TORRIJOS AND THE PANAMA CANAL

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00353R000100030002-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 10
• Document Creation Date: December 12, 2016
• Document Release Date: March 15, 2002
• Sequence Number: 2
• Publication Date: March 11, 1974
• Content Type: MEMO

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Secret
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Intelligence Memorandum
Torrilos and the Panama Canal
Secret
March 11, 1974
No. 0929/74
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D
March 11, 1974
Since becoming the political leader of Panama in 1968, Brigadier General Omar
Torrijos has often said that his biggest frustration has been the lack of progress
toward a new treaty covering the Panama Canal. During the past few months,
however, Torrijos has perceived a considerable improvement in the prospects for
replacing the 1903 canal pact. Two rounds of talks with the US canal negotiator,
Ambassador Ellsworth Bunker, brought agreement on a set of eight principles to
guide the treaty negotiations. Torrijos considered the visit of Secretary Kissinger to
sign this agreement on February 7 a major personal triumph, and. he hopes that a
treaty will be signed this year.
He believes the "right" pact would ensure him a high place on the list of
national heroes, and would enable him to move forward with the social and
economic reforms which, he believes, will lead to a "New Panama." Furthermore,
with a new treaty under his belt and increased income from higher canal payments,
he will have greater freedom to take foreign policy initiatives, such as strengthening
ties with "third world" and Communist nations. Torrijos believes that these benefits
will outweigh the criticism by some Panamanians who he expects will charge him
with "selling out" to the US.
Torrijos is determined that the new treaty bear his personal trademark. It must
include all the benefits for Panama that were incorporated in the drafts prepared
during the 1965-67 negotiations, plus a good deal more. As a man who aspires to be
known as a true nationalist and reformer, he must get a better deal than the
oligarchs who ruled Panama before him.
To be acceptable to Torrijos, any treaty must:
? Eliminate the "government within a government" in the Canal Zone, and
implement Panamanian sovereignty there;
? Set a fairly short deadline-probably no more than 25 years-for Panama to
take over control of the present canal, and only a slightly longer one to take over
any canal that may be built in the future;
Comments and queries on the contents of this publication are welcome. They may
be addressed to
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? Secure increased economic benefits for Panama from the operation
of the present and future canals and from US payments for the use of
land and facilities for the protection of the canal;
? Limit the number, size, and functions of US military bases and
provide for consultation with and participation of Panama in the protec-
tion of the canal.
will be
more exi e on some
issues than others. It
would be very difficult
for Torrijos to accept a
date for Panama to take
control of the canal be-
yond the year 2000 that
was stipulated in the
1967 draft. The Pan-
amanian negotiators also
will press hard to obtain
early evidence of their
country's jurisdiction in
the zone, such as control
of police and fire depart-
ments, the courts, hospi-
tals, schools, and the
mails. They recognize
that some US military
presence will be necessary
to protect the canal until
Omar Torrijos
Panama takes it over, but they will call for the negotiation of a status-of-
forces agreement that provides payment for US military installations.
The Panamanians have refrained from emphasizing economic issues,
partly because they consider the canal question a moral and legal, rather
than a financial problem, and partly because they think that financial
concessions will be the easiest kind to win from the US. They almost
certainly will not accept the $25-million annual payment that was offered in
1967, and are probably thinking in terms of $50-100 million per year.
Torrijos will probably continue his habitual policy of waiting for the US to
make proposals before making his own counteroffers.
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Domestic Influences on Torrijos
Torrijos is confident that the great majority of Panamanians support his
handling of the canal issue, and he will informally consult with students and
other groups during the negotiations to ensure that this backing does not
erode. In fact, he has promised to hold a plebiscite on the treaty before
signing it. His currently strong position is a result of his success in achieving
several domestic goals he set early in his administration. He has consolidated
and legitimized his regime, earned for it a considerable degree of public
approval, and maintained one of the highest economic growth rates in Latin
America. He has worked particularly hard to gain the support of youth,
peasants, and urban labor. He has substantially expanded educational oppor-
tunities, created a Labor Ministry, raised the wage level, and promoted
low-cost food and housing programs. In his frequent trips to areas outside
the capital, he has been cautious about making promises he is not certain he
can fulfill.
