TORRIJOS AND THEIR TREATY: A CRUCIAL YEAR

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00353R000100320007-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 16
• Document Creation Date: December 16, 2016
• Document Release Date: September 30, 2004
• Sequence Number: 7
• Publication Date: September 13, 1976
• Content Type: MEMO

Approved Fort
CIM-76-10161
No. 0753-76
September 13, 1976
SUBJECT: Torrijos and the Treaty: A Crucial Year
State Department review
completed Summary
Panamanian strongman Omar Torrijos may be facing
a critical period in which domestic and international
pressures could prompt him to compromise on his ad-
ministration's stated negotiating positions to bring
the canal talks to a conclusion.
--The Panamanians would be most likely to give
initially on technical issues and on such
matters as land and waters jurisdiction.
25X1
--Even on more crucial issues such as defense,
they will probably be flexible.
--Duration will be the most difficult issue for
compromise but Torrijos could likely secure
plebiscite approval even of a treaty which
does not end all US involvement in the Canal
Zone before the end of the century.
Torrijos' international support--the mainstay
of Panamanian strategy to pressure the US into con-
cessions--is not as unqualified as in the past. In
Panama, an economic slump, widespread official cor-
ruption, lack of progress in the canal talks, and
other problems have eroded the regime's revolutionary
image and contradicted its rhetoric. Torrijos now
Approved For Release 2004/11/03 : CIA-RDP85T00353R000100320007-4
25X1
 Approved For f2Please 2004/11/03 - CIA-
has enough domestic enemies that widespread violence
against US personnel or installations, his implicit
threat throughout the negotiations, would also en-
danger him.
While not posing a threat to the stability of
the government, these developments increase the
pressure on Torrijos to conclude the treaty talks.
The mercurial leader will probably react in charac-
teristic fashion by occasionally taking aggressive
actions against the US. Even his conscious strategy
undoubtedly calls for more aggressive moves following
the US elections, to demonstrate that the hiatus in
the negotiations occasioned by the US election cam-
paign has not sidetracked Panamanian demands. His
focus, however, remains the international arena and
there are soft spots in his strategy.
Torrijos' Strategy
During much of the long negotiating process,
Torrijos, who took power in 1968, has felt he had
the US over a barrel. He reasoned that the Vietnam
experience in particular had created a climate in
which the US would go to considerable lengths to
avoid the possibility of violent confrontations over-
seas. At international forums, Panama provided a
pat case of a small exploited nation attempting to
throw off the imperialist yoke; it won vocal third
world.support. Strong Latin American backing in the
name of regional solidarity was practically an auto-
matic reflex. In Panama, aggressive tactics against
the US--from threats to take "the Ho Chi Minh trail"
to attempted seizures of US vessels in Panama's
claimed territorial waters--were implicitly attributed
to the pressures caused by popular impatience.
To date, Torrijos has used his broad international
support, his posturing as a prisoner of revolutionary
forces, and his threat of a violent popular explosion
to pressure the US into concessions in the treaty
negotiations. Panama, now calculating that the ne-
gotiations will be entering their final phase after
25X1
25X1
Approved For Release 2004/11/03 : CIA-RDP85T00353R000100320007-4
 Approved For
the US elections, is demanding a complete end to the
US role in the Canal Zone before the year 2000. Its
spokesmen have suggested that such public demands
are practically non-negotiable.
Cracks have begun to appear in Torrijos' strate-
gy, however, and they may well grow wider. Some of
Torrijos' most prominent supporters in the hemisphere
may be having second thoughts about backing him to
the hilt.
The political pendulum in Latin America has taken
a conservative swing during the course of the canal
negotiations. The incumbent administrations in Peru,
Argentina,-and Chile, for example, will not back
Panama as unreservedly as their predecessors. Some
of their reservations are purely economic, others
ideological. Some concerns are probably a reaction
to Torrijos' personality and image. More general
third world support continues to be semiautomatic,
but most nonaligned states outside the hemisphere are
only superficially concerned with the Panama Canal.
Torrijos counts heavily on support in Latin America
so he can bill the canal issue as a hemispheric concern.
