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The original documents are located in Box 6, folder "Panama Canal Treaty Negotiations:
1975" of the White House Special Files Unit Files at the Gerald R. Ford Presidential
Library.
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THE DEPARTMENT
OF STATE
News Release:
January 1975
Bureau of Public Affair
Office of Media Servic-
PANAMA CANAL TREATY NEGOTIATIONS:
BACKGROUND AND CURRENT STATUS
Background
Canal, rearrangement of markets and sources,
product exchanges, and partial or complete sub-
The United States and Panama are currently
stitution of land or air transport for ocean tran
negotiating a new Panama Canal treaty to replace
port. As canal users take advantage of these
the Treaty of 1903.
alternatives, the canal's value declines relative :
In that treaty Panama granted the United
the economies of the user nations. For the
States-in perpetuity-the use of a 10-mile wide
United States, in particular, a recent study has
zone of Panamanian territory for the "construc-
shown that the canal's impact on the domestic
tion, maintenance, operation and protection" of
economy is quite small compared to the econo
a canal, as well as all the rights, power, and
as a whole.
authority within that zone which the United
States would "possess if it were the sovereign."
Panamanian Treaty Concerns
The very favorable terms of the treaty were a
major factor in the U.S. decision to build the
Panama has been dissatisfied with the treaty
canal in Panama rather than in Nicaragua as
many years. Part of this dissatisfaction has de-
initially planned.
rived from Panama's interpretation of two aspe
of the situation which resulted in the Treaty of
Canal's Economic Value
1903: (1) Panama's acceptance of unfavorable
treaty terms due to its dependence upon the
Since its opening in 1914, the canal has pro-
United States to protect its new-found indepen
vided benefits to the United States, to Panama,
dence from Colombia; and (2) Panama's princi
and to the world. Of the total tonnage that
negotiator was a Frenchman who benefited
transits the canal, about 44 percent originates in,
considerably when the United States purchased
and 22 percent is destined for, U.S. ports. This
the private French concession to build a trans-
tonnage represents about 16 percent of the total
isthmian canal.
U.S. export and import tonnages.
Over the years Panama has also charged that
The canal has been economically important to
the United States has unilaterally interpreted
Panama, too. More than 30 percent of Panama's
treaty to Panama's disadvantage and given Pan
foreign exchange earnings and nearly 13 percent
an inadequate share of the benefits from the
of its GNP are directly or indirectly attributed to
eration of the waterway. Even more objection
the presence' of the canal. But those contribu-
able in Panama's view, are the provisions in the
tions represent a smaller portion of Panama's
Treaty of 1903 which give to a foreign power
economy now than they did in years past.
perpetuity governmental jurisdiction within
In fact, reliance on the canal By all parties has
portion of Panamanian territory. Increasingly
evolved from earlier years. As trading patterns
recent years Panama has insisted that U.S. cont.
have changed and world commerce has become
over the Canal Zone prevents the country from
more sophisticated, alternatives to the canal have
realizing its full economic potential.
begun to emerge. These alternatives include the
The United States has responded sympathet
Digitized from Box 6 of the White House Special Files Unit Files at the Gerald R. Ford Presidential Library
2
1905 it recognized Panama's titular sovereignty
President Nixon established negotiating objectives
over the Canal Zone. The treaty was revised in
which, although modified by developments, were
1936, and again in 1955, to provide Panama
similar to those set by President Johnson In 1951.
with a greater share of the economic benefits of
The objectives and positions of the United States
the canal and to remove certain outdated aspects,
thus reflect a bipartisan approach to treaty nego-
such as the right grants to the United States to
tiations with Panama. They also are consistent
interfere, when it believed necessary, in Panama's
with the broader policy stated in Secretary
internal affairs. Despite these modifications, how-
Kissinger's call in October 1973 for a "new dia-
ever, many of the features of the treaty most
logue" with our Latin American neighbors, a
objectionable to Panama remain unchanged.
policy which President Ford has publicly endorse
The canal has become the major political issue
A Panamanian negotiating team arrived in
in Panama. In recent years the intensification of
Washington in June 1971. Intensive negotiations
Panama's campaign for more favorable treaty
during the rest of the year resulted in a U.S.
terms has produced tensions in U.S.-Panamanian
treaty offer covering most of the issues relevant
relations, In 1964 the death of 20 Panamanians
to the treaty. The Panamanian negotiators carried
and 4 Americans brought the Panama Canal issue
the offer to Panama for a review in December
to the attention of the United Nations and the
1971. Except for some informal conversations in
Organization of American States (OAS).
March 1972 and an exchange of correspondence
in the fall, the negotiations were not resumed
Evaluation of Bilateral Negotiations for a New
until December 1972, when a U.S. delegation
Treaty
traveled to Panama.
Following discussion of the issue by the OAS,
U.S. Security Council Action
the United Nations, and other intern: tional agen-
cies after the 1964 riots, the United States and
At Panama's initiative, the U.N. Security
Panama agreed in 1964 to begin bilateral negotia-
Council met in Panama City from March 15 to
tions for a new treaty. In so doing, the United
March 21, 1973. In those sessions, Panama criti-
States recognized that a comprehensive moderni-
cized the U.S. posture on the canal question and
zation of its relationship with Panama correspond-
sought a resolution supporting its position. This
ed to its long-term national interests and to a
teen nations voted for the resolution; the United
changing international environment.
Kingdom abstained. The United States vetood
U.S. officials entered the negotiations in late
the resolution on the grounds that it recognized
1964 with a view to insuring that:
Panama's needs but not those of the United
The canal should continue to be available to
States; that 1: was incomplete in it." references to
the world's commercial vessels on an equal
the negotiations; and that it was inappropriate
basis at reasonable tolls;
because the treaty was a bilateral matter under
It should be operated and defended by the
amicable negotiations. In explaining the U.S.
United States for a reasonably extended, but
position, the U.S. Permanent Representative com-
definite, period of time; and
mitted the United States to peaceful adjustment
It should continue to serve world commerce
of its differences with Panama and invited
efficiently. To this end, the United States
Panama to continue serious treaty negotiations.
sought the right to provide additional canal
capacity if it is needed.
New U.S. Approach
By 1967, the negotiators of both countries had
prepared three draft treaties. They provided for
In September 1973 Secretary Kissinger charged
operation of the present canal under 2. joint U.S.-
Ambassador at Large Ellsworth Bunker with the
Panamanian authority; for construction and op-
task of renewing discussions with Panamasian
eration of a sea-level canal under a si; tilar joint
officials for the purpose of arriving at a common
authority; and for U.S. defense of the old and
approach to future treaty negotiations. Ambus-
new canals for the duration of each treaty. Nei-
sador Bunker visited Panama from November 26
ther Panama nor the U.S. Government moved to
to December 3, 1973, and again on January
ratify these treaties, and the new government
and 7, 1974, to discuss with Panimanian Foreign
headed by General Omar Torrijos, wh ch assumed
Minister Juan Antonio Tack general principles
power in October 1968, formally rejected them.
upon which a new treaty might he based. These
In 1970 the Government of Panama requested
discussions resulted in the Statement of Principles
the renewal of negotiations and the U.S. agreed.
of February 7, 1974 (See P. 3), which has
3
served as a useful framework for the present
the United States require to accomplish its
negotiations.
purpose?
3. Jurisdiction: What areas will be controlled
U.S. Treaty Objective
and what functions will be exercised by the
United States when its jurisdiction terminates,
The principal objective of the United States
and what is the period of transition?
in the current treaty negotiations is to protect
4. Expansion of Capacity: How will the
our basic interests in the Panama Canal. The
treaty provide for possible enlargement of canal
U.S. Government is seeking to establish a new and
capacity?
mutually acceptable relationship between our
5. Participation: How and to what extent
two countries whereby the United States will re-
will Panama participate in the administration and
tain essential rights to continue operating and
defense of the canal?
defending the canal for a reasonably extended
6. Compensation: What will be the form and
period of time. A new treaty based on partner-
level of economic benefits to Panama in any new
ship with Panama would enable the United States
treaty?
to devote all its energies to the efficient operation
of the waterway. Moreover, it would provide a
Current Status of Negotiations
friendly environment in Panama that is most con-
ducive to protecting our vital interests in keeping
Since June 1974, the talks have been taking
the canal open and secure. Such a treaty would
place in a cordial, informal atmosphere. The
be consistent with good business management,
U.S. negotiators have been proceeding carefully
represent good foreign and defense policy, and
and methodically. While there is no fixed time-
signify a new era of cooperation between the
table, the negotiators from both countries have
United States and the rest of the hemisphere.
indicated their satisfaction with the progress to
In recent years Latin American nations have
date and are hopeful that both countries can
made the negotiation of a more equitable canal
reach agreement on a draft treaty.
treaty with Panama a major hemispheric issue
Any decision which the President might make
and a test of U.S. intentions regarding the "new
affecting the future of the canal will, of course,
dialogue."
be designed to protect U.S. interests. Indeed, a
major reason for negotiating a new treaty is to
Issues in the Negotiations
avert a serious crisis which would endanger our
interests.
In the months following the February 7 signing
Any treaty agreed upon by the negotiators and
of the Statement of Principles, Ambassador
approved by the executive branch will be submit-
Bunker and Foreign Minister Tack met several
ted to the U.S. Senate for ratification and subject
times in Panama and Washington to define the
to full constitutional process. Panama, for its
issues involved in the new treaty arrangement.
part, has said that it will submit the new treaty
After agreement was reached, the negotiators
to a plebiscite to insure that it is acceptable to
moved into substantive talks aimed at resolving
the Panamanian people.
these issues.
The United States and Panama have agreed in
principle that the Treaty of 1903 should be re-
placed by a modern treaty that rejects the concept
of perpetuity and accommodates the sovereignty
STATEMENT OF PRINCIPLES
of Panama with the interests of the United States,
on the understanding that U.S. control and de-
Joint Statement by the Honorable Henry A.
fense of the Panama Canal would continue for a
Kissinger, Secretary of State of the United
period of fixed duration. In the context of the
States of America, and His Excellency Juan
Statement of Principles the issues the two nego-
Antonio Tack, Minister of Foreign Affairs of
tiating parties are working to resolve are:
the Republic of Panama, on February 7, 1974
1. Duration: How long will the new treaty
at Panama
remain in force?
2. Operation and Defense: What rights and
The United States of America and the Repub-
arrangements will the United States have to
lic of Panama have been engaged in negotiations
permit it to continue to operate, maintain, and
to concide an entirely new treaty respecting
defend the canal? What geographic areas will
the Panama Canal, negotiations which were made
possible by the Joint Declaration between the
dance with what that treaty states, the right to
two countries of April 3, 1964, agreed to under
use the lands, waters and airspace which may be
the auspices of the Permanent Council of the
necessary for the operation, maintenance, protec-
Organization of American States acting provision-
tion and defense of the canal and the transit of
ally as the Organ of Consultation. The new
ships.
treaty would abrogate the treaty existing since
5. The Republic of Panama shall have a just
1903 and its subsequent amendments, establish-
and equitable share of the benefits derived from
ing the necessary conditions for a modern rela-
the operation of the canal in its territory. It is
tionship between the two countries based on the
recognized that the geographic position of its
most profound mutual respect.
territory constitutes the principal resource of the
Since the end of last November, the authorized
Republic of Panama.
representatives of the two governments have been
6. The Republic of Panama shall participate
holding important conversations which have per-
in the administration of the canal, in accordance
mitted agreement to be reached on a set of fun-
with a procedure to be agreed upon in the treaty.
damental principles which will serve to guide the
The treaty shall also provide that Panama will
negotiators in the effort to conclude a just and
assume total responsibility for the operation of
equitable treaty eliminating, once and for all, the
the canal upon the termination of the treaty. The
causes of conflict between the two countries.
Republic of Panama shall grant to the United
The principles to which we have agreed, on
States of America the rights necessary to regulate
behalf of our respective governments, are as
the transit of ships through the canal and operate,
follows:
maintain, protect and defend the canal, and to
undertake any other specific activity related to
1. The treaty of 1903 and its amendments
those ends, as may be agreed upon in the treaty.
will be abrogated by the conclusion of an entirely
7. The Republic of Panama shall participate
new interoceanic canal treaty.
with the United States of America in the pro-
2. The concept of perpetuity will be eliminated.
tection and defense of the canal in accordance
The new treaty concerning the lock canal shall
with what is agreed upon in the new treaty.
have a fixed termination date.
8. The United States of America and the
3. Termination of United States jurisdiction
Republic of Patama, recognizing the important.
over Panamanian territory shall take place prompt-
services rendered by the interoccanic Panama,
by in accordance with terms specified in the treaty.
Canal to international maritime traffic, and bear-
4. The Panamanian territory in which the canal
ing in mind the possibility that the present canal
is simmted shall be returned to the jurisdiction of
could become Luadequate for said leaffic, shall
the Republic of Panama. The Republic of Panama,
agree bilaterally on provisions for new projects
in its capacity as territorial sovereign, shall grant
which will enlarge canal capacity. Such provi-
to the United States of America, for the duration
sions will be incorporated in the new treaty in 20
of the new interoceanic- canal treaty and in accor-
cord with the concepts established in principle 2.
DEPARTMENT OF STATE, U.S.A.
POSTAGE AND FEES PAID
DEPARTMENT C.F DTATE
WASHII GTON, D.C. 20320
STA-501
THIRD CLASS
DULK RT.
ORGA CUBRARY
4
possible by the Joint Declaration between the
dance with what that treaty states, the right to
two countries of April 3, 1964, agreed to under
use the lands, waters and airspace which may be
the auspices of the Permanent Council of the
necessary for the operation, maintenance, protec-
Organization of American States acting provision-
tion and defense of the canal and the transit of
ally as the Organ of Consultation. The new
ships.
treaty would abrogate the treaty existing since
5. The Republic of Panama shall have a just
1903 and its subsequent amendments, establish-
and equitable share of the benefits derived from
ing the necessary conditions for a modern rela-
the operation of the canal in its territory. It is
tionship between the two countries based on the
recognized that the geographic position of its
most profound mutual respect.
territory constitutes the principal resource of the
Since the end of last November, the authorized
Republic of Panama.
representatives of the two governments have been
6. The Republic of Panama shall participate
holding important conversations which have per-
in the administration of the canal, in accordance
mitted agreement to be reached on a set of fun-
with a procedure to be agreed upon in the treaty.
damental principles which will serve to guide the
The treaty shall also provide that Panama will
negotiators in the effort to conclude a just and
assume total responsibility for the operation of
equitable treaty eliminating, once and for all, the
the canal upon the termination of the treaty. The
causes of conflict between the two countries.
Republic of Panama shall grant to the United
The principles to which we have agreed, on
States of America the rights necessary to regulate
behalf of our respective governments, are as
the transit of ships through the canal and operate,
follows:
maintain, protect and defend the canal, and to
undertake any other specific activity related to
1. The treaty of 1903 and its amendments
those ends, as may be agreed upon in the treaty.
will be abrogated by the conclusion of an entirely
7. The Republic of Panama shall participate
new interoceanic canal treaty.
with the United States of America in the pro-
2. The concept of perpetuity will be eliminated.
tection and defense of the canal in accordance
The new treaty concerning the lock canal shall
with what is agreed upon in the new treaty.
have a fixed termination date.
8. The United States of America and the
3. Termination of United States jurisdiction
Republic of Panama, recognizing the important
over Panamanian territory shall take place prompt-
services rendered by the interoceanic Panama.
by in accordance with terms specified in the treaty.
Canal to international maritime traffic, and bear-
4. The Panamanian territory in which the canal
ing in mind the possibility that the present canal
is situated shall be returned to the jurisdiction of
could become indequate for said traffic. shull
the Republic of Panama. The Republic of Panama,
agree bilaterally on provisions for new projects
in its capacity as territorial sovereign, shall grant
which will enlarge canal capacity. Such provi-
to the United States of America, for the duration
sions will be incorporated in the new treaty in 2C-
of the new interoceanic canal treaty and in accor-
cord with the concepts established in principle 2.
DEPARTMENT OF STATE, U.S.A.
POOTAGE AND FEED PAID
DEPARTMENT CF STATE
WASHIT IGTON, D.C. 20520
STA-501
THIRD CLASS
BULK RT.
SECRET XGDS
THE WHITE HOUSE
If
WASHINGTON
August 18, 1975
National Security Decision Memorandum 302
TO:
The Secretary of State
The Secretary of Defense
SUBJECT:
Panama Canal Treaty Negotiations
After considering the views expressed by the Departments of State
and Defense concerning proposals for negotiating instructions on a
new United States-Panama Canal Treaty, I have decided to modify
the negotiating instructions contained in NSDMs 131 and 115 and to
supplement them as follows:
The negotiators are authorized to propose to the
Panamanians that the treaty duration applicable for defense be
separated from its application to operation of the Canal. With
regard to duration applicable to operation of the Canal, the United
States negotiators should seek to obtain the longest possible period,
to terminate not earlier than December 31, 1999. With regard to
duration applicable to defense of the Canal, they should seek to
obtain a minimum of 50 years, but are authorized to recede to no
less than 40 years, They should also make efforts to obtain a
right in principle for the United States to participate in Canal
defense, including a limited military presence in Panama, following
the expiration of the treaty period applicable to defense, such
participation to be of a nature and under terms to be agreed upon
between the parties not less than one year prior to the treaty's
expiration. As a fallback, if deemed necessary to achieve the
objective of an extended period for Canal defense or other critical
negotiating objectives, the Negotiators may offer a reduction of the
duration period applicable to Canal operation to a period of not less
than 20 years.
-- With regard to Canal expansion, the United States
Negotiators should seek to obtain the longest possible period up to
the termination of United States responsibility for operation for a
SECRET - XGDS (3)
NSC DECLASSIFIED 80086 12/30/80
By WHM NARS, Date 12/19/84
SECRET XCDS
2
United States option to exercise definitive and exclusive rights to
expand the Canal's capacity, whether by addition of a third lane of
locks or the construction of a sea-level canal. As a fallBack, they
may seek to obtain -- either in lieu of or in combination with
definitive rights commitments that: (a) Panama will not permit
the construction of a sea level canal in its territory during the
period of United States control of the existing Canal unless it has
first offered to the United States the option to construct such a
canal. That option should be under terms and conditions which
would accord to the United States rights relating to operation and
defense commensurate with the due protection and enjoyment of a
United States investment of that magnitude; (b) no country other
than the United States or Panama shall have responsibility for
operation and defense of an interoceanic canal in Panama; and
(c) the neutrality guarantee applicable to the existing Canal will
apply to any new canal built in Panama.
- - With regard to land/water areas, the United States
Negotiators should seek to obtain Panama's acceptance of the United
States offer of January 1S, 1975, modified by the addition of such of
the following areas as the Negotiators find necessary in order to
further our objectives:
- Cristobal Piers
- Land and Water Areas in Gatun Lake
- Fort Sherman jungle training area south of the
22nd grid
- Coco Solo, Fort Randolph and access to them via
Randolph Road
- Portions of the Albrook/Clayton Training Areas
If agreement is not possible on the basis of these offers, the United
States Negotiators should request further instructions from the
President.
SEGRET XGDS
SECRET XGDS
3
With regard to the negotiating process, the United States
Negotiators should seek to obtain Panama's agreement that the
negotiations will remain confidential so that the Panama Canal issue
will not be injected into the domestic political process in the United
States in 1976.
With regard to the resumption of negotiations, the United
States Negotiators should proceed promptly to continue their task.
With regard to the creation of a favorable national
environment for treatv ratification, the Departments of State and
Defense should join in regular consultations with the Congress on
the course of treaty negotiations and should initiate an effort to
build support for a new treaty with Panama.
Herald
R.7ord
cc:
The Chairman, Joint Chiefs of Staff
The Director of Central Intelligence
The Chief Negotiator for the Panama Canal Treaty
SEGRET - XGDS
S 15434
CONGRESSIONAL RECORD - SENATE
September 8, 1975
I do not know.
NATIONAL SECURITY
which it would have "if it were sovereign."
A governmental agency certainly does
"The fact of the matter is that the great-
Obviously, these words would not have been
not know and is incapable of deciding.
est danger to the security of the United
necessary if the United States were, in fact.
The people who watch it will know-
States would be the continuance of. the
sovereign. A new treaty which recognizes
each in his own way. And if it becomes
present status of the canal."
that fact and goes on from there to work out
necessary to make a decision, that de-
POLITICAL INSTABILITY AND VIOLENCE
a mutually agreeable arrangement for con-
trol of the territory can hardly be called a
cision will be made in the voting booth.
"If any course is designed to expose the
surrender of United States sovereignty.
If people do not like the decisions made
canal to political instability and violence, it
Will a new Panama Canal treaty prejudice
would be an anachronistic effort to maintain
by their elected representatives on con-
our national security?
in effect a treaty negotiated in 1903 which is
troversial issues of public importance,
The fact of the matter is that the greatest
no longer respected, which is looked upon by
such as hunting, they can vote them out
danger to the security of the United States
Panamanians of all political persuasions as
of office.
would be the continuance of the present
an affront to Panama's national dignity and
status of the canal. If there is not a new
That is the way the system-should
as a colonial enclave, and which is viewed
treaty, we will be running the grave risk
work. And it can work only if the people
throughout Latin America as the last ves-
that the canal-which is, of course, exceed-
get all kinds of facts and opinions on
tige of 'big stick' diplomacy."
ingly vulnerable under any circumstances—
all sorts of issues from printed publica-
U.S. COMMERCIAL INTERESTS
may be damaged or destroyed by irate Pan-
tions and radio and television pro-
"Admittedly, the canal is important to us
amanians. By the same token we may find
grams-the press-free from govern-
commercially, but obviously its economic
ourselves in the position of having to defiend
mental interference.
significance has diminished considerably as
the canal by force against a hostile popula-
world commerce patterns and technologies of
tion and in the face of widespread, if not
shipping have changed."
universal, condemnation. Since the new
WHAT FUTURE FOR THE PANAMA
treaty will specifically include provisions for
These observations are as timely as
a continued U.S. defense role with respect to
CANAL
they are accurate. They deserve the most
the canal, it is hard to see how a new treaty
Mr. McGEE. Mr. President, last week
careful consideration by each Member of
could be adverse to our national security.
U.S. Ambassador Ellsworth Bunker re-
this forum.
Will a new treaty weaken the United States
turned to the negotiating table in Pan-
I ask unanimous consent that the
position by exposing the canal to political
instability and violence?
ama. This is a very significant develop-
Linowitz article be printed in the RECORD.
If any course is designed to expose the
ment because, as the press has reported,
There being no objection, the article
canal to political instability and violence,
it is solid evidence that the impasse over
was ordered to be printed in the RECORD,
it would be an anachronistic effort to main-
the U.S. negotiating position has been
as follows:
tain in effect a treaty negotiated in 1903
broken, thanks to the political courage
WHAT FUTURE FOR THE PANAMA CANAL?
which is no longer respected, which is looked
shown by President Ford.
(By Sol M. Linowitz)
upon by Panamanians of all political persua-
The President is to be commended for
sions as an affront to Panama's political dig-
OAS Secretary General Orfila recently
nity and as a colonial anclave, and which is
his determination to get on with the
called the Panama Canal "the most explosive
viewed throughout Latin America as the last
canal negotiations. Much of the credit
issue in Latin America." A lot of other con-
vestige of "big stick" diplomacy. Under the
due him on this issue stems from the fact
cerned Latin American and U.S. leaders have
new treaty the United States would be able
that there are SO many misconceptions
for some time been warning us about the
to protect its position while allowing Pan-
about the Panama Canal and our rela-
canal issue and what it may mean to the
ama a greater responsibility in the canal's
tionship to it that any political leader
whole future of the hemisphere.
operation.
But most Americans have not been listen-
who advocates a new treaty relationship
Will a new treaty adversely affect U.S. com-
ing-especially Congress.
mercial interests?
with Panama is, in the eyes of many
As though to prove how hard it has not
Admittedly, the canal is important to us
Americans, automatically guilty of "trea-
been listening, just before the August recess
commercially, but obviously its economic
son, bribery, or other high crimes and
the House of Representatives passed 246-164
significance has diminished considerably as
misdemeanors." Endorsing a new treaty
the Snyder Amendment to the State Depart-
world commerce patterns and technologies
relationship with Panama is akin to a
ment appropriation bill, which would have
of shipping have changed. Today large ves-
public statement denouncing mother-
kept the State Department from even nego-
sels cannot use the canal and a major ex-
tiating about a new Panama Canal treaty.
hood, apple pie, and "when Johnny comes
pansion of the present capacity may be nec-
Only vigorous efforts in the Senate kept that
marching home again"-all rolled into
essary-possibly a sea level canal. If the sit-
body from adopting the Byrd Amendment to
uation remains as it is, it is hardly likely that
one.
the same effect.
Panama would accede to the modernization
Mr. President, no one has done more
These developments came some weeks after
required. In order to accomplish that, there
to dispell this kind of thinking about the
38 senators and 126 representatives co-spon-
must be assurance of Panamanian coopera-
Panama Canal issue than Sol Linowitz,
sored a resolution that sharply opposed the
tion precisely as called for in the proposed
basic objectives of a new treaty.
our former Ambassador to the Organiza-
treaty.
tion of American States and Chairman
Obviously there must be some reason
In the light of these facts, it certainly re-
otherwise thoughtful members of Congress
quires no extended argument to recognize
of the U.S. Latin American Commission.
are lining up as they are with respect to such
that efforts on our part to adhere to the 1903
Ambassador Linowitz has done yeoman's
a potentially dangerous issue. The answer is
treaty would be both damaging to our na-
service in helping Americans to overcome
clear enough: Neither the administration
tional interests and in derogation of our
the "Panama Canal syndrome," and
nor those members of the Congress support-
hemispheric objectives. By the same token
erase the many misconceptions about the
ing a new treaty have directly responded to
the new treaty would demonstrably offer the
canal and our real interests in it.
the arguments and concerns of those who are
prospect of increased security for the canal
opposing the treaty. Rather, they have been
and the furtherance of our common goals
In this regard, I want to draw my col-
content to let the opposition build in the ap-
for the Americas.
leagues' attention to an article by Am-
parent expectation that once a treaty is
bassador Linowitz, which appeared in
negotiated they will be able to make their
Friday's-September
5-Washington
case effectively.
ZERO TO $5 MILLION IN JUST 9
Post. This article entitled, "What Future
But time is running out and opposition is
YEARS
for the Panama Canal?" is addressed
building. Meanwhile, Ambassador Ellsworth
specifically to Congress because of the
Bunker and Panamanian Foreign Minister
Mr. NUNN. Mr. President, earlier this
Juan Tack make progress toward a new
year, I was privileged to participate in a
recent efforts on Capitol Hill to impede
treaty which may face rejection in the Sen-
ceremony honoring the Georgia Small
the treaty negotiations, if not postpone
ate. If that happens, we may find that the
Businessman of the Year for 1975. This
them indefinitely.
Panama Canal has become a tinderbox.
young man, Joe Kelly McCutchen, Jr., of
Mr. President, the Linowitz article goes
It is long past time to take a hard look at
Dalton is an ardent believer in the free
directly to the gut issues:
the arguments being advanced against the
enterprise system.
SOVEREIGNTY OVER THE CANAL
new treaty and to deal with them forth-
In a recent issue of Georgia Progress
The simple answer is that the United States
rightly. Good questions are being asked and
magazine there appeared an article de-
never had sovereignty. The 1903 treaty speci-
they deserve responsive answers.
scribing how Joe Kelly has put his be-
fically gave the United States authority which
Will the new treaty mean a surrender of
United States sovereignty over the Canal?
liefs into practice, enabling his small
it would have "If it were sovereign." Obvious-
ly, these words would not have been neces-
The simple answer is that the United
family firm to grow to international
sary if the United States were, in fact,
States never had sovereignty. The 1903 treaty
status with annual sales of over $5
sovereign.
specifically gave the United States authority
million.
May 20, 1975
CONGRESSIONAL RECORD-SENATE
8701
full-faith bargaining. To the contrary, of
Finally, the editorial notes that "airline
how smart so many editorial writers can be,
course, it encourages management negotia-
unions have their own mutual aid program
absent of most of the facts.
tors to withhold concessions and com-
in the form of strike funds."
Among the many reasons I ask it, is the
promises.
This is so ill-informed a comment as to be
fact that people of St. Paul and our city's
In fact, Hearing Examiner Present recom-
ludicrous.
business community and air traveling public
mended in 1972 that CAB not approve higher
First off, there is absolutely no mutual aid
want to prevent a repetition of the 160-day
strike payments because they could have the
pact among the airline unions, nothing paral-
1970 Northwest Airlines strike which brought
effect of swaying an airline's decision "as to
leling MAP with its $2,000,000-a-day strike
no inconveniences to Northwest executives
when it should settle a strike, to the detri-
subsidy payments to TWA.
but large profits into their corporate bank
ment of the public utilizing air transporta-
The fact is that some unions pay no strike
accounts.
tion."
benefits at all. Some unions that do pay,
Sincerely,
There is other solid proof that MAP en-
provide only the barest subsistence funds,
JOSEPH E. KARTH,
courages and prolongs strikes. In 1958 when
$2 to $7-a-day, and that hardly puts food
Member of Congress.
MAP was organized, airline strikes lasted an
on the table. Certainly no one can suggest
that is profit making.
P.S.-I am satisfied that you did not write
average of 30.7 days. Today airline strikes
average 95 days-a soaring increase of more
Senator Gravel (testifying alongside me at
the editorial because you never write one
absent most of the facts.
than 200% in the 16 years MAP has been
the hearing) astonished some Senators by
at work. This is a far greater increase in the
revealing that "Airline clerks and machinists
duration of strikes than in any other major
may-if the union strike fund is full-receive
THE PANAMA CANAL ZONE TREATY
industry.
$15 and $40 a week respectively. The pilots
receive one-fifth of their salary but only after
NEGOTIATIONS
Thousands of St. Paul residents and bust-
nessmen have vivid memories of the 1970
one month of a strike." If it will help any,
Mr. HUMPHREY. Mr. President, I
Northwest Airlines strike. Although on strike
I would agree that airlines get the same
for 160 days, Northwest enjoyed a net profit
proportion of their normal profit that em-
ask unanimous consent to have printed
ployees get of theirs.
in the RECORD a statement by the dis-
of $44,000,000 for that year. Without MAP
payments, Northwest would have lost
Those facts stultify any remark that "air-
tinguished Senator from Wyoming (Mr.
$2,000,000.
line unions have their own mutual aid pro-
McGEE), and the material attached
That story is repeated over and over again
gram in the form of strike funds." While a
thereto.
with other MAP-affiliated airlines. Over and
strikebound airline is enjoying up to 20%
The PRESIDING OFFICER. Without
over again airline strikes were induced and
guaranteed profits, the striking airline clerk
objection, it is so ordered.
then prolonged unreasonably because of the
or mechanic is looking for a part-time job,
STATEMENT By SENATOR McGEE
guaranteed profits. As one witness told the
applying for unemployment compensation,
Aviation Subcommittee last week, "Why
or standing in line for food stamps.
The negotiations between the United
should management be anxious to settle;
Finally let me bring forward one aspect of
States and the Republic of Panama over a
they can't lose."
MAP which the Pioneer Press editorial wisely
new Canal Zone Treaty has sparked con-
Sometimes in unguarded moments, air-
sidestepped: the damage inflicted by MAP-
siderable controversy within the Congress.
line executives admit that they like strikes
prolonged strikes on whole communities and
Much of this controversy has been based
because they're a source of profit. For ex-
regions, especially those served by only one
upon an outdated emotionalism-an emo-
ample, C. C. Tilinghast, Chairman of Trans
airline.
tionalism which ignores basic factual con-
World Airlines, told a Honolulu newspaper
We know of airports in single-airline com-
siderations involved in this issue.
reporter that the longer a strike by flight
munities being almost entirely shut down,
Therefore, I would urge my colleagues to
attendants continued, the higher TWA's
disemploying airport personnel, maintenance
give close attention to a paper written by
profits would be for 1973. TWA banked
workers and employees of such airport enter-
Robert G. Cox for The Americas in a Chang-
$74,484,000 in MAP assistance payments
prises as restaurants, rent-a-car agencies,
ing World, which was published just this
during that 44-day walkout.
freight-forwarding firms, and bus lines.
year. The book was compiled by the Com-
We know of factories in such communities
mission on United States-Latin American
As Reporter Eisele quoted me as telling the
Subcommittee, "These facts and figures are
having to close down because machinery re-
Relations, whose Chairman is former OAS
placement parts could not be obtained by
Ambassador, Sol M. Linowitz. Mr. Cox, who
enough to convince any reasonable person
that MAP is a strike inducing, strike-pro-
air-freight. We know of retail stores and
was a consultant to the Commission, sets
wholesalers suffering greatly. reduced busi-
out the issues involved in the Panama Canal
longing and strike-breaking instrument."
ness because salesmen and suppliers had to
Treaty in a very pragmatic and factual man-
Your editorial next makes the point that
come to the community by car, sometimes
ner. He is to be commended for this in-
MAP has been upheld by a U.S Court of
from long distances.
valuable contribution to the debate sur-
Appeals decision. When Senator Gravel was
Those of us responsible for national policy
rounding the issue of a new treaty with
asked about this during the hearing he
can't forget those communities, even if edi-
Panama.
replied that it is within living money that
torial writers can. We cannot, for example,
As Mr. Cox notes: "Americans have been
some of the nation's highest courts upheld
forget Fargo, North Dakota, which was 80
inclined occasionally to overstate the
child labor, the shameful 12-hour day of
badly injured by the 1972 Northwest Airlines
commercial significance of the Panama
toll for youngsters 11 and 12 years old in coal
strike that it asked CAB to rescind North-
Canal
mines and textile mills. I also point out that
west's certificate and issue a new one to
He points out that only 18 percent of the
the court ruled on the basis of existing na-
another airline.
world's total merchant fleet (4,500 out of
tional policy brought about by national law.
We cannot forget the resolutions of protest
25,000 ships over 1,000 tons) transit the
Obviously since there is no law to the con-
against MAP that reached us in Congress last
canal each year. In an effort to set our fac-
trary, MAP is not in violation of national
year and this year from communities in
tual house in order, it is interesting to note
policy.
Texas, Loulsiana and New Mexico because of
that the United States ranks tenth in the
Next the Pioneer Press editorial points an
the needlessly prolonged shutdown by Texas
oceanborne commerce it sends through the
accusatory finger, or so it seems, at the pay
International Airlines, a shutdown that
canal by weight. Nicaragua ranks first with
scales of pilots and ground crews. When this
ended earlier this year after 125 days.
76.8 percent of that nation's oceanborne
point was briefly raised at the hearing I made
An investigation into this strike disclosed
commece transiting the canal each year. The
this response: "When I fly I feel confident
that 26 Texas communities served only by
United States sends only 16.8 percent of its
and comfortable when I know there's a pilot
TI were severely hurt by the closures, with
oceanborne commerce through the canal.
up front getting $50,000 or more and not
business failures sharply increased.
How vital is an effective and efficient op-
$10,000; I know he has to be the best trained
We cannot forget that the New Mexico
eration of the canal to the two participants
and most skilled in the world. And I feel con-
State Legislature, alarmed and worried over
in the treaty negotiations-the U.S. and
fident and comfortable when I board a plane
the effect of the MAP-supported TI strike
Panama? As Mr. Cox notes, about 30 per-
that has just come from maintenance know-
on the state's economic health, memorialized
cent of Panama's gross national product and
ing that the maintenance men are highly
us in Congress and asked for a "full Con-
40 percent of Its foreign exchange earnings
paid and therefore highly skilled."
gressional investigation of the Mutual Aid
are directly or indirectly attributable to the
Does the editorial writer want to analogize
Pact."
Canal and related institutions. Yet, the
between an airline pilot in command of a 747
Congress is now responding to the appeals
Panama Canal affects less than one percent
with responsibility for 400 lives, and a steel-
from Fargo, North Dakota, from scores of
of our total GNP as a nation.
worker in a highly automated plant?
communities in Texas and Louisiana, and
Mr. Cox notes that:
Pilots do not buy planes. Aircraft get
from the New Mexico State Legislature.
By volume, less than five percent of the
larger and larger; their equipment becomes
And ironically while we are doing so, the
total world trade transits the Panama Canal.
more and more intricate and complex. They
Pioneer Press editorial tells us that "The
By value, the proportions would be little
carry more and more people. Consequently
move against the mutual aid pact in the
more than one percent; an increasing per-
there are greater demands of responsibility,
Senate seems uncalled for
centage of more expensive cargo is being
skill, experience and judgment Imposed on
We hope that in the interests of fairness
transported by air (for example, about 10
airline pilots than on any other service em-
and press accountability that you will print
percent of the U.S. foreign trade), and most
ployees in the world.
the foregoing rebuttal. I often marvel at
Canal cargo is in bulk commodities.
8702
CONGRESSIONAL RECORD-SENATE
May 20, 1975
I found this observation by Mr. Cox quite
revised draft treaty but the Canal and the
fiscal 1973 accounted for most of the tran-
interesting:
Zone will predominate.
siting cargo.
The adjective most frequently applied to
Panama, by the 1903 treaty, granted the
Percentage
the Canal by Americans is 'vital.' In terms of
U.S. perpetual jurisdiction as If it were sov-
Petroleum and its products
18.2
U.S. trade, however, the numbers would jus-
ereign over the Canal Zone "to the entire
Grains
15. 8
tify more modest description. Convenient.
exclusion of the exercise by the Republic of
Coal and Coke
11. 1
Useful. The Canal is economically vital to
Panama of any such sovereign rights, power
Ores and metals
0.9
Panama, perhaps also to Nicaragua and a
or authority."
few other Latin American countries, but not
The Zone extends 5 miles on each side of
55.0
to the United States.
the center line of the Canal, and has an area
These are just but a few of the observations
of 553 square miles of which 362 are land. It
Since transiting cargo tends to be made up
which Mr. Cox offers which I think are im-
is larger than the Amercian Virgin Islands,
of commodities which are volatile on the
portant for Senators to consider at this mo-
Guam, and American Samoa combined. Pop-
world market, traffic forecasting is difficult.
ment, rather than allowing themselves to be
ulation was 44,198 at the 1970 census. About
Each year 18 percent of the world's total
deluded by emotional arguments reminiscent
11,000 U.S. Armed Forces personnel have been
merchant fleet (4,500 out of 25,000 ships
of an earlier era. The military and strategic
stationed in the Zone during recent years.
over 1,000 tons) transit the Canal. The size
arguments are also handled in the same fac-
The Canal Zone Government and the
of an average ship transiting the Canal has
tual manner by Mr. Cox and certainly should
Panama Canal Company are the two principal
been increasing over the past ten years.
be studied very carefully by members of the
operating agencies, headed by one officer who
P.C.
Senate.
serves both as Governor of the Canal Zone
net tons
However, there is one observation which I
and President of the Company. The Governor
1964
5,910
believe very relevant to our consideration of
is appointed by the President of the United
1969
7, 658
a new treaty. This observation was made by
States and reports to the Secretary of the
1973
9, 100
Jack Vaughn, former U.S. Ambassador to
Army. As President of the Company he re-
Panama, former Assistant Secretary of State
ports to the Board of Directors, appointed by
The countries most dependent on the
for Inter-American Affairs, former Director
the Secretary of the Army. The Canal Zone
Panama Canal send the following percentages
of the Peace Corps and former Ambassador
Government maintains the civil executive
of the oceanborne commerce through the
to Colombia.
authority. The legislative power resides in
Canal, by weight:
'a Latin American Vietnam.' He finds
the U.S. Congress and the judicial power is
Percent
that through the collaboration of Congres-
exercised by a District Court of the U.S. Fed-
Nicaragua
76. 8
El Salvador
sional and military supporters of the Canal
eral Court System. The Company operates the
66.
Ecuador
Zone, 'Presidents' orders have been reversed,
Canal, the Panama Railroad, and a ship
51.
Peru
diplomatic maneuvers and decisions brushed
which sails between New Orleans and the
41. 3
Chile
aside, and the United Nations told to go to
Zone.
34. 3
Colombia
hell.' And he concludes, "The tinder awaits
Another U.S.-Panama treaty was signed
32. 5
Guatemala
the spark.'
January 25, 1955, increasing the annuity and
30.
Panama
granting Panama some real estate and build-
29. 4
The report ordered to be printed in the
Costa Rica
ings no longer needed by the Canal Zone ad-
27. 2
RECORD is as follows:
United States
ministration. U.S.-citizen and non-citizen
16. 8
Mexico
CHOICES FOR PARTNERSHIP OR BLOODSHED IN
employees were guaranteed equality of pay
16. 6
New Zealand
PANAMA
and opportunity. The U.S. also agreed to
15.
(By Robert G. Cox)
build a bridge over the Pacific entrance to
About 30 percent of Panama's gross na-
the Canal. The bridge was opened October 12,
On November 2, 1903, at 5:30 in the after-
tional product and 40 percent of its foreign
1962 on the Inter-American Highway.
noon, the cruiser U.S.S. Nashville arrived at
exchange earnings are directly or indirectly
Colon in the Republic of Colombia, its mis-
Panamanians have shown little immediate
attributable to the Canal and related instal-
sion to block deployment of Colombian
determination-of the kind so prevalent in
lations.
troops. The next day citizens in the Pana-
Egypt 20 years ago with the Suez Canal-to
Canal Company tolls, by remaining con-
manian province revolted and declared their
assume the burdens and risks of administer-
stant in dollar terms since 1914, have de-
independence. The revolution was bloodless,
ing the Canal.1 Nationalization or purchase of
creased in real terms, and at a precipitous
except for the death of one Chinese by-
the Canal, assuming either were feasible,
rate, as a result of international monetary
stander. Fifteen days later, the U.S. govern-
might require Panama to contribute some
readjustments in the 1970s. The result is
ment and the Republic of Panama entered
effort to its management and defense, and
growing subsidy to Canal users.
into a treaty, drafted by a Frenchman and
would imply sharing in the losses as well as
Revenues of the Panama Canal Company
consisting entirely of language convenient
profits. In 1973, some officials of the Pana-
were $200 million in fiscal 1973. Approxi-
to the United States. Still in effect today,
manian government considered the possi-
mately 43 percent of regular receipts came
the treaty granted the right to build and
bility of acquiring the Canal by purchase
from operations other than Canal tolls. The
operate forever an interocean canal, and to
out of net earnings from increased tolls and
Company finances its own operations with-
establish, for that purpose, an American en-
services.² This, however, seems not to have
out budgetary support from the U.S. govern-
clave in a strip of land and water nearly
received serious attention.
ment despite a policy of low toll rates and
half the size of Rhode Island, bisecting the
Economic Considerations
minimal profits from other operations.
Republic on an axis between its two major
Americans have been inclined occasionally
Proportions of the Canal Zone's product
population centers. The U.S. consummated
to overstate the commercial significance of
derived from various sources in 1970 was as
that right as fast as logistics and technology
the Panama Canal, but its value is none-
follows:
would permit.
theless real. Adequate data exists to place it
Percentage
The position of the United States in world
in proper perspective. The recent volume of
Canal Company
44.7
politics for nearly two centuries has rested
transits, in number and cargo weight, is as
Zone Government
10.2
on hegemony in the Western Hemisphere.
follows.
Military bases and other official
The country acquired interests during those
agencies
39.9
17 days in 1903 which included a responsi-
Private enterprise
5.2
bility for the emergence of a nation, for the
Total
Cargo
administration of a major territorial posses-
oceangoing
(in million
transits
long tons)
Total
100. 0
sion, and for the management of an inter-
national public utility of both commercial
Of total U.S. foreign trade, by value, the
and military value.
Fiscal year:
following precentages transited the Canal in
Focusing on current efforts to negotiate
1968
14,807
106
the two most recent years for which data is
1969
14,602
109
and ratify a new treaty, this paper submits
available:
1970
14,829
119
some findings of fact and observations con-
1971
14,617
121
PERCENTAGES
cerning the nature of those interests and
1972
14,238
111
the fulfillment of that responsibility.
1973
14,238
128
1971, exports, 12.1; imports, 5.6; total, 8.8.
1972, exports, 13.0; imports, 5.3; total, 9.0.
DESCRIPTION OF THE SUBJECT MATTER
Since foreign trade accounts for less than
Although U.S.-Panamanian affairs are sub-
The Canal's ultimate capacity is 26,800
10 percent of U.S. gross national product, the
ject to the full range of complexities found
transits annually. with certain physical
Canal affects less than one percent of GNP.
in other binational relationships, the princi-
improvements.
By volume, less than 5 percent of the total
pal subject matter has always been, and will
Four categories of bulk commodities in
world trade transits the Panama Canal. By
continue to be, the Canal and the Zone. It
value, the proportion would be little more
is too early to predict the contents of the
Footnotes at end of article.
than one percent; an increasing percentage
May 20, 1975
CONGRESSIONAL RECORD-SENATE
8703
of more expensive cargo is being transported
wail after collaborating in a revolt there.
ever, the Zone, as long as it remains relatively
by air (for example, about 10 percent of U.S.
The U.S. then responded to the 1899 Boxer
secure from renewal of the nationalistic at-
foreign trade), and most Canal cargo is in
Rebellion in China, by sending two infantry
tacks of the 1960s, provides a location of un-
bulk commodities.
regiments, one troop of cavalry, one battery
rivaled excellence for an administrative head-
COMMENTARY
of light artillery, and two battalions of Ma-
quarters, communications center, and'train-
The adjective most frequently applied to
rlnes, commanded by a major general, to
ing ground.
join in military operations with the British,
COMMENTARY
the Canal by Americans is "vital." In terms
of U.S. trade, however, the numbers would
French, Japanese and Russians. A transisth-
Two military issues concerning the Pana-
justify more modest descriptions. Conven-
mian canal, long regarded as a potential as-
ma Canal overshadow all others: utility and
ient. Useful. The Canal is economically vital
set to burgeoning U.S. foreign trade, sud-
defensibility.
to Panama, perhaps also to Nicaragua and a
denly became a strategic imperative. The
The Canal's military value during the first
few other Latin American countries, but not
Canal has never been interrupted or serious-
half of this century is well established, prin-
to the United States.
ly threatened by hostile action.
cipally by its contributions to the two World
One way to analyze the Canal's commer-
FACTS
Wars. Regarding the Korean War and the
cial value is to consider what would happen
The Canal remains a prime consideration
conflict in Southeast Asia, its utility is less
If it were not there. The figures already pro-
in the planning for and accomplishment of
certainly established. A former senior officer
vided for U.S. and world trade transiting the
the safe and timely movement of naval units
of the U.S. Budget Bureau Military Division
Canal-9 percent and 1 percent, respec-
between the Atlantic and Pacific Oceans. A
estimates that alternative modes of shipment
tively-should not be regarded as represent-
saving in distance of approximately 8,000
would have had no adverse effect on the Viet-
ing the portion that would be lost if the
miles is realized by Canal translt (versus
nam War effort and that additional costs
Canal were inoperative. The decision to send
rounding Cape Horn), in the deployment of
would have been negligible.8 A ranking State
a given shipment through the Canal is fre-
ships from one coast to the other. A time
Department expert in Panamanian affairs
quently a close one, and almost always there
saving of up to 30 days can accrue for slower
now terms the Canal "a military asset of de-
are alternative routes or modes of trans-
ships and at least 15 days for fast ships cruis-
clining value." Nevertheless, a residual util-
portation. John Elac* has described the im-
ing at about 20 knots.
ity will remain for some time, largely be-
pact of closure of the Canal on total U.S.
During fiscal 1968, a representative year
cause of the constraints of U.S. West Coast
and world commerce as "inconsequential."
of the Vietnam conflict, 33 percent of the
port facilities, particularly in munitions-
An indicator often cited as proving the
dry cargo shipped from the continental U.S.
handling.
Canal's essential worth is: "70 percent of its
by the military sea transport service to South
As for the second issue, the Cameron re-
traffic either originates or terminates in U.S.
Vietnam, Thailand, and the Philippines, and
port of the Center for Inter-American Re-
ports." In the first place, the percentage is a
Guam, transited the Canal. For petroleum.
lations puts it succinctly: "The Panama
little inflated. It should be 65 percent, but it
oil, and lubricants the proportion was 29
Canal is no longer defensible." 10 This holds
should then be compared to a totality of 200
percent. An unofficial estimate of the pro-
for either a strategic attack or destruction
percent, not 100 percent, because it refers to
portion of dry cargo used to support U.S.
by a determined and resourceful enemy."
both arrivals at and departures from U.S.
military involvement in Vietnam which tran-
The Canal can, of course, be held against
ports. The indicator, even when placed in
sisted the Canal is as high as 40 percent.
some levels of civil disturbance. These in-
that perspective, is spurious because it im-
However, in 1970 there were about 1,300
formed but independent views do not diverge
plies but does not provide an impressive
ships afloat, under construction, or on order
essentially from the later official judgment
statistical base. Presumably no one believes
which could not enter the Panama Canal
of the National Defense Study Group.11
that if only ten motorboats transited the
locks. There were approximately 1,750 more
As the strategic value and defensibility of
Canal in 1975, four coming from and three
ships that could not pass through the Canal
the Canal eroded, the Zone has taken on a
bound for U.S. ports this would reflect some
fully laden because of draft limitations due
new military significance. The U.S. bases
kind of vital U.S. interest.
to seasonal low-water level.
there form the operational center of Ameri-
When we look at U.S. investment in the
The National Defense Study Group of the
can military activity in Latin America. Am-
Canal, it is tempting to include defense
Atlantic-Pacific Interoceanic Canal Study
bassador Jack Vaughn* thus described the
costs, as Senator Strom Thurmond does
Commission specifically noted the "vulnera-
situation last October:
when he says we have committed a total of
bility of the present canal," and stated the
The U.S. military command in Panama is
$5,695,745,000.1 But since the Canal is con-
fact that it could be closed by the use of
made of two parts: a major general from
sidered a defense asset. we would presumably
relatively unsophisticated weapons is par-
the Corps of Engineers who governs the
be spending more than its costs on addi-
ticularly significant in view of forecasts
Panama Canal Company from Balboa
tional defense if we did not have it. The cost
which anticipate that insurgency and sub-
Heights, and a four-star general from the
of defending it should be at least off-set by
version will probably persist in Latin Amer-
Army (CINCSOUTH) who directs Canal Zone
its asset value. Moreover, $5.7 billion is a
ica to the end of the century; interruption
military operations from an underground
small fraction of one percent of U.S. military
for extended periods to Canal service could
complex at Quarry Heights. Their overriding
expenditures during the 60 years of the
be achieved with relative ease.5
common objective is to maintain the status
Canal's operation. Indeed, the entire cost of
If Gatun Lake were emptied by simple
quo, and over the years they have been
the Canal might have been lost in the
breach of its dam, for example, the Canal
largely immune to the precepts and changes
round-off of the defense budget in the fiscal
could be out of operation for as long as two
of U.S. foreign policy.
years 1914 to 1973.
years, awaiting sufficient rainfall to refill the
While the Administration's policy has led
As for the $700 million in actual unrecov-
lake.
to a reduction in all the U.S. military mis-
ered investment, the U.S. government would
The National Defense Study Group further
sions assigned to other Latin nations, the
have had that back by now had it not elected
found that even a sea level canal, though
Pentagon has maintained its top-heavy com-
to subsidize the shipping operations of user
less vulnerable, would face threats of sabo-
mand intact in the Zone. (The superabun-
nations through reductions in real toll
tage, clandestine mining, or the attack of
dance of Colonels in the Southern Com-
charges while demand for transit service was
shipping by low-performance aircraft or
mand has led enlisted men to refer to it as
increasing.
readily transportable weapons. The more tra-
"Southern Comfort.") While the U.S. mili-
MILITARY CONSIDERATIONS
ditional forms of attack-blockade, naval, or
tary in all other Latin nations is under the
By the turn of the century, the United
aerial bombardment, or ultimately attack by
direct supervision of the U.S. Ambassador,
missile-delivered nuclear weapons-are un-
in Panama independent policy control is ex-
States had staked out its continental domain,
subdued the indigenous peoples, resolved its
likely, in the Group's view, because the at-
ercised by the Pentagon. Just when Presi-
tacker would be confronted by the total mil-
dent Nixon was assuring our good neighbors
main internal conflicts, established unques-
that the U.S. would wear a white hat in the
tioned predominence in the Hemisphere, and
itary strength of the United States.
Hemisphere, the Pentagon expanded train-
was ready to become a global power. On April
The Study Group concluded that closure
ing of Green Berets in the Zone.¹²
21, 1898, the nation went to war with Spain,
of the Canal for periods of approximately 30
and in three months destroyed the Spanish
days, provided that they could be anticipated
In May 1974, there was some indication in
fleet at Manila, drove the Spaniards from
in advance, would not have serious defense
the Pentagon that civilian officials might
Cuba, conquered the Philippines, took Puer-
implications, but the denial of the Canal to
succeed in abolishing CINCSOUTH as a uni-
fied command and reduce the rank of the
to Rico and Guam. The battleship U.S.S.
both defense and commercial shipping for
Oregon made a dramatic 16,000 mile voyage
two years could have a serious adverse effect
senior U.S. troop commander in the Zone to
around Cape Horn to participate in the Bat-
on the national defense?
major general.19
tle of Santiago de Cuba. During the Span-
POLITICAL CONSIDERATIONS
The original purpose of U.S. troops in Pan-
ish-American War, the U.S. annexed Ha-
ama was to protect the Canal from a foreign
The history of U.S.-Panama relations has
aggressor. That is still ostensibly their pri-
been characterized by (1) Panamanian sur-
*Dr. John C. Elac is an international econ-
mary mission. However, the Canal Zone is
prise and mortification over the implemen-
omist and a specialist in U.S.-Latin Amer-
also a command or coordination center for
ican relations. He was a member of the Board
most U.S. Armed Forces programs and ac-
*Jack Hood Vaughn was U.S. Ambassador
of Directors of the Panama Canal Company
tivities in Latin America, including foreign
to Panama (1964-1965); Assistant Secretary
and a member of its Committee on Budget
military assistance and training, intelligence,
of State for Inter-American Affairs (1965-
and Finance (1967-69).
and operational preparedness. The legality of
1966); Director of the Peace Corps (1966->
Footnotes at end of article.
these operations has been questioned. How-
1969); Ambassador to Colombia (1969-1970).
S 8704
CONGRESSIONAL RECORD-SENATE
May 20, 1975
tation of the 1903 treaty; (2) increasing
demonstrating the firm determination of our
dents faced each other at Balboa High School
Panamanian agitation for revision; (3) an
people that the United States maintain its
in the Zone over the issue of flying the
initial dilatory paternalism on the part of
indispensable sovereignty and jurisdiction
American flag without the Panamanian flag
the U.S.; and (4) a more recent willingness
over the Canal and the Zone
at the school. The ensuing riots lasted for
by the U.S. Exccutive Branch to relieve Pan-
And resolving that:
four days. Sniper fire into the Zone reached
ama's grievances while influential members
The Government of the United States
500 rounds an hour at various times. Toll:
of the House and Senate demand retention
should maintain and protect its sovereign
Four American soldiers and 20 Panamanian
of "personal sovereignty" in the Zone. For
rights and jurisdiction over the Canal and
civilians killed; over 400 Panamanians and
the past ten years, off and on, the two coun-
Zone, and should in no way cede, dilute, for-
Americans wounded or injured; extensive
tries have been trying to negotiate a way
feit, negotiate, or transfer any of these
property damage. From 1964 to 1968 there
out of the 1903 treaty.
sovereign rights, power, authority, jurisdic-
were riots annually.
The Canal Zone is an American colony. In
tion, territory, or property that are indispen-
On October 11, 1968, the Guardia Nacional
the international political context, the word
sably necessary for the protection and se-
seized control of the country after a year
"colony" has two generally accepted defini-
curity of the United States and the entire
of political turmoil. Over the next few
tions: (1) the compact settlement of a group
Western Hemisphere
months, Colonel (now Brigadier General)
of nationals from one country within the
Writing in the New York Times on May 7,
Omar Torrijos emerged as the dominant fig-
territory of another while the settlers re-.
1974, Senator Thurmond stated that a total
ure in the "revolutionary government."
maln loyal to the mother country; and (2)
of 35 Senators had, with "no great effort"
Treaty negotiations with the U.S. were
a nonself-governing territory, or a depend-
and mostly in a single afternoon, been con-
long underway when Torrijos came to power
ency without full self-government, considered
vinced to co-sponsor the resolution. He
and were continuing on the third anniver-
by the various governing powers to be a
added:
sary of the military coup, October 11, 1971.
territory under the jurisdiction of the mother
In my judgment, the Secretary committed
Addressing an anniversary rally of 200,000
country, prevented by social, economic, and
an egregious blunder in committing the
Panamanians assembled two blocks from the
political restraints from being fully in charge
United States to a course of action on a new
Zone, Torrijos asked:
of its own decisions. The Canal Zone con-
Panama treaty without a reasonable assur-
"What nation on earth would bear the hu-
forms to both of these definitions.
ance that the requisite two-thirds majority
millation of seeing a foreign flag planted
In Panama City, March 21, 1973, the United
of the Senate supported the abrogation of
in its very heart? What nation would allow
States vetoed a U.N. Security Council resolu-
sovereignty.
a foreign governor on its territory?
Our
tion calling on both countries to negotiate a
In consultations with members of Con-
enemies want us to march on the Zone to-
new treaty to "guarantee full respect for
gress before signing the statement, Mr. Kis-
day. When all hope is lost of removing this
Panama's effective sovereignty over all its
singer and his chief negotiator, Ambassador
colonial enclave, Omar Torrijos will come
territory." The U.S. explained its veto, the
Ellsworth Bunker, were advised that sur-
to this same square to you: "Let us
third in its history, by saying it wanted to
render of United States sovereignty in the
advance." Omar Torrijos will accompany
negotiate with Panama "without outside
Canal Zone was not a negotiable item; they
you, and the 6,000 rifles of the Guardia
pressure." All other Security Council mem-
apparently chose to ignore this advice.
Nacional will be there to defend the integ-
bers voted for the resolution except the U.K.
There is no way in which the Joint State-
rity and dignity of the people. But today we
which abstained.14
ment of Principles can be reconciled with
are not going to the Zone."
The multinational forum then shifted to
the Senate resolution.17
The New York Times concluded that: Gen-
the Organization of American States where
Senator Thurmond and certain members
eral Torrijos cannot turn back without los-
hemispheric foreign ministers have, during
of the House of Representatives contend
ing face. Violence does not seem imminent,
the past year, expressed unprecedented con-
that the relevant language in the constitu-
but only a satisfactory agreement will pre-
cern over the Canal Zone issue.
tion requires that a majority of the House
vent future trouble" And the negotia-
On February 7, 1974, in Panama City, Sec-
as well as two-thirds of the Senate approve
tions continued.
retary of State Kissinger and Panamanian
any agreement which cedes land to Panama.
Foreign Minister Juan Tack initialed a state-
The State Department contends it is one of
COMMENTARY
ment of eight Principles of Agreement pro-
many constitutional grants of power to Con-
The Archbishop of Panama, Marcos Mc-
viding that:
gress which is affirmative but not exclu-
Grath, describes the Canal Zone in these
Panama will grant the United States the
sionary, and cites precedents which "in the
terms:
rights and facilities and lands necessary to
specific context of Panama,
look two
the heartland, the most valuable eco-
continue operating and defending the Canal;
ways." 18
nomic area In Panama today, the growth
The United States will agree to return to
The State Department has understood
of her two major cities, Panama on the
Panama jurisdiction over its territory; to rec-
throughout the recent negotiations that no
Pacific and Colon on the Atlantic end of
ompense Panama fairly for the use of its
treaty with Panama affecting U.S. jurisdic-
the Canal, is hemmed in by the Canal Zone.
territory; and to arrange for the participation
tion will be ratified without the approval or
Teaming tenements face across the street a
by Panama, over time, in the Canal's opera-
acquiescence of the Joint Chiefs of Staff. The
fence and open fields or virgin jungles-
tion and defense;
JCS lines to Capitol Hill are time-honored
space unused, space reserved, space denied.
The new treaty shall not be in perpetuity,
and uncontested. The Chiefs have accepted
Panama City has grown from 200,000 to over
but rather for a fixed period, and that the
the eight negotiating Principles of February
500,000 in the past 15 years. It has had to
parties will provide for any expansion of
7, 1974. It remains to be seen whether they
grow unnaturally along the coast five miles
Canal capacity in Panama that may eventu-
will approve the treaty, if and when it is
and then cut inland, because of the Canal
ally be needed.
concluded. Certainly as long as no treaty
Zone, creating a clumsy triangle, bottling
Senator Strom Thurmond on March 29,
has been drafted and Senator Thurmond
traffic, and testing the patience of every city
1974, introduced Senate Resolution 301 on
has a blocking third of the Senate aligned
planner and in fact of every citizen. Pana-
behalf of himself and 31 other Senators
against the Principles, the JCS would have
manians, to go from one part of their coun-
noting, in part, that:
no need to take a negative stand in any case.
try, in this day and age, still must traverse
United States diplomatic representatives
In early 1958, a few Panamanian students
an area that, though legally it is not, looks
are presently engaged in negotiations with
quietly entered the Zone on the Pacific side
like a foreign land: with its own police,
representatives of the de facto Revolutionary
and planted small Panamanian flags in pre-
courts, post-office, stores, and this across the
Government of Panama, under a declared
designated spot. They called the foray "Op-
very waist and heart of the nation.' 20
purpose to surrender to Panama, now or on
eration Sovereignty." The flags were quickly
Senator Alan Cranston has observed that
some future date, United States sovereign
removed by Zone employees. It was the har-
of the 15,000 workers in the Canal Zone,
rights and treaty obligations, as defined be-
binger of other, more serious, demonstra-
4,000 are Americans, and of those, 1,289
low, to maintain, operate, protect, and other-
tions to follow.
work on the Canal while the other 2,700
wise govern the United States-owned Canal
On Independence Day, November 3, 1959,
are employed in' schools, movie theaters,
and its protective frame of the Canal Zone;
crowds of Panamanians, led by students,
bowling alleys, commissaries, gold courses,
Title to and ownership of the Canal Zone,
tried repeatedly to surge into the Canal
and a Z00.21
under the right "in perpetuity" to exercise
Zone and raise their flag. Demonstrators
The Panamanians, for their part, now have
sovereign control thereof, were invested ab-
assaulted the U.S. Embassy and Information
the toughest and most charismatic leader in
solutely in the United States and recognized
Service offices in Panama, tore down the
their history. They proved from 1958 to 1967
to have been so vested in certain solemnly
Embassy flag, and attacked the American
that they can be tenacious in the drive to
ratified treaties by the United States with
Consulate in Colon. U.S. Army units took
establish national jurisdiction over the Zone.
Great Britain, Panama, and Colombia
up defensive positions on the Zone border.
They have also shown that, under Torrijos,
United States House of Representatives, on
Later that month even larger crowds dem-
they are willing to be patient as long as he
February 2, 1960, adopted H. Con. Res. 459,
onstrated and had to be subdued by Ameri-
remains believable. But history does not
Eighty-sixth Congress, reaffirming the sover-
can troops.
permit any national leader total control of
eignty of the United States over the zone
On April 18, 1961, 500 demonstrators tried
his people's destiny, or even his own. The
territory by the overwhelming vote of three
to storm the Canal Zone protesting the Bay
General has four alternatives: he can pro-
hundred and eighty-two to twelve, thus
of Pigs and the role of Zone bases in the
duce a supportable treaty. He can delay. He
invasion of Cuba. In January 1964, rival
can leave office. Or he can attack the Zone.
Footnotes at end of article.
groups of Panamanian and Canal Zone stu-
Time is running out on the first two.
May 20, 1975
CONGRESSIONAL RECORD-SENATE
8705
Futures and interests
That the United States have the right to
amphibious landing, an expensive and ex-
The Panama Canal has five alternative fu-
expand Canal capacity, either by adding an
acting task, but not prohibitively SO.
tures:
additional lane of locks to the existing Canal
3. Despite these defensive measures, some
A. Closure by hostile action, or by an ef-
or by building a sea level canal.24
exposure to sabotage, guerrilla attack, or as-
fective decision that it costs exceed its bene-
Panama's interests and intentions are
sult by regular military units from the Re-
fits, or both. There is little evidence that
Negotiate the Zone out of existence;
public would persist. Such moves, even when
points to such an eventuality, though it is
Failing that, try to make it too expensive
easily repulsed, have already involved serious
as imaginable today as a seven-year closure
for the U.S. to stay in Panama, recognizing
costs even though they have not yet included
of the Suez Canal was 20 years ago.
that dollar costs alone may not be very im-
an act of sabotage or interruption of Canal
B. Internationalization under the auspices
pressive to Americans;
operations.
of the United Nations, the Organization of
Either way, assume an active role in operat-
4. An overt decision to maintain the status
American States, or some other multilateral
ing and protecting the Canal.
quo in the Zone would undermine the U.S.
body. This is a theoretical alternative that
Problems of Awareness and Attitude
leadership position in the hemisphere. If it
continue to be discussed, though it would be
The real content of the Panama-Canal
were followed by another bloody episode in
far beyond the experience, capacity, and in-
Zone issue may be as much psychological as
or around the Zone, U.S. political leverage
terest of the UN or the OAS. Only a military
would be further diminished and could result
it is military or commercial. No problem of
stalemate between the United States and
current international affairs is more encum-
in violent responses directed at our enter-
Panama-inconceivable before the U.S.-Viet-
bered by national pride, convenient miscon-
prises, diplomatic establishments, and citi-
nam stalemate, and still most unlikely-
ception, legal abstraction, and ignorance.
zens throughout the region. The Latin Ameri-
could lead to internationalization in the
cans have never before been as united and
Americans have not been perceptive or even
foreseeable future.
consistent about Panama. Theodore Roosevelt
outspoken in support of Panama's grievances
C. Ownership and operation by Panama.
against the United States. An issue that was
could boast one day, "I took Panama," and
The greatest disservice which the present
essentially bllateral in the 1950s has become
another day proclaim:
Canal regime does to Panama is not In with-
"We have not the slightest intention of
a matter of legitimate hemispheric concern.
holding benefits, but in withholding the bur-
establishing an independent colony in the
Even the United States has acknowledged
dens and problems of operating the Canal.
middle of the State of Panama
it
is
this by accepting OAS investigation, media-
our
Some argue that Panama has been cheated
full intention that the rights which we ex-
tion, and oversight.
out of its fair share of the benefits. Others
5. The world community would condemn
ercise shall be exercised with all proper care
contend that Panama was hansomely com-
U.S. efforts to hold the Zone indefinitely.
for the honor and interest of the people of
pensated in 1904 for a strip of mosquito-in-
While most of the countries which use the
Panama."
fested, disease-ridden swamp and jungle, and
Canal are interested mainly in efficient op-
For three generations American democracy
that the Canal and the Zone constitute an
eration and reasonable tolls, no civilized na-
has been absent in the Canal Zone, where
economic windfall which Panamanians could
tion can be oblivious to a breach of interna-
public officials are not elected, but imposed.
have received only from the Americans. Both
tional peace, or the threat of it. This was,
Civilian control of the military is inverted:
arguments have merit. But, by assuming all
in part, the motivation for the Security
the Governor is a major general, but dis-
the burdens of running and protecting the
Council's effort to intervene in 1973.
tinctly junior to the local troop commander.
Canal, the United States has denied Pana-
Most colonial powers that have tried to re-
The Zone economy is state socialism, with
ma the experience and the challenge it needs
tain their possessions in the developing world
95 percent of the productive capacity con-
to reach its full maturity as a nation. Pan-
have come to regret it. At a minimum, we
centrated in the hands of the government.
amanians consider their geographic position,
should avoid striking a posture that is at
The world may well wonder whether the
which the Canal exploits, to be their prin-
once domineering and weak. We should de-
United States knows what it is doing in
cipal national resource. Yet, with its man-
cide in advance, as we regrettably failed to
Panama.
agement pre-empted by Americans, they are
do in Southeast Asia, how many more hu-
Options and Costs
not prepared to assume control of this re-"
man lives this real estate is worth to us,
source. A new treaty might permit their grad-
Given the alternatives governing the future
and for what period of time. Once the escala-
of the Panama Canal and the basic Ameri-
ual assumption of operational authority,
tion begins it is too late for that kind of
but Panamanians are neither determined
can objectives, there are only two operative
analysis.
nor able to take full charge in the foresee-
choices for U.S. policy: we can pursue our
PARTNERSHIP
able future.
goals in active cooperation with, or in oppo-
Alternatively, the United States could sign
D. Continued ownership and operation by
sition to, the Panamanians. Panama will not
and ratify a treaty along the lines of the
the U.S. alone. If the U.S. government de-
participate directly in that decision, but will
February 7 Principles. This approach would
cides to hold the Canal and the Zone, it can
presumably impose costs for either course.
not rule out Canal defense bases, but it
probably do so for a period of years and per-
MAINTAINING THE STATUS QUO
would assume that the U.S. will acknowledge
haps until the Canal's commercial and mill-
One option is to hold the Canal Zone while
effective Panamanian jurisdiction over the
tary asset-value declines to a negligible level.
land on which the bases would be located.
we have the capability to fortify and defend
The cost could be high and should be esti-
it against Panamanians.
Loss of American property would be a
mated in advance.
Senator Alan Cranston stated in October
direct cost. But the major disadvantage of
E. Partnership between the United States
1971 that the U.S. Armed Forces had-out of
the partnership option lies in the irretriev-
and Panama. This alternative is only feasible
40,000 officers, men, and dependents in the
able loss of absolute U.S. authority over the
if the U.S. is genuinely wiling to relinquish
Zone-only two battalions of Army combat
enterprise. More specifically:
its exclusive jurisdiction over the Canal
1. Once we relinquished our position in
troops and no high performance combat units
Zone. In the words of Ambassador Vaughn,
the Zone, the increasing Panamanian in-
from the Air Force and Navy But reinforce-
"Intransigence
can only inflame the
volvement might serve to dilute the opera-
ments are available, and CINCSOUTH pre-
tional effectiveness of the Canal.
Panamanians, for they now feel grossly
sumably learned from its experiences in Jan-1
abused" by the existence of the American
2. If efficiency declined, world shipping, in-
uary of 1964; for example:
colony.22 If the political, economic, and cul-
cluding our own, would suffer.
That the Guardia National cannot always
tural insulation of the Zone were to dis-
3. The United States, having assumed an
be relied upon to restrain attacks upon the
appear, Panama would be drawn inevitably
obligation to the maritime nations and to
Zone;
into an evolving operational partnership
world commerce, could be critized for al-
That small arms fire from the Zone into
with the United States in the Canal's sup-
lowing the Canal to deteriorate.
the Republic is not an adequate response
port, management, maintenance, defense,
even to a few snipers;`
4. Ultimately, the waterway might be
and possibly in its further development.
closed because of some failure of the Pan-
That the command had better have its
The United States has only three essential
own search-and-destroy capability in any
amanian partners, or the joint management,
objectives relating to the Panama Canal, ac-
serious future confrontation;
to perform. While the Canal is no longer a
cording to the Atlantic-Pacific Interoceanic
strategic asset against any conceivable en-
That some of the civilians in the Zone (in-
Canal Study Commission:
emy, it is still possible that its loss to the
cluding 8,000 women and 15,000 children)
1. That is always be available to the world's
United States could in some future national
could become casualties or hostages almost
vessels on an equal basis and at reasonable
emergency be significant, or even crucial.
instantly, in the absence of adequate con-
tolls;
tingency planning, security, fortification,
In a world of accelerating and violent
2. That it serve its users efficiently; and
tactical preparedness, and evacuation proce-
change accompanied by increasing uncer-
3. That the United States have unimpaired
dures.
tainty, the United States should not yield
rights to defend the Canal from any threat
Foreseeable costs of this choice could in-
military and commercial advantages without
and to keep it open in any circumstances,
clude the following:
careful analysis and commensurate incen-
peace or war.23
tive. However, if Americans have a national
An American treaty negotiator, authorized
1. Milltary expenditures and manpower
interest in protecting a distant enterprise
commitments of significant, but not burden-
to speak for the Executive Branch, subse-
that can be marginally useful in their de-
some, levels would have to be made.
quently omitted the Study Commission's sec-
fense and affects less than one percent of
ond objective on efficiency and added:
2. The United States would have to make
their GNP, the Panamanians might have
the Zone less accessible to unauthorized en-
even greater motivation to protect the Canal.
Footnotes at end of article.
try from the Republic and less vulnerable to
It is on their territory, provides almost a
8706
CONGRESSIONAL RECORD-SENATE
May 20, 1975
third of their GNP, and constitutes their
Neither of these admonitions can be disre-
haps emotional; that is to be expected
primary national resource.
garded. Likewise, we ignore at our peril the
since public transportation, health care
ACCOMMODATION WITHOUT A TREATY
public commitments of national leaders
abroad: indeed, it has been the commonest
planning, law enforcement, and taxa-
Even if the Administration persists in its
determination to achieve an accommodation
error of American foreign policy during the
tion are all issues which directly touch
with Panama, its objectives are, for the
past four decades,
the lives of every citizen. The manner
moment, thwarted by a decisive bloc in the
FOOTNOTES
in which public officials in the metro-
Senate and a potent group in the House, as
politan area respond to and discuss these
1 Cf. Lyman M. Tondel, Jr. (ed.), The
well. Also, judging by past performance, the
Panama Canal (New York: The Association
issues in public forums, however, is
JCS is probably capable of producing addi-
of the Bar of the City of New York, 1965),
equally critical. For what we say, and
tional legislative obstacles to any new treaty,
pp. 42, 43.
how we say it, may well influence the
if necessary. The Administration knows it
2 Robert G. Cox, "Questions Concerning the
attitudes and behavior that neighbor-
could not have obtained ratification of a
Panama Canal: A Preliminary Opinion" (New
ing communities will display toward each
treaty before the November 1974 elections,
York: Transnational Consulting Group,
other.
which means February or March of 1975
1973), p. 24.
Will we, out of some misguided sense
would be the earliest. Much will depend on
3Panama Canal Company, Canal Zone
President Ford and the composition of the
of parochialism, cavalierly play to a
Government, Annual Reports, 1968-1973
new Senate.
(Balboa Heights)
narrow constituency without care for
Should it become impossible to negotiate a
Senate Resolution 301, 93rd Congress, 2nd
the message we send to our neighbors?
treaty, the Administration-assuming it
Session, March 29, 1974, p. 3.
Or will be act out of a recognition that
moves fast and decisively-could head off
Report of the Atlantic-Pacific Inter-
the National Capital region is indivisible;
an immediate confrontation and buy addi-
oceanic Canal Study Commission (Washing-
that each community's major problems
tional time through direct executive action.
ton, 1970), II-11.
transcend her borders; and that the best
If the same creative energy that built the
Ibid., II-11.
long-range interests of all are served
Canal Zone were applied to dismantling it,
7 Ibid., II-20, 21.
that would probably be sufficient. For ex-
when the region as a whole lifts its sights
8 Interview; May 14, 1974.
ample, the Administration could:
9 Interview, May 10, 1974.
and goals beyond immediate considera-
1. Drastically reduce the numbers of civil-
10 Cameron, op. cit., p. 4.
tion of which community and what group
ian and military personnel stationed in the
11 Canal Study Group, op. cit., pp. II-11, 12.
within will achieve some immediate and
Zone.
12 Jack Hood Vaughn, "A Latin-American
possibly short-lived gain.
2. Bring all dependents home, except those
Vietnam," The Washington Monthly (Oct.
Mr. President, I ask unanimous con-
of civilian personnel whose permanent em-
1973), pp. 30, 31.
sent that Mr. William Raspberry's article
ployment is critical to the operation of the.
13 Interview with Senior Department of De-
entitled "Lessons From Racial Hatred"
Canal itself. (This would automatically re-
fense Policy Officer, May 10, 1974.
duce the visibility of the U.S. government
14 For summary of the State Department
be printed in the RECORD.
enterprises which Panamanians find most
position see News Release, op. cit., p. 6.
There being no objection, the article
disturbing: golf courses, theaters, commis-
15 Ibid., pp. 2, 3.
was ordered to be printed in the RECORD,
saries, post exchanges, howling alleys, swim-
16 Senate Resolution, op. cit.
as follows:
ming pools. It would also stimulate the use
17 The New York Times, May 7, 1974.
LESSONS FROM RACIAL HATRED
of privately owned Panamanian commercial
18 Subcommittee on Panama Canal, Hear-
(By William Raspberry)
and recreational establishments, bringing
ings, Serial No. 92-30 (Washington, 1972),
Americans and Panamanians into more nat-
pp. 13-16.
D.C. Del. Walter Fauntroy was participat-
ural contact with each other.)
19 The New York Times, Oct. 12, 1971.
ing in a Human Kindness Day TV post
3. Appoint a civilian Governor of the Canal
20 "The Canal Question: A Christian View,"
mortem the other day when he said some-
Zone who speaks Spanish and who is accept-
address before Carnegie Endowment for In-
thing that has occurred to a lot of us.
able to Panama, and give him authority over
ternational Peace, April 16, 1974.
