PANAMA CANAL TREATY NEGOTIATIONS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00803R000400030046-2
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 28
• Document Creation Date: December 19, 2016
• Document Release Date: August 8, 2000
• Sequence Number: 46
• Publication Date: September 17, 1973
• Content Type: REPORT

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PANAMA CANAL TREATY NEGOTIATIONS
I. THE PROBLEM
President
In 1971 the/authorized a program of substantial change
in our posture in the Canal Zone through revision of the
Treaty of 1903. By several decisions you gave the
negotiators broad authority to agree to changes in.the
exercise of jurisdiction in the Zone, duration of the
treaty, land use in the Zone, arrangements for expanding
canal capacity, and other matters.
Although in some instances all of what the 'President has
authorized, and in others a substantial part thereof, has
been offered to Panama,, we have not made significant pro-
gress toward a new treaty. The lack of progress has
contributed to tension in Panama as well as to frequent
criticism by that country and by other nations of our
"colonialist presence" and, to a lesser extent, of our
military presence there. It is timely, therefore, to
review this situation in order to determine how best to
achieve 'a new, mutually satisfactory relationship,
to minimize our vulnerability to international criticism,
to avoid the emergence of a hostile posture on Panama's,
part, and at the same time to gain congressional acceptance
of a new relationship with Panama. In this review we must
open, efficient, and available at reasonable cost to the
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11. THE NEGOTIATIONS
A. Their Current State
In the course of six months of intensive negotiations, the
U.S. side had presented by December 1971 a comprehensive draft
treaty offer which provided for the continuation of our
rights to operate and defend the canal for an extended
but specific period and which at the same time took
cognizance of Panama's interest by returning to that
country rights and properties we no longer required.
A year elapsed before Panama replied, although Panama's
negotiators had appeared to accept much of the U.S.
position. During the interim, the Panamanian negotiators
found that'(a) General Torrijos was concentrating upon
.putting his domestic hdt.se in order (the "elections" of
August 1972) and (b) Foreign Minister Tack and a number
of his advisers believed that their negotiators' tenta-
tive concessions were too great and the U.S. offer too
little. These hard-lining nationalists regarded as
inadequate the 1967 draft agreements reached between
representatives of previous Panamanian and U.S. govern-
ments and they insisted that a new treaty must reflect
a substantial improvement over the earlier drafts.
When negotiations resumed in December 1972, it became
evident that this nationalist stance had become government
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policy: Panama's counter offer proposed stringent curtail-
ment of our operational and defense rights in the short run
and their elimination altogether by the century's end. Our
negotiators found no signs of flexibility in this retrograde
Panamanian position. Thus we were at an impasse: the gap
between the two positions on major issues -- duration of a
new treaty, exercise of jurisdictional and defense rights in
the Canal area, and U.S. options to expand canal capacity --
appeared all but unbridgeable (Tab A).
Concommitantly it became clear that Panama had decided
to seek to wring concessions from the U.S. by marshalling
international sympathy for its charge that the U.S. maintains
a colonial enclave and excessive military presence on Panamanian
territory. As a first-step in this campaign, Panama publicly
revealed the detailed negotiating positions of both parties,
in violation of our mutual understanding to negotiate privately'.
In doing so Panama sought to demonstrate that failure to progress
in the negotiations resulted-from U.S. insistence upon thwarting
Panama's aspiration to "perfect its independence" by ending
U.S. colonialism.
Secondly, the hard-lining nationalists successfully maneu-
vered the United Nations Security Council into holding a
session in Panama so that Panama's "cause" would receive world-
wide attention. A majority of the participants, some of them
otherwise friendly to the U.S., were critical of the extent
of our military presence and of our exercise of perpetual
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extraterritoriality in the Canal Zone. Their attitude was
reflected in their vote supporting a Panamanian resolution
(only the UK abstained) which we were forced to veto since
it recocnized Panama's interests, but not ours. Although
Panama did gain some sympathy abroad, U.S. public opinion --
another Panamanian target -- was generally unsympathetic
to Panama's tactics. Nevertheless there is some possibility
Panama will pursue its efforts in international fora,
particularly at the next General Assembly where we cannot
veto.
