow President Johnson to assume article IV powers. In fact, just the opposite was the case. Numerous actions, particularly in the House of Representatives, had indicated that the sentiment was against the abrogation of the sovereignty and perpetuity clauses of the 1903 Treaty. Indeed, by the time that the treaties had been negotiated per- suant to the President's announcement and initiated in 1967, the sentiment in both Houses was strongly opposed to them. In fact, the executive branch felt that the sentiment was so strong that the treaties were not even sent up to the Senate. KISSINGER-TACK AGREEMENT Nevertheless, on February 4, 1974, then Secretary of State Henry Kissinger signed a so-called Agreement on Basic Principles with Panamanian Foreign Minister Juan Tack. Now these basic principles were even more insidious than the straightforward announcement by President Johnson that he would seek to abrogate the 1903 treaty. For the basic principles implied, without ever saying so specifically, that the United States did not possess either territory or sovereign powers. Principle 4, for example, begins: The Panamanian territory in which the canal is situated shall be returned to the jurisdiction of the Republic of Panama. The Republic of Panama, in its capacity as territorial sovereign, shall grant to the United States of America, etc. The Kissinger-Tack agreement put the prestige of the executive branch behind a statement that is historically untrue, profoundly unconstitutional, and an illegal usurpation or power. Whereas the Johnson announcement implied per se that the United States did have sovereign powers, and that they should be abrogated, the Kissinger statement implicitly denied that the United States had sovereign powers, and hence there was no need to speak of abroga- tion. This was an attempt to end run the Constitution and the laws of the United States, and to create an accomplished fact. It amounted to a concession of the major point before the negotia- tions began. The reaction in the Senate was very intense, as well as in the House. In the Senate, under the able leadership of the distin- guished senior Senator from Arkansas (Mr. McClellan) and the distinguished senior Senator from South Carolina (Mr. Thurmond), 39 Senators cosponsored a resolution demand that our sovereignty 67 remain undiluted in the Canal Zone. As a very freshman Senator at that time, I was proud to be among that distinguished group of cosponsors. Usurpation is a process which seems to blind the usurpers to the consequences of their actions. Now the very set of basic principles, odious as they were, were exactly the sort of thing which should have been brought to Congress for approval before they were signed. If Congress had chosen to adopt those principles as guide- lines under article IV, then the negotiators could have safely as- sumed that they would get a treaty acceptable to the Senate and the House. But the Secretary of State and the President were not willing to take the risk of submitting such basic principles to the Congress for fear that they would precipitate an intense debate resulting in rejection or amendment. They chose, therefore, to ignore article IV, and continue negotiations, despite the fact that a group of Senators large enough to block the treaty had declared themselves opposed to their work. They had set themselves upon a course that may well end in tragedy and disaster. THE 1975 CONCEPTUAL AGREEMENTS The direction of the negotiations soon became evident. In Decem- ber 1975 another document emerged — so called "conceptual agree- ments" amplifying the Kissinger-Tack principles. These went into more detail, but confirmed the worst fears of those opposed to the surrender of sovereignty. For although the American people had been promised "practical control" in lieu of sovereignty, it was plain that even "practical control" would vanish almost immediate- ly upon ratification, leaving only a mixed control for approximate- ly 3 years. More recent news accounts confirm the extent to which the conceptual agreement has been carried out in the present negotiations. Mr. President, on December 4, 1975, in a statement on the Senate floor, I made an extensive analysis of the hitherto "secret" conceptual agreements. It will make very interesting reading, I believe, when final drafts of the new treaty become available. AMBASSADOR LINOWTTZ AND ARTICLE II Nothing, however, seemed to deter the Department of State, not even the change of administrations in the beginning of this year. The appointment of Ambassador Sol Linowitz as conegotiator is a case in point. Ambassador Linowitz is not an impartial and profes- sional negotiator. He has long been an advocate of surrendering the canal to Panama, and his business interests coincide with that advocacy. Unfortunately, the administration once again chose to avoid debate in the Senate by appointing him only to a 6-month term — a legal subterfuge which enabled him to bypass the confir- mation process. If the State Department had really been interested in consulting with the Senate, they would have used the opportunity to put their positions on the line. But instead they chose the bypass route. And as a result of avoiding the advice-and-consent procedures of article II, a great embarrassment was created to the U.S. Government and to the State Department itself. For after a Senate speech in which I pointed out that Ambassa- dor Linowitz was on the board of directors of Pan American Air- ways, and on the board of directors of the Marine Midland Bank— and on its executive committee — both of which had extensive inter- ests in Panama and needed to curry favor with the regime to maintain those interests — the Ambassador was forced to resign from at least one of them. ENCROACHMENT AND USURPATION What all this shows, Mr. President, is that encroachment follows upon encroachment. The failure of the Executive to abide by arti- cle IV, section 3 leads to the failure of the Executive to abide by the spirit of article II, section 2. What kind of a ratification process is it, when the Executive bypasses an essential part of it; namely, the advice and consent to ambassadors about to undertake a major negotiation? This is the only opportunity the Senate gets before a negotiation to officially instruct a negotiator on its views before a treaty is locked in; yet the State Department bypassed even that by nominating a candidate who proved to be unsuitable for that par- ticular post. As I indicated before, usurpation and irresponsibility lead to seizure of power and tragedy. For 12 years the State Department has been unconstitutionally raising the aspirations of the Panama- nians, acting wantonly and without authority. If this treaty fails — and there are good reasons why it should— the blame will lie entirely with the executive branch, which has constantly refused to abide by its constitutional authority, and has failed to take the Congress into its confidence about actions which are solely in the field of congressional prerogative anyway. Unfortunately, it will be the Nation, and the American people who have to suffer the conse- quences. I would like to close, therefore, with the very blunt warning of George Washington in the Farewell Address: It is important, likewise, that the habits of thinking in a free country should inspire caution in those intrusted with its administration to confine themselves within their respective constitutional spheres, avoiding in the exercise of the powers of one department to encroach upon another. The spirit of encroachment tends to consolidate the powers of all the departments in one, and thus to create, whatever the form of government a real despotism. If in the opinion of the people the distribution or modification of the constitutional powers be in any particular wrong, let it be corrected by an amendment in the way which the Constitution designates. But let there be no change by usurpation; for though this in one instance may be n b\ the instrument of good, it is the customary weapon by which free governments are destroyed. The precedent must always greatly overbalanct partial or transient benefit which the use at any time yield. [From the Congressional Record — Senate, Aug. 4. 1977] SENATOR SCOTT'S REPORT ON HIS RECENT TRIP TO PANAMA, ARGENTINA, AND CHILE Mr. Scott. Mr. President, earlier today I made a report to the Committee on Armed Services on a recent trip to Panama, Argenti- na, and Chile to ascertain information primarily for the committee with regard to the Canal Zone and the feeling of the people in the general area regarding the proposed transfer of title, of jurisdic- tion, and control to the country of Panama. I ask unanimous consent, Mr. President, that a copy of the report and the enclosures contained therein be printed in the Record at the conclusion of my remarks. The Presiding Officer. Without objection, it is so ordered. (See exhibit 1.) Mr. Scott. Let me add that three volumes of material filed with the committee are too voluminous to include in the Record, and that further information was provided to the Committee on Armed Services in executive session which would not be appropriate to be made public. I would hope, Mr. President, that all Members of the Senate will obtain independent information with regard to the proposed trans- fer of the canal in addition to what may be made available from our own State Department. My report may be helpful to Senators, and the enclosures include a brief summary of the history of the canal, a copy of the 1903 treaty, a position paper presented by the civic councils of several American communities within the area of the Canal Zone, and a recent statement by Adm. Thomas H. Moorer who retired from the Navy after service as Chairman of the Joint Chiefs of Staff for a 4- year period. This statement by a gentleman who was our top military officer from 1970 to 1974 expresses the same concern that I heard from more than 100 individuals, both Americans and for- eign nationals, during the trip last month. The Subcommittee on Separation of Powers of the Senate Judici- ary Committee has also had rather extensive hearings primarily on constitutional questions relating to the status of the canal, the authority of the executive branch of Government to negotiate for a transfer of title in view of section 3 of article IV of the Constitution which provides that — The Congress shall have power to dispose of and make all necessary rules and regulations respecting the territory or other property belonging to the United States • « « Our Subcommittee on Separation of Powers also discussed the treaty power of the President under article II, section 2, of the Constitution. Based upon the facts as I have been able to ascertain them, Mr. President, from the hearings before the Judiciary Committee, from discussions with officials and private persons, both Americans and foreign, the contemplated transfer appears to be against the best interests of the United States from an economic, political and a national defense point of view. The Supreme Court has held that we own title to the Canal Zone and the fifth circuit court of 70 appeals has held that it is the unincorporated territory of the United States. Therefore, unless the Congress, or the American people can prevail upon the White House or the Department of State not to enter into a treaty to give away our property, the only recourse is for the Senate to refuse to ratify the treaty and for the Congress to refuse to appropriate funds specified in the proposed treaty. Exhibit 1 Report of Senator William L. Scott of Virginia on Panama Canal Trip Mr. Conneely and I left Dulles airport near midnight on June 29th and arrived in Panama early the following morning. In order to obtain an overview we were provided with a helicopter flight over the entire Canal Zone with Lt. General Dennis McAuliffe accompanying us and explaining various details. Thereafter, we visited a set of locks on the ground and were provided with a film study of the history and the operation of the canal. Then we visited the American Ambassador William J. Jorden who discussed the proposed treaty with us. Later we visited the Governor of the Canal Zone. Governor Parfitt is a major general in the army and has general supervisory jurisdiction over the maintenance and operation of the canal, as well as executive oversight of the Zone and the Panama Railroad Compa- ny. We arranged to have a detailed discussion with General McAuliffe and his staff, including a number of colonels and naval captains at a joint meeting. They were most cooperative in sharing their thoughts and responded freely to questions with the understanding that we were attempting to obtain general information to share with the committee and possibly with the full Senate. Each of the general's staff was asked his personal views on the future of the canal, whether it would be operated efficiently if turned over to the Panamanians; whether there was any danger of Communist influence, and whether there would be any policy changes regarding the use of the canal or the fees charged for its use. Similar questions were put to Americans employed in the operation of the canal and later to businessmen, intelligence officials and staffs of the American Embassies in both Argentina and Chile. Argentine officials included the minister of defense, undersecretary of foreign affairs and assistant to the president. Chilean officials included the president, foreign minister, defense minister, other cabinet officials and the Chilean Ambassador to the United Nations. During the 10-day trip we obtained the views of more than 100 individuals, some American citizens and some foreign nationals. Our Ambassador to Panama and a former Foreign Minister of Panama favored the proposed treaty. Others had a different point of view. The general consensus of these views was that the United States had constructed the canal and utilized it in the best interests of all countries of the world without profit, and with toll charges only to cover the cost of operation. In fact, it was suggested that the name "Panama Canal" should never have been used but it could better have been named the "American International Canal." Fear was expressed that the Panamanians would not have the necessary skills, or expertise to operate the canal, although they had waged a very successful propaganda effort in favor of obtaining control. We were also told that there were Communists with important positions within the Panamanian Government and regardless of the terms of a treaty, the canal might be nationalized by the Panamanians and might come under the control of Communists dominated by Cuba and Russia. The committee might want to obtain the views of Admiral Turner and the C.I.A. in this regard. There was a common belief that tolls would be raised substantially and statistics were cited that 70 percent of the ships using the canal either came from, or were destined for American ports. In Argentina we were told that the canal was not as important to it and to other Atlantic nations as it was to countries on the Pacific side of the South American continent or nations closer to the canal, Chilean officials stated that although they could go around Cape Horn more easily than more northern countries, it was more convenient and economical for their ships to utilize the canal and 95 percent of their shipping did pass through the canal. In both Chile and Argentina surprise was expressed that we would solicit their views on the future of the canal as State Department officials had led them to 71 believe that the United States had lost interest in continuing its operation. They indicated, however, that the United States had always kept the canal in very good operational condition, but that it would deteriorate under the Panamanians; that Panama would have to obtain outside help to operate the canal and it would not be in the interest of other Nations for the operation or the control of the canal to be turned over to the Panamanians. We were advised that the Panamanian Govern- ment itself was inefficient and that the Government could not be expected to do any better in the operation of the canal. Concern was expressed that terrorists' tactics might be employed if the United States did not execute a treaty under which control of the canal would be given to the Panamanians and that while our troops could successfully meet a direct threat against the canal, military personnel would probably have to board ships as they entered the canal and accompany them through the various locks and no guarantee could be made that a small group of terrorists, under cover of darkness and jungle growth, could not penetrate our defenses and plant explosives at vital spots which would make the canal inoperative. It was not believed, however, that this would happen as it would be very detrimental to the interest of the Panamanian people and their Government since their economic prosperity, to a considerable extent, depended upon uninterrupted operation of the canal. Concern was expressed that the State Department was proceeding as if it had the full backing of the American people and without considering opposition in the Congress. We were told that Panamanians respected strength and resoluteness and in recent years our Government had shown little firmness and even encouraged Panamanians and others to believe that we intended to give up our rights to the Canal Zone. We were told it would be easier to maintain the security of the canal by continuing our control than it would be to guarantee its security in the event it was operated by Panamanians or to retain control once it was transferred to others. Americans working and living in the Canal Zone were especially bitter about the prospects of transferring control to Panama. They indicated that all of our military ships but 13 could go through the canal; that war material of all kinds could transit it, including men and equipment; that over 96% of all ships afloat throughout the world could go through the canal; and that the fares paid by ships of any Nation flying any flag were the same with no discrimination, and in time of peace all Nations of the world are permitted to utilize the canal. Americans living in the Canal Zone stated that the Panamanian Government was inefficient and ineffective; that it was socialistic in nature, headed by a dictator, with little freedom of the press, speech or other civil liberties. It was indicated that our government had been more than generous to the country of Panama not only with regard to the Canal Zone but in conveying to Panama American property outside the Canal Zone worth many million of dollars; property that had formally been used by our Government as quarters for U.S. employees, schools, hospitals and hotels, and for other purposes. It might be well, Mr. Chairman, to insert, at this point in the Record, a short factual statement of the history of the canal, the American role in the establish- ment of the country of Panama, as well as a copy of the 1903 treaty. It is interesting to note that the width of the canal is 5 miles on each side of a center line and about 50 miles in length, containing somewhat more than 500 square miles, or more than 5 times the original size of the District of Columbia. I would also like to make available other written material given to us but for committee use only, not to be made a part of the Record. This material was given to us by American citizens living in the Canal Zone and even a casual reading indicates the deep concern of our own citizens, who should be most familiar with conditions in Panama, about the proposed transfer. For example, a position paper to the House Subcommittee on the Panama Canal on April 12th of this year contains this statement: "The State Department is negotiating a treaty which it is willing to ratify. They make the assumption that they know what is 'in the best interest of the United States' and all other opinions are to be considered ill-informed, unenlight- ened, and out of step with modern times." We were told military personnel would appear if requested by the committee and express their opinions in the same manner as they expressed them to us if the committee asked for an expression of personal opinion. My overall impression from the entire trip is that there is a variance between official opinions and private ones. Military and civilian Americans are hesitant to speak out against the transfer of the canal while our State Department is negotiating a transfer of ownership and control. Moreover, there is little doubt that Pan American nations privately desire the United States to continue both operation and control but are hesitant to publicly 72 oppose the Panamanian position, especially when the United States has not at- tempted to cultivate a contrary view: I believe it would be against the interests of our Government to transfer control of the canal; that there is evidence of commu- nist influence and that a transfer would have an adverse effect on both American commerce, and defense posture. Since our government did pay the Panamanians for the right to construct the canal, operate it in perpetuity, exercise the rights of sovereignty, paid the French and Colombian Governments for their interests, and purchased title to the property from private owners and even squatters on the property, the claims of the Panamanians do not appear reasonable. There is also the question the effect the transfer of the control of the canal might have upon the size and composition of our navy and the committee might want to make inquiry in this regard of the Chief of Naval Operations or Chairman of the Joint Chiefs. A former chairman of the Joint Chiefs Adm. Thomas H. Moorer in recent testimony before the Subcommittee on Separation of Powers of our Senate Judiciary Committee spoke out very strongly against the transfer and in response to questions expressed the opinion that transferring the control of the canal to Panama could very well result in Communist control of the canal. I would like to insert a copy of his direct testimony at this point in the record. I would ask for a short closed session that would take only a few minutes to go over some sensitive information and identify its sources. [From the Military Engineer, July-August 1974] A Panama Summary (By John J. Kern) Then felt I like some watcher of the skies When a new planet swims into his ken; Or like stout Cortez when with eagle eyes He star'd at the Pacific,-*and all his men Look'd at each other with a wild surmise — Silent, upon a peak in Darien. (John Keats, "On First Looking Into Chapman's Homer.") In this sonnet Keats ascribes the discovery of the Pacific Ocean to Cortez. Al- though his sonnet is a masterpiece, Keats was historically inaccurate since it was actually Vasco Nunez de Balboa who discovered the Pacific Ocean in 1513 while atop a mountain peak in the Darien province of eastern Panama. EARLY explorers Rodrigo de Bastidas of Seville discovered Panama in 1501 from the Atlantic side. Christopher Columbus explored the area on his fourth American voyage in 1502. Surprisingly, within 50 years of the discovery of Panama, all of the presently discussed possible canal routes across Central America had been identified, de- scribed, and to a certain extent surveyed. Alvaro de Saavedra Ceron, a cousin of Cortez, drafted the first plan for a transisthmian canal in 1529. In 1534, Charles V of Spain directed that a survey be made for a ship canal between the Chagres River and the Pacific Ocean. EARLY HISTORY OF REGION The Camino Real was in use by 1535 and over it millions of dollars worth of Peruvian and Mexican gold was transported for ocean shipment to Spain. The Panama area was subsequently incorporated into the vice-royalty of New Granada of Spain's western empire. A preliminary Spanish attempt to construct a canal in 1814 was interrupted by a revolt of her colonies. Panama severed political relations with Spain in 1821 and joined with Colombia in the Republic of Greater Colombia. In 1831, New Granada became an independent republic incorporating Panama as a state. Ten years later Panama seceded from New Granada and maintained its independence for thirteen months. UNITED STATES INVOLVEMENT The 1846 Treaty between the United States and New Granada gave the United States a transportation concession across the Isthmus in return for a guarantee to protect the sovereignty of New Granada. One year later the Panama Railroad Company was organized, and in 1848 gold was discovered at Sutter's Mill in Califor- 73 nia. This event soon brought to the Isthmus a tidal wave of immigrants seeking a better route to the gold fields of California rather than the arduous overland route. Congress co-operated in the same year and authorized steamship lines from New York and New Orleans to Chagres and from Panama City to California and Oregon. The economic pressure of an emerging nation was beginning to be felt on the Isthmus. Difficulties again between Panama and New Granada resulted in Panama's tem- porary secession in 1853. In 1856 the United States Marines landed to protect the Panama Railroad during a riot. Thus began the military involvement of the United States. In 1869 a diplomatic agreement between the United States and Colombia (which had changed its name from New Granada in 1861) provided for the construction of a canal. This was rejected by the Colombian Senate. This same year the opening of the Suez Canal focused international attention on a similar canal in Panama. The United States Congress, in 1872, authorized appointment of the first of many such committees — The Interoceanic Canal Commission — to determine the most practical route for a waterway between the Atlantic and the Pacific. Its report recommended construction of a lock canal across Nicaragua. FRENCH INVOLVEMENT In 1875 Ferdinand de Lesseps, the successful builder of the Suez Canal, proposed a sea-level canal at Panama. The Societe Civile International du Canal Interoceanique was organized in 1876 to make surveys and explorations. The negotiations in 1878 between Lucien Napoleon Bonaparte Wyse and the Government of Colombia for a canal concession and subsequent French proposals of de Lepiney for a lock canal, resulted in counteraction by the United States. On June 25, 1879, the United States Congress resolved that any attempt of a European power to establish a ship canal across the Isthmus would be considered "a manifestation of an unfriendly disposi- tion towards the United States." Thus, politics and diplomacy joined previous United States economic and military pressures for action in constructing a canal across the Isthmus of Panama. Nevertheless, in the same year, the Compagnie Universelle du Canal Interoceani- que de Panama was organized with de Lesseps as president. The new company ceremoniously started digging a sea-level canal on January 1, 1880, on the Pacific side of the Isthmus. Excavation of Culebra Cut was started in ten days although it was not until one year later that sizable numbers of French construction gangs arrived at Colon. Within five months, the first deaths from yellow fever occurred among Canal employees. FRENCH CONSTRUCTION DIFFICULTIES In September 1882, a severe earthquake damanged the canal railroad and build- ings. Internal security remained a problem and in May 1885, Colon was burned during a Panamanian revolution. The following year the status of Panama was changed from a Colombian state to a department governed by federal appointees. Corporate difficulties increased within the Compagnie Universelle. Philippe Bunau- Varilla was appointed canal engineer in 1885, only to be relieved one year later. Construction difficulties increased and it became apparent that a sea-level canal was beyond the capabilities of the French company. The plan was changed to a lock canal in 1887. In 1888, after further unsuccessful efforts, the Compagnie Universelle went into receivership. Meanwhile, independent United States efforts to build a canal across Nicaragua continued. In 1889 the United States Congress incorporated the Maritime Canal Company which began an unsuccessful four-year effort to construct a canal over the San Juan route. These efforts coincided with the suspension of work by the French company on the Panama Canal. The latter company was replaced by the Compagnie Nouvelle du Canal de Panama, but little progress was made and efforts were further hindered by the start of a five-year revolt against Colombia by Panama in 1898. ISTHMIAN CANAL COMMISSION On March 3, 1899, the First Isthmian Canal Commission was created by President McKinley to examine all practicable routes across the Isthmus. A year later, this Commission determined from the engineering aspects that a Nicaraguan or a Pana- manian route would be about equally feasible. With the expectation of difficulty in acquiring the assets of the French company and operating rights in Panama, the Commission recommended the Nicaragua route. In 1902 the Isthmian Canal Com- mission reversed its decision and favored adoption of the Panama route after the 74 French company reduced its demands to approximate the appraisal of its assets. United States attention finally settled on Panama as the site of the canal. The Compagnie Nouvelle then agreed to a sale of its canal assets for $40,000,000. The United States Congress promptly granted broad powers to the President to construct the Panama Canal. PANAMANIAN REVOLT AND THE HAY/BUNAU-VARILLA TREATY On March 17, 1903, the Senate ratified the Hay-Herran Treaty which would grant construction rights in a canal zone in return for payment of $10,000,000 to Colombia and an annuity of $250,000. This treaty was rejected by Colombia on August 12, 1903, and on November 3 the final Panamanian revolt against Colombia resulted in a declaration of independence. Three days later the new Government of Panama was recognized by the United States and within an additional 12 days the Hay/ Bunau-Varilla Treaty was signed and ratified by both sides, granting United States occupation of the Canal Zone in perpetuity under similar financial terms as origi- nally offered to Colombia. Relations between the United States and Panama were thus initiated, and assumed much of their later character. In 1904 the French canal properties were transferred to United States ownership and in November of that year the first American construction effort began. Work was steadily pushed ahead for the next decade and on August 15, 1914, the SS Ancon transited the canal, officially opening the waterway to world commerce. RECENT STUDIES The 1929 Study. — Several years after the opening of the Panama Canal, concern that traffic demands would eventually exceed canal capacity led Congress, in 1929, to direct a survey in Panama and Nicaragua to decide the feasibility of adding additional locks to the existing canal, or of constructing another canal at some other location. The United States Army Interoceanic Canal Board of 1929-1931 was cre- ated and its report, submitted in 1931, proposed three long-term alternatives: a third set of locks for the existing canal; conversion of the existing canal to sea level; or construction of a new lock canal in Nicaragua. The Third Locks Project Study (1936-1939).— Congress authorized the Governor of the Panama Canal to study the possibilities of increasing the capacity of the canal. The study report revised a concept which was considered in the original design of the canal and further revised in the 1929 study, and proposed a third set of locks separated from each of the existing locks. In 1939 the Congress authorized its construction, but the project was suspended in 1942 and has never been resumed. The 1947 Report. — Congress again directed the Governor, in late 1945, to study methods of increasing canal capacity and defenses as well as to consider other alternative routes. Thirty possible routes from Mexico to Colombia were identified and numbered. The report recommended that the existing canal (Route 15) be converted to a sea-level canal by deepening and straightening the existing align- ment along a new route called Route 14. 1957-1960 Ad Hoc Committee for Isthmian Canal Plans. The Board of Directors of the Panama Canal Company authorized this study in which recommendations in- cluded the first mention of nuclear excavation. The report recommended planning for construction of a sea-level canal using nuclear excavation along a route outside of the Canal Zone. If such plans were not available to implement by the early 1970's, the existing canal was to be converted to a sea-level canal. 1957-1960 Board of Consultants Study.— Concurrently with the Ad Hoc Commit- tee's study, the House Committee on Merchant Marine and Fisheries appointed a Board of Consultants to prepare short- and long-range improvement plans. The report recommended that a sea-level conversion project should not be undertaken in the near future, but that the situation should be reviewed by 1970. In the interim, new studies should continue on conventional and nuclear construction methods. 1964 Isthmian Canal Studies. — This report was prepared by the president of the Panama Canal Company with the participation of the Atomic Energy Commission, the Corps of Engineers, and consultants. This comprehensive study summarized canal traffic projections and capacity, examined methods of improving lock canal facilities, provided a detailed analysis of the Third Locks Plan and a modification of this plan called the Terminal Lakes Plan, and proposed a sea-level canal within the Canal Zone. This report also set the number of lockages per year which could be accommodated at about 26,000. It also examined the technical feasibility of using nuclear excavation on sea-level canals in eastern Panama and northwestern Colom- bia. Interoceanic Canal Studies 1970.— This Study Commission was required by Public Law 88-609 of the 88th Congress, September 22, 1964, to study the feasibility of, and 75 the most suitable site for, a sea-level canal connecting the Atlantic and Pacific Oceans. The Commission was appointed in April 1965 and presented its report to President Nixon on December 1, 1970. Concerning nuclear excavation, the report concludes that this technology will not be available because its technical feasibility and international acceptability has not been established. Using conventional con- struction means, a sea-level canal is physically feasible and the most suitable site is along Route 10 in the Republic of Panama. Construction cost was estimated at $2.88 billion in 1970 dollars. A suitable treaty should be negotiated with Panama provid- ing for a unified canal system (existing canal plus a sea-level canal on Route 10) to be operated and defended jointly by the United States and Panama. Construction should be started no later than 1985. PRESENT LEGISLATIVE STATUS House Resolution 1517 is pending before Congress and would authorize completion of a third lane of locks. Beyond this, there is no legislation pending which would provide for radically altering the existing canal or constructing another canal in some other location. Thus, future definitive action will apparently depend on an increase in the pressure areas (economic, military, political, and diplomatic) which originally combined to result in construction of the present canal. Isthmian Canal Convention, November, 18, 1903 (Convention between the United States and the Republic of Panama for the con- struction of a ship canal to connect the waters of the Atlantic and Pacific oceans. Signed at Washington, November 18, 1903; ratification advised by the Senate, Febru- ary 23, 1904; ratified by the President, February 25, 1904; ratified by Panama, December 2, 1903; ratifications exchanged at Washington, February 26, 1904; pro- claimed, February 26, 1904.) By the President of the United States of America a proclamation Whereas a Convention between the United States of America and the Republic of Panama to insure the construction of a ship canal across the Isthmus of Panama to connect the Atlantic and Pacific Oceans, was concluded and signed by their respec- tive Plenipotentiaries at Washington, on the eighteenth day of November, one thousand nine hundred and three, the original of which Convention, being in the English language, is word for word as follows: ISTHMIAN canal convention The United States of America and the Republic of Panama being desirous to insure the construction of a ship canal across the Isthmus of Panama to connect the Atlantic and Pacific oceans, and the Congress of the United States of America having passed an act approved June 28, 1902, in furtherance of that object, by which the President of the United States is authorized to acquire within a reasonable time the control of the necessary territory of the Republic of Colombia, and the sover- eignty of such territory being actually vested in the Republic of Panama, the high contracting parties have resolved for that purpose to conclude a convention and have accordingly appointed as their plenipotentiaries, — The President of the United States of America, John Hay, Secretary of State, and The Government of the Republic of Panama, Philippe Bunauvarilla, Envoy Ex- traordinary and Minister Plenipotentiary of the Republic of Panama, thereunto specially empowered by said government, who after communicating with each other their respective full powers, found to be in good and due form, have agreed upon and concluded the following articles: ARTICLE I The United States guarantees and will maintain the independence of the Republic of Panama. ARTICLE n The Republic of Panama grants to the United States in perpetuity the use, occupation and control of a zone of land and land underwater for the construction, maintenance, operation, sanitation and protection of said Canal of the width of ten miles extending to the distance of five miles on each side of the center line of the route of the Canal to be constructed; the said zone beginning in the Caribbean Sea 76 three marine miles from mean low water mark and extending to and across the Isthmus of Panama into the Pacific ocean to a distance of three marine miles from mean low water mark with the proviso that the cities of Panama and Colon and the harbors adjacent to said cities, which are included within the boundaries of the zone above described, shall not be included within this grant. The Republic of Panama further grants to the United States in perpetuity the use, occupation and control of any other lands and waters outside of the zone above described which may be necessary and convenient for the construction, maintenance, operation, sanitation and protection of the said Canal or of any auxiliary canals or other works necessary and convenient for the construction, maintenance, operation, sanitation and protec- tion of the said enterprise. The Republic of Panama further grants in like manner to the United States in perpetuity all islands within the limits of the zone above described and in addition thereto the group of small islands in the Bay of Panama, named Perico, Naos, Culebra and Flamenco. ARTICLE m The Republic of Panama grants to the United States all the rights, power and authority within the zone mentioned and described in Article II of this agreement and within the limits of all auxiliary lands and waters mentioned and described in said Article II which the United States would possess and exercise if it were the sovereign of the territory within which said lands and waters are' located to the entire exclusion of the exercise by the Republic of Panama of any such sovereign rights, power or authority. ARTICLE IV As rights subsidiary to the above grants the Republic of Panama grants in perpetuity to the United States the right to use the rivers, streams, lakes and other bodies of water within its limits for navigation, the supply of water or water-power or other purposes, so far as the use of said rivers, streams, lakes and bodies of water and the waters thereof may be necessary and convenient for the construction, maintenance, operation, sanitation and protection of the said Canal. ARTICLE V The Republic of Panama grants to the United States in perpetuity a monopoly for the construction, maintenance and operation of any system of communication by means of canal or railroad across its territory between the Caribbean Sea and the Pacific ocean. ARTICLE VI The grants herein contained shall in no manner invalidate the titles or rights of private land holders or owners of private property in the said zone or in or to any of the lands or waters granted to the United States by the provisions of any Article of this treaty, nor shall they interfere with the rights of way over the public roads passing through the said zone or over any of the said lands or waters unless said rights of way or private rights shall conflict with rights herein granted to the United States in which case the rights of the United States shall be superior. All damages caused to the owners of private lands or private property of any kind by reason of the grants contained in this treaty or by reason of the operations of the United States, its agents or employees, or by reason of the construction, mainte- nance, operation, sanitation and protection of the said Canal or of the works of sanitation and protection herein provided for, shall be appraised and settled by a joint Commission appointed by the Governments of the United States and the Republic of Panama, whose decisions as to such damages shall be final and whose awards as to such damages shall be paid solely by the United States. No part of the work on said Canal or the Panama railroad or on any auxiliary works relating thereto and authorized by the terms of this treaty shall be prevented, delayed or impeded by or pending such proceedings to ascertain such damages. The appraisal of said private lands and private property and the assessment of damages to them shall be based upon their value before the date of this convention. article vn The Republic of Panama grants to the United States within the limits of the cities of Panama and Colon and their adjacent harbors and within the territory adjacent thereto the right to acquire by purchase or by the exercise of the right of eminent domain, any lands, buildings, water rights or other properties necessary and conve- nient for the construction, maintenance, operation and protection of the Canal and 77 of any works of sanitation, such as the collection and disposition of sewage and the distribution of water in the said cities of Panama and Colon, which, in the discre- tion of the United States may be necessary and convenient for the construction, maintenance, operation, sanitation and protection of the said Canal and railroad. All such works of sanitation, collection and disposition of sewage and distribution of water in the cities of Panama and Colon shall be made at the expense of the United States, and the Government of the United States, its agents or nominees shall be authorized to impose and collect water rates and sewerage rates which shall be sufficient to provide for the payment of interest and the amortization of the princi- pal of the cost of said works within a period of fifty years and upon the expiration of said term of fifty years the system of sewers and water works shall revert to and become the properties of the cities of Panama and Colon respectively, and the use of the water shall be free to the inhabitants of Panama and Colon, except to the extent that water rates may be necessary for the operation and maintenance of said system of sewers and water. The Republic of Panama agrees that the cities of Panama and Colon shall comply in perpetuity with the sanitary ordinances whether of a preventive or curative character prescribed by the United States and in case the Government of Panama is unable or fails in its duty to enforce this compliance of the cities of Panama and Colon with the sanitary ordinances of the United States the Republic of Panama grants to the United States the right and authority to enforce the same. The same right and authority are granted to the United States for the mainte- nance of public order in the cities of Panama and Colon and the territories and harbors adjacent thereto in case the Republic of Panama should not be, in the judgment of the United States, able to maintain such order. article vm The Republic of Panama grants to the United States all rights which it now has or hereafter may acquire to the property of the New Panama Canal Company and the Panama Railroad Company as a result of the transfer of sovereignty from the Republic of Colombia to the Republic of Panama over the Isthmus of Panama and authorizes the New Panama Canal Company to sell and transfer to the United States its rights, privileges, properties and concessions as well as the Panama Railroad and all the shares or part of the shares of that company; but the public lands situated outside of the zone described in Article II of this treaty now included in the concessions to both said enterprises and not required in the construction or operation of the Canal shall revert to the Republic of Panama except any property now owned by or in the possession of said companies within Panama or Colon or the ports or terminals thereof. ARTICLE LX The United States agrees that the ports at either entrance of the Canal and the waters thereof, and the Republic of Panama agrees that the towns of Panama and Colon shall be free for all time so that there shall not be imposed or collected custom house tolls, tonnage, anchorage, lighthouse, wharf, pilot, or quarantine dues or any other charges or taxes of any kind upon any vessel using or passing through the Canal or belonging to or employed by the United States, directly or indirectly, in connection with the construction, maintenance, operation, sanitation and protec- tion of the main Canal, or auxiliary works, or upon the cargo officers, crew, or passengers of any such vessels, except such tolls and charges as may be imposed by the United States for the use of the Canal and other works, and except tolls and charges imposed by the Republic of Panama upon merchandise destined to be introduced for the consumption of the rest of the Republic of Panama, and upon vessels touching at the ports of Colon and Panama and which do not cross the Canal. The Government of the Republic of Panama shall have the right to establish in such ports and in the towns of Panama and Colon such houses and guards as it may deem necessary to collect duties on importations destined to other portions of Panama and to prevent contraband trade. The United States shall have the right to make use of the towns and harbors of Panama and Colon as places of anchorage, and for making repairs, for loading, unloading, depositing, or transshipping cargoes either in transit or destined for the service of the Canal and for other works pertaining to the Canal. The Republic of Panama agrees that there shall not be imposed any taxes, national, municipal, departmental, or of any other class, upon the Canal, the rail- 78 ways and auxiliary works, tugs and other vessels employed in the service of the Canal, store houses, work shops, offices, quarters for laborers, factories of all kinds, warehouses, wharves, machinery and other works, property, and effects appertain- ing to the Canal or railroad and auxiliary works, or their officers or employees, situated within the cities of Panama and Colon, and that there shall not be imposed contributions or charges of a personal character of any kind upon officers, employ- ees, laborers, and other individuals in the service of the Canal and railroad and auxiliary works. ARTICLE XI The United States agrees that the official dispatches of the Government of the Republic of Panama shall be transmitted over any telegraph and telephone lines established for canal purposes and used for public and private business at rates not higher than those required from officials in the service of the United States. ARTICLE XH The Government of the Republic of Panama shall permit the immigration and free access to the lands and workshops of the Canal and its auxiliary works of all employees and workmen of whatever nationality under contract to work upon or seeking employment upon or in any wise connected with the said Canal and its auxiliary works, with their respective families, and all such persons shall be free and exempt from the military service of the Republic of Panama. ARTICLE XIH The United States may import at any time into the said zone and auxiliary lands, free of custom duties, imports, taxes, or other charges, and without any restrictions, any and all vessels, dredges, engines, cars, machinery, tools, explosives, materials, supplies, and other articles necessary and convenient in the construction, mainte- nance, operation, sanitation and protection of the Canal and auxiliary works, and all provisions, medicines, clothing, supplies and other things necessary and conve- nient for the officers, employees, workmen and laborers in the service and employ of the United States and for their families. If any such articles are disposed of for use outside of the zone and auxiliary lands granted to the United States and within the territory of the Republic, they shall be subject to the same import or other duties as like articles imported under the laws of the Republic of Panama. ARTICLE XIV As the price or compensation for the rights, powers and privileges granted in this convention by the Republic of Panama to the United States, the Government of the United States agrees to pay to the Republic of Panama the sum of ten million dollars ($10,000,000) in gold coin of the United States on the exchange of the ratification of this convention and also an annual payment during the life of this convention of two hundred and fifty thousand dollars ($250,000) in like gold coin, beginning nine years after the date aforesaid. The provisions of this Article shall be in addition to all other benefits assured to the Republic of Panama under this convention. But no delay or difference of opinion under this Article or any other provisions of this treaty shall affect or interrupt the full operation and effect of this convention in all other respects. ARTICLE XV The joint commission referred to in Article VI shall be established as follows: The President of the United States shall nominate two persons and the President of the Republic of Panama shall nominate two persons and they shall proceed to a decision; but in case of disagreement of the Commission (by reason of their being equally divided in conclusion) an umpire shall be appointed by the two Govern- ments who shall render the decision. In the event of the death, absence, or incapac- ity of a Commissioner or Umpire, or of his omitting, declining or ceasing to act, his place shall be filled by the appointment of another person in the manner above indicated. All decisions by a majority of the Commission or by the umpire shall be final. ARTICLE XVI The two Governments shall make adequate provision by future agreement for the pursuit, capture, imprisonment, detention and delivery within said zone and auxil- iary lands to the authorities of the Republic of Panama of persons charged with the commitment of crimes, felonies or misdemeanors without said zone and for the 79 pursuit, capture, imprisonment, detention and delivery without said zone to the authorities of the United States of persons charged with the commitment of crimes, felonies and misdemeanors within said zone and auxiliary lands. ARTICLE XVH The Republic of Panama grants to the United States the use of all the ports of the Republic open to commerce as places of refuge for any vessels employed in the Canal enterprise, and for all vessels passing or bound to pass through the Canal which may be in distress and be driven to seek refuge in said ports. Such vessels shall be exempt from anchorage and tonnage dues on the part of the Republic of Panama. ARTICLE XVm The Canal, when constructed, and the entrances thereto shall be neutral in perpetuity, and shall be opened upon the terms provided for by Section 1 of Article three of, and in conformity with all the stipulations of, the treaty entered into by the Governments of the United States and Great Britain on November 18, 1901. ARTICLE XIX The Government of the Republic of Panama shall have the right to transport over the Canal its vessels and its troops and munitions of war in such vessels at all times without paying charges of any kind. The exemption is to be extended to the auxiliary railway for the transportation of persons in the service of the Republic of Panama, or of the police force charged with the preservation of public order outside of said zone, as well as to their baggage, munitions of war and supplies. ARTICLE XX If by virtue of any existing treaty in relation to the territory of the Isthmus of Panama, whereof the obligations shall descend or be assumed by the Republic of Panama, there may be any privilege or concession in favor of the Government or the citizens and subjects of a third power relative to an interoceanic means of communication which in any of its terms may be incompatible with the terms of the present convention, the Republic of Panama agrees to cancel or modify such treaty in due form, for which purpose it shall give to the said third power the requisite notification within the term of four months from the date of the present convention, and in case the existing treaty contains no clause permitting its modifications or annulment, the Republic of Panama agrees to procure its modification or annul- ment in such form that there shall not exist any conflict with the stipulations of the present convention. ARTICLE XXI The rights and privileges granted by the Republic of Panama to the United States in the preceding Articles are understood to be free of all anterior debts, liens, trusts, or liabilities, or concessions or privileges to other Governments, corporations syndi- cates or individuals, and consequently, if there should arise any claims on account of the present concessions and privileges or otherwise, the claimants shall resort to the Government of the Republic of Panama and not to the United States for any indemnity or compromise which may be required. article xxn The Republic of Panama renounces and grants to the United States the participa- tion to which it might be entitled in the future earnings of the Canal under Article XV of the concessionary contract with Lucien N. B. Wyse now owned by the New Panama Canal Company and any and all other rights or claims of a pecuniary nature arising under or relating to said concession, or arising under or relating to the concessions to the Panama Railroad Company or any extension or modification thereof; and it likewise renounces, confirms and grants to the United States, now and hereafter, all the rights and property reserved in the said concessions which otherwise would belong to Panama at or before the expiration of the terms of ninety-nine years of the concessions granted to or held by the above mentioned party and companies, and all right, title and interest which it now has or may hereafter have, in and to the lands, canal, works, property and rights held by the said companies under said concessions or otherwise, and acquired or to be acquired by the United States from or through the New Panama Canal Company, including any property and rights which might or may in the future either by lapse of time, forfeiture or otherwise, revert to the Republic of Panama under any contracts or 80 concessions, with said Wyse, the Universal Panama Canal Company, the Panama Railroad Company and the New Panama Canal Company. The aforesaid rights and property shall be and are free and released from any present or reversionary interest in or claims of Panama and the title of the United States thereto upon consummation of the contemplated purchase by the United States from the New Panama Canal Company, shall be absolute, so far as concerns the Republic of Panama, excepting always the rights of the Republic specifically secured under this treaty. article xxm If it should become necessary at any time to employ armed forces for the safety or protection of the Canal, or of the ships that make use of the same, or the railways and auxiliary works, the United States shall have the right, at all times and in its discretion, to use its police and its land and naval forces or to establish fortifications for these purposes. ARTICLE XXIV No change either in the Government or in the laws and treaties of the Republic of Panama shall, without the consent of the United States, affect any right of the United States under the present convention, or under any treaty stipulation be- tween the two countries that now exists or may hereafter exist touching the subject matter of this convention. If the Republic of Panama shall hereafter enter as a constituent into any other Government or into any union or confederation of states, so as to merge her sovereignty or independence in such Government, union or confederation, the rights of the United States under this convention shall not be in any respect lessened or impaired. ARTICLE XXV For the better performance of the engagements of this convention and to the end of the efficient protection of the Canal and the preservation of its neutrality, the Government of the Republic of Panama will sell or lease to the United States lands adequate and necessary for naval or coaling stations on the Pacific coast and on the western Caribbean coast of the Republic at certain points to be agreed upon with the President of the United States. ARTICLE XXVI This convention when signed by the Plenipotentiaries of the Contracting Parties shall be ratified by the respective Governments and the ratifications shall be exchanged at Washington at the earliest date possible. In faith whereof the respective Plenipotentiaries have signed the present conven- tion in duplicate and have hereunto affixed their respective seals. Done at the City of Washington the 18th day of November in the year of our Lord nineteen hundred and three. John Hay. P. Bunau-Varilla. And whereas the said Convention has been duly ratified on both parts, and the ratifications of the two governments were exchanged in the City of Washington, on the twenty-sixth day of February, one thousand nine hundred and four; Now, therefore, be it known that I, Theodore Roosevelt, President of the United States of America, have caused the said Convention to be made public, to the end that the same and every article and clause thereof, may be observed and fulfilled with good faith by the United States and the citizens thereof. In testimony whereof, I have hereunto set my hand and caused the seal of the United States of America to be affixed. Done at the City of Washington, this twenty-sixth day of February, in the year of our Lord one thousand nine hundred and four, and of the Independence of the United States the one hundred and twenty-eighth. Theodore Roosevelt. By the President: John Hay, Secretary of State. 81 A Position Paper, Presented by U.S. Crvic Councils to the House Subcommittee on the Panama Canal, April 12, 1977 The Panama Canal was created by United States taxpayers' dollars, American ingenuity, engineering and medical expertise, and dedicated labor, transforming a sparsely populated, fever-infested jungle into the eighth wonder of the world. In fact, the Republic of Panama owes its very existence to the United States and the Panama Canal. Anyone who has seen the Nicaraguan area which was once consid- ered for a Canal route can readily imagine what Panama would look like today had there been no Canal built here. Likewise, Panama owes its former prosperity to the United States and the Canal Zone, not just from the annual railroad annuity, but also from wages paid to Panamanian employees in the Canal Zone, from purchases made by U.S. citizens and agencies of the Canal Zone, and from the millions of dollars in foreign aid given so lavishly out of U.S. taxpayers' money. The U.S. citizen work force in the Canal Zone is comprised largely of highly- skilled, dedicated, technical employees, who have left their homeland, not for serv- ice in a foreign country, but in the service of the United States government under the flag of the United States. Their outstanding record of accomplishments in keeping the Canal running smoothly and efficiently has been due largely to their sense of pride in their work, their sense of loyalty to the United States, and their attitude of concern for their country's welfare. These people believe strongly that the Panama Canal cannot operate effectively or efficiently without a Canal Zone which is under the jurisdiction of the United States — with U.S. laws, courts, postal system, police and fire protection, and schools with U.S. curriculum and U.S. citizen teachers. We believe that the U.S. government owes a strong legal and moral responsibility to these loyal employees to protect their job security, their lives, their property, and their families, while at the same time protecting the tremendous investment of taxpayers' money in the Canal. For the past 3Vij years, the U.S. Civic Councils in the Canal Zone have been preparing position papers and formal statements of community opinion for submis- sion to Congressmen, Canal Zone officials, Department of Army representatives, treaty negotiators, and State Department officials. We have tried to maintain an attitude of rationality, calmness, and sensible perspective on the subject of a new Panama Canal treaty with the Republic of Panama. One of the many points we have tried to make so often, so much so that we feel like "broken records," is that the U.S. citizen in the Canal Zone feels very apprehensive about living under the type of "legal system" now in force in the Republic of Panama. We live next-door to the Republic of Panama all year long! We use our eyes and ears to observe what is going on there and we are not naive enough to believe that the Guardia Nacional, that mistreats fellow Panamanians with arbitrary beatings, imprisonment, expatriation and murder, is going to give special treatment to those "hated colonialist gringoes" who have finally come under their jurisdiction. (This attitude of hostility is encouraged and developed by the Government-controlled news media in the Republic of Panama.) The actions of the Panamanian govern- ment during the past year-and-a-half have done nothing to sell the U.S. employee in the Canal Zone on the idea of living under Panamanian jurisdiction. Let us cite a few examples: 1. In January, 1976, a group of Panamanian businessmen and professionals were exiled, contrary to the Panamanian constitution, for their opposition to the Torrijos regime. 2. The student riots in Panama City in September, 1976, were clumsily handled by the Guardia Nacional, so much so that the disorder continued almost daily for a week-and-a-half. When the Guardia finally took decisive action, it was brutal. 3. The October bombings in the Canal Zone have been credited to members of the G-2 of the Guardia Nacional, although members of the U.S. Embassy speculated informally that Bill Drummond might have bombed his own cars and participated in bombings at other sites in order to gain sympathy for his anti-treaty stand. 4. An Air Panama pilot, officially charged with possession of bombs to be used against the Panamanian government, told people at Paitilla Medical Center that the bomb that exploded in his car was tossed in there by a passing G-2 car. According to the Panamanian government's "official version ', the man s wife was holding a bomb in her lap (a somewhat incredible tale) when the bomb exploded, injuring her seriously. Incidentally, his wife was sentenced to five years in prison. 5. Guardia Nacional escorted groups of students into the Canal Zone January 9, 1977, where American flags were burned and Panamanian flags were raised. (This last ritual seemed somewhat unnecessary because Panamanian flags are already flying in the Canal Zone.) 29-AOO - 78 82 6. William Drummond, while passing through Tocumen Airport on February 11, 1977, en route to Washington on labor union business, was detained by G-2 agents and questioned for about three hours in the downtown Panama City office. When he tried to board another plane the following day, he was detained for 15 minutes at the foot of the boarding ramp, and seven friends who accompanied him to the airport were also detained and questioned because one of them took pictures of Mr. Drummond being stopped by G-2 agents. The film was confiscated by the G-2. It seems inconsistent with the stated refusal of our government to deal with countries who have violated human rights that any negotiations should be carried on with a government which is in power illegally, and which has a record of frequent violation of human rights. The Torrijos dictatorship has used extreme repression against political, professional, business, student and labor groups. The expatriation of what is estimated to be about 1300 Panamanians and the murder of some 500 persons in a country of only 1,700,000 inhabitants would compare to 168,000 expatriations and 65,000 murders in the United States. (Definitive, authori- tative figures on expatriations and political murders are difficult to obtain in Panama because of Government secrecy and suppression of information which the Government does not want its people to have.) What exists now in the Canal Zone, after many attempts on our part to send out warning signals and indications of problems to come, is a "seige mentality" and crisis atmosphere. Now that one of the Civic Council presidents whose signature appears at the conclusion of this paper (Harold Green of Gamboa) has had recent experience with arbitrary detention, arrest, interrogation and search in the Repub- lic, we are having real difficulty in maintaining an attitude of composure and calm rationality. In short, our people have told us that they are more rigidly opposed than ever to living under Panamanian jurisdiction. The list of 15 assurances, recently released by Governor Harold R. Parfitt, spelled out for them the cold hard reality that Panamanian law would go into effect when the treaty was inaugurated, and many, many of our people now tell us that "the day that the Canal Zone Police go, we go," and also, more alarmingly, "When the U.S. workers see the day getting closer when jurisdiction will be handed to Panama, you can expect to see the Canal shut down." Last year Dr. Richard Cheville addressed your committee not long after the March sick-out, and he explained in his testimony some of the factors that led up to the closing of the Panama Canal. Morale at that time was extremely low; this year we have to say honestly that our people are so demoralized that they are ready to give up and quit — a shutdown of the Canal, if it occurs, will not happen over a labor issue. It will result from apprehensive employees, who in their fear for their physical security, will simply leave their jobsites, go home and pack their suitcases for repatriation. We do not say this lightly; we do not say it as a threat. But we must make the honest observation that our people feel so thoroughly discouraged and so exhausted after several years' worth of worry and insecurity (with nothing much to look forward to), that it would not take much to get some of them to join a job action. In contrast to our position as year-round residents and as elected representatives of U.S. citizens living in the Panama Canal communities, the treaty negotiators and State Department officials have little at stake themselves personally, other than to successfully negotiate a treaty which will, in their minds, ease hemispheric tensions and get rid of chronic problems in our relations with Panama. When they finish their assignment, they will move on to other missions, leaving us to live with what they have arranged in treaty form. Generally, the treaty negotiators came to Panama for short periods of time, followed by journalists who become experts after a three-day tour that includes standard briefings by the Panamanian and Canal Zone governments. These negotiators for the most part stay in isolation on the island of Contadora, and when they have consented to meet with Canal Zone labor and civic representa- tives, they have said relatively nothing of any significance on the treaty issue. We sincerely resent the fact that our services and the future security of our nation are being negotiated under a cloak and dagger atmosphere, particularly since the secre- cy is unilateral. Secrecy, in recent years, has been closely linked with dishonest, illegal or shady dealings. We in the Canal Zone are hard pressed to accurately define the secrecy attached to the Panama Canal negotiations. (Imagine our chagrin to daily read in the Panama papers that a Panamanian government spokesman is briefing Panamanian student, professional, business or labor groups on the "pro- gress of the negotiations." And the presidents of Costa Rica, Colombia, Venezuela seemed to be briefed regularly by General Torrijos about treaty matters. Does the U.S. State Department believe that the American people are not mature enough to properly accept and assimilate such highly important information?) Let us make clear that we are American citizens deeply concerned with the present and future well-being of our nation. Our opinions on what the U.S. has at stake in the negotiation of a new Canal treaty are also affected by our conversations with Panamanian friends, our reading of Spanish-language and English-language newspapers in Panama, and our understanding of the behavioral traits of the Panamanian government (something which one does not arrive at overnight or even in three days). Because of the present situation in the Republic of Panama, many of us do not "cross the border" as often, as freely, or even as nonchalantly as we used to. Fear, apprehension, and deep concern for our personal safety brought about by a succession of events in Panama, have given us an increasing "looked-in" feeling in the Canal Zone. When Panamanians are deported, or arrested, tortured and even killed for having dissident opinions, and when even our own people are subject to arrest in Tocuman Airport, in violation of existing treaty agreements — the average U.S. citizen in the Canal Zone is not at all enthusiastic about arbitrarily being subjected to the legal jurisdiction of such a repressive government. As an additional item of evidence, we have had numerous conversations with many Panamanians that you will never be able to meet. Our impression from these conversations is that when the Panamanian government officials speak today, they are not speaking for all the people. Let us cite a statement made recently by an educated businesswoman from Panama City. Speaking to a Civic Council president informally, she said, "The United States is a world leader and so is the Soviet Union. But the United States has the advantage of liberty and freedom. Yet your country is doing nothing to help promote the spread of liberty in Latin America today. I understand that your government cannot interfere in our internal affairs, but your government COULD withhold foreign aid and could stop giving military assistance to our government. Our people are growing in their resentment of the United States government because they see your government selling weapons, armored cars, and other equip- ment to this government that oppresses us." The Panamanian people seem to be overtly silent because they have no effective means that they can see with which to fight back. However, the ever increasing opposition to the dictatorial Government of Omar Torrijos became glaringly evident during the past September riots in Panama. Rumors have been rampant for months in the Canal Zone and Panama that more antigovernment riots may be imminent in the months of April and May. What effect does all this have on the operation of the Canal? Right now it is having a disastrous effect on the quality of work being performed because workers are "uptight" constantly about physical and economic security. The pride in work- ing on the Panama Canal that has been part of our historical heritage here since the Canal's construction is now giving way to constant preoccupation with one's personal welfare. The recent arrests of U.S. citizens at Tocumen Airport was not highly regarded by our people, many of whom wonder about their own safety in passing through this airport. The Panamanian government has not yet responded to the official protest concerning their violation of the Air Transport Service Agree- ment of 1949. Comments in the Panamanian press were that the Panamanian government did not like the agreement, a sentiment that does not augur well for any commitments made in a new treaty. The Panamanian government could decide, sooner or later, that they "don't like the agreement" again. On the subject of Tocumen Airport, let us add that our requests for use of Howard Air Force Base as the point of air departure and arrival from the Canal Zone were denied because "one arrest does not justify the civilian use of this military air terminal." U.S. residents who one year ago thought William Drummond was an eccentric who made his own problems, have been so jarred by events of the past year that now they identify fully with what happened to him at Tocumen Airport. The reason thusly: "If it can happen to Bill Drummond, then perhaps it can happen to me." Our people are now asking us, "How many arrests are needed for someone in our federal government to take steps to insure our protection in travel by air to and from the Canal Zone?" Turning now to the subject of employee status under a new treaty with Panama, we would like to respond to the recent list of 15 items which the U.S. presumably proposes to submit at the negotiating table. In spite of the fact that the Panama- nian government has said that this list of "assurances" would not be acceptable, we wish to let you know the reaction from the U.S. community in the Canal Zone. Assurances of U.S.-provided schooling and medical care, adequate housing, duty-free import and purchasing privileges and exemption from Panamanian 'income tax were good news to us, as you may be well aware. The language regarding job assurances 84 was somewhat vague and left us wondering if we would be given help or if we would not. The assurances seem to promise only what we already have: "all eligible employees are guaranteed by current regulation reduction-in-force and reassignment rights, transfer of function rights, and discontinued service retirement following involuntary separation." We were also told that "Civil Service Commission approval will be sought to provide any present U.S. citizen employee requesting such assist- ance with priority placement consideration for appropriate vacancies in federal government agencies." This is still vague and uncertain, and our people have had about all they can tolerate of uncertainty. The irony of the list of 15 assurances is that, in spite of advantages which the U.S. citizen who might consider remaining here will have over the locally-hired Panamanian citizen employee, our people have such strong objections to the fifth item in that list, that they have little interest in the other somewhat positive assurances. The item which caught the exclusive attention of the U.S. community reads like this: "In connection with offenses arising from acts of omission punish- able under the laws of the Republic of Panama, United States citizen employees and their dependents will be entitled to specific procedural guarantees, such as prompt and speedy trial, specific charges, cross-examination of witnesses and legal represen- tation of choice." Disregarding the fact that Panamanian government officials have announced in their local newspapers that they would never allow U.S. employees in the Canal enterprise to have a SOFA-type of agreement such as the U.S. military will have, and assuming for the sake of argument that the Panamanian negotiators agree to this assurance as part of the new treaty, who will guarantee that the Panamanian government will consistently comply with the request to give U.S. citizen employees these "procedural guarantees"? After reviewing the list of assurances, we would like to hear something more specific and concrete, in language that we can understand, concerning priority transfers to government jobs in the United States. In addition, we would like to express concern for two particular job categories: teachers and policemen. At this point, teachers have no transfer rights from the Canal Zone into the U.S. Civil Service system, other than for jobs at Indian reservations. They have worked faithfully and well in educating our children, and we are distressed that they are left "out on a limb" when it comes to job transfers. Those who do not choose to participate in the DOD school system which will probably go into effect down here should be given first priority for employment in the U.S. and assistance in obtaining such employment. The men and women of the Canal Zone Policies Division are among those living under a "death sentence" because treaty negotiators have made it quite clear that law enforcement functions of the present Canal Zone Government will cease within three years after the new treaty goes into effect. The morale in this particular division continues daily at an all-time low because these employees only know that they will be out of a job soon; they know nothing about any future employment that will allow them to provide for their families. In general, our people were appreciative of the attempt to give them some information about their status under a new treaty, even if that list of assurances is rejected by the Panamanian government. Nevertheless, our Personnel Bureau con- tinues to have difficulty in recruiting pilots, doctors, nurses, marine engineers, electricians, tugboat masters, and other needed workers for the Canal enterprise. Our constituents tell us that June will witness another mass exodus from the Canal Zone, further magnifying the problem for our job recruitment specialists. During the past three to four years, while job security has been a major concern for our people, they have been receiving an "education" from the State Department con- cerning the treaty. In briefings, newspaper articles, and informal discussions, the State Department officials make clear these basic premises for their argument that a new treaty is needed: 1. A Canal Zone is not necessary for the successful operation of the Canal. (They tell us that we wouldn't WANT to live in the Canal Zone if Panama did not get the treaty it desires.) 2. The countries of Latin America give full support to Panama's claims for sovereignty over the Canal Zone and eventual control of the Canal operation. 3. The turnover of the Canal to Panama is in the best interests of the United States because not to do so would possibly involve our country in another Viet Nam- style guerrilla war. 4. Panama has a sincere interest in keeping the Canal open and would not do anything to jeopardize the efficient operation of the Canal. 5. The Canal Zone is an anachronism; it is a source of irritation. Once the U.S. citizens are scattered throughout Panama City and Colon, they will no longer be 85 identified as "Zonians," thus easing tensions and friction between the U.S. and Panama. 6. The economic growth of Panama depends on acquiring the lands in the Canal Zone so that Panama City and Colon can expand their business interests. 7. The denial of basic human rights within the Republic of Panama is not a matter that needs to be brought into the treaty negotiations. After all, Panama is one of the "developing countries of the world," and such behavior is normal for such countries. 8. The State Department would not negotiate a treaty which the U.S. Congress would not ratify. The above concepts might be plausible to someone who has not lived here, to someone who has little or no dealings with the Panamanian government and its officials. They make the negotiation of a new treaty with Panama under the Kissinger-Tack conceptual principles as the most logical course to follow. Permit us to provide some responses to these concepts we have listed. 1. When the Canal Zone U.S.-based legal system ceases to exist, many, if not all U.S. employees will leave because they prefer to work and live under an orderly system of laws that guarantees them justice and fair play. They are becoming increasingly resistant to the thought of living under Panamanian legal system as it is now administered. 2. The countries of Latin America say one thing in public and another privately. In the newspapers they pledge full support for Panama's claims to the Canal. In private, to people such as former Under Secretary of State William Rogers, they say that they are satisfied with the course that the U.S. is taking in the Canal treaty negotiations. From observation of the political behavior and egocentrism of Latin American governments, one can safely say that Omar Torrijos could not depend on his Latin American neighbors for monetary or military support in an open conflict with the United States. Those other countries wish to preserve their own ties to the United States in foreign aid allotments and commercial ventures. They would not sacrifice their own interests for the sake of Torrijos' "just aspirations' concerning the Canal. Rhetorical support is about all that General Torrijos can expect from Central and South America. 3. Turning over the Canal to prevent "guerrilla warfare" is NOT in the best interests of the United States because: a. construction of enough warships to provide a "two-ocean navy" would be necessary in case Panama became whimsical in permitting us access to the Canal for military vessels. The extra cost in fuel for sending these ships around the tip of South America would be astronomical. b. The Moscow-Havana axis has been casting lustful eyes for a long time toward our Canal as well as at other straits and waterways of the world. Panama does not have the military strength (even with the armored cars new in their possession) to withstand an assault from ANY country that would choose to invade and occupy it. The Panamanian people are not "fighters" by tradition; they have never fought a war of liberation. The average campesino reasons in this way: "Why should I get myself killed for the sake of a dictator? What will it gain me or my family? Absolutely nothing. Therefore I will simply adjust to whoever is in power. One ruler is as bad as another." c. The flow of Alaskan oil through the Panama Canal en route to eastern ports in the United States will be in serious jeopardy when Panama has control over access to the Canal and over the setting of tolls. d. Our first line of defense in the western hemisphere would suddenly become Harlingen or McAllen, Texas (or perhaps Key West, Florida.) e. The threat of "guerrilla warfare" amounts to nothing more than an attempt at political "blackmail ' and appears to be contradictory in nature, based on the actions of the State Department. How valid is the threat if the State Department permits the sale and assists in the movement of armed personnel carriers to the Panamanian government? This military equipment was furnished in two install- ments, the first in October, 1976, and the second on March 5, 1977. The second installment, consisting of 12 armored vehicles, was delivered under Canal Zone police escort, to the Republic of Panama. What can justify the sale of military equipment to a potential enemy? How does one explain this situation to a U.S. soldier who may some day face his own death at the hands of an enemy who is using equipment built in the United States and delivered with the help of our own Government officials? (One rather weak explanation from the U.S. Embassy in Panama is "Well, if they don't buy from us, they'll buy from someone else. It's better that US industry gets the money and we can control the supply of replace- ment parts." 4. The Panamanian government is not noted for rational, logical behavior, nor for extensive attention toward preventive maintenance of government equipment. At this point, the Panamanian government, nearly bankrupt, needs money so desper- ately that we agree they have a sincere interest in keeping the Canal open and operating efficiently. We further believe that the Canal will remain open and operating efficiently even if the Panamanian government does not gain control of the Canal and the Canal Zone. Panama presently derives about one-third of its national income ($256,000,000 in 1976) from Canal sources and they are not about to jeopardize that income by foolishly attempting to sabotage the Canal. Any terrorist or guerrilla type action, if at all, will be aimed at targets other than the Canal. In short, U.S. taxpayers are being required to sacrifice their tax dollars, land and national security in order to protect the investment of multinational business corpo- rations. One of the differences between U.S. control and Panamanian control of the Canal and Canal Zone is the anticipated exorbitant increase in tolls which Panama would levy. Any such increase would seriously jeopardize the economic health of the Canal and increase the cost of products in countries that can ill afford such an increase. Sabotage and toll increases will hurt most of these Central and South American countries who are supposedly solidly behind the "just aspirations" of General Torri- jos. The lackadaisical attitude toward repairs and maintenance would contribute to the mechanical and structural breakdown of the Canal and appurtenances (unless the United States agreed to continue supplying parts and maintenance indefinitely). 5. The "gringo" as he is often called here in Panama will continue to receive harassment, whether he lives in Panama or the present Canal Zone. The United States has been a rather convenient whipping-boy for the Republic of Panama for years and years. Criticism of the U.S. has always been used to distract the Panama- nian's attention from the incompetence, graft, corruption, and poor judgment of his government. Besides, the average Panamanian (when he permits himself to talk freely,) DOES NOT want a treaty signed under the regime of Omar Torrijos. Such a treaty would reinforce the already crushing power of the Torrijos government on the Panamanian people. 6. The economic growth of Panama will need more than a Canal to restore it to health. The repressive atmosphere has inhibited consumers from visiting stores and businesses; it has inhibited investors from putting their money to work in Panama- nian enterprises. The acquisition of Canal Zone lands for use by Panamanian commercial interests still requires the intelligent use and exploitation of those lands by competent businessmen. Such people are not the ones in control in the Panama- nian government today. The ones in power are military men without adequate training in economics and business management. At this point we will not even attempt to explore the plight of the businessman in Panama who is weighed down by a pyramid of government taxes and fees, a labor code full of headaches for everyone, and abundant government red tape necessary in order to operate a business in the Republic. 7. The denial of basic human rights within the Republic of Panama IS a matter that should be considered in the treaty negotiations. President Carter has expressed repeated interest in the matter of human rights. If our country is to participate in a metaphorical "marriage" by means of a treaty with another country, we should know just WHO that "spouse" is. Denial of human rights is bound to make further problems for Canal employees later on, no matter WHAT nationality they are. Rather than taking an amoral stance, our country should apply its influence on the Panamanian government, to the extent that U.S. citizens (who DO come under the legitimate concern of our federal government) will not be permitted to live under such repression. We cannot rightfully interfere in the domestic policies of another nation, but we can let them know that they will not receive what they want so desperately from us until they make some changes in those policies. 8. The State Department, is negotiating a treaty which IT is willing to ratify. They make the assumption that they know what is "in the best interest of the United States" and that all other opinions are to be considered ill-informed, unenlightened and out of step with modern times. In past years, civic leaders from the Canal Zone have presented to you concerns they had about day-to-day items such as health cart, commissaries, substandard housing, and schools. We continue to have such concerns, but in an important hearing such as this, when your time is at a premium, we emphasize that our concern this year is the survival of the Canal and the physical well-being of the Canal operation. 87 U.S. citizens in the Canal Zone have been greatly disturbed in the past year with the direction in which the treaty negotiations seem to be going. They tend to feel powerless in the writing of a major agreement between two countries, an agreement which will have far-reaching effects on these workers as well as on the United States as a nation. Because of the political unrest in Panama today as opposition to the Torrijos regime mounts because of economic and political problems, we know we live and work here with a certain amount of risk. But at the same time we are concerned with the implications that the treaty being negotiated with Omar Torri- jos will have on the United States. The behavior of the Panamanian government in the past year should be testimony enough in itself to give our Senators and Repre- sentatives some serious reservations about the wisdom of a treaty with a govern- ment that runs roughshod over its citizens' human rights and that drains the national treasury to supply a comfortable lifestyle for numerous high-ranking offi- cials. A case in point is the current trip to Libya, during which General Torrijos and 49 other dignitaries will expend government funds while their nation is on the threshhold of bankruptcy and the people at home are exhorted to make "sacrifices" for the national good. While all these things have been going on in Panama, State Department officials have assumed that the Panama Canal worker would stay in his place and patiently await the verdict on the treaty. They can no longer make that assumption safely, If the U.S. Government wishes the Canal to continue operating efficiently for world commerce, it will need to supply employees who are willing to work under the present tense and uncertain conditions. The U.S. Government may find them, but with some difficulty and probably at great cost in financial enticements. It would seem to make more sense to respond to the needs of the current workforce and likewise to avoid any haste in ratifying a treaty with Panama that promises to bring even more headaches in the future. For ourselves as U.S. citizens living and working thousands of miles from our homeland, we can say, "Pack us up tomorrow. We're ready to go." But for the sake of U.S. commerce and of U.S. national interests in general in the Western Hemi- sphere, we urge you to examine the proposed treaty (whenever it is announced) in minute detail. We urge you to visit here for more than three days, to observe the situation with your own eyes and not to depend solely on briefings by U.S. or Panamanian government officials. The new treaty with Panama will have long- range repercussions that coming generations will have to live with; we urge you not to ratify a new treaty solely because the State Department says that a treaty is the cure-all to problems with Panama. The Russia-Cuba axis and the American elector- ate are waiting to see which way the treaty goes. A hasty decision on the part of our Congressmen without giving deep and thoughtful study to the question would please the former and infuriate the latter. Mrs. Charlotte Kennedy, President, Cristobal-Margarita-Brazos Heights Civic Council; Mrs. Patricia Fulton, President, Pacific Civic Council; Mr. Harold B. Green, Jr., President, Gamboa Civic Council; Mr. Dale Windle, President, Gatun Civic Council; Dr. Melvin Boreham, Presi- dent, Coco Solo-France Field Civic Council. Statement by Admiral Thomas H. Moorer Mr. Chairman and Distinguished Members of the Subcommittee on the Separa- tion of Powers, I am honored to be here as a witness. I hope my testimony will prove helpful in these hearings regarding the U.S. Canal Zone and the Panama Canal. My military experience during the last twelve years of active duty, from 1962 to 1974, offered me some extraordinary and unique opportunities to assess the impor- tance of the Panama Canal to the United States, as well as its value to our Allies and friends and, indeed, to all maritime nations. My evaluation of this waterway as an invaluable possession of the United States was intensified in 1962. At that time I was Commander Seventh Fleet operating in the Western Pacific. Frequently my fleet's capabilities depended on the prompt arrival of supplies from the Atlantic seaboard, supplies loaded aboard ships which were utilizing the Panama Canal. From the Seventh Fleet I went to Commander-in-Chief, Pacific; from there to Commander-in-Chief, Atlantic, and NATO's Supreme Allied Commander, Atlantic; from there to Chief of Naval Operations and from there to Chairman of the Joint Chiefs of Staff. Each of these commands provided unique opportunities, and some- times urgent reasons, to evaluate the Panama Canal. I saw this strategic waterway from many vantage points and under stressful circumstances. 88 As Commander-in-Chief, Pacific, I recall in some detail the Tonkin Gulf era of 1964. During that period I saw the Panama Canal as a conduit for rapid reinforce- ment from the Atlantic Fleet should the naval forces of the Soviet Union or mainland China become involved in the Vietnamese War. The U.S. high command was never sure during those early phases of the war of the intentions of either the Soviet Union or mainland China. We knew they had the naval and air capabilities to make trouble and therefore we had to draw up contingency plans for such eventualities. In order to equalize the wartime explosure and hardship throughout the entire Navy, large numbers of Atlantic Fleet units were continuously rotated through the Canal to the combat theatre in the Pacific. In addition, as the Pacific Fleet Commander, I looked to the Atlantic side for rapid logistics support. The U.S. Army, the U.S. Air Force, the U.S. Marine Corps and the U.S. Navy all required a continuous and heavy flow of logistic support; such necessities as fuel, ammunition, spare parts and food. Our allies fighting with us in Vietnam also required consider- able support from the United States. If the Panama Canal had not been open and available, the war in Vietnam would have been much more difficult and costly to conduct. This conclusion is also true for the war in Korea. To give you some idea of the magnitude of Panama Canal usage and its relation- ship to the war effort, in 1963 there was a total of 300 U.S. government transits through the Panama Canal. As the war escalated, the number of government ships transiting by 1966 had almost doubled. The records show for that year — 1966— a total of 591 government ships transited the Canal. Most of these ships were carrying critically needed logistics support to the forces operating under my command. As Commander-in-Chief, Atlantic, and NATO's Supreme Allied Commander, I saw the situation at Panama in another perspective. That was for the period 1965 to 1967. The war in Vietnam was still expanding, but now I was looking at the Canal not only as a means of sending support to the Commander-in-Chief, Pacific, but also from the Atlantic perspective. I saw the possible need to reverse the flow of ships through the Canal, particularly if the situation deteriorated in the Middle East or in the Caribbean during those volatile months of tension and conflict in both these Both in our U.S. planning and in our NATO planning we envisioned contingencies calling for reinforcements from the Pacific Ocean areas. We envisioned the need for combatant tonnage, Army and Marine Divisions, and particularly we saw the need for amphibious lift. As Chief of Naval Operations I had to look at the Panama Canal as an essential means of equalizing the strength and providing the balance between the Atlantic and Pacific fleets. The Canal made it possible to preposition certain types and tonnages, but always with the knowledge that the balance could be shifted to meet unforeseen situations. The Panama Canal gives the naval planner much flexibility and versatility that he would be deprived of without it. As Chairman of the Joint Chiefs of Staff I became even more sensitive to the strategic value of this U.S. Canal as a means of protecting the security of the United States. My job as Chairman involved all of the Armed Forces of the United States — their collective requirements — and I was primarily responsible to the Presi- dent for their ability to carry out their roles and missions as assigned by the Congress. Any Commander acting in that capacity will immediately perceive that it is vital to United States interests to retain complete ownership and control of the Panama Canal. It was at this juncture of my command responsibility that I became concerned about the proposals to surrender the Panama Canal to a leftist oriented government allied with Cuba. There existed the potential danger for giving this U.S. advantage to a man who might allow or might be persuaded that it was in his best interest to permit Soviet power and influence to prevail by proxy over the Canal, in much the same manner as happened in Cuba. I was convinced as Chairman of the JCS — and I remain convinced today — that if the Soviet Union ever gained even proxy sovereign- ty and control over the U.S. Canal Zone and Canal through Cuba, U.S. security as well as U.S. prosperity would be placed in serious jeopardy. The United States would be placed in jeopardy because interocean mobility would be threatened. The mobility of allied commercial shipping and naval forces would face the same threat. The economic lifelines of the entire Western Hemisphere would be needlessly jeopardized, and the point is: there is no point in surrendering this vital interest. I have yet to see any solid justification advanced as to why the United States should willingly sacrifice the strategic advantages afforded to us by our possession of the Panama Canal. Also, by relinquishing control of the Canal Zone and the Canal, we would force all those nations who depend on our power and leadership to accommodate to the adverse implications of such action on our part. 89 The Canal Zone could become the satellite base of an adversary, and the advocates of "giveaway" do not appear to take this factor into account. For the foregoing reasons and others not listed, I co-signed with three former Chiefs of Naval Operations a letter to President Carter. The key message in that letter was this: "Under the control of a potential adversary the Panama Canal would become an immediate crucial problem and prove a serious weakness in the overall U.S. defense with enormous potential consequences for evil." The military and commercial considerations are obvious. Although the large aircraft carriers and large supertankers cannot use the Canal, 97 percent of the world's commercial and naval fleets can use the Canal as it is. The Canal does need some modernization. About two-thirds of all the current Canal traffic is bound to or from U.S. ports. When ships round the Horn instead of going through the Canal, they must travel about 8,000 extra miles, have 8,000 extra miles of wear and tear, need 8.000 extra miles of fuel. On an average it takes 31 extra days to round the Horn. If we were denied use of the Canal, we would* have to build a much larger Navy; much larger storage and harbor facilities on both the East and West Coasts of the United States, and provide more merchant ships as weD as escorts. Surrender of U.S. sovereignty over the Canal Zone would inevitably lead to the transformation of the entire friendly character of the Caribbean and the Gulf of Mexico. Everything would depend on the attitude of those who held sovereignty and ownership. In military affairs there is no substitute for ownership of the territory and the ability to control or to deny the waters and the air space. After having lived through three decades of conflict I don't believe it takes much imagination to envisage some of the pitfalls we might face in turning the U.S. Canal Zone and Canal over to any government that might see fit to use it against us. Mr. Chairman, I would like to include in the record the letter signed by four Chiefs of Naval Operations, including myself, and the forwarding endorsement signed by four distinguished members of the United States Senate as part of my statement. Regarding the question of sovereignty, ownership and control of the U.S. Canal Zone and the Canal, I am not a lawyer, but I am satisfied with the Supreme Court's decision of 1907 in the famous Wilson vs. Shaw case that the United States does have legal sovereignty and ownership for the purposes enumerated in the Treaty of 1903. This ruling was" reaffirmed as recently as 1972. Also, our Constitution states in Article IV, Section 3, Clause 2, that only "Congress has the authority to dispose of U.S. territory and other property of the United States. The language in the Su- preme Court's decision of 1907 is quite precise. It is not ambiguous. So is the language in our Constitution. Since the Supreme Court's decision of 1907 still stands— it has never been overruled— and since the Constitution, in my opinion, is still the best governing document in existence. I can only conclude that we would be well advised to abide by these documents in our negotiations with other countries. Thank you, Mr. Chairman. 90 [From the Congressional Record— Senate, Sept. 7, 1977] PANAMA CANAL TREATIES Mr. Thurmond. Mr. President, after careful consideration and study over a number of years, I have concluded that the Panama Canal is of such vital importance to the United States that it would be a serious error to cede it to the Republic of Panama as contem- plated in the treaties which will be signed later today. I have made several trips to Panama to view firsthand the situa- tion there. As recently as August 19-21 of this year, I traveled with Senator Helms of North Carolina and Senator Hatch of Utah on an inspection trip to view the canal. The more I learn about the situation there, and the more I am able to find out about the treaty to cede the territory and the neutrality treaty and their implica- tions, the more convinced I am that the Senate should reject them. There are a number of considerations I would like to discuss with you this morning, among them the defense, political, economic, and legal reasons to oppose ratification of the treaties. First, I will discuss national defense considerations. The canal permits a quick two-ocean response by our naval forces to any military emergency. As you are probably aware, four former Chiefs of Naval Operations have so attested in a personal letter to the President. These four great naval strategists, Admirals Anderson, Burke, Carney, and Moorer, have retired from the active service and speak with a free mind uninhibited by political consid- erations. Their assessment of a canal giveaway, as reflected in the warning to the President, is sobering to say the least. In their letter to the President they warned: Loss of the Panama Canal' which would be a serious setback in war, would contribute to the encirclement of the U.S. by hostile naval forces and threaten our ability to survive. Approximately 98 percent of our naval fleet can transit the canal. Only our larger aircraft carriers are unable to use it. It is well to bear in mind that the 8,000-mile journey around the Horn adds 3 weeks to interocean transit time and costs 10 times as much as passage through the canal. Clearly, movement of troops or sup- plies around the Horn is hardly an acceptable alternative to use of the canal. As long as the United States retains sovereignty over and title to the canal, our Government maintains practical control. Under the neutrality arrangement proposed in the treaty, we lose practical control. Not only that, but according to members of the State Department negotiating team who briefed me, we oblige our- selves to guarantee access to our enemies in time of war. For this reason alone, Mr. President, I would urge my colleagues to reject this treaty. Control of territory and access routes is one of the most important elements of successful military strategy. Unless we maintain control, we will be at the mercy of the government which controls Panama. Now, Mr. President, I shall turn to the question of the political importance of the canal and to foreign policy considerations. Closely related to the military importance of the canal is the strategic deterrence which our presence in the canal area provides against Communist initiatives in that part of the world. As our 91 treaty negotiators were reaching the agreement in principle on ceding American ownership and control, the ink was barely dry on a new economic and commercial agreement between Panama and the Soviet Union. Apparently, as our Government prepares to evac- uate that part of the world pursuant to the proposed treaty, the Soviets are preparing to move in. As might be expected, a canal giveaway has other implications as well for our foreign policy. Whether this means a further diminish- ing of U.S. influence throughout the world is of great concern to me. Is it part of a pattern of retreat which we have established in Southeast Asia, South Korea, Western Europe, and possibly Taiwan? This misguided direction of our foreign policy engenders consternation on the part of our allies and audacity on the part of our adversaries. Mr. President, we cannot hope to deal effectively with other nations, and certainly not to play a leadership role, if we yield to blackmail. That is the only way to describe the threats of violence in Panama and in the Canal Zone, and threats of sabotage to the canal, which treaty proponents are broadcasting far and wide, and using as their chief argument for ratification. If the Senate were to ratify a treaty in the face of such threats, it would show the world a craven attitude which is entirely alien to our national character and our history and which would invite further exploitation by others. Moreoever, the present government in Panama is unstable and ill-prepared to run the canal. Panama has had 59 chief executives in 74 years. Under General Torrijos, who has ruled as dictator since 1968, public indebtedness has increased ten-fold, from $167 million to $1.5 billion. Furthermore, the current government there has violated the present treaty 11 times within the past 2 years. This is not a record which inspires confidence in those of us who are being asked to approve a new, more generous treaty. The aspect of the Torrijos government through, which may be most significant for our purposes, is that it is a repressive dictatorship. Freedom House, the respected organization which ranks countries on the basis of human rights, gives Panama the lowest rating in Latin America. Panama received the same 1977 rating on political and civil liberties as the Soviet Union, and was rated even lower than Cuba. Freedom House is a nonpartisan organization which the State Department cities in its report to Congress pursuant to the provi- sions of the Foreign Assistance Act. At the time of its last report on January 30, 1977, Freedom House listed as members of its board such eminent citizens as Mr. Zbigniew Brzezinski, now Director of the National Security Council; former Senator Gale McGee, new Ambassador to the OAS; Senator Jacob Javits; Mr. Roy Wilkins, former executive director of the NAACP; and other notable Ameri- cans. Mr. President, I ask unanimous consent that the Freedom House table of nations that sets out the comparative survey of freedom among the nations of the world be printed in the Record. There being no objection, the table was ordered to be printed in the Record, as follows: 92 COMPARATIVE SURVEY OF FREEDOM— TABLE OF NATIONS Political rights Civil rights 1 Status of freedom 2 Outlook 3 Afghanistan Albania Algeria Andorra Angola Argentina Australia Austria Bahamas Bahrain Bangladesh Barbados Belgium Benin 4 Bhutan Bolivia Botswana Brazil Brunei Bulgaria Burma Burundi Cambodia 4 Cameroon Canada Cape Verde Islands Central African Republic. Chad Chile China (Communist) China (National) Colombia Comoro Islands Congo Republic Costa Rica Cuba Cyprus Czechoslovakia Denmark Dominican Republic Ecuador ElSalvador Equatorial Guinea Ethiopia Fiji Finland France Gabon Gambia Germany (East) Germany (West) Ghana Greece Grenada Guatemala Guinea Guinea-Bissau Guyana Haiti Honduras Hungary Iceland India Indonesia Iran Iraq Ireland Israel Italy Ivory Coast Jamaica 6 NF 7 NF c 6 NF 4 PF 6 NF 5 NF- 1 F 1 F 2 F 4 PF 4? PF+ 1 F 1 F 7 NF 4 PF *4 PF* 3 F 5 PF 5 F 7 NF 6 NF 6 NF 7 NF *5 NF* 1 F *6 NF* 7 NF 6 NF 5 NF 7 NF ► c 5 PF* 3 F *3 PF 6 PF 1 F *6 NF 3 + 4 PF 6 NF 1 F *3 PF 4 PF 5+ 4 PF 3 PF- 7 NF 6 NF 2 F 2 F *1 F 6 NF 2 F 7 NF 1 F 5 NF 2 F 4 PF 3 PF 7 NF 6 NF 3+ 3 PF 6 NF 3 PF 6 NF 1 F 3_ 5 PF 5 PF 6 NF 7 NF *1 F 3 F *1 F 5 NF 3- F COMPARATIVE SURVEY OP FREEDOM— TABLE OF NATIONS— Continued Political rights 1 Civil rights 1 Status of freedom 2 Outlook 3 Japan 2 1 F Jordan 6 6 NF Kenya 5 5 PF Korea (North) 7 7 NF Korea (South) 5 6- PF? Kuwait 6- 5- NF- Laos 7- 7- NF- Lebanon 4 4 PF Lesotho 5 4 PF Liberia 6 4 PF Libya 7 6 NF Liechtenstein 4 2 PF Luxembourg 2 IF Malagasy Republic 6- 5 NF- Malawi 7 6 NF Malaysia 3 • 4 PF Maldives 4 4 PF Mali 7 7 NF Malta 1 2— F Mauritania 6 6 NF Mauritius 3 2 F Mexico 4 4- PF Monaco 4 2 PF Mongolia 7 7 NF Morocco 5 5 PF + Mozambique 7- 7- NF Nauru 2 2 F Nepal 6 5 NF - Netherlands 1 1 F New Zealand 1 1 F Nicaragua 5 *5 PF Niger 7 6 NF Nigeria 6 *4 PF + Norway 1 1 F Oman *6 6 NF Pakistan *4 5 PF Panama 7 6 NF Papua-New Guinea *2 2 F* Paraguay 2 6- NF- Peru 6 4 PF + Philippines 5 5 PF Poland 6 6 NF + Portugal 2+ 2+ F+ Qatar *5 5 PF* Rhodesia 6 5 NF Rumania 7 6 NF + Rwanda 7 5 NF San Marino 2 2 F Sao Tome and Principe 5 5 PF? Saudi Arabia 6 6 NF Senegal 6 4 PF + Seychelles 1+ 2 F Sierra Leone 6 5 PF Singapore 5 5 PF Somalia 7 *7 NF South Africa 4 5 PF + Spain 5 3+ PF + Sri Lanka 2 *3 F* Sudan 6 6 NF Surinam 2 2 F Swaziland 6 4 PF Sweden 1+ IF Switzerland 1 1 F Syria 6 *6 NF Tanzania 6 6 NF Thailand 6- 6- NF- + Togo 7 6 NF Tonga 5 3 PF Transkei 6 5 NF? Trinidad and Tobago 2 2 F + Tunisia 6 5 NF Turkey 2 3 F 94 COMPARATIVE SURVEY OF FREEDOM-TABLE OF NATIONS— Continued Political rights 1 Civil rights 1 Status of freedom 2 Outlook 3 Uganda U.S.S.R United Arab Emirates United Kingdom United States Upper Volta Uruguay Venezuela Vietnam Western Samoa Yemen (North) Yemen (South) Yugoslavia Zaire Zambia 7 7 NF 7 6 NF '5 5 PF* 1 1 F 1 1 F 5+ 5- PF + 6- *6- NF- + "1 2 F 7 7 NF 4 2 PF + 6 5 NF 7 7 NF 6 6 NF 7 6 + NF 5 5 PF x The scales use the numbers 1-7, with 1 comparatively offering the highest level of political or civil rights, and 7 the lowest. A plus or minus following a rating indicates an improvement or decline in the rating since the last survey. A rating marked with an asterisk (*) has been changed since the last survey due to reevaluation by the author. This does not imply any change in the country. For further information on the scale and survey see "Freedom at Issue ' Jan.