It's time to move beyond the particulars
CINCSOUTH, except during a military emer-
21 The New York Times, Oct. 19, 1971.
of that day, he told a "Nine in the Morning"
gency.
23 Cf. Vaughn, op. cit., p. 32.
(WTOP) audience, and to start asking our-
4. Make Spanish a second official language
23 Canal Study Commission, op. cit., pp.
selves why our children are so full of race
of the Zone for one year, and the only official
8, 9.
hatred.
language thereafter.
24 Hearings, Serial No. 92-30, op. cit., p. 5.
It's a fair question, and I'm afraid that
5. Require that (a) all U.S. military and
25 The New York Times, Oct. 19, 1971.
part of the answer is that they learned race
clvilian personnel study Spanish under Pan-
hatred from us-from black adults, mili-
amanian instructors, and (b) all personnel
tant and moderate alike, who tried hard to
whose assignment to the Zone is for two
LESSONS FROM RACIAL HATRED
teach one lesson and inadvertently taught
another.
years or more attain a working knowledge of
Mr. MATHIAS. Mr. President, every
What we tried to impart was some under-
the language within one year.
Ambassador Robert Anderson who headed
now and then, some event occurs which
standing of the pervasiveness of racism in
the U.S. negotiating team from 1964 to 1973
is so portentous in nature that our in-
America. It was our feeling that it was
acknowledged to his State Department col-
terest and concern become aroused be-
necessary that our children learn the bitter
leagues that he had a recurring "nightmare"
yond the ordinary level at which we treat
truth about racism in order that they might
learn to deal with it.
of collapsed talks, shattered expectations, ex-
daily affairs. Human Kindness Day may
Some of them learned the lesson, all
ploding emotions, and the Zone under siege.
well represent one such event.
The proposed course of action might avoid
right. Others got only a piece of it and con-
Washington Post Columnist, William
cluded that if white racism is bad, then
that kind of deterioration, provided the Ad-
Raspberry, has taken a look at what hap-
white people must be bad. And anyone who
ministration maintained credible efforts to
conclude a treaty at the earliest date.
pened on the Washington Monument
had trouble distinguishing between white
Insofar as Panama is concerned, the Com-
grounds two Saturdays ago. His com-
racism and white people might be led to
mission on United States-Latin American Re-
suppose that the way to fight the former is
ments, which appeared in the Washing-
lations came into being at a fortuitous mo-
by attacking the latter.
ton Post's May 19 edition, should be
ment. With the observations outlined here,
The need always was for two forums, one
carefully read and reflected upon by all.
and the additional evidence which will
of addressing whites, the other tuned to
One point he made "That what you say
blacks.
doubtless be presented by interested parties,
the Commission should be able to weigh the
to one is heard by all. And some do not
That way we could have taken a phe-
nomenon like the 1960s riots and told white
alternatives, and reach a sound position on
always hear it right," struck home with
people-quite truthfully, by the way:
this urgent issue of foreign policy.
me. It might do well for all public of-
This is the result of racism. This the price
Senator Thurmond holds that "there is no
ficials, especially those in the metro-
you pay for the continued denial of oppor-
way that any treaty can adequately protect
politan Washington area to be guided
tunity. This is what you get when you per-
and defend our interests in operating the
by those words.
mit a selected handful of black people to
Canal when it has as its basis the abrogation
of sovereignty."
In the coming months, each juris-
enter the American mainstream but leave
the rest behind in the interest of main-
Ambassador Vaughn considers Panama "a
diction within the National Capital
Latin American Vietnam." He finds that
taining white supremacy.
region will be presented with several
through the collaboration of Congressional
We might have sent the children out of
major decisions affecting the metropoli-
and military supporters of the Canal Zone,
the room while we were delivering that mes-
tan area. What is decided by one local
"Presidents' orders have been reversed, dip-
sage, recalling them to hear this one:
lomatic maneuvers and decisions brushed
government, therefore, will have a bear-
You see what's happening in the streets?
aside, and the United Nations told to go to
ing on most, if not all of the others.
That is the result of frustration spawned
hell." And he concludes, "The tinder awaits
Without question, the issues contained
by denial of opportunity. But look more
the spark."
in each decision will be thorny and per-
closely, and you'll see that while it registers
()
THE LIBRARY OF CONGRESS
Congressional Research Service
Vo: nh Jack Marrh
as requested back.
ground information on
the Canama Caual.
D Backs- CRD
426-6331
The attached information is forwarded in
response to your recent inquiry. We hope it
meets your needs in this matter.
Please do not hesitate to call on us for
further assistance.
Sincerely,
Nórman Beckman
Acting Director
5 55b (rev 10/75)
JX 1428 L.A. Panama
LIBRARY OF CONGRESS
LEGISLATIVE REFERENCE SERVICE
REPORT ON UNITED STATES
RELATIONS WITH PANAMA
by the
Subcommittee on Inter-American Affairs
of the
Committee on Foreign Affairs
U. S. House of Representatives
Eighty-Sixth Congress
Second Session
pursuant to
H.RES. 113
A Resolution Authorizing the Committee on Foreign Affairs
To Conduct Thorough Studies and Investigations of
All Matters Coming Within the Jurisdiction of Such Committee
Reproduced by the Library of Congress, Congressional Research
Service, October 1, 1975.
-1-
LETTER OF TRANSMITTAL
FOREWORD
AUGUST 31, 1960.
HOUSE OF REPRESENTATIVES,
Hon. THOMAS E. MORGAN,
COMMITTEE ON FOREIGN AFFAIRS,
Chairman, Committee on Foreign Affairs,
Washington, D.C., August 31, 1960.
House of Representatives, Washington, D.C.
This report has been submitted to the Committee on Foreign Affairs
DEAR MR. CHAIRMAN: There is transmitted herewith the report
by the Subcommittee on Inter-American Affairs, comprising Hon.
of the Subcommittee on Inter-An.erican Affairs on "U.S. Relations
Armistead I. Selden, Jr., chairman, Hon. Barratt O'Hara, Hon.
With Panama." The historical data contained in this report was
Dante B. Fascell, Hon. Omar Burleson, Hon. Donald L. Jackson,
prepared under my direction by Rosita Rieck Bennett, analyst in
and Hon. Chester E. Merrow.
Latin American affairs of the Legislative Reference Service of the
The conclusions in this report do not necessarily reflect the views
Library of Congress. The findings and recommendations are those
of all the membership of the Committee on Foreign Affairs. This
of the subcommittee and are based not only on the report, but on
report is filed in the hope that it will prove useful to the committee
hearings, discussions, and study conducted by the subcommittee
and to the Congress as background data.
during the present session of Congress.
THOMAS E. MORGAN, Chairman.
It is hoped that the information contained in this report will be
useful to the members of the committee and to the Congress as
III
background information on matters affecting United States-Panama
relations.
ARMISTEAD I. SELDEN, Jr.,
Chairman, Subcommittee on Inter-American Affairs.
V
-2-
-
CONTENTS
Page
Foreword
III
I. Preface
1
PANAMA
Elevation- 2,000 ft. and Over
COLOMBIA
Letter of transmittal
V
Mañana
II. Background history
3
A. U.S. interest in interoceanic canal takes root
3
Joqué
B. Rivalry with Great Britain (Clayton-Bulwer Treaty)
3
100
C. U.S. interest dims
4
D. New awareness of the strategic value of a canal
4
Islands
E. The legal obstacle is cleared (Hay-Pauncefote Treaty)
5
F. The battle for the canal route
6
G. Colombia's dilemma
6
anama
H. The Hay-Herrán Treaty
7
I. Colombian Senate turns down treaty
8
J. Panama revolts
Panama
50
MILES
9
Pearl
K. Colombia is indemnified
9
L. Hay-Bunau-Varilla Treaty
10
Gulf_of_Panama
25
M. The canal is opened
11
N. The Nicaraguan route
11
III. Importance of the Panama Canal to the United States
12
Sea
Portobelo
12
Colón
A. Commercial importance
B. Strategic importance
12
IV. Importance of the Panama Canal to the Republic of Panama
13
V. U.S. contributions to Panama's development
15
CANAL ZONE
VI. Current points of friction between Panama and the United States
16
A. Sovereignty in the Canal Zone
16
B. Commissaries
22
C. Third-country purchases
26
D. Wage and employment opportunities in the zone
28
E. The annuity
30
Cebaco
VII. Comparison of the legal status of the Suez and Panama Canals
32
A. Suez Canal basic agreements
32
B. Legal status of the Panama Canal
32
Coiba
VIII. Alternatives to U.S. control
33
A. Internationalization of the canal
33
B. Organization of American States control
35
C. Purchase from Panama
36
D. Other suggestions
36
IX. Subcommittee findings and recommendations
37
Bocos
Appendix:
A. Convention for the construction of a Ship Canal, 1903
41
David
B. General Treaty of Friendship and Cooperation between the United
Panama
Conal
Balboa
States of America and Panama, 1936
49
Amuelles
Boy of Panama
C. Treaty of Mutual Understanding and Cooperation, United States
CANAL ZONE
of America and Panama, 1955
59
D. Comparison of the rights and obligations of the United States under
the terms of the three basic treaties with Panama
72
E. Public Law 85-550, July 25, 1958, United States-Panama Wage
and Employment Practices Act
80
F. Press release on 9-point program for improvement of relations be-
GOSTA
RICA
tween the United States and Panama, April 19, 1960
88
Pacific
Colón,
MILES
VII
Caribbeen
VIII
-3-
UNITED STATES-PANAMA RELATIONS
and an inviting target for nationalist outbursts. Meanwhile, inter-
86TH CONGRESS
HOUSE OF REPRESENTATIVES
REPORT
national communism plays on Panamanian nationalism and frustra-
2d Session
No. 2218
tions to subvert inter-American relations. The Egyptian seizure of
the Suez Canal and the rise of Castroism in Cuba also exacerbate
Panamanian problems.
During the congressional recess in the autumn of 1959 a numberof
disquieting events occurred on the Isthmus of Panama. On Novem-
ber 3, 1959, Panama's independence day, mobs led by rabble rousers
gathered along the border of the Canal Zone intent upon planting the
REPORT ON UNITED STATES RELATIONS WITH PANAMA
Panamanian flag within the zone. With Panamanian National
Guardsmen conspicuously absent from the scene, the Governor of
the Canal Zone was forced to call for U.S. Armed Forces to help quell
the ensuing violence. In the Republic of Panama on the same day
AUGUST 31, 1960.-Committed to the Committee of the Whole House on the State
rioters lowered the American flag at the U.S. chancery and tore it to
of the Union and ordered to be printed
shreds. They also shattered windows at the chancery and the U.S.
Information Agency building.
On November 28, the anniversary of Panama's break with Spain,
mobs again tried to gain entry to the Canal Zone. This time they
Mr. MORGAN, from the Committee on Foreign Affairs, submitted the
were dispersed by Panama Guardsmen working alongside U.S. troops,
following
but not before at least 30 persons were injured. During this second
attempt to forcibly enter the Canal Zone, the presence of Cuban
REPORT
agitators urging on the crowd was noted. After 3 hours of rioting
at the zone border, the mobs turned to looting and destroying
property several blocks away in downtown Panama City.
[Pursuant to a resolution (H. Res. 113) authorizing the Committee on Foreign
When Congress reconvened in January, the Committee on Foreign
Affairs to conduct a full and complete investigation of matters relating to the
Affairs learned that the Department of State had under consideration
laws, regulations, directives, and policies including personnel pertaining to the
Department of State and such other departments and agencies engaged pri-
a request from the Republic of Panama (dated November 25, 1959)
marily in the implementation of U.S. foreign policy and the oversea operations,
that the Panamanian flag be flown in the Canal Zone. When it
personnel, and facilities of departments and agencies of the United States
appeared likely that permission might be granted, the chairman of the
which participate in the development and execution of such policy]
Subcommittee on Inter-American Affairs (Mr. Selden) requested the
I. PREFACE
Secretary of State to delay a decision until after the subcommittee had
an opportunity to study the matter.
The Panama Canal, built and operated by the United States, slices
Subsequently, the subcommittee held eight meetings on the subject,
the Republic of Panama in half. Relations between the United States
during which testimony was received from Members of Congress,
and Panama are thus unique and intimate.
representatives of the Departments of State and Defense, and private
From the outset of Panama's independence and the construction of
citizens.¹
the canal (which practically coincide), the two nations have held
Out of these meetings grew a conviction that to accede to the
varying views regarding the canal. The Republic of Panama has
Panamanian request, after more than half a century in which only the
regarded the canal as a source of revenue. The U.S. objective has
U.S. flag has been raised in the zone, would constitute a major de-
been the efficient operation of the waterway for international com-
parture from established policy. In the subcommittee's judgment,
merce at reasonable rates and for defense purposes.
such a basic change in treaty interpretation should not be accom-
Even without this basic difference in viewpoint, it is probably
plished through executive fiat.
inevitable that the operation of so vast an enterprise side by side with
Accordingly, on January 19, 1960, the subcommittee unanimously
a small, poor country should give rise to misunderstandings and irrita-
agreed to the following resolution (H. Con. Res. 459):
tions on both sides. Throughout the last 57 years accommodations
Resolved by the House of Representatives (the Senate con-
have been made to alleviate grievances and to adjust to new circum-
curring), That it is the sense of the Congress that any
stances.
variation in the traditional interpretation of the treaties of
In recent years several international developments have complicated
1903, 1936, and 1955 between the United States and the
the delicate task of maintaining harmonious relations on the isthmus.
Republic of Panama, with special reference to matters con-
As elsewhere in underdeveloped regions, Panama is swept by na-
cerning territorial sovereignty, shall be made only pursuant
tionalism and by outcries for an end to subhuman living conditions.
to treaty.
The canal presents at once the illusion of a cornucopia from which
1 See: United States Relations with Panama," hearings before the Subcommittee on Inter-American
could pour forth an avalanche of funds for development purposes
Affairs of the Committee on Foreign Affairs, House of Representatives, 86th Cong., 2d sees.
-4-
UNITED STATES-PANAMA RELATIONS
UNITED STATES-PANAMA RELATIONS
The full Committee on Foreign Affairs reported the resolution
over Texas, Britain proceeded to extend its hegemony in Nicaragua
favorably on January 21, 1960. On February 2 the House of Repre-
to prevent the United States from gaining exclusive rights over both
sentatives voted 381 to 12 in support of the resolution.
canal routes.
As a result of its deliberations regarding the issue of the flag, the
The two powers checkmated each other in the Clayton-Bulwer
subcommittee felt a growing concern over the apparent deterioration
Treaty of 1850. By that treaty they pledged never to obtain or
in U.S. relations with the Republic of Panama. In consequence, the
maintain exclusive control over a ship canal, or to fortify it, or to
subcommittee undertook to prepare a background study of United
assume or exercise dominion over any territory in Central America
States-Panamanian relations. It is hoped that this report can help
through which a canal might pass. The Clayton-Bulwer Treaty,
to clarify the frequently complex issues involved and provide a basis
while it did limit the United States from obtaining exclusive control
for evaluating current problems and proposed solutions.
over a possible canal, forced Great Britain to relinquish the territorial
control which it in fact possessed in 1850 over the Nicaraguan route.
II. BACKGROUND HISTORY
C. U.S. INTEREST DIMS
A. U.S. INTEREST IN INTEROCEANIC CANAL TAKES ROOT
The same year as the Clayton-Bulwer Treaty, private American
For centuries the Isthmus of Panama astride the Atlantic and
interests began the construction of a transisthmian railroad. The
Pacific Oceans has been a crossroads of international passenger and
railroad was completed in 1855. In ensuing years during periods of
cargo routes. During the colonial period Spanish galleons called
insurgent movements on the isthmus against the Colombian Govern-
regularly to pick up treasures extracted from Spain's colonies on the
ment, on request of or with the consent of the Colombian Government,
western coast of South America. Spain's decision in 1814 to build
the United States landed troops to keep transit open.
a canal across the isthmus came to nothing since it coincided with the
Following the opening of railroad transportation across the isthmus,
collapse of that nation's imperial power.
U.S. interest in a waterway subsided. The joining of the Union Pacific
Early U.S. interest in an interoceanic highway appears to have
and Central Pacific Railroads in 1869, linking the Atlantic and Pacific
been primarily commercial. In 1826 Secretary of State Hay pro-
Oceans across continental United States, further dulled interest in an
posed a joint enterprise to the newly independent South American
interoceanic canal.
nations meeting at the Congress of Panama, saying:
What is to redound to the advantage of all America
D. NEW AWARENESS OF THE STRATEGIC VALUE OF CANAL
should be effected by common means and united exertions,
and should not be left to the separate and unassisted efforts
In 1878 a new consideration quickened U.S. interest in a Western
of any one power.
The benefits of it ought not to be
Hemisphere canal. In that year a French company, which included
exclusively appropriated to any one nation * * * 2
Ferdinand de Lesseps of Suez fame, procured a concession from
Colombia to build a navigable waterway across the isthmus. Despite
A Senate resolution in 1835 and a House resolution in 1839 urged
the fact that the French company pledged that the canal should
the President to negotiate with other nations for the construction
"always be kept free from political influence," Secretary of State
of a canal and for securing free and equal right to navigation to all
Evarts protested:
nations. Toward mid-19th century the discovery of gold in Cali-
fornia, western migration, and the country's growing economy which
Our Pacific coast is so situated that, with our railroad
sought raw materials and markets gave impetus to the idea of an
connections, time (in case of war) would always be allowed
isthmian canal.
to prepare for its defense. But with a canal through the
In 1846 the United States assured its right of passage across
isthmus the same advantage would be given to a hostile fleet
the Isthmus of Panama in a treaty with New Granada (Colombia).
which would be given to friendly commerce; its line of opera-
The pact guaranteed to the United States the right of way or transit
tions and the time in which warlike demonstration could be
across the Isthmus of Panama upon any modes of communication
made, would be enormously shortened. All the treaties of
that now exist or that may be hereafter constructed." In return the
neutrality in the world might fail to be a safeguard in a time
United States guaranteed the neutrality of the isthmus and the rights
of great conflict."
of sovereignty and property which New Granada possessed over the
In 1881 President Arthur tried to extricate the United States from
territory.
the limitations imposed by the Clayton-Bulwer Treaty (see above), but
B. RIVALRY WITH GREAT BRITAIN
Great Britian refused to negotiate a revision. Meanwhile, the French
company went ahead.
In the meantime, Britain entered into an intense rivalry with the
At the height of French operations in 1887, a group of American
United States over control of the other feasible canal route, through
capitalists began a rival project through Nicaragua. In 1889 Con-
Nicaragua. While the United States engaged in war with Mexico
3 Evarts to Dickman (Minister to Colombia), dated Apr. 19, 1880. In J. B. Moore, "Digest of Interna-
3 Norman J. Padelford, "The Panama Canal in Peace and War." The Macmillan Co., New York,
tional Law." GPO, Washington, 1906, vol. III, p. 15.
1942, p.4.
-5-
UNITED STATES-PANAMA RELATIONS
UNITED STATES-PANAMA RELATIONS
gress incorporated that enterprise as the Maritime Canal Company
F. THE BATTLE FOR THE CANAL ROUTE
of Nicaragua.
That same year the French enterprise collapsed, defeated by graft,
The question of where to build a canal became a hotly contested
corruption, and a series of tropical diseases that felled 20,000 in a
issue. Colombians and Nicaraguans hoped the canal would open their
total labor force which averaged only 10,000 a year. Some $260
countries to prosperous international commerce. Public sentiment in
million had been disbursed in the undertaking. According to Ameri-
the United States overwhelmingly favored the Nicaraguan route. In
can engineers, only $40 million of this was expended for concessions
the popular view, Panama was associated with the French company
and work on the canal, the rest being graft.
while Nicaragua was viewed as a "national project." The New
Three years later the Maritime Canal Company of Nicaragua also
Panama Canal Co., organized in 1894 for the purpose of selling the
went bankrupt, having exhausted its paid-in capital of $6 million
assets of the French venture to the highest bidder, engaged in powerful
after laying several miles of railroad track and making a small start
and sometimes devious lobbying activities to convince U.S. legislators
on excavation. But for its misfortune that the need for new financing
and the public to buy up their investment.
arose at the same time as the panic of 1893, the company might have
The Walker Commission was appointed in 1897 to study the canal
been able to raise enough capital to keep the venture going."
situation. Although many of its technical conclusions were favorable
World events toward the close of the 19th century heightened
to Panama, it recommended in 1899 the Nicaraguan route as the most
American awareness of the strategic value of a canal under U.S. au-
feasible because of the unwillingness of the French interests to state
spices. The 90-day race of the U.S. cruiser Oregon around the tip
definite terms of sale.
of South America from the Pacific to the Atlantic battlefield during
Enthusiasts for the Panama route reaped their first success with
the Spanish-American War in 1898 dramatized the military advan-
the passage of a law in 1899 which directed the President to name a
tage of an interoceanic canal. Moreover, the United States emerged
commission to examine all practical routes, thus hamstringing the
from the war as a naval power, with Pacific possessions.
passage of Nicaraguan canal bills then pending in Congress.
President McKinley in his message to Congress in 1898 stated the
As the battle waged over which route, the Department of State in
new conviction:
1900 prepared for any eventuality by signing protocols with Costa
Rica and Nicaragua by which they agreed to negotiate treaties with
That the construction of such a maritime highway is now
the United States for a canal when the President was authorized by
more than ever indispensable to that intimate and ready
Congress to acquire a route through their territories.
intercommunication between our eastern and western sea-
Colombia, alarmed at the prospect of not being selected as the site
boards demanded by the annexation of the Hawaiian Is-
for the international waterway, dispatched a minister to Washington
lands and the prospective expansion of our influence and
to negotiate a treaty with the United States.
commerce in the Pacific, and that our national policy now
The Walker Commission, in its final report in November of 1901,
more imperatively than ever calls for its control by this
again recommended the Nicaraguan route. The New Panama Canal
Government, are propositions which I doubt not the Con-
Co., fearful that the patience of Congress might be exhausted, in
gress will duly appreciate and wisely act upon.6
January of 1902 wired an offer to sell its property for $40 million, the
amount which the Walker Commission deemed appropriate. Two
E. THE LEGAL OBSTACLE IS CLEARED (HAY-PAUNCEFOTE TREATY)
weeks later, the Walker Commission issued a supplementary report
The crescendo of opinion in the United States favoring construction
recommending the Panama route due to the changed circumstances.
In the interim, the House of Representatives had voted the Nicara-
of a canal under the exclusive jurisdiction of the United States led
Secretary of State Olney to approach the British again in 1896 about
gua route (Hepburn bill) by the crushing majority of 309 to 2. Sen-
timent in the Senate favored Panama. A compromise was worked out
removing the obstacle imposed by the Clayton-Bulwer Treaty. At
first reluctant, Britain, involved in the Boer War in Africa and faced
(Spooner Act) by which the President was authorized to acquire the
with unfriendly nations in Europe, decided to acquiesce.
assets of the New Panama Canal Co. for $40 million, a strip of land
from Colombia not less than 6 miles in width in which to construct
The resulting Treaty To Facilitate the Construction of a Ship Canal
(Hay-Pauncefote Treaty) of 1901 abrogated the limitations imposed
and operate the canal, and additional territory and rights which in his
by the prior agreement and provided that a ship canal may "be con-
judgment would facilitate the general purposes; if these terms could
structed under the auspices of the Government of the United States,
not be fulfilled within a reasonable time, the President was directed
directly or indirectly," and that the United States "shall have and
to proceed with steps to build the Nicaragua canal. Congress enacted
enjoy all the rights incident to such construction, as well as the
the Spooner Act on June 2, 1902.
exclusive right of providing for the regulation and management of the
canal."
G. COLOMBIA'S DILEMMA
4 Hugh Gordon Miller, "The Isthmian Highway." New York, the Macmilian Co., 1929, p. 10.
While the battle of the routes went on in Washington, Colombia
$ Dwight Carroll Miner, The Fight for the Panama Route." New York, Columbia University Press,
1940, p. 25,
was in the midst of civil war. The Government was beset by adminis-
6 Quoted in Padelford, op. cit., p. 18.
trative disorganization and a desperate financial situation. With the
country in a state of siege, the executive ruled by decree.
-6-
UNITED STATES-PANAMA RELATIONS
UNITED STATES-PANAMA RELATIONS
The Colombian Government sorely wished to postpone definitive
recognized Colombia's sovereignty over the canal zone (art. IV): estab-
consideration of the canal problem until the country could be pacified
lished three types of judicial tribunals-Colombian, United States,
and Congress reconvened. But bills pending in the U.S. Congress
and joint (art. XIII); charged Colombia with the defense of the canal
authorizing construction in Nicaragua pressed the Colombians into
and railroad, except "under exceptional circumstances" when—
foregoing further delay.
the Government of the United States is authorized to act in
Colombians seem to have desired very much the canal with its
the interest of their protection, without the necessity of ob-
accompanying economic benefits which could help the recovery of
taining consent beforehand of the Government of Colombia
their war-torn country and bankrupt treasury. Moreover, in the
(art. XXIII).
background hovered the threat that Colombia might forfeit not only
the canal but the isthmus itself should treaty negotiations with the
In November 1902 civil war in Colombia ended. President Theo-
United States fail. Carlos Martínez Silva, Colombia's negotiator |in
dore Roosevelt became impatient with further delay regarding the
the United States in 1901, wrote in that vein to José Manuel Mar-
canal. On January 21, 1903, Secretary of State Hay delivered the
roquín, Vice President and head of the Colombian Government during
following ultimatum to Minister Herrán:
the period of civil disorders:
I am commanded by the President to inform you that the
*** the Panamanians of position and financial resources
reasonable time provided in the statute for the conclusion
will never willingly submit to the opening of the canal in
of the negotiations with Colombia for the excavation of an
any other place than at the isthmus. They understand very
isthmian canal has expired, and he has authorized me to
well that the adoption of the Nicaragua route will be the
sign the treaty of which I had the honor to give you a draft,
moral and material ruin of Panama; and this sacrifice, which
with the modification that the sum of $100,000, fixed therein
will have no compensations, may very well prove superior to
as the annual payment, be increased to $250,000. I am not
the concept of a platonic patriotism.
authorized to consider or discuss any other change.
During the negotiations with the United States, Marroquín's ad-
The following day the treaty was signed in Washington. The U.S.
ministration was so harassed by domestic crisis that Colombia's min-
Senate approved it on March 17, 1903.
isters in Washington frequently went ahead on their own initiative
under pressure of events. Marroquín stated his dilemma in a letter
I. COLOMBIAN SENATE TURNS DOWN TREATY
dated July 26, 1902:
In March 1903 congressional elections were held in Colombia. In
Concerning the canal question, I find myself in a horrible
May, Marroquín called a special session of congress for June 20.
perplexity; in order that the North Americans may complete
During the 5 months between the time the treaty was signed and
the work by virtue of a convention with the Government of
the Colombian Senate convened, Colombian newspapers carried
Colombia, it is necessary to make concessions of territory, of
numerous articles regarding the treaty by the foremost legal minds
sovereignty, and of jurisdiction, which the executive power
in a country renowned for its legal talent. Four major objections
has not the power of yielding
emerged in these polemics: the loss of sovereignty involved; the
History will say of me that I ruined the isthmus and all
doubtful constitutionality of the grant of perpetual jurisdiction to a
Colombia, by not permitting the opening of the Panama
foreign power; dissatisfaction with the financial compensation; and
Canal, or that I permitted it to be done, scandalously injur-
mistrust of imperialism. Colombian public opinion became aware
ing the rights of my country.8
of the vast distinction between granting a canal concession to a foreign
Marroquín reiterated officially on a number of occasions that any
private concern and leasing a strip of territory in perpetuity to a
canal agreement was subject to ratification by the Colombian Con-
foreign government.
gress.
In the debate in the Colombian Senate, the Foreign Minister
H. THE HAY-HERRÁN TREATY
pointed out that the United States was the only agency willing and
able to undertake the gigantic task of uniting the oceans and that
The draft agreement, as finally worked out by Secretary of State
the U.S. Government had been most explicit in insisting that it would
Hay and Colombia's current negotiator, Tomás Herrán, included the
not assume the cost and responsibility without control over the
following principal terms: Granted the United States a 100-year lease,
zone.¹⁰ In his judgment, the only alternative to rejecting the Hay-
renewable at the sole option of the United States, on a zone of land
Herrán treaty was no canal.
10 kilometers wide across the isthmus for an initial payment of $10
On August 12, the Colombian Senate unanimously rejected the
million and an annuity of $250,000 (arts. II and XXV); granted the
convention. The legislature took no further action before its ad-
United States exclusive right to construct, maintain, operate, and
journment on October 31, 1903.
protect the canal (art. II); authorized the New Panama Canal Com-
# lbid., p. 195.
pany to sell its rights and properties to the United States (art. I);
10 Ibid., p. 325.
7 Miner, op. cit., p. 217.
0 Ibid., p. 233.
-7-
UNITED STATES-PANAMA RELATIONS
UNITED STATES-PANAMA RELATIONS
L. HAY-BUNAU-VARILLA TREATY
J. PANAMA REVOLTS
A treaty with the newly independent Republic of Panama was
Panamanians had never felt a strong attachment for the rest of the
negotiated in Washington by Secretary Hay and Philippe Bunau-
country. Isolated from the capital and centers of population by soar-
Varilla, former chief engineer of the French company. Bunau-Varilla
ing mountains, the Isthmus of Panama had been left largely to its
had insisted on his appointment as diplomatic agent in exchange for
own resources. In the preceding three-quarters of a century since
his services to the Panamanian conspirators. The provisional govern-
independence from Spain, Panamanian discontent had erupted on a
ment of Panama also appointed two Panamanian ministers to conduct
number of occasions into attempts to establish an independent state.
negotiations with the United States. A letter of instructions which
Isthmian delegates to the special session of Congress were out-
they carried to Bunau-Varilla read:
spoken in warning that failure to ratify the treaty would mean
rebellion on the isthmus.¹¹
You will have to adjust a treaty for the canal construction
While the Colombian Senate debated, prominent Panamanians met
by the United States. But all the clauses of this treaty will
to plot a course of action should the treaty be rejected. The con-
be discussed previously with the delegates of the junta, MM.
spirators were aided and abetted by agents of the New Panama
Amador and Boyd. And you will proceed in everything
Canal Company who were intent on securing the promised $40 million
strictly in accord with them
from the United States.
On November 18, 1903, before Messrs. Amador and Boyd arrived
President Roosevelt and Secretary of State Hay knew that a revolt
in Washington, Bunau-Varilla and Secretary Hay signed the con-
was imminent. Roosevelt, convinced that the Colombian Govern-
vention for the construction of a ship canal to connect the waters of
ment was thwarting an enterprise of "universal utility" for "collective
the Atlantic and Pacific Oceans. The treaty was ratified by the
humanity" out of pure greed, welcomed the move. Assurances were
provisional government of Panama on December 2, 1903.
conveyed to the conspirators that the United States would send war
Terms of the Hay-Banau-Varilla pact were substantially the same
vessels "to protect life and property" on the isthmus 12
as those of the rejected Hay-Herran agreement. One change en-
When Panamanians raised the standard of independence on No-
larged the area: the United States was empowered to construct a
vember 3, 1903, the railroad was closed to Colombian troop move-
canal through a zone 10 miles in width (as compared with 6 miles in
ments and naval forces from the United States were on hand to prevent
the earlier treaty). Panama agreed that the United States should
more Colombian troops from landing. The coup was accomplished
have the right at all times to use its armed forces in defense of the
with only one casualty, an innocent Chinese who was killed during a
canal and its auxiliary works. The most significant modification
brief bombardment."
occurs in article III:
The United States recognized the Republic of Panama on Novem-
ber 6.
The Republic of Panama grants to the United States
all the rights, power, and authority within the zone mentioned
K. COLOMBIA IS INDEMNIFIED
and described in article II of this agreement and within the
Under the Wilson administration an attempt was made toward
limits of all auxiliary lands and waters mentioned and
repairing the damaged relations with Colombia which resulted from
described in said article II which the United States would
the isthmian affair. By the terms of the Thompson-Urrutia conven-
possess and exercise if it were the sovereign of the territory
tion, signed in April 1914, the U.S. Government expressed-
within which such lands and waters are located to the entire
exclusion of the exercise by the Republic of Panama of
sincere regret that anything should have occurred to inter-
any such sovereign rights, power, or authority.
rupt or to mar the relations of cordial friendship that had
so long subsisted between the two nations.
Secretary Hay, fearing that opponents of the Roosevelt administra-
tion in the Senate might introduce amendments to the treaty and thus
Colombia agreed to recognize the Republic of Panama in return for an
afford Panama an excuse to do likewise, wrote as follows to Senator
indemnity of $25 million and special transportation privileges. The
Spooner on January 20, 1904:
Colombian Senate promptly ratified the treaty. The U.S. Senate
failed to act, mainly because of spirited denunciations of the agree-
As it stands now as soon as the Senate votes we shall have a
ment by former President Roosevelt whose conduct the treaty
treaty in the main very satisfactory, vastly advantageous to
obliquely indicted.
the United States, and we must confess, with what face we
In 1921, after Roosevelt's death, the U.S. Senate ratified an amended
can muster, not so advantageous to Panama. If we amend
form of the treaty which retained the indemnity but omitted the
the treaty and send it back there some time next month, the
apology. The following year Colombia accepted the compromise and
period of enthusiastic unanimity, which, as I said to Cullom,
the Panamanian incident was closed.
comes only once in the life of a revolution, will have passed
away, and they will have entered on the new field of politics
11 Padeliord, op. cit., p. 12.
18 Miner, op. cit., p. 359-370, 387-388.
and dispute. You and I know too well how many points there
12 Ibid.
are in this treaty to which a Panaman patriot could object.
14 Miner, op. cit., p. 375.
-8-
UNITED STATES-PANAMA RELATIONS
UNITED STATES-PANAMA RELATIONS
If it is again submitted to their consideration they will at-
III. IMPORTANCE OF THE PANAMA CANAL TO THE UNITED STATES
tempt to amend it in many places, no man can say with what
A. COMMERCIAL IMPORTANCE
result, then they will feel that we had passed definitely upon
the main subject; that the treaty was safe; that their inde-
Approximately 70 percent of the total commercial cargo which
pendence was achieved, and that now it was time for them to
transited the Panania Canal in fiscal year 1959 originated in or was
look out for a better bargain than they were able to make at
destined for U.S. ports. 20 Thus, financial savings in both intercoastal
first.18
and foreign trade because of the Panama shortcut represent reduced
The U.S. Senate consented to the treaty without amendment on
costs to U.S. consumers.
February 23, 1904. It was proclaimed by President Roosevelt
The canal itself is not regarded in the United States as a source of
3 days later.
revenue. The Panama Canal Company is required by law to be
M. THE CANAL IS OPENED
self-sustaining, not a profitable enterprise. Gross receipts from the
Panama Canal Company amounted to over $87 million in fiscal year
The engineering and medical conquests which made possible
1959. Net revenue, however, was under $3 million. Furthermore,
construction of the Panama Canal in the midst of once pestilential
this amount would be cut in half if the full $1.93 million annuity to
tropical jungle are a matter of great pride to all those who participated
Panama were assessed against the company, instead of $1.5 million
and to millions of Americans who have come to admire their courage
being paid from appropriated funds.
and abilities.
The canal was opened to navigation in August 1914. However,
B. STRATEGIC IMPORTANCE OF THE CANAL
a slide in October of that year delayed formal completion and opening
to regular traffic until July 1920. Total cost of construction amounted
The Panama Canal has proved to be an invaluable asset to the
to $366,650,000.
United States and its allies in time of crisis. During World War I
N. THE NICARAGUAN ROUTE
the canal served as a supply line to fighting forces in Europe. During
World War II more than 5,300 combat vessels and about 8,500 other
Although advocates of the Nicaragua route were defeated by the
craft transporting troops and military cargo transited the canal,
selection of Panama as the canal site, the possibility of a canal through
with incalculable savings to the Allied nations in terms of time, money
Nicaraguan territory has not been abandoned.
and lives. The strategic value of the shortened canal route was
In 1914 the United States signed a convention with Nicaragua
again demonstrated during the Korean conflict. In fiscal year 1953,
(Bryan-Chamorro Treaty) which conferred upon the United States
the last full year of the Korean conflict, 1,064 U.S. Government
exclusive rights to construct, operate, maintain and defend an inter-
vessels transited the canal carrying supplies and war materials to the
oceanic canal by a Nicaraguan route in exchange for $3 million.
United Nations forces in the Far East.
The Bryan-Chamorro Treaty was ratified by the U.S. Senate in
In peacetime, too, the Panama Canal plays an important role in
1916, more with the objective of preventing the construction of another
national welfare and defense. The strength of the United States,
canal than for the purpose of building one.¹⁶ In the ensuing years,
which rests in large measure upon the nation's economic well-being,
however, as increased commercial traffic has taxed the facilities of the
depends in turn upon the availability of vital raw materials for
Panama Canal and modern military developments have cast doubt on
transportation and industry. Moreover, when the Suez Canal was
the ability to defend it, the idea of a Nicaragua canal has occasionally
suddenly closed to traffic several years ago, effective operation of the
been revived.
Panama Canal did much to prevent serious disruption of the
The feasibility of constructing a canal in Nicaragua was explored
economies and defense capabilities of the nations of the free world.
recently by the Board of Consultants contracted by the Committee
It is argued in some quarters that modern technological develop-
on Merchant Marine and Fisheries. In its report issued on June 23,
ments have substantially depreciated the canal's strategic significance.
1960, the Board of Consultants recommended against a Nicaraguan
It is pointed out that the canal is increasingly vulnerable to sabotage
canal.¹⁷ The Board based its conclusions on engineering and fiscal
and long-range missiles; that the growth of continental means of
grounds. The construction of the sea-level canal in Nicaragua was
transportation, such as high-speed highways, air transport, and con-
eliminated completely from the Board's considerations because of
tinental pipelines for transporting oil, greatly diminish dependence on
excessive cost and because it would involve drainage of Lake Nicaragua
the canal; and that major U.S. aircraft carriers are now too big to
or Lake Managua which would seriously affect the economy of the
pass through it.
country.¹ The Board estimated the cost to construct a Nicaraguan
Adm. James S. Russell, Vice Chief of Naval Operations, in testi-
lock-canal at over $4 billion.19
mony before the Subcommittee on Inter-American Affairs, stated the
18 Ibid., p. 375.
Department of the Navy's continuing conviction of the strategic
16 J. Fred Rippy, Globe and Hemisphere, Chicago, Henry Regnery Co., 1958, p. 109.
importance of the canal. According to Admiral Russell:
".U.S. Cong., 86th, 2d sess., Report on a Long-Range Program for Isthmian Canal Transits," H. Rept.
No. 1960, Washington, GPO, June 23, 1960, p. 7, 32.
20 Panama Canal Company, Annual Report, fiscal year ended June 30, 1959, p. 10.
18 Ibid., p. 32.
31 Ibid., n. 48.
ID Ibld.
23 U.S. Cong., 86th, 2d sess., House of Representatives, Committee on Foreign Affairs, United States,
Relations with Panama, hearings before the Subcommitte on Inter-American Affairs, Feb. 2, 1960,
pp. 91-107.
UNITED STATES-PANAMA RELATIONS
UNITED STATES-PANAMA RELATIONS
Militarily, the greatest threat to commerce on the sea in
dicates the following sources of income to Panama from the presence
time of war is the submarine fleet of Soviet Russia, which
of the canal:
[In millions of dollars]
today has a peacetime strength about equal to Hitler's maxi-
mum number of operational submarines at the height of
Direct purchases from Panama
12. 5
World War II. To reinforce the Pacific antisubmarine forces
Wages of non-U.S. citizens employed in zone who reside in Panama
21. 5
Disability and relief payments
2. 5
off the California coast with a squadron of destroyers from
Expenditures in Panama of non-U.S. citizens resident in Canal Zone
1. 6
the vicinity of the Virginia Capes would entail 21 days
Expenditures in Panama of U.S. employees including military
18. 2
steaming via the straits, versus 8 days via the canal.23
Income generated by auxiliary works in zone
4. 4
Maintenance of Transisthmian Highway
3
Annuity
1. 93
As the range of ballistic missiles increases, as the power of
These receipts have enabled Panama to offset, to a large extent,
their nuclear explosives gets greater, and, importantly, as the
deficits in the country's balance of payments.
precision of their guidance delivers them with increasing
Critics claim that the presence of the canal has attracted people
accuracy against their targets, military forces must look more
from "productive labor," thus distorting the economy. But long
and more to dispersion, mobility, and concealability as an
before the construction of the canal Panama's geographical setting
answer to the problem of surviving attack. Thus the vast
favored activities connected with international trade, with the con-
oceans will have an ever-increasing importance as areas for
sequent concentration of population and political power in the terminal
dispersion, maneuver, and concealment
The Polaris
cities of Panama and Colon and the virtual isolation and neglect of
submarine, as also the other types of nuclear submarines, can
rural areas.
transit the Panama Canal.
Rural conditions are still bad. While 64 percent of the population
Admiral Russell further pointed out that the United States is allied
live in rural areas, agriculture contributes only about one-third of the
with 42 nations of the free world in mutual defense agreements and
national income. Responsibility for lagging agricultural production
that we are principally an oceanic confederation. Accordingly, he
lies in large measure in the prevailing system of land tenure. Less
argued:
than 8 percent of the land surface is privately owned. Most of the
When one realizes that it is 8,000 miles, and weeks of
best land suited for cropping is being used for extensive livestock
sailing time farther around Cape Horn than across the
raising and is producing only a fraction of its capacity. Meanwhile,
Central American Isthmus, it can be seen that the Panama
nearly one-half of the occupied farmland is held by squatters (85
Canal means much to us in terms of getting our own fighting
percent of the farmers), most of whom hack out a bare subsistence
forces, as well as material aid, quickly to a beleaguered ally.2
on the relatively poor land which is available to them. They have
no security of tenure and consequently no access to credit and little
Admiral Russell granted the vulnerability of the canal.* But he
incentive to improve their farming methods.81
added:
The overwhelming majority of farms have no animal or mechanized
I would say that the Panama Canal has great value to us
power, 99 percent using only handtools for cultivation.82 In addition,
in a limited war, and in a general war, if it is not destroyed,
rural transportation is very poor. Only 8 percent of farmers send
would be very useful to us. In all-out war there would be
their produce to market by truck, while 77 percent still depend upon
a lot of destruction probably early in the war. Whether the
packhorse, human carriers, or boat. The balance send nothing, con-
canal goes or not, I don't know, but if it does survive, I
tributing zero to the economy.³³
think it would be of great use in what comes after the first
Meanwhile, population growth in rural areas is high, estimated at
massive exchange."
between 3 and 3.5 percent per annum.34 Poor living conditions have
resulted in wholesale migrations to the cities in search of employment,
IV. IMPORTANCE OF THE PANAMA CANAL TO THE REPUBLIC OF PANAMA
creating there an explosive mixture of extreme crowding, unhealthful
slums, and unemployment.
Although the canal may not be the magic wand of prosperity
Panama's economic difficulties lie not in the presence of the canal,
envisioned by some Panamanians, it does make a large contribution
but in local indifference for centuries to the development of other po-
to the economy of the Republic. Income generated by the canal far
tentially profitable resources. Fortunately, Panamanian authorities
exceeds the $1,930,000 annual annuity. In 1958, for instance, income
now are directing their attention to the serious imbalance which exists
derived from the canal was estimated at approximately $63 million, or
in the economy. The Panama Canal, far from being a deterrent to
about one-sixth the national income." A breakdown of the total in-
" P. A. Reid, 'Agricultural Development of Panama," prepared by the International Bank for Recon-
Ibid., p. 92.
struction and Development for the Government of the Republic of Panama, Washington, 1957, p. 7.
30 Ibid., p. 11.
24 Ibid., p. 93.
Ibid.
31 Ibid., p. 8.
Ibid., p. 94.
# Ibid., p. 9.
SV Ibid., p. 95.
" Ibid., p. 13.
U.S. Department of State, Amembassy, Panama, Dispatch No. 716, June 29, 1959.
"Ibid.,p.4.
-10-
UNITED STATES-PANAMA RELATIONS
UNITED STATES-PANAMA RELATIONS
development, makes a sizable and steady contribution to the Nation's
In addition, the following loans have been extended to Panama
coffers.
by the Export-Import Bank: 37
In addition to the canal's economic value, Panama, as a member of
In millions of dollars]
the inter-American community pledged to the defense of the Western
Hemisphere from aggression, is as deeply concerned with the strategic
June 21, 1948 (El Panama Hotel)
July 26, 1951 (supplementary financing for El Panama Hotel)
2. 5
value of the canal as is the United States.
June 14, 1957 (for financing Panama's ½ contribution to construction of
1.5
Inter-American highway)
V. U.S. CONTRIBUTIONS TO PANAMA'S DEVELOPMENT
July 27, 1959 (airport equipment)
12. 85
25
Total
The United States has contributed substantially to the well-being
17. 10
and the progress of the Republic of Panama. Construction of the
The Republic of Panama has met its obligations to the Export-
canal brought a large injection of capital and employment to the
Import Bank promptly.
isthmus. At that time Panama City had an estimated population of
The Republic of Panama's economy also has received a boost from
18,000 and Colon about 6,000. The entire region was backward, with
nongovernmental U.S. sources. Direct private U.S. investments in
no paved streets and roads, no sewer and water systems.
Panama, covering a large range of interests which include manu-
The battle waged by U.S. health officers during the construction
facturing, public utilities, agriculture, banks, trading operations, real
period against mosquito-borne yellow fever is world renowned. Since
estate, insurance, brokerage houses, and petroleum, amounted to an
the new little Republic lacked the resources to provide essential health
estimated $240 million in 1958. These investments amount to
services, Canal Zone authorities provided water, removed the sewage,
roughly 50 percent of private capital invested in Panama, 48 percent
and maintained the sanitary and public health services in Panama
City and Colon as well as in the Canal Zone.³⁵ What had once been
Swiss, and British interests.³⁹
of the total being Panamanian and the remaining 2 percent French,
regarded as a tropical graveyard became a relatively healthful place
to live.
VI. CURRENT POINTS OF FRICTION BETWEEN PANAMA AND THE
Monetary benefits to Panama stemming from the presence of the
UNITED STATES
canal, such as wages to many thousands of Panamanian citizens em-
ployed in the zone, purchases in the Republic of Panama of supplies
A. SOVEREIGNTY IN THE CANAL ZONE
and services by the Panama Canal Company, and purchases made in
Panama by the residents of the Canal Zone, were discussed previously
Recently there has been much agitation in Panama regarding the
(see p. 13).
question of sovereignty in the Canal Zone. On two occasions in
Another U.S. contribution to Panama's progress was the construc-
November 1959, mobs led by rabble rousers tried to force entry into
tion of the Transisthmian Highway which crosses the Republic from
the Canal Zone in order to plant Panamanian flags there as symbols of
Panama City to Colon, at a cost of $9,785,000 (completed in 1949).
Panama's sovereignty. On November 3 the Governor of the zone
The United States continues to assume full responsibility for mainte-
was compelled to call for U.S. Armed Forces to help quell the ensuing
nance of the highway.
violence. Within the week Panama's unicameral congress resolved
Under terms of the 1955 treaty with Panama, construction of the
not to rest until the Panamanian flag was raised "on our territory."
Balboa Bridge across the canal is now underway at an estimated cost
During the second attempt on November 28 to invade the zone, it
to the United States of $20 million.
took Panama guardsmen working alongside U.S. troops 3 hours to
Under various assistance programs, the United States has made
turn back the mob.
the following contributions to the Republic of Panama in the period
On November 26 the Panamanian Ambassador in Washington
from July 1, 1945, to June 30, 1959: 36
delivered a note at the Department of State asking the United States
to consider the desire of Panama to fly its flag in the zone.
[In millions of dollars]
Technical assistance
10. 3
Sectors of the Panamanian press and several demagogic politicians
Special assistance (Smathers amendment fund)-for sewerage in Panama
keep the issue red hot. It is also reported that envoys from Cuba
City
2.0
and Egypt actively encourage anti-U.S. sentiments. Cuban agi-
Public Law 480 (title III)-contributions by voluntary relief agencies
5. 2
22. 3
tators participated in the riots of November 28. The United
Inter-American highway-% cost of construction
Arab Republic delegation is said to be the most active diplomatic
Total
39. 8
mission in Panama although there are few Arab residents and virtually
as Responsibilities of the Canal Zone government for health in the terminal cities ended in 1953, after 50
no Arab commercial interests. 40 Cairo beams two broadcasts nightly
years; they were transferred to the Republic of Panama in 1953-55. Responsibility for water supply, sewer-
to Panama almost entirely devoted to the alleged unfair treatment
age, garbage disposal, etc., was transferred in 1953-54 to a newly created department within the Ministry
of Labor, Social Weifare and Public Health.
Panama is receiving from the United States with respect to the canal.41
26 ICA, Office of Statistics and Reports, U.S. External Assistance, Obligations and Commitments, July 1,
1945 through June 30, 1959.
37 Export-Import Bank, Office of the Secretary.
shipping operations, investments by Americans who are residents in Panama, and that portion of holding
39 U.S. Department of Commerce, Office of Business Economics. (This preliminary figure excludes
companies' assets engaged in business in third countries.)
39 U.S. Department of Commerce, Panama desk.
Panama, Mar. 13, 1960, p. 1.
40 New York Times, Washington split on Panama policy, Dec. 3, 1959, p. 15; Cuban and Arab active in
41 New York Times, Washington split on Panama policy, ibid.
-11-
UNITED STATES-PANAMA RELATIONS
UNITED STATES-PANAMA RELATIONS
The issue of sovereignty in the Canal Zone is almost as old as the
Under the stipulations of article III, if sovereign powers
treaty of 1903 which was intended to define the respective powers of
are to be exercised in and over the Canal Zone, they must
Panama and the United States with relation to the Canal Zone.
be exercised by the United States. Such exercises of power
The United States had hardly taken formal possession of the Canal
must be, therefore, in accordance with the judgment and
Zone when disagreement occurred over the scope of U.S. powers.
discretion of the constituted authorities of the United States,
The first Panamanian protest arose in 1904 after the United States
the governmental entity charged with responsibility for
established ports of entry, customhouses, tariffs, and post offices in
such exercise, and not in accordance with the judgment and
the zone. The ensuing diplomatic correspondence between Pana-
discretion of a governmental entity that is not charged with
manian Minister to Washington José de Obaldía and Secretary of
such responsibility and by treaty stipulations acquiesces in
State Hay sets forth the classic positions held by Panama and the
"the entire exclusion of the exercise by it of any sovereign
United States down to the present time.
rights, power, or authority" in and over the territory
The differing Panamanian-United States interpretations of the
involved.
treaty of 1903 with regard to sovereignty hinge primarily on articles
Article II provides that "the Republic of Panama grants
II and III of that pact. The pertinent part of article II declares:
to the United States in perpetuity the use, occupation, and
The Republic of Panama grants to the United States in
control of a zone of land and land under water for the con-
perpetuity the use, occupation, and control of a zone of land
struction, maintenance, operation, sanitation, and protection
and land under water for the construction, maintenance,
of said canal."
operation, sanitation and protection of said canal of the
The Panamanian authorities now contend that the words
width of 10 miles.
"for the construction, maintenance, operation, sanitation,
and protection of said canal" constitute a limitation on the
Article III states:
grant; that is to say, that the grant is confined to the pur-
The Republic of Panama grants to the United States all
poses so stated. The position of the United States is that
the rights, power, and authority within the zone mentioned
the words "for the construction, maintenance, operation,
and described in article II of this agreement and within the
sanitation, and protection of said canal" were not intended
limits of all auxiliary lands and waters mentioned and de-
as a limitation on the grant, but are a declaration, and
scribed in said article II which the United States would
appropriate words of conveyance.
possess and exercise if it were sovereign of the territory
Secretary of State Hay's definitive declaration of U.S. rights in
within which said lands and waters are located to the entire
the Canal Zone by no means brought to an end the first major con-
exclusion of the exercise by the Republic of Panama of any
troversy regarding sovereignty in the Canal Zone. Tension mounted
such sovereign rights, power, or authority.
on the isthmus, and as Secretary of War William H. Taft later testified,
According to Minister Obaldía, U.S. jurisdiction is not full and
"it led to passive resistance by Panama to the making or carrying out
complete, but a delegated and limited jurisdiction granted to the
of any agreement between the United States and the Panamanian
United States only in matters pertaining to "the construction, mainte-
authorities necessary in the progress of our work.' 44
nance, operation, sanitation, and protection of said canal." Moreover,
Taft was dispatched to the isthmus in November 1904 to settle
Obaldía argued, the term "if it were sovereign" in article III implies
Panama's grievances. To do SO he amicably worked out an arrange-
that the United States is not sovereign. He claimed that if Panama
ment with Panamanian authorities designed to ease the situation
had had any intention of ceding sovereignty of the Canal Zone, only
during the construction period. It specifically provided, however,
two articles would have been necessary in the treaty: "one specifying 42
that it could not be interpreted as a restrictive or enlarging construc-
the thing sold and the other expressing the price of the sale.
tion of the treaty.
Secretary of State Hay replied to the Minister's note as follows: 48
Taft's minutes of his conferences with President Amador of the
If it could or should be admitted that the titular sovereign
Republic of Panama reflect the care he exercised not to jeopardize
of the Canal Zone is the Republic of Panama, such sovereign
U.S. rights in the zone: 45
is mediatized by its own act, solemnly declared and publicly
Assuming the power to the extent declared in Secretary
proclaimed by treaty stipulations, induced by a desire to
Hay's note, how far can I go in waiving the exercise of
make possible the completion of a great work which will
these powers and withholding the exercise of powers al-
confer inestimable benefit upon the people of the isthmus
ready exercised, so as to assure the Government of Panama
and the nations of the world. It is difficult to believe that
that we wish to exercise no powers that we do not deem
a member of the family of nations seriously contemplates
necessary in the construction, maintenance, and protection
abandoning so high and honorable a position in order to
of the canal?
engage in an endeavor to secure what at best is a barren
Now, I am not in a position to waive absolutely-I mean
scepter.
to give up the right to exercise-those powers, but I am
# Quoted in McCain, op. cit., p. 30.
44 Hearings, ibid., p. 2524.
" Reply of Secretary of State to Sefior de Obaldia, Oct. 24, 1904. In hearings before the Committee on
40 Ibid., p. 2589.
Interoceanic Canals of the U.S. Senate, Washington, Government Printing Office, 1906, vol. III, p. 2378.
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UNITED STATES-PANAMA RELATIONS
UNITED STATES-PANAMA RELATIONS
given authority by the President to establish now, subject
article III of the treaty of 1903 as if it were the sovereign of
to action by Congress, a nonexercise of those pcwers, such
the Canal Zone and to the exclusion of any sovereign rights
as I hope will be satisfactory to the Government of the Re-
or authority on the part of Panama * * This must be
public, and will continue indefinitely until the construction
regarded as ending the discussion of that matter.
of the canal shall so affect the relations and conditions existing
The two major revisions of the treaty of 1903-the General Treaty
as to require a new adjustment of the relations between
of Friendship and Cooperation of 1936 and the Treaty of Mutual
the two Governments.
Understandings and Cooperation of 1955-amend and supplement the
Taft's view on the question of sovereignty in the Canal Zone is
original pact but leave intact the controversial articles II and III of
further defined in his report to President Roosevelt of his negotia-
the early agreement.
tions with Panama: 46
During hearings in the Foreign Relations Committee of the U.S.
The recognition that a citizen of the Republic of Panama
Senate on the 1955 treaty with Panama, Assistant Secretary of State
may reside in the Canal Zone and not lose his rights as a
for Inter-American Affairs, Henry Holland, revealed that the Depart-
citizen to the exercise of the elective franchise in the Repub-
ment of State was still zealously on guard against any diminution,
lic it was wise to make. The truth is that while we have all
then or in the future, of what the United States regarded as its rights in
the attributes of sovereignty necessary in the construction,
the Canal Zone. The following exchange took place at the hearings: 49
maintenance, and protection of the canal, the very form in
Senator WILEY. As I understood from you, Secretary Hol-
which these attributes are conferred in the treaty seems to
land, there is nothing in this present treaty that would in the
preserve the titular sovereignty over the Canal Zone in the
slightest degree depreciate all the attributes of sovereignty
Republic of Panama, and as we have conceded to us com-
that we possess.
plete judicial and police power and control over the zone
Mr. HOLLAND. That is true; and so true is it, that in the
and the two ports at the end of the canal, I can see no reason
course of the negotiations the Panamanians advanced several
for creating a resentment on the part of the people of the
small requests which, one by one, had considerable appeal,
isthmus by quarreling over that which is dear to them but
but all of which we refused because we did not want to leave
which to us is of no real moment whatever.
one grain of evidence that could a hundred years hence be
interpreted as implying any admission by the United States
A year and a half later, while testifying before the Senate Com-
mittee on Interoceanic Canals, Secretary of War Taft made his now
that we possess and exercise anything less than 100 percent
of the rights of sovereignty in this area.
famous statement which is frequently referred to in discussions regard-
For example, they asked that ships transiting the canal, as
ing sovereignty in the Canal Zone:
a token of deference to Panama, fly the Panamanian flag as
[Article III] is peculiar in not conferring sovereignty
well as the U.S. flag.
directly upon the United States, but in giving to the United
Now, it seemed, perhaps, a little unfriendly to say, "No,"
States the powers which it would have if it were sovereign.
because while the gentlemen representing Panama would
This gives rise to the obvious implication that a mere titular
never have any misunderstanding as to why that might be
sovereignty is reserved in the Panamanian Government.
done, generations coming after us might have some mis-
Now, I agree that to the Anglo-Saxon mind a titular sover-
understanding as to why that was done, and we felt we could
eignty is like what Governor Allen, of Ohio, once character-
not agree to do anything, nor would the Senate approve it if
ized as a "barren ideality," but to the Spanish or Latin mind
we were to agree to it, which could be construed a hundred
poetic and sentimental, enjoying the intellectual refinements,
years hence as receding 1 millimeter from the position that we
and dwelling much on names and forms, it is by no means
possess and exercise all of the rights that we would have if
unimportant.
we were the sovereign in that area.
Neither Panama nor the United States subsequently has budged on
Some Panamanian politicians and jurists and various publicists
their respective constructions of the terms of the treaty of 1903. In
turn from arguing the legal constructions placed on the treaty of
1924, after negotiations to replace the Taft agreement had gone ahead
1903 to criticizing the manner in which the pact was negotiated. They
intermittently since 1915, Secretary of State Hughes stated in con-
protest that the treaty was negotiated by a Frenchman, in haste
versation with the Panamanian Minister:
(see p. 23), and cast somber doubts as to his motivation and that of
This Government would never recede from the position
the provisional Panamanian government which ratified the treaty.
it had taken in the note of Secretary Hay in 1904. This
In these arguments it is customary to refer to the letter from Secretary
Government could not and would not enter into any discus-
of State Hay to Senator Spooner on January 20, 1904,50 in which he
sion affecting its full right to deal with the Canal Zone under
points out the advantages of the treaty to the United States and
cautions against giving Panama more time to ponder.
" Ibid., p. 2399.
47 Ibid., p. 2527.
49 U.S. Senate, 84th Cong., 1st sess., Committee on Foreign Relations, hearings before the Committee on
" Memorandum by the Secretary of State of a conversation with the Panamanian Minister (Alfaro),
Foreign Relations, the Panama Treaty, Washington, Government Printing Office, 1955, p. 164.
Dec. 15, 1923. "Foreign Relations of the U.S. Government, 1923," vol. II, Washington, Government
M See p. 10 for the complete text.
Printing Office, 1938, p. 684.
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UNITED STATES-PANAMA RELATIONS
UNITED STATES-PANAMA RELATIONS
This attack on the basic document governing Panama's relations
B. COMMISSARIES
with the United States has an emotional appeal to the national pride
of the Panamanian people. Nevertheless, by ratifying negotiations
Another controversy which extends back to the construction era
in both 1936 and 1955, Panamanian authorities have reaffirmed the
relates to the operation of commissaries in the Canal Zone. In order
handiwork of their founding fathers.
to make living palatable, indeed possible, for workers who were
The small group which traditionally has controlled Panama's Gov-
imported to the isthmus to work on the canal, the U.S. Government
ernment and newspapers has been wont to condemn North American
opened supply stores in the Canal Zone. As early as 1904 Secretary
"imperialism." This tactic serves a triple purpose. It provides a
of War Taft noted the "great alarm" felt by Panamanian merchants
convenient scapegoat for their own impotency in solving the nation's
"lest the United States might use the clause of the Hay-Varilla Treaty
pressing economic problems; it is an effective vote getter among a
which permits the United States to import free of duty into
populace which is extremely sensitive to slights to the national pride;
the isthmus all machinery, equipment, material, and supplies needed
and, finally, Panamanian leaders can exploit the nationalistic senti-
by it or its employees in the construction of the canal to break up
ment they have whipped up to enhance their bargaining power with
their normal business in native supplies in the zone. 55
the United States.
President Roosevelt sent his Secretary of War, Taft, to the isthmus
Egyptian nationalization of the Suez Canal in 1956 added fuel to
to work out an agreement designed to allay Panamanian fears. In
the already well-stoked flames of nationalism in Panama. Panama
his instructions to Taft, he noted: 56
protested to the United States and Britain for not having been
Apparently they fear lest the effect be to create out of part
invited to the London conference concerning the Suez Canal in view
of their territory a competing and independent community
of the fact that "it was necessary and proper, and of special impor-
which shall injuriously affect their business, reduce their
tance" that it participate in the talks since "the Suez Canal has
revenues, and diminish their prestige as a nation
We
fundamental analogies with the Panama Canal." Secretary of State
have not the slightest intention of establishing an independent
Dulles asserted that there was no question of sovereignty in the zone
colony in the middle of the State of Panama, or of exercising
since "the United States has all the rights which it would possess if it
any greater governmental functions than are necessary to
were sovereign." 51
enable us conveniently and safely to construct, maintain,
In March 1957 a conference on the juridical aspects of the Panama
and operate the canal under the rights given us by the treaty.
and Suez Canals was held under the auspices of the University
Least of all do we desire to interfere with the business and
of Panama with representatives present from eight Latin American
prosperity of the people of Panama.
countries. Former Foreign Minister Octavio Fabrega, who headed
Panama's delegation to Washington to negotiate the treaty of 1955
To pacify Panamanian fears, Taft included a proviso in the modus
(which left intact the relevant terms of the treaty of 1903), asserted
vivendi of December 1904, which provided for the importation and
that Panama's grant of the Canal Zone to the United States in
sale of merchandise "necessary and convenient" for the officers,
perpetuity was inconsistent with the sovereignty of the nation.
employees, workmen, and laborers in the service and in the employ
Following the attempts in November 1959 to plant the Panamanian
of the United States, and for their families, but which excluded from
the benefits of the commissaries-
flag in the Canal Zone as a symbol of Panama's sovereignty, President
Eisenhower and Deputy Under Secretary of State Livingston Mer-
all employees and workmen who are natives of tropical
chant made policy statements which bear upon the question. The
countries wherein prevail climatic conditions similar to
Deputy Under Secretary, on a visit to Panama, made the following
those prevailing on the Isthmus of Panama, and who there-
statement on November 24:
fore may be presumed to be able to secure the articles of food,
During the course of our discussions, in response to a
clothing, household goods, and furnishings, of the kind and
question by the President of Panama, I assured him that the
character to which they are accustomed, from the merchants
policy of the U.S. Government with respect to the status of
of Panama, Colon, and the towns of the Canal Zone.⁵⁷
the Canal Zone remains as it had been stated more than 50
In the event that-
years ago to the effect that the United States recognizes that
titular sovereignty over the Canal Zone remains in the
such merchants charge prices in excess of legitimate profit,
Government of Panama."
or practice other extortion, the United States, for the protec-
tion and assistance of all its employees, whether from the
A week later in his press conference, President Eisenhower stated:
tropical or Temperate Zone, will supply its commissaries
... I do in some form or other believe we should have
with such staple articles as are required and desired by the
visual evidence that Panama does have titular sovereignty
inhabitants of tropical countries, and permit all its employees
over the region.
and workmen and those of its contractors to avail themselves
81 The New York Times, Aug. 29, 1956, p. 4.
Interoceanic Canals, op. cit., p. 2527.
85 Statement of Hon. William H. Taft, Secretary of War, Apr. 18, 1906, hearings before Committee on
Perpetual pacts termed invalid. New York Times, Mar. 31, 1957, p. 15.
a Panama reassured on titular sovereignty in Canal Zone, statement by Deputy Under Secretary Mer-
Committee on Interoceanic Canals, op. cit., p. 2394.
56 President Theodore Roosevelt to Secretary of War William Howard Taft, Oct. 18, 1904, hearings before
chant, Department of State Bulletin, Dec. 14, 1959, p. 859.
67 Ibid., p. 2528.
M Transcript of the President's news conference on foreign and domestic matters, the New York Times,
Dec. 3, 1959, p. 18.
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UNITED STATES-PANAMA RELATIONS
UNITED STATES-PANAMA RELATIONS
of the benefits and privileges afforded by said Government
inherent in its geographical situation so far as that may be
commissaries.
done without prejudice to the maintenance, operation, sani-
In 1905, service of the commissaries was extended to all Govern-
tation, and protection of the Panama Canal by the United
ment workers because, as Taft told the Senate Committee on
States of America which is earnestly desirous of the pros-
Interoceanic Canals—
perity of the Republic of Panama.
after a sudden influx of laborers, the merchants of the zone
The United States agreed to prohibit sales of "tourist" goods by the
were apparently quite short of provisions, or else they
commissaries for disposal on ships in transit through the canal, to
attempted to make a corner upon them.50
exercise special vigilance to prevent contraband trade in articles
After the crash construction program for the canal was completed
purchased in the commissaries, and to regulate other sales by the
and activities in the zone settled down to a more steady tempo,
commissaries to ships "with the interest of Panamanian merchants
Panamanian merchants renewed their laments that U.S.-operated
in view."
commissaries were depriving them of their legitimate market in the
In 1936 a new General Treaty of Friendship and Cooperation em-
zone. In negotiations during 1919 to replace the Taft modus vivendi
bodied a number of revisions in the economic relations between the
of 1904, Panamanian authorities charged that one-half the people in
United States and Panama in the Canal Zone. In order to enable
Panama City and Colon used articles bought in the commissaries and
Panama to take advantage of "the commercial opportunities inherent
smuggled from the zone. With the canal construction completed,
in its geographic situation," the United States agreed to confine sales
the merchants claimed that the United States no longer was justified
in the commissaries to U.S. employees and Armed Forces; to impose
in underselling them and driving them out of competition.
specific restrictions for regulating the sales by commissaries to ships
During negotiations for a new treaty Minister Ricardo J. Alfaro
and tourists passing through the canal; to cooperate in the preven-
called attention to the old grievance that the Panama Railroad
tion of contraband trade; and to prohibit the establishment in the
Company operated—
Canal Zone of any new private businesses, with the exception of
those—
commissaries, livery stables, garages, baggage trans-
portation within the cities of Panama and Colon, dairies,
having a direct relation to the operation, maintenance, sani-
poultry farms, butcheries, packing and refrigerating plants,
tation, or protection of the canal, such as those engaged in
soap factories, laundries, plants for roasting and packing
the operation of cables, shipping, or dealing in oil or fuel.
coffee, sausage and canned meat factories, ironworks, car-
The United States retained freedom of decision as to which businesses
penter shops, and cooperages, etc.
61
have a "direct relation" to the operation and maintenance of the canal.
The treaty of 1926 did contain an article stating that purchases
The treaty of 1936 did not lay to rest the controversy over the
from commissaries should be limited to employees of the American
Canal Zone commissaries. For a period after the exchange of ratifi-
Government, their families and diplomats accredited to and designated
cations in 1939 Panamanian grievances lay dormant. This hiatus
by the Panamanian Government. The Panamanian Congress, how-
was due more to the local prosperity resulting from U.S. wartime
ever, failed to ratify the treaty after public opinion became stirred
expenditures on the isthmus than to results produced by the treaty.
over the provision that Panama should enter any war in which the
During the war years a number of processing facilities were installed
United States was engaged.
in Panama to meet local needs for goods which no longer could be
When complaints again were made against the Canal Zone com-
imported and to fulfill requirements of the influx of Armed Forces
missaries in 1927, the Department of State answered bluntly: "When
personnel.63 As U.S. expenditures tapered off in the postwar period,
the ratifications of this treaty are exchanged, the question will be
the new enterprises operated at partial capacity. Strong pressure
definitely settled." 02
was brought by Panamanian industry and commerce for withdrawal
With Panama deep in the throes of the world depression in 1933,
of the Panama Canal Company from the manufacturing and process-
President Arias decided to make a personal appeal to the new admin-
ing in the zone of a wide range of consumer items and for a halt to the
istration in Washington. After several conferences, he and President
sale of tax-exempt and duty-free goods imported for sale in the zone
Franklin Roosevelt issued a joint statement that the treaty of 1903
commissaries.
now covered only-
A new basic agreement between the United States and Panama in
the use, occupation, and control by the United States of
1955 again tackled the problem of the commissaries. Item 9 of the
the Canal Zone for the purpose of maintenance, operation,
memorandum of understandings attached to the treaty of 1955 states:
sanitation, and protection of the canal-
With respect to the manufacture and processing of goods
and that the-
for sale to or consumption by individuals, now carried on by
the Panama Canal Company, it will be the policy of the
Republic of Panama is recognized as entitled, as a sovereign
United States of America to terminate such activities when-
nation, to take advantage of the commercial opportunities
ever and for so long as such goods, or particular classes
38 Ibid.
58 Ibid.
63 In 1942 and 1943 the zone's population more than doubled as compared with 1940.
60 McBain, op. cit., p. 227.
61 Ibid., p. 230.
as Ibid., p. 240.
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UNITED STATES-PANAMA RELATIONS
UNITED STATES-PANAMA RELATIONS
thereof, are determined by the United States to be available
C. THIRD-COUNTRY PURCHASES
in the Republic of Panama on a continuing basis, in satis-
factory qualities and quantities, and at reasonable prices.
Another sore point with Panama over the years has been the
The United States will give prompt consideration to a re-
practice of Canal Zone agencies of buying supplies in the cheapest
quest in writing on the part of the Government of Panama
world market for resale in the zone commissaries and post exchanges.
concerning the termination of the manufacture or processing
Mérchandise so purchased entered the zone duty free. Items included
of any goods covered in this item as to which the Govern-
everything from staples, like New Zealand meat, to luxury items like
ment of Panama may consider the criteria specified in this
diamonds and Oriental wood carvings. Panama complained that
item to have been met.
such imports constituted unfair competition with Panamanian mer-
chants who must pay Panamanian duties on similar articles.
In the course of the Senate hearings on the treaty of 1955, repre-
During the negotiations of the treaty of 1955, Panama proposed
sentatives of various Canal Zone organizations indicated deep fears
that the United States formally agree that all items needed or desired
regarding the quality, availability, and price of food products from
either by individuals or for the maintenance, functioning, and defense
Panama and the consequent possible deterioration in the living
of the canal (except war materiel) would be purchased by U.S. Gov-
standards of zone residents. Department of State representatives
ernment agencies from Panamanian production, commerce, and in-
testified that every safeguard would be taken to assure sufficient
dustries, subject to certain provisos with respect to price, quality,
supplies of good quality.
and availability. This proposal was in line with Panama's assump-
In accord with item 9 of the memorandum of understandings, the
tion that the commerce and industry of Panama should be enabled
following Panamanian requests for discontinuance of Canal Company
to take advantage of the market offered by the Canal Zone."
activities have been allowed: slaughter house with related meat process-
According to the Secretary of State's report to the President regard-
ing plants; carbonated beverage plant; oxygen and acetylene gas
ing the treaty of 1955, the United States "could not agree to a sub-
plant; ice-manufacturing plant; industrial laboratory involving the
sidization of the Panamanian economy at the expense of individuals
manufacture or processing of some 200 food, drug, and other items
residing in the zone or in connection with the importation of materials
(such as mouthwash, shaving lotion, etc.).
require for the maintenance, operation, and defense of the canal." 68
The following requests for discontinuance have not been allowed:
Two general statements were included in the memorandum of
dairy (Panama does not have the capacity to produce sufficient quan-
understandings attached to the treaty of 1955 relative to the problem
tity meeting sanitary standards); bakeries (as in the case of dairy
of third-country purchases.
products, it is believed that the Republic of Panama cannot produce
enough products meeting sanitary standards); laundry and dry clean-
Item 7. It is and will continue to be the policy of the
ing plants and tire recapping plant (the Panama Canal Company
Panama Canal agencies and of the Armed Forces in the
contends that this is not the type of activity contemplated in item 9
Canal Zone in making purchases of supplies, materials and
of the memorandum of understanding).
equipment, so far as permitted under U.S. legislation, to
The dire consequences predicted by some residents of the Canal
afford to the economy of the Republic of Panama full
Zone do not appear to have materialized. During February 1960,
opportunity to compete for such business.
on the average, food prices on the Canal Zone were 1.8 percent lower
In the words of the Secretary of State, "item 7 represents the full
than those in effect in the average city in the United States. 66 At the
extent to which the interested agencies of this Government con-
same time, all U.S. employees of the Canal Company and zone gov-
sidered it feasible to go in this matter. 69
ernment are paid a 25-percent differential rate above that of U.S.
Government employees in continental United States and even Depart-
Item 8. In general connection with the matter of the im-
portation of items of merchandise for resale in the sales
ment of State employees in the Republic of Panama.
The treaty of 1955 makes further concessions to the Republic of
stores in the Canal Zone, it will be the practice of the agencies
Panama with regard to sales and services by commissaries in the Canal
concerned to acquire such items either from U.S. sources or
Zone. The privilege of availing themselves of services offered in the
Panamanian sources unless, in certain instances, it is not
feasible to do SO.
zone is withdrawn after December 31, 1956, from persons employed
by zone agencies, who are not citizens of the United States and who
The Secretary of State's explanatory note to the President gives
do not actually reside in the zone, thus requiring them to purchase the
the Department's interpretation of item 8: 70
services they desire within the Panamanian economy (item 6, memoran-
The undertaking in item 8 was drafted with a view to
dum of understandings).
alleviating irritations which have arisen with respect to the
The memorandum of understandings also provides (item 4) for the
sale in the zone of so-called luxury items. Panama is not
withdrawal of the United States, with a few exceptions, from the
given a monopoly over sales of the kind to which this item
business of selling supplies to ships transiting the canal.
67 U.S. Senate, 84th Cong., 1st sess., hearings before the Committee on Foreign Relations, "The Panama.
64 Department of State, Panama desk.
Treaty, Washington, Government Printing Office, 1955, p. 15.
as Ibid.
Ibid.
Panama Canal Co., U.S. Citizen Consumer Price Index, April 1960.
" Ibid.
TO Ibid., p. 16.
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UNITED STATES-PANAMA RELATIONS
UNITED STATES-PANAMA RELATIONS
relates, and in certain circumstances the zone agencies retain
D. WAGE AND EMPLOYMENT OPPORTUNITIES IN THE ZONE
their freedom to acquire desired items elsewhere.
No issue has aroused more bitterness in Panama than the charge
Shortly after the treaty of 1955 was concluded, the Panama Canal
that Panamanian citizens are being discriminated against in the Canal
Company restricted sales of so-called luxury items in the commissaries
Zone with regard to wages and employment opportunities.
to those which sold for less than $50. No restrictions were placed by
The roots of the problem stretch back to construction days. Skilled
the Defense Department upon sales in the post exchanges.
laborers, most of whom were U.S. citizens, were paid in gold, whereas
Panama resentment over third country purchases did not abate
other laborers, mostly natives from the tropical lands of Panama,
with the signing of the treaty of 1955. Panama interpreted item 8 of
Jamaica, Puerto Rico, and the West Indies, were paid in silver. Wages
the memorandum of understandings in broader terms than did the
of "silver" employees were generally set at levels equal to or slightly
United States. In the Panamanian view, item 8 did not specify
above those prevailing for native labor in the Caribbean area, the
luxury items and was not intended to have such a restrictive inter-
theory being that such wages provided for their accustomed standard
pretation. Panama argued that the requirement to purchase supplies
of living.
from either the United States or Panama should apply to all U.S.
The American mechanics and artisans who contributed their skills
purchases for resale in the zone.
to the construction of the canal found little in common either with
The ensuing controversy hinged more on the word "feasible." The
the cultured white Panamanians of Spanish descent or with the pre-
Panama Canal Company and the Department of Defense took the
dominantly Negro laboring force. Separate housing areas, schools,
position that "feasibility" should be determined in terms of price,
and commissaries sprang up in the Canal Zone to meet their needs.
quality, and assured supply. Panama, on the other hand, insisted
The concept of "silver" and "gold" employees almost inevitably
that it means supplies must be purchased in the United States or
took on aspects of racial and nationality discrimination and came to
Panama unless it is impossible to buy them in either place.
be a severe irritant to Panamanians of all racial origins.