That the U.S. could effectively negate Panama's
effort to obtain meaningful treaty concessions through
international pressure was not lost upon, the practical
General Torrijos. Some intelligence reports indicate
that he believes he was misled by Foreign Minister Tack
and his coterie of nationalistic advisers, and that the
entire UNSC adventure had brought no concrete results, only
expenditure of scarce funds. Despite having gained some
international sympathy for it, cause the Panamanian govern-
ment apparently has come to realize that its goals were
not thereby advanced, and may have adopted a more concilia-
tory posture. It has turned down the volume of normal
anti-U.S. invective in, the media it controls. In early
May, Foreign.Minister Tack wrote to
3,11 SOmeeWllci(
flexibility. Later that month in Buenos Aires Tack
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delivered a letter to Secretary Rogers in which he once
again, in a seemingly conciliatory fashion, urged that
detailed negotiations continue a--- this time on the basis
of a set of principles which restated the established
Panamanian position.
B. Future Prospects
Panama has made clear its willingness to continue
negotiations, and there are indi(ations General Torrijos
is taking a somewhat greater personal interest in the
" He has maintained that in order to achieve
a new treaty two steps are essential: an agreement at a
very high level between the two governments on the
basic principles which would: govern the new treaty relation-
ship (after which the negotiators would work out the details),
and the taking of unilateral measures by the U.S. which,
by providing Panama with some rights and properties useful
to it, would improve the negotiating atmosphere and enable
Panama to become more flexible in its negotiating position.
.Recently Panama furnished us with a list of principles,
which essentially restate its position, to serve as a
basis of negotiation. These principles mask the gap that
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separates us on critical issues, but'they are of a
generality such that there is much in them we can accept
at the outset and we could attempt to negotiate the
differences. (Tab B shows the differences between
Panama's proposed principles and those the USC believes
are acceptable). It is possible that in probing Panama's
position, using the set of principles as an instrumentality,
we can learn whether Panama is truly moving toward a more
flexible negotiating position.
In assessing the state of negotiations in Marche, of: this,
year, Special National Intelligence 84-73 (SNIE) addressed
two significant issues:
1. What are Panama's minimum requirements for a
treaty?
2. What course of action might Panama follow if
frustrated in its efforts to secure such a
treaty?
As to the first question the SNIE stated (p. 8):
"Though there are many unpredictables, this much
is clear: there could be no accord without appreciable
movement by both sides (emphasis added) on the
central issues of jurisdiction and duration."
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As applied to the U.S. position, this means that we
cannot expect to achieve a treaty-in the near future on
the basis of a 50-year duration plus a sea-level Canal
and third-locks option and of a jurisdictional phase-
out over a 15 year period. On the Panamanian side, this
means that their refusal to give up their insistence on
a treaty of no more than 25 years duration, and on full
Panamanian jurisdiction in the Zone within 5 years, would
put an end to the chances for a treaty acceptable to us
in the foreseeable future.
It may well be that a treaty can be negotiated
somewhere in the middle ground between the positions,
but we cannot be certain.
If we decide that-we cannot accomplish some change
in the status quo in the Zone, we will be faced with
increasingly difficult choices. The status quo would be
costly to maintain in terms of our position in Latin
America where the nature of,.-our presence in Panama seems
to contradict the essence of the President's policy of
partnership; in terms of international opposition to our
position; and in terms of our domestic position if Panaman-
ian agitation leads to violence.
Clearly the achievement of a relationship satisfactory
to both sides over at least the near term should be the
primary objective. Preferably this would be achieved by
a new treaty. But such a treaty will definitely require
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concessions on both sides. On ours, some concessions
that Panama might demand for .treaty would adversely
affect to some degree our ability to operate and defend
the Canal on an optimum basis. But failure to achieve
a new substantive change in the status quo over the
longer term would potentially erode even more severely
our ability to maintain adequate control over Canal
operation and defense except at an unacceptable international
cost. For this reason, this paper considers changes in
the relationship through non-treaty means.
As to the second question, the SNIE 'stated (p. 7)
that if the U.S. offer is unchanged and there are no new
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initiatives or concessions the following would apply:
"If: Torrijos comes to believe over the coming
months that the offer made by the U.S. in February
1973 is final, he could be expected to react strongly.