Torrijos calls his government "revolutionary." The basic elements of
this "revolution" seem to be a shift in power from the traditional political
and economic elite-the "oligarchy"-to the middle and lower classes; a
number of fundamental changes in the institutions of government; and a
modification of social values and goals, with strong emphasis on nationalism.
A key goal of his government is national integration, meaning not only the
elimination of the foreign-controlled zone that physically divides the coun-
try, but also the integration of all Panamanians-peasants, Indians, and slum
dwellers as well as businessmen and wealthy farmers-into the national
society. Most of his policies have been rooted in a mixture of nationalism
and populist reformism. The slogan "Neither with the right nor with the left,
but with both hands for Panama" not only reflects his pragmatism, but also
captures his approach to government. Torrijos has done little toward
organizing a political movement that could channel mass support for him. He
believes that reforms cannot be carried out through the traditional party
system, but that the creation of a new broadly based movement led by him
and independent of the National Guard would not be acceptable to senior
Guard officers.
Thus far, Torrijos has not seriously tried to alter fundamentally Pan-
ama's economic system based on international commerce and banking. To
have done so precipitously would have provoked economic disaster for
Panama and foreshadowed the end of Torrijos' political power. The fairly
modest reforms have been improvised largely by a small group of young,
middle-class civilian administrators who support the regime because they
view it as an opportunity to push for social and economic change within an
over-all program of national development.
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There has been a discernible trend toward greater regulation of private
industry, as well as an underlying hostility toward the former political
establishment in which all parties were bound up with vested economic
interests. Most businessmen have never liked or trusted Torrijos. They look
down on him because of his modest, rural origins. More important, they fear
that his economic policies may harm and eventually destroy the private
sector. The economic power of this group is greater than its numerical size
would indicate, and it retains a measure of influence on Torrijos. Its
influence has declined, however, as Torrijos' confidence in his ability to
handle the group has grown.
Some businessmen, especially progressive-minded members of the new
generation, understand the nature of Torrijos' government and have decided
they can live and prosper with it. Others have exploited the expanding
economy to advance their business interests, but are worried about what the
future under a Torrijos government might hold for them. Still others are
merely enjoying the present economic boom while awaiting the right time to
join an effort to overthrow Torrijos. The economic elitists have seldom fared
well in direct confrontations with Torrijos, and now are resorting to less
risky tactics such as accusing him of "selling out" by giving up too much in
the canal negotiations. They will probably receive some support in this effort
from ultra-nationalists of the far left and right, who fear that they will lose
their main issue if Torrijos succeeds in getting a new pact.
The key group to which Torrijos must ultimately sell a new treaty is the
National Guard-the cornerstone of his regime. At 45, Torrijos is the Guard's
only general officer. He is some years older than other officers, most of
whom seem to prefer to have him in charge rather than any of their
contemporaries. A few officers did attempt to oust Torrijos in 1968 and
1969, but none has challenged his leadership since. The officers of the
General Staff continue to have at least a consultative role in national
decision-making, and the commanders of the ten military zones are the most
powerful local representatives of the national government. Their loyalty to
Torrijos is based on his continued effective performance, and he makes
frequent personal contacts at all levels of the Guard in order to reinforce his
authority and his image of competence. He also uses the Assistant Chief of
Staff for Intelligence, Lieutenant Colonel Manuel Noriega, to keep a finger
on the pulse of the Guard. Thus far the Guard leaders appear to have let
Torrijos handle the canal negotiations without much interference, and they
are likely to approve any treaty that Torrijos signs. Nevertheless, he will
make sure that the Guard endorses the treaty before he fulfills his promise to
hold a plebiscite.
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Foreign Policy Implications
With a new treaty concluded, Torrijos would have greater freedom to
pursue a more independent foreign policy. Torrijos is sensitive to his coun-
try's traditional reputation as a "protectorate" of the US and is eager to
strike an independent pose. Yet as long as the negotiations are under way, he
has to consider the effect that any major foreign policy initiatives would
have on the talks.
Thus far in his dealings with other governments, Torrijos has concen-
trated on securing support for Panama's side of the canal issue and bringing
that support to bear in its negotiations with the US. To a degree, nation-
alistic forces in Latin America have reinforced Torrijos' determination to
conclude a new and more favorable deal with the US. When other Latin
American leaders declare that political independence is a sham without
economic independence and insist on controlling their national resources,
the Panamanian Government is reminded of its own situation and the lack of
control over what it views as its primary endowment-the canal.