Within the United States a split developed on U.S. policy. The
The idea that Panamanians should have access to equal opportuni-
Armed Forces and Panama Canal Company felt concern lest Panama
ties for employment had little acceptance among U.S. residents of
sources of such items as beef and lamb (which, imported from New
the Canal Zone. For many years only citizens of the United States
Zealand and Australia, retailed in the zone for 25 cents per pound) be
were eligible for employment in executive, supervisory, professional,
higher priced and of inferior quality. The Department of State, on
subprofessional, and clerical positions. Representatives of organized
the other hand, held the view that U.S. foreign policy should not be
labor in the Canal Zone, especially during the depression, lobbied for
determined by certain fringe benefits to U.S. employees, especially
the replacement of "silver" employees in artisan groups with citizens
those enjoying a 25-percent wage differential over rates in the United
of the United States.
States. According to the Department of State, Panama's economic
First official recognition of Panama's desire to secure equal treat-
viability and political stability should be the prime considerations
ment for its nationals in the Canal Zone's labor policy occurred in
upon which U.S. policy is formulated. Accordingly, the United
1936. In an exchange of notes ancillary to the 1936 general treaty,
States should assist Panama in achieving the benefits to be derived
it was stated that the United States—
from the presence of the Panama Canal down the middle of the nation.
In October 1959, the Panama Canal Company decided to purchase
will favor the maintenance, enforcement, or enactment of
all items for resale in the zone from either the Republic of Panama or
such provisions, consistent with the efficient operation and
the United States. Thus, all merchandise for sale in zone commissaries
maintenance of the canal and its auxiliary works and their
will pass through either United States or Panama customs barriers.
effective protection and sanitation, as will assure to Pana-
The Department of Defense, fearful lest such a purchasing policy
manian citizens employed by the canal or the railroad equal-
would establish a precedent in its worldwide operations, resisted the
ity of treatment with employees who are citizens of the
change. On March 15, 1960, at the insistence of President Eisen-
United States of America."
hower, it was announced that henceforth the Department of Defense
In 1948 the silver and gold roll designations were replaced. The
would purchase all supplies except gasoline for its operations in the
Canal Zone Government and the Panama Canal Company then
Canal Zone from either Panama or the United States. The Armed
followed a practice of dividing positions into two categories, "U.S.
Forces also fell into line with the Panama Canal Company's existing
rate" and "local rate." In theory, non-U.S. citizens were eligible for
policy of a $50 limit on luxury items that can be sold in post exchanges.
"U.S. rate" positions, if qualified. In practice, less than 4 percent of
The new ban on third country purchases should bring to an end
jobs classified as "U.S. rate" were filled by non-U.S. citizens. The
one of the foremost points of friction between the Republic of Panama
Armed Forces maintained its worldwide policy, that is, a dual-wage
and the United States.
system whereby all jobs, regardless of their nature, had two wage
Side effects of the ban are already visible. The Panama Canal
rates, one for U.S. citizens ("U.S. rate") and one for non-U.S. citizens
Company sent purchasing parties all over the Republic of Panama to
("local rate").
start farmers cooperatives, and point 4 technicians are teaching cattle
In a joint statement issued October 1, 1953, by the President of
growers how to bring meat up to standards. While promoting much
the United States and the President of Panama, the principle of
needed diversification of the economy, these efforts are engendering an
71 Ibid., p. 12.
incalculable reservoir of good will.
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UNITED STATES-PANAMA RELATIONS
UNITED STATES-PANAMA RELATIONS
personnel must generally be sought outside of the area are paid at
equality of job opportunity and treatment for citizens of Panama
rates based on equivalent or closely similar rates prevailing in the
was proclaimed:
Federal service in the United States, plus a 25-percent differential and
We have equally agreed that, inasmuch as the two countries
tax increment in the case of U.S. citizens.
have a mutual and vital interest in the work of the Panama
Since implementation of the Treaty with Panama the percentage
Canal, the principle of equality of opportunity and treat-
of non-U.S. citizens paid at U.S. base rates by the Panama Canal
ment must have full effect in regard to the citizens of Panama
Company and the Canal Zone Government has moved upward as
and the United States employed in the Canal Zone as set forth
follows:
in the exchange of notes of March 2, 1936, on this subject and
February 1959: 144 out of a total of 3,520 or 4 percent.
that wherever circumstances should be found which in any
June 1959: 173 out of a total of 3,542 or 5 percent.
manner interfere with the observance of that principle,
December 1959: 234 out of a total of 3,702 or 6 percent.
appropriate measures will be taken by the United States.
April 1960: 259 out of a total of 3,702 or 7 percent.
The memorandum of understandings attached to the treaty of
Fears expressed during hearings on the Treaty of 1955 by U.S.
1955 embodies the principle of equal treatment. It is stated in item
citizen employees in the zone that their jobs would be classified down
1 that:
to Panamanian wage-levels have not materialized. In implementing
Legislation will be sought which will authorize each agency
the treaty with Panama no U.S. citizen employees have had their
of the U.S. Government in the Canal Zone to conform its
wages reduced to conform to prevailing rates in Panama.⁷
existing wage practices in the zone to the following principles:
In line with the clause in item 1 of the memorandum of under-
(a) The basic wage for any given grade level will be the
standings with regard to affording Panamanians-
same for any employee eligible for appointment to the
opportunity to participate in such training programs as may
position without regard to whether he is a citizen of the
be conducted for employees by U.S. agencies in the Canal
United States or of the Republic of Panama.
Zone—
Paragraphs (b) and (c) provide that U.S. citizen employees may
President Eisenhower announced on April 19, 1960, an increase in the
receive an overseas differential, an allowance for taxes which operate
Panama Canal Company's apprenticeship program. Henceforth, 25
to reduce their disposable income as compared with employees who are
Panamanian citizens would be selected each year to participate in the
residents of the area, and greater annual leave benefits.
Canal Company's 4-year training course. As a result of the first
Item 1 further provides:
examinations after the announcement, 27 Panamanians and 10 U.S.
Legislation will be sought to make the Civil Service
citizens have been selected.
Retirement Act uniformly applicable to citizens of the
Some criticism still is heard regarding employment practices of
United States and of the Republic of Panama employed
U.S. zone agencies. Despite the principle of equality of opportunity
by the Government of the United States in the Canal Zone.
embodied in the memorandum of understanding and Public Law
The United States will afford equality of opportunity to
85-550, the charge is made that U.S. authorities, in order to give
citizens of Panama for employment in all U.S. Government
preference to U.S. citizens, stretch the definition of "security" to
positions in the Canal Zone for which they are qualified
apply to a large number of positions which actually do not involve
and in which the employment of U.S. citizens is not required,
security risk.75 There are 1,961 positions classified as "security"."
in the judgment of the United States, for security reasons.
Panama, meanwhile, argues that in two World Wars no sabotage
The agencies of the U.S. Government will evaluate, classify,
occurred, and that continuing discrimination against Panamanians
and title all positions in the Canal Zone without regard to
by means of the "security" escape clause, rather than assuring secur-
the nationality of the incumbent or proposed incumbent.
ity, creates dissension and the basis for insecurity.
Citizens of Panama will be afforded opportunity to
participate in such training programs as may be conducted
E. THE ANNUITY
for employees by U.S. agencies in the Canal Zone.
The annuity which the United States pays yearly to the Republic
On July 25, 1958, Congress implemented the obligations assumed
by the United States under the memo of understandings with the
Panama. of Panama provides a rallying slogan for anti-U.S. agitators in
passage of Public Law 85-550.
The original figure specified by the Hay-Bunau-Varilla Treaty of
Rates of pay for various occupational categories are determined by
1903 was $250,000. Under the terms of the treaty of 1936, the amount
the area of principal recruitment, without regard to the nationality
was increased to $430,000 to adjust to the reduction of the gold con-
of the incumbent. Wages for positions for which satisfactory per-
sonnel can be recruited locally are based upon local prevailing rates.
Foreign Affairs Committee, Apr. 29, 1960.
" Letter from secretary, Panama Canal Company to chairman, Subcommittee on Inter-American Affairs,
74 Ibid.
In practice, present Canal Zone wages for these jobs average from
78 James L. Busey, "Conflict in Panama." the New Leader, Feb. 15, 1960, p. 18.
30 to 200 percent higher than prevailing wages in Panama. Positions
76 Letter from secretary, Panama Canal Company, op. cit.
demanding special skills, education, or training for which qualified
19 Thid.
UNITED STATES-PANAMA RELATIONS
UNITED STATES-PANAMA RELATIONS
tent of the American dollar. Article I of the treaty of 1955 raised
VII. COMPARISON OF THE LEGAL STATUS OF THE SUEZ AND
the amount of the annuity to $1,930,000.77 The same article contains
PANAMA CANALS
a provision designed to safeguard the United States against any
assertion of the right to demand an increase in the annuity. It is
Nationalist and leftwing elements in the Republic of Panama were
stated that the parties "recognize the absence of any obligation on
stirred by Egypt's nationalization of the Suez Canal Co. on July 26,
the part of either party to alter the amount of the annuity."
1956. Recently United Arab Kingdom representatives have been
Some critics of U.S. policy in Panama demand that the gross
active in Panama. As stated previously, the UAR delegation is said
receipts of the Canal Zone be split 50-50. Gross revenue from the
to be the most active diplomatic mission in Panama although there
Panama Canal Company (which includes tolls, sales of commodities,
are few Arab residents and virtually no Arab commercial interests.
and rentals) amounted to over $87 million in fiscal year 1959. Net
Cairo also beams two radio broadcasts nightly to Panama devoted to
revenue, however, was less than $3 million. Payroll costs for the
the alleged unfair treatment Panama is receiving from the United
Canal Company and the Canal Zone Government consumed over
States with respect to the canal.
$52 million. Other financial obligations include operating costs,
UAR, Castro, and Communist propaganda notwithstanding, the
interest and depreciation charges on the U.S. Government's invest-
legal status of the Suez Canal differs fundamentally from that of the
Panama Canal.
ment in the project, and a part of the $1,930,000 annuity paid annually
to the Republic of Panama.
A. SUEZ CANAL BASIC AGREEMENTS
The following table gives a breakdown of revenues and
The fundamental agreement concerning the Suez Canal was between
expenditures: 78
an international company and the Egyptian Government. The Suez
Comparative statement of revenue and expenses, fiscal years ended June 30, 1959,
Canal was constructed and operated-until nationalized in 1956-by
and 1958
a private international company, established and recognized for the
purpose under a concession granted by the Khedive of Egypt to
1959
1958
Ferdinand de Lesseps in 1856 for the formation of an international
company of which he was to be the director. The concession was to
Revenue:
Tolls
run for 99 years from the date of the opening of the canal, which took
$46,546,621
$42,834,006
Sales of commodities
18,452,121
17,706,260
place in November 1869.
Service sales and rentals
22,252,129
22,570,343
The assets of the company, originally in Egyptian and French
Total revenue
87,250,871
83,110,609
hands, later were acquired to a preponderant extent by the British
Operating expenses and deductions:
Government and British subjects, due chiefly to the extravagances of
Payroll and related costs
41,065,800
38,399,717
Material and other operating expenses
the Khedive. Riots broke out in Alexandria and the British sent a
3,673,316
Cost of commodities sold
3,498,469
13,685,418
13,347,951
Depreciation
successful expedition to the isthmus of Suez. After extended negotia-
4,787,254
5,262,336
Annuity to Republic of Panama (repayment to U.S. Treasury)
430,000
430,000
tions, the Suez Convention was signed in 1888 by Great Britain,
Net cost to Canal Zone Government (repayment to U.S. Treasury)
11,646,136
10,737,194
Interest on net direct investment of U.S. Government
8,979,415
8,778,560
France, Austria-Hungary, Germany, Italy, the Netherlands, Russia,
Total operating expenses and deductions
Spain, and Turkey (then in nominal control of Egypt). By that
84,267,339
80,454,227
multilateral convention, passage through the Suez Canal was to be
Net revenue
2,983,532
2,656,382
open at all times to ships of all nations.
When Egypt nationalized the canal in 1956, Great Britain and
Those who urge that gross proceeds be split 50-50 with Panama
France, with the support of other users of the canal, claimed before the
turn aside the fact that Panama now receives more than half the net
United Nations that the Suez Canal Co. enjoyed international status
profits of the canal with the argument that the United States receives
and that therefore Egypt had no right to nationalize it. According to
inestimable benefits from the canal and should be willing to pay.
this view, the 1888 Convention, with its provision for open passage to
This claim ignores the benefits which accrue to Panama from oper-
all users, was the chief legal instrument violated by Egypt's act.
ations of the Panama Canal (see p. 13).
Egypt held that granting the concession was a domestic act; that the
The demands for a 50-50 split of the gross receipts rest on emo-
nationalization was a legitimate act of sovereignty; and that the Suez
tional rather than rational bases. Since construction days the canal
Canal Co. was an Egyptian company and no part of the system estab-
has conjured up for many Panamanians a tissuey dream of easy pros-
lished by the 1888 convention. An Egyptian announcement in 1957
perity. With the passage of time reality has shown that the canal is
concerning the future use of the canal stated that the 1888 agreement
not, after all, a cornucopia of wealth. But the dream persists. The
would be complied with.
presence in the Canal Zone of an island of prosperous U.S. residents,
in sharp contrast to the widespread poverty in the surrounding Re-
B. LEGAL STATUS OF THE PANAMA CANAL
public of Panama, accentuates the notion that the canal can provide
high living standards.
Without passing judgment on the legality of Egypt's nationaliza-
tion of the Suez Canal Co., the legal status of the Panama Canal is
77 The Panama Canal Company assumes responsibility for $430,000; the additional $1,500,000 added by
the Treaty of 1955 is paid by funds appropriated to the Department of State.
another matter. The story of how the United States came to build
78 Panama Canal Company, Annual Report, fiscal year ended June 30, 1959, p. 48.
the Panama Canal is told in some detail at the beginning of this report.
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UNITED STATES-PANAMA RELATIONS
UNITED STATES-PANAMA RELATIONS
The fundamental agreements governing the Panama Canal are bi-
lateral ones between the U.S. Government and the Government of the
Consequently: to-face naval engagements, "the two-ocean navy is itself outdated."
Republic of Panama, not between a sovereign state and a private
company.
That left the canal as a waterway for peacetime shipping
By the Hay-Bunau-Varilla Treaty of 1903, the United States is
and as a route of only secondary usefulness for the wartime
granted "in perpetuity" (not a 99-year lease) the use, occupation, and
transportation of critical materials-hardly a target of
control of the Canal Zone as if it were sovereign. No provision is
prime importance to enemy forces. Since then the canal's
made to terminate the agreement. Treaties of 1936 and 1955 have
vulnerability in an atomic-missile war has been demon-
modified some of the provisions of the treaty of 1903, but no changes
strated by the war games of April 1957. Henceforth, the
were made in the basic arrangements with respect to the legal basis of
defense of the canal must be fought far out in the Pacific and
U.S. operations in the Panama Canal area. In fact, both the later
the Atlantic or from land bases in continental United States.
treaties confirm those parts of the 1903 treaty which are relevant to
In the event of a limited war the risk of expanding the con-
U.S. jurisdiction in the Canal Zone.
flict is likely to deter the enemy from designating as a strategic
target what is no longer a vital supply route.
VIII. ALTERNATIVES TO U.S. CONTROL
Some observers foresee a rising tide of nationalism in Panama,
Since World War II, defense of the canal has been assigned
due in part to the wave of nationalism sweeping the underdeveloped
a low strategic priority. The military is apparently oper-
ating on the conclusion expressed by Hanson Baldwin in
regions of the world, to Castro's Cuban example, and to Communist
1957 that the canal today is indefensible in total war and
efforts to aggravate tensions in an area of U.S. interest. These
commentators reason that Panama leaders will no longer be able to
short of total war is less defensible and less strategic than
ever before.
contain and exploit popular hostility, and that in these explosive
circumstances, the United States, regardless of its legal rights on the
Reasoning that a "storm is building up in Panama" and "appro-
isthmus, could not uphold its position in the Canal Zone. They
priate measures taken soon can protect the real as distinguished from
further maintain that armed intervention by the United States would
the illusory U.S. interest in the canal, while a policy of drifting
not only place the highly vulnerable canal in the midst of an armed
along may jeopardize our interests far beyond Central America",
camp, but would probably wreck the inter-American system whose
Professors Travis and Watkins see the answer to the dilemma in inter-
cornerstone is the doctrine of nonintervention. Accordingly, a
nationalization of the canal under the United Nations. They argue:
number of alternative suggestions have been put forward for main-
To concede to the tiny population of Panama the power to
taining the canal in effective operation.
control a vested interest of the whole community of nations
would be no more justifiable than to try to continue the
A. INTERNATIONALIZATION OF THE CANAL
present arrangement. To set up under the Organization of
President Truman proposed at the Potsdam Conference in 1945
American States a hemispheric agency for operating the
that the Panama Canal be internationalized along with other inter-
canal, a waterway which serves all maritime powers directly
national waterways. In this he was supported by Prime Minister
and all others indirectly, would open it to the same objections
Attlee of Great Britain, but the Russians vetoed the idea.79 President
which can be charged against a Danube Commission made up
only of riparian powers. There remains the alternative of
Truman's plan was not designed to avoid problems in Panama.
Rather, it was a package deal aimed at an international guarantee of
establishing under the United Nations a specialized agency,
free passage along all international waterways as a means of removing
the Panama Canal Commission, serving and responsible to
the community of nations, and including representatives of
possible future trouble spots. Since that time the Suez Canal has
the canal's principal users.
been nationalized by Egypt and the Danube River has fallen to the
Internationalization would leave unimpaired the real in-
mercy of the Danube Commission which is dominated by Soviet-
bloc countries.
terest of the United States, namely, the preservation of the
Stanford University political scientists, Martin B. Travis and
canal and access to it, good service at low cost, and a voice
in the operation of the canal. The security of the canal would
James T. Watkins, in an article appearing in Foreign Affairs, April
1959, present a case for internationalization of the Panama Canal
be, if anything, enhanced. Already hopelessly vulnerable, an
under United Nations auspices.⁸ Their reasons differ from those
internationalized canal might seem to a potential aggressor
motivating President Truman's 1945 suggestion. Travis and Watkins
a less attractive target than one under the exclusive juris-
diction of the United States. In any case, the United States
contend that the "changed nature of modern warfare" has "deprived
the canal of its original importance." With the outmoding of face-
would be entitled to come to the defense of the canal, if de-
fense were feasible, by acting within the United Nations
TO Demaree Bess, "The Panama Danger Zone," Saturday Evening Post. May 9, 1959, 74.
under article 51 of the charter or the "Uniting for Peace"
so Martin B. Travis and James T. Watkins, "Control of the Panama Canal: an Obsolete Shibboleth?"
Foreign Affairs, April 1959, pp. 407-418.
procedures. Such action in defense of an international
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UNITED STATES-PANAMA RELATIONS
UNITED STATES-PANAMA RELATIONS
agency would enjoy moral and practical support which the
It is stated, moreover, that by regionalization the United States would
defense of an exclusive interest claimed by the United States
not only strengthen the Organization of American States but reap a
could not evoke. The same principle would apply in the
number of political gains:
event of limited warfare, where, again, the United States
would be in a better moral position to attract the support of
A promise to multilaterize the Canal Zone will be another
the world community.
striking symbol of the nonimperialistic nature of our foreign
Good service at a reasonable cost could also be expected
policy. The move would be as forceful a demonstration of
from an international agency. Indeed, from a strictly eco-
our integrity as was the honoring of our early-made promise
nomic standpoint internationalization would offer every hope
of freedom to the Philippines. Further, the act would give
of bringing an improvement. Less exposed to special-interest
us a firm posture for maneuver with respect to future prob-
pressures than is the U.S. Congress, a Panama Canal Com-
lems regarding the Suez Canal. However, its most important
mission could more readily determine an optimum toll
and fundamental impact would be within the Americas. It
schedule for facilitating the flow of traffic and yet building
would be another demonstration-and a most impressive
up reserves for needed improvements. And finally, partici-
one-of our long-term willingness to work as partners with
pation in the operation of the canal would be insured as long
the other nations in the hemisphere.
as the United States remained one of the principal users.
C. PURCHASE FROM PANAMA
It might be argued that internationalization would be
injurious to certain interests claimed by Panama, which
Another political scientist, Prof. James L. Busey of the University
stands in a special relationship to the canal. Under inter-
of Colorado, opposes multilateralization of the Panama Canal under
national jurisdiction, Panama could expect little support for
either OAS or U.N. auspices. In his view-
grandiose schemes for third locks or a sea-level channel.
But, that, as we have seen, is the present situation. Then,
if the United States were to continue to run it under inter-
too, Panama's bargaining power, derived from pitting the
national authority, the bickering would increase. If opera-
claims of nationalism against those of the U.S. colossus, would
tions were to be handled by several participating powers, the
be lost. Yet this would be more than compensated for by
service would probably deteriorate and controversy would
the more effective support which Panama would obtain from
be inevitable. In any event, the unhappiest party of all
Latin American representatives on the Panama Canal Com-
would be Panama itself."
mission. Finally, Panama would lose to the international
Like his counterparts at Stanford and Northwestern Universities,
agency powers heretofore claimed (but not exercised) by
Professor Busey feels that the present circumstances are fraught with
itself with respect to the canal, but by the same measure
danger for the United States. He recommends that the United
it would render itself more secure from the arbitrary exercise
States—
of power by others.
now enter into negotiations with Panama with the object of
abandoning the foggy provisions of the 1903 convention, and
B. ORGANIZATION OF AMERICAN STATES CONTROL
of securing full and undivided U.S. sovereignty over the
The Department of Political Science of Northwestern University,
canal and the zone-or better still, propose to purchase the
in a study on the Organization of American States prepared, in 1959,
entire Central American half of the Republic of Panama,
on the request of the Senate Committee on Foreign Relations, recom-
from the zone's present eastern border to the Costa Rican
mends that the administration of the Panama Canal be turned over
frontier.83
to the OAS.81
If negotiations to purchase from Panama fail, Mr. Busey suggests
They take a dim view of the idea of giving the United Nations con-
building a canal in Nicaragua which-
trol "because of the tendency of the United Nations to invest con-
has the huge advantage of giving the United States full title
troversial issues with the politics of the cold war." They note "how
to a strip of territory located between two countries, instead
the Security Council of the United Nations muddled the Guatemalan
situation in 1954."
of cutting one in half.
According to the study, by regionalizing the canal through the
D. OTHER SUGGESTIONS
OAS, the United States would-
avoid the political dilemma of internationalizing it through
Other suggestions which crop up occasionally include the formation
a divided U.N. or having it eventually nationalized despite
of an agency of canal users to administer the canal or simply letting
ourselves by the Panamanians.
the canal revert to Panama.
at U.S. Cong., 86th, 1st sess., "United States-Latin American Relations, The Organization of American
James L. Busey, "Conflict in Panama," The New Leader, Feb. 15, 1960, p. 19.
States,' a study prepared at the request of the Subcommittee on American Republics Affairs of the Com-
Ibid.
mittee on Foreign Relations, by Northwestern University, Washington, Government Printing Office,
Dec. 24, 1959, pp. 66-67.
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UNITED STATES-PANAMA RELATIONS
UNITED STATES-PANAMA RELATIONS
IX. SUBCOMMITTEE FINDINGS AND RECOMMENDATIONS
Furthermore, by the terms of the treaty arrangements between the
United States and the Republic of Panama, the consent of both nations
(1) The subcommittee does not believe that either the interests of
would be necessary to undertake any scheme for international or
the Republic of Panama, the United States, or the users of the Panama
regional administration of the Panama Canal.
Canal would be served by the transfer of the control and operation of
As for purchasing the zone outright as has been suggested, given the
the canal.
degree of nationalism in Panama and in Latin America, the sub-
Turning over the canal's administration to the United Nations is
committee thinks any effort to effect purchase of the area is not only
advanced by its proponents as a means of relieving United States-
doomed to failure but is likely to stimulate great hostility and out-
Panama friction which can be exploited by enemies of the free world.
cries of "imperialism" not only in Panama but throughout Latin
Holders of this view rest their case on the presumption that the
America.
Panama Canal's strategic value has vanished in the light of recent
The possibility of building a new canal other than in Panama has
military developments.
been mentioned. The United States does hold exclusive treaty rights
The subcommittee believes that the strategic value of the canal
in Nicaragua to construct, maintain, control, and defend a canal.
continues to be an important consideration. The subcommittee is
(See p. 11.) A number of factors militate against the construction
convinced, moreover, that giving the United Nations control of the
at this time of an alternate canal route through Nicaragua. As
Panama Canal would facilitate Communist endeavors to disrupt the
reported on page 11 of this study, the Board of Consultants contracted
economic and political stability of the Western Hemisphere. As
by the Committee on Merchant Marine and Fisheries to study the
long as the Communists are bent on destroying inter-American
canal situation from a technical viewpoint recommended against a
unity, it makes no sense to give Communist-bloc countries a voice in
Nicaraguan Canal. However, the Board of Consultants is optimistic
the administration of a waterway which traverses the Western
about the possibility of a canal in Colombia, recommending that
Hemisphere. Administration of the Panama Canal by the Organization of
"further engineering studies of sea-level routes across the isthmus in
Colombia should be initiated and prosecuted vigorously." The sub-
American States poses drawbacks of a different nature.
committee concurs fully with the Board of Consultants in this matter.
The subcommittee finds that OAS administration of the canal has a
As for reversion to Panama, responsible Panamanians themselves do
certain regional appeal and might indeed be interpreted by the
not urge such a course. The cost of running the canal at its present
American Republics as a sincere commitment to partnership with
capacity and preparing it for future expanded traffic is well beyond the
them. However, maritime nations outside the hemisphere who rely
means of the small Republic. The most conservative estimate of the
on the canal are likely to greet regionalization of the canal less en-
costs to make improvements to provide additional capacity to meet
thusiastically. The following table showing the principal Panama Canal trade
the demands of international commerce beyond the year 2000 is
$61 million.88
routes discloses the vital interests which nations outside the Western
(2) the subcommittee recognizes that the efficient operation of the
Hemisphere share in the effective operation of the canal:84
Panama Canal depends in large measure upon the good will of the
Major Panama Canal trade routes, ranked by cargo tonnage volume for selected
Panamanian people toward the United States. We acknowledge that
fiscal years
the overwhelming presence of the United States in Panama makes an
inviting target for every sort of agitation. We believe, however, that
Trade route
1957
1956
1950
1949
1939
1930
it is possible for the United States and Panama to maintain normal,
friendly relations.
East coast United States-Asia
1
1
3
2
2
4
To this end, the subcommittee recommends that the agencies of
East coast United States-west coast South America
2
3
2
1
5
3
United States intercoasta
3
2
1
3
1
1
the U.S. Government in the Panama Canal Zone be scrupulously dili-
West coast South America-Europe
4
4
6
6
3
5
gent in applying the provisions of our treaty arrangements with the
West coast Canada-Europe
5
5
5
4
6
6
Australasia-Europe
6
7
4
5
7
7
Republic of Panama-the intent as well as the letter of our agreements.
West coast United States-Europe
7
6
7
7
4
2
West coast United States-east coast South America
8
8
13
12
14
11
The subcommittee recognizes that U.S. residents in the Canal Zone
East coast United States-Australasia
9
9
9
8
10
8
10
13
3
3
(1)
14
perform a great service for their country at certain personal sacrifices.
West Indies-Asia
West Indies-west coast South America
11
10
10
9
12
13
At the same time, American citizens in the Canal Zone have a special
East coast South America-west coast South America
12
11
8
3
15
13
3
Europe-Asia
13
(1)
(e)
3
11
responsibility to assist to the maximum extent toward furthering
East coast United States-Hawall
14
12
8
10
8
9
West Indies-west coast United States
15
15
12
13
9
10
amicable relations with nationals of the Republic of Panama. The
subcommittee approves every effort to assure U.S. citizens in the zone
a standard of living comparable with that which they would enjoy
1 Not among the 15 most important routes.
in continental United States. However, the Republic of Panama is
se U.S. Cong., 86th, 2d sess., "Report on a Long-Range Program for Isthmian Canal Transits," H. Rept.
No. 1960, Washington, GPO, June 23, 1960, p. 50.
no longer the isolated frontier civilization of construction days which
motivated the U.S. Government to adopt measures designed to miti-
a Ibid., p. 32.
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UNITED STATES-PANAMA RELATIONS
UNITED STATES-PANAMA RELATIONS
gate harsh living conditions. Unfortunately, there exists 8 human
the Department of State with regard to any legislation that might be
tendency to regard emergency measures which endure for a long
required to meet envisaged commitments.
period of time as vested interests. The subcommittee is confident
(7) The subcommittee recognizes that the overwhelming presence
that officials of the U.S. agencies operating in the Canal Zone, in
of the United States on the Isthmus of Panama will always be the
living up to our treaty commitments with Panama, will take into
source of some friction between the Republic of Panama and the
consideration the welfare of the residents of the zone. At the same
United States. In the prophetic words of William Howard Taft at
time, the subcommittee urges the Panama Canal Company and Zone
the outset of the construction of the canal:
Government to emphasize to their employees their responsibilities as
There are many other matters constantly arising between
U.S. citizens living in a unique situation.
(3) The subcommittee recognizes that Panama's unbalanced econ-
the American representatives on the isthmus and the Pana-
manian authorities calling for adjustment. We are living in
omy breeds human misery, leading to political instability. As the
the same house and family with them, so to speak, and if we
Republic's principal and most apparent source of income, the Panama
Canal becomes the target of bitter popular discontent.
do not get on in a friendly way it will be uncomfortable for
The subcommittee realizes that the Republic of Panama is largely
both.
devoid of resources with which the economy could be diversified.
The subcommittee is confident that wise leaders in both the United
But we are of the opinion that proper utilization of the resources
States and the Republic of Panama will work cooperatively in order
which Panama does possess would contribute to raising to satisfactory
to maintain the Panama Canal as a service to Panama, to the United
levels the living conditions of the large masses of Panamanian people.
States, and to all mankind.
The subcommittee hopes that Panama's leaders recognize that the
revenues from the Canal Zone are not adequate to sustain the eco-
nomic life of the Panamanian community.
The subcommittee recommends that the United States cooperate
generously by providing technical and financial assistance for projects
designed to broaden the base of Panama's economy. However, the
subcommittee realizes that it is up to the leaders of the Government
of the Republic of Panama to take the necessary measures which
would make U.S. assistance effective.
(4) The subcommittee acknowledges that the question of flying the
Panamanian flag within the Canal Zone as a recognition of Panama's
'titular sovereignty" is charged with dangers that could explode
beyond Panama-United States relations. The issue offers a constant
temptation to demagogs, with the consequent possibility of an ugly
incident which could be used to arouse anti-American sentiment
throughout the hemisphere.
The subcommittee is convinced, however, that to accede to the
Panamanian request, after more than half a century in which only
the U.S. flag has been raised in the Canal Zone, would constitute a
major departure from established policy. In the subcommittee's judg-
ment, such a proposal would represent a basic change in treaty inter-
pretation. Hence, should the Government of the United States deter-
mine at any time in the future that a concession of this magnitude
would be in the national interest, such a change should be accomplished
only after due constitutional process.
(5) The subcommittee believes that U.S. relations with the Republic
of Panama are weakened by dissension regarding the Canal Zone
within the administration. Conflicting views of the Department of
State, the Panama Canal Company, and the Department of Defense
should be adjusted at the highest level-the Presidency-and then
firmly administered with a single voice.
(6) The subcommittee recognizes that congressional delays in imple-
menting some of the treaty provisions have been responsible for a meas-
ure of resentment in Panama. With a view to reducing the possibil-
ities of congressional disapproval, the subcommittee recommends that
in the future the appropriate committees of Congress be consulted by
-23-
UNITED STATES-PANAMA RELATIONS
ARTICLE II.
The Republic of Panama grants to the United States in perpetuity
the use, occupation and control of a zone of land and land under water
APPENDIXES
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 three
APPENDIX A
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
CONVENTION FOR THE CONSTRUCTION OF A SHIP
marine miles from mean low water mark with the proviso that the
CANAL, 1903
cities of Panama and Colon and the harbors adjacent to said cities,
which are included within the boundaries of the zone above described,
Concluded November 18, 1903; ratification advised by the Senate
shall not be included within this grant. The Republic of Panama
February 23, 1904; ratified by President February 25, 1904; ratifi-
further grants to the United States in perpetuity the use, occupation
cations exchanged February 26, 1904; proclaimed February 26, 1904.
and control of any other lands and waters outside of the zone above
(U.S. Stats., vol. 33.)
described which may be necessary and convenient for the construc-
ARTICLES.
tion, maintenance, operation, sanitation and protection of the said
I. Independence of Panama.
XIV. Compensation.
Canal or of any auxiliary canals or other works necessary and con-
II. Canal zone.
XV. Joint commission.
venient for the construction, maintenance, operation, sanitation and
III. Authority in canal zone.
XVI. Extradition.
protection of the said enterprise.
IV. Subsidiary rights.
XVII. Ports of Panama.
The Republic of Panama further grants in like manner to the United
V. Monopoly for construction, etc.
XVIII. Neutrality rules.
VI. Private property.
XIX. Free transport.
States in perpetuity all islands within the limits of the zone above
VII. Panama; Colon; harbors.
XX. Cancellation of existing treaties.
described and in addition thereto the group of small islands in the
VIII. Panama Canal Company and
XXI. Anterior debts, concessions, etc.
Bay of Panama, named, Perico, Naos, Culebra and Flamenco.
railroad.
XXII. Renunciation of rights under
IX. Ports at entrance of canal.
concessionary contracts.
ARTICLE III.
X. Taxes, etc.
XXIII. Protection of canal.
XI. Official dispatches.
XXIV. Changeingoverninent, laws, etc.
XII. Access of employees.
XXV. Coaling stations.
The Republic of Panama grants to the United States all the rights,
XIII. Importation into zone.
XXVI. Ratification.
power and authority within the zone mentioned and described in
The United States of America and the Republic of Panama being
Article II of this agreement and within the limits of all auxiliary lands
desirous to insure the construction of a ship canal across the Isthmus
and waters mentioned and described in said Article II which the
of Panama to connect the Atlantic and Pacific oceans, and the Con-
United States would possess and exercise if it were the sovereign of
gress of the United States of America having passed an act approved
the territory within which said lands and waters are located to the
June 28, 1902, in furtherance of that object, by which the President
entire exclusion of the exercise by the Republic of Panama of any
of the United States is authorized to acquire within a reasonable time
such sovereign rights, power or authority.
the control of the necessary territory of the Republic of Colombia,
and the sovereignty of such territory being actually vested in the
ARTICLE IV.
Republic of Panama, the high contracting parties have resolved for
that purpose to conclude a convention and have accordingly appointed
As rights subsidiary to the above grants the Republic of Panama
as their plenipotentiaries,-
grants in perpetuity to the United States the right to use the rivers,
The President of the United States of America, John Hay, Secre-
streams, lakes and other bodies of water within its limits for naviga-
tary of State, and
tion, 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
The Government of the Republic of Panama, Philippe Bunau-
Varilla, Envoy Extraordinary and Minister Plenipotentiary of the
thereof may be necessary and convenient for the construction, main-
Republic of Panama, thereunto specially empowered by said govern-
tenance, operation, sanitation and protection of the said Canal.
ment, who after communicating with each other their respective full
ARTICLE V.
powers, found to be in good and due form, have agreed upon and
concluded the following articles:
The Republic of Panama grants to the United States in perpetuity
a monopoly for the construction, maintenance and operation of any
ARTICLE I.
system of communication by means of canal or railroad across its ter-
The United States guarantees and will maintain the independence
ritory between the Caribbean Sea and the Pacific ocean.
of the Republic of Panama.
-24-
UNITED STATES-PANAMA RELATIONS
UNITED STATES-PANAMA RELATIONS
ARTICLE VI.
in case the Government of Panama is unable or fails in its duty to
enforce this compliance by the cities of Panama and Colon with the
The grants herein contained shall in no manner invalidate the titles
sanitary ordinances of the United States the Republic of Panama
or rights of private land holders or owners of private property in the
grants to the United States the right and authority to enforce the
said zone or in or to any of the lands or waters granted to the United
same.
States by the provisions of any Article of this treaty, nor shall they
The same right and authority are granted to the United States for
interfere with the rights of way over the public roads passing through
the maintenance of public order in the cities of Panama and Colon
the said zone or over any of the said lands or waters unless said rights
and the territories and harbors adjacent thereto in case the Republic
of way or private rights shall conflict with rights herein granted to
of Panama should not be, in the judgment of the United States, able
the United States in which case the rights of the United States shall
to maintain such order.
be superior. All damages caused to the owners of private lands or
ARTICLE VIII.
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
The Republic of Panama grants to the United States all rights which
or employees, or by reason of the construction, maintenance, opera-
it now has or hereafter may acquire to the property of the New Panama
tion, sanitation and protection of the said Canal or of the works of
Canal Company and the Panama Railroad Company as a result of the
sanitation and protection herein provided for, shall be appraised and
transfer of sovereignty from the Republic of Colombia to the Repub-
settled by a joint Commission appointed by the Governments of the
lic of Panama over the Isthmus of Panama and authorizes the New
United States and the Republic of Panama, whose decisions as to such
Panama Canal Company to sell and transfer to the United States its
damages shall be final and whose awards as to such damages shall be
rights, privileges, properties and concessions as well as the Panama
paid solely by the United States. No part of the work on said Canal
Railroad and all the shares or part of the shares of that company;
or the Panama railroad or on any auxiliary works relating thereto
but the public lands situated outside of the zone described in Article
and authorized by the terms of this treaty shall be prevented, delayed
II of this treaty now included in the concessions to both said enter-
or impeded by or pending such proceedings to ascertain such damages.
prises and not required in the construction or operation of the Canal
The appraisal of said private lands and private property and the assess-
shall revert to the Republic of Panama except any property now
ment of damages to them shall be based upon their value before the
owned by or in the possession of said companies within Panama or
date of this convention.
Colon or the ports or terminals thereof.
ARTICLE VII.
ARTICLE IX.
The Republic of Panama grants to the United States within the
limits of the cities of Panama and Colon and their adjacent harbors and
The United States agrees that the ports at either entrance of the
within the territory adjacent thereto the right to acquire by purchase
Canal and the waters thereof, and the Republic of Panama agrees that
or by the exercise of the right of eminent domain, any lands, buildings,
the towns of Panama and Colon shall be free for all time so that there
water rights or other properties necessary and convenient for the con-
shall not be imposed or collected custom house tolls, tonnage, anchor-
struction, maintenance, operation and protection of the Canal and of
age, lighthouse, wharf, pilot, or quarantine dues or any other charges or
any works of sanitation, such as the collection and disposition of sewage
taxes of any kind upon any vessel using or passing through the Canal or
and the distribution of water in the said cities of Panama and Colon,
belonging to or employed by the United States, directly or indirectly,
which in the discretion of the United States may be necessary and
in connection with the construction, maintenance, operation, sanita-
convenient for the construction, maintenance, operation, sanitation
tion and protection of the main Canal, or auxiliary works, or upon the
and protection of the said Canal and railroad. All such works of
cargo, officers, crew, or passengers of any such vessels, except such
sanitation, collection and disposition of sewage and distribution of
tolls and charges as may be imposed by the United States for the use
water in the cities of Panama and Colon shall be made at the expense
of the Canal and other works, and except tolls and charges imposed
of the United States, and the Government of the United States, its
by the Republic of Panama upon merchandise destined to be intro-
agents or nominees shall be authorized to impose and collect water
duced for the consumption of the rest of the Republic of Panama, and
rates and sewerage rates which shall be sufficient to provide for the
upon vessels touching at the ports of Colon and Panama and which do.
payment of interest and the amortization of the principal of the cost
not cross the Canal.
of said works within a period of fifty years and upon the expiration
The Government of the Republic of Panama shall have the right to
of said term of fifty years the system of sewers and water works shall
establish in such ports and in the towns of Panama and Colon such
revert to and become the properties of the cities of Panama and Colon
houses and guards as it may deem necessary to collect duties on impor-
respectively, and the use of the water shall be free to the inhabitants
tations destined to other portions of Panama and to prevent contraband
of Panama and Colon, except to the extent that water rates may be
trade. The United States shall have the right to make use of the towns
necessary for the operation and maintenance of said system of sewers
and harbors of Panama and Colon as places of anchorage, and for mak-
and water.
ing repairs, for loading, unloading, depositing, or transshipping cargoes
The Republic of Panama agrees that the cities of Panama and Colon
either in transit or destined for the service of the Canal and for other
shall comply in perpetuity with the sanitary ordinances whether of a
works pertaining to the Canal.
preventive or curative character prescribed by the United States and
-25-
UNITED STATES-PANAMA RELATIONS
UNITED STATES-PANAMA RELATIONS
ARTICLE X.
convention and also an annual payment during the life of this conven-
tion of two hundred and fifty thousand dollars ($250,000) in like gold
The Republic of Panama agrees that there shall not be imposed any
coin, beginning nine years after the date aforesaid.
taxes, national, municipal, departmental, or of any other class, upon
The provisions of this Article shall be in addition to all other bene-
the Canal, the railways and auxiliary works, tugs and other vessels
fits assured to the Republic of Panama under this convention.
employed in the service of the Canal, store houses, work shops, offices,
But no delay or difference of opinion under this Article or any other
quarters for laborers, factories of all kinds, warehouses, wharves,
provisions of this treaty shall affect or interrupt the full operation and
machinery and other works, property, and effects appertaining to the
effect of this convention in all other respects.
Canal or railroad and auxiliary works, or their officers or employees,
situated within the cities of Panama and Colon, and that there shall
ARTICLE XV.
not be imposed contributions or charges of a personal character of any
kind upon officers, employees, laborers, and other individuals in the
The joint commission referred to in Article VI shall be established
service of the Canal and railroad and auxiliary works.
as follows:
The President of the United States shall nominate two persons and
ARTICLE XI.
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 United States agrees that the official dispatches of the Govern-
the Commission (by reason of their being equally divided in conclu-
ment of the Republic of Panama shall be transmitted over any tele-
sion) an umpire shall be appointed by the two Governments who shall
graph and telephone lines established for canal purposes and used for
render the decision. In the event of the death, absence, or incapacity
public and private business at rates not higher than those required
of a Commissioner or Umpire, or of his omitting, declining or ceasing
from officials in the service of the United States.
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
ARTICLE XII.
Commission or by the umpire shall be final.
The Government of the Republic of Panama shall permit the immi-
ARTICLE XVI.
gration and free access to the lands and workshops of the Canal and
its auxiliary works of all employees and workmen of whatever nation-
The two Governments shall make adequate provision by future
ality under contract to work upon or seeking employment upon or in
agreement for the pursuit, capture, imprisonment, detention and
any wise connected with the said Canal and its auxiliary works, with
delivery within said zone and auxiliary lands to the authorities of the
their respective families, and all such persons shall be free and exempt
Republic of Panama of persons charged with the commitment of
from the military service of the Republic of Panama.
crimes, felonies or misdemeanors without said zone and for the pur-
suit, capture, imprisonment, detention and delivery without said zone
ARTICLE XIII.
to the authorities of the United States of persons charged with the
commitment of crimes, felonies and misdemeanors within said zone
The United States may import at any time into the said zone and
and auxiliary lands.
auxiliary lands, free of custom duties, imposts, taxes, or other charges,
ARTICLE XVII.
and without any restrictions, any and all vessels, dredges, engines,
cars, machinery, tools, explosives, materials, supplies, and other arti-
The Republic of Panama grants to the United States the use of all
cles necessary and convenient in the construction, maintenance, opera-
the ports of the Republic open to commerce as places of refuge for any
tion, sanitation and protection of the Canal and auxiliary works, and
vessels employed in the Canal enterprise, and for all vessels passing or
all provisions, medicines, clothing, supplies and other things necessary
bound to pass through the Canal which may be in distress and be
and convenient for the officers, employees, workmen and laborers in
driven to seek refuge in said ports. Such vessels shall be exempt from
the service and employ of the United States and for their families.
anchorage and tonnage dues on the part of the Republic of Panama.
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
ARTICLE XVIII.
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
The Canal, when constructed, and the entrances thereto shall be
Panama.
neutral in perpetuity, and shall be opened upon the terms provided
ARTICLE XIV.
for by Section I of Article three of, and in conformity with all the
stipulations of, the treaty entered into by the Governments of the
As the price or compensation for the rights, powers and privileges
United States and Great Britain on November 18, 1901.
granted in this convention by the Republic of Panama to the United
States, the Government of the United States agrees to pay to the
ARTICLE XIX.
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
The Government of the Republic of Panama shall have the right to
transport over the Canal its vessels and its troops and munitions of
UNITED STATES-PANAMA RELATIONS
UNITED STATES-PANAMA RELATIONS
war in such vessels at all times without paying charges of any kind.
under any contracts or concessions, with said Wyse, the Universal
The exemption is to be extended to the auxiliary railway for the
Panama Canal Company, the Panama Railroad Company and the
transportation of persons in the service of the Republic of Panama,
New Panama Canal Company.
or of the police force charged with the preservation of public order
The aforesaid rights and property shall be and are free and released
outside of said zone, as well as to their baggage, munitions of war
from any present or reversionary interest in or claims of Panama and
and supplies.
the title of the United States thereto upon consummation of the con-
ARTICLE XX.
templated purchase by the United States from the New PanamaCanal
Company, shall be absolute, so far as concerns the Republic of Panama,
If by virtue of any existing treaty in relation to the territory of the
excepting always the rights of the Republic specifically secured under
Isthmus of Panama, whereof the obligations shall descend or be
this treaty.
assumed by the Republic of Panama, there may be any privilege or
ARTICLE XXIII.
concession in favor the the Government or the citizens and subjects
of a third power relative to an interoceanic means of communication
If it should become necessary at any time to employ armed forces
which in any of its terms may be incompatible with the terms of the
for the safety or protection of the Canal, or of the ships that make use
present convention, the Republic of Panama agrees to cancel or mod-
of the same, or the railways and auxiliary works, the United States
ify such treaty in due form, for which purpose it shall give to the
shall have the right, at all times and in its discretion, to use its police
said third power the requisite notification within the term of four
and its land and naval forces or to establish fortifications for these
months from the date of the present convention, and in case the exist-
purposes.
ing treaty contains no clause permitting its modifications or annul-
ARTICLE XXIV.
ment, the Republic of Panama agrees to procure its modification or
annulment in such form that there shall not exist any conflict with the
No change either in the Government or in the laws and treaties of
stipulations of the present convention.
the Republic of Panama shall, without the consent of the United
States, affect any right of the United States under the present con-
ARTICLE XXI.
vention, or under any treaty stipulation between the two countries
that now exists or may hereafter exist touching the subject matter of
The rights and privileges granted by the Republic of Panama to the
this convention.
United States in the preceding Articles are understood to be free of
If the Republic of Panama shall hereafter enter as a constituent into
all anterior debts, liens, trusts, or liabilities, or concessions or privi-
any other Government or into any union or confederation of states, so
legas to other Governments, corporations, syndicates or individuals,
as to merge her sovereignty or independence in such Government,
and consequently, if there should arise any claims on account of the
union or confederation, the rights of the United States under this con-
present concessions and privileges or otherwise, the claimants shall
vention shall not be in any respect lessened or impaired.
resort to the Government of the Republic of Panama and not to the
United States for any indemnity or compromise which may be
ARTICLE XXV.
required.
ARTICLE XXII.
For the better performance of the engagements of this convention
and to the end of the efficient protection of the Canal and the preser-
The Republic of Panama renounces and grants to the United States
vation of its neutrality, the Government of the Republic of Panama
the participation to which it might be entitled in the future earnings
will sell or lease to the United States lands adequate and necessary
of the Canal under Article XV of the concessionary contract with
for naval or coaling stations on the Pacific coast and on the western
Lucien N. B. Wyse now owned by the New Panama Canal Company
Caribbean coast of the Republic at certain points to be agreed upon
and any and all other rights or claims of a pecuniary nature arising
with the President of the United States.
under or relating to said concession, or arising under or relating to
the concessions to the Panama Railroad Company or any extension
ARTICLE XXVI.
or modification thereof; and it likewise renounces, confirms and
grants to the United States, now and hereafter, all the rights and
This convention when signed by the Plenipotentiaries of the Con-
property reserved in the said concessions which otherwise would
tracting Parties shall be ratified by the respective Governments and
belong to Panama at or before the expiration of the terms of ninety-
the ratifications shall be exchanged at Washington at the earliest date
nine years of the concessions granted to or held by the above men-
possible.
tioned party and companies, and all right, title and interest which it
In faith whereof the respective Plenipotentiaries liave signed the
now has or may hereafter have, in and to the lands, canal, works,
present convention in duplicate and have hereunto affixed their
property and rights held by the said companies under said concessions
respective seals.
or otherwise, and acquired or to be acquired by the United States
Done at the City of Washington the 18th day of November in the
from or through the New Panama Canal Company, including any
year of our Lord nineteen hundred and three.
property and rights which might or may in the future either by lapse
JOHN HAY
[SEAL]
of time, forfeiture or otherwise, revert to the Republic of Panama
P. BUNAU VARILLA [SEAL]
-27-
UNITED STATES-PANAMA RELATIONS
In view of the official and formal opening of the Panama Canal on
July 12, 1920, the United States of America and the Republic of
Panama declare that the provisions of the Convention of November
APPENDIX B
18, 1903, contemplate the use, occupation and control by the United
States of America of the Canal Zone and of the additional lands and
GENERAL TREATY OF FRIENDSHIP AND COOPERATION
waters under the jurisdiction of the United States of America for the
BETWEEN THE UNITED STATES OF AMERICA AND
purposes of the efficient maintenance, operation, sanitation and
PANAMA
protection of the Canal and of its auxiliary works.
The United States of America will continue the maintenance of the
Signed at Washington, March 2, 1936; ratification advised by the Senate
Panama Canal for the encouragement and use of interoceanic com-
of the United States, July 25, 1939; ratified by the President of the
merce, and the two Governments declare their willingness to cooperate,
United States, July 26, 1939; ratified by Panama, July 17, 1939;
as far as it is feasible for them to do so, for the purpose of insuring the
ratifications exchanged at Washington, July 27, 1939; proclaimed
full and perpetual enjoyment of the benefits of all kinds which the
by the President of the United States, July 27, 1939.
Canal should afford the two nations that made possible its construction
as well as all nations interested in world trade.
By THE PRESIDENT OF THE UNITED STATES OF AMERICA
ARTICLE II
A PROCLAMATION
The United States of America declares that the Republic of Panama
WHEREAS a Treaty between the United States of America and the
has loyally and satisfactorily complied with the obligations which it
Republic of Panama to strengthen further the bonds of friendship and
entered into under Article II of the Convention of November 18,
cooperation between the two countries and to regulate on a stable and
1903, by which it granted in perpetuity to the United States the use,
mutually satisfactory basis certain questions which have arisen as a
occupation and control of the zone of land and land under water as
result of the construction of the interoceanic canal across the Isthmus
described in the said Article, of the islands within the limits of said
of Panama was concluded and signed by their respective Plenipoten-
zone, of the group of small islands in the Bay of Panama, named
tiaries at Washington on the second day of March, one thousand nine
Perico, Naos, Culebra and Flamenco, and of any other lands and
hundred and thirty-six, the original of which Treaty, being in the
waters outside of said zone necessary and convenient for the construc-
English and Spanish languages, is word for word as follows:
tion, maintenance, operation, sanitation and protection of the Panama
The United States of America and the Republic of Panama, ani-
Canal or of any auxiliary canals or other works, and in recognition
mated by the desire to strengthen further the bonds of friendship
thereof the United States of America hereby renounces the grant made
and cooperation between the two countries and to regulate on a
to it in perpetuity by the Republic of Panama of the use, occupation
stable and mutually satisfactory basis certain questions which have
and control of lands and waters, in addition to those now under the
arisen as a result of the construction of the interoceanic canal across
jurisdiction of the United States of America outside of the zone as
the Isthmus of Panama, have decided to conclude a treaty, and have
described in Article IT of the aforesaid Convention, which may be
designated for this purpose as their Plenipotentiaries:
necessary and convenient for the construction, maintenance, opera-
The President of the United States of America:
tion, sanitation and protection of the Panama Canal or of any auxiliary
Mr. Cordell Hull, Secretary of State of the United States of America,
canals or other works necessary and convenient for the construction,
and Mr. Sumner Welles, Assistant Secretary of State of the United
maintenance, operation, sanitation and protection of the said enter-
States of America; and
prise.
The President of the Republic of Panama:
While both Governments agree that the requirement of further
The Honorable Doctor Ricardo J. Alfaro, Envoy Extraordinary and
lands and waters for the enlargement of the existing facilities of the
Minister Plenipotentiary of Panama to the United States of America,
Canal appears to be improbable, they nevertheless recognize, subject
and The Honorable Doctor Narciso Garay, Envoy Extraordinary and
to the provisions of Articles I and x of this Treaty, their joint obliga-
Minister Plenipotentiary of Panama on special mission;
tion to insure the effective and continuous operation of the Canal and
Who, having communicated their respective full powers to each
the preservation of its neutrality, and consequently, if, in the event
other, which have been found to be in good and due form, have agreed
of some now unforeseen contingency, the utilization of lands or waters
upon the following:
additional to those already employed should be in fact necessary for
ARTICLE I
the maintenance, sanitation or efficient operation of the Canal, or
for its effective protection, the Governments of the United States of
Article I of the Convention of November 18, 1903, is hereby
America and the Republic of Panama will agree upon such measures
superseded.
There shall be a perfect, firm and inviolable peace and sincere
as it may be necessary to take in order to insure the maintenance,
sanitation, efficient operation and effective protection of the Canal, in
friendship between the United States of America and the Republic of
Panama and between their citizens.
which the two countries are jointly and vitally interested.
-28-
UNITED STATES-PANAMA RELATIONS
UNITED STATES-PANAMA RELATIONS
ARTICLE III
unloading cargoes and receiving or disembarking passengers to or
from the territory under the jurisdiction of the Republic of Panama.
In order to enable the Republic of Panama to take advantage of
The Republic of Panama will permit vessels entering at or clearing
the commercial opportunities inherent in its geographical situation,
from the ports of Panamá or Colón, in case of emergency and also
the United States of America agrees as follows:
under suitable regulations and upon the payment of proper charges,
.1) The sale to individuals of goods imported into the Canal Zone
to use and enjoy the dockage and other facilities of said ports for the
or purchased, produced or manufactured therein by the Government
purpose of receiving or disembarking passengers to or from the terri-
of the United States of America shall be limited by it to the persons
tory of the Republic of Panama under the jurisdiction of the United
included in classes (a) and (b) of Section 2 of this Article; and with
States of America, and of loading and unloading cargoes either in
regard to the persons included in classes (c), (d) and (e) of the said
to the Canal.
transit or destined for the service of the Canal or of works pertaining
Section and members of their families, the sales above mentioned
shall be made only when such persons actually reside in the Canal
7) The Government of the United States of America will extend
Zone.
to private merchants residing in the Republic of Panama full oppor-
2) No person who is not comprised within the following classes
tunity for making sales to vessels arriving at terminal ports of the
shall be entitled to reside within the Canal Zone:
Canal or transiting the Canal, subject always to appropriate adminis-
(a) Officers, employees, workmen or laborers in the service or
trative regulations of the Canal Zone.
employ of the United States of America, the Panama Canal or the
Panama Railroad Company, and members of their families actually
ARTICLE IV
residing with them;
(b) Members of the armed forces of the United States of America
The Government of the Republic of Panama shall not impose-
and members of their families actually residing with them;
import duties or taxes of any kind on goods destined for or consigned
(c) Contractors operating in the Canal Zone and their employees,
to the agencies of the Government of the United States of America in
workmen and laborers during the performance of contracts;
the Republic of Panama when the goods are intended for the official
(d) Officers, employees or workmen of companies entitled under
use of such agencies, or upon goods destined for or consigned to per-
Section 5 of this Article to conduct operations in the Canal Zone;
sons included in classes (a) and (b) in Section 2 of Article III of this
(e) Persons engaged in religious, welfare, charitable, educational,
Treaty, who reside or sojourn in territory under the jurisdiction of
recreational and scientific work exclusively in the Canal Zone;
the Republic of Panama during the performance of their service
(f) Domestic servants of all the beforementioned persons and
with the United States of America, the Panama Canal or the Panama
members of the families of the persons in classes (c), (d) and (e)
Railroad Company, when the goods are intended for their own use
actually residing with them.
and benefit.
3) No dwellings belonging to the Government of the United States
The United States of America shall not impose import duties or
of America or to the Panama Railroad Company and situated within
taxes of any kind on goods, wares and merchandise passing from
the Canal Zone shall be rented, leased or sublet except to persons with-
territory under the jurisdiction of the Republic of Panama into the
in classes (a) to (e), inclusive of Section 2 hereinabove.
Canal Zone.
4) The Government of the United States of America will continue
No charges of any kind shall be imposed by the authorities of the
to cooperate in all proper ways with the Government of the Republic
United States of America upon persons residing in territory under
of Panama to prevent violations of the immigration and customs laws
the jurisdiction of the Republic of Panama passing from the said ter-
of the Republic of Panama, including the smuggling into territory
ritory into the Canal Zone, and no charges of any kind shall be im-
under the jurisdiction of the Republic of goods imported into the
posed by the authorities of the Republic of Panama upon persons in
Canal Zone or purchased, produced or manufactured therein by the
the service of the United States of America or residing in the Canal
Government of the United States of America.
Zone passing from the Canal Zone into territory under the jurisdiction
5) With the exception of concerns having a direct relation to the
of the Republic of Panama, all other persons passing from the Canal
operation, maintenance, sanitation or protection of the Canal, such
Zone into territory under the jurisdiction of the Republic of Panama
as those engaged in the operation of cables, shipping, or dealing in oil
being subject to the full effects of the immigration laws of the Republic.
or fuel, the Government of the United States of America will not
In view of the fact that the Canal Zone divides the territory under
permit the establishment in the Canal Zone of private business
the jurisdiction of the Republic of Panama, the United States of Amer-
enterprises other than those existing therein at the time of the sig-
ica agrees that, subject to such police regulations as circumstances
nature of this Treaty.
may require, Panamanian citizens who may ocasionally be deported
6) In view of the proximity of the port of Balboa to the city of
from the Canal Zone shall be assured transit through the said Zone,
Panamá and of the port of Cristobal to the city of Colón, the United
in order to pass from one part to another of the territory under the
States of America will continue to permit, under suitable regulations
jurisdiction of the Republic of Panama.
and upon the payment of proper charges, vessels entering at or clear-
ing from the ports of the Canal Zone to use and enjoy the dockage
and other facilities of the said ports for the purpose of loading and
UNITED STATES-PANAMA RELATIONS
-29-
UNITED STATES-PANAMA RELATIONS
ARTICLE III
unloading cargoes and receiving or disembarking passengers to or
In order to enable the Republic of Panama to take advantage of
from the territory under the jurisdiction of the Republic of Panama.
the commercial opportunities inherent in its geographical situation,
The Republic of Panama will permit vessels entering at or clearing
the United States of America agrees as follows:
from the ports of Panamá or Colón, in case of emergency and also
.1) The sale to individuals of goods imported into the Canal Zone
under suitable regulations and upon the payment of proper charges,
or purchased, produced or manufactured therein by the Government
to ust and enjoy the dockage and other facilities of said ports for the
of the United States of America shall be limited by it to the persons
purpose of receiving or disembarking passengers to or from the terri-
included in classes (a) and (b) of Section 2 of this Article; and with
tory of the Republic of Panama under the jurisdiction of the United
regard to the persons included in classes (c), (d) and (e) of the said
States of America, and of loading and unloading cargoes either in
Section and members of their families, the sales above mentioned
to the Canal.
transit or destined for the service of the Canal or of works pertaining
shall be made only when such persons actually reside in the Canal
Zone.
7) The Government of the United States of America will extend
2) No person who is not comprised within the following classes
to private merchants residing in the Republic of Panama full oppor-
shall be entitled to reside within the Canal Zone:
tunity for making sales to vessels arriving at terminal ports of the
(a) Officers, employees, workmen or laborers in the service or
Canal or transiting the Canal, subject always to appropriate adminis-
trative regulations of the Canal Zone.
employ of the United States of America, the Panama Canal or the
Panama Railroad Company, and members of their families actually
ARTICLE IV
residing with them;
(b) Members of the armed forces of the United States of America
The Government of the Republic of Panama shall not impose-
and members of their families actually residing with them;
import duties or taxes of any kind on goods destined for or consigned
(c) Contractors operating in the Canal Zone and their employees,
to the agencies of the Government of the United States of America in
workmen and laborers during the performance of contracts;
the Republic of Panama when the goods are intended for the official
(d) Officers, employees or workmen of companies entitled under
use of such agencies, or upon goods destined for or consigned to per--
Section 5 of this Article to conduct operations in the Canal Zone;
sons included in classes (a) and (b) in Section 2 of Article III of this
(e) Persons engaged in religious, welfare, charitable, educational,
Treaty, who reside or sojourn in territory under the jurisdiction of
recreational and scientific work exclusively in the Canal Zone;
the Republic of Panama during the performance of their service
(f) Domestic servants of all the beforementioned persons and
with the United States of America, the Panama Canal or the Panama
members of the families of the personsvin classes (c), (d) and (e)
Railroad Company, when the goods are intended for their own use.
actually residing with them.
and benefit.
3) No dwellings belonging to the Government of the United States
The United States of America shall not impose import duties or
of America or to the Panama Railroad Company and situated within
taxes of any kind on goods, wares and merchandise passing from
the Canal Zone shall be rented, leased or sublet except to persons with-
Canal Zone.
territory under the jurisdiction of the Republic of Panama into the
in classes (a) to (e), inclusive of Section 2 hereinabove.
4) The Government of the United States of America will continue
No charges of any kind shall be imposed by the authorities of the
to cooperate in all proper ways with the Government of the Republic
United States of America upon persons residing in territory under
of Panama to prevent violations of the immigration and customs laws
the jurisdiction of the Republic of Panama passing from the said ter-
of the Republic of Panama, including the smuggling into territory
ritory into the Canal Zone, and no charges of any kind shall be im-
under the jurisdiction of the Republic of goods imported into the
posed by the authorities of the Republic of Panama upon persons in
Canal Zone or purchased, produced or manufactured therein by the
the service of the United States of America or residing in the Canal
Government of the United States of America.
Zone passing from the Canal Zone into territory under the jurisdiction
5) With the exception of concerns having a direct relation to the
of the Republic of Panama, all other persons passing from the Canal
operation, maintenance, sanitation or protection of the Canal, such
Zone into territory under the jurisdiction of the Republic of Panama
as those engaged in the operation of cables, shipping, or dealing in oil
being subject to the full effects of the iminigration laws of the Republic
or fuel, the Government of the United States of America will not
In view of the fact that the Canal Zone divides the territory under
permit the establishment in the Canal Zone of private business
the jurisdiction of the Republic of Panama, the United States of Amer-
enterprises other than those existing therein at the time of the sig-
ica agrees that, subject to such police regulations as circumstances
nature of this Treaty.
may require, Panamanian citizens who may ocasionally be deported
6) In. view of the proximity of the port of Balboa to the city of
Panamá and of the port of Cristobal to the city of Colón, the United
from the Canal Zone shall be assured transit through the said Zone,
in order to pass from one part to another of the territory under the
States of America will continue to permit, under suitable regulations
jurisdiction of the Republic of Panama.
and upon the payment of proper charges, vessels entering at or clear-
ing from the ports of the Canal Zone to use and enjoy the dockage
and other facilities of the said ports for the purpose of loading and
-30-
UNITED STATES-PANAMA RELATIONS
UNITED STATES-PANAMA RELATIONS
ARTICLE V
or wharves with passengers destined for the Republic; and that the
appropriate authorities of the Panama Canal will adopt such adminis-
Article IX of the Convention of November 18, 1903, is hereby
trative regulations regarding persons entering ports of the Canal Zone
superseded.
and destined to points within the jurisdiction of the Republic of
The Republic of Panama has the right to impose upon merchandise
Panama as will facilitate the exercise by the authorities of Panama
destined to be introduced for use or consumption in territory under
of their jurisdiction in the manner provided in Paragraph 4 of this
the jurisdiction of the Republic of Panama, and upon vessels touching
Article for the purposes stated in Paragraph 3 thereof.
at Panamanian ports and upon the officers, crew or passengers of
such vessels, the taxes or charges provided by the laws of the Republic
ARTICLE VI
of Panama; it being understood that the Republic of Panama will
continue directly and exclusively to exercise its jurisdiction over the
The first sentence of Article VII of the Convention of November
ports of Panamá and Colón and to operate exclusively with Pana-
18, 1903, is hereby amended so as to omit the following phrase: "or
manian personnel such facilities as are or may be established therein
by the exercise of the right of eminent domain".
by the Republic or by its authority. However, the Republic of
The third paragraph of article VII of the Convention of November
Panama shall not impose or collect any charges or taxes upon any
18, 1903, is hereby abrogated.
vessel using or passing through the Canal which does not touch at a
port under Panamanian jurisdiction or upon the officers, crew or
ARTICLE VII
passengers of such vessels, unless they enter the Republic; it being
also understood that taxes and charges imposed by the Republic of
Beginning with the annuity payable in 1934 the payments under
Panama upon vessels using or passing through the Canal which touch
Article XIV of the Convention of November 18, 1903, between the
at ports under Panamanian jurisdiction, or upon their cargo, officers,
United States of America and the Republic of Panama, shall be four
crew or passengers, shall not be higher than those imposed upon
hundred and thirty thousand Balboas (B/430,000.00) as defined by
vessels which touch only at ports under Panamanian jurisdiction and
the agreement embodied in an exchange of notes of this date. The
do not transit the Canal, or upon their cargo, officers, crew or
United States of America may discharge its obligation with respect
to any such payment, upon payment in any coin or currency, pro-
passengers.
The Republic of Panama also has the right to determine what
vided the amount so paid is the equivalent of four hundred and thirty
persons or classes of persons arriving at ports of the Canal Zone shall
thousand Balboas (B/430,000.00) as so defined.
be admitted to the Republic of Panama and to determine likewise
ARTICLE VIII
what persons or classes of persons arriving at such ports shall be
excluded from admission to the Republic of Panama.
In order that the city of Colón may enjoy direct means of land
The United States of America will furnish to the Republic of
communication under Panamanian jurisdiction with other territory
Panama free of charge the necessary sites for the establishment of
under jurisdiction of the Republic of Panama, the United States of
customhouses in the ports of the Canal Zone for the collection of
America hereby transfers to the Republic of Panama jurisdiction over
duties on importations destined to the Republic and for the exami-
a corridor, the exact limits of which shall be agreed upon and demar-
nation of merchandise, baggage and passengers consigned to or bound
cated by the two Governments pursuant to the following description:
for the Republic of Panama, and for the prevention of contraband
(a) The end at Colón connects with the southern end of the east
trade, it being understood that the collection of duties and the exam-
half of the Paseo del Centenario at Sixteenth Street, Colón; thence
ination of merchandise and passengers by the agents of the Govern-
the corridor proceeds in a general southerly direction, parallel to and
ment of the Republic of Panama, in accordance with this provision,
east of Bolivar Highway to the vicinity of the northern edge of Silver
shall take place only in the customhouses to be established by the
City; thence eastward near the shore line of Folks River, around the
Government of the Republic of Panama as herein provided, and that
northeast corner of Silver City; thence in a general southeasterly
the Republic of Panama will exercise exclusive jurisdiction within the
direction and generally parallel to the Randolph Road to a crossing
sites on which the customhouses are located so far as concerns the
of said Randolph Road, about 1200 feet east of the East Diversion;
enforcement of immigration or customs laws of the Republic of
thence in a general northeasterly direction to the eastern boundary
Panama, and over all property therein contained and the personnel
line of the Canal Zone near the southeastern corner of the Fort Ran-
therein employed.
dolph Reservation, southwest of Cativá. The approximate route of
To further the effective enforcement of the rights hereinbefore
the corridor is shown on the map which accompanies this Treaty,
recognized, the Government of the United States of America agrees
signed by the Plenipotentiaries of the two countries and marked
that, for the purpose of obtaining information useful in determining
"Exhibit A".
whether persons arriving at ports of the Canal Zone and destined to
(b) The width of the corridor shall be as follows: 25 feet in width
points within the jurisdiction of the Republic of Panama should be
from the Colón end to a point east of the southern line of Silver City;
admitted or excluded from admission into the Republic, the immi-
thence 100 feet in width to Randolph Road, except that, at any
gration officers of the Republic of Panama shall have the right of free
elevated crossing which may be built over Randolph Road and the
access to vessels upon their arrival at the Balboa or Cristobal piers
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UNITED STATES-PANAMA RELATIONS
UNITED STATES-PANAMA RELATIONS
railroad, the corridor will be no wider than is necessary to include the
thence N. 32°45' E. a distance of 656.8 ft. to station 334 plus
viaduct and will not include any part of Randolph Road proper, or of
10.7 ft.;
the railroad right of way, and except that, in case of a grade crossing
thence on a 3° curve to the left a distance of 455.55 ft. to station
over Randolph Road and the railroad, the corridor will be interrupted
338 plus 66.25 ft.;
by that highway and railroad; thence 200 feet in width to the boundary
thence N. 19°05' E. a distance of 1,135.70 ft. to station 350
line of the Canal Zone.
plus 01.95 ft.;
The Government of the United States of America will extinguish
thence on an 8° curve to the left a distance of 650.7 ft. to station
any private titles existing or which may exist in and to the land in-
356 plus 52.7 ft.;
cluded in the above-described corridor.
thence N. 32°58' W. a distance of 636.0 ft. to station 362 plus
The stream and drainage crossing of any highway built in the
88.7 ft.;
corridor shall not restrict the water passage to less than the capacity
thence on a 10° curve to the right a distance of 227.3 ft. to
of the existing streams and drainage.
station 365 plus 16.0 ft.;
No other construction will take place within the corridor than that
thence N. 10°14' W. a distance of 314.5 ft. to station 368 plus
relating to the construction of a highway and to the installation of
30.5 ft.;
electric power, telephone and telegraph lines; and the only activities
thence on a 5° curve to the left a distance of 178.7 ft. to station
which will be conducted within the said corridor will be those pertain-
370 plus 09.2 ft.;
ing to the construction, maintenance and common uses of a highway
thence N. 19°10' W. a distance of 4,250.1 ft. to station 412
and of power and communication lines.
plus 59.3 ft.;
The United States of America shall enjoy at all times the right of
thence on a 5° curve to the right a distance of 720.7 ft. to sta-
unimpeded transit across the said corridor at any point, and of travel
tion 419 plus 80.0 ft.;
along the corridor, subject to such traffic regulations as may be
thence N. 16°52' E. a distance of 1,664.3 ft. to station 436 plus
established by the Government of the Republic of Panama; and the
44.3 ft.;
Government of the United States of America shall have the right to
thence on a 5° curve to the left a distance of 597.7 ft. to station
such use of the corridor as would be involved in the construction of
442 plus 42.0 ft.;
connecting or intersecting highways or railroads, overhead and under-
thence N. 13°01' W. a distance of 543.8 ft. to station 447 plus
ground power, telephone, telegraph and pipe lines, and additional
85.8 ft.;
drainage channels, on condition that these structures and their use
thence on a 5° curve to the right a distance of 770.7 ft. to
shall not interfere with the purpose of the corridor as provided herein-
station 455 plus 56.5 ft.;
above.
thence N. °31' E. a distance of 1,492.2 ft. to station 470 plus
ARTICLE IX
48.7 ft.;
thence on a 5° curve to the right- a distance of 808.0 ft. to
In order that direct means of land communication, together with
station 478 plus 56.7 ft.;
accommodation for the high tension power transmission lines, may
be provided under jurisdiction of the United States of America from
thence N. 65°55' E. a distance of 281.8 ft. to station 481 plus
38.5 ft.;
the Madden Dam to the Canal Zone, the Republic of Panama hereby
thence on an 8° curve to the left a distance of 446.4 ft. to station
transfers to the United States of America jurisdiction over a corridor,
485 plus 84.9 ft.;
the limits of which shall be demarcated by the two Governments pur-
suant to the following descriptions:
thence N. 30°12' E. a distance of 479.6 ft. to station 490 plus
64.5 ft.;
A strip of land 200 ft. in width, extending 62.5 ft. from the center
thence on a 5° curve to the left a distance of 329.4 ft. to station
line of the Madden Road on its eastern boundary and 137.5 ft. from
493 plus 93.9 ft.;
the center line of the Madden Road on its western boundary, con-
taining an area of 105.8 acres or 42.81 hectares, as shown on the map
thence N. 13°44' E. a distance of 1,639.9 ft. to station 510 plus
33.8 ft.;
which accompanies this Treaty, signed by the Plenipotentiaries of
thence on a 5° curve to the left a distance of 832.3 ft. to station
the two countries and marked "Exhibit B".
518 plus 66.1 ft.;
Beginning at the intersection of the located center line of the
Madden Road and the Canal Zone-Republic of Panama 5-mile
thence N. 27°53' W. a distance of 483.9 ft. to station 523 plus
50.0 ft.;
boundary line, said point being located N. 29°20' W. a distance of
thence on an 8° curve to the right a distance of 469.6 ft. to
168.04 ft. along said boundary line from boundary monument No. 65,
station 528 plus 19.6 ft.;
the geodetic position of boundary monument No. 65 being latitude
N. 9°07' plus 3,948.8 ft. and longitude 79°37' plus 1,174.6 ft.;
17.2 ft.;
thence N. 9°41' E. a distance of 1,697.6 ft. to station 545 plus
thence N. 43°10' E. a distance of 541.1 ft. to station 324 plus
thence on a 10° curve to the left a distance of 451.7 ft. to sta-
06.65 ft.;
tion 549 plus 68.9 ft., which is the point marked Point Z on the
thence on a 3° curve to the left, a distance of 347.2 ft. to station
above-mentioned map known as "Exhibit B".
327 plus 53.9 ft.;
(.All bearings are true bearings.)
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UNITED STATES-PANAMA RELATIONS
UNITED STATES-PANAMA RELATIONS
The Government of the Republic of Panama will extinguish any
IN WITNESS WHEREOF, the Plenipotentiaries have signed this Treaty
private titles existing or which may exist in and to the land included
in duplicate, in the English and Spanish languages, both texts being
in the above-described corridor.
authentic, and have hereunto affixed their seals.
The stream and drainage crossings of any highway built in the
DONE at the city of Washington the second day of March, 1936.
corridor shall not restrict the water passage to less than the capacity
CORDELL HULL
[SEAL]
of the existing streams and drainage.
SUMNER WELLES
SEAL
No other construction will take place within the corridor than that
R. J. ALFARO
SEAL
relating to the construction of a highway and to the installation of
NARCISO GARAY
[SEAL]
electric power, telephone and telegraph lines; and the only activities
which will be conducted within the said corridor will be those pertain-
AND WHEREAS the said Treaty has been duly ratified on both parts,
ing to the construction, maintenance and common uses of a highway,
and the ratifications of the two Governments were exchanged in the
and of power and communication lines, and auxiliary works thereof.
city of Washington on the twenty-seventh day of July one thousand
The Republic of Panama shall enjoy at all times the right of un-
nine hundred and thirty-nine;
impeded transit across the said corridor at any point, and of travel
Now, THEREFORE, be it known that I, Franklin D. Roosevelt,
along the corridor, subject to such traffic regulations as may be estab-
President of the United States of America, have caused the said
lished by the authorities of the Panama Canal; and the Government
Treaty to be made public, to the end that the same and every article
of the Republic of Panama shall have the right to such use of the
and clause thereof may be observed and fulfilled with good faith by
corridor as would be involved in the construction of connecting or
the United States of America and the citizens thereof.
intersecting highways or railroads, overhead and underground power,
IN TESTIMONY WHEREOF, I have hereunto set my hand and caused
telephone, telegraph and pipe lines, and additional drainage channels,
the Seal of the United States of America to be affixed.
on condition that these structures and their use shall not interfere
DONE at the city of Washington this twenty-seventh day of July
with the purpose of the corridor as provided hereinabove.
in the year of our Lord one thousand nine hundred and
[SEAL] thirty-nine and of the Independence of the United States
ARTICLE X
of America the one hundred and sixty-fourth.
FRANKLIN D ROOSEVELT
In case of an international conflagration or the existence of any
By the President:
threat of aggression which would endanger the security of the Republic
CORDELL HULL
of Panama or the neutrality or security of the Panama Canal, the
Secretary of State.
Governments of the United States of America and the Republic of
Panama will take such measures of prevention and defense as they
may consider necessary for the protection of their common interests.
Any measures, in safeguarding such interests, which it shall appear
essential to one Government to take, and which may affect the terri-
tory under the jurisdiction of the other Government, will be the
subject of consultation between the two Governments.