Any weakening of support impacts on Panama's
confidence and tactics--which rely heavily on inter-
national backing. Torrijos firmly believes that it
is international pressure that will force the US to
accede eventually to Panama's demands. He was the
only Western Hemisphere leader other than Guyana's
Forbes Burnham at Sri Lanka for the nonaligned confer-
ence in August. Torrijos has traveled throughout the
hemisphere to generate additional support. OAS, UN,
and third world declarations of support are used at
home to stress the inevitability of a final treaty
incorporating Panama's "just" demands. The Panamanians
would be particularly sensitive to anything less
than complete and unanimous support in Latin America
and the Caribbean for their position. A diplomatic
team is visiting Central and South American capitals
to promote Panama's views--and probably to attempt
to shore up backing.
The Peruvians, among others, have been reappraising
Approved ForlRelease 2004/11/03 : CIA-RDP85T00353R0001003210007-4
25X1
25X1
 their support of Panama. Early in June, long-time
Peruvian opposition leader Haya de la Torre called
for Panamanian sovereignty over the canal--but in
conjunction with an internationalization of the water-
way as .a regional resource. The Panamanians hurriedly
responded with an official communique and a series of
orchestrated press articles deriding the idea. This
was a significant public departure from unequivocal
support for Panama's position by a prominent Latin
American.
Of even greater concern to Panama is the Peruvian
government's behind-the-scenes re-evaluation of of-
ficial policy. in late June, a Peruvian Foreign
Ministry official told the US embassy that the
Panamanians' overly ambitious pursuit of sovereignty
was having a negative effect and that Peru was shifting
its perspective on the canal issue to include economic
aspects,
The ouster of leftist Prime Minister
Fernandez Maldonado and his supporters in mid-July can
only have accelerated the trend toward more pragmatic
consideration of the issue.
Colombian President Lopez, who has been one of
Panama's principal regional backers, recently has in-
jected an even-handed approach into his public
statements that has undoubtedly troubled Panamanian
officials. In a public message to Panama in June Lopez
noted: "It would be naive, I would even say un-
reasonable, for Panama to become the exclusive guaran-
tor of traffic through the canal." Although supporting
Panama's general aspirations, he stated the US should
maintain a reasonable number of bases. On August 8,
Lopez reiterated that the US should retain responsi-
bility for the defense of the canal. Panamanian
sensitivity to such statements was obvious when most
of the controlled press, which usually trumpets Latin
American support, failed to carry the text of Lopez'
remarks.
The foreign ministers of Bolivia and the West
Coast Latin American countries--Ecuador, Peru, and
Chile--have also met to discuss near and long-term
prospects for toll rates and access to the canal.
25X1
25X1
-4-
Approved For a ease - 007-4 25X1
 Approved For
Publicly, there has been a demarche to,the OAS pro-
testing proposed increases in toll rates by the US
Canal Zone administration. At the same time, however,
there have long been private misgivings about the
stability of toll rates and orderly management under
Panamanian administration.
These concerns are partly economic. Colombia,
for example, has its Atlantic and Pacific coasts
divided by the Panamanian isthmus and is dependent
on the canal for its intracoastal commerce. I
As for the West Coast countries, a substantial amount
of their foreign trade passes through the canal. Partly
because of the long-term stability of canal tolls under
the US, these countries had not clearly focused on the
economic impact of any future increases by a Panamanian
administration.
In addition, several Latin American governments
are disturbed at Torrijos' relationship with Havana,
especially in the wake of Cuba's Angola adventure.
Panama and Cuba reestablished diplomatic relations in
1974 and Torrijos visited Havana early this year.
These ties led directly to the failure of Torrijos'
self-serving plans to celebrate the 150th anniversary
of the Bolivarian congress with a Latin American
summit in Panama. After the Panamanian leader in-
vited Fidel Castro, many Latin American chiefs of
state, unwilling to associate publicly with the Cuban
leader and uncomfortable at being drawn into an ex-
pected propaganda barrage at the US, declined to at-
tend. Even plans for a lower-level meeting of foreign
ministers were eventually scrapped.