He might first make further attempts to mobilize
international support against the U.S. but he would
realize before long that the endeavor was not
promising. He would then turn to cruder tactics
at home (of the sort he has recently told foreign
visitors he would have to consider). Probably he.
would devise some carefully-controlled demonstra-
tive incident, e.g., the occupation of a Canal
Zone facility. Such a move could readily trigger
more drastic actions, deliberate or not. Even if he
intended to avoid direct provocation to the US,,
the chances for ' spontaneous. violence in the heightened
nationalist atmosphere would be appreciable. The
resulting tensions could bring a point of crisis and
give the U.S. little crioice but to persist in confron-
tation rather than be pushed by these tactics into
a new phase of negotiations."
If there are no new U.S. concessions on central issues but
some offers of ad hoc accommodation on secondary ones, the
SNIE stated,
"Torrijos would probably be quite receptive to such
could show the Panamanians that he was making
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visible, if not very significant, gains. He would
also recognize that in this way he might be getting
something free that the U.S. could otherwise have
used for bargaining purposes. And for a while he
would probably temper his anti--U..S. propaganda
and perhaps his nationalist appeals. Nonetheless,
sooner or later, he would likely become convinced
that the U.S. was trying to divert him indefinitely
from insisting on settlement of the basic issues.
And he would then swing back to pressure moves...."
In sum, the treaty position between the two govern-
ments diverge significantly; there are some hints of
flexibility on the Panamanian side that require further
probing; but we are in for a long process' during which
we can expect a considerable amount of international
criticism to which we are vulnerable, and during which
tensions will probably mount in Panama.
r
C. Con.gression.al Attitudes
Members of the Congress who oppose any alteration
of the existing relationship in Panama's favor appear
limited in number but are vocal and influential
There are virtually no announced supporters of such an
alteration.
The opponents believe that the Canal is crucial to
the well-being of our economy and to our national security;
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that we cannot count on Panamanian governments always
being stable enough -- or politically inclined -- to
guarantee the uninterrupted passage of our commercial
and military vessels through the waterway; and that
interruptions would occur were we to return to
Panama-any of the treaty rights now possessed in
perpetuity and especially the right to act as if sovereign
in the Zone. They argue that the world's seafaring nations
expect the U.S. to continue the efficient operation of
the Canal at low tolls, and that Panama should be led
to understand its economy would falter in the absence
of it. They also argue that our construction of the
Canal and impeccable stewardship over it for 70 years
constitute a national pride which the American people
will. not permit to be tarnished. They would have the
purportedly
U.S. pay no heed to international criticism of our/colonialist
presence in the Canal Zone and not hesitate to defend
that presence against any Panamanian incursion.
Opposition in the Senate is theoretically the primary
source of concern to the Executive since it must ratify
any treaty, but in practice the opposition in the House
is equally of concern, and possibly more so, since opponents
there are more strident and numerous than those in the
Senate, and since implementation of any treaty would
require legislation requiring approval by both chambers,
some of it initiated in the House. Moreover it
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a Committee of the House (Merchant Marine and Fisheries)
that the Congress has assumed the role of overseer of
the American stewardship of the Canal, and its Chairwoman
is adamantly opposed to change in the status quo of the
Zone. In addition the House has sought to exert primacy
within the Congress in matters involving the disposition
of American territcry, which the opponents consider the
Canal Zone to be. In each session as many as 100 resolutions
are introduced, although never pressed to a vote, by
House Members which call on the Executive to refrain
from negotiating away sovereign U.S. rights in the
Zone.
As for.the Senate, when the U.S. negotiators consulted
each member in 1967 on the three draft treaties agreed
upon in that year with the Panamanian, negotiators they
received assurances of support from well over a two-
thirds majority. It is important to note, however, that
such support may in part have derived from the fact that
those drafts provided for U.S. control over the waterway
for a very extended period of time. During that consul-
tation 16 senators including 9 on the Armed Services
Committee indicated opposition to any diminution of U.S.
treaty rights.
In the years since that consultation there have been
important changes in the Senate lineup and indications
are that the views of key members maybe more cautious .