ARTICLE XI
The provisions of this Treaty shall not affect the rights and obliga-
tions of either of the two High Contracting Parties under the treaties
now in force between the two countries, nor be considered as a limi-
tation, definition, restriction or restrictive interpretation of such
rights and obligations, but without prejudice to the full force and
effect of any provisions of this Treaty which constitute addition to,
modification or abrogation of, or substitution for the provisions of
previous treaties.
ARTICLE XII
The present Treaty shall be ratified in accordance with the consti-
tutional methods of the High Contracting Parties and shall take effect
immediately on the exchange of ratifications which shall take place
at Washington.
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UNITED STATES-PANAMA RELATIONS
ARTICLE I
Beginning with the first annuity payable after the exchange of
ratifications of the present Treaty, the payments under Article XIV
of the Convention for the Construction of a Ship Canal between the
United States of America and the Republic of Panama, signed Novem-
APPENDIX C
ber 18, 1903, as amended by Article VII of the General Treaty of
Friendship and Cooperation, signed March 2, 1936, shall be One
TREATY OF MUTUAL UNDERSTANDING AND
Million Nine Hundred Thirty Thousand and no/100 Balboas (B/1,930,-
COOPERATION
000) as defined by the agreement embodied in the exchange of notes
of March 2, 1936, between the Secretary of State of the United States
Treaty, with memorandum of understandings reached; signed at Panamá,
of America and the Members of the Panamanian Treaty Commission.
January 25, 1955; ratification advised by the Senate of the United
The United State of America may discharge its obligation with respect
States of America, July 29, 1955; ratified by the President of the
to any such payment in any coin or currency, provided the amount so
United States of America, August 17, 1955; ratified by Panama,
paid is the equivalent of One Million Nine Hundred Thirty Thousand
August 15, 1955; ratifications exchanged at Washington, August 23,
and no/100 Balboas (B/1,930,000) as so defined.
1955; proclaimed by the President of the United States of America,
On the date of the first payment under the present Treaty, the
August 26, 1955; entered into force, August 23, 1955.
provisions of this Article shall supersede the provisions of Article VII
of the General Treaty signed March 2, 1936.
By THE PRESIDENT OF THE UNITED STATES OF AMERICA
Notwithstanding the provisions of this Article, the High Contract-
A PROCLAMATION
ing Parties recognize the absence of any obligation on the part of
either Party to alter the amount of the annuity.
WHEREAS a Treaty of Mutual Understanding and Cooperation
between the United States of America and the Republic of Panama,
ARTICLE II
together with a related Memorandum of Understandings Reached,
was signed at Panamá on January 25, 1955;
(1) Notwithstanding the provisions of Article X of the Convention
WHEREAS the texts of the said Treaty and related Memorandum
signed November 18, 1903, between the United States of America
of Understandings Reached, in the English and Spanish languages,
and the Republic of Panama, the United States of America agrees
are word for word as follows:
that the Republic of Panama may, subject to the provisions of para-
graphs (2) and (3) of this Article, impose taxes upon the income
TREATY OF MUTUAL UNDERSTANDING AND COOPERATION BETWEEN
(including income from sources within the Canal Zone) of all persons
THE UNITED STATES OF AMERICA AND THE REPUBLIC OF PANAMA
who are employed in the service of the Canal, the railroad, or auxiliary
works, whether resident within or outside the Canal Zone, except-
The President of the United States of America and the President
(a) members of the Armed Forces of the United States of
of the Republic of Panama, desirous of concluding a treaty further
America.
to demonstrate the mutual understanding and cooperation of the two
(b) citizens of the United States of America, including those
countries and to strengthen the bonds of understanding and friendship
who have dual nationality, and
between their respective peoples, have appointed for that purpose as
(c) other individuals who are not citizens of the Republic of
their respective Plenipotentiaries:
Panama and who reside within the Canal Zone.
The President of the United States of America:
(2) It is understood that any tax levied pursuant to paragraph (1)
Selden Chapin, Ambassador Extraordinary and Plenipo-
of this Article shall be imposed on a non-discriminatory basis and
tentiary of the United States of America to the Republic of
shall in no case be imposed at a rate higher or more burdensome than
Panama,
that applicable to income of citizens of the Republic of Panama
The President of the Republic of Panama:
generally.
Octavio Fábrega, Minister of Foreign Relations of the Republic
(3) The Republic of Panama agrees not to impose taxes on pensions,
of Panama,
annuities, relief payments, or other similar payments, or payments by
who, having communicated to one another their respective full powers,
way of compensation for injuries or death occurring in connection
found in good and due form, and recognizing that neither the provi-
with, or incident to, service on the Canal, the railroad, or auxiliary
sions of the Convention signed November 18, 1903, nor the General
works paid to or for the benefit of members of the Armed Forces or
Treaty signed March 2, 1936, nor the present Treaty may be modified
citizens of the United States of America or the lawful beneficiaries of
except by mutual consent, agree upon the following articles:
such members or citizens who reside in territory under the jurisdiction
59
of the Republic of Panama.
The provisions of this Article shall be operative for the taxable
years beginning on or after the first day of January following the
year in which the present Treaty enters into force.
-34-
UNITED STATES-PANAMA RELATIONS
UNITED STATES-PANAMA RELATIONS
ARTICLE III
subject to the enactment of legislation by the Congress, are designated
Subject to the provisions of the succeeding paragraphs of this
and set forth in Item 2 of the Memorandum of Understandings
Reached which bears the same date as this Treaty. The United
Article, the United States of America agrees that the monopoly
States of America also agrees that, subject to the enactment of
granted in perpetuity by the Republic of Panama to the United States
legislation by the Congress, there shall be conveyed to the Republic
for the construction, maintenance and operation of any system of com-
of Panama free of cost all its right, title and interest to the land and
munication by means of canal or railroad across its territory between
improvements in the area known as PAITILLA POINT and that
the Caribbean Sea and the Pacific Ocean, by Article V of the Conven-
effective with such conveyance the United States of America shall
tion signed November 18, 1903, shall be abrogated as of the effective
relinquish all the rights, power and authority granted to it in such
date of this Treaty in so far as it pertains to the construction, mainte-
nance and operation of any system of trans-Isthmian communication
area under the Convention signed November 18, 1903. The Republic
of Panama agrees to save the Government of the United States
by railroad within the territory under the jurisdiction of the Republic
harmless from any and all claims which may arise incident to the
of Panama.
Subject to the provisions of the succeeding paragraphs of this
conveyance of the area known as PAITILLA POINT to the Republic
of Panama.
Article, the United States further agrees that the exclusive right to
ARTICLE VI
establish roads across the Isthmus of Panama acquired by the United
States as a result of a concessionary contract granted to the Panama
Article V of the Boundary Convention, signed September 2, 1914,
Railroad Company shall be abrogated as of the date of the entry into
between the United States of America and the Republic of Panama,
force of this Treaty, in so far as the right pertains to the establishment
shall be replaced by the following provisions:
of roads within the territory under the jurisdiction of the Republic of
"It is agreed that the permanent boundary line between the City
Panama.
of Colón (including the Harbor of Colón, as defined in Article VI of
In view of the vital interest of both countries in the effective pro-
the Boundary Convention of 1914, and other waters adjacent to the
tection of the Canal, the High Contracting Parties further agree that
shores of Colón, and the Canal Zone shall be as follows:
such abrogation is subject to the understanding that no system of
Beginning at an unmarked point called "E", located on the north-
inter-oceanic communication within the territory under the jurisdic-
easterly boundary of the Colón Corridor (at its Colón extremity),
tion of the Republic of Panama by means of railroad or highway may
the geodetic position of which, referred to the Panamá-Colón datum
be financed, constructed, maintained, or operated directly or indirectly
of the Canal Zone triangulation system, is in latitude 9° 21' N. plus
by a third country or nationals thereof, unless in the opinion of both
0.00 feet (0.000 meters) and longitude 79° 54' W. plus 356.09 feet
High Contracting Parties such financing, construction, maintenance,
(108.536 meters).
or operation would not affect the security of the Canal.
Thence from said initial point by metes and bounds:
The High Contracting Parties also agree that such abrogation as is
Due East, 2662.83 feet (811.632 meters), along North latitude
contemplated by this Article shall in no wise affect the maintenance
9° 21' plus 0.00 feet (0.000 meters); to an unmarked point in
and operation of the present Panama Railroad in the Canal Zone and
Folks River, called "F", located at longitude 79° 53' W. plus
in territory subject to the jurisdiction of the Republic of Panama.
3700.00 feet (1127.762 meters);
N. 36° 36' 30" E., 2616.00 feet (797.358 meters), to an un-
ARTICLE IV
marked point in Manzanillo Bay, called "G";
The second paragraph of Article VII of the Convention signed
N. 22° 41' 30" W., 1192.00 feet (363.322 meters), to an un-
November 18, 1903, having to do with the issuance of, compliance
marked point in Manzanillo Bay, called "H";
with, and enforcement of, sanitary ordinances in the Cities of Panamá
N. 56° 49' 00" W., 777.00 feet (236.830 meters), to an un-
and Colón, shall be abrogated in its entirety as of the date of entry
marked point in Manzanillo Bay, called "I";
into force of this Treaty.
N. 29° 51' 00" W., 2793.00 feet (851.308 meters), to an un-
marked point in Manzanillo Bay, called "J";
ARTICLE V
N. 50° 56' 00" W., 3292.00 feet (1003.404 meters), to an
The United States of America agrees that, subject to the enactment
unmarked point in Limon Bay, called "K";
of legislation by the Congress, there shall be conveyed to the Republic
S. 56° 06' 11" W., 4258.85 feet (1298.100 meters), to an
of Panama free of cost all the right, title and interest held by the
unmarked point in Limon Bay, called "L", which is located on
United States of America or its agencies in and to certain lands and
the northerly boundary of the Harbor of Colón.
improvements in territory under the jurisdiction of the Republic of
Thence following the boundary of the Harbor of Colón, as described
Panama when and as determined by the United States to be no longer
in Article VI of the Boundary Convention signed September 2, 1914,
needed for the operation, maintenance, sanitation or protection of
to monument "D", as follows:
the Panama Canal or of its auxiliary works, or for other authorized
N. 78° 30' 30" W., 2104.73 feet (641.523 meters), on a line to
purposes of the United States in the Republic of Panama. The lands
the light house on Toro Point, to an unmarked point in Limon
and improvements referred to in the preceding sentence and the
Bay, called "M", located 330 meters or 1082.67 feet easterly and
determinations by the United States of America respecting the same,
at right angles from the centerline of the Panama Canal;
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UNITED STATES-PANAMA RELATIONS
UNITED STATES-PANAMA RELATIONS
S. 00° 14' 50" W., 3074.46 feet (937.097 meters), parallel to
through a curve to the left with a radius of 40.8 feet (12.436
and 330 meters or 1082.67 feet easterly from the centerline of the
meters) and the intersection of its tangents at point A-6 in North
Panama Canal, to an unmarked point in Limon Bay, called "N";
latitude 9° 21' plus 1306.23 feet (398.140 meters) and West longi-
S. 78° 30' 30" E., 3952.97 feet (1204.868 meters), to monument
tude 79° 54' plus 1669.37 feet (508.825 meters), and a curve to
"D", which is a concrete monument, located on the easterly shore
the right with a radius of 1522 feet (436.907 meters) with the
of Limon Bay.
point of intersection of its tangents at point A-5 in North latitude
Thence following the boundary between the City of Colón and the
9° 21' plus 958.14 feet (292.042 meters) and West longitude 79°
Canal Zone, as described in Article V of the Boundary Convention
54' plus 1105.89 feet (337.076 meters));
signed September 2, 1914, to monument "B" as follows:
Through a curve to the left with a radius of 262.2 feet (79.919
S. 78° 30' 30" E., 258.65 feet (78.837 meters) through monu-
meters) and the intersection of its tangents at point A-3 in North
ments Nos. 28 and 27 which are brass plugs in pavement, to
latitude 9° 21' plus 769.07 feet (234.413 meters) and West longi-
monument "D", which is a concrete monument, the distances
tude 79° 54' plus 955.43 feet (291.216 meters); a curve to the
being 159.96 feet (48.756 meters), 28.26 feet (8.614 meters), and
right with a radius of 320.0 feet (97.536 meters) and the inter-
70.43 feet (21.467 meters), successively, from beginning of the
section of its tangents at point A-2 in North latitude 9° 21' plus
course;
673.38 feet (205.247 meters) and West longitude 79° 54' plus
N. 74° 17' 35" E., 533.60 feet (162.642 meters), along the
836.40 feet (254.935 meters); and a curve to the left with a radius
centerline of Eleventh Street, through monuments Nos. 26, 25,
of 2571.5 feet (783.795 meters) and the intersection of its tangents
24 and 23, which are brass plugs in the pavement, to "C", which
at point A-1 in North latitude 9° 21' plus 302.15 feet (92.096
is an unmarked point beneath the clock pedestal on the centerline
meters) and West longitude 79° 54' plus 680.96 feet (207.557
of Bolivar Avenue, the distances being 95.16 feet (29.005 meters),
meters) to Monument No. "A", which is a 1½ inch brass plug
91.02 feet (27.743 meters), 166.71 feet (50.813 meters), 158.66
located in the old sea wall, in North latitude 9° 21' plus 45.60
feet (48.360 meters) and 22.05 feet (6.721 meters), successively,
feet (13.899 meters) and West longitude 79° 54' plus 487.65 feet
from beginning of the course;
(148.636 meters);
S. 15° 58' 00" E., 965.59 feet (294.312 meters), along the cen-
S. 21° 34' 50" W., 29.19 feet (8.897 meters), to an unmarked
terline of Bolivar Avenue, through monuments Nos. 22, 21, 20
point called #1;
and 19, which are brass plugs in the pavement, to monument
Southeasterly, 23.26 feet (7.090 meters), along a curve to the
"B", which is a brass plug, the distances being 14.35 feet (4.374
left with a radius of 2596.48 feet (791.409 meters) (the chord of
meters), 143.13 feet (43.626 meters), 238.77 feet (72.777 meters),
which bears S. 37° 28' 20" E., 23.26 feet (7.090 meters) to an
326.77 feet (99.600 meters) and 242.57 feet (73,935 meters),
unmarked point called #2, located on the southwesterly boundary
successively from beginning of the course. (Monument "B" is
of the Colón Corridor at North latitude 9° 21' plus 0.00 feet
the point of beginning referred to in Article I of the Convention
(0.000 meters).
between the United States of America and the Republic of
The directions of the lines refer to the true meridian.
Panama regarding the Colón Corridor and certain other Corridors
The above-described boundary is as shown on Panama Canal Com-
through the Canal Zone, signed at Panamá on May 24, 1950.)
pany drawing No. 6117-22, entitled "Boundary Line Between the
Thence following the boundary between the City of Colón and the
City of Colón and the Canal Zone", scale 1 inch to 600 feet, dated
Canal Zone, to monument "A", as described in Article I of the Corridor
December 23, 1954, prepared for the Canal Zone Government, at-
Convention referred to in the next-preceding paragraph:
trached as an annex hereto and forming a part hereof.
S. 15° 57' 40" E., 117.10 feet (35.692 meters) along the center-
Article VIII of the General Treaty signed March 2, 1936, as
line of Bolivar Avenue to Monument No. A-8, which is a brass
amended by Article III of the Convention between the United States
plug located at the intersection with the centerline of 14th Street
of America and the Republic of Panama regarding the Colón Corridor
projected westerly, in North latitude 9° 21' plus 1356.18 feet
and certain other corridors through the Canal Zone, signed May 24,
(413.364 meters) and West longitude 79° 54' plus 1862.57 feet
1950, is hereby modified by removing from the Colón, or westerly,
(567.712 meters);
end of the Colón Corridor the portion thereof lying north of North
N. 73° 59' 35 E., 172.12 feet (52.462 meters) along the center-
latitude 9° 21' and incorporating such portion within the boundary of
line of 14th Street to Monument No. A-7, which is a brass plug
the City of Colón as described above.
located at the intersection with the line of the west curb of
This Article shall become effective upon completion of the with-
Boundary Street projected northerly in North latitude 9° 21'
drawal by the United States of America from the sections of the city
plus 1403.64 feet (427.830 meters) and West longitude 79° 54'
of Colón known as New Cristobal, Colón Beach and the de Lesseps
plus 1697.12 feet (517.283 meters);
Area, with the exception of the lots retained for consulate purposes,
Southerly along the westerly curb of Boundary Street and its
except that it shall in no case become effective prior to the exchange
prolongation to Monument No. A-4, which is a brass plug located
of the instruments of ratification of this Treaty and the exchange of
at the intersection of two curves, in North latitude 9° 21' plus
instruments of ratification of the Convention signed May 24, 1950,
833.47 feet (254.042 meters) and West longitude 79° 54' plus
referred to in the preceding paragraph.
980.94 feet (298,991 meters) (this last mentioned course passes
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UNITED STATES-PANAMA RELATIONS
UNITED STATES-PANAMA RELATIONS
ARTICLE VII
ARTICLE IX
The second paragraph of Article VII of the Boundary Convention
The Republic of Panama hereby waives the right under Article XIX
signed September 2, 1914, between the United States of America and
of the Convention signed November 18, 1903, to transportation by
the Republic of Panama, shall be abrogated in its entirety as of the
railway within the Zone, without paying charges of any kind, of per-
date of entry into force of the present Treaty.
sons in the service of the Republic of Panama, or of the police force
The landing pier situated in the small cove on the southerly side of
charged with the preservation of public order outside of the Canal Zone,
Manzanillo Island, constructed pursuant to provisions contained in
as well as of their baggage, munitions of war and supplies.
the second paragraph of Article VII of the Boundary Convention of
1914 between the two countries, shall become the property of the
ARTICLE X
Government of the Republic of Panama as of the date of entry into
force of the present Treaty.
The High Contracting Parties agree that, in the event of the dis-
continuance of the Panama Railroad, and of the construction or com-
ARTICLE VIII
pletion by the United States of a strategic highway across the Isthmus
lying wholly within the Canal Zone intended primarily for serving the
(a) The Republic of Panama will reserve exclusively for the purpose
operation, maintenance, civil government, sanitation and protection
of maneuvers and military training the area described in the maps
of the Panama Canal and Canal Zone, and notwithstanding anything
(Nos. SGN-7-54 and SGN-8-54, each dated November 17, 1954)
to the contrary in Article VI of the Convention signed November 18,
and accompanying descriptions prepared by the Comisión Catastral
1903, the United States of America may in its discretion either pro-
of the Republic of Panama, attached as the Annex hereto, and will
hibit or restrict the use, by busses or trucks not at the time engaged
permit the United States of America, without cost and free of all
exclusively in the servicing of, or the transportation of supplies to,
encumbrances, exclusively to utilize said area for the indicated purpose
installations, facilities or residents of the Canal Zone, of that portion
for a period of fifteen (15) years, subject to extension thereafter as
of such highway which lies between Mount Hope, Canal Zone and the
agreed by the two Governments. This authorization includes the
intersection of such highway with the Canal Zone section of the
free access to, egress from, and movements within and over, said area.
Trans-Isthmian Highway referred to in the Trans-Isthmian Highway
This utilization will not affect the sovereignty of the Republic of
Convention between the United States of America and the Republic
Panama, or the operation of the Constitution and the laws of the
of Panama, signed March 2, 1936.
Republic over the mentioned area.
(b) The United States Armed Forces, the members thereof and their
ARTICLE XI
families actually residing with them, and United States nationals
who, in an official capacity, are serving with or accompanying the
The Republic of Panama agrees, notwithstanding the provisions of
Armed Forces of the United States and members of their families
Article III of the General Treaty signed March 2, 1936, that the
actually residing with them will be exempted within the said area from
United States of America may extend the privilege of purchasing at
divisions. all taxation by the Republic of Panama or any of its political sub-
post exchanges small items of personal convenience and items neces-
sary for professional use, to military personnel of friendly third coun-
(c) Prior to the expiration of the period envisaged in this Article
tries present in the Zone under auspices of the United States.
and within a reasonable time thereafter the United States shall have
the right to remove from this training and maneuver area, or other-
ARTICLE XII
wise to dispose of, without limitation or restriction all structures,
installations, facilities, equipment and supplies brought into, or con-
The United States of America agrees that, effective December 31,
structed or erected within this training and maneuver area by or on
1956, there will be excluded from the privilege of making purchases in
behalf of the United States. The Republic of Panama will not be re-
the commissaries and other sales stores in the Canal Zone as well as
quired to reimburse the United States for any structures, installations,
the privilege of making importations into the Canal Zone all those
facilities, equipment and supplies not removed or otherwise disposed
persons who are not citizens of the United States of America, except
of as provided herein.
members of the Armed Forces of the United States, and who do not
(d) The United States shall be under no obligation to restore this
actually reside in the Canal Zone but who are included in the cate-
training and meneuver area or the facilities and installations thereon
gories, of persons authorized to reside in said Zone; it being understood
to their original condition upon the termination of this Article, except
nevertheless that all personnel of the agencies of the United States of
for the landing strip which will be returned in at least as good condition
America will be permitted under adequate controls to purchase small
as that obtaining at the time of coming into effect of this Article.
articles such as meals, sweets, chewing gum, tobacco and similar
(e) The provisions of this Article shall in no manner terminate or
articles near the sites of their jobs.
modify the provisions concerning the holding of military maneuvers
The United States of America further agrees that, effective Decem-
in the Republic of Panama established by the Notes ancillary to the
ber 31, 1956, and notwithstanding the provisions of the first para-
General Treaty signed March 2, 1936 other than as provided herein
graph of Article IV of the General Treaty signed March 2, 1936, the
for this training and maneuver area.
Government of the Republic of Panama may impose import duties
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UNITED STATES-PANAMA RELATIONS
UNITED STATES-PANAMA RELATIONS
and other charges upon goods destined or consigned to persons, other
2. With reference to that part of Article V of the Treaty signed
than citizens of the United States of America, included in class (a) in
today which deals with the conveyance to the Republic of Panama
Section 2 of Article III of said Treaty, who reside or sojourn in terri-
free of cost of all the right, title and interest held by the United States
tory under the jurisdiction of the Republic of Panama during the per-
of America or its agencies in and to certain lands and improvements
formance of their service with the United States of America or its
situated in territory under the jurisdiction of the Republic of Panama,
agencies, even though such goods are intended for their own use and
steps will be taken as provided in this Item.
benefit.
(a) Legislation will be sought to authorize and direct the transfer
ARTICLE XIII
to the Republic of Panama of all the right, title and interest held by
the United States or its agencies in or to the following real property:
The present Treaty shall be subject to ratification and the instru-
1. The J. N. Vialette and Huerta de San Doval tracts in the
ments of ratification shall be exchanged at Washington. It shall
city of Panamá and the Aspinwall tract on the Island of Taboga.
enter into force on the date of the exchange of the instruments of
2. Las Isletas and Santa Catalina Military Reservations on the
ratification.
Island of Taboga. This transfer will include the cable rights-of-
way which have a width of 20 feet (6.10 meters) and extend be-
MEMORANDUM OF UNDERSTANDINGS REACHED
tween the Ancon Cove Military Reservation and the Santa
In connection with the 1953-1954 negotiations between representa-
Catalina Military Reservation, and between the El Vigia Military
tives of the United States of America and the Republic of Panama,
Reservation and the Las Isletas Military Reservation.
3. The lot in Colón now reserved for consulate purposes.
which have resulted in the signature of a Treaty between the two
4. Certain lands on the westerly shores of the city of Colón
countries, the following understandings have been reached:
described roughly as extending from the southerly boundary of
On the part of the United States of America:
1. Legislation will be sought which will authorize each agency of
the de Lesseps area (4th Street extended) to the Colón-Canal
the United States Government in the Canal Zone to conform its
Zone boundary and bounded on the east by the east wall of the
existing wage practices in the Zone to the following principles:
old freight house and, below that structure, by a line 25 feet
(7.622 meters) west of the center line of the most westerly rail-
(a) The basic wage for any given grade level will be the same
road track. This transfer will include the certain improvements
for any employee eligible for appointment to the position without
regard to whether he is a citizen of the United States or of the
consisting of the old freight house and Colón Pier Number 3.
(b) Legislation will be sought to authorize and direct the Panama
Republic of Panama.
(b) In the case of an employee who is a citizen of the United
Canal Company to remove its railway terminal operations from the
city of Panamá and to transfer to the Republic of Panama free of coast
States, there may be added to the base pay an increment repre-
all of the right, title and interest of the Panama Canal Company in and
senting an overseas differential plus an allowance for those
elements, such as taxes, which operate to reduce the disposable
to the lands known as the Panama Railroad Yard, including the im-
income of such an employee as compared with an employee who
provements thereon and specifically including the railway passenger
station. This action will also relieve the Government of the Republic
is a resident of the area.
(c) The employee who is a citizen of the United States will
of Panama of its obligation under Point 10 of the General Relations
also be eligible for greater annual leave benefits and travel allow-
Agreement between the United States of America and the Republic of
ances because of the necessity for periodic vacations in the United
Panama signed May 18, 1942 to make available without cost to the
Government of the United States of America a suitable new site for
States for recuperation purposes and to maintain contact with
such terminal facilities.
the employee's home environment.
Legislation will be sought to make the Civil Service Retirement Act
(c) With respect to those areas in the city of Colón known as de
uniformly applicable to citizens of the United States and of the
Lessepe, Colón Beach and New Cristobal (with the exception of two
Republic of Panama employed by the Government of the United
lots in the de Lesseps area which the United States intends to use for
States in the Canal Zone.
consulate purposes), legislation will be sought to authorize and direct
The United States will afford equality of opportunity to citizens of
the gradual withdrawal from these areas and the conveyance or trans-
Panama for employment in all United States Government positions
fer to the Republic of Panama free of cost of all the right, title and
in the Canal Zone for which they are qualified and in which the employ-
interest of the United States and of its agency, the Panama Canal
ment of United States citizens is not required, in the judgment of the
Company, in and to the lands and improvements thereon. Under
United States, for security reasons.
this process of gradual withdrawal the United States Government,
The agencies of the United States Government will evaluate,
and/or its agencies, will not be obligated to install any new structure
classify and title all positions in the Canal Zone without regard to the
in such areas and, as severable parts of the areas cease to be needed,
nationality of the incumbent or proposed incumbent.
the lands and improvements would be conveyed or transferred. The
Citizens of Panama will be afforded opportunity to participate in
severability of parts of the areas depends upon a number of practical
such training programs as may be conducted for employees by United
considerations including those having to do with the present obliga-
States agencies in the Canal Zone.
tions of the United States, with respect to the subject areas, concern-
ing water and sewerage facilities, street cleaning and pavaing, water
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UNITED STATES-PANAMA RELATIONS
UNITED STATES-PANAMA RELATIONS
supply, et cetera, as stipulated in the Instrument of Transfer of Water
7. It is and will continue to be the policy of the Panama Canal
and Sewerage Systems, executed between the Governor of the Panama
agencies and of the Armed Forces in the Canal Zone in making pur-
Canal and the Foreign Minister of Panama on December 28, 1945.
chases of supplies, materials and equipment, so far as permitted under
(d) With respect to the railroad passenger station and site in the
United States legislation, to afford to the economy of the Republic
city of Colón, legislation will be sought to authorize and direct the
of Panama full opportunity to compete for such business.
withdrawal from such site and structure at such time as the with-
8. In general connection with the matter of the importation of
drawal from the areas known as de Lesseps, Colón Beach and New
items of merchandise for resale in the sales stores in the Canal Zone,
Cristobal, contemplated by the next preceding subparagraph, shall
it will be the practice of the agencies concerned to acquire such items
have been fully completed, and the conveyance to the Republic of
either from United States sources or Panamanian sources unless, in
Panama free of cost of all the right, title and interest of the United
certain instances, it is not feasible to do so.
States and of its agency, the Panama Canal Company, in and to such
9. With respect to the manufacture and processing of goods for sale
site and structure. However, the railroad tracks and trackage area
to or consumption by individuals, now carried on by the Panama
in Colón, being required for switching purposes serving the Cristobal
Canal Company, it will be the policy of the United States of America
piers, will be retained for such purposes.
to terminate such activities whenever and for so long as such goods,
(e) All transfers or conveyances of lands and improvements con-
or particular classes thereof, are determined by the United States of
templated by this Item, subject to legislative authorization and direc-
America to be available in the Republic of Panama on a continuing
tion, will necessarily be made subject to any leases which may be
basis, in satisfactory qualities and quantities, and at reasonable prices.
outstanding in the respective areas, and will also contain provisions
The United States of America will give prompt consideration to a
fully protecting the Government of the United States of America
request in writing on the part of the Government of Panama concern-
against any claims by lessees for damages or losses which may arise
ing the termination of the manufacture or processing of any goods
as a result of such transfers or conveyances.
covered in this Item as to which the Government of Panama may
(f) The transfers or conveyances contemplated by this Item, sub-
consider the criteria specified in this Item to have been met.
ject to legislative authorization, are in addition to the conveyance of
10. Prompt consideration will be given to withdrawing from the
Paitilla Point as specifically covered by Article V of the Treaty signed
handling of commercial cargo for transshipment on Canal Zone
today, and to the transfer of real property effected by Article VI of
piers SO soon as Panamanian port facilities are in satisfactory opera-
said Treaty.
tion in Colón.
3. Articles, materials, and supplies that are mined, produced or
11. The United States agrees that the term "auxiliary works" as
manufactured in the Republic of Panama, when purchased for use in
used in the Treaty includes the Armed Forces of the United States of
the Canal Zone, will be exempted from the provisions of the Buy
America.
American Act.
On the part of the Republic of Panama:
4. Referring to the exchange of notes dated March 2, 1936, accessory
1. The Republic of Panama will lease to the United States of
to the General Treaty between the United States of America and the
America, free of all cost save for the recited consideration of one
Republic of Panama signed on that date, relative to the sale to ships
Balboa, for a period of 99 years, two parcels of land contiguous to
of goods imported into the Canal Zone by the Government of the
the present United States Embassy residence site, as designated on
United States of America, the United States of America agrees,
the sketch (No. SGN-9-54, dated November 19, 1954) and accom-
effective December 31, 1956, and in benefit of Panamanian commerce,
panying descriptions prepared by the Comisión Catastral of the
to withdraw wholly from, and thereafter to refrain from, any such
Republic of Panama, attached hereto.
sales to ships, provided that nothing in this Item shall apply-
2. The Republic of Panama assures the United States of America
(a) to sales to ships operated by or for the account of the
that the property, shown and described on the attached map (No.
Government of the United States of America,
SGN-6-54, dated October 1954) and accompanying description
(b) to the sale of fuel or lubricants, or
prepared by the Comisión Catastral of the Republic of Panama, in
(c) to any sale or furnishing of ships stores which is incidental
front of the United States Embassy office building site and between
to the performance of ship repair operations by any agency of
the Bay of Panama and Avenida Balboa as it may be extended
the Government of the United States of America.
between 37th and 39th Streets, will be preserved permanently as a
5. Legislative authorization and the necessary appropriations will
park and not developed for commercial or residential purposes.
be sought for the construction of a bridge at Balboa referred to in
3. So long as the United States of America maintains in effect those
Point 4 of the General Relations Agreement of 1942.
provisions of Executive Order No. 6997 of March 25, 1935 governing
6. The United States of America agrees, effective December 31,
the importation of alcoholic beverages into the Canal Zone, the
1956, to withdraw from persons employed by agencies of the Govern-
Republic of Panama will grant a reduction of 75 percent in the
ment of the United States of America in the Canal Zone who are not
import duty on alcoholic beverages which are sold in Panama for
citizens of the United States of America and who do not actually
importation into the Canal Zone pursuant to such Executive Order.
reside in said Zone the privilege of availing themselves of services
which are offered within said Zone except those which are essential
to health or necessary to permit them to perform their duties.
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UNITED STATES-PANAMA RELATIONS
4. In connection with the authorization granted to the United
States of America in Article VIII of the Treaty, the United States shall
have free access to the beach areas contiguous to the maneuver area
described in said Article VIII for purposes connected with training
and maneuvers, subject to the public use of said beach as provided
under the Constitution of Panama.
The provisions of this Memorandum of Understandings Reached
shall enter into force upon the exchange of instruments of ratification
of the Treaty signed this day by the United States of America and the
Republic of Panama.
APPENDIX D
COMPARISON OF THE RIGHTS AND OBLIGATIONS OF THE UNITED STATES UNDER THE TERMS
OF THE THREE BASIC TREATIES WITH PANAMA
HaY-BUNAU-VARILLA TREATY, 1903
RIGHTS RECEIVED
CONCESSIONS
(1) In perpetuity, to a zone of land and land under
(1) Guaranteed the independence of the Republic of
water 10 miles in width and extending 3 miles into the
Panama.
Caribbean sea and 3 miles into the Pacific ocean, plus
(2) Granted the right to have official dispatches of the
certain small islands in the Bay of Panama, for the
Government of Panama transmitted over any telegraph
maintenance, operation, sanitation, and protection of a
and telephone lines established for canal purposes and
canal across the Isthmus of Panama.
used for public and private business at rates not higher
(2) In perpetuity, the use, occupation, and control of
than those required from officials in the service of the
any other lands and waters outside of the zone which may
United States.
be necessary and convenient for the construction, mainte-
(3) $10 million in gold coin of the United States and an
nance, operation, sanitation, and protection of the canal.
annual payment of $250,000, beginning 9 years after the
(3) All the power and authority within the zone and
date of the exchange of ratifications.
within the limits of all auxiliary lands and waters which
(4) Granted the Republic of Panama the right to trans-
the United States would possess and exercise if it were
port over the canal its vessels and its troops and munitions
sovereign, to the entire exclusion of the exercise by the
of war at all times without paying charges of any kind.
Republic of Panama of any such sovereign rights, power,
The exemption is extended to the auxiliary railway for
or authority.
the transportation of persons in the service of the Republic
(4) All the rights of the New Panama Canal Company
of Panama, or of the police force charged with the preser-
and the Panama Railroad upon purchase of the Com-
vation of public order outside of the zone, as well as to
pany's rights, privileges, properties, and concessions.
their baggage, munitions of war, and supplies.
(5) At all times and at its discretion to use its police
(5) United States assumes the costs of damages caused
and its land and naval forces or to establish fortifications
to owners of private property of any kind by reason of the
for the safety or protection of the canal, or of the ships
grants contained in the treaty or by reason of the opera-
that transit it, or the railways and auxiliary works.
tions of the United States, its agents or employees, or by
-40-
(6) To use the rivers, streams, lakes, and other bodies
reason of the construction, maintenance, operation,
of water in the Republic of Panama for navigation, the
sanitation, and protection of the canal or of the works of
supply of water, or water power or other purposes as may
sanitation and protection provided for in the treaty.
be necessary and convenient for the construction, mainte-
(6) After 50 years, the system of sewers and waterworks
nance, operation, sanitation, and protection of the canal.
constructed and maintained by the United States shall
(7) A monopoly in perpetuity for the construction,
revert to and become the properties of the cities of Panama
maintenance, and operation of any system of communi-
and Colon.
cation by means of canal or railroad connecting the
Caribbean Sea and the Pacific Ocean across Panamanian
territory.
(8) To acquire in the cities of Panama and Colon, by
purchase or by the exercise of the right of eminent domain,
any lands, buildings, water rights, or other properties
necessary and convenient for the construction, mainte-
nance, operation, and protection of the canal and 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, at the discretion of the United
States.
(9) 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 principal of the cost
of such works within a period of fifty years, upon which
time the system of sewers and water works shall revert to
and become the properties of the cities of Panama and
Colon.
(10) To enforce in perpetuity sanitary ordinances pre-
scribed by the United States 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 judg-
ment of the United States, able to maintain such order.
-41-
HaY-BUNAU-VArILLA TREATY, 1903-Continued
RIGHTS RECEIVED
CONCESSIONS
(11) In perpetuity, to maintain 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.
(12) To make use of the towns and harbors of Panama
and Colon as places of anchorage, and for making repairs,
for loading, unloading, deposition, or transshipping cargoes
either in transit or destined for the service of the canal
and for other works pertaining to the canal.
(13) Freedom from taxation upon the canal, the rail-
ways and auxiliary works, tugs, and other vessels em-
ployed in the service of the canal, storehouses, workshops,
offices, quarters for laborers, factories of all kinds, ware-
houses, wharves, machinery and other works, property,
and effects appertaining to the canal or railroad and
auxiliary works, or their officers or employees, situated
within the cities of Panama and Colon, and freedom from
taxation upon officers, employees, laborers, and other
individuals in the service of the canal and railroad and
auxiliary works.
(14) To import at any time into the zone and auxiliary
lands, free of customs duties, imposts, taxes, or other
charges, and without any restrictions, all materials neces-
sary and convenient in the construction, maintenance,
operation, sanitation, and protection of the canal and all
-42-
provisions necessary and convenient for employees in the
service of the United States and their families.
(15) The right to purchase or lease lands adequate and
necessary for naval or coaling stations on the Pacific coast
and on the western Caribbean coast of the Republic of
Panama at certain points to be agreed upon.
TREATY OF 1936
(1) Jurisdiction of a corridor from Madden Dam to the
(1) Renounces the guarantee of Panamanian independ-
Canal Zone.
ence.
(2) Unimpeded transit across the Colon corridor (pro-
(2) Renounces the right to expropriate without restric-
vided for in the treaty) at any point, and of travel along
tion additional land for canal use. Henceforth, in the
the corridor, and to such use of the corridor as would be
event of some unforeseen contingency, should the utiliza-
involved in the construction of connecting or intersecting
tion of lands or waters additional to those already em-
highways or railroads, overhead and underground power,
ployed be necessary for the maintenance, sanitation, or
telephone, telegraph and pipe lines, and additional
efficient operation of the canal, or for its effective protec-
drainage channels.
tion, the two governments will agree upon such measures
as may be necessary to take.
(3) Renounces right of "eminent domain" in cities of
Panama and Colon.
(4) Renounces right to intervene to maintain public
order in the cities of Panama and Colon.
(5) Renounces unlimited right to defend canal. In the
event that the security of the Republic of Panama or the
canal is threatened, the matter will be the subject of con-
sultation between the two governments.
(6) Increases annuity from $250,000 to $430,000.
(7) Persons not connected with the operation or admin-
istration of the canal are not to rent dwellings in the
Canal Zone belonging to the Government of the United
States or to reside in the zone.
-43-
TREATY OF 1936-Continued
RIGHTS RECEIVED
CONCESSIONS
(8) Sale of goods imported into the zone or purchased,
produced, or manufactured there by the Government of
the United States is limited to persons employed by the
United States in the Canal Zone and members of the
Armed Forces of the United States, and their families.
Contractors operating in the zone and their employees
and persons engaged in religious, welfare, charitable, edu-
cational, recreational, and scientific work may purchase
such items only when they actually reside in the zone.
(9) All private business enterprises in the zone, with the
exception of concerns having a direct relation to the oper-
ation, maintenance, sanitation, or protection of the canal,
other than those existing at the time of the signature of
the treaty, are prohibited.
(10) United States extends to merchants residing in
Panama full opportunity for making sales to vessels arriv-
ing at terminal ports of the canal or transiting the canal.
(11) United States will permit vessels entering at or
clearing from ports of the Canal Zone to use and enjoy the
dockage and other facilities of the ports for the purpose of
loading or unloading cargoes and receiving or disembark-
ing passengers to or from territory under the jurisdiction
of the Republic of Panama.
(12) Republic of Panama is given right to collect tolls
from merchant ships in the ports of Panama City and
Colon, even though they later pass through the canal.
(13) United States will furnish to the Republic of
Panama free of charge the necessary sites for the establish-
ment of customhouses in the ports of the Canal Zone for
the collection of duties on importations destined to the
Republic and for the examination of merchandise and
passengers consigned to or bound for the Republic of
Panama. Panama is given exclusive jurisdiction to
enforce the immigration or customs laws of the Republic
of Panama within the sites so provided.
(14) Republic of Panama given right to determine what
persons or classes of persons arriving at ports of the Canal
Zone shall be admitted or excluded from its jurisdiction.
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TREATY OF 1955
RIGHTS RECEIVED
CON CESSIONS
(1) Exclusive use without cost, for a period of at least
(1) The annuity is increased from $430,000 to
15 years, of a military training and maneuver area (ap-
$1,930,000.
proximately 19,000 acres) in the Rio Hato region.
(2) Subject to certain general conditions, Panama is
(2) Panama waives the right, under article XIX of the
enabled to levy income taxes on the following categories
1903 convention, to free transportation over the Panama
of personnel employed by Canal Zone agencies: (1)
Railroad of persons in the service of the Republic of
Panamanian citizens irrespective of their place of residence
Panama, or of the police force charged with the preserva-
and (2) citizens of third countries who reside in territory
tion of public order outside of the Canal zone, as well as
under the jurisdiction of Panama.
to their baggage, munitions of war, and supplies.
(3) Renounces monopoly with respect to the construc-
(3) Panama waives certain treaty rights in order to
tion, maintenance, and operation of transisthmian rail-
enable the United States to prohibit or restrict the use of
roads and highways, with the provision that no system of
a contemplated new strategic highway within the Canal
interoceanic communication by railroad or highway within
Zone by commercial transisthmian traffic.
territory under Panamanian jurisdiction may be financed,
(4) Panama waives certain treaty provisions in order to
constructed, maintained, or operated directly or indirectly
enable the United States to extend limited post exchange
by a third country or nationals thereof unless in the
privileges to military personnel of friendly foreign coun-
opinion of both parties such action would not affect the
tries visiting the Canal Zone under U.S. auspices.
security of the canal.
(5) A lease for a period of 99 years without cost to two
(4) Renounces treaty right to prescribe and enforce
parcels of land contiguous to the U.S. Embassy residence
sanitary measures in the cities of Panama and Colon.
site in the city of Panama.
(5) Certain lands, with improvements thereon, previ-
(6) Panama will reserve permanently as a park area
ously acquired for canal purposes (including Paitilla Point
certain land in front of the U.S. Embassy office building
and the Panama Railroad yard and station in the city of
site in the city of Panama.
Panama) but no longer needed for such purposes, are to
(7) A reduction of 75 percent in the import duty on
be transferred to Panama and there is to be a gradual
alcoholic beverages which are sold in Panama for importa-
transfer to Panama of the New Cristobal, Colon Beach.
tion into the Canal Zone.
and Fort de Lesseps areas in Colon.
(6) Canal Zone commissary and import privileges of
non-U.S. citizen employees of Canal Zone agencies, except
members of the Armed Forces of the United States, who
do not reside in the zone are withdrawn.
(7) The U.S. Congress will be requested to enact legis-
lation authorizing establishment of a single basic wage
scale for all United States and Panamanian employees
of the U.S. Government in the Canal Zone and providing
for uniform application of the Civil Service Retirement
Act to citizens of the United States and citizens of Panama
employed by the U.S. Government in the Canal Zone.
(8) The United States will afford equality of oppor-
tunity to citizens of Panama for employment in all U.S.
Government positions in the Canal Zone for which they
are qualified and in which the employment of U.S. citizens
is not required, in the judgment of the United States, for
security reasons.
(9) Citizens of Panama will be afforded opportunity to
participate in such training programs as may be conducted
for employees by U.S. agencies in the Canal Zone.
(10) Articles, materials, and supplies that are mined,
produced, or manufactured in the Republic of Panama,
when purchased for use in the Canal Zone, will be exempted
from the provisions of the Buy American Act.
(11) The U.S. Congress will be requested to enact the
necessary legislation for the construction across the canal
at Balboa of a bridge.
-45-
Republic of Panama employed by the Government of the United
States in the Canal Zone.
"The United States will afford equality of opportunity to citizens
of Panama for employment in all United States Government posi-
tions in the Canal Zone for which they are qualified and in which the
employment of United States citizens is not required, in the judgment
APPENDIX E
of the United States, for security reasons.
Public Law 85-550
"The agencies of the United States Government will evaluate, clas-
sify, and title all positions in the Canal Zone without regard to the
85th Congress, S. 1850
nationality of the incumbent or proposed incumbent.
"Citizens of Panama will be afforded opportunity to participate in
July 25, 1958
such training programs as may be conducted for employees by the
United States agencies in the Canal Zone."
AN ACT
(c) The Congress further finds that the enactment of legislation
To implement item 1 of a Memorandum of Understandings attached to the
containing a statement of general policies and principles and other
treaty of January 25, 1955, entered into by the Government of the United
provisions in implementation of item 1 of such Memorandum of Under-
States of America and the Government of the Republic of Panama with respect
standings is necessary to the faithful and proper discharge of the obli-
to wage and employment practices of the Government of the United States
of America in the Canal Zone.
gations assumed by the Government of the United States under such
item.
Be it enacted by the Senate and House of Representatives of the
DEFINITIONS
United States of America in Congress assembled,
SEC. 2. As used in the following provisions of this Act, the term-
(1) "department" means a department, agency, or independent
FINDINGS
establishment in the executive branch of the Government of the
SECTION 1. (a) The Congress of the United States of America hereby
United States (including a corporation wholly owned or con-
finds that the Government of the United States of America and the
trolled by the United States) which conducts operations in the
Government of the Republic of Panama on January 25, 1955, entered
Canal Zone;
into a treaty (known as the Treaty of Mutual Understanding and
(2) "position" means those duties and responsibilities of a
Cooperation), to which was attached a Memorandum of Understand-
civilian nature under the jurisdiction of a department (A) which
ings Reached (otherwise referred to as the Memorandum of Under-
are performed in the Canal Zone or (B) with respect to which
standings), signed by such governments on such date.
the exclusion of individuals from the Classification Act of 1949,
(b) The Congress further finds that, under such Memorandum of
as amended, is provided for by section 202(21) (B) of such Act
Understandings, the Government of the United States assumed certain
as amended by section 16 (a) of this Act;
obligations set forth in item 1 of such Memorandum as follows:
(3) "employee" means any individual holding a position; and
"1. Legislation will be sought which will authorize each agency of
(4) "continental United States" means the several States of the
the United States Government in the Canal Zone to conform its
United States of America existing on the date of enactment of
existing wage practices in the Zone to the following principles:
this Act and the District of Columbia.
"(a) The basic wage for any given grade level will be the same
for any employee eligible for appointment to the position without
GENERAL RULES FOR EMPLOYMENT AND WAGE PRACTICES OF UNITED
regard to whether he is a citizen of the United States or of the
STATES GOVERNMENT IN THE CANAL ZONE
Republic of Panama.
"(b) In the case of an employee who is a citizen of the United
SEC. 3. (a) The head of each department is authorized and directed
States, there may be added to the base pay an increment repre-
to conduct the employment and wage practices in the Canal Zone of
senting an overseas differential plus an allowance for those
such department in accordance with-
elements, such as taxes, which operate to reduce the disposable
(1) the principles established in item 1 of the Memorandum of
income of such an employee as compared with an employee who
Understandings set forth in section 1(b) of this Act;
is a resident of the area.
(2) the provisions of this Act;
"(c) The employee who is a citizen of the United States will
(3) the regulations promulgated by, or under authority of, the
also be eligible for greater annual leave benefits and travel allow-
President of the United States in accordance with this Act; and
ances because of the necessity for periodic vacations in the United
(4) provisions of applicable law.
States for recuperation purposes and to maintain contact with
(b) The President is authorized, to the extent he deems appro-
the employee's home environment.
priate-
"Legislation will be sought to make the Civil Service Retirement
(1) to exclude any employee or position from this Act or from
Act uniformly applicable to citizens of the United States and the
any provision of this Act, and
-46-
(2) to extend to any employee, whether or not such employee
UNIFORM APPLICATION OF STANDARDS AND RATES OF
is a citizen of the United States, the same rights and privileges
COMPENSATION
as are provided by applicable laws and regulations for citizens
SEC. 6. The employment standards established under section 4 of
of the United States employed in the competitive civil service of
the Government of the United States.
this Act and the rates of basic compensation established under section
5 of this Act shall be applied unifornily, within and among all depart-
ments, to the respective positions, employees (other than employees
EMPLOYMENT STANDARDS
who are citizens of the United States and are assigned to work in the
SEC. 4. (a) The head of each department shall establish written
Canal Zone on temporary detail), and individuals under considera-
standards, in conformity with this Act, the regulations promulgated
tion for appointment to positions, irrespective of whether the employee
under section 15(b) of this Act, and the Canal Zone Merit System
or individual concerned is a citizen of the United States or a citizen
established under section 10 of this Act, for-
of the Republic of Panama.
(1) the determination of the qualifications and fitness of em-
ployees and of individuals under consideration for appointment to
ADDITIONAL ALLOWANCE AND DIFFERENTIAL
positions, and
(2) the selection of individuals for appointment, promotion,
SEC. 7. (a) Each employee who is a citizen of the United States
or transfer to positions.
shall receive, in addition to basic compensation at the rate established
(b) Such standards shall be placed in effect on such date as the
under section 5 of this Act, such amounts as the head of the depart-
President shall prescribe but not later than the one hundred and
ment concerned may determine to be payable, as follows:
eightieth day following the date of enactment of this Act.
(1) an allowance for taxes which operate to reduce the dispos-
able income of such United States citizen employee in comparison
with the disposable incomes of those employees who are not citi-
COMPENSATION
zens of the United States; and
SEC. 5. (a) The head of each department shall establish and may
(2) an overseas (tropical) differential not in excess of an
revise, from time to time, in accordance with this Act, the rates of
amount equal to 25 per centum of the aggregate amount of the
basic compensation for positions and employees under his jurisdiction.
rate of basic compensation established under section 5 of this Act
(b) Such rates of basic compensation may be established and revised
and the amount of the allowance provided in accordance with
in relation to the rates of compensation for the same or similar work
paragraph (1) of this subsection.
performed in the continental United States or in such areas outside
(b) The allowances and differentials provided for by subsection (a)
the continental United States as may be designated in regulations
of this section shall become effective initially on the first day of the
promulgated under section 15(b) of this Act.
first pay period which begins more than sixty days after the date on
(c) The head of each department may grant increases in such rates
which regulations are promulgated under section 15(b) of this Act.
of basic compensation in amounts not to exceed the amounts of the
increases granted, from time to time, by Act of Congress in corre-
SECURITY POSITIONS
sponding rates of compensation in the appropriate schedule or scale of
pay. The head of the department concerned may make such increases
SEC. 8. Notwithstanding any other provision of this Act but subject
effective as of such date as he may designate but not earlier than
to regulations promulgated under section 15(b) of this Act, the head
the effective date of the corresponding increases provided by Act of
of each department may designate any position under his jurisdiction
Congress.
as a position which for security reasons shall be filled by a citizen of
(d) No rate of basic compensation established under this section
the United States.
shall exceed by more than 25 per centum, when increased by the
amounts of the allowance and the differential authorized by section 7
BENEFITS BASED ON COMPENSATION
of this Act, the rate of basic compensation for the same or similar
work performed in the continental United States by employees of the
SEC. 9. For the purposes of determining-
Government of the United States.
(1) amounts of insurance under the Federal Employees' Group
(e) The initial adjustments in rates of basic compensation under
Life Insurance Act of 1954, as amended (5 U.S.C. 2091-2103),
authority of this section shall be effective on the first day of the first
(2) amounts of compensation for death or disability under the
pay period which begins more than sixty days after the date on which
Federal Employees' Compensation Act, as amended (5 U.S.C.
regulations are promulgated under section 15(b) of this Act.
751 et seq.),
(3) amounts of overtime pay or other premium compensation,
(4) benefits under the Civil Service Retirement Act, as amended
(5 U.S.C. 2251-2267),
(5) annual leave benefits, and
-47-
(6) any other benefits which are related to basic compensation,
UNITED STATES-PANAMA RELATIONS
the basic compensation of each employee who is a citizen of the United
States shall include-
APPEALS
(A) the rate of basic compensation for his position estab-
lished in the manner provided by section 5 of this Act, and
SEC. 12. (a) There shall be established, in conformity with this
(B) the amount of the allowance and the differential deter-
Act and by regulations promulgated by, or under authority of, the
mined in the manner provided by section 7 of this Act.
President, a Canal Zone Board of Appeals. It shall be the duty of
the Board to review and determine the appeals of employees in accord-
alice with this section.
CANAL ZONE MERIT SYSTEM
(b) The regulations referred to in subsection (a) shall provide for,
SEC. 10. (a) There shall be established, in conformity with this Act,
in accordance with this Act, the number of members of the Board,
and by regulations promulgated by, or under authority of, the Presi-
the appointment, compensation, and terms of office of such members,
dent, a Canal Zone Merit System of selection for appointment, reap-
the selection of a Chairman of the Board, the appointment and com-
pointment, reinstatement, reemployment, and retention with respect
pensation of employees of the Board, and such other matters as may
to positions, employees, and individuals under consideration for
be relevant and appropriate.
appointment to positions.
(c) Any employee may request at any time that the department in
(b) The Canal Zone Merit System, irrespective of whether the
which he is employed-
employees or individuals concerned are citizens of the United States
(1) review the classification of his position or the grade or pay
or citizens of the Republic of Panama, shall-
level for his position, or both, and
(1) be based solely on the merit of the employee or individual
(2) revise or adjust such classification, grade, and pay level,
and upon his qualifications and fitness to hold the position con-
or any of them, as the case may be.
cerned, and
Such request for review and revision or adjustment shall be submitted
(2) apply uniformly within and among all departments to
and adjudicated in accordance with the regularly established appeals
positions, employees, and individuals concerned.
procedure of such department.
(c) The Canal Zone Merit System—
(d) Each employee shall have the right to appeal to the Board
(1) shall conform generally to policies, principles, and stand-
from an adverse determination made under subsection (c) of this
ards established by or in accordance with the Civil Service Act
section. Such appeal shall be made in writing within a reasonable
of January 16, 1883, as amended and supplemented, and
time, as prescribed in regulations promulgated by, or under authority
(2) shall include provision for appropriate interchange of
of, the President, after the date of the transmittal by the department
citizens of the United States employed by the Government of the
to the employee of written notice of such adverse determination.
United States between such merit system and the competitive civil
(e) The Board, in its discretion, may authorize, in connection with
service of the Government of the United States.
an appeal under subsection (d) of this section, a personal appearance
(d) The Canal Zone Merit System shall be placed in effect on such
before the Board by such employee, or by his representative designated
date as the President shall prescribe but not later than the one hundred
for such purpose.
and eightieth day follo ving the date of enactment of this Act.
the Board shall-
(f) After investigation and consideration of the evidence submitted,
SALARY PROTECTION IN CONNECTION WITH CONVERSION OF COMPENSA-
(1) prepare a written decision on each such appeal,
TION BASE
(2) transmit its decision to the department concerned, and
(3) transmit copies of such decision to the employee concerned
SEC. 11. Whenever the rate of basic compensation of an employee
or to his designated representative.
established prior to, on, or after the date of enactment of this Act in
(g) The decision of the Board on any question or other matter
relation to rates of compensation for the same or similar work in the
relating to any such appeal shall be final and conclusive. It shall be
continental United States is converted on or after the effective date
mandatory on the department concerned to take action in accordance
of the initial adjustments under authority of section 5 of this Act to a
with the decision of the Board.
rate of basic compensation established in relation to rates in areas
other than the continental United States in the manner provided by
CIVIL SERVICE RETIREMENT COVERAGE
section 5(b) of this Act, such employee shall, pending transfer to a
position for which the rate of basic compensation is established in
SEC. 13. (a) Effective on and after the first day of the first pay period
relation to rates of compensation in the continental United States in
which begins in the third calendar month following the calendar
the manner provided by such section 5 (b), continue to receive a rate
month in which this Act is enacted—
of basic compensation not less than the rate of basic compensation to
(1) the Act of July 8, 1937 (50 Stat. 478; 68 Stat. 17; Public
which he was entitled immediately prior to such conversion SO long
Numbered 191, Seventy-fifth Congress; Public Law 299, Eighty-
as he remains in the same position or in a position of equal or higher
third Congress), shall apply only with respect to those individuals
grade.
within the classes of individuals subject to such Act of July 8,
1937, whose employment shall have been terminated, prior to
such first day of such first pay period, in the manner provided by
the first section of such Act; and
-48-
UNITED STATES-PANAMA RELATIONS
(2) the Civil Service Retirement Act (5 U.S.C. 2251-2267)
shall apply with respect to those individuals who are in the service
ADMINISTRATION
of the Canal Zone Government or the Panama Canal Company
SEC. 15. (a) The President shall coordinate the policies and activi-
and who, except for the operation of paragraph (1) of this sub-
ties of the respective departments under this Act.
section, would be within the classes of individuals subject to such
(b) The President is authorized to promulgate such regulations
Act of July 8, 1937.
as may be necessary and appropriate to carry out the provisions and
(b) On or before the first day of the first pay period which begins
accomplish the purposes of this Act.
in the third calendar month following the calendar month in which
(c) The President is authorized to delegate any authority vested
this Act is enacted, the Panama Canal Company shall pay, as an
in him by this Act and to provide for the redelegation of any such
agency contribution, into the civil service retirement and disability
authority.
fund created by the Act of May 22, 1920, for each individual-
CHANGES IN EXISTING LAW
(1) who is employed, on such first day of such first pay period,
by the Canal Zone Government or by the Panama Canal Com-
SEC. 16. (a) Paragraph (21) of section 202 of the Classification Act
pany, and
of 1949, as amended (5 U.S.C. 1082), is amended to read as follows:
(2) who, by reason of the enactment of this section and the
(21) (A) employees of any department who are stationed in
operation of the Civil Service Retirement Act (5 U.S.C. 2251-
the Canal Zone and (B) upon approval by the Civil Service
2267), is subject to such Act on and after such first day of such
Commission of the request of any department which has em-
first pay period,
ployees stationed in both the Republic of Panama and the Canal
for service performed by such individual in the employment of-
Zone, employees of such department who are stationed in the
(A) the Panama Railroad Company during the period
Republic of Panama;".
which began on June 29, 1948, and ended on June 30, 1951, or
(b) The following provisions of law are hereby repealed:
(B) the Panama Canal (former independent agency), the
(1) paragraph (32) of section 202 of the Classification Act of
Canal Zone Government, or the Panama Canal Company
1949, as amended (5 U.S.C. 1182);
during the period which began on July 1, 1951, and which
(2) subsection (c) of the first section of the Act of October 25,
ends immediately prior to such first day of such first pay
1951 (65 Stat. 637)
period,
(3) section 804 of the Postal Field Service Compensation Act
an amount equal to the aggregate amount which such individual would
of 1955 (69 Stat. 130; 39 U.S.C. 1034); and
have been required to contribute for retirement purposes if he had been
(4) section 404 of the Act of May 27, 1958 (72 Stat. 146;
subject to the Civil Service Retirement Act during such periods of
Public Law 85-426).
service.
(c) Subsections (a) and (b) of this section shall become effective
(c) Nothing contained in this section shall affect-
on the first day of the first pay period which begins more than sixty
(1) the rights of any individual existing immediately prior to
days after the date on which regulations art promulgated under sec-
such first day of such first pay period above specified, or
tion 15 (b) of this Act.
(2) the continuing obligations of the Canal Zone Government
and the Panama Canal Company under section 4(a) of the Civil
APPLICABILITY OF CERTAIN EXISTING LAW
Service Retirement Act (5 U.S.C. 2254(a)), to reimburse the
civil service retirement and disability fund for Government con-
SEC. 17. Nothing contained in this Act shall affect the applicability
tributions to such fund covering service performed, on or after
of-
such first day of such first pay period above specified, by the
(1) the Veterans' Preference Act of 1944, as amended (5 U.S.C.
employees concerned.
851-869),
(2) section 6 of the Act of August 24, 1912, as amended (5
PARTICIPATION IN TRAINING PROGRAMS
U.S.C. 652), and
(3) section 23 of the Independent Offices Appropriation Act,
SEC. 14. Any training program established by a department shall
1935 (48 Stat. 522), as amended (5 U.S.C. 673c), or section 205
be applied uniformly to each employee irrespective of whether such
of the Federal Employees Pay Act of 1945, as amended (5 U.S.C.
employee is a citizen of the United States or of the Republic of
913), to those classes of employees within the scope of such
Panama. Each such employee who is a citizen of the Republic of
sections 23 and 205 on the date of enactment of this Act.
Panama shall be afforded opportunity to participate in such training
program on the same basis as that upon which opportunity to partici-
EFFECTIVE DATES
pate in such training program is afforded to employees who are citizens
of the United States.
SEC. 18. Except as otherwise provided in sections 4, 5, 7, 10, 13, and
16 of this Act, this Act shall become effective on the date of its
enactment.
Approved July 25, 1958.
-49-
UNITED STATES-PANAMA RELATIONS
7. The Panama Canal Company and Canal Zone Government will
upport legislation now pending in Congress to increase the gratuity
paid to employees who previously were not within the civil service
retirement disability. system and who were terminated because of physical
APPENDIX F
8. Teachers in the Latin American schools in the Canal Zone will
PRESS RELEASE ON 9-POINT PROGRAM FOR IMPROVE-
receive a 10-percent pay increase.
MENT OF RELATIONS BETWEEN THE UNITED STATES
9. All agencies in the Canal Zone have been directed by the Presi-
dent to review the list of jobs reserved for citizens of the United States
AND PANAMA, APRIL 19, 1960
THE WHITE HOUSE,
positions. with a view to placing more Panamanians in skilled and supervisory
Augusta, Ga.
The President today approved a nine-point program for improve-
ment of relations between the United States and Panama in reference
to operations in the Canal Zone. The program calls for substantial
employee benefits including pay increases and improved housing for
Panamanian employees, the expansion of the apprentice program to
train more Panamanians in skilled trades and support of legislation
to increase the pensions of disabled former employees.
The program also calls for the installation of a new water main to
serve the city of Panama, and a reduction in the rate charged for
water sold to the Government of Panama for distribution within that
country. The President has also directed that jobs in the Canal
Zone be continuously reviewed with a view to employing the maximum
number of Panamanians.
Nearly all of the items in the program will be made effective imme-
diately.
The complete program includes the following points:
1. A 10 percent increase in the wage rate schedules of unskilled
and semiskilled employees.
2. The Panama Canal Company's apprentice program will be
expanded to afford an opportunity to 25 Panamanians each year to
begin 3- and 4-year courses leading to qualification as skilled workmen
in various trades. This is a marked expansion of opportunity for
Panamanians to learn those skills that are useful both in the Canal
Zone and in the Republic of Panama. This program, in implementa-
tion of assurances given in the treaty, will provide to Panamanians
upon graduation access to more positions, the pay rates of which are
based on those in the United States.
3. Substandard housing occupied by Panamanian employees in the
Canal Zone will be replaced by modern construction. Construction
of approximately 500 units of modern rental housing is planned.
Construction of the first houses in the program will be commenced
immediately.
4. The Panama Canal Company will also pursue a course of action
leading to the construction of 500 houses in Panama for sale to Pan-
amanians employed in the Canal Zone but living in Panama.
5. The Panama Canal Company will proceed with the construction
of a new water main at a cost of $750,000 to supply the rapidly
expanding suburbs of the city of Panama.
6. The Panama Canal Company will also substantially reduce the
rate at which water is sold to the Government of Panama for distribu-
tion in the cities of Panama and Colon.
