PANAMA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R00890A001100110021-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 3
• Document Creation Date: December 12, 2016
• Document Release Date: July 17, 2002
• Sequence Number: 21
• Publication Date: November 4, 1959
• Content Type: BRIEF

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Approved For Release 2002/Q(&;TiIOA'RDP79R0089OA001100110021-0
4 November 1959
Y. Panamanian grievances over Canal Zone policies based on growing
nationalism and on a feeling that Panama has long been unjustly
treated by the US in the Canal "partnership."
A. Panama wants recognition of its sovereignty in Canal Zone--
at least a.titular sovereignty giving it right to fly flag there
1. 1903 treaty gives US "in perpetuity" all rights in Zone
which US would have "if it were sovereign," to entire ex-
clusion of exercise of such rights by Panama.
2. Treaty revisions in 1936 and 1955 did not alter this grant.
B. Panamanians want larger share of Canal revenue. (Aquilino
Boyd, leader of 3 November "sovereignty march" on Zone, wants
50 percent gross Canal revenues.)
1. US paid Panama $10,000,000 in 1903; annuity of $250,000
raised to $430,000 in 1936,rand to $1,930,000 in 1955.
2. Fifty percent of annual gross Canal revenues would be
about $40,000,000.
a. Net profits are usually about $4,000,000; US defense
costs, figured separately, are about $50,000,000.
b. Canal toll charges have not been raised since
opening of Canal in 1914.
C. Perennial sore point is disparity of wages received by US
and Panamanian workers in Zone. DOCUMENINO. _
NO CHANGE IN CLA3'
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1. In 1955 US agreed to equalize basic wages, but
Panamanians still dissatisfied. (US workers still get
overseas differential in addition to basic wage and
higher-paid jobs reserved for US personnel for security
reasons.)
2. US personnel in Zone often undiplomatic in relations
with locals.
D. Purchases by Zone authorities of goods from third countries
irritates Panamanians.
1. In 1955 US promised, whenever "feasible," to buy from
Panama or US, but recently purchased foodstuffs from
Netherlands, Denmark, and New Zealand.
E. Businesses in Zone competing with Panamanian ones long a
sore point, but now largely done away with.
1. Transisthmian railway is most important such business
remaining.
2. In 1955, all non-US citizens, except military, not living
in Zone were excluded from using Zone commissaries.
F. Panamanian politicians frequently exploit grievances against US.
II. Since independence in 1903, Panama has been ruled bysmall
oligarchy,
A. Governments characteristically unstable with factions of
oligarchy fighting for spoils.
1. Since 1948 there have been 10 presidents, and if incum-
bent Ernesto de la Guardia completes his term, due to
end October 1960, he will be first to do so in 24 years.
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2. Ricardo Arias, Ambassador in Washington and ex-President,
is leading contender for May 1960 presidential elections.
3. Arias, the personification of the oligarchy, is choice
of pro-govt coalition, but about a dozen dissident fac-
tions and parties competing.
B. Governments have done little to improve lot of lower-income
groups, which becoming increasingly restless, resentful
of oligarchy.
1. Chronic unemployment now
reaching record levels.
2. Overcrowded slums in Panama City and Colon bordering
Canal Zone are tinderbox for serious outbreaks of violence.
3. Excitable student groups and resentful lower classes being
exploited by dissident politicians in search of mass
following.
4. Communist party nearly impotent, but individual Communists
and/or pro-Communists and ultranationalists trying to
channel discontent.
C. Government traditonally relies on direct and indirect income
from Canal, largely neglecting potentially rich agricultural
lands in interior.
1. Canal operations annually inject about $56,000,000 into
economy, compared with annual budget of $58,500,000.
2. Over 40% of population lives in provinces bordering
Canal Zone.
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