More recent, unsubstantiated rumors of a growing
Cuban presence in Panama have probably further dis-
turbed such conservative regimes as those in Nicaragua,
Brazil, Argentina, Paraguay, and Chile.
25X1
25X1
25X6
25X6
25X1
Approved Fdr Release 2004/11/03 : CIA-RDP85T00353R00010032p007-4
 Approved For
Torrijos' personal reputation does little to
bolster Panama's regional support--and may be con-
tributing to the misgivings of his neighbors. I
/Some o Latin
America's more sophisticated and better educated
leaders have personal reservations about Torrijos'
judgment, style, and acumen--if only to the point of
worrying that the Cubans might take advantage of him.
The sum total of these reservations and second
thoughts about the Torrijos regime probably will not
have a striking public impact either at international
forums or in the tempo of declarations of support
from Panama's neighbors. Regional solidarity against
the US colossus remains a powerful Latin American
bond. Some countries such as Cuba, Jamaica, and
probably Mexico will remain avid, unequivocal boosters
of the canal cause--although even the Cubans were
apparently annoyed when Torrijos arrived in Colombo
intoxicated last month. Leaders of other states may
privately convey less than unreserved support, how-
ever, and if their reservations begin creeping into
public statements, the effect will be very unsettling
for Torrijos.
Domestic Difficulties
The possible pressures that could lead Torrijos
to compromise do not stem solely from the international
facet of his strategy. His problems at home are
growing and the political pinch could narrow his
options.
His popularity has slipped from a high point in
1973-74 for a variety of economic and political causes.
25X1
25X6
25X1
Approved For Release 2004/11/03 : CIA-RDP85T00353R000P00320007-4
 Approved For - 07-4 25X1
He does not appear to be in:-any danger of being
overthrown, but there is discernible, growing dis-
satisfaction. Torrijos is counting on a signed
treaty in 1977 as a political panacea.
The economic slump that gripped the country in
1974-75 may be the bedrock of unhappiness with the
regime. Although Panama weathered the world re-
cession in relatively good shape for an underdeveloped
country, the 2-percent growth rates of the last two
years came as a rude shock after the sustained high
growth of the early part of the decade. Despite the
government's hope that the worst is past, the slump
has held on. Investment especially has not recovered.
Businessmen are not only reluctant to invest on
financial grounds, they have personal and political
disincentives as well. Most dislike Torrijos for
his crudity, his leftist rhetoric, his lack of well
defined long-term economic plans, his coziness with
Cuba, and the steps he has taken toward state control
in some areas. Businessmen are for the most part
charter members of the oligarchy and look down on Torrijos'
lack of polish. Torrijos further antagonized the
private sector early this year by exiling about a
dozen leading businessmen on vague, unsubstantiated
charges of subversion. Three of those exiled have
now been permitted to return, and in early August
the National Guard ended its six-month occupation of
a businessmen's association headquarters. The residue
of ill feeling has not dissipated, however. A series
of government fence-mending seminars with leading
private sector representatives has yet to have much
impact.
The economic slump has contributed to a
tightening financial situation. Tax revenues--which
finance 70 percent of the budget--have lagged. By
mid-year, Panama's current budget deficit was already
reported to be more than $30 million, although of-
ficials hope to hold the revenue shortfall to $20
million for the entire year. In addition, the foreign
debt burden is heavy--some $400 million last year--
and this year's debt service is a whopping $91 million.
The situation is not out of control, but is of serious
concern to Panamanian officials. The government has
25X1
Approved Fdr 07-4
 Approved For
recently been seeking foreign loans to help refinance
some of it's current commitments. Although the fi-
nancial squeeze by itself is not sufficient to force
concessions from Torrijos, he is well aware that a
new treaty, confirming the prospect of larger US canal
payments, would aid the government's borrowing efforts.
Adding to the government's economic worries is
the drought. It is already worse than the 1972 dry
spell, which seriously damaged grain production and
prompted increased livestock slaughtering to ease the
pressure on pastures and grain supplies.