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"ocrText": "The original documents are located in Box 6, folder \"Panama Canal Treaty Negotiations:\n1975\" of the White House Special Files Unit Files at the Gerald R. Ford Presidential\nLibrary.\nCopyright Notice\nThe copyright law of the United States (Title 17, United States Code) governs the making of\nphotocopies or other reproductions of copyrighted material. Gerald Ford donated to the United\nStates of America his copyrights in all of his unpublished writings in National Archives collections.\nWorks prepared by U.S. Government employees as part of their official duties are in the public\ndomain. The copyrights to materials written by other individuals or organizations are presumed to\nremain with them. If you think any of the information displayed in the PDF is subject to a valid\ncopyright claim, please contact the Gerald R. Ford Presidential Library.\nTHE DEPARTMENT\nOF STATE\nNews Release:\nJanuary 1975\nBureau of Public Affair\nOffice of Media Servic-\nPANAMA CANAL TREATY NEGOTIATIONS:\nBACKGROUND AND CURRENT STATUS\nBackground\nCanal, rearrangement of markets and sources,\nproduct exchanges, and partial or complete sub-\nThe United States and Panama are currently\nstitution of land or air transport for ocean tran\nnegotiating a new Panama Canal treaty to replace\nport. As canal users take advantage of these\nthe Treaty of 1903.\nalternatives, the canal's value declines relative :\nIn that treaty Panama granted the United\nthe economies of the user nations. For the\nStates-in perpetuity-the use of a 10-mile wide\nUnited States, in particular, a recent study has\nzone of Panamanian territory for the \"construc-\nshown that the canal's impact on the domestic\ntion, maintenance, operation and protection\" of\neconomy is quite small compared to the econo\na canal, as well as all the rights, power, and\nas a whole.\nauthority within that zone which the United\nStates would \"possess if it were the sovereign.\"\nPanamanian Treaty Concerns\nThe very favorable terms of the treaty were a\nmajor factor in the U.S. decision to build the\nPanama has been dissatisfied with the treaty\ncanal in Panama rather than in Nicaragua as\nmany years. Part of this dissatisfaction has de-\ninitially planned.\nrived from Panama's interpretation of two aspe\nof the situation which resulted in the Treaty of\nCanal's Economic Value\n1903: (1) Panama's acceptance of unfavorable\ntreaty terms due to its dependence upon the\nSince its opening in 1914, the canal has pro-\nUnited States to protect its new-found indepen\nvided benefits to the United States, to Panama,\ndence from Colombia; and (2) Panama's princi\nand to the world. Of the total tonnage that\nnegotiator was a Frenchman who benefited\ntransits the canal, about 44 percent originates in,\nconsiderably when the United States purchased\nand 22 percent is destined for, U.S. ports. This\nthe private French concession to build a trans-\ntonnage represents about 16 percent of the total\nisthmian canal.\nU.S. export and import tonnages.\nOver the years Panama has also charged that\nThe canal has been economically important to\nthe United States has unilaterally interpreted\nPanama, too. More than 30 percent of Panama's\ntreaty to Panama's disadvantage and given Pan\nforeign exchange earnings and nearly 13 percent\nan inadequate share of the benefits from the\nof its GNP are directly or indirectly attributed to\neration of the waterway. Even more objection\nthe presence' of the canal. But those contribu-\nable in Panama's view, are the provisions in the\ntions represent a smaller portion of Panama's\nTreaty of 1903 which give to a foreign power\neconomy now than they did in years past.\nperpetuity governmental jurisdiction within\nIn fact, reliance on the canal By all parties has\nportion of Panamanian territory. Increasingly\nevolved from earlier years. As trading patterns\nrecent years Panama has insisted that U.S. cont.\nhave changed and world commerce has become\nover the Canal Zone prevents the country from\nmore sophisticated, alternatives to the canal have\nrealizing its full economic potential.\nbegun to emerge. These alternatives include the\nThe United States has responded sympathet\nDigitized from Box 6 of the White House Special Files Unit Files at the Gerald R. Ford Presidential Library\n2\n1905 it recognized Panama's titular sovereignty\nPresident Nixon established negotiating objectives\nover the Canal Zone. The treaty was revised in\nwhich, although modified by developments, were\n1936, and again in 1955, to provide Panama\nsimilar to those set by President Johnson In 1951.\nwith a greater share of the economic benefits of\nThe objectives and positions of the United States\nthe canal and to remove certain outdated aspects,\nthus reflect a bipartisan approach to treaty nego-\nsuch as the right grants to the United States to\ntiations with Panama. They also are consistent\ninterfere, when it believed necessary, in Panama's\nwith the broader policy stated in Secretary\ninternal affairs. Despite these modifications, how-\nKissinger's call in October 1973 for a \"new dia-\never, many of the features of the treaty most\nlogue\" with our Latin American neighbors, a\nobjectionable to Panama remain unchanged.\npolicy which President Ford has publicly endorse\nThe canal has become the major political issue\nA Panamanian negotiating team arrived in\nin Panama. In recent years the intensification of\nWashington in June 1971. Intensive negotiations\nPanama's campaign for more favorable treaty\nduring the rest of the year resulted in a U.S.\nterms has produced tensions in U.S.-Panamanian\ntreaty offer covering most of the issues relevant\nrelations, In 1964 the death of 20 Panamanians\nto the treaty. The Panamanian negotiators carried\nand 4 Americans brought the Panama Canal issue\nthe offer to Panama for a review in December\nto the attention of the United Nations and the\n1971. Except for some informal conversations in\nOrganization of American States (OAS).\nMarch 1972 and an exchange of correspondence\nin the fall, the negotiations were not resumed\nEvaluation of Bilateral Negotiations for a New\nuntil December 1972, when a U.S. delegation\nTreaty\ntraveled to Panama.\nFollowing discussion of the issue by the OAS,\nU.S. Security Council Action\nthe United Nations, and other intern: tional agen-\ncies after the 1964 riots, the United States and\nAt Panama's initiative, the U.N. Security\nPanama agreed in 1964 to begin bilateral negotia-\nCouncil met in Panama City from March 15 to\ntions for a new treaty. In so doing, the United\nMarch 21, 1973. In those sessions, Panama criti-\nStates recognized that a comprehensive moderni-\ncized the U.S. posture on the canal question and\nzation of its relationship with Panama correspond-\nsought a resolution supporting its position. This\ned to its long-term national interests and to a\nteen nations voted for the resolution; the United\nchanging international environment.\nKingdom abstained. The United States vetood\nU.S. officials entered the negotiations in late\nthe resolution on the grounds that it recognized\n1964 with a view to insuring that:\nPanama's needs but not those of the United\nThe canal should continue to be available to\nStates; that 1: was incomplete in it.\" references to\nthe world's commercial vessels on an equal\nthe negotiations; and that it was inappropriate\nbasis at reasonable tolls;\nbecause the treaty was a bilateral matter under\nIt should be operated and defended by the\namicable negotiations. In explaining the U.S.\nUnited States for a reasonably extended, but\nposition, the U.S. Permanent Representative com-\ndefinite, period of time; and\nmitted the United States to peaceful adjustment\nIt should continue to serve world commerce\nof its differences with Panama and invited\nefficiently. To this end, the United States\nPanama to continue serious treaty negotiations.\nsought the right to provide additional canal\ncapacity if it is needed.\nNew U.S. Approach\nBy 1967, the negotiators of both countries had\nprepared three draft treaties. They provided for\nIn September 1973 Secretary Kissinger charged\noperation of the present canal under 2. joint U.S.-\nAmbassador at Large Ellsworth Bunker with the\nPanamanian authority; for construction and op-\ntask of renewing discussions with Panamasian\neration of a sea-level canal under a si; tilar joint\nofficials for the purpose of arriving at a common\nauthority; and for U.S. defense of the old and\napproach to future treaty negotiations. Ambus-\nnew canals for the duration of each treaty. Nei-\nsador Bunker visited Panama from November 26\nther Panama nor the U.S. Government moved to\nto December 3, 1973, and again on January\nratify these treaties, and the new government\nand 7, 1974, to discuss with Panimanian Foreign\nheaded by General Omar Torrijos, wh ch assumed\nMinister Juan Antonio Tack general principles\npower in October 1968, formally rejected them.\nupon which a new treaty might he based. These\nIn 1970 the Government of Panama requested\ndiscussions resulted in the Statement of Principles\nthe renewal of negotiations and the U.S. agreed.\nof February 7, 1974 (See P. 3), which has\n3\nserved as a useful framework for the present\nthe United States require to accomplish its\nnegotiations.\npurpose?\n3. Jurisdiction: What areas will be controlled\nU.S. Treaty Objective\nand what functions will be exercised by the\nUnited States when its jurisdiction terminates,\nThe principal objective of the United States\nand what is the period of transition?\nin the current treaty negotiations is to protect\n4. Expansion of Capacity: How will the\nour basic interests in the Panama Canal. The\ntreaty provide for possible enlargement of canal\nU.S. Government is seeking to establish a new and\ncapacity?\nmutually acceptable relationship between our\n5. Participation: How and to what extent\ntwo countries whereby the United States will re-\nwill Panama participate in the administration and\ntain essential rights to continue operating and\ndefense of the canal?\ndefending the canal for a reasonably extended\n6. Compensation: What will be the form and\nperiod of time. A new treaty based on partner-\nlevel of economic benefits to Panama in any new\nship with Panama would enable the United States\ntreaty?\nto devote all its energies to the efficient operation\nof the waterway. Moreover, it would provide a\nCurrent Status of Negotiations\nfriendly environment in Panama that is most con-\nducive to protecting our vital interests in keeping\nSince June 1974, the talks have been taking\nthe canal open and secure. Such a treaty would\nplace in a cordial, informal atmosphere. The\nbe consistent with good business management,\nU.S. negotiators have been proceeding carefully\nrepresent good foreign and defense policy, and\nand methodically. While there is no fixed time-\nsignify a new era of cooperation between the\ntable, the negotiators from both countries have\nUnited States and the rest of the hemisphere.\nindicated their satisfaction with the progress to\nIn recent years Latin American nations have\ndate and are hopeful that both countries can\nmade the negotiation of a more equitable canal\nreach agreement on a draft treaty.\ntreaty with Panama a major hemispheric issue\nAny decision which the President might make\nand a test of U.S. intentions regarding the \"new\naffecting the future of the canal will, of course,\ndialogue.\"\nbe designed to protect U.S. interests. Indeed, a\nmajor reason for negotiating a new treaty is to\nIssues in the Negotiations\navert a serious crisis which would endanger our\ninterests.\nIn the months following the February 7 signing\nAny treaty agreed upon by the negotiators and\nof the Statement of Principles, Ambassador\napproved by the executive branch will be submit-\nBunker and Foreign Minister Tack met several\nted to the U.S. Senate for ratification and subject\ntimes in Panama and Washington to define the\nto full constitutional process. Panama, for its\nissues involved in the new treaty arrangement.\npart, has said that it will submit the new treaty\nAfter agreement was reached, the negotiators\nto a plebiscite to insure that it is acceptable to\nmoved into substantive talks aimed at resolving\nthe Panamanian people.\nthese issues.\nThe United States and Panama have agreed in\nprinciple that the Treaty of 1903 should be re-\nplaced by a modern treaty that rejects the concept\nof perpetuity and accommodates the sovereignty\nSTATEMENT OF PRINCIPLES\nof Panama with the interests of the United States,\non the understanding that U.S. control and de-\nJoint Statement by the Honorable Henry A.\nfense of the Panama Canal would continue for a\nKissinger, Secretary of State of the United\nperiod of fixed duration. In the context of the\nStates of America, and His Excellency Juan\nStatement of Principles the issues the two nego-\nAntonio Tack, Minister of Foreign Affairs of\ntiating parties are working to resolve are:\nthe Republic of Panama, on February 7, 1974\n1. Duration: How long will the new treaty\nat Panama\nremain in force?\n2. Operation and Defense: What rights and\nThe United States of America and the Repub-\narrangements will the United States have to\nlic of Panama have been engaged in negotiations\npermit it to continue to operate, maintain, and\nto concide an entirely new treaty respecting\ndefend the canal? What geographic areas will\nthe Panama Canal, negotiations which were made\npossible by the Joint Declaration between the\ndance with what that treaty states, the right to\ntwo countries of April 3, 1964, agreed to under\nuse the lands, waters and airspace which may be\nthe auspices of the Permanent Council of the\nnecessary for the operation, maintenance, protec-\nOrganization of American States acting provision-\ntion and defense of the canal and the transit of\nally as the Organ of Consultation. The new\nships.\ntreaty would abrogate the treaty existing since\n5. The Republic of Panama shall have a just\n1903 and its subsequent amendments, establish-\nand equitable share of the benefits derived from\ning the necessary conditions for a modern rela-\nthe operation of the canal in its territory. It is\ntionship between the two countries based on the\nrecognized that the geographic position of its\nmost profound mutual respect.\nterritory constitutes the principal resource of the\nSince the end of last November, the authorized\nRepublic of Panama.\nrepresentatives of the two governments have been\n6. The Republic of Panama shall participate\nholding important conversations which have per-\nin the administration of the canal, in accordance\nmitted agreement to be reached on a set of fun-\nwith a procedure to be agreed upon in the treaty.\ndamental principles which will serve to guide the\nThe treaty shall also provide that Panama will\nnegotiators in the effort to conclude a just and\nassume total responsibility for the operation of\nequitable treaty eliminating, once and for all, the\nthe canal upon the termination of the treaty. The\ncauses of conflict between the two countries.\nRepublic of Panama shall grant to the United\nThe principles to which we have agreed, on\nStates of America the rights necessary to regulate\nbehalf of our respective governments, are as\nthe transit of ships through the canal and operate,\nfollows:\nmaintain, protect and defend the canal, and to\nundertake any other specific activity related to\n1. The treaty of 1903 and its amendments\nthose ends, as may be agreed upon in the treaty.\nwill be abrogated by the conclusion of an entirely\n7. The Republic of Panama shall participate\nnew interoceanic canal treaty.\nwith the United States of America in the pro-\n2. The concept of perpetuity will be eliminated.\ntection and defense of the canal in accordance\nThe new treaty concerning the lock canal shall\nwith what is agreed upon in the new treaty.\nhave a fixed termination date.\n8. The United States of America and the\n3. Termination of United States jurisdiction\nRepublic of Patama, recognizing the important.\nover Panamanian territory shall take place prompt-\nservices rendered by the interoccanic Panama,\nby in accordance with terms specified in the treaty.\nCanal to international maritime traffic, and bear-\n4. The Panamanian territory in which the canal\ning in mind the possibility that the present canal\nis simmted shall be returned to the jurisdiction of\ncould become Luadequate for said leaffic, shall\nthe Republic of Panama. The Republic of Panama,\nagree bilaterally on provisions for new projects\nin its capacity as territorial sovereign, shall grant\nwhich will enlarge canal capacity. Such provi-\nto the United States of America, for the duration\nsions will be incorporated in the new treaty in 20\nof the new interoceanic- canal treaty and in accor-\ncord with the concepts established in principle 2.\nDEPARTMENT OF STATE, U.S.A.\nPOSTAGE AND FEES PAID\nDEPARTMENT C.F DTATE\nWASHII GTON, D.C. 20320\nSTA-501\nTHIRD CLASS\nDULK RT.\nORGA CUBRARY\n4\npossible by the Joint Declaration between the\ndance with what that treaty states, the right to\ntwo countries of April 3, 1964, agreed to under\nuse the lands, waters and airspace which may be\nthe auspices of the Permanent Council of the\nnecessary for the operation, maintenance, protec-\nOrganization of American States acting provision-\ntion and defense of the canal and the transit of\nally as the Organ of Consultation. The new\nships.\ntreaty would abrogate the treaty existing since\n5. The Republic of Panama shall have a just\n1903 and its subsequent amendments, establish-\nand equitable share of the benefits derived from\ning the necessary conditions for a modern rela-\nthe operation of the canal in its territory. It is\ntionship between the two countries based on the\nrecognized that the geographic position of its\nmost profound mutual respect.\nterritory constitutes the principal resource of the\nSince the end of last November, the authorized\nRepublic of Panama.\nrepresentatives of the two governments have been\n6. The Republic of Panama shall participate\nholding important conversations which have per-\nin the administration of the canal, in accordance\nmitted agreement to be reached on a set of fun-\nwith a procedure to be agreed upon in the treaty.\ndamental principles which will serve to guide the\nThe treaty shall also provide that Panama will\nnegotiators in the effort to conclude a just and\nassume total responsibility for the operation of\nequitable treaty eliminating, once and for all, the\nthe canal upon the termination of the treaty. The\ncauses of conflict between the two countries.\nRepublic of Panama shall grant to the United\nThe principles to which we have agreed, on\nStates of America the rights necessary to regulate\nbehalf of our respective governments, are as\nthe transit of ships through the canal and operate,\nfollows:\nmaintain, protect and defend the canal, and to\nundertake any other specific activity related to\n1. The treaty of 1903 and its amendments\nthose ends, as may be agreed upon in the treaty.\nwill be abrogated by the conclusion of an entirely\n7. The Republic of Panama shall participate\nnew interoceanic canal treaty.\nwith the United States of America in the pro-\n2. The concept of perpetuity will be eliminated.\ntection and defense of the canal in accordance\nThe new treaty concerning the lock canal shall\nwith what is agreed upon in the new treaty.\nhave a fixed termination date.\n8. The United States of America and the\n3. Termination of United States jurisdiction\nRepublic of Panama, recognizing the important\nover Panamanian territory shall take place prompt-\nservices rendered by the interoceanic Panama.\nby in accordance with terms specified in the treaty.\nCanal to international maritime traffic, and bear-\n4. The Panamanian territory in which the canal\ning in mind the possibility that the present canal\nis situated shall be returned to the jurisdiction of\ncould become indequate for said traffic. shull\nthe Republic of Panama. The Republic of Panama,\nagree bilaterally on provisions for new projects\nin its capacity as territorial sovereign, shall grant\nwhich will enlarge canal capacity. Such provi-\nto the United States of America, for the duration\nsions will be incorporated in the new treaty in 2C-\nof the new interoceanic canal treaty and in accor-\ncord with the concepts established in principle 2.\nDEPARTMENT OF STATE, U.S.A.\nPOOTAGE AND FEED PAID\nDEPARTMENT CF STATE\nWASHIT IGTON, D.C. 20520\nSTA-501\nTHIRD CLASS\nBULK RT.\nSECRET XGDS\nTHE WHITE HOUSE\nIf\nWASHINGTON\nAugust 18, 1975\nNational Security Decision Memorandum 302\nTO:\nThe Secretary of State\nThe Secretary of Defense\nSUBJECT:\nPanama Canal Treaty Negotiations\nAfter considering the views expressed by the Departments of State\nand Defense concerning proposals for negotiating instructions on a\nnew United States-Panama Canal Treaty, I have decided to modify\nthe negotiating instructions contained in NSDMs 131 and 115 and to\nsupplement them as follows:\nThe negotiators are authorized to propose to the\nPanamanians that the treaty duration applicable for defense be\nseparated from its application to operation of the Canal. With\nregard to duration applicable to operation of the Canal, the United\nStates negotiators should seek to obtain the longest possible period,\nto terminate not earlier than December 31, 1999. With regard to\nduration applicable to defense of the Canal, they should seek to\nobtain a minimum of 50 years, but are authorized to recede to no\nless than 40 years, They should also make efforts to obtain a\nright in principle for the United States to participate in Canal\ndefense, including a limited military presence in Panama, following\nthe expiration of the treaty period applicable to defense, such\nparticipation to be of a nature and under terms to be agreed upon\nbetween the parties not less than one year prior to the treaty's\nexpiration. As a fallback, if deemed necessary to achieve the\nobjective of an extended period for Canal defense or other critical\nnegotiating objectives, the Negotiators may offer a reduction of the\nduration period applicable to Canal operation to a period of not less\nthan 20 years.\n-- With regard to Canal expansion, the United States\nNegotiators should seek to obtain the longest possible period up to\nthe termination of United States responsibility for operation for a\nSECRET - XGDS (3)\nNSC DECLASSIFIED 80086 12/30/80\nBy WHM NARS, Date 12/19/84\nSECRET XCDS\n2\nUnited States option to exercise definitive and exclusive rights to\nexpand the Canal's capacity, whether by addition of a third lane of\nlocks or the construction of a sea-level canal. As a fallBack, they\nmay seek to obtain -- either in lieu of or in combination with\ndefinitive rights commitments that: (a) Panama will not permit\nthe construction of a sea level canal in its territory during the\nperiod of United States control of the existing Canal unless it has\nfirst offered to the United States the option to construct such a\ncanal. That option should be under terms and conditions which\nwould accord to the United States rights relating to operation and\ndefense commensurate with the due protection and enjoyment of a\nUnited States investment of that magnitude; (b) no country other\nthan the United States or Panama shall have responsibility for\noperation and defense of an interoceanic canal in Panama; and\n(c) the neutrality guarantee applicable to the existing Canal will\napply to any new canal built in Panama.\n- - With regard to land/water areas, the United States\nNegotiators should seek to obtain Panama's acceptance of the United\nStates offer of January 1S, 1975, modified by the addition of such of\nthe following areas as the Negotiators find necessary in order to\nfurther our objectives:\n- Cristobal Piers\n- Land and Water Areas in Gatun Lake\n- Fort Sherman jungle training area south of the\n22nd grid\n- Coco Solo, Fort Randolph and access to them via\nRandolph Road\n- Portions of the Albrook/Clayton Training Areas\nIf agreement is not possible on the basis of these offers, the United\nStates Negotiators should request further instructions from the\nPresident.\nSEGRET XGDS\nSECRET XGDS\n3\nWith regard to the negotiating process, the United States\nNegotiators should seek to obtain Panama's agreement that the\nnegotiations will remain confidential so that the Panama Canal issue\nwill not be injected into the domestic political process in the United\nStates in 1976.\nWith regard to the resumption of negotiations, the United\nStates Negotiators should proceed promptly to continue their task.\nWith regard to the creation of a favorable national\nenvironment for treatv ratification, the Departments of State and\nDefense should join in regular consultations with the Congress on\nthe course of treaty negotiations and should initiate an effort to\nbuild support for a new treaty with Panama.\nHerald\nR.7ord\ncc:\nThe Chairman, Joint Chiefs of Staff\nThe Director of Central Intelligence\nThe Chief Negotiator for the Panama Canal Treaty\nSEGRET - XGDS\nS 15434\nCONGRESSIONAL RECORD - SENATE\nSeptember 8, 1975\nI do not know.\nNATIONAL SECURITY\nwhich it would have \"if it were sovereign.\"\nA governmental agency certainly does\n\"The fact of the matter is that the great-\nObviously, these words would not have been\nnot know and is incapable of deciding.\nest danger to the security of the United\nnecessary if the United States were, in fact.\nThe people who watch it will know-\nStates would be the continuance of. the\nsovereign. A new treaty which recognizes\neach in his own way. And if it becomes\npresent status of the canal.\"\nthat fact and goes on from there to work out\nnecessary to make a decision, that de-\nPOLITICAL INSTABILITY AND VIOLENCE\na mutually agreeable arrangement for con-\ntrol of the territory can hardly be called a\ncision will be made in the voting booth.\n\"If any course is designed to expose the\nsurrender of United States sovereignty.\nIf people do not like the decisions made\ncanal to political instability and violence, it\nWill a new Panama Canal treaty prejudice\nwould be an anachronistic effort to maintain\nby their elected representatives on con-\nour national security?\nin effect a treaty negotiated in 1903 which is\ntroversial issues of public importance,\nThe fact of the matter is that the greatest\nno longer respected, which is looked upon by\nsuch as hunting, they can vote them out\ndanger to the security of the United States\nPanamanians of all political persuasions as\nof office.\nwould be the continuance of the present\nan affront to Panama's national dignity and\nstatus of the canal. If there is not a new\nThat is the way the system-should\nas a colonial enclave, and which is viewed\ntreaty, we will be running the grave risk\nwork. And it can work only if the people\nthroughout Latin America as the last ves-\nthat the canal-which is, of course, exceed-\nget all kinds of facts and opinions on\ntige of 'big stick' diplomacy.\"\ningly vulnerable under any circumstances—\nall sorts of issues from printed publica-\nU.S. COMMERCIAL INTERESTS\nmay be damaged or destroyed by irate Pan-\ntions and radio and television pro-\n\"Admittedly, the canal is important to us\namanians. By the same token we may find\ngrams-the press-free from govern-\ncommercially, but obviously its economic\nourselves in the position of having to defiend\nmental interference.\nsignificance has diminished considerably as\nthe canal by force against a hostile popula-\nworld commerce patterns and technologies of\ntion and in the face of widespread, if not\nshipping have changed.\"\nuniversal, condemnation. Since the new\nWHAT FUTURE FOR THE PANAMA\ntreaty will specifically include provisions for\nThese observations are as timely as\na continued U.S. defense role with respect to\nCANAL\nthey are accurate. They deserve the most\nthe canal, it is hard to see how a new treaty\nMr. McGEE. Mr. President, last week\ncareful consideration by each Member of\ncould be adverse to our national security.\nU.S. Ambassador Ellsworth Bunker re-\nthis forum.\nWill a new treaty weaken the United States\nturned to the negotiating table in Pan-\nI ask unanimous consent that the\nposition by exposing the canal to political\ninstability and violence?\nama. This is a very significant develop-\nLinowitz article be printed in the RECORD.\nIf any course is designed to expose the\nment because, as the press has reported,\nThere being no objection, the article\ncanal to political instability and violence,\nit is solid evidence that the impasse over\nwas ordered to be printed in the RECORD,\nit would be an anachronistic effort to main-\nthe U.S. negotiating position has been\nas follows:\ntain in effect a treaty negotiated in 1903\nbroken, thanks to the political courage\nWHAT FUTURE FOR THE PANAMA CANAL?\nwhich is no longer respected, which is looked\nshown by President Ford.\n(By Sol M. Linowitz)\nupon by Panamanians of all political persua-\nThe President is to be commended for\nsions as an affront to Panama's political dig-\nOAS Secretary General Orfila recently\nnity and as a colonial anclave, and which is\nhis determination to get on with the\ncalled the Panama Canal \"the most explosive\nviewed throughout Latin America as the last\ncanal negotiations. Much of the credit\nissue in Latin America.\" A lot of other con-\nvestige of \"big stick\" diplomacy. Under the\ndue him on this issue stems from the fact\ncerned Latin American and U.S. leaders have\nnew treaty the United States would be able\nthat there are SO many misconceptions\nfor some time been warning us about the\nto protect its position while allowing Pan-\nabout the Panama Canal and our rela-\ncanal issue and what it may mean to the\nama a greater responsibility in the canal's\ntionship to it that any political leader\nwhole future of the hemisphere.\noperation.\nBut most Americans have not been listen-\nwho advocates a new treaty relationship\nWill a new treaty adversely affect U.S. com-\ning-especially Congress.\nmercial interests?\nwith Panama is, in the eyes of many\nAs though to prove how hard it has not\nAdmittedly, the canal is important to us\nAmericans, automatically guilty of \"trea-\nbeen listening, just before the August recess\ncommercially, but obviously its economic\nson, bribery, or other high crimes and\nthe House of Representatives passed 246-164\nsignificance has diminished considerably as\nmisdemeanors.\" Endorsing a new treaty\nthe Snyder Amendment to the State Depart-\nworld commerce patterns and technologies\nrelationship with Panama is akin to a\nment appropriation bill, which would have\nof shipping have changed. Today large ves-\npublic statement denouncing mother-\nkept the State Department from even nego-\nsels cannot use the canal and a major ex-\ntiating about a new Panama Canal treaty.\nhood, apple pie, and \"when Johnny comes\npansion of the present capacity may be nec-\nOnly vigorous efforts in the Senate kept that\nmarching home again\"-all rolled into\nessary-possibly a sea level canal. If the sit-\nbody from adopting the Byrd Amendment to\nuation remains as it is, it is hardly likely that\none.\nthe same effect.\nPanama would accede to the modernization\nMr. President, no one has done more\nThese developments came some weeks after\nrequired. In order to accomplish that, there\nto dispell this kind of thinking about the\n38 senators and 126 representatives co-spon-\nmust be assurance of Panamanian coopera-\nPanama Canal issue than Sol Linowitz,\nsored a resolution that sharply opposed the\ntion precisely as called for in the proposed\nbasic objectives of a new treaty.\nour former Ambassador to the Organiza-\ntreaty.\ntion of American States and Chairman\nObviously there must be some reason\nIn the light of these facts, it certainly re-\notherwise thoughtful members of Congress\nquires no extended argument to recognize\nof the U.S. Latin American Commission.\nare lining up as they are with respect to such\nthat efforts on our part to adhere to the 1903\nAmbassador Linowitz has done yeoman's\na potentially dangerous issue. The answer is\ntreaty would be both damaging to our na-\nservice in helping Americans to overcome\nclear enough: Neither the administration\ntional interests and in derogation of our\nthe \"Panama Canal syndrome,\" and\nnor those members of the Congress support-\nhemispheric objectives. By the same token\nerase the many misconceptions about the\ning a new treaty have directly responded to\nthe new treaty would demonstrably offer the\ncanal and our real interests in it.\nthe arguments and concerns of those who are\nprospect of increased security for the canal\nopposing the treaty. Rather, they have been\nand the furtherance of our common goals\nIn this regard, I want to draw my col-\ncontent to let the opposition build in the ap-\nfor the Americas.\nleagues' attention to an article by Am-\nparent expectation that once a treaty is\nbassador Linowitz, which appeared in\nnegotiated they will be able to make their\nFriday's-September\n5-Washington\ncase effectively.\nZERO TO $5 MILLION IN JUST 9\nPost. This article entitled, \"What Future\nBut time is running out and opposition is\nYEARS\nfor the Panama Canal?\" is addressed\nbuilding. Meanwhile, Ambassador Ellsworth\nspecifically to Congress because of the\nBunker and Panamanian Foreign Minister\nMr. NUNN. Mr. President, earlier this\nJuan Tack make progress toward a new\nyear, I was privileged to participate in a\nrecent efforts on Capitol Hill to impede\ntreaty which may face rejection in the Sen-\nceremony honoring the Georgia Small\nthe treaty negotiations, if not postpone\nate. If that happens, we may find that the\nBusinessman of the Year for 1975. This\nthem indefinitely.\nPanama Canal has become a tinderbox.\nyoung man, Joe Kelly McCutchen, Jr., of\nMr. President, the Linowitz article goes\nIt is long past time to take a hard look at\nDalton is an ardent believer in the free\ndirectly to the gut issues:\nthe arguments being advanced against the\nenterprise system.\nSOVEREIGNTY OVER THE CANAL\nnew treaty and to deal with them forth-\nIn a recent issue of Georgia Progress\nThe simple answer is that the United States\nrightly. Good questions are being asked and\nmagazine there appeared an article de-\nnever had sovereignty. The 1903 treaty speci-\nthey deserve responsive answers.\nscribing how Joe Kelly has put his be-\nfically gave the United States authority which\nWill the new treaty mean a surrender of\nUnited States sovereignty over the Canal?\nliefs into practice, enabling his small\nit would have \"If it were sovereign.\" Obvious-\nly, these words would not have been neces-\nThe simple answer is that the United\nfamily firm to grow to international\nsary if the United States were, in fact,\nStates never had sovereignty. The 1903 treaty\nstatus with annual sales of over $5\nsovereign.\nspecifically gave the United States authority\nmillion.\nMay 20, 1975\nCONGRESSIONAL RECORD-SENATE\n8701\nfull-faith bargaining. To the contrary, of\nFinally, the editorial notes that \"airline\nhow smart so many editorial writers can be,\ncourse, it encourages management negotia-\nunions have their own mutual aid program\nabsent of most of the facts.\ntors to withhold concessions and com-\nin the form of strike funds.\"\nAmong the many reasons I ask it, is the\npromises.\nThis is so ill-informed a comment as to be\nfact that people of St. Paul and our city's\nIn fact, Hearing Examiner Present recom-\nludicrous.\nbusiness community and air traveling public\nmended in 1972 that CAB not approve higher\nFirst off, there is absolutely no mutual aid\nwant to prevent a repetition of the 160-day\nstrike payments because they could have the\npact among the airline unions, nothing paral-\n1970 Northwest Airlines strike which brought\neffect of swaying an airline's decision \"as to\nleling MAP with its $2,000,000-a-day strike\nno inconveniences to Northwest executives\nwhen it should settle a strike, to the detri-\nsubsidy payments to TWA.\nbut large profits into their corporate bank\nment of the public utilizing air transporta-\nThe fact is that some unions pay no strike\naccounts.\ntion.\"\nbenefits at all. Some unions that do pay,\nSincerely,\nThere is other solid proof that MAP en-\nprovide only the barest subsistence funds,\nJOSEPH E. KARTH,\ncourages and prolongs strikes. In 1958 when\n$2 to $7-a-day, and that hardly puts food\nMember of Congress.\nMAP was organized, airline strikes lasted an\non the table. Certainly no one can suggest\nthat is profit making.\nP.S.-I am satisfied that you did not write\naverage of 30.7 days. Today airline strikes\naverage 95 days-a soaring increase of more\nSenator Gravel (testifying alongside me at\nthe editorial because you never write one\nabsent most of the facts.\nthan 200% in the 16 years MAP has been\nthe hearing) astonished some Senators by\nat work. This is a far greater increase in the\nrevealing that \"Airline clerks and machinists\nduration of strikes than in any other major\nmay-if the union strike fund is full-receive\nTHE PANAMA CANAL ZONE TREATY\nindustry.\n$15 and $40 a week respectively. The pilots\nreceive one-fifth of their salary but only after\nNEGOTIATIONS\nThousands of St. Paul residents and bust-\nnessmen have vivid memories of the 1970\none month of a strike.\" If it will help any,\nMr. HUMPHREY. Mr. President, I\nNorthwest Airlines strike. Although on strike\nI would agree that airlines get the same\nfor 160 days, Northwest enjoyed a net profit\nproportion of their normal profit that em-\nask unanimous consent to have printed\nployees get of theirs.\nin the RECORD a statement by the dis-\nof $44,000,000 for that year. Without MAP\npayments, Northwest would have lost\nThose facts stultify any remark that \"air-\ntinguished Senator from Wyoming (Mr.\n$2,000,000.\nline unions have their own mutual aid pro-\nMcGEE), and the material attached\nThat story is repeated over and over again\ngram in the form of strike funds.\" While a\nthereto.\nwith other MAP-affiliated airlines. Over and\nstrikebound airline is enjoying up to 20%\nThe PRESIDING OFFICER. Without\nover again airline strikes were induced and\nguaranteed profits, the striking airline clerk\nobjection, it is so ordered.\nthen prolonged unreasonably because of the\nor mechanic is looking for a part-time job,\nSTATEMENT By SENATOR McGEE\nguaranteed profits. As one witness told the\napplying for unemployment compensation,\nAviation Subcommittee last week, \"Why\nor standing in line for food stamps.\nThe negotiations between the United\nshould management be anxious to settle;\nFinally let me bring forward one aspect of\nStates and the Republic of Panama over a\nthey can't lose.\"\nMAP which the Pioneer Press editorial wisely\nnew Canal Zone Treaty has sparked con-\nSometimes in unguarded moments, air-\nsidestepped: the damage inflicted by MAP-\nsiderable controversy within the Congress.\nline executives admit that they like strikes\nprolonged strikes on whole communities and\nMuch of this controversy has been based\nbecause they're a source of profit. For ex-\nregions, especially those served by only one\nupon an outdated emotionalism-an emo-\nample, C. C. Tilinghast, Chairman of Trans\nairline.\ntionalism which ignores basic factual con-\nWorld Airlines, told a Honolulu newspaper\nWe know of airports in single-airline com-\nsiderations involved in this issue.\nreporter that the longer a strike by flight\nmunities being almost entirely shut down,\nTherefore, I would urge my colleagues to\nattendants continued, the higher TWA's\ndisemploying airport personnel, maintenance\ngive close attention to a paper written by\nprofits would be for 1973. TWA banked\nworkers and employees of such airport enter-\nRobert G. Cox for The Americas in a Chang-\n$74,484,000 in MAP assistance payments\nprises as restaurants, rent-a-car agencies,\ning World, which was published just this\nduring that 44-day walkout.\nfreight-forwarding firms, and bus lines.\nyear. The book was compiled by the Com-\nWe know of factories in such communities\nmission on United States-Latin American\nAs Reporter Eisele quoted me as telling the\nSubcommittee, \"These facts and figures are\nhaving to close down because machinery re-\nRelations, whose Chairman is former OAS\nplacement parts could not be obtained by\nAmbassador, Sol M. Linowitz. Mr. Cox, who\nenough to convince any reasonable person\nthat MAP is a strike inducing, strike-pro-\nair-freight. We know of retail stores and\nwas a consultant to the Commission, sets\nwholesalers suffering greatly. reduced busi-\nout the issues involved in the Panama Canal\nlonging and strike-breaking instrument.\"\nness because salesmen and suppliers had to\nTreaty in a very pragmatic and factual man-\nYour editorial next makes the point that\ncome to the community by car, sometimes\nner. He is to be commended for this in-\nMAP has been upheld by a U.S Court of\nfrom long distances.\nvaluable contribution to the debate sur-\nAppeals decision. When Senator Gravel was\nThose of us responsible for national policy\nrounding the issue of a new treaty with\nasked about this during the hearing he\ncan't forget those communities, even if edi-\nPanama.\nreplied that it is within living money that\ntorial writers can. We cannot, for example,\nAs Mr. Cox notes: \"Americans have been\nsome of the nation's highest courts upheld\nforget Fargo, North Dakota, which was 80\ninclined occasionally to overstate the\nchild labor, the shameful 12-hour day of\nbadly injured by the 1972 Northwest Airlines\ncommercial significance of the Panama\ntoll for youngsters 11 and 12 years old in coal\nstrike that it asked CAB to rescind North-\nCanal\nmines and textile mills. I also point out that\nwest's certificate and issue a new one to\nHe points out that only 18 percent of the\nthe court ruled on the basis of existing na-\nanother airline.\nworld's total merchant fleet (4,500 out of\ntional policy brought about by national law.\nWe cannot forget the resolutions of protest\n25,000 ships over 1,000 tons) transit the\nObviously since there is no law to the con-\nagainst MAP that reached us in Congress last\ncanal each year. In an effort to set our fac-\ntrary, MAP is not in violation of national\nyear and this year from communities in\ntual house in order, it is interesting to note\npolicy.\nTexas, Loulsiana and New Mexico because of\nthat the United States ranks tenth in the\nNext the Pioneer Press editorial points an\nthe needlessly prolonged shutdown by Texas\noceanborne commerce it sends through the\naccusatory finger, or so it seems, at the pay\nInternational Airlines, a shutdown that\ncanal by weight. Nicaragua ranks first with\nscales of pilots and ground crews. When this\nended earlier this year after 125 days.\n76.8 percent of that nation's oceanborne\npoint was briefly raised at the hearing I made\nAn investigation into this strike disclosed\ncommece transiting the canal each year. The\nthis response: \"When I fly I feel confident\nthat 26 Texas communities served only by\nUnited States sends only 16.8 percent of its\nand comfortable when I know there's a pilot\nTI were severely hurt by the closures, with\noceanborne commerce through the canal.\nup front getting $50,000 or more and not\nbusiness failures sharply increased.\nHow vital is an effective and efficient op-\n$10,000; I know he has to be the best trained\nWe cannot forget that the New Mexico\neration of the canal to the two participants\nand most skilled in the world. And I feel con-\nState Legislature, alarmed and worried over\nin the treaty negotiations-the U.S. and\nfident and comfortable when I board a plane\nthe effect of the MAP-supported TI strike\nPanama? As Mr. Cox notes, about 30 per-\nthat has just come from maintenance know-\non the state's economic health, memorialized\ncent of Panama's gross national product and\ning that the maintenance men are highly\nus in Congress and asked for a \"full Con-\n40 percent of Its foreign exchange earnings\npaid and therefore highly skilled.\"\ngressional investigation of the Mutual Aid\nare directly or indirectly attributable to the\nDoes the editorial writer want to analogize\nPact.\"\nCanal and related institutions. Yet, the\nbetween an airline pilot in command of a 747\nCongress is now responding to the appeals\nPanama Canal affects less than one percent\nwith responsibility for 400 lives, and a steel-\nfrom Fargo, North Dakota, from scores of\nof our total GNP as a nation.\nworker in a highly automated plant?\ncommunities in Texas and Louisiana, and\nMr. Cox notes that:\nPilots do not buy planes. Aircraft get\nfrom the New Mexico State Legislature.\nBy volume, less than five percent of the\nlarger and larger; their equipment becomes\nAnd ironically while we are doing so, the\ntotal world trade transits the Panama Canal.\nmore and more intricate and complex. They\nPioneer Press editorial tells us that \"The\nBy value, the proportions would be little\ncarry more and more people. Consequently\nmove against the mutual aid pact in the\nmore than one percent; an increasing per-\nthere are greater demands of responsibility,\nSenate seems uncalled for\ncentage of more expensive cargo is being\nskill, experience and judgment Imposed on\nWe hope that in the interests of fairness\ntransported by air (for example, about 10\nairline pilots than on any other service em-\nand press accountability that you will print\npercent of the U.S. foreign trade), and most\nployees in the world.\nthe foregoing rebuttal. I often marvel at\nCanal cargo is in bulk commodities.\n8702\nCONGRESSIONAL RECORD-SENATE\nMay 20, 1975\nI found this observation by Mr. Cox quite\nrevised draft treaty but the Canal and the\nfiscal 1973 accounted for most of the tran-\ninteresting:\nZone will predominate.\nsiting cargo.\nThe adjective most frequently applied to\nPanama, by the 1903 treaty, granted the\nPercentage\nthe Canal by Americans is 'vital.' In terms of\nU.S. perpetual jurisdiction as If it were sov-\nPetroleum and its products\n18.2\nU.S. trade, however, the numbers would jus-\nereign over the Canal Zone \"to the entire\nGrains\n15. 8\ntify more modest description. Convenient.\nexclusion of the exercise by the Republic of\nCoal and Coke\n11. 1\nUseful. The Canal is economically vital to\nPanama of any such sovereign rights, power\nOres and metals\n0.9\nPanama, perhaps also to Nicaragua and a\nor authority.\"\nfew other Latin American countries, but not\nThe Zone extends 5 miles on each side of\n55.0\nto the United States.\nthe center line of the Canal, and has an area\nThese are just but a few of the observations\nof 553 square miles of which 362 are land. It\nSince transiting cargo tends to be made up\nwhich Mr. Cox offers which I think are im-\nis larger than the Amercian Virgin Islands,\nof commodities which are volatile on the\nportant for Senators to consider at this mo-\nGuam, and American Samoa combined. Pop-\nworld market, traffic forecasting is difficult.\nment, rather than allowing themselves to be\nulation was 44,198 at the 1970 census. About\nEach year 18 percent of the world's total\ndeluded by emotional arguments reminiscent\n11,000 U.S. Armed Forces personnel have been\nmerchant fleet (4,500 out of 25,000 ships\nof an earlier era. The military and strategic\nstationed in the Zone during recent years.\nover 1,000 tons) transit the Canal. The size\narguments are also handled in the same fac-\nThe Canal Zone Government and the\nof an average ship transiting the Canal has\ntual manner by Mr. Cox and certainly should\nPanama Canal Company are the two principal\nbeen increasing over the past ten years.\nbe studied very carefully by members of the\noperating agencies, headed by one officer who\nP.C.\nSenate.\nserves both as Governor of the Canal Zone\nnet tons\nHowever, there is one observation which I\nand President of the Company. The Governor\n1964\n5,910\nbelieve very relevant to our consideration of\nis appointed by the President of the United\n1969\n7, 658\na new treaty. This observation was made by\nStates and reports to the Secretary of the\n1973\n9, 100\nJack Vaughn, former U.S. Ambassador to\nArmy. As President of the Company he re-\nPanama, former Assistant Secretary of State\nports to the Board of Directors, appointed by\nThe countries most dependent on the\nfor Inter-American Affairs, former Director\nthe Secretary of the Army. The Canal Zone\nPanama Canal send the following percentages\nof the Peace Corps and former Ambassador\nGovernment maintains the civil executive\nof the oceanborne commerce through the\nto Colombia.\nauthority. The legislative power resides in\nCanal, by weight:\n'a Latin American Vietnam.' He finds\nthe U.S. Congress and the judicial power is\nPercent\nthat through the collaboration of Congres-\nexercised by a District Court of the U.S. Fed-\nNicaragua\n76. 8\nEl Salvador\nsional and military supporters of the Canal\neral Court System. The Company operates the\n66.\nEcuador\nZone, 'Presidents' orders have been reversed,\nCanal, the Panama Railroad, and a ship\n51.\nPeru\ndiplomatic maneuvers and decisions brushed\nwhich sails between New Orleans and the\n41. 3\nChile\naside, and the United Nations told to go to\nZone.\n34. 3\nColombia\nhell.' And he concludes, \"The tinder awaits\nAnother U.S.-Panama treaty was signed\n32. 5\nGuatemala\nthe spark.'\nJanuary 25, 1955, increasing the annuity and\n30.\nPanama\ngranting Panama some real estate and build-\n29. 4\nThe report ordered to be printed in the\nCosta Rica\nings no longer needed by the Canal Zone ad-\n27. 2\nRECORD is as follows:\nUnited States\nministration. U.S.-citizen and non-citizen\n16. 8\nMexico\nCHOICES FOR PARTNERSHIP OR BLOODSHED IN\nemployees were guaranteed equality of pay\n16. 6\nNew Zealand\nPANAMA\nand opportunity. The U.S. also agreed to\n15.\n(By Robert G. Cox)\nbuild a bridge over the Pacific entrance to\nAbout 30 percent of Panama's gross na-\nthe Canal. The bridge was opened October 12,\nOn November 2, 1903, at 5:30 in the after-\ntional product and 40 percent of its foreign\n1962 on the Inter-American Highway.\nnoon, the cruiser U.S.S. Nashville arrived at\nexchange earnings are directly or indirectly\nColon in the Republic of Colombia, its mis-\nPanamanians have shown little immediate\nattributable to the Canal and related instal-\nsion to block deployment of Colombian\ndetermination-of the kind so prevalent in\nlations.\ntroops. The next day citizens in the Pana-\nEgypt 20 years ago with the Suez Canal-to\nCanal Company tolls, by remaining con-\nmanian province revolted and declared their\nassume the burdens and risks of administer-\nstant in dollar terms since 1914, have de-\nindependence. The revolution was bloodless,\ning the Canal.1 Nationalization or purchase of\ncreased in real terms, and at a precipitous\nexcept for the death of one Chinese by-\nthe Canal, assuming either were feasible,\nrate, as a result of international monetary\nstander. Fifteen days later, the U.S. govern-\nmight require Panama to contribute some\nreadjustments in the 1970s. The result is\nment and the Republic of Panama entered\neffort to its management and defense, and\ngrowing subsidy to Canal users.\ninto a treaty, drafted by a Frenchman and\nwould imply sharing in the losses as well as\nRevenues of the Panama Canal Company\nconsisting entirely of language convenient\nprofits. In 1973, some officials of the Pana-\nwere $200 million in fiscal 1973. Approxi-\nto the United States. Still in effect today,\nmanian government considered the possi-\nmately 43 percent of regular receipts came\nthe treaty granted the right to build and\nbility of acquiring the Canal by purchase\nfrom operations other than Canal tolls. The\noperate forever an interocean canal, and to\nout of net earnings from increased tolls and\nCompany finances its own operations with-\nestablish, for that purpose, an American en-\nservices.² This, however, seems not to have\nout budgetary support from the U.S. govern-\nclave in a strip of land and water nearly\nreceived serious attention.\nment despite a policy of low toll rates and\nhalf the size of Rhode Island, bisecting the\nEconomic Considerations\nminimal profits from other operations.\nRepublic on an axis between its two major\nAmericans have been inclined occasionally\nProportions of the Canal Zone's product\npopulation centers. The U.S. consummated\nto overstate the commercial significance of\nderived from various sources in 1970 was as\nthat right as fast as logistics and technology\nthe Panama Canal, but its value is none-\nfollows:\nwould permit.\ntheless real. Adequate data exists to place it\nPercentage\nThe position of the United States in world\nin proper perspective. The recent volume of\nCanal Company\n44.7\npolitics for nearly two centuries has rested\ntransits, in number and cargo weight, is as\nZone Government\n10.2\non hegemony in the Western Hemisphere.\nfollows.\nMilitary bases and other official\nThe country acquired interests during those\nagencies\n39.9\n17 days in 1903 which included a responsi-\nPrivate enterprise\n5.2\nbility for the emergence of a nation, for the\nTotal\nCargo\nadministration of a major territorial posses-\noceangoing\n(in million\ntransits\nlong tons)\nTotal\n100. 0\nsion, and for the management of an inter-\nnational public utility of both commercial\nOf total U.S. foreign trade, by value, the\nand military value.\nFiscal year:\nfollowing precentages transited the Canal in\nFocusing on current efforts to negotiate\n1968\n14,807\n106\nthe two most recent years for which data is\n1969\n14,602\n109\nand ratify a new treaty, this paper submits\navailable:\n1970\n14,829\n119\nsome findings of fact and observations con-\n1971\n14,617\n121\nPERCENTAGES\ncerning the nature of those interests and\n1972\n14,238\n111\nthe fulfillment of that responsibility.\n1973\n14,238\n128\n1971, exports, 12.1; imports, 5.6; total, 8.8.\n1972, exports, 13.0; imports, 5.3; total, 9.0.\nDESCRIPTION OF THE SUBJECT MATTER\nSince foreign trade accounts for less than\nAlthough U.S.-Panamanian affairs are sub-\nThe Canal's ultimate capacity is 26,800\n10 percent of U.S. gross national product, the\nject to the full range of complexities found\ntransits annually. with certain physical\nCanal affects less than one percent of GNP.\nin other binational relationships, the princi-\nimprovements.\nBy volume, less than 5 percent of the total\npal subject matter has always been, and will\nFour categories of bulk commodities in\nworld trade transits the Panama Canal. By\ncontinue to be, the Canal and the Zone. It\nvalue, the proportion would be little more\nis too early to predict the contents of the\nFootnotes at end of article.\nthan one percent; an increasing percentage\nMay 20, 1975\nCONGRESSIONAL RECORD-SENATE\n8703\nof more expensive cargo is being transported\nwail after collaborating in a revolt there.\never, the Zone, as long as it remains relatively\nby air (for example, about 10 percent of U.S.\nThe U.S. then responded to the 1899 Boxer\nsecure from renewal of the nationalistic at-\nforeign trade), and most Canal cargo is in\nRebellion in China, by sending two infantry\ntacks of the 1960s, provides a location of un-\nbulk commodities.\nregiments, one troop of cavalry, one battery\nrivaled excellence for an administrative head-\nCOMMENTARY\nof light artillery, and two battalions of Ma-\nquarters, communications center, and'train-\nThe adjective most frequently applied to\nrlnes, commanded by a major general, to\ning ground.\njoin in military operations with the British,\nCOMMENTARY\nthe Canal by Americans is \"vital.\" In terms\nof U.S. trade, however, the numbers would\nFrench, Japanese and Russians. A transisth-\nTwo military issues concerning the Pana-\njustify more modest descriptions. Conven-\nmian canal, long regarded as a potential as-\nma Canal overshadow all others: utility and\nient. Useful. The Canal is economically vital\nset to burgeoning U.S. foreign trade, sud-\ndefensibility.\nto Panama, perhaps also to Nicaragua and a\ndenly became a strategic imperative. The\nThe Canal's military value during the first\nfew other Latin American countries, but not\nCanal has never been interrupted or serious-\nhalf of this century is well established, prin-\nto the United States.\nly threatened by hostile action.\ncipally by its contributions to the two World\nOne way to analyze the Canal's commer-\nFACTS\nWars. Regarding the Korean War and the\ncial value is to consider what would happen\nThe Canal remains a prime consideration\nconflict in Southeast Asia, its utility is less\nIf it were not there. The figures already pro-\nin the planning for and accomplishment of\ncertainly established. A former senior officer\nvided for U.S. and world trade transiting the\nthe safe and timely movement of naval units\nof the U.S. Budget Bureau Military Division\nCanal-9 percent and 1 percent, respec-\nbetween the Atlantic and Pacific Oceans. A\nestimates that alternative modes of shipment\ntively-should not be regarded as represent-\nsaving in distance of approximately 8,000\nwould have had no adverse effect on the Viet-\ning the portion that would be lost if the\nmiles is realized by Canal translt (versus\nnam War effort and that additional costs\nCanal were inoperative. The decision to send\nrounding Cape Horn), in the deployment of\nwould have been negligible.8 A ranking State\na given shipment through the Canal is fre-\nships from one coast to the other. A time\nDepartment expert in Panamanian affairs\nquently a close one, and almost always there\nsaving of up to 30 days can accrue for slower\nnow terms the Canal \"a military asset of de-\nare alternative routes or modes of trans-\nships and at least 15 days for fast ships cruis-\nclining value.\" Nevertheless, a residual util-\nportation. John Elac* has described the im-\ning at about 20 knots.\nity will remain for some time, largely be-\npact of closure of the Canal on total U.S.\nDuring fiscal 1968, a representative year\ncause of the constraints of U.S. West Coast\nand world commerce as \"inconsequential.\"\nof the Vietnam conflict, 33 percent of the\nport facilities, particularly in munitions-\nAn indicator often cited as proving the\ndry cargo shipped from the continental U.S.\nhandling.\nCanal's essential worth is: \"70 percent of its\nby the military sea transport service to South\nAs for the second issue, the Cameron re-\ntraffic either originates or terminates in U.S.\nVietnam, Thailand, and the Philippines, and\nport of the Center for Inter-American Re-\nports.\" In the first place, the percentage is a\nGuam, transited the Canal. For petroleum.\nlations puts it succinctly: \"The Panama\nlittle inflated. It should be 65 percent, but it\noil, and lubricants the proportion was 29\nCanal is no longer defensible.\" 10 This holds\nshould then be compared to a totality of 200\npercent. An unofficial estimate of the pro-\nfor either a strategic attack or destruction\npercent, not 100 percent, because it refers to\nportion of dry cargo used to support U.S.\nby a determined and resourceful enemy.\"\nboth arrivals at and departures from U.S.\nmilitary involvement in Vietnam which tran-\nThe Canal can, of course, be held against\nports. The indicator, even when placed in\nsisted the Canal is as high as 40 percent.\nsome levels of civil disturbance. These in-\nthat perspective, is spurious because it im-\nHowever, in 1970 there were about 1,300\nformed but independent views do not diverge\nplies but does not provide an impressive\nships afloat, under construction, or on order\nessentially from the later official judgment\nstatistical base. Presumably no one believes\nwhich could not enter the Panama Canal\nof the National Defense Study Group.11\nthat if only ten motorboats transited the\nlocks. There were approximately 1,750 more\nAs the strategic value and defensibility of\nCanal in 1975, four coming from and three\nships that could not pass through the Canal\nthe Canal eroded, the Zone has taken on a\nbound for U.S. ports this would reflect some\nfully laden because of draft limitations due\nnew military significance. The U.S. bases\nkind of vital U.S. interest.\nto seasonal low-water level.\nthere form the operational center of Ameri-\nWhen we look at U.S. investment in the\nThe National Defense Study Group of the\ncan military activity in Latin America. Am-\nCanal, it is tempting to include defense\nAtlantic-Pacific Interoceanic Canal Study\nbassador Jack Vaughn* thus described the\ncosts, as Senator Strom Thurmond does\nCommission specifically noted the \"vulnera-\nsituation last October:\nwhen he says we have committed a total of\nbility of the present canal,\" and stated the\nThe U.S. military command in Panama is\n$5,695,745,000.1 But since the Canal is con-\nfact that it could be closed by the use of\nmade of two parts: a major general from\nsidered a defense asset. we would presumably\nrelatively unsophisticated weapons is par-\nthe Corps of Engineers who governs the\nbe spending more than its costs on addi-\nticularly significant in view of forecasts\nPanama Canal Company from Balboa\ntional defense if we did not have it. The cost\nwhich anticipate that insurgency and sub-\nHeights, and a four-star general from the\nof defending it should be at least off-set by\nversion will probably persist in Latin Amer-\nArmy (CINCSOUTH) who directs Canal Zone\nits asset value. Moreover, $5.7 billion is a\nica to the end of the century; interruption\nmilitary operations from an underground\nsmall fraction of one percent of U.S. military\nfor extended periods to Canal service could\ncomplex at Quarry Heights. Their overriding\nexpenditures during the 60 years of the\nbe achieved with relative ease.5\ncommon objective is to maintain the status\nCanal's operation. Indeed, the entire cost of\nIf Gatun Lake were emptied by simple\nquo, and over the years they have been\nthe Canal might have been lost in the\nbreach of its dam, for example, the Canal\nlargely immune to the precepts and changes\nround-off of the defense budget in the fiscal\ncould be out of operation for as long as two\nof U.S. foreign policy.\nyears 1914 to 1973.\nyears, awaiting sufficient rainfall to refill the\nWhile the Administration's policy has led\nAs for the $700 million in actual unrecov-\nlake.\nto a reduction in all the U.S. military mis-\nered investment, the U.S. government would\nThe National Defense Study Group further\nsions assigned to other Latin nations, the\nhave had that back by now had it not elected\nfound that even a sea level canal, though\nPentagon has maintained its top-heavy com-\nto subsidize the shipping operations of user\nless vulnerable, would face threats of sabo-\nmand intact in the Zone. (The superabun-\nnations through reductions in real toll\ntage, clandestine mining, or the attack of\ndance of Colonels in the Southern Com-\ncharges while demand for transit service was\nshipping by low-performance aircraft or\nmand has led enlisted men to refer to it as\nincreasing.\nreadily transportable weapons. The more tra-\n\"Southern Comfort.\") While the U.S. mili-\nMILITARY CONSIDERATIONS\nditional forms of attack-blockade, naval, or\ntary in all other Latin nations is under the\nBy the turn of the century, the United\naerial bombardment, or ultimately attack by\ndirect supervision of the U.S. Ambassador,\nmissile-delivered nuclear weapons-are un-\nin Panama independent policy control is ex-\nStates had staked out its continental domain,\nsubdued the indigenous peoples, resolved its\nlikely, in the Group's view, because the at-\nercised by the Pentagon. Just when Presi-\ntacker would be confronted by the total mil-\ndent Nixon was assuring our good neighbors\nmain internal conflicts, established unques-\nthat the U.S. would wear a white hat in the\ntioned predominence in the Hemisphere, and\nitary strength of the United States.\nHemisphere, the Pentagon expanded train-\nwas ready to become a global power. On April\nThe Study Group concluded that closure\ning of Green Berets in the Zone.¹²\n21, 1898, the nation went to war with Spain,\nof the Canal for periods of approximately 30\nand in three months destroyed the Spanish\ndays, provided that they could be anticipated\nIn May 1974, there was some indication in\nfleet at Manila, drove the Spaniards from\nin advance, would not have serious defense\nthe Pentagon that civilian officials might\nCuba, conquered the Philippines, took Puer-\nimplications, but the denial of the Canal to\nsucceed in abolishing CINCSOUTH as a uni-\nfied command and reduce the rank of the\nto Rico and Guam. The battleship U.S.S.\nboth defense and commercial shipping for\nOregon made a dramatic 16,000 mile voyage\ntwo years could have a serious adverse effect\nsenior U.S. troop commander in the Zone to\naround Cape Horn to participate in the Bat-\non the national defense?\nmajor general.19\ntle of Santiago de Cuba. During the Span-\nPOLITICAL CONSIDERATIONS\nThe original purpose of U.S. troops in Pan-\nish-American War, the U.S. annexed Ha-\nama was to protect the Canal from a foreign\nThe history of U.S.-Panama relations has\naggressor. That is still ostensibly their pri-\nbeen characterized by (1) Panamanian sur-\n*Dr. John C. Elac is an international econ-\nmary mission. However, the Canal Zone is\nprise and mortification over the implemen-\nomist and a specialist in U.S.-Latin Amer-\nalso a command or coordination center for\nican relations. He was a member of the Board\nmost U.S. Armed Forces programs and ac-\n*Jack Hood Vaughn was U.S. Ambassador\nof Directors of the Panama Canal Company\ntivities in Latin America, including foreign\nto Panama (1964-1965); Assistant Secretary\nand a member of its Committee on Budget\nmilitary assistance and training, intelligence,\nof State for Inter-American Affairs (1965-\nand Finance (1967-69).\nand operational preparedness. The legality of\n1966); Director of the Peace Corps (1966->\nFootnotes at end of article.\nthese operations has been questioned. How-\n1969); Ambassador to Colombia (1969-1970).\nS 8704\nCONGRESSIONAL RECORD-SENATE\nMay 20, 1975\ntation of the 1903 treaty; (2) increasing\ndemonstrating the firm determination of our\ndents faced each other at Balboa High School\nPanamanian agitation for revision; (3) an\npeople that the United States maintain its\nin the Zone over the issue of flying the\ninitial dilatory paternalism on the part of\nindispensable sovereignty and jurisdiction\nAmerican flag without the Panamanian flag\nthe U.S.; and (4) a more recent willingness\nover the Canal and the Zone\nat the school. The ensuing riots lasted for\nby the U.S. Exccutive Branch to relieve Pan-\nAnd resolving that:\nfour days. Sniper fire into the Zone reached\nama's grievances while influential members\nThe Government of the United States\n500 rounds an hour at various times. Toll:\nof the House and Senate demand retention\nshould maintain and protect its sovereign\nFour American soldiers and 20 Panamanian\nof \"personal sovereignty\" in the Zone. For\nrights and jurisdiction over the Canal and\ncivilians killed; over 400 Panamanians and\nthe past ten years, off and on, the two coun-\nZone, and should in no way cede, dilute, for-\nAmericans wounded or injured; extensive\ntries have been trying to negotiate a way\nfeit, negotiate, or transfer any of these\nproperty damage. From 1964 to 1968 there\nout of the 1903 treaty.\nsovereign rights, power, authority, jurisdic-\nwere riots annually.\nThe Canal Zone is an American colony. In\ntion, territory, or property that are indispen-\nOn October 11, 1968, the Guardia Nacional\nthe international political context, the word\nsably necessary for the protection and se-\nseized control of the country after a year\n\"colony\" has two generally accepted defini-\ncurity of the United States and the entire\nof political turmoil. Over the next few\ntions: (1) the compact settlement of a group\nWestern Hemisphere\nmonths, Colonel (now Brigadier General)\nof nationals from one country within the\nWriting in the New York Times on May 7,\nOmar Torrijos emerged as the dominant fig-\nterritory of another while the settlers re-.\n1974, Senator Thurmond stated that a total\nure in the \"revolutionary government.\"\nmaln loyal to the mother country; and (2)\nof 35 Senators had, with \"no great effort\"\nTreaty negotiations with the U.S. were\na nonself-governing territory, or a depend-\nand mostly in a single afternoon, been con-\nlong underway when Torrijos came to power\nency without full self-government, considered\nvinced to co-sponsor the resolution. He\nand were continuing on the third anniver-\nby the various governing powers to be a\nadded:\nsary of the military coup, October 11, 1971.\nterritory under the jurisdiction of the mother\nIn my judgment, the Secretary committed\nAddressing an anniversary rally of 200,000\ncountry, prevented by social, economic, and\nan egregious blunder in committing the\nPanamanians assembled two blocks from the\npolitical restraints from being fully in charge\nUnited States to a course of action on a new\nZone, Torrijos asked:\nof its own decisions. The Canal Zone con-\nPanama treaty without a reasonable assur-\n\"What nation on earth would bear the hu-\nforms to both of these definitions.\nance that the requisite two-thirds majority\nmillation of seeing a foreign flag planted\nIn Panama City, March 21, 1973, the United\nof the Senate supported the abrogation of\nin its very heart? What nation would allow\nStates vetoed a U.N. Security Council resolu-\nsovereignty.\na foreign governor on its territory?\nOur\ntion calling on both countries to negotiate a\nIn consultations with members of Con-\nenemies want us to march on the Zone to-\nnew treaty to \"guarantee full respect for\ngress before signing the statement, Mr. Kis-\nday. When all hope is lost of removing this\nPanama's effective sovereignty over all its\nsinger and his chief negotiator, Ambassador\ncolonial enclave, Omar Torrijos will come\nterritory.\" The U.S. explained its veto, the\nEllsworth Bunker, were advised that sur-\nto this same square to you: \"Let us\nthird in its history, by saying it wanted to\nrender of United States sovereignty in the\nadvance.\" Omar Torrijos will accompany\nnegotiate with Panama \"without outside\nCanal Zone was not a negotiable item; they\nyou, and the 6,000 rifles of the Guardia\npressure.\" All other Security Council mem-\napparently chose to ignore this advice.\nNacional will be there to defend the integ-\nbers voted for the resolution except the U.K.\nThere is no way in which the Joint State-\nrity and dignity of the people. But today we\nwhich abstained.14\nment of Principles can be reconciled with\nare not going to the Zone.\"\nThe multinational forum then shifted to\nthe Senate resolution.17\nThe New York Times concluded that: Gen-\nthe Organization of American States where\nSenator Thurmond and certain members\neral Torrijos cannot turn back without los-\nhemispheric foreign ministers have, during\nof the House of Representatives contend\ning face. Violence does not seem imminent,\nthe past year, expressed unprecedented con-\nthat the relevant language in the constitu-\nbut only a satisfactory agreement will pre-\ncern over the Canal Zone issue.\ntion requires that a majority of the House\nvent future trouble\" And the negotia-\nOn February 7, 1974, in Panama City, Sec-\nas well as two-thirds of the Senate approve\ntions continued.\nretary of State Kissinger and Panamanian\nany agreement which cedes land to Panama.\nForeign Minister Juan Tack initialed a state-\nThe State Department contends it is one of\nCOMMENTARY\nment of eight Principles of Agreement pro-\nmany constitutional grants of power to Con-\nThe Archbishop of Panama, Marcos Mc-\nviding that:\ngress which is affirmative but not exclu-\nGrath, describes the Canal Zone in these\nPanama will grant the United States the\nsionary, and cites precedents which \"in the\nterms:\nrights and facilities and lands necessary to\nspecific context of Panama,\nlook two\nthe heartland, the most valuable eco-\ncontinue operating and defending the Canal;\nways.\" 18\nnomic area In Panama today, the growth\nThe United States will agree to return to\nThe State Department has understood\nof her two major cities, Panama on the\nPanama jurisdiction over its territory; to rec-\nthroughout the recent negotiations that no\nPacific and Colon on the Atlantic end of\nompense Panama fairly for the use of its\ntreaty with Panama affecting U.S. jurisdic-\nthe Canal, is hemmed in by the Canal Zone.\nterritory; and to arrange for the participation\ntion will be ratified without the approval or\nTeaming tenements face across the street a\nby Panama, over time, in the Canal's opera-\nacquiescence of the Joint Chiefs of Staff. The\nfence and open fields or virgin jungles-\ntion and defense;\nJCS lines to Capitol Hill are time-honored\nspace unused, space reserved, space denied.\nThe new treaty shall not be in perpetuity,\nand uncontested. The Chiefs have accepted\nPanama City has grown from 200,000 to over\nbut rather for a fixed period, and that the\nthe eight negotiating Principles of February\n500,000 in the past 15 years. It has had to\nparties will provide for any expansion of\n7, 1974. It remains to be seen whether they\ngrow unnaturally along the coast five miles\nCanal capacity in Panama that may eventu-\nwill approve the treaty, if and when it is\nand then cut inland, because of the Canal\nally be needed.\nconcluded. Certainly as long as no treaty\nZone, creating a clumsy triangle, bottling\nSenator Strom Thurmond on March 29,\nhas been drafted and Senator Thurmond\ntraffic, and testing the patience of every city\n1974, introduced Senate Resolution 301 on\nhas a blocking third of the Senate aligned\nplanner and in fact of every citizen. Pana-\nbehalf of himself and 31 other Senators\nagainst the Principles, the JCS would have\nmanians, to go from one part of their coun-\nnoting, in part, that:\nno need to take a negative stand in any case.\ntry, in this day and age, still must traverse\nUnited States diplomatic representatives\nIn early 1958, a few Panamanian students\nan area that, though legally it is not, looks\nare presently engaged in negotiations with\nquietly entered the Zone on the Pacific side\nlike a foreign land: with its own police,\nrepresentatives of the de facto Revolutionary\nand planted small Panamanian flags in pre-\ncourts, post-office, stores, and this across the\nGovernment of Panama, under a declared\ndesignated spot. They called the foray \"Op-\nvery waist and heart of the nation.' 20\npurpose to surrender to Panama, now or on\neration Sovereignty.\" The flags were quickly\nSenator Alan Cranston has observed that\nsome future date, United States sovereign\nremoved by Zone employees. It was the har-\nof the 15,000 workers in the Canal Zone,\nrights and treaty obligations, as defined be-\nbinger of other, more serious, demonstra-\n4,000 are Americans, and of those, 1,289\nlow, to maintain, operate, protect, and other-\ntions to follow.\nwork on the Canal while the other 2,700\nwise govern the United States-owned Canal\nOn Independence Day, November 3, 1959,\nare employed in' schools, movie theaters,\nand its protective frame of the Canal Zone;\ncrowds of Panamanians, led by students,\nbowling alleys, commissaries, gold courses,\nTitle to and ownership of the Canal Zone,\ntried repeatedly to surge into the Canal\nand a Z00.21\nunder the right \"in perpetuity\" to exercise\nZone and raise their flag. Demonstrators\nThe Panamanians, for their part, now have\nsovereign control thereof, were invested ab-\nassaulted the U.S. Embassy and Information\nthe toughest and most charismatic leader in\nsolutely in the United States and recognized\nService offices in Panama, tore down the\ntheir history. They proved from 1958 to 1967\nto have been so vested in certain solemnly\nEmbassy flag, and attacked the American\nthat they can be tenacious in the drive to\nratified treaties by the United States with\nConsulate in Colon. U.S. Army units took\nestablish national jurisdiction over the Zone.\nGreat Britain, Panama, and Colombia\nup defensive positions on the Zone border.\nThey have also shown that, under Torrijos,\nUnited States House of Representatives, on\nLater that month even larger crowds dem-\nthey are willing to be patient as long as he\nFebruary 2, 1960, adopted H. Con. Res. 459,\nonstrated and had to be subdued by Ameri-\nremains believable. But history does not\nEighty-sixth Congress, reaffirming the sover-\ncan troops.\npermit any national leader total control of\neignty of the United States over the zone\nOn April 18, 1961, 500 demonstrators tried\nhis people's destiny, or even his own. The\nterritory by the overwhelming vote of three\nto storm the Canal Zone protesting the Bay\nGeneral has four alternatives: he can pro-\nhundred and eighty-two to twelve, thus\nof Pigs and the role of Zone bases in the\nduce a supportable treaty. He can delay. He\ninvasion of Cuba. In January 1964, rival\ncan leave office. Or he can attack the Zone.\nFootnotes at end of article.\ngroups of Panamanian and Canal Zone stu-\nTime is running out on the first two.\nMay 20, 1975\nCONGRESSIONAL RECORD-SENATE\n8705\nFutures and interests\nThat the United States have the right to\namphibious landing, an expensive and ex-\nThe Panama Canal has five alternative fu-\nexpand Canal capacity, either by adding an\nacting task, but not prohibitively SO.\ntures:\nadditional lane of locks to the existing Canal\n3. Despite these defensive measures, some\nA. Closure by hostile action, or by an ef-\nor by building a sea level canal.24\nexposure to sabotage, guerrilla attack, or as-\nfective decision that it costs exceed its bene-\nPanama's interests and intentions are\nsult by regular military units from the Re-\nfits, or both. There is little evidence that\nNegotiate the Zone out of existence;\npublic would persist. Such moves, even when\npoints to such an eventuality, though it is\nFailing that, try to make it too expensive\neasily repulsed, have already involved serious\nas imaginable today as a seven-year closure\nfor the U.S. to stay in Panama, recognizing\ncosts even though they have not yet included\nof the Suez Canal was 20 years ago.\nthat dollar costs alone may not be very im-\nan act of sabotage or interruption of Canal\nB. Internationalization under the auspices\npressive to Americans;\noperations.\nof the United Nations, the Organization of\nEither way, assume an active role in operat-\n4. An overt decision to maintain the status\nAmerican States, or some other multilateral\ning and protecting the Canal.\nquo in the Zone would undermine the U.S.\nbody. This is a theoretical alternative that\nProblems of Awareness and Attitude\nleadership position in the hemisphere. If it\ncontinue to be discussed, though it would be\nThe real content of the Panama-Canal\nwere followed by another bloody episode in\nfar beyond the experience, capacity, and in-\nZone issue may be as much psychological as\nor around the Zone, U.S. political leverage\nterest of the UN or the OAS. Only a military\nwould be further diminished and could result\nit is military or commercial. No problem of\nstalemate between the United States and\ncurrent international affairs is more encum-\nin violent responses directed at our enter-\nPanama-inconceivable before the U.S.-Viet-\nbered by national pride, convenient miscon-\nprises, diplomatic establishments, and citi-\nnam stalemate, and still most unlikely-\nception, legal abstraction, and ignorance.\nzens throughout the region. The Latin Ameri-\ncould lead to internationalization in the\ncans have never before been as united and\nAmericans have not been perceptive or even\nforeseeable future.\nconsistent about Panama. Theodore Roosevelt\noutspoken in support of Panama's grievances\nC. Ownership and operation by Panama.\nagainst the United States. An issue that was\ncould boast one day, \"I took Panama,\" and\nThe greatest disservice which the present\nessentially bllateral in the 1950s has become\nanother day proclaim:\nCanal regime does to Panama is not In with-\n\"We have not the slightest intention of\na matter of legitimate hemispheric concern.\nholding benefits, but in withholding the bur-\nestablishing an independent colony in the\nEven the United States has acknowledged\ndens and problems of operating the Canal.\nmiddle of the State of Panama\nit\nis\nthis by accepting OAS investigation, media-\nour\nSome argue that Panama has been cheated\nfull intention that the rights which we ex-\ntion, and oversight.\nout of its fair share of the benefits. Others\n5. The world community would condemn\nercise shall be exercised with all proper care\ncontend that Panama was hansomely com-\nU.S. efforts to hold the Zone indefinitely.\nfor the honor and interest of the people of\npensated in 1904 for a strip of mosquito-in-\nWhile most of the countries which use the\nPanama.\"\nfested, disease-ridden swamp and jungle, and\nCanal are interested mainly in efficient op-\nFor three generations American democracy\nthat the Canal and the Zone constitute an\neration and reasonable tolls, no civilized na-\nhas been absent in the Canal Zone, where\neconomic windfall which Panamanians could\ntion can be oblivious to a breach of interna-\npublic officials are not elected, but imposed.\nhave received only from the Americans. Both\ntional peace, or the threat of it. This was,\nCivilian control of the military is inverted:\narguments have merit. But, by assuming all\nin part, the motivation for the Security\nthe Governor is a major general, but dis-\nthe burdens of running and protecting the\nCouncil's effort to intervene in 1973.\ntinctly junior to the local troop commander.\nCanal, the United States has denied Pana-\nMost colonial powers that have tried to re-\nThe Zone economy is state socialism, with\nma the experience and the challenge it needs\ntain their possessions in the developing world\n95 percent of the productive capacity con-\nto reach its full maturity as a nation. Pan-\nhave come to regret it. At a minimum, we\ncentrated in the hands of the government.\namanians consider their geographic position,\nshould avoid striking a posture that is at\nThe world may well wonder whether the\nwhich the Canal exploits, to be their prin-\nonce domineering and weak. We should de-\nUnited States knows what it is doing in\ncipal national resource. Yet, with its man-\ncide in advance, as we regrettably failed to\nPanama.\nagement pre-empted by Americans, they are\ndo in Southeast Asia, how many more hu-\nOptions and Costs\nnot prepared to assume control of this re-\"\nman lives this real estate is worth to us,\nsource. A new treaty might permit their grad-\nGiven the alternatives governing the future\nand for what period of time. Once the escala-\nof the Panama Canal and the basic Ameri-\nual assumption of operational authority,\ntion begins it is too late for that kind of\nbut Panamanians are neither determined\ncan objectives, there are only two operative\nanalysis.\nnor able to take full charge in the foresee-\nchoices for U.S. policy: we can pursue our\nPARTNERSHIP\nable future.\ngoals in active cooperation with, or in oppo-\nAlternatively, the United States could sign\nD. Continued ownership and operation by\nsition to, the Panamanians. Panama will not\nand ratify a treaty along the lines of the\nthe U.S. alone. If the U.S. government de-\nparticipate directly in that decision, but will\nFebruary 7 Principles. This approach would\ncides to hold the Canal and the Zone, it can\npresumably impose costs for either course.\nnot rule out Canal defense bases, but it\nprobably do so for a period of years and per-\nMAINTAINING THE STATUS QUO\nwould assume that the U.S. will acknowledge\nhaps until the Canal's commercial and mill-\nOne option is to hold the Canal Zone while\neffective Panamanian jurisdiction over the\ntary asset-value declines to a negligible level.\nland on which the bases would be located.\nwe have the capability to fortify and defend\nThe cost could be high and should be esti-\nit against Panamanians.\nLoss of American property would be a\nmated in advance.\nSenator Alan Cranston stated in October\ndirect cost. But the major disadvantage of\nE. Partnership between the United States\n1971 that the U.S. Armed Forces had-out of\nthe partnership option lies in the irretriev-\nand Panama. This alternative is only feasible\n40,000 officers, men, and dependents in the\nable loss of absolute U.S. authority over the\nif the U.S. is genuinely wiling to relinquish\nZone-only two battalions of Army combat\nenterprise. More specifically:\nits exclusive jurisdiction over the Canal\n1. Once we relinquished our position in\ntroops and no high performance combat units\nZone. In the words of Ambassador Vaughn,\nthe Zone, the increasing Panamanian in-\nfrom the Air Force and Navy But reinforce-\n\"Intransigence\ncan only inflame the\nvolvement might serve to dilute the opera-\nments are available, and CINCSOUTH pre-\ntional effectiveness of the Canal.\nPanamanians, for they now feel grossly\nsumably learned from its experiences in Jan-1\nabused\" by the existence of the American\n2. If efficiency declined, world shipping, in-\nuary of 1964; for example:\ncolony.22 If the political, economic, and cul-\ncluding our own, would suffer.\nThat the Guardia National cannot always\ntural insulation of the Zone were to dis-\n3. The United States, having assumed an\nbe relied upon to restrain attacks upon the\nappear, Panama would be drawn inevitably\nobligation to the maritime nations and to\nZone;\ninto an evolving operational partnership\nworld commerce, could be critized for al-\nThat small arms fire from the Zone into\nwith the United States in the Canal's sup-\nlowing the Canal to deteriorate.\nthe Republic is not an adequate response\nport, management, maintenance, defense,\neven to a few snipers;`\n4. Ultimately, the waterway might be\nand possibly in its further development.\nclosed because of some failure of the Pan-\nThat the command had better have its\nThe United States has only three essential\nown search-and-destroy capability in any\namanian partners, or the joint management,\nobjectives relating to the Panama Canal, ac-\nserious future confrontation;\nto perform. While the Canal is no longer a\ncording to the Atlantic-Pacific Interoceanic\nstrategic asset against any conceivable en-\nThat some of the civilians in the Zone (in-\nCanal Study Commission:\nemy, it is still possible that its loss to the\ncluding 8,000 women and 15,000 children)\n1. That is always be available to the world's\nUnited States could in some future national\ncould become casualties or hostages almost\nvessels on an equal basis and at reasonable\nemergency be significant, or even crucial.\ninstantly, in the absence of adequate con-\ntolls;\ntingency planning, security, fortification,\nIn a world of accelerating and violent\n2. That it serve its users efficiently; and\ntactical preparedness, and evacuation proce-\nchange accompanied by increasing uncer-\n3. That the United States have unimpaired\ndures.\ntainty, the United States should not yield\nrights to defend the Canal from any threat\nForeseeable costs of this choice could in-\nmilitary and commercial advantages without\nand to keep it open in any circumstances,\nclude the following:\ncareful analysis and commensurate incen-\npeace or war.23\ntive. However, if Americans have a national\nAn American treaty negotiator, authorized\n1. Milltary expenditures and manpower\ninterest in protecting a distant enterprise\ncommitments of significant, but not burden-\nto speak for the Executive Branch, subse-\nthat can be marginally useful in their de-\nsome, levels would have to be made.\nquently omitted the Study Commission's sec-\nfense and affects less than one percent of\nond objective on efficiency and added:\n2. The United States would have to make\ntheir GNP, the Panamanians might have\nthe Zone less accessible to unauthorized en-\neven greater motivation to protect the Canal.\nFootnotes at end of article.\ntry from the Republic and less vulnerable to\nIt is on their territory, provides almost a\n8706\nCONGRESSIONAL RECORD-SENATE\nMay 20, 1975\nthird of their GNP, and constitutes their\nNeither of these admonitions can be disre-\nhaps emotional; that is to be expected\nprimary national resource.\ngarded. Likewise, we ignore at our peril the\nsince public transportation, health care\nACCOMMODATION WITHOUT A TREATY\npublic commitments of national leaders\nabroad: indeed, it has been the commonest\nplanning, law enforcement, and taxa-\nEven if the Administration persists in its\ndetermination to achieve an accommodation\nerror of American foreign policy during the\ntion are all issues which directly touch\nwith Panama, its objectives are, for the\npast four decades,\nthe lives of every citizen. The manner\nmoment, thwarted by a decisive bloc in the\nFOOTNOTES\nin which public officials in the metro-\nSenate and a potent group in the House, as\npolitan area respond to and discuss these\n1 Cf. Lyman M. Tondel, Jr. (ed.), The\nwell. Also, judging by past performance, the\nPanama Canal (New York: The Association\nissues in public forums, however, is\nJCS is probably capable of producing addi-\nof the Bar of the City of New York, 1965),\nequally critical. For what we say, and\ntional legislative obstacles to any new treaty,\npp. 42, 43.\nhow we say it, may well influence the\nif necessary. The Administration knows it\n2 Robert G. Cox, \"Questions Concerning the\nattitudes and behavior that neighbor-\ncould not have obtained ratification of a\nPanama Canal: A Preliminary Opinion\" (New\ning communities will display toward each\ntreaty before the November 1974 elections,\nYork: Transnational Consulting Group,\nother.\nwhich means February or March of 1975\n1973), p. 24.