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The Senate Foreign Relations Committee, however, has
traditionally taken a more sympathetic view of treaty
negotiations than its counterpart in the House.
Five committees. in both chambers can claim a legiti-
mate interest in negotiations and any new treaty concluded ---
foreign affairs, armed forces, commerce, merchant marine
and appropriations.
The opponents reflect a mix of private American opinion.
Veterans organizations and many individual members of
the`Ar'med Forces, both active and retired, having served
in Panama believe U.S. security depends significantly
on unimpaired U.S. control of the Canal. Most of the
40,000 U.S. citizens living in the Zone, together with
many of their relatives-and friends in the.U.S. oppose
any change in the status quo. American shipping companies
and merchant houses fear any change would cause an increase
in Canal tolls and could cause an interruption in Canal
service. Patriotic groups such as the Daughters of the
American Revolution insist that U.S. sovereignty in the
Canal Zone must not be lessened, as do groups such as the
Scouts and the Boys-Girls Nation. Free-trade advocates
argue that only the U.S. can keep the Canal always open
for international commerce. Labor unions which have
organized or hoped to organize in the Zone fear that any
decline in the U.S. presence would cause a reduction. in
numbers of job opportunities, pay rates and fringe benefits,
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and they are represented effectively by the AFL-CIO
leadership in Washington. Elements of the American
media, conservative political groupings and some state
legislatures also seek maintenance of the status quo in
Panama.
Private and congressional opposition tends. to be
sustained, perhaps invigorated, by developments in
Panama. News coverage in this country when a U.S. owned
company was threatened with expropriation by the Panamanian.
Government last year led the opponents to charge that
this was an act of irresponsibility indicative of the
manner in which Panama would operate the Canal were the
waterway to be entrusted to it, The UN Security Council
meeting which the Panamanian Government arranged in
its capital. city last March provided asimilar opportunity.
for charges of Panamanian irresponsibility. Moreover
that meeting led some members of the Congress, not previously..
identified with the opposition, to resent the U.S. having
been pressured in an unseemly fashion and to doubt
Panama?s good faith in the negotaitions.
Since the pace of negotiation has been slow and the
results negligible, we have not needed to test the
strength of congressional opposition in any systematic
way over the past two years. Such consultations as were
held left no clear indications of congressional sentiment.
Hence we cannot at this tine j udge how Jar txi.E U . Si.
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negotiators could move in tk . direction of modernizing
the relationship between the two countries without
risking some exhilaration of congressional opposition
which, at the extreme, might conceivably lead to rejection
of a treaty or failure to implement it.
Some observers believe the opposition has grown in
quality and quantity since Panama adopted confrontation
tactics.,.~,and that a major effort on the Administration's
part would be required to move a treaty through the Congress.
Other observers believe that the opposition continues
to be confined to a number of congressional members
not large enough to prevent ratification or implementation,
although a strong Administrative effort would be required.
Whatever the case, with a treaty as important and provoca-
tive as the Panama one the temper of the Congress with
respect to it will depend notably on the timing of the
presentation of any new treaty. For example, members, of
the Congress might not-wish to have-the Canal issue before
them in close proximity to the 1974 congressional elections.
As we enter another phase of the negotiations with
a new U.S. negotiator, fresh consultations with the Congress
will. be appropriate. In order to test the views of the
members as rigorously as possible he should avoid general-
i_ties.and query them on specific, though necessarily
hypothetical., proposals which the U.S. has presented
or.might in the future present to the Panamanians on
each major treaty issue. Unfortunately he will likely
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find that many of the members apart from the hard--core
opponents, even if persuaded the U.S. is protecting
vital U.S. interests in the negotiations, will be
reluctant to make any judgments until they can examine
a draft treaty. Consultations at a point when there is
a draft treaty, however, might be too late, for we could
discover inadequate sympathy for its terms to risk
presenting it for ratification and implementation.