-Feb. 1973, p. 2ff. 2 A free state is designated by F, a partly free state by PF, and a not free state by NF. 3 A positive outlook for freedom is indicated by a plus sign, a negative outlook, by a minus, and relative stability of ratings by a zero. The outlook for freedom is based on the problems the country is facing, the way the government and people are reacting to these problems and the longer run political traditions of the society. A judgment of outlook may also reflect an imminent change, such as the expected adoption of a meaningful new constitution. "The name of Dahomey has been changed to Benin. Cambodia is now officially Kampachea. Mr. Thurmond. In fact, we are about to legitimize the regime of General Torrijos by awarding him the triumph of concluding this treaty. If the administration were serious about human rights, it would not even negotiate with this man until he held free, open, and honest elections. This is selective morality at its worst. Now, Mr. President, I shall turn to the economic considerations involved in the current debate. The economic interest which the United States has in the canal, like our defense interest, is so vital to us that we can ill-afford to gamble with it. In 1975, approximately 14,000 ships transited the canal; 45 per- cent of which originated in the United States, and 23 percent of which were bound for the United States. No Other nation has an equal economic stake in the canal. The canal, though, is important to all of the world's commercial nations, since 96 percent of the world's ocean-going vessels can transit it. The canal is just this year assuming an additional commercial importance to the United States as Alaskan oil begins to flow. When the Alaskan pipeline reaches its full capacity, it will yield 1.2 million barrels of oil a day. The west coast of the United States can accommodate only 700,000 barrels a day. This means that approximately 500,000 barrels a day cannot be used on the west coast, and must be transported to the east. No pipeline has yet been constructed across the United States, and the trip around the Horn, as has been demonstrated, is not economically feasible. Un- hindered use of the Panama Canal is critical until an adequate pipeline can be constructed. At the present time, the United States has an overall investment in Panama of $7 billion. By the year of our total evacuation under 95 the terms of the treaty, that interest will have grown to $9.3 billion. Contrary to popular argument, control of the canal by the United States serves the best economic interests of the people of Panama. In 1976, U.S. agencies purchased over $29 million worth of goods in Panama, and we paid over $108 million in wages, to non-U.S. citizens. U.S. private investments amount to 50 percent of the capital investment in Panama. And U.S. employees spent $39 million there. If we retain sovereignty and control over the canal, it is my suggestion that we propose a modernization which will mutually benefit the people of the United States and the citizens of Panama. In the past, I have supported the terminal lake-third lock plan. This would provide for, approximately $2.5 billion in capital invest- ments over a 5- to 10-year period. In this effort, many Panamanian nationals would be used as subcontractors, and the result would be an infusion of American capital into the Panamanian economy. As the canal is modernized, any unneeded land in the zone can be ceded to Panama. It would also be appropriate to make a realistic adjustment in the annuity. With the foregoing considerations in mind, Mr. President, I turn now to the legal question posed by the current debate. Article IV, section IIJ, clause 2 of the Constitution unequivocally gives Congress the "power to dispose of and make all needful rules and regulations respecting the territory or other property belong- ing to the United States." Congress enacted the Spooner Act in 1902 to provide for the construction and defense of an interocean canal, and pursuant to this act the United States acquired its property rights in the Canal Zone in perpetuity. It is thus my belief that a treaty to cede property rights in the Canal Zone to the Republic of Panama requires prior authorization by Congress. On the other hand, the State Department contends that under the treaty power clause contained in article II, section 2, the Presi- dent holds concurrent authority to dispose of U.S. property. The counterargument is that the property clause in article IV limits the treaty power clause where the disposition of property is con- cerned. That seems to me to be obvious. Since the Executive claimed the authority, however, to dispose of U.S. property without first seeking prior authorization from Con- gress, and actually proceeded to do so, I joined with a number of other Senators and Congressmen to seek a declaratory judgment on this significant separation of powers question. Both the District Court for the District of Columbia and the Court of Appeals in the District refused to consider the merits of the case on the basis that the issue was premature. At that Lime, they said, we did not know the specifics of any proposed treaty. In June, the Supreme Court declined to grant certiorari. Now, Mr. President, we do know the specifics of the treaties. We know, too, that the State Department continues to ignore the ques- tions of prior authorization and the role of the House of Represen- tatives in disposition of property by treaty. The only way to settle the questions is to seek a determination by the courts. I am pleased, therefore, to inform the Senate this 96 morning that Senators Jesse Helms, James A. McClure, and I, together with Congressmen Daniel J. Flood, Lawrence P. McDonald and M. Gene Snyder, and William R. Drummond, a resident of the Canal Zone, will again file suit as soon as the President formally sends the treaties to the Senate. I am further pleased to inform the Senate that five States will join as parties to the action, and that because of the importance and timeliness of the issue, we will seek original jurisdiction in the U.S. Supreme Court. We will be represented by the distinguished attorney, George S. Leonard, of the District of Columbia, who has so ably testified before the Subcommittee on Separation of Powers of the Senate Judiciary Committee on the legal problems raised in respect to the Panama Canal negotiations. It is not the function of our courts to enforce public opinion. Nevertheless, it is worth noting that public opinion is strongly against a giveaway of the Panama Canal. The margin was 3 to 1 in a nationwide poll by Opinion Research Corp., and 9 to 1 in my own poll of South Carolinians. Its individual members are also charged with the responsibility of responding to the public will. In this matter, the two responsibil- ities converge. The disposition of the Panama Canal under the proposed treaty is unwise, unwanted and unconstitutional. I urge the Senate to do all it can to prevent it. This Senate is charged with the responsibility of protecting the interests of the legislative branch and of monitoring the separation of powers between the three coordinate branches of our Govern- ment. Mr. President, I wish to thank the distinguished Senators who yielded time to me. I now yield the floor. PANAMA CANAL GIVEAWAY VIOLATES CONSTITUTION Mr. Garn. Mr. President, during the recess, President Carter announced the completion of negotiations with the Government of Panama over new treaties governing the management of the Panama Canal. Early indications were that the President would press for early ratification of the treaties by the Senate. In my opinion, that would be most unwise, Mr. President, and would lead to almost certain rejection by this body. More recently, the Presi- dent appears to have moderated his haste, and seems ready to accept the fact that he has a big selling job to do if the American people are ever to accept these treaties. Since his announcement, I have heard it argued that most Americans do not care very much about the Panama Canal, and are reacting emotionally to an issue which has little real signifi- cance. In my opinion, that is both true and not true. Arguments can be made that our defense is not affected by the canal, though equally good arguments can be made on the other side. Arguments can also be made that the loss of the canal would not have serious impacts on the economy of the United States, though again, there are some serious arguments to be made on the other side, particularly in view of the need to move petroleum from one coast to the other. 97 But if we call those questions even, there is still a sense in which the American people are quite correct in calling the Panama Canal an important issue. The American people have a surer sense than the State Department does of the importance of psychological fac- tors in international relations. In fact, as far as the State Depart- ment is concerned, Panama appears to be a riddle, wrapped in an enigma, stuffed in a burrito. The people recognize instinctively what is at play in Panama. It is a clear-cut case of international blackmail, and the American people do not like it. It may very well be that the present state of affairs is less than fair to the Panamanians, though it must be said that the original treaty was not negotiated under duress. It may very well be that Panamanians should take a larger role in the operation of the canal itself. It may also be said that there should be less insulation of the American community from the local Panamanian economy and society. But saying all that is quite different from saying that the United States should turn over effective control of the canal to Panama, whatever language is used to disguise what is happening, and allow itself to be pushed out of an area of arguably critical importance to the rest of the world. Some time ago, I published an article exploring the difference that a positive attitude in foreign policy might make in Panama, and in some other critical areas around the world. I will not now repeat the arguments, except to say that even at this date, if we would stop beating our breasts over the injustice and inequity that abounds in the world, stop accepting responsibility for evils for which we are not responsible, and start asserting ourselves as practically the only example of freedom and justice in the world, we would find it easier to deal with dictators like Omar Torrijos. I have no doubt that, even now, the Senate can operate on this proposed treaty to make it acceptable to the American people. As it stands, its terms are not advantageous to the United States, and no amount of talking by the President can make them seem so. Unless it is made advantageous to the United States, and acceptable to our employers, the American people, it will fail, and I will be glad to help it fail. Mr. President, there is one more aspect of the Panama Canal argument that needs to be made, and since I am not a lawyer, I will turn to my colleague from Utah, Senator Hatch. Senator Hatch has written, in the current issue of the Conservative Digest, an excellent analysis of the constitutional arguments against the proposed treaty. As Senator Hatch points out in his article, the proposed treaties will set precedents with implications far beyond the simple foreign policy defeat they will constitute. Ratification will constitute acquiescence in yet another usurpation of power by the executive. We must think twice before condoning this usurpa- tion. Mr. President, Senator Hatch's analysis should be read by every Senator prior to the vote. I ask unanimous consent that it be printed in the Record. There being no objection, the analysis was ordered to be printed in the Record, as follows: 29^*00 0-78 Panama Canal Giveaway Violates Constitution (By Senator Orrin G. Hatch) Our venerable octogenarian, Ellsworth Bunker, veteran of more than 25 years service to the State Department, and Ambassador-at-Large directing negotiations with Panama for a new treaty, says that "the United States does not own the Panama Canal Zone." His assistant, Ambassador Sol Linowitz, claims that "the Panama Canal is a colonial enclave carried over from the early part of this century and which has caused bitter resentment and indeed hostility." The story of the Panama Canal, as they tell it, is rather like the leftist folklore surrounding the history of capitalism. They would have us believe that "Yankee Imperialists" descended upon a helpless people, wrongfully took possession of the isthmus of Panama under the guise of a fraudulent treaty, and built a canal to exploit the Panamanians in the selfish interests of commerce and militarism. Like the Greeks, Bunker and Linowitz now come bearing gifts. And what are these wondrous gifts? They are the gift of redemption for past crimes and sins against the people of Panama, and the prospect of better relations with our Latin American neighbors. To get them, we need only make a gift of the Panama Canal. Besides, America doesn't really need this Canal, we are told. What we really need, so far as the Canal is concerned, is a clear conscience, a cleansing of the American soul, a real purging of guilt and shame. What better way to do this than by simply giving the Panama Canal away? Just so there are no hard feelings, we'll even go so far as to pay the Panamanians for taking it off our hands. And so, negotiations begun under Secretary Kissinger in 1974 for a new treaty with Panama are now in their final stages. On July 29, President Carter met with American and Panamanian negotiators in the White House, and stated that he was pleased with the progress of negotiations and with "Panama's very constructive attitude." Expressing hope that the accord could be signed in time to bring it to the Senate before the Fall recess, Carter declared that the United States "will cooperate to the fullest degree to rapidly conclude an agreement for a treaty." The last remaining obstacle, it appears, is the question of "conscience money." In addition to the territory of the Canal Zone and the canal itself, which are valued at approximately $7 billion, the Panamanians demand $5 billion for our continued use of the canal and the rental of military bases. Forget, if you will, that we already own all of this free and clear, and that the Panamanians already enjoy the highest per capita income of any people in Central America because of the annuities and other benefits derived from our Canal. But $5 billion is apparently too much even for our "hard-headed" diplomats, who have indicated that more realistic amounts" will have to be agreed upon before the treaty is concluded. In anticipation of the ratification struggle that lies ahead, the negotiators have been preparing the American people for acquiescence by attempting to discredit the treaty of 1903. One device relied upon rather extensively is the familiar one of rewriting history. The object of this ploy is to lay a moral foundation for the surrender of the Canal by creating guilt feelings and redefining the terms of the original treaty. Thus the advocates of a new treaty have come up with the novel idea that we don't really own the Canal after all, and must return it to its "rightful owners." The original treaty, they say, simply transferred "rights" in the Canal Zone rather than full sovereign control — even though such an interpretation flatly contradicts the expressed intent of the 1903 negotiators and the terms of the treaty itself. They have also expressed the curious view that the Canal Zone is "leased" territory and that the United States pays a "rental" for its use. In truth, of course, the Canal Zone is not a leased area but a "grant in perpetuity" for the perpetual maintenance, operation and protection of the canal. What Panama actually receives is an annuity, not a rental. Article II of the 1903 treaty grants to the United States "in perpetuity" the use, occupation, and control of the Zone — meaning ownership. The word "lease" does not appear in the treaty with reference to the Canal Zone; but the word "grant" makes nineteen appearances. The phrase "in perpetuity" occurs seven times. The treaty, unlike a lease agreement, contains no provision for renegotiation and no terminal date for the obvious reason that it was intended to be a final and absolute transfer of sovereignty in perpetuity. Though an embarrassment to the negotiators, these are facts which they can easily manipulate, if not ignore; for once the treaty is signed, the question of U.S. sovereignty over the Canal will become moot. What the supporters of the treaty cannot ignore, however, are the political, military and legal realities of the situation. For one thing, General Omar Torrijos of Panama, who will take possession of the canal, is a dictator. His administration is riddled with Marxists. These realities not only cast a cloud of suspicion on his intentions, but raise the issue of whether the Canal can be insulated against the harsh winds of ideology and political instability which so often sweep across Latin America. If the Canal were in the hands of this petty tyrant, the United States would surely find itself increasingly embroiled in Panama's internal affairs in order to maintain the Canal's security and protect the flow of Commerce. For another, the American people are overwhelmingly against the giveaway of the Panama Canal. The drumming insistence of the negotiators that we must lie down and be sheared like sheep in the name of Latin American "justice" has not been convincing. More persuasive are American military leaders such as Admiral Thomas Moorer, former Chairman of the Joint Chiefs of Staff, and three former Chiefs of Naval Operations, who recently informed President Carter that "under the control of a potential adversary the Panama Canal would become an immediate crucial problem and prove to be a serious weakness in the overall U.S. defense with enormous potential consequences for evil." Little wonder that recent public opinion polls show that the American people oppose a new treaty by a ratio of 5 to 1. They understand the realities of the situation, even if Bunker and Linowitz do not. We may be thankful that many of our representatives in Congress are already antagonized by the Administration's methods and procedures. Resentment is wide- spread because the members have neither been informed of the substance of negoti- ations nor asked to authorize them — as is customary. Laboring at their self-appoint- ed task in secrecy, the negotiators have defied our constitutional process, realizing that they lack congressional support and constitutional authority for their actions. Though largely ignored by the press, constitutional issues of major proportions have recently surfaced in the Senate concerning the new treaty with Panama, adding another wrinkle to the controversy. One issue involves the economic assist- ance provisions of the treaty. The negotiators have not told Congress how much money will be given to Panama, or whether it will come in the form of a cash grant or loan package. But one matter is clear: a treaty cannot appropriate funds. The Constitution expressly provides that "No money shall be drawn from the Treasury but in consequence of Appropriations made by law." This means that the approval of both houses of Congress, and not just the Senate, must be given in order to validate this type of treaty. The Administration, however, has given no assurances to Congress that it will definitely seek implementing legislation regarding the economic and financial arrangements contained in the treaty. The other issue is whether the President has the constitutional authority to transfer U.S. territory in the Canal Zone to the Republic of Panama by treaty and by-pass the House of Representatives. In hearings before the Separation of Powers Subcommittee of the Senate Judiciary Committee which I attended, legal advisors to the State Department argued that the President may make such a treaty because he possesses "concurrent" authority with Congress to give away U.S. property. Ratification of the treaty by the Senate, they stated, was all that was necessary. Under cross-examination, however, the witnesses were unable to give me a single valid judicial precedent for this extraordinary and unconstitutional view of the President's power. My own studies lead me to the conclusion that the proposed treaty with Panama is unconstitutional, unless both Houses of Congress enact accompanying legislation authorizing the transfer of Canal territory. Article IV of the Constitution states, "The Congress shall have the power to dispose of and make all needful Rules and Regulations respecting the Territory or other Property belonging to the United States." The courts have repeatedly ruled that this is an exclusive power of the full Congress. Any authority of the Executive to dispose of U.S. property, therefore, must first be derived from authority given by an Act of Congress. In light of these considerations, a constitutional crisis is about to erupt between Congress and the President. There is no precedent in American history, to be sure, for the disposal by treaty, and without congressional authorization, of U.S. territory that has been acquired by purchase. Likewise, there is no precedent for the broad and sweeping exercise of the treatymaking power which the President is now claiming. If he persists, and the Senate ratifies the treaty, Americans will lose more than the Canal, more than an important American territory, and more than a vital link in our strategic defenses and international trade. They will have lost another restraint on the powers of the President. "If the Executive is permitted to sidestep the House of Representatives on this vital constitutional issue of disposal of Canal property," John Murphy, Chairman of the House Merchant Marine Fisheries Com- mittee recently observed, "it will try to sidestep the Senate on another issue, and 100 the Judiciary on still another. The very fundamental precepts of the Constitution are at stake and we have already had one instance in which the Executive Branch attempted to expand its powers, resulting in the worst scandal in our nation's history — Watergate." 101 [From the Congressional Record— Senate, Sept. 8, 1977] POLL SHOWS CLOSE MARGIN ON PANAMA CANAL TREATY Mr. Chafee. Mr. President, the Panama Canal treaties have generated the most intense interest around the country and while polls are useful tools for analysis, the complexity of the issues before us demands more careful study on our own. However, in view of the largely one-sided margin that is shown in the mail that most of us have been receiving on the Panama Canal issue, I would like to call to the attention of my colleagues the recent Gallup poll on how Americans feel about the Panama Canal treaties on a nationwide basis. The level of support indicated by this survey might be surprising to those who have suggested that Americans are opposed to the treaties by as much as a 3-to-l margin. While the issues involved in these treaties may not yet be readily familiar to many Americans, I am hopeful that in the course of our debates the American public will maintain an open mind. Mr. President, I ask unanimous consent that this most recent Gallup poll be printed in the Record. There being no objection, the Gallup poll was order to be printed in the Record, as follows: In National Public Opinion Referendum U.S. Public Closely Divided on Panama Treaty; 39 Percent Approve; 46 Percent Disapprove (By George Gallup) Princeton, N.J.— President Jimmy Carter's decision to go to the American people to win supprt for the Panama treaty comes at a time when the public is closely divided on this controversial issue. In the first nationwide survey — in effect, a national referendum — 39 per cent of those who have heard or read about the treaty express approval, while 46 per cent disapprove of the proposed new treaty between the U.S. and Panama, which calls for the U.S. to turn over ownership of the canal to Panama at the end of this century but to retain protective rights and responsibilities. Fifteen per cent of the aware group are undecided. Sharp differences are found on the basis of population groups. Persons with a college background, for example, lean 49 to 40 per cent in approval of the treaty, Republicans disapprove by a 2-to-l margin, while Democratic voters and indepen- dents are about evenly divided. WHAT VOTERS ARE SAYING Among those who approve of the new treaty is a 59-year-old stock speculator in Miami, Fla. "It is important to have more cooperation with Latin America. People in Latin America feel the canal is just another example of American colonialism," he said. Another who approves is a 54-year-old college professor in Knoxville, Tenn. "By the year 2000, the canal will have little strategic or economic value to us. The supertankers of tomorrow won't be able to use it. There is more emotion than logic connected with it (the treaty) and we have done very well in making this treaty," he said. A 60-year-old retiree in Washington, D.C., opposes the treaty. "I disapprove of the treaty for two main reasons: First, we have billions of dollars invested in it and it has been our property for three-quarters of a century: second, Panama is a dictatorship with no freedom for its citizens— how could they control the canal better than we?" This question was asked first in the survey: "Have you heard or read about the proposed new treaty between the U.S. and the Republic of Panama regarding the Panama Canal?" 102 The results show three in four nationwide saying they have heard or read about the treaty. About 9 in 10 among the college-educated group express awareness. Awareness levels are lower among women than men, and younger persons than older, as seen below; Have heard or read about Percent National 76 Men 83 Women 69 18 to 29 years 65 30 to 49 years 76 50 and over 82 College 89 High school 71 Grade school 56 Republicans 84 Democrats 73 Independents 74 All persons in the survey were next asked this question: "The proposed new treaty between the U.S. and Panama calls for the U.S. to turn over ownership of the canal to Panama at the end of this century. However, the U.S. will maintain control over the land and installations necessary to operate and defend the canal. Do you approve or disapprove of this proposed new treaty?" Here are the findings based on those who have heard or read about the treaty: APPROVE OR DISAPPROVE PANAMA CANAL TREATY? [In percent] Approve Disapprove No opinion Nationwide College High school Grade school 18 to 29 years 30 to 49 years 50 and over East Midwest South West Republicans Democrats Independents 39 46 15 49 40 11 32 52 16 28 46 26 44 44 12 45 43 12 30 51 19 43 42 15 37 50 13 35 47 18 38 49 13 31 58 11 43 41 16 41 43 16 Note: The results reported today are based on interviews with 1,025 adults, out of a total sample of 1,356 adults, 18 and older, conducted in person in more than 300 scientifically selected localities across the Nation August 18-22. PANAMA CANAL TREATY Mr. Muskie. Mr. President, because of the broad interest of my constituents and, indeed, all" Americans, in the provisions of the new Panama Canal Treaties, I believe the full text of those treaties should be available to as many people as possible. Accordingly, I ask unanimous consent that a copy of that text be printed in the Record. There being no objection, the treaty was ordered to be printed in the Record, as follows: Panama Canal Treaty The United States of America and the Republic of Panama. 103 Acting in the spirit of the Joint Declaration of April 3, 1964, bv the Representa- tives of the Governments of the United States of America and the Republic of Panama, and of the Joint Statement of Principles of February 7, 1974, initialed by the Secretary of State of the United States of America and the Foreign Minister of the Republic of Panama, and Acknowledging the Republic of Panama's sovereignty over its territory, Have decided to terminate the prior Treaties pertaining to the Panama Canal and to conclude a new Treaty to serve as the basis for a new relationship between them and, accordingly, have agreed upon the following: ARTICLE I Abrogation of prior treaties and establishment of a new relationship 1. Upon its entry into force, this Treaty terminates and supersedes: (a) The Isthmian Canal Convention between the United States of America and the Republic of Panama, signed at Washington, November 18, 1903; (b) The Treaty of Friendship and Cooperation signed at Washington, March 2. 1936, and the Treaty of Mutual Understanding and Cooperation and the related Memorandum of Understandings Reached, signed at Panama, January 25, 1955, between the United States of America and the Republic of Panama; (c) All other treaties, conventions, agreements and exchanges of notes between the United States of America and the Republic of Panama, concerning the Panama Canal which were in force prior to the entry- into force of this Treaty; and (d) Provisions concerning the Panama Canal which appear in other treaties. conventions, agreements and exchanges of notes between the United States of America and the Republic of Panama which were in force prior to the entry into force of this Treaty. 2. In accordance with the terms of this Treaty and related agreements, the Republic of Panama, as territorial sovereign, grants to the United States of Amer- ica, for the duration of this Treaty, the rights necessary to regulate the transit of ships through the Panama Canal, and to manage, operate, maintain, improve, protect and defend the Canal. The Republic of Panama guarantees to the United States of America the peaceful use of the land and water areas which it has been granted the rights to use for such purposes pursuant to this Treaty and related agreements. 3. The Republic of Panama shall participate increasingly in the management and protection and defense of the Canal, as provided in this Treaty. 4. In view of the special relationship established by this Treaty, the United States of America and the Republic of Panama shall cooperate to assure the uninterrupted and efficient operation of the Panama Canal. article n Ratification, entry into force, and termination 1. This Treaty shall be subject to ratification in accordance with the constitutional procedures of the two Parties. The instruments of ratification of this Treaty shall be exchanged at Panama at the same time as the instruments of ratification of the Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal, signed this date, are exchanged. This Treaty shall enter into force, simultaneously with the Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal, six calendar months from the date of the exchange of the instru- ments of ratification. 2. This Treaty shall terminate at noon, Panama time, December 31, 1999. ARTICLE HJ Canal operation and management 1. The Republic of Panama, as territorial sovereign, grants to the United States of America the rights to manage, operate, and maintain the Panama Canal, its com- plementary works, installations and equipment and to provide for the orderly transit of vessels through the Panama Canal. The United States of America accepts the grant of such rights and undertakes to exercise them in accordance with this Treaty and related agreements. 2. In carrying out the foregoing responsibilities, the United States of America may: (a) Use for the aforementioned purposes, without cost except as provided in this Treaty, the various installations and areas (including the Panama Canal) and waters, described in the Agreement in Implementation of this Article, signed this date, as well as such other areas and installations as are made available to the 104 United States of America under this Treaty and related agreements, and take the measures necessary to ensure sanitation of such areas; (b) Make such improvements and alterations to the aforesaid installations and areas as it deems appropriate, consistent with the terms of this Treaty; (c) Make and enforce all rules pertaining to the passage of vessels through the Canal and other rules with respect to navigation and maritime matters, in accord- ance with this Treaty and related agreements. The Republic of Panama will lend its cooperation, when necessary, in the enforcement of such rules; (d) Establish, modify, collect and retain tolls for the use of the Panama Canal, and other charges, and establish and modify methods of their assessment; (e) Regulate relations with employees of the United States Government; (f) Provide supporting services to facilitate the performance of its responsibilities under this Article; (g) Issue and enforce regulations for the effective exercise of the rights and responsibilities of the United States of America under this Treaty and related agreements. The Republic of Panama will lend its cooperation, when necessary, in the enforcement of such rules; and (h) Exercise any other right granted under this Treaty, or otherwise agreed upon between the two Parties. 3. Pursuant to the foregoing grant of rights, the United States of America shall, in accordance with the terms of this Treaty and the provisions of United States law, carry out its responsibilities by means of a United States Government agency called the Panama Canal Commission, which shall be constituted by and in conformity with the laws of the United States of America. (a) The Panama Canal Commission shall be supervised by a Board composed of nine members, five of whom shall be nationals of the United States of America, and four of whom shall be Panamanian nationals proposed by the Republic of Panama for appointment to such positions by the United States of America in a timely manner. (b) Should the Republic of Panama request the United States of America to remove a Panamanian national from membership on the Board, the United States of America shall agree to such a request. In that event, the Republic of Panama shall propose another Panamanian national for appointment by the United States of America to such position in a timely manner. In case of removal of a Panama- nian member of the Board at the initiative of the United States of America, both Parties will consult in advance in order to rea'ch agreement concerning such remov- al, and the Republic of Panama shall propose another Panamanian national for appointment by the United States of America in his stead. (c) The United States of America shall employ a national of the United States of America as Administrator of the Panama Canal Commission, and a Panamanian national as Deputy Administrator, through December 31, 1989. Beginning January 1, 1990, a Panamanian national shall be employed as the Administrator and a national of the United States of America shall occupy the position of Deputy Administrator. Such Panamanian nationals shall be proposed to the United States of America by the Republic of Panama for appointment to such positions by the United States of America. (d) Should the United States of America remove the Panamanian national from his position as Deputy Administrator, or Administrator, the Republic of Panama shall propose another Panamanian national for appointment to such position by the United States of America. 4. An illustrative description of the activities the Panama Canal Commission will perform in carrying out the responsibilities and rights of the United States of America under this Article is set forth at the Annex. Also set forth in the Annex are procedures for the discontinuance or transfer of those activities performed prior to the entry into force of this Treaty by the Panama Canal Company or the Canal Zone Government which are not to be carried out by the Panama Canal Commis- sion. 5. The Panama Canal Commission shall reimburse the Republic of Panama for the costs incurred by the Republic of Panama in providing the following public services in the Canal operating areas and in housing areas set forth in the Agree- ment in Implementation of Article III of this Treaty and occupied by both United States and Panamanian citizen employees of the Panama Canal Commission: police, fire protection, street maintenance, street lighting, street cleaning, traffic manage- ment and garbage collection. The Panama Canal Commission shall pay the Republic of Panama the sum of ten million United States dollars ($10,000,000) per annum for the foregoing services. It is agreed that every three years from the date that this Treaty enters into force, the costs involved in furnishing said services shall be 105 reexamined to determine whether adjustment of the annual payment should be made because of inflation and other relevant factors affecting the cost of such services. 6. The Republic of Panama shall be responsible for providing, in all areas compris- ing the former Canal Zone, services of a general jurisdictional nature such as customs and immigration, postal services, courts and licensing, in accordance with this Treaty and related agreements. 7. The United States of America and the Republic of Panama shall establish a Panama Canal Consultative Committee, composed of an equal number of high-level representatives of the United States of America and the Republic of Panama, and which may appoint such subcommittees as it may deem appropriate. This Commit- tee shall advise the United States of America and the Republic of Panama on matters of policy affecting the Canal's operation. In view of both Parties' special interest in the continuity and efficiency of the Canal operation in the future, the Committee shall advise on matters such as general tolls policy, employment and training policies to increase the participation of Panamanian nationals in the oper- ation of the Canal, and international policies on matters concerning the Canal. The Committee's recommendations shall be transmitted to the two Governments, which shall give such recommendations full consideration in the formulation of such policy decisions. 8. In addition to the participation of Panamanian nationals at high management levels of the Panama Canal Commission, as provided for in paragraph 3 of this Article, there shall be growing participation of Panamanian nationals at all other levels and areas of employment in the aforesaid Commission, with the objective of preparing, in an orderly and efficient fashion, for the assumption by the Republic of Panama of full responsibility for the management, operation and maintenance of the Canal upon the termination of this Treaty. 9. The use of the areas, waters and installations with respect to which the United States of America is granted rights pursuant to this Article, and the rights and legal status of United States Government agencies and employees operating in the Republic of Panama pursuant to this Article, shall be governed by the Agreement in Implementation of this Article, signed this date. 10. Upon entry into force of this Treaty, the United States Government agencies known as the Panama Canal Company and the Canal Zone Government shall cease to operate within the territory of the Republic of Panama that formerly constituted the Canal Zone. ARTICLE IV Protection and defense 1. The United States of America and the Republic of Panama commit themselves to protect and defend the Panama Canal. Each Party shall act, in accordance with its constitutional processes, to meet the danger resulting from an armed attack or other actions which threaten the security of the Panama Canal or of ships transit- ing it. 2. For the duration of this Treaty, the United States of America shall have grimary responsibility to protect and defend the Canal. The rights of the United tates of America to station, train, and move military forces within the Republic of Panama are described in the Agreement in Implementation of this Article, signed this date. The use of areas and installations and the legal status of the armed forces of the United States of America in the Republic of Panama shall be governed by the aforesaid Agreement. 3. In order to facilitate the participation and cooperation of the armed forces of both Parties in the protection and defense of the Canal, the United States of America and the Republic of Panama shall establish a Combined Board comprised of an equal number of senior military representatives of each Party. These repre- sentatives shall be charged by their respective governments with consulting and cooperating on all matters pertaining to the protection and defense of the Canal, and with planning for actions to be taken in concert for that purpose. Such com- bined protection and defense arrangements shall not inhibit the identity or lines of authority of the armed forces of the United States of America or the Republic of Panama. The Combined Board shall provide for coordination and cooperation con- cerning such matters as: (a) The preparation of contingency plans for the protection and defense of the Canal based upon the cooperative efforts of the armed forces of both Parties; (b) The planning and conduct of combined military exercises; and (c) The conduct of United States and Panamanian military operations with re- spect to the protection and defense of the Canal. 106 4. The Combined Board shall, at five-year intervals throughout the duration of this Treaty, review the resources being made available by the two Parties for the protection and defense of the Canal. Also, the Combined Board shall make appropri- ate recommendations to the two Governments respecting projected requirements, the efficient utilization of available resources of the two Parties, and other matters of mutual interest with respect to the protection and defense of the Canal. 5. To the extent possible consistent with its primary responsibility for the protec- tion and defense of the Panama Canal, the United States of America will endeavor to maintain its armed forces in the Republic of Panama in normal times at a level not in excess of that of the armed forces of the United States of America in the territory of the former Canal Zone immediately prior to the entry into force of this Treaty. ARTICLE V Principle of non-intervention Employees of the Panama Canal Commission, their dependents and designated contractors of the Panama Canal Commission, who are nationals of the United States of America, shall respect the laws of the Republic of Panama and shall abstain from any activity incompatible with the spirit of this Treaty. Accordingly, they shall abstain from any political activity in the Republic of Panama as well as from any intervention in the internal affairs of the Republic of Panama. The United States of America shall take all measures within its authority to ensure that the provisions of this Article are fulfilled. ARTICLE VI Protection of the environment 1. The United States of America and the Republic of Panama commit themselves to implement this Treaty in a manner consistent with the protection of the natural environment of the Republic of Panama. To this end, they shall consult and cooper- ate with each other in all appropriate ways to ensure that they shall give due regard to the protection and conservation of the environment. 2. A Joint Commission on the Environment shall be established with equal representation from the United States of America and the Republic of Panama, which shall periodically review the implementation of this Treaty and shall recom- mend as appropriate to the two Governments ways to avoid or, should this not be possible, to mitigate the adverse environmental impacts which might result from their respective actions pursuant to the Treaty. 3. The United States of America and the Republic of Panama shall furnish the Joint Commission on the Environment complete information on any action taken in accordance with this Treaty which, in the judgment of both, might have a signifi- cant effect on the environment. Such information shall be made available to the Commission as far in advance of the contemplated action as possible to facilitate the study by the Commission of any potential environmental problems and to allow for consideration of the recommendation of the Commission before the contemplated action is carried out. ARTICLE VH Flags 1. The entire territory of the Republic of Panama, including the areas the use of which the Republic of Panama makes available to the United States of America pursuant to this Treaty and related agreements, shall be under the flag of the Republic of Panama, and consequently such flag always shall occupy the position of honor. 2. The flag of the United States of America may be displayed, together with the flag of the Republic of Panama, at the headquarters of the Panama Canal Commis- sion, at the site of the Combined Board, and as provided in the Agreement in Implementation of Article IV of this Treaty. The flag of the United States of America also may be displayed at other places and on some occasions as agreed by both Parties. ARTICLE Vffl Privileges and immunities 1. The installations owned or used by the agencies or instrumentalities of the United States of America operating in the Republic of Panama pursuant to this Treaty and related agreements, and their official archives and documents, shall be 107 inviolable. The two Parties shall agree on procedures to be followed in the conduct of any criminal investigation at such locations by the Republic of Panama. 2. Agencies and instrumentalities of the Government of the United States of America operating in the Republic of Panama pursuant to this Treaty and related agreements shall be immune from the jurisdiction of the Republic of Panama. 3. In addition to such other privileges and immunities as are afforded to employ- ees of the United States Government and their dependents pursuant to this Treaty, the United States of America may designate up to twenty officials of the Panama Canal Commission who, along with their dependents, shall enjoy the privileges and immunities accorded to diplomatic agents and their dependents under international law and practice. The United States of America shall furnish to the Republic of Panama a list of the names of said officials and their dependents, identifying the positions they occupy in the Government of the United States of America, and shall keep such list current at all times. ARTICLE DC Applicable laws and law enforcement 1. In accordance with the provisions of this Treaty and related agreements, the law of the Republic of Panama shall apply in the areas made available for the use of the United States of America pursuant to this Treaty. The law of the Republic of Panama shall be applied to matters or events which occurred in the former Canal Zone prior to the entry into force of this Treaty only to the extent specifically provided in prior treaties and agreements. 2. Natural or juridical persons who, on the date of entry into force of this Treaty, are engaged in business or non-profit activities at locations in the former Canal Zone may continue such business or activities at those locations under the same terms and conditions prevailing prior to the entry into force of this Treaty for a thirty-month transition period from its entry into force. The Republic of Panama shall maintain the same operating conditions as those applicable to the aforemen- tioned enterprises prior to the entry into force of this Treaty in order that they may receive licenses to do business in the Republic of Panama subject to their compli- ance with the requirements of its law. Thereafter, such persons shall receive the same treatment under the law of the Republic of Panama as similar enterprises already established in the rest of the territory of the Republic of Panama without discrimination. 3. The rights of ownership, as recognized by the United States of America, enjoyed by natural or juridical private persons in buildings and other improvements to real property located in the former Canal Zone shall be recognized by the Republic of Panama in conformity with its laws. 4. With respect to buildings and other improvements to real property located in the Canal operating areas, housing areas or other areas subject to the licensing procedure established in Article IV of the Agreement in Implementation of Article III of this Treaty, the owners shall be authorized to continue using the land upon which their property is located in accordance with the procedures established in that Article. 5. With respect to buildings and other improvements to real property located in areas of the former Canal Zone to which the aforesaid licensing procedure is not applicable, or may cease to be applicable during the lifetime or upon termination of this Treaty, the owners may continue to use the land upon which their property is located, subject to the payment of a reasonable charge to the Republic of Panama. Should the Republic of Panama decide to sell such land, the owners of the buildings or other improvements located thereon shall be offered a first option to purchase such land at a reasonable cost. In the case of nonprofit enterprises, such as churches and fraternal organizations, the cost of purchase will be nominal in accordance with the prevailing practice in the rest of the territory of the Republic of Panama. 6. If any of the aforementioned persons are required by the Republic of Panama to discontinue their activities or vacate their property for public purposes, they shall be compensated at fair market value by the Republic of Panama. 7. The provisions of paragraphs 2-6 above shall apply to natural or juridical persons who have been engaged in business or nonprofit activities at locations in the former Canal Zone for at least six months prior to the date of signature of this Treaty. 8. The Republic of Panama shall not issue, adopt or enforce any law, decree, regulation, or international agreement or take any other action which purports to regulate or would otherwise interfere with the exercise on the part of the United States of America of any right granted under this Treaty or related agreements. 108 9. Vessels transiting the Canal, and cargo, passengers and crews carried on such vessels shall be exempt from any taxes, fees, or other charges by the Republic of Panama. However, in the event such vessels call at a Panamanian port, they may be assessed charges incident thereto, such as charges for services provided to the vessel. The Republic of Panama may also require the passengers and crew disem- barking from such vessels to pay such taxes, fees and charges as are established under Panamanian law for persons entering its territory. Such taxes, fees and charges shall be assessed on a nondiscriminatory basis. 10. The United States of America and the Republic of Panama will cooperate in taking such steps as may from time to time be necessary to guarantee the security of the Panama Canal Commission, its property, its employees and their dependents, and their property, the Forces of the United States of America and the members thereof, the civilian component of the United States Forces, the dependents of members of the Forces and the civilian component, and their property, and the contractors of the Panama Canal Commission and of the United States Forces, their dependents, and their property. The Republic of Panama will seek from its Legisla- tive Branch such legislation as may be needed to carry out the foregoing purposes and to punish any offenders. 11. The Parties shall conclude an agreement whereby nationals of either State, who are sentenced by the courts of the other State, and who are not domiciled therein, may elect to serve their sentences in their State of nationality. Employment with the Panama Canal Commission 1. In exercising its rights and fulfilling its responsibilities as the employer, the United States of America shall establish employment and labor regulations which shall contain the terms, conditions and prerequisites for all categories of employees of the Panama Canal Commission. These regulations shall be provided to the Republic of Panama prior to their entry into force. 2. (a) The regulations shall establish a system of preference when hiring employ- ees, for Panamanian applicants possessing the skills and qualifications required for employment by the Panama Canal Commission. The United States of America shall endeavor to ensure that the number of Panamanian nationals employed by the Panama Canal Commission in relation to the total number of its employees will conform to the proportion established for foreign enterprises under the law of the Republic of Panama. (b) The terms and conditions of employment to be established will in general be no less favorable to persons already employed by the Panama Canal Company or Canal Zone Government prior to the entry into force of this Treaty, than those in effect immediately prior to that date. 3. (a) The United States of America shall establish an employment policy for the Panama Canal Commission that shall generally limit the recruitment of personnel outside the Republic of Panama to persons possessing requisite skills and qualifica- tions which are not available in the Republic of Panama. (b) The United States of America will establish training programs for Panama- nian employees and apprentices in order to increase the number of Panamanian nationals qualified to assume positions with the Panama Canal Commission, as positions become available. (c) Within five years from the entry into force of this Treaty, the number of United States nationals employed by the Panama Canal Commission who were previously employed by the Panama Canal Company shall be at least twenty per- cent less than the total number of United States nationals working for the Panama Canal Company immediately prior to the entry into force of this Treaty. (d) The United States of America shall periodically inform the Republic of Panama, through the Coordinating Committee, established pursuant to the Agree- ment in Implementation of Article III of this Treaty, of available positions within the Panama Canal Commission. The Republic of Panama shall similarly provide the United States of America any information it may have as to the availability of Panamanian nationals claiming to have skills and qualifications that might be required by the Panama Canal Commission, in order that the United States of America may take this information into account. 4. The United States of America will establish qualification standards for skills, training and experience required by the Panama Canal Commission. In establishing such standards, to the extent they include a requirement for a professional license, the United States of America, without prejudice to its right to require additional professional skills and qualifications, shall recognize the professional licenses issued by the Republic of Panama. 109 5. The United States of America shall establish a policy for the periodic rotation, at a maximum of every five years, of United States citizen employees and other non- Panamanian employees, hired after the entry into force of this Treaty. It is recog- nized that certain exceptions to the said policy of rotation may be made for sound administrative reasons, such as in the case of employees holding positions requiring certain non-transferable or non-recruitable skills. 6. With regard to wages and fringe benefits, there shall be no discrimination on the basis of nationality, sex, or race. Payments by the Panama Canal Commission of additional remuneration, or the provision of other benefits, such as home leave benefits, to United States nationals employed prior to entry into force of this Treaty, or to persons of any nationality, including Panamanian nationals who are thereafter recruited outside of the Republic of Panama and who change their place of residence, shall not be considered to be discrimination for the purpose of this paragraph. 7. Persons employed by the Panama Canal Company or Canal Zone Government prior to the entry into force of this Treaty, who are displaced from their employ- ment as a result of the discontinuance by the United States of America of certain activities pursuant to this Treaty, will be placed by the United States of America, to the maximum extent feasible, in other appropriate jobs with the Government of the United States in accordance with United States Civil Service regulations. For such persons who are not United States nationals, placement efforts will be confined to United States Government activities located within the Republic of Panama. Like- wise, persons previously employed in activities for which the Republic of Panama assumes responsibility as. a result of this Treaty will be continued in their employ- ment to the maximum extent feasible by the Republic of Panama. The Republic of Panama shall, to the maximum extent feasible, ensure that the terms and condi- tions of employment applicable to personnel employed in the activities for which it assumes responsibility are no less favorable than those in effect immediately prior to the entry into force of this Treaty. Non-United States nationals employed by the Panama Canal Company or Canal Zone Government prior to the entry into force of this Treaty who are involuntarily separated from their positions because of the discontinuance of an activity by reason of this Treaty, who are not entitled to an immediate annuity under the United States Civil Service Retirement System, and for whom continued employment in the Republic of Panama by the Government of the United States of America is not practicable, will be provided special job place- ment assistance by the Republic of Panama for employment in positions for which they may be qualified by experience and training. 8. The Parties agree to establish a system whereby the Panama Canal Commis- sion may, if deemed mutually convenient or desirable by the two Parties, assign certain employees of the Panama Canal Commission, for a limited period of time, to assist in the operation of activities transferred to the responsibility of the Republic of Panama as a result of this Treaty or related agreements. The salaries and other costs of employment of any such persons assigned to provide such assistance shall be reimbursed to the United States of America by the Republic of Panama. 9. (a) The right of employees to negotiate collective contracts with the Panama Canal Commission is recognized. Labor relations with employees of the Panama Canal Commission shall be conducted in accordance with forms of collective bar- gaining established by the United States of America after consultation with employ- ee unions. (b) Employee unions shall have the right to affiliate with international labor organizations. 10. The United States of America will provide an appropriate early optional retirement program for all persons employed by the Panama Canal Company or Canal Zone Government immediately prior to the entry into force of this Treaty. In this regard, taking into account the unique circumstances created by the provisions of this Treaty, including its duration, and their effect upon such employees, the United States of America shall, with respect to them: (a) determine that conditions exist which invoke applicable United States law permitting early retirement annuities and apply such law for a substantial period of the duration of the Treaty; (b) seek special legislation to provide more liberal entitlement to, and calculation of, retirement annuities than is currently provided for by law. ARTICLE XI Provisions for the transition period 1. The Republic of Panama shall reassume plenary jurisdiction over the former Canal Zone upon entry into force of this Treaty and in accordance with its terms. In 110 order to provide for an orderly transition to the full application of the jurisdictional arrangements established by this Treaty and related agreements, the provisions of this Article shall become applicable upon the date this Treaty enters into force, and shall remain in effect for thirty calendar months. The authority granted in this Article to the United States of America for this transition period shall supplement, and is not intended to limit, the full application and effect of the rights and authority granted to the United States of America elsewhere in this Treaty and in related agreements. 2. During this transition period, the criminal and civil laws of the United States of America shall apply concurrently with those of the Republic of Panama in certain of the areas and installations made available for the use of the United States of America pursuant to this Treaty, in accordance with the following provi- sions: (a) The Republic of Panama permits the authorities of the United States of America to have the primary right to exercise criminal jurisdiction over United States citizen employees of the Panama Canal Commission and their dependents, and members of the United States Forces and civilian component and their depend- ents, in the following cases: (i) for any offense committed during the transition period within such areas and installations, and. (ii) for any offense committed prior to that period in the former Canal Zone. The Republic of Panama shall have the primary right to exercise jurisdiction over all other offenses committed by such persons, except as otherwise provided in this Treaty and related agreements or as may be otherwise agreed. (b) Either Party may waive its primary right to exercise jurisdiction in a specific case or category of cases. 3. The United States of America shall retain the right to exercise jurisdiction in criminal cases relating to offenses committed prior to the entry into force of this Treaty in violation of the laws applicable in the former Canal Zone. 4. For the transition period, the United States of America shall retain police authority and maintain a police force in the aforementioned areas and installations. In such areas, the police authorities of the United States of America may take into custody any person not subject to their primary jurisdiction if such person is believed to have committed or to be committing an offense against applicable laws or regulations, and shall promptly transfer custody to the police authorities of the Republic of Panama. The United States of America and the Republic of Panama shall establish joint police patrols in agreed areas. Any arrests conducted by a joint patrol shall be the responsibility of the patrol member or members representing the Party having primary jurisdiction over the person or persons arrested. 5. The courts of the United States of America and related personnel, functioning in the former Canal Zone immediately prior to the entry into force of this Treaty, may continue to function during the transition period for the judicial enforcement of the jurisdiction to be exercised by the United States of America in accordance with this Article. 6. In civil cases, the civilian courts of the United States of America in the Republic of Panama shall have no jurisdiction over new cases of a private civil nature, but shall retain full jurisdiction during the transition period to dispose of any civil cases, including admiralty cases, already instituted and pending before the courts prior to the entry into force of this Treaty. 7. The laws, regulations, and administrative authority of the United States of America applicable in the former Canal Zone immediately prior to the entry into force of this Treaty shall, to the extent not inconsistent with this Treaty and related agreements, continue in force for the purpose of the exercise by the United States of America of law enforcement and judicial jurisdiction only during the transition period. The United States of America may amend, repeal or otherwise change such laws, regulations and administrative authority. The two Parties shall consult con- cerning procedural and substantive matters relative to the implementation of this Article, including the disposition of cases pending at the end of the transition period and, in this respect, may enter into appropriate agreements by an exchange of notes or other instrument. 8. During this transition period, the United States of America may continue to incarcerate individuals in the areas and installations made available for the use of the United States of America by the Republic of Panama pursuant to this Treaty and related agreements, or to transfer them to penal facilities in the United States of America to serve their sentences. Ill ARTICLE XII A sea-level canal or a third lane of locks 1. The United States of America and the Republic of Panama recognize that a sea- level canal may be important for international navigation in the future. Conse- quently, during the duration of this Treaty, both Parties commit themselves to study jointly the feasibility of a sea-level canal in the Republic of Panama, and in the event they determine that such a waterway is necessary, they shall negotiate terms, agreeable to both Parties, for its construction. 2. The United States of America and the Republic of Panama agree on the following: (a) No new interoceanic canal shall be constructed in the territory of the Republic of Panama during the duration of this Treaty, except in accordance with the provisions of this Treaty, or as the two Parties may otherwise agree; and (b) During the duration of this Treaty, the United States of America shall not negotiate with third States for the right to construct an interoceanic canal on any other route in the Western Hemisphere, except as the two Parties may otherwise 3. The Republic of Panama grants to the United States of America the right to add a third lane of locks to the existing Panama Canal. This right may be exercised at any time during the duration of this Treaty, provided that the United States of America has delivered to the Republic of Panama copies of the plans for such construction. 4. In the event the United States of America exercises the right granted in paragraph 3 above, it may use for that purpose, in addition to the areas otherwise made available to the United States of America pursuant to this Treaty, such other areas as the two Parties may agree upon. The terms and conditions applicable to Canal operating areas made available by the Republic of Panama for the use of the United States of America pursuant to Article III of this Treaty shall apply in a similar manner to such additional areas. 5. In the construction of the aforesaid works, the United States of America shall not use nuclear excavation techniques without the previous consent of the Republic of Panama. ARTICLE Xm Property transfer and economic participation by the Republic of Panama 1. Upon termination of this Treaty, the Republic of Panama shall assume total responsibility for the management, operation, and maintenance of the Panama Canal, which shall be turned over in operating condition and free of liens and debts, except as the two Parties may otherwise agree. 2. The United States of America transfers, without charge, to the Republic of Panama all right, title and interest the United States of America may have with respect to all real property, including non-removable improvements thereon, as set forth below: (a) Upon the entry into force of this Treaty, the Panama Railroad and such property that was located in the former Canal Zone but that is not within the land and water areas the use of which is made available to the United States of America pursuant to this Treaty. However, it is agreed that the transfer on such date shall not include buildings and other facilities, except housing, the use of which is retained by the United States of America pursuant to this Treaty and related agreements, outside such areas; (b) Such property located in an area or a portion thereof at such time as the use by the United States of America of such area or portion thereof ceases pursuant to agreement between the two Parties. (c) Housing units made available for occupancy by members of the Armed Forces of the Republic of Panama in accordance with paragraph 5(b) of Annex B to the Agreement in Implementation of Article IV of this Treaty at such time as such units are made available to the Republic of Panama. (d) Upon termination of this Treaty, all real property, and non-removable im- provements that were used by the United States of America for the purposes of this Treaty and related agreements, and equipment related to the management, oper- ation and maintenance of the Canal remaining in the Republic of Panama. 3. The Republic of Panama agrees to hold the United States of America harmless with respect to any claims which may be made by third parties relating to rights, title and interest in such property. 4. The Republic of Panama shall receive, in addition, from the Panama Canal Commission a just and equitable return on the national resources which it has 112 dedicated to the efficient management, operation, maintenance, protection and de- fense of the Panama Canal, in accordance with the following: (a) An annual amount to be paid out of Canal operating revenues computed at a rate of thirty hundredths of a United States dollar ($0.30) per Panama Canal net ton, or its equivalency, foY each vessel transiting the Canal, after the entry into force of this Treaty, for which tolls are charged. The rate of thirty hundredths of a United States dollar ($0.30) per Panama Canal net ton, or its equivalency, will be adjusted to reflect changes in the United States wholesale price index for total manufactured goods during biennial periods. The first adjustment shall take place five years after entry into force of this Treaty, taking into account the changes that occured in such price index during the preceding two years. Thereafter successive adjustments shall take place at the end of each biennial period. If the United States of America should decide that another indexing method is preferable, such method shall be proposed to the Republic of Panama and applied if mutually agreed. (b) A fixed annuity of ten million United States dollars ($10,000,000) to be paid out of Canal operating revenues. This amount shall constitute a fixed expense of the Panama Canal Commission. (c) An annual amount of up to ten million United States dollars ($10,000,000) per year, to be paid out of Canal operating revenues to the extent that such revenues exceed expenditures of the Panama Canal Commission including amounts paid pursuant to this Treaty. In the event Canal operating revenues in any year do not produce a surplus sufficient to cover this payment, the unpaid balance shall be paid from operating surpluses in future years in a manner to be mutually agreed. ARTICLE XIV Settlement of disputes In the event that any question should arise between the Parties concerning the interpretation of this Treaty or related agreements, they shall make every effort to resolve the matter through consultation in the appropriate committees established pursuant to this Treaty and related agreements, or, if appropriate, through diplo- matic channels. In the event the Parties are unable to resolve a particular matter through such means, they may, in appropriate cases, agree to submit the matter to conciliation, mediation, arbitration, or such other procedure for the peaceful settle- ment of the dispute as they may mutually deem appropriate. ANNEX Procedures for the cessation or transfer of activities carried out by the Panama Canal Company and the Canal Zone Government and illustrative list of the functions that may be performed by the Panama Canal Commission 1. The laws of the Republic of Panama shall regulate the exercise of private economic activities within the areas made available by the Republic of Panama for the use of the United States of America pursuant to this Treaty. Natural or jurisdical persons who, at least six months prior to the date of signature of this Treaty, were legally established and engaged in the exercise of economic activities in the former Canal Zone, may continue such activities in accordance with the provisions of paragraphs 2-7 of Article IX of this Treaty. 2. The Panama Canal Commission shall not perform governmental or commercial functions as stipulated in paragraph 4 of this Annex, provided, however, that this shall not be deemed to limit in any way the right of the United States of America to perform those functions that may be necessary for the efficient management, oper- ation and maintenance of the Canal. 3. It is understood that the Panama Canal Commission, in the exercise of the rights of the United States of America with respect to the management, operation and maintenance of the Canal, may perform functions such as are set forth below by way of illustration: a. Management of the Canal enterprise. b. Aids to navigation in Canal Waters and in proximity thereto. c. Control of vessel movement. d. Operation and maintenance of the locks. e. Tug service for the transit of vessels and dredging for the piers and docks of the Panama Canal Commission. f. Control of the water levels in Gatun, Alajuela (Madden) and Miraflores Lakes. g. Non-commercial transportation services in Canal waters, h. Meteorological and hydrographic services. i. Admeasurement. j. Non-commercial motor transport and maintenance. k. Industrial security through the use of watchmen. 113 1. Procurement and warehousing. m. Telecommunications. n. Protection of the environment by preventing and controlling the spillage of oil and substances harmful to human or animal life and of the ecological equilibrium in areas used in operation of the Canal and the anchorages. o. Non-commercial vessel repair. p. Air conditioning services in Canal installations. q. Industrial sanitation and health services. r. Engineering design, construction and maintenance of Panama Canal Commis- sion installations. s. Dredging of the Canal channel, terminal ports and adjacent waters. t. Control of the banks and stabilizing of the slopes of the Canal. u. Non-commercial handling of cargo on the piers and docks of the Panama Canal Commission. v. Maintenance of public areas of the Panama Canal Commission, such as parks and gardens. w. Generation of electric power. x. Purification and supply of water. y. Marine salvage in Canal waters. z. Such other functions as may be necessary or appropriate to carry out, in conformity with this Treaty and related agreements, the rights and responsibilities of the United States of America with respect to the management, operation and maintenance of the Panama Canal. 4. The following activities and operations carried out by the Panama Canal Company and the Canal Zone Government shall not be carried out by the Panama Canal Commission, effective upon the dates indicated herein: (a) Upon the date of entry into force of this Treaty: (i) Wholesale and retail sales, including those through commissaries, food stores, department stores, optical shops and pastry shops; (ii) The production of food and drink, including milk products and bakery prod- ucts; (iii) The operation of public restaurants and cafeterias and the sale of articles through vending machines; (iv) The operation of movie theaters, bowling alleys, pool rooms and other recre- ational and amusement facilities for the use of which a charge is payable; (v) The operation of laundry and dry cleaning plants other than those operated for official use; (vi) The repair and service of privately owned automobiles or the sale of petro- leum or lubricants, including the operation of gasoline stations, repair garages and tire repair and recapping facilities, and the repair and service of other privately owned property, including appliances, electronic devices, boats, motors, and furni- ture; (vii) The operation of cold storage and freezer plants other than those operated for official use; (viii) The operation of freight houses other than those operated for official use; (ix) Commercial services to and supply of privately owned and operated vessels, including the construction of vessels, the sale of petroleum and lubricants and the provision of water, tug services not related to the Canal or other United States Government operations, and repair of such vessels, except in situations where repairs may be necessary to remove disabled vessels from the Canal; (x) Printing services other than for official use; (xi) Maritime transportation for the use of the general public; (xii) Health and medical services provided to individuals, including hospitals, leprosariums, veterinary, mortuary and cemetery services; (xiii) Educational services not for professional training, including schools and libraries; (xiv) Postal services; (xv) Immigration, customs and quarantine controls, except those measures neces- sary to ensure the sanitation of the Canal; (xvi) Commercial pier and dock services, such as the handling of cargo and passengers; and (xvii) Any other commercial activity of a similar nature, not related to the management, operation or maintenance of the Canal. (b) Within thirty calendar months from the date of entry into force of this Treaty, governmental services such as: (i) Police; (ii) Courts; and i»-*00 0-78-9 114 (iii) Prison system. 5. (a) With respect to those activities or functions described in paragraph 4 above, or otherwise agreed upon by the two Parties, which are to be assumed by the Government of the Republic of Panama or by private persons subject to its authori- ty, the two Parties shall consult prior to the discontinuance of such activities or functions by the Panama Canal Commission to develop appropriate arrangements for the orderly transfer and continued efficient operation or conduct thereof. (b) In the event that appropriate arrangements cannot be arrived at to ensure the continued performance of a particular activity or function described in paragraph 4 above which is necessary to the efficient management, operation or maintenance of the Canal, the Panama Canal Commission may, to the extent consistent with the other provisions of this Treaty and related agreements, continue to perform such activity or function until such arrangements can be made. AGREED MINUTE TO THE PANAMA CANAL TREATY 1. With reference to paragraph 1(c) of Article I (Abrogation of Prior Treaties and Establishment of a New Relationship), it is understood that the treaties, conven- tions, agreements and exchanges of notes, or portions thereof, abrogated and super- seded thereby include: (a) The Agreement delimiting the Canal Zone referred to in Article II of the Interoceanic Canal Convention of November 18, 1903 signed at Panama on June 15, 1904. (b) The Boundary Convention signed at Panama on September 2, 1914. (c) The Convention regarding the Colon Corridor and certain other corridors through the Canal Zone signed at Panama on May 24, 1950. (d) The Trans-Isthmian Highway Convention signed at Washington on March 2, 1936, the Agreement supplementing that Convention entered into through an ex- change of notes signed at Washington on August 31 and September 6, 1940, and the arrangement between the United States of America and Panama respecting the Trans-Isthmian Joint Highway Board, entered into through an exchange of notes at Panama on October 19 and 23, 1939. (e) The Highway Convention between the United States and Panama signed at Panama on September 14, 1950. (f) The Convention regulating the transit of alcoholic liquors through the Canal Zone signed at Panama on March 14, 1932. (g) The Protocol of an Agreement restricting use of Panama and Canal Zone waters by belligerents signed at Washington on October 10, 1914. (h) The Agreement providing for the reciprocal recognition of motor vehicle license plates in Panama and the Canal Zone entered into through an exchange of notes at Panama on December 7 and December 12, 1950, and the Agreement establishing procedures for the reciprocal recognition of motor vehicle operator's licenses in the Canal Zone and Panama entered into through an exchange of notes at Panama on October 31, 1960. (i) The General Relations Agreement entered into through an exchange of notes at Washington on May 18, 1942. (j) Any other treaty, convention, agreement or exchange of notes between the United States and the Republic of Panama, or portions thereof, concerning the Panama Canal which was entered into prior to the entry into force of the Panama Canal Treaty. 2. It is further understood that the following treaties, conventions, agreements and exchanges of notes between the two Parties are not affected by paragraph 1 of Article I of the Panama Canal Treaty: (a) The Agreement confirming the cooperative agreement between the Panama- nian Ministry of Agriculture and Livestock and the United States Department of Agriculture for the prevention of foot-and-mouth disease and rinderpest in Panama, entered into by an exchange of notes signed at Panama on June 21 and October 5, 1972, and amended May 28 and June 12, 1974. (b) The Loan Agreement to assist Panama in executing public marketing pro- grams in basic grains and perishables, with annex, signed at Panama on September 10, 1975. (c) The Agreement concerning the regulation of commercial aviation in the Re- public of Panama, entered into by an exchange of notes signed at Panama on April 22, 1929. (d) The Air Transport Agreement signed at Panama on March 31, 1949, and amended May 29 and June 3, 1952, June 5, 1967, December 23, 1974, and March 6, 1975. 115 (e) The Agreement relating to the establishment of headquarters in Panama for a civil aviation technical assistance group for the Latin American area, entered into by an exchange of notes signed at Panama on August 8, 1952. (f) The Agreement relating to the furnishing by the Federal Aviation Agency of certain services and materials for air navigation aids, entered into by an exchange of notes signed at Panama on December 5, 1967 and February 22, 1968. (g) The Declaration permitting consuls to take note in person, or by authorized representatives, of declarations of values of exports made by shippers before cus- toms officers, entered into by an exchange of notes signed at Washington on April 17, 1913. (h) The Agreement relating to customs priviledges for consular officers, entered into by an exchange of notes signed at Panama on January 7 and 31, 1935. (i) The Agreement relating to the sale of military equipment, materials, and services to Panama, entered into by an exchange of notes signed at Panama on May 20, 1959. (j) The Agreement relating to the furnishing of defense articles and services to Panama for the purpose of contributing to its internal security, entered into by an exchange of notes signed at Panama on March 26 and May 23, 1962. (k) The Agreement relating to the deposit by Panama of ten percent of the value of grant military assistance and excess defense articles furnished by the United States, entered into by an exchange of notes signed at Panama on April 4 and Mav 9, 1972. Q) The Agreement concerning payment to the United States of net proceeds from the sale of defense articles furnished under the military assistance program, entered into by an exchange of notes signed at Panama on May 20 and December 6, 1974. (m) The General Agreement for Technical and Economic Cooperation, signed at Panama on December 11, 1961. (n) The Loan Agreement relating to the Panama City water supply system, with annex, signed at Panama on May 6, 1969, and amended September 30, 1971. (o) The Loan Agreement for rural municipal development in Panama, signed at Panama on November 28, 1975. (p) The Loan Agreement relating to a project for the modernization, restructuring and reorientation of Panama's educational programs, signed at Panama on Novem- ber 19, 1975. (q) The Treaty providing for the extradition of criminals, signed at Panama on May 25, 1904. (r) The Agreement relating to legal tender and fractional silver coinage by Panama, entered into by an exchange of notes signed at Washington and New York on June 20, 1904, and amended March 26 and April 2, 1930, May 28 and June 6, 1931, March 2, 1936, June 17, 1946, May 9 and 24, 1950, September 11 and October 22, 1953, August 23 and October 25, 1961, and September 26 and October 23, 1962. (s) The Agreement for enlargement and use by Canal Zone of sewerage facilities in Colon Free Zone Area, entered into by an exchange of notes signed at Panama on March 8 and 25, 1954. (t) The Agreement relating to the construction of the inter-American highway, entered into by an exchange of notes signed at Panama on May 15 and June 7, 1943. (u) The Agreement for cooperation in the construction of the Panama segment of the Darien Gap highway, signed at Washington on May 6, 1971. (v) The Agreement relating to investment guaranties under sec. 413(bX4) of the Mutual Security Act of 1954, as amended, entered into by an exchange of notes signed at Washington on January 23, 1961. (w) The Informal Arrangement relating to cooperation between the American Embassy, or Consulate, and Panamanian authorities when American merchant seamen or tourists are brought before a magistrate's court, entered into by an exchange of notes signed at Panama on September 18 and October 15, 1947. (x) The Agreement relating to the mutual recognition of ship measurement certifi- cates, entered into by an exchange of notes signed at Washington on August 17, 1937. (y) The Agreement relating to the detail of a military officer to serve as adviser to the Minister of Foreign Affairs of Panama, signed at Washington on July 7, 1942, and extended and amended February 17, March 23, September 22 and November 6, 1959, March 26 and July 6, 1962, and September 20 and October 8, 1962. (z) The Agreement relating to the exchange of official publications, entered into by an exchange of notes signed at Panama on November 27, 1941 and March 7, 1942. (aa) The Convention for the Prevention of Smuggling of Intoxicating Liquors, signed at Washington on June 6, 1924. 116 (bb) The Arrangement providing for relief from double income tax on shipping profits, entered into by an exchange of notes signed at Washington on January 15, February 8, and March 28, 1941. (cc) The Agreement for withholding of Panamanian income tax from compensa- tion paid to Panamanians employed within Canal Zone by the canal, railroad, or auxiliary works, entered into by an exchange of notes signed at Panama on August 12 and 30, 1963. (dd) The Agreement relating to the withholding of contributions for educational insurance from salaries paid to certain Canal Zone employees, entered into by an exchange of notes signed at Panama on September 8 and October 13, 1972. (ee) The Agreement for radio communications between amateur stations on behalf of third parties, entered into by an exchange of notes signed at Panama on July 19 and August 1, 1956. (ff) The Agreement relating to the granting of reciprocal authorizations to permit licensed amateur radio operators of either country to operate their stations in the other country, entered into by an exchange of notes signed at Panama on November 16, 1966. (gg) The Convention facilitating the work of traveling salesmen, signed at Wash- ington on February 8, 1919.. (hh) The Reciprocal Agreement for gratis nonimmigrant visas, entered into by an exchange of notes signed at Panama on March 27 and' May 22 and 25, 1956. (ii) The Agreement modifying the Agreement of March 27 and May 22 and 25, 1956 for gratis nonimmigrant visas, entered into by an exchange of notes signed at Panama on June 14 and 17, 1971. (jj) Any other treaty, convention, agreement or exchange of notes, or portions thereof, which does not concern the Panama Canal and which is in force immediate- ly prior to the entry into force of the Panama Canal Treaty. 3. With reference to paragraph 2 of Article X (Employment with the Panama Canal Commission), concerning the endeavor to ensure that the number of Panama- nian nationals employed in relation to the total number of employees will conform to the proportion established under Panamanian law for foreign business enter- prises, it is recognized that progress in this regard may require an extended period in consonance with the concept of a growing and orderly Panamanian participation, through training programs and otherwise, and that progress may be affected from time to time by such actions as the transfer or discontinuance of functions and activities. 4. With reference to paragraph 10(a) of Article X, it is understood that the currently applicable United States law is that contained in Section 8336 of Title 5, United States Code. 5. With reference to paragraph 2 of Article XI (Transitional Provisions), the areas and installations in which the jurisdictional arrangements therein described shall apply during the transition period are as follows: (a) The Canal operating areas and housing areas described in Annex A to the Agreement in Implementation of Article DI of the Panama Canal Treaty. (b) The Defense Sites and Areas of Military Coordination described in the Agree- ment in Implementation of Article IV of the Panama Canal Treaty. (c) The Ports of Balboa and Cristobal described in Annex B of the Agreement in Implementation of Article HI of the Panama Canal Treaty. 6. With reference to paragraph 4 of Article XI, the areas in which the police authorities of the Republic of Panama may conduct joint police patrols with the police authorities of the United States of America during the transition period are as follows: (a) Those portions of the Canal operating areas open to the general public, the housing areas and the Ports of Balboa and Cristobal. (b) Those areas of military coordination in which joint police patrols are estab- lished pursuant to the provisions of the Agreement Treaty, signed this date. The two police authorities shall develop appropriate administrative arrangements for the scheduling and conduct of such joint police patrols. Done at Washington, this 7th day of September, 1977, in duplicate, in the English and Spanish languages, both texts being equally authentic. Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal The United States of America and the Republic of Panama have agreed upon the following: 117 The Republic of Panama declares that the Canal, as an international transit waterway, shall be permanently neutral in accordance with the regime established in this Treaty. The same regime of neutrality shall apply to any other international waterway that may be built either partially or wholly in the territory of the Republic of Panama. article n The Republic of Panama declares the neutrality of the Canal in order that both in time of peace and in time of war it shall remain secure and open to peaceful transit by the vessels of all nations on terms of entire equality, so that there will be no (discrimination against any nation, or its citizens or subjects, concerning the condi- tions or charges of transit, or for any other reason, and so that the Canal, and therefore the Isthmus of Panama, shall not be the target of reprisals in any armed conflict between other nations of the world. The foregoing shall be subject to the following requirements: (a) Payment of tolls and other charges for transit and ancillary services, provided they have been fixed in conformity with the provisions of Article III H.R. 7119, 72nd Cong., 1st Seas., 72 Cong. Rec. 4652-4657 (1932). The legislation was approved, 72 Cong. Rec. 4657. » S.J. Res. 162, 77th Cong., 2nd Sess.; 88 Cong. Rec. 9266-9287, 9320-9328. 167 "Another reason why it is not necessary to embody the provisions of the joint resolution in a treaty or treaties is that so far as Panama is concerned, most of the results sought to be attained by means of the joint resolution have already been accomplished. We already have the sites; we already are occupying them; we al- ready are putting installations upon them for the proper defense of the Canal Zone. The instrumentalities involved comprise not only airfields, but detector stations, searchlight stations, and all the other various instrumentalities for the proper protection of the Canal and its approaches." 52 Despite calls that the Joint Resolution be rejected because it infringed upon the Senate's right to pass upon treaties (88 Cong. Rec. at 9230), the measure was approved (88 Cong. Rec. at 9328). The House Committee on Foreign Affairs held hearings on that transfer" in early 1943. In its Report the Committee stated that — Congressional approval of the Executive commitments to Panama is sought in the form of legislation because there is involved (a) a disposition of property of the United States and (b) an appropriation of funds, both requiring an exercise of the legislative power, independently of the treaty-making power. Article IV of the Constitution provides that the Congress shall have power to dispose of * * * the territory or other property belonging to the United States. 54 A 1955 treaty provided for the transfer of real property to Panama. By terms of the treaty the transfer of some property was to be immediate, and the transfer of the remainder was dependent upon Congressional authorization. A representative of the State Department testifying at Hearings on the Treaty admitted that legislation would be needed to implement the transfer of all the territory and property men- tioned in the treaty. 55 In addition, those sections of the Treaty (Articles VI and VII) alleged not to require implementing legislation amended the Boundary Convention of 1914 be- tween the U.S. and Panama. The transfer in these Articles, then, may be distin- guished from a transfer of the entire Canal Zone or a major portion thereof to Panama. Certainly there is a difference between a boundary adjustment, and the cession of the entire Canal Zone. ///. Conclusion We have seen that the treaty making power, vested in the President to be exercised with the advice and consent of the Senate, is extremely broad in scope. That power is limited when the Constitution confers an exclusive grant of authority on Congress. Although there are excellent arguments in favor of the proposition that the authority to dispose of property is concurrent and may therefore be exercised under the treaty making power, those arguments are not altogether free from doubt. Supreme Court decisions have recognized the exclusive nature of con- gress' Article IV powers as they relate to the federal-state relationship. Those rulings have never been qualified by other decisions characterizing those powers as concurrent when used by the executive under the treaty making power. It does not appear that past treaty practice with either foreign nations or Indian tribes pro- vides authoritative precedent establishing, with any degree of certainty, the exclu- sive or concurrent nature of Article IV, as that provision relates to disposal of land to a foreign sovereign. It is clear that Congress has often asserted an exclusive right to dispose of federal territory and property. It is also apparent that both the Executive and the Senate have recognized that claim in past dispositions of property in the Canal Zone to Panama. Therefore, while it is impossible to make a categorical assertion that Article IV Section 3, clause 2 is either exclusive or concurrent, it appears that those powers have been recognized as exclusive for purposes of disposal of property in the Canal Zone to Panama. Finally, regardless of the exclusive nature of the Article IV power, the co-oper- ation of all three branches of government is necessary for the effective implementa- tion of American foreign policy. Although the President is the sole organ of commu- nications with other nations, conclusion of a treaty without prior regard for Con- gressional attitudes might adversely affect the continuing Executive /Congressional relationship. - 88 Cong. Rec. at 9267. ■» HJ. Res. 14. M H. Rpt. No. 78-271, pg. 6. ■ Hearings before the Senate Foreign Relations Committee on the Panama Treaty, Exec. F., 8rth Cong., 1st Sess., pp. 60-61. Authorizing legislation discussed property conveyed in all three Articles. P.L. 85-223, 71 Stat. 509 (1957). 168 It is a very serious matter for the treaty-making power to enter into an engage- ment calling for action by Congress unless there is every reason to believe that Congress will act accordingly. 5 * Kenneth Merin, Legislative Attorney, American Law Division. August 4, 1977. Mr. Scott. Mr. President, I yield the remainder of my time to the distinguished Senator from Alabama (Mr. Allen). The Presiding Officer. Without objection, the Senator from Ala- bama is recognized. Mr. Allen. Mr. President, I thank the Chair, and I thank the distinguished Senator from Virginia (Mr. Scott). Do I understand then, Mr. President, that I have such time as the distinguished Senator from Virginia did not use plus 15 min- utes in my own right? The Presiding Officer. That is correct. Mr. Allen. I thank the Chair. I will not use any additional time, however, than was originally allotted to me, in my judgment. THE PANAMA CANAL TREATY Mr. Allen. Mr. President, Senators, I am sure, over the past few days have been studying carefully the details of the Panama Canal Treaty and its associated executive agreements. In my own review of the proposed treaty, one aspect is particularly disturbing to me because it is so obviously unnecessary to the basic provisions of the treaty and because it so totally favors the Panamanian position to the great detriment of our own country. I refer, Mr. President, to the treaty provision forbidding the United States to agree with any other country except Panama for the construction of a new West- ern Hemispheric Interoceanic Canal, unless expressly permitted by Panama in some further future agreement. The treaty reads in relevant part as follows: During the duration of this Treaty — And that would be the year 2000 — the United States of America shall not negotiate with third States for the right to construct an interoceanic canal on any other route in the Western Hemisphere, except as the two Parties may otherwise agree — I find it astonishing that the negotiators for the United States saw fit to preclude any possibility of construction of a new intero- ceanic canal, perhaps at sea level, without our first obtaining the express consent of a pro-Marxist and highly unstable military dic- tatorship. Why was this concession necessary? What did we gain from this concession? I notice with some amusement, Mr. President, that the Republic of Panama purports to grant to the United States of America the right to add a third lane of locks to the existing canal. Inasmuch as the United States already has the right to add a third lane of locks to the existing canal, surely our negotiators did not think that a M Secretary of State Hughes, in an address concerning the League of Nations Covenant, in March, 1919, cited in Wright, supra, note 17, at 356-357 (n. 48). 169 meaningless concession of that variety was sufficient consideration for giving the Panamanians a veto over any other project we may wish to undertake to connect the two oceans. Certainly, the negoti- ators for the United States could not have felt that the Panama- nian agreement to commit Panama "to study jointly the feasibility of a sea level canal" warranted a countervailing commitment from the United States not to do anything whatsoever without Panama- nian permission — but perhaps so. The bizarre behavior of our nego- tiators has produced other results equally as startling. In any event, Mr. President, one thing is sure and that is that the Panamanians know they got the best of this bargain. Discuss- ing the sea level canal issue, chief Panamanian negotiator, Romulo Escobar Bethancourt, on August 19, 1977, explained to the Pana- manian National Assembly the unilateral benefits of the so called sea-level canal options. Dr. Bethancourt's remarks on the subject are illuminating and are worth studying in full. Instead of obtain- ing an option to build a sea level canal, our negotiators gave to the Panamanians the option to veto construction of a sea level canal by the United States anywhere in the Western Hemisphere. But here are Dr. Bethancourt's own remarks. I am quoting them at some length for the benefit of the Senate and the public. I believe we can find out more from the Panamanian negotiators as to what this treaty really means than we find out from listening to our own negotiators. Here is what Dr. Bethancourt, the Panama- nian negotiator had to say: The other problem we — Speaking of the negotiators on both sides — The other problem we discussed was that of the option for the construction of a sea-level canal. In all these years the problem of a sea-level canal was hardly discussed at all at the negotiating table. There were about two talks on this. We discussed this, nothing came out of these discussions and then came the Bogota conference with the presidents. That is, the Presidents of the various countries. That is where the option problem really reached a crisis. It reached a crisis because a very direct and continuous communication was established among all the presidents meeting there and President Carter through negotiators Bunker and Linowitz as well as with us through Dr Giogenes de la Rosa, who was there at the time, and our Ambassador Gabriel Galindo. This is Dr. Bethancourt, the Panamanian negotiator, talking. Continuing with his remarks: But they made a proposal to us — That is, our negotiators made the proposal to Panama— But they made a proposal to us on that option and that is why the issue reached a crisis. They proposed that Panama grant them an option to build a sea-level canal without setting any date. Second, they wanted Panama to promise that no other country would construct a sea-level canal. These are very fine proposals that our people made. Let us see if they won out. We rejected that proposal in Bogota. We read it to the presidents. That was the proposal brought the previous evening by several of our negotiators and we read it to them. The negotiations between the two countries was practically broken in Bogota. So much so that I remember that at one point General Torrijos told the presidents: "Well, we called this conference several days ago for a celebration of a 170 new treaty and it turns out that we have come for the wake." The struggle between the two countries began in Bogota. And I say the two countries because the rest of the presidents got as involved as if they had been Panamanians. We must really be very grateful to the presidents that met with the general in Bogota. Regarding this problem they acted just like any of us; they even wanted to walk out mad. The Mexican president wanted to get on his plan and leave; he was very furious. They all became Panamanians regarding the option problem. When the United States finally realized that there was no way in which an agreement would be reached regarding this option in the terms they were proposing and that the issue had reached an impasse, they asked for a recess. During that recess, we continued our discussions with the presidents meeting in Bogota. The Panamanian delegation then prepared a draft which all presidents liked. They said it was correct and fair. We then called the United States, they examined it for a while and finally accepted it. I think that it would be a good idea to read the text of this draft to you so that you will see how the option problem came out. I read: Article 3. Possibility of building a third set of locks or a sea-level canal. First, the Republic of Panama and the United States of America acknowledge that a sea-level canal can be important for future international navigation. As a result of this, after supporting the treaty of the existing canal and for the duration of this treaty, both countries promise to study jointly the viability of such a canal. In the event that the need for such a canal is viewed favorably, they will negotiate its construction in the terms agreed on by both the countries. This is how the option issue came out. (Applause.) This is Dictator Bethancourt, still quoting him. As you can see, it is not even an option to build a sea-level canal. It is an option to promise to study the viability of it. He is letting the cat out of the bag, Mr. President, in his com- ments there to his people. That is the true option. The true commitment is to sit down with the United States to study whether or not it is viable to build a sea-level canal. If the two countries feel it is viable, then they will sit down to negotiate the terms agreed on by the two countries. * * * You know, Mr. President, this fellow Bethancourt has been very- helpful to me in understanding the true implications of the Panama Canal Treaty. From him, I learned the true meaning of the so-called neutrality pact. From him, I learned that the neutral- ity pact was a sham and of no true benefit whatsoever to the security of the United States. I cannot help but note, Mr. Presi- dent, in reviewing Dr. Bethancourt's August 19 speech that he explains that the real purpose of the neutrality pact is to propa- gandize the U.S. Congress and the people of the United States with the myth that the neutrality of the canal will be insured after December 31, 1999. But I would prefer that Dr. Bethancourt answer in his own words the question, "Why this neutrality pact?" He states this: * * * Because they think — That is, the United States — * * * Because they think that maybe in the year 2000 this country will become socialist and will turn into their enemy and they feel it is better to make sure right now that even if our country becomes socialist — Panama, that is — it cannot prevent them from using the canal. To be even more frank, they do not need that neutrality pact to tell them whether or not they may intervene. They need it to show to their Congress in order to be able to tell their Congress: "Look, we are turning the canal over to the Panamanians, but we still have the right to watch over them so they behave." That is the truth. It is a question of their internal policy. They are solving an internal problem regarding a Congress that is largely 171 opposed to these negotiations and which even has members who have not been elected of their own free will — I do not know whether that is a substantive loss in translation or not, because I do not know of any Members of the House of Repre- sentatives who were not elected of their own free will. I know of no Senator or House Member who was forced to run for the position he holds. turned into members of the U.S. Congress. They are Panamanians who lived here and in Miami. There is a parenthetical statement that was "as heard," and there was great applause, as shown by the transcript of his re- marks. Mr. President, it strikes me that there is an awful lot of eyewash in these treaties for the benefit of Congress and mighty little in them for the benefit of the United States. We have obtained a neutrality pact which is meaningless, and we have foregone the right to construct a new canal without the express consent of a gangster dictator. What a spectacle this situa- tion must present to the world — the United States required to seek the consent of a reprehensible and repressive minor autocrat before even undertaking canal discussions with another sovereign nation. How does that strike the average American? We cannot even negotiate with another country for 23 years about building another canal without the express permission of the Panamanians. It just humiliates the United States. Before even undertaking canal discussions with another sover- eign nation, the United States is surrendering control of a vital international waterway to the Communist advisers of a bandit government. Mr. President, I have availed myself of this opportunity of dis- cussing two features of the canal treaty. At other times I plan to discuss other sections of the treaty, in order that Members who care to read the Record will see the views that I have expressed, and will have a right to consider whether these provisions are in the interest of the United States. I do plan, as does the distin- guished Senator from Virginia (Mr. Scott), to make other speeches here on the floor of the Senate, in the hope that those who read the Record will be able to see just what is involved, and in hopes that others throughout the country may be advised. Mr. Scott. Mr. President, will the Senator yield to me? Mr. Allen. Yes, I am delighted to yield to the Senator from Virginia. Mr. Scott. Mr. President, I commend the distinguished Senator from Alabama for the statement that he has made, for his pene- trating analysis of Article 12 with regard to the construction of an additional lane or an additional set of locks in the existing canal, and the prohibition against the United States constructing an addi- tional canal at any other spot in the isthmus outside of Panama. I agree with the distinguished Senator; there seems to be abso- lutely no reason why our Government should agree with another nation not to construct something outside of their territory. 