\nWill we, out of some misguided sense\nwould be the earliest. Much will depend on\n3Panama Canal Company, Canal Zone\nPresident Ford and the composition of the\nof parochialism, cavalierly play to a\nGovernment, Annual Reports, 1968-1973\nnew Senate.\n(Balboa Heights)\nnarrow constituency without care for\nShould it become impossible to negotiate a\nSenate Resolution 301, 93rd Congress, 2nd\nthe message we send to our neighbors?\ntreaty, the Administration-assuming it\nSession, March 29, 1974, p. 3.\nOr will be act out of a recognition that\nmoves fast and decisively-could head off\nReport of the Atlantic-Pacific Inter-\nthe National Capital region is indivisible;\nan immediate confrontation and buy addi-\noceanic Canal Study Commission (Washing-\nthat each community's major problems\ntional time through direct executive action.\nton, 1970), II-11.\ntranscend her borders; and that the best\nIf the same creative energy that built the\nIbid., II-11.\nlong-range interests of all are served\nCanal Zone were applied to dismantling it,\n7 Ibid., II-20, 21.\nthat would probably be sufficient. For ex-\nwhen the region as a whole lifts its sights\n8 Interview; May 14, 1974.\nample, the Administration could:\n9 Interview, May 10, 1974.\nand goals beyond immediate considera-\n1. Drastically reduce the numbers of civil-\n10 Cameron, op. cit., p. 4.\ntion of which community and what group\nian and military personnel stationed in the\n11 Canal Study Group, op. cit., pp. II-11, 12.\nwithin will achieve some immediate and\nZone.\n12 Jack Hood Vaughn, \"A Latin-American\npossibly short-lived gain.\n2. Bring all dependents home, except those\nVietnam,\" The Washington Monthly (Oct.\nMr. President, I ask unanimous con-\nof civilian personnel whose permanent em-\n1973), pp. 30, 31.\nsent that Mr. William Raspberry's article\nployment is critical to the operation of the.\n13 Interview with Senior Department of De-\nentitled \"Lessons From Racial Hatred\"\nCanal itself. (This would automatically re-\nfense Policy Officer, May 10, 1974.\nduce the visibility of the U.S. government\n14 For summary of the State Department\nbe printed in the RECORD.\nenterprises which Panamanians find most\nposition see News Release, op. cit., p. 6.\nThere being no objection, the article\ndisturbing: golf courses, theaters, commis-\n15 Ibid., pp. 2, 3.\nwas ordered to be printed in the RECORD,\nsaries, post exchanges, howling alleys, swim-\n16 Senate Resolution, op. cit.\nas follows:\nming pools. It would also stimulate the use\n17 The New York Times, May 7, 1974.\nLESSONS FROM RACIAL HATRED\nof privately owned Panamanian commercial\n18 Subcommittee on Panama Canal, Hear-\n(By William Raspberry)\nand recreational establishments, bringing\nings, Serial No. 92-30 (Washington, 1972),\nAmericans and Panamanians into more nat-\npp. 13-16.\nD.C. Del. Walter Fauntroy was participat-\nural contact with each other.)\n19 The New York Times, Oct. 12, 1971.\ning in a Human Kindness Day TV post\n3. Appoint a civilian Governor of the Canal\n20 \"The Canal Question: A Christian View,\"\nmortem the other day when he said some-\nZone who speaks Spanish and who is accept-\naddress before Carnegie Endowment for In-\nthing that has occurred to a lot of us.\nable to Panama, and give him authority over\nternational Peace, April 16, 1974.\nIt's time to move beyond the particulars\nCINCSOUTH, except during a military emer-\n21 The New York Times, Oct. 19, 1971.\nof that day, he told a \"Nine in the Morning\"\ngency.\n23 Cf. Vaughn, op. cit., p. 32.\n(WTOP) audience, and to start asking our-\n4. Make Spanish a second official language\n23 Canal Study Commission, op. cit., pp.\nselves why our children are so full of race\nof the Zone for one year, and the only official\n8, 9.\nhatred.\nlanguage thereafter.\n24 Hearings, Serial No. 92-30, op. cit., p. 5.\nIt's a fair question, and I'm afraid that\n5. Require that (a) all U.S. military and\n25 The New York Times, Oct. 19, 1971.\npart of the answer is that they learned race\nclvilian personnel study Spanish under Pan-\nhatred from us-from black adults, mili-\namanian instructors, and (b) all personnel\ntant and moderate alike, who tried hard to\nwhose assignment to the Zone is for two\nLESSONS FROM RACIAL HATRED\nteach one lesson and inadvertently taught\nanother.\nyears or more attain a working knowledge of\nMr. MATHIAS. Mr. President, every\nWhat we tried to impart was some under-\nthe language within one year.\nAmbassador Robert Anderson who headed\nnow and then, some event occurs which\nstanding of the pervasiveness of racism in\nthe U.S. negotiating team from 1964 to 1973\nis so portentous in nature that our in-\nAmerica. It was our feeling that it was\nacknowledged to his State Department col-\nterest and concern become aroused be-\nnecessary that our children learn the bitter\nleagues that he had a recurring \"nightmare\"\nyond the ordinary level at which we treat\ntruth about racism in order that they might\nlearn to deal with it.\nof collapsed talks, shattered expectations, ex-\ndaily affairs. Human Kindness Day may\nSome of them learned the lesson, all\nploding emotions, and the Zone under siege.\nwell represent one such event.\nThe proposed course of action might avoid\nright. Others got only a piece of it and con-\nWashington Post Columnist, William\ncluded that if white racism is bad, then\nthat kind of deterioration, provided the Ad-\nRaspberry, has taken a look at what hap-\nwhite people must be bad. And anyone who\nministration maintained credible efforts to\nconclude a treaty at the earliest date.\npened on the Washington Monument\nhad trouble distinguishing between white\nInsofar as Panama is concerned, the Com-\ngrounds two Saturdays ago. His com-\nracism and white people might be led to\nmission on United States-Latin American Re-\nsuppose that the way to fight the former is\nments, which appeared in the Washing-\nlations came into being at a fortuitous mo-\nby attacking the latter.\nton Post's May 19 edition, should be\nment. With the observations outlined here,\nThe need always was for two forums, one\ncarefully read and reflected upon by all.\nand the additional evidence which will\nof addressing whites, the other tuned to\nOne point he made \"That what you say\nblacks.\ndoubtless be presented by interested parties,\nthe Commission should be able to weigh the\nto one is heard by all. And some do not\nThat way we could have taken a phe-\nnomenon like the 1960s riots and told white\nalternatives, and reach a sound position on\nalways hear it right,\" struck home with\npeople-quite truthfully, by the way:\nthis urgent issue of foreign policy.\nme. It might do well for all public of-\nThis is the result of racism. This the price\nSenator Thurmond holds that \"there is no\nficials, especially those in the metro-\nyou pay for the continued denial of oppor-\nway that any treaty can adequately protect\npolitan Washington area to be guided\ntunity. This is what you get when you per-\nand defend our interests in operating the\nby those words.\nmit a selected handful of black people to\nCanal when it has as its basis the abrogation\nof sovereignty.\"\nIn the coming months, each juris-\nenter the American mainstream but leave\nthe rest behind in the interest of main-\nAmbassador Vaughn considers Panama \"a\ndiction within the National Capital\nLatin American Vietnam.\" He finds that\ntaining white supremacy.\nregion will be presented with several\nthrough the collaboration of Congressional\nWe might have sent the children out of\nmajor decisions affecting the metropoli-\nand military supporters of the Canal Zone,\nthe room while we were delivering that mes-\ntan area. What is decided by one local\n\"Presidents' orders have been reversed, dip-\nsage, recalling them to hear this one:\nlomatic maneuvers and decisions brushed\ngovernment, therefore, will have a bear-\nYou see what's happening in the streets?\naside, and the United Nations told to go to\ning on most, if not all of the others.\nThat is the result of frustration spawned\nhell.\" And he concludes, \"The tinder awaits\nWithout question, the issues contained\nby denial of opportunity. But look more\nthe spark.\"\nin each decision will be thorny and per-\nclosely, and you'll see that while it registers\n()\nTHE LIBRARY OF CONGRESS\nCongressional Research Service\nVo: nh Jack Marrh\nas requested back.\nground information on\nthe Canama Caual.\nD Backs- CRD\n426-6331\nThe attached information is forwarded in\nresponse to your recent inquiry. We hope it\nmeets your needs in this matter.\nPlease do not hesitate to call on us for\nfurther assistance.\nSincerely,\nNórman Beckman\nActing Director\n5 55b (rev 10/75)\nJX 1428 L.A. Panama\nLIBRARY OF CONGRESS\nLEGISLATIVE REFERENCE SERVICE\nREPORT ON UNITED STATES\nRELATIONS WITH PANAMA\nby the\nSubcommittee on Inter-American Affairs\nof the\nCommittee on Foreign Affairs\nU. S. House of Representatives\nEighty-Sixth Congress\nSecond Session\npursuant to\nH.RES. 113\nA Resolution Authorizing the Committee on Foreign Affairs\nTo Conduct Thorough Studies and Investigations of\nAll Matters Coming Within the Jurisdiction of Such Committee\nReproduced by the Library of Congress, Congressional Research\nService, October 1, 1975.\n-1-\nLETTER OF TRANSMITTAL\nFOREWORD\nAUGUST 31, 1960.\nHOUSE OF REPRESENTATIVES,\nHon. THOMAS E. MORGAN,\nCOMMITTEE ON FOREIGN AFFAIRS,\nChairman, Committee on Foreign Affairs,\nWashington, D.C., August 31, 1960.\nHouse of Representatives, Washington, D.C.\nThis report has been submitted to the Committee on Foreign Affairs\nDEAR MR. CHAIRMAN: There is transmitted herewith the report\nby the Subcommittee on Inter-American Affairs, comprising Hon.\nof the Subcommittee on Inter-An.erican Affairs on \"U.S. Relations\nArmistead I. Selden, Jr., chairman, Hon. Barratt O'Hara, Hon.\nWith Panama.\" The historical data contained in this report was\nDante B. Fascell, Hon. Omar Burleson, Hon. Donald L. Jackson,\nprepared under my direction by Rosita Rieck Bennett, analyst in\nand Hon. Chester E. Merrow.\nLatin American affairs of the Legislative Reference Service of the\nThe conclusions in this report do not necessarily reflect the views\nLibrary of Congress. The findings and recommendations are those\nof all the membership of the Committee on Foreign Affairs. This\nof the subcommittee and are based not only on the report, but on\nreport is filed in the hope that it will prove useful to the committee\nhearings, discussions, and study conducted by the subcommittee\nand to the Congress as background data.\nduring the present session of Congress.\nTHOMAS E. MORGAN, Chairman.\nIt is hoped that the information contained in this report will be\nuseful to the members of the committee and to the Congress as\nIII\nbackground information on matters affecting United States-Panama\nrelations.\nARMISTEAD I. SELDEN, Jr.,\nChairman, Subcommittee on Inter-American Affairs.\nV\n-2-\n-\nCONTENTS\nPage\nForeword\nIII\nI. Preface\n1\nPANAMA\nElevation- 2,000 ft. and Over\nCOLOMBIA\nLetter of transmittal\nV\nMañana\nII. Background history\n3\nA. U.S. interest in interoceanic canal takes root\n3\nJoqué\nB. Rivalry with Great Britain (Clayton-Bulwer Treaty)\n3\n100\nC. U.S. interest dims\n4\nD. New awareness of the strategic value of a canal\n4\nIslands\nE. The legal obstacle is cleared (Hay-Pauncefote Treaty)\n5\nF. The battle for the canal route\n6\nG. Colombia's dilemma\n6\nanama\nH. The Hay-Herrán Treaty\n7\nI. Colombian Senate turns down treaty\n8\nJ. Panama revolts\nPanama\n50\nMILES\n9\nPearl\nK. Colombia is indemnified\n9\nL. Hay-Bunau-Varilla Treaty\n10\nGulf_of_Panama\n25\nM. The canal is opened\n11\nN. The Nicaraguan route\n11\nIII. Importance of the Panama Canal to the United States\n12\nSea\nPortobelo\n12\nColón\nA. Commercial importance\nB. Strategic importance\n12\nIV. Importance of the Panama Canal to the Republic of Panama\n13\nV. U.S. contributions to Panama's development\n15\nCANAL ZONE\nVI. Current points of friction between Panama and the United States\n16\nA. Sovereignty in the Canal Zone\n16\nB. Commissaries\n22\nC. Third-country purchases\n26\nD. Wage and employment opportunities in the zone\n28\nE. The annuity\n30\nCebaco\nVII. Comparison of the legal status of the Suez and Panama Canals\n32\nA. Suez Canal basic agreements\n32\nB. Legal status of the Panama Canal\n32\nCoiba\nVIII. Alternatives to U.S. control\n33\nA. Internationalization of the canal\n33\nB. Organization of American States control\n35\nC. Purchase from Panama\n36\nD. Other suggestions\n36\nIX. Subcommittee findings and recommendations\n37\nBocos\nAppendix:\nA. Convention for the construction of a Ship Canal, 1903\n41\nDavid\nB. General Treaty of Friendship and Cooperation between the United\nPanama\nConal\nBalboa\nStates of America and Panama, 1936\n49\nAmuelles\nBoy of Panama\nC. Treaty of Mutual Understanding and Cooperation, United States\nCANAL ZONE\nof America and Panama, 1955\n59\nD. Comparison of the rights and obligations of the United States under\nthe terms of the three basic treaties with Panama\n72\nE. Public Law 85-550, July 25, 1958, United States-Panama Wage\nand Employment Practices Act\n80\nF. Press release on 9-point program for improvement of relations be-\nGOSTA\nRICA\ntween the United States and Panama, April 19, 1960\n88\nPacific\nColón,\nMILES\nVII\nCaribbeen\nVIII\n-3-\nUNITED STATES-PANAMA RELATIONS\nand an inviting target for nationalist outbursts. Meanwhile, inter-\n86TH CONGRESS\nHOUSE OF REPRESENTATIVES\nREPORT\nnational communism plays on Panamanian nationalism and frustra-\n2d Session\nNo. 2218\ntions to subvert inter-American relations. The Egyptian seizure of\nthe Suez Canal and the rise of Castroism in Cuba also exacerbate\nPanamanian problems.\nDuring the congressional recess in the autumn of 1959 a numberof\ndisquieting events occurred on the Isthmus of Panama. On Novem-\nber 3, 1959, Panama's independence day, mobs led by rabble rousers\ngathered along the border of the Canal Zone intent upon planting the\nREPORT ON UNITED STATES RELATIONS WITH PANAMA\nPanamanian flag within the zone. With Panamanian National\nGuardsmen conspicuously absent from the scene, the Governor of\nthe Canal Zone was forced to call for U.S. Armed Forces to help quell\nthe ensuing violence. In the Republic of Panama on the same day\nAUGUST 31, 1960.-Committed to the Committee of the Whole House on the State\nrioters lowered the American flag at the U.S. chancery and tore it to\nof the Union and ordered to be printed\nshreds. They also shattered windows at the chancery and the U.S.\nInformation Agency building.\nOn November 28, the anniversary of Panama's break with Spain,\nmobs again tried to gain entry to the Canal Zone. This time they\nMr. MORGAN, from the Committee on Foreign Affairs, submitted the\nwere dispersed by Panama Guardsmen working alongside U.S. troops,\nfollowing\nbut not before at least 30 persons were injured. During this second\nattempt to forcibly enter the Canal Zone, the presence of Cuban\nREPORT\nagitators urging on the crowd was noted. After 3 hours of rioting\nat the zone border, the mobs turned to looting and destroying\nproperty several blocks away in downtown Panama City.\n[Pursuant to a resolution (H. Res. 113) authorizing the Committee on Foreign\nWhen Congress reconvened in January, the Committee on Foreign\nAffairs to conduct a full and complete investigation of matters relating to the\nAffairs learned that the Department of State had under consideration\nlaws, regulations, directives, and policies including personnel pertaining to the\nDepartment of State and such other departments and agencies engaged pri-\na request from the Republic of Panama (dated November 25, 1959)\nmarily in the implementation of U.S. foreign policy and the oversea operations,\nthat the Panamanian flag be flown in the Canal Zone. When it\npersonnel, and facilities of departments and agencies of the United States\nappeared likely that permission might be granted, the chairman of the\nwhich participate in the development and execution of such policy]\nSubcommittee on Inter-American Affairs (Mr. Selden) requested the\nI. PREFACE\nSecretary of State to delay a decision until after the subcommittee had\nan opportunity to study the matter.\nThe Panama Canal, built and operated by the United States, slices\nSubsequently, the subcommittee held eight meetings on the subject,\nthe Republic of Panama in half. Relations between the United States\nduring which testimony was received from Members of Congress,\nand Panama are thus unique and intimate.\nrepresentatives of the Departments of State and Defense, and private\nFrom the outset of Panama's independence and the construction of\ncitizens.¹\nthe canal (which practically coincide), the two nations have held\nOut of these meetings grew a conviction that to accede to the\nvarying views regarding the canal. The Republic of Panama has\nPanamanian request, after more than half a century in which only the\nregarded the canal as a source of revenue. The U.S. objective has\nU.S. flag has been raised in the zone, would constitute a major de-\nbeen the efficient operation of the waterway for international com-\nparture from established policy. In the subcommittee's judgment,\nmerce at reasonable rates and for defense purposes.\nsuch a basic change in treaty interpretation should not be accom-\nEven without this basic difference in viewpoint, it is probably\nplished through executive fiat.\ninevitable that the operation of so vast an enterprise side by side with\nAccordingly, on January 19, 1960, the subcommittee unanimously\na small, poor country should give rise to misunderstandings and irrita-\nagreed to the following resolution (H. Con. Res. 459):\ntions on both sides. Throughout the last 57 years accommodations\nResolved by the House of Representatives (the Senate con-\nhave been made to alleviate grievances and to adjust to new circum-\ncurring), That it is the sense of the Congress that any\nstances.\nvariation in the traditional interpretation of the treaties of\nIn recent years several international developments have complicated\n1903, 1936, and 1955 between the United States and the\nthe delicate task of maintaining harmonious relations on the isthmus.\nRepublic of Panama, with special reference to matters con-\nAs elsewhere in underdeveloped regions, Panama is swept by na-\ncerning territorial sovereignty, shall be made only pursuant\ntionalism and by outcries for an end to subhuman living conditions.\nto treaty.\nThe canal presents at once the illusion of a cornucopia from which\n1 See: United States Relations with Panama,\" hearings before the Subcommittee on Inter-American\ncould pour forth an avalanche of funds for development purposes\nAffairs of the Committee on Foreign Affairs, House of Representatives, 86th Cong., 2d sees.\n-4-\nUNITED STATES-PANAMA RELATIONS\nUNITED STATES-PANAMA RELATIONS\nThe full Committee on Foreign Affairs reported the resolution\nover Texas, Britain proceeded to extend its hegemony in Nicaragua\nfavorably on January 21, 1960. On February 2 the House of Repre-\nto prevent the United States from gaining exclusive rights over both\nsentatives voted 381 to 12 in support of the resolution.\ncanal routes.\nAs a result of its deliberations regarding the issue of the flag, the\nThe two powers checkmated each other in the Clayton-Bulwer\nsubcommittee felt a growing concern over the apparent deterioration\nTreaty of 1850. By that treaty they pledged never to obtain or\nin U.S. relations with the Republic of Panama. In consequence, the\nmaintain exclusive control over a ship canal, or to fortify it, or to\nsubcommittee undertook to prepare a background study of United\nassume or exercise dominion over any territory in Central America\nStates-Panamanian relations. It is hoped that this report can help\nthrough which a canal might pass. The Clayton-Bulwer Treaty,\nto clarify the frequently complex issues involved and provide a basis\nwhile it did limit the United States from obtaining exclusive control\nfor evaluating current problems and proposed solutions.\nover a possible canal, forced Great Britain to relinquish the territorial\ncontrol which it in fact possessed in 1850 over the Nicaraguan route.\nII. BACKGROUND HISTORY\nC. U.S. INTEREST DIMS\nA. U.S. INTEREST IN INTEROCEANIC CANAL TAKES ROOT\nThe same year as the Clayton-Bulwer Treaty, private American\nFor centuries the Isthmus of Panama astride the Atlantic and\ninterests began the construction of a transisthmian railroad. The\nPacific Oceans has been a crossroads of international passenger and\nrailroad was completed in 1855. In ensuing years during periods of\ncargo routes. During the colonial period Spanish galleons called\ninsurgent movements on the isthmus against the Colombian Govern-\nregularly to pick up treasures extracted from Spain's colonies on the\nment, on request of or with the consent of the Colombian Government,\nwestern coast of South America. Spain's decision in 1814 to build\nthe United States landed troops to keep transit open.\na canal across the isthmus came to nothing since it coincided with the\nFollowing the opening of railroad transportation across the isthmus,\ncollapse of that nation's imperial power.\nU.S. interest in a waterway subsided. The joining of the Union Pacific\nEarly U.S. interest in an interoceanic highway appears to have\nand Central Pacific Railroads in 1869, linking the Atlantic and Pacific\nbeen primarily commercial. In 1826 Secretary of State Hay pro-\nOceans across continental United States, further dulled interest in an\nposed a joint enterprise to the newly independent South American\ninteroceanic canal.\nnations meeting at the Congress of Panama, saying:\nWhat is to redound to the advantage of all America\nD. NEW AWARENESS OF THE STRATEGIC VALUE OF CANAL\nshould be effected by common means and united exertions,\nand should not be left to the separate and unassisted efforts\nIn 1878 a new consideration quickened U.S. interest in a Western\nof any one power.\nThe benefits of it ought not to be\nHemisphere canal. In that year a French company, which included\nexclusively appropriated to any one nation * * * 2\nFerdinand de Lesseps of Suez fame, procured a concession from\nColombia to build a navigable waterway across the isthmus. Despite\nA Senate resolution in 1835 and a House resolution in 1839 urged\nthe fact that the French company pledged that the canal should\nthe President to negotiate with other nations for the construction\n\"always be kept free from political influence,\" Secretary of State\nof a canal and for securing free and equal right to navigation to all\nEvarts protested:\nnations. Toward mid-19th century the discovery of gold in Cali-\nfornia, western migration, and the country's growing economy which\nOur Pacific coast is so situated that, with our railroad\nsought raw materials and markets gave impetus to the idea of an\nconnections, time (in case of war) would always be allowed\nisthmian canal.\nto prepare for its defense. But with a canal through the\nIn 1846 the United States assured its right of passage across\nisthmus the same advantage would be given to a hostile fleet\nthe Isthmus of Panama in a treaty with New Granada (Colombia).\nwhich would be given to friendly commerce; its line of opera-\nThe pact guaranteed to the United States the right of way or transit\ntions and the time in which warlike demonstration could be\nacross the Isthmus of Panama upon any modes of communication\nmade, would be enormously shortened. All the treaties of\nthat now exist or that may be hereafter constructed.\" In return the\nneutrality in the world might fail to be a safeguard in a time\nUnited States guaranteed the neutrality of the isthmus and the rights\nof great conflict.\"\nof sovereignty and property which New Granada possessed over the\nIn 1881 President Arthur tried to extricate the United States from\nterritory.\nthe limitations imposed by the Clayton-Bulwer Treaty (see above), but\nB. RIVALRY WITH GREAT BRITAIN\nGreat Britian refused to negotiate a revision. Meanwhile, the French\ncompany went ahead.\nIn the meantime, Britain entered into an intense rivalry with the\nAt the height of French operations in 1887, a group of American\nUnited States over control of the other feasible canal route, through\ncapitalists began a rival project through Nicaragua. In 1889 Con-\nNicaragua. While the United States engaged in war with Mexico\n3 Evarts to Dickman (Minister to Colombia), dated Apr. 19, 1880. In J. B. Moore, \"Digest of Interna-\n3 Norman J. Padelford, \"The Panama Canal in Peace and War.\" The Macmillan Co., New York,\ntional Law.\" GPO, Washington, 1906, vol. III, p. 15.\n1942, p.4.\n-5-\nUNITED STATES-PANAMA RELATIONS\nUNITED STATES-PANAMA RELATIONS\ngress incorporated that enterprise as the Maritime Canal Company\nF. THE BATTLE FOR THE CANAL ROUTE\nof Nicaragua.\nThat same year the French enterprise collapsed, defeated by graft,\nThe question of where to build a canal became a hotly contested\ncorruption, and a series of tropical diseases that felled 20,000 in a\nissue. Colombians and Nicaraguans hoped the canal would open their\ntotal labor force which averaged only 10,000 a year. Some $260\ncountries to prosperous international commerce. Public sentiment in\nmillion had been disbursed in the undertaking. According to Ameri-\nthe United States overwhelmingly favored the Nicaraguan route. In\ncan engineers, only $40 million of this was expended for concessions\nthe popular view, Panama was associated with the French company\nand work on the canal, the rest being graft.\nwhile Nicaragua was viewed as a \"national project.\" The New\nThree years later the Maritime Canal Company of Nicaragua also\nPanama Canal Co., organized in 1894 for the purpose of selling the\nwent bankrupt, having exhausted its paid-in capital of $6 million\nassets of the French venture to the highest bidder, engaged in powerful\nafter laying several miles of railroad track and making a small start\nand sometimes devious lobbying activities to convince U.S. legislators\non excavation. But for its misfortune that the need for new financing\nand the public to buy up their investment.\narose at the same time as the panic of 1893, the company might have\nThe Walker Commission was appointed in 1897 to study the canal\nbeen able to raise enough capital to keep the venture going.\"\nsituation. Although many of its technical conclusions were favorable\nWorld events toward the close of the 19th century heightened\nto Panama, it recommended in 1899 the Nicaraguan route as the most\nAmerican awareness of the strategic value of a canal under U.S. au-\nfeasible because of the unwillingness of the French interests to state\nspices. The 90-day race of the U.S. cruiser Oregon around the tip\ndefinite terms of sale.\nof South America from the Pacific to the Atlantic battlefield during\nEnthusiasts for the Panama route reaped their first success with\nthe Spanish-American War in 1898 dramatized the military advan-\nthe passage of a law in 1899 which directed the President to name a\ntage of an interoceanic canal. Moreover, the United States emerged\ncommission to examine all practical routes, thus hamstringing the\nfrom the war as a naval power, with Pacific possessions.\npassage of Nicaraguan canal bills then pending in Congress.\nPresident McKinley in his message to Congress in 1898 stated the\nAs the battle waged over which route, the Department of State in\nnew conviction:\n1900 prepared for any eventuality by signing protocols with Costa\nRica and Nicaragua by which they agreed to negotiate treaties with\nThat the construction of such a maritime highway is now\nthe United States for a canal when the President was authorized by\nmore than ever indispensable to that intimate and ready\nCongress to acquire a route through their territories.\nintercommunication between our eastern and western sea-\nColombia, alarmed at the prospect of not being selected as the site\nboards demanded by the annexation of the Hawaiian Is-\nfor the international waterway, dispatched a minister to Washington\nlands and the prospective expansion of our influence and\nto negotiate a treaty with the United States.\ncommerce in the Pacific, and that our national policy now\nThe Walker Commission, in its final report in November of 1901,\nmore imperatively than ever calls for its control by this\nagain recommended the Nicaraguan route. The New Panama Canal\nGovernment, are propositions which I doubt not the Con-\nCo., fearful that the patience of Congress might be exhausted, in\ngress will duly appreciate and wisely act upon.6\nJanuary of 1902 wired an offer to sell its property for $40 million, the\namount which the Walker Commission deemed appropriate. Two\nE. THE LEGAL OBSTACLE IS CLEARED (HAY-PAUNCEFOTE TREATY)\nweeks later, the Walker Commission issued a supplementary report\nThe crescendo of opinion in the United States favoring construction\nrecommending the Panama route due to the changed circumstances.\nIn the interim, the House of Representatives had voted the Nicara-\nof a canal under the exclusive jurisdiction of the United States led\nSecretary of State Olney to approach the British again in 1896 about\ngua route (Hepburn bill) by the crushing majority of 309 to 2. Sen-\ntiment in the Senate favored Panama. A compromise was worked out\nremoving the obstacle imposed by the Clayton-Bulwer Treaty. At\nfirst reluctant, Britain, involved in the Boer War in Africa and faced\n(Spooner Act) by which the President was authorized to acquire the\nwith unfriendly nations in Europe, decided to acquiesce.\nassets of the New Panama Canal Co. for $40 million, a strip of land\nfrom Colombia not less than 6 miles in width in which to construct\nThe resulting Treaty To Facilitate the Construction of a Ship Canal\n(Hay-Pauncefote Treaty) of 1901 abrogated the limitations imposed\nand operate the canal, and additional territory and rights which in his\nby the prior agreement and provided that a ship canal may \"be con-\njudgment would facilitate the general purposes; if these terms could\nstructed under the auspices of the Government of the United States,\nnot be fulfilled within a reasonable time, the President was directed\ndirectly or indirectly,\" and that the United States \"shall have and\nto proceed with steps to build the Nicaragua canal. Congress enacted\nenjoy all the rights incident to such construction, as well as the\nthe Spooner Act on June 2, 1902.\nexclusive right of providing for the regulation and management of the\ncanal.\"\nG. COLOMBIA'S DILEMMA\n4 Hugh Gordon Miller, \"The Isthmian Highway.\" New York, the Macmilian Co., 1929, p. 10.\nWhile the battle of the routes went on in Washington, Colombia\n$ Dwight Carroll Miner, The Fight for the Panama Route.\" New York, Columbia University Press,\n1940, p. 25,\nwas in the midst of civil war. The Government was beset by adminis-\n6 Quoted in Padelford, op. cit., p. 18.\ntrative disorganization and a desperate financial situation. With the\ncountry in a state of siege, the executive ruled by decree.\n-6-\nUNITED STATES-PANAMA RELATIONS\nUNITED STATES-PANAMA RELATIONS\nThe Colombian Government sorely wished to postpone definitive\nrecognized Colombia's sovereignty over the canal zone (art. IV): estab-\nconsideration of the canal problem until the country could be pacified\nlished three types of judicial tribunals-Colombian, United States,\nand Congress reconvened. But bills pending in the U.S. Congress\nand joint (art. XIII); charged Colombia with the defense of the canal\nauthorizing construction in Nicaragua pressed the Colombians into\nand railroad, except \"under exceptional circumstances\" when—\nforegoing further delay.\nthe Government of the United States is authorized to act in\nColombians seem to have desired very much the canal with its\nthe interest of their protection, without the necessity of ob-\naccompanying economic benefits which could help the recovery of\ntaining consent beforehand of the Government of Colombia\ntheir war-torn country and bankrupt treasury. Moreover, in the\n(art. XXIII).\nbackground hovered the threat that Colombia might forfeit not only\nthe canal but the isthmus itself should treaty negotiations with the\nIn November 1902 civil war in Colombia ended. President Theo-\nUnited States fail. Carlos Martínez Silva, Colombia's negotiator |in\ndore Roosevelt became impatient with further delay regarding the\nthe United States in 1901, wrote in that vein to José Manuel Mar-\ncanal. On January 21, 1903, Secretary of State Hay delivered the\nroquín, Vice President and head of the Colombian Government during\nfollowing ultimatum to Minister Herrán:\nthe period of civil disorders:\nI am commanded by the President to inform you that the\n*** the Panamanians of position and financial resources\nreasonable time provided in the statute for the conclusion\nwill never willingly submit to the opening of the canal in\nof the negotiations with Colombia for the excavation of an\nany other place than at the isthmus. They understand very\nisthmian canal has expired, and he has authorized me to\nwell that the adoption of the Nicaragua route will be the\nsign the treaty of which I had the honor to give you a draft,\nmoral and material ruin of Panama; and this sacrifice, which\nwith the modification that the sum of $100,000, fixed therein\nwill have no compensations, may very well prove superior to\nas the annual payment, be increased to $250,000. I am not\nthe concept of a platonic patriotism.\nauthorized to consider or discuss any other change.\nDuring the negotiations with the United States, Marroquín's ad-\nThe following day the treaty was signed in Washington. The U.S.\nministration was so harassed by domestic crisis that Colombia's min-\nSenate approved it on March 17, 1903.\nisters in Washington frequently went ahead on their own initiative\nunder pressure of events. Marroquín stated his dilemma in a letter\nI. COLOMBIAN SENATE TURNS DOWN TREATY\ndated July 26, 1902:\nIn March 1903 congressional elections were held in Colombia. In\nConcerning the canal question, I find myself in a horrible\nMay, Marroquín called a special session of congress for June 20.\nperplexity; in order that the North Americans may complete\nDuring the 5 months between the time the treaty was signed and\nthe work by virtue of a convention with the Government of\nthe Colombian Senate convened, Colombian newspapers carried\nColombia, it is necessary to make concessions of territory, of\nnumerous articles regarding the treaty by the foremost legal minds\nsovereignty, and of jurisdiction, which the executive power\nin a country renowned for its legal talent. Four major objections\nhas not the power of yielding\nemerged in these polemics: the loss of sovereignty involved; the\nHistory will say of me that I ruined the isthmus and all\ndoubtful constitutionality of the grant of perpetual jurisdiction to a\nColombia, by not permitting the opening of the Panama\nforeign power; dissatisfaction with the financial compensation; and\nCanal, or that I permitted it to be done, scandalously injur-\nmistrust of imperialism. Colombian public opinion became aware\ning the rights of my country.8\nof the vast distinction between granting a canal concession to a foreign\nMarroquín reiterated officially on a number of occasions that any\nprivate concern and leasing a strip of territory in perpetuity to a\ncanal agreement was subject to ratification by the Colombian Con-\nforeign government.\ngress.\nIn the debate in the Colombian Senate, the Foreign Minister\nH. THE HAY-HERRÁN TREATY\npointed out that the United States was the only agency willing and\nable to undertake the gigantic task of uniting the oceans and that\nThe draft agreement, as finally worked out by Secretary of State\nthe U.S. Government had been most explicit in insisting that it would\nHay and Colombia's current negotiator, Tomás Herrán, included the\nnot assume the cost and responsibility without control over the\nfollowing principal terms: Granted the United States a 100-year lease,\nzone.¹⁰ In his judgment, the only alternative to rejecting the Hay-\nrenewable at the sole option of the United States, on a zone of land\nHerrán treaty was no canal.\n10 kilometers wide across the isthmus for an initial payment of $10\nOn August 12, the Colombian Senate unanimously rejected the\nmillion and an annuity of $250,000 (arts. II and XXV); granted the\nconvention. The legislature took no further action before its ad-\nUnited States exclusive right to construct, maintain, operate, and\njournment on October 31, 1903.\nprotect the canal (art. II); authorized the New Panama Canal Com-\n# lbid., p. 195.\npany to sell its rights and properties to the United States (art. I);\n10 Ibid., p. 325.\n7 Miner, op. cit., p. 217.\n0 Ibid., p. 233.\n-7-\nUNITED STATES-PANAMA RELATIONS\nUNITED STATES-PANAMA RELATIONS\nL. HAY-BUNAU-VARILLA TREATY\nJ. PANAMA REVOLTS\nA treaty with the newly independent Republic of Panama was\nPanamanians had never felt a strong attachment for the rest of the\nnegotiated in Washington by Secretary Hay and Philippe Bunau-\ncountry. Isolated from the capital and centers of population by soar-\nVarilla, former chief engineer of the French company. Bunau-Varilla\ning mountains, the Isthmus of Panama had been left largely to its\nhad insisted on his appointment as diplomatic agent in exchange for\nown resources. In the preceding three-quarters of a century since\nhis services to the Panamanian conspirators. The provisional govern-\nindependence from Spain, Panamanian discontent had erupted on a\nment of Panama also appointed two Panamanian ministers to conduct\nnumber of occasions into attempts to establish an independent state.\nnegotiations with the United States. A letter of instructions which\nIsthmian delegates to the special session of Congress were out-\nthey carried to Bunau-Varilla read:\nspoken in warning that failure to ratify the treaty would mean\nrebellion on the isthmus.¹¹\nYou will have to adjust a treaty for the canal construction\nWhile the Colombian Senate debated, prominent Panamanians met\nby the United States. But all the clauses of this treaty will\nto plot a course of action should the treaty be rejected. The con-\nbe discussed previously with the delegates of the junta, MM.\nspirators were aided and abetted by agents of the New Panama\nAmador and Boyd. And you will proceed in everything\nCanal Company who were intent on securing the promised $40 million\nstrictly in accord with them\nfrom the United States.\nOn November 18, 1903, before Messrs. Amador and Boyd arrived\nPresident Roosevelt and Secretary of State Hay knew that a revolt\nin Washington, Bunau-Varilla and Secretary Hay signed the con-\nwas imminent. Roosevelt, convinced that the Colombian Govern-\nvention for the construction of a ship canal to connect the waters of\nment was thwarting an enterprise of \"universal utility\" for \"collective\nthe Atlantic and Pacific Oceans. The treaty was ratified by the\nhumanity\" out of pure greed, welcomed the move. Assurances were\nprovisional government of Panama on December 2, 1903.\nconveyed to the conspirators that the United States would send war\nTerms of the Hay-Banau-Varilla pact were substantially the same\nvessels \"to protect life and property\" on the isthmus 12\nas those of the rejected Hay-Herran agreement. One change en-\nWhen Panamanians raised the standard of independence on No-\nlarged the area: the United States was empowered to construct a\nvember 3, 1903, the railroad was closed to Colombian troop move-\ncanal through a zone 10 miles in width (as compared with 6 miles in\nments and naval forces from the United States were on hand to prevent\nthe earlier treaty). Panama agreed that the United States should\nmore Colombian troops from landing. The coup was accomplished\nhave the right at all times to use its armed forces in defense of the\nwith only one casualty, an innocent Chinese who was killed during a\ncanal and its auxiliary works. The most significant modification\nbrief bombardment.\"\noccurs in article III:\nThe United States recognized the Republic of Panama on Novem-\nber 6.\nThe Republic of Panama grants to the United States\nall the rights, power, and authority within the zone mentioned\nK. COLOMBIA IS INDEMNIFIED\nand described in article II of this agreement and within the\nUnder the Wilson administration an attempt was made toward\nlimits of all auxiliary lands and waters mentioned and\nrepairing the damaged relations with Colombia which resulted from\ndescribed in said article II which the United States would\nthe isthmian affair. By the terms of the Thompson-Urrutia conven-\npossess and exercise if it were the sovereign of the territory\ntion, signed in April 1914, the U.S. Government expressed-\nwithin which such lands and waters are located to the entire\nexclusion of the exercise by the Republic of Panama of\nsincere regret that anything should have occurred to inter-\nany such sovereign rights, power, or authority.\nrupt or to mar the relations of cordial friendship that had\nso long subsisted between the two nations.\nSecretary Hay, fearing that opponents of the Roosevelt administra-\ntion in the Senate might introduce amendments to the treaty and thus\nColombia agreed to recognize the Republic of Panama in return for an\nafford Panama an excuse to do likewise, wrote as follows to Senator\nindemnity of $25 million and special transportation privileges. The\nSpooner on January 20, 1904:\nColombian Senate promptly ratified the treaty. The U.S. Senate\nfailed to act, mainly because of spirited denunciations of the agree-\nAs it stands now as soon as the Senate votes we shall have a\nment by former President Roosevelt whose conduct the treaty\ntreaty in the main very satisfactory, vastly advantageous to\nobliquely indicted.\nthe United States, and we must confess, with what face we\nIn 1921, after Roosevelt's death, the U.S. Senate ratified an amended\ncan muster, not so advantageous to Panama. If we amend\nform of the treaty which retained the indemnity but omitted the\nthe treaty and send it back there some time next month, the\napology. The following year Colombia accepted the compromise and\nperiod of enthusiastic unanimity, which, as I said to Cullom,\nthe Panamanian incident was closed.\ncomes only once in the life of a revolution, will have passed\naway, and they will have entered on the new field of politics\n11 Padeliord, op. cit., p. 12.\n18 Miner, op. cit., p. 359-370, 387-388.\nand dispute. You and I know too well how many points there\n12 Ibid.\nare in this treaty to which a Panaman patriot could object.\n14 Miner, op. cit., p. 375.\n-8-\nUNITED STATES-PANAMA RELATIONS\nUNITED STATES-PANAMA RELATIONS\nIf it is again submitted to their consideration they will at-\nIII. IMPORTANCE OF THE PANAMA CANAL TO THE UNITED STATES\ntempt to amend it in many places, no man can say with what\nA. COMMERCIAL IMPORTANCE\nresult, then they will feel that we had passed definitely upon\nthe main subject; that the treaty was safe; that their inde-\nApproximately 70 percent of the total commercial cargo which\npendence was achieved, and that now it was time for them to\ntransited the Panania Canal in fiscal year 1959 originated in or was\nlook out for a better bargain than they were able to make at\ndestined for U.S. ports. 20 Thus, financial savings in both intercoastal\nfirst.18\nand foreign trade because of the Panama shortcut represent reduced\nThe U.S. Senate consented to the treaty without amendment on\ncosts to U.S. consumers.\nFebruary 23, 1904. It was proclaimed by President Roosevelt\nThe canal itself is not regarded in the United States as a source of\n3 days later.\nrevenue. The Panama Canal Company is required by law to be\nM. THE CANAL IS OPENED\nself-sustaining, not a profitable enterprise. Gross receipts from the\nPanama Canal Company amounted to over $87 million in fiscal year\nThe engineering and medical conquests which made possible\n1959. Net revenue, however, was under $3 million. Furthermore,\nconstruction of the Panama Canal in the midst of once pestilential\nthis amount would be cut in half if the full $1.93 million annuity to\ntropical jungle are a matter of great pride to all those who participated\nPanama were assessed against the company, instead of $1.5 million\nand to millions of Americans who have come to admire their courage\nbeing paid from appropriated funds.\nand abilities.\nThe canal was opened to navigation in August 1914. However,\nB. STRATEGIC IMPORTANCE OF THE CANAL\na slide in October of that year delayed formal completion and opening\nto regular traffic until July 1920. Total cost of construction amounted\nThe Panama Canal has proved to be an invaluable asset to the\nto $366,650,000.\nUnited States and its allies in time of crisis. During World War I\nN. THE NICARAGUAN ROUTE\nthe canal served as a supply line to fighting forces in Europe. During\nWorld War II more than 5,300 combat vessels and about 8,500 other\nAlthough advocates of the Nicaragua route were defeated by the\ncraft transporting troops and military cargo transited the canal,\nselection of Panama as the canal site, the possibility of a canal through\nwith incalculable savings to the Allied nations in terms of time, money\nNicaraguan territory has not been abandoned.\nand lives. The strategic value of the shortened canal route was\nIn 1914 the United States signed a convention with Nicaragua\nagain demonstrated during the Korean conflict. In fiscal year 1953,\n(Bryan-Chamorro Treaty) which conferred upon the United States\nthe last full year of the Korean conflict, 1,064 U.S. Government\nexclusive rights to construct, operate, maintain and defend an inter-\nvessels transited the canal carrying supplies and war materials to the\noceanic canal by a Nicaraguan route in exchange for $3 million.\nUnited Nations forces in the Far East.\nThe Bryan-Chamorro Treaty was ratified by the U.S. Senate in\nIn peacetime, too, the Panama Canal plays an important role in\n1916, more with the objective of preventing the construction of another\nnational welfare and defense. The strength of the United States,\ncanal than for the purpose of building one.¹⁶ In the ensuing years,\nwhich rests in large measure upon the nation's economic well-being,\nhowever, as increased commercial traffic has taxed the facilities of the\ndepends in turn upon the availability of vital raw materials for\nPanama Canal and modern military developments have cast doubt on\ntransportation and industry. Moreover, when the Suez Canal was\nthe ability to defend it, the idea of a Nicaragua canal has occasionally\nsuddenly closed to traffic several years ago, effective operation of the\nbeen revived.\nPanama Canal did much to prevent serious disruption of the\nThe feasibility of constructing a canal in Nicaragua was explored\neconomies and defense capabilities of the nations of the free world.\nrecently by the Board of Consultants contracted by the Committee\nIt is argued in some quarters that modern technological develop-\non Merchant Marine and Fisheries. In its report issued on June 23,\nments have substantially depreciated the canal's strategic significance.\n1960, the Board of Consultants recommended against a Nicaraguan\nIt is pointed out that the canal is increasingly vulnerable to sabotage\ncanal.¹⁷ The Board based its conclusions on engineering and fiscal\nand long-range missiles; that the growth of continental means of\ngrounds. The construction of the sea-level canal in Nicaragua was\ntransportation, such as high-speed highways, air transport, and con-\neliminated completely from the Board's considerations because of\ntinental pipelines for transporting oil, greatly diminish dependence on\nexcessive cost and because it would involve drainage of Lake Nicaragua\nthe canal; and that major U.S. aircraft carriers are now too big to\nor Lake Managua which would seriously affect the economy of the\npass through it.\ncountry.¹ The Board estimated the cost to construct a Nicaraguan\nAdm. James S. Russell, Vice Chief of Naval Operations, in testi-\nlock-canal at over $4 billion.19\nmony before the Subcommittee on Inter-American Affairs, stated the\n18 Ibid., p. 375.\nDepartment of the Navy's continuing conviction of the strategic\n16 J. Fred Rippy, Globe and Hemisphere, Chicago, Henry Regnery Co., 1958, p. 109.\nimportance of the canal. According to Admiral Russell:\n\".U.S. Cong., 86th, 2d sess., Report on a Long-Range Program for Isthmian Canal Transits,\" H. Rept.\nNo. 1960, Washington, GPO, June 23, 1960, p. 7, 32.\n20 Panama Canal Company, Annual Report, fiscal year ended June 30, 1959, p. 10.\n18 Ibid., p. 32.\n31 Ibid., n. 48.\nID Ibld.\n23 U.S. Cong., 86th, 2d sess., House of Representatives, Committee on Foreign Affairs, United States,\nRelations with Panama, hearings before the Subcommitte on Inter-American Affairs, Feb. 2, 1960,\npp. 91-107.\nUNITED STATES-PANAMA RELATIONS\nUNITED STATES-PANAMA RELATIONS\nMilitarily, the greatest threat to commerce on the sea in\ndicates the following sources of income to Panama from the presence\ntime of war is the submarine fleet of Soviet Russia, which\nof the canal:\n[In millions of dollars]\ntoday has a peacetime strength about equal to Hitler's maxi-\nmum number of operational submarines at the height of\nDirect purchases from Panama\n12. 5\nWorld War II. To reinforce the Pacific antisubmarine forces\nWages of non-U.S. citizens employed in zone who reside in Panama\n21. 5\nDisability and relief payments\n2. 5\noff the California coast with a squadron of destroyers from\nExpenditures in Panama of non-U.S. citizens resident in Canal Zone\n1. 6\nthe vicinity of the Virginia Capes would entail 21 days\nExpenditures in Panama of U.S. employees including military\n18. 2\nsteaming via the straits, versus 8 days via the canal.23\nIncome generated by auxiliary works in zone\n4. 4\nMaintenance of Transisthmian Highway\n3\nAnnuity\n1. 93\nAs the range of ballistic missiles increases, as the power of\nThese receipts have enabled Panama to offset, to a large extent,\ntheir nuclear explosives gets greater, and, importantly, as the\ndeficits in the country's balance of payments.\nprecision of their guidance delivers them with increasing\nCritics claim that the presence of the canal has attracted people\naccuracy against their targets, military forces must look more\nfrom \"productive labor,\" thus distorting the economy. But long\nand more to dispersion, mobility, and concealability as an\nbefore the construction of the canal Panama's geographical setting\nanswer to the problem of surviving attack. Thus the vast\nfavored activities connected with international trade, with the con-\noceans will have an ever-increasing importance as areas for\nsequent concentration of population and political power in the terminal\ndispersion, maneuver, and concealment\nThe Polaris\ncities of Panama and Colon and the virtual isolation and neglect of\nsubmarine, as also the other types of nuclear submarines, can\nrural areas.\ntransit the Panama Canal.\nRural conditions are still bad. While 64 percent of the population\nAdmiral Russell further pointed out that the United States is allied\nlive in rural areas, agriculture contributes only about one-third of the\nwith 42 nations of the free world in mutual defense agreements and\nnational income. Responsibility for lagging agricultural production\nthat we are principally an oceanic confederation. Accordingly, he\nlies in large measure in the prevailing system of land tenure. Less\nargued:\nthan 8 percent of the land surface is privately owned. Most of the\nWhen one realizes that it is 8,000 miles, and weeks of\nbest land suited for cropping is being used for extensive livestock\nsailing time farther around Cape Horn than across the\nraising and is producing only a fraction of its capacity. Meanwhile,\nCentral American Isthmus, it can be seen that the Panama\nnearly one-half of the occupied farmland is held by squatters (85\nCanal means much to us in terms of getting our own fighting\npercent of the farmers), most of whom hack out a bare subsistence\nforces, as well as material aid, quickly to a beleaguered ally.2\non the relatively poor land which is available to them. They have\nno security of tenure and consequently no access to credit and little\nAdmiral Russell granted the vulnerability of the canal.* But he\nincentive to improve their farming methods.81\nadded:\nThe overwhelming majority of farms have no animal or mechanized\nI would say that the Panama Canal has great value to us\npower, 99 percent using only handtools for cultivation.82 In addition,\nin a limited war, and in a general war, if it is not destroyed,\nrural transportation is very poor. Only 8 percent of farmers send\nwould be very useful to us. In all-out war there would be\ntheir produce to market by truck, while 77 percent still depend upon\na lot of destruction probably early in the war. Whether the\npackhorse, human carriers, or boat. The balance send nothing, con-\ncanal goes or not, I don't know, but if it does survive, I\ntributing zero to the economy.³³\nthink it would be of great use in what comes after the first\nMeanwhile, population growth in rural areas is high, estimated at\nmassive exchange.\"\nbetween 3 and 3.5 percent per annum.34 Poor living conditions have\nresulted in wholesale migrations to the cities in search of employment,\nIV. IMPORTANCE OF THE PANAMA CANAL TO THE REPUBLIC OF PANAMA\ncreating there an explosive mixture of extreme crowding, unhealthful\nslums, and unemployment.\nAlthough the canal may not be the magic wand of prosperity\nPanama's economic difficulties lie not in the presence of the canal,\nenvisioned by some Panamanians, it does make a large contribution\nbut in local indifference for centuries to the development of other po-\nto the economy of the Republic. Income generated by the canal far\ntentially profitable resources. Fortunately, Panamanian authorities\nexceeds the $1,930,000 annual annuity. In 1958, for instance, income\nnow are directing their attention to the serious imbalance which exists\nderived from the canal was estimated at approximately $63 million, or\nin the economy. The Panama Canal, far from being a deterrent to\nabout one-sixth the national income.\" A breakdown of the total in-\n\" P. A. Reid, 'Agricultural Development of Panama,\" prepared by the International Bank for Recon-\nIbid., p. 92.\nstruction and Development for the Government of the Republic of Panama, Washington, 1957, p. 7.\n30 Ibid., p. 11.\n24 Ibid., p. 93.\nIbid.\n31 Ibid., p. 8.\nIbid., p. 94.\n# Ibid., p. 9.\nSV Ibid., p. 95.\n\" Ibid., p. 13.\nU.S. Department of State, Amembassy, Panama, Dispatch No. 716, June 29, 1959.\n\"Ibid.,p.4.\n-10-\nUNITED STATES-PANAMA RELATIONS\nUNITED STATES-PANAMA RELATIONS\ndevelopment, makes a sizable and steady contribution to the Nation's\nIn addition, the following loans have been extended to Panama\ncoffers.\nby the Export-Import Bank: 37\nIn addition to the canal's economic value, Panama, as a member of\nIn millions of dollars]\nthe inter-American community pledged to the defense of the Western\nHemisphere from aggression, is as deeply concerned with the strategic\nJune 21, 1948 (El Panama Hotel)\nJuly 26, 1951 (supplementary financing for El Panama Hotel)\n2. 5\nvalue of the canal as is the United States.\nJune 14, 1957 (for financing Panama's ½ contribution to construction of\n1.5\nInter-American highway)\nV. U.S. CONTRIBUTIONS TO PANAMA'S DEVELOPMENT\nJuly 27, 1959 (airport equipment)\n12. 85\n25\nTotal\nThe United States has contributed substantially to the well-being\n17. 10\nand the progress of the Republic of Panama. Construction of the\nThe Republic of Panama has met its obligations to the Export-\ncanal brought a large injection of capital and employment to the\nImport Bank promptly.\nisthmus. At that time Panama City had an estimated population of\nThe Republic of Panama's economy also has received a boost from\n18,000 and Colon about 6,000. The entire region was backward, with\nnongovernmental U.S. sources. Direct private U.S. investments in\nno paved streets and roads, no sewer and water systems.\nPanama, covering a large range of interests which include manu-\nThe battle waged by U.S. health officers during the construction\nfacturing, public utilities, agriculture, banks, trading operations, real\nperiod against mosquito-borne yellow fever is world renowned. Since\nestate, insurance, brokerage houses, and petroleum, amounted to an\nthe new little Republic lacked the resources to provide essential health\nestimated $240 million in 1958. These investments amount to\nservices, Canal Zone authorities provided water, removed the sewage,\nroughly 50 percent of private capital invested in Panama, 48 percent\nand maintained the sanitary and public health services in Panama\nCity and Colon as well as in the Canal Zone.³⁵ What had once been\nSwiss, and British interests.³⁹\nof the total being Panamanian and the remaining 2 percent French,\nregarded as a tropical graveyard became a relatively healthful place\nto live.\nVI. CURRENT POINTS OF FRICTION BETWEEN PANAMA AND THE\nMonetary benefits to Panama stemming from the presence of the\nUNITED STATES\ncanal, such as wages to many thousands of Panamanian citizens em-\nployed in the zone, purchases in the Republic of Panama of supplies\nA. SOVEREIGNTY IN THE CANAL ZONE\nand services by the Panama Canal Company, and purchases made in\nPanama by the residents of the Canal Zone, were discussed previously\nRecently there has been much agitation in Panama regarding the\n(see p. 13).\nquestion of sovereignty in the Canal Zone. On two occasions in\nAnother U.S. contribution to Panama's progress was the construc-\nNovember 1959, mobs led by rabble rousers tried to force entry into\ntion of the Transisthmian Highway which crosses the Republic from\nthe Canal Zone in order to plant Panamanian flags there as symbols of\nPanama City to Colon, at a cost of $9,785,000 (completed in 1949).\nPanama's sovereignty. On November 3 the Governor of the zone\nThe United States continues to assume full responsibility for mainte-\nwas compelled to call for U.S. Armed Forces to help quell the ensuing\nnance of the highway.\nviolence. Within the week Panama's unicameral congress resolved\nUnder terms of the 1955 treaty with Panama, construction of the\nnot to rest until the Panamanian flag was raised \"on our territory.\"\nBalboa Bridge across the canal is now underway at an estimated cost\nDuring the second attempt on November 28 to invade the zone, it\nto the United States of $20 million.\ntook Panama guardsmen working alongside U.S. troops 3 hours to\nUnder various assistance programs, the United States has made\nturn back the mob.\nthe following contributions to the Republic of Panama in the period\nOn November 26 the Panamanian Ambassador in Washington\nfrom July 1, 1945, to June 30, 1959: 36\ndelivered a note at the Department of State asking the United States\nto consider the desire of Panama to fly its flag in the zone.\n[In millions of dollars]\nTechnical assistance\n10. 3\nSectors of the Panamanian press and several demagogic politicians\nSpecial assistance (Smathers amendment fund)-for sewerage in Panama\nkeep the issue red hot. It is also reported that envoys from Cuba\nCity\n2.0\nand Egypt actively encourage anti-U.S. sentiments. Cuban agi-\nPublic Law 480 (title III)-contributions by voluntary relief agencies\n5. 2\n22. 3\ntators participated in the riots of November 28. The United\nInter-American highway-% cost of construction\nArab Republic delegation is said to be the most active diplomatic\nTotal\n39. 8\nmission in Panama although there are few Arab residents and virtually\nas Responsibilities of the Canal Zone government for health in the terminal cities ended in 1953, after 50\nno Arab commercial interests. 40 Cairo beams two broadcasts nightly\nyears; they were transferred to the Republic of Panama in 1953-55. Responsibility for water supply, sewer-\nto Panama almost entirely devoted to the alleged unfair treatment\nage, garbage disposal, etc., was transferred in 1953-54 to a newly created department within the Ministry\nof Labor, Social Weifare and Public Health.\nPanama is receiving from the United States with respect to the canal.41\n26 ICA, Office of Statistics and Reports, U.S. External Assistance, Obligations and Commitments, July 1,\n1945 through June 30, 1959.\n37 Export-Import Bank, Office of the Secretary.\nshipping operations, investments by Americans who are residents in Panama, and that portion of holding\n39 U.S. Department of Commerce, Office of Business Economics. (This preliminary figure excludes\ncompanies' assets engaged in business in third countries.)\n39 U.S. Department of Commerce, Panama desk.\nPanama, Mar. 13, 1960, p. 1.\n40 New York Times, Washington split on Panama policy, Dec. 3, 1959, p. 15; Cuban and Arab active in\n41 New York Times, Washington split on Panama policy, ibid.\n-11-\nUNITED STATES-PANAMA RELATIONS\nUNITED STATES-PANAMA RELATIONS\nThe issue of sovereignty in the Canal Zone is almost as old as the\nUnder the stipulations of article III, if sovereign powers\ntreaty of 1903 which was intended to define the respective powers of\nare to be exercised in and over the Canal Zone, they must\nPanama and the United States with relation to the Canal Zone.\nbe exercised by the United States. Such exercises of power\nThe United States had hardly taken formal possession of the Canal\nmust be, therefore, in accordance with the judgment and\nZone when disagreement occurred over the scope of U.S. powers.\ndiscretion of the constituted authorities of the United States,\nThe first Panamanian protest arose in 1904 after the United States\nthe governmental entity charged with responsibility for\nestablished ports of entry, customhouses, tariffs, and post offices in\nsuch exercise, and not in accordance with the judgment and\nthe zone. The ensuing diplomatic correspondence between Pana-\ndiscretion of a governmental entity that is not charged with\nmanian Minister to Washington José de Obaldía and Secretary of\nsuch responsibility and by treaty stipulations acquiesces in\nState Hay sets forth the classic positions held by Panama and the\n\"the entire exclusion of the exercise by it of any sovereign\nUnited States down to the present time.\nrights, power, or authority\" in and over the territory\nThe differing Panamanian-United States interpretations of the\ninvolved.\ntreaty of 1903 with regard to sovereignty hinge primarily on articles\nArticle II provides that \"the Republic of Panama grants\nII and III of that pact. The pertinent part of article II declares:\nto the United States in perpetuity the use, occupation, and\nThe Republic of Panama grants to the United States in\ncontrol of a zone of land and land under water for the con-\nperpetuity the use, occupation, and control of a zone of land\nstruction, maintenance, operation, sanitation, and protection\nand land under water for the construction, maintenance,\nof said canal.\"\noperation, sanitation and protection of said canal of the\nThe Panamanian authorities now contend that the words\nwidth of 10 miles.\n\"for the construction, maintenance, operation, sanitation,\nand protection of said canal\" constitute a limitation on the\nArticle III states:\ngrant; that is to say, that the grant is confined to the pur-\nThe Republic of Panama grants to the United States all\nposes so stated. The position of the United States is that\nthe rights, power, and authority within the zone mentioned\nthe words \"for the construction, maintenance, operation,\nand described in article II of this agreement and within the\nsanitation, and protection of said canal\" were not intended\nlimits of all auxiliary lands and waters mentioned and de-\nas a limitation on the grant, but are a declaration, and\nscribed in said article II which the United States would\nappropriate words of conveyance.\npossess and exercise if it were sovereign of the territory\nSecretary of State Hay's definitive declaration of U.S. rights in\nwithin which said lands and waters are located to the entire\nthe Canal Zone by no means brought to an end the first major con-\nexclusion of the exercise by the Republic of Panama of any\ntroversy regarding sovereignty in the Canal Zone. Tension mounted\nsuch sovereign rights, power, or authority.\non the isthmus, and as Secretary of War William H. Taft later testified,\nAccording to Minister Obaldía, U.S. jurisdiction is not full and\n\"it led to passive resistance by Panama to the making or carrying out\ncomplete, but a delegated and limited jurisdiction granted to the\nof any agreement between the United States and the Panamanian\nUnited States only in matters pertaining to \"the construction, mainte-\nauthorities necessary in the progress of our work.' 44\nnance, operation, sanitation, and protection of said canal.\" Moreover,\nTaft was dispatched to the isthmus in November 1904 to settle\nObaldía argued, the term \"if it were sovereign\" in article III implies\nPanama's grievances. To do SO he amicably worked out an arrange-\nthat the United States is not sovereign. He claimed that if Panama\nment with Panamanian authorities designed to ease the situation\nhad had any intention of ceding sovereignty of the Canal Zone, only\nduring the construction period. It specifically provided, however,\ntwo articles would have been necessary in the treaty: \"one specifying 42\nthat it could not be interpreted as a restrictive or enlarging construc-\nthe thing sold and the other expressing the price of the sale.\ntion of the treaty.\nSecretary of State Hay replied to the Minister's note as follows: 48\nTaft's minutes of his conferences with President Amador of the\nIf it could or should be admitted that the titular sovereign\nRepublic of Panama reflect the care he exercised not to jeopardize\nof the Canal Zone is the Republic of Panama, such sovereign\nU.S. rights in the zone: 45\nis mediatized by its own act, solemnly declared and publicly\nAssuming the power to the extent declared in Secretary\nproclaimed by treaty stipulations, induced by a desire to\nHay's note, how far can I go in waiving the exercise of\nmake possible the completion of a great work which will\nthese powers and withholding the exercise of powers al-\nconfer inestimable benefit upon the people of the isthmus\nready exercised, so as to assure the Government of Panama\nand the nations of the world. It is difficult to believe that\nthat we wish to exercise no powers that we do not deem\na member of the family of nations seriously contemplates\nnecessary in the construction, maintenance, and protection\nabandoning so high and honorable a position in order to\nof the canal?\nengage in an endeavor to secure what at best is a barren\nNow, I am not in a position to waive absolutely-I mean\nscepter.\nto give up the right to exercise-those powers, but I am\n# Quoted in McCain, op. cit., p. 30.\n44 Hearings, ibid., p. 2524.\n\" Reply of Secretary of State to Sefior de Obaldia, Oct. 24, 1904. In hearings before the Committee on\n40 Ibid., p. 2589.\nInteroceanic Canals of the U.S. Senate, Washington, Government Printing Office, 1906, vol. III, p. 2378.\n-12-\nUNITED STATES-PANAMA RELATIONS\nUNITED STATES-PANAMA RELATIONS\ngiven authority by the President to establish now, subject\narticle III of the treaty of 1903 as if it were the sovereign of\nto action by Congress, a nonexercise of those pcwers, such\nthe Canal Zone and to the exclusion of any sovereign rights\nas I hope will be satisfactory to the Government of the Re-\nor authority on the part of Panama * * This must be\npublic, and will continue indefinitely until the construction\nregarded as ending the discussion of that matter.\nof the canal shall so affect the relations and conditions existing\nThe two major revisions of the treaty of 1903-the General Treaty\nas to require a new adjustment of the relations between\nof Friendship and Cooperation of 1936 and the Treaty of Mutual\nthe two Governments.\nUnderstandings and Cooperation of 1955-amend and supplement the\nTaft's view on the question of sovereignty in the Canal Zone is\noriginal pact but leave intact the controversial articles II and III of\nfurther defined in his report to President Roosevelt of his negotia-\nthe early agreement.\ntions with Panama: 46\nDuring hearings in the Foreign Relations Committee of the U.S.\nThe recognition that a citizen of the Republic of Panama\nSenate on the 1955 treaty with Panama, Assistant Secretary of State\nmay reside in the Canal Zone and not lose his rights as a\nfor Inter-American Affairs, Henry Holland, revealed that the Depart-\ncitizen to the exercise of the elective franchise in the Repub-\nment of State was still zealously on guard against any diminution,\nlic it was wise to make. The truth is that while we have all\nthen or in the future, of what the United States regarded as its rights in\nthe attributes of sovereignty necessary in the construction,\nthe Canal Zone. The following exchange took place at the hearings: 49\nmaintenance, and protection of the canal, the very form in\nSenator WILEY. As I understood from you, Secretary Hol-\nwhich these attributes are conferred in the treaty seems to\nland, there is nothing in this present treaty that would in the\npreserve the titular sovereignty over the Canal Zone in the\nslightest degree depreciate all the attributes of sovereignty\nRepublic of Panama, and as we have conceded to us com-\nthat we possess.\nplete judicial and police power and control over the zone\nMr. HOLLAND. That is true; and so true is it, that in the\nand the two ports at the end of the canal, I can see no reason\ncourse of the negotiations the Panamanians advanced several\nfor creating a resentment on the part of the people of the\nsmall requests which, one by one, had considerable appeal,\nisthmus by quarreling over that which is dear to them but\nbut all of which we refused because we did not want to leave\nwhich to us is of no real moment whatever.\none grain of evidence that could a hundred years hence be\ninterpreted as implying any admission by the United States\nA year and a half later, while testifying before the Senate Com-\nmittee on Interoceanic Canals, Secretary of War Taft made his now\nthat we possess and exercise anything less than 100 percent\nof the rights of sovereignty in this area.\nfamous statement which is frequently referred to in discussions regard-\nFor example, they asked that ships transiting the canal, as\ning sovereignty in the Canal Zone:\na token of deference to Panama, fly the Panamanian flag as\n[Article III] is peculiar in not conferring sovereignty\nwell as the U.S. flag.\ndirectly upon the United States, but in giving to the United\nNow, it seemed, perhaps, a little unfriendly to say, \"No,\"\nStates the powers which it would have if it were sovereign.\nbecause while the gentlemen representing Panama would\nThis gives rise to the obvious implication that a mere titular\nnever have any misunderstanding as to why that might be\nsovereignty is reserved in the Panamanian Government.\ndone, generations coming after us might have some mis-\nNow, I agree that to the Anglo-Saxon mind a titular sover-\nunderstanding as to why that was done, and we felt we could\neignty is like what Governor Allen, of Ohio, once character-\nnot agree to do anything, nor would the Senate approve it if\nized as a \"barren ideality,\" but to the Spanish or Latin mind\nwe were to agree to it, which could be construed a hundred\npoetic and sentimental, enjoying the intellectual refinements,\nyears hence as receding 1 millimeter from the position that we\nand dwelling much on names and forms, it is by no means\npossess and exercise all of the rights that we would have if\nunimportant.\nwe were the sovereign in that area.\nNeither Panama nor the United States subsequently has budged on\nSome Panamanian politicians and jurists and various publicists\ntheir respective constructions of the terms of the treaty of 1903. In\nturn from arguing the legal constructions placed on the treaty of\n1924, after negotiations to replace the Taft agreement had gone ahead\n1903 to criticizing the manner in which the pact was negotiated. They\nintermittently since 1915, Secretary of State Hughes stated in con-\nprotest that the treaty was negotiated by a Frenchman, in haste\nversation with the Panamanian Minister:\n(see p. 23), and cast somber doubts as to his motivation and that of\nThis Government would never recede from the position\nthe provisional Panamanian government which ratified the treaty.\nit had taken in the note of Secretary Hay in 1904. This\nIn these arguments it is customary to refer to the letter from Secretary\nGovernment could not and would not enter into any discus-\nof State Hay to Senator Spooner on January 20, 1904,50 in which he\nsion affecting its full right to deal with the Canal Zone under\npoints out the advantages of the treaty to the United States and\ncautions against giving Panama more time to ponder.\n\" Ibid., p. 2399.\n47 Ibid., p. 2527.\n49 U.S. Senate, 84th Cong., 1st sess., Committee on Foreign Relations, hearings before the Committee on\n\" Memorandum by the Secretary of State of a conversation with the Panamanian Minister (Alfaro),\nForeign Relations, the Panama Treaty, Washington, Government Printing Office, 1955, p. 164.\nDec. 15, 1923. \"Foreign Relations of the U.S. Government, 1923,\" vol. II, Washington, Government\nM See p. 10 for the complete text.\nPrinting Office, 1938, p. 684.\n-13-\nUNITED STATES-PANAMA RELATIONS\nUNITED STATES-PANAMA RELATIONS\nThis attack on the basic document governing Panama's relations\nB. COMMISSARIES\nwith the United States has an emotional appeal to the national pride\nof the Panamanian people. Nevertheless, by ratifying negotiations\nAnother controversy which extends back to the construction era\nin both 1936 and 1955, Panamanian authorities have reaffirmed the\nrelates to the operation of commissaries in the Canal Zone. In order\nhandiwork of their founding fathers.\nto make living palatable, indeed possible, for workers who were\nThe small group which traditionally has controlled Panama's Gov-\nimported to the isthmus to work on the canal, the U.S. Government\nernment and newspapers has been wont to condemn North American\nopened supply stores in the Canal Zone. As early as 1904 Secretary\n\"imperialism.\" This tactic serves a triple purpose. It provides a\nof War Taft noted the \"great alarm\" felt by Panamanian merchants\nconvenient scapegoat for their own impotency in solving the nation's\n\"lest the United States might use the clause of the Hay-Varilla Treaty\npressing economic problems; it is an effective vote getter among a\nwhich permits the United States to import free of duty into\npopulace which is extremely sensitive to slights to the national pride;\nthe isthmus all machinery, equipment, material, and supplies needed\nand, finally, Panamanian leaders can exploit the nationalistic senti-\nby it or its employees in the construction of the canal to break up\nment they have whipped up to enhance their bargaining power with\ntheir normal business in native supplies in the zone. 55\nthe United States.\nPresident Roosevelt sent his Secretary of War, Taft, to the isthmus\nEgyptian nationalization of the Suez Canal in 1956 added fuel to\nto work out an agreement designed to allay Panamanian fears. In\nthe already well-stoked flames of nationalism in Panama. Panama\nhis instructions to Taft, he noted: 56\nprotested to the United States and Britain for not having been\nApparently they fear lest the effect be to create out of part\ninvited to the London conference concerning the Suez Canal in view\nof their territory a competing and independent community\nof the fact that \"it was necessary and proper, and of special impor-\nwhich shall injuriously affect their business, reduce their\ntance\" that it participate in the talks since \"the Suez Canal has\nrevenues, and diminish their prestige as a nation\nWe\nfundamental analogies with the Panama Canal.\" Secretary of State\nhave not the slightest intention of establishing an independent\nDulles asserted that there was no question of sovereignty in the zone\ncolony in the middle of the State of Panama, or of exercising\nsince \"the United States has all the rights which it would possess if it\nany greater governmental functions than are necessary to\nwere sovereign.\" 51\nenable us conveniently and safely to construct, maintain,\nIn March 1957 a conference on the juridical aspects of the Panama\nand operate the canal under the rights given us by the treaty.\nand Suez Canals was held under the auspices of the University\nLeast of all do we desire to interfere with the business and\nof Panama with representatives present from eight Latin American\nprosperity of the people of Panama.\ncountries. Former Foreign Minister Octavio Fabrega, who headed\nPanama's delegation to Washington to negotiate the treaty of 1955\nTo pacify Panamanian fears, Taft included a proviso in the modus\n(which left intact the relevant terms of the treaty of 1903), asserted\nvivendi of December 1904, which provided for the importation and\nthat Panama's grant of the Canal Zone to the United States in\nsale of merchandise \"necessary and convenient\" for the officers,\nperpetuity was inconsistent with the sovereignty of the nation.\nemployees, workmen, and laborers in the service and in the employ\nFollowing the attempts in November 1959 to plant the Panamanian\nof the United States, and for their families, but which excluded from\nthe benefits of the commissaries-\nflag in the Canal Zone as a symbol of Panama's sovereignty, President\nEisenhower and Deputy Under Secretary of State Livingston Mer-\nall employees and workmen who are natives of tropical\nchant made policy statements which bear upon the question. The\ncountries wherein prevail climatic conditions similar to\nDeputy Under Secretary, on a visit to Panama, made the following\nthose prevailing on the Isthmus of Panama, and who there-\nstatement on November 24:\nfore may be presumed to be able to secure the articles of food,\nDuring the course of our discussions, in response to a\nclothing, household goods, and furnishings, of the kind and\nquestion by the President of Panama, I assured him that the\ncharacter to which they are accustomed, from the merchants\npolicy of the U.S. Government with respect to the status of\nof Panama, Colon, and the towns of the Canal Zone.⁵⁷\nthe Canal Zone remains as it had been stated more than 50\nIn the event that-\nyears ago to the effect that the United States recognizes that\ntitular sovereignty over the Canal Zone remains in the\nsuch merchants charge prices in excess of legitimate profit,\nGovernment of Panama.\"\nor practice other extortion, the United States, for the protec-\ntion and assistance of all its employees, whether from the\nA week later in his press conference, President Eisenhower stated:\ntropical or Temperate Zone, will supply its commissaries\n... I do in some form or other believe we should have\nwith such staple articles as are required and desired by the\nvisual evidence that Panama does have titular sovereignty\ninhabitants of tropical countries, and permit all its employees\nover the region.\nand workmen and those of its contractors to avail themselves\n81 The New York Times, Aug. 29, 1956, p. 4.\nInteroceanic Canals, op. cit., p. 2527.\n85 Statement of Hon. William H. Taft, Secretary of War, Apr. 18, 1906, hearings before Committee on\nPerpetual pacts termed invalid. New York Times, Mar. 31, 1957, p. 15.\na Panama reassured on titular sovereignty in Canal Zone, statement by Deputy Under Secretary Mer-\nCommittee on Interoceanic Canals, op. cit., p. 2394.\n56 President Theodore Roosevelt to Secretary of War William Howard Taft, Oct. 18, 1904, hearings before\nchant, Department of State Bulletin, Dec. 14, 1959, p. 859.\n67 Ibid., p. 2528.\nM Transcript of the President's news conference on foreign and domestic matters, the New York Times,\nDec. 3, 1959, p. 18.\n-14-\nUNITED STATES-PANAMA RELATIONS\nUNITED STATES-PANAMA RELATIONS\nof the benefits and privileges afforded by said Government\ninherent in its geographical situation so far as that may be\ncommissaries.\ndone without prejudice to the maintenance, operation, sani-\nIn 1905, service of the commissaries was extended to all Govern-\ntation, and protection of the Panama Canal by the United\nment workers because, as Taft told the Senate Committee on\nStates of America which is earnestly desirous of the pros-\nInteroceanic Canals—\nperity of the Republic of Panama.\nafter a sudden influx of laborers, the merchants of the zone\nThe United States agreed to prohibit sales of \"tourist\" goods by the\nwere apparently quite short of provisions, or else they\ncommissaries for disposal on ships in transit through the canal, to\nattempted to make a corner upon them.50\nexercise special vigilance to prevent contraband trade in articles\nAfter the crash construction program for the canal was completed\npurchased in the commissaries, and to regulate other sales by the\nand activities in the zone settled down to a more steady tempo,\ncommissaries to ships \"with the interest of Panamanian merchants\nPanamanian merchants renewed their laments that U.S.-operated\nin view.\"\ncommissaries were depriving them of their legitimate market in the\nIn 1936 a new General Treaty of Friendship and Cooperation em-\nzone. In negotiations during 1919 to replace the Taft modus vivendi\nbodied a number of revisions in the economic relations between the\nof 1904, Panamanian authorities charged that one-half the people in\nUnited States and Panama in the Canal Zone. In order to enable\nPanama City and Colon used articles bought in the commissaries and\nPanama to take advantage of \"the commercial opportunities inherent\nsmuggled from the zone. With the canal construction completed,\nin its geographic situation,\" the United States agreed to confine sales\nthe merchants claimed that the United States no longer was justified\nin the commissaries to U.S. employees and Armed Forces; to impose\nin underselling them and driving them out of competition.\nspecific restrictions for regulating the sales by commissaries to ships\nDuring negotiations for a new treaty Minister Ricardo J. Alfaro\nand tourists passing through the canal; to cooperate in the preven-\ncalled attention to the old grievance that the Panama Railroad\ntion of contraband trade; and to prohibit the establishment in the\nCompany operated—\nCanal Zone of any new private businesses, with the exception of\nthose—\ncommissaries, livery stables, garages, baggage trans-\nportation within the cities of Panama and Colon, dairies,\nhaving a direct relation to the operation, maintenance, sani-\npoultry farms, butcheries, packing and refrigerating plants,\ntation, or protection of the canal, such as those engaged in\nsoap factories, laundries, plants for roasting and packing\nthe operation of cables, shipping, or dealing in oil or fuel.\ncoffee, sausage and canned meat factories, ironworks, car-\nThe United States retained freedom of decision as to which businesses\npenter shops, and cooperages, etc.\n61\nhave a \"direct relation\" to the operation and maintenance of the canal.\nThe treaty of 1926 did contain an article stating that purchases\nThe treaty of 1936 did not lay to rest the controversy over the\nfrom commissaries should be limited to employees of the American\nCanal Zone commissaries. For a period after the exchange of ratifi-\nGovernment, their families and diplomats accredited to and designated\ncations in 1939 Panamanian grievances lay dormant. This hiatus\nby the Panamanian Government. The Panamanian Congress, how-\nwas due more to the local prosperity resulting from U.S. wartime\never, failed to ratify the treaty after public opinion became stirred\nexpenditures on the isthmus than to results produced by the treaty.\nover the provision that Panama should enter any war in which the\nDuring the war years a number of processing facilities were installed\nUnited States was engaged.\nin Panama to meet local needs for goods which no longer could be\nWhen complaints again were made against the Canal Zone com-\nimported and to fulfill requirements of the influx of Armed Forces\nmissaries in 1927, the Department of State answered bluntly: \"When\npersonnel.63 As U.S. expenditures tapered off in the postwar period,\nthe ratifications of this treaty are exchanged, the question will be\nthe new enterprises operated at partial capacity. Strong pressure\ndefinitely settled.\" 02\nwas brought by Panamanian industry and commerce for withdrawal\nWith Panama deep in the throes of the world depression in 1933,\nof the Panama Canal Company from the manufacturing and process-\nPresident Arias decided to make a personal appeal to the new admin-\ning in the zone of a wide range of consumer items and for a halt to the\nistration in Washington. After several conferences, he and President\nsale of tax-exempt and duty-free goods imported for sale in the zone\nFranklin Roosevelt issued a joint statement that the treaty of 1903\ncommissaries.\nnow covered only-\nA new basic agreement between the United States and Panama in\nthe use, occupation, and control by the United States of\n1955 again tackled the problem of the commissaries. Item 9 of the\nthe Canal Zone for the purpose of maintenance, operation,\nmemorandum of understandings attached to the treaty of 1955 states:\nsanitation, and protection of the canal-\nWith respect to the manufacture and processing of goods\nand that the-\nfor sale to or consumption by individuals, now carried on by\nthe Panama Canal Company, it will be the policy of the\nRepublic of Panama is recognized as entitled, as a sovereign\nUnited States of America to terminate such activities when-\nnation, to take advantage of the commercial opportunities\never and for so long as such goods, or particular classes\n38 Ibid.\n58 Ibid.\n63 In 1942 and 1943 the zone's population more than doubled as compared with 1940.\n60 McBain, op. cit., p. 227.\n61 Ibid., p. 230.\nas Ibid., p. 240.\n-15-\nUNITED STATES-PANAMA RELATIONS\nUNITED STATES-PANAMA RELATIONS\nthereof, are determined by the United States to be available\nC. THIRD-COUNTRY PURCHASES\nin the Republic of Panama on a continuing basis, in satis-\nfactory qualities and quantities, and at reasonable prices.\nAnother sore point with Panama over the years has been the\nThe United States will give prompt consideration to a re-\npractice of Canal Zone agencies of buying supplies in the cheapest\nquest in writing on the part of the Government of Panama\nworld market for resale in the zone commissaries and post exchanges.\nconcerning the termination of the manufacture or processing\nMérchandise so purchased entered the zone duty free. Items included\nof any goods covered in this item as to which the Govern-\neverything from staples, like New Zealand meat, to luxury items like\nment of Panama may consider the criteria specified in this\ndiamonds and Oriental wood carvings. Panama complained that\nitem to have been met.\nsuch imports constituted unfair competition with Panamanian mer-\nchants who must pay Panamanian duties on similar articles.\nIn the course of the Senate hearings on the treaty of 1955, repre-\nDuring the negotiations of the treaty of 1955, Panama proposed\nsentatives of various Canal Zone organizations indicated deep fears\nthat the United States formally agree that all items needed or desired\nregarding the quality, availability, and price of food products from\neither by individuals or for the maintenance, functioning, and defense\nPanama and the consequent possible deterioration in the living\nof the canal (except war materiel) would be purchased by U.S. Gov-\nstandards of zone residents. Department of State representatives\nernment agencies from Panamanian production, commerce, and in-\ntestified that every safeguard would be taken to assure sufficient\ndustries, subject to certain provisos with respect to price, quality,\nsupplies of good quality.\nand availability. This proposal was in line with Panama's assump-\nIn accord with item 9 of the memorandum of understandings, the\ntion that the commerce and industry of Panama should be enabled\nfollowing Panamanian requests for discontinuance of Canal Company\nto take advantage of the market offered by the Canal Zone.\"\nactivities have been allowed: slaughter house with related meat process-\nAccording to the Secretary of State's report to the President regard-\ning plants; carbonated beverage plant; oxygen and acetylene gas\ning the treaty of 1955, the United States \"could not agree to a sub-\nplant; ice-manufacturing plant; industrial laboratory involving the\nsidization of the Panamanian economy at the expense of individuals\nmanufacture or processing of some 200 food, drug, and other items\nresiding in the zone or in connection with the importation of materials\n(such as mouthwash, shaving lotion, etc.).\nrequire for the maintenance, operation, and defense of the canal.\" 68\nThe following requests for discontinuance have not been allowed:\nTwo general statements were included in the memorandum of\ndairy (Panama does not have the capacity to produce sufficient quan-\nunderstandings attached to the treaty of 1955 relative to the problem\ntity meeting sanitary standards); bakeries (as in the case of dairy\nof third-country purchases.\nproducts, it is believed that the Republic of Panama cannot produce\nenough products meeting sanitary standards); laundry and dry clean-\nItem 7. It is and will continue to be the policy of the\ning plants and tire recapping plant (the Panama Canal Company\nPanama Canal agencies and of the Armed Forces in the\ncontends that this is not the type of activity contemplated in item 9\nCanal Zone in making purchases of supplies, materials and\nof the memorandum of understanding).