Thus a consultative process which not only tests the
congressional temper but also begins to shape the thinking
of key congressional member is indicated. It is a matter
of convincing them that the present relationship is
outmoded, and that'by returning to Panama rights. and
properties we no longer-require-we can modernize the
relationship yet still be able to enjoy our essential
rights and properties for an extended period. It is also
a matter of refuting the hard-core opponents' argument
that we need to exercise full sovereignty in the Canal
Zone in order to retain effective control over the operation
and defense'of the Canal. Building over time a bi-partisan
cadre of active supporters in both houses should be a
primary task of the new negotiator. That process will
require the participation of the U.S. agencies vitally
concerned with the Canal Zone.
It would also seem useful for the new negotiator to.
lead an inter.-agency effort to build support for a
'TJ
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modernized treaty relationship among influential groups
in the private sector, which could in turn lobby with the
Congress.
III. ALTERNATIVE OPTIONS FOR THE U.S.
The following options represent two basic courses
of action that might be followed in carrying out the process
of change in our operations in the Canal Zone to which
our negotiations have looked. One course of action is
represented by Option A and the other, in three variations,
by Options B, C., and.D.
Under the first course (Option A) a decision would
be made to press forward toward a greemerit on a treaty
with the recognition that substantially greater
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concessions will probably be necessary. The second
course of action (Options B, C, or D) would call for
maintaining.the U.S. offer within guidelines that you
in the case of options C and D,
have previously established, but,/taking executive
and legislative action to work changes in our
Panama operations that will be helpful in limiting U.S:'
Panama.nian tensions somewhat and in
reducing international criticism of our "colonialist
presence." The difference between Options B, C .and
D'`is one of degree. Options B andC are designed
to limit--criticism in Congress and would make
no real change in the status quo in the Zone. Option
D would make such a. change, by implementing a moderate
portion of the broader changes already approved by
you for the treaty negotiations and already offered
to Panama.
It would be intended that the approved executive
and congressional unilateral actions would. be available
to the U.S. negotiators for use at such times and in
they
such ways as consider beneficial to the course
of negotiations.
We have ruled out as viable options the possibility
of attempting to force Panama into a settlement on
our terms through economic sanctions and of attempting
to attract Panama into such a settlement through
iarge-s(..a.Le :L:(JLium- U
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A. Continue as at present to _negotiate seriously, with
a view to determinin$c over the next several months
what charges in our offer would result in settlement.
Also continue our forthcoming attitude on non-treat
related matters such as economjc.and military assistance.
'In addition make unilateral changes designed to improve
the negotiating atmosphere which do not require cone ression-
cour.se of
al approval. ~~rpr t-hn/, several months of probing, change
the exi:itinq offer in order to reach a settlement,
within limits set forth in paragraphs 1-6 below.
The general premise of this option is that we have no
reason to expect a settlement along the general lines of
what we have offered to date. On the other hand, no one
can predict with any great precision at this.time what
would be necessary to settle with Panama. An estimate in
' ;g.eriei~aI terms of what might be required to settle, however,, ,
is possible. The principal elements of such a change in
1. Expansion --- We. would have to give up our request
for definitive options and agree to negotiate the question
of whether and how the expansion should be done at the
time construction. of third locks or a sea level canal would
need to begin probably about 1980-1985.
approximately
2. Duration _-- The treaty would have to terminate by.-/
2015, but U.S. tenure could be extended if the negotiations
referred to in paragraph 1. were successful..
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3. Jurisdiction The phaseout of jurisdiction would
have to be faster than offered to date and our ability to
retain control-related jurisdictional rights would be
limited. We could probably retain the power to prevent
Panama from exercising jurisdiction over canal shipping
but would have to limit severely, or even terminate., the
activities of U.S. courts.
4. Payment -- The royalty would have to be increased
from the $25 million level to the $35-40 million area.
5. Land -- Much more substantial use and control
of Zone land by Panama would be necessary.
There would have to be
6. Defense --/some willingness.on our part to accept
limitations on the nature and extent of U.S. military activi-9
ties in the Zone, with a need for considerable language
in the treaty about Panamanian defense responsibility,
consultation between the U.S. and Panama, etc.
The major changes in the U.S. offer set forth above
should not be made without the U.S. negotiators, in consul-
tation with the congressional relations staff of the White
and Defense,
Mouse and the Department of State /having reasonably
sound assurances from key members of the Congress that the
Congress would agree to such a treaty.
dvantages
(1) Would greatly increase the chances of negotiation
of a new treaty.