There is also a latent dissatisfaction with eight
years of curtailed political freedoms and ignored
constitutional rights--an imposed sacrifice for which
there appears little return.
Torrijos may also be realizing that the public
is nearly sated by his steady diet of sovereignty
Approved Ff
25X1
25X6
25X1
 Approved Fo
propaganda. Domestic concerns, chiefly economic,
weigh more heavily on most people than does the publi-
cized colonialist yoke of the Canal Zone--which pro-
vides some 14,000 Panamanians with a wage well above
what they could earn in Panama. A new treaty is unde-
niably Panama's equivalent of apple pie and motherhood,
but it is not a burning daily concern for most people.
Torrijos, realizing this, will probably be devoting
greater attention to economic matters in coming months.
Offsetting many of Torrijos' problems is the
fact that the National Guard continues to line up
solidly behind him, leaving the opposition with few
openings or alternatives. Exile plotting, although
it continues, has come to nothing. Torrijos demon-
strated his strength when he used strong-arm tactics
to squelch the street protests initiated by business-
men following the exilings early this year.
The Threat of Violence
That incident showed Torrijos that the private
sector would be likely to take advantage of oppor-
tunities to fuel protest against him. Many business-
men fear that if Torrijos does successfully negotiate
a new treaty, he will be so entrenched in power that
he will be able to rule with little or no regard for
their views. Should Torrijos allow or encourage
major rioting against the US presence, businessmen
might well try to take advantage of the accompanying
instability, and Torrijos knows it. A further disin-
centive is that violence in Panama would necessarily
involve students--and this is one genie that Torrijos
would prefer to keep in the bottle he has kept
carefully plugged throughout his administration.
Students present Torrijos with one of his most
effective tools and canal negotiating gambits--and
also with his most outspoken critics and potentially
dangerous adversaries. When Torrijos raises the
threat of a violent explosion against the Canal Zone,
he is essentially speaking of the students--and the
spectre of the 1964 riots that were touched off by
a student incident. With 1964 still fresh in the
minds of many, Torrijos' sabre rattling and hints of
another Vietnam have a less hollow ring. He has
Approved Fc
25X1
25X1
 Approved For
frequently employed such threats to try to win con-
cessions from the US. Yet the very last thing on
which he would want to stake his political future
and his place in the Panamanian pantheon would be a
major student uprising. At some point he might have
to try to control it and risk killing students or
chance that student radicals who criticize his
caricature of a revolution might turn major demon-
strations against him.
Torrijos has manipulated the student movement to
his great advantage. The largest student federation
is responsive to government control and has been used
to support the official line. in some instances, it
has been used directly against opponents, as when
students overran and vandalized an antigovernment
radio station.
The administration treats the student sector
with some deference and the students--given their
central role in the 1964 disturbances--are imbued
with a considerable sense of self-importance. Torrijos
has met personally with complaining students. School-
age protestors have forced senior officials to see them
about grievances and the education minister on one
occasion even had to walk through the rain with them in
order to make an immediate, first-hand examination of
maintenance problems. Torrijos released details of the
then secret negotiations to a student group last year
and student clamor helped push him into declaring an
official policy of open negotiations. Torrijos still
meets periodically with students along with repre-
sentatives of other interest groups to keep them in-
formed on the negotiations.
Many student groups are unhappy with Torrijos,
however, for his failure to carry out radical domestic
reforms or take a stronger line against the US in the
canal talks. These groups, bitterly anti-US, are
antigovernment as well. The radicals have been princi-
pally responsible for the violence attending student
demonstrations. The government, through close moni-
toring and the muscle of the National Guard, has
nevertheless kept these demonstrations within bounds
and used them to its advantage. The stoning of the US
embassy during the "banana war" protests against
25X1
25X1
Approved For Release 2004/11/03 - CIA-RDP85T00353R0001003200fl7-4
 Approved For Release '2004111103 - C!A-Rr-11285T00353ROO0100390007-4,
25X1
United Brands fruit company in 1974, for example,
served the government's purpose of underscoring the
struggle against multinationals. There have been
striking differences in the extent of National Guard
"protection" of the US embassy during different
demonstrations.