172 Frankly, Mr. President, if someone in the committee does not strike that provision of the treaty under the amending process, I believe it should be done on the floor of the Senate and I will be prepared to do so unless another Senator does. I would like to go further than the remarks of the distinguished Senator has made on the floor today and commend him as chair- man of the Subcommittee on Separation of Powers of the Senate Judiciary Committee for holding hearings, as he has done, in at- tempting to find out the legalities of this proposed treaty which has been signed by the President, which was obtained by the State Department. I believe we need reason and we need to determine just how we should proceed. Mr. President, it is basic in the laws of contracts that there be some quid pro quo, that there be some consideration flowing from one party to another. I do not see any quid pro quo in this treaty. The distinguished Senator from Alabama, and the subcommittee on which I am privileged to serve with him, is attempting to delve into this question. I would hope, Mr. President, that somehow we can eliminate the emotionalism and do some straight thinking as to what is best for our own Government in determining whether the Senate should advise and consent to this treaty. I appreciate the Senator yielding. Mr. Allen. I thank the distinguished Senator for his comments. I commend him for his hard work on this issue and the leadership he has exerted in seeking to point out the dangerous provisions, the unfair provisions, in the treaty. I commend him for his work on the Separation of Powers Subcommittee of the Judiciary Commit- tee. I also appreciate his enlightening the Senate and the country on these issues. The Senator mentioned that there needs to be a quid pro quo in a contract. There also needs to be a meeting of the minds between the contracting parties. Obviously, there is no meeting of the minds on many, but certainly two, very important issues. One is the priority of our ships in the canal. Apparently there is no priority as the Panamanians regard the construction of the treaty. Second is the misunderstanding about the neutrality of the canal; whether we have a right to determine whether their neutrality is in danger; whether we have a right to land troops there or not. The Panama- nians say not. So there is no meeting of the minds here. The distinguished Senator from Virginia raises another most important point and it will be asked of the Chair at the proper time, though not now, when the treaty is before the Senate. He feels in the committee, and I feel on the floor certain action should be taken; the committee should strike this provision requir- ing the United States to get the permission of Panama before even negotiating with another nation for another canal, a sea level canal. I feel reasonably sure that the committee will strike this very dangerous provision, and I feel the Senate will back up the committee. Having seen one of its provisions stricken, and the Senate if it should approve the treaty with major amendments made to the treaty, would that require the execution of another treaty? There 173 are constitutional authorities to the effect that once a treaty is amended it cannot then be approved by the other party without entering into a new treaty. If that be the case, if major amend- ments are made to the treaty, it may well be that that, in itself, will defeat this treaty, because it will require entering into a new treaty. It will be an interesting constitutional question about which the Chair will be asked. That question may have to be submitted to the Senate for the Senate's view. That would not necessarily be binding if, in fact, that would vitiate the treaty in the absence of another treaty submitted to both countries. Mr. Scott. Will the Senator yield on that point? Mr. Allen. I yield. Mr. Scott. It would appear to me that in the event the Senate does offer amendments and they are adopted by the Senate, and the treaty, as amended, would later be ratified by the Senate, this would influence the executive branch of Government in its efforts to negotiate a new treaty. I feel, quite frankly, Mr. President, that the Senate is somewhat closer to the people of the United States than the executive branch. Certainly, it is closer than the unelect- ed negotiators of this treaty. In fact, no one within our State Department or within our diplomatic corps has had to face the electorate as has each Member of the Senate. I feel someone must speak for the people, and I hope it will be the Senate. Mr. Allen. I thank the distinguished Senator. There is one other point I would like to make as we suggest guidelines for the consideration of this treaty. I do not foresee here on the floor of the Senate a filibuster against this treaty. I believe there will be a long discussion, a legitimate debate. Though I have not discussed the matter with the leadership, I feel sure that the leadership would not file any cloture petition as long as the debate is legitimate debate. It may last for weeks without being a filibus- ter. I do not believe a filibuster will ensue, the reason being the difference in what it takes to cut off a filibuster; 60 votes, and 67 votes to approve the treaty, assuming all Senators are present. Far more than that, the reason there will not be a filibuster is if the treaty is defeated by extended debate, the treaty would still remain on the Executive Calendar for the next session of this Congress and for succeeding Congresses, to be brought up by the leadership at any time. What I am going to be working toward is a vote up or down on the treaty. Once it is defeated by the Senate, it becomes a complete nullity. If other negotiations are held and other treaties are sub- mitted to the Senate, we would have to consider them ab initio. But there will be no filibuster, as such, and no need to invoke cloture. The Presiding Officer. The Senator's time has expired. 174 [From the Congressional Record— Senate, Sept. 16, 1977] THE PANAMA CANAL TREATY Mr. Allen. Mr. President, on Monday, September 12, 1977, I brought to the attention of the Senate remarks made by chief Panamanian negotiator, Dr. Romulo Escobar Bethancourt, who gave interpretations of the treaty at a news conference in Panama City on October 24. Dr. Bethancourt's comments showed that, at least in the minds of the Panamanians, the United States would not have the right to intervene militarily to guarantee the neutral- ity of the canal nor would the United States have the right to priority of passage of its vessels of war. Today, Mr. President, I have received a translation of a speech given by the Panamanian Planning and Economic Policy Minister, Nicolas Ardito Barletta, given on August 19, 1977, before the Na- tional Assembly of Panama in Panama City. Minister Barletta's remarks should be of great value to the Senate in assessing the actual economic impact of the proposed canal treaty. Like Dr. Bethancourt, Minister Barletta interprets the treaty to his country in a manner which stands in stark contrast to the cost analysis presented by our own Government. While the treaty provides only for the payment of $20 million per year for police services and for fixed annuity, Minister Barletta states that the cash economic benefits actually amount to the astonishing sum of $2,262 billion in 1977 dollars, for an annual average payment of approximately $100 million. That is for each of the 23 years of the life of the treaty. Mr. President, some rather ingenious devices have been discov- ered by the executive department for providing this $2y4 billion to Panama without the necessity of seeking congressional approval through the appropriations process. But, Mr. President, unlike our own Department of the Treasury, Minister Barletta gives a very careful explanation of the devices used and, in my judgment, Sena- tors should therefore find of great interest the entire substance of his speech which I intend to enter into the Record if given unani- mous consent to do so. For example, Minister Barletta reckons the average income to Panama from the proposed new Panama Canal Commission to be $80 million per year, not a maximum of $20 million as expressly stated in the proposed treaty. But his explana- tion is better than any that I could give. Here is what Minister Barletta had to say: The agreements reached in this aspect are as follows: An average income of $80 million per year, I repeat, average, for the next 23 years; that is, a total of $1.8 billion in the 23 years. The majority of this income is subject to a clause of inflationary correction so that the annuity consistently maintains its purchasing value, based on the year 1977. It is quite easy to see that this amount would escalate tremen- dously in 23 years, if we continue the inflationary spiral of some 6 or 7 percent, on the average, per annum — The income for the first year is estimated to be $65 million. By the end of the treaty, the amount will reach approximately $100 million in real values of 1977, that is, corrected against any inflation that may occur during that period. The mean of this gradually increasing sum gives us the average amount of $80 million. This income is itemized as follows: $0.30 for each ton of cargo that transits the canal. According to traffic projections through the canal, this means an average income of 175 $55 million per year which in the first year will amount to about $42 million, to reach $70 million by the end of the century. Of course, that would be added to the oil that we receive from Alaska, and it is anticipated that there will be a tremendous volume of oil going through the Panama Canal in years to come — The second item of this round sum is $20 million per year, of which $10 million is guaranteed each year, the rest depending upon the level of income of the Panama Canal Company in that year. If in one year the second half of the $20 million cannot be covered, the deficit caused would be covered in the subsequent years to maintain the $20 million per year payment. This is in addition to the average of $80 million, which would make it up to $100 million in 1977 dollars — And a third item of approximately $5 million per year of income will come from several businesses and operations being transferred to the national government, such as ports, railroads, sale of fuel, repair of ships, and so forth. Therefore, the total sum of $80 million is composed of these three items that I just discussed. • * • But, Mr. President, in glowing terms and with obvious pride in accomplishment, Minister Barletta points out other plums he suc- ceeded in shaking loose in the negotiations. And the Panamanian negotiators surely did skin our negotiators. They just outtraded us. We are supposed to be the Yankee traders, but they surely outtrad- ed our negotiators; and every step of the way, of course, the negoti- ations were carried on in secrecy as far as the general public here in the United States is concerned; and then we are confronted, here in the Senate, with a fait accompli, with the treaty already signed, with great fanfare, by the President. But here is what Minister Barletta says they shook from the plum tree of the American taxpayers: Another aspect gleaned from the canal operation is the transference to Panama — as Edwin Fabrega will explain shortly — of buildings and infrastructure for a current value of $82 million. Aside from this aspect, which is what Panama would derive from the operation of the canal and from the transfer of physical assets which currently exist in the Canal Zone, there is a parallel and corollary package of economic cooperation. This package reaches an amount of $345 million, above all, within the next 5 years, and is itemized as follows: loans from the Export-Import Bank up to the amount of $200 million in the next 5 years; loans for the construc- tion of housing guaranteed by AID up to $75 million in the next 5 years; loans guaranteed by a U.S. agency called OPIT for $20 million for Cofina, our develop- ment bank, and other loans and equipment, principally military equipment, for the amount of $50 million in the next 10 years. Furthermore, Minister Barletta places a 1977 value on facilities which will be donated to Panama in 1999. His figure is $3 billion, and I have little doubt that it is correct, as to the value of the facilities which will come to Panama in 1999. Or, possibly, it will be a much higher figure. Minister Barletta continues: Aside from the foregoing, it must be emphasized that all the rest of the existing structures in the Canal Zone, that is, the canal itself and the rest of the civilian and military installations, will be returned to Panama, free of charge, on 31 December 1999. "Returned to Panama"; this is Barletta's language, it is not the language of the Senator from Alabama, because I do not feel it is a return to Panama. It is a gift to Panama, because obviously they had nothing to do with constructing these facilities, or with con- structing the Panama Canal: And these structures have an approximate value of $3 billion currently. Aside from that, we must also point out that Panama will receive from the company that 176 operates the canal the amount of $10 million per year, also with inflationary correction, to cover the costs of the public services which Panama will administer in the exercise of its jurisdiction in the zone area, for these services which are generat- ed by reason of the existence and operation of the Panama Canal. Therefore, lending these services will cost nothing to the national treasury. We are going to pay for the police operations there in the Canal Zone. Minister Barletta does not place a dollar figure on the immense- ly valuable real property which would be transferred to Panama immediately upon implementation, but surely those real property values must be well into the billions. He does, however, discuss the significance of the cash contributions in terms of the annual budget of the Government of Panama. His remarks in that respect are particularly illuminating in showing the tremendous benefits being transferred to this small country of only 1.7 million citizens. Perhaps the Governors of some of our smaller States would par- ticularly appreciate Minister Barletta's thoughts on this subject: In brief, what is the significance of these figures? We can say that in the next few years, the next 3 or 4 years, the amount of the annuity alone, without taking into consideration the economic cooperation, is 19 percent of the national government's budget; that is, it is a considerable increase, one-fifth. That is just the amount of the annuity alone. It is 25 percent of the operational expenses of the current budget and is 15 percent of the program of investments of the public sector. As the national govern- ment's intention for the time being is to devote the majority of these resources to solving the problems of our nation, the problems of our people through its invest- ment program, we have to take into consideration that this amount — the annuity only, which in the first few years will be approximately $65 million per year — means at least 15 percent more for the program of investments being carried out by the country. This amount can become a figure of more impact through financing which can be negotiated on the basis of this income. They are going to use this income as a vehicle to get still more money by putting this in as equity. We can also say — as another manner of illustrating what these figures mean, because they are so large that one often does not see them in real terms — that this means considerably speeding up the program of investments which we are develop- ing. There he refers to public works and investments in Panama. All of us here are aware that during the past year we have had to reduce investment in order to face the serious economic crisis which the country and the world have been experiencing. * * * So, Mr. President, the Panamanians plan not only to take the loans and cash we are offering; they also apparently intend to use our money as leverage for additional loans. Panama is already bankrupt, but the spendthrift Panamanian Government no doubt has already pledged our country's largesse as collateral in a mad search for even more borrowed funds. Later on, Mr. President, I am going to talk about the loans by the big banks in this country to Panama and the fact that this treaty income that Panama will receive from the U.S. taxpayers and the users of the canal will be used to pay on these existing debts. Mr. President, sooner or later the Congress must draw the line and stop robbing American taxpayers to extend funds to bankrupt, Third World countries so that international banks can collect prin- 177 cipal and interest on shaky loans. In my judgment, the internation- al banks should be required to write off their bad debts, at least some portion of the loans they made in error, and the international banks should be put on notice that the American taxpayer will not always guarantee a profit in any loan transaction with unstable governments. Perhaps, the Panama Canal treaty will be a good starting place. Mr. President, I ask unanimous consent that Minister Bartletta's speech be printed in the Record. There being no objection, the speech was ordered to be printed in the Record, as follows: Excerpt From Speech by Minister Nicolas Ardito Barletta Gentlemen representatives, colleagues, ladies and gentlemen: It is my duty to inform you about the economic aspects of these negotiations, aspects which are fully as important as the others because at this stage we are all convinced of the necessity that a strong national economy must be the basis for obtaining and fully implementing our freedom of action. They are important also because the real valorization of our geographical position as a natural resource was at stake as well as Panama's obtaining of revenue equal to the value of that geographical position. This means, as a result, the real possibility of accelerating Panama's general devel- opment and providing an answer to the important needs of our people in this process. In other words, it would be one thing to have dignity and sovereignty with hunger and quite another to have and to consolidate the dignity and the sovereignty with the integral development of our people. And this has been our aim through the economic aspect of these negotiations in attempting to consolidate the value of our geographical position and the resources and revenue which respect to it so as to use it in our development. The agreements reached in this aspect are as follows: An average income of $80 million per year, I repeat, average, for the next 23 years; that is, a total of $1.8 billion in the 23 years. The majority of this income is subject to a clause of inflationary correction so that the annuity consistently maintains its purchasing value, based on the year 1977. The income for the first year is estimated to be $65 million. By the end of the treaty, the amount will reach approximately $100 million in real values of 1977, that is, corrected against any inflation that may occur during that period. The mean of this gradually increasing sum gives us the average amount of $80 million. This income is itemized as follows: $0.30 for each ton of cargo that transits the canal. According to traffic projections through the canal, this means an average income of $55 million per year which in the first year will amount to about $42 million, to reach $70 million by the end of the century. The second item of this round sum is $20 million per year, of which $10 million is guaranteed each year, the rest depending upon the level of income of the Panama Canal Company in that year. If in one year the second half of the $20 million cannot be covered, the deficit caused would be covered in the subsequent years to maintain the $20 million per year payment. And a third item of approximately $5 million per year of income will come from several businesses and operations being transferred to the national government, such as ports, railroads, sale of fuel, repair of ships, and so forth. Therefore, the total sum of $80 million is composed of these three items that I just discussed. Another aspect gleaned from the canal operation is the transference to Panama — as Edwin Fabrega will explain shortly — of buildings and infrastructure for a current value of $82 million. Aside from this aspect, which is what Panama would derive from the operation of the canal and from the transfer of physical assets which currently exist in the Canal Zone, there is a parallel and corollary package of economic cooperation. This package reaches an amount of $345 million, above all, within the next years, and is itemized as follows: loans from the Export-Import Bank up to the amount of $200 million in the next 5 years; loans for the construc- tion of housing guaranteed by AID up to $75 million in the next 5 years; loans guaranteed by a U.S. agency called OPIT for $20 million for Cofina, our develop- ment bank, and other loans and equipment, principally military equipment, for the amount of $50 million in the next 10 years. In short, all these elements of economic benefits which I have mentioned in structures, payments and loans for development will in 23 years amount to the sum of $2,262 billion. This is compared to what Panama would receive under the current 29-400 0-78-13 178 treaty during that same period, which would be the ridiculous amount of $52 million. This, then, is the difference between what this treaty means as far as economic benefits and what Panama would receive under the current treaty. Aside from the foregoing, it must be emphasized that all the rest of the existing structures in the Canal Zone, that is, the canal itself and the rest of the civilian and military installations, will be returned to Panama, free of charge, on 31 December 1999. And these structures have an approximate value of $3 billion currently. Aside from that, we must also point out that Panama will receive from the company that operates the canal the amount of $10 million per year, also with inflationary correction, to cover the costs of the public services which Panama will administer in the exercise of its jurisdiction in the zone area, for these services which are generat- ed by reason of the existence and operation of the Panama Canal. Therefore, lending these services will cost nothing to the national treasury. In brief, what is the significance of these figures? We can say that in the next few years, the next 3 or 4 years, the amount of the annuity alone, without taking into consideration the economic cooperation, is 19 percent of the national government's budget; that is, it is a considerable increase, one-fifth. It is 25 percent of the operational expenses of the current budget and is 15 percent of the program of investments of the public sector. As the national government's intention for the time being is to devote the majority of these resources to solving the problems of our nation, the problems of our people through its investment program, we have to take into consideration that this amount— the annuity only, which in the first few years will be approximately $65 million per year — means at least 15 percent more for the program of investments being carried out by the country. This amount can become a figure of more impact through financing which can be negotiated on the basis of this income. We can also say — as another manner of illustrating what these figures mean, because they are so large that one often does not see them in real terms — that this means considerably speeding up the program of investments which we are developing. All of us here are aware that during the past year we have had to reduce investment in order to face the serious economic crisis which the country and the world have been experiencing. MISCONCEPTIONS ABOUT PANAMA Mr. Cranston. Mr. President, negotiations on the Panama Canal treaties went through several discussion stages during the past 13 years. As a result, some misconceptions may have arisen. I am convinced these will be dispelled when the facts of the treaty become more widely known. For example, some people were justifiably concerned that we might have to give up our continuing right to protect the canal against threats from within and without. At President Carter's insistence, our negotiations made clear to the Panamanian negotia- tors that we reserve the unlimited right to intervene — both under the basic treaty until the year 2000, and under the neutrality treaty thereafter. Similarly, some people feared that with Panama in control, some other power might come in and construct a sea-level canal and cut us out. But the United States has gotten a firm treaty commitment that we will be directly involved in any sea-level canal or any modification to accommodate large modern warships and cargo ships that can not fit through the present waterway. Still others felt that an abrupt transfer might disrupt efficient operation of the canal. The basic treaty, however, continues overall U.S. management until the end of this century, thereby explicitly assuring continuous U.S. control prior to that date. The Panama Canal treaties will strengthen our national security interests in Panama and throughout Latin America. Under terms of the treaties — as we understand them and the basis on which I will vote for ratification — the United States re- 179 tains indefinitely the right to take whatever action we deem neces- sary to defend the canal against any threat. Similarly, the treaties guarantee the permanent and unconditional right of U.S. warships to pass through the canal — with priority in the event of an emer- gency. The Panamanian Government is on notice that this is our under- standing of the agreement. Obviously we will not consider our- selves bound by any other interpretation. We not only keep all the authority we now have to assure an open, safe, and efficient canal, we pick up some new and valuable assets besides. Under the treaties Panama — now only an unwilling host — will have a greater stake in protecting the canal and keeping it open and neutral. So will other countries in Latin America that for seven decades have resented the claim that the United States "owns" a part of an independent nation in Central America. United States national interests depend upon the proper use and assured security of the canal, not upon its ownership. And U.S. national interests will be far more secure when Panama and other Latin American nations are our genuine friends and allies and are committed to similar, mutually beneficial goals. Our highest military leaders — the Joint Chiefs of Staff— unani- mously agree. THE PANAMA CANAL TREATY Mr. Harry F. Byrd, Jr. Mr. President, for months now, the question as to whether the United States should accept a treaty which would surrender U.S. control of the Panama Canal has been prominent in the news. This coverage reached a peak last week when President Carter formally signed two treaties which, if ratified, would completely relinquish U.S. control over the Panama Canal and the Canal Zone. As a result of this extended media coverage a great deal of information and misinformation has been put forth and repeated many, many times. Several distortions of fact have been used over and over again to foster support for a canal treaty and unfortunately, with repetition, these half truths and distortions are gaining a wider acceptance. However, a recently published article by Hanson W. Baldwin, former military editor for the New York Times, dispells much of the ignorance and distortion which has surrounded the Panama Canal controversy and provides factual, documentable evidence in opposition to the proposed canal treaties. This article, published in the AEI Defense Review is entitled "The Panama Canal: Sovereignty and Security" and should be read by every Member of the U.S. Senate. It addresses the military and economic importance of the Panama Canal to the United States and documents the clear fact that the United States has full sovereignty over the canal and the Canal Zone. 180 Further, this article explodes the myth of American exploitation of Panama and provides an impressive summary of the benefits Panama has derived from the canal and the U.S. presence. Finally, and most importantly, Mr. Baldwin explodes the myth that the United States can effectively maintain control over the operation of the canal and insure its defense without retaining sovereignty. Once that sovereignty is relinquished the ability of the United States to assert control— should that become necessary— will be almost nonexistent short of an invasion of Panama to reassert control. I command this thought-provoking article to my colleagues and I ask unanimous consent that its full text be printed in the Record. There being no objection, the material was ordered to be printed in the Record, as follows: The Panama Canal: Sovereignty and Security (By Hanson W. Baldwin) The future security and well-being of the United States are threatened by the administration's proposed abandonment of sovereignty over the Panama Canal and the Canal Zone. Any such action would have global consequences, nowhere more adverse than in the Caribbean Sea-Gulf of Mexico area. The vital interests of a nation can be defined in territorial and regional terms or as political, psychological, economic, or military interests. By any and all of these yardsticks, the security of the Caribbean, the ability of the United States to control the Caribbean in war and to be a dominant influence there in peace, is vital to our country. THE STRATEGIC IMPORTANCE OF THE CANAL These southern seas have been considered essential to U.S. security since the time of Thomas Jefferson and the enunciation of the Monroe Doctrine. The great impor- tance of the Caribbean has been restated in modern terms by Alfred Thayer Mahan and all succeeding generations of strategists. In fact, in a strategic sense the Carib- bean-Gulf of Mexico area must be considered the mare nostrum of the United States. Unless we are capable of controlling it, we are, indeed, undone. Yet that capability has already been gravely weakened; the turning point was the Communists' seizure of power in Cuba, the Caribbean's most important island, only ninety miles from our shores. Soviet Migs flying in Cuban skies, Soviet submarines calling at Cuban ports, and the hammer and sickle flaunting its red blazon of revolution across the area are both cause and symbol of the deterioration in the past fifteen years of U.S. security on our southern flank. Our own mistakes and weaknesses have cost us dearly; the infiltrators are within the outer walls, and what should be our island-speckled ramparts are becoming today the soft underbelly of North America. It is in this broad perspective — the future of the Caribbean-Gulf of Mexico area — that any basic change in the status of the Panama Canal must be judged, for any such change will profoundly affect our interests in the area and hence, ultimately, our political, psychological, economic, and military security. And, in an even larger, global sense, any retreat or major concession in Panama in the face of the threats of General Omar Torrijos, the Panamanian dictator, can only be interpreted around the world as scuttle-and-run, further proof of the weakening of the will and resolu- tion of the United States. Faith in promises made, belief in the power of a nation and its will to use it in defense of its own interests, is the coin of international respect; since Castro, Vietnam, Angola, the credibility of the United States has been severely impaired and our international solvency in doubt. Panama and the canal are therefore both cause and symbol; the canal is highly important in its own right, but far more so as a symbol of U.S. resolution and as one of the vital links in our vital interests in the Caribbean. Looked at in this light, the canal itself, contrary to the claims of its detractors, is in no way obsolete. It is ironic, indeed, that in an era when the United States Navy needs the canal to a greater degree than at any time since the end of World War LI, Washington is 181 considering its abandonment. The navy today is in the same strategic bind it was in prior to World War II: it is a one-ocean navy (in size and power) with two-ocean responsibilities. We are outnumbered in submarines and surface ships by the Soviet Union, and, more than at any period since 1945, the navy must have a quick transfer capability between Atlantic and Pacific in order to meet sudden crises. To send the fleet or individual ships around the Horn, as in the days of Fighting Bob Evans and Teddy Roosevelt, might be, in the modern age of speed, to lose a war. General V. H. Krulak, United States Marine Corps (ret.), writing in the summer 1975 issue of Strategic Review, summarized the canal's naval importance: "In truth the Panama Canal is an essential link between the naval forces of the United States deployed in the Atlantic and in the Pacific. It is only because of the waterway that we are able to risk having what amounts to a barebones, one-ocean Navy." It is ironic, too, that a major change in naval ship size, construction, and design is starting just at the time when proponents of a transfer of canal sovereignty justify their position by arguing that the locks cannot accommodate the navy's largest ships. The argument — true, though only for the moment — is irrelevant. Only the thirteen giant aircraft carriers of the U.S. Navy have too large a beam to pass through the 110-foot width of the present locks. Yet the days of these behemoths of the seas are numbered; well before 2000 (one of the dates proposed for the transfer of sovereignty over the canal to Panama) a new generation of ships will begin to replace them — smaller, but more effective, with VSTOL aircraft, drones, missiles, or other new state-of-the-art developments like hovercraft and hydrofoils. Even more important is the fact that every other ship in the U.S. Navy (except the thirteen carriers) can transit the canal, a fact of major importance in limited war, the type of crisis we are most likely to face. Our missile-firing and attack submarines (now deservedly called capital ships of the navy), all our antisubmarine and escort forces, our amphibious vessels, and our support and supply craft can transit the canal — a fact which has already proved of major importance in two recent instances. During the Cuban missile crisis marines and supplies from the West Coast were ferried through the canal to the Caribbean. If they had had to pass around Cape Horn, they would never have arrived in time to influence the outcome. As it was, the threat of invasion helped materially to force Khrushchev to change his mind. During the Vietnam War about 98 percent of all supplies for our forces were shipped by sea; of this total, approximately 33 percent were loaded in East and Gulf Coast ports and transited the canal. The volume of military-sponsored cargo in the four years from 1964 to 1968 increased, for dry cargo, by some 640 percent and for petroleum products by about 430 percent. And the number of U.S. government vessels (chiefly naval) transiting the canal increased from 284 in 1965 to more than 1,500 in 1968. The limitations of the current locks (though, indeed, the canal can handle much more traffic than the 12,000 to 14,000 vessels a year that now use it) have, in any case, little relevance. A third set of locks, larger than the existing ones, was long ago authorized and started, but work was suspended because of World War II; the excavations (within the present ten-mile-wide Canal Zone) still exist, and whenever the need is demonstrated the new locks could be completed. There is another military factor which bears on the present and future utility of the canal and deserves mention in passing. Nuclear weapons, it is said, have made the canal indefensible and vulnerable to sudden destruction. Actually other means of blocking or closing the canal existed long before the development of nuclear weapons. The point is, however, that this change is completely irrelevant. No sane enemy would waste a nuclear warhead on the Panama Canal with such decisive targets naked to his missiles as New York City and Washington, the industrial complexes of Pittsburgh and Celeveland, the huge urban, industrial, and naval-port complexes of Norfolk and San Diego. In a nuclear war, the Panama Canal would simply play no role whatsoever, either as target or as launching pad. Finally, the U.S. Panama Canal Zone offers facilities unavailable elsewhere under the U.S. flag for training troops in jungle warfare. More important, the zone is oriented towards the problems of Central and South America and the zone's army schools and training facilities have fostered and helped to develop a close and productive military liaison between the armed forces of many nations in the South- ern Hemisphere and the United States. Most important, the zone is the southern and western anchor of our entire position in the Caribbean. Together with the southern Florida — Florida Keys area, Guantanamo Bay, which dominates the Wind ward Passage (one of the principal passages into the Caribbean from the Atlantic) and the Roosevelt Roads base in Puerto Rico (supplemented by Virgin Island ports), it offers naval, air, and land facilities which can strengthen the security of our 182 southern flank. (Incidentally, it also has importance to the strategy of the Central Pacific, outward to the Galapagos.) It is within this framework that the Panama position is of the greatest signifi- cance to the strategic control of the Caribbean and to the security of the United States. Without it, the other island positions of the United States in the area— already threatened by Castroism and communism — would probably be engulfed by a hostile sea. Thus, the Panama Canal, strategically significant in its own right, is far more important to the United States as a part of the vital whole of Caribbean — Gulf of Mexico security. ECONOMIC CONSIDERATIONS The economic factor is also of major importance in the canal-Caribbean equation. In the past four years, the canal, for the first time in its history, has lost money, despite its first toll increases in seventy years. Part of this loss appears to be due to a change in bookkeeping practice: for the first time amortization costs for the original excavations of the Panama Canal were charged off, apparently in anticipa- tion of a treaty transferring sovereignty. But there were more important economic causes. The world recession and the reopening of the Suez Canal in 1975, currency devaluations, and rapid inflation which increased the canal's operating expenses from about $182 million to $260 million in four years, as well as the increase in "land-bridge" traffic (that is, the shipment of containers from Atlantic to Pacific ports by rail) all contributed materially to a recent period in which ship transits, contrary to the long-term trend, did not increase on an annual basis but stabilized or declined. Nevertheless, in recent years, there have been some 12,000 to 14,000 ship transits annually; vessels of all the nations of the world have been lifted from sea to sea economically and efficiently. Ships flying the Liberian and Panamanian flags — so- called flags of convenience — many of them actually owned by U.S. citizens, ships of Latin American nations, and vessels flying the flags of Great Britain and the United States are among the greatest users of the canal. The fees they pay (still only half as high as the Suez Canal fees) are a small price for the savings and convenience of the short transit. To the American economy, and particularly to U.S. overseas shippers aad importers, the canal has major importance; it has been estimated that, of all cargoes transiting the canal in ships of all flags, about 60 to 70 percent are bound to or from U.S. ports. More than 1,000 transits annually are by U.S. flag ships, and an increasing number of them are "Panamax" vessels specially designed to fit snugly the locks of the canal. Many of these are engaged in the growing container-ship traffic from the East Coast and Europe to the Orient. Some thirteen major trade routes funnel through the Caribbean Sea-Gulf of Mexico-Panama Canal region. The skies and waters of the Caribbean and the Gulf are vital arteries for U.S. industry and trade, through which pass coffee and fibers, manganese and iron ore, beryl and colombium from Brazil; oil and iron ore from Venezuela; bananas and other tropical fruits from Central America; copper from Peru and Chile; bauxite from Jamaica, Surinam, the Dominican Republic, and Haiti; antimony and tin and tungsten from Bolivia; zinc from Mexico and Peru; sugar from the sugar islands of the Caribbean. These products and others are essential to U.S. industry, and Latin American markets help to maintain U.S. prosperity. The so-called Sun Belt of the United States, that growing and prosperous region extending across the country from southern California to Florida and Georgia, is greatly dependent upon its gateways to the world. The most important of these are the Gulf Coast ports and the entrance to the mighty Mississippi River. All the approaches to this area lie through the Caribbean-Gulf of Mexico region. The seas that wash these shores also border Mexico, where newly discovered major reserves of petroleum add immeasurably to the importance of this vast southern region for our future security. There is, too, in the Gulf of Mexico, extending seaward farther and farther from our shores, a resource that is increasingly more precious than gold — the offshore and undersea deposits of gas and oil, resources which require security for their development. And one of the plans for transporting the oil of Alaska's North Slope to the hungry markets of the "lower forty-eight" contemplates shipment by tanker through the Panama Canal to Gulf and East Coast ports. POLITICAL AND PSYCHOLOGICAL FACTORS Even more compelling than the military and economic importance of the canal are the political and psychological considerations. Since the failure at the Bay of Pigs, U.S. foreign policy has suffered a series of severe defeats; we have been in 183 retreat in many places around the world; human errors, gloomy Spenglerian indeci- siveness and confusion, poor leadership, and a lack of mobilized national wall have led to the loss of Vietnam and our retreat from Southeast Asia, the debacle of Angola, the substitution of Communist for U.S. influence in Ethiopia — and, in the Caribbean, the transformation of a friendly Cuba into a springboard for Soviet imperialism in the Western Hemisphere. As the Pueblo, Mayaguez, and other inci- dents have shown, even second- and third-rate powers now dare to tweak Uncle Sam's nose. This process of losing not only face and prestige but also control has gone far in the Caribbean; it will accelerate greatly if we abandon the canal. The much- maligned domino theory was valid for Southeast Asia; along with Vietnam, Cambo- dia and Laos fell to Communist governments; Thailand expelled our forces; the Philippines immediately announced a shift away from the United States and de- manded a revision of our base agreements; and all over the world, U.S. resolution and will were questioned. The domino theory is equally valid for the Caribbean: if Panama goes, all our positions there may eventually follow. This is particularly true of Guantanamo Bay at the western tip of Cuba, a base important for training and, because of its geographical location, commanding the Windward Passage. The treaty that governs our use of the base is remarkably similar in some ways to the Panamanian treaty. We enjoy at Guantanamo Bay "complete jurisdiction and control," or de facto exercise of sovereign rights, over some 29,000 acres of land and water. (There is a major difference; we concede in the Cuban case that "ultimate sovereignty" — not defined in the treaty — resides in Cuba, but our "complete jurisdiction and control" continue indefinitely until the United States voluntarily "abandons" the base or agrees mutually with Cuba to revise the treaty.) In other words, we lease the Cuban base and under the terms of the lease, which can be terminated only by mutual agreement, we hold sovereignty over it. But we do not — as we do in Panama — own the land or water. If we give up our sovereign rights in Panama and abandon the canal, it seems certain that Castro — who long ago cut off the Guantanamo Bay reservation from the rest of Cuba — will reassert his past demands that the United States get out. Nor is "Gitmo," as the navy calls it, the only threatened point d'appui. Castro has never made any secret of his ambition to be, in his own right, a dominant figure in the Caribbean and, with help from the Communist bloc, to make the neighboring island and mainland countries safe for Marxism. Indeed, his Communist and Third World alignment has led him with Moscow's encouragement and support far afield from the Caribbean, to the African continent, where Cuban troops armed by the Soviet Union have been operating in various countries for years. By far the largest and most ambitious manifestation of Castro's determination to make the world safe for communism was, of course, Angola, where a left-wing faction in a three-way civil war took over the country only because some 12,000 to 20,000 Cuban troops, trans- ported chiefly by Moscow and armed and supplied by the Soviet Union, easily overran the primitive guerrillas that opposed them. Castro must be judged by his actions as well as by his words, and his actions — endorsed and supported by the Soviet Union — are clear. Indeed, Castro and Brezhnev jointly reiterated during Castro's visit to Moscow in the spring of 1977 their determination to continue to support revolutions around the world — a public statement that seemed to cause few ripples in Washington, intent on "normalizing" relations with Cuba. At Russian urging, Castro abandoned some years ago his overt attempts to sub- vert other Latin American countries; his strategy is now more insidious because largely, though not entirely, covert. His Russian-trained agents operate secretly in numerous countries, through propaganda, subversion, and infiltration of key govern- ment positions. He has encouraged and supported all left-wing governments in the Caribbean, with training missions, agents, provocateurs, guerrillas. His spore, which is to say the spore of Soviet communism, is everywhere in the area; his agents have appeared in Jamaica, Guayana, Puerto Rico, and Panama. Nor would "better rela- tions" between Cuba and the United States halt these subversive manipulations; any Communist program includes, alongside the formal and overt implements of policy, their unofficial and covert counterparts. Even more important, a U.S. retreat from Panama would probably put the last nail in the coffin of the Monroe Doctrine. Until Castro took power and Cuba became a Soviet protectorate, this 150-year-old policy — that the Western Hemisphere was for the Americas — was a no-trespassing sign to Moscow's imperialism. Under the Monroe Doctrine the Caribbean had been— particularly throughout the twentieth century— within the U.S. "sphere of influence," a term that today is too often misunderstood and denigrated. This southern sea has been as important to us as Eastern Europe has been to the Kremlin. It has lost none of that importance, but 184 communism in Cuba, fortified by the largest Soviet-trained and equipped army in Latin America, a Soviet submarine base at Cienfuegos, Soviet antiaircraft missiles in large numbers, and modern Soviet aircraft flying from Cuban bases, some of them piloted by Russians, has gravely threatened our predominance. A retreat from Panama would be certain, therefore, to further impair our politi- cal and psychological position in the Caribbean and throughout the world; its specific effects cannot be forecast. It is clear, however, that a cession of sovereignty by the United States, in the face of the open demands and threats of violence made by Panama's Torrijos government with the overt backing of Castro and Moscow would weaken our power position, our prestige, and our pride. Guantanamo Bay would be next to go, and the ripples would spread far. The world would again ask as it did after the Pueblo, Vietnam, Angola: Is the United States a paper tiger? Are its will and resolution to be depended on? Where would Washington draw the line if not at its own back door? ARGUMENTS FOR ENDING U.S. SOVEREIGNTY All of these considerations appear to support so clearly the retention of the Panama Canal under U.S. sovereignty that one may well ask why the question of transferring the canal to Panama is even an issue. What possible arguments can be made for it? There are, I think, three principal reasons for Washington's persistence in adher- ing to what the great majority of Americans (according to the polls) believe to be an aberration, a mistaken policy, namely, the relinquishment of sovereignty. These reasons are related and mutually reenforcing. First, there is — particularly among our intellectuals, our literate and literary opinion molders, our academics, and our liberal political thinkers — what Robert M. Utley has well described as "a national guilt complex that would expiate sin by bending history to modern social purposes." 1 This stems, I believe, from the great emphasis in the past two decades on civil rights (particularly for the Negro, the Indian, and minorities), the excesses of Watergate, the trauma of Vietnam, and blind frustration at the changing world about us. The American pride of the past has given way to the breast-beating shame of the present. This guilt complex has been particularly pronounced in that small but highly important group of managers and public servants and opinion formers who tend to make policy. The second reason is simply obfuscation — what has been described as "our lack of purpose, our strategic self-effacement, and our confusion". 2 These are particularly evident in the State Department's canal policy. There has been little evidence of firm, coherent, positive policy; rather we have been diffident, divided, and defensive. Our great efforts have been largely patch-and-mend. Compromise and concession are essential parts of diplomacy, but when they are used merely to paper over cracks, they inevitably lead to defeat and retreat, especially when the adversary is aggressive, strong, and expansionist. A third reason is the change, since World War II, in the world around us— the end of empire (except the Soviet empire), the excoriation of colonialism, the gradual exhaustion of some U.S. raw materials such as oil, and the consequent increasing political and in some cases economic importance of a plethora of newly independent Third World countries. In particular, the ultimately successful seizure of control of the Suez Canal by Egypt has had an important influence, not only upon the government of Panama but also upon some of our own intellectuals. And now the chickens have come home to roost. As a result of all our past mistakes and fruitless concessions, we are facing a put-up-or-shut-up situation. The waffling of past administrations and, since the Suez takeover in 1956, a long series of concessions reached a point of no return in 1974 when Secretary of State Henry Kissinger, in a personal visit to Panama, initialed a document which set guidelines for the treaty negotiations that are now reaching their culmination. This Joint Statement of Principles proposed that at some future undetermined date the operation and defense of the canal would become a joint U.S.-Panamanian responsi- bility, but that the canal and the U.S. territory of the Canal Zone would ultimately be transferred to Panama. This unprecedented action, which, in effect, would give to Panama territory over which the U.S. flag has flown for more than seventy years and the canal installa- tions that have cost the U.S. taxpayer a total of, perhaps $7 to $8 billion, was a unilateral action of the executive branch, unauthorized by Congress, indeed, un- 1 Robert M. Utley, The Contribution of the Frontier to the American Military Tradition, Harmon Memorial Lecture, U.S. Air Force Academy, September 30, 1976. * Roger Fontaine, Introduction to Mario Lazo, Panama Canal Giveaway, Special Study no. 1 (Washington, D.C.: Council for Inter-American Security, 1977). 185 known to most congressmen until after the fact. In brief, this is what the current debate and the battle still to come in the Senate are all about: will the Senate rubber-stamp Henry Kissinger's fait accompli, or will it reassert, as it has done on other issues in the past decade, its ancient prerogatives? THE HISTORY OF U.S. SOVEREIGNTY Many of the arguments for the switch in sovereignty and much of the conscious or subconscious motivation for it stem, in part, from ignorance or distortion of the manner in which the Panama Canal territory was acquired by the United States and of the wording of the original treaty of 1903. S. I. Havakawa, now a senator from California, spoke last fall in his eccentric campaign about our "stealing" the canal. Even President Carter has contributed to the perpetuation of myths spawned by revisionist historians and liberals. In his telephone call-in last March, he told a caller that "the treaty signed when Theodore Roosevelt was President gave Panama sovereignty over the Panama Canal Zone itself." But, contrary to these assertions from public officials who should know better, we did not steal the canal, nor does Panama have residual, titular, or any other kind of sovereignty over it. The United States bought the canal territory — a strip across the Isthmus of Panama some fifty miles long and ten miles wide — at a cost to the American taxpayer that far exceeded the cost of the Louisiana purchase, the Mexi- can cession, the Florida purchase, the purchase of Alaska, or any other territorial acquisition. An isthmian canal had been talked about for centuries and became an overriding issue when the California gold rush drew thousands westward. But it was not until the turn of the century that Panama became the preferred locale; in fact, up until the digging began, many American experts preferred a route through Nicaragua. A French company lost $260 million in an abortive attempt, ending in 1889, to con- struct an isthmian canal. In 1901, when the canal issue was still hot politically as a result of the Spanish- American war and the battleship Oregon 's mad dash through the Straits of Magellan to bolster the Atlantic Fleet, the United States ratified the first of a series of enabling treaties which led to the construction of the Panama Canal. The Hay-Pauncefote Treaty of 1901 between Britain and the United States established guidelines for the operation of an isthmian canal, when completed; it provided (as did the arrangements governing the Suez Canal, then controlled by the French and the British) for unhindered passage by the ships of all nations. In that treaty — which is still operative — Britain agreed that the United States should have "the exclusive right of providing for the regulation and management of the canal" and that "no change oi territorial sovereignty or of the international relations of the country or countries traversed by the * * * canal, shall affect the general principle of neutralisation or the obligation of the High Contracting Parties (Britain and the United States) under the present Treaty." 8 The Hay-Pauncefote Treaty, which would seem to preclude any transfer of sover- eignty to Panama without British agreement, was followed in 1902 by the Spooner Act, m which Congress provided President Theodore Roosevelt with $40 million with which to purchase the rights to an isthmian canal obtained by the French from Colombia. The act provided specifically for "perpetual" control by the United States of any canal that might be built. A Colombian representative agreed to the transfer in perpetuity of a strip of isthmian land to the United States, but the government of Colombia repected the treaty. In 1903, the Colombian province of Panama — which had once been independent and had occasionally seethed with revolt since its autonomy had been revoked by Bogota — saw its golden opportunity slipping through its fingers and falling to its rival, Nicaragua. With some French and American encouragement and help, a bloodless revolution occurred; Colombian ships and troops were held at arm's length by a U.S. show of force, and the Republic of Panama, now one of the most economi- cally favored of Latin American nations, was born out of a pestilential swampland. The establishment of Panama led almost immediately to the conclusion of the Hay-Bunau-Varilla Treaty between the United States and Panama in 1903. This treaty has governed the administration, operation, and control of the canal and the Canal Zone ever since. The fundamental terms of this treaty, which Secretary Kissinger and before him President Johnson abandoned, are now at issue. The articles which have aroused so much discussion and debate are Articles 2 and 3. Article 2 states that "the Republic of Panama grants to the United States in * Treaty between the United States and Great Britain to Facilitate the Construction of a Ship Canal, signed in Washington, D.C., November 18, 1901; manuscript, U.S. Department of State, Archives, Treaty Series, no. 401; quoted in U.S. Congress, House, Subcommittee on the Panama Canal of the Committee on Merchant Marine and Fisheries, Panama Canal Finances, 94th Congress, 2nd session, 1977. 186 perpetunity [a reiteration of the language of the Spooner Act; italics added] the use, occupation and control of the Canal Zone, of which the dimensions are then described. Article 3 states, "the Republic of Panama grants to the United States all the rights, power and authority within the zone mentioned and described in Article 2 * * • which the United States would possess and exercise if it were the sovereign * * * to the entire exclusion of the exercise by the Republic of Panama of any such sovereign rights, power or authority." For this outright transfer of territory the United States paid the new republic an initial $10 million. In the same treaty, the U.S. government assumed the annual obligations of the Panama Railroad Company, a private company that had built a rail link across the isthmus many years before. Washington bought the entire stock of the company as an aid to construction of the canal and undertook to pay to Panama the $250,000 annuity or "compensation" the private company had previously paid to Colombia annually. From this clause — the annuity or grant for the railroad right of way — has arisen the myth that we are paying Panama rent for the Canal Zone, although the term lease is nowhere mentioned in the treaties and the transfer of sovereignty is specific. Ratifications of this treaty were exchanged, and in May 1904 the foreign minister of the Republic of Panama formally notified Washington that the Republic of Panama considered that its jurisdiction over the zone had ceased. The United States then purchased, in accordance with the treaty, title in fee simple to all privately owned lands within the Canal Zone, at a cost of something more than $4 million. Thus, the initial acquisition of the Canal Zone — entirely aside from the accumulation over the years of the annual annuity paid to Panama, the later transfer of millions of dollars worth of U.S. property to Panama, and the cost of construction and modernization of the canal itself— cost the United States some $54 million. The 1903 and 1904 agreements were implemented by provisional boundary agree- ments delineating the Canal Zone, in which Panama specifically ceded (the word is used four times) the land defined to the United States. The National Assembly of Panama ratified the agreements and used the word ceded in so doing. This provi- sional agreement was finalized and formalized in 1914 (when the canal was complet- ed) and established the boundary lines "permanently." Following the initial treaties a three-year struggle to conquer yellow fever and reduce malaria, then endemic in the area, permitted the construction of what was and still is an engineering marvel. Many of the laborers who helped to build the canal were not, contrary to present belief, Panamanians, but blacks from West Indian islands. The canal was completed in 1914 at an initial cost (including the $54 million acquisition payments to Panama, the French company, and private land- owners) of $366,650,000. Together, this initial outlay and all the improvements, modernization, and maintenance of some seven decades now total almost $2 billion, exclusive of cumulative defense costs. In the year the canal was completed, disgruntled Colombia, which had always wanted more American dollars, settled its differences with the United States in the Thomson-Urrutia Treaty, which was finally ratified in 1922. As a result of this treaty the United States gave Colombia valuable canal and railroad transit rights across the isthmus and paid Colombia $25 million in compensation for the loss of the province that had become the Republic of Panama. Colombia recognized Pana- ma's independence, formalized the boundaries between them, and acknowledged that title to both the canal and the railroad was vested "entirely and absolutely in the United States. 4 Partly as a belated result of the settlement with Colombia and the formal recogni- tion by Bogota of Panama's independence, the original treaty of 1903 was renegoti- ated in 1936 to eliminate what had become an obsolescent clause. The U.S. guaran- tee of Panama's independence was cancelled, at Panama's request, and Panama, encouraged by Franklin D. Roosevelt's Good Neighbor policy, won many other concessions. Most important was the elimination of the right granted the United States in the original treaty to what amounted to "eminent domain" throughout the Republic of Panama, that is the right to use any defense sites it required outside the zone. Also abrogated was the right of the United States to keep order in the Panamanian cities of Colon and Panama, located near the Atlantic and Pacific entrances to the canal respectively. In addition Panama was granted customhouse sites in U.S. Cristobal and Balboa and a corridor or legal easement over the zone. Despite current contentions by the State Department that the 1936 treaty revi- sions recognized Panama's sovereignty over the Canal Zone, it is clear that in both 4 House, Subcommittee on the Panama Canal of the Committee on Merchant Marine and Fisheries, Colombia, Settlement of Differences, Article 1, n. 123. 187 wording and intent the treaty actually reemphasized the sovereignty, in perpetuity, of the United States. At the time, Undersecretary of State Sumner Welles, anticipating what was to come, attached a memorandum to the treaty noting that both the Panamanian foreign minister and the Panamanian ambassador had stated that the treaty met fully every request Panama might ever make. The Welles memorandum quoted the two Panamanian officials as stating that their country had received "everything that Panama could possibly want from the United States and henceforth would request no more concessions." 5 During World War II, air bases and defense sites deemed necessary to defend the canal were acquired and utilized during hostilities in the Republic of Panama, but only at a price, paid to Panama, of about $1 billion. A 1955 treaty revision increased the annual compensation or annuity, made some property adjustments, which turned over about $40 million worth of U.S. property to Panama, and clarified the status and improved the employment opportunities of Panamanians working in the zone. The Implicit Shift in U.S. Policy But the formal treaty revisions have perhaps been less important than some of the executive actions taken by various administrations. One of the most symbolic of these actions, which was widely publicized in Latin America, occurred in 1946 when Alger Hiss, then head of the Office of Political Affairs at the State Department, sent to the new United Nations a list of so-called U.S.-occupied territories, which included the Panama Canal Zone. This action sig- nalled a split in the State Department, with Spruille Braden, then assistant secre- tary of state for Latin America, in furious opposition to Hiss. Even more important, the action of Dean Acheson, then acting secretary of state, in backing Hiss forecast the beginning of an implicit shift in State Department policy about the sovereignty of the Canal Zone. - Panama's increasingly clamorous claims to sovereignty over the zone received striking symbolic support when President Eisenhower ordered the Panamanian flag to be flown at one location in the zone. His action followed some minor student riots in Panama City in 1959 and an invasion of the zone by Panamanian students who planted their flag at several locations. Eisenhower's action was interpreted by the Panamanian government and, at least symbolically and implicitly, by many in the State Department as recognizing Pana- ma's residual, or ultimate, sovereignty over the zone. Later, President Kennedy authorized the flying of the Panamanian flag at some seventeen different locations in the zone. Still unsatisfied, Panamanian mobs rioted in 1964 and attacked the zone. They were tacitly encouraged by the Panamanian leadership, but directly led and egged on by "persons trained in communist countries for political action." 7 These mobs consisted of "known and identifiable communists, members of the communist party of Panama and people who belonged to the vanguard of National Action, which is * * * the Castro Communist Party in Panama." 8 Partly as a result of the bloodshed in these riots (twenty-three Panamanians and four U.S. soldiers were killed) and the insistence of the State Department that the canal was really the sovereign territory of Panama, President Lyndon Johnson negotiated a series of treaties with Panama (never ratified) basically similar to the Kissinger-Tack agreement, which have provided the parameters for the present treaty negotiations. Congressman Gerald Ford commented: "With Cuba under the control of the Soviets through its puppet Castro, and with increased communist subversion in Latin America, a communist threat to the Panama Canal is clearly a grave danger. The American people will be shocked by the terms of this treaty." 9 As President, however, Ford supported the reversion of sovereignty to Panama. Now President Carter is supporting the same view, though both have paid lip service to the necessity of joint U.S.-Panamanian control and defense. 5 Statement of Alfred T. Schweppe, "Panama Canal Treaties," in U.S. Congress, House, Congressional Record, 95th Congress, 1st session, March 3, 1977, p. H1713. • The State Department's shift in policy has been perceptible in the last thirty years, particularly since the Suez Canal crisis, but opinion on the sovereignty issue is not unanimous — within either the State Department or the executive branch of government — even today. The Defense Department's attitude has ranged from aggressive opposition to foot dragging. 7 Ambassador Ellsworth Bunker in a public statement, 1964, cited in Lazo, Panama Canal Giveaway, p. 12. ■ Joseph A. Califano, Jr., then assistant secretary of defense in the administration of President Johnson, in a public statement, 1964, cited in Lazo, Panama Canal Giveaway, p. 12. • Lazo, Panama Canal Giveway, p. 12. 188 The Debate over Sovereignty It has been necessary to summarize the history of the canal and the mutations in the original treaty and in our relationship with Panama in order to understand— and to refute — two of the basic arguments made by proponents of turning over the Panama Canal to Panama. These arguments are that Panama retains, and always has retained, sovereignty and that, in any case, the great big United States has exploited poor little Panama in the past and should make amends (part of the warp and woof of the guilt trauma, which particularly seems to infect intellectuals). The sovereignty argument derives from two sources: the "if' clause in Article 3 of the 1903 treaty, which appears to qualify U.S. sovereignty over the zone, and the use of the phrase titular sovereignty by Secretary of State John Hay and Secretary of War William Howard Taft soon after the treaty was signed. Panama itself has not directly raised the issue of titular sovereignty; instead, some of its administra- tions have claimed at various times and under various circumstances that Article 3 preserved the republic's sovereignty over the zone. The issue of residual or titular sovereignty has been discussed on many occasions in the United States since 1903. Secretary of State Hay never conceded the validity of the theory, and termed the concept at best a "barren scepter." 10 Taft, then secretary of war, discussed the theory in a long statement presented to the Senate Committee on Interoceanic Canals on April 18, 1906. He noted that Article 3 "gives rise to the obvious implication that a mere titular sovereignty is reserved to the Panamanian government," and continued: "Now, I agree that to the Anglo-Saxon mind a titular sovereignty is like what Governor Allen, of Ohio, once characterized as a 'barren ideality,' but to the Spanish or Latin mind, poetic and sentimental, enjoying the intellectual refinements, and dwelling much on names and forms, it is by no means unimportant." 11 Taft later explained that titular sovereignty really meant, in pragmatic terms, that if, at some future time, the United States ^ided to abandon the canal, it would turn it over only to Panama, which had ceded it to the United States originally, and to no other nation. Later, as President, Taft visited Panama, and told the Panamanians that they had given the United States sovereignty and jurisdiction over part of their country. Still later, in 1930, when he was chief justice of the United States in the case of Luckenbach Steamship Co. v. United States he noted that the theory of titular sovereignty was "the subject of diverging opinions." But in the same opinion, he cited as one of the precedents the case of Wilson v. Shaw, a unanimous Supreme Court opinion of 1907 which interpreted the 1903 treaty as having "ceded" title over the zone to the United States. Taft quoted the 1907 opinion, which stated: "It is hypercritical to contend that the title of the United States is imperfect, and that the territory described does not belong to this nation, because of the omission of some of the technical terms used in ordinary conveyances of real estate. * * *" 12 Throughout the decades various secretaries of state and attorneys general of the United States have declared in unequivocal terms that the United States holds full sovereignty and title over the Canal Zone. In 1923, Secretary of State Hughes vehemently insisted the United States had full and sovereign rights to govern and regulate and control the Canal Zone. He added— ironically in view of recent devel- opments: "It was an absolute futility for the Panamanian Government to expect any American administration, no matter what it was, any President or Secretary of State, ever to surrender any part of these rights which the United States had acquired under the Treaty of 1903." 13 And as recently as the early 1970s, the Supreme Court let stand a U.S. Fifth Circuit Court of Appeals ruling, referring to both the 1903 and 1936 treaties, which declared that the "Canal Zone is an unincor- 10 House Subcommittee on the Panama Canal of the Committee on Merchant Marine and Fisheries, Panama Canal Finances, p. 398. 11 Ibid, p. 402. This source includes some of the most thorough discussions of the sovereignty issue in the public record. Particularly important are the pages cited, which include a memoran- dum written in 1959 from Governor W. E. Potter of the Canal Zone to the Honorable Herbert C. Bonner, chairman of the Committee on Merchant Marine and Fisheries of the House of Repre- sentatives on the subject "Sovereignty over the Canal Zone." »• Luckenbach Steamship Co. v. United States, 280 U.S. 173; 50 Sup. Ct. 148. Wilson v. Shaw, 204 U.S.; 27 Sup. a., 233, 235. " House, Subcommittee on the Panama Canal of the Committee on Merchant Marine and Fisheries, Panama Canal Finances, p. 400. 189 porated territory of the United States over which Congress exercises 'complete and plenary authority.' " ,4 History and the law appear to indicate in no uncertain terms that there is no merit whatsoever to the concept that the treaty of 1903 vested so-called titular sovereignty or residual sovereignty in Panama. The wording, to repeat, is clear and unequivocal: "The Republic of Panama grants to the United States in perpetuity the use, occupation and control" of the Canal Zone. "The Republic of Panama grants to the United States all the rights, power and authority within the zone mentioned * * * which the United States would possess and exercise if it were the sovereign * * * to the entire exclusion of the exercise by the Republic of Panama of any such sovereign rights, power or authority." (Italics added.) The State Department's current contention that the treaty does not mean what it says (a complete reversal of its interpretation of the treaty during our first forty to fifty years in Panama) is in flat contradiction with its attempts to negotiate a new treaty. What is being negotiated is a transfer of sovereignty. One cannot transfer sovereignty unless one exercises it. The United States has, and will retain until Congress decides otherwise, complete sovereignty and control over the Canal Zone in perpetuity. The Myth of U.S. Exploitation The other argument, that the United States has exploited Panama, is obvious nonsense. Panama had been no more than a pestilential swamp in 1903; it is a potentially prosperous little nation today almost entirely because of Uncle Sam's munificence and the golden flood of dollars that poured into the region because of the Canal. In addition to the approximately $2 billion spent by the United States in acquir- ing, building, maintaining, and improving the canal and its supporting infrastruc- ture in the Canal Zone, the United States has spent, over the years, some $6 to $7 billion on the military defense and security of the canal, much of which has found its way into Panamanian pockets. To offset these expenditures, about $1,125 billion has been paid back into the U.S. Treasury in tolls and other revenues, leaving the U.S. taxpayer in the hole over the seventy years of our hegemony in the zone to the tune of almost $8 billion. These figures are in themselves an index of U.S. policy. The United States has regarded the Panama Canal as a major strategic asset but also as an international utility of great benefit to the world. Tolls have been kept low purposely, and the canal has been open impartially to the ships of all nations, in accordance with the Hay-Pauncefote Treaty with Britain. There is no question that it is the canal and its efficient operation and the tremendous economic stimulus provided by direct and indirect U.S. grants that have made little Panama, with its 1.7 million people, a viable, if restless, entity. The canal, to Panama, is the goose that laid the golden egg. The country could not exist without it. Consider some figures: In 1975 Panama received — including an annuity which now totals $2.32 million per year — some $236.9 million from the United States, of which about $103 million was paid in wages and retirement and disability benefits to Panamanians employed in the zone. About 10,000 people, 72 percent of the total work force of the Panama Canal Company and the Canal Zone government, are Panamanian nationals; other thousands work for the U.S. military. The canal is larger than any other single source of employment in Panama. Between 1946 and 1973, according to House Appropriations Committee hearings, Panama was the recipient of $342 million in total U.S. aid, more per capita than any other country in the world. Net income to the Panamanian government originating in the zone totalled about 12.5 percent of the gross domestic product of Panama in 1975. In addition to these direct economic infusions Panama has received all sorts of benefits from literally hundreds of projects. A bridge and highway across the canal were built at U.S. expense to link the two parts of Panama; the country's deep- water ports are U.S. built and operated; its principal international airfield was U.S. built and its transisthmian road and railroad were U.S. constructed or operated. Its water supply comes largely from reservoirs and purification systems constructed by the United States. Its sanitation system was largely a product of U.S. organization and equipment; until some years ago, when by mutual agreement the responsibility was transferred to Panama, the United States collected the garbage in the terminal " Statement by Alfred T. Schweppe, The Panal Canal Treaties, p. H1713. See also Donald Dozer, Panama Canal Series, no. 1, p. 4, a National Education Project, Emergency Committee to Save the U.S. Canal Zone, P.O. Box 30054, Santa Barbara, California. The case cited is U.S. v. Husband R. Roach, 406 U.S. 935 (1972). 190 cities of Panama and Col6n and directed the mosquito elimination program which safeguarded the health of residents in Panama and the Canal Zone alike. U.S.-owned merchant ships, flying Panama's flag of convenience, add to the revenues in Panama's coffers, and tourism attracted primarily by the canal provides a stream of dollars, particularly for the merchants in Panama City, a free port. U.S. f)rivate capital has invested fairly heavily in hotels and other projects or in direct oans to the Panamanian government, and a number of the largest U.S. banks have established branches in Panama City. All of this golden stream has made Panama — despite its unstable governments, mismanagement, and a greedy elite — one of the most favored nations in Latin America. If "poor little Panama" has been exploited, none of the economic, health, or social statistics show it. It has one of the highest GNPs per capita among all the nineteen Latin American nations; it had, from 1960 to 1974, a per capita growth rate surpassed only, and barely, by that of Brazil; until 1975 it haa one of the lowest inflation rates in Latin America; thanks to American medicine, infant mortality has been the lowest in all Latin America and the mortality rate, second lowest. Pana- ma's literacy rate is considerably higher than most in the region, and its life expectancy has been fourth among all the Latin American nations. Far from being exploited, it is quite clear that Panama has derived benefits- from the American presence in the Canal Zone that have made it fortunate among nations. The canal is Panama's single greatest revenue source. The exploitation myth is just that — a propaganda ploy fostered by Panama's politicians, by Castro's Cuba, and by the Soviet bloc to help force the United States out of the zone. It has no basis in fact. THE VIEW FROM LATIN AMERICA These two completely groundless arguments for giving away the canal are often supported by two others — usually advanced by Panama — that have made some impression, at least in the public media, in the United States. First, the Latin American nations are unanimously in favor of the transfer of the canal, it is said: and second, if the United States does not bow to Panamanian demands, it will face gunfire and disruption in the zone (as in 1964), sabotage of the canal or zone installations, or even guerrilla warfare. Both arguments should be closelv examined. To anyone who knows the countries of South and Central America, the notion of solid unity on nearly any issue is far from convincing. On the other hand, pro forma denunciations of the Big Brother to the north are virtually obligatory for Latin American politicians, and public expressions of solidarity with Panama should not come as a surprise. To damn the gringo and Yankee imperialism is the normal rhetoric of some Latin American politicians, but at the same time they respect firmness and strength. Such statements in no sense imply a unified, or even a majority, approval by the Latin American nations of a transfer of sovereignty. The same men who express such opinions publicly often renounce them privately. The late Mario Lazo, himself a Latin American, wrote before his death that "the almost universal reaction among the educated people of Latin America to * * * a giveaway treaty would be * * * incredulity • * • sadness * * • eventually ridicule and even contempt for the once greatly respected nation that had shown itself no longer to have the will to maintain its prestige and discharge its responsibilities." 15 General V. H. Krulak, writing in the summer 1975 issue of Strategic Review, declares that most Latin Americans "realize that the critical strip [the Canal Zone] must never be allowed to fall into irresponsible hands." In the same article General Krulak, who is an executive with the Copley newspapers, cites the remarks of both Chilean and Venezuelan delegates to a recent Inter-American Press Association meeting, warning the United States not to give in to Panamanian demands. Congressman Daniel A. Flood of Pennsylvania, who has made the canal one of his primary interests during his twenty years in Congress, points to the views and opinions expressed during an Inter-American Conference on Freedom and Security in 1975, attended by representatives from thirteen hemispheric nations. "The over- whelming views," he states "* * * were in opposition to surrender of the Canal Zone to Panama, and a general desire for the United States to continue its undilut- ed sovereign control." 16 The claim that all Latin America backs Panama's position is propaganda, pure and simple, propaganda which has used the Goebbels technique that if a lie is repeated often enough it will be believed. In a 1976 General Assembly meeting of the Organization of American States the only resolution referring to Panama ex- 18 Lazo, Panama Canal Giveaway, p. 10. " Statement by Congressman Flood in U.S. Congress, House, Congressional Record, 94th Congress, 2nd session, September 9, 1976, p. H9658. 191 pressed the simple hope that the two countries might settle their differences peace- fully by the end of 1976. Earlier, a much advertised invitation from General Torri- jos, the Panamanian dictator, to all Latin American presidents to attend a confer- ence in Panama had to be cancelled when a number of presidents declined the invitation after learning that Fidel Castro would attend. Despite his drum beating and his invocation of solidarity, Torrijos has never been able to enlist all the nations of Central America behind his demands, much less all the nations of the Southern Hemisphere. The reasons for this are clear: those nations — and they probably represent a majority — that hold aloof from the Torrijos campaign have a definite self-interest in preserving the status quo of the Canal Zone, which to them is compelling. Latin American trade routes use the canal to such an extent that it has assumed major significance for the hemisphere. Nicaragua and El Salvador are particularly depend- ent upon the waterway; more than two-thirds of their trade passes through its locks. More than half of Ecuador's trade uses the waterway; for Peru, the figure is more than 40 percent, for Chile, Colombia, and Guatemala approximately one-third. Most of these users do not want to buy a pig-in-a-poke; under the American flag the low rates and the stability and efficiency of canal operation have been impressive. Under Panamanian jurisdiction the users could have no such assurance; consider- ably higher rates (some unofficial Panamanian sources have suggested a 400 percent increase) would almost certainly be imposed and sizable outlays for maintenance and modernization indefinitely postponed. Even more important, the example of the Suez Canal since its nationalization by Egypt gives no assurance that a Panama Canal under Panamanian operation would indeed be open to all shipping. Political preferences would almost certainly infringe upon the canal's maritime neutrality— all the more so because of the close ties of Torrijos and his one-party regime with the Communist bloc. Castro's Cuba and behind it the looming figure of Soviet imperialism are still a frightening specter to Latin America. Many of the nations that Torrijos has wooed are well aware of his ties, overt and covert, to Cuba and of the growing Communist influence in various forms in Panama. To many countries of Latin America, better the devil you know than the devil you don't. The Torrijos Regime And there is, finally, the image that General Omar Torrijos projects, the record on which he stands, and the political history of the little country he represents. None is reassuring for the future of the canal if it is transferred to Panamanian hands. Torrijos has been in power for eight years — a strong contrast to the average tenure of 2.25 years of the thirty-two presidents who have ruled Panama since its creation. But duration does not necessarily mean stability. Torrijos is a military man, the former and present head of the Panamanian National Guard, a paramilitary police force, trained, organized, and equipped by the United States. The guard is the only organized military or police force in Panama; as such it has always strongly influenced and sometimes dominated politics. But until Torrijos seized power from an elected president in 1968 in a coup backed by the guard, the so-called fifty wealthy families dominated both the Panamanian economy and to a great extent (often in an alliance with one or another guard officer) Panamanian politics. These families oscillated in and out of politics, accumu- lating wealth which many of them kept in Spanish or U.S. banks. They usually sent their children abroad to school and they varied greatly in their services to their country; a few were generally progressive and public spirited, the majority selfishly reactionary. But no matter who was in power, the tactics of Panamanian politics for the past thirty years have always been to use Uncle Sam as a whipping boy. The leaders who controlled these politics never hesitated to incite street mobs to demon- strate against the American ogre and to try to extort from Washington more concessions to put more money in their pockets. The golden flood, either in the form of increased payments, direct or indirect, from the canal or from Washington, or in the form of loans or grants by American banks for private development or to the Panamanian government, increased. But little of it filtered down to the poverty-stricken peasants of the interior, many of whom, as in other countries, migrated to urban areas, to live in the torpid, dirty slums of Panama City and Colon just across the street from the American zone. As the United States from the 1930s to the present turned over more and more of the responsibilities of nationhood to Panama and made concession after concession, the rich got richer and the poor got poorer. The tragedy of Panama, similar to the tragedy of so many Latin American countries, is that until relatively recently there was a very small middle class; a few had great wealth; many were poor. (Parenthetically, however, Panama's extremes— 192 though more obvious to the tourist strolling from the oasis of the Canal Zone to the slums of Panama City — are not nearly as lopsided as those of Brazil or most other Latin American countries.) General Omar Torrijos, like many other Latin American dictators before him, played on these economic discrepancies to consolidate power. He started a miniature version of a modified welfare state and wooed the masses. He spent heavily on health, education, training, public services, and transport and gave the unions the highest wages in Central America, while at the same time approving legislation that virtually prohibited any worker dismissals. These tactics made him, for a time, a popular figure with "the street," which has always played a volatile role in Panama. But above all, he has until recently been able to insure the loyalty of the 8,000-man National Guard, which alone was enough to perpetuate his power. 17 The Torrijos economic reforms and the wastefulness of his rule cost the Panama- nian treasury heavily, and the dictator went deeply into debt, chiefly to American banks. Partially to distract his followers from his Droken promises at home, Torrijos concentrated his fire against the United States. He endorsed the same basic goal enunciated by the Communist party of Panama when it was founded in 1930 — the seizure of the canal, by treaty negotiations if possible, by force if necessary. Since then, with the very great help of a vocal and highly placed minority in the United States, he has beaten the drums of Panamanian sovereignty, with, until last year, what seemed to be considerable success. In the fall of 1976, for the first time in Torrijos's reign, students and youth groups rioted against the government. Their discontent, quickly controlled by the loyal National Guard, had notliing to do with the Canal Zone treaty. It was a manifesta- tion, as the New York Times put it, of "deep economic discontent and growing political dissatisfaction" with Torrijos and his dictatorship. 18 The situation in Panama today is smouldering. The country is greatly overextend- ed economically, with about thirty-five cents of every dollar of revenue' going to pay the interest on foreign debts worth $1.1 billion. The rising growth rate of about 8 percent per year which helped Torrijos greatly when he seized power has declined to less than 1 percent in 1976 (in part because of the worldwide recession). Unem- ployment in Panama City is high; to meet inflation and to placate the fearful business community, a two-year wage freeze was initiated and taxation was in- creased, while salary cuts for bureaucrats were promised. But the result has antago- nized the left and has not satisfied the right. At the same time Panama has been through some of the same speculative land and real estate booms so familiar to Florida. In the late 1960s and early 1970s scores of foreign banks established branches in Panama, enticed by "the most liberal money-exchange laws in Latin America," and helped to promote a real estate boom. This has now virtually col- lapsed, and unfinished office buildings and partially occupied luxury apartments dot the skyline of Panama City. The rural migration to city slums has added to Pana- ma's problems. Torrijos today is reaping the fruits of his own self-perpetuating rule. He is an absolute dictator, who has established a one-party system, rules without legislative check, and brooks no opposition. The press is completely censored and the economy shackled. He has exiled dissenting businessmen, and active oppositionists get d shrift; there are repeated reports of extensive government corruption and of Nation- al Guard involvement in smuggling or contraband. High Panamanian officials are alleged to be involved in a heroin ring, and the republic has been officially described by the director of the U.S. Bureau of Narcotics and Dangerous Drugs as one of the most significant countries for the transshipment of narcotic drugs into the U.S." 19 There are also reports of political prisoners and even of murders, atrocities, and torture, though President Carter — still intent on a canal treaty — has not chosen to include Panama among the nations he has publicly denounced as violators of human rights. Far more important from the point of view of U.S. security is the character of the Torrijos regime and its relationships to Communist powers. A kind of neo-Manrist establishment rules the country, even though there is no proof that Torrijos himself is a Communist (of either Soviet, Cuban, or Chinese coloration). Known and open Communist ,jcupy high positions in the Torrijos regime. The ties oetween Torrijos, Castro's Cuba, and the Soviet Union have been cordial and close, though some of their most important manifestations have been hidden. The original visits of members of Torrijos's government and his top advisers to Cuba " Some estimates of the National Guard's strength are as low as 5,000. Either way the guard includes all police and militarized police forces in the Republic of Panama. " Jonathan Kandell, New York Times, February 17, 1977, p. 2. " U.S. Congress, House, Congressional Record, 94th Congress, 2nd session, September 23, 1976, p. E5275. 193 were not reported and were apparently made as covertly as possible. Reports of these visits first surfaced about 1971. Later, the veil was thrown off and in one well- publicized visit Torrijos hailed the Cuban dictator as "an example and a light" to be followed elsewhere. 20 In recent years the traffic between Panama and Cuba has been extensive; the Cuban embassy maintains a very large staff of sixty people in Panama, and, far more ominous, numerous writers have recorded unconfirmed reports, seemingly with considerable substance, that sizable cadres of guerrilla- trained Cubans and of Panamanians trained in rioting and sabotage are now in Panama and are training or subverting some units of the National Guard. These reports deserve credence, if only because it has happened before; the bloody 1964 riots were led by identified and trained Communists. And, in the early years when Castro and Che Guevara were openly promoting armed revolution in Latin Ameri- can countries, a small Cuban guerrilla force was surreptitiously landed in Panama. 21 The character of the regime to which we are being asked to turn over the Panama Canal is clear. It does not matter whether Torrijos is a Communist or not; Castro was not a self-proclaimed Communist until he seized power, and now Cuba is shackled to Communist doctrines. Torrijos may well have started as a populist who broke the monopoly of the oligarchy that had long ruled Panama, but today he is a beleaguered tyrant, surrounded at the top by men who profess or are extremely friendly an ideology and to nations which have sworn our undoing. The Torrijos regime is all the more unstable because of the growing discontent of the masses, upon whom Torrijos has attempted to build his power base. His original populist image is wearing thin, particularly because of the concessions to the right he has had to make in a time of recession and inflation. Some National Guard officers are said to be restive, worried by the increased power of Torrijos's Commu- nist-oriented advisors. Meanwhile, opposition from students, businessmen, and the middle class, wary of communism, has increased materially in the past few years. Guillermo Ford, former president of the Panama Chamber of Commerce and one of a number of businessmen exiled by Torrijos for trying to foster a general strike against the dictator, expressed the sentiments of many Panamanians when he said simply, "* * * we do not want the United States to make the proposed treaty with the oppressive, unconstitutional regime of Omar Torrijos or any of his like." 22 As long as the National Guard remains loyal, Torrijos may remain in power, but if the political and economic dissatisfaction spreads and cracks widen in the Nation- al Guard, Torrijos, who has been trying to straddle the political fence, will have either to veer even more sharply to the left or to be swept aside. He is trying, of course, to avoid this— as all threatened rulers do — by focusing public attention upon an external issue and an external enemy, the canal and the United States. If Washington gives him the canal, Torrijos will be a hero for a day and his tenure will be lengthened, but the triumph will be brief. Panama's volatility and instability are there to stay; the political hero of today is the villain of tomorrow. The vacuum left when the United States retreats will be quickly filled by Cuban and Soviet power and influence. So much for the argument that transferring sovereignty over the canal to Panama is desired by Latin America and will contribute to the stable and peaceful operation of the canal. It just is not so. Self-interest, the specter of Cuban or Soviet influence in the isthmus, the moody, power hungry, unreliable character of Torrijos, and the unstable situation in Panama itself are forceful warning signs, even to some Panamanians. THE DANGER OF ARMED CONFRONTATION What, then, of the argument that we must face confrontation and the danger of bloodshed in Panama if we do not give up sovereignty there? This is a far more realistic threat tnan the possibility that all of Latin America would unite against us. There will almost certainly be more rioting in Panama; it is endemic there. And physical attacks upon the Canal Zone, Americans, American property, or even the canal itself may, indeed, occur, particularly if the U.S. Congress refuses to cede sovereignty to Panama. The hopes of "the street" in Panama have been built high by demagoguery and by very skillful Communist propaganda. Fanatical ideologues, trained groups, and excited mobs might well seek to wreak vengeance for their disappointment. *>Ibid. " At that time — before Torrijos had seized power — its presence had negative effects; existing Latin American governments were frightened by Castro's aggressive attempts to overthrow constituted governments. ** Public statement in Miami, 1976, quoted in Sea Power Magagine, August 1976; Virginia Prewett, "The Panama Canal," printed in the Congressional Record of July 22, 1976. 29-HOO 0-78 194 If such trouble does occur, the blame must be shared with the Panamanian government by the State Department and by the several administrations past and present that have made concession after concession and have encouraged in Panama expectations that are not supported by the U.S. public. In any case the threat of physical or even armed confrontation is no justification for surrender when a nation's vital interest is involved. One may concede, bow gracefully, and withdraw about minor issues, but unless a nation stands fast when major interests are involved, it will invite war ultimately or an endless spiral of retreat and defeat. A confrontation in Panama could take one or more forms; terrorism, harassment, sabotage, rioting and attacks upon the zone, with or without the active participation of the National Guard, or even a kind of guerrilla warfare. Any violent action in the area, other than the acts of individual fanatics, would have to have either the overt or covert support or the tacit acquiescence of the Panamanian government. It would certainly be accompanied by Panamanian demands in the United Nations and elsewhere for condemnation of the United States, demands which would be carefully concerted with and supported by Cuba and the Soviet Union and quite probably a sizable number of Third World powers, particularly African nations. Terrorism, on a small scale, may already have started. United States businesses in Panama have been attacked. A number of U.S.-owned automobiles parked in the zone, including one owned by a Canal Zone employee who has led organized opposi- tion to the transfer of sovereignty, have already been destroyed by surreptitiously placed bombs. Terrorism has also been used to stifle internal opposition in Panama; the homes and offices of some businessmen who dared to oppose Torrijos openly have been the targets of bombings. The U.S. embassy in Panama City was stoned, most recently in 1976. Harassment, too, has been employed by the Panamanian government. In at least one instance, contrary to existing provisions which guarantee free access by Canal Zone residents to Panama's commercial airfield (built by the United States), the same opponent of a transfer of sovereignty whose car was destroyed was detained by Panama Nation- al Guard officers on his way to the airfield. Threats have been freely employed by Torrojos and his subordinates, and Panamanian police have tried to exercise their authority in the zone. On at least twenty occasions Torrijos has invoked the threat of open attack, led by the National Guard, on the Canal Zone unless a treaty transferring sovereignty is signed. The personnel officer of the Panamanian National Guard who doubles as minister of agricultural development, was one of the latest members of the Torrijos administration to promise bloodshed unless Torrijos gets control of the canal. He told a student audience a few months ago that members of the guard would be the first to fall. Much of this rodomontade can be dismissed as breast-beating machismo, but not all of it. When addressed to volatile people and particularly to fanatics, it is deliberately inflammatory, and it is intended as psychological blackmail. Unfortu- nately few U.S. newspapers have reported the excessive rhetoric of Torrijos and his associates or the instances of internal repression and terrorist activities; thus, the impression, seemingly fostered by the State Department, that there is a stable government in Panama has been reenforced. The silence encourages more harass- ment and repression and an extension of terrorism. A more serious form of terrorism would be sabotage against facilities in the zone, including pumping stations, power plants, dams, the Gatun spillway, and the lock gates. Modern explosives and the ease of procuring them (with help from Cuba and the Soviet Union), the large numbers of Panamanian citizens who work on the canal or in the zone, and the very openness of the zone to such attack would facilitate the task. There are, in most places, no fences or obstacles to access; the zone is just across the street from Panamania territory and no documents are required for entry. Sabotage could be a serious threat. And yet there are ameliorating considerations. A successful blockage of the canal, particularly if Gatun Lake were drained or both sets of locks put out of commission, would kill the goose that laid the golden egg. Panama's relative prosperity is entirely dependent upon the canal. If the canal were closed, thousands of Panamanian employees would be thrown out of work, and they could well represent a dissident force within Panama. Economic conditions would deteriorate in Panama to a point of no return; Torrijos and his regime would almost certainly be finished regardless of what else happened. And sabotage on a sufficient scale to paralyze the canal is not easy to accomplish; it was prevented during World War II, Korea, and Vietnam. 195 But the incitement of street mobs led by what Ambassador Ellsworth Bunker described in 1964 as "persons trained in communist countries" 23 is a tactic which is entirely possible, easy to arrange, and hard to prevent. A mob rampaging from the National University or the slums of Panama City could threaten and perhaps overrun parts of the Canal Zone, particularly if U.S. troops were held in barracks or were ordered to hold their fire. It could conceivably burn, loot, and destroy U.S. property in the zone and perhaps injure or kill U.S. citizens. The seriousness of any such action would depend almost entirely upon the support given "the street" by the Panamanian National Guard and/or by infiltrated Cuban or Soviet forces, operating covertly. The National Guard is seemingly rather formidable in size — some 8,000 men, though less than 2,000 of them combat-trained and equipped— and armed chiefly with fairly modern U.S. infantry weapons (including some armored cars, which the State Department, in its inscrutable wisdom, allowed to be sold to Panama recently). But it has no staying power; the guard — a paramilitary police force — is well trained in riot control but has virtually no heavy weapons and its supplies and communications and stocks of food and fuel could sustain it in any actual paramilitary or combat situation only for a few days. Nevertheless, if the guard participated in any numbers in an attack on the zone or stood aloof, as it did in 1964, there is no doubt that blood, and perhaps considerable amounts of it, would be shed on both sides. Such action, if obviously supported by the Panamanian government, would represent a self-defeating threat to that government even more than a threat to U.S. sovereignty over the canal. Still another possibility is the gradual institution of a kind of guerrilla warfare — nit-picking, perhaps, but persistent and drawn-out. This seems unlikely if only because the Panamanians are in no way similar to the Vietcong in temperament, discipline, or resolution, and in any case, the fragile structure of the government and the establishment in Panama would be incapable of standing the protracted strain of such an effort. PEACE AT ANY PRICE? Nevertheless the distinct possibility of a physical confrontation — perhaps an armed one — must be faced. This does not mean that we must cut and run. The avoidance of bloodshed is devoutly to be desired, but for some things we must be prepared to fight. If we establish as our goal peace at any price — if, faced with the threat of force, we continuously concede and compromise — we shall lose the world. Since the Bay of Pigs the United States has been in retreat. The communization of Cuba, the defeat in Vietnam and the loss of southeast Asia, the administration's promise to withdraw U.S. troops from South Korea, the triumph of African, Cuban, and Soxiet Marxism in Angola, the fumbling American policies in Africa, and the siren slogan of "no more Vietnams" have all lent substance to the gloomy Spengleri- an-Solzhenitsyn vision of decline and fall. Somewhere the line must be drawn— this far and no father. Sometime the resolu- tion and will of the American people must be made manifest. Panama is the place and now the time. Throughout the world, Soviet communism has tried to secure control of, or influence over, the global maritime choke points. For a considerable period the Soviet Union was dominant in Egypt and the Suez Canal, and a pro- Soviet Communist underground, smashed just in time, came close to making that dominance permanent. Now, rebuffed in Egypt, Soviet communism is highly influ- ential on the Horn of Africa, which gives access to the Red Sea and the southern approaches of the Suez Canal, and it is jockeying for position to threaten the Strait of Bab-el-Mandeb, through which most of the world s oil traffic from the Persian Gulf flows. In Indonesia, on the flank of the Malacca Strait, it came within a hair's breadth, in Sukarno's day, of assuming power. In West Africa, Nigeria and Angola, notably, provide facilities for Soviet naval vessels close to the important South Atlantic shipping routes. In Southern Africa, a vital geographic area which dominates the important shipping routes around the Cape of Good Hope, Moscow has been making slow gains. It is, therefore, no accident that the Panama Canal has been the object of so much Soviet and Cuban attention. A Communist Panama, in control of the canal and dominated or greatly influenced and supported by Havana and Moscow, would indeed represent another major defeat for the United States and a strategic victory for communism, this time in an area vital to the United States. If we will not stand fast in our own backyard, if we compromise and equivocate and retreat about an issue as vital as the Panama Canal and an area as strategic as the Caribbean, where will we stand? Alexander Solzhenitsyn, in his book Warning *» Lazo, Panama Canal Giveaway, p. 12. * 196 to the West, sums up the dilemma, the crisis, of which Panama is a part: We are at "a turning point in history," he says, facing implacable Communist enemies, who are united in one aim — the destruction of capitalism and of the social order of the West. The Myth of Control without Sovereignty The answer from those who advocate retreat evades the issue. American support- ers of a transfer of sovereignty to Panama try to make the shift seem a minor adjustment which will ensure happy relations with a friendly and stable Panama and stress that "control" of the canal would remain in our hands. In the 1976 campaign, Jimmy Carter ducked the sovereignty issue, but said unequivocally, "I would never give up complete control or practical control of the Panama Canal Zone. * * *"** Yet control without sovereignty is doublespeak. Torrijos has stated that withdrawal of U.S. troops and the complete elimination of the American presence — including management and operational personnel — from the area is his goal. Control without sovereignty has inevitably led, in all instances where it has been attempted, to loss of control. To cite but two examples out of many: A government changed in Libya and the great air base there, built entirely with U.S. dollars, was closed to us. Greece and Turkey quarrelled over Cyprus, and U.S. bases in those countries, some of them highly important to U.S. security,. were closed or limited in their operations simply because we were not sovereign— that is, in paramount control. United States sovereignty simply means that within the parameters of U.S. law, the United States holds supreme power over the region in question, unchallengeable by any other power. Our sovereignty over the Canal Zone has been untainted and absolute, but how we operate the Panama Canal has always been subject to the provisions of the Hay-Pauncefote Treaty with Britain — which requires equality of treatment for the shipping of all nations. Colombian treaty rights would also be involved in any treaty revision; as Congressman Daniel J. Flood has said, the projected transfer of sovereignty would open a "Pandora's box of difficulties."* 5 Without sovereignty it is clear that we shall not be able to carry out the terms of the Anglo-American treaty, nor shall we be able, regardless of the wording of any attempted compromise solution, to "control" the canal. If we transfer sovereignty over the canal to Panama — an act that seems to be, under the Hay-Pauncefote Treaty, legally questionable unless Britain agrees — we should leave the isthmus, lock, stock, and barrel; our "control" would become completely ineffective, probably after protracted wrangling, unending disputation, and perhaps repeated clashes. Again, to quote Congressman Flood: The operation of the Canal by the United States on an extra-territorial basis in a land of endless intrigue and turmoil could only result in endless conflicts and recriminations. Besides, it would result in the removal of an island of stability on the isthmus that has often served as a haven of refuge for Panamanian leaders seeking to escape assassination. One of the most recent Panamanians to seek refuge there was Senora Torrijos, the wife of Panama's chief of government, during an attempt to depose her husband while he was out of the country.