(2 ) Would replace the 1903 treaty with a ..new treaty
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much more easily defended against Panamanian and world
criticism.
- (3) Would make the U.S. less ' susceptible to interna-
tional criticism were forceful action ever required to
defend our Canal interests, since we would be defending
not antiquated 1903 rights but rights recently granted
by a new treaty.
(4) Would give greater credibility to U.S. Latin
American policy by demonstrating implementation of the
"Mature! partnership" policy in a difficult case.
(5,) Would provide us a stable relationship with
Panama for an extended period.
Disadvantages:
1.TT Would reduce the period of time the U.S. would
control. the canal to a period substantially less than
approved in 1971.
2.. Might necessitate the abandonment of the U.S.
effort to get definitive options to build a sea level
canal or third lane of locks and require a later U.S.
effort to negotiate such rights should they later be
desired.
3. Might result in a jurisdictional transfer that
is too rapid and pervasive in the view of Zone residents.
4. Might call for larger payment to Panama than
could be financed from a toll increase.
land use and complicate significantly our canal operations.
a_,i:l_l..i t at a__J i. Jai,..:
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B. Continue as at present to negotiate seriously, without
not authorized by present guidelines.
making any chaises in our existing treaty offe
Also continue our forthcoming attitude on non-trca.ty
related matters -such as economic and militar assa.stance.
By selecting this option we would. have decided that
Torrijos is testing the firmness of our negotiating position
and that eventually, once we have 'made a few iriore minor
concessions and he is convinced he can do.no better, he
will decide that something for his people is better than
nothing and settle on terms only slightly more favorable
to Panama than those we now offer. We would also have
decided that we would accept the risk of an outbreak of
Panamanian hostility against th.e zone due to frustration
over lack of progress.
Advantages:
(l) Would safeguard for the.time,being our essential
rights and properties.
(2) Would divest us of no;ma.jor bargaining chips in
the negotiating process.
(3) Might lessen over the short run the conceivable
risk of hostility emerging in Panama as a result of our
forthcoming attitude on non-treaty related matters.
(a.) Would be within our estimation of what the Congress
would accept.
Disadvantages:
(1) Would be based on the very slight pro
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Torrijos would conclude a treaty not incorporating some
major U.S. concessions.
(2) Would ovei time raise the risk of forceful action
against the U.S. presence on the part of Panama.
(3) Would not reduce our vulnerability to world
criticism.
C. Continue as,at present to negotiate se?ious , without.
making an chancjes in our existin tr -at. offer
not authorized by present guidelines.
/Aisso continue our forthcoming attitude on non-treaty
related matters, and proceed to make unilateral th e>
to i; rove the negotiating atmosphere which do not
Eequiire congressional appaoval.
In ad dition, propose
to the Congress a selecpted group of unilateral actions,
which would be of a -non-controversial nature and would
not notablv. alter
the status quo in the Canal Zone.
This option is based on the premise that-despite Panama?-s'
apparently hard position at present, it may later alter its
views and accept a treaty algng the lines that we have
proposed. Such an alteration would be more likely to
occur if unilateral concessions to produce some of the
overdue changes in the Canal Zone were made, and thezefore
they should be undertaken. These actions would also serve
to reduce Panamanian tensions and our vulnerability to
international criticism. However, actions which would excite
opposition in C:o.nur_oss should not be undertaken in view
of the desire to hold ourselves in readiness for a treaty
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submission to Congress.
Two categories of unilateral actions are proposed under
this option:
(1) Those listed in this report that can be accomplished
by Executive action (less IV C 23, 24 and 25), and
(2) Those measures listed in the report requiring
congressional action which are not expected to encounter
serious congressional-opposition (IV B 5, 15, 16 and 17),
None of the proposed actions go beyond what we have
already offered or been prepared to offer in the negotiations,
nor do they represent a large enough portion of our total
treaty offer to impair our negotiating position or our
ability to continue operating and defending the canal.
Advantages:
(1) Might produce, through skillful use of unilateral
actions during the negotiations process, progress toward a
settlement safeguarding all our essential prerogatives and.
thus maximizing chances for Senate ratification.