Proof that the students acknowledge the govern-
ment's upper hand is the fact that Torrijos, recog-
nizing that the US election campaign would cause an
effective halt to the negotiations, has apparently
imposed a tacit moratorium on anti-US demonstrations.
On a recent radio program one student radical im-
plicitly acknowledged the situation with the comment:
"The fact that all Panamanians must obey does not
mean that all Panamanians agree with those who are
ruling us."
The government is probably not so confident of
its control that it would want to risk touching off
massive demonstrations, however. There is no doubt
about simmering resentment toward Torrijos in the
student left, and National Guard officers have re-
portedly been surprised on occasion at the lack of
general student support for the government, notably
during the confrontation with the private sector
surrounding the January exilings of businessmen.
Students have sometimes ignored Guard orders and the
Guard had to use tear gas to disperse one demon-
stration. Last year when the controlled media re-
peatedly warned that those seeking to foment violence
were enemies of the revolution who were being duped
by imperialists, Torrijos was setting the stage for
possible repression of radical, antigovernment students,
In general, however, Torrijos has a reasonably
firm grip on the student movement. The National
Guard gives him the means to maintain this hold and
selectively employ student protest, and even small-
scale violence, to his advantage. He must be aware,
however, of the potential danger in widespread
student violence because student radicals who are
most opposed to him would probably assume a major
role and could seize leadership of the student
movement. Torrijos probably would not unleash and
support major violence unless he believed he had been
Approved Fo - 07-4
25X1
 Approved For Release 2004/11/03 : CIA-RDP85T00353R000100320007-4
25X1
forced into a position--for example by a complete
breakdown in the talks and little prospect of their
resumption--where a desperate gamble was his only
hope for a new treaty. He would be far more likely
to turn to the international arena to try to pressure
the US first instead of embracing violence. His
negotiating ace--major violence--is a wild card he
probably hopes he never has to play.
A dissatisfied business sector, a troubled gener-
al public, and restive students have brought Torrijos'
ballyhooed revolutionary bandwagon pretty much to a
standstill. The eight-year-old Revolution, always
more mild reform than radical change in spite of the
rhetoric, has broken little new ground recently. In
fact, the only really clear goal of the otherwise
amorphous Revolution is a new treaty.
1977--Year of the Treaty
To.rrijos has now billed 1977 as the "Year of the
Treaty" and his spokesmen are talking of "months"
before a new treaty is signed. Panamanian officals
are raising the expectation that once US elections
are past, the talks will be speedily concluded. In
1977, Torrijos says, "the US will have run out of
excuses and the Panamanians out of patience".
For the moment, however, Torrijos' strategy
appears to be that following the US elections he
will step up his international campaign, probably
focusing on the UN. He has indicated he will consult
with national sectors concerning the timing of a UN
move and that his support at the nonaligned meeting
laid the founddtion for a suceessful UN effort.
Official spokesmen have fuzzed up the timing of
any UN move in order to keep as many options open
as possible. If negotiations do not proceed
smoothly following the US elections, the UN timetable
will be moved up, but even Torrijos is probably
unsure of how exactly he will proceed at this point.
If it suits his purposes, he appears willing to
stretch Panamanian "patience" into next year without
vigorous cage rattling. October 11, the eighth..
anniversary of Torrijos' revolutionary takeover,, will
present some temptation for anti-US action, but he is
probably willing to let it pass uneventfully. He has
laid the groundwork in Panama for a major push next
year rather than this.
Approved Fort
007-4 25X1
 Approved For
Torrijos' efforts to conclude the negotiations
are quite likely to include rash actions that could
disrupt relations with the US. Torrijos, with his
military background and macho image, prefers forceful
tactics to protracted negotiation. His aggressive
side was evident in April when the National Guard
attempted to seize foreign, including US, fishing
boats and levy heavy fines as a show of sovereignty
and for financial gain. The campaign ended with two
US boats bottled up in the Canal Zone. Torrijos
eventually agreed to scale down the fines to retro-
active license fees, but only the National Guard's
limited marine capabilities and the international
media's late start on the story prevented a major
bilateral incident. Then in May, Torrijos apparently
gave his approval for a brief National Guard seizure
of a boat in Canal Zone waters that was the subject
of an ownership dispute. Not all such actions are
hastily conceived--Torrijos believes the US responds
to aggressive tactics with greater concessions.