** If we are to retain the canal, there cannot be any compromise on the issue of sovereignty; if we are going to scuttle and run, let us do it completely, with no doubleteik. We must not retain responsibility without authority. FACING THE PROBLEM Thus, we have followed a long straight road to a point of no return since the days when Christian Herter, alarmed by student rioting, persuaded President Eisenhow- er to allow the Panamanian flag to fly, along with the stars and stripes, in the Canal Zone. Ever since that day, American Presidents, supported by State Depart- ment policies of concession, have greatly encouraged Torrijos and his predecessors to press for the transfer of sovereignty. We face, therefore, a dilemma of our own making, from which there is no escape. If Panama's hopes of sovereignty are dashed — as they must be— frustration, coupled with emotional volatility, may well lead to a brief explosion of violence. What should we do? We must face the problem head-on. Rejection of any treaty transferring sovereign- ty is not enough. Washington must officially announce that the United States is — and will remain, in perpetuity — sovereign in the Canal Zone. *• New York Times, October 8, 1976, p. A18. * Speech by Congressman Flood before the National Aviation Club, Washington, D.C., April 22, 1974. "Ibid. 197 Within that parameter, there is, however, room for maneuver on less important problems. A third set of locks and a deeper waterway— the construction of which was started but suspended in World War II— may well be required by world trade in the next century; as early a resumption of this project as economic conditions permit should be a high priority and would have a beneficial effect on Panama's now stagnant economy. The annuity paid to Panama— now $2.32 million annually— might be increased somewhat to provide for inflation. Some profits from the canal operation, when the canal operates in the black again, might be passed on, in recognition of improved productivity, to Panama Canal employees regardless of citizenship. Many of the personnel problems that are irritants to good relations must be solved. Most important should be a well-organized public relations cam- paign by Washington to correct, in this country, in Panama, and elsewhere, the distorted image of the ugly American which has grown up around the Canal Zone. Morale in the Canal Zone Partly because of our own mistakes, partly because of the growth among some American canal employees of a "colonial ghetto" mentality, partly because of the sheer contrast between the neat middle-class order of the Canal Zone and the slum misery that lies cheek-to-jowl with it just across the street, but largely because of skillful and heavily financed Panamanian and Communist propaganda, the Canal Zone's American population have come to be unfairly identified in too many minds— particularly in the minds of the liberals— as colonialist exploiters. The image is flawed; most of the Americans who work in the zone are simple, average people living in a simple, low-middle-class style, willing to be friendly, wanting to be liked. It is true, however, that over the years the close contacts and friendly relations of the first generation of "ditch-diggers" with the indigenous population have been weakened. Some of the sons and daughters of the first genera- tion live in claustrophobic insularity; too few of them speak Spanish or take an interest in the culture of Panama. Similarly, there is far too little effort within Panama or elsewhere in Latin America to advertise the better aspects of U.S. culture. Nor have the Panamanian workers in the Canal Zone been unfairly treated, as is so often claimed. They are subject, along with U.S. citizens, to U.S. minimum wage laws. Until 1955, when at the request of the Panamanian government the privilege was in large part revoked, they were able to shop at U.S. commissaries and stores in the zone, at prices considerably lower than those that prevailed in Panama. A good many of them lived in the zone in U.S. -furnished quarters. Their rates of pay are considerably higher than those in Panama— in some cases two to four times as high. Their children attend U.S.-supported schools in the zone, some of which teach in Spanish a curriculum emphasizing Spanish and Latin American culture. Many objective observers believe the Panamanian employees of the canal live in the best of both possible worlds. Yet there are flies in paradise. Most U.S. citizens employed in the Canal Zone have received a 15 percent "tropical differential" not paid to Panamanians. (This is now to be largely but gradually phased out.) Higher-paying, so-called security posi- tions are reserved for U.S. citizens. Two school systems, one for Panamanians and one for U.S. citizens, and two systems of housing allocation, have prevailed; they are now being merged. The Panamanian employees of the canal, despite the benefits they receive, expect and are demanding through their unions exactly the same benefits the U.S. employees receive. Little things loom large in today's Canal Zone and they affect U.S. employees even more than many of the disgruntled Panamanians. The U.S. employees have resisted what they believe to be a gradual but persistent erosion of the benefits they have enjoyed; they feel strongly that with inadequate and insufficient housing in the zone, U.S. citizens should have preference; many of them object strongly to what they believe will prove to be the destruction by merger of the U.S.-supported school system. They have other gripes. Wage freezes, cuts, and reductions all along the line, some of them forced by the recession and the necessity of reducing costs, the elimination of some medical and hospital services, reclassification of jobs, and the prospect of future cuts and reductions have angered them. They see their jobs threatened by Panamanian replacements, and above all they face the uncertainty of the future — perhaps the complete elimination of all jobs held by U.S. citizens in the zone. The reaction on both sides is natural and understandable. The concessions made to Panamanian employees have merely made them want more. The several thou- sands of U.S. citizens employed by the canal have seen those concessions as a threat to their own standard of living, and this, along with the uncertainty of the future, has depressed their morale to what Governor of the Canal Zone Harold Parfitt 198 described recently as the lowest point in history. So low, indeed, that the canal has been closed twice — in 1973 and 1976 — by "sick-outs" or strikes of its American employees, actions which hurt their own cause but dramatized their grievances. In 1973 the canal's 80 pilots (only a handful of them Panamanian) walked off the job; in 1976, about 700 essential employees, all American, closed down the canal. Both events — indicative of the tremendous deterioration in the "legacy of pride" the canal workers once held — symbolize the insecurity and instability in the zone itself. These problems are a direct product of the long drawn-out, off-again-on-again treaty negotiations; the entire area has been living in a limbo of uncertainty and frustration for a decade. Until the United States finally and unequivocally rejects the transfer of sovereignty there will be little stability in the zone or in Panama. When that is done, some of the ancillary problems can be settled. Reactions at Home In the United States, there has been little organized effort devoted to presenting the case for U.S. sovereignty. Polls indicate that some 80 percent of the people want the United States to retain the canal, but the results are far from specific. Igno- rance about the canal, its past and its present and above all its strategic impor- tance, is profound, and indifference is apparent. Into this partial vacuum Torrijos and his Communist supporters have moved. In January 1977, Panama's United Nations mission signed a contract with a New York firm— Public Affairs AnalVsts — to conduct a nationwide public relations drive to influence the U.S. public to back a new treaty transferring sovereignty. Former politicos including former Democratic National Chairman Lawrence F. O'Brien and campaign aides of Senator Barry Goldwater and Senator Hubert Humphrey are connected with Public Affairs Analysts. The firm plans to send protreaty informa- tion to a list of thousands of influential people. It will also monitor, it is said, the activities of the score or more of organizations that have publicly opposed a new treaty, though it will not — a fine line, indeed — lobby or engage in propaganda. Perhaps even more influential than this campaign will be the activities of an organization called the Council of the Americas, comprising more than 200 major U.S. corporations with investments in Latin America, and the quiet private influ- ence of some U.S. banks with outstanding loans in Panama. These organizations, which have considerable clout, operate undoubtedly from a sense of self-interest; the Council of the Americas states that a new treaty would have a "very positive impact" in Latin America, and some of the banks are said to believe the only way Panama can pay interest on its loans is by achieving control of the canal and raising the transit rates. These organizations will undoubtedly be supported by a sales campaign promoted by both the State Department and the White House if a treaty can be arranged that saves face for President Carter and ostensibly permits U.S. control without sovereignty. Thus, the lines are drawn for a possible battle in the Senate which may shape, and will certainly influence, the future of the United States. It is conceivable that the senatorial battle might be preempted by events in Panama; Torrijos's throne is propped up by bayonets and his position and the economy and social structure of Panama are unstable. But whatever the specific course, of events in Panama, the argument that the transfer of sovereignty would promote stability, insure a friendly Panamanian government, and secure vital U.S. strategic interests seems groundless in the light of existing conditions. CONCLUSION In considering the vital issue of the future of the Panama Canal, two fundamental questions should be asked. (1) Can the Republic of Panama operate, maintain, improve, and defend the canal without external aid and with equitable treatment for all shipping? The answer, to anyone who has studied canal problems, is clear. Panama could undoubtedly physically operate the canal, with the help of sizable numbers of the present American employees. This initial period of operation might cover several years, during which U.S. employees would be gradually replaced and outside aid phased out. But Panama clearly does not have the economic or technical capability to maintain — much less to improve and modernize — the canal without massive external financial and engineering aid. Unless it has complete authority (which means sovereignty) over such expenditures, the United States should not provide such aid. "Internationalization" of the canal, a term which has a beguiling ring, would be, in reality, a cover for some form of collectivized control or consortium, with Communist and/or Third World influence probably predominant. The canal, U.S.-owned and operated, is an asset to our strategic interests. But the canal, controlled and operated by a nation or nations actively or potentially hostile to our 199 way of life, is a menace to our security. And, given the ideological instability of past Panamanian governments and the example of the Suez Canal, it seems highly unlikely that, with Panama nominally sovereign over the canal, the "big ditch ' would be truly and perpetually neutral or its long-term operation efficient. (2) Would transfer of sovereignty to Panama impair the U.S. strategic position in the Caribbean? Again, the answer is clear. U.S. control and U.S. influence in this vital backdoor area — already impaired by the extension of Communist power and influence out- ward from Cuba and by our past defeats and retreats around the world — would be fatally weakened. We cannot insure control without sovereignty; the mere phrase is doublespeak. We cannot provide military security for the canal without sovereignty; to attempt it would be to accept responsibility without authority. 200 [From the Congressional Record— Senate, Sept. 20, 1977] THE PANAMA CANAL TREATY Mr. Allen. Mr. President, last Friday there was an interesting editorial in the Wall Street Journal by George F. Kennan, who is, I am sure, well known to Senators. Mr. Kennan is currently profes- sor emeritus at the Institute for Advanced Studies in Princeton, N.J., and throughout his very distinguished diplomatic and aca- demic career he has been a leading and very able apologist for Third World dictators and Soviet imperialism. Mr. Kennan's edito- rial was no doubt seen by many, but I feel its significance should be emphasized to all. His subject was the proposed Panama Canal Treaty, and surpris- ingly he apparently shares my own opinion that the plan for joint United States/Panama operation of the canal — as set forth in the treaty — is totally unworkable. However, Mr. President, rather than concluding that the treaty should be rejected, Mr. Kennan recom- mends an immediate, total withdrawal from the Isthmus of Panama. Prof. George Kennan has always stood, so to speak, at the head of the class, and I wonder if he is not setting the stage for the next act in the Panamanian road show. Would we ratify this proposed treaty only to face renewed demands by dictator Torrijos that the area be abandoned entirely and immediately? In my judgment, following ratification, such a result would be inevitable. But, Mr. President, as I said, George Kennan does agree with the view held by many of us here in the Senate that the proposals for joint operation of the Panama Canal Company are going to cause more problems in our relations with Panama and Latin America than they would solve. As Mr. Kennan put it: One can only quail at the prospect of attempting to operate and protect the canal in some sort of "partnership" with the Panamanians. An arrangement of this nature would weaken the American position without giving permanent and com- plete satisfaction to the Panamanians. It would be replete with possibilities for disagreement and minor conflict. Yes, Mr. President, this proposed solution would indeed be "re- plete with possibilities for disagreement" and with the possibility or probability of minor, even major, military conflict. Surely, the Department of State must recognize the futility of undertaking to operate the Panama Canal on a joint basis with participation by two nations having wholly divergent political sys- tems, national goals, technological ability, and national tempera- ment. Rather than the "possibility of disagreement" suggested by Mr. Kennan, the United States and Panama would face the cer- tainty of disagreement — virtually on a day-to-day basis — through- out any joint operation of the Panama Canal. These disagreements would range from what is a "reasonable" rent to be charged to occupants of housing which now belongs to the United States and is occupied by U.S. citizens to the proper level of transit shipping tolls to be charged in order to guarantee a profit to the new joint company so that Panama could be paid its $10 million kicker for a profitable year. We have not seen a spirit of conciliation or give- and-take from the Panamanians in the negotiations for this one- sided canal treaty, we have already seen that they disagree with 201 our interpretation of it, and we ought not to be so naive as to expect a conciliatory attitude from the Panamanians in the joint operation of the canal. Musing over these same problems, Mr. Kennan speculates as follows: Could not the dilemma be better resolved, one wonders, by turning the Canal over entirely to the Panamanians. He continues with this statement in a burst of candor: The proposal may sound extreme. Yes, Mr. President, George Kennan's proposal does sound ex- treme because it is extreme. Would not a better option be exercised in a simple rejection by the Senate of this ludicrously inept docu- ment, the Panama Canal Treaty, which unfortunately the execu- tive department is seeking to foist on the citizens of the United States and on the Congress? But, Mr. President, George Kennan must be given due credit for recognizing what has seemingly eluded the leading active-duty military thinkers in our Defense Establishment. George Kennan accurately points out that the Panama Canal Treaty will not be a panacea guaranteeing our freedom from insurgent attack on Panama Canal installations or on U.S. Forces in the Isthmus of Panama. If the Canal Zone is already indefensible as many would have us believe, how much more indefensible will it be when the U.S. military presence is reduced to 4 bases, as against some 14 now and limited, more or less regardless of the circumstances, to present strength. With deference to Mr. Kennan's peculiar perception of this fact, it does not take a visionary or a great military planner to be able to see that U.S. Forces — when confined to four small bases and associated military areas — are going to be particularly vulnerable to harassing attacks designed to hasten our withdrawal from Panama. Mr. Kennan seems to acknowledge that such attacks would be likely should the proposed treaty be ratified and should the United States thereby signal its complete lack of resolve to defend and protect the Canal. In his testimony before the Subcommittee on Separation of Powers of the Committee on the Judiciary, Lt. Gen. Dennis McAu- liffe, Commander in Chief of the Southern Command, including Panama, stated the mission of his troops as follows: The principal mission, sir, is that of defending the Panama Canal and the Canal Zone. Thereafter, I pursued a line of questions which I am satisfied got answers demonstrating the present defensibility, not indefensibil- ity, of the canal and laying to rest the myth that the canal cannot be defended by our forces in their present posture. Mr. President, Senators should find General McAuliffe's testimony decisive on this subject and, therefore, I quote from the pertinent record from the hearing: Senator Allen. I assume, then, that if you concluded that you were unable to perform the mission of defending the Panama Canal you would so report to the Pentagon, would you not? General McAulifte. Absolutely. To the Joint Chiefs of Staff. 202 Senator Allen. Have you made any such report since you have been assigned there? General McAuliffe. No, sir. Senator Allen. I would assume, then, that you feel that you are adequately equipped and manned to perform that mission. General McAuliffe. Again, if I may, Mr. Chairman, my answer is dependent upon the threat scenario. However, under the kind of threat scenarios that I see today or in the immediate future I can tell you that I have an adequate force to carry out this defense mission. Senator Allen. Should you not be prepared for just routine defense, but for any emergency? We have seen our various bases attacked in the past by enemy nations. Should we not be able to react successfully to any conditions? General McAuliffe. I can assure you, Mr. Chairman, that we are well trained and prepared to react to any contingency. This is the general in charge of the defense of the Panama Canal in answer to the question of whether or not the canal is defensible. Just to clarify my statement about needing reinforcements, let me say that my forces are able to react and, I think, do an adequate job of defending. However, sooner or later in an emergency period that relatively small force may be over- committed. Hopefully, within those couple of days or whatever period of time we may be talking about we might be able to bring in additional forces to help meet the requirement. So ends the portion of the testimony to which I have alluded. So, Mr. President, the canal is now defensible, but, as George Kennan points out, should this treaty be ratified. U.S. forces will more or less find themselves boxed up in small enclaves subject to terrorist attack by dissident elements in Panama and subject to the inflammatory polemic which has characterized pronouncements of the Panamanian Government and government-controlled press ever since the seizure of power by Dictator Torrijos. Would such conditions present an emergency situation for which military rein- forcements would be required? Would the United States be permit- ted to reinforce under the provisons of paragraph 5, article IV of the proposed treaty? Or would we prefer simply, as suggested by Mr. Kennan, to bug out? Let us not kid ourselves, Mr. President. We do not solve a de- fense problem with this proposed treaty; we create instead a night- mare with a predictable result. Mr. President, I suggest the absence of a quorum. Mr. Robert C. Byrd. Mr. President, would the distinguished Senator not suggest the absence of a quorum at this time? Mr. Allen. Yes, I withhold my suggestion. I yield the floor. 203 [From the Congressional Record— Senate, Sept. 21, 1977] THE PANAMA CANAL TREATY Mr. Allen. Mr. President, last week I had occasion to speak from time to time on matters involving the proposed Panama Canal treaty and the proposed neutrality treaty for the Canal Zone. In my study of the terms of both treaties, I have relied heavily on Panamanian interpretations of the various documents involved in- asmuch as the Panamanian negotiators have been somewhat more candid with the Panamanian National Assembly than our own negotiators have been with the U.S. Congress. Too, Mr. President, the information we gathered as to the inter- pretation that the Panamanians put on these treaties is of vital concern to the Senate in reaching a determination as to whether it shall advise and give its consent to the ratification of these trea- ties. Because of the fact there has been no meeting of the minds between the two countries, the treaties would, in effect, be com- pletely worthless if we had one interpretation and the Panama- nians had another. I might add also, Mr. President, that the dictator-controlled Pan- amanian Press, in many respects, has set forth more real informa- tion on this subject than has our own press. Over the weekend, I ran across an informative editorial in a U.S. newspaper, this week's Army Times, and this editorial does deserve high commen- dation for its very accurate assessment of one facet of the executive department's propaganda offensive for ratification of these treaties. The Army Times editorial is entitled "Using the Chiefs" — having reference to the Joint Chiefs of Staff— and it points out the double standard, the inconsistency, and the impropriety of chastising mili- tary personnel on the one hand for speaking out against the poli- cies of the executive branch yet coercing them on the other hand to speak out in favor of such policies. The editors of Army Times apparently share my own deep conviction that the professional military cannot be permitted to intervene publicly in politics and that grave danger is posed by deliberate misuse of the military for political advantage. Army Times states its disapproval in this manner: One of the reservations we have about the administration merchandising of the treaty is the early use of the Joint Chiefs of Staff to promote ratification. In addition, JCS chairman Gen. George S. Brown, supposedly on his own accord, met with ranking military retirees in the Washington area in an attempt to win their support for the treaty. We accept the contention that the chiefs acted out of honest conviction in their protreaty effort. But their presence among political figures who are endorsing the treaty is cause for concern. Critics of the pact already are charging that the military leaders acted out of loyalty to the Commander in Chief. Brown has denied the charge but probably has not laid it to rest. We would rather have seen the military views given in that forum instead of the White House extravaganza preceding it. I might state that while the Joint Chiefs have endorsed the treaty, four former Chiefs of Naval Operations have come out in strong opposition to the treaty, showing the direct contrast be- tween those who are still on the payroll and in active military service who may have one view, but their equally distinguished 204 colleagues, many of them, and certainly four former Chiefs of Naval Operations, have come out against the treaty. You know, Mr. President, we have just recently been treated to the public spectacle of a senior military commander in Korea being summarily relieved of command for remarks thought inconsistent with the executive department's apparent determination to aban- don South Korea, yet almost in the same breath we have had paraded before us assorted active-duty generals and admirals, all chorusing in unison the praise of the President and endorsing to a man this strategically disastrous treaty proposal. The irony, at least, has not been lost on the editors of Army Times who see danger in this obvious politicizing of the role of the military deci- sionmakers. I again quote the Army Times: It is fair, in our view, to criticize the President for the service leader's participa- tion in the pre-debate "education" effort. I welcome an education effort, educating the American people about these treaties, because the more they find out about the treaties, in my opinion, the harder and the more determined will the opposition of the American people be to the treaties. When general officers have spoken out on other national policy matters, he and his representatives have been quick to remind them of the bounds of their military responsibilities. "He," in this case, is the President. In this case, however, the military leaders are showing approval of administration policy, not opposition. The difference may be difficult to explain and may result in some erosion in the military's traditional political neutrality. Mr. President, I do believe that the fair and dispassionate views of our leading military officers should be considered by the Con- gress, but I trust the Members will recognize the unseemliness of ballyhooing active-duty military support for the new treaties, when such support is so obviously generated by a desire for job security and personal advancement rather than out of loyalty to the nation- al interest of the United States, at least as I perceive it. Mr. President, from time to time I have spoken out against these treaties, and I have pointed out reasons for my opposition. I am going to continue, week in and week out, until this matter comes before the Senate, with the approval of the distinguished majority leader and his graciousness in getting me this time, to speak out against these treaties and to give a backlog of information showing that approval by the Senate of these treaties will be contrary to our national interest. I believe that the education process which the executive depart- ment is going to carry on in connection with trying to sell this treaty to the Senate and to the American people will be counter- productive insofar as getting approval of the treaties is concerned; and that public opinion will be stronger and stronger, as time goes on, against the treaties. Mr. President, I ask unanimous consent that the editorial to which I referred be printed in the Record. There being no objection, the editorial was ordered to be printed in the record as follows: 205 Using the Chiefs The administration's selling job on the new Panama Canal treaty has to be one of the major political spectaculars of recent memory. While Congress was on vacation in August, the President worked to rally support for the pact among legislators, key people in the former administration, union leaders, governors, business people and others. The signing brought more heads of foreign governments to Washington than have been here since the last state funer- al. The political activity gives the impression that the treaty is about to take effect. In fact, it still faces Senate ratification and what amounts to House endorsement through approval of related money bills. Heated debate on the issue is predicted. The administration's effort may be good political strategy, but it tends to raise questions. If the treaty — actually two treaties are involved — is good, it may be asked, why the hard sell and why, until now the lack of specifics? We don't pretend at this point to know whether the treaty is the best arrange- ment the U.S. can make with Panama. Senate hearings and debate should provide light as well as heat on the issues involved. But it should be evident that over- whelming protreaty arguments are going to have to be made to persuade lawmakers and perhaps a majority of the American public that the U.S. should relinquish its Canal rights. For many Americans the treaty surfaces at the wrong time. The U.S. has "lost" a war in Asia, and is preparing to withdraw ground combat forces from South Korea. Negotiating away American rights on the canal comes as the final straw. One of the reservations we have about the administration merchandising of the treaty is the early use of the Joint Chiefs of Staff to promote ratification. In addition, JCS chairman Gen. George S. Brown, supposedly on his own accord, met with ranking military retirees in the Washington area in an attempt to win their support for the treaty. We accept the contention that the chiefs acted out of honest conviction in their protreaty effort. But their presence among political figures who are endorsing the treaty is cause for concern. Critics of the pact already are charging that the military leaders acted out of loyalty to the Commander in Chief. Brown has denied the charge but probably has not laid it to rest. We would rather have seen the military views given in that forum instead of the White House extravaganza preceding it. It is fair, in our view, to criticize the President for the service leaders' participa- tion in the pre-debate "education" effort. When general officers have spoken out on other national policy matters, he and his representatives have been quick to remind them of the bounds of their military responsibilities. In this case, however, the military leaders are showing approval of administration policy, not opposition. The difference may be difficult to explain and may result in some erosion in the military's traditional political neutrality. THE PANAMA CANAL TREATY Mr. Thurmond. Mr. President, I have before me a news article written by John Chamberlain for publication in The Florida Times- Union and published in the August 19, 1977, edition. Mr. Chamber- lain's analysis of the terms of the Panama Canal treaties is informa- tive and one with which I totally agree. The Panama Canal is vital to our national security and economic well-being. President Carter is attempting to persuade the Ameri- can people to put both in jeopardy in order that Panama be ap- peased. In view of the importance of this issue to the U.S. Senate and the American people, I ask unanimous consent that this excel- lent analysis by Mr. Chamberlain be printed in the Record. There being no objection, the article was ordered to be printed in the Record as follows: 206 [From the Jacksonville (Fla.) Times-Union, Aug. 19, 1977] GUANTANAMO SURRENDER NEXT (By John Chamberlain) The Carter Administration pulled a fast one when it divulged the major points of its proposed new Panama Canal Treaty during a Congressional recess. This meant it would be days before the opposition, including Democrats as well as Republicans, could form its lines for putting pressure on 17 more or less undecided Senators who are still needed to block the treaty, which must have 67 votes to pass. There must also be House of Representatives concurrence, a requisite for treaties that dispose of U.S. property. The treaty, as set forth by our negotiators, contains its superficially reassuring features. We do not propose to relinquish all control of the canal until the year 2000. By then the present Panamanian dictator, Omar Torrijos, will be overthrown or dead. We can be sure the face of the world will be changed almost unrecognizably in 23 years. Brezhnev will be gone, Jimmy Carter (if the fates are kind to him) will be sitting on a porch in Plains, Ga., shelling peanuts. Ronald Reagan may still be riding a horse but he will no longer be a political force unless Geritol develops some unsus- pected properties. By 2000 there may not be much Alaskan oil left to put in big tankers that can't get through the canal anyway. So why, since many of us won't even be around in 2000 A.D., isn't it the mark of expedient wisdom to leave the long-term future of the canal up to our children, along with the six trillion of debt obligations that we have already bequeathed to them? The reason why this is a stupid question is that Marxists of every stripe regard the fight over the treaty as a test of will in a struggle that is not going to be postponed to 2000. The Panamanian Marxists have already made blackmail claims on us to compen- sate for artificially low canal fees. Our willingness to give up sovereignty over the sublime engineering feat that our technology (and our tropical medical hygiene) made possible where the French canal builders had failed will not be lost on Fidel Castro, who will surely be raising the question of our Caribbean base in Guantana- mo. The Jamaican Prime Minister, Michael Manley, who has welcomed thousands of Cubans to his country to run such things as a "people's militia," will be putting in more phone calls to Havana. The Washington-based Council for Inter-American Security, which has excellent correspondents, speaks of Jamaicans staring with awe at closed circuit television replays of Panamanian youth being trained in warfare, singing and shouting Marxist slogans. This is the sort of thing that dictator Torrijos looks upon with complaisance, even if it is "unofficial" insofar as his government is concerned. It makes it look as though we were quitting the canal out of fear. Some of the still officially undivulged terms of the Treaty which I saw circulating last week at an Inter-American Symposium at the University of Miami in Florida would seem to indicate that many of the attributes of Canal Zone sovereignty are scheduled to be relinquished to Panama long before 2000. U.S. citizens working for the Department of Defense or whatever authority will be operating the canal will be required to have Panamanian visas on ID cards. U.S. Customs employees will lose their jobs immediately. There could be a five-year rotation plan for canal employees recruited in the U.S. for "noncritical" jobs (pilots and marine engineers would, fortunately, be another matter). PX and Army commissary privileges would be discontinued after five years, with no compensatory cost-of-living subsidy from the U.S. government. In short, the treaty would make it unpleasant for U.S. citizens to take jobs in the Canal Zone. With U.S. police jobs being turned over to Panamanians, who knows how many Castroites would be telling Americans where to park their cars or when to put out their lights 9 We are told that the Canal Treaty must be accepted if Latin America as a whole is to be appeased. This is arrant nonsense. There is only worry in the West Coast Latin countries (Chile and Peru with their copper, Ecuador with its bananas) lest a Panamanian-owned canal, presumably "nationalized," should hike the canal tolls. When the Brazilian and the Argentine complain of Yankee "imperialism" these days, they have Carter's selective statements on "human rights" in mind, not the U.S. engineers who keep watch on the canal's Gaillard Cut and Gatun Dam. 207 The Senate, if it is seeking to know the truth about Latin American opinion, should find some means of conducting honest polls all the way from Guatemala to Cape Horn. An honest poll might disclose a yearning for a "users' control" of the Canal after 2000. Everyone knows what happened to the Suez Canal when the "users" lost sover- eignty there. 208 [From the Congressional Record— Senate, Sept. 22, 1977] THE PANAMA CANAL TREATY Mr. Allen. Mr. President, no doubt the Senate is aware by now of my very deep conviction that the proposed Panama Canal trea- ties are directly contrary to the national interest of the United States and the free world. This is the seventh speech I have given in the Senate since the Panama Canal Treaties were signed by the President and the Panamanian dictator. I intend to make other speeches from time to time while this matter is before the Senate and before the country, I might say, Mr. President. But, Mr. President, the more I study this matter, the more I am convinced that these proposed treaties are not even in the interest of the people of Panama. Stating the matter bluntly, these treaties seem chiefly to benefit the large multinational banks and the elitist dictatorial regime now in power in Panama, a regime which has repressed and subjugated the people of Panama since its incep- tion in 1968. Let us face it— dictator Torrijos and the clique surrounding him see these treaties not as a program for uplifting and improving the lot of the people of Panama, but rather as a means for perpetuat- ing their own privileged position as a ruling class. Dictator Torrijos in 1968 was an undistinguished left-leaning major in the Panamanian National Guard. Now, after a career based more on gangsterism than on military ability, he professes to hold the rank of brigadier general and is without argument titular head of one of the world's worst dictatorships. Mr. President, Freedom House, which is recognized internation- ally as an impartial monitor of the status of human freedom — and, I might add, counts Dr. Henry Kissinger as a member of its adviso- ry council — rates Panama as one of the ever-growing number of nations in the world whose people are counted among the "not free." As a matter of interest, according to Freedom House, 67 nations are "not free," 48 are "partly free," and 42 are "free." So, Panama is in bad company, but certainly not alone. But, Mr. President, in addition to these three major categories, Freedom House further breaks down and characterizes the govern- ments of the world by rating political rights under those govern- ments on a scale of 1 to 7, with 7 being least free. Panama is rated 7. That is right at the bottom in the degree of freedom which the citizens of Panama enjoy or fail to enjoy under the dictator regime in Panama. Civil rights — or, if you prefer, human rights — are rated on a similar scale, and Panama receives a 6. A 7 is the worst they can possibly receive under this rating system. The sad case of the late Leopoldo Aragon is typical of the consist- ent pattern of gross violation of human rights by the military dictatorship in Panama. Aragon was a working journalist, an ideal- ist, and politically a Social Democrat. Strongly anti-Communist, he had been forced to leave Czechoslovakia because of his opinions and was barred from virtually all socialist-Communist dominated 209 countries. In Panama, rather than being expelled for his political activities, he was jailed summarily without trial for 15 months in Panama's infamous penal colony, Coiba — pronounced CO — E — BA. Amnesty International, the International Commission of Jurists, and the Human Rights Commission of the United Nations finally prevailed on Dictator Torrijos to release this journalist-idealist, who had had the audacity to suggest that Panamanians should be permitted to enjoy basic human rights on the same footing as people of this country or of other free nations. Of course, Mr. President, Senators know the sad end to corre- spondent Aragon's life, but I question whether many Members of the Senate are aware that our own Department of State refused Aragon's application for a visa to enter the United States, presum- ably because the Department of State, like dictator Torrijos, did not wish any dissent or opinion conflicting with its own view of what is best for Latn America and the Republic of Panama. I sometimes wonder where our own country would rate on the scales at Freedom House if the Department of State could impose its programs here as they are imposed abroad. To be sure, Mr. President, the Panamanian dictatorship, in the present glare of international publicity, will pay lip-service to the forms of democracy. We will be treated to the spectacle of a plebi- scite by the Panamanian people allegedly in ratification of these proposed treaties, we will see demonstrations of support and even expressions of patriotic affection for this guileful gangster dictator, and some of us will be remained of similar plebiscites and expres- sions of support from another era and on another continent. Yes, we will see the forms of democracy observed, but I trust that our own media, our own free press, will report substance and not sham. I trust, Mr. President, that our press, being free, will recognize the hollowness, indeed the perversity, of a plebiscite con- ducted in a country with a censored and controlled news media and with a legislature hand-picked and installed by a military dictator. Perhaps Senators wonder why the Panamanian dictator is even bothering to go through the motions of conducting a plebiscite. Some hint can be found in remarks made on August 19 in the dictator-controlled Panamanian National Assembly. So-called Rep- resentative Luis Castillo posed the following revealing question: Mr. President, distinguished negotiators, dear comrade: I would like to ask the negotiators about the plebiscite. Since this is the means by which the Panamanian people will ratify the treaty and is related to the ratification by the U.S. Congress, I would like to ask whether a date has been set for the plebiscite and whether it has considered that it is important for the plebiscite to be held before the U.S. Congress ratifies the treaty. The idea is that once the results of the plebiscite are known — and we feel sure the Panamanian people will approve the treaty by a majority — this would have an impact on the U.S. Congress. So, Mr. President, the real purpose of this plebiscite is going to be to add fuel to the propaganda fires here in the United States. The Panamanian plebicite will have nothing whatsoever to do with the desires or interests of the Panamanian people. It will be con- ducted only for its impact on the U.S. Congress. Panama is a small country but the dictator and his henchmen understand our politics much better, apparently, then we understand the facts of political life in Panama. As chief negotiator, Romulo Escobar Bethancourt put the matter: 29-400 0-78 210 As for the U.S. Congress, there is a big problem, to be frank with you. They (the U.S. negotiators) have a big problem, worse than you can imagine . . . Why? Because the U.S. Congressman, as a good politician, acts as an instrument of those electing him. He is always aware of how the voter of the district or state that elects him feels. I might say parenthetically, Mr. President, if the Members of the Senate act according to the wishes of their constituents, in my judgment, there is no doubt whatsoever that the two treaties will be rejected by the U.S. Senate. Of course, I think that would be a most fortunate result of the treaty vote in the U.S. Senate. You see, Mr. President, this matter of elections is something of a novelty down there in Panama. Of course, Torrijos did not get there by an election. He took over in a coup. Negotiator Bethancourt had to go to some trouble to explain the whole process to the "representatives" in the National Assembly. I can almost imagine their amusement at the thought of having to take account of the views of the people. But they do have to ratify it, and that is the form that they are going through. It is absolutely meaningless. It will be 999 to 1, I dare say, in favor of the ratification of the treaty unless it would serve their best interests to show a closer vote, indicating that the treaties are not stacked in favor of Panama, which, of course, they are. But, Mr. President, one representative in this appointed National Assembly of over 400 members did voice a little opposition to the dictator's treaties. Let us see what happened to him. This is Repre- sentative Luis Emilio Veces: I wish to clear up a point of order. . . . This fellow seems to have the same problems with the Chair that a number of us have experienced from time to time — not the present occupant of the Chair, I hasten to add. This Representative continues: I wish to clear up a point of order, because the Secretary has declared that the vote was unanimous for the resolution approving the accomplishments of the Pana- manian negotiators regarding the treaty. One can almost imagine the situation. Over 400 dictator-appoint- ed assembly members shouting approval of the actions of the dicta- tor's negotiators, yet one brave voice insisting to be recorded as an abstention. Apparently, a direct vote against might have been viewed as treason. Representative Veces bravely continues: I wish to explain my abstention from voting. With the indulgence of those at the presidential table, the vice president, the cabinet ministers and fellow representa- tives, I wish to explain that I am incapable of bregrudging the merits with which the resolution credits those abroad who have expressed their solidarity with our country. However, there is a basic issue which has caused me to abstain from voting for that resolution. It is the fact that I cannot share the pleasure of those at this meeting or the pleasure expressed by the government team today for a treaty which I have not yet seen. Apparently, they had the same problems in Panama, in this dictator-run national assembly, that we had here in the U.S. Con- gress—the same problems in discovering actually what had been negotiated on behalf of our respective Governments. But Repre- sentative Veces had an additional concern which caused him to abstain: 211 According to the national press and the government team, we have ample guaran- tees permitting a debate on the new treaty draft. Nevertheless, the same govern- ment team has made a series of threats of a political nature against persons who oppose the treaty. We have not had any such situation as that in this country, and I do not anticipate that we will have any, although, of course, the President and the Department of State are conducting what they call an educational campaign. I believe the more people are educat- ed, though, on this question, the more against the treaty they are going to be. If there is any retaliation, it will not be on the part of the executive department, I am sure. If there is any at all against those who vote for the treaty, it will be by the voters back home, in my judgment. Says Representative Veces: I wish to state clearly that in such a situation it would appear that we are left only to take it or leave it. We shall not have that situation here. We shall have an opportu- nity to amend the treaty. If we amend it successfully in a basic and fundamental way, that will have the effect of killing the treaty, because it would then have to be renegotiated. I am hopeful that we will be able to amend it. For instance, one section, aside from the major question of whether we ought to give the canal away, one article says that, during the 23-year period of the treaty, the United States will not negotiate with any other nation regarding another Isthmian Canal. There has been suggested a route through Nicaragua. The House, at one time, back around 1903, favored and passed a resolution to that effect, for the Nicaraguan route. But under the treaty, we will not be able even to negotiate with another nation for another sea- level canal without the permission of Panama. Of course, they are not going to give their permission, because the Panama Canal would be a great asset. Certainly, that ought to be knocked out of the treaty, and many other provisions, as well, should be knocked out, assuming that the treaty is going to be ratified in some form, which I oppose. The similarities between this Panamanian Assembly and our own Con- gress are sometimes startling. Veces continues: I am also worried about a number of ideas being expressed, such as that those who oppose the government or the treaty are traitors to the fatherland. That was stated down in Panama, not here, because no one goes that far. These are ideas which given the pretense that there is a democratic atmosphere, constitute a threat for anyone in this country who has the power to reason. Certainly, that same situation would apply here. Those of us who have the power to reason and who can point out the defects in this treaty and the inadvisability of going ahead with it certainly are held up to some degree of— vilification possibly is too strong a word, but some degree of ridicule in the media. Representative Veces seems to be seeking to discover the limits of permissible dissent, and negotiator Bethancourt advises him in this fashion. Here is the propaganda line they are handing out in Panama — 212 Any person who during the debate objects to the approval of the treaties because Torrijos is a dictator will receive our reply explaining why we do not consider Torrijos a dictator, and in addition we will reprimand that person. So they do not have much freedom of speech down there in Panama. That will be the debate, at whatever level people choose to engage in it, but whoever decides to enter the debate should know that he will get a reply. The reply that they are suggesting is not too favorable to any dissenters' life and health. Veces got his answer, and I am sure he got with it the clear message it carried. The following facts certainly portend great danger to our use of the Panama Canal. Mr. President, on July 19, a Soviet delegation in Panama negoti- ated an agreement with Panama which included the following points — construction of a major heavy equipment repair facility in Panama for use by the Soviet Union; permission for the Soviet Union to take advantage of the tariff "free zone" at Colon for Soviet merchandise; establishment of Soviet installations at France Field, formerly a U.S. Air Force base; and informally, a commit- ment to allow construction of a Soviet hydroelectric plant and oil storage facilities. Moving in very rapidly, Mr. President. Against that background, I question seriously the judgement of those who would urge the Congress to support treaties which will prop up and perpetuate a military regime whose leader oppresses lus own coun- trymen and seems bent on forging an alliance with the world's bloodiest and most tyrannical imperial power. These treaties are clearly not in the best interest of the United States or the free world. Since they will tend to darken and prolong the night of tyranny and oppression in Panama, neither are they in the best interest of the Panamanian people. Mr. Sparkman. Will the Senator yield? Mr. Allen. I am delighted to yield to my colleague. Mr. Sparkman. Speaking of those early discussions and particu- larly the proposal for a sea-level route through Nicaragua, I want to call to the Senator's attention that his predecessor and mine many years ago, Senator John T. Morgan, was one of the great advocates of the sea-level route through Nicaragua. I have often thought it would have been a great blessing had that gone through. Mr. Allen. Yes. The Acting President pro tempore. The time of the Senator from Alabama has expired. Mr. Allen. Mr. President, I ask unaninous consent for 2 addi- tional minutes. The Acting President pro tempore. Is there objection? Without objection, it is so ordered. Mr. Allen. The Senator already has been called, as the distin- guished Senator knows, the father of the Panama Canal. Mr. Sparkman. Correct. Mr. Allen. He had advocated the Nicaragua route. The House of Representatives passed the resolution calling for the Nicaraguan route in working out a treaty with them and in the Senate. 213 They only changed the resolution substituting Panama for Nica- ragua. Senator Morgan, though he for decades advocated the Nicaragua route, was so interested in the Isthmian Canal, he urged his friends in the House not to make any effort to go back to Nicaragua, not to have a conference, and they accepted the Senate amendment. Certainly, it is a great tribute to Senator John T. Morgan that he was willing to sacrifice his own notions of where it ought to go in order to achieve the objective of getting the Isthmian Canal. Mr. Sparkman. While we are reminiscing, I would like to recall that one of the great men in Panama during those days was an Alabamian, Col. William C. Gorgas, who cleared it of yellow fever. Mr. Allen. That is correct. Also, Gen. William L. Sibert of Alabama. Mr. Sparkman. A corps engineer. Mr. Allen. He did not get the credit, but he was actually the engineer in charge of the construction. Mr. Sparkman. The Senator is correct. Mr. President, may I be recognized in my own right since the time is up? The Acting President pro tempore. Does the Senator make a unanimous-consent request to be recognized? Mr. Sparkman. I ask unanimous consent that my colleague's time be extended. Mr. Allen. Three minutes. Mr. Sparkman. For 3 minutes. The Acting President pro tempore. Without objection, it is so ordered. The time of the Senator is extended for 3 minutes. Mr. Allen. I yield to the Senator. Mr. Sparkman. Mr. President, of course, my colleague realizes that these treaties are coming before us. Mr. Allen. Yes. Mr. Sparkman. I had printed in the Record sometime back a rather detailed announcement on the hearings. The Senator recog- nizes that I am chairman of that committee. Mr. Allen. The very distinguished chairman, I might say. Mr. Sparkman. I shall do my best to preside, shall I say on a nonpartisan basis. Mr. Allen. I know that the Senator will. Mr. Sparkman. I believe we do have a wonderful parade of witnesses that are coming before us. Mr. Allen. I might say while the Senator is looking for his paper that I have requested time before the committee and the distin- guished Senator has certainly graciously stated I would have that time to speak or testify in opposition to the treaties. Mr. Sparkman. Mr. President, I would like to refer to the notice that I put in the Record. First, we are going to open these hearings on the 26th. I will be presiding and not supporting either side. Mr. Allen. I understand. Mr. Sparkman. I am going to be presiding officer. We do have a very fine schedule of witnesses. It will probably run about 2 weeks, I should think, and maybe longer than that. 214 We do not look forward to presenting the treaties — there are two treaties — to the Senate until we are back here the first of the year. I believe that is what Senator Robert C. Byrd has scheduled. Mr. Allen. That is correct. Mr. Sparkman. But we are going to start off with our negotia- tors, Ambassador Bunker and Ambassador Linowitz. I have tremendous respect for both of them. I believe they did yeoman work down there. We expect to hear from them first. Then we are going to hear from the Defense people because they are vitally concerned in this matter. Then we will hear from some of our former Secretaries of State, Secretary Kissinger and Secretary Rusk are particularly men- tioned. I think we have a very fine selection. Furthermore, we are not going to try to rush these hearings. We are going to give an opportunity to as many as we possibly can — that will include Members of both Houses of Congress, it will include the military, it will include interested citizens and others. We plan to give as broad a hearing as we possibly can. Mr. Allen. I know that. Mr. Sparkman. I want to assure the Senator of that. Mr. Allen. I know he will be eminently fair and give all sides an opportunity to be heard. I do not know any Member that I would rather see chair these hearings than my distinguished senior col- league from Alabama (Mr. Sparkman). I know it will be a fair hearing. He has outlined those who will testify on behalf of the treaty. I am sure he will be just as fair in giving an opportunity to those of us who oppose the treaty to be heard. I have full confidence in the Senator's handling of the hearing. THE PANAMA CANAL Mr. Cranston. Mr. President, I urge all within and without the Senate to read the remarkable statement on Panama just made public by our esteemed colleague from South Carolina (Mr. Holl- ings). Senator Hollings was one of the numerous Senators who in the last Congress cosponsored the resolution that warned the State Department against negotiating a treaty with Panama. He was one of the numerous Senators who cosponsored the reso- lution in the last Congress who has refrained from cosponsoring the resolution in this Congress. And now, after reading, thinking, listening, asking, studying, and traveling to Panama to make a penetrating examination of all the factors at close hand, Senator Hollings has come out for ratifica- tion of the Panama Treaty. He set forth a careful, detailed, and thoughtful dissertation of all the steps and stages he went through as he came to his decision, and the reasons and thought processes that led him to his conclu- sions, in his September newsletter to his constituents. 215 I ask unanimous consent that Senator Hollings' statement be printed in the Record, and I urge that it be read with care equal- ling the care with which it was written. There being no objection, the statement was ordered to be print- ed in the Record, as follows: The Panama Canal Do you want to give the Panama Canal away? NO! I don't either. Nor does President Carter. If President Carter's treaty is not giving it away, what is it doing? Keeping it to use! Given the present circumstances, the two new treaties are the only reliable and fair way for the United States to keep the Canal to use. We all start by agreeing that the Panama Canal is important to the United States, both from a commercial standpoint and from a strategic standpoint. We all start by agreeing that the Canal should be continuously open and continuously in use. The debate centers on how best to keep it open and operating, so that our commerce can flow and our Naval fleets can remain mobile. After looking at this question from every angle, listening to both sides over the years, and visiting Panama for another first-hand look, I join all our recent Presi- dents the Joint Chiefs of Staff, and a bipartisan group of political leaders in supporting Senate ratification of the treaties. They are the best safeguards for an open Canal, and they guarantee America's continued access and continued freedom of transit permanently. If this treaty prevented our ability to use or defend the Canal, it would be different. But it does no such thing. On the contrary, the United States continues to operate and defend the Canal until the year 2000. After 2000, we retain the right to intervene to guarantee the Canal's accessibility to U.S. shipping. Let's be practical. The Canal is like an airplane — it is no good unless it can be used. We can go out and squat in the airplane, but unless we can fly it, the plane is of no use. So title to the Canal is not the issue. The problem is the unimpeded right to use it. Does the treaty give the' United States the permanent, unimpeded right to use the Canal? Are we guaranteed freedom of transit even after 2000? A few days ago in Panama when President Demetrio Lakas was asked these questions, he answered "Yes" to both. Returning home and checking, Article IV of the treaty provides it, and Dictator Torrijos states in Washington, ' we are agreeing to a treaty of neutrality which places us under the protective umbrella of the Pentagon. Why, then, all the hubbub? Two main reasons. First, we have not yet fully learned the lesson of Vietnam. A decade there should have convinced us that people do not like foreigners in their country. The Vietnamese did not like it. The Panama- nians do not like it. But failing to recognize this, the treaty opponents see no problem. They think the whole thing is a scheme of the State Department, and all we need to do is prove title or sovereignty and the treaty will be defeated. Secondly, we feel frustrated. The cry is, "We lost in Vietnam; we lost in Angola; we are pulling out of Korea; we talk about abandoning Taiwan. We have given away too much and 'detented' too much, and just once we should stand up and say — 'NO!' " This was exactly my reaction ten years ago when former Secretary of the Navy Robert Anderson came before our Commerce Committee to testify on a proposed new treaty for the Canal. "We bought the Zone, we built the Canal, we paid for it all. Why should we want a new treaty?" Secretary Anderson said quietly, 'We made a bad treaty. The people of Panama have never accepted it, and now they are ready to lay down their lives for their country." "Baloney" was the reaction. America s sovereignty must be protected at all costs. In 1967 in Vietnam, it was becoming difficult to explain to next-of-kin how their sons were being sacrificed for U.S. sovereignty. But in Panama — it could be explained easily. This feeling permeated a glowing newsletter about U.S. "sovereignty" five years ago. But the legal opinions to support sovereignty were not forthcoming. President Lyndon Johnson had conferred with former Presidents Eisenhower and Truman and the three Presidents agreed we needed a new treaty. When President Nixon and President Ford also endorsed the idea, everyone began to wonder. Nixon had ignored the State Department and Ford would like to have ignored State if his conscience would allow him. Ronald Reagan was giving him a fit and it would have been a lot easier for Ford if he could just stand up and say "No" on the Panama Canal. My conscience hurt — and in another newsletter last year, it was pointed out that we did not have sovereignty, and the need was emphasized to rid ourselves of the vestiges of the "Ugly American" in the Canal Zone by relinquishing separate courts, the commissaries, special stores, etc. But, the newsletter concluded, the United States should make sure "* * * that we will be in charge of the Canal both 216 five years and 50 years from now." Previously, I had joined in the Panama Canal resolution putting Henry Kissinger on notice. We never knew what he was up to and it was thought healthy to let him know that some of us in the Senate were watching. In January of this year, with Henry gone, there was no need to co-sponsor the resolution. Today I am better informed— reading "The Path Between the Seas" by David McCullough— a 698 page historical account of how we created the Republic of Panama after Colombia, the sovereign, refused to ratify our treaty. Talking and listening at length to Ambassador Bunker and Ambassador Linowitz, who was President Johnson's Ambassador to the Organization of American States— hearing the joint Chiefs of Staff, including General Brown, the Chairman, and General Jones, head of the Air Force — talking more recently with Army Secretary Alexan- der after his return from a trip to the Canal Zone — traveling to Colombia, Argenti- na, Peru and the Canal Zone, meeting with their Presidents— talking in Brazil to the Foreign Minister and the President of the Brazilian Senate and with many other officials — talking with the Economic Minister and Secretary of Commerce in the Republic of Panama — meeting with a group of Zonians, people living in the Canal Zone — lunching with American business leaders who had lived from two to twelve years in Panama City — outside the Zone — traveling with the U.S. Governor of Panama over the entire Canal — being briefed all along by Lt. General Dennis P. McAuliffe, the U.S. Commander of the Canal Zone — spending an evening with the U.S. Ambassador to Panama Jorden, meeting with a former prisoner of the Bay of Pigs in Cuba. With the exception of some of the Zonians, they agree to a man that the Senate should ratify the treaty. Even the Zonians emphasize that the treaty ought to be "modernized." There must be good reason for all of these leaders plus six American Presidents to favor a new treaty. The good reason, of course, is an appreciation of the true character of America. Some think our strength lies in our military might alone. But America's power lies in its solid stand on the principle of self-determination. Having lost 56,000 for this principle in Vietnam, it is appalling that some would suggest we now lose Americans to deny the principle in Panama. Much is proclaimed about building the Canal — but so little said about building the Republic of Panama. If ever a country should be stamped, "Made in the USA, Panama is the country. We created it 70 years ago — and today it is a stronghold of American free enterprise. Seventy major U.S. banks operate in Panama City — those which refuse to operate in Communist countries. Recently, when Panama needed increased revenues, she took the Chamber of Commerce approach — a value-added tax rather than an increase in income tax. Dictator Torrijos' economic team are all U.S. trained and educated. President Lakas — six years in the United States, a graduate of Texas Tech. Planning Minister Nicolas Barletta, a classmate of Gover- nor Hunt of North Carolina — both graduates of N. C. State. The Guardia National, or army — U.S. trained. Like many other heads of state in Latin America, Torrijos has visited with Castro. But Panama does not recognize the Soviet Union and Panama refuses to recognize Red China — she recognizes Taiwan instead. In a popu- lation of 1,700,000 — there are reportedly 600 Communists — but none in the govern- ment. The government is patterned after the United States with three branches — legislative, executive and judicial. And they have an American system of education. Now the important point of all this is that we have taught them one American trait — patriotism. The Republic of Panama has developed a nationalism of its own. The people are proud, they are patriotic. They have learned the cardinal principle of government — the right of the people to determine their own destiny. The ten-mile strip of foreign occupation in the heart of their country is viewed the same way as if the French had retained a five-mile zone on either side of the Mississippi. Every Panamanian schoolchild is taught the wrong that the United States did in obtaining the treaty in 1903. Everyone in the city and countryside of Panama feels it and as they showed in 1964, they are willing to die for it. But most importantly, in this section of the world where the United States lacks strong friends, the Panamanians are friends of the United States. Everything they feel or know comes from the United States. Pointing out to President Lakas the feeling that existed in the United States, that the people were tired of being pushed around, that somewhere, sometime we had to stand up and say "No"— the President responded quietly, "But why do it to a friend." Let me touch briefly on the certain aspects of the Panama Canal controversy: 1. SOVEREIGNTY 1. Legally, we don't have sovereignty; 2. Morally, we don't have sovereignty; 217 3. Realistically, we don't need, we don't want sovereignty. Legally— Article HI of the 1903 treaty grants to the United States certain rights as '" • ' if it were the sovereign of the territory." This retained sovereignty in Panama. President Roosevelt's Secretary of War William Howard Taft, later to become President, said in a 1905 report: "The truth is that while we have all the attributes of sovereignty, the very form in which the attributes are conferred in the treaty seems to preserve the titular sovereignty over the Canal Zone in the Republic of Panama." The Supreme Court decisions cited by treaty opponents are like the 1896 Plessy v. Ferguson segregation decision— totally untenable in this day and age. The real test is how the Government of the United States or Congress treats the Canal Zone — and it has not been as sovereign. If the Panamanian couple gives birth to a child in South Carolina or Louisiana or Alaska, under the Constitution that child is a U.S. citizen. If the same couple gives birth to a child in Guam or the Virgin Islands, then the child becomes a citizen, because Congress has treated these two areas as under our sovereignty. But if the same Panamanian couple gives birth to a child in the U.S. Canal Zone, that child does not become a citizen. So while the treaty said we could act as if sovereign, we were not and we did not. Morally— No question, the United States rooked Panama back in 1903. We active- ly supported the revolution against Colombia by its Isthmus section after Colombia refused to ratify the treaty we wanted. We sent ships and troops and this guaran- teed the outcome. Then we signed the treaty hurriedly before the official delegation objecting from Panama could even arrive in Washington. Signing for Panama was— not a Panamanian— but a French citizen who had not been in Panama for 17 years, and who returned to France immediately after the ratification. Further, it was made known that our military might would be withdrawn from the fledgling revolu- tion in Panama unless ratification was promptly forthcoming. Such withdrawal would have left Panama at the mercy of a far stronger Colombia. This congeals hundreds of items, but it is interesting to note that the majority of the U.S. payment was retained by a New York bank and invested in real estate in the City of New York. At the time, Teddy Roosevelt's Secretary of State commented. "You and I know too well how many points there are in this treaty to which a Panama- nian patriot could object." Said Woodrow Wilson, who would soon be President, "Our acquisition of the Panama Canal Zone has been a scandal since the day of the fake "revolution" of November 3, 1903. * * ' In every country to the south of us we are distrusted, feared, hated." Today this diplomacy is characterized by conservative columnist James Kilpatrick as a "national shame.' Don't want sovereignty — After spending our history destroying colonialism from the beginning in 1776 thru to the Philippines, Cuba, World War II, Korea and Vietnam, let s not insist on colonialism in Panama. If there is one thing that President Carter and the United States have going for us in the world today, it is our stand on human rights— the right of people to determine their own destiny. We finally are getting the Soviets and others on the defensive about their denial of human rights, and things are beginning to move our way. Are we now going to say, "Yes, human rights for everyone — except the people of Panama. 2. DEFENSE Flying up and down the length of the Canal in a helicopter. Lt. General McAuliffe was pointing out the strategic points to be defended — the lakes, the power facilities, the bridge and most important, the dam at Gatun Lake filling from the Charges River. This lake is 25 miles across, the largest man-made lake in the world. The locks are filled by gravity flow taking 52 million gallons of water for each ship that goes through. If the dam was blown at any point emptying the lake, it would take two years to refill. "It would take 80,000 to 100,000 men to defend key points," said General McAuliffe. "This does not mean wall-to-wall coverage of the entire length, only the key places. And this would not include the hundreds of inspectors neces- sary to examine each ship going through— an almost impossible task.' Guantanamo Bay in Cuba is a tip of land — easily defended. But the Panama Canal is open to ships from Cuba, Russia— all nations — and a lunch box of explosives could put it out of commission. 3. COMPETENCE Can the Panamanians learn to operate the Canal efficiently? Presently there are 12,000 Panamanians helping to operate the Canal efficiently. Can they take over the jobs of pilots, engineers, etc? Yes. This could be done in short order. The Pan- American Airlines manager in Panama City, having operated in seventeen coun- tries, said the best management and operating team of the seventeen was right now in Panama. Another friend, the Latin American manager of Intercomsa handling 218 85% of the communications from Latin America, came two years ago with an operating team of twenty-two U.S. experts. Already, he has sent back all but three to the United States — the Panamanians are doing the job. Let's remember the Egyptians readily learned to operate the Suez Canal. 4. TOLLS AND PAYMENTS Can the Canal operate without further appropriations from the Congress? This year the Canal will operate at a $7 million profit. But for the past several years, the Canal has been subsidized by the American taxpayer. The first ship with Alaskan oil went through the Canal on August 30. This increase in traffic will permit the Canal Company to pay the added 30 cents per ton plus the $10 million required annually under the treaty. Tolls will have to be increased from $1.29 a ton to approximately $1.70. But if a pipeline connection for Alaskan oil is made from the West to the East Coast, then further increases in tolls could be counterproductive. This plus the loan guarantees may require us to subsidize again. Treaty opponents cry, "It's bad enough to give it back, but why do we have to pay them to take it?" Spain: $685 million for base rights for five years. Greece: $700 million for base rights for four years. Turkey Demanding $1 billion for base rights for four years. Philippines Demanding $1 billion for base rights for five years. We have had a free ride in Panama for 74 years. Now Panama, like other allies, wants compensation for the military installations in her country — Fort Kobbe, Fort Amador, Howard Air Force Base, Fort Clayton, Albrook Air Station, Fort Davis, Fort Gulick, Fort Sherman, the Jungle Warfare Range, etc. We are not paying to take the Canal back — we're paying for these installations. And most of the pay- ments will be coming from toll revenues. 5. NEW CANAL A new sea-level canal will probably be built by Panama and the United States before the year 2000. An estimate in 1970 reported the cost at $2.7 billion. With inflation today that cost would be $5.7 billion. With hindsight now we realize that rather than working for thirteen years to renegotiate the old treaty, we should have insisted on a new sea-level canal. This would have been wide enough for all our warships as well as the largest oil tankers. Then the sovereignty, sabotage and other problems would have been moot. What is unexplainable is the provision that forbids us to negotiate a new canal anywhere but Panama. 6. IMPORTANCE OF THE CANAL The Panama Canal is important to the commerce and defense of the United States. It is especially important to South American countries such as Colombia, Peru, Chile, Ecuador and Nicaragua. Colombia, for example, drills its oil on the Pacific side and refines it on the Atlantic side. The Canal is Colombia's lifeline. Over % of Nicaragua's trade passes through the Canal. The list goes on. I recently heard the statement that all Latin American nations wanted Panama to control the Canal. False. They feel that Panama should have sovereignty over its own territory, but time and again different leaders in South America told me that the United States is the only power in the Western Hemisphere strong enough to protect the Canal. They are worried about toll increases. They are worried about freedom of transit for their countries. They feel that the neutrality treaty is ideal in that Panama regains sovereignty and they all have freedom of transit — with a U.S. guarantee. Finally, they are worried about communism. More so than are treaty opponents, because attempts have been made on these leaders' lives. They all oppose any communist takeover of the Canal. 7. COMMUNISTS IN THE CANAL Treaty opponents feel that once the treaty is ratified then in a couple of years the Canal will be turned over to the communists. No one knows or can guarantee what will happen in the years to come. All studied opinion holds firm that communism will have no issue upon which to take root if the treaty is ratified. However, they all feel that if the Senate turns the treaty down, then the communists will have a controlling issue not only in Panama but all over South America. Right now the communists in Panama are in the streets agitating against this treaty which they know will deprive them of their big issue. The best way to keep it from the communists in the future is to validate the neutrality treaty. And the best way to keep it from the communists today is to ratify the new treaty. 219 TORRIJOS No question about it— he is a dictator. But not "tin horn" like opponents contend. Every head of state emphasized this fact— Torrijos is a man supported by his people. Previously, rulers of Panama were from the city, educated in Europe. But as President Lopez-Michelsen of Colombia said, "Torrijos is not a patrician. He is first and foremost a man of his people." Torrijos is from the countryside. He was educated in Panama and trained at Fort Sherman and the U.S. Army School of the Americas. He came to power after the uprising in 1964. At the time he was a major in the National Guard — and had the bitter task of subduing his own people. After the riots, he took over pledging to rid the Canal Zone of foreigners. When asked if the Senate's failure to ratify the treaty would weaken or strengthen Torrijos, all national leaders in South America plus the American business leadership in Panama City said it would strengthen him. Several immediately replied: "It would make him a hero." What happens if the Senate ratifies the treaty — There is no guarantee that this would solve all of our problems in Panama or in Latin America. Brazil particularly has a chip on her shoulder. They favor the treaty but the Brazilians want the United States to know that this would not solve all the problems in Latin America. During the twenty year transition period, the Panamanians will have a chance to prove themselves. No doubt ratification will be followed with free elections next year as promised. There is every reason to believe that with the United States and Panama working together under the new treaty, Panama could become a showcase of American free enterprise. Ratification could prove a dramatic turning point in U.S.-Latin American relations. For ten years now, we have ignored South America. Each President has promised a new policy — only to be followed with neglect. During this period, the countries down under have developed a nationalism. No longer are they client states of the United States. And the disregard for this development has resulted in a "Bad Neighbor" policy. With the new Panama treaty, the United States could once again start acting as a "Good Neighbor." What happens if the Senate fails to ratify — The one group in Panama solidly opposed to the treaty are the communists. They realize that their principal arguing point will vanish with ratification. But they become an important movement if the treaty is rejected. Talking recently to a senior U.S. official in Panama, one who had served in combat at the DMZ in Vietnam — a man with guts and a lot of sense — "Just remember," he said, "There's lots of jungle out here and the use and control of -this Canal depends upon a friendly people. If the treaty is not confirmed, you will have another Vietnam on your hands." Maybe not a Vietnam, but at least an Ireland. The top CIA man in one South American country said, "Turn that treaty down and within hours, cars will be overturned and this embassy will be fire- bombed." When asked how long this would last, he answered, "Just as long as the President of this country permits it — and, politically, he would probably have to let it go on for some time.' I wondered who would be with us. Surely not the British and French after the way we treated them in the Suez Canal. The Free World and the Communist World would both be arrayed against us. We would have learned nothing from experience. Separatism cannot sustain. It held us back in the South; it is the trouble today in Africa; and that ten-mile wide strip of separatism in Panama is an embarrassment. Listening and studying as carefully and thoroughly as one can, I am convinced that our future in the Canal, our credibility on human rights, our being true to ourselves, and the respect for the United States will all be advanced by ratification. By every count, the new Panama Canal treaties are in the best interests of every American. In short, ratification is in our national interest. 220 [From the Congressional Record— Senate, Sept. 23, 1977] THE PANAMA CANAL TREATIES Mr. Dole. Mr. President, I have asked for this time today to discuss what will be, perhaps next year, perhaps later, a very important issue in the Congress of the United States, and that is the discussion and debate and consideration of the Panama Canal Treaties. I would like to take this time to define the defects, as the Senator from Kansas sees the defects, in the treaties presented to Congress, and suggest some amendments and some reservations to the treaties so that, perhaps next week, when the Senate Commit- tee on Foreign Relations starts its deliberations these amend- ments—and certainly there will be others submitted by other Mem- bers of the Senate — can be properly considered. There will be formal consideration starting on Monday, and then the proposals will be considered, although it is my understanding there will be no vote on ratification until early in 1978. The Panama Canal Treaty issue is certainly one that will demand much of our attention in the weeks ahead. The American people look for and hope for an exchange of views and responsible consideration of our Nation's future security at every stage of debate on the matter. Now that the pomp and ceremony associated with the treaties is over, and the foreign dignitaries have left, we in the Senate shall consider the proposed treaties in a thoughtful and responsible manner. An issue such as this which bears so heavily on our national security and economic well-being cannot be passed on casually. I know that each of my colleagues will carefully examine all of the treaty provisions, and reflect carefully on them. The Senate For- eign Relations Committee hearings will contribute in a valuable way to this process. Administration spokesmen, Defense establish- ment leaders, Members of Congress, and a variety of public wit- nesses will all have an opportunity to testify on the merits of the treaty proposals. I know that the committee will make a genuine effort to listen to all interested parties and make every effort to obtain all points of view on this highly controversial issue. The committee will, in turn, be expected to pass on its own recommen- dations to the full Senate for final consideration and judgment. SEEK OUT INFORMATION All of us have a responsibility to become as well-educated as possible on all aspects of the Panama Canal issue. Now that the treaty drafts are available for inspection, we should actively seek additional information and advice from a variety of sources. A well-informed public can provide guidance during our deliberations, as well as support for our decision once it is made. Because I believe the American people deserve the opportunity to hear the full range of arguments for themselves, I have already suggested to the majority leader that Senate debate on the Panama Canal trea- ties be televised. Television coverage would place the treaty issues 221 before a far greater number of our citizens, and enable them to better understand and participate in the decisionmaking process. At all times during the weeks ahead, we, in the Senate, must be attentive to any new developments which may bear upon the treaty issue. I am thinking at this moment of reports last week that surveillance activity may have taken place during the treaty negotiations. The Senate Intelligence Committee, after conducting hearings on the matter, concluded that our treaty negotiators had not been compromised in any way by the disclosures. But I raise this matter to make a point: No matter what our predisposition toward the treaties may be, all of us should remain receptive to updated information on the treaty matter as it becomes available. During the past several weeks, I have made an active effort to familiarize myself with all points of view on the matter. I have discussed the treaties with President Carter, former President Ford, and Governor Reagan, and I received a detailed briefing on both treaties by the State Department. I have deliberated upon the provisions of both treaties and consulted with respected members of the academic and professional community. Having now had the opportunity to carefully consider the background, the context, and the details of the treaty proposals, I have arrived at certain conclu- sions. In order to express my observations and concerns about the treaties, I will today introduce several proposals for their modifica- tion. TREATIES UNACCEPTABLE I cannot support the two Panama Canal Treaties in their present form. Both the basic treaty, and the treaty concerning permanent neutrality contain omissions and defects which make them unac- ceptable, in my opinion. In order to focus attention upon these weaknesses, particularly for the benefit of forthcoming Senate hearings, I am proposing two reservations and six amendments to the treaty language at this time. The U.S. Constitution gives this body the power of "advice and consent" over international treaties concluded by the President with foreign heads of government. As such, we have the constitu- tional obligation to scrutinize these treaties for their impact on our national interest, and to identify the defects or omissions. On 16 occasions in our Nation's history, the U.S. Senate has directly rejected treaty proposals submitted by the President. In 38 other instances, the Senate has attached reservations or amendments which ultimately led to the demise of proposed treaties. The modifications I propose would, in my opinion, better protect the Nation's vital interests and substantially improve upon these documents. Hopefully, the Senate Foreign Relations Committee will solicit testimony on each of these points, and the full Senate will later have an opportunity to consider them. NO RESTRICTIONS ON LOCATION OF NEW CANAL My first amendment will insure that the United States is not committed in advance to refrain from constructing a new sea-level canal, at some point in the future, in a country other than Panama. Article XII of the basic Panama Canal Treaty would, in fact, bind the United States to construct such a canal in Panama if 222 it should be determined that a modernized canal is desirable in Central America. Yet, there is no commitment on the part of Panama to agree to permit construction of the canal; we are only prevented from constructing one elsewhere. I do not suggest that we rush right down and build a new canal in Central America. That project may or may not be vital to U.S. defense and economic interests at some point in the distant future. The President has been talking a good deal lately about a new sea- level canal, but I suspect that the vast majority of American people will want to know first why we are giving up one canal in order to build another, which I understand may cost as much as $7 billion. This very logical question acquires all the more significance when we talk about building a new canal in the same country that is now demanding possession of the old one. Whether or not Panama is the best location for construction of a sea-level canal is really not the immediate issue. The central ques- tion is whether the United States should bind itself, by this treaty, to foreclose all options with respect to a new canal. We have no idea at this point how cooperative the Panamanian Government will be in observing the provisions of the present treaty. We have no idea what the nature of a future Panamanian Government may be. Because this is a question that could bear directly on American defense and economic interests, it is vital that it be given careful attention. My amendment will strike that section of article XII which would foreclose our options, and substitute in its place a clause specifically rejecting any restrictions on U.S. negotiations with other countries for the right to construct a new canal some- where in the Western Hemisphere. In my opinion, it is absolutely necessary that this freedom of choice is maintained. REDUCE PAYMENTS Probably no other aspect of these treaties causes as much con- cern among so many Americans as the payment provisions out- lined in article XIII of the basic treaty. This "pay-away" plan is an enigma— are we providing rent, ransom, or conscience' money? The United States currently pays the Panamanian Government an annuity of $2.3 million. Article XIH would raise those payments to between $70 and $80 million per year— a windfall by any stand- ard, particularly when we consider the value of real estate and equipment that will be transferred without charge to the Panama- nian Government under the treaty terms. In addition, our Govern- ment agrees to negotiate an economic loan package amounting to as much as $345 million. According to calculations by Panama's own economic policy min- ister, the total amount of anticipated U.S. financial aid may reach as high as $2.26 billion over the next 23 years, amounting yearly to more than 20 percent of Panama's annual national budget. CUT PAYMENT IN HALF The amendment I am proposing would reduce the payments provided in article XIII by more than one-half. First, it would reduce Panama's share of the canal's annual operating revenues 223 from 30 cents per net ton to 15 cents per net ton for each vessel transiting the canal. Second, it will eliminate altogether the bienni- al adjustment of this rate according to changes in the U.S. whole- sale price index, which, frankly, I have never totally understood why that was a provision in any event, but it is mandated in the treaty. Finally, my amendment will strike that provision supplying Panama with "up to" $10 million per year depending upon rev- enues. Although this provision is billed as contingent upon the profitability of the canal in any given year, it in fact guarantees payment of the full annuity "from operating surpluses in future years" whenever annual revenues are insufficient. With implementation of this amendment, the Panamanians are still provided a fixed annual annuity of $10 million, plus an equita- ble share of canal revenues, plus eventual receipt of U.S. loans and zonal property. No one can seriously dispute the generosity of this arrangement. Yet, it is far more rational and equitable in terms of compensation for our continuing primary role in using and operat- ing the canal until the year 2000. NO PAYMENT IF CANAL IS CLOSED In addition, my amendment provides that the fixed annual annu- ity shall cease during any period in which the canal is inoperable. It would be unfair and irresponsible to continue that payment during a time in which the canal is closed, whether due to natural catastrophe, functional breakdown, or intentional sabotage. We almost certainly would be expected to bear the major economic burden of reopening the canal in any such instance, and it simply does not make sense for us to continue paying Panama for a passage route that is temporarily nonexistent. The present treaty makes no provision for such a contingency, and the United States must be protected on this point. EXTENSION OF TRANSITION PERIOD FOR JURISDICTIONAL ARRANGEMENTS In accordance with the intent of article XI of the basic Panama Canal Treaty, to provide for an "orderly transition" of jurisdiction over the Canal Zone, my amendment would extend the period for transfer of certain jurisdictional arrangements. This treaty is being marketed by the administration as a "23- year" transition document, with the superficial implication the United States will maintain principal control over the Canal Zone and canal until the year 2000. In fact, a careful reading of the treaty provisions suggests that this concept is largely fictional. In effect, this is not a 23-year transition treaty: It is a 30-month transfer of title. Article XI provides that the Republic of Panama shall regain full jurisdiction over the Canal Zone as soon as the treaty enters into force, and a complete transfer of U.S. judicial, administrative, and regulatory authority will be accomplished within 30 months. After that, U.S. citizens will be subject to Panamanian law, and subject to Panamanian civil and criminal justice as well. 224 I believe that a transfer of this magnitude in such a short period of time will not constitute "orderly transition." In effect, the provi- sion will tend to drive Americans out of Panama. We may see a mass exodus of U.S. engineers and other canal personnel within the next 2Vfe years. In order to provide for a more gradual phaseout of U.S. authority over Americans employed in the area, my amendment would permit the Panama Canal consultative committee to study the issue after the treaty takes effect and, with the benefit of actual experience, make a recommendation as to when the period of tran- sition should formally end. However, in no case will this be prior to January 1, 1990. This date coincides with transfer of the adminis- tration of the Panama Canal Commission from United States to Panamanian leadership. It is only logical that primary U.S. author- ity over both the canal and the Canal Zone should expire at ap- proximately the same time. By the same token, we will allow for a more orderly and gradual phase-out of American employees in the area, and of judicial and administrative control over them. The amendment would not alter the theoretical return of "sover- eignty" over the Canal Zone to Panama on the date the treaty comes into force. However, it would provide for the more practical arrangement of gradually phasing out U.S. jurisdiction over its own citizens in the former Canal Zone area. HUMAN RIGHTS For an administration which has made the subject of human rights a basic element of its foreign policy, particularly toward Latin America, the White House has been remarkably silent on the issue with respect to the Panama Canal negotiations. Yet, I believe this is an issue that should not be ignored. In the interest of moral principle, as well as consistent policy, it is important that we address the subject of human rights observance within Panama for both Panamanian and United States citizens. There are several very important reasons why we have the obli- gation as a nation to pursue this point. First, U.S. employees will remain for a time in what was formerly the Panama Canal Zone. Under the terms of the treaty proposed by this administration, American citizens will become subject to both civil and criminal jurisdiction of the Panamanian Government at the end of a 30- month transition period. We have a responsibility to see that their basic rights are at all times strictly observed and fully protected. Second, we are effectively expanding the territory under the direct control of Gen. Omar Torrijos and his regime. In ratifying this treaty, we are strengthening the political and economic power of the Torrijos government. As such, I think we have both a responsi- bility and a right to insist upon a better observance of the basic human rights of Panamanian citizens, as a condition of this treaty. The Carter administration has not hesitated to exercise this condi- tion with regard to aid proposals for Brazil, Argentina, Uruguay, and other Latin American nations to the point of straining diplo- matic relations. The Acting President pro tempore. The Senator's 15 minutes have expired. 225 Mr. Dole. May I have 2 additional minutes? Mr. Robert C. Byrd. Mr. President, who is the next Senator to be recognized under the special order? The Acting President pro tempore. The Senator from Rhode Island (Mr. Chafee). Mr. Chafee. Mr. President, the Senator from Kansas is certainly entitled to have 2 minutes of my time. The Acting President pro tempore. The Senator may proceed for 2 minutes. Mr. Dole. I thank the Senator from Rhode Island. Interestingly enough, the State Department itself has refused to give the Panamanian regime a clean bill of health with regard to the observance of human rights. In a report prepared by the De- partment and submitted to the Senate Subcommittee on Foreign Assistance in March of this year, the State Department shed light on the repressive conditions in the country. The report notes that "Political opposition is not tolerated. The media are monitored by the Government." We are told Panamanians "generally" are as- sured of judicial redress where criminal charges are concerned, but "the guarantee of a fair trial might not be observed in a case with important political considerations." A human rights survey conducted by "Freedom House" in New York is consistent with these observations. On a scale of 1 to 7, with 7 representing the lowest level of observance, the Government of Panama ranks 7 in extent of political rights, and 6 in extent of civil rights. In its comparative survey of freedom issued in January of this year, Freedom House characterizes the nation of Panama as "not free" and indicates the outlook for a change in these repres- sive conditions is unlikely. Why, then, have we ignored the human rights issue altogether while confronting the persistent demands of General Torrijos? The Latin American correspondent for the Chicago Daily News recently reported that the response she received to this question by a high ranking State Department official was — Of course, we are not going to challenge human rights in Panama because we want the treaty. I am concerned about these authoritative reports of political repression within Panama, as I know many of my colleagues are. I am concerned as well about additional allegations of torture, murder, and severe punishment communicated by concerned groups of Panamanians. My amendment would insist upon Pana- maanian protection for the human rights of all those living and working in the former Canal Zone. My reservation would condition treaty ratification on the under- standing that the Panamanian Government will make "significant progress" toward observing the human rights of all its citizens during the basic treaty period. Both modifications will also encour- age onsite investigations of alleged repression by respected interna- tional organizations. TRANSFER OF CANAL ZONE PROPERTY My second reservation would reaffirm the constitutional respon- sibility of the House of Representatives to participate in transfer of 29-400 0-78-1* 226 ownership of the Canal Zone territory. Article IV, section 3, para- graph 2 of the U.S. Constitution reads: The Congress shall have power to dispose of and make all needful rules and regulations respecting the territory or other property belonging to the United States; and nothing in this Constitution shall be so construed as to prejudice any claims of the United States, or any particular State. U.S. title to the Canal Zone property has been affirmed on sever- al occasions by the highest courts in our land. In 1907, the Su- preme Court, by unanimous decision, confirmed our clear title to the Canal Zone property: It is hypercritical to contend that the title of the United States is imperfect, and that the territory described does not belong to this Nation because of the omission of some of the technical terms used in ordinary conveyances of real estate. (Wilson v. Shaw 204 U.S. 24). That unanimous Supreme Court decision affirming U.S. sover- eignty over the Panama Canal Zone still stands as a law of our land, and was reaffirmed by the U.S. Court of Appeals decision in 1971 United States v. Husband R. Roach, 453 F. 2d 1054, 1057), where the court said: The Canal Zone is an unincorporated territory of the United States. Both of these cases clearly reaffirm the fact that the Canal Zone is "territory" of the United States. Consequently, not only two- thirds of the U.S. Senate but a majority of the U.S. House of Representatives must approve the proposed treaties as well. As a footnote to the issue of whether or not the United States can clearly claim title to the Canal Zone territory, it should be pointed out that our Government actually made payment to indi- vidual property owners at the time the original treaty was promul- gated. Besides the initial payment of $10 million to the Panama- nian Government, the United States paid approximately $4 million for acquisition of property from ownerships that existed in the Canal Zone area. We paid over $300,000 to the French for land rights they already possessed in that region. So I think there is little question that we currently have clear title to this territory. As such, both Houses of Congress must participate in its transfer, and my second reservation will make this a precondition to enforcement of this treaty. UNILATERAL U.S. MILITARY INTERVENTION I propose to amend article IV of the treaty concerning the per- manent neutrality and operation of the Panama Canal, by adding a provision specifically guaranteeing our authority to intervene mili- tarily on behalf of the canal whenever we determine its neutrality to be threatened. In my opinion, this amendment is absolutely necessary to the protection of our national security interests. We cannot count on Panamanian concurrence in every instance where we may perceive the operation of the canal to be in jeopardy. For all we know, the Panamanian Government itself may be conscious- ly or unconsciously a part of that threat at some point. The administration has sought to reassure the American people that this treaty, by implication, assures that the United States can unilaterally intervene in the defense of the canal whenever neces- 227 sary. I see nothing in article IV or in any other section of the treaty which specifically guarantees that prerogative. In fact, in a Panamanian radio broadcast on August 24, Panama- nian negotiator Escobar Bethancourt maintained just the opposite: The pact does not establish that the United States has the right to intervene in Panama. This word was discussed and eliminated, and what is stated is that Panama and the United States will maintain the neutrality of the canal. What is the meaning of "will maintain?" In practice, the meaning of "will maintain" is that, if neutrality is ever violated, Panama on one hand and the United States on the other, or the two countries jointly, will determine how they will guard the canal against such a violation. • • • the neutrality pact does not provide what the United States will say when neutrality is violated. If this is, in fact, what the article say — and I would say that Panamanian interpretation is at least 50 percent of the defini- tion — then this is an unacceptable accord and should be either modified or rejected by the U.S. Senate. Regardless of how the State Department may choose to interpret this or that clause in the treaty, the point is that U.S. authority to intervene should be made crystal clear to the Panamanians within the treaty itself. My amendment would provide the necessary modification. GUARANTEE U.S. WARSHIPS PRIORITY PASSAGE This amendment relates to article VI of the treaty concerning the permanent neutrality and operation of the Panama Canal. The article guarantees that United States and Panamanian vessels of war will be entitled to transit the Panama Canal "expeditiously" at all times. At face value, this is a reassuring provision, given the importance of the canal to our national security interests. We can assume that the term was included because our negotiators recog- nized the vital security implications of the canal and felt it impor- tant to imply a special right of passage. Now, some proponents of the Panama Canal treaty have tried to convince us that the canal is no longer vital to our national securi- ty interests. I do not agree with that point of view, and we have certainly seen some persuasive comments from those most knowl- edgeable about our naval operations that support the canal's con- tinuing importance. It just seems to me that, by including the term "expeditious passage," the treaty drafters admit to an immediate defense interest by our Government. But, it is imperative to get a precise interpretation for that term. To be more specific, I have to wonder why the treaty negotiators did not use term "priority" or "privileged" passage for United States and Panamanian warships, if that is in fact what the con- cept is supposed to be. My skepticism on this point was heightened recently when I became aware of a Panamanian radio broadcast on August 24, in which the Panamanian Minister of Information and chief negotiator, Escobar Bethancourt, gave the Panamanian Gov- ernment's interpretation of the term. Senor Escobar explained that: Expeditious passage does not mean privileged passage. As a matter of fact, the concept of privileged passage was rejected * * * if after examining the provision the gringos with their warships say, "I want to go through first," then that is their problem with the other ships waiting there. We cannot go that far." 228 It is readily apparent, then, that the Panamanians do not under- stand expeditious passage to mean that U.S. warships would re- ceive priority, even during a period of crisis. In effect, the Panama- nians intend to interpret the concept in this way: If there is a line of ships waiting to pass through the canal, the U.S. warships must get in line with the others and wait their turn. I do not believe that America's security can, or should, depend on traffic circum- stances on any given day. Our naval defense could be thwarted by a bottleneck. My amendment would specifically amend article VI to stipulate that, during a period of crisis, American vessels of war and their auxiliary vessels will be entitled to privileged passage through the canal. I believe this is an equitable arrangement, and certainly the only one that our country can accept in consideration of national defense, Latin American defense, and defense of the free world. POINTS OF CONCERN The foregoing represents some of my principal concerns about these treaties. Specialists on the subject have identified these as- pects as among the greatest weaknesses in the treaty proposals, although there are a number of other deficiencies that can and should be addressed. The forthcoming Senate committee hearings are intended to shed some light on all of these problems. There is no question in my mind but what a number of modifications will eventually be proposed by various members of the Senate, and I may offer additional amendments or reservations myself after fur- ther analysis of the treaties has been conducted. Furthermore, the specific concerns expressed by our constituents should be fully represented at every stage of deliberation on the treaties. NO APOLOGIES In closing, I want to say that the people of the United States owe Panama no apologies for our involvement with the canal. The generosity of our Government in building the canal, in operating and maintaining it for 65 years, and in thereby enhancing the standard of living for Panamanians, requires no remorse on our part. Free of any implications of guilt, we should proceed to ana- lyze these treaties in an objective and responsible manner. But the Panamanian Government officials must know that we will never relinquish our presence in the Canal Zone because of veiled threats or direct pressures. They must know that we reserve all rights to intervene when the security of the canal is threatened, and that we expect priority passage for our ships during periods of crisis. And they must be told that we expect to see substantial progress in the area of human rights in which they rate so poorly. Above all, we do not intend to pay exorbitant amounts of money for the purpose of turning over control of the canal and Canal Zone. My amendments and reservation will effectively communi- cate these messages, at the same time that we consider the basic merits of the treaties themselves. We should settle for nothing less. Mr. President, I ask unanimous consent that the texts of my amendments and reservations be printed in the Record at the conclusion of my remarks. 229 The Acting President pro tempore. Without objection, it is so ordered. (See exhibit 1.) Mr. Dole. As I say, Mr. President, we have no apologies to make. The United States does not owe Panama or anyone else any apolo- gies for our involvement with the canal. We have been generous; we have operated and maintained the canal for 65 years; and we have enhanced the standard of living of the Panamanians. Certainly there are areas of agreement and disagreement, and it may be modifications should be made. I just suggest that the amendments and reservations offered by the Senator from Kansas be carefully considered. As indicated, there will be others, but I hope I have responsibly addressed some of the major defects in the treaty submitted to Congress. I yield back the remainder of my time. Exhibit 1 Amendment No. 1. (Exec.) 95-1 Paragraph 2(b) of article XII is amended to read as follows: (b) During the duration of this Treaty, the United States of America may negotiate with any third State for the right to construct an interoceanic canal through such third State on any other route in the Western Hemisphere. Amendment No. 2 (Exec.) 95-1 In article XIII, paragraph 4, strike out subparagraphs (a), (b), and (c), and insert in lieu thereof the following: (a) An annual amount to be paid out of Canal operating revenues computed at a rate of fifteen hundredths of a United States dollar ($0.15) per Panama Canal net ton, or its equivalency, for each vessel transiting the Canal, after the entry into force of this Treaty, for which tolls are charged. (b) An annuity of ten million United States dollars ($10,000,000) to be paid out of Canal operating revenues and as an expense of the Panama Canal Commission, except that such sum shall be reduced by the proportion which the number of days during the calendar year the Canal is not navigable bears to the calendar year. Amendment No. 3 (Exec.) 95-1 In the second sentence of the first paragraph of article XI, strike out "for thirty calendar months" and insert in lieu thereof 'until such date as is agreed upon by the members of the Panama Canal Consultative Committee, but not before January 1, 1990". In paragraph 2 of article XI, amend subparagraph (a) to read as follows: (a) The authorities of the United States of America shall have the primary right to exercise criminal and civil jurisdiction over employees of the Panama Canal Commission who are citizens of the United States and their dependents, and mem- bers of the United States Forces and civilian component and their dependents, in the following cases: In paragraph 2(aXi) of article XI, strike out "offense committed" and insert in lieu thereof "act or omission". In paragraph 2(aXii) of article XI, strike out "offense committed" and insert in lieu thereof act or omission". In the text following clause (ii) of paragraph 2(a) of article XI, strike out "offenses committed" and insert in lieu thereof "acts or omissions". In the annex entitled "Procedures for the Cessation or Transfer of Activities Carried out by the Panama Canal Company and the Canal Zone Government and Illustrative List of the Functions that may be Performed by the Panama Canal Commission", strike out paragraph 4(b) and insert in lieu thereof the following: "(b) Upon termination of the transition period provided for under article XI of this Treaty, governmental services such as: "(i) Police; 230 "(ii) Courts; and "(iii) Prison system. Amendment No. 4 (Exec.) 95-1 At the end thereof, add the following: Article XV HUMAN RIGHTS 1. The United States of America and the Republic of Panama agree on the importance of maintaining and properly observing internationally recognized human rights, including civil and political rights, in the former Canal Zone and commit themselves to maintaining, observing, and protecting such rights during the duration of this Treaty. 