(2) Would preserve all of our major bargaining chips.
(3) Would avoid wide-spread, serious congressional
focus on and debate over the canal issue.
(4) Might relieve Panamanian tensions and help preclude
a potentially hostile posture.
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SECI2.UT 23
(5) Would to some degree improve our international
posture.
Disadvan tag-es
(1) Might not be sufficient to reach an agreement.
(2) Would stimulate criticism from a numerically
limited but vocal group of members of the Congress opposed
to any treaty alteration of our presence in Panama..
(3) Would basically retain the status quo in the Canal
Zone by leaving unaffected jurisdiction, land, perpetuity,
the annuity, etc.
(4) Would give up some of our bargaining chips.
(5) Might cause some morale problems among the
personnel of the Canal Company and Zone government.
(6) Might, if handled improperly, make Panama feel
that the U.S. is not serious about the negotiations.
D. Continue as at present to negotiate serious, without
making any changes in our existing treaty offer not
authorized by present guidelines. Also continua our
for hcom1ng attitude on non-treaty related matters
an.d2roceed_to make the unilateral changes specified
under Option C. In addition, develo a roaram of
unilateral actions from those already offered to Panama
in the negotiations (as more s pecificaIl. set fortil.
below) which, although in some measure controversial,
would chancre the status quo in the Zone,
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but in a wad consistent with our operation and control ob,cj.. a vev
Our treaty efforts have been carried out with the idea that cur
tenure in Panama can be put on a sounder basis if we modernize our
relationship with Panama. However, our assessments now indicate that
if the US offer is not altered substantially the likelihood of our
achieving a prompt modcrni zati on of our relationship with Panama ':hrough
a new treat is limited. Option D does not call for a substantial
change in the US offer but instead specifies a program to bring ad)-,gut a
,modest 'portion of the change presently contemplated by our treaty offer.
Modest though it would be, it would still generate some opposition in
Congress, though by no means as much as the treaty itself. on tj)(_-.
other hand it would ~o further toward depriving the Zor)
of its character, as a '!colonial enclave" than less contro--
vc:? ia1 plans and correspond :hgly increase the benefit.; that
flow from modernization.
The unilateral actions called for. by this option -would
include those listed under Option C. But they would go farther,
with provisions for allowing Panamanian law to apply .7~. the Zone
to'some matters not essential to operation and control.-, wider
Panamanian use of Zone. land, and an increase in the annuity.
The specific items are listed as items 26, 27 and 28 under
part IV of this paper.
Fldvan ac es:
(1) Would demonstrate to Panama and the world that the US is willing
to modernize its Panama operations and give due weight to Panama's
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the
(2) Would take some of the force out of criticism of/US
posture in Panama, giving US tenure a more-easily defended basis.
(3) Would alleviate to some degree Panamanian tension
resulting from political pressures for change.
(4) Would preserve for the US its principal bargaining chips
for treaty negotiations.
Disadvantages:
(1) Would not be likely to lead to treaty agreement.
(2). Woul,d stimulate criticism from a numerically limited but
vocal group of members of the Congress opposed to any alteration of
our presence in Panama.
(3) Would give up some of our less important bargaining chips.
(4) Might cause some morale problems among the personnel of
the Canal Company and Zone government.
(5) Might, if handled improperly, make Panama feel that the US
is not serious about the negotiations.
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IV. THE NATURE OF UNILATERAL U.S. ACTIONS
In the Options A and C the possibility of Executive and
congressional unilateral U.S. actions which would not significantly
affect the status quo in the Canal Zone is envisaged. These
actions, numbered 1 through 25 in what follows, fall broadly
into three categories: actions related to acknowledgment of
Panamanian sovereignty; actions related to U.S. operations
in the Zone, and actions. related to the U.S. military
presence inthe Zone.
Option D envisages actions (nos. 26, 27 and 28), each
requiring legislation, which would change the status
quo in the Zone.
It is important to note that in the case of the"xecutive
actions contemplated in Options A .nd C, some would require
agreement with the Government of Panama, and some would be
difficult of implementation unless the Government were, to agree
to operate under existing U.S. legislation.
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