Conclusion
Torrijos may be playing with a weaker hand than
at any time during his negotiations. His international
position is obviously not without some flaws. For the
near term, Panamanian negotiators may continue gener-
ally to hold to their positions and yield little. If
the negotiations approach their final stages and it
appears the sticking points are primarily US concerns
for defense arrangements, guarantees of reasonable
tolls, and unimpeded access--as opposed to centering
on such sovereignty-laden issues as local jurisdiction,
jobs, and land-and-waters administration--then hemi-
spheric leaders may signal Torrijos to moderate his
stand.
Even the sometimes strident call for a complete
end to all US involvement in Panama before the end
of the century is a possible area for compromise,
although duration would probably be the most difficult
issue for the Panamanians to give ground on. Perhaps
significantly, Torrijos' performance at Sri Lanka
was relatively moderate. He had practically a blank
check for the Panamanian resolution, but the decla-
ration that emerged omitted any reference to a
complete end to US involvement before the year 2000.
25X1
25X1
Approved For Release 2004/11/03 : CIA-RDP85T00353R000100320007-4
 Approved For Release 2004/11/03 : CIA-RDP85T00353R000100320007-4
The omission could have resulted from moderate counsel
from the Colombian and Venezuelan presidents. Although
the Panamanians have backed themselves toward a corner
with public statements about the year 2000, they could
still compromise if Torrijos felt he could get an
otherwise generally acceptable treaty. The duration
issue could be soft-pedaled if provisions for a US
presence were contained in a defense agreement, for
example, rather than the treaty proper.
The dispute over defense sites and roles remains
an area for possible Panamanian compromise, since
there appears to be Latin American concern that there
be a continued US guarantee of stability and access to
the canal. The Panamanians, for example, have de-
manded that the present fourteen US bases be cut to
three. A loose definition of what constitutes a base
area, however, could allow the Panamanians to gain
their numerical target without as drastic a corre-
sponding reduction in the actual size of US forces..
On lands and waters, where the US and Panama
started far apart, the Panamanians are probably
willing to give on their initial proposal that the US
retain only a strip of land equivalent to 10 percent
of the present Canal Zone. Panama will be gaining a
considerable amount of land, and could easily emphasize
the gains rather than continued US control in some
areas.
Torrijos has promised a plebiscite on a new
treaty, but compromise in any of these several areas
or others would probably not jeopardize public
acceptance of an officially backed treaty. Govern-
ment resources should allow Torrijos to propagandize
and mobilize a vote, especially from rural areas,
guaranteeing a favorable outcome to a plebiscite.
In any event; Torrijos would have few scruples about
rigging the vote, if that were necessary.
Torrijos has promised and promised that he can
secure a treaty with his tactics and he will feel an
increasing domestic need--underscored by continued
economic doldrums, some political disenchantment,
and a lack of revolutionary successes on other fronts--
to deliver. Even with the National Guard solidly
Approved Fot Release 2004/11/03 : CIA-RDP85T00353R000100320g07-4
25X1
25X1
 Approved For
behind him, Torrijos would be loath to look ahead to
1978 without a final treaty accord. He would then be
facing--with empty hands--the tenth anniversary of his
rule, national assembly elections, and the need for
another six-year term as Maximum Leader of the Revo-
lution. He wants an agreement in the near term and,
as the talks move into 1977 he will probably feel
under increasing pressure to conclude the negotiations.
His threat of major violence, although not entirely
hollow given his rash temperament, is still a very
unattractive option.
25X1
25X1
Approved For Release 2004/11/03 : CIA-RDP85T00353R000100320007-4
 STAT Approved For Release 2004/11/03 : CIA-RDP85T00353R000100320007-4
Next 1 Page(s) In Document Exempt
Approved For Release 2004/11/03 : CIA-RDP85T00353R000100320007-4