2. The Panama Canal, Consultative Committee shall report annually to the nation- al legislatures of the two Parties on the maintaining, observing, and protecting of such rights. 3. The two Parties agree to permit unimpeded investigations of alleged violations of internationally recognized human rights, including civil and political rights, by appropriate international organizations including, but not limited to, the Interna- tional Committee of the Red Cross, Amnesty International, the International Com- mission of Jurists, and groups or persons acting under the authority of the United Nations or the Organization of American States. In article V, strike out the second sentence. ' Amendment No. 5 (Exec.) 95-1 At the end of article rV, add the following: "Nothing in this Treaty may be construed to prevent the United States of America, in accordance with its constitu- tional processes, from intervening militarily to maintain such regime of neutrality when determined to be seriously threatened by the President of the United States of America or, through the adoption of a concurrent resolution, by the Congress of the United States of America.". Amendment No. 6 (Exec.) 95-1 Before the period at the end of the first paragraph of article VI, insert a comma and the following: "except that the Republic of Panama shall, upon request, afford privileged passage through the Canal to such vessels of the United States of Amer- ica during any period in which the United States of America is at war". Reservation No. 1 (Exec.) 95-1 Before the period at the end of the resolution of ratification, insert a comma and the following: "and subject to the following reservations: "(1) that the Republic of Panama demonstrate, during the duration of this Treaty, significant progress toward observing the internationally recognized human rights of its citizens, including the right of free speech and the right to a fair trial; and "(2) that the Republic of Panama permit unimpeded investigations of alleged violations of internationally recognized human rights by appropriate international organizations including, but not limited to, the International Committee of the Red Cross, Amnesty International, the International Commission of Jurists, and groups or persons acting under the authority of the United Nations or the Organization of American States '. Reservation No. 2 (Exec.) 95-1 Before the period at the end of the resolution of ratification, insert a comma and the following: "and subject to the reservation that before the date of entry into force of this Treaty, the Congress has adopted appropriate legislation to transfer the Canal Zone to the Republic of Panama, in exercise of the power of Congress under article IV, section 3, clause 2 of the Constitution, relating to the disposal of territory or other property belonging to the United States". 231 The Acting President pro tempore. Under the previous order, the Senator from Rhode Island (Mr. Chafee) is recognized for not to exceed 13 minutes. THE PANAMA CANAL TREATIES Mr. Harry F. Byrd, Jr. Mr. President, the able syndicate colum- nist, Henry J. Taylor, a former U.S. Ambassador to Switzerland, raised some serious charges concerning Cuban intervention into Panama and the possibility of guerrilla infiltration from Costa Rica and Colombia. I have no way of knowing if these charges are accurate, but I believe that they should be thoroughly investigated during the Senate hearings which will soon be held on the matter of the proposed Panama Canal treaties. I ask unanimous consent that excerpts from Mr. Taylor's column be printed in the Record. There being no objection, the excerpts were ordered to be printed in the Record, as follows: Communists Welcome Panama Canal Treaty (By Henry J. Taylor) President Carter has foolishly laid his prestige on the line for ratification of the new Panama Canal treaty. This blunder may not be as great as, say, Hitler attack- ing Russia, but it will do for openers. The real question is not the surrender of U.S. control of the Canal versus Commu- nist control. The real question is U.S. control versus Communist control. It should be debated on that basis — for this is the stark reality. The global strategic importance of the Panama Canal in U.S. hands is self- evident. Our Joint Chiefs of" Staff, beholden to President Carter, have been corralled behind the proposed treaty. But six former Chiefs of Naval Operations [the No. 1 men in our Navy] publicly oppose this give-away. As for Latin America, a full 80 percent of Peru's and Chile's imports and exports pass through it. The dependency is equivalent along the entire Pacific side of the South American continent • • • The Latin American Communists welcome President Carter's new treaty with the forebearance of a hungry shark. Fidel Castro's guerrilla fleet is moving armed fighters into Panama from La Colma, Cuba. Air deliveries are from a heavily guarded air base at San Julian, 90 miles southeast of Havana. The propaganda support is sparked from Castro's powerful Russian-built radio station on Cuba's Kay peninsula. Costa Rica borders on Panama. Castro has installed there Havana-based Costa Rican Communist Julio Sunol. And Castro's resident agent in Panama itself is Communist Thelma King. She won her spurs in 1964 when four U.S. soldiers were killed in the riot in our Canal Zone. Thelma King herself led the rioters into the U.S. Canal Zone and boasts of killing these U.S. soldiers. Nicaragua except for the U.S. 10-mile-wide Zone, is the only zone of stability in the entire area. President Anastasio Somoza Debalye told me that Castro has made 22 armed attempts to invade Nicaragua. Moreover, the Republic of Panama is directly threatened on its two frontiers by Communist guerrillas. How can President Carter ignore the fact that Panama borders on chaotic Costa Rica and Colombia? Is it news to President Carter that imported Red guerrillas are active in nearby El Salvador? Can he forget the Red-instigated insurrections in neighboring Guatemala and Honduras? The Republic of Panama itself is a political jungle. Demagogues' tirades light a contrived fuse under Panamanian emotions and serve to district the Panamanians from so much that should be done. 232 Panama is blessed with an amazing amount of rich, arable land — as rich as Iowa's best farmland. But less than half is under cultivation. Panama's true need is for better agriculture, animal husbandry and light industry. It's easy for nearly any politician to roar against the United States, "Yankee Imperialism," "The Yankee Dollar," etc.— and bite the only hand that feeds Panama. 233 [From the Congressional Record— Senate, Sept. 24, 1977] REFERRAL OF A RESOLUTION CONCERNING TELEVISION AND RADIO COVERAGE OF THE PANAMA CANAL TREA- TIES DEBATE Mr. Robert C. Byrd. Mr. President, I offer a resolution on behalf of the distinguished minority leader and myself, and I ask simply that it be stated and referred in the normal course of things, and printed. The Acting President pro tempore. The clerk will report. The legislative clerk read as follows: S. Res. 268 Resolved, That the Committee on Rules and Administration be and is hereby authorized and directed to provide for radio and television coverage (including the making of videotapes) of proceedings in the Senate Chamber during consideration of the Panama Canal Treaty and the Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal, both signed at Washington, D.C., on September 7, 1977. Such coverage shall be provided for continuously at all times while the Senate is considering the Treaties, except for any time when a meeting with closed doors is ordered. Sec. 2. The radio and television coverage of proceedings in the Senate Chamber, and the videotapes of such coverage, provided for in the first section shall be made available to public and commercial radio and television broadcasting stations and networks under such terms and conditions as the Committee on Rules and Adminis- tration may prescribe. Sec 3. The radio and television coverage of proceedings in the Senate Chamber under this resolution shall be carried out in such manner as the Committee on Rules and Administration shall prescribe. Mr. Robert C. Byrd. Mr. President, we recently witnessed an historic occasion upon the signing of the Panama Canal Treaties by President Carter, on behalf of the United States, and President Torrijos, on behalf of the Republic of Panama. After 74 continuous years, these treaties would cause a signifi- cant change in that status. This is certainly a major change in the relationship of the United States and Panama and in the event the treaties are ratified, and it would be one that would have generat- ed widespread interest among the citizens. Over the course of the next several weeks, the President and the administration will make major efforts to advise the public on the results and the ramifications of the treaties, if ratified. I compliment the President for the effort he will expend in this regard, and I say this without implying what position I may take or how I may vote. Certainly, however, one of the most crucial needs we in the Congress will have in making our determination — we in the Senate will have in making our determination — is to know how our indi- vidual constituencies and the American public as a whole feel about the treaties. Only if the public is fully informed in this regard will they be able to impart the benefit of their wisdom to us. In order to continue the process of imparting information on both sides of the issue, the public should be informed of the delib- erations that will take place in the Senate. Woodrow Wilson said that one of the most important functions of the Senate was the informing function, and that is one of the 234 reasons why I believe the hearings of the Committee on Foreign Relations should be televised, and it is my understanding that they will be televised. It is also important that, following the hearings, which will begin shortly, and the record which will be made therefrom, we in the Senate can have access to that record of hearings and begin to base our own conclusions on the facts that are adduced in the course of those hearings. I personally want to go to Panama, after the Senate adjourns, and see with my own eyes and hear with my own ears what is to be seen and heard in the interest of making my own decision in that regard. I have today, as I have said, introduced this resolution, and the distinguished minority leader and I have joined in sponsoring it and calling for television and radio coverage of the deliberations and voting which will take place in the Chamber of the Senate of the United States. I hope this resolution can be considered and approved by the committee to which it has been referred in due time, and if it is approved, preparation then can go forward for such televising and other publication by the media to the American people. Mr. Baker. Mr. President, I congratulate the majority leader for proposing this resolution and for his statement in support of it. I am pleased to cosponsor it with him. There are few issues that have come before the Senate in the almost 11 years that I have served here that are of greater conse- quence and of more importance, not only to the people of the United States, but, in fact, to much of the world. It is important that we proceed carefully in our deliberations and judgment, in our exercise of the coordinate jurisdictional authority granted to the Senate by the Constitution in matters of foreign policy, particularly the ratification of treaties. I, too, have not made up my mind on how I will vote on the treaties or what action I may take in respect to them. I am a member of the Committee on Foreign Relations, and I intend to participate fully in those hearings, and energetically I intend to try to develop a record and to contribute to it according to whatever talents I may possess, to test the testimony of witnesses as that may be appropriate or desirable. But mostly, I intend to function in my capacity and under my responsibility as a Senator exercising the unique and special responsibilities the Senate has in foreign policy. But in doing so I want, indeed I need and I greatly desire, the advice and consent of the country because I am mindful, as I have said on other occasions, that America has been remarkably right in her major decisions, not because she has had great leaders always, although she has had more than her share, but because the people of the United States in their collective judgment and wisdom have been remarkably right in their judgments and deter- minations. It is the very essence of the congressional system that the public is informed, that it has access to and is aware of our deliberations and proceedings. 235 In this age of electronic media, of instantaneous communication, I believe it is our responsibility to broaden, to extend, and to elaborate the access of the public to our deliberations. So, Mr. President, I think the time has come in having some- thing of a significant departure from the past, and that is to present these deliberations in this body through the electronic media, as well as the writing press, as we proceed to make a judgment of such fundamental importance that we dare not do less than our best. Mr. Robert C. Byrd. I thank the distinguished minority leader for his comments and for his joining with me in the introduction of this resolution. Mr. Thurmond. Mr. President, will the distinguished Senator yield? Mr. Robert C. Byrd. I yield. Mr. Thurmond. As I understand it, the resolution that has been introduced would provide for television in the Senate Chamber; is that correct? Mr. Robert C. Byrd. Yes. Television and radio coverage. Mr. Thurmond. The distinguished Senator referred to the For- eign Relations Committee. Does this resolution cover the Foreign Relations Committee hearings, also? Mr. Robert C. Byrd. The resolution only covers the Senate debate in the Chamber. Mr. Thurmond. That is what I was thinking. I guess that would be left to each committee chairman as to TV in the committees, would it not? Mr. Robert C. Byrd. Yes. Mr. Thurmond. The Armed Services Committee, I believe, is planning some hearings, also, and I would think that probably if the Foreign Relations Committee is going to have TV the Armed Services Committee may want TV also. I have no objection to the resolution. I think it is a fine idea. Mr. Robert C. Byrd. I thank the distinguished Senator from South Carolina. Mr. President, I ask unanimous consent that any Senators who may wish to join the distinguished minority leader and me in cosponsoring the resolution to which we have just alluded may have the privilege of doing so before the resolution is printed, so I would ask that they have until 3 p.m. on Monday to add their names. The Acting Presuoent pro tempore. Without objection, it is so ordered. Mr. Abourezk. Mr. President, I wish to be added as a cosponsor. Mr. Thurmond. Mr. President, I wish to have my name added as a cosponsor. Mr. Huddleston. I wish to have my name added as a cosponsor to the resolution. Mr. Robert C. Byrd. I thank the distinguished Senators. Mr. President, I ask unanimous consent that Mr. Abourezk, Mr. Thurmond, and Mr. Huddleston be added as cosponsors. The Acting President pro tempore. Without objection, it is so ordered. 236 [From the Congressional Record— Senate, Sept. 26, 1977] SENATE STATESMANSHIP AND THE PANAMA CANAL TREATIES Mr. Cranston. Mr. President, John Averill, veteran Capitol Hill reporter for the Los Angeles Times, wrote an excellent article over the weekend about Senate prospects for the Panama Canal Trea- ties, which also appeared in the Sunday Washington Post. I want to say that despite the excellence of the article, I emphati- cally disagree with an unidentified Senate aide whom he quotes as saying: I fear we won't see many statesmen around here when the vote comes. If correctly quoted, that unidentified Senate aide did a disservice to the Senate and a disservice to the advise-and-consent process of the Senate in connection with the Panama Canal Treaties. I have no desire to ascertain who that person may be. He may remain anonymous as far as I am concerned. I have, as my colleagues know, been working hard over the past several months to help steer the treaties through the Senate. I have probably talked, at one time or another, with well over two-thirds of the Senate about the treaties. So I think I talk from intimate, firsthand knowledge when I say that Mr. AvernTs anony- mous Senate aide is way, way off base. I do not believe I have ever seen in my years in the Senate such serious, careful deliberation on one issue by so many Senators. All are very much aware of the heavy crush of mail they are getting opposing the treaty, even though much of the mail is obvi- ously the result of an organized campaign rather than a spontane- ous outpouring from their constituents. Nonetheless, Senator after Senator I have talked with is clearly determined to find out all he can about pros and cons of the treaties and to make his final decision on the merits of the case. That is one of the reasons for the delay in the treaties coming to the floor. Most Senators have been following carefully the course of the debate so far — in the press and on the floor of the Senate. They will be following perhaps even more carefully the Foreign Affairs Committee hearings that begin today. They want time to read and to reflect on this vital national issue. They very correctly don't want to be rushed into a decision. And they will not be. Most of my colleagues know by now how strongly I feel about the treaties. The treaties are — in my view — essential to our Nation's national security interests in Latin America. But that is my view. Other Senators may disagree; some already do. But I have never had cause to question their motives or their sincerity. The burden is on those of us who favor the treaties to prove our case. This much I am already convinced of: That when the final vote for ratification comes, every Senator will be voting his conscience — and his sincere view of the national interest — and not his mail. 237 It may be a hard vote for some. While I see the merits of the case overwhelmingly in favor of the treaties, others may see it as rather a close call, one way or another. I respect that view. But win or lose, I am convinced the decision will be a decision of statesmen, of Senators who make up their own minds about right and wrong and who are not swayed — in a matter as vital as this — by outside pressures and fears about the next election. Indeed, they know that so-called conventional wisdom is often wrong, and that the voters are far more likely to reward courage, integrity, and the strength of a man's conviction. Mr. Robert C. Byrd. Mr. President, will the Senator yield? Mr. Cranston. Yes, I yield. Mr. Robert C. Byrd. Mr. President, I subscribe completely to what the distinguished majority whip has just said. I also want to say that I have very high regard for John Averill and the same high regard for the Los Angeles Times. Now and then statements of aides are allowed to color the stories in all publications. I want to say that the Senate has never been devoid of statesmanship, and it has never been devoid of coura- geous men. Whatever our viewpoints are, when the time comes for the Senate to show down on the issue, I have faith in the courage and the integrity of every Senator who will cast his decision. There will be those who will vote against, and there will be those who will vote for. I myself am keeping a completely open mind. I am determined that the Senate have an opportunity at some point to reach its decision, and I think that we owe it to the President and we owe it to the country, in the meantime, to have enough time to get over the emotional hump, lay out the facts, let Senators and the American people take a good look at those facts, and let Senators make their decisions on the basis of the facts that have been adduced. Now, there may be some Senators who have already decided one way or the other. I do not question their judgment, their integrity, their courage, or their dedication as being just as good and high as mine. But this business of basing a story on a Senate aide's obser- vations, I think, is a rather bad way to go about reaching a judg- ment as to what the Senate will do. We have to have our aides; we could not do without them. They perform a very important service to Senators and the Senate. But as far as I know, Senators are accessible to the press. The leadership on both sides of the aisle is very accessible to the press, and any time the press wishes to speak with the leadership or any Senator to get their viewpoints, we are accessible, and the press knows that. I would just hope that in a matter of such vital importance, either way one views it, if one is for the treaties or if one is against them, nevertheless it is a subject of such moment, such far-reach- ing significance, and such importance that Senators ought to be able to make up their own minds and have time to do so. I think they are capable of expressing their sentiments, they are capable of being statesmen, and they are capable of showing courage where courage is required. I have no doubt that the Senate will reach one of its finest moments when the time comes. 238 I am glad that the distinguished majority whip took the floor and the occasion to say what he said. I subscribe to it thoroughly. Let us be done with this business of Senate aides prognosticating and predicting what the outcome will be and how little courage there will be, and how devoid of backbone 100 Members of the Senate may be. I have absolute faith, confidence, and trust that this Senate will make the right decision when it is made, and I do not doubt any Senator's courage and dedication when it comes to the point of putting his country's interest first. All of us are politicians; there is no question about that. We all get heavy mail, many times on many subjects. In connection with some subjects more than with others, I think, a degree of states- manship is called for. But when it comes to something like the Panama Canal Treaty, watch the Senate. I dare say there will be many Senators who will cast votes that will cost them, politically, insofar as their constituents' support back home is concerned. We reach issues from time to time when, any way one votes, one is going to disappoint some constituents. I cannot satisfy all my constituents without voting two ways on the treaties — one for and one against. But each of us has only one vote and we all realize that. When the time comes to cast that vote, I believe that every Senator is going to cast his vote in what he sees as the best interests of the Nation. Partisanship should have no part in this matter, in my judgment, whether we are Democrats or Republi- cans, whether we are for or against. I hope that that, may I say to my friend from California, will help to supplement his fine statement. Mr. Cranston. That is a superb statement. I welcome it. I agree with every bit of it. I want to stress, as the majority leader did, my recognition of the right of the press and my respect for the ability of the press to cover our doings and what is said and done by the Senate. The Presiding Officer. The Senator's time has expired. Mr. Stevens. I shall be happy to yield a portion of our time to the Senator. Mr. Cranston. I specifically admire John Averill for ferreting out the Senate aide who gave him that quote to spice his article, along with all else he wrote. I do not admire the wisdom of that Senate aide at that particular moment. Mr. Allen. Will the Senator yield? Mr. Stevens. Yes, I yield some time. Mr. Allen. I commend the majority leaders for their statements. I, too, feel that there will be statesmanship shown by Members of the Senate on this issue. I might stress, too, that the side that the Senator votes on does not necessarily indicate whether he is a statesman or not. I think statesmen will appear on both sides of the issue. Mr. Cranston. Of course. Mr. Allen. I think there are pressures from many, many quar- ters that will be evident as this debate goes on. But I do not feel that only those who vote "aye" on the treaties will be regarded as statesmen. I think those who feel that it is in the best interests of the country to vote "nay" can, equally well, be regarded as states- men. 239 Then, too, I commend both leaders on stating that this matter will be allowed to be debated at length here in the Senate so that Senators can be fully informed and so that the Nation can be informed as to these issues. Speaking for myself, I assure the leaders that there will be no filibuster, as such, on this treaty. As soon as legitimate arguments have been made, and legitimate amendments to the treaties and the reservations have had an opportunity to be considered here, in the Senate, I shall certainly be ready to vote. I do feel that the treaty needs to be amended at a number of points, and there need to be reservations where amendments are not regarded as being a proper vehicle. But it should be debated at length and I am confident that there will be no obstructionist tactics used in connection with the treaty. While the debate will be extended, it will not rise to be a filibus- ter. I think that is the sentiment on both sides. Mr. Cranston. Will the Senator yield me 30 seconds? Mr. Stevens. Yes. Mr. Cranston. I want to say that I welcome the statement of the Senator from Alabama, and I assure him that, of course, I recog- nize that there are and will be statesmen on both sides of this issue. Mr. Allen. I might state that I plan to offer an amendment to the treaty that will leave the present treaty in full force and effect except as to the increase in the amount of annuity paid to Panama. If that amendment is adopted, that being the sole provision of the treaty, then I should be willing to support the treaty. But I think that is what we need to do here in the Senate. An amendment will be offered along that line, to raise the annuity, but let that be the only change in the treaties. Mr. Cranston. I look forward to statesmanlike debates on the merits of this case on another occasion. Mr. Robert C. Byrd. Mr. President, I thank the distinguished acting minority leader for his courtesy in yielding to us on this side. Mr. Stevens. I thank the majority leader. I am happy to cooper- ate. If the minority leader were here, I am sure he would echo the sentiments of the majority leader. For myself, I state again that this is no time for haste. I com- mend the majority leader for indicating that time will be taken to explore thoroughly all of the ramifications of these treaties and that the Senators will be given an opportunity to return to their homes to discuss the issues involved and to be part of the process of national education which must take place if these treaties are to be voted upon by an informed Senate. I even believe that it ought to be a duty of each Member of the Senate to go to Panama, to see what we are talking about, and to be fully informed of the total consequences of the approval of these treaties. That, in and of itself, will take time. If that time is taken, I think the final judgment of the Senate will be the proper one. If we have any further time, Mr. President, I yield it back. 240 THE PANAMA CANAL TREATIES Mr. Sparkman. Mr. President, today the Committee on Foreign Relations began an extension series of hearings to consider the Panama Canal treaties. Today the committee heard testimony from Secretary of State Cyrus Vance and our two negotiators for the treaties, Ambassador Ellsworth Bunker and Mr. Sol M. Linowitz. I ask unanimous consent that the statements of each be printed in the Record, I believe that these statements will be of interest to my colleagues and and other readers of the Record, in view of the intense interest in the treaties. There being no objection, the statements were ordered to be printed in the Record, as follows: Statement by Secretary of State Cyrus R. Vance on the Panama Canal Treaties Mr. Chairman, Members of the Committee: Today I seek your support for new treaties governing the Panama Canal. First, these treaties protect and advance the national interests of both the United States and Panama. Second, they provide for an open, neutral, secure and efficiently operated Canal for this hemisphere, and for other nations throughout the world. And third, they will promote constructive and positive relationships between the United States and other nations in this hemisphere. These treaties, in my judgment, will gain us respect among other nations of the world — both large and small — because of the responsible way they resolve complex and emotional issues which have been with us for most of this century. The treaties are the culmination of 13 years' work by four American Presidents of both major political parties, and their Secretaries of State. They are the outcome of patient and skillful negotiation since 1964 by a number of dedicated political leaders, diplomats, and military men. They have been achieved because of valuable counsel and support offered by members of this Committee and by representatives of American business and labor who have seen these new treaties as being in their own interest and in the larger national interest. They are, above all, a triumph for the principle of the peaceful and constructive settlement of disputes between nations. That is a principle we seek to apply in all aspects of American foreign policy. It is quite proper that this Committee, the Senate, and the American people should consider carefully the content and implications of these treaties. For they should not at some later time be made the subject of partisan or divisive debate. In my opinion, they should be beyond partisanship. They should now be examined in detail by this Committee, and by the nation. Basic questions are being asked— and should be asked— about them. These questions express the same concerns and goals that have been on our minds during the negotiations. Do these treaties safeguard our national security interest in the Canal? Do they establish a long-term basis for open and effective operation of the Canal? Do they enhance our relationships with nations of this Hemisphere? Do they place any new burden on the American taxpayer? Do American workers in the Canal Zone get a fair shake? And, without the treaties, what might happen? I am satisfied in my own mind that these questions have been properly answered, thanks to the skilled and hard bargaining by our negotiators. I will discuss these questions briefly this morning. LONG-TERM OPERATION OF THE CANAL The United States will control canal operations through a new U.S. government agency — the Panama Canal Commission— to be supervised by a board composed of five Americans and four Panamanians. The Commission will operate the Canal until the end of this century. The present Panama Canal Company will be discontin- ued. The United States will maintain responsibility for managing the canal, setting tolls, and enforcing rules of passage until the year 2000. Until the year 2000 the U.S. will also maintain primary responsibility for the defense of the Canal. After 241 that, the United States will have responsibility to maintain the permanent neutral- ity of the Canal to assure that it will remain open to our ships, and those of all other nations on a nondiscriminatory basis. The treaties further allow for the modernization of the Canal through construc- tion of a third lane of locks and foresee the possibility of construction in Panama of a new, sea-level canal. This would provide access for many modern super-tankers and warships too large to pass through the present Canal. HEMISPHERIC RELATIONS I believe the ratification and implementation of these treaties will be the single most positive action to be undertaken in recent years in our relations with Latin America. Only last month, in Bogota, the democratic governments of Venezuela, Costa Rica, Colombia, Mexico and Jamaica issued a joint communique urging the United States and Panama to conclude the new treaties rapidly. For years, Latin American peoples and governments have viewed our negotiations with Panama over the Canal as a litmus test of our intentions toward their countries. The treaties, as negotiated, represent a fair and balanced reconciliation of the interests of the U.S. and Panama. They create a partnership under which our two countries can join in the peaceful and efficient operation of the Canal. They symbol- ize our intentions toward the Hemisphere. And they prove, once and for all, the falsity of the tired charges that we are imperialistic exploiters bent only on extract- ing Latin American raw materials and using the' continent for our own economic interests. NATIONAL SECURITY ASPECTS Representatives of the Joint Chiefs of Staff worked closely with the treaty negoti- ators on the security provisions, and played a major role in drafting the neutrality treaty. The United States will retain all military bases and facilities — all the lands and waters — that we require for the Canal's defense until the year 2000. We may keep the same force levels we now maintain in the zone — about 9300 — and can increase them if necessary. After the year 2000, as I indicated earlier, the United States will have a perma- nent right to maintain the Canal's neutrality, including the right to defend the Canal if necessary. Our warships are given the right to use the Canal expeditiously. Article IV of the Neutrality Treaty says: "The United States of America and the Republic of Panama agree to maintain the regime of neutrality established in this treaty, which shall be maintained in order that the Canal shall remain permanently neutral, notwithstanding the termi- nation of any other treaties entered into by the two contracting parties." This means there is no limit under the Treaty on the freedom of the U.S. to assure permanently the Canal's neutrality. THE ECONOMICS Under the treaties, Panama will receive payments which more fairly reflect the fact that it is making available its major national resource — its territory. But the treaties require no new appropriations, nor do they add to the burdens of the American taxpayer. The treaties provide that Panama will receive 30 cents per Canal ton for traffic transiting the Canal; a fixed annuity of $10 million per year; and an additional $10 million per year provided canal revenues permit. Panama would initially receive about $60 million per year under this formula, which will apply until the year 2000. All of these payments are to be made from Canal revenues. Panama will thus have a strong interest in insuring unimpeded and efficient use of the canal. We have agreed, outside the treaty, to certain arrangements which will assist the general economic development of Panama and enhance its stability. We have for- mally told the Panama Government that we are prepared to develop a program of loans, loan guarantees and credits to Panama— including up to $200 million in Export-Import Bank credits over a five-year period; up to $75 million in AID housing investment guarantees over the same period; and a loan guarantee of up to $20 million from the Overseas Private Investment Corporation. All the loans con- cerned require repayment. There are no grants. In addition, over a 10-year period, Panama will receive up to $50 million in foreign military sales repayment guaran- tees, so that its armed forces can be better prepared to help defend the Canal. Most of this assistance will be used to purchase American equipment. These programs would be subject to all relevant U.S. legal requirements and program criteria. 29-1*00 0-78-17 242 AMERICAN WORKERS IN THE ZONE Some 3,500 American employees of the Canal enterprise and their dependents live in the Canal Zone. Some have spent all their working lives there; most of these American workers will continue to be employees of the U.S. Government until their retirement. The treaties protect their basic conditions of employment. If they remain they will be free to continue living in government housing and to use the American schools and hospitals in the areas. Until the year 2000, the treaties guarantee American employees and their dependents basic civil rights, similar to those that apply in the U.S., in Panamanian courts, and other benefits and protec- tions similar to those enjoyed by other U.S. Government employees overseas. The AFL-CIO, which represents both Panamanian and U.S. workers in the Canal Zone, supports these treaties. WHAT IF THE TREATIES ARE REJECTED? It would be all too easy for me to emphasize today that if 13 years of effort were lost, and these treaties rejected, our relations with Panama would be shattered; our standing in Latin America damaged immeasurably; and the security of the Canal itself placed in jeopardy. Indeed, all of these things could and might happen if these treaties were not ratified. But that is not the major reason for supporting them. They deserve support because they are in our interest, as well as the interest of Panama. For the people and government of Panama, there is the knowledge that they, eventually, will assume full jurisdiction over their own territory. There are also the economic benefits to be gained from canal revenues, and from the guarantees, loans and credits— not grants— we have pledged to consider on their behalf. Panama, as a result, will be a more stable and prosperous country. For us, there is our knowledge that the Canal will be open, neutral, secure and efficiently operated, for our benefit and that of other nations in the world. We are not appropriating American taxpayers' money to accomplish this. And we will have gained respect throughout Latin America and the world for addressing this issue peacefully and constructively. It is our interest, not foreign pressures, that lead us to these treaties. OTHER QUESTIONS Let me address, very briefly, some doubts about the treaties that have been raised but can be dispelled as the facts become better known. We are asked whether the new treaties may encourage Panama to nationalize the Canal. But our new treaty rights would be no less binding than our rights under the existing treaty. Moreover, a Panama which is cooperating with us in canal manage- ment and will eventually exercise full managment responsiblity has no reason to seize or obstruct the Canal. Any Panamanian government will have an interest in preserving the treaties because the treaties are in the interest of Panama — as well as ourselves. These treaties reduce the chance of such an event. It has been suggested that the new treaties could diminish our ability to maintain the neutrality and security of the canal. But, in fact, the Joint Chiefs of Staff are satisfied that the treaties enable us to keep the canal open indefinitely. It has been suggested that we are "paying the Panamanians to take the canal away from us." But payments to Panama will come from canal revenues, not from American taxpayers. Finally, let me address briefly another question which has been raised: Human rights in Panama. The Panamanian government has in the past been charged with abusing the civil and political rights of some of its citizens. And we have discussed this issue with that government. The closer relations between our two countries that will grow out of the new treaties will provide a more positive context in which to express such concerns, should it be necessary in the future. Already, there are encouraging signs. On September 13 Panama invited the Inter- American Human Rights Commission to send a team to investigate human rights conditions in Panama. In addition, it has invited the United Nations to send observers to its plebiscite on the new treaties next month. At the same time, the Panamanian government has made continuing and real commitments to the economic and social rights of its citizens. Its economic develop- ment plans give priority to upgrading the housing, nutrition, health care and education of the ordinary Panamanian citizen. How we respond to an issue such as these Panama Canal treaties will help set the tone for our relations with the rest of the world for some time to come. 243 Both we, and others, are under considerable pressure in our domestic economies. There is a tendency toward economic protectionism. And there is question about the most appropriate ways to use our power in a world grown so complex. Panama is a small country. It would be all too easy for us to lash out, in impatience and frustration, to tell Panama and Latin America — and other countries around the world — that we intended to speak loudly and carry a big stick and to turn away from the treaties four Presidents have sought over so long a time. But that, in my judgment, would not be conduct appropriate to a responsible world power or consonant with the character and ideals of the American people. Any nation's foreign policy is based, in the end, not just upon its interests — and, in Panama, our interests are clear and apparent. It also is based upon the nature and will of its people. I believe the American people want to live in peace with their neighbors • • • want to restraint • • * want all peoples, everywhere, to have their own chance to better themselves and to live in self-respect. That is all a part of our American tradition. And that is why I am convinced that after the national debate they deserve, these treaties will be approved without reservations by the Senate, with the strong support of the American people. Statement by Hon. Sol M. Linowttz Mr. Chairman and Members of the Committee: Although I have not been involved in Panama Canal diplomacy for as many years as Secretary Vance and Ambassador Ellsworth Bunker, I have for a long time been deeply concerned about the Panama Canal issue and its implications for our whole relationship with Latin America. For three years prior to my designation as Co-Negotiator of the new Canal treaties, I served as Chairman of the Commission on United States-Latin American Relations. In the Report which our Commission issued on December 20, 1976 we said: "The most urgent issue the new Administration will face in the Western Hemisphere in 1977 is unquestionably the smoldering dispute with Panama." We went on to say: "1977 will be a crucial year for resolving the volatile Panama issue; if negotiations do not produce an equitable solution during this coming year, deepened hostility seems inevitable." We urged the new President "to exercise prompt, vigorous and decisive leadership in negotiating an acceptable compromise with the Panamanian Government while serving our own interest in the Canal. Such an action will also indicate our desire to address the issues which concern the United States and Latin America in a more cooperative and mutually respectful atmosphere." Our recommendation was: "The new Administration should promptly negotiate a new canal treaty with Panama; it should involve members of both parties and both Houses of Congress in the negotiations; and it should make clear to the American public why a new and equitable treaty with Panama is not only desirable, but urgently required." Mr. Chairman, the treaties which we have negotiated and which are now before you in large measure follow that prescription. We have negotiated treaties which are, we believe fair and equitable and which fully preserve our interest in the canal while taking into account Panamanian aspirations. In the course of the negotia- tions, we have involved members of both parties and both Houses of Congress. And the terms we have agreed upon clearly reveal a more cooperative and mutually respectful atmosphere in hemispheric relations. There are, I believe, three basic facts which must be understood about the Panama Canal issue. First, it is an issue which involves far more than relations between the United States and Panama. For it is an issue which affects all United States-Latin Ameri- can relations. In the eyes of our Latin American neighbors, the Panama Canal runs not just through the center of Panama, but through the center of the Western Hemisphere. All the countries of the hemisphere have made common cause in looking upon our position in the canal as the last vestige of a colonial past which evokes bitter memories and deep animosities. So in going forward with these new treaties with Panama, the United States will be improving its position with virtual- ly all the countries of this hemisphere whose attitude towards us as a nation will be importantly influenced by how we conduct ourselves on the Panama Canal issue. Second, our primary interest in the Canal is, and always has been, to assure that it remains secure and open, on a neutral, non-discriminatory basis. Viewed in this light it is unmistakably clear that the greatest threat to the operation and security of the Canal would be to try to insist upon retention of the present outmoded treaty 244 and its anachronistic provisions — provisions which have in the past and can so easily again in the future, trigger hostility and violence. The simple fact is that if we do not agree upon treaties which are mutually agreeable and acceptable, the time may come when we may find ourselves in the position of having to defend the Canal by force against a hostile population and in the face of widespread condemna- tion by the countries of Latin America and even the rest of the world. Third, it is, therefore, clear that the best way to preserve an open, accessible and secure canal and to maintain its permanent neutrality would be to substitute for the 1903 Panama Canal Treaty a new arrangement which will be mutually fair, which will properly provide for Panama's just aspirations, and which will take into full account our own national needs. Putting it another way a new treaty arrange- ment is the most practical means for protecting the very interests we are seeking to preserve in the Canal. We believe that the new treaties meet this test by preserving for the nation the important interest it has in assuring that the Canal remains secure, accessible and open on a nondiscriminatory basis — and in a manner which will both advance our national security interests and further our hemispheric objectives. With your indulgence I would like to recall a few words of history about how we got where we are in the Panama Canal. During the middle of the 1800's we were, as a young nation, interested in the possibility of constructing a canal across the isthmus in order to connect the Atlantic and Pacific Oceans. This need was dramatically underlined when, during the Spanish American War, it took the battleship Oregon 67 days to get from the Pacific coast to its Atlantic battle station. At the end of the 1800's the French Canal Company had undertaken to construct a canal through the Province of Colombia known as Panama. By the end of the century it acknowledged failure — failure because of disease, because of technological and scientific problems which seemed insurmountable, because of lack of financing, and finally because of lack of spirit and morale. At that time an engineer, Philippe Bunau-Varilla, who had worked for the French Canal Company, spurred an effort for the United States to take over the French company's assets and enter into a treaty with Colombia for the completion of the canal. Such a treaty was rejected by the Colombian Senate. At that point it was suggested that the Province of Panama might undertake to declare its independence from Colombia and then enter into a satisfactory treaty with the United States. On November 4, 1903 a revolution occurred in Panama and a few days later the United States recognized Panama's independence. Thereupon a treaty was entered into known as the Hay/Bunau-Varilla treaty. The treaty granted the United States rights "in perpetuity* to construct a canal within a zone 10 miles wide over which the United States would exercise the "rights, powers and authority" it would have if "it were the sovereign." Secretary of State Hay candidly wrote to a leading Senator that the treaty was "very satisfac- tory, vastly advantageous to the United States and, we must confess with what face we can muster, not so advantagous from Panama." The treaty was ratified in 1904 and construction of the canal was begun immediately. It was completed in 1914 after a brilliant engineering and scientific performance by American engineers, doctors, scientists and builders who were determined to conquer the unconquerable and make the canal a reality. Today the Panama Canal stands as an engineering marvel, as one of this coun- try's greatest accomplishments. In a very real sense it was our moon shot of the early 1900's. Any America must view with pride this highly complex, integrated hydraulic system of locks, dams and artificial bodies of water designed to move ships over the uplands of the isthmus for 50 miles from ocean to ocean. And we can also point with pride to the way we have operated the Canal. For 62 years it has been run as a public service for the nations of the world rather than as a business. Tolls have been set as low as compatible with meeting costs and provid- ing a modest return, and world commerce has been a major beneficiary of the Canal operation. The toll rate when the Canal opened in 1914 was $1.20 per Panama Canal ton; today it is $1.29. It is against this backdrop that these new treaties must be evaluated. Several arguments have been widely advanced against a new treaty arrangement with Panama. Secretary Vance has already discussed the sovereignty issue, and I would like to touch upon several other major concerns which have been asserted in connection with the new treaties. First, will the new treaties in any manner prejudice our national security? Your Committee will have the benefit of the testimony of our foremost defense authori- ties on this score; but it is important to stress that in all of our negotiations we have 245 worked closely with the Department of Defense and the Joint Chiefs of Staff to assure that our national security interest would not in any respect be prejudiced under the new treaty arrangements. And we have been assured by them that the treaties we have agreed upon will not only preserve but indeed enhance our nation- al security interests. Second, will the new treaties seriously affect United States commercial interests? The new treaties, we believe, are the best protection of our commercial interest in the Canal. The simple fact is that the commercial value of the Canal has diminished considerably as world commerce patterns and technologies of shipping have changed. Today supertankers and other larger vessels cannot use the Canal. In percentage terms the Canal is much more important to the various countries of Latin America than it is to us. Today approximately 7 percent of total United States international maritime trade passes through the Canal each year. About 4 percent of the trade between the East and West coasts travels the Canal. It is, therefore, clear that though the Canal is still important, it has, to a substantial extent become economically obsolescent. Third, is the present Government of Panama the one with whom we should be negotiating these new treaties? For over 13 years we have been engaged in negotia- tions for a new Panama Canal treaty. The present Chief of Government, General Omar Torrijos, who has been in power for almost 9 years, has been committed to trying to work out a new treaty with the United States and in doing so he is supported by the people of his country and is following in the footsteps of every Panamanian Head of State since 1903 — irrespective of ideological differences. More- over, pursuant to the Panamanian Constitution, the treaties will now have to be submitted to a plebiscite in Panama next month so that the Panamanian people will be able to express their judgment with respect to these treaties. Secretary Vance and Ambassador Bunker have already described to you the major terms of the new Panama Canal treaty, and I would like to focus my remarks on the neutrality treaty. This treaty commits the United States and Panama to maintain a regime of permanent neutrality for the canal. Under the rules of neutrality set forth in this treaty, the Canal is to be open to merchant and naval vessels of all nations at all times without discrimination as to conditions or charges of transit. A special provision authorized United States and Panamanian warships to transit the Canal expeditiously in both peace and war without being subject to any restriction as regards means of propulsion, armament or cargo. Under this provision no question can be raised about the right of U.S. naval vessels to transit the Canal with all their weapons nor can any restriction be placed on the type of cargo they may carry. Further, we are assured of a preferential right to expeditious transit of our naval vessels whenever we consider this necessary. Under the treaty the United States is in a position to assure that the Canal's permanent neutrality is maintained and there is no limitation on our ability to take such action as we may deem necessary in the event the Canal's neutrality is threatened or violated from any source. The precise type of response we might determine to make would of course depend upon all the political, military, legal, economic and other factors involved in a particular situation. But the key point is that it is for the United States to make the determination as to how we should respond and how we should defend our rights under the Canal's regime of perma- nent neutrality. Thus the treaty provides for the United States maximum freedom to determine how to carry out its responsibility for Canal neutrality. We are under no obligation to consult with or seek approval from any other nation or internation- al body before acting to maintain the neutrality of the canal nor does the treaty in any other way limit our ability to act. This permanent neutrality treaty will also apply to any other international gate- way that may be built in Panama in the future. In short, the neutrality treaty provides a firm foundation for assuring that our long-term interest in the mainte- nance of an open, accessible, secure, efficient Canal is preserved— now and in the future. In order to emphasize the importance of the regime of neutrality to world ship- ping there is a protocol to the neutrality treaty which will be open to accession by all the countries of the world. The signatories to this protocol will, in effect, endorse the neutrality treaty by specifically associating themselves with its objectives and by agreeing to respect the regime of permanent neutrality of the Canal both in time of war and in time of peace. The Instruments of Accession will be deposited with the Secretary-General of the Organization of American States. The lasting and deeply significant implications of this treaty have been fully recognized by the Panamanians. In signing the treaties at the Pan American Union here in Washington on Septemer 7, 1977, General Torrijos clearly told the people of 246 Panama, the people of the hemisphere, and the people of the world: "We have agreed upon a neutrality treaty that places us under the protective umbrella of the Pentagon. This pact could, if not administered judiciously by future generations, become an instrument of permanent intervention." Both countries recognize that this treaty is designed not only to assure that our own interests will be fully preserved but to assure the other countries of the world that the United States will be in a position to do whatever may be required in the furture to preserve the openness, security and accessibility of the Canal. It is vitally important that the American people study these new treaties careful- ly and open-mindedly and recognize what is at stake. The issues involved are far too complex and significant to be compressed into a slogan or reduced to the size of a poster. In these agreements we believe we have a rare opportunity to demonstrate to the world how a large nation and a small nation can settle their differences amicably and with mutual respect and enter into a lasting partnership of which future generations will be proud. They will bear witness to our intentions to build a balanced, constructive, and lasting relationship among the countries of the hemi- sphere. Theodore Roosevelt put it very well: "We have no choice as to whether or not we shall play a great part in the world. That has been determined for us by fate. The only question is whether we will apply that part well or badly." Statement by Ambassasor Ellsworth Bunker With the opening today of the hearings, the resolution of one of our nation's most difficult and pressing foreign policy problems enters a new stage. You have before you two new treaties designed to assure our interest in a secure and efficient Panama Canal. Those of us who have participated in the negotiations have completed our task. It is now up to the Senate to examine the agreements and to make a judgment on them. My first involvement with Panama Canal diplomacy came in 1964, when I was serving as Ambassador to the Organization of American States. From the vantage point it was possible to see at firsthand how urgent was the need for the United States to modernize its relationship with Panama and how important such a step forward was for our position in the Hemisphere. My direct association with the Canal negotiations began in 1973. At that time the two sides began working out a set of principles to serve as a guide in preparing new treaties. These principles — which have guided the subsequent negotiations — were embodied in the Joint United States-Panamanian Statement signed at Panama City in February 1974. In January of this year these principles were reaffirmed by Secretary Vance on behalf of the Carter Administration. This action followed a thorough policy review in which the incoming Administration established its posi- tions on the principal issues at stake in the negotiations. The fundamental concept in the 1974 principles is that of United States-Panama- nian partnership. Throughout the discussions of the past three years, our objective has been to shape a close and enduring partnership between the United States and Panama in maintaining an open and efficiently operated canal. That is the concept which underlies the treaties you have before you today. The partnership envisioned in the new treaties has three aspects: The United States and Panama will be partners in the operation of the Canal through the end of this century. During this period the United States will continue to shoulder the responsibility of managing the canal enterprise, building on a tradition of safety and reliability developed in over sixty years of experience. At the same time, we will be preparing Panamanians to carry on this tradition after the year 2000. The United States and Panama will also be partners in protecting the Canal. For the duration of the Panama Canal Treaty, the United States will have the primary responsibility for defense of the waterway and will retain bases and troops in Panama for that purpose. Panama will also contribute forces to canal defense. While the forces of the two countries will work in coordination, they will retain their separate lines of command. We will be able to act unilaterally to maintain canal security if need be. Finally the United States and Panama will share a long-term responsibility for maintaining the Canal's neutrality. The United States role in assuring neutrality will continue for as long as the Canal remains in operation— even after manage- ment of the waterway passes to Panama. 247 Let me now explain more specifically how the United States-Panamanian partner- ship in operation of the Canal will function. The Panama Canal Treaty provides for the creation of the Panama Canal Com- missioner, which will manage and operate the Canal through December 31, 1999. The Commission, which will replace the existing Panama Canal Company, will be a United States Government agency constituted in accordance with legislation to be sought from the Congress. The Commission will be supervised by a nine-man Board consisting of five Ameri- cans and four Panamanians. The Commission's executive officers will be an Admin- istrator and a Deputy Administrator. Until 1990 the Administrator will be an American and the Deputy Administrator a Panamanian. After that time, the Ad- ministrator will be Panamanian and the Deputy, American. The United States will appoint all officials of the Commission, including the Administrator, Deputy Administrator, and the nine Board members — Panamanian as well as American. The Panamanian appointees will, however, be proposed by Panama. United States control of Canal operations throughout the treaty period is fully assured. The United States will have a majority on the Commission Board; it will appoint Commission officers; it can remove the Commission executive officers at will. Most importantly, thp n _^xnssion will operate in accordance with United States law. At the sa^ic tune, the participation of Panamanians at the highest levels in the Canal enterprise — both as Board members and executive officers— will permit Panama to attain the managerial expertise to operate the Canal after the year 2000. When Panama assumes responsibility for canal operation, Panamanians will have had the benefit of twenty >ears of involvement in the direction of the Canal enterprise. The Treaty grants to the United States the rights needed to carry out its responsi- bility for operating the Canal. These include the authority to establish and collect tolls, make and enforce rules pertaining to navigation and marine traffic control, and regulate planning relations with employees. The Treaty also grants the United States the use of all lands, waters and facilities required for Canal operation. The areas and facilities reserved for this use and specifically identified. They include the Canal itself and related installations. . The Panama Treaty encourages continuity and quality in the Canal work force. The provisions governing employees are designed to encourage experienced person- nel to remain with the Canal under the new Commission. Salary levels, and the terms and conditions of employment, will remain generally as favorable as they are now. An important difference for employees will be the change from United States to Panamanian jurisdiction in what is now the Canal Zone. For the United States employees — most of whom reside in the Canal Zone and who will therefore be most deeply affected by the shift— the treaties provide special guarantees which commit Panama to apply specified procedural standards in criminal cases involving United States citizen employees. In addition, an agreed minute provides that Panama, as a matter of general policy, will in such cases, transfer jurisidiction to the United States at the latter's request. As with management, there is provision for development of a qualified Panama- nian work force to man the Canal enterprise. In hiring new employees the Panama Canal Commission will give preference to qualified Panamanians. The Commission will also provide training programs to develop Panamanian workers with all the requisite skills needed by the Canal enterprise. During the more than two decades of the Treaty period, it should therefore be possible to build up a fully qualified Panamanian work force. We, of course, start from a strong base. Seventy-four percent of current Canal employees are Panamanian. A sound financial structure is also important to the success of the Canal enter- prise. We have kept this objective very much in mind in working out the economic arrangements under the new Treaty. At the start of these negotiations — in the 1974 Kissinger-Tack Joint Statement of Principles— both countries agreed that Panama should receive "a just and equitable share of the benefits derived from the operation of the Canal in its territory". In line with this principle the United States consistently maintained during the negoti- ations that payments to Panama for its contributions to the Canal enterprise should be drawn entirely from Canal revenues — that is, that the payments should reflect the Canal's economic value as measured by its revenue-generating capacity. Panama initially sought much larger payments, which far exceeded what could be financed by Canal earnings. 248 The United States concept has been followed in establishing the payments to be made to Panama under the Panama Canal treaty. These payments — as Secretary Vance explained— will come entirely from Canal revenues. The amounts established are based on what we consider sound and realistic projections of the Canal's earning capacity. The economic and military assistance — of up to $345 million, which— as Secretary Vance has stated — we have undertaken to provide Panama, has been kept entirely separate from the Canal treaty and from Canal operations. This aid is not linked in any way to our rights and obligations under the new Canal treaties and will not be a burden on the Canal operation. At the same time, it will, we believe, enhance the successful implementation of the new treaties by contributing to Panama's economic development and thereby helping to foster a climate of stability conducive to effi- cient and secure Canal operation. We are confident that the economic arrangements worked out will contribute to the success of the United States-Panamanian partnership. The payments Panama will received from Canal revenues will give it a stake in the success of the Canal enterprise. At the same time, they are set at a level within the Canal's projected earning capacity. And the economic assistance to be provided outside the Treaty — while in no way tied to Canal operations — will contribute to the success of the new arrangements. I am confident that the Treaties provide the basis for efficient operation of the Canal under United States stewardship until the end of the century and with Panamanian management thereafter. They build on effective operating procedures already established. They provide for an orderly shift to Panamanian operation. They ensure that over the long term the Canal will have an effective management, qualified work force and a sound financial base — three of the essential elements for any successful industrial enterprise. I am also confident that the United States and Panama can work together effectively in carrying out all aspects of the new relationship which these Treaties envision. In our preoccupation with differences over the Canal, both Americans and Pana- manian tend to overlook the many positive elements in our long association. The United States and Panama have been working together for three-quarters of a century. It is fair to say that there is no other nation with which Panama maintains a closer relationship than the United States. This relationship has centered on the Canal, but it has not been limited to that. Important ties of trade and investment link our two countries. For thirty years the United States and Panama have also been allies under a mutual defense treaty — the Rio Pact. And on a personal level, thousands of Panamanians have attended the schools and universities in the United States. The United States and Panama are well prepared to enter on an area of closer cooperation in the Canal enterprise. They begin from a solid foundation of mutual understanding and concrete accomplishment. Without that, these Treaties would never have been concluded. That is why I am convinced that the partnership envisioned in these Treaties will be productive and successful. CONSERVATIVES SUPPORT THE PANAMA TREATIES, TOO Mr. Cranston. Mr. President, the national debate over the Panama Canal Treaties sometimes gives the impression that this is a liberals versus conservatives dispute, with so-called liberals favor- ing the treaties and so-called conservatives opposing them. That is an erroneous perception, as a column by Emmett B. Ford, Jr. who calls himself a card-carrying conservative, makes eloquent- ly clear. Mr. Ford, who supports the treaties, writes a weekly column for the Charlottesville, Va., Daily Progress. One of his columns was reprinted in today's Washington Post. In it, he accurately points out that there is "a considerable body of conservatives in good standing," that also supports the treaties. The reason, as he puts it, is simple: 249 In the final analysis * * * it really does not matter whether we bought the canal, paid for it, built it or stole it. That is all in the past. In deciding whether or not to ratify the Panama treaty, the Senate * • • must very simply decide which future course is in the best interests of the United States. The course offered by the new treaty can serve only to enhance the international prestige and moral authority of the United States. By neutralizing a potential hot spot and cutting down on the numbers of those hostile to us abroad, it effectively strengthens our overall defense posture. How can an avowed conservative object to that? Mr. President, I ask unanimous consent that Mr. Ford's article, as it appeared in the September 26, 1977, issue of the Washington Post, be printed in the Record — except for one sentence, which I have deleted, because I do not want to give wider audience to some critical remarks about some Members of the Senate and their supporters. There being no objection, the article was ordered to be printed in the Record, as follows: [From the Washington Poet, Sept. 26, 1977] Conservation Support (By Emmett B. Ford, Jr.) Everyone seems to asume of late that all Americans on the conservative end of the political spectrum are united in their opposition to the recently signed treaty giving Panama unrestricted sovereignty over the Canal Zone. • ••**♦• There remains a considerable body of conservatives in good standing, including Gerald Ford, Bill Buckley and Henry Kissinger, who firmly support the Panama treaty. And, as a card-carrying conservative, I support it myself. I support it because it corrects a gross injustice that we perpetrated against Panama, Colombia and indeed all of Latin America three-quarters of a century ago. (Is the perception of injustice and inequality reserved only for liberals?) I support it because it slowly and subtly phases out an anachronistic colonial arrangement that has increasingly soured our relations not only with Panama, but with all of our neighbors to the south. I find that I can, in good conscience, support it because I am persuaded absolutely that our vital security interests in the canal are safeguarded. A Panama with which we have concluded a mutually satisfactory agreement is far less likely to create difficulties for us over the use of the canal than would a Panama with a permanent 10-mile-wide strip of foreign occupation right through its middle. Moreover, under the terms of a separate treaty to be signed later by every country in the Western Hemisphere, the United States will guarantee the neutral- ity of the canal and its accessibility to world shipping (that is we will have the right to intervene militarily). Opposition to the treaty seems to be based more on nostalgia for the late 19th- century era of "manifest destiny" than anything else. One can almost hear Ronald Reagan saying (to paraphrase Winston Churchill): "I did not become Mr. Conserva- tive in order to preside over the liquidation of the American Empire." What Reagan actually did say about the canal during the election campaign last year has gradually become the rallying cry of the opposition: "We bought it, we paid for it, we built it. And we are going to keep it." "We are going to keep it," he said, "because it is ours," and to cede anything that is ours constitutes ignominious retreat. But there is a good deal of lose rhetoric in this position. Certainly there is more motion than fact in his arguments. To begin with, the Canal Zone is not "ours" and never has been. Even in 1903, when we could have dictated any terms we wished to impose upon the newly created Panamanian state, we did not choose to acquire full and sovereign rights to the territory. According to the treaty of that date, Panama granted to the United States, in perpetuity, "all the rights, power, and authority * * * which it would possess and exercise if [repeat, if] it were the sovereign" of the zone. Thus, as we confirmed in a subsequent agreement with the Republic of Panama, that country has always re- 250 tained legal sovereignty over the Canal Zone, despite the fact that we exercise full control in perpetuity over it. Similarly, we may have paid out enormous sums as rent, construction costs and bribes, but we have never bought" the Canal Zone from anyone. A few years after we had successfully separated the Republic of Colombia from its province of Panama, we paid Colombia the sum of $25 million as "a gesture of goodwill." And, of course we spent over $350 million to build the canal itself. None of these expenditures, however, can be (or is) legally regarded as the purchase price of the property. The Canal Zone was never purchased outright for a specific sum of money as was the case with Louisiana, Alaska or the Gadsden strip. Panama, in effect, still has the deed, while the United States plays the role of an unwanted tenant with a very long-term lease. That lease is the 1903 treaty, upon which all rights exercised by the United States in the Canal Zone are based. It is historically of enormous significance to the Panamanians that no Panamanian had anything to do with drawing up the docu- ment that rented out part of their country forever. The 1903 treaty was negotiated in Washington between Philippe Bunau-Varilla, a French businessman serving as Panama's envoy to the United States, and John Hay, the American Secretary of State. It was approved by the U.S. Senate before the arrival of the official Panamanian delegation and ratified later by the Panamanian provisional government under threat of the withdrawal of American military protection. A thoroughly sneaky and discreditable performance. But if we could not be proud of the manner in which we acquired the right-of-way for the canal, we covered ourselves with glory in the building of it. By the time it was completed, Dr. William Gorgas had conquered yellow fever, and Maj. Gen. George W. Goethals had overcome the incredible engineering prob- lem of cutting through the mountains of a continental divide. It was — as many have already noted— the moon shot of its day. In tne final analysis, however, it really does not matter whether we bought the canal, paid for it, built it or stole it. That is all in the past. In deciding whether or not to ratify the Panama treaty, the Senate, which will begin hearings this week on approval of the treaty, must very simply decide which future course is in the best interests of the United States. The course offered by the new treaty can serve only to enhance the international prestige and moral authority of the United States. By neutralizing a potential hot spot and cutting down on the numbers of those hostile to us abroad, it effectively strengthens our overall defense posture. How can an avowed conservative object to that? 251 [From the Congressional Record— Senate, Sept. 27, 1977] THE PANAMA CANAL TREATY Mr. Allen. Mr. President, on Friday, September 16, 1977, I dis- cussed in some detail the major cash benefits which would flow to the Government of Panama should the Senate ratify the proposed Panama Canal Treaty. I relied heavily on an analysis of treaty benefits by the Panamanian Planning and Economic Policy Minis- ter, Nicolas Ardito Barletta, given on August 19, 1977, to the National Assembly of Panama in Panama City. Minister Barletta stated to the National Assembly that cash benefits accruing to Panama under the treaty would total some $2,262 billion in 1977 dollars, for an average annual payment of approximately $100 million, during the term of the proposed treaties. The major treaty I have reference to would turn full control of the canal over to Panama in the year 2000. At the time I made my remarks on Minister Barletta's analysis of the expected cash flow from the proposed treaty, I advised the Senate that I would subsequently discuss the relationship of this projected cash flow to the enormous loans which have been made by the large multinational banks to Panama and which are in danger of default. The fact is, Mr. President, that the treaty income that the military dictatorship in Panama hopes to exact from U.S. taxpayers and from the users of the canal would be spent not to upgrade the position of the Panamanian worker, but rather to refinance or pay off these existing tremendous debts owed to the big international banks. Some time ago, at my request, the Economics Division at the Library of Congress researched the claims of the foreign and do- mestic branches of U.S. banks against Panamanian borrowers. The Library of Congress reported an astonishing total of $2.77 billion in claims on Panama by U.S. banks and their foreign branches alone, and I should point out, Mr. President, that this $2.77 billion in claims does not — does not — take into account similar claims by major European and Japanese multinational lenders. To be sure, much Panamanian borrowing is in the private sector — no doubt also substantial personal loans have been ex- tended to members of the elitist Panamanian regime — but of U.S. total claims of $2.77 billion, a minimum of $1.4085 billion is public sector borrowing, and I am reliably advised that this figure has grown over recent months to a conservatively estimated $1.7 billion in public sector borrowing. How did Panama raise this kind of cash? What collateral was pledged for this enormous debt? A clue is found in a particularly perceptive passage from the recent staff report of the Committee on Foreign Relations entitled "Interna- tional Debt, the Banks, and U.S. Foreign Policy." I quote: The question arises of how prudent the banks have been in their lending, how thorough their assessment of the credit worthiness of individual borrowers. In light of the general lack of accurate data on the external debt situation of many coun- tries, it is hard to see how their evaluations of sovereign risk can be very precise. Has the profitability of this activity blinded them to the underlying risks? Or has the banks' willingness to lend to foreign countries for balance of payments purposes been premised on the unstated assumption that in the event of a real debt repay- ment crisis the governments of the wealthy industrial countries will have to come to 252 the rescue because they cannot afford to see either the debtor countries or their own large banking institutions go under? In my judgment, the answers to the questions posed should be obvious to us all. So, Mr. President, although it is virtually impossible to obtain completely accurate data on the debt position of the Government of Panama, a fact recognized by the Foreign Relations staff report, my own study of this matter convinces me that Panama is in the midst of a serious financial crisis, if not on the brink of bankrupt- cy. This pending insolvency of Panama should be especially obvious to the big U.S. banks which are clearly overlent to Panama, and indeed the multinational banks must all see the clear danger that the Government of Panama could soon default on very substantial loans now coming due — unless, of course, the U.S. taxpayer puts up the cash or unless the Panama Canal, with its substantial rev- enues, is handed over. We are, in this case, being asked to do both. As I said, Mr. President, the multinational bankers like to shroud their affairs in a cloud of mystery, making it accordingly quite difficult to keep tabs on international banking transactions, but again, the Panamanians have helpfully supplied us with a memorandum from Minister Barletta to the President of Panama, Demetrio B. Lakas — Mr. Torrijos is the dictator, but they do have a nominal President, Mr. Lakas — in which financial perspectives for Panama for 1977 are outlined in grim, but presumably accurate, detail. Minister Barletta advises President Lakas that commit- ments of an obligatory nature in the Panamanian budget include: Between B/42.3 million— A Balboa is the equivalent of the dollar in Panama. It has the same value as the American dollar. It is tied to the American dollar. Between B/42.3 million to B/42.7 million for servicing the foreign debt which will increase from between B/87.5 million to B/129.8 million or B/130.2 million in 1977, depending on whether or not the economy recuperates during the last semester. Interest will increase from between B/24.8 million or B/25.2 million, depending on the above observation, while the amortizations will be increased by B/17.5 million. Due to the tendency required to service the foreign debt, its ratio in respect to current revenue increases from 29.6 percent to between 38.2 percent and 39.0 percent which significantly deteriorates our capacity for further indebtedness. That is Minister Barletta advising President Lakas of Panama. If we in this country pay some $42 billion in interest on our national debt, it is only approximately 10 percent of our current Federal income. The interest on the Panamanian debt is going to jump up to about 38 or 39 percent of their total revenue. So we see the horrible financial straits they are in. The only thing that can save them and, secondarily, the big international banks is to have this Panama Canal Treaty approved. I do not believe it is in the interest of the American taxpayer to hand over the canal to Panama in order that they can pay back the international banks. Mr. President, these figures are truly incredible. This small coun- try of 1.7 million people is already obligating up to 39 percent of its current revenues to foreign debt service. These multinational banks have got their hooks into Panama pretty solidly, and one can well imagine the dilemma facing the Government of Panama 253 and can certainly understand the Panamanian dictator's frantic desire to shake down the Panama Canal Company for quiet money to satisfy these international bankers. But, Mr. President, Minister Barletta's memorandum to Presi- dent Lakas contains other information which ought to be carefully considered by the Senate. Minister Barletta states: The global (annual) deficit (of Panama) will be between B/ 131.9 million and B/ 138.7 million, depending on how well the economy recuperates during the second semester of 1977. To finance this deficit we will require B/ 15.6 million from the Venezuelan Investment Fund, B/ 5.0 million in Internal Bonds, and from B/ 111.3 million to B/ 118.7 million from the private banks. So we can see the desperate straits that Panama is in. Mr. President, I do not know whether this latest B/ 118.7 million from the private banks has yet been obtained, but I understand that a consortium of banks did extend an additional $150 million in loans to Panama about the time it became obvious that the execu- tive department of the United States was serious about pressing for the conclusion of a proposed treaty and a cash bailout of the Government of Panama. So one of the chief parties in interest in this whole proceeding is the group of international banks. They stand to gain by this more than anybody else, possibly. Minister Barletta continues in this fashion: We feel it will be extremely difficult to syndicate loans with the commercial banks in the amounts previously mentioned, taking into account that during the present fiscal period we must contract for a total of B/323.6 million with those sources, who in turn have become more demanding each time that an accord has to be finalized. Besides, the relation between servicing the debt and current revenues of between 38.9 percent and 39 percent suggest a deteriorated capacity to service this debt and thus will increase the risk as realized by the lending institutions. We should remember, Mr. President, that these remarks are in a memorandum which predates by some months the conclusion of the proposed treaty, and I note particularly that Minister Barletta refers to commercial banks becoming "more demanding each time that an accord has to be finalized." I do not think there should be any doubt in anyone's mind what accord Barletta has in mind. He is talking about this treaty, Mr. President. He is talking about this document signed a few weeks ago amid such fanfare down there at the OAS and at the White House. So, Mr. President, what we have is a relative small country down there of some 1.7 million inhabitants — about half the size of my native State of Alabama — a spendthrift dictatorial government, and multinational banks demanding payment. What we have gotten proposed to us as a solution to their problems is apparently the Panama Canal Treaty. The banks get their money, the Pana- manians get the canal, the Canal Zone, and the American people get to hold the bag. That is what the whole situation boils down to. Again, Mr. President, Minister Barletta expresses the problem quite succinctly: In short, 1977 lines up as extremely delicate due as much to current expenses increasing more than current revenues, as well as to the amount and structure of the new financing that must be contracted which reaches the limits available to the Nation as such. Yes, 1977 does line up as an extremely delicate year for Panama and for the United States and for the big banks. But, Mr. Presi- dent, the U.S. Senate cannot permit the interests of these multina- 254 tional banks to outweigh the critical and special national interest of our own people. Perhaps methods of assisting this destitute Panamanian Govern- ment should be explored, notwithstanding the repressive and re- pugnant character of the present dictator, but in no event should the United States give economic aid to Panama in a form which damages the security of our country and, indeed, the entire free world. If we must bail out these banks, can we not find some other method of rendering assistance? The stability of these banks, to be sure, is important to us all, but surely we ought not permit the dismantling of our own country in order to satisfy their insatiable appetite for profit. Mr. President, I ask unanimous consent that the memorandum of Minister Barletta, together with a related memorandum of the U.S. Embassy in Panama and two reports from the Congressional Research Service of the Library of Congress dated July 21, 1977, and July 28, 1977, be printed in the Record. There being no objection, the material was ordered to be printed in the Record, as follows: The Library of Congress, Congressional Research Service, Washington, D.C., July 21, 1977. To: Subcommittee on Separation of Powers, Attention: Quentin Crommelin. From: Economics Division. Subject: U.S. Commercial Bank Loans to the Government of Panama. As we have discussed on the telephone, we are enclosing photocopies of different materials pertinent to the above-mentioned subject. There is a statement by Henry C. Wallich, Member, Board of Governors of the Federal Reserve System, dated March 23, 1977, to the House Subcommittee on Financial Institutions of the Com- mittee on Banking, Finance and Urban Affairs, which includes a table on claims of U.S. banks on various foreign countries, including Panama. We have also included a June 3, 1977 Federal Reserve press release which has tables on U.S. bank claims on selected foreign countries in 1976. Panama is included in the section on offshore banking centers on page 5 of the tables. Another source in the Federal Reserve indicated that foreign branches of U.S. banks had claims of $1,886 billion on Panama at the end of 1976, while the March 1977 Treasury Bulletin indicated that domestic offices of U.S. banks had $886 million in short and long-term claims against Panama as of that date. Of this amount, only 13% were long-term claims. Adding the two figures results in $2,772 billion in claims on Panama by U.S. banks and their foreign branches. This appears to be the number used by Governor Wallich in the attachment to his statement. We are also including a photocopy of the World Debt Tables, Volume II, p. 117, which shows the external public debt position of Panama. Unfortunately, the table includes data only up through 1974. Conversation with a World Bank official re- vealed that 1975 and 1976 figures are in the process of compilation and some results are expected by the end of next week. If you would like further assistance on this matter, please do not hesitate to contact us on 426-5750. David Hoyt, Analyst in Banking and Capital Markets. The Library of Congress, Congressional Research Service, Washington, D.C., July 28, 1977. To: Senate Judiciary Committee, Subcommittee on Separation of Powers. From: Economic Division. Subject: Further information on loans to Panama. As we have discussed on the telephone, we have been able to gain some further information on the availability of data on U.S. bank loans to the Government of Panama. 255 In conversation with a Federal Reserve official, it was learned that they do not have information available which gives a distinction by type of borrower for foreign loans from U.S. banks. They do have a figure for borrowing by banks and official institutions in Panama from the head office of a U.S. bank. This figure, however, is not available over the telephone and is obtainable only "through normal channels". Information on loans made from individual U.S. banks is, in some instances, known by the Federal Reserve, but is regarded as confidential information and was not released to us. The World Bank provided us with some preliminary data on the external debt of the entire Panamanian public sector. At the end of 1975, loans outstanding and actually disbursed by foreigners to Panama totaled $767.9 million with $58.7 million accounted for by Panamanian branches or offices of private, foreign-owned banks. The corresponding figures for 1976 were $1.0909 billion and $129.4 million. The 1976 figure for Panamanian public sector borrowing, disbursed or undisbursed was $1.4085 billion. David Hoyt, Analyst in Banking and Capital Markets. Memorandum To: Eng. Demetrio B. Lakas, President of the Republic, Presidency of the Republic. From: Nicolas Ardito Barletta, Planification Minister. Matter: Financial perspectives for 1977. The purpose of this Memorandum is to call attention to the financial basis upon which will be defined the budget policy of 1977 thus permitting to show the perti- nent limitations that are being detected in this year's budget. (a) The current revenues should increase between B/ 43.6 million and B/ 44.2 million with respect to this year's revised income figures thus reaching totals of B/ 33.97 million or B/ 333.3 million; dependent on whether or not there is a recuper- ation in the economic activity during the last six months of this year. (b) The increase in current revenues assumes an economic upturn of 3 percent and an inflation rate of 5 percent throughout 1976. (c) It also assumes a B/ 21.0 million package increase of taxes which should not interfere significantly in the desired economic recuperation process. (d) The technical group involved in this evaluation has concluded that the follow- ing are the tributary measures that would fill the above requirements: A consumer tax designed in such a manner as to minimize its effect on prices and on lower income groups. This type of taxation tends to divert private expenditure towards investments, thus stimulating economic development. Reform import duties in order to replace specific value taxes by value added duties. This measure will adjust the increase of tax income to the increased cost of imported goods, and will thus help to stimulate internal production. Limit the tax deduction permitted on interest paid for mortgage loans used to buy homes for one's personal use. Consolidate the progressive tax structure for corporations into one tax rate in order to avoid the use of numerous companies to lower the effective tax rate. (e) At the same time, operational expenses are estimated to increase from between B/ 50.3 million and B/ 50.7 million and will reach totals of B/ 340.6 million or B/ 341 million, depending on how the economy is reactivated during the second semes- ter of this year. (f) The fact that the increase in revenues will be inferior to the increase in expenses suggest that there will virtually be no new recourses to augment the coverage of public services. (g) The significance of the rigidity to which the new budget elaboration will be subjected will be understood when one observes that only B/ 3.1 million will correspond to net reincorporations of previously frozen expenditures, while the remaining B/ 47.2 million correspond to commitments of an obligatory nature. (h) These commitments of an obligatory nature can be broken down in the following manner: (1) From between B/ 42.3 million to B/ 42.7 million for servicing the foreign debt which will increase from between B/ 87.5 million to B/ 129.8 million or B/ 130.2 million in 1977, depending on whether or not the economy recuperates during the last semester. Interest will increase from between B/ 24.8 million or B/ 25.2 million, depending on the above observation, while the amortizations will be increased by B/ 17.5 million. Due to the tendency required to service the foreign debt, its ratio in 256 respect to current revenue increases from 29.6 percent to between 38.2 percent and 39 percent which significantly deteriorates our capacity for further indebtedness. (2) B/ 2.3 million of the amortization of salaries are for: Education— B/ 1.4 million. Health— 0.4 million. Housing— 0.1 million. Other institutions — 0.4 million. (3) B/ 1.3 million of current transferences which reflex the increase in subsidy to the National University, the payment of Balboa notes subscribed to BID and the increased consumption of water. (4) E/ 0.4 million in salary increases to: Health — 0.3 million. Government and Justice, Labor — . Presidency— 0.1 million. (5) B/ 0.3 million for the XIII the month of public functionaries. (6) B/ 0.2 million for inclusion in the MIDA budget for personnel frozen in its investment portion of said budget and for the hiring of new auditors for the Finance Ministry. (7) B/ 0.4 million in order to bolster the supply budget of the Health Ministry and other compulsory expenditures. (i) Since, for the above reasons, all other expenses must be maintained at the budgeted fiscal 1976 level, it is convenient to eliminate from the budgeting process all programmed budgeting meetings in order that the respective institutions and our analyst can dedicate the most amount of their time possible to formulate, evaluate and turn in punctually their budget by program. 0') As to the Central Government contribution towards the public investment program, we calculate that it will be B/ 78 million which represents an increase of B/ 18 million over B/ 60 million that is estimated will have been contributed this year. (k) Asa result, the global deficit will be between B/ 131.9 million and B/ 138.7 million, depending on how well the economy recuperates during the second semes- ter. (1) To finance this deficit we will require B/ 15.6 million from the Venezuelan Investment Fund B/ 5 million in Internal Bonds, and from B/ 111.3 million to B/ 118.7 million from the private banks. (m) Thus, the amounts that must be financed as well as the amounts that must be obtained, create very concrete problems which in turn reiterate the need to increase expenses and investments only in those areas of an obligatory nature and to dedicate the most of time possible to the conscientious elaboration of a budget by programs in order to execute the largest possible amount of services required by our society with the scarce resources that are available. (n) On the one side, the required new financing of between B/ 131.9 million and B/ 138.7 million implies that there will be pressure on the liquidity and solvency of the National Bank which must provide the Central Government the monetary resources while the 3 previously mentioned financial operations can be formalized, all of which should take at least four months. During this period, the National Bank will have to recur to its lines of credit as well as to its internal reserves which have been practically saturated during the present year by having to finance the global deficit of B/99.3 million which in turn is between B/32.6 million and B/39.4 million less than what has been estimated for 1977. (n) On the other hand, we feel it will be extremely difficult to syndicate loans with the commercial banks in the amounts previously mentioned, taking into ac- count that during the present fiscal period we must contract for a total of B/323.6 million with those sources, who in turn have become more demanding each time than an accord has to be finalized. Besides, the relation between servicing the debt and current revenues of between 38.9 percent and 39 percent suggest a deteriorated capacity to service this debt and thus will increase the risk as realized by the leading institutions. (o) In short, 1977 lines up as extremely delicate due as much to current expenses increasing more than current revenues, as well as to the amount and structure of the new financing that must be contracted which reaches the limits available to the Nation as such. (p) As a result of the above, I respectfully request your backing in eliminating the budgeting meetings and in demanding from the institutions that they pay the most attention to formulating and elaborating a budget by program. Also, I ratify the need for you to back the approval and execution of the taxing measures that we have presented for your consideration, once that we have finalized the pertinent studies. 257 With my highest consideration and appreciation. Exhibit 4 (Sent by United States Embassy in Panama to the State Department on Oct. 26, 1970) Tags: ECON, EFIN. Subject: Panama's recession is structural — a result of low productivity. 1. This message is part of a continuing series of mission economic studies of the State of the Panamanian economy and projections for its future. 2. Summary: Panama's recession, which deepened during the first half of 1976, is neither cyclical nor primarily a product of economic conditions outside Panama. In our view the economy is floundering mainly because its high cost output is not competitive in the world market and few opportunities exist for available private investment. To establish a basis for renewed sustainable growth will require actions that lead to lower costs and improved productivity. These could include easing the labor code, reducing subsidies, boosting domestic savings, and directing resource flows more toward the international service sector where Panama has natural advantages, however, most such actions would cut back social benefits granted to the working classes under the "revolution", and might not be politically acceptable under the present government, inflows of foreign capital have not been getting at the core problem of high costs flow productivity). Lack of access to relevant Canal Zone sites is delaying GOP development of infrastructure which is prerequisite to the growth of various commercial services industries by the Panamanian private sector. End summary. 3. Economic conditions in Panama worsened steadily during the 1976 first half. There were decreases from a year ago in key indicators — manufacturing, construc- tion, external trade, unemployment, (increase), and sales to the Canal Zone (see reftel), overall growth is likely to be near zero for 1976. 4. Failure of the economy to respond to a variety of stimulants indicates that the recession is more than a cyclical maladjustment. Credit has remained relatively plentiful, with preferential rates available from the government for both agricultur- al and industrial projects. There are tax subsidies for new exports, and tax benefits for reinvested profits. No basic changes have been made in the "rules of the game" under which business operates, such as the labor code or tax laws, since before the onset of recession, in fact, the GOP in recent months has actively sought by various direct means to improve the business climate. A large boost in 1975 public sector spending had little effect on either private investment or aggregate demand. 5. Also, Panamanian economic problems do not seem to be caused primarily by worldwide economic trends or world trade. In contrast to Panama's continuing decline, other developing countries (LDC's) have been experiencing a quickening economic tempo so far this year in response to rapid recovery by the industrialized countries, plus some correction of structural maladjustments, LDC exports have been generally increasing as a part of the marked improvement in 1976 first half world trade (plus 10 percent) while the value of Panamanian exports remained at its 1975 level (excluding an abnormal decline in petroleum products exports), changes in Panama's economy also differed from the worldwide pattern both during the 1974-75 world recession and the years immediately preceding it. Despite sharp 1974-75 recession among the industrialized countries (zero growth), LDC's, gross domestic product (GDP) increased 5.5 percent in 1974 and 1.7 percent in 1975. Growth had begun tapering off in 1971 whereas during 1971-73 the rest of the world including Latin America experienced unprecedented boom. 6. Private investment in Panama reached a peak in 1971. Growth in manufactur- ing began to fall off in 1971 with a decline in the number of attractive import substitution possibilities, little increase has subsequently taken place in the volume of manufactured exports, output of both construction materials and intermediate goods stopped expending in 1973. Expansion of construction activity began slowing in 1972 and has actually been declining since 1974. Imposition of rent controls in 1973 brought private investment in low cost housing to a standstill. On the other hand, growth of the important services sector remained near 8 percent annually through 1974 (plus 3 percent in 1975) due in part to the major expansion of the foreign banking sector since 1971, growth in agricultural output has remained sluggish since 1970 at about 3 percent annually, much slower than during the 1960\ 29-400 0-78 258 7. Panama's basic economic weakness in our view and the reason behind current stagnation is its non-competitiveness in the world market — a structural problem involving primarily high cost production (coupled with a lack of resources) in both agriculture and industry. The export potential for Panamanian agriculture is ex- tremely limited at present, the main exports, bananas, is in the hands of foreign plantation operators, and has probably reached its peak in an increasingly competi- tive world market. In general land is of poor quality and farm labor costs are high — the $3 per day minimum wage is estimated to be at least double the rate anywhere else in Central America. The government encourages high cost production, includ- ing rice, the principal crop, by subsidizing producers through support prices typical- ly set above the world market. Thus, Panama cannot profitably export major crops such as rice and corn and is further precluded from developing any profitable export potential for various lesser crops by the small domestic market base in Panama. Accessible forests have been cut over and there is little potential for meat exports while access to. the U.S. market is restricted. Panama's sugar industry is likewise non-competitive due to high costs of both cane production and refining operations. 8. As with agriculture, Panama's manufacturing industry currently has little export or overall growth potential because of high production costs coupled with a dearth of natural resources (copper deposits have not yet been determined to be economically exploitable). Minimum wages and the general wage and benefit struc- ture in Panama are estimated to be the highest in Central America and among the highest in all Latin America. Higher wages and benefits in the Canal Zone exert upward pressure on wages in the republic as employers compete for the generally better qualified workers attracted by Zone wages. The dominance of the service sector in Panama's central urban areas with its higher skill levels also creates upward pressure on the entire wage and benefit structure. Employee benefits under Panama's labor code add to direct employment costs. The code exerts indirect pressures on costs through subsidies such as firing restrictions imposed on employ- ers and, by strengthening the trade union movement, bolsters the trend toward costlier contract settlements. High labor costs encourage the substitution of capital for labor, thus boosting structural unemployment throughout the economy. Also, relative capital costs — mostly foreign sourced — are likely to rise as Panama's al- ready high debt service burden worsens and the economic outlook for other LDC's improves relative to Panama. 9. Establishing the basis for renewed growth and improved economic well being that can be sustained will require actions that lead to a lower cost structure. One widely discussed possibility is an easing of the labor code, although its real impact on costs remains uncertain (it did not bring on recession although it may have stood in the way of needed private sector adjustments). Changes probably would not induce an immediate surge of private investment, however, the business community has made clear its conviction that changes are essential, giving them an additional psychological importance that bears importantly on the general investment climate. Changes might be a convincing sign of GOP concern over the private sector's economic plight. 10. Appropriate belt tightening also could include lowering subsidies as well as the wage/benefit structure to reduce relative production costs, and increasing per- sonal taxes to curb consumption (particularly imports) and expand domestic savings. These effects are usually achieved indirectly by currency devaluation. Since Pana- ma's currency is the U.S. dollar, such actions must be taken directly; in addition, resources may need to be more heavily concentrated in the internationally-based services sector where Panama has more natural advantages, with proportionately less in agriculture and the nonproductive social sectors. 11. Comments: (A) Panama's high wages, subsidies, and consumer imports — together with a mod- erate tax burden and little public saving — permit a standard of living which no longer appears to be supportable by Panama's inefficient domestic production. (B) Increased external financial flows per se, regardless of concessionary, permit Panama to defer grappling with the core problem of low productivity until a later date when the problem will probably have worsened, unless such financing bears specifically on some aspect of costs. Indeed, much of the capital inflow of the past three years has aggravated Panama's economic malaise by exacerbating its debt service burden without enhancing overall productivity. Moreover, total inflows greatly exceeded the current account deficit of Panama's balance of payments, resulting in large negative "errors and omissions" (around $100 million annually) most of which probably represented outflows of domestically-owned capital. 259 (C) The types of actions mentioned above for addressing Panama's high cost structure run headlong into the "revolution" — the social and economic benefits granted to the urban and rural working classes over the past eight years which would need to be reversed in part — in short, the "revolution" has collided with growth and one or the other must yield; whether or not actions of sufficient scope to be economically meaningful along the above lines are politically possible for the present government is questionable. (D) Panama's best economic prospects lie in the development of its potential as a sub for servicing international commerce, various aspects of cargo handling are an essential part of the picture. Thus, the GOP has a valid case in urging early access to relevant canal zone sites needed to develop the infrastructure on which growth of various transport, storage and other commercial services depend. TESTIMONY ON PANAMA CANAL TREATIES Mr. Sparkman. Mr. President, the Committee on Foreign Rela- tions continued its hearings today on the Panama Canal treaties. The witnesses today were Dr. Harold Brown, Secretary of Defense, Gen. George S. Brown, Chairman of the Joint Chiefs of Staff, Adm. Robert L. J. Long speaking for Adm. James L. Holloway III, the Chief of Naval Operations, and Lt. Gen. D. P. McAuliffe, Com- mander in Chief, U.S. Southern Command. I ask unanimous consent that the prepared statements of these witnesses be printed in the Record. There being no objection, the statements were ordered to be printed in the Record, as follows: Statement of the Honorable Harold Brown Mr. Chairman and Members of the Committee: Just over sixty-three years ago the first United States vessel crossed through the Panama Canal from one to the other of the two great oceans which border our country. Let us strip the matter to its essentials. Your deliberations in this committee room today are vital. As much as any other factor, they will determine whether we can be confident that our ships of war and vessels of commerce will continue to use that important but fragile waterway during and beyond the last quarter of the twentieth century as they did in the first. We have always been a practical people — proud of our history, but not sentimen- tal; remembering where we have been, but oriented toward the future. You all are practical men or you would not hold the offices you do. In my judgment, the issues before you are practical ones, and it is in practical terms that I shall address them. On September 7, 1977 the President signed two treaties affecting the operation and control of the Panama Canal. I am pleased to appear before you this morning with General George Brown, Chairman of the Joint Chiefs of Staff, to state that the Department of Defense wholeheartedly and fully supports these treaties, and to explain why I believe they deserve our — and your — full support. Quite properly, the focus of your deliberations must be on whether these treaties promote the national interest — and specifically the national security interest — of the United States. To help in answering that question, there are three points that I consider critical: Use of the Canal is more important than ownership. Efficient operation of the Canal in the years ahead is more important than nostalgia for a simpler past. Ability to defend and control access to the Canal is essential. But the issue is how that ability can best be assured — by a cooperative effort with a friendly Panama, or by a garrison amid hostile surroundings. I have examined these issues personally and in detail. So have the Joint Chiefs of Staff. The Department of Defense has been fully involved in all stages of the drafting and negotiation of these treaties. Mr. Chairman, I believe, personally, and in the light of my responsibilities as Secretary of Defense, that these treaties fully serve, and greatly promote, our national security interests. The Joint Chiefs of Staff, as General Brown will tell you, share that assessment. These treaties deal with today's realities. They provide the security which we need for the future. 