Torrijos has been cautious about building firm diplomatic and political
ties with other regimes. On his first South American tour, he chose to visit
leaders of the governments he apparently feels closest to. Torrijos looks up
to President Peron of Argentina as the father figure of Latin American
military leaders, and as an early promoter of the concept of economic
independence and the inter-relationship of the countries of the "third
world." Similarly, he looks on Velasco in Peru as somewhat of a "brother";
both took power in October 1968 and are determined to carry out economic
and social "revolutions" in their countries.
Torrijos values his friendly relationship with Fidel Castro as certifica-
tion of his "revolutionary" credentials, but has made no overtures to
establish diplomatic relations with Havana. Nevertheless, Panama has exten-
sive ties with Cuba, which are steadily expanding. The official Cuban news
agency has an active bureau in Panama City; cultural delegations from both
countries frequently exchange visits; trade is gradually expanding; and Cuba
has sent numerous agricultural technicians to Panama. As long as Torrijos
believes that he has a good chance of getting an acceptable canal treaty from
the US, he is not likely to risk it by establishing diplomatic relations with
Cuba.
If, on the other hand, the negotiations break down, or if Torrijos
concludes that the US is seriously working to improve relations with Havana,
he would want a quick tightening of his own ties with Castro, possibly
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including the establishment of diplomatic relations. Torrijos also has held off
establishing diplomatic ties with the USSR and China because of the canal
issue. If the treaty talks are broken off or reach an impasse that leads
Torrijos to believe that he has no chance for a negotiated "victory" on the
canal question, he would probably seek support from any and all quarters.
A Treaty in 1974?
During the last few months Torrijos seems to have begun seriously
working for a new treaty. Previously, both he and his predecessors had often
treated negotiation of a new pact as a matter of the utmost urgency only to
develop second thoughts when the US agreed to negotiate and agreement
seemed within reach.
Part of Torrijos' present optimism is a result of US initiatives. The
appointment of Ambassador Bunker fulfilled Torrijos' desire to deal with a
senior negotiator whose views are respected in Washington. He considered
the visit of Secretary Kissinger to sign the negotiating principles an impor-
tant sign of progress, and he viewed the White House's request for con-
gressional authority to transfer two airfields in the Zone to Panamanian
jurisdiction as evidence of Washington's good intentions. He believes that the
US now is focusing on the canal issue, and he probably wants to conclude a
treaty before the next US presidential campaign gets under way. On the
domestic scene, he has raised his people's hopes for a treaty and does not
want to disappoint them. The sooner he signs a treaty, the sooner the
economy will benefit from increased US payments.
There are several factors, however, that could delay a new pact. Para-
mount is Torrijos' fear of signing the "wrong" treaty. He knows that he must
be able to defend the treaty against some groups of Panamanians who will
attack a settlement no matter what form it takes. At the same time, he will
want a careful assessment from his influential ambassador in Washington on
the attitude of the US Congress to make sure the treaty will not die there
after it is signed. Although Torrijos has often told US officials that he is
under heavy pressure to conclude an agreement, the fact remains that he has
generated much of this pressure himself. There are no organized groups
clamoring for an immediate agreement.
Indeed, Torrijos probably believes that, at least in the short run, it is
the US that is under international pressure to conclude a treaty, and-given
his concern for his place in Panamanian history-he may be more interested
in winning dramatic concessions than in speed. He will want to maintain a
favorable negotiating climate while also pressing the US to yield more. For
the past several months he has obtained several of his secondary objectives
without having to do much more than take a somewhat less belligerent
attitude.
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If things stop going his way, he may return to bluster and threats. He
could turn up the volume of the ever-present propaganda campaign against
the US presence in the canal. He could also order his diplomats to try to gain
further support-even if only symbolic-from other countries for the Pan-
amanian cause. He might go beyond this and initiate a minor harassment
campaign, such as interfering with the movement of US personnel into and
out of the Zone. The most drastic action he could take would be to promote
demonstrations on the border, which would run the risk of leading to
incursions and bloodshed, as when the students demonstrated in 1964. This,
however, could result in a major long-term defeat for Torrijos because it
would smash his hopes for a treaty and might lead to uncontrolled violence
that could imperil his regime.
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Secret
Secret
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