\nequipment, so far as permitted under U.S. legislation, to\nThe dire consequences predicted by some residents of the Canal\nafford to the economy of the Republic of Panama full\nZone do not appear to have materialized. During February 1960,\nopportunity to compete for such business.\non the average, food prices on the Canal Zone were 1.8 percent lower\nIn the words of the Secretary of State, \"item 7 represents the full\nthan those in effect in the average city in the United States. 66 At the\nextent to which the interested agencies of this Government con-\nsame time, all U.S. employees of the Canal Company and zone gov-\nsidered it feasible to go in this matter. 69\nernment are paid a 25-percent differential rate above that of U.S.\nGovernment employees in continental United States and even Depart-\nItem 8. In general connection with the matter of the im-\nportation of items of merchandise for resale in the sales\nment of State employees in the Republic of Panama.\nThe treaty of 1955 makes further concessions to the Republic of\nstores in the Canal Zone, it will be the practice of the agencies\nPanama with regard to sales and services by commissaries in the Canal\nconcerned to acquire such items either from U.S. sources or\nZone. The privilege of availing themselves of services offered in the\nPanamanian sources unless, in certain instances, it is not\nfeasible to do SO.\nzone is withdrawn after December 31, 1956, from persons employed\nby zone agencies, who are not citizens of the United States and who\nThe Secretary of State's explanatory note to the President gives\ndo not actually reside in the zone, thus requiring them to purchase the\nthe Department's interpretation of item 8: 70\nservices they desire within the Panamanian economy (item 6, memoran-\nThe undertaking in item 8 was drafted with a view to\ndum of understandings).\nalleviating irritations which have arisen with respect to the\nThe memorandum of understandings also provides (item 4) for the\nsale in the zone of so-called luxury items. Panama is not\nwithdrawal of the United States, with a few exceptions, from the\ngiven a monopoly over sales of the kind to which this item\nbusiness of selling supplies to ships transiting the canal.\n67 U.S. Senate, 84th Cong., 1st sess., hearings before the Committee on Foreign Relations, \"The Panama.\n64 Department of State, Panama desk.\nTreaty, Washington, Government Printing Office, 1955, p. 15.\nas Ibid.\nIbid.\nPanama Canal Co., U.S. Citizen Consumer Price Index, April 1960.\n\" Ibid.\nTO Ibid., p. 16.\n-16-\nUNITED STATES-PANAMA RELATIONS\nUNITED STATES-PANAMA RELATIONS\nrelates, and in certain circumstances the zone agencies retain\nD. WAGE AND EMPLOYMENT OPPORTUNITIES IN THE ZONE\ntheir freedom to acquire desired items elsewhere.\nNo issue has aroused more bitterness in Panama than the charge\nShortly after the treaty of 1955 was concluded, the Panama Canal\nthat Panamanian citizens are being discriminated against in the Canal\nCompany restricted sales of so-called luxury items in the commissaries\nZone with regard to wages and employment opportunities.\nto those which sold for less than $50. No restrictions were placed by\nThe roots of the problem stretch back to construction days. Skilled\nthe Defense Department upon sales in the post exchanges.\nlaborers, most of whom were U.S. citizens, were paid in gold, whereas\nPanama resentment over third country purchases did not abate\nother laborers, mostly natives from the tropical lands of Panama,\nwith the signing of the treaty of 1955. Panama interpreted item 8 of\nJamaica, Puerto Rico, and the West Indies, were paid in silver. Wages\nthe memorandum of understandings in broader terms than did the\nof \"silver\" employees were generally set at levels equal to or slightly\nUnited States. In the Panamanian view, item 8 did not specify\nabove those prevailing for native labor in the Caribbean area, the\nluxury items and was not intended to have such a restrictive inter-\ntheory being that such wages provided for their accustomed standard\npretation. Panama argued that the requirement to purchase supplies\nof living.\nfrom either the United States or Panama should apply to all U.S.\nThe American mechanics and artisans who contributed their skills\npurchases for resale in the zone.\nto the construction of the canal found little in common either with\nThe ensuing controversy hinged more on the word \"feasible.\" The\nthe cultured white Panamanians of Spanish descent or with the pre-\nPanama Canal Company and the Department of Defense took the\ndominantly Negro laboring force. Separate housing areas, schools,\nposition that \"feasibility\" should be determined in terms of price,\nand commissaries sprang up in the Canal Zone to meet their needs.\nquality, and assured supply. Panama, on the other hand, insisted\nThe concept of \"silver\" and \"gold\" employees almost inevitably\nthat it means supplies must be purchased in the United States or\ntook on aspects of racial and nationality discrimination and came to\nPanama unless it is impossible to buy them in either place.\nbe a severe irritant to Panamanians of all racial origins.\nWithin the United States a split developed on U.S. policy. The\nThe idea that Panamanians should have access to equal opportuni-\nArmed Forces and Panama Canal Company felt concern lest Panama\nties for employment had little acceptance among U.S. residents of\nsources of such items as beef and lamb (which, imported from New\nthe Canal Zone. For many years only citizens of the United States\nZealand and Australia, retailed in the zone for 25 cents per pound) be\nwere eligible for employment in executive, supervisory, professional,\nhigher priced and of inferior quality. The Department of State, on\nsubprofessional, and clerical positions. Representatives of organized\nthe other hand, held the view that U.S. foreign policy should not be\nlabor in the Canal Zone, especially during the depression, lobbied for\ndetermined by certain fringe benefits to U.S. employees, especially\nthe replacement of \"silver\" employees in artisan groups with citizens\nthose enjoying a 25-percent wage differential over rates in the United\nof the United States.\nStates. According to the Department of State, Panama's economic\nFirst official recognition of Panama's desire to secure equal treat-\nviability and political stability should be the prime considerations\nment for its nationals in the Canal Zone's labor policy occurred in\nupon which U.S. policy is formulated. Accordingly, the United\n1936. In an exchange of notes ancillary to the 1936 general treaty,\nStates should assist Panama in achieving the benefits to be derived\nit was stated that the United States—\nfrom the presence of the Panama Canal down the middle of the nation.\nIn October 1959, the Panama Canal Company decided to purchase\nwill favor the maintenance, enforcement, or enactment of\nall items for resale in the zone from either the Republic of Panama or\nsuch provisions, consistent with the efficient operation and\nthe United States. Thus, all merchandise for sale in zone commissaries\nmaintenance of the canal and its auxiliary works and their\nwill pass through either United States or Panama customs barriers.\neffective protection and sanitation, as will assure to Pana-\nThe Department of Defense, fearful lest such a purchasing policy\nmanian citizens employed by the canal or the railroad equal-\nwould establish a precedent in its worldwide operations, resisted the\nity of treatment with employees who are citizens of the\nchange. On March 15, 1960, at the insistence of President Eisen-\nUnited States of America.\"\nhower, it was announced that henceforth the Department of Defense\nIn 1948 the silver and gold roll designations were replaced. The\nwould purchase all supplies except gasoline for its operations in the\nCanal Zone Government and the Panama Canal Company then\nCanal Zone from either Panama or the United States. The Armed\nfollowed a practice of dividing positions into two categories, \"U.S.\nForces also fell into line with the Panama Canal Company's existing\nrate\" and \"local rate.\" In theory, non-U.S. citizens were eligible for\npolicy of a $50 limit on luxury items that can be sold in post exchanges.\n\"U.S. rate\" positions, if qualified. In practice, less than 4 percent of\nThe new ban on third country purchases should bring to an end\njobs classified as \"U.S. rate\" were filled by non-U.S. citizens. The\none of the foremost points of friction between the Republic of Panama\nArmed Forces maintained its worldwide policy, that is, a dual-wage\nand the United States.\nsystem whereby all jobs, regardless of their nature, had two wage\nSide effects of the ban are already visible. The Panama Canal\nrates, one for U.S. citizens (\"U.S. rate\") and one for non-U.S. citizens\nCompany sent purchasing parties all over the Republic of Panama to\n(\"local rate\").\nstart farmers cooperatives, and point 4 technicians are teaching cattle\nIn a joint statement issued October 1, 1953, by the President of\ngrowers how to bring meat up to standards. While promoting much\nthe United States and the President of Panama, the principle of\nneeded diversification of the economy, these efforts are engendering an\n71 Ibid., p. 12.\nincalculable reservoir of good will.\n-17-\nUNITED STATES-PANAMA RELATIONS\nUNITED STATES-PANAMA RELATIONS\npersonnel must generally be sought outside of the area are paid at\nequality of job opportunity and treatment for citizens of Panama\nrates based on equivalent or closely similar rates prevailing in the\nwas proclaimed:\nFederal service in the United States, plus a 25-percent differential and\nWe have equally agreed that, inasmuch as the two countries\ntax increment in the case of U.S. citizens.\nhave a mutual and vital interest in the work of the Panama\nSince implementation of the Treaty with Panama the percentage\nCanal, the principle of equality of opportunity and treat-\nof non-U.S. citizens paid at U.S. base rates by the Panama Canal\nment must have full effect in regard to the citizens of Panama\nCompany and the Canal Zone Government has moved upward as\nand the United States employed in the Canal Zone as set forth\nfollows:\nin the exchange of notes of March 2, 1936, on this subject and\nFebruary 1959: 144 out of a total of 3,520 or 4 percent.\nthat wherever circumstances should be found which in any\nJune 1959: 173 out of a total of 3,542 or 5 percent.\nmanner interfere with the observance of that principle,\nDecember 1959: 234 out of a total of 3,702 or 6 percent.\nappropriate measures will be taken by the United States.\nApril 1960: 259 out of a total of 3,702 or 7 percent.\nThe memorandum of understandings attached to the treaty of\nFears expressed during hearings on the Treaty of 1955 by U.S.\n1955 embodies the principle of equal treatment. It is stated in item\ncitizen employees in the zone that their jobs would be classified down\n1 that:\nto Panamanian wage-levels have not materialized. In implementing\nLegislation will be sought which will authorize each agency\nthe treaty with Panama no U.S. citizen employees have had their\nof the U.S. Government in the Canal Zone to conform its\nwages reduced to conform to prevailing rates in Panama.⁷\nexisting wage practices in the zone to the following principles:\nIn line with the clause in item 1 of the memorandum of under-\n(a) The basic wage for any given grade level will be the\nstandings with regard to affording Panamanians-\nsame for any employee eligible for appointment to the\nopportunity to participate in such training programs as may\nposition without regard to whether he is a citizen of the\nbe conducted for employees by U.S. agencies in the Canal\nUnited States or of the Republic of Panama.\nZone—\nParagraphs (b) and (c) provide that U.S. citizen employees may\nPresident Eisenhower announced on April 19, 1960, an increase in the\nreceive an overseas differential, an allowance for taxes which operate\nPanama Canal Company's apprenticeship program. Henceforth, 25\nto reduce their disposable income as compared with employees who are\nPanamanian citizens would be selected each year to participate in the\nresidents of the area, and greater annual leave benefits.\nCanal Company's 4-year training course. As a result of the first\nItem 1 further provides:\nexaminations after the announcement, 27 Panamanians and 10 U.S.\nLegislation will be sought to make the Civil Service\ncitizens have been selected.\nRetirement Act uniformly applicable to citizens of the\nSome criticism still is heard regarding employment practices of\nUnited States and of the Republic of Panama employed\nU.S. zone agencies. Despite the principle of equality of opportunity\nby the Government of the United States in the Canal Zone.\nembodied in the memorandum of understanding and Public Law\nThe United States will afford equality of opportunity to\n85-550, the charge is made that U.S. authorities, in order to give\ncitizens of Panama for employment in all U.S. Government\npreference to U.S. citizens, stretch the definition of \"security\" to\npositions in the Canal Zone for which they are qualified\napply to a large number of positions which actually do not involve\nand in which the employment of U.S. citizens is not required,\nsecurity risk.75 There are 1,961 positions classified as \"security\".\"\nin the judgment of the United States, for security reasons.\nPanama, meanwhile, argues that in two World Wars no sabotage\nThe agencies of the U.S. Government will evaluate, classify,\noccurred, and that continuing discrimination against Panamanians\nand title all positions in the Canal Zone without regard to\nby means of the \"security\" escape clause, rather than assuring secur-\nthe nationality of the incumbent or proposed incumbent.\nity, creates dissension and the basis for insecurity.\nCitizens of Panama will be afforded opportunity to\nparticipate in such training programs as may be conducted\nE. THE ANNUITY\nfor employees by U.S. agencies in the Canal Zone.\nThe annuity which the United States pays yearly to the Republic\nOn July 25, 1958, Congress implemented the obligations assumed\nby the United States under the memo of understandings with the\nPanama. of Panama provides a rallying slogan for anti-U.S. agitators in\npassage of Public Law 85-550.\nThe original figure specified by the Hay-Bunau-Varilla Treaty of\nRates of pay for various occupational categories are determined by\n1903 was $250,000. Under the terms of the treaty of 1936, the amount\nthe area of principal recruitment, without regard to the nationality\nwas increased to $430,000 to adjust to the reduction of the gold con-\nof the incumbent. Wages for positions for which satisfactory per-\nsonnel can be recruited locally are based upon local prevailing rates.\nForeign Affairs Committee, Apr. 29, 1960.\n\" Letter from secretary, Panama Canal Company to chairman, Subcommittee on Inter-American Affairs,\n74 Ibid.\nIn practice, present Canal Zone wages for these jobs average from\n78 James L. Busey, \"Conflict in Panama.\" the New Leader, Feb. 15, 1960, p. 18.\n30 to 200 percent higher than prevailing wages in Panama. Positions\n76 Letter from secretary, Panama Canal Company, op. cit.\ndemanding special skills, education, or training for which qualified\n19 Thid.\nUNITED STATES-PANAMA RELATIONS\nUNITED STATES-PANAMA RELATIONS\ntent of the American dollar. Article I of the treaty of 1955 raised\nVII. COMPARISON OF THE LEGAL STATUS OF THE SUEZ AND\nthe amount of the annuity to $1,930,000.77 The same article contains\nPANAMA CANALS\na provision designed to safeguard the United States against any\nassertion of the right to demand an increase in the annuity. It is\nNationalist and leftwing elements in the Republic of Panama were\nstated that the parties \"recognize the absence of any obligation on\nstirred by Egypt's nationalization of the Suez Canal Co. on July 26,\nthe part of either party to alter the amount of the annuity.\"\n1956. Recently United Arab Kingdom representatives have been\nSome critics of U.S. policy in Panama demand that the gross\nactive in Panama. As stated previously, the UAR delegation is said\nreceipts of the Canal Zone be split 50-50. Gross revenue from the\nto be the most active diplomatic mission in Panama although there\nPanama Canal Company (which includes tolls, sales of commodities,\nare few Arab residents and virtually no Arab commercial interests.\nand rentals) amounted to over $87 million in fiscal year 1959. Net\nCairo also beams two radio broadcasts nightly to Panama devoted to\nrevenue, however, was less than $3 million. Payroll costs for the\nthe alleged unfair treatment Panama is receiving from the United\nCanal Company and the Canal Zone Government consumed over\nStates with respect to the canal.\n$52 million. Other financial obligations include operating costs,\nUAR, Castro, and Communist propaganda notwithstanding, the\ninterest and depreciation charges on the U.S. Government's invest-\nlegal status of the Suez Canal differs fundamentally from that of the\nPanama Canal.\nment in the project, and a part of the $1,930,000 annuity paid annually\nto the Republic of Panama.\nA. SUEZ CANAL BASIC AGREEMENTS\nThe following table gives a breakdown of revenues and\nThe fundamental agreement concerning the Suez Canal was between\nexpenditures: 78\nan international company and the Egyptian Government. The Suez\nComparative statement of revenue and expenses, fiscal years ended June 30, 1959,\nCanal was constructed and operated-until nationalized in 1956-by\nand 1958\na private international company, established and recognized for the\npurpose under a concession granted by the Khedive of Egypt to\n1959\n1958\nFerdinand de Lesseps in 1856 for the formation of an international\ncompany of which he was to be the director. The concession was to\nRevenue:\nTolls\nrun for 99 years from the date of the opening of the canal, which took\n$46,546,621\n$42,834,006\nSales of commodities\n18,452,121\n17,706,260\nplace in November 1869.\nService sales and rentals\n22,252,129\n22,570,343\nThe assets of the company, originally in Egyptian and French\nTotal revenue\n87,250,871\n83,110,609\nhands, later were acquired to a preponderant extent by the British\nOperating expenses and deductions:\nGovernment and British subjects, due chiefly to the extravagances of\nPayroll and related costs\n41,065,800\n38,399,717\nMaterial and other operating expenses\nthe Khedive. Riots broke out in Alexandria and the British sent a\n3,673,316\nCost of commodities sold\n3,498,469\n13,685,418\n13,347,951\nDepreciation\nsuccessful expedition to the isthmus of Suez. After extended negotia-\n4,787,254\n5,262,336\nAnnuity to Republic of Panama (repayment to U.S. Treasury)\n430,000\n430,000\ntions, the Suez Convention was signed in 1888 by Great Britain,\nNet cost to Canal Zone Government (repayment to U.S. Treasury)\n11,646,136\n10,737,194\nInterest on net direct investment of U.S. Government\n8,979,415\n8,778,560\nFrance, Austria-Hungary, Germany, Italy, the Netherlands, Russia,\nTotal operating expenses and deductions\nSpain, and Turkey (then in nominal control of Egypt). By that\n84,267,339\n80,454,227\nmultilateral convention, passage through the Suez Canal was to be\nNet revenue\n2,983,532\n2,656,382\nopen at all times to ships of all nations.\nWhen Egypt nationalized the canal in 1956, Great Britain and\nThose who urge that gross proceeds be split 50-50 with Panama\nFrance, with the support of other users of the canal, claimed before the\nturn aside the fact that Panama now receives more than half the net\nUnited Nations that the Suez Canal Co. enjoyed international status\nprofits of the canal with the argument that the United States receives\nand that therefore Egypt had no right to nationalize it. According to\ninestimable benefits from the canal and should be willing to pay.\nthis view, the 1888 Convention, with its provision for open passage to\nThis claim ignores the benefits which accrue to Panama from oper-\nall users, was the chief legal instrument violated by Egypt's act.\nations of the Panama Canal (see p. 13).\nEgypt held that granting the concession was a domestic act; that the\nThe demands for a 50-50 split of the gross receipts rest on emo-\nnationalization was a legitimate act of sovereignty; and that the Suez\ntional rather than rational bases. Since construction days the canal\nCanal Co. was an Egyptian company and no part of the system estab-\nhas conjured up for many Panamanians a tissuey dream of easy pros-\nlished by the 1888 convention. An Egyptian announcement in 1957\nperity. With the passage of time reality has shown that the canal is\nconcerning the future use of the canal stated that the 1888 agreement\nnot, after all, a cornucopia of wealth. But the dream persists. The\nwould be complied with.\npresence in the Canal Zone of an island of prosperous U.S. residents,\nin sharp contrast to the widespread poverty in the surrounding Re-\nB. LEGAL STATUS OF THE PANAMA CANAL\npublic of Panama, accentuates the notion that the canal can provide\nhigh living standards.\nWithout passing judgment on the legality of Egypt's nationaliza-\ntion of the Suez Canal Co., the legal status of the Panama Canal is\n77 The Panama Canal Company assumes responsibility for $430,000; the additional $1,500,000 added by\nthe Treaty of 1955 is paid by funds appropriated to the Department of State.\nanother matter. The story of how the United States came to build\n78 Panama Canal Company, Annual Report, fiscal year ended June 30, 1959, p. 48.\nthe Panama Canal is told in some detail at the beginning of this report.\n-19-\nUNITED STATES-PANAMA RELATIONS\nUNITED STATES-PANAMA RELATIONS\nThe fundamental agreements governing the Panama Canal are bi-\nlateral ones between the U.S. Government and the Government of the\nConsequently: to-face naval engagements, \"the two-ocean navy is itself outdated.\"\nRepublic of Panama, not between a sovereign state and a private\ncompany.\nThat left the canal as a waterway for peacetime shipping\nBy the Hay-Bunau-Varilla Treaty of 1903, the United States is\nand as a route of only secondary usefulness for the wartime\ngranted \"in perpetuity\" (not a 99-year lease) the use, occupation, and\ntransportation of critical materials-hardly a target of\ncontrol of the Canal Zone as if it were sovereign. No provision is\nprime importance to enemy forces. Since then the canal's\nmade to terminate the agreement. Treaties of 1936 and 1955 have\nvulnerability in an atomic-missile war has been demon-\nmodified some of the provisions of the treaty of 1903, but no changes\nstrated by the war games of April 1957. Henceforth, the\nwere made in the basic arrangements with respect to the legal basis of\ndefense of the canal must be fought far out in the Pacific and\nU.S. operations in the Panama Canal area. In fact, both the later\nthe Atlantic or from land bases in continental United States.\ntreaties confirm those parts of the 1903 treaty which are relevant to\nIn the event of a limited war the risk of expanding the con-\nU.S. jurisdiction in the Canal Zone.\nflict is likely to deter the enemy from designating as a strategic\ntarget what is no longer a vital supply route.\nVIII. ALTERNATIVES TO U.S. CONTROL\nSome observers foresee a rising tide of nationalism in Panama,\nSince World War II, defense of the canal has been assigned\ndue in part to the wave of nationalism sweeping the underdeveloped\na low strategic priority. The military is apparently oper-\nating on the conclusion expressed by Hanson Baldwin in\nregions of the world, to Castro's Cuban example, and to Communist\n1957 that the canal today is indefensible in total war and\nefforts to aggravate tensions in an area of U.S. interest. These\ncommentators reason that Panama leaders will no longer be able to\nshort of total war is less defensible and less strategic than\never before.\ncontain and exploit popular hostility, and that in these explosive\ncircumstances, the United States, regardless of its legal rights on the\nReasoning that a \"storm is building up in Panama\" and \"appro-\nisthmus, could not uphold its position in the Canal Zone. They\npriate measures taken soon can protect the real as distinguished from\nfurther maintain that armed intervention by the United States would\nthe illusory U.S. interest in the canal, while a policy of drifting\nnot only place the highly vulnerable canal in the midst of an armed\nalong may jeopardize our interests far beyond Central America\",\ncamp, but would probably wreck the inter-American system whose\nProfessors Travis and Watkins see the answer to the dilemma in inter-\ncornerstone is the doctrine of nonintervention. Accordingly, a\nnationalization of the canal under the United Nations. They argue:\nnumber of alternative suggestions have been put forward for main-\nTo concede to the tiny population of Panama the power to\ntaining the canal in effective operation.\ncontrol a vested interest of the whole community of nations\nwould be no more justifiable than to try to continue the\nA. INTERNATIONALIZATION OF THE CANAL\npresent arrangement. To set up under the Organization of\nPresident Truman proposed at the Potsdam Conference in 1945\nAmerican States a hemispheric agency for operating the\nthat the Panama Canal be internationalized along with other inter-\ncanal, a waterway which serves all maritime powers directly\nnational waterways. In this he was supported by Prime Minister\nand all others indirectly, would open it to the same objections\nAttlee of Great Britain, but the Russians vetoed the idea.79 President\nwhich can be charged against a Danube Commission made up\nonly of riparian powers. There remains the alternative of\nTruman's plan was not designed to avoid problems in Panama.\nRather, it was a package deal aimed at an international guarantee of\nestablishing under the United Nations a specialized agency,\nfree passage along all international waterways as a means of removing\nthe Panama Canal Commission, serving and responsible to\nthe community of nations, and including representatives of\npossible future trouble spots. Since that time the Suez Canal has\nthe canal's principal users.\nbeen nationalized by Egypt and the Danube River has fallen to the\nInternationalization would leave unimpaired the real in-\nmercy of the Danube Commission which is dominated by Soviet-\nbloc countries.\nterest of the United States, namely, the preservation of the\nStanford University political scientists, Martin B. Travis and\ncanal and access to it, good service at low cost, and a voice\nin the operation of the canal. The security of the canal would\nJames T. Watkins, in an article appearing in Foreign Affairs, April\n1959, present a case for internationalization of the Panama Canal\nbe, if anything, enhanced. Already hopelessly vulnerable, an\nunder United Nations auspices.⁸ Their reasons differ from those\ninternationalized canal might seem to a potential aggressor\nmotivating President Truman's 1945 suggestion. Travis and Watkins\na less attractive target than one under the exclusive juris-\ndiction of the United States. In any case, the United States\ncontend that the \"changed nature of modern warfare\" has \"deprived\nthe canal of its original importance.\" With the outmoding of face-\nwould be entitled to come to the defense of the canal, if de-\nfense were feasible, by acting within the United Nations\nTO Demaree Bess, \"The Panama Danger Zone,\" Saturday Evening Post. May 9, 1959, 74.\nunder article 51 of the charter or the \"Uniting for Peace\"\nso Martin B. Travis and James T. Watkins, \"Control of the Panama Canal: an Obsolete Shibboleth?\"\nForeign Affairs, April 1959, pp. 407-418.\nprocedures. Such action in defense of an international\n-20\nUNITED STATES-PANAMA RELATIONS\nUNITED STATES-PANAMA RELATIONS\nagency would enjoy moral and practical support which the\nIt is stated, moreover, that by regionalization the United States would\ndefense of an exclusive interest claimed by the United States\nnot only strengthen the Organization of American States but reap a\ncould not evoke. The same principle would apply in the\nnumber of political gains:\nevent of limited warfare, where, again, the United States\nwould be in a better moral position to attract the support of\nA promise to multilaterize the Canal Zone will be another\nthe world community.\nstriking symbol of the nonimperialistic nature of our foreign\nGood service at a reasonable cost could also be expected\npolicy. The move would be as forceful a demonstration of\nfrom an international agency. Indeed, from a strictly eco-\nour integrity as was the honoring of our early-made promise\nnomic standpoint internationalization would offer every hope\nof freedom to the Philippines. Further, the act would give\nof bringing an improvement. Less exposed to special-interest\nus a firm posture for maneuver with respect to future prob-\npressures than is the U.S. Congress, a Panama Canal Com-\nlems regarding the Suez Canal. However, its most important\nmission could more readily determine an optimum toll\nand fundamental impact would be within the Americas. It\nschedule for facilitating the flow of traffic and yet building\nwould be another demonstration-and a most impressive\nup reserves for needed improvements. And finally, partici-\none-of our long-term willingness to work as partners with\npation in the operation of the canal would be insured as long\nthe other nations in the hemisphere.\nas the United States remained one of the principal users.\nC. PURCHASE FROM PANAMA\nIt might be argued that internationalization would be\ninjurious to certain interests claimed by Panama, which\nAnother political scientist, Prof. James L. Busey of the University\nstands in a special relationship to the canal. Under inter-\nof Colorado, opposes multilateralization of the Panama Canal under\nnational jurisdiction, Panama could expect little support for\neither OAS or U.N. auspices. In his view-\ngrandiose schemes for third locks or a sea-level channel.\nBut, that, as we have seen, is the present situation. Then,\nif the United States were to continue to run it under inter-\ntoo, Panama's bargaining power, derived from pitting the\nnational authority, the bickering would increase. If opera-\nclaims of nationalism against those of the U.S. colossus, would\ntions were to be handled by several participating powers, the\nbe lost. Yet this would be more than compensated for by\nservice would probably deteriorate and controversy would\nthe more effective support which Panama would obtain from\nbe inevitable. In any event, the unhappiest party of all\nLatin American representatives on the Panama Canal Com-\nwould be Panama itself.\"\nmission. Finally, Panama would lose to the international\nLike his counterparts at Stanford and Northwestern Universities,\nagency powers heretofore claimed (but not exercised) by\nProfessor Busey feels that the present circumstances are fraught with\nitself with respect to the canal, but by the same measure\ndanger for the United States. He recommends that the United\nit would render itself more secure from the arbitrary exercise\nStates—\nof power by others.\nnow enter into negotiations with Panama with the object of\nabandoning the foggy provisions of the 1903 convention, and\nB. ORGANIZATION OF AMERICAN STATES CONTROL\nof securing full and undivided U.S. sovereignty over the\nThe Department of Political Science of Northwestern University,\ncanal and the zone-or better still, propose to purchase the\nin a study on the Organization of American States prepared, in 1959,\nentire Central American half of the Republic of Panama,\non the request of the Senate Committee on Foreign Relations, recom-\nfrom the zone's present eastern border to the Costa Rican\nmends that the administration of the Panama Canal be turned over\nfrontier.83\nto the OAS.81\nIf negotiations to purchase from Panama fail, Mr. Busey suggests\nThey take a dim view of the idea of giving the United Nations con-\nbuilding a canal in Nicaragua which-\ntrol \"because of the tendency of the United Nations to invest con-\nhas the huge advantage of giving the United States full title\ntroversial issues with the politics of the cold war.\" They note \"how\nto a strip of territory located between two countries, instead\nthe Security Council of the United Nations muddled the Guatemalan\nsituation in 1954.\"\nof cutting one in half.\nAccording to the study, by regionalizing the canal through the\nD. OTHER SUGGESTIONS\nOAS, the United States would-\navoid the political dilemma of internationalizing it through\nOther suggestions which crop up occasionally include the formation\na divided U.N. or having it eventually nationalized despite\nof an agency of canal users to administer the canal or simply letting\nourselves by the Panamanians.\nthe canal revert to Panama.\nat U.S. Cong., 86th, 1st sess., \"United States-Latin American Relations, The Organization of American\nJames L. Busey, \"Conflict in Panama,\" The New Leader, Feb. 15, 1960, p. 19.\nStates,' a study prepared at the request of the Subcommittee on American Republics Affairs of the Com-\nIbid.\nmittee on Foreign Relations, by Northwestern University, Washington, Government Printing Office,\nDec. 24, 1959, pp. 66-67.\n-21-\nUNITED STATES-PANAMA RELATIONS\nUNITED STATES-PANAMA RELATIONS\nIX. SUBCOMMITTEE FINDINGS AND RECOMMENDATIONS\nFurthermore, by the terms of the treaty arrangements between the\nUnited States and the Republic of Panama, the consent of both nations\n(1) The subcommittee does not believe that either the interests of\nwould be necessary to undertake any scheme for international or\nthe Republic of Panama, the United States, or the users of the Panama\nregional administration of the Panama Canal.\nCanal would be served by the transfer of the control and operation of\nAs for purchasing the zone outright as has been suggested, given the\nthe canal.\ndegree of nationalism in Panama and in Latin America, the sub-\nTurning over the canal's administration to the United Nations is\ncommittee thinks any effort to effect purchase of the area is not only\nadvanced by its proponents as a means of relieving United States-\ndoomed to failure but is likely to stimulate great hostility and out-\nPanama friction which can be exploited by enemies of the free world.\ncries of \"imperialism\" not only in Panama but throughout Latin\nHolders of this view rest their case on the presumption that the\nAmerica.\nPanama Canal's strategic value has vanished in the light of recent\nThe possibility of building a new canal other than in Panama has\nmilitary developments.\nbeen mentioned. The United States does hold exclusive treaty rights\nThe subcommittee believes that the strategic value of the canal\nin Nicaragua to construct, maintain, control, and defend a canal.\ncontinues to be an important consideration. The subcommittee is\n(See p. 11.) A number of factors militate against the construction\nconvinced, moreover, that giving the United Nations control of the\nat this time of an alternate canal route through Nicaragua. As\nPanama Canal would facilitate Communist endeavors to disrupt the\nreported on page 11 of this study, the Board of Consultants contracted\neconomic and political stability of the Western Hemisphere. As\nby the Committee on Merchant Marine and Fisheries to study the\nlong as the Communists are bent on destroying inter-American\ncanal situation from a technical viewpoint recommended against a\nunity, it makes no sense to give Communist-bloc countries a voice in\nNicaraguan Canal. However, the Board of Consultants is optimistic\nthe administration of a waterway which traverses the Western\nabout the possibility of a canal in Colombia, recommending that\nHemisphere. Administration of the Panama Canal by the Organization of\n\"further engineering studies of sea-level routes across the isthmus in\nColombia should be initiated and prosecuted vigorously.\" The sub-\nAmerican States poses drawbacks of a different nature.\ncommittee concurs fully with the Board of Consultants in this matter.\nThe subcommittee finds that OAS administration of the canal has a\nAs for reversion to Panama, responsible Panamanians themselves do\ncertain regional appeal and might indeed be interpreted by the\nnot urge such a course. The cost of running the canal at its present\nAmerican Republics as a sincere commitment to partnership with\ncapacity and preparing it for future expanded traffic is well beyond the\nthem. However, maritime nations outside the hemisphere who rely\nmeans of the small Republic. The most conservative estimate of the\non the canal are likely to greet regionalization of the canal less en-\ncosts to make improvements to provide additional capacity to meet\nthusiastically. The following table showing the principal Panama Canal trade\nthe demands of international commerce beyond the year 2000 is\n$61 million.88\nroutes discloses the vital interests which nations outside the Western\n(2) the subcommittee recognizes that the efficient operation of the\nHemisphere share in the effective operation of the canal:84\nPanama Canal depends in large measure upon the good will of the\nMajor Panama Canal trade routes, ranked by cargo tonnage volume for selected\nPanamanian people toward the United States. We acknowledge that\nfiscal years\nthe overwhelming presence of the United States in Panama makes an\ninviting target for every sort of agitation. We believe, however, that\nTrade route\n1957\n1956\n1950\n1949\n1939\n1930\nit is possible for the United States and Panama to maintain normal,\nfriendly relations.\nEast coast United States-Asia\n1\n1\n3\n2\n2\n4\nTo this end, the subcommittee recommends that the agencies of\nEast coast United States-west coast South America\n2\n3\n2\n1\n5\n3\nUnited States intercoasta\n3\n2\n1\n3\n1\n1\nthe U.S. Government in the Panama Canal Zone be scrupulously dili-\nWest coast South America-Europe\n4\n4\n6\n6\n3\n5\ngent in applying the provisions of our treaty arrangements with the\nWest coast Canada-Europe\n5\n5\n5\n4\n6\n6\nAustralasia-Europe\n6\n7\n4\n5\n7\n7\nRepublic of Panama-the intent as well as the letter of our agreements.\nWest coast United States-Europe\n7\n6\n7\n7\n4\n2\nWest coast United States-east coast South America\n8\n8\n13\n12\n14\n11\nThe subcommittee recognizes that U.S. residents in the Canal Zone\nEast coast United States-Australasia\n9\n9\n9\n8\n10\n8\n10\n13\n3\n3\n(1)\n14\nperform a great service for their country at certain personal sacrifices.\nWest Indies-Asia\nWest Indies-west coast South America\n11\n10\n10\n9\n12\n13\nAt the same time, American citizens in the Canal Zone have a special\nEast coast South America-west coast South America\n12\n11\n8\n3\n15\n13\n3\nEurope-Asia\n13\n(1)\n(e)\n3\n11\nresponsibility to assist to the maximum extent toward furthering\nEast coast United States-Hawall\n14\n12\n8\n10\n8\n9\nWest Indies-west coast United States\n15\n15\n12\n13\n9\n10\namicable relations with nationals of the Republic of Panama. The\nsubcommittee approves every effort to assure U.S. citizens in the zone\na standard of living comparable with that which they would enjoy\n1 Not among the 15 most important routes.\nin continental United States. However, the Republic of Panama is\nse U.S. Cong., 86th, 2d sess., \"Report on a Long-Range Program for Isthmian Canal Transits,\" H. Rept.\nNo. 1960, Washington, GPO, June 23, 1960, p. 50.\nno longer the isolated frontier civilization of construction days which\nmotivated the U.S. Government to adopt measures designed to miti-\na Ibid., p. 32.\n-22-\nUNITED STATES-PANAMA RELATIONS\nUNITED STATES-PANAMA RELATIONS\ngate harsh living conditions. Unfortunately, there exists 8 human\nthe Department of State with regard to any legislation that might be\ntendency to regard emergency measures which endure for a long\nrequired to meet envisaged commitments.\nperiod of time as vested interests. The subcommittee is confident\n(7) The subcommittee recognizes that the overwhelming presence\nthat officials of the U.S. agencies operating in the Canal Zone, in\nof the United States on the Isthmus of Panama will always be the\nliving up to our treaty commitments with Panama, will take into\nsource of some friction between the Republic of Panama and the\nconsideration the welfare of the residents of the zone. At the same\nUnited States. In the prophetic words of William Howard Taft at\ntime, the subcommittee urges the Panama Canal Company and Zone\nthe outset of the construction of the canal:\nGovernment to emphasize to their employees their responsibilities as\nThere are many other matters constantly arising between\nU.S. citizens living in a unique situation.\n(3) The subcommittee recognizes that Panama's unbalanced econ-\nthe American representatives on the isthmus and the Pana-\nmanian authorities calling for adjustment. We are living in\nomy breeds human misery, leading to political instability. As the\nthe same house and family with them, so to speak, and if we\nRepublic's principal and most apparent source of income, the Panama\nCanal becomes the target of bitter popular discontent.\ndo not get on in a friendly way it will be uncomfortable for\nThe subcommittee realizes that the Republic of Panama is largely\nboth.\ndevoid of resources with which the economy could be diversified.\nThe subcommittee is confident that wise leaders in both the United\nBut we are of the opinion that proper utilization of the resources\nStates and the Republic of Panama will work cooperatively in order\nwhich Panama does possess would contribute to raising to satisfactory\nto maintain the Panama Canal as a service to Panama, to the United\nlevels the living conditions of the large masses of Panamanian people.\nStates, and to all mankind.\nThe subcommittee hopes that Panama's leaders recognize that the\nrevenues from the Canal Zone are not adequate to sustain the eco-\nnomic life of the Panamanian community.\nThe subcommittee recommends that the United States cooperate\ngenerously by providing technical and financial assistance for projects\ndesigned to broaden the base of Panama's economy. However, the\nsubcommittee realizes that it is up to the leaders of the Government\nof the Republic of Panama to take the necessary measures which\nwould make U.S. assistance effective.\n(4) The subcommittee acknowledges that the question of flying the\nPanamanian flag within the Canal Zone as a recognition of Panama's\n'titular sovereignty\" is charged with dangers that could explode\nbeyond Panama-United States relations. The issue offers a constant\ntemptation to demagogs, with the consequent possibility of an ugly\nincident which could be used to arouse anti-American sentiment\nthroughout the hemisphere.\nThe subcommittee is convinced, however, that to accede to the\nPanamanian request, after more than half a century in which only\nthe U.S. flag has been raised in the Canal Zone, would constitute a\nmajor departure from established policy. In the subcommittee's judg-\nment, such a proposal would represent a basic change in treaty inter-\npretation. Hence, should the Government of the United States deter-\nmine at any time in the future that a concession of this magnitude\nwould be in the national interest, such a change should be accomplished\nonly after due constitutional process.\n(5) The subcommittee believes that U.S. relations with the Republic\nof Panama are weakened by dissension regarding the Canal Zone\nwithin the administration. Conflicting views of the Department of\nState, the Panama Canal Company, and the Department of Defense\nshould be adjusted at the highest level-the Presidency-and then\nfirmly administered with a single voice.\n(6) The subcommittee recognizes that congressional delays in imple-\nmenting some of the treaty provisions have been responsible for a meas-\nure of resentment in Panama. With a view to reducing the possibil-\nities of congressional disapproval, the subcommittee recommends that\nin the future the appropriate committees of Congress be consulted by\n-23-\nUNITED STATES-PANAMA RELATIONS\nARTICLE II.\nThe Republic of Panama grants to the United States in perpetuity\nthe use, occupation and control of a zone of land and land under water\nAPPENDIXES\nfor the construction, maintenance, operation, sanitation and protection\nof said Canal of the width of ten miles extending to the distance of\nfive miles on each side of the center line of the route of the Canal to\nbe constructed; the said zone beginning in the Caribbean Sea three\nAPPENDIX A\nmarine miles from mean low water mark and extending to and across\nthe Isthmus of Panama into the Pacific ocean to a distance of three\nCONVENTION FOR THE CONSTRUCTION OF A SHIP\nmarine miles from mean low water mark with the proviso that the\nCANAL, 1903\ncities of Panama and Colon and the harbors adjacent to said cities,\nwhich are included within the boundaries of the zone above described,\nConcluded November 18, 1903; ratification advised by the Senate\nshall not be included within this grant. The Republic of Panama\nFebruary 23, 1904; ratified by President February 25, 1904; ratifi-\nfurther grants to the United States in perpetuity the use, occupation\ncations exchanged February 26, 1904; proclaimed February 26, 1904.\nand control of any other lands and waters outside of the zone above\n(U.S. Stats., vol. 33.)\ndescribed which may be necessary and convenient for the construc-\nARTICLES.\ntion, maintenance, operation, sanitation and protection of the said\nI. Independence of Panama.\nXIV. Compensation.\nCanal or of any auxiliary canals or other works necessary and con-\nII. Canal zone.\nXV. Joint commission.\nvenient for the construction, maintenance, operation, sanitation and\nIII. Authority in canal zone.\nXVI. Extradition.\nprotection of the said enterprise.\nIV. Subsidiary rights.\nXVII. Ports of Panama.\nThe Republic of Panama further grants in like manner to the United\nV. Monopoly for construction, etc.\nXVIII. Neutrality rules.\nVI. Private property.\nXIX. Free transport.\nStates in perpetuity all islands within the limits of the zone above\nVII. Panama; Colon; harbors.\nXX. Cancellation of existing treaties.\ndescribed and in addition thereto the group of small islands in the\nVIII. Panama Canal Company and\nXXI. Anterior debts, concessions, etc.\nBay of Panama, named, Perico, Naos, Culebra and Flamenco.\nrailroad.\nXXII. Renunciation of rights under\nIX. Ports at entrance of canal.\nconcessionary contracts.\nARTICLE III.\nX. Taxes, etc.\nXXIII. Protection of canal.\nXI. Official dispatches.\nXXIV. Changeingoverninent, laws, etc.\nXII. Access of employees.\nXXV. Coaling stations.\nThe Republic of Panama grants to the United States all the rights,\nXIII. Importation into zone.\nXXVI. Ratification.\npower and authority within the zone mentioned and described in\nThe United States of America and the Republic of Panama being\nArticle II of this agreement and within the limits of all auxiliary lands\ndesirous to insure the construction of a ship canal across the Isthmus\nand waters mentioned and described in said Article II which the\nof Panama to connect the Atlantic and Pacific oceans, and the Con-\nUnited States would possess and exercise if it were the sovereign of\ngress of the United States of America having passed an act approved\nthe territory within which said lands and waters are located to the\nJune 28, 1902, in furtherance of that object, by which the President\nentire exclusion of the exercise by the Republic of Panama of any\nof the United States is authorized to acquire within a reasonable time\nsuch sovereign rights, power or authority.\nthe control of the necessary territory of the Republic of Colombia,\nand the sovereignty of such territory being actually vested in the\nARTICLE IV.\nRepublic of Panama, the high contracting parties have resolved for\nthat purpose to conclude a convention and have accordingly appointed\nAs rights subsidiary to the above grants the Republic of Panama\nas their plenipotentiaries,-\ngrants in perpetuity to the United States the right to use the rivers,\nThe President of the United States of America, John Hay, Secre-\nstreams, lakes and other bodies of water within its limits for naviga-\ntary of State, and\ntion, the supply of water or water-power or other purposes, so far as\nthe use of said rivers, streams, lakes and bodies of water and the waters\nThe Government of the Republic of Panama, Philippe Bunau-\nVarilla, Envoy Extraordinary and Minister Plenipotentiary of the\nthereof may be necessary and convenient for the construction, main-\nRepublic of Panama, thereunto specially empowered by said govern-\ntenance, operation, sanitation and protection of the said Canal.\nment, who after communicating with each other their respective full\nARTICLE V.\npowers, found to be in good and due form, have agreed upon and\nconcluded the following articles:\nThe Republic of Panama grants to the United States in perpetuity\na monopoly for the construction, maintenance and operation of any\nARTICLE I.\nsystem of communication by means of canal or railroad across its ter-\nThe United States guarantees and will maintain the independence\nritory between the Caribbean Sea and the Pacific ocean.\nof the Republic of Panama.\n-24-\nUNITED STATES-PANAMA RELATIONS\nUNITED STATES-PANAMA RELATIONS\nARTICLE VI.\nin case the Government of Panama is unable or fails in its duty to\nenforce this compliance by the cities of Panama and Colon with the\nThe grants herein contained shall in no manner invalidate the titles\nsanitary ordinances of the United States the Republic of Panama\nor rights of private land holders or owners of private property in the\ngrants to the United States the right and authority to enforce the\nsaid zone or in or to any of the lands or waters granted to the United\nsame.\nStates by the provisions of any Article of this treaty, nor shall they\nThe same right and authority are granted to the United States for\ninterfere with the rights of way over the public roads passing through\nthe maintenance of public order in the cities of Panama and Colon\nthe said zone or over any of the said lands or waters unless said rights\nand the territories and harbors adjacent thereto in case the Republic\nof way or private rights shall conflict with rights herein granted to\nof Panama should not be, in the judgment of the United States, able\nthe United States in which case the rights of the United States shall\nto maintain such order.\nbe superior. All damages caused to the owners of private lands or\nARTICLE VIII.\nprivate property of any kind by reason of the grants contained in this\ntreaty or by reason of the operations of the United States, its agents\nThe Republic of Panama grants to the United States all rights which\nor employees, or by reason of the construction, maintenance, opera-\nit now has or hereafter may acquire to the property of the New Panama\ntion, sanitation and protection of the said Canal or of the works of\nCanal Company and the Panama Railroad Company as a result of the\nsanitation and protection herein provided for, shall be appraised and\ntransfer of sovereignty from the Republic of Colombia to the Repub-\nsettled by a joint Commission appointed by the Governments of the\nlic of Panama over the Isthmus of Panama and authorizes the New\nUnited States and the Republic of Panama, whose decisions as to such\nPanama Canal Company to sell and transfer to the United States its\ndamages shall be final and whose awards as to such damages shall be\nrights, privileges, properties and concessions as well as the Panama\npaid solely by the United States. No part of the work on said Canal\nRailroad and all the shares or part of the shares of that company;\nor the Panama railroad or on any auxiliary works relating thereto\nbut the public lands situated outside of the zone described in Article\nand authorized by the terms of this treaty shall be prevented, delayed\nII of this treaty now included in the concessions to both said enter-\nor impeded by or pending such proceedings to ascertain such damages.\nprises and not required in the construction or operation of the Canal\nThe appraisal of said private lands and private property and the assess-\nshall revert to the Republic of Panama except any property now\nment of damages to them shall be based upon their value before the\nowned by or in the possession of said companies within Panama or\ndate of this convention.\nColon or the ports or terminals thereof.\nARTICLE VII.\nARTICLE IX.\nThe Republic of Panama grants to the United States within the\nlimits of the cities of Panama and Colon and their adjacent harbors and\nThe United States agrees that the ports at either entrance of the\nwithin the territory adjacent thereto the right to acquire by purchase\nCanal and the waters thereof, and the Republic of Panama agrees that\nor by the exercise of the right of eminent domain, any lands, buildings,\nthe towns of Panama and Colon shall be free for all time so that there\nwater rights or other properties necessary and convenient for the con-\nshall not be imposed or collected custom house tolls, tonnage, anchor-\nstruction, maintenance, operation and protection of the Canal and of\nage, lighthouse, wharf, pilot, or quarantine dues or any other charges or\nany works of sanitation, such as the collection and disposition of sewage\ntaxes of any kind upon any vessel using or passing through the Canal or\nand the distribution of water in the said cities of Panama and Colon,\nbelonging to or employed by the United States, directly or indirectly,\nwhich in the discretion of the United States may be necessary and\nin connection with the construction, maintenance, operation, sanita-\nconvenient for the construction, maintenance, operation, sanitation\ntion and protection of the main Canal, or auxiliary works, or upon the\nand protection of the said Canal and railroad. All such works of\ncargo, officers, crew, or passengers of any such vessels, except such\nsanitation, collection and disposition of sewage and distribution of\ntolls and charges as may be imposed by the United States for the use\nwater in the cities of Panama and Colon shall be made at the expense\nof the Canal and other works, and except tolls and charges imposed\nof the United States, and the Government of the United States, its\nby the Republic of Panama upon merchandise destined to be intro-\nagents or nominees shall be authorized to impose and collect water\nduced for the consumption of the rest of the Republic of Panama, and\nrates and sewerage rates which shall be sufficient to provide for the\nupon vessels touching at the ports of Colon and Panama and which do.\npayment of interest and the amortization of the principal of the cost\nnot cross the Canal.\nof said works within a period of fifty years and upon the expiration\nThe Government of the Republic of Panama shall have the right to\nof said term of fifty years the system of sewers and water works shall\nestablish in such ports and in the towns of Panama and Colon such\nrevert to and become the properties of the cities of Panama and Colon\nhouses and guards as it may deem necessary to collect duties on impor-\nrespectively, and the use of the water shall be free to the inhabitants\ntations destined to other portions of Panama and to prevent contraband\nof Panama and Colon, except to the extent that water rates may be\ntrade. The United States shall have the right to make use of the towns\nnecessary for the operation and maintenance of said system of sewers\nand harbors of Panama and Colon as places of anchorage, and for mak-\nand water.\ning repairs, for loading, unloading, depositing, or transshipping cargoes\nThe Republic of Panama agrees that the cities of Panama and Colon\neither in transit or destined for the service of the Canal and for other\nshall comply in perpetuity with the sanitary ordinances whether of a\nworks pertaining to the Canal.\npreventive or curative character prescribed by the United States and\n-25-\nUNITED STATES-PANAMA RELATIONS\nUNITED STATES-PANAMA RELATIONS\nARTICLE X.\nconvention and also an annual payment during the life of this conven-\ntion of two hundred and fifty thousand dollars ($250,000) in like gold\nThe Republic of Panama agrees that there shall not be imposed any\ncoin, beginning nine years after the date aforesaid.\ntaxes, national, municipal, departmental, or of any other class, upon\nThe provisions of this Article shall be in addition to all other bene-\nthe Canal, the railways and auxiliary works, tugs and other vessels\nfits assured to the Republic of Panama under this convention.\nemployed in the service of the Canal, store houses, work shops, offices,\nBut no delay or difference of opinion under this Article or any other\nquarters for laborers, factories of all kinds, warehouses, wharves,\nprovisions of this treaty shall affect or interrupt the full operation and\nmachinery and other works, property, and effects appertaining to the\neffect of this convention in all other respects.\nCanal or railroad and auxiliary works, or their officers or employees,\nsituated within the cities of Panama and Colon, and that there shall\nARTICLE XV.\nnot be imposed contributions or charges of a personal character of any\nkind upon officers, employees, laborers, and other individuals in the\nThe joint commission referred to in Article VI shall be established\nservice of the Canal and railroad and auxiliary works.\nas follows:\nThe President of the United States shall nominate two persons and\nARTICLE XI.\nthe President of the Republic of Panama shall nominate two persons\nand they shall proceed to a decision; but in case of disagreement of\nThe United States agrees that the official dispatches of the Govern-\nthe Commission (by reason of their being equally divided in conclu-\nment of the Republic of Panama shall be transmitted over any tele-\nsion) an umpire shall be appointed by the two Governments who shall\ngraph and telephone lines established for canal purposes and used for\nrender the decision. In the event of the death, absence, or incapacity\npublic and private business at rates not higher than those required\nof a Commissioner or Umpire, or of his omitting, declining or ceasing\nfrom officials in the service of the United States.\nto act, his place shall be filled by the appointment of another person\nin the manner above indicated. All decisions by a majority of the\nARTICLE XII.\nCommission or by the umpire shall be final.\nThe Government of the Republic of Panama shall permit the immi-\nARTICLE XVI.\ngration and free access to the lands and workshops of the Canal and\nits auxiliary works of all employees and workmen of whatever nation-\nThe two Governments shall make adequate provision by future\nality under contract to work upon or seeking employment upon or in\nagreement for the pursuit, capture, imprisonment, detention and\nany wise connected with the said Canal and its auxiliary works, with\ndelivery within said zone and auxiliary lands to the authorities of the\ntheir respective families, and all such persons shall be free and exempt\nRepublic of Panama of persons charged with the commitment of\nfrom the military service of the Republic of Panama.\ncrimes, felonies or misdemeanors without said zone and for the pur-\nsuit, capture, imprisonment, detention and delivery without said zone\nARTICLE XIII.\nto the authorities of the United States of persons charged with the\ncommitment of crimes, felonies and misdemeanors within said zone\nThe United States may import at any time into the said zone and\nand auxiliary lands.\nauxiliary lands, free of custom duties, imposts, taxes, or other charges,\nARTICLE XVII.\nand without any restrictions, any and all vessels, dredges, engines,\ncars, machinery, tools, explosives, materials, supplies, and other arti-\nThe Republic of Panama grants to the United States the use of all\ncles necessary and convenient in the construction, maintenance, opera-\nthe ports of the Republic open to commerce as places of refuge for any\ntion, sanitation and protection of the Canal and auxiliary works, and\nvessels employed in the Canal enterprise, and for all vessels passing or\nall provisions, medicines, clothing, supplies and other things necessary\nbound to pass through the Canal which may be in distress and be\nand convenient for the officers, employees, workmen and laborers in\ndriven to seek refuge in said ports. Such vessels shall be exempt from\nthe service and employ of the United States and for their families.\nanchorage and tonnage dues on the part of the Republic of Panama.\nIf any such articles are disposed of for use outside of the zone and\nauxiliary lands granted to the United States and within the territory\nARTICLE XVIII.\nof the Republic, they shall be subject to the same import or other\nduties as like articles imported under the laws of the Republic of\nThe Canal, when constructed, and the entrances thereto shall be\nPanama.\nneutral in perpetuity, and shall be opened upon the terms provided\nARTICLE XIV.\nfor by Section I of Article three of, and in conformity with all the\nstipulations of, the treaty entered into by the Governments of the\nAs the price or compensation for the rights, powers and privileges\nUnited States and Great Britain on November 18, 1901.\ngranted in this convention by the Republic of Panama to the United\nStates, the Government of the United States agrees to pay to the\nARTICLE XIX.\nRepublic of Panama the sum of ten million dollars ($10,000,000) in gold\ncoin of the United States on the exchange of the ratification of this\nThe Government of the Republic of Panama shall have the right to\ntransport over the Canal its vessels and its troops and munitions of\nUNITED STATES-PANAMA RELATIONS\nUNITED STATES-PANAMA RELATIONS\nwar in such vessels at all times without paying charges of any kind.\nunder any contracts or concessions, with said Wyse, the Universal\nThe exemption is to be extended to the auxiliary railway for the\nPanama Canal Company, the Panama Railroad Company and the\ntransportation of persons in the service of the Republic of Panama,\nNew Panama Canal Company.\nor of the police force charged with the preservation of public order\nThe aforesaid rights and property shall be and are free and released\noutside of said zone, as well as to their baggage, munitions of war\nfrom any present or reversionary interest in or claims of Panama and\nand supplies.\nthe title of the United States thereto upon consummation of the con-\nARTICLE XX.\ntemplated purchase by the United States from the New PanamaCanal\nCompany, shall be absolute, so far as concerns the Republic of Panama,\nIf by virtue of any existing treaty in relation to the territory of the\nexcepting always the rights of the Republic specifically secured under\nIsthmus of Panama, whereof the obligations shall descend or be\nthis treaty.\nassumed by the Republic of Panama, there may be any privilege or\nARTICLE XXIII.\nconcession in favor the the Government or the citizens and subjects\nof a third power relative to an interoceanic means of communication\nIf it should become necessary at any time to employ armed forces\nwhich in any of its terms may be incompatible with the terms of the\nfor the safety or protection of the Canal, or of the ships that make use\npresent convention, the Republic of Panama agrees to cancel or mod-\nof the same, or the railways and auxiliary works, the United States\nify such treaty in due form, for which purpose it shall give to the\nshall have the right, at all times and in its discretion, to use its police\nsaid third power the requisite notification within the term of four\nand its land and naval forces or to establish fortifications for these\nmonths from the date of the present convention, and in case the exist-\npurposes.\ning treaty contains no clause permitting its modifications or annul-\nARTICLE XXIV.\nment, the Republic of Panama agrees to procure its modification or\nannulment in such form that there shall not exist any conflict with the\nNo change either in the Government or in the laws and treaties of\nstipulations of the present convention.\nthe Republic of Panama shall, without the consent of the United\nStates, affect any right of the United States under the present con-\nARTICLE XXI.\nvention, or under any treaty stipulation between the two countries\nthat now exists or may hereafter exist touching the subject matter of\nThe rights and privileges granted by the Republic of Panama to the\nthis convention.\nUnited States in the preceding Articles are understood to be free of\nIf the Republic of Panama shall hereafter enter as a constituent into\nall anterior debts, liens, trusts, or liabilities, or concessions or privi-\nany other Government or into any union or confederation of states, so\nlegas to other Governments, corporations, syndicates or individuals,\nas to merge her sovereignty or independence in such Government,\nand consequently, if there should arise any claims on account of the\nunion or confederation, the rights of the United States under this con-\npresent concessions and privileges or otherwise, the claimants shall\nvention shall not be in any respect lessened or impaired.\nresort to the Government of the Republic of Panama and not to the\nUnited States for any indemnity or compromise which may be\nARTICLE XXV.\nrequired.\nARTICLE XXII.\nFor the better performance of the engagements of this convention\nand to the end of the efficient protection of the Canal and the preser-\nThe Republic of Panama renounces and grants to the United States\nvation of its neutrality, the Government of the Republic of Panama\nthe participation to which it might be entitled in the future earnings\nwill sell or lease to the United States lands adequate and necessary\nof the Canal under Article XV of the concessionary contract with\nfor naval or coaling stations on the Pacific coast and on the western\nLucien N. B. Wyse now owned by the New Panama Canal Company\nCaribbean coast of the Republic at certain points to be agreed upon\nand any and all other rights or claims of a pecuniary nature arising\nwith the President of the United States.\nunder or relating to said concession, or arising under or relating to\nthe concessions to the Panama Railroad Company or any extension\nARTICLE XXVI.\nor modification thereof; and it likewise renounces, confirms and\ngrants to the United States, now and hereafter, all the rights and\nThis convention when signed by the Plenipotentiaries of the Con-\nproperty reserved in the said concessions which otherwise would\ntracting Parties shall be ratified by the respective Governments and\nbelong to Panama at or before the expiration of the terms of ninety-\nthe ratifications shall be exchanged at Washington at the earliest date\nnine years of the concessions granted to or held by the above men-\npossible.\ntioned party and companies, and all right, title and interest which it\nIn faith whereof the respective Plenipotentiaries liave signed the\nnow has or may hereafter have, in and to the lands, canal, works,\npresent convention in duplicate and have hereunto affixed their\nproperty and rights held by the said companies under said concessions\nrespective seals.\nor otherwise, and acquired or to be acquired by the United States\nDone at the City of Washington the 18th day of November in the\nfrom or through the New Panama Canal Company, including any\nyear of our Lord nineteen hundred and three.\nproperty and rights which might or may in the future either by lapse\nJOHN HAY\n[SEAL]\nof time, forfeiture or otherwise, revert to the Republic of Panama\nP. BUNAU VARILLA [SEAL]\n-27-\nUNITED STATES-PANAMA RELATIONS\nIn view of the official and formal opening of the Panama Canal on\nJuly 12, 1920, the United States of America and the Republic of\nPanama declare that the provisions of the Convention of November\nAPPENDIX B\n18, 1903, contemplate the use, occupation and control by the United\nStates of America of the Canal Zone and of the additional lands and\nGENERAL TREATY OF FRIENDSHIP AND COOPERATION\nwaters under the jurisdiction of the United States of America for the\nBETWEEN THE UNITED STATES OF AMERICA AND\npurposes of the efficient maintenance, operation, sanitation and\nPANAMA\nprotection of the Canal and of its auxiliary works.\nThe United States of America will continue the maintenance of the\nSigned at Washington, March 2, 1936; ratification advised by the Senate\nPanama Canal for the encouragement and use of interoceanic com-\nof the United States, July 25, 1939; ratified by the President of the\nmerce, and the two Governments declare their willingness to cooperate,\nUnited States, July 26, 1939; ratified by Panama, July 17, 1939;\nas far as it is feasible for them to do so, for the purpose of insuring the\nratifications exchanged at Washington, July 27, 1939; proclaimed\nfull and perpetual enjoyment of the benefits of all kinds which the\nby the President of the United States, July 27, 1939.\nCanal should afford the two nations that made possible its construction\nas well as all nations interested in world trade.\nBy THE PRESIDENT OF THE UNITED STATES OF AMERICA\nARTICLE II\nA PROCLAMATION\nThe United States of America declares that the Republic of Panama\nWHEREAS a Treaty between the United States of America and the\nhas loyally and satisfactorily complied with the obligations which it\nRepublic of Panama to strengthen further the bonds of friendship and\nentered into under Article II of the Convention of November 18,\ncooperation between the two countries and to regulate on a stable and\n1903, by which it granted in perpetuity to the United States the use,\nmutually satisfactory basis certain questions which have arisen as a\noccupation and control of the zone of land and land under water as\nresult of the construction of the interoceanic canal across the Isthmus\ndescribed in the said Article, of the islands within the limits of said\nof Panama was concluded and signed by their respective Plenipoten-\nzone, of the group of small islands in the Bay of Panama, named\ntiaries at Washington on the second day of March, one thousand nine\nPerico, Naos, Culebra and Flamenco, and of any other lands and\nhundred and thirty-six, the original of which Treaty, being in the\nwaters outside of said zone necessary and convenient for the construc-\nEnglish and Spanish languages, is word for word as follows:\ntion, maintenance, operation, sanitation and protection of the Panama\nThe United States of America and the Republic of Panama, ani-\nCanal or of any auxiliary canals or other works, and in recognition\nmated by the desire to strengthen further the bonds of friendship\nthereof the United States of America hereby renounces the grant made\nand cooperation between the two countries and to regulate on a\nto it in perpetuity by the Republic of Panama of the use, occupation\nstable and mutually satisfactory basis certain questions which have\nand control of lands and waters, in addition to those now under the\narisen as a result of the construction of the interoceanic canal across\njurisdiction of the United States of America outside of the zone as\nthe Isthmus of Panama, have decided to conclude a treaty, and have\ndescribed in Article IT of the aforesaid Convention, which may be\ndesignated for this purpose as their Plenipotentiaries:\nnecessary and convenient for the construction, maintenance, opera-\nThe President of the United States of America:\ntion, sanitation and protection of the Panama Canal or of any auxiliary\nMr. Cordell Hull, Secretary of State of the United States of America,\ncanals or other works necessary and convenient for the construction,\nand Mr. Sumner Welles, Assistant Secretary of State of the United\nmaintenance, operation, sanitation and protection of the said enter-\nStates of America; and\nprise.\nThe President of the Republic of Panama:\nWhile both Governments agree that the requirement of further\nThe Honorable Doctor Ricardo J. Alfaro, Envoy Extraordinary and\nlands and waters for the enlargement of the existing facilities of the\nMinister Plenipotentiary of Panama to the United States of America,\nCanal appears to be improbable, they nevertheless recognize, subject\nand The Honorable Doctor Narciso Garay, Envoy Extraordinary and\nto the provisions of Articles I and x of this Treaty, their joint obliga-\nMinister Plenipotentiary of Panama on special mission;\ntion to insure the effective and continuous operation of the Canal and\nWho, having communicated their respective full powers to each\nthe preservation of its neutrality, and consequently, if, in the event\nother, which have been found to be in good and due form, have agreed\nof some now unforeseen contingency, the utilization of lands or waters\nupon the following:\nadditional to those already employed should be in fact necessary for\nARTICLE I\nthe maintenance, sanitation or efficient operation of the Canal, or\nfor its effective protection, the Governments of the United States of\nArticle I of the Convention of November 18, 1903, is hereby\nAmerica and the Republic of Panama will agree upon such measures\nsuperseded.\nThere shall be a perfect, firm and inviolable peace and sincere\nas it may be necessary to take in order to insure the maintenance,\nsanitation, efficient operation and effective protection of the Canal, in\nfriendship between the United States of America and the Republic of\nPanama and between their citizens.\nwhich the two countries are jointly and vitally interested.\n-28-\nUNITED STATES-PANAMA RELATIONS\nUNITED STATES-PANAMA RELATIONS\nARTICLE III\nunloading cargoes and receiving or disembarking passengers to or\nfrom the territory under the jurisdiction of the Republic of Panama.\nIn order to enable the Republic of Panama to take advantage of\nThe Republic of Panama will permit vessels entering at or clearing\nthe commercial opportunities inherent in its geographical situation,\nfrom the ports of Panamá or Colón, in case of emergency and also\nthe United States of America agrees as follows:\nunder suitable regulations and upon the payment of proper charges,\n.1) The sale to individuals of goods imported into the Canal Zone\nto use and enjoy the dockage and other facilities of said ports for the\nor purchased, produced or manufactured therein by the Government\npurpose of receiving or disembarking passengers to or from the terri-\nof the United States of America shall be limited by it to the persons\ntory of the Republic of Panama under the jurisdiction of the United\nincluded in classes (a) and (b) of Section 2 of this Article; and with\nStates of America, and of loading and unloading cargoes either in\nregard to the persons included in classes (c), (d) and (e) of the said\nto the Canal.\ntransit or destined for the service of the Canal or of works pertaining\nSection and members of their families, the sales above mentioned\nshall be made only when such persons actually reside in the Canal\n7) The Government of the United States of America will extend\nZone.\nto private merchants residing in the Republic of Panama full oppor-\n2) No person who is not comprised within the following classes\ntunity for making sales to vessels arriving at terminal ports of the\nshall be entitled to reside within the Canal Zone:\nCanal or transiting the Canal, subject always to appropriate adminis-\n(a) Officers, employees, workmen or laborers in the service or\ntrative regulations of the Canal Zone.\nemploy of the United States of America, the Panama Canal or the\nPanama Railroad Company, and members of their families actually\nARTICLE IV\nresiding with them;\n(b) Members of the armed forces of the United States of America\nThe Government of the Republic of Panama shall not impose-\nand members of their families actually residing with them;\nimport duties or taxes of any kind on goods destined for or consigned\n(c) Contractors operating in the Canal Zone and their employees,\nto the agencies of the Government of the United States of America in\nworkmen and laborers during the performance of contracts;\nthe Republic of Panama when the goods are intended for the official\n(d) Officers, employees or workmen of companies entitled under\nuse of such agencies, or upon goods destined for or consigned to per-\nSection 5 of this Article to conduct operations in the Canal Zone;\nsons included in classes (a) and (b) in Section 2 of Article III of this\n(e) Persons engaged in religious, welfare, charitable, educational,\nTreaty, who reside or sojourn in territory under the jurisdiction of\nrecreational and scientific work exclusively in the Canal Zone;\nthe Republic of Panama during the performance of their service\n(f) Domestic servants of all the beforementioned persons and\nwith the United States of America, the Panama Canal or the Panama\nmembers of the families of the persons in classes (c), (d) and (e)\nRailroad Company, when the goods are intended for their own use\nactually residing with them.\nand benefit.\n3) No dwellings belonging to the Government of the United States\nThe United States of America shall not impose import duties or\nof America or to the Panama Railroad Company and situated within\ntaxes of any kind on goods, wares and merchandise passing from\nthe Canal Zone shall be rented, leased or sublet except to persons with-\nterritory under the jurisdiction of the Republic of Panama into the\nin classes (a) to (e), inclusive of Section 2 hereinabove.\nCanal Zone.\n4) The Government of the United States of America will continue\nNo charges of any kind shall be imposed by the authorities of the\nto cooperate in all proper ways with the Government of the Republic\nUnited States of America upon persons residing in territory under\nof Panama to prevent violations of the immigration and customs laws\nthe jurisdiction of the Republic of Panama passing from the said ter-\nof the Republic of Panama, including the smuggling into territory\nritory into the Canal Zone, and no charges of any kind shall be im-\nunder the jurisdiction of the Republic of goods imported into the\nposed by the authorities of the Republic of Panama upon persons in\nCanal Zone or purchased, produced or manufactured therein by the\nthe service of the United States of America or residing in the Canal\nGovernment of the United States of America.\nZone passing from the Canal Zone into territory under the jurisdiction\n5) With the exception of concerns having a direct relation to the\nof the Republic of Panama, all other persons passing from the Canal\noperation, maintenance, sanitation or protection of the Canal, such\nZone into territory under the jurisdiction of the Republic of Panama\nas those engaged in the operation of cables, shipping, or dealing in oil\nbeing subject to the full effects of the immigration laws of the Republic.\nor fuel, the Government of the United States of America will not\nIn view of the fact that the Canal Zone divides the territory under\npermit the establishment in the Canal Zone of private business\nthe jurisdiction of the Republic of Panama, the United States of Amer-\nenterprises other than those existing therein at the time of the sig-\nica agrees that, subject to such police regulations as circumstances\nnature of this Treaty.\nmay require, Panamanian citizens who may ocasionally be deported\n6) In view of the proximity of the port of Balboa to the city of\nfrom the Canal Zone shall be assured transit through the said Zone,\nPanamá and of the port of Cristobal to the city of Colón, the United\nin order to pass from one part to another of the territory under the\nStates of America will continue to permit, under suitable regulations\njurisdiction of the Republic of Panama.\nand upon the payment of proper charges, vessels entering at or clear-\ning from the ports of the Canal Zone to use and enjoy the dockage\nand other facilities of the said ports for the purpose of loading and\nUNITED STATES-PANAMA RELATIONS\n-29-\nUNITED STATES-PANAMA RELATIONS\nARTICLE III\nunloading cargoes and receiving or disembarking passengers to or\nIn order to enable the Republic of Panama to take advantage of\nfrom the territory under the jurisdiction of the Republic of Panama.\nthe commercial opportunities inherent in its geographical situation,\nThe Republic of Panama will permit vessels entering at or clearing\nthe United States of America agrees as follows:\nfrom the ports of Panamá or Colón, in case of emergency and also\n.1) The sale to individuals of goods imported into the Canal Zone\nunder suitable regulations and upon the payment of proper charges,\nor purchased, produced or manufactured therein by the Government\nto ust and enjoy the dockage and other facilities of said ports for the\nof the United States of America shall be limited by it to the persons\npurpose of receiving or disembarking passengers to or from the terri-\nincluded in classes (a) and (b) of Section 2 of this Article; and with\ntory of the Republic of Panama under the jurisdiction of the United\nregard to the persons included in classes (c), (d) and (e) of the said\nStates of America, and of loading and unloading cargoes either in\nSection and members of their families, the sales above mentioned\nto the Canal.\ntransit or destined for the service of the Canal or of works pertaining\nshall be made only when such persons actually reside in the Canal\nZone.\n7) The Government of the United States of America will extend\n2) No person who is not comprised within the following classes\nto private merchants residing in the Republic of Panama full oppor-\nshall be entitled to reside within the Canal Zone:\ntunity for making sales to vessels arriving at terminal ports of the\n(a) Officers, employees, workmen or laborers in the service or\nCanal or transiting the Canal, subject always to appropriate adminis-\ntrative regulations of the Canal Zone.\nemploy of the United States of America, the Panama Canal or the\nPanama Railroad Company, and members of their families actually\nARTICLE IV\nresiding with them;\n(b) Members of the armed forces of the United States of America\nThe Government of the Republic of Panama shall not impose-\nand members of their families actually residing with them;\nimport duties or taxes of any kind on goods destined for or consigned\n(c) Contractors operating in the Canal Zone and their employees,\nto the agencies of the Government of the United States of America in\nworkmen and laborers during the performance of contracts;\nthe Republic of Panama when the goods are intended for the official\n(d) Officers, employees or workmen of companies entitled under\nuse of such agencies, or upon goods destined for or consigned to per--\nSection 5 of this Article to conduct operations in the Canal Zone;\nsons included in classes (a) and (b) in Section 2 of Article III of this\n(e) Persons engaged in religious, welfare, charitable, educational,\nTreaty, who reside or sojourn in territory under the jurisdiction of\nrecreational and scientific work exclusively in the Canal Zone;\nthe Republic of Panama during the performance of their service\n(f) Domestic servants of all the beforementioned persons and\nwith the United States of America, the Panama Canal or the Panama\nmembers of the families of the personsvin classes (c), (d) and (e)\nRailroad Company, when the goods are intended for their own use.\nactually residing with them.\nand benefit.\n3) No dwellings belonging to the Government of the United States\nThe United States of America shall not impose import duties or\nof America or to the Panama Railroad Company and situated within\ntaxes of any kind on goods, wares and merchandise passing from\nthe Canal Zone shall be rented, leased or sublet except to persons with-\nCanal Zone.\nterritory under the jurisdiction of the Republic of Panama into the\nin classes (a) to (e), inclusive of Section 2 hereinabove.\n4) The Government of the United States of America will continue\nNo charges of any kind shall be imposed by the authorities of the\nto cooperate in all proper ways with the Government of the Republic\nUnited States of America upon persons residing in territory under\nof Panama to prevent violations of the immigration and customs laws\nthe jurisdiction of the Republic of Panama passing from the said ter-\nof the Republic of Panama, including the smuggling into territory\nritory into the Canal Zone, and no charges of any kind shall be im-\nunder the jurisdiction of the Republic of goods imported into the\nposed by the authorities of the Republic of Panama upon persons in\nCanal Zone or purchased, produced or manufactured therein by the\nthe service of the United States of America or residing in the Canal\nGovernment of the United States of America.\nZone passing from the Canal Zone into territory under the jurisdiction\n5) With the exception of concerns having a direct relation to the\nof the Republic of Panama, all other persons passing from the Canal\noperation, maintenance, sanitation or protection of the Canal, such\nZone into territory under the jurisdiction of the Republic of Panama\nas those engaged in the operation of cables, shipping, or dealing in oil\nbeing subject to the full effects of the iminigration laws of the Republic\nor fuel, the Government of the United States of America will not\nIn view of the fact that the Canal Zone divides the territory under\npermit the establishment in the Canal Zone of private business\nthe jurisdiction of the Republic of Panama, the United States of Amer-\nenterprises other than those existing therein at the time of the sig-\nica agrees that, subject to such police regulations as circumstances\nnature of this Treaty.\nmay require, Panamanian citizens who may ocasionally be deported\n6) In. view of the proximity of the port of Balboa to the city of\nPanamá and of the port of Cristobal to the city of Colón, the United\nfrom the Canal Zone shall be assured transit through the said Zone,\nin order to pass from one part to another of the territory under the\nStates of America will continue to permit, under suitable regulations\njurisdiction of the Republic of Panama.\nand upon the payment of proper charges, vessels entering at or clear-\ning from the ports of the Canal Zone to use and enjoy the dockage\nand other facilities of the said ports for the purpose of loading and\n-30-\nUNITED STATES-PANAMA RELATIONS\nUNITED STATES-PANAMA RELATIONS\nARTICLE V\nor wharves with passengers destined for the Republic; and that the\nappropriate authorities of the Panama Canal will adopt such adminis-\nArticle IX of the Convention of November 18, 1903, is hereby\ntrative regulations regarding persons entering ports of the Canal Zone\nsuperseded.\nand destined to points within the jurisdiction of the Republic of\nThe Republic of Panama has the right to impose upon merchandise\nPanama as will facilitate the exercise by the authorities of Panama\ndestined to be introduced for use or consumption in territory under\nof their jurisdiction in the manner provided in Paragraph 4 of this\nthe jurisdiction of the Republic of Panama, and upon vessels touching\nArticle for the purposes stated in Paragraph 3 thereof.\nat Panamanian ports and upon the officers, crew or passengers of\nsuch vessels, the taxes or charges provided by the laws of the Republic\nARTICLE VI\nof Panama; it being understood that the Republic of Panama will\ncontinue directly and exclusively to exercise its jurisdiction over the\nThe first sentence of Article VII of the Convention of November\nports of Panamá and Colón and to operate exclusively with Pana-\n18, 1903, is hereby amended so as to omit the following phrase: \"or\nmanian personnel such facilities as are or may be established therein\nby the exercise of the right of eminent domain\".\nby the Republic or by its authority. However, the Republic of\nThe third paragraph of article VII of the Convention of November\nPanama shall not impose or collect any charges or taxes upon any\n18, 1903, is hereby abrogated.\nvessel using or passing through the Canal which does not touch at a\nport under Panamanian jurisdiction or upon the officers, crew or\nARTICLE VII\npassengers of such vessels, unless they enter the Republic; it being\nalso understood that taxes and charges imposed by the Republic of\nBeginning with the annuity payable in 1934 the payments under\nPanama upon vessels using or passing through the Canal which touch\nArticle XIV of the Convention of November 18, 1903, between the\nat ports under Panamanian jurisdiction, or upon their cargo, officers,\nUnited States of America and the Republic of Panama, shall be four\ncrew or passengers, shall not be higher than those imposed upon\nhundred and thirty thousand Balboas (B/430,000.00) as defined by\nvessels which touch only at ports under Panamanian jurisdiction and\nthe agreement embodied in an exchange of notes of this date. The\ndo not transit the Canal, or upon their cargo, officers, crew or\nUnited States of America may discharge its obligation with respect\nto any such payment, upon payment in any coin or currency, pro-\npassengers.\nThe Republic of Panama also has the right to determine what\nvided the amount so paid is the equivalent of four hundred and thirty\npersons or classes of persons arriving at ports of the Canal Zone shall\nthousand Balboas (B/430,000.00) as so defined.\nbe admitted to the Republic of Panama and to determine likewise\nARTICLE VIII\nwhat persons or classes of persons arriving at such ports shall be\nexcluded from admission to the Republic of Panama.