260 I see three elements which together make up our national security concerns relating to the Canal. These are: First, unimpeded use; Second, effective operation; and Finally, physical security of the Canal. These are our paramount objectives. The first requirement includes free and unimpeded use of the Canal both by our Navy and by our merchant ships. Free use of the Canal is essential to assure optimum ability to shift our forces and materiel rapidly between the Atlantic and Pacific Oceans. That capability enhances our defense posture in both the European and Pacific regions. The neutrality treaty — more formally, the Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal — provides that the Canal shall be open permanently to all vessels of all nations. Moreover, it contains an important additional provision. The United States is given a preferred position with respect to use of the Canal, a position which no other country except Panama will enjoy: United States vessels of war, and the United States auxiliary fleet (important examples of which are oilers and supply ships) are guaranteed rapid transit through the Canal. This is so irrespective of the cargo they carry. These provisions assure us that the United States will remain able to use the Canal in timely fashion whenever military necessity dictates, just as we can today. Our second national security requirement is that the Canal operate effectively. The Panama Canal treaty provides that during its term the United States will operate the Canal, with increasing participation of Panamanian managers and workers operating under the treaty terms according to U.S. laws and regulations. Thus, the United States can continue the present efficient operation of the Canal for many years to come, and the Panamanians will be in a position to operate it successfully when the treaty expires. Our third national security requirement is that we must be able to defend the Canal from hostile acts. Our armed forces now control, and they will continue to control with overwhelming forces, the sea approaches to the Canal, on both the Pacific and Caribbean ends. This is not affected by the treaty. The treaty goes even further, however. It states unequivocally that during the life of the treaty, the United States armed forces shall enjoy the right and the primary responsibility to defend the Canal itself. It further provides that during that period the United States may station, train, and support units of our armed forces in Panama, and that the United States will decide unilaterally whether and how to modify the force levels we maintain there. All key military bases and training areas which we now operate in the Canal Zone will remain under U.S. control. When the Panama Canal treaty expires, as the year 2000 dawns, the neutrality treaty provides that U.S. and Panama are to maintain jointly the permanent neutrality of the Canal, and that no troops other than Panamanian may be sta- tioned in Panama. The United States is also made a guarantor of the neutrality of the Canal. In that capacity, we have the right to take appropriate measures to enforce this guarantee. In my judgment, these provisions ensure that the United States' ability and unilateral right to defend the Canal against any external threat remain unimpaired. There is another aspect of the third national security requirement — ability to defend the Canal from hostile acts — which cannot be ignored. Such hostile acts might not be external. If Panama and other Latin American countries, or major elements of the Panamanian population, became hostile to the United States, then protecting the Canal against internal threats, terrorism and guerrilla actions would become much more difficult. Such occurrences are far less likely under the new treaty than they would be if the long unsettled status quo were to continue. The treaty is a guage of our good faith, toward Panama and all of Latin America. It also provides Panama with a tangible stake in the continued effective operation of the Canal. Further, the treaty contemplates a combined defense agreement between the United States and Panama as a result of which Panama's armed forces will be able to protect the Canal against threats from within Panama more effectively than they can at present. Nothing in life, and still less in international life, is certain. But all these elements should add to the real security of the Canal, and make its availabil- ity for United States use much more sure than any alternative course of action. As I see it, and I do not think anyone with national security responsibilities disagrees, the Panama Canal will, for the foreseeable future, be an important defense artery for the United States. The treaties which you are examining provide real security, not paper claims. They offer the firmest and most practical guaran- 261 tees obtainable that the Canal will remain operational, secure, and available to the United States. The Canal was built for shipping, not slogans. We seek to guarantee transit of vessels, not theoretical claims of title. These goals we have sought, as I said at the beginning, are practical. The issues before you are practical ones. Our negotiations have obtained instruments which— more certainly than thousands of forces and their armaments on the spot — will assure those practical objectives for generations to come. I am convinced that approval of these treaties will best provide for our national security. I would be happy now to answer any questions you may have. Statement by General George S. Brown, USAF Mr. Chairman and Members of the Committee: I am here to discuss the security aspects of the proposed Panama Canal treaty. The Joint Chiefs of Staff recognize the Panama Canal as a major defense asset, the use of which enhances United States capability for timely reinforcement of United States Forces. The strategic military value of the canal is reflected in our ability to accelerate the shift of military forces and logistic support by sea between the Atlantic and Pacific Oceans. The strategic value of the canal is not expected to change substantially throughout the life of the new Panama Canal Treaty and beyond, so long as the canal provides the sole means of transiting ships across the American continent. United States military interests in the Panama Canal are in its use, not its ownership. Therefore, any new treaty must assure that access to and security of the Panama Canal are protected in times of war and peace. This assurance is provided by a permanent regime of neutrality to be maintained by the U.S. and Panama which specifies that the canal will remain open to all world shipping at reasonable tolls, without discrimination, in accordance with specific rules of neutrality, and that it will always be operated efficiently under rules that are just, equitable and reasonable and necessary for safe navigation and efficient, sanitary operation. Defense of the Panama Canal has two components: internal security and external defense. Both are presently the responsibility of the United States Government. Internal security entails surveillance and control. It is primarily concerned with countering sabotage and terrorist activities. Currently the Canal Zone's police and security forces are responsible for internal security. When required, reinforcement is provided by the United States military units assigned to U.S. Southern Command. Under the new Panama Canal Treaty there will no longer be a Canal Zone and police functions will become the responsibility of the Government of Panama. How- ever, the Canal Commission will continue to provide security for Canal installations. The military units of U.S. Southern Command will be available to augment the Panamanian forces and Commission guards. External defense is concerned with defense against armed attack by hostile forces using guerrilla or conventional tactics. Our current plans will be described by General McAuliffe. Under the new Panama Canal Treaty, the United States will have primary responsibility for the defense of the canal during the balance of this century. Under the new Panama Canal Treaty, the Panamanian Guardia Nacional and appropriate U.S. Forces Commander will develop plans in concert to provide for mutual defense. The Joint Chiefs of Staff will continue to plan for rapid reinforce- ment of U.S. Southern Command in the event of emergency need. Our capability to defend the Panama Canal will be enhanced through cooperation with the Government of Panama. The new treaty provides a basis for such coopera- tion between the United States and Panama. The alliance relationship should develop and strengthen during the life of the Panama Canal Treaty and be further enhanced by the Neutrality Treaty. The regime of neutrality- provided in the Neu- trality Treaty calls for a canal open to all ships of all nations in times of peace or war. It specifically provides that U.S. and Panamanian naval ships shall transit expeditiously without impediments or preconditions. Since both the United States and Panama agree to this regime, out right to take the measures that we may deem to be necessary to maintain the canal's neutrality is assured. For these reasons, the Joint Chiefs of Staff support the treaty as being protective of the military interests of the United States and as providing an effective basis for defense of the canal. 262 Statement of Adm. Robert L. J. Long, U.S. Navy, (Speaking For Admiral James L. Holloway III, U.S. Navy Chief of Naval Operations) I have gone on record with the other members of the Joint Chiefs of Staff, in supporting the Panama Canal Treaties. The Joint Chiefs of Staff are unanimous in their position supporting the Panama Canal Treaty and the Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal, although each of us may have reached this conclusion on the basis of our individual line of reasoning. I would like to provide the Committee, in this statement, with my own rationale. The Panama Canal is and will remain of major importance to the United States. Its use is a key factor in the Navy's ability to accomplish its responsibilities in connection with essential war plans and other contingencies involving our national security. While I cannot state that loss of the Canal would result in the failure of these plans or in the inability of the Navy to carry out these responsibilities, it would certainly make these tasks enormously more difficult. We would be much better off with the use of the Canal than without it. The importance of the Canal to the Navy for defense purposes lies in its assured use, not in its ownership. There are two threats to the continued use of the Canal by our naval forces and essential shipping: the external threat and the internal threat. The external threat is represented by a general war situation. In a conventional conflict, our capabilities to defend the approaches of the Canal are adequate to provide me with reasonable confidence that defense of the Canal against an exter- nal threat is practicable. In the case of a nucler conflict defense of the Canal would be virtually impossible as would be defense of almost any other major installation of importance to the United States. However, in a strategic nuclear war, the impor- tance of the Canal in relative priorities diminishes to an inconsequential position. The second threat to our continued use of the Canal is the internal threat from subversive, clandestine, or local guerrilla activities. The defense against such a threat in the formidable jungle terrain of the Canal area would be extremely difficult, particularly in view of the vulnerability of the lock system to disruption as the result of relatively minor damage to critical mechanical components. Defense against a persistent and continuing internal threat would be particularly difficult. Therefore defending against this internal threat is significantly enhanced if the cooperation of the local interests, the Panamanians and Central Americans, can be maximized. On the other hand, our ability to defend and protect the Canal so as to ensure its continued operation, would become extremely difficult in the face of an adversary relationship with our Latin neighbors, or an active hostility on the part of the local population. Our adherence to these treaties, which make the Panama- nians our direct partners in the defense of the Canal, will substantially contribute to a friendly and cooperative attitude among all Latin Americans toward the United States on the Panama Canal issue. The specific provisions in the Panama Canal Treaty providing for the defense of the Canal by the United States until the year 2000, and in the Treaty of Neutrality which will guarantee our use of the Canal after the turn of the century, are considered by the unified commander, Commander-in-Chief Southern Command, to be adequate. That view is shared by the Joint Chiefs of Staff, based upon the analysis of the Services and the unified commander. It is my judgment that the favorable effect which I believe the Treaties will have on the attitudes of the Panamanians and Central Americans toward our continued use of the Canal, for national and hemispheric security purposes, will substantially assist the United States to defend the Canal against the internal threat. On this basis, it is my view that the continued use of the Panama Canal for military purposes in our national defense plans is best assured through the provisions of the new Treaties. Statement by Lieutenant General D. P. McAuliffe Mr. Chairman and Members of the Committee, thank you for inviting me to appear before you, as the Commander in Chief of the United States Southern Command. My priority mission is the defense of the Panama Canal. I will discuss with you my present capability to perform that mission with the forces and facilities presently available and also an assessment of my capability to perform that mission under the treaties signed on 7 September. The forces presently available to me to carry out the mission of canal defense are well trained and capable of implementing a wide range of defense tasks to protect the canal and also to protect U.S. lives and property. They are not capable, without reinforcement from the United States, of protecting the canal from a major external 263 threat. Substantial reinforcement forces would be needed in the event of such a contingency. We could not, however, assure the uninterrupted operation of the canal in such a hostile environment, but it is my firm conviction that under the most likely threats, we can limit such interruptions to ones of short duration. I have been consulted regularly during the course of the treaty negotiations and have furnished information, comments and recommendations to the Joint Chiefs of Staff for the development of U.S. defense positions concerning the negotiations. In my judgment the Panama Canal treaty provides adequately for the United States to exercise primary responsibility for the defense of the Panama Canal and for the support of the forces needed to carry out that mission. That judgment is based upon the following factors: The United States has an adequate military force structure in the canal area now; that force structure is expected to remain adequate and may, of course, be modernized during the treaty period; our capability to reinforce from the United States will continue to exist; U.S. forces, located astride the most critical canal facilities, have sufficient bases and training facilities, the latter of which will be shared; the treaty and its agreements provide freedom of movement for military forces in carrying out the canal defense mission. The Panama Canal treaty establishes a concept of defense which includes U.S. and Panamanian forces operating cooperatively to defend the canal. Indeed, the most effective defense of the canal can be obtained in conjunction with a friendly Panama. We expect that the Panamanian armed forces, that is, the Guardia Na- cional, will contribute military units to canal defense and that they will train with our forces in appropriate canal defense tasks. The concept for combined defense which I have recommended to the Joint Chiefs of Staff envisions the continued presence of American forces in the vicinity of the canal for the term of US control of canal operations, not only to assist in defense of the canal but also to provide protection of US lives and property. Under this concept certain types of military facilities are essential to support the US Forces committed to canal defense. These include the major airfield, cantonment areas for stationing of forces in close proximity to the canal, training areas, commu- nications facilities, piers and docks, logistic support facilities and family housing. These essential facilities are provided for in the Panama Canal treaty and its implementing agreements. It is apparent that the Panama Canal treaty will require the relocation of a few US military units from their present locations in the Canal Zone to other locations within selected US military defense sites in Panama. These consolidations will not adversely affect our capability to defend the canal and, in fact, in many ways will contribute to a more efficient operation. The US primary defense responsibility and the presence of US military force in Panama, together with the provisions of the neutrality guarantee, adequately pro- tect the security interests of the United States. When these factors are combined with a cooperative defense effort by the Government of Panama and its armed forces, they even more adequately provide for the security interests of the United States. That concludes my statement. I shall be pleased to answer any questions you may have. 264 [From the Congressional Record— Senate, Sept. 28, 1977] PANAMA CANAL TREATY Mr. Allen. Mr. President, when I first initiated this series of speeches on the proposed Panama Canal Treaty and on the pro- posed so-called neutrality treaty — and this is the ninth speech in the series — I had some concern that my speeches might tend to become redundant, inasmuch as apparently these proposed treaties will not be presented to the Senate for some months; but, Mr. President, the more I study these proposed treaties, the more de- fects I discover and the more I realize that I will be at no loss for topics to discuss over the coming weeks and months. I have no desire to bore the Members of the Senate with redundancy, so I will on each occasion discuss a separate aspect of the proposed treaties in a manner which I sincerely desire to be illuminating and informative rather than repetitive. Today, Mr. President, I intend to discuss the environmental impact of the new treaty. We hear a lot in Congress about the environmental impact, and we have environmental impact statements for almost everything. This new treaty has an environmental impact. Let us study it a little bit. I will use as the basis for my remarks the draft environmental impact statement for the new Panama Canal Treaty prepared by the Department of State and published on August 30, 1977. That is a new publication. This proposed environmental impact statement is now open for comment, and I would encourage anyone wishing to comment thereon to correspond with the Office of Environmen- tal Affairs in room 7820 at the offices of the Department of State here in Washington. There is much to be learned from this draft environmental impact statement which cannot be learned from a cursory reading of the proposed treaty itself. And incidentally, Mr. President, this draft statement applies only to the proposed Panama Canal Treaty and does not apply to the proposed neutrality treaty. Presumably a draft statement on the proposed neutrality treaty will also soon be forthcoming. As I said, Mr. President, much can be learned about the proposed canal treaty from this draft environment statement, and although obviously the Department of State is lobbying heavily and heartily for ratification of this treaty, nevertheless, the author of this draft statement should be commended for his candor in stating at least some of the more obvious environmental problems which are likely to ensue if the proposed canal treaty is ratified. Under the heading "Unavoidable Adverse Impacts," the state- ment reads as follows: The principal unavoidable adverse impact resulting from actions under the pro- posed Treaty will be the loss of jobs of certain American and non-American employ- ees of the Canal Company and the Canal Zone Government. There are also two other possible adverse impacts: increase in Canal tolls with a consequent increase in transcontinental rail traffic in the U.S. (section HI B. 7.); and extensive deforesta- tion in the Canal Zone, if protective measures are inadequate. The environmental statement then proceeds to discuss in some 100 pages or more the details of this sobering conclusion. The 265 statement further considers major alternatives to the proposed treaty including, "taking no action on the proposed treaty.' I do not favor that. I want to take action, up and down action, against giving advice and consent to the ratification of the treaty. Then, it states, "postponing further action on the treaty, imple- menting the treaty s provisions (including those on environmental protection), and the possibility of a new treaty with stronger envi- ronmental safeguards." Mr. President, I doubt if there is ever going to be another treaty. I believe this one will be defeated so badly that they are not going to come back with another treaty. I believe, too, that substantial amendments must be made to this treaty. Some definitely must be made in the area which forbids us to even negotiate with another nation for a sea level canal for this 23-year period without the consent of Panama. That must be changed. Then there has to be an amendment giving us the right to determine whether the neutrality of the canal is in danger and giving us the right to send in troops. The failure to give us priority on our warships going through the canal is amended. Once these amendments are made, Mr. President, it is treaty law that the treaty would become a nullity and would have to be renegotiated and submitted again as a treaty ab initio. I want to see an up and down vote defeating this treaty. Before we have that up and down vote, I want to see substantial amend- ments offered. One amendment I am going to offer, Mr. President, and I would be willing to vote for the treaty if this amendment is made, would be to raise the annuity that Panama receives from the Panama Canal Company out of the tolls, to raise it substantially— and it is around $2.3 million now — and leave all other provisions of the present treaty in full force and effect. That is, that we would continue to have sovereignty over the Canal Zone; that we would continue to have the power to operate and maintain the canal, and that we would continue to have the right to defend the canal. Another thing we are certainly going to have to amend is the American presence we have there. I believe under the treaty and executive agreements, we are supposed to cut down our bases there from 14 to 4. That will have to be changed. The whole treaty will have to be redrafted by the Senate, in my judgment, which would be another way of saying it is dead because it would then have to be renegotiated. The reservations are not going to do any good, mere reservations. That is merely a unilateral statement of how we interpret the treaty. It would not be binding on Panama, as I see it. It is not sufficient to say, "We make this reservation, that we feel the treaty means" this. That is not worth anything. We have to amend the treaty in the particulars I am talking about. Then to be absolutely safe, not only amend it but then defeat it after it has been amend- ed as best we can. As I say, I would be willing to substantially raise the amount of the tolls which Panama receives, the amount of annuity payments Panama receives, because I know they need the money, possibly raising the figure tenfold. That would not shock me. We could raise 266 it up to $25 million annually, provided all of the provisions of the present treaty remain in full force and effect. Mr. President, how much time have I remaining? The Acting President pro tempore. The Senator from Alabama has 5 minutes remaining. Mr. Allen. I thank the Chair. So, Mr. President, as far as the Office of Environmental Affairs at the Department of State is concerned this matter is still open to discussion — but, I might add, a limited amount of discussion inas- much as the 30 days for comment will expire on September 30. In other words — the day after tomorrow. I would like to make my comments on the environmental impact of this treaty now, and I do feel after reviewing the draft environmental statement that the proposed new treaty will have adverse environmental impact suffi- cient to warrant rejection of the treaty in its present form unless substantially amended to include stronger environmental safe- guards. Let me get back to the subject from which I digressed a moment ago. As I stated, if this is a substantial amendment to the treaty that would vitiate and nullify the treaty because it would not be sufficient then for Panama to accept the treaty in its amended form we would have to renegotiate and submit a new treaty to the Senate. We would have to go through the same process that this present treaty has gone through or is going through. But the value of the amendments would be that it would be a guideline, Mr. President, to what the Senate would probably accept in the subsequent negotiations between the two countries having to do with a Panama Canal Treaty. So if we amend this treaty in these substantial forms that I have suggested, even though that would nullify and hold for naught the entire treaty, it would serve as a guideline for the negotiators to have a treaty that would be acceptable to the Senate. In my judgment, Senators should listen carefully to the recom- mendations of environmental groups and consumer groups and business groups in assessing the unavoidable adverse impacts of the proposed treaty in its present form on the environment, the rate of inflation, unemployment, and commerce generally. Chief among the immediate adverse environmental impacts of the proposed canal treaty will be the short-term use and deforesta- tion of the land in the Canal Zone turned over to the Panama- nians. In considering this problem, the environmental impact state- ment reads as follows: Short-term use of the forest resources in Panama involves slash and burn prac- tices by squatters to clear fields for corn and other crops. Given population pres- sures and rural poverty, these subsistence crops are very important to the nutrition and welfare of the numerous squatters engaged in these practices. This is the reason for the widespread deforestation around the Canal Zone and the threat to the Zone's forests. However, within a year or two the soil is exhausted, the squatters move on to new forest areas, and erosion sets in with resultant damage to the entire ecosys- tem of the Canal watershed. Wildlife disappears, reforestation is difficult or impossi- ble, and silting of the Canal may increase. Over the longer term and in combination with droughts, the level of the lakes may even diminish to the point of limiting the operation of the Canal and the Panama City water supply. Archeological sites and artifacts exposed during cultivation may also be lost. 267 There is, therefore, Mr. President, apparently some considerable concern that once the zone is thrown open to the Panamanians, Panamanian farmers will rapidly deplete the natural forest re- sources of the zone. This concern is expressed under the heading "Irreversible and Irretrievable Commitments of Resources" in the following fashion: If the environmental protection measures in the draft treaty and the supplemen- tary watershed management project should prove ineffective, the forests and associ- ated cosystem in the Canal Zone could disappear. We are trusting an awful lot to chance, Mr. President, if even the Department of State recognizes the danger that the forests and associated ecosystem in the Canal Zone could disappear and pre- sumably be ruined for the foreseeable future — that is if, of course, this proposed treaty is in fact ratified. Other considerations which come to light are the various laws, regulations, and policies now is force in the Canal Zone which would be supplanted by Panamanian law, regulations, and policies affecting environmental matters, if any. Among the U.S. laws which would apparently cease to operate after implementation of the treaty are the following: 1. National Environmental Policy Act of 1969 (NEPA). 2. Section 311, Federal Water Pollution Control Act of 1972 (FWPCA) regulating the discharge of oil and other hazardous substances into the navigable waters of the U.S. 3. Section 312, FWPCA regulating marine sanitation devices. 4. Marine Protection, Research and Sanctuaries Act (Ocean Dumping Act). 5. Section 4, Noise Control Act. 6. Executive Order 11514. 7. Occupational Safety and Health Act (OSHA) where it regulates the environ- ment. 8. Environmental Control Policy for Canal Agencies (published in Federal Regis- ter Vol. 37, No. 204, October 20, 1972.) 9. Guidelines for the Preparation and Coordination of Environmental Impact Statements for Canal Agencies, dated Dece mber 15, 1972. 10. Title 35, Code of Federal Regulations (CFR): a. Chapter 1, Part 61 Health Sanitation and Quarantine (includes controls on use of pesticides, herbicides, and rodenticides). b. Chapter 1, Part 103.21 Precautions against sparks, smoke, etc. from vessels. c. Chapter 1, Part 103.22 Vessels at Fuel Berths. d. Chapter 1, Part 113, Subparts B, C and D: Handling Explosives, Hazardous Liquid Cargos and other Hazardous Materials (noxious chemicals, radioactive mate- rials). e. Chapter 1, Part 125 Sanitary Requirements: Vessel Wastes, Garbage Ballast. 11. Canal Zone Administration and Regulations (CZAR): a. Chapter 5, Part 167.111: Transporting Explosives, Flammable Liquids and Liq- uefied Petroleum Gases. b. Chapter 5, Part 167.85: Mufflers; prevention of noise. 12. Regulations Governing the Storage and Handling of Petroleum Products in Bulk at Canal Zone Terminals. (This document has a different primary purpose but a major environmental secondary effect.) The above list is not exhaustive and regardless of efforts to guarantee adequate environmental safeguards under the proposed treaty, I doubt that the measure of protection now afforded by U.S. law could ever be achieved in any arrangement with the Panama- nians which included supplanting U.S. legal jurisdiction with Pana- manian jurisdiction. Tab F of the draft environmental impact statement is a study entitled, "Environmental Assessment of Proposals to Increase Tolls." You know, Mr. President, a major consideration in the proposed treaty is the increase in tolls proposed in order to cover promised payments to the near-bankrupt Government of Panama. But what effect will this increase in tolls have on commerce with the United States and on prices charged to consumers in the United States? Well, Mr. President, the effect is not going to be salutory. The author of this study on the proposal to increase tolls, Wil- liam Whitman of Kensington, Md. — and, I might add parenthetical- ly that his study has been approved by the Canal Zone Environ- mental Quality Committee — Mr. Whitman's study is based on pro- jected traffic through the Panama Canal in 1985 and assumes no increase above the rates in effect prior to July 8, 1974 except a 50 percent across-the-board increase in those rates. In fact, Mr. Presi- dent, two increases have occurred since that time and a major jump in toll rates is still envisioned by the proposed treaty. Yet even discounting the two toll increases which we have already seen, Mr. Whitman finds the following unavoidable environmental effects: "A minimal increase in air pollutants over the United States; and an unquantifiable loss of employment and employment benefits in U.S. Atlantic ports." These environmental impacts are unavoidable effects of the toll increases which have already oc- curred and do not even take into account to any significant degree the major new increases which we are being asked to ratify in this proposed treaty. You see, Mr. President, when these tolls go up, the inevitable effect is going to be to burden ocean-borne commerce and, as a result, to inflate the costs of basic raw materials shipped through the canal. Those materials will either be shipped at a higher cost through the Isthmus of Panama or will be transported by other means, chiefly rail, with the result both of higher prices and in- creased atmospheric pollution. Lest there be any doubt that a toll increase could have a very serious adverse effect on U.S. commerce, I ask unanimous consent to include in the Record a table of major trade routes and tonnage carried on those routes through the Panama Canal in 1975. Mr. President, I ask unanimous consent that a table entitled "Major Trade Routes in Panama Canal Traffic" be printed in the Record. There being no objection, the table was ordered to be printed in the Record, as follows: 269 MAJOR TRADE ROUTES IN PANAMA CANAL TRAFFIC: 1975 PC Long tons Trade route net tons cargo East Coast United States-Asia 41,970 55,402 Europe-Asia 13,779 10,028 Europe-West Coast United States/Canada 10,186 10,561 East Coast United States-West Coast South America 9,792 8,417 Europe-West Coast South America 7,642 5,481 U.S. Intercoast (including Alaska and Hawaii) 4,627 4,386 Europe-Oceania 4,484 3,590 East Coast United States/Canada-Oceania 4,112 4,130 East Coast Canada-Asia 3,891 3,461 South American Intercoastal 3,532 4,675 West Coast South America-West Indies 2,474 1,985 West Coast United States-East Coast South America 2,277 2,934 Subtotal 108,766 115,050 All other routes 26,288 25,051 Total 135,054 140,101 Mr. Allen. Mr. President, this table shows pretty conclusively that the United States is quite dependent on ocean-borne com- merce through the Canal Zone and that the principal beneficiary of traffic through the zone is, contrary to some reports, the United States. But let us look at the type of commerce moving through the canal. I ask unanimous consent that a table entitled "Panama Canal Traffic by Commodities" be printed in the Record. There being no objection, the table was ordered to be printed in the Record, as follows: Panama Canal traffic by commodities, 1975 Percent of Commodity: toto/ car 8° Coal and coke 18.8 Petroleum and products 17.1 Grains 12.7 Ores and metals 9.5 Manufacturers of iron and steel 8.0 Nitrates, phosphates, and potash 6.7 Miscellaneous agricultural products 5.1 Lumber and lumber products 4.1 Canned and refrigerated foods 3.0 Chemicals and petrochemicals 1.9 Machinery and equipment 1.8 Miscellaneous minerals 1.7 All other 9.6 Source: Annual Report, Panama Canal Company, fiscal year 1975. Mr. Allen. Mr. President, this table shows that a substantial amount of cargo moving through the canal is energy-related or bulk shipment of raw materials required in the manufacture of consumer goods here in this country. The major increases in Panama Canal tolls are bound to have a multiplier effect in raising the cost of raw materials and thereafter raising the cost of consum- er goods. Mr. President, I ask unanimous consent that a third table enti- tled "Effect of 50 Percent Tolls Increase on Commodity Manufac- turers" be printed in the Record. 270 There being no objection, the table was ordered to be printed in the Record, as follows: EFFECT OF 50 PERCENT TOLLS INCREASE ON COMMODITY MOVEMENTS THROUGH PANAMA CANAL IN 1985 [Thousands of long tons] 50 percent Percent Commodity No increase increase Difference change Bananas 2,342 1,710 Iron ore 3,300 2,508 Crude petroleum 19,900 17,512 Petroleum products 13,600 11,968 Coal 14,000 12,460 Phosphates 4,700 4,277 Coarse grain and wheat 26,237 24,343 Soybeans 12,345 11,604 Iron and steel manufacture 11,543 10,966 Sugar 6,127 5,943 Miscellaneous ores 4,655 4,562 General cargo 30,659 30,046 Cargo not affected 35,534 35,534 632 27 792 24 2,388 12 1,632 12 1,540 11 423 9 1,894 7 741 6 577 5 184 3 93 2 613 2 Total 184,942 173,433 11,509 Mr. Allen. Mr. President, this table shows significant percent- age reductions in the transportation of iron ore, crude petroleum, petroleum products, and coal through the Canal Zone if a 50- percent increase over pre-June 1974 tolls would be permitted. I want to emphasize, Mr. President, that a 50-percent increase over pre-June 1974 tolls has just about already occurred with the two increases put into effect to date. We can expect, therefore, reduc- tions in energy products transiting the Isthmus of Panama if the further increases contemplated by the new Canal Zone Treaty are permitted. This at the very time when we are spending days here in the Senate working on legislation designed to solve energy prob- lems. Let us not put any more burdens on the energy industry, Mr. President. Let us not drive up the cost of coal and petroleum products by a wholly unjustified increase in Panama Canal tolls. There is another aspect of this environmental impact statement which I would call to the attention of the Senate and in particular to the members of the Committee on Agriculture, Nutrition, and Forestry. This one item appears under the heading "United States- Japan Via Cape of Good Hope." It discusses the bulk movement of coarse grains and wheat and soybeans between New Orleans and Japan. The report reads: The distance between New Orleans and Yokohama is 9,126 miles via the Panama Canal and 15,762 miles via the Cape of Good Hope, a difference of 6,636 miles. The movement of 2,635,000 tons of soybeans and coarse grains and wheat via the Cape of Good Hope would entail about 16 voyages by a bulk carrier of 183,570 deadweight tons lifting approximately 170,000 tons of cargo. Each voyage would require about 42.4 days and fuel consumption at 15 knots would be 101.5 tons a day. Senators ought to consider the possible impact on our farm ex- ports if commercial shipping is diverted from the Panama Canal either because of the economics of increased tolls or because of other reasons beyond our control. Will farm exports be decreased because of a decrease in our ability to compete in world markets? Yes, in my judgment, much study should be given to the real world consequences of these proposed toll increases which have been given to us as part and parcel of this disastrous treaty. Mr. Presi- 271 dent, I ask unanimous consent that five additional tables from Mr. Whitman's study dealing with diversion of commodities from the canal route be printed at this point in the Record for easy refer- ence by Senators and staff members. There being no objection, the tables were ordered to be printed in the Record, as follows: Rearrangement of sources and markets resulting from 50 percent tolls increase [By Long tons Commodity: (thousands; 1. Bananas 632 2. Iron ore 627 3. Petroleum 2,388 4. Petroleum products 1,632 5. Iron and steel manufactures 195 Total 5,474 The reaction to a tolls increase by rearranging sources and markets in effect eliminates the necessity for moving the cargo involved from one ocean to the other thereby reducing energy consumption that otherwise would be used for that pur- pose. Obviously, in this aspect, the effect of the proposed increase in tolls is benefi- cial to the environment. DIVISION OF COMMODITIES FROM PANAMA CANAL TO SUEZ OR CAPS OF GOOD HOPE RESULTING FROM 50 PERCENT INCREASE IN PANAMA CANAL TOLLS (1985) Commodity Tonnage Trade route Via General cargo * 1.201 Euro^Japan-Austraia Suez. HwfaKom ores 93 Europe-Australa _ Cape of Good Hope- Iron and steel manufactures 186 Europe-Japan Suez. Pfcunifcrti, 423 Africa-Japan Suez. Coal 1,540 United States-Japan Cape of Good Hope. Coarse grains and wheat 1.894 United States-Japan Do. Soybeans 741 United States-Japan Do. Sugar 116 Philippines-New York Do. Total 6,194 1 Europe-Far East & Oceania. Because of the shorter dbtances involved, the movements of general cargo, miscellaneous ores, iron and steel manufactures, and phosphates, aggregating 1,315 tons, between Europe and Japan, Africa and Japan, and Europe and Australia, via Suez or the Cape of Good Hope, wi result in less fuel consumption than would movement of the cargo through the CARGO DIVERSIONS INVOLVING VOYAGES OF DECREASED LENGTH VIA SUEZ CANAL OR CAPE OF G000 HOPE distance on Commodity Tr-age '•:■* :.-. route General cargo l \M Europe- Japan (Suez) 1,251 MBcetoneous ores 93 Europe-Australa (Cape) 1.558 Iron and steel manufacturers 186 Europe-Japan (Suez) 1,251 Phosphates 423 Africa-Japan 4,726 Total 1,903 1 lndu *s 588 tons assuming hi impact of cumulative increase on reefers and general cargo ships without consideration of shift of 272 DIVERSION OF CARGO TO FAR EAST MINIBRIDGE BY 50 PERCENT INCREASE IN PANAMA CANAL TOLLS (1985) [Thousands of tons] Commodity: Route Tons diverted Total through PC Sugar: Hawaii — United States 68 5 943 Iron and steel manufacturers: Japan — United States 196 10,966 Total 264 16909 Ships carrying cargo between Japan and East Coast United States ports may proceed directly from Japan to East Coast U.S. via the canal, or move from Japan to the West Coast U.S. and thence to East Coast U.S. via the canal. Cargo moving by the minibridge route moves from Japan to the West Coast U.S. by water and from there to the East Coast by rail. Movements from the East Coast U.S. to Japan follow the reverse pattern. Whether the all-water movement is direct between the East Coast and Japan or via intermediate West Coast ports, the shorter distance involved in the intermodal movement using rail transportation across the United States, results in a substantial saving in energy consumption in the use of that route in comparison to the all-water routes. The distance between Yokohama and New York on the all-water routes indicated is shown in the following table: Distance Yokohama to New York on all-water routes via Panama Canal Statute Route: mUe8 Direct Yokohama-New York 11,115 Yokohama-San Francisco 5,261 Yokohama-Los Angeles 5,565 San Francisco-New York 6,053 Los Angeles-New York 5,671 Total Yokohama-New York (via SF) 11,269 Total Yohohama-New York (via LA) 11,236 Source: H.O. Doc 151, with nautical miles converted to statute miles at ratio of 1:1.15. I yield the floor. 273 [From the Congressional Record— Senate, Sept. 29, 1977] THE PANAMA CANAL TREATIES Mr. Allen. Mr. President, I appreciate the distinguished major- ity leader and the distinguished minority leader arranging for me to speak from time to time, at the start of the Senate hearings, on the subject of the Panama Canal treaties. This is the 10th speech I have given in the Senate on the Panama Canal treaties since the announcement was made that an agreement had been reached between our negotiators and the Pan- amanian' negotiators, and from time to time in the future while this issue remains before the Senate I do plan, with the acquies- cence and assistance of the distinguished leaders, to make speeches here in the Senate pointing out the defects, as I see them, in the Panama Canal treaties. Mr. President, I am obviously greatly troubled with the substan- tive provisions of the proposed Panama Canal Treaty and the proposed so-called Neutrality Treaty — since there are two trea- ties — but beyond my strong objection to the substance of both treaties, I am also greatly concerned that the treaty drafters saw fit to include so much of the meat of these proposed arrangements not in the body of the treaties themselves — by the way, which is not a very voluminous document — but rather in the associated executive agreements, protocols, and minutes. We have agreements and annexes to agreements and annexes to annexes; we have min- utes; we have exchanges of notes between the negotiators; we have protocols, and all of these form a part of the treaties. But the catch is, Mr. President, that these executive agreements can be modified from time to time by executive agreement requiring no assent by the Senate. So once the treaties are approved, the provisions of the treaties can be greatly altered by executive agreement over which the Senate has no control whatsoever. I am particularly concerned, Mr. President, that the major substantive defense provisions are not actually set forth in the canal treaty in its article IV, which is entitled "Protection and Defense," but appear instead in the pro- posed executive agreement in implementation of article IV — which is several times as large as the entire treaties themselves. I have that in my hand. Article IV itself does not cover a complete printed page, yet the agreement in implementation of article IV is some 53 pages long excluding annexes and an additional 22 pages of agreed minutes, the minutes themselves having their own annexes. So if we are going to find out what the Panama Canal treaties really provide, we are going to have to do a whole lot of research, because it is not contained just in the body of the treaties them- selves. Admittedly, some of the provisions contained in these very lengthy documents implementing this very short article IV are provisions which ought not to burden the treaty itself. But, Mr. President, much is in these additional pages which in my judgment should have been set forth in the treaty text rather than in these executive agreements. The Canal Treaty reads: 29JM>0 0-78-19 274 The rights of the United States of America to station, train, and move military forces within the Republic of Panama are described in the Agreement in Implemen- tation of this Article, signed this date. Mr. President, recognize that the rights that are being talked about here are rights to move, station, and train military forces within what is now the Canal Zone. By this one sentence, if rati- fied, the Senate would turn over entirely to the executive depart- ment all future arrangements regarding our defense rights in the Canal Zone, even during the duration of the treaty. So, Mr. President, in its present form, what does this agreement in implementation of article IV now provide? Already, the execu- tive department proposes in this executive agreement to surrender 10 out of 14 bases — we have 14 bases down there and we are going to surrender 10 of them right at the outset and to have our forces hemmed in at four relatively small enclaves — and I would encour- age Senators, if they have not done so already, to have a look at some of these maps that are contained in the annexes to these executive agreements to get some idea of just how hemmed in our forces are going to be if this treaty is agreed to and implemented. But, Mr. President, beyond this immediate surrender of 10 mili- tary bases, what lies down the road? If we turn to article I of the executive agreement in implementation of article IV of the canal treaty, under the heading "Definitions" is the following explana- tion: Defense Sites: Those areas, and the installations within them, which the Republic of Panama by this Agreement permits the United States Forces to use for the specific purposes of the Panama Canal Treaty, and as the two Governments may otherwise agree, a list of which is set forth in paragraph (1) of Annex A of this Agreement. In other words, they can wipe it all out by subsequent agree- ment. So these defense sites are already on pretty tenuous ground. If this thing is ratified, a couple of years from now or sooner, the Department of State could agree — and they seem to be pretty agreeable with this dictator down there in Panama — the Depart- ment of State could agree that it was time to shut down another base. Would they have to come to the Senate for ratification of that decision? No. Would they go to Congress for permission to turn over some more U.S. property to a foreign government? Well, Mr. President, they have shown no inclination to do that with this proposal to give away virtually the entire Canal Zone, notwith- standing the Constitution, so I doubt congressional authorization would be sought for simply shutting down one more base. After all, we would have already closed down 10. I cannot understand, Mr. President, why it is thought if we have 14 bases now to defend the canal and the Canal Zone, why 4 would be sufficient. Is the thought that we no longer have to defend it from the Panamanians and, therefore, we can cut down from 14 to 4 bases? Why is it that the defense of the canal will be so easy after the treaty is implemented? Why does it become so easy unless the bases are there for the defense of the canal against the Pana- manians? I would assume they are not the ones we are defending the canal against, that is, the Panamanians. But under the agreement, the bases would be cut from 14 down to 4. 275 Now, Senators may not think that this process is contemplated, but I would call attention to executive agreement article IV, enti- tled "Use of Defense Sites," which is not a part of the treaty but is a part of this proposed executive agreement in implementation of article IV of the canal treaty. Paragraph (1) of this executive agreement article IV reads this way: The United States Forces may use the defense sites listed in paragraph (2) of Annex A of this Agreement.* • * So we have permissive use of these four defense sites, but let us not be fooled into thinking that that use is contemplated through- out the term of this proposed treaty. Paragraph (2) of this article IV of this executive agreement contains the following language: Annex A of this Agreement shall be examined every two years or upon the request of either Government, and shall be revised to reflect any agreed elimination or change in areas. The United States Forces may notify the Republic of Panama at any time that the use of a defense site or a military area of coordination or of a specified portion thereof, or other right granted by the Republic of Panama is no longer required. Under such circumstances, said use or right shall cease on the date determined by the two Governments. This is astonishing, Mr. President. We have already agreed in the body of the executive agreement that we are going to renegoti- ate it every 2 years or at the request of either government. This treaty is for a proposed term of 23 years. We are going to need negotiators to negotiate this deal if we want to hang onto these defense sites for a term of 23 years with our Government already proposing to negotiate the matter on a biannual basis or upon request. Would Congress have any say in this matter? No, Mr. President, we will have relinquished effectively any say whatsoever in our military operations in defense of the canal. The Department of State could simply with the stroke of a pen more or less at will wipe out what little they propose to retain. You know, Mr. President, I am amused by this language in this paragraph (2) in which we are given permission to notify Panama at any time that the right they have granted us to use one of our defense sites is no longer needed. Apparently, someone down at the Department of State thought it was necessary to give us the option to renounce this so-called right of use given to us by the Panama- nians in the event pressure was on to move out before the anniver- sary date of a biannual renegotiation. Of course, on the other hand, it is conceivable with the political turbulence in the Republic of Panama that some new government in Panama might at a future date wish the United States to stay, but the Department of State has been careful to retain the unilateral right to leave anyway. The more I review this material that is in the treaty and a whole lot more that is not contained in the treaty, but would nevertheless bind our Government the more I am of the opinion that the De- partment of State is seeking both to obtain ratification of this proposed treaty and at the same time get absolute control of all future dealings with the Republic of Panama inasmuch as the real substance of our relations with Panama can be modified simply by amending these executive agreements with no need for consulta- tion with Congress and no need for approval by the Senate. 276 But, Mr. President, another motive of the Department of State may have been to bury in these executive agreements some of the more embarrassing terms of this proposed arrangement with Panama. I think that also could well be the case. For example, do the American people know that we would renounce forever the right to place any type of nuclear armament in what is now the Canal Zone? I doubt that they do know that, Mr. President, be- cause that particular provision— this critical major provision— is buried away in paragraph (6) of article IV of the agreement in implementation of article IV of the Panama Canal Treaty. So it takes some pretty careful reading to find out just what is afoot. Fortunately, we do have time to give complete study to these proposed agreements, and I am confident that the Senate will discharge its responsibilities in ferreting out fully the substance of this proposed deal regardless of how fine the print. Mr. President, I yield the floor. TESTIMONY ON PANAMA CANAL TREATIES Mr. Sparkman. Mr. President, the Committee on Foreign Rela- tions continued its hearings today on the Panama Canal treaties. The witnesses today were the Honorable Griffin B. Bell, Attorney General, Department of Justice; the Honorable Herbert J. Hansell, Legal Adviser, Department of State; the Honorable Clifford L. Al- exander, Secretary of the Army; Maj. Gen. H. R. Parfitt, U.S. Governor of the Canal Zone; and the Honorable William J. Jorden, U.S. Ambassador to Panama. I ask unanimous consent that the prepared statements of these witnesses be printed in the Record. There being no objection, the statements were ordered to be printed in the Record, as follows: Statement by the Honorable Griffin B. Bell Mr. Chairman: I am pleased to appear before your Committee to testify on and discuss with you a problem arising in connection with the Panama Canal Treaty. The question is whether the treaty-making power of the United States vested by the Constitution in the President, by and with the advice and consent of two-thirds of the Senate, can dispose of the proprietary interests of the United States in the Panama Canal Zone by treaty alone, or whether such action requires in addition legislation authorizing, approving, or actually effectuating such transfer. The principal provisions governing the rights of the United States in the Panama Canal Zone are to be found in Articles II and III of the Hay-Bunau- Varilla Treaty of 1903. Pursuant to those Articles, the Republic of Panama granted to the United States— "* * * in perpetuity the use, occupation and control of a zone of land and land under water for the construction, maintenance, operation, sanitation and protection of said Canal of the width of ten miles extending to the distance of five miles on each side of the center line of the route of the Canal to be constructed." Art. II. And— "• * * all the rights, power and authority within the zone mentioned and de- scribed in Article II of this agreement and within the limits of all auxiliary lands and waters mentioned and described in said Article II which the United States would possess and exercise if it were the sovereign of the territory within which said lands and waters are located to the entire exclusion of the exercise by the Republic of Panama of any such sovereign rights, power or authority." Art. III. Additional provisions relating to the interests of the United States in the Canal Zone are to be found in Articles VI, Vm and XXII of the 1903 Treaty, which concern the rights of private landholders in the area granted to the United States 277 by the Republic of Panama, and the property of the Panama Railroad Company and the New Panama Canal Company. It is recognized that under these provisions the Republic of Panama retained titular sovereignty over the Canal Zone. The United States is not the sovereign, but it has jurisdiction over the Canal Zone, that is to say that the United States has all the rights, power, and authority which it would possess and exercise if it were the sovereign of the Canal Zone. In addition, the United States has title to substantial lands, buildings, and facilities in the Zone. According to Article II, section 2, clause 2 of the Constitution, the President has the power to make treaties by and with the advice and consent of the Senate provided two-thirds of the Senators present concur, and Article VI, clause 2 provides that such treaties shall be the supreme law of the land. It has been established since Foster v. Nielson, 2 Pet. 253, 314 (1829), that whenever a treaty operates of itself and does not merely constitute an undertaking to enact legislation it is the equivalent of an act of the legislature. Geofroy v. Riggs, 133 U.S. 258, 266-267 (1890), and Asakura v. Seattle, 265 U.S. 332, 341 (1924), have taught that the treaty-making power of the United States extends "to all proper subjects of negotiation between our government and other nations * * *," although it does not extend "so far as to authorize what the Constitution forbids." To the same effect are United States v. Curtiss-Wright Corp., 299 U.S. 204, 320 (1936), Reid v. Covert, 354 U.S. 1, 5-10, 16-19 (1957). Foremost, among those constitutional provisions are those designed to protect rights of citizens from enroachment by the Government (Reid v. Covert, supra.) The question raised in the present context is whether a treaty would do some- thing "prohibited by the Constitution" if it seeks to be self-executing in an area in which Congress has legislative jurisdiction. Here the problem posed is whether a treaty can dispose of the territory and property of the United States in the face of Article TV, section 3, clause 2 of the Constitution, which gives the Congress power to do so. Even brief reflection shows that the application of the supreme law of the land clause in Article VI to treaties would be extremely limited, if it were restricted to those areas in which Congress did not have power to legislate. The courts have concluded that this is not so and that the mere existence of a congressional power to legislate in the field does not preclude a treaty from being self-executing. Foster v. Nielson, supra, recognized this by equating a treaty to an act of legislature. The courts have given self-executing effect to a number of treaties which dealt with matters over which Congress has legislative jurisdiction under Article I, section 8, such as claims against the United States, customs inspection, and trademarks. On the other hand, it is generally assumed that the specific powers granted to the House of Representatives and the Congress in fiscal matters (Article I, section 7, clause 1 and Article I, section 9, clause 7, money bills and appropriation power) preclude making treaties self-executing to the extent that they involve the raising of revenue or the expenditure of funds. Were it otherwise President and Senate could bypass the power of Congress and in particular of the House of Representatives over the pursestrings. It is our conclusion that this consideration does not apply to Article rV, section 3, clause 2 of the Constitution. In other words the power of Congress to dispose of the territory and property of the United States does not have the same unique and prominent status as the fiscal powers of Congress. To begin with, Article IV, section 3, clause 2 uses the same phraseology "Congress shall have power" as does Article I, section 8, and we have shown above that the legislative powers vested in Congress under that section do not preclude the making of self-executing treaties. The conclusion that this clause is not designed to foreclose the conclusion of self-executing treaties disposing of the territory and property of the United States gains strong support from the records of the proceedings of the Constitutional Convention. The pertinent debates indicate that the members of the Convention were fully aware of the possibility that a treaty might dispose of the territory or property of the United States. Much of the opposition to the treaty power of the United States and the requirement of a two-thirds majority in the Senate were based on fears that the Senate might give away territorial right of the United States. I wish to mention a few of the pertinent remarks. Thus, Col. Mason observed "that the Senate by means of a treaty might alienate territory, etc. without legisla- tive sanction." Farrand, Records of the Federal Convention Vol. 2, p. 297. Later, Messrs. Williamson and Speight moved "that no Treaty of Peace affecting Territori- al rights should be made without the concurrence of two-thirds of the [members of the Senate present]." Id. at p. 543, Mr. Gerry felt that — "• * • in treaties of peace, a greater rather than less proportion of votes was necessary than in other treaties. In treaties of peace, the dearest interests will be at 278 stake, as the fisheries, territories, etc. and there is more danger to the extremities of the Continent of being sacrificed than in any other occasion." Warren, The Making of the Constitution 656. Sherman and Morris proposed but did not formally move the following proviso: "But no treaty (of peace) shall be made without the concurrence of the House of Representatives, by which the territorial boundaries of the U.S. may be contracted, or by which the common rights of navigation or fishery recognized to the United States by the late treaty of peace, or accruing to them by virtue of the laws of nations may be abridged." Warren, op. cit, p. 657, Farrand, op. cit. Vol. 4, p. 58. The awareness of the Founding Fathers that the Constitution authorizes self- executing treaties disposing of the territory and property of the United States also appears from the following amendment to the Constitution proposed by the Ratify- ing Convention of Virginia: '7th. That no commercial treaty shall be ratified without the concurrence of two- thirds of the whole number of the members of the Senate; and no treaty ceding, contracting, restraining, or suspending, the territorial rights or claims of the United States, or any of them, on their, or any of their rights or claims to fishing in the American seas, or navigating the American rivers, shall be made, but in cases of the most urgent and extreme necessity; nor shall any such treaty be ratified without the concurrence of three-fourths of the whole number of the members of both houses respectively." Elliot, Debates on the Federal Constitution Vol. 3, p. 660. A letter from Hugh Williamson, a delegate to the Convention from North Caroli- na dated June 2, 1788, reminded James Madison of the background of the treaty clause and the requirement of a two-thirds majority in the Senate: "* * * It is said that some antifed in Maryland on the last Winter fastened on the Ear of Genl. Wilkinson who was accidentally there and persuaded him that in case of a new Govt, the Navigation of the Mississippi would infallibly be given up. Your Recollection must certamly enable you to say that there is a Proviso in the new Sistem which was inserted for the express purpose of preventing a majority of the Senate or of the States which is considered as the same thing from giving up the Mississippi. It is provided that two thirds of the Members present in the Senate shall be required to concur in the making Treaties and if the southern states attend to their Duty, this will imply % of the States in the Union together with the President, a security rather better than the present 9 States especially as Vermont & the Province of Main may be added to the Eastern Interest and you may recollect that when a Member, Mr. Willson objected to this Proviso, saying that in all Govts, the Majority should govern it was replyed that the Navigation of the Mississippi after what had already happened in Congress was not to be risqued in the Hands of a meer Majority and the Objection was withdrawn." Farrand, op. cit, vol. 3, pp. 306-307. The text of the Constitution and its history thus support the proposition that a treaty disposing of the territory and property belonging to the United States can be self-executing. I am aware of a number of decisions of the Supreme Court holding that Article IV, section 3, clause 2 of the Constitution is of an exclusive nature, and that some have argued from those decisions that treaties disposing of property of the United States must be implemented by legislation enacted under that clause of the Consti- tution. It should be noted, however, that the decisions declaring Article IV, section 3, clause 2 to be exclusive related to the authority of the Executive and Judicial Branches to dispose of the territory or property of the United States. None of them dealt with the question here involved, the power of the treaty-making authority to make such disposition. To the contrary, as shown in my opinion, there is a substan- tial body of Supreme Court decisions dealing with Indian treaties which holds that a treaty may dispose of territory belonging to the United States without implement- ing congressional legislation under Article IV, section 3, clause 2. Of those cases, Holden v. Joy, 17 Wall. 211 (1872), appears the only one in which the question was raised whether Article IV, section 3, clause 2 of the Constitution precludes such a treaty from being self-executing. The Court conceded that the question was immaterial in the case at bar because Congress had actually imple- mented and ratified that particular treaty. Nevertheless, it rendered the following strong dictum: "* * * [S]till it is insisted that the President and Senate, in concluding such a treaty, could not lawfully covenant that a patent should issue to convey lands which belonged to the United States without the consent of Congress, which cannot be admitted. On the contrary, there are many authorities where it is held that a treaty may convey to a grantee a good title to such lands without an act of Congress conferring it, and that Congress has no constitutional power to settle or interfere 279 with rights under treaties, except in cases purely political. Much reason exists in view of those authorities and others which might be referred to, for holding that the objection of the appellant is not well founded, but it is not necessary to decide the question in this case, as the treaty in question has been fully carried into effect, and its provisions have been repeatedly recognized by Congress as valid." At 247. In addition to the Indian treaty cases, in United States v. Percheman, 7 Pet. 51, 88-89 (1833), the Court held self-executing certain clauses of the Florida Treaty with Spain which related to the regulation of property rights in newly acquired territory. Those provisions of the treaty thus came within that part of Article IV, section 3, clause 2 which gives Congress power to make all needful rules and regulations respecting the Territory of the United States. If a treaty which deals with that part of Article IV, section 3, clause 2 can be self-executing, the same reasoning applies to a treaty coming within another part of that clause. The final point which I wish to make is that throughout our history Presidents acting with the advice and consent of the Senate have made numerous self-executing treaties transferring territory or property belonging to or claimed by the United States. One example, cited in the Opinion, is the 1819 Florida Treaty with Spain. Under that treaty the United States ceded all its territory beyond the Sabine River in Texas to Spain in return for the cession of the Spanish territories of East and West Florida. While there had been some dispute over some of the relevant boundaries, the congressional debates, as well as President Monroe's annual message to Congress, make it clear that many considered the action to be an outright cession of American territory in exchange for Spanish territory. 36 Annals of Congress 1719-38, 1743-81; 2 J. Richards, Mes- sages and Papers of the Presidents 55 (1896). There was no statute authorizing this cession of American territory. There have been numerous other treaties which have transferred U.S. territory or compromised U.S. claims. See, e.g., United States-Great Britain Treaty of 1842 (Webster- Ashburton), 8 Stat. 572, T.S. No. 119; United States- Great Britain Treaty in regard to limits westward of the Rocky Mountains of 1846 (Oregon Treaty), 9 Stat. 869, T.S. No. 120. In conclusion, the text and history of the Constitution, as well as the decisions of the Supreme Court and historical treaty practice all support the opinion I recently rendered that property of the United States may be transferred by treaty absent statutory authorization. Thank you, Mr. Chairman. If you or the members of this Committee have any questions, I shall be pleased to answer them. Statement of Herbert J. Hansell Mr. Chairman, Members of the Committee: I appreciate the opportunity to appear before you today to discuss the new Panama Canal Treaties. Judge Bell's statement has explained the Administration's view with reference to the Constitutional issues that have been raised concerning transfer of property by treaty. The State Department is in full accord with the view expressed by Judge Bell. If the Committee wishes any additional information or expression of views from the Department of State on this subject, we will be happy to provide it. I believe that it would be helpful to you if I focus on four additional aspects of the Treaties: 1. The timing and manner of transfers of U.S. property to Panama; 2. The legal structure that will replace the Canal Zone; 3. The organization of the new Canal Commission; and 4. The necessary implementing legislation. 1. PROPERTY TRANSFER First, as to property transfers, Article XIQ of the Panama Canal Treaty provides for the transfer of property by the United States to the Republic of Panama in stages. Upon entry into force of the Treaty, the United States will transfer to the Republic of Panama its interests in real property, including non-removable improve- ments, not to be used by the United States, under the Treaty. This transfer includes the Panama Railroad and some of our facilities in the port areas of Balboa and Cristobal. Title to housing owned by the Panama Canal Company prior to the entry into force of the Treaty will also pass to the Republic of Panama at the outset of the Treaty. However, the United States will retain, without cost, the use of the housing deemed necessary for the accommodation of United States citizen employees of the Canal Commission during the life of the Treaty. Housing occupied by United States Armed Forces will not be transferred at that time, except a few units which are made available to the Panamanian forces. 280 Real property not transferred to Panama upon the entry into force of the Treaty will pass to Panama during the term of the Treaty, if the United States agrees to discontinue the use of the area in which the property is located. During that period specified military housing units will likewise be transferred to Panama. Upon termination of the Treaty, the Panama Canal shall be turned over to Panama in operating condition and free of liens and debts, except as may be otherwise agreed upon by the Parties. At that time, all remaining United States interests in real property and non-removable improvements used by the United States under the Treaty and related agreements, and all equipment remaining in Panama related to the management, operation and maintenance of the Canal, will pass to the Republic of Panama. 2. THE NEW LEGAL SYSTEM Mr. Chairman, I now turn to the new legal system that will supplant the Canal Zone. A. General structure Upon entry into force of the Treaty, the Canal Zone will cease to constitute a separate area governed by the United States, and the Canal Zone Government will end its operation in Panama. The Republic of Panama reassumes plenary jurisdic- tion throughout its territory, subject to the privileges, immunities and arrange- ments established pursuant to the Panama Canal Treaty to protect the interests of the United States Government and American citizens serving the Panama Canal. Special provisions will apply during the first 30 months to ensure a smooth transfer of the various jurisdictional functions to the Republic of Panama. B. Criminal jurisdiction During that 30-month transition period, the United States will have primary jurisdiction over criminal offenses committed within areas used by the United States citizen employees of the Panama Canal Commission, members of the United States Armed Forces, the civilian component of the Armed Forces and dependents of those groups. During the transition period, the U.S. police and courts continue to exercise criminal jurisdiction and U.S. criminal law continues to be applicable. During that period, the United States may continue to incarcerate individuals in the areas used by the United States or to transfer them to penal facilities in the United States to serve their sentences. Upon the end of the transition period, while Panama will acquire primary crimi- nal jurisdiction over United States citizen employees regardless of the place of the offense within Panama, Panama will, as a matter of general policy, waive its jurisdiction at the request of the United States in cases of offenses committed by United States citizen employees or their dependents that are punishable under the laws of both nations. In cases of waiver of its jurisdiction by Panama, the accused must be tried outside Panama, since the U.S. courts in Panama will cease to function in all cases after the expiration of the transition period. Upon the end of the transition period, the United States retains primary jurisdic- tion over criminal offenses committed by members of the United States Armed Forces, including civilian component and dependents, within the defense sites, and over offenses committed by such persons outside the defense sites arising out of performance of official duty and in certain other cases. An accused United States citizen employee, a member of the United States Forces or its civilian component or a dependent tried by Panama is entitled to special rights, specified in detail in the Implementing Agreements. Among these are the right to a prompt and speedy trial, the right to be informed in advance of trial of the charges made, the right to confrontation and cross-examination of witnesses, the right to legal counsel and the privilege against self-incrimination. C. Privileges and immunities Installations owned or used by agencies and instrumentalities of the United States operating in Panama, and their archives and documents, are to be inviolable. The Parties are to agree upon procedures to be followed in the conduct of any criminal investigation by Panamanian authorities at such locations. Agencies and instrumentalities of the United States operating in Panama pursu- ant to the Treaty are immune from the jurisdiction of the Republic of Panama. In addition, the United States may designate up to twenty officials of the Panama Canal Commission who with their dependents shall enjoy the privileges and immu- nities accorded to diplomatic agents and their dependents under international law and practice. 281 D. Continuation of activities and ownership rights The Treaty contains provisions protecting established business enterprises and non-profit activities, and private ownership rights. Business and non-profit activities conducted in the Canal Zone for at least six months prior to the signing of the Treaty may be continued. They will have 30 months to come into compliance with Panamanian law. Thereafter they will be subject to all Panamanian laws applicable to similar enterprises in Panama, without discrimination. Existing private owner- ship rights in buildings and other real property improvements located in the Canal Zone will be recognized in conformity with Panamanian law. The Treaty assures to the owners of improvements the use of the land upon which the improvements are located, upon specified terms. If Panama requires persons protected by the Treaty to discontinue their activities or to vacate their property for public purposes, they shall be compensated by Panama at fair market value. E. Exemption from Panamanian taxes The Implementing Agreements provide exemptions from Panamanian taxes for United States agencies and their personnel, including dependents, and contractors. 3. ORGANIZATION OF THE PANAMA CANAL COMMISSION Next, Mr. Chairman, I want to provide to the Committee a brief summary of the basic organization of the new Canal Commission. As the Committee members know, the operation of the Canal will be transferred from the Panama Canal Company to a new U.S. Government agency to be known as the Panama Canal Commission. The Commission is to be supervised by a Board composed of nine persons, of whom five will be nationals of the United States and four nationals of the Republic of Panama proposed by their government. Until December 31, 1989, the Administrator will be a national of the United States and the Deputy Administrator a national of the Republic of Panama. After that date, the Administrator will have Panamanian nationality and the Deputy Administrator will be a U.S. national. If the Republic of Panama requests the removal of a Panamanian national from membership on the Board, the United States shall honor the request and the Government of the Republic of Panama shall propose the replacement. If the United States wishes to remove a Panamanian national, the two governments shall consult in advance to reach an agreement on such removal. The United States has the right to remove an Administrator or Deputy Administrator of Panamanian nationality. In such case, Panama shall pro- pose another Panamanian national to replace the removed official. In addition to the participation of Panamanian nationals at the top management level just described, there shall be an increasing participation of Panamanian na- tionals at all other levels and fields of employment. A Panama Consultative Committee, composed of an equal number of high-level representatives of both nations, shall be appointed to advise both governments on matters of policy affecting the Canal's operation. 4. IMPLEMENTING LEGISLATION Finally, Mr. Chairman, I am pleased to have this opportunity to report to this Committee on the proposed legislation to implement these Treaties that is being prepared for submission to Congress in the near future. That legislation of course will be an essential component of the overall program of implementation of the Treaties. Among the subject matters on which legislation will be needed are: A. Organization and activities of the new Panama Canal Commission, including arrangements for establishing and collecting tolls and payment of the stipulated sums to Panama; B. Employment practices of the Panama Canal Commission, and the special retirement program envisaged in Article X of the Treaty; C. Adjustments of the jurisdiction of U.S. courts and law enforcement authorities during the transition period; and D. Certain diplomatic aspects of United States-Panama relationships under the Treaty, and other matters relating to Panama's assumption of various governmental functions. The Executive branch looks forward to working with both houses of Congress on this important legislation. In conclusion, Mr. Chairman, I would like to assure the Committee of our convic- tion that these treaties establish the legal structures and relationships necessary to assure fair and just treatment of United States citizens, a smooth and effective 282 transition to Panamanian authority and continued efficient and peaceful operation of the Canal. Statement by Honorable Clifford L. Alexander, Jr. INTRODUCTION Mr. Chairman, members of the Committee on Foreign Relations, I appreciate the opportunity to appear before you today as you receive testimony regarding the impact of the proposed new Panama Canal treaty on future Canal operations. As you know, my primary responsibility as Secretary of the Army is the head of the Department of the Army. However, the Secretary of the Army has also a major responsibility for overseeing the effective and efficient operation of the Panama Canal. Specifically, the Secretary of the Army has been designated by the President: "As the officer of the United States to Supervise the adnnnistration of the Canal Zone Government * • • and to act as stockholder of the Panama Canal Company. In performing his functions * * • the Secretary of the Army shall act as the direct representative of the President of the United States, and not in his capacity as head of the Department of the Army." I want to assure you that I do not take this duty lightly. I firmly believe in the importance of the Canal to our country and will be the first to identify myself with those who believe that the Canal will continue to be a valuable asset in the foreseeable future. However, I am equally firm in my support for restructuring our treaty relationship with Panama. By negotiating a new treaty relationship with Panama, our country has shown that it can be sensitive to and respectful of Panama's needs and desires as a sovereign state, while continuing to insure United States interests and the contin- ued effective use of the Canal by world commerce. I believe that through these treaties our country can insure that protection of its vital interests while, at the same time, put to rest the old conflicts and frustrations that have impeded the development of a cooperative partnership between our country and Panama. The Canal treaties provide our country with an excellent opportunity to do justice to our real accomplishments in Panama, correct past inequities, protect the legiti- mate needs of the United States and international shipping, and rightly take into account the aspirations of the people of Panama. We can achieve all this in a spirit of cooperation and accommodation that has previously been known on few occasions in the history of U.S.-Latin American relations. I would like to present a short opening statement outlining my views with regard to the future operation of the Canal, after which Governor Parfitt will provide additional and more detailed data. We will then be glad to answer any questions which you might have regarding current and future Canal operations. Over the past 63 years the Panama Canal enterprise has provided a valuable service to world shipping. This exceptional performance by the Canal organization has often been recognized by members of Congress as well as by the users of the Canal. Under the new treaty we will continue to operate the Canal utilizing, to the greatest extent possible, tried and proven procedures — those which have been ac- cepted by the users and the Congress. Required deviations from proven practice and established managerial procedures will beheld to the minimum necessary to con- form to the letter and spirit of the treaty. In my view this is most desirable, and certainly achievable under this new treaty. I would like to comment briefly on three general aspects of Canal operations under the proposed new treaty: activities of the Panama Canal Company, the functions of the Canal Zone Government, and finally caring for our employees. THE PANAMA CANAL COMPANY The treaty calls for the Panama Canal Company to be replaced by a successor agency to be known as the Panama Canal Commission. The Commission will be a self-supporting United States Government agency with the same broad mission as the Panama Canal Company: The movement of ships between the oceans and the conduct of supporting functions incident thereto. While the Commission, will control the lands and waters necessary to the transit of ships and will not be precluded from conducting any activities which are directly related to that function, it will not perform certain supporting activities which are now conducted by the Canal Company. Examples of the latter are: commercial port 283 operations, commercial bunkering, commercial ship repair and retail sale of goods and services. Although the existing Panama Canal Company retail store system will be discon- tinued, Commission employees will be authorized use of military exchanges and commissaries for the first five years of the treaty. I will propose that after that period an additional compensation be provided to employees in order to offset the associated increase in their cost of living. There will be an increase in toll rates at the beginning of the treaty period as a result of the increased payments to Panama. This toll increase will insure that adequate revenues are available to cover additional costs at the outset of the new relationship. We are now conducting a detailed analysis to determine the exact toll increase which will be necessary to meet expenditures. In subsequent years we would hold tolls to the minimum necessary to meet costs, as has been past practice. I recommend that the future Canal organization continue to be operated under the provisions of the Government Corporation Act thus enabling us to utilize business and management practices which will best provide efficient operations at minimum costs to the user. THE CANAL ZONE GOVERNMENT Under the new treaty the Canal Zone and its Government will cease to exist six months after the exchange of ratifications. Nevertheless, in those cases where a Governmental service is essential to the well being of our employees we have retained the necessary rights for the United States to provide the needed service. Thus, health and educational functions now provided by the Canal Zone Govern- ment, which include over 67% of the Canal Zone Government's employees, will be transferred to the Department of Defense. United States citizen employees of the Commission will, of course, retain the right to use these facilities for the life to the treaty. The Governmental functions of police, courts, customs and immigration will be assumed by the Republic of Panama on the effective date of treaty. It should be noted; however, that for United States citizen employees and their dependents, police and court activities will be continued by the United States for a period of three years after the exchange of ratifications. While the Canal Zone postal system will be discontinued, its services will be assumed in part by the U.S. military post offices in Panama. The fire protection division will be reduced in strength and transferred to the Commission. RIGHTS AND BENEFITS OF EMPLOYEES One of the most important issues to be considered regarding the new treaty is how the rights and benefits of current employees of the Canal enterprise will be protected. Let me list just a few of the many actions which we will take or propose be taken in order to adequately deal with this matter. Provision of a priority job placement program. Provision of an early optional retirement program which would be designed to ease the impact of necessary force reductions while at the same time providing an incentive for employees with essential skills to remain with the Commission. Assurance of the continued availability of adequate housing. Provision of adequate educational and medical services. Terms and conditions of employment no less favorable than those existing on the effective date of the treaty. In short, Mr. Chairman, the treaty will provide us with all the rights necessary to adequately care for both the Panamanian and United States citizens of our dedi- cated work force. CONCLUSION Mr. Chairman, under the new treaty we would retain all of the specific rights necessary to efficiently operate the canal and adequately care for our employees. Governor Parfitt will now provide you with more detailed information on Canal operations. Presentation by H. R. Parfitt Mr. Chairman and members of the Foreign Relations Committee, you have asked that I outline to you my impressions on how the Panama Canal organization will operate under the new treaty, and I will attempt to do so. 284 First, however, I should note that my remarks are based on an initial review of the recently signed treaty documents. Considerable further analysis must be made before precise implementation plans can be developed. This effort is underway. A prime consideration in the determination of method of operation under a new treaty should be an assessment of how well the existing organization has functioned. On that score, one need have no reservations. From the completion of the canal in 1914, and continuing today, the canal has been operated efficiently, safely, and has provided excellent service at reasonable cost. CURRENT SITUATION At this point it might be helpful to briefly review the current situation. The agencies known as the Panama Canal Company and the Canal Zone Government have existed since July 1, 1951, when Public Law 811 became effective. Business operations, including operation of the waterway, are separated from the functions associated with civil government, but both organizations function as an integrated enterprise. By law, the Panama Canal Company is required to finance its operating costs, and in addition, to pay annually to the U.S. Treasury, the following: (1) interest on the net direct investment of the U.S. Government in the Company; (2) the net cost of the Canal Zone Government; and (3) a portion of the annuity to Panama. Thus the Company is required to be self-sustaining. Although appropri- ations are authorized to cover operating losses or for capital improvements, this has not been necessary to date. Major contributing factors toward this success have been: (1) a stable and well qualified workforce; (2) sound preventive maintenance practices; and (3) the finan- cial and operational flexibility of this Government corporation. Some measure of the success of the Panama Canal Company since its formulation in 1952 can be gleaned from the few highlights of FY 1952 through FY 1976 results which follow: A. Although transits increased 70 percent and Panama Canal tonnage increased 274 percent during the period, the full-time workforce was reduced 35 percent. B. Net revenues of S90 million were generated. C. Capital investment of $284 million was made from internally generated funds. D. Although general, inflation indexes increased 230 percent over the period, tolls were in effect raised only 50 percent. It should be noted, however, that this increase has been required in the last three years. Operating losses during the past four years due to rampant inflation, worldwide recession, and the reopening of the Suez Canal have been overcome by management improvements, cost cutting, and the recent adjustments to tolls. As a result we are again in the black in FY 1977. Traffic growth is expected to continue, but at a moderate rate; and even without treaty impacts, periodic increases in tolls may be necessary to absorb the increase in costs resulting from inflation. In the short run, North Slope oil movements through the Canal could temporarily alter our growth pattern and need for tolls increases. However, these movements are not expected to last more than a few years as pipeline alternatives appear to be more economical. Given the success of the present agency, it seems logical to model the Canal Commission after it, making adjustments consistent with the requirements imposed by the new treaty but avoiding unnecessary change in the interest of operating stability. TREATY PROVISIONS With this in mind, I will now briefly review the most significant provisions of the treaty likely to influence the structure of the new organizational entity and its ability to perform the basic mission of transiting ships safely and efficiently through the canal. The dominant and all encompassing change under the treaty is immediate recog- nition of Panamanian sovereignty and general territorial jurisdiction over the pres- ent Canal Zone. This provides a back drop against which all other changes must be viewed. Given this basic change, the status of the new Canal Commission takes on the semblance of a business enterprise operating in a foreign country. Obviously, it is somewhat more than that since the new operating agency, the Pa n ama Canal Commission, will be a United States Government agency and will be granted exten- sive rights, particularly as they pertain to the management, operation and mainte- nance of the Panama Canal. More specifically, the treaty would eliminate the Canal Zone Government and the Panama Canal Company and substitute therefor the Panama Canal Commission. 285 This agency will have no authority to perform most governmental or commercial functions. Many of these functions will be performed sifter the effective date of the treaty by Panamanian government agencies or private interests in Panama. These include: the operation of the ports of Balboa and Cristobal; the operation of the railroad; provision of bunkering services; licensing of vehicles, vessels, and aircraft; customs and immigration services; and partial police and fire protection; street maintenance; and garbage collection. The total police function, the operation of the prison system, and the provision of postal, commissary and post exchange services (available initially from the U.S. military) will likewise be provided by Panamanian sources after prescribed phase-out periods. Other functions — the operation of schools and hospitals— will be transferred immediately to the U.S. military forces. Aside from these changes in functional authority and responsibility, there are major changes in areas and facilities made available to the commission. These are identified in great detail on maps and in descriptive language in the agreement in implementation of the treaty. Briefly they fall into three categories: the Canal operating area consisting of a continuous area following the Panama Canal and generally contiguous to it, plus certain limited non-contiguous areas; specific instal- lations and facilities; and housing areas for U.S. citizens. The housing areas are to be administered in accordance with a regime of civil coordination, that is, a set of rules established in the implementing agreement. This regime provides that title to this housing will pass to Panama with the Commission having rights, without cost, to use, manage, maintain, improve, and rent such housing. Houses not required for U.S. citizen employees will pass exclusively to Panama and must, as a. minimum, be relinquished in accord with a prescribed schedule. The reduction in functions, activities, and area of responsibility of the Commis- sion will have a significant financial impact. There will be substantial reduction in expenses although this will be offset in part by a reduction in revenues from transferred activities. It is also anticipated that the Commission will be relieved of the requirement to pay interest on the net direct investment of the United States in the Canal. On the other hand, the Commission will be obliged to pay $10 million per annum to Panama as reimbursement for certain specified public services to be provided in canal operating areas and housing areas. At the same time, the Treaty imposes obligations to pay Panama the following out of revenues: 30 cents per Panama Canal net ton transiting the canal, to be adjusted periodically for inflation; a fixed sum of $10 million annually; and an additional $10 million per year to the extent revenues exceed expenditures. The latter $10 million has a provision that in the event canal operating revenues in any year do not produce a surplus sufficient to cover this payment, the unpaid balance shall be paid from operating surpluses in future years in a manner to be mutually agreed. The resulting difficulty in accumu- lating surpluses for application in lean years would appear to significantly restrict the flexibility of the new organization. In net, these additional obligations are certain to necessitate an immediate toll increase of an as-yet-uncertain amount. A new study of toll economics is now underway, with results due by mid-January. This study will update traffic projec- tions, including the likely extent and duration of North Slope oil movement, and will provide an analysis of the sensitivity of canal traffic to various levels of toll increase. The initial toll increase might range from 25% to 40% depending on several variables, key among which is the amount of revenue realized from transits of North Slope oil through the canal. If no such oil were to materialize — the worst case— the toll increase required to cover costs could be about 40%. If $25 million in annual revenue materialized from North Slope oil — the most optimistic current projection — then tolls might only have to be raised by about 25%. The Treaty provides that the Panama Canal Commission will be supervised by a Board of Directors comprised of five United States nationals and four Panamanian nationals. Until 1990 the Canal Administrator (the Chief Executive Officer) will be a United States national and the Deputy Administrator will be a Panamanian nation- al. There will be a Consultative Committee comprised of an equal number of representatives from the United States and Panama which will advise the two governments on such questions as general tolls policy and on employment policies aimed at increasing Panamanian participation in canal operation. There will also be a Coordinating Committee which will establish rules and procedures necessary to implement a number of provisions of the Treaty and their related agreements. The conditions of employment are of paramount importance, and in recognition of this, the Treaty and Implementing Agreements contain considerable detail on this subject. Unfortunately, there is no way that a change as major as the one contem- 286 plated can be accomplished without some adverse impact on employees and their families. Thus, efforts are being made to ameliorate any hardships. Those individ- uals displaced from employment will be placed, to the maximum extent feasible, in other appropriate jobs. Those employees continuing with the Commission will have, in general, terms and conditions no less favorable than those existing just prior to the Treaty effective date. Furthermore, an early-optional retirement program will be provided for all persons employed by the Company/Government immediately prior to the entry into force of the Treaty. As a final point, the Treaty enters into force six calendar months after exchange of instruments of ratification and terminates at noon, December 31, 1999. The major effects are felt on the effective date of the Treaty; however, there will be changes through the life of the Treaty with the most important taking place during the 30- month transition period. At the end of this period the limited jurisdictional authori- ty granted to the United States will cease. ENABLING LEGISLATION The impact discussed so far has been limited to that which would result from the Treaty terms themselves. In addition, enactment by Congress of implementing legislation will be necessary. Such legislation will also have a definite impact on our operations, and we have been assisting in its preparation. In my view, the legisla- tion should incorporate changes in the Canal Zone Code, so as to: Establish the Panama Canal Commission as the successor to the Panama Canal Company and the Canal Zone Government with respect to whatever property and functions of the government are retained; Generally conform the toll provisions and other fiscal provisions of present law to the new Treaty; Conform present personnel laws to the Treaty and provide special benefits to those affected by the Treaty, including liberalized retirement; and Amend provisions concerning court jurisdiction and related law enforcement mat- ters to conform to the treaty provisions that would govern the 30-month transition period following the effective date of the treaty. PLANNING FOR THE FUTURE .Thus far our participation in the Treaty process has primarily been in the area of providing to our negotiators detailed technical information as well as our views on Treaty initiatives. Now that the Treaties have been made available, our first task, which we are well into, is to review and analyze the lengthy and complicated Treaty documents. We have briefed the employees and the general public in the Canal Zone on the Treaties; are identifying areas that need clarification and problems that will require resolution; and have begun detailed planning to position ourselves to implement provisions of the Treaty at the appropriate time. More specifically, we are identifying activities which must be shed on a specific timetable and estimating their cost and revenue impacts; further identifying in the same terms the secondary impacts of shedding functions and facilities; considering required organization changes; and planning for the myriad of personnel actions that will ensue to include establishment of reduction-in-force and bumping rights and procedures, extra efforts to aid displaced employees and their families, and development of plans and programs for priority placement and training of Panama- nians; planning for modification of capital programs consistent with changed re- sponsibilities; and planning for financial changes with major emphasis on the extent to which toll rate increases are required and projected traffic sensitivity to any such increases. We are planning to pattern the new organization as closely as possible after the existing one. We are, of course, very mindful of the fact that all of this work must be done without adversely impacting on current mission accomplish- ment. I want to emphasize that these essential planning efforts are only that, and no pre-implementation is involved. Finalization of plans would follow Senate approval of the Treaties. Implementation of such plans will proceed in accord with the Treaties and the related implementing legislation. FUTURE OUTLOOK As indicated previously, we have not yet had adequate opportunity to identify and fully address the myriad of matters involved in implementing the Treaty. We have, however, accomplished much and have a good start on the job at hand. Based on our evaluation to date, the tentative conclusions are as follows. Minimum change needs to be made in staffing and operation of activities involved directly in the operation of the waterway. There are some potential problems here stemming from interface 287 with port operations and certain general support activities transferred to others. Some erosion in efficiency can be expected, particularly in the early days, but this can be minimized by close coordination and the wholehearted cooperation of Panama. There is no doubt, however, that transfer of support services from the direct control of the canal administration will create some problems in obtaining services at the same level that we enjoy now. On the basis of force projections, it appears that the shedding of activities is likely to reduce the size of the work-force by between 5,000 and 6,000 employees on the effective date of the Treaty, of which between 2,100 and 2,400 will be transferred to the Department of Defense. A further reduction of approximately 500 will occur by the end of the 30-month transition period. SUMMARY To summarize, the treaty eliminates the Canal Zone and recognizes sovereignty and jurisdiction of Panama. The new agency (Panama Canal Commission) will operate within a reduced area, with reduced assets and functions, but with exten- sive rights related to the movement of ships through the Panama Canal. The transitional period will be especially challenging. The key to success, especially at that time, but as well throughout the Treaty period, will be the ability to maintain a technically qualified and highly motivated workforce, as well as successful efforts to establish and nurture a spirit of cooperation with Panamanian officials. Legisla- tion consistent with the spirit of commitments made to employees will be critically important. Equally important will be the ability to provide for the financial needs of the Commission, including capital requirements whose cost is apt to increase con- tinuously due to inflation. Mr. Chairman, in the short time available, I have only been able to touch generally on those major areas where I feel there will be a significant impact on the way the canal would be run under the Treaty. As we proceed with our large task of planning to dischange major responsibilities for the operation of the canal until the year 2000, we are mindful of the extraordinary strength of the existing canal organization — of its sound flexible financial structure and, most importantly, its personnel. We are blessed with employees who feel a deep relationship to the canal; their dedication to keeping it well maintained and smartly run, and their willing- ness to go the extra mile in any emergency are truly extraordinary. To the extent these strengths can be retained, our ability to meet the challenges in the months and years ahead will be enhanced. We shall lend our every effort to insure that our performance will not falter and that we shall conclude that chapter of history of U.S. presence on the Isthmus of Panama on a high note. Statement by the Honorable William J. Jorden Mr. Chairman and distinguished members of the Foreign Relations Committee: It is a pleasure and an honor to appear again before this Committee. The Panama Canal treaty which you have before you for your advice and consent is a document of historic importance. I hope I will be able to provide information and insights that will be of use to you in your momentous deliberations. A few brief biographic notes might be in order. I have been the U.S. Ambassador in Panama since April 1974. Before that, I was a senior member of the staff of the National Security Council dealing with Latin American affairs in general. Before that, I was a special assistant to former President Lyndon Johnson, helping him to organize his presidential library and write his memoirs. I have been in the foreign affairs area of government for 16 years, in the Department of State and the White House. Before that I was a newspaperman, for 14 years, almost wholly in the foreign policy area— first for the Associated Press and then for the New York Times. Let me say at the outset, Mr. Chairman, that I have followed the course of the treaty negotiations fairly closely over recent years. I am also generally amiliar with the history of our relations with Panama over the years since the 1903 treaty was adopted. Based on my own observations of the situation in Panama and my awareness of our deep interest in the Canal, I wish to say that I am wholeheartedly in favor of the proposed treaty and the related treaty concerning the permanent neutrality and operation of the Panama Canal. I believe they represent the best, the wisest, the most statesmanlike course we can follow at this juncture of history. When I was invited to appear before this Committee. I asked myself what I could provide that would be most useful. I knew you would have heard from the Secretary of State regarding the foreign policy implications of the new treaties. You would have heard a detailed report on the treaties themselves from my two distinguished 288 colleagues who negotiated the agreements, Ambassadors Bunker and Linowitz. You have explored the security and military implications of the treaties with the Secre- tary of Defense and the Chairman of the Joint Chiefs of Staff. As for the technical operations of the Canal itself, now and in the future, my colleagues at this session — Secretary Alexander and Governor Parfitt — can provide more detailed information than I can. What I would like to do is to look at this matter from the vantage point of the Isthmus of Panama. How did we get where we are? Where do we go from here? What course best serves our fundamental interests? How do Panamanians look at all this? What are the prospects for a reasonable working relationship between our countries? These are some of the questions I would like to address with you. I am sure the members of this Committee are familiar with the dubious history of the treaty of 1903 which the present agreements would replace. That treaty, written and signed in unseemly haste, is what Panamanians call "the treaty no Panama- nian ever signed." As you know, it was developed and approved by a Frenchman who — it is fair to say — had little interest in the future of Panama, but a great interest in salvaging what he could of the financial interests of the defunct French Canal Company. It gave the United States rights it would have "if it were sovereign of the territory" — and it gave us those rights "in perpetuity." We agreed to pay Panama $10 million and the munificent sum of $250,000 a year and in the debate in the Senate which followed, one member of this august body said: "We have never had such a concession so extraordinary in its character as this. In fact, it sounds very much as if we wrote it ourselves." Incidentally, the payment to the French Company was $40 million — four times what we paid Panama. It was an arrangement, Mr. Chairman, greatly advantageous to the United States, and vastly profitable to the French Canal Company. But it was not much of a deal for Panama. It was an arrangement which — as the Secretary of State admitted at the time — was "we must confess, with what face we can muster, not so advanta- geous to Panama." "You and I know too well," he wrote his senatorial friend, "how many points there are in this treaty to which a Panamanian patriot could object." And object they did. There is a notation widespread among our fellow Americans that Panama- nian resistance to the 1903 treaty is something of recent origin, a development of the last few years. And some have portrayed opposition to the 1903 treaty as merely a product of "leftists" and "extremists." That, Mr. Chairman, is the wildest kind of distortion of history. If one takes the trouble to go back to the files of the Panama- nian press of the period, you quickly find that resistance to the 1903 treaty began in 1903. And it has never ceased since. This is an issue — probably the only issue — which brings Panamanians together in a kind of national unanimity that is rare in history. Some members of this Commit- tee have been in Panama; I urge those who have not to make the trip. Talk with Panamanians. You will find that whether they are rich or poor, city men or campesinos, university graduates or day laborers, they are as one in their dream of a Panama that is unified and sovereign, a country that is no longer divided in half by a foreign enclave. And this brings me, Mr. Chairman, to one of the central points I wish to make today. For us Americans, the key goal in this situation— it seems to me — is to assure that the Panama Canal is open and efficient, available to us and to world com- merce, and that it be properly protected against external attack. I believe the treaties before you give us that assurance. Opponents of those treaties would have you believe that Panama's key role is to take over the Canal. That, I submit, misses the whole point, the whole explanation of Panamanian attitudes. They want a canal that works well as much as we do. They have pride in it; they benefit from it. The issue, as seen through Panamanian eyes, is not the canal at all. Rather it is the presence in a friendly country of a zone governed by the United States. It is an area over which Panama— the country in which it is located— has absolutely no control of any kind. If a Panamanian is caught speeding or is involved in an accident, he gets a ticket from a foreign policeman. If the offense is serious enough, he is tried in a foreign court, under a foreign code of laws. You and I can well imagine what the reaction would be of Americans faced with such a situation. Suppose, for example, that history had dictated that the Mississip- pi River and a strip of territory on each side were controlled by a foreign power. Suppose that in going from Illinois to Missouri, or from Louisiana to Texas you had to cross that strip. And imagine, if you will, that you broke the law in some fashion — by speeding or having a tail light out, or whatever — and you were arrested by a French gendarme or a Mexican policeman. It does not take great imagination to know what our reactions would be. Yet that is the situation that our Panama- nian friends have found themselves in for the past 70 years. That is what they have for so long wished to see changed. That is what the treaty now before you will change. And I for one say that it is high time for such change. What is our central interest in Panama? I submit that it has not changed essential- ly since President Theodore Roosevelt's day. It is to maintain between the two great oceans a passageway that is open, efficient, safe and neutral. Our commercial interest in that waterway continues to be significant — though in a world of chang- ing trade patterns and changing technology, it is less than it once was. Our military interest, too, continues — though, again, it is not what it once was. I think that all of us are agreed that the maintenance of the Canal in an efficient and open way is a great advantage — to us and to the other nations of the world. How do we best achieve that end? Not, I think by being inflexible and bull- headed. Not by simplistic formulas like "it's ours and we're going to keep it." No waterway or road, no military base or business can long remain open and efficient if it is surrounded by a sea of public hostility and resentment. But, you may well ask, don't the Panamanians realize that the Canal is a major resource that produces great benefits for them? Of course they do. They want to have the Canal open and operating well just as much as we do, perhaps more. They know better than we do what it means to them and their country. Their feelings — and I share it — is that the best guarantee of a canal that is working well and serving us all is one in which the American people and the Panamanian people are working as partners. And that is precisely the goal of the treaty that is before you. There can be no better security for the Panama Canal than to have the people who live around it, who work on it feel that it is part of them — and that any effort to attack it or disrupt its operation is an attack on them and on their best interests. I am sometimes asked, Mr. Chairman, whether we can "do business" with Panama? My answer is Yes" — at least if in dealing with this small country we try to understand what it is really like and if we treat it as a powerful yet fair nation must treat a neighbor. I believe it is fair to say that Panama has deeper and closer ties with the United States than has any other country in Latin America. In large part that is because of the presence of the Canal and because of the many ties that have developed between us stemming from that fact of geography. Thousands of Panamanians have attended our colleges and technical schools. They have come to know us well and to develop a respect for our way of life, for its freedom and its fairness. And if they feel some bitterness over the historical record, it is, in part, because they see such a gap between what we have sometimes done and what we have professed. Despite some rhetorical outbursts and occasional incidents and demonstrations, there is remarkably little anti-Americanism in Panama. The vast majority of Pana- manians harbor warm and friendly feelings toward our country and our citizens. They want us as friends, not enemies. Nonetheless, I realize that some Americans living in the Canal Zone feel other- wise. They are nervous and concerned. I think we can all understand that. For they see in a new treaty an end to the very special and protected way of life they have enjoyed. They have gone through a very trying period in which they felt their future was being changed, and they were not at all sure in what direction. In the absence of hard information, many of them imagined the worst. They became vulnerable to every rumor and exaggerated prediction. And there has been no shortage of rumors and exaggerations! Now, I think, the situation is changing drastically. With the publication of the text of the treaties, Americans in the Canal Zone realize they have not been sold down the river. They understand that their basic employment rights, job security and the like are preserved. Thanks to the efforts of Governor Parfitt and Secretary Alexander, there is a vastly better perspective as to what a new treaty means — and will not mean. One thing that has greatly bothered many people in the Zone is the prospect of being subject to Panamanian laws and jurisdiction. To meet this concern, the treaty negotiators reached agreement on certain procedural guarantees — set forth in an annex to the treaty — that assure certain special protections to any American who, in the future, may face prosecution. Those protections include the right to a speedy trial, to a lawyer of choice, to full disclosure of charges, to have a representative of the U.S. Government present at any trial, etc., etc., down a very long list. I believe the Government of Panama has every intention of living up to these guarantees. I am sure they would not have agreed to these special features at all if they had no intention of abiding by them. Moreover, it is clear that the Panamanians want as 29-*00 0-78 290 many Americans as possible to remain in their country for some time — to provide the skills needed to keep the Canal operative and to train Panamanians to do those jobs. My clear impression is that, as these various features of the new treaty have become known, the outlook among Americans in the Zone has moderated. I believe that the vast majority — are ready to see how such a treaty works in practice, to give it a fair chance. In this connection, I should point out to this Committee that there are some 3,000 American employees of the Canal Company who will be affected by a change in their life style and in the rules of the game. At the same time there are some 6,000 Americans living and working peacefully in Panama — in banks and businesses, selling and buying, teaching and preaching, in short doing all the things that Americans are doing in most other countries around the world, day in and day out — without special privileges or special rules. With time — and with good will on both sides — I think our citizens now in the Zone will find that it is not that difficult to live and work in another country. I have been asked by friends here and in Panama how the various joint boards and committees provided for in the treaty will work out. As you know, there is provision for a consultative committee to act as a kind of policy advisory board to the Panama Canal Commission. There will also be a coordinating committee of both Americans and Panamanians to help see that the provisions of the treaty are carried out in an orderly and reasonable fashion. Similarly, on the military side, there will be a combined board of senior military representatives as well as a joint committee to help carry out the military provisions of the treaty. I cannot say, of course, how these various bodies will conduct their business. They will be breaking new ground and carrying out functions that have not previously existed. What is clear, of course, is that the working of any body of men and women depends on the quality of people selected to do the job— and on the spirit in which they undertake their tasks. I have been assured by the highest levels of the Pana- manian Government that they want these various groups to be efficient and to work in harmony. For that purpose, they have told me, they intend to pick the best possible and most highly qualified people available. Given that spirit, I see no reason why these joint groups should not work in harmony and in the best interest of both countries. A related question is whether the Panamanians will ever be able to run the Canal. There is a kind of arrogance in the very question that I do not like. It reminds me of the way some people used to talk of the impossibility of Egyptians ever running Suez. In an earlier period, you will recall how unthinkable it was in London that a bunch of ragtag colonists could ever run their own affairs. The short answer, Mr. Chairman, is that of course Panama will be able to run the Canal. 70 percent of the work force now operating the Canal is Panamanian. They could doubtless fill many of the administrative and technical jobs tomorrow. As for some of the more highly developed skills, there is no reason why Panama- nians cannot acquire them in a reasonable time. And we can help greatly in providing the necessary technical training. One final question that is frequently asked: In giving the Canal to Panama, wouldn't we be turning it over to a left-wing military dictatorship? My answer to that loaded question is, first, to note that under the treaty we are discussing, the United States retains the responsibility for operating and the primary responsibility for defending the Canal for the remainder of this century. The government that finally will take control of Canal operations will not be the present government. And we cannot know precisely what form of government that will be— any more than we know what our own condition will be in the year 2000. But more than that, I would say that the American people have been given a quite distorted picture of the present Government of Panama. It is not a full-blown democracy as you and I understand that term. Frankly, there are things I would like to see changed in the system. But I am not a Panamanian and it is not for me to prescribe what is good or bad for others. That is a judgment only the Panama- nian people can make — as they will over time. We can perhaps explore these matters more fully if you like. One thing I do know, Mr. Chairman: if we wish to encourage change in what we regard as a positive and constructive direction — in Panama or in any other country — we can only do so in an atmosphere of friendship and trust, of cooperation and mutual advantage. We cannot hope to see our values flourish, we cannot expect to have our suggestions heeded, we cannot work effective- ly with others toward the goals we cherish if we try to do so in an atmosphere of bitterness and frustration. It is to the goal of eliminating the bitterness of the past 291 and the frustrations of the present that the treaty now before you is so largely aimed. I hope it will receive your thoughtful and favorable consideration. PANAMA CANAL ISSUE Mr. Mathias. Mr. President, we are in the process of posing questions to the Carter administration on its proposed Panama Canal Treaty. Whether or not we ratify this treaty will depend largely on how effective the President is in making his case to us and to the country. As a very useful contribution to the ongoing debate, I should like to insert in the Record an editorial by the Cleveland Press together with the very useful response written by one of my constituents, Reed I. Irvine of Silver Spring, Md. I ask unanimous consent that this article be printed in the Record. There being no objection, the material was ordered to be printed in the Record, as follows: Panama Canal Issue After bloody riots in the Canal Zone that left 25 dead in 1964 and after tortuous negotiations since then, the United States and Panama at last have agreed "in principle" on the future of the Panama Canal. In a historic and sensible step toward decolonialism, the Carter administration wishes to yield control over the waterway and the 533 square mile Canal Zone to Panama in the year 2000. The negotiators no doubt feel they have accomplished a difficult feat, but the hardest part lies ahead: to convince the required 67 U.S. senators that it is in the national interest to ratify a new canal treaty. While we may change our mind after a word-by-word reading of the treaty — it has not yet been written — the outlined agreement seems fair to both sides and we hope the Senate approves it. The Panamanians made major concessions: Letting the Americans run the canal for 23 more years; accepting a U.S. military presence until 2000; agreeing that U.S. forces could return after that date to defend the canal, and scaling down their annual rental demands to $50 million, which can be covered by canal tolls. Unfortunately the canal issue is an emotional one in this country and a violent debate can be expected. Ronald Reagan and other conservatives are fond of declaim- ing, "We bought it, we paid for it, we built it and we ought to keep it." In fact, "we built it" is about the only accurate part of the statement. We didn't buy it; Teddy Roosevelt used to admit proudly that he "took" the Canal Zone and all but blackmailed Panama into ratifying the one-sided 1903 treaty giving the United States rights there "in perpetuity." However, it's pointless to argue about ancient history. What this country got away with in an era of imperialism is not what it should practice today. It makes more sense to argue about the canal's value, which is much exaggerated by its admirers. Diplomatically it is a handicap. It is seen throughout Latin America as proof of "Yankee imperialism" and thus harms the nation's interests in the hemisphere. Strategically it is obsolete. Big aircraft carriers, large naval vessels and modern tankers cannot fit through it. That is why this country built a two-ocean Navy. Also, the canal is indefensible; in wartime one Soviet submarine could close it with one nuclear missile. Economically the canal is overrated. It now carries only 2 percent of this coun- try's coast-to-coast trade. And by the year 2000 its military and economic value will be less than today's. Americans ought to try to look at the canal through Panamanian eyes. It was stolen from them. It is an open wound dividing their country, diminishing their nationhood. It is their main natural resource — held by foreigners. There are only 1.7 million Panamanians but they are united in their determina- tion to regain the Canal Zone. If the Senate succumbs to demagoguery and jingoism and defeats the treaty, one can expect guerrilla warfare and sabotage of the canal. 292 In their struggle the Panamanians will have the backing of all Latin America. Should this country risk a nasty little tropical Vietnam over a waterway that isn't worth much anymore? Senate, September 3, 1977. Editor, The Cleveland Press, Cleveland, Ohio Sir: Your editorial on the Panama Canal on August 12 was flawed by several factually inaccurate statements. 1. You said that we "built" the Panama Canal but we didn't "buy" it. Of course, the United States paid both for the construction of the canal and for the territory through which it was built. We built the canal at a cost of $375 million, a figure which would amount to some $2.5 billion at today's prices. We paid Panama $10 million for the rights to the Canal Zone and we paid individual landowners nearly $5 million for title to their property in the zone. We subsequently paid $25 million to Colombia to compensate it for its claims on the zone. In addition we paid $40 million to the private French company that had tried and failed to build the canal for its rights and equipment. The Canal Zone has been called our most expensive territorial acquisition. 2. You state that the Panama Canal is obsolete strategically, arguing that "large naval vessels and modern tankers cannot fit through it." Two former chairmen of the Joint Chiefs of Staff and two former chiefs of Naval Operations have sent a joint letter to the President in which they say: "As long as most of the world's combatant and commercial tonnage can transit through the Canal, it offers inestimable strate- gic advantages to the United States . . . Under the control of a potenial adversary, the Panama Canal would become an immediate crucial problem and prove a serious weakness in the overall U.S. defense capability, with enormous potential conse- quences for evil." These experts note that all naval vessels except the largest (13) carriers can transit the Canal. Modern tankers carrying Alaskan oil are now tran- siting the Canal. Only huge supertankers cannot make the passage, and the U.S. does not have ports that can accommodate supertankers. 3. You say that the Canal is overrated economically. The New York Times says that it saves $1.5 billion on the prices of American imports and exports. Higher prices for our exports caused by higher transportation costs could drive our already excessive trade deficit even higher, as our ability to compete with other countries weakened. The Canal is of even greater economic importance to several Latin American countries, who use the Canal for the majority of their shipping. 4. You say the Canal "was stolen" from the Panamanians. Rubbish! How could we have stolen the Canal when it was we who built it? As noted above, we paid a high price for the land, and Panama was delighted that we built the canal there and not in Nicaragua. They have reaped enormous benefits from it, including the attain- ment of a per capita GNP of over $1,000 a year. Reed Irvtne. [From the Congressional Record— Sept. 30, 1977] THE PANAMA CANAL TREATIES— 11 Mr. Allen. Mr. President, Senators are always glad to receive letters from constituents. This morning I received a most interest- ing letter from a constituent from Guntersville, Ala., a long-time friend, now some 85 years of age. In his letter, he gives some interesting history about the financing of the Panama Canal. At the suggestion of the distinguished majority leader, I do ask unanimous consent that I may speak, irrespective of the rule of germaneness. The Presiding Officer. Is there objection? Without objection, it is so ordered. Mr. Allen. I thank the Chair. I thank the distinguished majority leader. This is some information that I did not have on the early financ- ing of the Panama Canal. This letter comes from Mr. J. P. Willis, Sr., who was formerly the president of the First National Bank of Guntersville, Ala. He is retired from that position, though he and his family still own the bank. He speaks of Senator John T. Morgan, one of Alabama's greatest Senators, who served for a period of 30 years in the U.S. Senate, and who has been called the father of the Panama Canal. The prominent part that Senator Morgan played in the planning of the Canal and the great work that he did over the years in advocating an Isthmian Canal is related pretty fully in a most interesting book that has recently been published. It is called the "Path Between the Seas," published by Simon and Schuster this year, written by McCullough. I think it ought to be required read- ing for everyone who is interested in the proposed Panama Trea- ties. It is a most interesting book, going back to the early days of the concept of the Isthmian Canal. It speaks of the DeLesseps efforts, taking it on down to the completion of the canal. It tells about the great work of three great Alabamians in the planning of the canal and the advocacy of the canal. Of course, Senator John T. Morgan took, possibly, the leading part in the entire Congress in pushing for the Isthmian Canal. He recommend- ed Nicaragua, by the way, rather than Panama. We might have to go the Nicaraguan route yet, but we cannot do it if we approve this treaty, because it provides that we cannot even negotiate with another country about an Isthmian Canal without the permission of Panama. So we are going to have to defeat the treaty if we are ever going to have a sea-level canal anywhere other than Panama in this century. Dr. William Crawford Gorgas and Colonel — later General — Wil- liam L. Sibert were the two other Alabamians that played impor- tant roles in the great story of the building of the Panama Canal. Going on about the financing of the canal, Mr. Willis writes: As I remember the United States sold $200 million 2 percent consoles (sic) to the National Banks of that day to use in the construction of the canal. That is they issued the amount in National Bank notes and only paid 2 percent interest on the bonds. In turn the banks had to maintain 5 percent of the amount with the Government — I guess we would call that a compensating balance today — 294 to guarantee the assurance that they would repay for the bills destroyed and reissued, and would have to pay all costs of reissue and postal expense for shipment to the banks. So most of the 2 percent interest was taken up in expense, but gave some measure of publicity to the National Banks. We would receive about two shipments of renewal bills all in tens and twenties each month. We had to sign the bills as Presidents and cashiers of the banks, then cut them apart ready to put in circulation. That was no small job itself. Thousands and thousands of those bills are now in the hands of former bank officials and friends who hold them as keepsakes. I have one myself. I am quoting Mr. Willis, not speaking for myself: I have one myself with my name on it, and I gave some to friends. I think our bank still has a few of them. All this means the government is in that much as it is just a piece of paper but the government will have to redeem them if ever present- ed. But Mr. Roosevelt redeemed the bonds — I am sure that is Teddy Roosevelt — and they have not have any more 2 percent money bonds. And now all currency is issued by Federal Reserve Bank. There is a postscript to his letter, a little sheet attached. This former president of the First National Bank of Guntersville said: I do not owe any money. I have not paid any interest in 20 years. They could not use me in Washington. I think probably that is correct. An interesting feature of the letter is reference to the word "consols." I must admit that my familiarity with Government secu- rities or mv lack of familiarity did not cause me to be familiar with the word 'consol" as being a security. I ask unanimous consent that an excerpt marked here from the Webster's International Dictionary, second edition, which is in the Marble Room, be printed in the Record at this point. There being no objection, the excerpt was ordered to be printed in the Record, as follows: con' sols (kon' solz; kon' solz'), n. pi. [Contr. of corcso/idated (annuities).] The British funded government securities. In 1751 a considerable part of the public debt of Great Britain, consisting of various public securities, chiefly representing debt contracted in the form of annuities at various rates of interest on the sum borrowed, was consolidated into one fund at 3 per cent interest, the account of which is kept at the Bank of England. Since 1903 the interest has been 2% per cent. Before the World War consols constituted more than half of the national debt, and the market price was regarded as a gauge of the national credit. Consols is also sometimes applied to obligations of the United States government which may legally be depos- ited to secure national bank notes. Mr. Allen. It is a very, very interesting bit of information. I am indebted to Mr. Willis for making me familiar with this word. Possibly other Senators are familiar with it, "consol," or the plural c-o-n-s-o-l-s, a contraction of the word "consolidated": The British funded government securities. In 1751 a considerable part of the public debt of Great Britain, consisting of various public securities, chiefly repre- senting debt contracted in the form of annuities in the various rates of interest on the sum borrowed, was consolidated into one fund at 3 percent interest, the account of which is kept at the Bank of England. Since 1903, the interest has been 2V2 percent. Before the World War, consols constituted more than half the national debt, and the market price was regarded as a gauge of the national credit. Then the second definition: Consols is also sometimes applied to obligations of the United States Government, which may legally be deposited to secure national bank notes. 295 Since national banks no longer issue bank notes, this type of security apparently has gone out of use. I call that to the Senate's attention as an interesting sidelight of the Panama Canal issue. I might say, also, that the Panama Canal was built at less than the estimated cost, even though they ran into all sorts of difficul- ties in the construction of the canal. That could not happen today in this day of cost overruns. I ask unanimous consent that this letter from Mr. Willis be printed in the Record. There being no objection, the material was ordered to be printed in the Record, as follows: The First National Bank, Guntersville, Ala., September 10, 1977. Hon. James B. Allen, U.S. Senate, Washington, D.C. Dear Senator Allen: It is Great to note that you expect the Panama Canal to have your best effort to prevent the Give Away. Glad that you have brought the name of John T. Morgan back to the memory of our people. I think I am correct that his very early home was just over the Clay County line in Talladega County near Clairmont Springs. My visit to the old home place prob- ably some 70 to 75 years past. A very small three or four room house such as so many people lived in at that time. John T. Morgan deserves the name ascribed to him as father of the Canal. As I remember that the United States sold $200, Million 2 percent Consoles to the National Banks of that day to use in the construction of the Canal. That is they issued the amount in National Bank notes and only paid 2 percent Interest on the bonds. In turn the banks had to maintain 5 percent of the amount with the Government to Guarantee the assurance that they would repay for the bills de- stroyed and re-issued, and would have to pay all costs of reissue and postal expense for shipment to the banks. So most of the 2 percent interest was taken up in expense, but gave some measure of publicity to the National Banks. We would receive about two shipment of renewal Bills all in 10's and 20's each month. We had to sign the bills as Presidents and Cashiers of the banks, then cut them apart ready to put in Circulation. That was no small job itself. Thousand and Thousands of those bills are now in the hands of former bank Officials and friend who hold them as keepsakes. I have one myself with my name on it, and I gave some to friends. I think our bank still has few of them. All this means the government is in that much as its just a piece of paper but the Government will, have to redeem them if ever presented. But Mr. Roosevelt redeemed the bonds and they have not had any more 2 percent money Bonds. And now all currency is issued by Federal Reserve Bank. I hope you are successful in defeating the give away. I tell all my friends that your conservative stand is natural as it is the Allen families that I always knew. Chesley B. Timothy and John all of Clay County. Also, Columbus C. of Gadsden. I attended court a number of times when he was attorney on the cases. However I never knew him as I did those who continued to live in Clay County. I spoke to you a few days ago when you visited at the courthouse and as I said then I have no complaint of your record as our Senator. I know I can depend on you taking the right stand. I am now 85 and most of all the organizations I belong to have issued life Membership. Just this moment 2 fellows came by and will take my picture for the VFW Hall of which I am a life member. If I am wrong on the birthplace of John T. Morgan I would like to know as my Memory is not too good anymore. Sincerely, J. P. Willis, Sr. 296 PANAMA CANAL TESTIMONY Mr. Sparkman. Mr. President, the Committee on Foreign Rela- tions continued its hearings today on the Panama Canal Treaties. The witnesses today were the Honorable Brock Adams, Secretary of Transportation, the Honorable Richard N. Cooper, Under Secre- tary of State for Economic Affairs, the Honorable Anthony M. Solomon, Under Secretary of the Treasury for Monetary Affairs, and Mr. Howard F. Casey, Deputy Assistant Secretary for Mari- time Affairs in the Department of Commerce. I ask unanimous consent that the prepared statements of these witnesses be printed in the Record. There being no objection, the statements were ordered to be printed in the Record, as follows: Statement of Brock Adams Mr. Chairman and Members of the Committee: I am pleased to be here to discuss with you the Panama Canal treaties. I strongly support the ratification of these treaties. As the Secretary of Transportation, I am concerned about whether the Panama Canal will serve this Nation's short term and long term transportation needs. In the short run, the treaty serves those needs, by settling long standing disputes which could have resulted in conflict hampering Canal traffic and by assuring that the U.S. will continue to manage the Canal for the next 25 years. In the long run the treaty provides a series of mechanisms whereby we can both study needed changes in the Canal to meet increased demands and then build any needed improvements together with Panama. Decisions concerning the future role of the Canal will depend to a great extent on the demands of the market place. A shipper'9 decision to use the Canal will depend on the competitiveness of alternative routes and modes of transportation. These alternatives include shipments around the Horn in supertankers, new oil or slurry pipelines, railroad transport or future "land bridge" or "minibridge" developments. These market place decisions should be made in a climate of "certainty" regard- ing that waterway. If potential users of the Ct-nal are assured that the canal will continue to be operated efficiently and that its capacity will be increased if economi- cally justified, then the canal has the potential to become an increasingly important transportation link. If not then usage will be uncertain. Ratification of the treaties will provide this assurance. You have heard testimony from Secretaries Vance and Brown, Ambassadors Linowitz and Bunker, and others on the diplomatic and national defense aspects of these treaties. Today, I would like to speak to the transportation consequences of the treaties before you and in this regard I would like to present to you factual data concerning the use of the existing Canal for commercial shipping. That data is contained in the charts appended to my prepared statement, and I would like now to have that data presented to you by Mr. Edward Scott, Assistant Secretary for Administration, who has been involved in Canal matters affecting the Department. The treaties permit the United States to retain effective control over Canal operations until the year 2000, when as was highlighted in Mr. Scott's presentation, according to the estimates of most informed observers, traffic through the present lock Canal will be approaching the Canal's capacity. I think that the time has come to reappraise the future of the Canal and to plan for that future. As Mr. Scott has pointed out, one of the problems of the existing Canal is that supertankers and other large specialty ships are too large to transit the Canal. The treaties give us the capability to address this problem. They commit both the United States and Panama to study the feasibility of a sea-level canal. A sea-level canal could be used by these very large ships. Further, the treaties contem- plate the building of any such canal in Panama where our studies suggest it could be most economically constructed. The treaties further grant the United States the right to construct a third lane of locks beside the present Canal. While there is much debate about the technical wisdom of such an undertaking, a third lane of locks could increase the capacity and extend the useful life of the present Canal. In any event, it is clear that the next 25 years are critical and during that time the United States and Panama must jointly make some very important decisions regarding the future of the Canal. 297 I believe these treaties create a climate for a technological review that will permit these decisions to be made in an orderly manner. We must take the Canal and its operation out of the political arena and undertake these next 25 years of redirection in a context of mutual respect and cooperation. So, in summary, it is not solely a question of whether the treaties are good foreign policy or defense initiatives, which I believe they are, but I submit that they are important to the transportation vitality of the present Canal and of any future Canals. The Department of Transportation will have an important role to play in the examination and evaluation of options for the future development of the Panama Canal. We welcome that challenge and I believe it is one which we will be able to carry out effectively in the context of the treaties which you have before you for ratification. I therefore urge, without qualification, your prompt ratification of the treaties which I believe are consistent with a framework for strengthening the overall fabric of our national transportation system. I will be pleased to answer any questions you may have. [Appended charts not printed in the Record] THE PANAMA CANAL-CANAL TRAFFIC-PANAMA CANAL COMMERCIAL OCEAN TRAFFIC Fiscal year Transits Average ships per day 1915 1,108 3.0 1921 3,371 9.2 1936 6,453 17.6 1951 7,751 21.2 1966 11,925 32.6 1967 12,412 34.0 1968 13,199 36.2 1969 13,146 36.1 1970 13,658 37.4 1971 14,020 38.4 1972 13,766 37.7 1973 13,841 37.9 1974 14,033 38.4 1975 13,609 37.2 1976 12,157 33.3 Source: Panama Canal Co., annual reports. U.S. oceanborne cargo through Panama Canal Millions Year: of tons 1958 27.2 1959 28.9 1960 34.8 1961 37.5 1962 40.5 1963 35.5 1964 40.7 1965 44.1 1966... 48.6 1967 53.1 1968 57.8 1969 63.9 1970 74.8 1971 77.9 1975 85.6 In 1975, 14 percent of U.S. oceanborne tonnage passed through Panama Canal. Sources: Based on Paddleford, Norman J., and Stephen R. Gibbs, Maritime Commerce and the Future of the Panama Canal, Cambridge, Md.: Cornell Maritime Press, 1975; and Panama Canal Co., Annual Report, 1976. 298 MAJOR TRADE ROUTES IN CANAL TRAFFIC Trade route 1976 Panama Canal « Percent of total 2 40 610 318 12 293 96 9,639 8 940 7.5 69 7 206 56 5,213 4,314 3 991 40 3.4 31 3,777 3,217 2,867 2 556 2.9 2.5 2.2 20 104,623 23,161 18.1 East Coast United States-Asia Europe-West Coast United States/Canada Europe-Asia East Coast United States-West Coast America Europe-West Coast South America U.S. Intercoastal (including Alaska and Hawaii) Europe-Oceania East Coast United States/Canada-Oceania East Coast Canada-Asia South American Intercoastal West Coast South America-West Indies West Coast United States-West Indies Subtotal All other routes Total 127,784 100.0 Mn the thousands of tons. 2 57.4 percent of Canal traffic originates or terminates in U.S. ports. Source: Panama Canal Co., "Annual Report, 1976." INCREASE IN SHIP SIZE Ves- Per- Ves- Per- Fiscal year sels • cent 2 sels 3 cent 2 1976 3,071 25.0 4,010 32.7 1975 3,120 22.6 4,000 29.0 1974 3,201 22.4 3,843 26.9 1973 2,581 18.1 3,205 22.5 1972 2,085 14.6 2,428 17.1 'Vessels of 600-foot length and over. 2 Percent of total. 'Vessels of 80-ft beam and over. Source: Panama Canal Co., "Annual Report, 1976." Future traffic predictions also suggest Canal reaching capacity— projected canal transits [A// ^^j 1976 (Actual) 13,201 1980 15,400 1985 16,100 1990 17,600 1995 19,400 2000 21,300 Theoretical canal capacity 26,800 Source: Based on Paddleford, Norman J., and Stephen R. Gibbs, Maritime Commerce and The Future of the Panama Canal, Cambridge, Maryland: Cornell Martime Press, 1975; and Panama Canal Company, Annual Report, 1976. CONCLUSIONS There are decisions that need to be made concerning Canal capacity and size. Future Canal development needs to take place in context of national transporta- tion plans. The treaties will provide the framework for rationally addressing these decisions. Statement by Richard N. Cooper Mr. Chairman and Members of the Committee: I appreciate the opportunity to discuss with the Committee the plans for improved economic cooperation between the United States and Panama which will complement the process of implementing 299 the new Canal arrangements. The programs that Under Secretary Solomon and I will discuss today are entirely separate and independent from the new treaty, although the idea of having this associated package arose during the last few weeks of the treaty negotiations. Secretary Vance and Ambassadors Bunker and Linowitz have already described for the Committee the provisions within the Treaty which will provide for Panamanian participation in Canal revenues. The arrangements we discuss today are not directly related to the Canal but, rather, are an expression of our friendship and cooperation with the people of the Republic of Panama and reflect our interest in the economic well being of that country. As this Committee is aware, the discussion of economic arrangements associated with the Treaty were among the most difficult issues encountered in the negotia- tions. Panama's negotiators proposed that the United States pay Panama a large initial lump-sum payment and a very sizable annuity, either of which far exceeded the most optimistic estimates of gross Canal revenues. The Panamanian negotiators sought to justify these proposals by assigning high economic value to the economic and security benefits derived by the United States from the Canal, without compa- rable benefits to Panama. They further suggested that, as a counterpart to United States investment in the Panama Canal, Panama had provided its unique geograph- ic location, much of its prime land and water resources, as well as the labor of its people to the Canal effort. Panama also cited the low remuneration received by Panama under the present treaties and the value to our security interests of the military bases and the new neutrality arrangements. In a more compelling argu- ment, Panama's negotiators maintained that Panama's national priority lies in the rapid social and economic development of its people with wide distribution of the benefits. Both the economic provisions within the Treaty and the economic arrangements outside it are based on our shared recognition of the special relationship created by the interest in the Canal. Panama's development would serve the interests of the United States by fostering the stability which is the underpinning for an open, safe, efficient and accessible Canal before and after the expiration of the treaty which you are now considering. Giving the Panamanians a stake in the operation of the Canal makes political and economic sense — it will ensure Panamanian cooperation in the efficient run- ning of the Canal operation while also building broad political support for the enterprise in Panama. The broader program for improved economic cooperation with Panama rests on a similar assumption— that improving the welfare of an increasing number of Panamanians will result in a stable political climate in which the sound administration of the Canal can continue. As was covered in earlier testimony, for the purposes of the annuitv payments in the treaty, the economic provisions in the treaty reflect the United States position that the Canal operating revenues would be the source of financing. The purpose of this formula is to give Panama an equitable share of Canal benefits and assure a vital Panamanian interest in the efficient operation of the Canal. The arrangements outside the treaty also reflect the perception that Panama and the United States have mutual interests, specifically, in fostering economic develop- ment and the well being of the Panamanian people. Since we believe that Panama- nian development during the new treaty period could serve as a means of promoting an environment helpful in the operation of the Canal during and after the new treaty period, the United States Negotiators arranged for the Panamanian negotia- tors to meet with representatives of the Departments of State and Treasury, A. ID. and the Export-Import Bank to discuss Panama's development needs. Out of these discussions emerged a program which will be undertaken outside the treaty; which will introduce no special assistance devices and which is subject to all applicable procedures under existing programs. Its contents were outlined to the Panamanian Government in the form of a diplomatic note signed by Secretary Vance on Septem- ber 7, the date of the signing of the two treaties concerning the Panama Canal. I understand that a copy of this diplomatic note has already been provided the Committee. The note outlines a program, to be undertaken on a best efforts basis, which seeks to enhance Panamanian development with the participation of the private sector in the United States as well as Panama. It is composed of the following elements: Up to $200 million in Export-Import Bank loans, loan guarantees or insurance over a 5-year period subject to approval by the Bank; Up to $75 million in A.I.D. Housing Guarantees over a 5-year period; and A guarantee by the Overseas Private Investment Corporation of $20 million in United States private capital to the Panamanian National Finance Corporation fCOFTNA) for use in productive projects in the Panamanian private sector. 300 The Secretary's note of September 7 also proposes issuance of repayment guaran- teed under our Foreign Military Sales Program not to exceed $50 million over a 10- year period. This aspect of the program is to assist Panama in assuming its in- creased responsibility for Canal defense during the new treaty period. It too is designed to further the spirit of cooperation between the two countries. Like the other parts of the program outside the treaty, the Military Sales Program is not a grant to be financed by the American taxpayer. The only appropriations required would be to cover 10 percent of the annual program in the form of deposits in a special reserve account. Under Secretary Solomon will discuss the Overseas Private Investment Guarantee and the Eximbank program. I would like to expand on the rationale for the A.I.D. housing guarantee program proposed in the Secretary's note. The purpose of the A.I.D. housing program is to provide housing to lower-to- medium income groups in less developed countries. The program provides a full faith and credit U.S. Government guaranty to private U.S. lenders who make loans for housing projects in less developed countries. The program demonstrates the valuable contribution of private capital and foreign investment to the social and economic development of such countries. The 5-year program proposed for Panama in the economic cooperation proposal would — as other elements of the package — fit within existing statutory authoriza- tion. The guarantee program was proposed in the early 1960's and is designed to be self-sufficient and has not required Congressional appropriations. Total current housing guarantee authority is $1,055 billion. The proposed Panama program would conform to the statutory limitations of $25 million per year to any one country and an average annual face value of $15 million. In other words, we are using existing programs — which are proven tools for furthering U.S. interests in many overseas economic areas — to strengthen Panamanian development and the cooperative rela- tionship between the two countries. Panama has had several successful A.I.D. housing guarantee projects. To date, A.I.D. has guaranteed a face amount of approximately $26 million in loans. Another $15 million project is now under consideration. This represents an 11 -year course of activity involving 8 projects. The United States and Panama have agreed that the Canal should continue to be operated in an efficient manner and every effort should be made to ensure that the Commission is designed to run in a businesslike fashion. This is an important shared interest since the economic provisions of the new treaty as well as the operating cost of the Canal are to be sustained from Canal revenues. The Commis- sion should be structured as a self-sustaining business which would finance the payments to Panama under the treaty as operating expenditures. The Executive Branch will submit to the Congress implementing legislation to the treaty which will execute these requirements. Finally, I would like to say a few words about the treaty provisions concerning the sea-level Canal. Both Panama and the United States are committed to study jointly the feasibility of such a canal. Any arrangement for the construction of a sea-level canal must be agreeable to both countries. Panama agreed that no third country be permitted to build a sea-level canal in Panama except with our consent In exchange, Panama asked the United States to agree to limit any sea-level canal construction to Panama. This was an acceptable stipulation — as the Committee is aware — in light of the 1970 study by the Interoceanic Canal Commission which concluded that the two preferred routes for a sea-level canal excavated by conven- tional means are both in Panama. Again, it appears to us that the interests of both countries are secured by the outcome of the negotiation. That concludes my statement. I welcome your questions. Statement by the Honorable Anthony M. Solomon I am pleased to be here to discuss the economic aspects of the Panama Canal Treaty and the economic cooperation arrangements. You have already heard testimony on the annuity and royalty payments Panama will receive according to the new treaty. My understanding is that these payments represent Panama's share of the benefits from operation of the Canal: they will be paid out of Canal revenues, and not out of U.S. tax revenues. These payments provisions will also serve U.S. interests by enlarging Panama's stake in the secure and efficient operation of the Canal. 301 In addition to the payments provisions of the treaty, we have extended to Panama, as Under Secretary Cooper has noted, an offer of economic cooperation involving as much as $295 million in U.S. loans, guarantees, and insurance, which I will presently discuss in detail. The benefits to Panama from the financial provisions of the treaty and the economic cooperation arrangements will be significant and timely. In the decade prior to 1974 Panama's GDP increased at an annual average rate of 7.3 percent. In 1974, however, economic growth abruptly slowed to 2.6 percent, and last year there was no growth. A major cause of Panama's economic slowdown was uncertainty over the future of the Canal, resulting in a marked decrease in private investment (which increased only slightly in 1974 and 1975 and fell by 25 percent in 1976). In addition, worldwide recission, the increase in the price of oil, and the recent de- crease in sugar prices also contributed to Panama's large current account deficits. The Government of Panama attempted to maintain overall investment levels by increasing public investment to offset the decline in private investment. As a result, the central government budget deficit increased from $69 million in 1973 to $122 million in 1976. This, combined with borrowings to finance Panama's current ac- count deficits, caused total public sector debt to rise from $0.6 billion in 1973 to $1.4 billion in 1976. There is reason, however, for some optimism about the future of Panama's econo- my. Panama has negotiated two stabilization agreements with the IMF (one last year and one in March 1977), and has taken steps to reduce the government deficit and limit public sector debt. World economy recovery will help to narrow Panama's current account deficit. Above all, the single most important factor in bringing returned vigor to the Panamanian economy will be settlement of the Canal issue, and the resulting restoration of a favorable investment climate in Panama. We expect that, as a consequence, foreign and domestic private investment will rise appreciably, leading to increases in employment, reduced budgetary pressure on the Panamanian government, and improvements in its external accounts. Panama's new economic program and settlement of the Canal issue are the fundamental requirements for returning Panama to its former path of economic growth. The payments provisions of the new treaty and the economic cooperation arrangements are ancillary to these developments, but we believe they will provide the extra boost to contribute to Panama's long-term economic development. This is of importance to the United States, in the sense that economic stability and an improved standard of living in Panama will strengthen the ability of Panama to act as our partner in the Canal enterprise, bearing its share of the responsibilities. We have designed arrangements for economic cooperation with this goal in mind, selecting financial assistance programs which are nonconcessional, befitting Panama's stage of development, and directed at meeting Panama's present economic needs for low-income housing and a revived private sector. The U.S. will benefit additionally from these economic arrangements, through participation by U.S. investors and business in the Eximbank, OPIC and housing investment guaran- tee programs the arrangements entail. I would now like to turn to the two aspects of the treaty effort in which I had a direct role. Treasury did not directly participate in the treaty negotiations. My contribution was to recommend economic cooperation arrangements, and to provide advice on the financing arrangements for the new Panama Canal Commission. ECONOMIC COOPERATION ARRANGEMENTS The proposed economic cooperation arrangements consist of: (1) an offer by the Overseas Private Investment Corporation to guarantee up to $20 million in borrow- ings in the U.S. capital market by the Panamanian development bank, (2) an offer by the Export-Import Bank to provide up to $200 million in loans, loan guarantees and insurance for individual U.S. export sales over a five-year period; and (3) a pledge by the Administration to consider providing up to $75 million in housing investment guarantees over a five-year period. In addition, we will provide up to $50 million in guarantees over a ten-year period under our Foreign Military Sales program. These particular arrangements were selected not only for the benefits they are expected to bring to both the U.S. and Panama, but also for the reasonable level of risk they present and their compatibility with the financial assistance programs involved. All of these offers are subject to compliance with legal and managerial requirements, and, as necessary, availability of funds. The housing guarantee aspect of the economic cooperation arrangements and the FMS offer have been addressed by Under Secretary Cooper. 302 As for the offer by Eximbank to provide up to $200 million in loans, guarantees and insurance, I would like to point out that the portfolio risk to Eximbank as a result of its offer will be small. With an additional $200 million to Panama over five years, exposure in Panama will amount to less than 1.37 percent of Eximbank's total existing portfolio. Project risk will be controlled in the usual manner, since each transaction will be subject to the normal Eximbank's financial, legal and engineering criteria— including Eximbank's statutory requirement to find a reason- able assurance of repayment. Once the Canal issue is settled and investment in Panama accelerates, Panama will become an expanding market for U.S. exports. This projected market expansion is expected to give rise to more applications for Eximbank support, and Eximbank has indicated that its business in Panama could well amount to $200 million over the next five years. A guarantee by the Overseas Private Investment Corporation of $20 million in borrowing by the Panamanian development bank would raise OPIC's exposure in Panama to only 8.5 percent of its total existing portfolio, a reasonable level of portfolio risk. The risk to OPIC will be further reduced by a Government of Panama guarantee. OPIC has also stipulated that its offer to Panama depends on terms being negotiated which are acceptable to the OPIC Board. This will be the first time OPIC has participated in financing the expansion of a government-owned development bank, although OPIC is permitted to do so by longstanding OPIC Board policy guidelines. The Panamanian development bank, COFINA, is engaged in supporting the development of private enterprises in Panama through project lending. This function is both wholly compatible with OPIC's mission and in accord with our view that it should help strengthen the private sector of Panama's economy. FUTURE FINANCING OF THE PANAMA CANAL COMMISSION Turning now to the financial aspects of the Canal operations, an essential point in negotiating the treaty was that any new entity established to operate the Canal must be self-financing over the life of the treaty. Our negotiators made it clear to the Panamanians that any arrangements which did not conform to this principle would not be acceptable to the U.S. I assure you that we will continue to be guided by that principle. The Administration will make every possible effort to see that costs of the Canal operation are contained and that revenues are sufficient to cover liabilities. However, as a normal provision for management flexibility, I feel it is appropriate for the Panama Canal Commission to have the authority to borrow, as does its predecessor agency, the Panama Canal Company. Thus, the Administration will request a continuation of this authority in the implementing legislation. I believe the following guidelines should be followed by the Commission in its borrowings. First, any borrowing by the Panama Canal Commission should be strictly limited to an amount sufficient to support the Commission's operations. The Commission should not have the authority to borrow for any other purpose, such as the general economic development of Panama. Second, all borrowing should be at a rate of interest equal to the cost of money to the U.S. Treasury for the period of time under consideration. Third, the repayment schedule will be tailored so that all borrowings will be fully repaid before the expiration date of the treaties. Mr. Chairman, this concludes my formal statement. I will be happy to answer any questions the Committee may have. Statement of Howard F. Casey Mr. Chairman and Members of the Committee, I am Howard F. Casey, Deputy Assistant Secretary of Commerce for Maritime Affairs. I appreciate this opportunity to appear before the Committee on behalf of the Department of Commerce and the Maritime Administration to assist you in your deliberations on the recently signed Panama Canal Treaty and the Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal. Our interest in the two treaties relates primarily to the provisions regarding the commercial operation of the Canal and their potential effect on the U.S. Merchant Marine. Although both treaties contain articles that will govern future Canal oper- ations, it is the Panama Canal Treaty that relates most directly and substantially to our concerns. The Panama Canal has great economic significance for the United States and, in particular, the U.S. Merchant Marine. Indeed, this significance has been increased by the present necessity of shipping Alaskan crude oil through the Canal. Moreover, the Canal is beneficial for our Latin American neighbors and many other nations of the world. The Panama Canal Treaties are evidence of this national and interna- 303 tional economic significance. One of their principal purposes is to assure for all nations the uninterrupted use of an efficiently operated canal. Implicit, too, in the treaties is an assurance of reasonable and equitable tolls for users. This assurance is firmly provided by the Panama Canal Treaty until its expiration on December 31, 1999. Until that time, tolls will continue to be established and modified by the United States through a new U.S. Government agency, the Panama Canal Commis- sion. Thereafter, Article m tc) of the Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal commits the Republic of Panama to the continued establishment of tolls and service charges that are "just, reasonable, equitable and consistent with the principles of international law." Because such conditions, if achieved, can only enhance the value and significance of the Canal for the U.S. Merchant Marine and all other users, we support these treaties. Of course, the Canal offers significant advantages to vessel operation in terms of time, distance traveled, fuel consumed, and net delivery or laydown capability. Thus, use of the Canal on the Indonesia to U.S. Gulf trade saves 28 percent in distance and steaming time over a trip around Cape Horn. Similarly, the Canal routes from Valdez, Alaska, to the Gulf or from El Segundo, California, to the Gulf save 57 and 67 percent, respectively. The reduced shipping time that the Canal makes possible has resulted in significant reductions in the cost of intercoastal shipments and the size of the U.S. merchant fleet required for their carriage. Both the U.S.-flag and world merchant fleets rely substantially on the Canal. In FY 1976, over 12,000 transits were made through the Canal by vessels flying the flags of 65 nations. U.S.-flag vessels made over 1,000 of these transits. Of the 117 million tons of commercial cargo transported through the Canal in FY 1976, 78 million tons or 67% were either part of the U.S. foreign or the U.S. domestic trades. This represents 9.1 percent of total U.S. oceangoing trade, a highly significant portion. Should Canal usage cease to be economically feasible for any reason, the increased costs and shipment times would undoubtedly cause many U.S. and foreign markets to face serious economic hardship. Some markets, such as the U.S. East Coast market for Ecuadorian bananas and Colombian coffee would probably disap- pear, while other movements such as ores and concentrates from Peru and Chile would tend to be captured by operators of larger vessels. While the loss of such markets might not be significant for U.S. consumers, the net impact on many U.S.- flag operators would be a serious loss of business. We believe that the advantages of Canal usage to U.S. shipping will be substantial through the remainder of this century. Even though the U.S. and world economies are expected to continue to recover and to expand, Canal capacity is expected to remain adequate through the year 2000. The anticipated increase in traffic will include, at least for the next few years, the transshipment of the West Coast surplus of Alaskan crude oil to the Gulf and East Coasts. Many of the other nations of the world rely on the Canal relatively much more than does the United States, and that reliance will continue. In 1974, approximately 73 percent of Ecuador's foreign trade and almost half of Peru's transited the Canal. In fact, most Central American and West Coast South American countries rely heavily on the Canal. The Maritime Administration sees this reliance as a stabiliz- ing influence under the new treaties, one which should work toward the continuing availability of the Canal at reasonable toll rates for all nations. This brings me to what I regard as my principal comment in these hearings. The chief concern of the Maritime Administration with any change in the status of the Panama Canal centers on those factors which suggest the possibility of increased operating costs and, hence, possible economic hardship for many U.S. ship operators. The possibility of toll hikes is of course one of those concerns; but above and beyond that is the concern that the Canal remain open and accessible to the many U.S. operators who depend on it. On balance, the Maritime Administration supports the new Panama Canal treaties as far and away the best means to assure this. Obviously if tolls were to increase too greatly many markets would be hurt severely in much the same manner, if not to the same degree, that they would be if the Canal were completely closed. But it is not certain what toll increase applied over what period of time would be too great. Under the new Panama Canal Treaty, we are faced with the possibility of an immediate toll hike to cover various provisions for reimbursement to the Repub- lic of Panama, and, under paragraph 4, Article XIII, we are committed to an indexing scheme for further adjustment of payments to Panama after five years and every two years thereafter until the expiration of the treaty on December 31, 1999. The prospective toll hikes to cover these payments would of course be in addition to the roughly 50 percent effective rate increase that has already taken place since 304 July 1974. The latter did not destroy the markets that I have voiced concern about, and, to the extent that future toll hikes reflect general inflationary pressures, to which all competing markets are subject, U.S. operators will very likely be able to operate under those too. One way to look at the possible effect of any immediate substantial toll hike is to consider the price elasticity of demand for commodities that are moved through the Canal. The Maritime Administration performed such a study in 1974, and its results were mainly applicable to a short-run outlook. The Department of State, with the Department of the Army, I should note, have recently commissioned a much more comprehensive study which will address the relationship of toll hikes to Canal transits, cargo and revenue in considerable detail. The approach taken in our own earlier study, however, helps to show what the net effect of a toll hike might be. The thread of the analysis is as follows: The average delivered value of the various commodities of U.S. trade that are moved through the Canal is about $300 per ton. Suppose, to take an extreme case, that the Canal tolls were to be raised 100 percent, that is, from about $1.29 per Canal ton to $2.58 per ton. That would mean that about forty-three hundredths of a percent (0.43%) would be added to the average landed price of a Canal transported commodity. Consider the "price elasticities" of the commodities. Price elasticities are numbers which characterize the marketplace for commodity sales. They usually represent the percentage drop in quantity sold for a given percentage increase in price and are expressed as a constant ratio. A commodity price elasticity of 1.0 for example, would mean that if the price were increased by some percentage, the quantity sold would drop by an equal percentage. According to a study done at the Maritime Administration a few years ago, the average price elasticity of the commodities that are transported through the Canal in U.S. trade is less than 1.5, meaning that the quantity of those commodities that is actually sold tends to drop by less than 1.5 percent for each 1 percent rise in price. Therefore, if tolls are raised 100 percent, thereby adding 0.43 percent to the average landed cost of a commodity, we can expect a drop in the U.S. tonnage that transits the Canal of under sixty-five hundredths of a percent (0.65%). According to the Panama Canal Company's FY 1976 figures, this translates into a tonnage drop of about 500,000 long tons. Since U.S.-flag shipping carries about 10 percent of U.S. Canal trade, U.S.-flag operators might expect to lose no more than about 50,000 tons of cargo per year overall under a 100 percent toll hike. Should toll increases immediately following ratification of the new treaties be about 30 percent, as some have suggested, the same line of reasoning would lead us to conclude that U.S.-flag operators would lose less than 15,000 tons of cargo. The elasticity approach helps us to illustrate arithmetically what we have under- stood from the start: that tolls do in fact make up only a small part of the total cost to the consumer of Canal-transported commodities, and, given that they are always adjusted to represent the fair economic value of Canal service to general users, then- increase will result in only a small loss of cargo overall to ship operators. In fact, the effect on U.S. export and import trade transiting the Canal that I have noted is essentially a short-term effect. All of the economic studies we have reviewed indi- cate that reductions in tonnages through the Canal, for toll increases approaching 100%, tend to be more than offset over a longer term by increased Canal traffic due to trade growth. Unfortunately, the elasticity type of analysis doesn't necessarily describe the effect of increased costs on small, differentiated markets. To return to my earlier examples, if toll hikes were to make Ecuadorian bananas and Colombian coffee more costly on the U.S. East Coast than bananas and coffee from other sources — by whatever amount — these markets, far from suffering a mere small percentage de- cline, would be seriously affected, possibly even destroyed. The total size of these markets is currently about 500,000 long tons per year. Of this, U.S.-flag ships typically carry 20-25 percent or 100,000 to 125,000 long tons. These figures serve to illustrate that smaller segments of a market can be affected to a greater extent than the overall, consumer oriented market analysis might suggest. Similar economic dislocations can of course occur in any industry or in any part of an industry whenever there is a change in the price or in the pricing structure of a major service to that industry. If the pricing structure is— and remains— reason- able and equitable, however, such dislocations can be minimized. The principal issue, then, that I see for the U.S. Merchant Marine in the new Canal treaty is the alteration in the pricing structure of Canal services that might be forced by the requirement to make payments to the Republic of Panama out of operating revenues and produced surpluses. Henceforth, if this treaty is ratified, Canal tolls can be expected to change frequently, but with an established regularity 305 and in highly predictable increments. This predictability should help to minimize any possible adverse effects on our industry. In addition, we can look forward to some immediate offsets to the new Panama payments which should help to reduce the amount of any new toll increases needed. I refer again to the transit of Alaskan oil and the increase in revenues that will result. Furthermore, the overall outlook for increased usage of the Canal for all commodity transport promises increased revenues at least through the year 2000. Given the assurances for the continued availability of the Canal to all users, and the continued practice of establishing reasonable and equitable tolls and service charges, as set forth in both treaties, the risks to the maritime industry appear, on balance, to be minimal and justified. We, therefore, recommend ratification. Mr. Chairman, this concludes my prepared statement. I will be happy to answer as best I can any questions that you or other members of the Committee may have. 29-400 0-78-21 306 [From the Congressional Record— Senate, Oct. 4, 1977] THE PANAMA CANAL TREATIES Mr. Harry F. Byrd, Jr. Mr. President, the distinguished Senator from South Carolina (Mr. Thurmond) made an excellent argument in opposition to the new Panama Canal treaties in testimony before the Senate Foreign Relation Committee this morning. I ask unanimous consent that Senator Thurmond's supporting documents he presented to the committee be printed in the Record. There being no objection, the material was ordered to be printed in the Record, as follows: Latin America TORRIJOS, TREATY NEGOTIATORS ADDRESS CORREGIMIENTO ASSEMBLY (By Foreign Minister Gonzalez Revilla) Your Excellency President of the Republic, Demetrio Basilio Lakas; Your Excel- lency chief of government, Gen. Omar Torrijos Herrera; Mr. Vice President of the Republic, Gerardo Gonzalez; honorable chairman of the national representatives assembly, Mr. Fernando A. Gonzalez; deputy commander in chief of the National Guard and members of the chiefs of staff; minister and members of the autonomous entities; legislation commissioners; honorable president of the Supreme Court of Justice, Dr. Juan Materno Vasquez; honorable representatives: The agreements reached in the negotiations for a new Panama Canal treaty constitute the culmination of a very important phase in the struggle of the Panama- nian people for its liberation from all forms of foreign domination. Created as an independent state in 1903 and recognized by all nations of the world, the Panama- nian nation immediately announced that the limitations of its sovereign attributes, imposed by a treaty that placed it in a status of dependence, would have to be eliminated. Only thus would it be possible for its position to be, in fact, equally sovereign among the other nations of the world. From its birth, our nation has struggled relentlessly and continuously to become the master of its own fate. With the contribution, throughout the years, of great Panamanians, whose names must not be mentioned hastily to avoid unfair omis- sions, we are today in the final stages of a historic battle. Such effort has evidenced that we possess the essential attributes of a true nation — the deep sentiments of freedom and political maturity. The name Panama today is uttered with respect by foreigners and with pride by Panamanians in all corners of the earth. The proud and constant struggle gave a characteristic nature to our liberation efforts. We can proudly and firmly tell our parents and grandparents that we understood their message and that we did the best we could under the circum- stances, that we fought tirelessly and based our debate on historic arguments and legal consistency, honoring those who deserved to be honored without questioning their efforts, united in a single team made up of men who were always inspired by their love for their fatherland. We may also tell them with the same pride that we shall turn over to our children a nation which has recovered its territorial integrity, which has rid itself of the colonial enclave, and which is ready to take full advantage of its greatest natural resource. Our chief of government, Gen. Omar Torrijos, promised the coming generations of Panamanians that this liberating process would firmly establish for them a terri- tory covered from border to border by our national sovereignty. This sovereignty includes the canal and its adjacent areas which had been cut off from the rest of our territory for 74 years. The objective of this struggle is already in sight. The watchword of our campaign has been total sovereignty. In order, however, to consolidate this sovereignty, it is necessary to rely on the expressed willingness of the peoples of both sides through the respective ratification procedure to be carried out in Panama and the United States. 307 In the case of Panama, it will be done through a national plebiscite as provided by the constitution approved by this assembly. Should we fail to achieve this ratifica- tion, we shall be committed to continue our struggle under unpredictable conditions. We are confident there will be sufficient common sense on both sides to realize that an honorable solution has been found which issues a peaceful death certificate to an anachronistic situation that will cease at a fixed date. To continue our information policy on behalf of the Panamanian people, where all sectors have equal value and rights, we offer an exposition of the main points of the agreements reached by the governments of Panama and the United States and which, in our opinion, constitute an effective program of decolonization. Thank you. FIRST ESCOBAR BETHANCOURT SPEECH Your Excellency, president of the republic; chief of government; president of the Assembly of Corregimiento Representatives; ministers; members of the National Guard General Staff; and representatives: We consider it to be most historic that a detailed report on the negotiations is being submitted to this assembly. It is deeply significant for what you represent. This revolutionary government considers that the republic's new composition, its new political structure, is in actuality linked to the Panamanian people through you, because you come from all sectors of the country. It is precisely you who will have to explain in each of your communities the problem of the negotiations. When the revolutionary government assumed power in 1968, a change took place in its international policy, a change aimed at obtaining for our country those things which needed improvement regarding its sovereignty and jurisdiction. Led by Gen- eral Torrijos, for the first time in our history a Panamian government, far from evading, opposing or attacking the Panamian people in response to their claims of sovereignty and jurisdiction, has done precisely the opposite and has taken hold of the banners which the Panamanian people have been holding high since 1903. The struggle for the full independence of our country and for the recovery of its natural resources has become not only the slogan but also the foundation of the revolution- ary government's policy. When this government is assessed by history, when the revolutionary government and General Torrijos are analyzed, the analysis will indicate that this government was basically revolutionary, because it made national liberation the slogan and the motive power of all its administrative, governmental and political activities. A campaign to force the United States to sit at the negotiating table and to arrive at conclusions favorable to and positive for our republic began from this position. But this is another of the great differences between this revolutionary govern- ment and our past. General Torrijos understood that a struggle for national liber- ation carried out at only a bilateral level was a struggle without a future, for the simple reason that it was the struggle of a very small country against the major power in the world. Then he decided, using one of his typical phrases, that the problem of Panama, the canal problem, would not be a real problem until it became a problem of the American continent and of the world. An independent internation- al policy was drafted on this basis. Now, when we are being criticized by certain national sectors or groups, we recall the criticism of those same groups when Panama began its independent internation- al policy. When the general said that each country had the right to its own friends and enemies and that our country's international policy was not going to continue according to the dictates from Washington as was customary, we received strong criticism from domestic sources. During the crisis of the Panamanian ships in Cuba, when the general decided to hold direct contact with Fidel Castro's regime, the persons who bewailed his policy on that occasion are doing the same now regarding the canal. However, now they are not protesting contacts with Cuba because the United States is making such contacts. But when Torrijos did so, they said it was crazy, that it did not make sense, that it was making Panama communist, that the gringos would not tolerate it. We went through all that criticism in this country from those sectors which are now criticizing the treaty draft. General Torrijos remained firm and imperturbable in defense of his policy and in the face of criticism. In a few years history proved him right and tossed into the wastebasket the position of those opposed to his independent policy. This policy continued with the meeting of the UN Security Council in this same building. We were strongly criticized on that occasion by local sectors and received threats from the United States and bribe offers from U.S. Government officials. General Torrijos 308 stood firm on that occasion. U.S. colonialist policy was denounced in this same building and all the countries of the world supported us. The United States was forced to veto the resolution. We were told we had done something crazy, but it is these things which have given dignity and strength to our country's presence in the eyes of the world. General Torrijos began a tour to all Latin American countries, and there was more criticism: The country's money is being spent on trips, what is he going to do in those countries? What can those countries do for us? He paid no attention to criticism. He continued meeting with the presidents of all Latin America. This was also a step, a landmark, in strengthening our dignity and our international pres- ence. When President Lakas went to the United Nations, Mexico and Greece, we were also criticized. Those sectors said, what is the government after? However, the visit of our president to those countries informed the world about our cause. When General Torrijos left again for Europe, for Sri Lanka, when our country joined the Organization of Nonalined Countries, as usual the same sectors continued to criti- cize: What does nonalined mean? What is the importance of Sri Lanka? The general only thinks about traveling. We who have traveled now and in the past can give the following answer: When we were students and traveled, we could not explain when we said we were Panamanians, what Panama was, because no one understood us. In some Latin American countries near ours, people were surprised that we spoke Spanish, because they thought we spoke only English. Now we can tell them that the Panamanian who leaves the country for any part of the world— the American continents, Europe, Asia, Africa, China— does not have to explain any further, once he says he is a Panamanian because everyone treats him with respect and dignity, because he is from a country which during all these years has been struggling against imperialism and for its national liberation. This is what Panamanians owe to this revolution and this man, this general, (applause) He gave dignity even to those Panamanians who criticize us. Those reactionary Panamanians are respected abroad, not because they are reactionaries, but because they are Panamanians. Those who call themselves revolutionaries are respected abroad, not because they are true revolutionaries, but because they are Panama- nians. Everybody knows where Panama is, what language is spoken here and is familiar with Panama's struggle. This is the reason for our pride in 8 years of revolution. We have rescued our country from the world's indifference and ignominy and acquired regional and international dignity, (applause) The negotiations had a difficult begin- ning. As to those who say that we have not obtained enough, we would like to have seen them sit down 4 or 5 years ago at the table in the Pentagon or the U.S. State Department and ask for Ancon Hill. We were almost beaten for asking for that little hill. The negotiations were not initiated by this revolution; they began with those who died in 1964. These negotiations were generated by their corpses and blood. It began slowly, painfully and with ridicule directed toward our country be the OAS, the U.S. State Department, the Pentagon and the President of the United States. Waging a hard struggle, Panamanian men who participated in negotiations before we did brought their maximum efforts to some projects which came to an end in 1967. It was the most that the period, our country's situation and the internation- al situation permitted. The revolution emerged, projects were studied, but despite some positive aspects, we still did not penetrate to the root of the problem— the liquidation of the Canal Zone and of the perpetuity idea. For that reason these talks were rejected and other negotiations were begun, also slow and painful. You will ask why negotiations? The general himself has said that this is not the only way. There are other paths — armed struggle, terrorism and sabotage. We all know this. But we also know the social price we have to pay — the immolation of the people, of youth. We know what it means in destruction, pain and death. A governor who considers himself responsible avoids those paths as much as he can. A responsi- ble leader does not send his people to sacrifice themselves, does not see his people abused, tortured and massacred. Instead, he seeks all possible alternatives to avoid such a situation, not because of fear— because there has been no other alternative we have decided on that course — but because of a sense of responsibility. When you are governing a country, you seek the paths for its political, economic and cultural development. If development can be achieved through an intelligent stance and tactics based on patience, an intelligent and prudent leader prefers this road, despite his impatience and knowledge that other roads may be faster. One of those men is General Torrijos. We have been with him all these years and witnessed his impatience. He has a military training different from ours. Therefore, he should be more inclined to use arms to try to solve problems, but constantly he urged us: Let us have negotiations by all means; let us develop our capacity for tolerance, because I do not want to have on my conscience the death of our youth. This he reiterated in his declaration: We have concluded this treaty in order not to sacrifice 50,000 youths. Nevertheless, there are people who are criticizing the negotiations. We can say that there is more opposition in the United States than here. We do not even know whether the U.S. Congress will approve these treaties or not. If they do not this country will take another course. This country will take a course of violence. And when this country takes that route, all those individuals who are in their offices writing on whether neutrality is good are going to have to take off their ties and come out. We are going to make sure that they do not remain in hiding. [Applause.] Today we are going to carry out the following program: Royo will deliver a report and an analysis to this assembly on certain aspects of the treaty, specifically on the problem of duration, jurisdiction, operation of the canal and employment policy. Later on, Minister Ahumada is going to explain the armed forces statute which has been negotiated between Panama and the United States as part of the treaty and the problem of the defense of the canal. Nicolas Ardito Barletta, planning and economic policy minister, will analyze the economic aspects of the treaty. Edwin Fabrega will give you a detailed explanation of the lands and waters problem. Later, we will again explain the neutrality issue and the option for a new sea-level canal. Finally, General Torrijos will speak, and in the afternoon we will be back to answer all your questions. SPEECH BY PLANNING MINISTER BARLETTA Gentlemen representatives, colleagues, ladies and gentlemen: It is my duty to inform you about the economic aspects of these negotiations, aspects which are fully as important as the others because at this stage we are all convinced of the necessity that a strong national economy must be the basis for obtaining and fully implementing our freedom of action. They are important also because the real valorization of our geographical position as a natural resource was at stake as well as Panama's obtaining of revenue equal to the value of that geographical position. This means, as a result, the real possibility of acclerating Panama s general develop- ment and providing an answer to the important needs of our people in this process. In other words, it would be one thing to have dignity and sovereignty with hunger and quite another to have and to consolidate the dignity and the sovereignty with the integral development of our people. And this has been our aim through the economic aspect of these negotiations in attempting to consolidate the value of our geographical position and the resources and revenue which respond to it so as to use it in our development. The agreements reached in this aspect are as follows: An average income of $80 million per year, I repeat, average, for the next 23 years; that is, a total of $1.8 billion in the 23 years. The majority of this income is subject to a clause of inflationary correction so that the annuity consistently maintains its purchasing value, based on the year 1977. The income for the first year is estimated to be $65 million. By the end of the treaty, the amount will reach approximately $100 million in real values of 1977, that is, corrected against any inflation that may occur during that period. The mean of this gradually increasing sum gives us the average amount of $80 million. This income is itemized as follows: $0.30 for each ton of cargo that transits the canal. According to traffic projections through the canal, this means an average income of $55 million per year which in the first year will amount to about $42 million, to reach $70 million by the end of the century. The second item of this round sum is $20 million per year, of which $10 million is guaranteed each year, the rest depending upon the level of income of the Panama Canal Company in that year. If in 1 year the second half of the $20 million cannot be covered, the deficit caused would be covered in the subsequent years to maintain the $20 million per year payment. And a third item of approximately $5 million per year of income will come from several businesses and operations being transferred to the national government, such as ports, railroads, sale of fuel, repair of ships and so forth. Therefore the total sum of $80 million is composed of these three items that I just discussed. Another aspect gleaned from the canal operation is the transference to Panama — as Edwin Fabrega will explain shortly — of buildings and infrastructure for a current value of $82 million. Aside from this aspect, which is what Panama would derive from the operation of the canal and from the transfer of physical assets which currently exist in the Canal Zone, there is a parallel and corollary package of economic cooperation. This package reaches an amount of $345 million, above all, within the next 5 years, and is itemized as follows: loans from the Export-Import 310 Bank up to the amount of $200 million in the next 5 years; loans for the construc- tion of housing guaranteed by AID up to $75 million in the next 5 years; loans guaranteed by a U.S. agency called OPIT for $20 million for Cofina, our develop- ment bank, and other loans and equipment, principally military equipment, for the amount of $50 million in the next 10 years. In short, all of these elements of economic benefits which I have mentioned in structures, payments and loans for development will in 23 years amount to the sum of $2,262 billion. This is compared to what Panama would receive under the current treaty during that same period, which would be the ridiculous amount of $52 million. This, then, is the difference between what this treaty means as far as economic benefits and what Panama would receive under the current treaty. Aside from the foregoing, it must be emphasized that all the rest of the existing structures in the Canal Zone, that is, the canal itself and the rest of the civilian and military installations, will be returned to Panama, free of charge, on 31 December 1999. And these structures have an approximate value of $3 billion currently. Aside from that, we must also point out that Panama will receive from the company that operates the canal the amount of $10 million per year, also with inflationary correction, to cover the cost of the public services which Panama will administer in the exercise of its jurisdiction in the zone area, for these services which are generat- ed by reason of the existence and operation of the Panama Canal. Therefore, lending these services will cost nothing to the national treasury. In brief, what is the significance of these figures? We can say that in the next few years, the next 3 or 4 years, the amount of the annuity alone, without taking into consideration the economic cooperation, is 19 percent of the national government's budget, that is, it is a considerable increase, one-fifth. It is 25 percent of the operational expenses of the current budget and is 15 percent of the program of investments of the public sector. As the national government's intention for the time being is to devote the majority of these resources to solving the problems of our nation, the problems of our people through its investment program, we have to take into consideration that this amount — the annuity only, which in the first few years will be approximately $65 million per year— means at least 15 percent more for the program of investments being carried out by the country. This amount can become a figure of more impact through financing which can be negotiated on the basis of this income. We can also say — as another manner of illustrating what these figures mean, because they are so large that one often does not see them in real terms — that this means considerably speeding up the program of investments which we are developing. All of us here are aware that during the past year we have had to reduce investment in order to face the serious economic crisis which the country and the world have been experiencing. We will now once again be able to accelerate the program of housing construction for the people at reasonable prices, generating employment for all this accumulation of public investments. It will be possible to take advantage of the important opportunities for national development which we have, opening up all our resources throughout the national territory. And we will therefore enter, through this aspect together with all the others already mentioned, a stage of enormous creativity and national realization in the next few years through the results that have been attained. Having responded with dignity during the last 2 years, withstanding the sacrifice that we have had to accept for the recession, we now find ourselves facing the possibility of entering a path of great economic activity, of growth in production and of distribution of the benefits of that growth to all the people throughout the national territory. In this respect I honestly and firmly believe — and I do not believe I am using superlatives — that Panama, with the united revolutionary effort of growth and distribution, with the participation of all our people and with this complement which we have obtained, may become an example among Third World countries as to how development within our historical and geographic reality with justice and with the participation of the entire people can be achieved. LABOR MINISTER AHUMADA President Lakas, General Torrijos, Commander Carcia, assembly president, repre- sentatives, government officials, gentlemen: The agreements in principle reached between Panama and the United States, especially during the efforts made last week and which are continuing this week in the drafting stage, contain what we consider to be a clear and categorical program of the country's decolonization from a military standpoint. They contain the pro- gram which marks the beginning of the end of the country's military occupation by foreign forces. This is important because up to now, contrary to the will of the Panamanian people and government, our country has been virtually occupied by an 311 overwhelming number of foreign forces in comparison to our nation's military forces. The agreement in principle thus means that from the moment the canal treaty goes into effect there will be substantial reductions in U.S. military forces in our country until 2400 on 31 December 1999. In this respect there are various problems and theories which have been debated. Those who will oppose any treaty regardless of whether it is a good one, such as this one, believe that the agreement in principle legalizes U.S. military forces in Panama. Consequently, to them, any treaty which directly or indirectly has any reference recognizing in any way the existence of any military base in Panama is a bad treaty. They argue that the joint defense of the Panama Canal agreed in principle is a step backwards and not a step forward in our country's final goal for its liberation. This theory basically considers that in matters of international policy, in regaining its international personality, and on sovereignty, jurisdiction and liber- ation, Panama must follow the line historically taken by an ostrich — in other words, it should hide its head underground so as not to see what is going on in the rest of the world. U.S. military installations in our country, objectively and independently of our will, exist and operate against our will. In the face of this reality, there were only two alternatives: Either you conduct negotiations to have these military installations slowly disappear by 31 December 1999, the date when all these military installations will be finally liquidated, or simply, according to international law and the views of great authors and essayists, be satisfied with saying that those installations are illegal and for that reason they will automatically and by the very will of the United States, disappear. These latter views are mirages of a historic nature which the Panamanian people cannot accept because they are deceiving attitudes which prolong the problem instead of solving it. [Applause.] For this reason Panama and the United States have reached an agreement of a military nature, which in first place accepts the role of the United States in the protection and defense of the canal. Panama's participation will increase greatly from the date the treaty goes into effect, while U.S. participation will decrease until the date the treaty ends. But this responsibility for protecting and defending the canal — which is shared with Panama in a combined military board which must submit consultations and coordinate actions for Panama's increasing participation according to equal [pari- taria] representation between Panama and the United States— is properly estab- lished in the agreements which have been approved. What does this mean? It means that now, at this moment, the U.S. military force is operating freely, according to its own creed and beliefs, according to its own criteria, whatever they may be, but, according to the agreement or principles, that military presence is solely and exclusively for the protection and defense of the canal and not to attack any country or to interfere in the problems of other countries. [Applause.] This military force must be harnessed by some sort of legal or political restraint, which will define its extent of legal activity in Panama. Therefore, the broad range of action without limitations will be, according to the agreement in principle, subject to rules and very definite laws and regulations that the two countries have agreed upon. Additionally, these are not final — not in their wording or application — because they may be revised every 2 years. This agreement is known as the statute on armed forces in Panama [estatuto de fuerzas armadas en Panama]. It establishes that at the defense sites that will remain, in the military complexes that will remain — and Fabrega is going to ex- plain how and which ones are involved — out of the 14 bases we now have, four will remain and they will gradually disappear by the year 1979. [Applause.] These defense sites, which will not be islands out off from the national scene and from the country's juridical and political systems, will be separate in as much as the treaty provisions provide that no soldier of any rank can directly or indirectly interfere politically or in any other manner in the affairs of this country. To us this is an extraordinary step forward for the consolidation of our freedom as a country that will now be truly sovereign and independent. [Applause.] Therefore, these defense sites will also be subject to Panamanian jurisdiction. There will be no separate juridical arrangement there; we are not going to make four small zones out of the Canal Zone. Panamanian law will apply there also, and if a Panamanian who works there or goes there breaks the law in any way, he will be judged by Panamanian authorities and not by a U.S. military court. Nevertheless, since this is an objective and serious report, information that is commensurate with this act must be provided, and some things must be said, because not everything in the treaty is beautiful. The treaty also has things which 312 are not liked by neither you, nor us the government, but, since it is not a capitula- tion by Panama to the United States, but a negotiation, the treaty obviously will have some things we would prefer were not in it. But its essence, that which gives it its essential character, leads us to feel that it is an instrument of liberation. For example, if a U.S. soldier commits a misdemeanor within a defense site, he will be tried by the authorities of the military forces themselves. This on the surface appears to be a concession, but it seems to be military practice each time the forces of a country must for some reason move outside their borders. We know, for example, when the Panamanian National Guard had to fulfill such an important peace effort as that in the Middle East, it was obvious that if some National Guardsman committed a criminal act, Panama could not be so naive as to allow this guardsman to be subjected to the rigours of the trial given him, for example, in some of the Arab countries or Israel. Consequently, Panama retained the power to try that guardsman. This is more or less — keeping in mind the differences of the examples — the present case. If that U.S. soldier commits an offense outside the military installation, then he will be tried by Panamanian authorities except if he commits an offense against another soldier, so long as it is a misdemeanor, an offense for which he will be tried by military authorities. But if it is one of the graver crimes which our laws provide for — homicide, for example, or robbery, or rape— and for which there is no bail according to our law, then the competency to try falls within the jurisdiction of the Republic of Panama, even though it is a U.S. soldier. If a U.S. soldier commits an offense against a Panamanian within a military base, then he will also be tried by Panamanian authorities even though he is a U.S. soldier. And if the Panamanian is the one who commits the offense against the soldier, that Panamanian will also be tried by Panamanian authorities, even though he committed the offense against a- U.S. soldier. Consequently, this means that the defense sites which may remain at the outset of the treaty — which, we must learn, are not defense sites in perpetuity because the only perpetuity which may finally remain here is the revolutionary process and its capacity to solve the people's problems [Applause.] [Ahumada does not finish the sentence.] On the other hand — Mr. President, will you allow me? I will soon finish. Here's another problem. Up to now the number of U.S. soldiers in Panama has been unlimited. In military terms, this is known as the level of forces [nivel de fuerza]. Others call it force strength [pie de fuerza]. So, then, it has been agreed, to avoid the impression — which is real and not imaginary — of an occupied country, an impres- sion resulting from the unlimited presence of U.S. troops around us, that this force level or amount of soldiers will never, never — unless there is a worldwide conflict or an extremely serious, uncontrollable situation, in which case we are not even going to have the resources to be aware of it — the number of U.S. soldiers in Panama can never be greater than the number of troops in the Panama National Guard. There- fore, our capacity for action will not be limited by an overwhelming foreign pres- ence. [Applause.] Royo mentioned the flags question. In effect, even though it is a case of military sites managed by the United States, the flag flown there will be the Panamanian flag. They can put theirs inside, according to agreements they can do this. This point caused a tremendous bemoaning, but is logical. After all, they are North Americans and it is quite logical for them to struggle to prevent their flag from disappearing completely. But it must go inside. And even when it flies inside, it must be beside the Panamanian flag, and even when it is beside the Panamanian flag, the Panamanian flag must occupy the position of honor. For those of us who have had an opportunity to discuss these things with the colossus, the work that has been done is cause for extraordinary pride. A great Colombian thinker has said: Extreme modesty is the pride of the hypocritical. Without reaching the execrable levels of pedantry, we believe that General Torrijos and President Lakas' leadership has been able to produce a good agreement which will place us in a situation to say definitely that we have already begun the stage of military withdrawal from the country. [Applause.] I will make this clear: The relationship between Panama and the United States from now until 1999 will be a bilateral one. The two countries will participate in the protection and defense of the canal. It will be this way until 1999 when only Panama will be responsible for the defense of the canal. From now until 1999 there will be a bilateral relationship. Both countries will participate in the protection and defense of the canal until 1999, when Panama alone will defend the canal and when only Panamanian troops — from 31 December 1999 onward— will be allowed any- where in the Republic of Panama. Only Panamanian troops. And this joint defense, this bilateral participation, will naturally demonstrate that on all fronts Panama is 313 capable of operating this canal, even more efficiently than the United States can, and that this canal will be defended even more efficiently than they can defend it, because in the final analysis the defense of the canal consists of two fundamental factors — one, the capability of the specialized force, and two, the love and faith of the Panamanian people who know that this is their canal and that consequently every Panamanian has to become a defender of this international waterway, which is a part of the country's natural resources. [Applause.] This is why, in considering a treaty of this nature — and I am not going to talk about the neutrality aspect, which will be discussed by the head of the negotiations team, Dr. Escobar Bethancourt — I will only say that the military ties will end on 31 December 1999. At this moment I recall a statement I recently read in an international report published in Panama, a statement which was very sad and painful to me. Two Panamanians by birth— according to the Panamanian constitution a person cannot lose his nationality — made a statement that they are not interested in the canal, that they are concerned only about the Torrijos dictatorship and that if the treaty is signed, it would be between the United States and Torrijos, but not between the United States and the Panamanian people. With a problem as large as this one, so large that people set aside their political attitudes, it is not a matter of what you or I think or what political leanings, crusade or ideology one advocates but of whether or not one loves one's country. At such a time, when a problem arises that is above domestic disputes, when Panamanian nationality and the state and the elimination of a state within a state are at stake, these Panamanians made this statement. It was a sad and depressing comment that could cause pessimism among those who are not politically aware. The truth is that when I gained political awareness at an early age, I began to understand that in the political dictionary of all countries, including ours, there is one clear and precise word to describe this type of action and position. That word is treason. This is so because, in any effort to inflict temporary wounds of a political nature, such people do not hesitate to grab a poisoned knife and thrust it into the loving heart of the fatherland! Thank you. EDUCATION MINISTER ROYO Mr. President, Mr. General, Mr. President of the Assembly, Mr. Vice President, second commander in chief, fellow government officials, members of the staff, honorable representatives: The subject of the duration of the treaty is related to the subject of abrogation. The 1977 treaty points out that this treaty supersedes all the other agreements that Panama has signed with the United States. This means that the 1903 Hay-Bunau-Varilla Treaty, the 1936 and the 1955 treaties and all the annexes, exchanges of notes and any other documents in conflict with the present treaty are abrogated. This treaty will have an approximate dura- tion of 23 years. It will expire on 31 December 1999 at 1200 o clock [as heard]. This treaty clearly establishes the principle of nonintervention. Neither U.S. civilians nor U.S. military forces- will have the right to intervene in the domestic affairs of Panama or to participate in Panamanian political affairs. Regarding the operation of the canal, there will no longer be a governorship in the Canal Zone. There will no longer be a governor of what? [Applause.] There will no longer be a Panama Canal Company in the form it has been operating up to now. There will be other organizations which will be explained immediately. The United States has primary responsibility for the administration of the canal until 31 December 1999. Panama will have a continuously increasing participation in the administration of the canal while U.S. participation will decrease, as will be ex- plained later together with the employment policy aspect. However, they will have primary responsibility [until 31 December 1999] in line with the Tack-Kissinger agreement. This does not mean — and we want to use this opportunity to make this clear — that foreigners working in the canal will be persecuted or dismissed. There will be no Belgian Congo here. There will not be an Algerian case here to expel the French. Those persons who have been working in the Canal Zone for years will be able to remain at their jobs. However, they have an obligation. In the first 5 years after the treaty goes into effect, they are under the obligation of reducing the foreign labor force by 20 percent. Lies have been reported, lies to the effect that all those who have been working in the present Canal Zone will be dismissed. We can tell them — making use of this opportunity — to rest assured and to sleep well, because although we had a 9 Janu- 314 ary of 1964 here, and despite all the interventions we have suffered, this is not a vindictive country. Finally, we would like to refer to a point which is perhaps more important from an emotional, rather than a practical, point of view. This is the problem of the flags. It is said that the flag problem is what caused the events of 1964, but this is not true. What caused it was the symbolic problem. The flag problem was a real one. It involved the recovery of our sovereignty in the Canal Zone. Regarding the flags, here has also been an important recovery: Throughout all the territory that now constitutes the Canal Zone, excluding the office of the Canal Commission — with only this exception — only the Panamanian flag will fly on the flagpoles. [Applause.] NEGOTIATOR FABREGA ON LAND RECOVERY Half of Fort Amador will revert to Panama with all the corresponding installa- tions on the 1st day of the treaty, as well as the islands of Naos, Perico and Flamenco. [Applause.] From the Bridge of the Americas you see all the installations of the fuel tanks, of the Port