\nIn order that the city of Colón may enjoy direct means of land\nThe United States of America will furnish to the Republic of\ncommunication under Panamanian jurisdiction with other territory\nPanama free of charge the necessary sites for the establishment of\nunder jurisdiction of the Republic of Panama, the United States of\ncustomhouses in the ports of the Canal Zone for the collection of\nAmerica hereby transfers to the Republic of Panama jurisdiction over\nduties on importations destined to the Republic and for the exami-\na corridor, the exact limits of which shall be agreed upon and demar-\nnation of merchandise, baggage and passengers consigned to or bound\ncated by the two Governments pursuant to the following description:\nfor the Republic of Panama, and for the prevention of contraband\n(a) The end at Colón connects with the southern end of the east\ntrade, it being understood that the collection of duties and the exam-\nhalf of the Paseo del Centenario at Sixteenth Street, Colón; thence\nination of merchandise and passengers by the agents of the Govern-\nthe corridor proceeds in a general southerly direction, parallel to and\nment of the Republic of Panama, in accordance with this provision,\neast of Bolivar Highway to the vicinity of the northern edge of Silver\nshall take place only in the customhouses to be established by the\nCity; thence eastward near the shore line of Folks River, around the\nGovernment of the Republic of Panama as herein provided, and that\nnortheast corner of Silver City; thence in a general southeasterly\nthe Republic of Panama will exercise exclusive jurisdiction within the\ndirection and generally parallel to the Randolph Road to a crossing\nsites on which the customhouses are located so far as concerns the\nof said Randolph Road, about 1200 feet east of the East Diversion;\nenforcement of immigration or customs laws of the Republic of\nthence in a general northeasterly direction to the eastern boundary\nPanama, and over all property therein contained and the personnel\nline of the Canal Zone near the southeastern corner of the Fort Ran-\ntherein employed.\ndolph Reservation, southwest of Cativá. The approximate route of\nTo further the effective enforcement of the rights hereinbefore\nthe corridor is shown on the map which accompanies this Treaty,\nrecognized, the Government of the United States of America agrees\nsigned by the Plenipotentiaries of the two countries and marked\nthat, for the purpose of obtaining information useful in determining\n\"Exhibit A\".\nwhether persons arriving at ports of the Canal Zone and destined to\n(b) The width of the corridor shall be as follows: 25 feet in width\npoints within the jurisdiction of the Republic of Panama should be\nfrom the Colón end to a point east of the southern line of Silver City;\nadmitted or excluded from admission into the Republic, the immi-\nthence 100 feet in width to Randolph Road, except that, at any\ngration officers of the Republic of Panama shall have the right of free\nelevated crossing which may be built over Randolph Road and the\naccess to vessels upon their arrival at the Balboa or Cristobal piers\n-31-\nUNITED STATES-PANAMA RELATIONS\nUNITED STATES-PANAMA RELATIONS\nrailroad, the corridor will be no wider than is necessary to include the\nthence N. 32°45' E. a distance of 656.8 ft. to station 334 plus\nviaduct and will not include any part of Randolph Road proper, or of\n10.7 ft.;\nthe railroad right of way, and except that, in case of a grade crossing\nthence on a 3° curve to the left a distance of 455.55 ft. to station\nover Randolph Road and the railroad, the corridor will be interrupted\n338 plus 66.25 ft.;\nby that highway and railroad; thence 200 feet in width to the boundary\nthence N. 19°05' E. a distance of 1,135.70 ft. to station 350\nline of the Canal Zone.\nplus 01.95 ft.;\nThe Government of the United States of America will extinguish\nthence on an 8° curve to the left a distance of 650.7 ft. to station\nany private titles existing or which may exist in and to the land in-\n356 plus 52.7 ft.;\ncluded in the above-described corridor.\nthence N. 32°58' W. a distance of 636.0 ft. to station 362 plus\nThe stream and drainage crossing of any highway built in the\n88.7 ft.;\ncorridor shall not restrict the water passage to less than the capacity\nthence on a 10° curve to the right a distance of 227.3 ft. to\nof the existing streams and drainage.\nstation 365 plus 16.0 ft.;\nNo other construction will take place within the corridor than that\nthence N. 10°14' W. a distance of 314.5 ft. to station 368 plus\nrelating to the construction of a highway and to the installation of\n30.5 ft.;\nelectric power, telephone and telegraph lines; and the only activities\nthence on a 5° curve to the left a distance of 178.7 ft. to station\nwhich will be conducted within the said corridor will be those pertain-\n370 plus 09.2 ft.;\ning to the construction, maintenance and common uses of a highway\nthence N. 19°10' W. a distance of 4,250.1 ft. to station 412\nand of power and communication lines.\nplus 59.3 ft.;\nThe United States of America shall enjoy at all times the right of\nthence on a 5° curve to the right a distance of 720.7 ft. to sta-\nunimpeded transit across the said corridor at any point, and of travel\ntion 419 plus 80.0 ft.;\nalong the corridor, subject to such traffic regulations as may be\nthence N. 16°52' E. a distance of 1,664.3 ft. to station 436 plus\nestablished by the Government of the Republic of Panama; and the\n44.3 ft.;\nGovernment of the United States of America shall have the right to\nthence on a 5° curve to the left a distance of 597.7 ft. to station\nsuch use of the corridor as would be involved in the construction of\n442 plus 42.0 ft.;\nconnecting or intersecting highways or railroads, overhead and under-\nthence N. 13°01' W. a distance of 543.8 ft. to station 447 plus\nground power, telephone, telegraph and pipe lines, and additional\n85.8 ft.;\ndrainage channels, on condition that these structures and their use\nthence on a 5° curve to the right a distance of 770.7 ft. to\nshall not interfere with the purpose of the corridor as provided herein-\nstation 455 plus 56.5 ft.;\nabove.\nthence N. °31' E. a distance of 1,492.2 ft. to station 470 plus\nARTICLE IX\n48.7 ft.;\nthence on a 5° curve to the right- a distance of 808.0 ft. to\nIn order that direct means of land communication, together with\nstation 478 plus 56.7 ft.;\naccommodation for the high tension power transmission lines, may\nbe provided under jurisdiction of the United States of America from\nthence N. 65°55' E. a distance of 281.8 ft. to station 481 plus\n38.5 ft.;\nthe Madden Dam to the Canal Zone, the Republic of Panama hereby\nthence on an 8° curve to the left a distance of 446.4 ft. to station\ntransfers to the United States of America jurisdiction over a corridor,\n485 plus 84.9 ft.;\nthe limits of which shall be demarcated by the two Governments pur-\nsuant to the following descriptions:\nthence N. 30°12' E. a distance of 479.6 ft. to station 490 plus\n64.5 ft.;\nA strip of land 200 ft. in width, extending 62.5 ft. from the center\nthence on a 5° curve to the left a distance of 329.4 ft. to station\nline of the Madden Road on its eastern boundary and 137.5 ft. from\n493 plus 93.9 ft.;\nthe center line of the Madden Road on its western boundary, con-\ntaining an area of 105.8 acres or 42.81 hectares, as shown on the map\nthence N. 13°44' E. a distance of 1,639.9 ft. to station 510 plus\n33.8 ft.;\nwhich accompanies this Treaty, signed by the Plenipotentiaries of\nthence on a 5° curve to the left a distance of 832.3 ft. to station\nthe two countries and marked \"Exhibit B\".\n518 plus 66.1 ft.;\nBeginning at the intersection of the located center line of the\nMadden Road and the Canal Zone-Republic of Panama 5-mile\nthence N. 27°53' W. a distance of 483.9 ft. to station 523 plus\n50.0 ft.;\nboundary line, said point being located N. 29°20' W. a distance of\nthence on an 8° curve to the right a distance of 469.6 ft. to\n168.04 ft. along said boundary line from boundary monument No. 65,\nstation 528 plus 19.6 ft.;\nthe geodetic position of boundary monument No. 65 being latitude\nN. 9°07' plus 3,948.8 ft. and longitude 79°37' plus 1,174.6 ft.;\n17.2 ft.;\nthence N. 9°41' E. a distance of 1,697.6 ft. to station 545 plus\nthence N. 43°10' E. a distance of 541.1 ft. to station 324 plus\nthence on a 10° curve to the left a distance of 451.7 ft. to sta-\n06.65 ft.;\ntion 549 plus 68.9 ft., which is the point marked Point Z on the\nthence on a 3° curve to the left, a distance of 347.2 ft. to station\nabove-mentioned map known as \"Exhibit B\".\n327 plus 53.9 ft.;\n(.All bearings are true bearings.)\n-32-\nUNITED STATES-PANAMA RELATIONS\nUNITED STATES-PANAMA RELATIONS\nThe Government of the Republic of Panama will extinguish any\nIN WITNESS WHEREOF, the Plenipotentiaries have signed this Treaty\nprivate titles existing or which may exist in and to the land included\nin duplicate, in the English and Spanish languages, both texts being\nin the above-described corridor.\nauthentic, and have hereunto affixed their seals.\nThe stream and drainage crossings of any highway built in the\nDONE at the city of Washington the second day of March, 1936.\ncorridor shall not restrict the water passage to less than the capacity\nCORDELL HULL\n[SEAL]\nof the existing streams and drainage.\nSUMNER WELLES\nSEAL\nNo other construction will take place within the corridor than that\nR. J. ALFARO\nSEAL\nrelating to the construction of a highway and to the installation of\nNARCISO GARAY\n[SEAL]\nelectric power, telephone and telegraph lines; and the only activities\nwhich will be conducted within the said corridor will be those pertain-\nAND WHEREAS the said Treaty has been duly ratified on both parts,\ning to the construction, maintenance and common uses of a highway,\nand the ratifications of the two Governments were exchanged in the\nand of power and communication lines, and auxiliary works thereof.\ncity of Washington on the twenty-seventh day of July one thousand\nThe Republic of Panama shall enjoy at all times the right of un-\nnine hundred and thirty-nine;\nimpeded transit across the said corridor at any point, and of travel\nNow, THEREFORE, be it known that I, Franklin D. Roosevelt,\nalong the corridor, subject to such traffic regulations as may be estab-\nPresident of the United States of America, have caused the said\nlished by the authorities of the Panama Canal; and the Government\nTreaty to be made public, to the end that the same and every article\nof the Republic of Panama shall have the right to such use of the\nand clause thereof may be observed and fulfilled with good faith by\ncorridor as would be involved in the construction of connecting or\nthe United States of America and the citizens thereof.\nintersecting highways or railroads, overhead and underground power,\nIN TESTIMONY WHEREOF, I have hereunto set my hand and caused\ntelephone, telegraph and pipe lines, and additional drainage channels,\nthe Seal of the United States of America to be affixed.\non condition that these structures and their use shall not interfere\nDONE at the city of Washington this twenty-seventh day of July\nwith the purpose of the corridor as provided hereinabove.\nin the year of our Lord one thousand nine hundred and\n[SEAL] thirty-nine and of the Independence of the United States\nARTICLE X\nof America the one hundred and sixty-fourth.\nFRANKLIN D ROOSEVELT\nIn case of an international conflagration or the existence of any\nBy the President:\nthreat of aggression which would endanger the security of the Republic\nCORDELL HULL\nof Panama or the neutrality or security of the Panama Canal, the\nSecretary of State.\nGovernments of the United States of America and the Republic of\nPanama will take such measures of prevention and defense as they\nmay consider necessary for the protection of their common interests.\nAny measures, in safeguarding such interests, which it shall appear\nessential to one Government to take, and which may affect the terri-\ntory under the jurisdiction of the other Government, will be the\nsubject of consultation between the two Governments.\nARTICLE XI\nThe provisions of this Treaty shall not affect the rights and obliga-\ntions of either of the two High Contracting Parties under the treaties\nnow in force between the two countries, nor be considered as a limi-\ntation, definition, restriction or restrictive interpretation of such\nrights and obligations, but without prejudice to the full force and\neffect of any provisions of this Treaty which constitute addition to,\nmodification or abrogation of, or substitution for the provisions of\nprevious treaties.\nARTICLE XII\nThe present Treaty shall be ratified in accordance with the consti-\ntutional methods of the High Contracting Parties and shall take effect\nimmediately on the exchange of ratifications which shall take place\nat Washington.\n-33-\nUNITED STATES-PANAMA RELATIONS\nARTICLE I\nBeginning with the first annuity payable after the exchange of\nratifications of the present Treaty, the payments under Article XIV\nof the Convention for the Construction of a Ship Canal between the\nUnited States of America and the Republic of Panama, signed Novem-\nAPPENDIX C\nber 18, 1903, as amended by Article VII of the General Treaty of\nFriendship and Cooperation, signed March 2, 1936, shall be One\nTREATY OF MUTUAL UNDERSTANDING AND\nMillion Nine Hundred Thirty Thousand and no/100 Balboas (B/1,930,-\nCOOPERATION\n000) as defined by the agreement embodied in the exchange of notes\nof March 2, 1936, between the Secretary of State of the United States\nTreaty, with memorandum of understandings reached; signed at Panamá,\nof America and the Members of the Panamanian Treaty Commission.\nJanuary 25, 1955; ratification advised by the Senate of the United\nThe United State of America may discharge its obligation with respect\nStates of America, July 29, 1955; ratified by the President of the\nto any such payment in any coin or currency, provided the amount so\nUnited States of America, August 17, 1955; ratified by Panama,\npaid is the equivalent of One Million Nine Hundred Thirty Thousand\nAugust 15, 1955; ratifications exchanged at Washington, August 23,\nand no/100 Balboas (B/1,930,000) as so defined.\n1955; proclaimed by the President of the United States of America,\nOn the date of the first payment under the present Treaty, the\nAugust 26, 1955; entered into force, August 23, 1955.\nprovisions of this Article shall supersede the provisions of Article VII\nof the General Treaty signed March 2, 1936.\nBy THE PRESIDENT OF THE UNITED STATES OF AMERICA\nNotwithstanding the provisions of this Article, the High Contract-\nA PROCLAMATION\ning Parties recognize the absence of any obligation on the part of\neither Party to alter the amount of the annuity.\nWHEREAS a Treaty of Mutual Understanding and Cooperation\nbetween the United States of America and the Republic of Panama,\nARTICLE II\ntogether with a related Memorandum of Understandings Reached,\nwas signed at Panamá on January 25, 1955;\n(1) Notwithstanding the provisions of Article X of the Convention\nWHEREAS the texts of the said Treaty and related Memorandum\nsigned November 18, 1903, between the United States of America\nof Understandings Reached, in the English and Spanish languages,\nand the Republic of Panama, the United States of America agrees\nare word for word as follows:\nthat the Republic of Panama may, subject to the provisions of para-\ngraphs (2) and (3) of this Article, impose taxes upon the income\nTREATY OF MUTUAL UNDERSTANDING AND COOPERATION BETWEEN\n(including income from sources within the Canal Zone) of all persons\nTHE UNITED STATES OF AMERICA AND THE REPUBLIC OF PANAMA\nwho are employed in the service of the Canal, the railroad, or auxiliary\nworks, whether resident within or outside the Canal Zone, except-\nThe President of the United States of America and the President\n(a) members of the Armed Forces of the United States of\nof the Republic of Panama, desirous of concluding a treaty further\nAmerica.\nto demonstrate the mutual understanding and cooperation of the two\n(b) citizens of the United States of America, including those\ncountries and to strengthen the bonds of understanding and friendship\nwho have dual nationality, and\nbetween their respective peoples, have appointed for that purpose as\n(c) other individuals who are not citizens of the Republic of\ntheir respective Plenipotentiaries:\nPanama and who reside within the Canal Zone.\nThe President of the United States of America:\n(2) It is understood that any tax levied pursuant to paragraph (1)\nSelden Chapin, Ambassador Extraordinary and Plenipo-\nof this Article shall be imposed on a non-discriminatory basis and\ntentiary of the United States of America to the Republic of\nshall in no case be imposed at a rate higher or more burdensome than\nPanama,\nthat applicable to income of citizens of the Republic of Panama\nThe President of the Republic of Panama:\ngenerally.\nOctavio Fábrega, Minister of Foreign Relations of the Republic\n(3) The Republic of Panama agrees not to impose taxes on pensions,\nof Panama,\nannuities, relief payments, or other similar payments, or payments by\nwho, having communicated to one another their respective full powers,\nway of compensation for injuries or death occurring in connection\nfound in good and due form, and recognizing that neither the provi-\nwith, or incident to, service on the Canal, the railroad, or auxiliary\nsions of the Convention signed November 18, 1903, nor the General\nworks paid to or for the benefit of members of the Armed Forces or\nTreaty signed March 2, 1936, nor the present Treaty may be modified\ncitizens of the United States of America or the lawful beneficiaries of\nexcept by mutual consent, agree upon the following articles:\nsuch members or citizens who reside in territory under the jurisdiction\n59\nof the Republic of Panama.\nThe provisions of this Article shall be operative for the taxable\nyears beginning on or after the first day of January following the\nyear in which the present Treaty enters into force.\n-34-\nUNITED STATES-PANAMA RELATIONS\nUNITED STATES-PANAMA RELATIONS\nARTICLE III\nsubject to the enactment of legislation by the Congress, are designated\nSubject to the provisions of the succeeding paragraphs of this\nand set forth in Item 2 of the Memorandum of Understandings\nReached which bears the same date as this Treaty. The United\nArticle, the United States of America agrees that the monopoly\nStates of America also agrees that, subject to the enactment of\ngranted in perpetuity by the Republic of Panama to the United States\nlegislation by the Congress, there shall be conveyed to the Republic\nfor the construction, maintenance and operation of any system of com-\nof Panama free of cost all its right, title and interest to the land and\nmunication by means of canal or railroad across its territory between\nimprovements in the area known as PAITILLA POINT and that\nthe Caribbean Sea and the Pacific Ocean, by Article V of the Conven-\neffective with such conveyance the United States of America shall\ntion signed November 18, 1903, shall be abrogated as of the effective\nrelinquish all the rights, power and authority granted to it in such\ndate of this Treaty in so far as it pertains to the construction, mainte-\nnance and operation of any system of trans-Isthmian communication\narea under the Convention signed November 18, 1903. The Republic\nof Panama agrees to save the Government of the United States\nby railroad within the territory under the jurisdiction of the Republic\nharmless from any and all claims which may arise incident to the\nof Panama.\nSubject to the provisions of the succeeding paragraphs of this\nconveyance of the area known as PAITILLA POINT to the Republic\nof Panama.\nArticle, the United States further agrees that the exclusive right to\nARTICLE VI\nestablish roads across the Isthmus of Panama acquired by the United\nStates as a result of a concessionary contract granted to the Panama\nArticle V of the Boundary Convention, signed September 2, 1914,\nRailroad Company shall be abrogated as of the date of the entry into\nbetween the United States of America and the Republic of Panama,\nforce of this Treaty, in so far as the right pertains to the establishment\nshall be replaced by the following provisions:\nof roads within the territory under the jurisdiction of the Republic of\n\"It is agreed that the permanent boundary line between the City\nPanama.\nof Colón (including the Harbor of Colón, as defined in Article VI of\nIn view of the vital interest of both countries in the effective pro-\nthe Boundary Convention of 1914, and other waters adjacent to the\ntection of the Canal, the High Contracting Parties further agree that\nshores of Colón, and the Canal Zone shall be as follows:\nsuch abrogation is subject to the understanding that no system of\nBeginning at an unmarked point called \"E\", located on the north-\ninter-oceanic communication within the territory under the jurisdic-\neasterly boundary of the Colón Corridor (at its Colón extremity),\ntion of the Republic of Panama by means of railroad or highway may\nthe geodetic position of which, referred to the Panamá-Colón datum\nbe financed, constructed, maintained, or operated directly or indirectly\nof the Canal Zone triangulation system, is in latitude 9° 21' N. plus\nby a third country or nationals thereof, unless in the opinion of both\n0.00 feet (0.000 meters) and longitude 79° 54' W. plus 356.09 feet\nHigh Contracting Parties such financing, construction, maintenance,\n(108.536 meters).\nor operation would not affect the security of the Canal.\nThence from said initial point by metes and bounds:\nThe High Contracting Parties also agree that such abrogation as is\nDue East, 2662.83 feet (811.632 meters), along North latitude\ncontemplated by this Article shall in no wise affect the maintenance\n9° 21' plus 0.00 feet (0.000 meters); to an unmarked point in\nand operation of the present Panama Railroad in the Canal Zone and\nFolks River, called \"F\", located at longitude 79° 53' W. plus\nin territory subject to the jurisdiction of the Republic of Panama.\n3700.00 feet (1127.762 meters);\nN. 36° 36' 30\" E., 2616.00 feet (797.358 meters), to an un-\nARTICLE IV\nmarked point in Manzanillo Bay, called \"G\";\nThe second paragraph of Article VII of the Convention signed\nN. 22° 41' 30\" W., 1192.00 feet (363.322 meters), to an un-\nNovember 18, 1903, having to do with the issuance of, compliance\nmarked point in Manzanillo Bay, called \"H\";\nwith, and enforcement of, sanitary ordinances in the Cities of Panamá\nN. 56° 49' 00\" W., 777.00 feet (236.830 meters), to an un-\nand Colón, shall be abrogated in its entirety as of the date of entry\nmarked point in Manzanillo Bay, called \"I\";\ninto force of this Treaty.\nN. 29° 51' 00\" W., 2793.00 feet (851.308 meters), to an un-\nmarked point in Manzanillo Bay, called \"J\";\nARTICLE V\nN. 50° 56' 00\" W., 3292.00 feet (1003.404 meters), to an\nThe United States of America agrees that, subject to the enactment\nunmarked point in Limon Bay, called \"K\";\nof legislation by the Congress, there shall be conveyed to the Republic\nS. 56° 06' 11\" W., 4258.85 feet (1298.100 meters), to an\nof Panama free of cost all the right, title and interest held by the\nunmarked point in Limon Bay, called \"L\", which is located on\nUnited States of America or its agencies in and to certain lands and\nthe northerly boundary of the Harbor of Colón.\nimprovements in territory under the jurisdiction of the Republic of\nThence following the boundary of the Harbor of Colón, as described\nPanama when and as determined by the United States to be no longer\nin Article VI of the Boundary Convention signed September 2, 1914,\nneeded for the operation, maintenance, sanitation or protection of\nto monument \"D\", as follows:\nthe Panama Canal or of its auxiliary works, or for other authorized\nN. 78° 30' 30\" W., 2104.73 feet (641.523 meters), on a line to\npurposes of the United States in the Republic of Panama. The lands\nthe light house on Toro Point, to an unmarked point in Limon\nand improvements referred to in the preceding sentence and the\nBay, called \"M\", located 330 meters or 1082.67 feet easterly and\ndeterminations by the United States of America respecting the same,\nat right angles from the centerline of the Panama Canal;\n-35-\nUNITED STATES-PANAMA RELATIONS\nUNITED STATES-PANAMA RELATIONS\nS. 00° 14' 50\" W., 3074.46 feet (937.097 meters), parallel to\nthrough a curve to the left with a radius of 40.8 feet (12.436\nand 330 meters or 1082.67 feet easterly from the centerline of the\nmeters) and the intersection of its tangents at point A-6 in North\nPanama Canal, to an unmarked point in Limon Bay, called \"N\";\nlatitude 9° 21' plus 1306.23 feet (398.140 meters) and West longi-\nS. 78° 30' 30\" E., 3952.97 feet (1204.868 meters), to monument\ntude 79° 54' plus 1669.37 feet (508.825 meters), and a curve to\n\"D\", which is a concrete monument, located on the easterly shore\nthe right with a radius of 1522 feet (436.907 meters) with the\nof Limon Bay.\npoint of intersection of its tangents at point A-5 in North latitude\nThence following the boundary between the City of Colón and the\n9° 21' plus 958.14 feet (292.042 meters) and West longitude 79°\nCanal Zone, as described in Article V of the Boundary Convention\n54' plus 1105.89 feet (337.076 meters));\nsigned September 2, 1914, to monument \"B\" as follows:\nThrough a curve to the left with a radius of 262.2 feet (79.919\nS. 78° 30' 30\" E., 258.65 feet (78.837 meters) through monu-\nmeters) and the intersection of its tangents at point A-3 in North\nments Nos. 28 and 27 which are brass plugs in pavement, to\nlatitude 9° 21' plus 769.07 feet (234.413 meters) and West longi-\nmonument \"D\", which is a concrete monument, the distances\ntude 79° 54' plus 955.43 feet (291.216 meters); a curve to the\nbeing 159.96 feet (48.756 meters), 28.26 feet (8.614 meters), and\nright with a radius of 320.0 feet (97.536 meters) and the inter-\n70.43 feet (21.467 meters), successively, from beginning of the\nsection of its tangents at point A-2 in North latitude 9° 21' plus\ncourse;\n673.38 feet (205.247 meters) and West longitude 79° 54' plus\nN. 74° 17' 35\" E., 533.60 feet (162.642 meters), along the\n836.40 feet (254.935 meters); and a curve to the left with a radius\ncenterline of Eleventh Street, through monuments Nos. 26, 25,\nof 2571.5 feet (783.795 meters) and the intersection of its tangents\n24 and 23, which are brass plugs in the pavement, to \"C\", which\nat point A-1 in North latitude 9° 21' plus 302.15 feet (92.096\nis an unmarked point beneath the clock pedestal on the centerline\nmeters) and West longitude 79° 54' plus 680.96 feet (207.557\nof Bolivar Avenue, the distances being 95.16 feet (29.005 meters),\nmeters) to Monument No. \"A\", which is a 1½ inch brass plug\n91.02 feet (27.743 meters), 166.71 feet (50.813 meters), 158.66\nlocated in the old sea wall, in North latitude 9° 21' plus 45.60\nfeet (48.360 meters) and 22.05 feet (6.721 meters), successively,\nfeet (13.899 meters) and West longitude 79° 54' plus 487.65 feet\nfrom beginning of the course;\n(148.636 meters);\nS. 15° 58' 00\" E., 965.59 feet (294.312 meters), along the cen-\nS. 21° 34' 50\" W., 29.19 feet (8.897 meters), to an unmarked\nterline of Bolivar Avenue, through monuments Nos. 22, 21, 20\npoint called #1;\nand 19, which are brass plugs in the pavement, to monument\nSoutheasterly, 23.26 feet (7.090 meters), along a curve to the\n\"B\", which is a brass plug, the distances being 14.35 feet (4.374\nleft with a radius of 2596.48 feet (791.409 meters) (the chord of\nmeters), 143.13 feet (43.626 meters), 238.77 feet (72.777 meters),\nwhich bears S. 37° 28' 20\" E., 23.26 feet (7.090 meters) to an\n326.77 feet (99.600 meters) and 242.57 feet (73,935 meters),\nunmarked point called #2, located on the southwesterly boundary\nsuccessively from beginning of the course. (Monument \"B\" is\nof the Colón Corridor at North latitude 9° 21' plus 0.00 feet\nthe point of beginning referred to in Article I of the Convention\n(0.000 meters).\nbetween the United States of America and the Republic of\nThe directions of the lines refer to the true meridian.\nPanama regarding the Colón Corridor and certain other Corridors\nThe above-described boundary is as shown on Panama Canal Com-\nthrough the Canal Zone, signed at Panamá on May 24, 1950.)\npany drawing No. 6117-22, entitled \"Boundary Line Between the\nThence following the boundary between the City of Colón and the\nCity of Colón and the Canal Zone\", scale 1 inch to 600 feet, dated\nCanal Zone, to monument \"A\", as described in Article I of the Corridor\nDecember 23, 1954, prepared for the Canal Zone Government, at-\nConvention referred to in the next-preceding paragraph:\ntrached as an annex hereto and forming a part hereof.\nS. 15° 57' 40\" E., 117.10 feet (35.692 meters) along the center-\nArticle VIII of the General Treaty signed March 2, 1936, as\nline of Bolivar Avenue to Monument No. A-8, which is a brass\namended by Article III of the Convention between the United States\nplug located at the intersection with the centerline of 14th Street\nof America and the Republic of Panama regarding the Colón Corridor\nprojected westerly, in North latitude 9° 21' plus 1356.18 feet\nand certain other corridors through the Canal Zone, signed May 24,\n(413.364 meters) and West longitude 79° 54' plus 1862.57 feet\n1950, is hereby modified by removing from the Colón, or westerly,\n(567.712 meters);\nend of the Colón Corridor the portion thereof lying north of North\nN. 73° 59' 35 E., 172.12 feet (52.462 meters) along the center-\nlatitude 9° 21' and incorporating such portion within the boundary of\nline of 14th Street to Monument No. A-7, which is a brass plug\nthe City of Colón as described above.\nlocated at the intersection with the line of the west curb of\nThis Article shall become effective upon completion of the with-\nBoundary Street projected northerly in North latitude 9° 21'\ndrawal by the United States of America from the sections of the city\nplus 1403.64 feet (427.830 meters) and West longitude 79° 54'\nof Colón known as New Cristobal, Colón Beach and the de Lesseps\nplus 1697.12 feet (517.283 meters);\nArea, with the exception of the lots retained for consulate purposes,\nSoutherly along the westerly curb of Boundary Street and its\nexcept that it shall in no case become effective prior to the exchange\nprolongation to Monument No. A-4, which is a brass plug located\nof the instruments of ratification of this Treaty and the exchange of\nat the intersection of two curves, in North latitude 9° 21' plus\ninstruments of ratification of the Convention signed May 24, 1950,\n833.47 feet (254.042 meters) and West longitude 79° 54' plus\nreferred to in the preceding paragraph.\n980.94 feet (298,991 meters) (this last mentioned course passes\n-36-\nUNITED STATES-PANAMA RELATIONS\nUNITED STATES-PANAMA RELATIONS\nARTICLE VII\nARTICLE IX\nThe second paragraph of Article VII of the Boundary Convention\nThe Republic of Panama hereby waives the right under Article XIX\nsigned September 2, 1914, between the United States of America and\nof the Convention signed November 18, 1903, to transportation by\nthe Republic of Panama, shall be abrogated in its entirety as of the\nrailway within the Zone, without paying charges of any kind, of per-\ndate of entry into force of the present Treaty.\nsons in the service of the Republic of Panama, or of the police force\nThe landing pier situated in the small cove on the southerly side of\ncharged with the preservation of public order outside of the Canal Zone,\nManzanillo Island, constructed pursuant to provisions contained in\nas well as of their baggage, munitions of war and supplies.\nthe second paragraph of Article VII of the Boundary Convention of\n1914 between the two countries, shall become the property of the\nARTICLE X\nGovernment of the Republic of Panama as of the date of entry into\nforce of the present Treaty.\nThe High Contracting Parties agree that, in the event of the dis-\ncontinuance of the Panama Railroad, and of the construction or com-\nARTICLE VIII\npletion by the United States of a strategic highway across the Isthmus\nlying wholly within the Canal Zone intended primarily for serving the\n(a) The Republic of Panama will reserve exclusively for the purpose\noperation, maintenance, civil government, sanitation and protection\nof maneuvers and military training the area described in the maps\nof the Panama Canal and Canal Zone, and notwithstanding anything\n(Nos. SGN-7-54 and SGN-8-54, each dated November 17, 1954)\nto the contrary in Article VI of the Convention signed November 18,\nand accompanying descriptions prepared by the Comisión Catastral\n1903, the United States of America may in its discretion either pro-\nof the Republic of Panama, attached as the Annex hereto, and will\nhibit or restrict the use, by busses or trucks not at the time engaged\npermit the United States of America, without cost and free of all\nexclusively in the servicing of, or the transportation of supplies to,\nencumbrances, exclusively to utilize said area for the indicated purpose\ninstallations, facilities or residents of the Canal Zone, of that portion\nfor a period of fifteen (15) years, subject to extension thereafter as\nof such highway which lies between Mount Hope, Canal Zone and the\nagreed by the two Governments. This authorization includes the\nintersection of such highway with the Canal Zone section of the\nfree access to, egress from, and movements within and over, said area.\nTrans-Isthmian Highway referred to in the Trans-Isthmian Highway\nThis utilization will not affect the sovereignty of the Republic of\nConvention between the United States of America and the Republic\nPanama, or the operation of the Constitution and the laws of the\nof Panama, signed March 2, 1936.\nRepublic over the mentioned area.\n(b) The United States Armed Forces, the members thereof and their\nARTICLE XI\nfamilies actually residing with them, and United States nationals\nwho, in an official capacity, are serving with or accompanying the\nThe Republic of Panama agrees, notwithstanding the provisions of\nArmed Forces of the United States and members of their families\nArticle III of the General Treaty signed March 2, 1936, that the\nactually residing with them will be exempted within the said area from\nUnited States of America may extend the privilege of purchasing at\ndivisions. all taxation by the Republic of Panama or any of its political sub-\npost exchanges small items of personal convenience and items neces-\nsary for professional use, to military personnel of friendly third coun-\n(c) Prior to the expiration of the period envisaged in this Article\ntries present in the Zone under auspices of the United States.\nand within a reasonable time thereafter the United States shall have\nthe right to remove from this training and maneuver area, or other-\nARTICLE XII\nwise to dispose of, without limitation or restriction all structures,\ninstallations, facilities, equipment and supplies brought into, or con-\nThe United States of America agrees that, effective December 31,\nstructed or erected within this training and maneuver area by or on\n1956, there will be excluded from the privilege of making purchases in\nbehalf of the United States. The Republic of Panama will not be re-\nthe commissaries and other sales stores in the Canal Zone as well as\nquired to reimburse the United States for any structures, installations,\nthe privilege of making importations into the Canal Zone all those\nfacilities, equipment and supplies not removed or otherwise disposed\npersons who are not citizens of the United States of America, except\nof as provided herein.\nmembers of the Armed Forces of the United States, and who do not\n(d) The United States shall be under no obligation to restore this\nactually reside in the Canal Zone but who are included in the cate-\ntraining and meneuver area or the facilities and installations thereon\ngories, of persons authorized to reside in said Zone; it being understood\nto their original condition upon the termination of this Article, except\nnevertheless that all personnel of the agencies of the United States of\nfor the landing strip which will be returned in at least as good condition\nAmerica will be permitted under adequate controls to purchase small\nas that obtaining at the time of coming into effect of this Article.\narticles such as meals, sweets, chewing gum, tobacco and similar\n(e) The provisions of this Article shall in no manner terminate or\narticles near the sites of their jobs.\nmodify the provisions concerning the holding of military maneuvers\nThe United States of America further agrees that, effective Decem-\nin the Republic of Panama established by the Notes ancillary to the\nber 31, 1956, and notwithstanding the provisions of the first para-\nGeneral Treaty signed March 2, 1936 other than as provided herein\ngraph of Article IV of the General Treaty signed March 2, 1936, the\nfor this training and maneuver area.\nGovernment of the Republic of Panama may impose import duties\n-37-\nUNITED STATES-PANAMA RELATIONS\nUNITED STATES-PANAMA RELATIONS\nand other charges upon goods destined or consigned to persons, other\n2. With reference to that part of Article V of the Treaty signed\nthan citizens of the United States of America, included in class (a) in\ntoday which deals with the conveyance to the Republic of Panama\nSection 2 of Article III of said Treaty, who reside or sojourn in terri-\nfree of cost of all the right, title and interest held by the United States\ntory under the jurisdiction of the Republic of Panama during the per-\nof America or its agencies in and to certain lands and improvements\nformance of their service with the United States of America or its\nsituated in territory under the jurisdiction of the Republic of Panama,\nagencies, even though such goods are intended for their own use and\nsteps will be taken as provided in this Item.\nbenefit.\n(a) Legislation will be sought to authorize and direct the transfer\nARTICLE XIII\nto the Republic of Panama of all the right, title and interest held by\nthe United States or its agencies in or to the following real property:\nThe present Treaty shall be subject to ratification and the instru-\n1. The J. N. Vialette and Huerta de San Doval tracts in the\nments of ratification shall be exchanged at Washington. It shall\ncity of Panamá and the Aspinwall tract on the Island of Taboga.\nenter into force on the date of the exchange of the instruments of\n2. Las Isletas and Santa Catalina Military Reservations on the\nratification.\nIsland of Taboga. This transfer will include the cable rights-of-\nway which have a width of 20 feet (6.10 meters) and extend be-\nMEMORANDUM OF UNDERSTANDINGS REACHED\ntween the Ancon Cove Military Reservation and the Santa\nIn connection with the 1953-1954 negotiations between representa-\nCatalina Military Reservation, and between the El Vigia Military\ntives of the United States of America and the Republic of Panama,\nReservation and the Las Isletas Military Reservation.\n3. The lot in Colón now reserved for consulate purposes.\nwhich have resulted in the signature of a Treaty between the two\n4. Certain lands on the westerly shores of the city of Colón\ncountries, the following understandings have been reached:\ndescribed roughly as extending from the southerly boundary of\nOn the part of the United States of America:\n1. Legislation will be sought which will authorize each agency of\nthe de Lesseps area (4th Street extended) to the Colón-Canal\nthe United States Government in the Canal Zone to conform its\nZone boundary and bounded on the east by the east wall of the\nexisting wage practices in the Zone to the following principles:\nold freight house and, below that structure, by a line 25 feet\n(7.622 meters) west of the center line of the most westerly rail-\n(a) The basic wage for any given grade level will be the same\nroad track. This transfer will include the certain improvements\nfor any employee eligible for appointment to the position without\nregard to whether he is a citizen of the United States or of the\nconsisting of the old freight house and Colón Pier Number 3.\n(b) Legislation will be sought to authorize and direct the Panama\nRepublic of Panama.\n(b) In the case of an employee who is a citizen of the United\nCanal Company to remove its railway terminal operations from the\ncity of Panamá and to transfer to the Republic of Panama free of coast\nStates, there may be added to the base pay an increment repre-\nall of the right, title and interest of the Panama Canal Company in and\nsenting an overseas differential plus an allowance for those\nelements, such as taxes, which operate to reduce the disposable\nto the lands known as the Panama Railroad Yard, including the im-\nincome of such an employee as compared with an employee who\nprovements thereon and specifically including the railway passenger\nstation. This action will also relieve the Government of the Republic\nis a resident of the area.\n(c) The employee who is a citizen of the United States will\nof Panama of its obligation under Point 10 of the General Relations\nalso be eligible for greater annual leave benefits and travel allow-\nAgreement between the United States of America and the Republic of\nances because of the necessity for periodic vacations in the United\nPanama signed May 18, 1942 to make available without cost to the\nGovernment of the United States of America a suitable new site for\nStates for recuperation purposes and to maintain contact with\nsuch terminal facilities.\nthe employee's home environment.\nLegislation will be sought to make the Civil Service Retirement Act\n(c) With respect to those areas in the city of Colón known as de\nuniformly applicable to citizens of the United States and of the\nLessepe, Colón Beach and New Cristobal (with the exception of two\nRepublic of Panama employed by the Government of the United\nlots in the de Lesseps area which the United States intends to use for\nStates in the Canal Zone.\nconsulate purposes), legislation will be sought to authorize and direct\nThe United States will afford equality of opportunity to citizens of\nthe gradual withdrawal from these areas and the conveyance or trans-\nPanama for employment in all United States Government positions\nfer to the Republic of Panama free of cost of all the right, title and\nin the Canal Zone for which they are qualified and in which the employ-\ninterest of the United States and of its agency, the Panama Canal\nment of United States citizens is not required, in the judgment of the\nCompany, in and to the lands and improvements thereon. Under\nUnited States, for security reasons.\nthis process of gradual withdrawal the United States Government,\nThe agencies of the United States Government will evaluate,\nand/or its agencies, will not be obligated to install any new structure\nclassify and title all positions in the Canal Zone without regard to the\nin such areas and, as severable parts of the areas cease to be needed,\nnationality of the incumbent or proposed incumbent.\nthe lands and improvements would be conveyed or transferred. The\nCitizens of Panama will be afforded opportunity to participate in\nseverability of parts of the areas depends upon a number of practical\nsuch training programs as may be conducted for employees by United\nconsiderations including those having to do with the present obliga-\nStates agencies in the Canal Zone.\ntions of the United States, with respect to the subject areas, concern-\ning water and sewerage facilities, street cleaning and pavaing, water\n-38-\nUNITED STATES-PANAMA RELATIONS\nUNITED STATES-PANAMA RELATIONS\nsupply, et cetera, as stipulated in the Instrument of Transfer of Water\n7. It is and will continue to be the policy of the Panama Canal\nand Sewerage Systems, executed between the Governor of the Panama\nagencies and of the Armed Forces in the Canal Zone in making pur-\nCanal and the Foreign Minister of Panama on December 28, 1945.\nchases of supplies, materials and equipment, so far as permitted under\n(d) With respect to the railroad passenger station and site in the\nUnited States legislation, to afford to the economy of the Republic\ncity of Colón, legislation will be sought to authorize and direct the\nof Panama full opportunity to compete for such business.\nwithdrawal from such site and structure at such time as the with-\n8. In general connection with the matter of the importation of\ndrawal from the areas known as de Lesseps, Colón Beach and New\nitems of merchandise for resale in the sales stores in the Canal Zone,\nCristobal, contemplated by the next preceding subparagraph, shall\nit will be the practice of the agencies concerned to acquire such items\nhave been fully completed, and the conveyance to the Republic of\neither from United States sources or Panamanian sources unless, in\nPanama free of cost of all the right, title and interest of the United\ncertain instances, it is not feasible to do so.\nStates and of its agency, the Panama Canal Company, in and to such\n9. With respect to the manufacture and processing of goods for sale\nsite and structure. However, the railroad tracks and trackage area\nto or consumption by individuals, now carried on by the Panama\nin Colón, being required for switching purposes serving the Cristobal\nCanal Company, it will be the policy of the United States of America\npiers, will be retained for such purposes.\nto terminate such activities whenever and for so long as such goods,\n(e) All transfers or conveyances of lands and improvements con-\nor particular classes thereof, are determined by the United States of\ntemplated by this Item, subject to legislative authorization and direc-\nAmerica to be available in the Republic of Panama on a continuing\ntion, will necessarily be made subject to any leases which may be\nbasis, in satisfactory qualities and quantities, and at reasonable prices.\noutstanding in the respective areas, and will also contain provisions\nThe United States of America will give prompt consideration to a\nfully protecting the Government of the United States of America\nrequest in writing on the part of the Government of Panama concern-\nagainst any claims by lessees for damages or losses which may arise\ning the termination of the manufacture or processing of any goods\nas a result of such transfers or conveyances.\ncovered in this Item as to which the Government of Panama may\n(f) The transfers or conveyances contemplated by this Item, sub-\nconsider the criteria specified in this Item to have been met.\nject to legislative authorization, are in addition to the conveyance of\n10. Prompt consideration will be given to withdrawing from the\nPaitilla Point as specifically covered by Article V of the Treaty signed\nhandling of commercial cargo for transshipment on Canal Zone\ntoday, and to the transfer of real property effected by Article VI of\npiers SO soon as Panamanian port facilities are in satisfactory opera-\nsaid Treaty.\ntion in Colón.\n3. Articles, materials, and supplies that are mined, produced or\n11. The United States agrees that the term \"auxiliary works\" as\nmanufactured in the Republic of Panama, when purchased for use in\nused in the Treaty includes the Armed Forces of the United States of\nthe Canal Zone, will be exempted from the provisions of the Buy\nAmerica.\nAmerican Act.\nOn the part of the Republic of Panama:\n4. Referring to the exchange of notes dated March 2, 1936, accessory\n1. The Republic of Panama will lease to the United States of\nto the General Treaty between the United States of America and the\nAmerica, free of all cost save for the recited consideration of one\nRepublic of Panama signed on that date, relative to the sale to ships\nBalboa, for a period of 99 years, two parcels of land contiguous to\nof goods imported into the Canal Zone by the Government of the\nthe present United States Embassy residence site, as designated on\nUnited States of America, the United States of America agrees,\nthe sketch (No. SGN-9-54, dated November 19, 1954) and accom-\neffective December 31, 1956, and in benefit of Panamanian commerce,\npanying descriptions prepared by the Comisión Catastral of the\nto withdraw wholly from, and thereafter to refrain from, any such\nRepublic of Panama, attached hereto.\nsales to ships, provided that nothing in this Item shall apply-\n2. The Republic of Panama assures the United States of America\n(a) to sales to ships operated by or for the account of the\nthat the property, shown and described on the attached map (No.\nGovernment of the United States of America,\nSGN-6-54, dated October 1954) and accompanying description\n(b) to the sale of fuel or lubricants, or\nprepared by the Comisión Catastral of the Republic of Panama, in\n(c) to any sale or furnishing of ships stores which is incidental\nfront of the United States Embassy office building site and between\nto the performance of ship repair operations by any agency of\nthe Bay of Panama and Avenida Balboa as it may be extended\nthe Government of the United States of America.\nbetween 37th and 39th Streets, will be preserved permanently as a\n5. Legislative authorization and the necessary appropriations will\npark and not developed for commercial or residential purposes.\nbe sought for the construction of a bridge at Balboa referred to in\n3. So long as the United States of America maintains in effect those\nPoint 4 of the General Relations Agreement of 1942.\nprovisions of Executive Order No. 6997 of March 25, 1935 governing\n6. The United States of America agrees, effective December 31,\nthe importation of alcoholic beverages into the Canal Zone, the\n1956, to withdraw from persons employed by agencies of the Govern-\nRepublic of Panama will grant a reduction of 75 percent in the\nment of the United States of America in the Canal Zone who are not\nimport duty on alcoholic beverages which are sold in Panama for\ncitizens of the United States of America and who do not actually\nimportation into the Canal Zone pursuant to such Executive Order.\nreside in said Zone the privilege of availing themselves of services\nwhich are offered within said Zone except those which are essential\nto health or necessary to permit them to perform their duties.\n-39-\nUNITED STATES-PANAMA RELATIONS\n4. In connection with the authorization granted to the United\nStates of America in Article VIII of the Treaty, the United States shall\nhave free access to the beach areas contiguous to the maneuver area\ndescribed in said Article VIII for purposes connected with training\nand maneuvers, subject to the public use of said beach as provided\nunder the Constitution of Panama.\nThe provisions of this Memorandum of Understandings Reached\nshall enter into force upon the exchange of instruments of ratification\nof the Treaty signed this day by the United States of America and the\nRepublic of Panama.\nAPPENDIX D\nCOMPARISON OF THE RIGHTS AND OBLIGATIONS OF THE UNITED STATES UNDER THE TERMS\nOF THE THREE BASIC TREATIES WITH PANAMA\nHaY-BUNAU-VARILLA TREATY, 1903\nRIGHTS RECEIVED\nCONCESSIONS\n(1) In perpetuity, to a zone of land and land under\n(1) Guaranteed the independence of the Republic of\nwater 10 miles in width and extending 3 miles into the\nPanama.\nCaribbean sea and 3 miles into the Pacific ocean, plus\n(2) Granted the right to have official dispatches of the\ncertain small islands in the Bay of Panama, for the\nGovernment of Panama transmitted over any telegraph\nmaintenance, operation, sanitation, and protection of a\nand telephone lines established for canal purposes and\ncanal across the Isthmus of Panama.\nused for public and private business at rates not higher\n(2) In perpetuity, the use, occupation, and control of\nthan those required from officials in the service of the\nany other lands and waters outside of the zone which may\nUnited States.\nbe necessary and convenient for the construction, mainte-\n(3) $10 million in gold coin of the United States and an\nnance, operation, sanitation, and protection of the canal.\nannual payment of $250,000, beginning 9 years after the\n(3) All the power and authority within the zone and\ndate of the exchange of ratifications.\nwithin the limits of all auxiliary lands and waters which\n(4) Granted the Republic of Panama the right to trans-\nthe United States would possess and exercise if it were\nport over the canal its vessels and its troops and munitions\nsovereign, to the entire exclusion of the exercise by the\nof war at all times without paying charges of any kind.\nRepublic of Panama of any such sovereign rights, power,\nThe exemption is extended to the auxiliary railway for\nor authority.\nthe transportation of persons in the service of the Republic\n(4) All the rights of the New Panama Canal Company\nof Panama, or of the police force charged with the preser-\nand the Panama Railroad upon purchase of the Com-\nvation of public order outside of the zone, as well as to\npany's rights, privileges, properties, and concessions.\ntheir baggage, munitions of war, and supplies.\n(5) At all times and at its discretion to use its police\n(5) United States assumes the costs of damages caused\nand its land and naval forces or to establish fortifications\nto owners of private property of any kind by reason of the\nfor the safety or protection of the canal, or of the ships\ngrants contained in the treaty or by reason of the opera-\nthat transit it, or the railways and auxiliary works.\ntions of the United States, its agents or employees, or by\n-40-\n(6) To use the rivers, streams, lakes, and other bodies\nreason of the construction, maintenance, operation,\nof water in the Republic of Panama for navigation, the\nsanitation, and protection of the canal or of the works of\nsupply of water, or water power or other purposes as may\nsanitation and protection provided for in the treaty.\nbe necessary and convenient for the construction, mainte-\n(6) After 50 years, the system of sewers and waterworks\nnance, operation, sanitation, and protection of the canal.\nconstructed and maintained by the United States shall\n(7) A monopoly in perpetuity for the construction,\nrevert to and become the properties of the cities of Panama\nmaintenance, and operation of any system of communi-\nand Colon.\ncation by means of canal or railroad connecting the\nCaribbean Sea and the Pacific Ocean across Panamanian\nterritory.\n(8) To acquire in the cities of Panama and Colon, by\npurchase or by the exercise of the right of eminent domain,\nany lands, buildings, water rights, or other properties\nnecessary and convenient for the construction, mainte-\nnance, operation, and protection of the canal and of any\nworks of sanitation, such as the collection and disposition\nof sewage and the distribution of water in the said cities\nof Panama and Colon, at the discretion of the United\nStates.\n(9) To impose and collect water rates and sewerage rates\nwhich shall be sufficient to provide for the payment of\ninterest and the amortization of the principal of the cost\nof such works within a period of fifty years, upon which\ntime the system of sewers and water works shall revert to\nand become the properties of the cities of Panama and\nColon.\n(10) To enforce in perpetuity sanitary ordinances pre-\nscribed by the United States in the cities of Panama and\nColon and the territories and harbors adjacent thereto in\ncase the Republic of Panama should not be, in the judg-\nment of the United States, able to maintain such order.\n-41-\nHaY-BUNAU-VArILLA TREATY, 1903-Continued\nRIGHTS RECEIVED\nCONCESSIONS\n(11) In perpetuity, to maintain public order in the\ncities of Panama and Colon and the territories and harbors\nadjacent thereto in case the Republic of Panama should\nnot be, in the judgment of the United States, able to\nmaintain such order.\n(12) To make use of the towns and harbors of Panama\nand Colon as places of anchorage, and for making repairs,\nfor loading, unloading, deposition, or transshipping cargoes\neither in transit or destined for the service of the canal\nand for other works pertaining to the canal.\n(13) Freedom from taxation upon the canal, the rail-\nways and auxiliary works, tugs, and other vessels em-\nployed in the service of the canal, storehouses, workshops,\noffices, quarters for laborers, factories of all kinds, ware-\nhouses, wharves, machinery and other works, property,\nand effects appertaining to the canal or railroad and\nauxiliary works, or their officers or employees, situated\nwithin the cities of Panama and Colon, and freedom from\ntaxation upon officers, employees, laborers, and other\nindividuals in the service of the canal and railroad and\nauxiliary works.\n(14) To import at any time into the zone and auxiliary\nlands, free of customs duties, imposts, taxes, or other\ncharges, and without any restrictions, all materials neces-\nsary and convenient in the construction, maintenance,\noperation, sanitation, and protection of the canal and all\n-42-\nprovisions necessary and convenient for employees in the\nservice of the United States and their families.\n(15) The right to purchase or lease lands adequate and\nnecessary for naval or coaling stations on the Pacific coast\nand on the western Caribbean coast of the Republic of\nPanama at certain points to be agreed upon.\nTREATY OF 1936\n(1) Jurisdiction of a corridor from Madden Dam to the\n(1) Renounces the guarantee of Panamanian independ-\nCanal Zone.\nence.\n(2) Unimpeded transit across the Colon corridor (pro-\n(2) Renounces the right to expropriate without restric-\nvided for in the treaty) at any point, and of travel along\ntion additional land for canal use. Henceforth, in the\nthe corridor, and to such use of the corridor as would be\nevent of some unforeseen contingency, should the utiliza-\ninvolved in the construction of connecting or intersecting\ntion of lands or waters additional to those already em-\nhighways or railroads, overhead and underground power,\nployed be necessary for the maintenance, sanitation, or\ntelephone, telegraph and pipe lines, and additional\nefficient operation of the canal, or for its effective protec-\ndrainage channels.\ntion, the two governments will agree upon such measures\nas may be necessary to take.\n(3) Renounces right of \"eminent domain\" in cities of\nPanama and Colon.\n(4) Renounces right to intervene to maintain public\norder in the cities of Panama and Colon.\n(5) Renounces unlimited right to defend canal. In the\nevent that the security of the Republic of Panama or the\ncanal is threatened, the matter will be the subject of con-\nsultation between the two governments.\n(6) Increases annuity from $250,000 to $430,000.\n(7) Persons not connected with the operation or admin-\nistration of the canal are not to rent dwellings in the\nCanal Zone belonging to the Government of the United\nStates or to reside in the zone.\n-43-\nTREATY OF 1936-Continued\nRIGHTS RECEIVED\nCONCESSIONS\n(8) Sale of goods imported into the zone or purchased,\nproduced, or manufactured there by the Government of\nthe United States is limited to persons employed by the\nUnited States in the Canal Zone and members of the\nArmed Forces of the United States, and their families.\nContractors operating in the zone and their employees\nand persons engaged in religious, welfare, charitable, edu-\ncational, recreational, and scientific work may purchase\nsuch items only when they actually reside in the zone.\n(9) All private business enterprises in the zone, with the\nexception of concerns having a direct relation to the oper-\nation, maintenance, sanitation, or protection of the canal,\nother than those existing at the time of the signature of\nthe treaty, are prohibited.\n(10) United States extends to merchants residing in\nPanama full opportunity for making sales to vessels arriv-\ning at terminal ports of the canal or transiting the canal.\n(11) United States will permit vessels entering at or\nclearing from ports of the Canal Zone to use and enjoy the\ndockage and other facilities of the ports for the purpose of\nloading or unloading cargoes and receiving or disembark-\ning passengers to or from territory under the jurisdiction\nof the Republic of Panama.\n(12) Republic of Panama is given right to collect tolls\nfrom merchant ships in the ports of Panama City and\nColon, even though they later pass through the canal.\n(13) United States will furnish to the Republic of\nPanama free of charge the necessary sites for the establish-\nment of customhouses in the ports of the Canal Zone for\nthe collection of duties on importations destined to the\nRepublic and for the examination of merchandise and\npassengers consigned to or bound for the Republic of\nPanama. Panama is given exclusive jurisdiction to\nenforce the immigration or customs laws of the Republic\nof Panama within the sites so provided.\n(14) Republic of Panama given right to determine what\npersons or classes of persons arriving at ports of the Canal\nZone shall be admitted or excluded from its jurisdiction.\n-44-\nTREATY OF 1955\nRIGHTS RECEIVED\nCON CESSIONS\n(1) Exclusive use without cost, for a period of at least\n(1) The annuity is increased from $430,000 to\n15 years, of a military training and maneuver area (ap-\n$1,930,000.\nproximately 19,000 acres) in the Rio Hato region.\n(2) Subject to certain general conditions, Panama is\n(2) Panama waives the right, under article XIX of the\nenabled to levy income taxes on the following categories\n1903 convention, to free transportation over the Panama\nof personnel employed by Canal Zone agencies: (1)\nRailroad of persons in the service of the Republic of\nPanamanian citizens irrespective of their place of residence\nPanama, or of the police force charged with the preserva-\nand (2) citizens of third countries who reside in territory\ntion of public order outside of the Canal zone, as well as\nunder the jurisdiction of Panama.\nto their baggage, munitions of war, and supplies.\n(3) Renounces monopoly with respect to the construc-\n(3) Panama waives certain treaty rights in order to\ntion, maintenance, and operation of transisthmian rail-\nenable the United States to prohibit or restrict the use of\nroads and highways, with the provision that no system of\na contemplated new strategic highway within the Canal\ninteroceanic communication by railroad or highway within\nZone by commercial transisthmian traffic.\nterritory under Panamanian jurisdiction may be financed,\n(4) Panama waives certain treaty provisions in order to\nconstructed, maintained, or operated directly or indirectly\nenable the United States to extend limited post exchange\nby a third country or nationals thereof unless in the\nprivileges to military personnel of friendly foreign coun-\nopinion of both parties such action would not affect the\ntries visiting the Canal Zone under U.S. auspices.\nsecurity of the canal.\n(5) A lease for a period of 99 years without cost to two\n(4) Renounces treaty right to prescribe and enforce\nparcels of land contiguous to the U.S. Embassy residence\nsanitary measures in the cities of Panama and Colon.\nsite in the city of Panama.\n(5) Certain lands, with improvements thereon, previ-\n(6) Panama will reserve permanently as a park area\nously acquired for canal purposes (including Paitilla Point\ncertain land in front of the U.S. Embassy office building\nand the Panama Railroad yard and station in the city of\nsite in the city of Panama.\nPanama) but no longer needed for such purposes, are to\n(7) A reduction of 75 percent in the import duty on\nbe transferred to Panama and there is to be a gradual\nalcoholic beverages which are sold in Panama for importa-\ntransfer to Panama of the New Cristobal, Colon Beach.\ntion into the Canal Zone.\nand Fort de Lesseps areas in Colon.\n(6) Canal Zone commissary and import privileges of\nnon-U.S. citizen employees of Canal Zone agencies, except\nmembers of the Armed Forces of the United States, who\ndo not reside in the zone are withdrawn.\n(7) The U.S. Congress will be requested to enact legis-\nlation authorizing establishment of a single basic wage\nscale for all United States and Panamanian employees\nof the U.S. Government in the Canal Zone and providing\nfor uniform application of the Civil Service Retirement\nAct to citizens of the United States and citizens of Panama\nemployed by the U.S. Government in the Canal Zone.\n(8) The United States will afford equality of oppor-\ntunity to citizens of Panama for employment in all U.S.\nGovernment positions in the Canal Zone for which they\nare qualified and in which the employment of U.S. citizens\nis not required, in the judgment of the United States, for\nsecurity reasons.\n(9) Citizens of Panama will be afforded opportunity to\nparticipate in such training programs as may be conducted\nfor employees by U.S. agencies in the Canal Zone.\n(10) Articles, materials, and supplies that are mined,\nproduced, or manufactured in the Republic of Panama,\nwhen purchased for use in the Canal Zone, will be exempted\nfrom the provisions of the Buy American Act.\n(11) The U.S. Congress will be requested to enact the\nnecessary legislation for the construction across the canal\nat Balboa of a bridge.\n-45-\nRepublic of Panama employed by the Government of the United\nStates in the Canal Zone.\n\"The United States will afford equality of opportunity to citizens\nof Panama for employment in all United States Government posi-\ntions in the Canal Zone for which they are qualified and in which the\nemployment of United States citizens is not required, in the judgment\nAPPENDIX E\nof the United States, for security reasons.\nPublic Law 85-550\n\"The agencies of the United States Government will evaluate, clas-\nsify, and title all positions in the Canal Zone without regard to the\n85th Congress, S. 1850\nnationality of the incumbent or proposed incumbent.\n\"Citizens of Panama will be afforded opportunity to participate in\nJuly 25, 1958\nsuch training programs as may be conducted for employees by the\nUnited States agencies in the Canal Zone.\"\nAN ACT\n(c) The Congress further finds that the enactment of legislation\nTo implement item 1 of a Memorandum of Understandings attached to the\ncontaining a statement of general policies and principles and other\ntreaty of January 25, 1955, entered into by the Government of the United\nprovisions in implementation of item 1 of such Memorandum of Under-\nStates of America and the Government of the Republic of Panama with respect\nstandings is necessary to the faithful and proper discharge of the obli-\nto wage and employment practices of the Government of the United States\nof America in the Canal Zone.\ngations assumed by the Government of the United States under such\nitem.\nBe it enacted by the Senate and House of Representatives of the\nDEFINITIONS\nUnited States of America in Congress assembled,\nSEC. 2. As used in the following provisions of this Act, the term-\n(1) \"department\" means a department, agency, or independent\nFINDINGS\nestablishment in the executive branch of the Government of the\nSECTION 1. (a) The Congress of the United States of America hereby\nUnited States (including a corporation wholly owned or con-\nfinds that the Government of the United States of America and the\ntrolled by the United States) which conducts operations in the\nGovernment of the Republic of Panama on January 25, 1955, entered\nCanal Zone;\ninto a treaty (known as the Treaty of Mutual Understanding and\n(2) \"position\" means those duties and responsibilities of a\nCooperation), to which was attached a Memorandum of Understand-\ncivilian nature under the jurisdiction of a department (A) which\nings Reached (otherwise referred to as the Memorandum of Under-\nare performed in the Canal Zone or (B) with respect to which\nstandings), signed by such governments on such date.\nthe exclusion of individuals from the Classification Act of 1949,\n(b) The Congress further finds that, under such Memorandum of\nas amended, is provided for by section 202(21) (B) of such Act\nUnderstandings, the Government of the United States assumed certain\nas amended by section 16 (a) of this Act;\nobligations set forth in item 1 of such Memorandum as follows:\n(3) \"employee\" means any individual holding a position; and\n\"1. Legislation will be sought which will authorize each agency of\n(4) \"continental United States\" means the several States of the\nthe United States Government in the Canal Zone to conform its\nUnited States of America existing on the date of enactment of\nexisting wage practices in the Zone to the following principles:\nthis Act and the District of Columbia.\n\"(a) The basic wage for any given grade level will be the same\nfor any employee eligible for appointment to the position without\nGENERAL RULES FOR EMPLOYMENT AND WAGE PRACTICES OF UNITED\nregard to whether he is a citizen of the United States or of the\nSTATES GOVERNMENT IN THE CANAL ZONE\nRepublic of Panama.\n\"(b) In the case of an employee who is a citizen of the United\nSEC. 3. (a) The head of each department is authorized and directed\nStates, there may be added to the base pay an increment repre-\nto conduct the employment and wage practices in the Canal Zone of\nsenting an overseas differential plus an allowance for those\nsuch department in accordance with-\nelements, such as taxes, which operate to reduce the disposable\n(1) the principles established in item 1 of the Memorandum of\nincome of such an employee as compared with an employee who\nUnderstandings set forth in section 1(b) of this Act;\nis a resident of the area.\n(2) the provisions of this Act;\n\"(c) The employee who is a citizen of the United States will\n(3) the regulations promulgated by, or under authority of, the\nalso be eligible for greater annual leave benefits and travel allow-\nPresident of the United States in accordance with this Act; and\nances because of the necessity for periodic vacations in the United\n(4) provisions of applicable law.\nStates for recuperation purposes and to maintain contact with\n(b) The President is authorized, to the extent he deems appro-\nthe employee's home environment.\npriate-\n\"Legislation will be sought to make the Civil Service Retirement\n(1) to exclude any employee or position from this Act or from\nAct uniformly applicable to citizens of the United States and the\nany provision of this Act, and\n-46-\n(2) to extend to any employee, whether or not such employee\nUNIFORM APPLICATION OF STANDARDS AND RATES OF\nis a citizen of the United States, the same rights and privileges\nCOMPENSATION\nas are provided by applicable laws and regulations for citizens\nSEC. 6. The employment standards established under section 4 of\nof the United States employed in the competitive civil service of\nthe Government of the United States.\nthis Act and the rates of basic compensation established under section\n5 of this Act shall be applied unifornily, within and among all depart-\nments, to the respective positions, employees (other than employees\nEMPLOYMENT STANDARDS\nwho are citizens of the United States and are assigned to work in the\nSEC. 4. (a) The head of each department shall establish written\nCanal Zone on temporary detail), and individuals under considera-\nstandards, in conformity with this Act, the regulations promulgated\ntion for appointment to positions, irrespective of whether the employee\nunder section 15(b) of this Act, and the Canal Zone Merit System\nor individual concerned is a citizen of the United States or a citizen\nestablished under section 10 of this Act, for-\nof the Republic of Panama.\n(1) the determination of the qualifications and fitness of em-\nployees and of individuals under consideration for appointment to\nADDITIONAL ALLOWANCE AND DIFFERENTIAL\npositions, and\n(2) the selection of individuals for appointment, promotion,\nSEC. 7. (a) Each employee who is a citizen of the United States\nor transfer to positions.\nshall receive, in addition to basic compensation at the rate established\n(b) Such standards shall be placed in effect on such date as the\nunder section 5 of this Act, such amounts as the head of the depart-\nPresident shall prescribe but not later than the one hundred and\nment concerned may determine to be payable, as follows:\neightieth day following the date of enactment of this Act.\n(1) an allowance for taxes which operate to reduce the dispos-\nable income of such United States citizen employee in comparison\nwith the disposable incomes of those employees who are not citi-\nCOMPENSATION\nzens of the United States; and\nSEC. 5. (a) The head of each department shall establish and may\n(2) an overseas (tropical) differential not in excess of an\nrevise, from time to time, in accordance with this Act, the rates of\namount equal to 25 per centum of the aggregate amount of the\nbasic compensation for positions and employees under his jurisdiction.\nrate of basic compensation established under section 5 of this Act\n(b) Such rates of basic compensation may be established and revised\nand the amount of the allowance provided in accordance with\nin relation to the rates of compensation for the same or similar work\nparagraph (1) of this subsection.\nperformed in the continental United States or in such areas outside\n(b) The allowances and differentials provided for by subsection (a)\nthe continental United States as may be designated in regulations\nof this section shall become effective initially on the first day of the\npromulgated under section 15(b) of this Act.\nfirst pay period which begins more than sixty days after the date on\n(c) The head of each department may grant increases in such rates\nwhich regulations are promulgated under section 15(b) of this Act.\nof basic compensation in amounts not to exceed the amounts of the\nincreases granted, from time to time, by Act of Congress in corre-\nSECURITY POSITIONS\nsponding rates of compensation in the appropriate schedule or scale of\npay. The head of the department concerned may make such increases\nSEC. 8. Notwithstanding any other provision of this Act but subject\neffective as of such date as he may designate but not earlier than\nto regulations promulgated under section 15(b) of this Act, the head\nthe effective date of the corresponding increases provided by Act of\nof each department may designate any position under his jurisdiction\nCongress.\nas a position which for security reasons shall be filled by a citizen of\n(d) No rate of basic compensation established under this section\nthe United States.\nshall exceed by more than 25 per centum, when increased by the\namounts of the allowance and the differential authorized by section 7\nBENEFITS BASED ON COMPENSATION\nof this Act, the rate of basic compensation for the same or similar\nwork performed in the continental United States by employees of the\nSEC. 9. For the purposes of determining-\nGovernment of the United States.\n(1) amounts of insurance under the Federal Employees' Group\n(e) The initial adjustments in rates of basic compensation under\nLife Insurance Act of 1954, as amended (5 U.S.C. 2091-2103),\nauthority of this section shall be effective on the first day of the first\n(2) amounts of compensation for death or disability under the\npay period which begins more than sixty days after the date on which\nFederal Employees' Compensation Act, as amended (5 U.S.C.\nregulations are promulgated under section 15(b) of this Act.\n751 et seq.),\n(3) amounts of overtime pay or other premium compensation,\n(4) benefits under the Civil Service Retirement Act, as amended\n(5 U.S.C. 2251-2267),\n(5) annual leave benefits, and\n-47-\n(6) any other benefits which are related to basic compensation,\nUNITED STATES-PANAMA RELATIONS\nthe basic compensation of each employee who is a citizen of the United\nStates shall include-\nAPPEALS\n(A) the rate of basic compensation for his position estab-\nlished in the manner provided by section 5 of this Act, and\nSEC. 12. (a) There shall be established, in conformity with this\n(B) the amount of the allowance and the differential deter-\nAct and by regulations promulgated by, or under authority of, the\nmined in the manner provided by section 7 of this Act.\nPresident, a Canal Zone Board of Appeals. It shall be the duty of\nthe Board to review and determine the appeals of employees in accord-\nalice with this section.\nCANAL ZONE MERIT SYSTEM\n(b) The regulations referred to in subsection (a) shall provide for,\nSEC. 10. (a) There shall be established, in conformity with this Act,\nin accordance with this Act, the number of members of the Board,\nand by regulations promulgated by, or under authority of, the Presi-\nthe appointment, compensation, and terms of office of such members,\ndent, a Canal Zone Merit System of selection for appointment, reap-\nthe selection of a Chairman of the Board, the appointment and com-\npointment, reinstatement, reemployment, and retention with respect\npensation of employees of the Board, and such other matters as may\nto positions, employees, and individuals under consideration for\nbe relevant and appropriate.\nappointment to positions.\n(c) Any employee may request at any time that the department in\n(b) The Canal Zone Merit System, irrespective of whether the\nwhich he is employed-\nemployees or individuals concerned are citizens of the United States\n(1) review the classification of his position or the grade or pay\nor citizens of the Republic of Panama, shall-\nlevel for his position, or both, and\n(1) be based solely on the merit of the employee or individual\n(2) revise or adjust such classification, grade, and pay level,\nand upon his qualifications and fitness to hold the position con-\nor any of them, as the case may be.\ncerned, and\nSuch request for review and revision or adjustment shall be submitted\n(2) apply uniformly within and among all departments to\nand adjudicated in accordance with the regularly established appeals\npositions, employees, and individuals concerned.\nprocedure of such department.\n(c) The Canal Zone Merit System—\n(d) Each employee shall have the right to appeal to the Board\n(1) shall conform generally to policies, principles, and stand-\nfrom an adverse determination made under subsection (c) of this\nards established by or in accordance with the Civil Service Act\nsection. Such appeal shall be made in writing within a reasonable\nof January 16, 1883, as amended and supplemented, and\ntime, as prescribed in regulations promulgated by, or under authority\n(2) shall include provision for appropriate interchange of\nof, the President, after the date of the transmittal by the department\ncitizens of the United States employed by the Government of the\nto the employee of written notice of such adverse determination.\nUnited States between such merit system and the competitive civil\n(e) The Board, in its discretion, may authorize, in connection with\nservice of the Government of the United States.\nan appeal under subsection (d) of this section, a personal appearance\n(d) The Canal Zone Merit System shall be placed in effect on such\nbefore the Board by such employee, or by his representative designated\ndate as the President shall prescribe but not later than the one hundred\nfor such purpose.\nand eightieth day follo ving the date of enactment of this Act.\nthe Board shall-\n(f) After investigation and consideration of the evidence submitted,\nSALARY PROTECTION IN CONNECTION WITH CONVERSION OF COMPENSA-\n(1) prepare a written decision on each such appeal,\nTION BASE\n(2) transmit its decision to the department concerned, and\n(3) transmit copies of such decision to the employee concerned\nSEC. 11. Whenever the rate of basic compensation of an employee\nor to his designated representative.\nestablished prior to, on, or after the date of enactment of this Act in\n(g) The decision of the Board on any question or other matter\nrelation to rates of compensation for the same or similar work in the\nrelating to any such appeal shall be final and conclusive. It shall be\ncontinental United States is converted on or after the effective date\nmandatory on the department concerned to take action in accordance\nof the initial adjustments under authority of section 5 of this Act to a\nwith the decision of the Board.\nrate of basic compensation established in relation to rates in areas\nother than the continental United States in the manner provided by\nCIVIL SERVICE RETIREMENT COVERAGE\nsection 5(b) of this Act, such employee shall, pending transfer to a\nposition for which the rate of basic compensation is established in\nSEC. 13. (a) Effective on and after the first day of the first pay period\nrelation to rates of compensation in the continental United States in\nwhich begins in the third calendar month following the calendar\nthe manner provided by such section 5 (b), continue to receive a rate\nmonth in which this Act is enacted—\nof basic compensation not less than the rate of basic compensation to\n(1) the Act of July 8, 1937 (50 Stat. 478; 68 Stat. 17; Public\nwhich he was entitled immediately prior to such conversion SO long\nNumbered 191, Seventy-fifth Congress; Public Law 299, Eighty-\nas he remains in the same position or in a position of equal or higher\nthird Congress), shall apply only with respect to those individuals\ngrade.\nwithin the classes of individuals subject to such Act of July 8,\n1937, whose employment shall have been terminated, prior to\nsuch first day of such first pay period, in the manner provided by\nthe first section of such Act; and\n-48-\nUNITED STATES-PANAMA RELATIONS\n(2) the Civil Service Retirement Act (5 U.S.C. 2251-2267)\nshall apply with respect to those individuals who are in the service\nADMINISTRATION\nof the Canal Zone Government or the Panama Canal Company\nSEC. 15. (a) The President shall coordinate the policies and activi-\nand who, except for the operation of paragraph (1) of this sub-\nties of the respective departments under this Act.\nsection, would be within the classes of individuals subject to such\n(b) The President is authorized to promulgate such regulations\nAct of July 8, 1937.\nas may be necessary and appropriate to carry out the provisions and\n(b) On or before the first day of the first pay period which begins\naccomplish the purposes of this Act.\nin the third calendar month following the calendar month in which\n(c) The President is authorized to delegate any authority vested\nthis Act is enacted, the Panama Canal Company shall pay, as an\nin him by this Act and to provide for the redelegation of any such\nagency contribution, into the civil service retirement and disability\nauthority.\nfund created by the Act of May 22, 1920, for each individual-\nCHANGES IN EXISTING LAW\n(1) who is employed, on such first day of such first pay period,\nby the Canal Zone Government or by the Panama Canal Com-\nSEC. 16. (a) Paragraph (21) of section 202 of the Classification Act\npany, and\nof 1949, as amended (5 U.S.C. 1082), is amended to read as follows:\n(2) who, by reason of the enactment of this section and the\n(21) (A) employees of any department who are stationed in\noperation of the Civil Service Retirement Act (5 U.S.C. 2251-\nthe Canal Zone and (B) upon approval by the Civil Service\n2267), is subject to such Act on and after such first day of such\nCommission of the request of any department which has em-\nfirst pay period,\nployees stationed in both the Republic of Panama and the Canal\nfor service performed by such individual in the employment of-\nZone, employees of such department who are stationed in the\n(A) the Panama Railroad Company during the period\nRepublic of Panama;\".\nwhich began on June 29, 1948, and ended on June 30, 1951, or\n(b) The following provisions of law are hereby repealed:\n(B) the Panama Canal (former independent agency), the\n(1) paragraph (32) of section 202 of the Classification Act of\nCanal Zone Government, or the Panama Canal Company\n1949, as amended (5 U.S.C. 1182);\nduring the period which began on July 1, 1951, and which\n(2) subsection (c) of the first section of the Act of October 25,\nends immediately prior to such first day of such first pay\n1951 (65 Stat. 637)\nperiod,\n(3) section 804 of the Postal Field Service Compensation Act\nan amount equal to the aggregate amount which such individual would\nof 1955 (69 Stat. 130; 39 U.S.C. 1034); and\nhave been required to contribute for retirement purposes if he had been\n(4) section 404 of the Act of May 27, 1958 (72 Stat. 146;\nsubject to the Civil Service Retirement Act during such periods of\nPublic Law 85-426).\nservice.\n(c) Subsections (a) and (b) of this section shall become effective\n(c) Nothing contained in this section shall affect-\non the first day of the first pay period which begins more than sixty\n(1) the rights of any individual existing immediately prior to\ndays after the date on which regulations art promulgated under sec-\nsuch first day of such first pay period above specified, or\ntion 15 (b) of this Act.\n(2) the continuing obligations of the Canal Zone Government\nand the Panama Canal Company under section 4(a) of the Civil\nAPPLICABILITY OF CERTAIN EXISTING LAW\nService Retirement Act (5 U.S.C. 2254(a)), to reimburse the\ncivil service retirement and disability fund for Government con-\nSEC. 17. Nothing contained in this Act shall affect the applicability\ntributions to such fund covering service performed, on or after\nof-\nsuch first day of such first pay period above specified, by the\n(1) the Veterans' Preference Act of 1944, as amended (5 U.S.C.\nemployees concerned.\n851-869),\n(2) section 6 of the Act of August 24, 1912, as amended (5\nPARTICIPATION IN TRAINING PROGRAMS\nU.S.C. 652), and\n(3) section 23 of the Independent Offices Appropriation Act,\nSEC. 14. Any training program established by a department shall\n1935 (48 Stat. 522), as amended (5 U.S.C. 673c), or section 205\nbe applied uniformly to each employee irrespective of whether such\nof the Federal Employees Pay Act of 1945, as amended (5 U.S.C.\nemployee is a citizen of the United States or of the Republic of\n913), to those classes of employees within the scope of such\nPanama. Each such employee who is a citizen of the Republic of\nsections 23 and 205 on the date of enactment of this Act.\nPanama shall be afforded opportunity to participate in such training\nprogram on the same basis as that upon which opportunity to partici-\nEFFECTIVE DATES\npate in such training program is afforded to employees who are citizens\nof the United States.\nSEC. 18. Except as otherwise provided in sections 4, 5, 7, 10, 13, and\n16 of this Act, this Act shall become effective on the date of its\nenactment.\nApproved July 25, 1958.\n-49-\nUNITED STATES-PANAMA RELATIONS\n7. The Panama Canal Company and Canal Zone Government will\nupport legislation now pending in Congress to increase the gratuity\npaid to employees who previously were not within the civil service\nretirement disability. system and who were terminated because of physical\nAPPENDIX F\n8. Teachers in the Latin American schools in the Canal Zone will\nPRESS RELEASE ON 9-POINT PROGRAM FOR IMPROVE-\nreceive a 10-percent pay increase.\nMENT OF RELATIONS BETWEEN THE UNITED STATES\n9. All agencies in the Canal Zone have been directed by the Presi-\ndent to review the list of jobs reserved for citizens of the United States\nAND PANAMA, APRIL 19, 1960\nTHE WHITE HOUSE,\npositions. with a view to placing more Panamanians in skilled and supervisory\nAugusta, Ga.\nThe President today approved a nine-point program for improve-\nment of relations between the United States and Panama in reference\nto operations in the Canal Zone. The program calls for substantial\nemployee benefits including pay increases and improved housing for\nPanamanian employees, the expansion of the apprentice program to\ntrain more Panamanians in skilled trades and support of legislation\nto increase the pensions of disabled former employees.\nThe program also calls for the installation of a new water main to\nserve the city of Panama, and a reduction in the rate charged for\nwater sold to the Government of Panama for distribution within that\ncountry. The President has also directed that jobs in the Canal\nZone be continuously reviewed with a view to employing the maximum\nnumber of Panamanians.\nNearly all of the items in the program will be made effective imme-\ndiately.\nThe complete program includes the following points:\n1. A 10 percent increase in the wage rate schedules of unskilled\nand semiskilled employees.\n2. The Panama Canal Company's apprentice program will be\nexpanded to afford an opportunity to 25 Panamanians each year to\nbegin 3- and 4-year courses leading to qualification as skilled workmen\nin various trades. This is a marked expansion of opportunity for\nPanamanians to learn those skills that are useful both in the Canal\nZone and in the Republic of Panama. This program, in implementa-\ntion of assurances given in the treaty, will provide to Panamanians\nupon graduation access to more positions, the pay rates of which are\nbased on those in the United States.\n3. Substandard housing occupied by Panamanian employees in the\nCanal Zone will be replaced by modern construction. Construction\nof approximately 500 units of modern rental housing is planned.\nConstruction of the first houses in the program will be commenced\nimmediately.\n4. The Panama Canal Company will also pursue a course of action\nleading to the construction of 500 houses in Panama for sale to Pan-\namanians employed in the Canal Zone but living in Panama.\n5. The Panama Canal Company will proceed with the construction\nof a new water main at a cost of $750,000 to supply the rapidly\nexpanding suburbs of the city of Panama.\n6. The Panama Canal Company will also substantially reduce the\nrate at which water is sold to the Government of Panama for distribu-\ntion in the cities of Panama and Colon."
}