of Balboa, and which extend to Diablo Heights, including the northern part of Diablo Heights, where there is an antenna field. All this land will revert to Panama immediately and it will be known as the Balboa Port complex, including areas for expansion. Albrook Field will revert to Panama on the first day of the treaty. Curundu Heights will revert to Panama 3 years later, as well as the antenna field across from Panama University. Ancon Hill will revert to Panama on the first day of the treaty, [applause] with two exceptions, namely Gorgas Hospital, to be used for military use by the U.S. Armed Forces and U.S. civilian personnel, and the area where the Quarry Heights offices are now located, which will serve as headquarters of the combined military board which will be in charge of planning and carrying out everything concerned with the defense of the canal — a combined defense. This board will be evenly divided, that is, it will have the same number of representatives from Panama and the United States. The rest of Ancon Hill will revert to Panama on the first day of the treaty. The railroad with all its installations will also revert to Panama on the first day of the treaty, as well as a coastal strip, from beneath the Bridge of the Americas at the entrance of Farfan Beach to Veracruz so that the residents of Veracruz will not have to transit a defense site. The strip has the best beaches closest to Panama City and every Panamanian may, as of that date, have access to those beaches, which are the best close to Panama City. On the Atlantic side, in the city of Colon, the port of Cristobal with all its installations will revert to Panama on the first day of the treaty, [applause] as well as Rainbow City and the towns of Paraiso and Pedro Miguel. To conclude, we want to point out that the agreement in principle does not grant lands and waters and installations, but the right to use them, according to the agreement, so that the United States may operate, maintain and defend the canal as a primary right, until 31 December 1999 at noon. We see, then, a Panama fully liberated from a condition that limited its political, economic and social geography. According to the new treaty, we shall have a truly free nation. Thank you. [Applause.] SECOND ESCOBAR BETHANCOURT ADDRESS Mr. President, General Torrijos, distinguished representatives and general public: We will now report on two very controversial points in the negotiations — one is the neutrality pact between Panama and the United States and the other is the prob- lem of the option to build a new sea-level canal. We feel that the best way to explain this is by pointing out the details of how this negotiation was conducted and what things Panama accepted or rejected, because that will allow you to see the real scope of the neutrality pact. One of the conditions originally established by the United States before beginning negotiations with Panama called for a neutrality pact and a military pact between the two countries. The military pact had to be concluded before the end of this century so that it could go into effect after 2000. This created a deadlock in the negotiations for some time because Panama opposed the signing of a military pact. And it opposed such a pact because the military pact entailed two things: First, the U.S. military presence in Panama after the expiration of the new treaty. Second, as a great power, the United States is often involved in wars in other parts of the world and we did not want a situation in which, on the basis of a military pact, our country's future generations would be required to fight in U.S. waters under the pretext that they were fighting because the war was being waged to defend the Panama Canal. That was a position Panama maintained until the United States 315 stopped insisting on the military pact, and discussions began only regarding the neutrality pact. One of the problems that arose had to do with granting preferential transit through the canal to U.S. warships. They said they had two problems: First, they had to please their Pentagon and had to present them in this matter of the treaty. Second, they said that since they are leaving after the expiration of the treaty they should at least have that [preferential treatment] because they had constructed the canal. We told them that we admitted that they had in effect constructed the canal, but that to put down in the neutrality pact that U.S. warships were entitled to preferen- tial transit in relation with other ships violated the neutrality pact itself, contra- dicting the very idea of the pact we were negotiating. This was another subject of long debates and thorough analysis. They kept looking into their books, we into ours; they kept quoting their treaty writers, we kept quoting ours, for this is the way in which these debates are conducted. So this is the framework of the neutrality pact. The criticism being made against it — some of which you may have heard or read — by a number of people who like to nitpick is that we are giving the United States the right to intervene in our country after the year 2000. Those people believe that the right to intervene is granted, but nobody grants the big powers the right to intervene. They intervene wherever they damn well please with or without a pact. [Applause.] When they landed in Santo Domingo they did not have any military pact with Santo Domingo, nor did they have any right to intervene in Santo Domingo. But just the same they landed there. But there are people here who believe that it is the articles in a code which tell a country whether or not it has the right to intervene. They do not know that is the bayonets and cannons and the atomic bombs which give a country the right to intervene. A country like the United States can land its troops in Panama whenever it pleases after 2000 with or without a neutrality pact. But it cannot land its troops in Russia, even if Russia told them to do so. This is reality. In other words, with the neutrality pact we are not giving the United States the right to intervene. What we are giving them is an assurance that the canal will remain permanently neutral, that we are not going to close the canal to their ships or those of any other country. Why this neutrality pact? Because they think that maybe in the year 2000 this country will become socialist and will turn into their enemy and they feel it is better to make sure right now that even if our country becomes socialist, it cannot prevent them from using the canal. To be even more frank, they do not need that neutrality pact to tell them whether or not they may intervene. They need it to show to their Congress; in order to be able to tell their Congress: Look, we are turning the Canal over to the Panamanians, but we still have the right to watch over them so they behave. That is the truth. It is a question of their internal policy. They are solving an internal problem regarding a Congress that is largely opposed to these negotiations and which even has members who have not been elected of their own free will, turned into members of the U.S. Congress. They are Panama- nians who live here and in Miami. [As heard.] [Applause.] The other problem we discussed was that of the option for the construction of a sea-level canal. In all these years the problem of a sea-level canal was hardly discussed at all at the negotiating table. There were about two talks on this. We discussed this, nothing came out of these discussions and then came the Bogota conference with the presidents. That is where the option problem really reached a crisis. It reached a crisis because a very direct and continuous communication was established among all the presidents meeting there and President Carter through negotiators Bunker and Linowitz as well as with us through Dr. Giogenes de la Rosa, who was there at the time, and our Ambassador Gabriel Lewis Galindo. But they made a proposal to us on that option and that is why the issue reached a crisis. They proposed that Panama grant them an option to build a sea-level canal without setting any date. Second, they wanted Panama to promise that no other country would construct a sea-level canal. We rejected that proposal in Bogota. We read it to the presidents. That was the proposal brought the previous evening by several of our negotiators and we read it to them. The negotiations between the two countries was practically broken in Bogota. So much so that I remember that at one point General Torrijos told the presidents: Well, we called this conference several days ago for a celebration of a new treaty and it turns out that we have come for the wake. The struggle between the two countries began in Bogota. And I say iha two countries because the rest of the presidents got as involved as if they had been Panamanians. We must really be very grateful to the presidents that met with the general in Bogota. Regarding this problem they acted just like any of us; they even 316 wanted to walk out mad. The Mexican president wanted to get on his plane and leave; he was very furious. They all became Panamanians regarding the option problem. When the United States finally realized that there was no way in which an agreement could be reached regarding this option in the terms they were proposing and that the issue had reached an impasse, they asked for a recess. During that recess we continued our discussions with the presidents meeting in Bogota. The Panamanian delegation then prepared a draft which all presidents liked. They said it was correct and fair. We then called the United States, they examined it for a while and finally accepted it. I think that it would be a good idea to read the text of this draft to you so that you will see how the option problem came out. It reads: Article 3. Possibility of building a third set of locks or a sea-level canal. First, the Republic of Panama and the United States of America acknowledge that a sea-level canal can be important for future international navigation. As a result of this, after approving the treaty of the existing canal and for the duration of this treaty, both countries promise to study joinly the viability of such a canal. In the event that the need for such a canal is viewed favorably, they will negotiate its construction in the terms agreed on by both countries. This is how the option issue came out. [Applause.] As you can see, it is not even a option to build a sea-level canal. It is an option to promise to study the viability of it. That is the true option. The true commitment is to sit down with the United States to study whether or not it is viable to build a sea-level canal. If the two countries feel it is viable, then they will sit down to negotiate the terms agreed on by the two countries. This is the panorama we have before us. This is the famous neutrality that is being criticized in these negotiations. The real problem, or rather the two real problems that those who oppose these negotiations will have to face, will be to prove to us that the 1903 treaty, the Buneau-Varilla Treaty, is better than this one. That will be their first problem — to prove that the perpetuity clause we now have and the present Canal Zone is better than this. That is something they will have to prove to us and our people. They will have to prove that the $2 million we now get is economically better for all the coming years than what has been presented by our planning and economic policy minister. That is something they will have to prove. We do not mind being criticized by those who say they do not want the treaty because, as Ahumada said, they do not like General Torrijos because he is a dictator and they do not want the treaty to be signed under a dictator. That is nonsense. At the bottom of this problem, those who oppose this treaty will have to prove to us that perpetuity, the Canal Zone's existence, the existence of a foreign jurisdiction here and the anarchic existence of military bases is better than what we are proposing. And those who do not attack us on that side, but on the contrary, say that we are not revolutionary enough, will have to prove it to us by getting their knapsacks and their grenades and entering the zone to get the gringos out of there. That is how they will have to prove it to us. Not with little speeches or documents. SPEECH BY GENERAL TORRIJOS Esteemed fellow members of the government, honorable representatives: You have heard a compact account of what has been 70 years of struggle for the Panamanian people. I say that it has been 70 years of struggle for the Panamanian people because America and the world know that many of the cemeteries of rebels in this country are full of the crosses of youths who sacrificed themselves to see their sovereignty and their dignity respected. This triumph, which I come to present to you here, is a triumph which results from the greatest conviction that we have triumphed [as heard]. It is a triumph which comes from the conviction that the country will take another path and a triumph which comes from the conviction that, had we not organized the country politically and given this people authentic representation in the administration of their destiny, no government or leader, no matter how great or how good a path- finder, could have presented to the nation a treaty which has as its most important feature the fact that it sets the date for the eradication of each of the colonialist stakes [surrounding the zone] which exist at present. [Applause.] I can tell you that this is a triumph which fills me with pride because to change the term perpetuity to 23 years is a triumph of this generation. I tell you that I am proud of the negotiating team, because they set a deadline on perpetuity, which in other words meant eternity plus one. And I tell you that I am proud because I am convinced that the great objectives of sovereignty can only be achieved through this 317 struggle which the country has waged, which I call the aplinism [alpinismo] of generations. I call it alpinism of generations because we would be very selfish if we failed to admit that all the past generations, within their own circumstances, fought with all their effort, valor and determination to eradicate the colonial enclave which divides the fatherland. [Applause.] Never before have I felt more respect for those who participated in this effort. I had not felt such respect because I was unaware of the pressure to which they had been subjected. Sirs: If one were not a leader with a good mental attitude, if one were not a leader who is inspired daily by love for our youth, if one were not a leader overly prepared to withstand pressure, today one would be in a mental asylum. One is subjected, in this type of negotiation — when one chooses the route of negotiation to liberate the country, one chooses a somewhat shorter, but which would entail the sacrifice and immolation of no less than 50,000 Panamanian youths who, being overly devoted to the cause of their fatherland, would have demonstrated that they are the aristocracy of the country's patriots. We would have left future generations headless, completely without future leaders, because the best — the aris- tocracy of patriotism, the aristocracy of talent and the aristocracy of courage — would have been sacrificed in the 1,142 square kilometers of the Canal Zone. What will happen? I know that there is question in the minds of all the people — will we recover this piece of land in order to change its owners? To exchange white masters for brown masters? This is the great question and the great doubt which I wish to clarify right now. We are not going to exchange that great piece of land which we are now incorporating under our sovereignty for new masters. We are going to make the most collective use possible of those recovered installations and of those square kilometers. [Applause.] When I say the most collective use, I refer to the use by which the greatest portion of the Panamanian people may enjoy the fruits of their labor. I visualize, with the idealism of a leader, I visualize Fort Amador, when I pass overhead in a helicopter, as the home of 20,000 Panamanian children playing on those fields, playing on those lawns, sheltered in those installations, without the fear that someone will say that their presence is illegal and that they are intruders on the soil which belongs to them. [Applause.] I visualize the children of the [national] institute — and when I say the children of the institute I refer not only to those who are registered there but all those who have the philosophy of the institute, since the philosophy of the institute has been the greatest quarry of rebelliousness that has nourished the patriotism of the fatherland. [Applause.] I visualize the children of the institute climbing Ancon Hill as they please and from there, looking down at the canal, the city, and wherever they wish without a foreign policeman arresting them and accusing them of the usual charge— disturb- ing the peaceful existence of 50,000 Zonians. Thank God that not everything in th*s country was badly designed, because he who had enough vision to install the national institute near the Canal Zone was doing so with the clear understanding that he was establishing there an outpost of national dignity so as to prevent those who had arrogantly usurped our territory from sleeping in peace for 70 years. [Applause.] And now we are in the stage of drafting, of the academic polishing of the treaty. After the Panamanian Government accepts it, accepts this draft as what has been agreed upon, the U.S. Government will have to do likewise. This will take 3 or 4 weeks. Then two alternatives will remain. President Carter is not averse to the idea of coming to the country to sign this document in a setting which was a source of shame for them for 60 years, and in the presence of all the leaders of Latin America. He is not averse to the idea, but on the other hand he is also too busy [empenado], too busy trying to get the treaty through the Senate, and this might possibly prevent his being present. If this is so, then we will have to fly to the United States to sign the treaty and immediately begin disseminating information in order to saturate the public with information on what is being approved or disapproved. We must stipulate that the government does not consider criticism of the treaty as criticism against the government and that all the government wants is for these opinions on the agreements to be expressed in a responsible manner. We must stipulate that the treaty will be submitted to a plebiscite and that every Panama- nian who goes to the ballot box should be aware that what he is depositing in the box is a message from his own conscience. [Applause.] It was possible to obtain this treaty due to the fact that a long time ago, following the moral scandal of Watergate in the United States, there a team of men began to be formed in the top political leadership of that country who gave a deep, funda- mental importance to morals. This team of men believed and believe, know and are convinced, that there is no juridical code that legalizes a colonial enclave. They are a team of men with a deep sense of shame and who balanced out the correlation of forces between a big nation and a small one. It balanced out the correlation of forces, not because the United States had become militarily weak, and Panama militarily powerful, but because conscience, honor and morals on both sides reached an equal level at which it was possible for us to reach an agreement. In this we must admit that President Carter has shown that he is not a president elected only to have the national anthem played for him, but to make decisions which will prevent his country, which is the great nation of the north, from continuing to live with the shame of maintaining a colonial enclave based on the principle that the United States is much stronger than we are. We must admit that this man has had the courage to tell his people not an agreeable truth but rather the logical truth and to tell his people that to continue treating Panama in this way is something which should shame each one of the 200 million U.S. citizens. [Ap- plause.] Soon — the date has not been determined yet — we will have to confront a general mobilization, a mobilization that will bring to the polls the greatest number of Panamanians able to exercise the right to vote. We have to do it because not doing it, not going, not being present en masse at the polls is to deny the idea that this cause stopped being a cause and became a national religion and later a religion of Latin America. We are soon going to have to deal with this situation, and I hope, and am completely certain, that no Panamanian with the right to vote will be indolent in responding to this call from the fatherland. And I am completely sure, because each member of our generation, one way or another, has been humiliated in that enclave which today we are dismantling by means of this treaty which we are proposing. [Applause.] I am completely sure that we will be present at the polls to give the country and the leaders a testimonial to the fact that, having given me a blank check to negotiate this treaty, you are now accepting the results of this act of faith and confidence. You are accepting it with satisfaction, and you do so because it is a treaty which decolonizes and does so rapidly because it is a treaty which returns to us all that had been taken from us by force; and because it is a treaty which will strengthen our personality as Panama- nians and will give Panamanians more dignity everywhere in the world. And I know that you will be present, because no Panamanian throughout history, faced with the hidden [as heard] demands of the fatherland, confronting a vehement appeal by the fatherland, no Panamanian in history has failed this call or these demands; nor will they fail this call now made by the country — the call which consists of the casting of their votes in the ballot box in the plebiscite. By this vote, they are expressing what their conscience and dignity as Panamanians and their position as the men of this country tell them they should do. Thank you very much. AGREEMENT ON TREATY PRINCIPLES SUMMARIZED Listeners of the state radio broadcasting system through the country: This is Danilo Caballero. Along with Arqueles Morales, we are going to read a summary of the agreement of principles signed between Panama and the United States to reach a new Panama Canal treaty. This document was prepared by the Foreign Ministry and the introductory paragraph is signed by Foreign Minister Gonzalez Revilla. It is for the Assembly of Corregimiento Representatives and was distributed to them this morning for them to study, to read during the recess and at 1500 when today's special meeting reconvenes. They will thus have a basis— with this document and the expositions made this morning — on which to ask pertinent questions to the members of the negotiation team. This document is especially important because it is the first time that the general content and specific data of the new canal treaty, which is of the highest interest to our people, are being submitted to the 505 representatives for their analysis. It is necessary to clarify, as Dr. Romulo Escobar Bethancourt did in his speech this morning on the contents of the treaty, that this is not the full document. That is, it is not the complete and absolute text of the draft agreement, the agreement of principles, for the simple reason that the document will only have domestic and international validity when it is signed by our Chief of Government Brig Gen Omar Torrijos Herrera and by U.S. President Jimmy Carter. Regarding the duration of the treaty, the document says: The 1977 treaty will have a set duration; it will expire on 31 December 1999. On that date, the Republic of Panama will begin to manage and defend the Panama Canal exclusively. Regarding jurisdiction, which historically has been one of the most debated prob- lems in our people's historical struggle to recover sovereignty, the text at our 1319 disposal reads: There will be no Canal Zone government or governor. Only Panama will exercise such governmental functions as police, firemen, customs, justice, postal services and so on. This transfer will be completed in a 30-month period after the treaty takes effect. Only Panamanian civil and penal laws will apply. The Foreign Ministry document goes on to say that the canal administration commission will not be allowed to carry out commercial operations and that these activities will be completely regulated by Panamanian laws. In this regard, the following activities and functions being carried out by the Panama Canal Company and the Canal Zone Government would cease: Wholesale and retail sales of merchandise of all types in commissaries, stores, optical shops and others, the preparation of food and drink and milk products; the operation of bakeries, public restaurants and cafeterias and the sale of articles using automatic vending machines; the operation of movie theaters, bowling alleys, bil- liard halls and other entertainment centers charging admission; launderies and drycleaning facilities that are not operated for official use; outlets to repair and service private automobiles or sell fuel and lubricants, including service stations, garages and outlets to repair or retread tires; repair shops for other privately owned property, including electronic and electrical home appliances, irons, motors and furniture; cold storage and cargo warehouses that are not being operated for official use; commercial supplying and servicing privately owned ships, including the sale of fuel and lubricants, towing services not related to the canal and other U.S. Govern- ment operations; the repair of private vessels except when it is necessary to remove damaged ships from the canal; nonofficial printing plants; ocean transportation for public use; mortuary services and cemeteries; educational services, including schools and libraries; the postal services; the customs, immigration and quarantine services, excluding those needed to ensure the cleanliness of the canal; the construction and repair of ships and supplying them with water, fuel and lubricants; the docks and the movement of cargo and passengers. Regarding the principle of nonintervention, the document distributed today to the 505 Corregimiento Representatives reads as follows: The U.S. military forces and civilian personnel will abstain from all political activities in the Republic of Panama, as well as any other intervention in the domestic affairs of the Republic of Panama. Regarding neutrality, Panama unilaterally declares the neutrality of the canal so that in times of peace or war it will remain open and at the service of the shipping of all nations of the world in terms of absolute equality and so that the canal and consequently the Isthmus of Panama will not be subjected to reprisals in any armed conflict between the nations of the world. Panama and the United States agree to maintain its neutrality so that the canal can remain permanently neutral. Panama and the United States will promote the support of all nations of the world for the protocol of neutrality. Regarding the canal's operation, this important document says the following: The United States will be mainly responsible for the operation of the canal until 31 December 1999, when the canal and its auxiliary projects will pass completely to Panama. The canal will be operated by an agency of the U.S. Government. This agency will be called the commission. This commission will have a board of directors made up of nine members, five of whom will be U.S. citizens and four will be Panamanians chosen by the Panamanian Government. From the moment the treaty comes into effect until 31 December 1989, the deputy manager will be a Panama- nian and the manager will be a U.S. citizen. Starting on 1 January 1990 until 31 December 1999, the manager will be a Panamanian and the deputy manager will be a U.S. citizen. Referring to the canal's operation, the document also says there will be a consul- tative committee made up of an equal number of Panamanian and U.S. representa- tives that will advise the governments of the two countries on policies related to the canal's operation. Regarding the employment policy, non-Panamians will be employed only when there are no competent Panamanians to fill the vacancies. This means that when there is a vacancy, it should be filled by a Panamanian. If there is no Panamanian able to fill the post, then foreign or non-Panamanian personnel will be employed. Within the 5 years following the treaty's implementation, the number of U.S. citizens employed in the former Panama Canal Company will be reduced by 20 percent. The employees of U.S. citizenship contracted after the treaty is in effect will be able to work only for a 5-year period. There will be no discrimination in matters regarding salaries, services or labor benefits because of nationality, sex or race. That is to say, there will be no gold roll or silver roll. There will be no security posts, which were held only by U.S. citizens. 320 One of the most important matters included in the document distributed to the 505 representatives refers to the canal's defense. In this respect, the text reads as follows: The Republic of Panama and the United States will be jointly responsible for the protection and defense of the Panama Canal during the new treaty's duration. The Republic of Panama will have a growing participation in the canal's defense. There will be a joint board with an equal number of military officers from each of the two countries who will be in charge of coordinating and consulting on matters related to the protection and joint defense of the canal without restricting the identity or lines of command of the Panamanian National Guard. The United States will station, train and transport military forces only in the manner described in the regulations for the U.S. armed forces in Panama. In times of peace, U.S. forces in Panama will not surpass the level in the Canal Zone prior to the treaty. After the Panama Canal treaty ends, only Panama will manage the canal, maintain military forces, defense sites and military installations in all its territory. Regarding flags, one of the most irritating matters for Panamanians for over 70 years, the summary of the agreement presented by the Foreign Ministry to the representatives of the assembly says: The Panamanian flag will be flown in all parts of Panamanian territory. The U.S. flag will be flown only at the office of the Panama Canal administration commission and within defense sites, where our flag will always have an honored place. That is, the Panamanian flag will always be in a honored location at all sites. The document also refers to the possibility of building a sea-level canal. For the treaty's duration, the two countries, if they believe a sea-level canal may be impor- tant, will commit themselves to a joint study of the feasibility of such a canal. If they do this, they will negotiate to try to reach an agreement for its construction under terms which could be established by the Republic of Panama and the United States at that time. This means that the agreement on principles does not include any clause which commits Panama to building a sea-level canal in conjunction with the United States. This agreement on principles merely provides for the possibility of a joint study with the United States of the feasibility of building a sea-level canal. The economic aspects of the negotiations we believe to be too complicated to set forth in this short report we are presenting to you via Radio Libertad. Regarding lands and waters, the document states the following specific points: When Panama grants the United States the right to use, until the year 1999, the lands and waters needed for the efficient operation of the canal, our country thereby liberates almost 70 percent of the lands and waters now occupied by the United States, including the following: Ancon Hill, the railroad, the ports of Balboa and Chistobal, half of Fort Amador, the Naos, Perico and Flamenco islands, part of Coco Solo, France Feld, all the towns of Rainbow City, Pedro Miguel and Paraiso, the littoral area from the Bridge of the Americas to Veracruz, Gatun and Alajuela lakes, Fort Randolph and Fort Gulick, Curundu Heights and Albrook Field, Summit Botanical Gardens. Fort San Lorenzo — part of our national historical heritage — the Mount Hope Cemetery, the Balboa and Ancon court buildings and a number of sports facilities. Some of these installations will revert to Panama on the first day after the signing of the treaty, and others 3 and 5 years later. Therefore, from the first day of the new treaty there will be no more Canal Zone. We shall have a canal without a colonial enclave. Well, this is a summary of the agreement on principles between Panama and the United States which was distributed this morning at the legislative palace to the honorable Corregimiento Representatives. It is a document drafted by the Foreign Ministry and signed by Foreign Minister Nicolas Gonzalez Revilla. NEGOTIATORS ANSWER ASSEMBLY'S QUESTIONS [Education Minister Royo] Regarding the question of whether Panama will have to repay the loans from the United States: In referring to discussions of economic aspects, Don Gilberto, we are speaking of two areas. One area is the payments which the United States makes to Panama and which are derived generally from the canal revenues. These include tolls derived from Panama's use of the ports of Balboa and Cristobal. Another, different area is the package which is called the economic cooperation agreement. That agreement has one goal: for Panama to achieve improved economic development, as Minister Ardito Barletta explained, and, on the day we have to administer the canal 100 percent and defend it, for Panama to have a level of economic development that will allow it to assume that tremendous responsibility. 321 This economic cooperation agreement provides for loans which Panama definitely must repay. For example, the loan from the Eximport Bank will be $200 million, and that loan will be made through what are called concessionary loans which are long term — 20 and 30 years — with grace periods of 5 to 10 years and, moreover, at an interest rate of between 5.5 and 7 percent. This rate is what is called a soft interest rate and it allows Panama, at the end of 30 years when it repays the $200 million, the payment at that time, at the values current at that time, will be much less than the amount we are receiving today [sentence as heard]. For this reason, it is said that these are loans paid for by the devaluation of the currency itself. [Representative Luis Castillo] Mr. President, distinguished negotiators, dear com- rade: I would like to ask the negotiators about the plebiscite. Since this is the means by which the Panamanian people will ratify the treaty and is related to the ratification by the U.S. Congress, I would like to ask whether a date has been set for the plebiscite and whether it has considered that it is important for the plebiscite to be held before the U.S. Congress ratifies the treaty. The idea is that once the results of the plebiscite are known — and we feel sure the Panamanian people will approve the treaty by a majority — this would have an impact on the U.S. Congress. [Romulo Escobar Bethancourt] About the plebiscite. The date for the plebiscite here in the Republic of Panama still has not been set, because naturally this depends on when General Torrijos and President Carter sign the treaty, and also on the amount of time allowed for public debate. After that period for debate — if it is decided here in Panama that, let's say, the debate will take place over a period of 4 weeks beginning on such and such a date — the plebiscite will take place. But the date for it can be set as soon as the two chiefs of government sign the treaty. I understand the electoral tribunal is already taking action and studying the mechan- ics of the plebiscite. We of course attach great importance to the plebiscite. I would point out that the revolutionary government is so honest and scrupulous regarding the negotiations with the United States that the 1972 constitution pro- vides for this plebiscite. That is, a constitution dictated by this very same govern- ment. What does this mean? Simply that, as General Torrijos has said from the beginning, the problem of relations with the United States is not the problem of one leader or one administration, it is the problem of all Panamanians. If all Panama- nians are to be affected for good or for ill by a treaty with the United States, then all Panamanians must have the right not only to express their opinions but to decide whether or not that treaty should stand. For the first time in the history of our republic and under our revolutionary government, that kind of political partici- pation has been established. We honestly agree with you that in a plebiscite here, after our people become truly informed about this treaty and the profound change it implies for the country, an overwhelming majority will be in favor of the treaty. This revolutionary government, despite the fact that this is a small country, is the only one that has confronted the United States in a really dignified and strong manner. As for the U.S. Congress, there is a big problem, to be frank with you. They have a big problem, worse than you can imagine. The United States is a country where people have been brought up thinking that the Canal Zone and the Panama Canal belong to them. All their lives they have been taught this in school, at home, through publications— that is the background of the American people. As a product of that training, they, or most of them, feel that this step which President Carter's administration wants to take is a step to give up part of the United States. Many of them feel that if the United States give Panama jurisdiction over the Canal Zone and the Panama Canal afterwards, it is as if they were giving up, for example, the Florida Peninsula. Because that is the training which they have had. Logically, then, the problem goes to congress. Why? Because the U.S. congress- man, as a good political, acts as the instrument of those electing him. He is always aware of how the voter of the district or state that elects him feels. As there are sectors in the United States which feel as I have told you, there are congressmen who, because of their own training, because they were also educated that way, and, because they act according to the desires of those voting for them totally oppose the treaty with Republic of Panama. [Representative Luis Emilio Veces] I wish to clear up a point of order, because the secretary has declared that the vote was unanimous [for the resolution approving the accomplishments of the Panamanian negotiators regarding the treaty]. I wish to explain my abstention from voting. With the indulgence of those at the presidential table, the vice president, the cabinet ministers and fellow representatives, I wish to explain that I am incapable of begrudging the merits with which the resolution credits those persons abroad who have expressed their solidarity with our country. However, there is a basic issue which has caused me to abstain from voting for that 29-AOO 0-78 322 resolution. It is the fact that I cannot share the pleasure of those at this meeting or the pleasure expressed by the government team today for a treaty which I have not yet seen. The agreement on principles as submitted by the negotiating team undoubtedly presents the positive portions of the agreements reached. Nevertheless, I do not want to talk about the agreement on principles excessively, because I am not able to express a knowledgeable opinion. I want to inform my fellow representatives and the government team of two or three concerns which have caused me to abstain from voting for that resolution. I have already expressed my concerns to Captain Ocalgan [head of the General Directorate for Community Development — DIGEDCOM] who visited the Chorrera Municipal Council during its last session. According to the national press and the government team, we have ample guarantees permitting a debate on the new treaty draft. Nevertheless, the same government team has made a series of threats of a political nature against persons who oppose the treaty. I wish to state clearly that in such a situation, it would appear that we are left only to take it or leave it. I do believe that one of the statements made by Romula Escobar Bethancourt is true. Right now it would appear that any academic lucubration of the treaty is unnecessary because it would in no way alter the agreement on principles or the treaty draft, because the negotiating stage has ended. I am also worried about a number of ideas being expressed, such as that those who oppose the government or the treaty are traitors to the fatherland. These are ideas which given the pretense that there is a democratic atmosphere, constitute a threat for anyone in this country who has the power to reason. Now, those who participate in politics in this or any other country have to accept the consequences of their participation, whatever they may be, and we know this. However, I believe that this whole process of consultation is being besmirched. This is not detrimental domestically because here we all know each other, what we want and where we are heading, and we do not deceive ourselves, but on the internation- al level where this type of threat sometimes denotes fascist ideas, such as accusing of treason two Panamanians in exile in Venezuela who made statements against General Torrijos. Frankly, I know of one Latin American government which has stated that whoev- er is against it can be labeled a traitor and lose his nationality, and this is General Pinochet's government. Other than that, not even General Somoza, the dictator closest to us, has made such a statement, as far as I know. I also wish to express to my fellow representa- tives and to the government team my deep concern over the fact that a political debate can be held that will affect not only the treaties, but the whole government as well. However, I sincerely believe that this is not the time for the country to undertake a debate on the national government's situation, because what is at stake is not the government's situation but the country's situation. Consequently, I believe that no one in this country should make any statement at this time on whether General Torrijos' government is appropriate or not, because what we must decide at this time is whether the treaties are appropriate or not, and it is the national government who must lead the debate. [Chairman interrupts] Fellow Representative Veces is reminded that he has 30 seconds until the end of the permitted 5-minute speaking period. [Veces] Honorable representatives and members of the government team, I do not believe that there is any doubt in Panama about that reality. I would like to strongly suggest that the government team seriously consider this fact. [Escobar Bethancourt] My reply to Representative Veces is the following: We are promoting a public and open debate and we are not leveling political threats at anyone. We believe that this is going to be a very democratic debate. However, it will probably not be a one-way democracy, but a two-way democracy. For example, if a person is against the treaty drafts and states it publicly, we will publicly explain the points which the person is opposed to. That is what we call a debate. However, if a person makes a statement in a newspaper, as we observed recently, that not even Bunau-Varilla would have done this— "this is a democracy," as one published statement read— that person had better not believe that we will remain silent after being compared to Bunau-Varilla. He should be prepared for our reply. This is not a threat. Some individuals believe that democracy consists of criticizing the government and that the government must simply accept it. We will not do that. Any person who during the debate objects to the approval of the treaties because Torrijos is a dictator will receive our reply explaining why we do not consider Torrijos a dictator, and in addition we will reprimand that person. 323 That will be the debate, at whatever level people choose to engage in it, but whoever decides to enter the debate should know that he will get a reply. It would be a threat if we said that anyone who opposes the treaty would be put in jail, fired from his job or persecuted. That would be a threat. However, having the right to reply to an individual's proposals, I would call true democracy, Veces. Some persons frequently bring up the question of the exiles in reference to the treaty. Let us address this matter. They were not exiled due to the treaty. When they were sent into exile, the negotiations for the treaty had not been completed, and at that time they had said nothing about the treaty, either for or against. They were sent into exile for other reasons, for political reasons, and I do not personally like to see anyone in exile. However, every government has a right to defend itself, and I believe that this government defends itself very mildly. In other countries people are not sent into exile. I have visited all of Latin America. I am going to propose to the general that he send you on a Latin America visit so that you can see what fascism is and what they do to their opponents, how they make them disappear from their homes. The problem of the exiles is a problem that should be solved. When we visited Cancun, Mexico, we met with the lawyer Turner and we told him we should return to Panama because he had spent too much time abroad, that he should return and see for himself. Turner came to Panama, visited everywhere he wanted, talked to anyone he wished and returned to Mexico. We published a long list of persons who are permitted to return to the country. Do you know why many do not return? Because they are working in those countries and earning much money. That is why they are not returning. In Miami they have already bought a bank. They are not over there suffering. We have many poorer people right here, who have no jobs, right here in our country. In Miami they live in a golden exile. ASSEMBLY RESOLUTION SUPPORTS NEGOTIATIONS The National Assembly of Corregimiento Representatives has issued a resolution of support for the negotiations at this stage that is so crucial for the total liberation of the country. The representatives who met with Chief of Government Gen. Omar Torrijos Herrera and the negotiating team yesterday were extensively briefed on the treaty draft concluded by our country and the United States. The assembly's resolution notes, among other things, that the briefing indicated that the new treaty will be instrumental in achieving national liberation because it eliminates the colonialist enclave imposed on our country 73 years ago, that the new treaty will have a specific deadline, when Panamanian territory will be free of any form of alien presence; and that the results obtained were possible due to the solidary support of Latin America and many other countries throughout the world. The resolution says that the assembly hereby decides to issue an appeal to the Panamanian people at this historic moment to renounce before the altar of the nation all their differences and to consolidate national unity by unanimously sup- porting the treaty. They urge the Panamanian people to fulfill their civic duty by means of a massive turnout for the plebiscite to cast a vote that their patriotic conscience tells them is a sign of their political maturity. In addition, political circles of the General Directorate for Community Develop- ment [DIGEDECOM] have voiced their support in a resolution, which states: Since the nation has been engaged for 13 years in negotiations with the United States to reach a new treaty over the so-called Canal Zone, and since the agreement on principles for the new treaty eliminates the perpetuity clause and guarantees full sovereignty and jurisdiction over national territory, they support the country's revolutionary leaders and the negotiating team. DIGEDECOM officials also feel that the next step is to work toward the ratifica- tion of the new treaty because it embodies the supreme aspirations of the Panama- nian people. LABOR LEADER ANDERSON INTERVIEWED ON TREATY [Question] How do you view the attitude of the Canal Zone workers right now and what is the labor leaders' position on the agreement of principles recently reached between Panama and the United States? [Answer] To us it has been very interesting to participate in the negotiating process which resulted in the agreement of principles. As far as the Canal Zone workers are concerned, it could be stated that they are generally quite pleased; first, because a treaty has been reached after so many years of negotiations and it is definitely a treaty that meets the aspirations of every good Panamanian— namely, that Panama wants to be a free, sovereign nation with jurisdiction over its entire territory. 324 Many feel that since the employer in the Canal Zone is the U.S. Government there is a negative feeling toward Panamanian aspirations. Our experience is that this is not so. Panamanians who work in the Canal Zone are very much aware of Panama's struggle. They share it and, in most cases, actively support it. Concerning the labor aspects, there is uncertainty among the workers because the specifics have not been disclosed. I think that after we hold several information meetings, after we issue public communiques and leaflets and after we use the mass media to brief the entire Panamanian labor force in the Canal Zone, there will be a great deal of acceptance of the content of the treaty. As leaders, we feel that the protection set forth in the treaty is very adequate, and this is not a rash judgment but a comparative judgment. It is significant that today we have certain benefits and that we have achieved a number of conquests for Panamanian workers in the Canal Zone. Those conquests and benefits have been achieved since the 1955 memorandum of understanding which contained only three labor clauses. Today we are faced with a treaty which includes about 25 labor clauses and none are unfavorable to Panamanian workers. This is indicative of why we accept the treaty. Today we have had the opportunity of participating directly in the negotiations. We did not have that opportunity in 1955 or 1967. There is also a great deal of acceptance because the Panamanian Government has fully met its promise of not only seeking to protect current benefits, but of correct- ing a number of ills existing in the Canal Zone which, despite many struggles, the labor leaders had been unable to correct. Concerning private business in the Canal Zone, there were 3,000 Panamanian workers whom we could not protect because this area was outside the scope of the law. We were unable to obtain any benefits for them even though this union in particular put all its manpower and funds behind that struggle for the past 15 years. This is one of the issues that the new treaty corrects. About 82 percent of workers of nonbudgeted activities such as clubs, pools, sports fields and libraries on the military posts were not covered by any labor benefits. This treaty corrects that. If we view it from the standpoint of just these two specific conquests, we would have to say that it is an extremely favorable treaty for Panamanian workers. [Question] How do you view the social security benefits that will become effective with the treaty? [Answer] There has been some confusion or misunderstanding over the benefits. The treaty does not stipulate any major change in labor benefits. However, from the first day of the treaty, those who start to work in the Canal Zone, whether for a state agency or a U.S. Government agency, will be covered by the Social Security Service. As far as present workers are concerned, there will be no change in their benefits. The changes that could occur are optional for the worker and that would also have to be explained. There will be several employers in the Canal Zone. There will be employees of private business, employees of those activities that go from the U.S. Government to the Panamanian Government and employees of activities that will be entirely administered by the U.S. Government. All those employes who will continue working for the U.S. Government will have the same benefits that they now have with minor differences such as medical care at Gorgas Hospital. The treaty stipulates that after 3 years no Panamanians will receive medical attention at Gorgas Hospital or any other hospital administered by the U.S. Government in the area. But here we are just saying that employees will receive care from other private institutions in Panama or, if they prefer, from the Social Security Service. [Question] What is the status of the workers who will be laid off and what possibilities do the labor leaders see of resolving this problem? [Answer] It would be impossible to specify now how many workers will be laid off. However, this is a matter of profound concern to us. In certain areas we have been given almost total assurances that there will be no layoffs and in other areas the very nature of the treaty poses the possibility that there will be layoffs, and this is a matter of deep concern to us. The fact that Panama will assume complete jurisdiction over political and crimi- nal matters within a maximum of 3 years after the treaty goes into effect means that all the government apparatus which the U.S. Government maintains in the Canal Zone will disappear. The strictly economic and commercial functions will also disappear. We confronted this reality not now, after a treaty has been reached, but before, when we foresaw this as a logical consequence of a treaty. We proposed early retirement as a means of keeping the loss of employment from becoming a serious 325 problem, not only for the working classes within these specific activities but also within the broader framework of the country's economy. As a matter of fact, when we spoke of a Canal Zone worker and the effects of his dismissal, we in fact said that the dismissal of a worker there would have the same results as the dismissal of three or four workers. Referring specifically to a document published here which referred to [the dismissal of] 3,000 to 8,000 employes, this would have the same effect as the closing of two breweries, Cemento Panama and two or three of the largest companies in the country. We do not really believe that so many employees will be dismissed, but we are aware of the fact that a meaningful number of workers could be dismissed. Let us see now what kind of protection can be given these workers. I believe that they can be given an early retirement so that those dismissals do not become a trauma for the workers or the national economy. In the specific case of the commissaries, we had mentioned that General Torrijos had suggested the possibility of creating cooperatives that would replace these commer- cial activities administered by the U.S. Government. This would be one of the many ways to solve the problem. However, these specific aspects would have to be studied as the various stages of the treaty develop. It is impossible now to make predictions because no one has any clear-cut concept. No one, not the U.S. Government, the Panamanian Government or we, the unions, have a clear-cut concept of how many jobs will be affected. [Question] Is there any possibility that your centrals, in solidarity, will press strongly to influence the Senate regarding the treaty's ratification? [Answer] All the unions now operating in the Canal Zone, except the Colon Portworkers Union, are affiliated with the AFL-CIO. The solidarity you referred to has been evident since 1974. Our federation, at a national level, has supported Panama's just aspirations in' the United States. This was the result of a proposal which Local 907 presented in the congress held that year in Honolulu. Our feder- ation's support was very real. It was published by the federation's official news media and also by mass communications media in the United States. What we can assure you is that our federation maintains this attitude of support for Panama and that this support is growing with a treaty which definitely protects the rights we have acquired. In my opinion, based on the study of the treaty's clauses, if the treaty's labor aspects, which is what should interest all labor organizations, are observed, we will be committed to support the treaty. The treaty is a document which protects both Panamanian and U.S. citizens. Ajiy possible opposition to the treaty by the labor unions would be provoked by other reasons, not laboral. [Question] What, in your opinion, will be the status of the existing labor code and the unions now existing in the Canal Zone? [Answer] This question is difficult to answer because we will have to await the legislation to implement the conceptual clauses of the treaty. Nevertheless, every- thing seems to indicate that the labor code will be applied mainly in the areas of private employment and not in those activities under the direct administration of the U.S. Government. Regarding our organization — Local 907 — we operate structur- ally with the labor code. We have had legal standing since 1954 and have always operated under an administrative structure based on the labor code principles. [Question] How does the union leadership view the employment of many Panama- nians in jobs formerly considered security positions? [Answer] I think that this is not a matter of human qualities. At this time it is we who run the canal. The security positions are really privileged positions to insure the continuity of U.S. personnel at the job and not because the position required a professional or technological level not obtainable in the Republic of Panama. The apprenticeship program begun in the Canal Zone 16 years ago has trained Panama- nians at a level capable of carrying out the efficient administration, operation, repair and maintenance of the Panama Canal. The security positions are a great fallacy. One sees, for example, that in the Canal Zone police there are security positions. The Canal Zone fire department desires security jobs. Certain levels of engineering common in Panama are classified as security positions. I rather believe that the problem of running the canal efficiently will fall in the realm of our administrative systems — the administrative systems applied by the republic as sov- ereign and owner of the canal— and not whether we have the human resources capable of operating it. It would be wrong to think that, as Panamanians, we could object to a treaty which returns to Panama the total jurisdiction over all of its ph>sical territory. We could object to a labor clause affecting our interests, just as we have protested in the past over the clauses which prevented the full utilization and development of Panamanian workers in the Canal Zone. But we could never object to a treaty which is the aspiration of all good Panamanians, and this organization will back 326 this treaty even if it contains certain clauses detrimental to our interests. What we would do is simply to wage a struggle at a labor level to correct these irregularities. RATIFICATION OF THE PANAMA CANAL TREATIES Mr. Sparkman. Mr. President, today the Committee on Foreign Relations continued its hearings on the Panama Canal treaties hearing as witnesses Senators Thurmond, Hollings, and Allen, and Congressmen Stratton, Flood, and Commissioner Corrada from Puerto Rico. For the information of the readers of the Record, I ask unanimous consent that the prepared statements of the witnesses be printed in the Record. Senator Hollings did not have a prepared statement but his remarks will be available for reading in the transcript in the committee offices. There being no objection, the statements were ordered to be printed in the Record, as follows: Statement by Senator Strom Thurmond Mr. Chairman: I am here this morning to present to the Committee and the American people my reasons for opposing the treaties with Panama. My interest in the Panama Canal is longstanding. Over the years I have intro- duced several bills to modernize the Panama Canal. In the 94th Congress, I offered a resolution signed by 38 other Senators opposing the surrender of this waterway to Panama. Last August, I visited the Canal Zone for briefings and study to ascertain any changes since my previous visit several years before. While I recognize the need for some adjustments with Panama concerning the Panama Canal, I see the retention of U.S. sovereignty as basic to continued "practi- cal control" of the Canal, which even the President has expressed himself as being necessary. My 1976 resolution was more than sufficient warning to both the Ford and Carter Administrations relative to the Senate's concern in this matter and to warn the government of Panama that the treaties would be scrutinized closely. Yet the treaties have been signed with great fanfare, and the threats from Panama strongly suggest either we ratify or pay the consequences of violence and disruption in the Canal Zone. In fact, Panamanian chief negotiator Escobar Bethancourt went so far as to say "* * * This country (Panama) will take a course of violence" if the treaties are not ratified. At no time in my memory have such threats and pressure been exerted on the Senate as is the case with these treaties. In making our decision, however, we must rationally decide what is in the best interest of our Nation, irrespective of the pressures and threats directed toward us. IMPORTANCE OF CANAL I disagree completely with Ambassador Linowitz's statement to this Committee last week that the Canal has become "economically obsolescent." This statement is designed to denigrate the importance of the Canal and thus make the proposed treaties more palatable. The Canal is one of a very few vital world waterways. It permits rapid two-ocean commerce very beneficial to our Nation. In 1975 about 14,000 ships transited the Canal. Approximately 70 percent of the traffic originated in the United States or was bound for the United States. It is estimated that 45 percent of Alaskan oil will be shipped through the Canal by 1980. Furthermore, its value from a national security standpoint is attested to by heavy use during the Korean and Vietnam Wars. Approximately 98 percent of our Navy can use this Canal. As an example, in FY 1968, about 70 percent of U.S. Govern- ment cargo headed for Vietnam used the Canal. U.S. Government vessels passing through the Canal increased from 285 in 1964 to 1,504 in 1968; 1,376 in 1969; and 1,068 in 1970 during the height of the Vietnam War. Also, we must not forget our Navy has declined from 900 ships to less than 500. Admiral Thomas Moorer, immediate past Chairman of the Joint Chiefs, states we no longer have a two-ocean Navy. All of our current major war plans are contingent on the interchange of ships between the Atlantic and Pacific Oceans. Ships of the Third and Seventh Fleets in the Pacific may have to bolster the Second Fleet or 327 even the Sixth Fleet. All of our military services — Army, Navy and Air Force — depend on logistical support which transits the Canal regularly. Four former Chiefs of Naval Operations have attested to the strategic importance of the Canal in a personal letter to the President. These four great naval strategists, Admirals Anderson, Burke, Carney and Moorer, have retired from the active service and speak from great experience. In their letter to the President, they warned: "Loss of the Panama Canal, which would be a serious setback in war, would contribute to the encirclement of the U.S. by hostile naval forces, and threaten our ability to survive." Now that we have clearly established the importance of the Canal. I want to reject outright the slogan that "Use of the Canal is more important than owner- ship." A more sensible slogan would be "Ownership assures control." As a matter of fact, it can be argued that our giving up ownership of the Canal would diminish our chances for having free access to the. Canal, particularly when we consider, for example, Panama's historic instability. Once the U.S. gives up sovereign and effec- tive control of the Canal Zone and Canal, it will be, in effect, an outsider with highly questionable authority to intervene if the neutrality of the Canal is threat- ened. This Country would be in a very difficult position internationally and domesti- cally if it had to resurrect "gunboat diplomacy" and intervene in Panama after we surrender sovereign rights. WHY OPPOSED? In an effort to be brief and avoid repetition of prior testimony, I will attempt to list my reasons for opposing the treaties. I. Nature of Panamanian Government I do not believe we should negotiate on such a vital issue with a government leader who deposed an elected President by military force and over a period of 9 years has not provided the people of Panama free elections. In this period, the Torrijos government has pushed the national debt from $167 million to over $1.5 billion. Today, about 39 percent of the Panama budget goes to service this national debt. Furthermore, this government of 1.7 million people has promoted close rela- tions with Cuba and the Soviet Union, two expansionist powers unfriendly to our Country. I seriously question why we should make national heroes out of govern- ment officials who have virtually eliminated all political and civil rights of their people. The documented human rights record of the Torrijos government is one of the worst in the world. One might ask, Once sovereignty is given to Panama, will that government remain friendly to the U.S.? Does the Panamanian government have the political strength or will to resist outside interference? Does it have the economic vitality to maintain and protect one of the world's vital waterways? What will we be paying after the year 2000 to keep the Canal open? If Panama finds it is unable to cope with the complex operation of the Canal, to whom will they turn? If to us, it means great outlays of cash. The only other great power to which it could turn would be the Soviet Union, through its figurehead Castro. Mr. Chairman, I wish to point out that in the prepared statements of Ambassa- dors Bunker and Linowitz, Secretary Brown and General Brown, before this Com- mittee, not one single time did any of these witnesses mention the name of General Torrijos. That should tell the Committee something about the nature of the Govern- ment to which we are being asked to turn over an approximate $8 billion national and world resource. II. Sovereignty surrendered I further oppose this treaty because it grants to Panama sovereignty six months after ratification, not in the year 2000, as the public has been led to believe. Once sovereignty is surrendered, control is lost for all practical purposes and control governs use. ///. Property surrendered Six months after ratification of the Treaty, the Canal Zone ceases to exist and about 65 percent of the land and 10 of the 14 U.S. bases are given to Panama. The remaining land adjoining the Canal itself is under limited U.S. control for the purpose of operating the Canal. We oblige ourselves to pay the Panama government huge sums in various ways, totaling up to nearly $1.5 billion over the next 22 years. By the year 2000, we will be turning over an investment valued at approximately $9.3 billion. 328 IV. Military pact rejected Our negotiators sought but failed to obtain a military pact with Panama for minimal base rights which would have greatly enhanced our ability to assure the Canal's neutrality after the year 2000. Negotiator Bethancourt stated in his address to the Panama Assembly on August 18 the U.S. desire for defense forces after the year 2000 "created a deadlock in the negotiations for some time because Panama opposed signing of a military pact." Instead, we accepted an ambiguous neutrality pact. V Foreign troops allowed? While U.S. negotiators claim the Neutrality Treaty allows only Panama to- main- tain troops on its own territory after the year 2000, the Treaty is silent on prohibit- ing foreign troops prior to the year 2000. There is nothing to prevent Panama from introducing Cuban, Soviet or troops of any other nation into those areas of the Canal Zone we surrender six months after the proposed ratification of the treaty in 1978. Changing political events could prompt Panama to take such a step. In my judgment, a prohibition on foreign troops prior to the year 2000 was one of the many errors made by our Canal negotiators. VI. New canal prohibited Another part of the Treaty with which I find fault is the provision prohibiting our construction of a sea-level canal prior to the year 2000, except in Panama or only with the permission of Panama. In this instance, we have surrendered an option which may be forced upon us. While I feel a sea-level canal is unnecessary, why have we foreclosed this option? In doing so, we place ourselves at the mercy of the government which controls Panama. VII. Privileged passage The right to priority passage is also denied us in Article VI of the Neutrality Treaty. Instead of "priority passage" through a canal we built and have maintained for the world's benefit, we are promised only "expeditious passage." Mr. Bethan- court has stated privileged passage sought by our negotiators was specifically reject- ed. The differences in statements made by the negotiators on the two sides make is unclear what our rights would be in a given situation, although priority passage through the Canal could be vital to our national security in an emergency or war. VIII. Unfriendly ships assured passage Presently, as a result of our control of the Canal, we could deny passage to adversary ships as a practical matter in time of an international crisis or war. Under the Treaty we surrender this right as it cannot be exercised once practical control of the Canal is surrendered. Tins means ships aiding an enemy of the U.S. could transit supplies through the Canal. IX. Neutrality treaty One of my most significant concerns is the ambiguity contained in the Neutrality Treaty. Ambassador Linowitz and others have maintained that no limits were spelled out in the Treaty, so we will be free to take whatever steps are necessary to protect the neutrality of the Canal. These remarks might be reassuring to the American public, except for the comments made by Chief Negotiator Bethancourt on these provisions to the Panama Assembly on August 19. He stated: "Those people believe that the right to intervene is granted, but nobody grants the big powers the right to intervene. They intervene wherever they damn well please with or without a pact." [Applause.] Additionally, in an August 24, 1977 radio broadcast, Mr. Bethancourt is quoted as saying: "The pact does not establish that the United States has the right to intervene in Panama. This word (intervention) was discussed and eliminated * * *" Later he stated: "• • • the neutrality pact does not provide what the United States will say when neutrality is violated.' Indeed, Mr. Chairman, Articles IV and V of the Neutrality Treaty are so ambigu- ous as to lend themselves to various interpretations. This reason alone is sufficient to reject the Treaties. BROAD CONCERNS Mr. Chairman, these are some of the specific concerns I have relative to these Treaties. There are other broader issues involved. Will our ratification of these treaties be seen as a pattern of withdrawal in view of our retreat in Korea, 329 Southeast Asia and possibly Taiwan? This misguided direction of our foreign policy engenders consternation on the part of our Allies and audacity on the part of our adversaries. This type of audacity has even been highlighted by the reckless and provacative statements of Mr. Bethancourt and others about violence. We cannot hope to deal effectively with other Nations as a world leader if we yield to blackmail. That is the only word to describe the threats of violence and sabotage which treaty proponents are broadcasting far and wide, and using as their chief argument for ratification. If the Senate were to ratify a treaty in the face of such threats, it would show the world a new policy alien to our national character and our history and which would invite further exploitation. While I will leave to others the history of our acquisition of this property, no one can deny its benefits to Panama. BENEFITS TO PANAMA Between 1946 and 1973, according to the House Appropriations Committee hear- ings, Panama was the recipient of $342 million in total U.S. aid, more per capita aid than was granted to any other country in the world. Benefits to Panamanians in 1975 alone amounted to $29 million in direct purchases in Panama by U.S. agencies; $108 million in wages to non-U.S. citizens; and $39 million in expenditures by U.S. employees. We have not exploited Panama; rather, our aid has enabled its people to enjoy one of the highest GNPs per capita among all 19 Latin American nations, and the highest per capita income in Central America. Panama has from 1960 to 1974 a per capita growth rate surpassed only, and barely, by Brazil. Furthermore, U.S. private investments represent 50 percent of the capital investment in Panama. POSITIVE ALTERNATIVES Mr. Chairman, I am not opposed to a new arrangement with Panama, but strong- ly opposed to this treaty. In the past, I have supported the Terminal Lake-Third Lock Modernization Plan. This would provide for approximately $2.5 billion in capital investments over a 5 to 10 year period. Such a major step will provide an opportunity between the people of the United States and the people of Panama. Under no circumstances, however, can we afford to cede sovereignty over the Canal to Panama. Stability for the Canal can only be maintained by U.S. control. Without sovereignty, we have no control. No provision of the treaties is more detrimental to our National interest than the provision which relinquishes sover- eignty and control. In conclusion, Mr. Chairman, neither our interests nor the interests of the people of Panama are served by the treaties. The only outcome of ratification can be danger ahead. Statement by James B. Allen Mr. Chairman, thank you very much for affording to me an opportunity to state to you and to the distinguished members of the Committee on Foreign Relations my reasons for opposing ratification of the proposed Panama Canal Treaty and the proposed, so-called neutrality treaty. Although the defects in both documents are legion, in my judgment there are five major flaws, each of which on its own ground would warrant complete rejection of the arrangements negotiated, inasmuch as each would independently damage the national interest of the United States to such extent as to render it improper for the Senate to give its assent. The five major defects, at least as I see it, are (1) the failure of the Canal Treaty to provide for an adequate defense of the Canal during the proposed 23-year term of the treaty, (2) the failure of the neutrality treaty to grant to the United States the unilateral right to intervene to assure the neutrality of the Canal Zone, (3) the astonishing provision of the Canal Treaty which forbids the United States even to negotiate with another nation for construction of a sea level canal without the express consent of Panama, (4) the decision embodied in the Canal Treaty and related loan agreements to pay to Panama some $2,262 billion, and (5) the failure of the Canal Treaty to require Congressional authorization for its proposed cession to Panama of United States territory and property. DEFENSE OF THE CANAL In order to understand the defense provisions of the proposed treaty, care must be taken to examine in detail the Executive Agreement in Implementation of Article rV of the Canal Treaty. Moreover, further study must be given to the annexes to the 330 executive agreement, to the annexes to the annexes, and to the various notes, minutes, and protocols— all of which form the fabric of the joint military defense we would undertake with Panama. I am particularly concerned, Mr. Chairman, that the drafters of the Canal Treaty saw fit to set forth the major substantive defense provisions not in the Canal Treaty in its Article IV, which is entitled "Protection and Defense," but instead in the Executive Agreement in Implementation of Article IV — an agreement which is several times as large as the entire Canal Treaty itself. Article rV of the Canal Treaty does not cover a complete printed page, yet the Agreement in Implementa- tion of Article IV is some 53 pages long, excluding annexes and excluding an additional 22 pages of agreed minutes, the minutes themselves having their own annexes. So, Mr. Chairman, we have critical defense provisions not in the text of the treaty but rather in this executive agreement and in other extrinsic documents which could be modified from time to time by the executive branch with no require- ment whatever to obtain the assent of the Senate. Moreover, Mr. Chairman, the defense provisions set forth in the executive agree- ment are themselves unworkable and portend a complete withdrawal of the U.S. forces from the Canal Zone well in advance of the projected date of 2000 AD. The Administration proposes in this first executive agreement to surrender 10 out of 14 bases. Thus, we are asked at the outset to permit the surrender of 10 out of 14 military bases and to permit our forces defending the Canal to be hemmed in from day one in 4 relatively small enclaves. These bases would indeed be enclaves because our freedom of action outside of the 4 bases would be severely limited by the treaty requirement for approval of operations by a joint military board in which the United States and Panama will have equal authority. Apparently, the doctrine of unity of command is imperfectly understood at the Department of State, but the Panamanians no doubt recognize fully that this provision of the executive agree- ment would give a de facto veto of United States operations outside of the 4 retained So our forces would be restricted to 4 relatively small enclaves, and only the naive would doubt that we would very soon see pressure on our forces to withdraw from the 4 sites retained. That process of withdrawal would be facilitated by the fact that the executive department could close down any one or all of the remaining bases by amendment of the executive agreement with the stroke of a pen without the consent of the Senate or the consent of the Congress. Now, Mr. Chairman, the members of the distinguished Committee may not think that this process of acceler- ated withdrawal is contemplated, but I would call attention to the provision of the executive agreement implementing Article IV which provides explicitly that the agreement will be renegotiated every two years or upon the request of either government and thus tacitly acknowledges what is coming. This treaty is for a proposed term of 23 years. Yes, we are going to need tough- minded negotiators if we plan to hang on to these 4 defense sites for a term of 23 years with the Panamanians hounding us daily for complete withdrawal and with our own government already proposing to negotiate the matter on a biennial basis or upon request. Frankly, Mr. Chairman, these 4 defense sites would rest on a foundation of sand if, by Senate ratification of the Canal Treaty, the Department of State were to be given the right to agree — and they seem pretty agreeable with this dictator down there in Panama— if the Department of State were to be given the right to agree with Panama more or less at any time that the time was propitious to shut down another base. Finally, Mr. Chairman, I would ask the Committee to consider carefully the feasibility of successful joint military operations with Panamanian forces. Over the long term we can expect problems. How can we expect full cooperation from an Army whose recruits are taught to chant in unison at their recruit training base at Fort Cimmaron, "Down with the Yankees, death to the Yankees, to the wall with the Yankees." No, Mr. Chairman, over the long term we would be naive in the extreme to expect full cooperation from Panama in any joint defense of the Canal. CANAL NEUTRALITY Closely related to the issue of defense is the failure of the executive branch to negotiate for the United States a right to defend the neutrality of the Canal after 2000 AD. Much has been said in the media to the effect that the United States could unilaterally preserve Canal neutrality after a full withdrawal of U.S. forces from the Isthmus of Panama, but, Mr. Chairman, a careful reading of the neutrality treaty makes it evident that, in fact, the United States would have no such right whatsoever. 331 The neutrality treaty simply declares that the Canal Zone is neutral and sets forth an agreement by the United States and Panama that both parties recognize the Canal's neutrality. Nowhere is the United States granted permission to deter- mine that the neutrality of the Canal is endangered or has been violated and nowhere is the United States granted the right to intervene to insure that the Canal is not made available to an enemy nation while being denied to our Navy and merchant ships. Additionally, Mr. Chairman, the so-called right of expeditious transit given to United States warships is totally meaningless. The failure of our negotiators to insist on privileged passage for United States war vessels could permit Panama in an emergency to delay the movement of United States warships by simply requiring those vessels to transit the Isthmus on the same "expeditious" basis as merchant ships of all nations. As Dr. Romulo Escobar Bethancourt, chief negotiator for Panama, put the matter, "If the gringos with their warships say, 'I want to go through first,' then that there is their problem with the other ships there." Regrettably, Mr. Chairman, Dr. Esco- bar's analysis of the practical meaning of our right to expiditious transit, although stated undiplomatically, is nevertheless precisely correct. His complete rejection of any claim that the United States is given the right to send troops to preserve Canal neutrality also accords accurately with the language in the text. In fact, the truth is, Mr. Chairman, that Dr. Escobar's construction of the neutrality treaty, is unlike the construction placed on it by our own executive department, is a construction based on the language of the treaty itself rather than on wishful thinking or on the assertions of the mass media. SEA LEVEL CANAL From the language in the Canal Treaty rather than from press reports, we also learn that the United States would agree not to negotiate without Panamian con- sent with any country except Panama for the right to construct an interoceanic canal on any route in the Western Hemisphere. Mr. Chairman, knowing you as I do, I feel certain you share my astonishment that the negotiators for the United States saw fit to preclude any possibility of construction of a new interoceanic canal, perhaps at sea level, without our country first obtaining the express consent of a pro-Marxist and highly unstable military dictatorship. Why was this concession necessary? What did the United States gain from the concession? I notice with some amusement, Mr. Chairman, that the Republic of Panama purports to grant to the United States of America the right to add a third lane of locks to the existing canal. Inasmuch as the United States already has the right to add a third lane of locks to the existing canal, surely our negotiators did not think that a meaningless concession of that variety was sufficient consideration for giving the Panamanians a veto over any other project we may wish to undertake to connect the two oceans. Certainly, the negotiators for the United States could not have felt that the Panamanian agreement to commit Panama "to study jointly the feasibility of a sea level canal" warranted a countervailing commitment from the United States not to do anything whatsoever without Panamanian permission — but perhaps so. The bizarre behavior of our negotiators has produced other results equally as startling. In any event, Mr. Chairman, one thing is sure and that is that the Panamanians know they got the best of this bargain. Discussing the sea level canal issue, chief Panamanian negotiator, Romulo Escobar Bethancourt, on August 19, 1977, with pride explained to the Panamanian National Assembly the unilateral benefits of the so-called sea level canal options. Dr. Escobar's remarks on the subject, like his remarks on neutrality, are illuminating and are worth studying in full. As Dr. Escobar explains, instead of the United States obtaining an option to build a sea level canal, the United States negotiators gave to the Panamanians the option to veto construction of a sea level canal by the United States anywhere in the Western Hemisphere. Now, Mr. Chairman, committing the United States to deal only with Panama about building another canal is a serious mistake. As the distinguished Chairman knows, the best route for a sea level canal is in Nicaragua, that being the route that Senator John Tyler Morgan favored during consideration of Isthmian routes in the early part of this century. Senator Morgan of Alabama, who was Chairman of the Senate Committee on Interoceanic Canals, felt strong strongly that Nicaragua pro- vided a more favorable political and geographical solution to the immense problems involved in constructing a canal between the two oceans. Retrospectively, he may well have been correct, yet our present treaty negotiators propose to foreclose entirely the option Senator Morgan and many others favored, an option which 332 should at least be kept open. Certainly, with the great volume of Alaskan oil which is only now beginning to come on stream and which must move to Gulf and East Coast refineries, any relinquishment of the right to negotiate for a sea level route in Nicaragua is a very grave mistake indeed. $2,262 BILLION TO PANAMA FOR THE RIGHT TO CEDE THE CANAL ZONE TO PANAMA So, Mr. Chairman, we are presented a treaty which does not provide for an adequate defense of the Canal, does not give the United States the right to inter- vene to guarantee neutrality, and does not allow the United States to initiate new canal projects except with Panama's consent. The Canal Treaty does, on the other hand, give the Canal Zone to Panama; it does eventually also give the Panama Canal Company to Panama; it does immediately give the most lucrative operations of the Panama Canal Company to Panama; it does give 10 United States military bases to Panama; it does give Panama political jurisdiction over 37,000 United States citizens living in the Canal Zone; and finally, Mr. Chairman, it gives to Panama over the life of the treaty $2,262 billion in 1977 dollars. You know, Mr. Chairman, ordinarily the grantee pays the grantor, but our clever negotiators have figured out a way for us to give away the Canal Zone and pay the recipient at the same time. I will not insist on going into great detail on how this $2,262 billion in 1977 dollars is to be paid to Panama because I know the Committee is fully familiar with the financial ramifications of this proposed arrangement. However, I would recommend to the Committee a careful reading of a speech given on August 19, 1977, before the Panamanian National Assembly by Panamanian Planning and Economic Policy Minister Nicolas Ardito Barletta. Minister Barletta's analysis of the cash flow of this arrangement is, in my judgment, valid, and it is from his work that I have drawn the figure $2,262 billion. Why are we proposing to pay these tremendous sums to Panama? Why would we permit these proposed toll increases which will surely burden commerce and inflate consumer prices in the United States? The only reason I can ascertain is a desire to provide Panama with funds to repay outstanding loans from the large international banks. The Library of Congress did a study at my request which indicates that the external public debt of Panama is some $1.7 billion. Interest on that sum is a tremendous burden on this small country of only 1.7 million inhabitants, and already 40% of current revenues in Panama go to carrying present indebtedness. Stating the matter bluntly, Panama is on the verge of bank- ruptcy and many of our large banks hold loans which may soon be bad debts, that is, of course, unless the United States taxpayer rescues the banks by providing the funds to Panama for repayment. Mr. Chairman, sooner or later the Congress must draw the line and stop robbing American taxpayers to extend funds to bankrupt Third World countries so that international banks can collect principal and interest on shaky loans. In my judg- ment, the international banks should be required to write off their bad debts, to write off at least some portion of the loans they made in error, and the internation- al banks should be put on notice that the American taxpayer will not always guarantee a profit in any loan transaction with unstable governments. Perhaps, rejection of the Panama Canal Treaty would be a good method to send that mes- sage. THE CONSTITUTION IGNORED The final major defect in the treaties is perhaps the most significant since it represents a direct assault by the executive branch on the prerogatives of Congress and since it would set a precedent extending the authority of the executive branch far beyond the bounds contemplated by the authors of the Constitution of the United States. Article IV. Section 3 of the Constitution provides that Congress "shall have power to dispose of and make all needful rules and regulations respecting the territory or other property belonging to the United States." Mr. Chairman, I know that the Attorney General has advised the Committee that the proposed treaties do not in any respect violate this clause, but with all due deference to him as a very able lawyer, I cannot share his rationalization of the clear language of the Constitution or his characterization of consistent past practice in our dealings with Panama. In 1936 and again in 1955, cessions of United States territory to Panama were made contingent on Congressional authorization. Yet now that a truly major cession of virtually all United States territory in the Isthmus of Panama is contemplated, the executive branch has seen fit to assert a novel theory by which the Administra- tion would circumvent the Congress. The reason for development of this novel 333 theory of Constitutional law is, I believe, a matter of practical politics rather than legal scholarship since public opposition to giving up the Canal is so overwhelming that any Congressional authorization of a cession of territory would be difficult, if not impossible to obtain. But beyond the immediate question, if we in the Senate permit this circumvention of the role of the Whole Congress in any cession of United States territory, we will be setting a very dangerous precedent which will surely be used again by this or future administrations to assert power in an area heretofore preserved to the Congress. My own guess is that we would next see this precedent applied to the Guantanamo Naval Base in Cuba, but perhaps other cessions of territory or proper- ty are also in the works. So, Mr. Chairman, this Committee should not lightly endorse a departure from sound Constitutional principles simply for the political expediency of the moment. This Committee, should, instead, amend the proposed treaty at all appropriate points to make cessions of territory subject to the enactment of authorizing legisla- tion by the Congress. I would hope that such an amendment would be one of many adopted in Committee to correct these glaring defects I have discussed. RESERVATIONS, AMENDMENTS, AND THE FILIBUSTER In summary, Mr. Chairman, I believe that the Senate should play a significant role in the formulation and revision of these proposed treaties so that the terms of any new arrangement with Panama can be made acceptable to the American public and so that the national security interests of the United States can be protected. Mr. Chairman, I am sure you know of the early practice of including Senators in delegations sent to foreign countries for the purpose of negotiating treaties. That practice has unhappily in large measure ceased, and the Senate has been more and more asked for consent rather than advice. These treaties provide an excellent opportunity for the Senate to reaffirm its Constitutional prerogative and, indeed, duty to advise the Executive — to advise the President — in matters of foreign policy, particularly with respect to treaty negotiation. The Senate can give its advice through the amending process. These treaties should be amended to cure their obvious defects, and since any amendment will require a renegotiation of the amended treaty, the Administration will be advised by these Senate amendments of what is acceptable to the Senate and to the people and what might later receive Senate consent. Reservations to these treaties would be of little or no value. Reservations simply state the opinion of the Senate and do not have the full force and effect of law. No, Mr. Chairman, the defects in these treaties require outright amendment, and I strongly urge that the Committee take in hand the process of amending the treaties before reporting the treaties to the Senate, at which time the Senate will first receive them as the Committee of the Whole. Although there will be ample opportu- nity, I am certain, for amendment in the Committee of the Whole and on the floor of the Senate, certainly the Committee on Foreign Relations should play the leading role in molding and amending these documents and giving thereby to the Adminis- tration its advice on arrangements with Panama. Finally, Mr. Chairman, I would comment that I do not foresee a filibuster of these proposed treaties. I do foresee a full discussion, legitimate debate, and consideration of substantive and serious amendments. A filibuster would be pointless, both be- cause a filibuster could be stopped by 60 Senators whereas the treaties could be stopped by 34 Senators and because both treaties present questions which should be disposed of without undue delay. Inasmuch as the concerns of the citizens of the United States are fairly evident, the Senate should with deliberations, but nevertheless promptly, discharge its duty in considering ratification. No good purpose would be served by having these pro- posed treaties more or less hanging around for years. They should be put to the test of ratification expeditiously, and it is my own sincere hope that the wisdom and desires of the people of the United States will be respected and that accordingly the treaties will be defeated. Thank you for the opportunity to appear before this distinguished Committee and before its distinguished Chairman, who is my friend and senior colleague. Testimony of Congressman Samuel S. Stratton Mr. Chairman, I appear here in opposition to the Panama Canal treaties "in their present form." I am recommending three "reservations" which I believe should be incorporated in these treaties before they will properly protect the national interest and so be suitable for ratification. 334 Thus my position differs from that of some other treaty opponents. I am not, for example, opposed to some adjustment in the existing canal treaty. I have been to Panama and have seen the glaring economic disparities there between those who live in the Zone and those outside. I recognize the potentialities for civil disturbance and even guerrilla warfare. I would agree we should take steps to eliminate many of these glaring inequities that are more appropriate for an earlier age. We ought to turn over more of the operation of the canal to the Panamanians, and make available to them a greater share of the financial benefits of the canal, if indeed there are any left. So I do not quarrel with the general thrust of the principal treaty pending before you. What disturbs me is that these treaties go too far. Clearly they throw out the baby with the bath. The Panama Canal is still a valuable American asset. It is important to our sea- borne commerce. One might argue that it is not quite as valuable today as it was 30 or 40 years ago. But it is still valuable and will continue to be valuable into the future, especially as we begin to ship our new Alaskan oil around to the East Coast. Thus whatever changes may be made in the operation or financing of the canal, it is absolutely essential the canal remain available to us and control of it be denied to our enemies into the indefinite future — which certainly means well beyond the next 22 years. That is why, throughout all these negotiations, and in the subsequent debate over the treaties themselves, the question of canal defense has been fundamental. The main treaty spells out in Article rV the right of the United States to defend the canal until the year 2000. In addition, all the statements made by the negotiators and by Administration spokesmen have asserted that the second treaty, the so- called neutrality treaty, gives the United States the right to defend the canal after the year 2000. Unfortunately, as recent hearings here and before several House committees have disclosed, this later assertion is simply not true. An alleged right of defense is supposed to be implicit in the text of Article IV of the neutrality treaty. But the word "defense" never appears there. Article IV provides that: "The United States of America and the Republic of Panama agree to maintain the regime of neutrality established in this Treaty, which shall be maintained in order that the Canal shall remain permanently neutral • * •" It doesn't say one word about defense. How exactly do you get "defense" out of "neutrality"? In his original press conference on the treaty President Carter, commenting on Article rV, said "we will have an assurance in perpetuity following the year 2000 that the Panama Canal will be neutral, that our ships will have unlimited access to the canal, along with the ships of other nations; we have no constraints on the action that we can take as a nation to guarantee that neutrality." But there is a world of difference between "no constraints" placed on the action we can take to preserve neutrality, and a clearcut, unambiguous right of defense. Indeed the Panamanian Foreign Minister, Dr. Romulo Escobar Bethancourt, de- clared in a news conference in Panama City on August 24th that "The treaty does not establish that the United States has the right to intervene in Panama. ' Just how meaningful can a supposed defense right be when a high official of one of the contracting parties publicly denies that the treaty assures such a right? The only possible conclusion is that these treaties are seriously deficient in protecting America's vital interests. They have been presented to the American people under gravely misleading colors, as containing what they do not in fact contain. Therefore, Mr. Chairman, my first proposed reservation is that these treaties must specifically spell out the right of the United States, after the year 2000, to defend the canal from any aggression or hostile action that might close it off or threaten to close it off to United States ships or render the canal itself inoperable. With possible threats against the canal from Cuban or Soviet action in the Caribbe- an, we simply cannot rest our vital national interests on abstruse interpretations of vague and ambiguous language that have already been repudiated by the other signatory power. For the Senate to ratify these treaties without insisting upon this important change would be a dereliction of duty. General George Brown and other military leaders were quoted in the Washington Post as having assured this committee on September 27th that "U.S. interests will be safeguarded by those treaty provisions giving the United States the right to intervene against threats to the canal's neutrality." Just where do these officers fmd that particular right in the two treaties? What legal experts told them that even though no such right is spelled out in the text it is there nevertheless? Since 335 when does it make sense for the most vital item of all not to be clearly and unambiguously spelled out in two treaties that devote hundreds of other precise and intelligible words to items of far less significance? If it is there, what's so wrong about stating it plainly? In testimony before the House International Relations Committee former Secre- tary Kissinger expressed concern that this defense right was not expressed in the treaty. And on September 26th before this committee Ambassador Linowitz was reminded by Senator Stone that Foreign Minister Escobar's statement contradicted all these repeated assurances of a specific right of intervention. Mr. Linowitz's only reported response was to say that regardless of what the Panamanians said, the United States still considers its own interpretation "binding on Panama." Famous last words! This was precisely the approach that got us in trouble with the SALT I treaty. Too many important items were either not mentioned at all or were referred to ambiguously. So when the Soviets began to do things we regarded as violations of the spirit of the treaty, it turned out there never were any such provisions in the treaty — only the conflicting interpretations of the two signatory powers. Let's not do this all over again with the Panama Canal treaties. In his September 26th testimony Mr. Linowitz offered to resolve this difficulty by "seeking some kind of clarification from the Panamanian government." Well, no amount of "clarification" merely from the Panamanian government can assure the American people this point. The only proper place to clarify the matter is in the text of the final ratified treaty itself. And that clarification can only be made by means of a specific reservation insisted upon by the United States Senate. Directly related to this principal reservation, I recommend two other reservations. The first is that this defense right be incorporated in the basic treaty itself, not in a separate treaty. So long as there are two treaties, one before 2000 and the other after 2000, disputes will always arise as to which is the real treaty and which should ultimately prevail. As far as defense is concerned, we can tolerate no such ambigu- ity. We must make it perfectly clear in the basic treaty that all the things we are agreeing to do up to the year 2000 are in direct consideration of the explicit defense right that is being guaranteed to us after the year 2000. Otherwise, the treaty process becomes just a one-sided giveaway. Finally, if any defense right after the year 2000 is to be meaningful, the United States must have in Panama itself the means to mount such a defense. Yet Article V of the Neutrality Treaty specifically forbids the United States to "maintain military forces, defense sites and military installations" within the Republic of Panama. So a third reservation is required. Here, too, the testimony of the Joint Chiefs of Staff is seriously deficient. Repeat- edly in his comments on the canal General Brown has insisted that the canal is basically "indefensible." If he really believes that, it doesn't matter whether our right to defend the canal is unambiguously assured or not. But I gather that what General Brown really means is that the canal is basically indefensible against an aroused Panamanian people. This may or may not be true. But defense against the Panamanian people is not the major military problem after the year 2000. Once the Panamanians are cut in on the operation and financial benefits of the canal, as this treaty does, they would have to be out of their minds to interrupt regular canal operations. Our major defense problem after 2000 is the Cubans and the Russians. Panama is not a major military power. Therefore, once United States forces have withdrawn completely from the canal there will be a sizable power vacuum, and with it a strong temptation for other military powers to take the canal away from the Panamanians. If Cuba can send a force of 10,000 combat troops to Africa, what is to stop her from sending paratroopers to Panama to take over the canal? Or what would prevent the Soviets from forcing special concessions out of Panama by moving several cruisers or nuclear submarines just off the coast of Panama City? If we are to oppose or, better still, deter any such efforts to capture the canal and deny its use to us we need a base located in the immediate vicinity of the canal. Otherwise our "defense" would amount to trying to recapture the canal from bases in Florida, Texas, or Guantanamo. But once the Cubans or the Russians were in physical possession of the canal, I wonder if America would really be willing to retake it in a contested amphibious landing? On the other hand, if U.S. military forces are still in place, if our defensive radar is working, and if our patrol planes are on station out of an American air base, then we can almost certainly deter any such attack well into the 21st century. So I propose, Mr. Chairman, that we insist, as part of our right to defend the canal, at least one United States base in Panama, including an airfield. Presently we have 13 or 14 there. If the treaty really gives us the right of defense, then it should also give us the capability of exercising that right effectively. This base would not, of course, be on American soil; it would be on Panamanian soil. And we would be there under treaty to aid Panama in the canal's defense. Anything less than that would make a mockery of the whole issue of American defense rights. I recognize that these reservations would require reopening negotiations. But let me point out that this would not have been necessary had the executive branch made a serious effort to listen to the American people and to the Congress while these negotiations were under way rather than after they had been concluded. Woodrow Wilson made a similar mistake in 1919 and lived to regret it. With these reservations the treaty is not quite as generous to the Panamanians as in its present form. But, after all, we are promising not only to give them the canal, but to pay them very generously, perhaps too generously, for taking it away. Surely in return for all these concessions it is little enough to ask that we have not just an implied, but a specific and meaningful right to protect and defend this engineering marvel we built and have successfully kept in operation. The American people have been led to believe that that right is actually con- tained in these treaties. You and I know better. Therefore, it is up to the Senate, and to a lesser extent the House, to see that this very serious omission is corrected. Panama Canal: The Problem and the Reasoned Solution (By Hon. Daniel J. Flood) Mr. Chairman, as a student of Panama Canal history and problems, I long ago recognized them as inexhaustible subjects. My interest was first aroused in early youth when former President Theodore Roosevelt used to be an occasional house guest at my grandfather's home in Hazleton, Pennsylvania. During those years, I listened many hours to that great American leader while he discussed the difficul- ties he had to face in launching what was then, and still is, one of the most stupendous industrial enterprises in history. He naturally became my youthful ideal and inspired an interest on my part in the Canal question that has increased over the years. It has been a privilege, indeed, since being a member of the Congress, to have been an instrument in the protection of the most strategic waterway of the Americas as a vital asset of the United States for interoceanic commerce and national defense. Instead of making a long and detailed statement, I ask that the following docu- ments be appended to my testimony: Hay-Pauncefote Treaty of 1901 with Great Britain and the April 22, 1977 letter of the Raja of Patiala to the Prime Minister of India. My statement before the House of Representatives Subcommittee on Inter-Ameri- can Affairs, September 22, 1971. My address on "New Panama Canal Treaty Report: Fallacies Clarified and Con- structive Program Proposed." Congressional Record, September 9, 1976, pp. H9657-60. H. Res. 92, 95th Congress. H.R. 1587, 95th Congress. Dr. Karl Brandt et al. "Panama Canal Sovereignty and Modernization: Memorial to the Congress," 1975. Press release of environmental organizations of September 6, 1977 and their telegram to the President of September 6, 1977. Panama Canal Pilot Association urges Major Modernization as Solution of Panama Canal Problems. Congressional Record, November 15, 1973, p. H. 10091. Mario Lazo. "Panama Canal Giveaway: A Latin American's View." Washington, D.C.: Council for Inter-American Security, 1977. Letter to the President by four former Chiefs of Naval Operations of June 8, 1977, and its forwarding endorsement by four Senators of June 15, 1977. In my studies of Isthmian canal policy questions, I have had the benefit of extensive consultations with the best informed authorities that I could find. They included experienced engineers and geologists, Panama Canal pilots and other navi- gators, marine biologists, lawyers, historians, and distinguished officers of the Armed Forces with high command experience. Though canal problems are immensely complicated, when reduced to their essen- tials they are relatively brief and simple. The two central ones are: (1) The question of U.S. sovereignty over the Canal Zone; and (2) the increase of transit capacity coupled with operational improvements. 337 From a study of extensive evidence, it is clear that one of the prime reasons for the tremendous success of the United States in the construction of the Panama Canal and its subsequent efficient maintenance, operation, sanitation, protection and defense, with tolls that are "just and equitable," during two World Wars, the Korean and Viet Nam Wars, and the Cuban missile crisis, was the exclusive sovereign control of the Canal Zone by the United States. When the present Panama Canal questions are evaluated from their most signifi- cant angles — engineering, marine operational economic, legal, environmental, de- fense and diplomatic — the only commonsense solutions are: