The Panama Canal, a reexamination

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Title:
The Panama Canal, a reexamination
Physical Description:
Book
Language:
English
Creator:
Gravel, Mike, 1930-
United States -- Congress. -- Senate. -- Committee on Environment and Public Works
Publisher:
U.S. Govt. Print. Off. ( Washington )
Publication Date:

Subjects

Genre:
Spatial Coverage:

Record Information

Rights Management:
All applicable rights reserved by the source institution and holding location.
Resource Identifier:
aleph - 24611350
oclc - 4229107
System ID:
AA00022276:00001

Table of Contents
    Front Cover
        Page i
        Page ii
    Table of Contents
        Page iii
        Page iv
    Letter of transmittal
        Page v
        Page vi
    Introduction
        Page 1
        Page 2
    Background to the present controversy
        Page 3
        Page 4
    Joint statement on principles
        Page 5
        Page 6
    Reaction to the proposed new treaty
        Page 7
        Page 8
    An historical sketch
        Page 9
        Page 10
        Page 11
        Page 12
        Page 13
        Page 14
        Page 15
        Page 16
        Page 17
        Page 18
    Justice of the 1903 treaty
        Page 19
        Page 20
        Page 21
        Page 22
    Sovereignty
        Page 23
        Page 24
    Economic importance of the canal
        Page 25
        Page 26
    The zone and the zonians
        Page 27
        Page 28
    Operation of the canal
        Page 29
        Page 30
    Defense implications
        Page 31
        Page 32
    Economic potential of the Panamanian Isthmus
        Page 33
        Page 34
        Page 35
        Page 36
        Page 37
        Page 38
        Page 39
        Page 40
        Page 41
        Page 42
    Conclusions and recommendations
        Page 43
        Page 44
    Notes
        Page 45
        Page 46
Full Text






COMENaTTIZ PRM







CANA.L-A REE MINATION

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A REPORT



SMATM: BUKRORAVEL

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V.MONMENT AND.. PUBLIC WORKS

UN TEIP.. STATES SENATE







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JULY 1977
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SERL&L NO. 9"





PrInted for Uke use of the Senate Committee on
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Environment and PubHc Works


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COMMITTEE ON lWVlWN MXN7 AND PUBLIC WORN$
JENNINGS ft 40DOLPH
EDMUND S. MUSKIE, Maine laOBERT T. STAiFORD, Vwvaont
RE GRAVEL, Ajoka HOWARD H. BAKER, JB, Tennoome
LLOYD M. BENTSAN, Texas 1AIMS A. McCLURE, Idaho
QUENTIN N. BURDICK, North Dakota PETE V. DOMEMCI, New MB4co
JOHN C. CULVER, Iowa JOTM 1j,., CRAFRE, Rhode Island
GARY HART, Colqmdo M.AL COtM WALLOP, Wy=ing
WENDELL, Ri ANDERSON,
M*..
DANIEL PATRICK MOYNIHAN, w York
3-0 W. YAGQ Xf., 8Ujjl*fd0r
ifAuxy Gumw, Auww* &atbiredur
LiKox 0. BumwGs and ll"oLD jff, BRAymLw (Minority),
Smiur Profasimal Staff J&mbers.
p T. Cumxmw, RxRmw M. HAum, RiouRD E. lElzRoD:(Miuorlty), an&
KATMUM9 Y. CUDIaPP (Minority), Aawbte Quus4b.
Professional and research slaff., IrA R. BRAmpvwAux, PAUL CIMLIU4 E. Kxvw Dowmu, axno*;* K
FzxTow, IT.,,-RAxD0lxR G. FLWD, K&TRALx1ot R. F. Pd wvx, lomi D. ft=pKAx, AwN QAult"
RicmA T. Guzrx, W=Lzy, F. HAYDEN, V**o*0A A. RouL&wD, RONALD L.. W.&TZ# WA,
KQuMoqtjlVw,1F0,PARxNTE, JoHN B. PuRB40m, J-4, J'Amzo D...RAxoz (Amiga* CWmselt,
LatgA% 8 ly 0"
ilicQu]3 q# Pat CX&V=jC A. STURBFM, It. STXVMO SWAMJr, R @T YAN
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susqutyadute o ifato n 91 o$.3mllo)
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revised th 193t t iJN==== H twoH =HH = subsequent........ treatiesiii of 1936 and 1955.iiii
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JOINTi STTEEN .... PRNI LS
I~e most recent phase in the effort to negotiate a new treaty was
initiated in .................. 197 with theiiiiconfirmation ofiiiiiiAmbassadoriiii


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WWO as........
1. Th "at of 903 nd is amndmets wll.b.abrgate
byth cncusonofanenirlyne iteocanc anl rety
2. Te ence ofperptin willbe limiate. Th ne
Airetyconcrnig th lok caa sall avea fied erm nainH
date.i
Twmiati of .S.juridicton oer anamnianteritor
shal tak pl prmptl inaccodanc wih tems seciiedi
the tiiiii
4. Te Paamanan trMA~y inwhic thecana is itae
shal b reurmd t th juisdctin o th Reublc o P nilam
Repulicof nema initscapaityas errioril sveri
VW gantto te SatesDf meria, or te dratin!o
the ow ntieocenic ana traty nd n acordnce ithwha
tha teat sats, herigt o se helanswaers ad irspaceiiiiiii
w~ch. may be necessary forithe operationimaintenanceipro
Secion an deens ofthecanl ad te tanit of ships. H




























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REACTION TO THE PROPOSED NEW TREATY
IMe U.S. public at large still holds to its historical perception that
the Panama Canal is an important commercial end defense asset for
the United States and the world. But the Kissinger-Tack Join t
StMement of Princi les, has served to polarize the debate into status
quo and protrenty es. T'he latter Kroup arg7es that a new treaty
accomin ates Panamanian grievances is the surest way of
upran eangthe United States basic interests in the continued fair,
=ent, and neutral operation of the canal. The status quo position,
ft the other hand, em ng
phasizes the legitimacy of U S i hts assured
in the 19M treaty. Proponents of this position, while doubtless
willing to fine tune the existing treaty, adamantly oppose negotiating
A mw treaty in accord with the 1974 Ptinciples. They raise the
particular objections:
(f), 1-he proposed new treaty would relinquish U.S. sovereignty
in the Canal Zone, thus abandoning S. citizens there and
minishing U.S. power and standing abroad.
(2) The proposed new treaty would abandon huge U.S.
capital investments in the Canaf Zone, which rightfully belong
to the American people.
(3) The proposed new treatX would relinquish the U.S. right
U..
to o ate the canal to the Panamanians, whose political in-
MA stabrty and lack of technical and managerial Wdll make them
A.
poor candidates to assume the role so effi6ently and imp"ally
by the United States for the past 60 ears
(4) Ile Proposed new treaty would abandon itizens M
the Canal Zone, who for generations have given their lives to
Jli the canal's construction and operation.
7: t: ew aeaty woul
6) The ed n d threaten hemispheric
el
security
defense and to
se which the "aid is vital,.
71 reed new treaty would endanger the U.S. economy
by inqu hmg operational control of the canal.
qu Val ihese ( objections to a now treaty is of course
J Apiobjeet to. it to Panama,
chidlenge. Durin -day vim
pumed oaf of tboseimiles in depth in conversations with Panaman-
Gffuials nies religious leaders, and other prominent citizens-
Embassy and military officials American businemahen: Clan;i
11600.1. labor leeAers; and officials of the Fm ma Canal Cornpan Based
lampm those. Meetings and extensive further study since !eaviu
g
Pkasmais I have coiialluded that in fact each of these objection is,
two" 1MY: or awther, invalid.: I hope to show that this is so -n what
n4*Hdw&. Let: me first point out, howwww, that owh of theme aqrtmonts
aghimtS nw treat mise: namely, that the
y contains a suppressed prom
e A.
..pruent tresty is fair and serves UX intereilUL If this promise iis false,
r" x L believw the evidience Compels us to conclude it in, then all of the
abeve ft=entS f6ilw
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60
lo All: AN HIM RJICAL ZKETCH.
ti CW=bus fost, towhed the Atlantic coast of Panama,
rm. sought to W ways through, over, or around, the
E dis vaz the P" c Ocean in 1513, and
lkslboa.. -ed UrIng
t AMMAMMEMMven"od, ofdovelopment under Spaiish.rule tremendous
of Od, eilver, and othergoods fi 6m the Ines Empw*e and
earned scross the isthmus by hurnami horses,
siad. boats. In those d sys the trail I ed f rom the c i ty of FZ
Own- )P#4W:.wpt to Fortobelo qn. the Atlantic coast.
Sptboom A t. from..8pain in 421, along with
Non joined Gran, 061 mbia, then
U 6
:of Womb*.: Vanemels,,t_ Ecuador. This n='W"
=mmwC&AkA&Af1A MW tv theRmmblia oANew Granada,. later known as
V Colombia, However, Fanams, never lost her identity,
E=W 564m:'b"is was never able to establish secure sovereignty. Expres-
onalism, took p4m in IM, IM, and 1861.
MrTL &iA..
..in J Colombia -wm, in fact, so: weakth" 1 1846 Colombia
it, tsAvAnN4mts to enter, into a Ganeral Treaty of Pesice,
to*,. N' wvjVGW= wW Commem betweien. United States of
Aloatiow4,od tho Republic of New Ch-sn"s, where the United
the right of free &*ass across the m.13M.-U.S."upon
awvm4w of nownication that now aidst, or that may be, here-
loll
tbs. United States paranteed the
4 "'WWMT of the isthmus and Volombials. sovereignty over it,
at-the fim..wsw Pressed to. Of.bw
cwwofta thiq
Y not aly -appAnstefforts., atfplaw independewe,
'bes 4Wjw a! hedge aminst British waritim intamts in th &M.
1"1;6 AAA *0 later the United
i Pact that Wme than halff a ce
his, tresty -01 A-.W sappartiag..
Sam-* &Wlys#"
11,1 8MIZ.1he in CA100. "M gdd
..4ho::41010110" ,vwt..Of t4e pretefted to $471
edh 16:11i ..'isthmus.vaAher: thm take the lon9:Wd
Ar*Azovind Cls": Rom, 4w::.:4rrv&qi&n& socrtme tbe.-stM nun-
-woutown.q0" sad.. oWitaiwofthe Uoited.-States. And,.
ODOMMMO old gwlt And:46herkittmhad to bbAhimed
theim"'Uteopamw tbeptaM WWdoms",
AMM CWWObia,
K:.A
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rodum "i"d .10 ifttenabp a in tb6XM!*.
SUMm av& Britaim m OWAX..
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Mitlelad ed&MI P
(ftbt AMMOMM
i**Mkw 41 206*1woreq, WWWO t& emproulaft..
bMWUk&*Wd FIR-E-- &aeh:mMed4"Ad* bv the chwton_
Bwvft Trfttyt wherein both speed never to obtain or for
itself iny exclusive control over a ship canal across Central America.





10
Meanwhile, private American investors proceeded with constme-
tion of the Panama Railroad. The last rails were laid JOU=9 the first
transcontinental railroad on January 27, 1855. it had cost around
$7 million-about $150,000 per mile. But even before the raibrood
was finished it had earned roughly one-third of its cost by trano-
portmig passengers Aine. By the end of
18581 ithad grossed over $8 million. The company had
what it thought would 1A proMW*e'tafiN jjj'
the number of users clankrft f W COWIt"
a-t SIM Cold and stem 11
track om sear f&iek-st66& fop f
Cha CIT bf- lh ulliiw
qW cumstances d. Ww" etic l
road across the Cqntinental'Vi'
road to fall into disuse dtot:, a, MA*W"r at ewrg Jt didI h#w#"w
Pajaa-ma tremendoug sdvaitfig* 6V& 6th4'ptAsih1e 4tos 16PA
oceanic CaAal.' Its 6 6110 '064Ad
of the, %Alm4 pb*,- by the Wki*fkid 'Aiifttte it)*
the nl indiepeils" 8k1::" :)f6rdi6Vi" 6(4 p
under the tern" of its lh* w A*rO7i761a&W
e Vri6bj!1'Tbr 'ction!-4
to exact "wd qifititble Ither tv4tru
its right-Of-WV.
we fiftt 9ftidus 496rt- to d*,AihW uiow:' OW 1?WaAftWAm& 1811
t ander wby m i 881i Whan 'a-Freh4=&n- FetOikt Dij
fo oin"
ludez, -Canal,. 1AW6 tho:'10
Intemcm Waye own tho 04 Pkji a @#MW 40iO 0"
the. toute, 9 lect d :byr DO' qAss p&- wis aubjecvto tl*
road Is consent I -he. was fiftt obligpd to K iatisf y # thre I*. R i&t W WAINNEWWWWW
UVML3'UP M the 9% &V
b : OOT Sti
hNm be hni
million ut in, spite Of old, W the PtdnOk1CftALV&
not to, be., IV,, Ufliwd::for iobiverat:"' 8SMS: Vig"I
building a sea level timal 4amtesod of locks ftnrv W 41 W_ l Wr
Ot Air, i 1,
req*ed. much Im mawutioit his iitsbility Ws&ft owftin
eng meennf problmw- itak of, limo*kdep of thweauiw bf n" &W-
and tnalan&7: wMeh--felled 201 ift 4 bO&Aq&b4 foreo,
ool 10A000 &': esw; ani ;a sorim, of -fin
t= a OOM&MMS WagreOf tlw in S" aft
Comp Work
hew
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one Issfvaliaitt O&ft IL
OeWber: 20j e 1 AN the 'Ooni 44t. ASTOUveHOW, ft", 10

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worth oif the New Company's stock in restitution for alleged
xw an their dealings with the Compagnie Universelle. Of
6 40W:z":subwiption of 60 million francs, this gave Bunau-
VWi" a -- .-ateiy a 4-percent interest in the New Co.2 This
a A. ___2 -
Offlnummen% PWUWx couplea with a Emnichnian's desire to clear his
awagood name wn; simultaneously b honor to his country,
ently provided Bunau-Varilla sufficient incentive to devote
iW-Rent 1.0 years d:his life to a anwadei for completion of the project.
A4W,:.mm*, than anyone also he deswves the credit for eventually
'bringing together the forces of Panamanian nationalism and American
intemst in,& waterway screw the isthmus which happened to coincide
#4 thwturn of the century, &Dd which finally brought to ft-uition the
old dream of Jomimir the two great oceans. The pure
by which"he achieved this end surel qualifies
NwAs am of the greatest entrepreneurial rogues of, the 201K century.
Ati fint the Ne* Panama, CazW Co. actually rejoined battle with
dW ehmnwts in the Panamanian jungles., and Tor several Te!WM some
was made in the excavation. But French investors
wo by now m than a little leary of the canal undertaking, and
W sOW of frantic efforts by Bunau-Varills, French interest m the
pro' i Nouvelle was de-
1@4 waned rapidly. By 1898 the. Compagme
YoUn .X most, of its attention to salvaamw what it could by sale of the
canal. To this end, the everwzesour eful Bunau-Varilla made it his
bushmais -to awat, every American with an interest in isthxnian affairs
wbw came to Paris. Out of one such encounter came an invitation for
bia 49 lectum on his favorite subject in the United States, and in
1901 he arrived mi New York to begin several weeks of
hAug and touring. During this time he met a number of influential
Americims who were later to serve his cause well, including the power-
hil-Swator Mark Hanna no 5 yean before had made history by
_* ir an-unprecedented SIU million for the Presidential
Of McKinle
q, WkMA Blinau-VAM& firA anived in the United States there was
imbnow.. interest in an interoceanic canal, but it was far from deter
mmWIthat the route should be through Panama. In fact, the United
States had long shown a predilection for a Nicaraguan canal. At the
valmnr of Senator John T. Morgan, rankinr Democratic member of
an Foreign Riilat ms -aa a stockholder in the
ILS--ill, Canal CO, wki& had started a 147icaraguan cang belore
wabing to the financW c of 18W, the Senate had in 18"
[Via
bill the, Allcms an te. Quick concurrence in
WR'I;m ;:d=vexpected, bu.trawns w'ere upset at the lost moment
wbwan swendment:was acceptied and then adopted in conference
wittm to create: a study commimion to investigate all feasible
VWtes for a camal, including Panama. This tilmo-buying coXU
__Pron m
was avpaewJy the handiwv* -9
William Nelson Crourwell, a cunnIn
an&via connected: New York attorney who had bwn retained by the
biew lp Wlp its
3 OW to reIn 421M Intlerlests in the United Statim
ilatdo-for the. Pr
req to was far from over, haw
The,-Walkw Commission, which: had bow appointed to aWdy the
conairtism, ma& ito -ftak report. in Novembir 1901 in which it




=-$a 0- In -3





12
recommendeitheiNicarguaniriiiiiiTheireprtiactuall: indicat
preernciiriteian maianroieoniiehncaiiiunsibtii
CommIIIIIIIi i ssion had been unabei to obtain a sa~ii~i~iiii~daciiiiiyiiiiiiiiiiiiiiiiiiIm
thiiiiiiiiiiieiwih el heP na acocsso. A
iprsienioiteiewCo payhairfuedit:iami&, e
and iiiin] fatfrdCowUfrissin hth d vnuk
aiiiisefreonzeiheneitiotafiuei-n lipt .vai
of$19,4150 n heprprt. hi-wsreecedbyte omisi|g
wicesiaethvauat40mlonan i oebrti4A
its epot fvorng he icaagun rute
I Bl'a-ailaatti pit riedbcki he nieiitt i
lobi o h aaainrue eqikyszdu h tain



illin
Bosofrwn u nJnay4 92 u twsto|t~ofr'
stl afvral ot na iaaga cnlbil hihi&" i
HoseoiRpesnatvs,38ii!dy'ltr.H wee, ciij
th Snae asstllreuied.an o, anar 1 Snaor H=
anoncdhs ovito ta teiiipnys ofe cetd e



tr a ckii ,,,.......... .i. .
Thenet ewmonhsweeiiled it mchbv111tb-s*I,*
maeuerngbibthCrmwliad uiiiiiiainldig w d
th mstfaou sheeioiteirech ans aee.i yln itiW
iiiiiiy ofthereio el, Biiiiiiiiieaizdiha..ii nw(Z4 ,
p nialyiosiiiin a g u e nsia ai st t h iiai!n r .
wai h rsneo 4~m civt hc oeeal.cud


of.... Matnqeiaeaecmltl dsryn h~bl~iy ...
S i ere n il 3,0iep uauail et ue:h C A,

pryo tehrrrhi aaoy;"e*.ef a tird'i:& mq
hers.Hiadtieimnydvieio: ti rolm.t he 0
l i thuimciicesiTeiidelyhiim m eedamiels






= II 13
i H a n d 't h ro u g h P a n a m a p r o v id e d h e c o u ld p u r c h a s e t h e a s s e t s o f the
M owiii iiiiiiiiiiiiiiiiiiii C a n a l iiiiii fo riiiiiiiiiiiiiiii a n a m o u n t n o ti i iii ii iiii i iiiiiiii iiiii i iiiiiii toi ii i ii iiiiiiiiiiii ii ii e x c e e d ii ii iiii iiiiiii iiii ii iiii$4 0ii iiii iiiiiii im illio nii i a ndiiii ii ii iiiiiii ii iiiiiiiiiiii ii iiiiiii
pmvda frter e oud btan ro Clomia"prptua" onro
..........................................................o........on s c o u ldiiino t iiib e m e ti
wiiiiiii iiii "resoablitmehe asto etito heplait bild aiiii


................... .................... c a.. ...............

.Once th Spoe c a ige nolw l arest h e

go~ t.....f..........reaty....h...lomb i ........ do n|he F e c




T ~dagee t sllfo $0 ilio, ndth olyoterob
1850ClatonBulwr TeatiwitiGratirit iniiiadiii

bem eciicaly upecedd i Febuar 192 wth he rocama ion iiof
the ay-aunefoe Teat, wich ithrewallresricion ag inst
.... eU m rolby t e U itedSta es f an ca al i miht c nst uct
COMiiiici
Negeistim wth Clomba rved omehat tick, bt whn io
Janury 2, 193, Scretry o Rtte Jhn Hy mae hii"fial".ffe
ota 10 illon pymet ad a 250000annuty herafte, Clom
bi~~~~~~~~~~a~~~ ......oe eri ccpe.Ote erso hetet
iftiiiiii
(1 A10-er emrnealea tesoeopin fth nie





,,,,,................................................4
of the consp i rators were connected with the: Panama Raffivii iiiiiiiiid -0ii
iiiii ii ii andi i circiiiu m stanitial i iiiiii i i i i iii i i ii il yH s ui i sii i i ii ii r ii ii i i
encouraged in.her..ue..b.nne...........X 6pt t~kr
welliiiiiiiiiiiiiiii wh.a..... ttre o teN wPa a sC ojbA
also... lea one oterira.B hta uutii*
clear tht.olmba.asn..oig.o.atfyte......~ T ,y
and. th reoutoayjnasn n fisnme,.ahw
Dri aulAao urrrt ,ahntn.tsudot.h
adminitratio ontepsiiiyo euig uprfr.
seeso.H a nbetsoRoeetrK,|~h iita
..... wa niln ob ulcyascitdwt osisosaamg
"!redysae mdrteeoetre oCowlwow,4
"i i tiontohadeiucimterimridscieippretyi)w!
..... seea ucsflmeiganiao a~norgdi
sudenly rmwl dspeae fo hesenha= et 4 v
ais t cnsltwih isclen. t ees ha te omiwlared
ofii........ th eolto ar lttn ,an rmw l as ihei r ur
iseid~ii..... thyw udcne h alodcocsini i iovao4
.........d.
Attispit ua-Vxlaraperdont seean et-oi
thth ihdt etwt mdo.Atog thsnvrbe

prvdiicmsataivdec soewhlig ht ieana
meel benaxagiiachng i aniides.Inay as, mao
ni deiniii-ai14ta e aien ekn a ert
$ mii ontiuirm o h evltobu a o t 9)owt
Crm elioeiini-arla roie t e ha ecol o
whruo efe noafur fatvt ihteitri
pups fwnigUS spotfrterpnngrblin lruh
cotcswt nleta red eqikylandta h oen
iiiwaiotepain oe ye acinonteish u.'Te
onOcoer9 h aia al nhi go. ren.FrnisB ,loms
wh a ttetm ne ertr fSae-Loi okhmt
th ht os ome rsdet'osvl n h w o




_ _ _ 7
t*WyI! be bribed. For this purpose, he personally would send $100,000 ll


aum the rebellion had occurred, on condition that he would be ap- !




6i
........... minister= i""'= to. theiii Unite State&, -




Doubtm levingAmadr in ometing f.a.hir. BnuVrla

W~e oW W tnwer emtwt eitr a n ae
hi o xec h otrekofarvouio.Ha eel ckol
e d g e d......a....e..o.o...x.....e....r...bl..,......in.d..........................
w on their way to the Gulf of Panama. This gave Bunau-Varilla
alliihe needed to know, and he rushed back to New York for anotheriiiii
sednwt mao.Ti ie eanucd htteA e in
daiie dhep u h ebl ol ae omk h i


toiimeetihimiltheiiiiiiiiiiiTii V beforeiisailingiforiiiiiiiii atiiiiii
tiiiiheiwouldibeipresentediiwithiaiflagiiaideclarationiiofiindependeiii,
constitutioniiiindiaisecretiicommunicationsiicode.iiTheseiiessiiiiiii
iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii
setiioffiiforiPanamaiitoiibeginitheiirevolution.i
Only 2iidiiysiaftieriiiiiiiiiagainisetiifootiioniPanamanianiisoiiiiiii
iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii
iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii
susicius Ina narpanc A adr cble BnauVarfl inth
sert oehehd enprvde:"en semr oCo Bnu

Varill,.... ofcure hdabouel o otrloerUS.wrsis





]]]] ] Z ] 16
But Bunau-Varilla, not one to be outmaneuver d, withheld
the junta desperately needed and simply refu,"d taA ke xn u1 f4*m-.*1
actions on the new government's bohaU until
theiiii ....h et rprt issain nc. h i o&h
qickystaott ncsaysesfrtektbnoa"
trayik
MenhlbcinPnm h nmeso h ut eeAk

whtteieadda eesr tp t. sue hiikeet:w*.


prpry ersetdbyter rnhMiitr-O oimr atl.
apinte Aadoiad edeic Bod elgats f te epbli, 1.
Panamai an......h m rte isrctost c rt:B nA*
Vaiiiriiiiiiiiii ile wsio n g titi rat ," l d u e yJ f w i :
toiei"revousyicnsutediwihiiiiiliad.:Bayiio= AI
prce i vrtig"tejna ietd srclivgenn-
iththm. A d hetrat'sprviiosimut otibi..*-v1e .,

favorableii fo................f heH y- er~ntesy.flt
Coomia"-1Wihthsedcuens nhadtt-eP .
delgaessaledfoiNw or onNoemerii
BuauVril ,hvigreeve or f h AaorBydxtiim.:
knwhi ie a hot Hirane o efomlyieivib
eidetRosietonFidy Nvmer1. hti wi s.1*
h hiteHoserecpton hetune toSerearyHa......i

aring

Fo er o aehddfiiism egtaig h :.
Caa raywt h ooban.ieenu ht 0i~g
ag tePaamnan wr siliolmias n bo

upt s h arpitn iletco ooi o avn*





17=H
qiiigiiiiiiiiiiieit.. ..he r it o r H e y 's o w n a lth o u g h h e e x p r e s se d a p re fe re n c e for
the fi~t of hisownilaborsibecase iti"hasitheidvantageiofico
f~ guo heUie tte nbodan eea e mstergt
sh eiiiiiiiiiiiiiiiiihiieii
Timewasnowpreiou Judee, a AmdorandBoy ha arrived
thatVagnmwuig No Yok. hey ad een elaed Idaywhe
theynai Crmwel a all bu on he 8ththePanaanins oul
V b e in ashingto to inst uct theiiMiniste .iinith e nightiof th ei17t
Bufw~rl ifrwdH dath ise o inth ratih
next doy Woreiiaiiiiiiiiiiiiarived.iHeistated


So Iog asthe elegtionhas ot arive iniashigton

I" befree o de~mithyou loneproviediwihicoplet
iiiiiii
amwa* ad asolte p W-fs-Whe the arive I hal

no k n fat, ma perapsno onge beher
ger beialone









caniusiiino siidvatageusitiPanaims. ivevaindlk'
trayadsn tbc hr oetm 6 mh'h
peido nhsatcuaiiy hta ad o1A
comesi onyonei.tel.eo.a...uin.vl h'
iN y n hywl aeetee ntenwfed 0td

an ipt.YuadIkiw oMh*iu Z!ti
arinihstray-iiwhc -.ii Ph main paro
obetifitiiiiisb itdt6trensdrkin-~i;' 1
iAla

ate pttia edimimniiii.u rn CU8
whtreut teiteiilieeiial*6 a, d
upnteiansbjc;titte 'aW;i
i ndepenenceiasiacievediiiih
andt i owiii astmeio
thmiolokou ora bterbrg ha he. WOAW4
make atifirst
No upiigy h omte mngdt e h seWAei

ofispoiinanonJnay2,te nnmnawr.

OnFbury2,190,teteaywsaprvdiy h
ilpeBnuVrlas iainwsacmlse.4 .nj0M117

iiiiiiiiiii
iiii
iiiiiia
iiiiiiiiiiiiiiiliiii7 39iia










JUSTICE....F.T.......3.T.EATY

Th rte lnth itoia sechiI oehlfu i

putW he reen Paam CnalTrat inpespctie.AsIiiiiiiiiiiii
il idcae ayresnal efottocmet trs ih h
so toa e teay ase b tausqu oresmutfisto
amases heovral aires o te xitig arageen. f po
Mamawlo w ae ored o hecoclsin hatth 103trat i
Jft1k~ft + al 121%td
..... tensurly e ustabado ou obec isii~i
Wrwstugitin or euiabl trm. nd uie rakly te or
1.1arnd 6 th hitor ofourpreentreltioshi, te mre on
"su-e-- Ibecme hatsimleeleentl jstie i alosttotll
lackntfrm th eqution
AU hstoicalrwod isuneuiyw onthi poit. ur on Scri
Uay f Sateat te tme escrbedthetreay a "vstlyadvntaeou
to A UntedSu~es"and notso dvatagous o Pnam." hes
Wo~qitale rragemnts ere moeovr, ffecivey i osd ud e
a, sate f duess Panma'sver exitenc asa naion ug i h
balam etwau er onsnt o te teat an cotined .S.pro
toeta fom Clomi& he ws ecourgedto eliee tat ithu

the. a%..the oher ouldalso ail.Undersuchcircistanesiseiwa
to rtif thetrety irtullysigh uneen

.-Y 's gen an spoesmn i al ths wa a renhma wh




- - -------ii .....
Of course, we would no tolerate such a situaion within our....de s
iii~ii~iiiiTha Panamanians have no choice. The United States is a superpower~~iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii i
iii~i~iiiiiand they are one of the world's weakest countries. Our military iiTorcesiiii~ii~ii~iii~i~~ii~iiiiiiiiiiiiiiiiiii~ii
iiiiiiiiiistationed in the Canal Zone are equal in size to Panama's entire N a-iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii ..
i~iii~iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiitiiiii i on al G u a rd It is n o m a tch a t all.~~iiii~ii~iiiiiiiiiiiiiiiiiiiiiiiiiiiii
On thei sietePnmain.hv:..ylgc hya st
neoit a e ray hypitotta oa iScnrloe
pri onofPaaanantrrtoyisa esie f dnilim To s
us to unesadhwi fed'hi|ntoa onradpioa
iii ~pe pl to have a U .S. policeiiiiiiiiiiiiiiiiiiiiiiiiii~iii~ forceiiiiiiiiiiiiiiiii~ U .S. courts, and U .S. jails eiforein

U.S laso aaainciieswti hironcuty i
iiiiiii~iiishow us how total U .S. control over land area M" the Canal Ziiiiiiiiorfa I taiiii~iii~iiiiiiiiiiiiiiiiiiiiiiiiiii
th urairwho hi w ags ctethwUS cnrlo l
depatrpotfaiite rsrit ttprdctvtyo ter iffft
Iiiiiiiiiiiand how U .S. com missaries unfairly compete with local buiiiiiiiiii~iiiiiiiiiiiiiii~iiii~ii~iiiiiiiiiessrdiii
Ho dow nwrths hre
Th motcmoia|fjsiyn hepeettet:irAVhA
is toctih eeiswihhveacud oPnm.Te!
iiiii~iiiiii~i~iiiiiiiiiiiiiiiiiiiiii~i i mportant of these, it can be conceded, is her independence. W ithoutiiiiiiiiiiiiiiii
..... ................................................................. s h e w o u ld...........................c r t i d
ii~~iiiiiiturpitude may attach to the U nited States motives iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiitiiii giiiaram eeh* iviiiiiii
iiiii~iiiibut to the Panamanians, who had hankered after their freedow fdiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii '
set hequresoacetriisctaalagrablsig ft
iiiiiiiiiis doubtful is that this justifies an arrangement under which sht sigitMiiiiiiiiiiiiiiiiiiii~iii
Iiiiiiiiiiaway "in perpetuity" the most niiiiiiiiiiiiiiiiiiportant part of her bbirtiiiiiiiiiiiiiirfiiiikht.~i
iiiiiii~iTo say that it does is like saying that the United States shixiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii~bb
iiiiiiiiiiforever indebted to France, without whom her own revolution couldi~iiiiiiiiiiiiiiiiiiiiiiiiiiiiiii~i
iiiiiiiiinever have succeeded. That is history now, and the UnitediiiiiiiiiiiiiiiiiiiiiiiiiiiiiiStiiitiim -hasii





21
a n n u a l c o s t s in c lu d in r d e p r e c ia t io n o f t a n g ib le a s s e ts a n d a m o d e r a te
rate ofiiiiiiiiii in ers onliiii iniiviesiiimieint fundsii~~ii~ igii i nal advancediii~~iii~~i biyithei

U.&== = Treasury.. IsT e fe tift i poliiiiiiiiii==iicy hasiiiiiiiiiiuce





suiiiiitiusesiiianiaoin equal toii the diii fference betweenith
"====UM os ie === revenuesiiiiiiiiiiiiii=""i=iiiiiiiiiii recoverablliiiiiii le= under= an lte natve oll
policy and the brekiveiicostsiactaly reovrd....RAstd
p project th at for III~iiiIiiiiiiiiiiiiii 1975~ iiiiliiiiiiiiiii th e iiiii m iiiiiiiiiiiiiiei ofiiiii~iiiiiiiiiiiiiiii th e su rplu s w ouldiii ill b eliiiiiiiiiiiiii eq u al ~iiiiiiiii
toapoiatli5prcniiteieeu ecvrdude rsn


14 A I is ........ th R -rjce 95tleeu



tolstutre. Rpyn
figure~~..... of$195milonieseiha heslus whichiiicouldiiihave
bnreoerdwa n hiodrifanter$5.i i llo.ih enft
Of ths suplus rater tan g ing iiitoiiitheiiipeopiile fPnmnwacu






igndiiretioiii,,h do at o w ic r rote Unt
Sttsihiigttouemiliiiiiitm x T rejn argz
M o o irB ssiiiR t a a B s -t e a dii R ae
ra g;in 8 t e m n rin t lato s 1iu n, h .:ii ,.8
gurnte S an 9 mfio olaswrt f miitr gmut:
credii~~iiii! i t ovrte...rlfeo h tet.
imilaly i 147weeteedino 9-y
ithte hlppnsfo h ueo Cak:Aried ubr sy
Naa i tto tC b P it.In15iW m dioe~wy~ti

rengotat thsareet twihtm eAre ti t.saA
haeatrifi5yasiiar o eeotaig t gan n @b
noagee eniasyeibeiracediisusiiiiiiicetid aa*4
ai rooiifoiaiiiiiiityin etr fr hihweiw ul irvio
$1iii on pi qal eteneooi n
agemns a ecmprdwthte oe 2iiilinz uiafWf-
paiaaaioii seo h anl ehve ee crpms
Panamaforiouiiiiiiiiii&enci.
It ao ore e rudta aaa roie xeiv
iireteooiieeisirmtecnl swelaiM3vd e ,
citionsntriaiiieecalfwih utb~aekbo
accouintiiiii.. inassigtepeettet.A hw tig r:iio
pual re u hycmltl ms h on.Tey]U SM
maetearneeteihrjsirujs- ti.ujw y"
thti rvnsPnm rmraigh cnmc de

piiiisureioevei os o.listgautusyTnw
col ertre hecnrloeie rsuewtoti
acii n g u w cnmco taei ieet. ntuh d
ani raneswliiiiiniotnin e ema usevsb: ni f






ii411
Ao
ibp








SOERIGT
The~~~ ~ ~ mostconuse,.bt..rhas.te. ms..opua.,objct.n.rise
st~~ i aboato ofth.103tr.t.i...ttodo.owold.nai
V1 ~ ~~~~ ~ ................ inyoe ertr hti smc ato h
United~ ~~ Stts sth ert aqiedbth ousan urhs
IMusa ohigcudb
or th Alask terrtor .....o
num~ ~ ~~iiii wrn.I h ln fte ray h Uie ttis, grate





































P.Al Aht




gal


Ul:







I j









Disit s eiim rs ion toi thei country theiiiiiiiii
C~~IS is no faygeteooicsgii oteU ite Sas
A~~=== *i fe adta prxmtl 0preto aa rfic ither



......ng her. But t is iieorrilithentoiconlude.tat.theUnite
Stats acount for68 prcen of he tnnag piiiiiihrouh ith
canal.The Uited Satesboth s shipeiianireceveriiioniolyion
endofthetrnsctin.Threfreths Tur mst e aledreeaigiiiiiiiii
"t oly 4 prcet o on-thrd f al cnalcaro i U.. o iented.i
But evn thisfiguredoes ntIproideiairoperieasureofith
econoic iportnce o thecana. We ave o asi34iercetiofwhat
If thePansi Canalis lagely ot useitheitheiact thti34iercen
of it useis atribtabl to';' te Unied Satesbecoesirthermean

'T h ............................. S t te ..... in fa c ,................ca a l, b u

altenatve taderoues nw edst or he ost mpotan

ucsand ommoitie, an mor woud beome cono ical
a~mptitve f th caal ere losd. n tems f oeral imortnce

the cnal i muchmore irnifcant o cerainiLtiniAericaiiiui
the, prtiulaly hos onthewet castof out Amric, taniiii
is. 6 ffe UitedStats. or istane, n 192 ony 1.8 piiiiiio
U..wtron omrepse truhtecnl o iaau
heifigur ws78pecnfrPnm294pretfoPru1......
pecet for Chliiiiiiiian orCloba 25 ecet
..Incrasinly, he PnamaCana is coming otmodd. Lrge
.. ....... fate snpa ela noain uha otie ehooy
ar iiiiiiiThe

giii alenaiest.tecaa.mr.admoe.trctv
shipuili idusry-mcontrutin suprtaker-inreaingly
dis~~~~~ountsul........ caawhciiii adl hi sz.Moe ta
.1,30 vesel am ow oo lrgeto a thoughthecana, adianthe





26
85 would be only $100 million per annum. Of this amount, the U.S. ..
share would be only $34 million annually."' In our trillion dollar-plus
economy, which exports in excess of $100 billion a year, this impact is
uttel tivil
is iiaimato opeels ftecnlms ecutr
poiiiiisedNr apins= th-amwihtisvltl"su cncuei u
reiosiwihaloLaiAmrcadifatteetr pr.
wol.ihiin recn miiieftwhciiiusiou fo ...h
caaioudcrailieioetanofeibii hsiiy eis
enedrbi iigt eov hecnlisei a iwda
eql ebthwolcomnt.Eethstityenmc
efetaoewudsrl ei xcs f$4mlin hsde!o
meaii n that............. thia a aC nli fn mprac.I snw adwl
cntinu tobi o sm ie notefuueacovnet en o
....................r neiiiiH t r a s p r t ................................. ...............................
in any sense..e..e....d.a..e.th.r.oe.w.elm ing.or.r.cia..$.."..2
















iiiii@7












THE ZONE AND THE ZONIANS
The Panama Canal Zone is surely the biggest com y town to be
i Id ath of
found anywhere in the world. It consists 4 t a 10-mL"e-wi e sw
land, running the full 50-mile width of this small country. Its 400
square miles is the heartland and most valuable economic area. of
Panama. But it contains no Panamanian enterprises, no Panamanian
fums, and no Panamanian officials. It is wholly controlled and admin-
istered by the United States, in the corporate person of the Panama
Canal Company/ Government. It has its own Governor, its own courts,
its own police force, its own transportation facilities, its own housm'
units, and its own public utilities. It also operates its own retail
stores, food service units, esoline stations, theaters, and bowling
alleys. It is, in fact, a colonial-Socialist enclave under the American
filt.S. citizens have resided in the Canal Zone for three generations
now. Understandably, they do not want to give up their life there.
But just as certainly, the present arrangements cannot be allowed to
continue. Firs. t of all, the socialistic enclave of the zone cannot be
squared with our own commitment to a free enterprise economy as
the most efficient and democratic social structure. In addition, the
zone constitutes a direct affront to the national integrity of Panama,
which cannot with honor tolerate a foreign governmental and lenal
structure imposed upon its people. The lj' S- citizens who live in t e
zone will, of course, have to be protected. As individuals they are not
responsible for the actions of their government. They have acted in
good faith in accepting the arrangements which exist today, and it
would be unfair to leave them m-ithout recourse. In all probability,
when the Canal Zone and its operation are returned to the Panama-
wig, these Americans %ill find suitable employment and IIVML7&rmnge-
ments under Panamanian auspices. But should they be una6le to, or
should any of them choose not to, provision should be made for their
relocation to the United States with a guarantee for appropriate new
employment, job training, and vested retirement. While even this will
.N. iduals,
no doubt be somewhat unsettling to these 3,000 or 4,000 indiv
it is the only way that we can reasonably proceed as a matter of
national policy.
(27)






























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OPERATION OF THE CANAL
Americans are understandably proud of their role over the last
7%some-odd years *in the construction and operation of the Panama
CUW. When the canal was built at the beginning of the century it
was the engineering marvel of the day, much as the Moon landing
is in our own time. And since its completion in 1914, the canal has
bam: efficiently and impartially operated for the benefit of the whole
ww1d. Unfortunately, this pride in our accomplishments has led
some Americans to believe that only we can operate it, and that
catastrophe would befall were this responsibility turned over to the
Panmanians. There is, however, absolutely no factual basis for
this c6nitention. It is not particularly difficult to operate a canal.
Certain highl skilled workers are, of course, required; but they can
be employed ty the Panamanians just as they are now emp'O.Ved by
'ited States. And even now the Canal Company's work ce
is 73 t Panamanian, including large numbers of individuals
in skilled jobs.
e opponents of return the canal to the Panamanians have
the additional specter t the present government in Panama
has communistic leanings. and cannot be trusted to keep the canal
open.to all nations on an impartial basis. My recent visit to Panama
convinced me that these concerns are completely groundless. The
_--smantan people of all socioeconomic strata conveyed an un
iistakably genuine affection for the United States in spite of their
raentment, of the present treaty arrangements. An amicable accom-
modation of them with a new treaty could only serve to reinforce
close bond th already feel. Finally,. it must be pointed out that
it-coWd only erve anama, s. own economic interests to keep the canal
opm to all comers.
(29)






















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ZWNOMIC POTENTIAL OF THE PANAMANIAN ISTHMUS
Xvw 816"Ahe 16th century, when Balboa first crossed the Panama-
iiia lahmus, men and nations have dreamed of a sea-level canal
wor 4OWd he two great oceans. Ferdinand de Lesseps, and his
lima jok t
Iwo" CamAl Co. had in fact attempted to construct such
&,jaims ia the 18M's, and his eventual failure was in no small part
atWbutablo to the giummm* i htmares posed by the
44 ngniff -- undertaking.
e a P os, -VV tke A.meriban 4cwi7 wli the French had f ailed can to
v
a'--- ***W be wqgained the doqm*'on to abandon the dream of
0.1.=011 canal M favor locks canal. But the dreamin has
ri&" W'should not, for the idea of a sea4evel
0" is Winticauya, onev,
lk 19ft: Pluides-t don'B. Johnson appointed the Atlantic-
Pacgo, h2bwoomnir, Study Commission to assess the prac-
4. buildiut & seiWevel canal *ith modern techno!ogy and
QO-WUW-0.WAg kww-how. In IM the Canal Study Commission com-
PW" io avhxustive, *= million examination of the issues and re-
ift"W&thatlhe constraction of a sea-level canal is physically feasible.
the Mgt of eekkktruetion to be approximately $2.88 billion
X -, wo k"Is. In ther letter of transnuttal to the President,
wrote:
A=m f thjs cost fros4 toll revenues may or may
depending on the growth in traffic, the time
when go Can becomes operative, the interest rate on the
11ifid paymft-u- to tbt: host country. We believe
that thipotential national defense and foreign Oolicy benefits
....... .. *fy
1jui CaA AtSt" jUpU acceptance of a SUbStantial finan-
........... ........
of thesis generWly pmtive findi'gs the Commission did not
tab immediate construct4on of a ;Zie;el canal, primard
be 19ud of uncertainty hung over United States-Panamanian
i&Uons W. the abedwe of a new canal treaty. Needless to sV, that
46ud is stM presentiodAy. However, I believe that new attentionlo a
I 6,,"vel cania is warreidied by. the foRowing five facts:
i. Presimt and pmjected discovtnes of oil and gas in Alaska
have the potential of the economic via:bilitj
20 A now p can a the Ran aniftna
fentw-04 i6spi c"
tial, X 's.
tion a..
of Wlu glyo: the U
A AP W A.
*b&*t 'to
edflex; y
t4 .t solurrm
avoaWltv Of a ca* coWA sive the United
States billion f-Soliiri of investment in new energy t;rans-
mission infrastructures.






34

5. At relatively marginal cogt ,., Wsef4evit.azatj *Olt" grftily
enhance U.S. defense, capabilitiegi.: rJIP ACIV 20
i Ute 41, of
Each of these reasons ajone probably C"ohstv,
further examination of the sea-level caial p,6ssibiih .' rf6''i eii
cerl W, 4.
y
a construe a s &-iVive
at only after Acin 4,-mn fmtoph
to' amirue aTtiThee M y is tZ
.PiatOer, W 16e- ovaluat04is S.t
feasi 4. such... an undert4dn
t g
f" in a rwonall, nViber. qf yoan? Bqt
_qmison pointed ou .,gt er facWj ,s, Ooh jj do
4 piansiderationsi ..Must, PTIW intQ_4Aq_1
1A.1k all
Can hin ponsi
certaiu..J QQA)
p,, or,
Now LnW b" ty'WiUl
to build, 644e-y l an&Ij if for n4,,,otb r-
,v6at-portio:n of costs might have"to b tfokn- 04
ecorditigi, to, the, C4nal Study C
basis, -for qssess.ing :6i anciaJ fi*sibihtXivt0,4#,
co 'be #jnortiwd over a 60-yeav, T
rpi .1 is inecessar to find th 0XWi
ps3Lnamts. to t4 ho# m Yl interest Pat*
'Which W"o
traffic lovels'. 'i na '611 -rates uld
costs fr6m, oll iiv To
C, poues. Qkpspq Oe
preferre, C rouy ) _00 JQ
at, a, wns
Million, th:e dommission assumed payin--ents to 404'
per long ton of c d then pro'e t d botl 0 1
I Are P!
traffiepwth 6w0iig
form. v!.q
TABLE 1,AVE8 qETqLL.RFVEK4ES PER LONG TAKQF ]QA4GQAJPQ1U2FD FJDRJ T
TIcr_11771" M.W11W
lk 69 YEARS fhLE' PAY AMA A YA 0 V
Y
tf d 11:- 1.4 4: )i Atx')
Traffic
open g =h raft aind C=1
a to Tlha! 141-51day6w
04 0 1, 6tiW
----------
20 -----------------------------
Low, k;
L 11941
lj,,q e
1995 ---------------- w1:-'M___-'t:-1r_ I
-------------------- ON---
O 4
V A lu
'If,(] tij !Yvan
n verage per ULaltlle d to prod
Riquired ils ei i a,,, ton *i ratb
rr a4w
6" of if and
itt -e
the hioer potential, trac gro h Xate, we seg CQst
-A
cotiqtrli t M_& a seft-le 1-= e if
so. go dai-RPR 6,4f ie6 C
1A
no re, ona e.,A 1g70 tUs and
0
,rs, unre7 jt
t
In"191 *&Ib -0
U:1, J Wi) a 0,41. '11:1 to elA 1 1# IV FatittiW "41;"







11is date would seem etron#ly to suggest that a sea-level canal is
fin ally feasible in its own rioit. A number of caveats are in order
SWL Mation in this of construction has been approla-
t-L A&,&
ce 1970. Accord to the Corrm of Engineers, the
WIM estimate must raised to U.29 bfflion-r This
tu toll revenue filrures in table I must be increased substan-
oil to *%o!dj k costs. 0course, inflation will also have affected the
e*y "WO e tons, so what may have been an excessive rate in
-1970 e _ything over $130 per ton) would not necessarily be so
WLW;r or not ii im in -other ewtors especiallyl shi
with construction costs is something that can be deter-
mi by extensive economic analysis. Presumptively, inflation
rates M be octuiparable and eonstruction costs will not seriously
.h-IL*,
h9ve, oWpped theability of tolls to amortize these costs.
otluer twmts an in order regarding financial feasibility. The
lkma royalty p"ent to Panama is almost certainly not a
TAd tion today. Isaaed an royalq figures being proposed by
aiss, WTay in MW negotialions, this figure may well have to
to $0.38.23
-Agure in table I
Mt Is would moon t1rat each toU
Th*
must meressed by $0.16. Moreover, then is some question whether
We[ 1OW-1 t ftffle growth rates at the higher level
"Y Upet
IW-IRJ6,4W 4 the 1970' t d Traffic levels in the past 6 ears have
keC borne out We P ,O rgua;'bly
Liection. Tbii sh6rtfallis a
ti& I"Z wqAdwi&'. of e esA 19"'s frwn which we are
.21 SOW bQhW,*JtfS dmenor, Sut it Wtod learly to tell if this is
the v6se It t Ile
&ed -he trend is long tam, the con!3 quences are msn=-
t ft Ar tablg I shows a seii-Mvel euW is not justifiable on &an-
tialf gomn& aleae'if we accept the low &affic Orowth rate and an
i2ft" voo 4 6.. penent- The only way to Liom this with any preci-
sion is t*ougbly to upd."e the 1970 study,
An impoiftimt factor in any reassessment of a sea-level canal's
feasibility will be potential traffic gr6wth derivmi g from new dis
C*Verias,00fma and gu in Alvia, mimh of which ir-ill be surplus to
the auo w nee& on the west coast. June of this year, oil
46 Ilow from Ala*&'s North Slom ankI by January 1978 the
produtfion level should reach 1.2 million barrels per day. As the
Wortk Slopes. Kuparuk and Lisburne rewrvoirs -an brought on line,
daily production wiK rise to 1.6 million barrels. Even at the low
1.2 i0ion, barrel level, &'west coast surpim of 400,000-W,000 =
per Oxy is prolected; and this figure is based on the assumption that
Ooduction at.X& Hills Peuvleum Reserve in California wM be held
at On present level of 185,WO betwels per day, rather than being
increased to its 3501,000 barrels.
Timm is evqy likelihood that these figures, ashigh as they am
wiTU lout doiible in the n"t GeVoul yeus-, The probabilit; that
V quantities of oil will be recovered from the Alaskan Gu
lar llw Nam.
tioiW -Petroleum Reserve No. 4, and other areas of Alaska, both
on and off shore, is very high. According to conservative projections
by the U.S. Geological Sw-vey (USGS), recoverable reserves in the
State may be five times as large as already demonstrated reserves,
as shown in the following table:










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A n na t io n o f t a b le 4 r e v e a ls t h a t t r a n s p o r t a t io n c o s ts; v ia
* 0 in e p e m a r in r o u te s v a r y fr o m $ 2 .0 6 t o $ 2 .7 8 p er
o ns W cru d e T o b e c o m p e t itiv e tr a n s p o r t c o s ts t h r o u g h a s e a -le v el
ammkmaiiiiiiitoiiiiiiwthinithiirange.Apparen liitheyiiido.
.0ku[tiw7hArhr .LiteIn.iniat ha tasprato
ar |
00st beween ez nd Hustn wold e $174 er brre fo
M M:.wt vmmds $1.6 fo 225,00 dt veselsiand$1.3
Sw~~~~~~~~~ ~ ~ ~ ~ .............xcuiv f aaltll. t sresnal
49:4um:Aat he tanst cots or anew ea~vel anaiwiud ib
1, el S" er brrelof ol.11Thismeaniiiiiiiiipor
some., tma Aawleel analmay e prlimnariyiesimatd it
1449iewh wihin $175 t $218 rnge
1: v nag Iri


yi I
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ca, esenfrm&at ,th owed f hs pctu
$0.1 liss &Adthe ighendis $.60less thn th reppc i iw
,hiv&endsof te cot rap fo combned ipelneiiiiiiiies
I ifthee 1%resare ustinedp'o a mre horogh nay ii
?fev1 cnalis ahigly ompeitie aterntiv fo traspotin
we t~co st oil
nki ~anto te cpitl inestentcost fo pielin an reiner
r truturs wich ay e ofse aganstthecostof onsruc i
cana, teie~r xtrmelyimprtat miitay ad foeig poi
v astoberealzed hrogh asea-evelcanl. Uderigreeent
:t~d tefd ito~o son t be'Conludd, uchof te est oas
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maibereiiii=et6n! n:- 04.;h IJ. ON
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iturs, s iportnt s tey.,ae.w to #u ntfivk W*
be gral eue-fia e-ee aa eam fA rI~t~
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ofth.Amtca ndPamw~npope Pnnuas r cn
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on th othr had, ae inlinedto bliev thaithecana
belop tothe nite Sttesthatit i vitl t ourinteestsiandtha


if mkw W anaanin aitaion ovr te isuein ecet yars
vft t 'anam canot rused o ru th can] aone.Clerly
bot p~s i i a eryemoioal ssu, ad ne n wichnaional..
Wkk~iplys ~o m&Hpar. Bt wen he moton s sniped way



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NOTES
P iq dnd 4# 106midn Cianal
Als in Lawrence 0 Eal Tonvus 4M
The zMan"I *102" M e tTnlvwd'v Preast 1971 63.
D.. AmwinW "The Panama 06na 1; ; Of &-pe Bunau-
W1111am Neb6n bm;; IZOV Ma A0wiesm H46rkal LXVIII
1963).* 347-&
M. M 10 .. LOW ZMW in Pamma: A Caso Study in Re-
Jqan rn er6Amet*ian UWvw*ty Prem .1977). p. 31.
Bermrd A. Webberger, "no Affair of the Taldn of
zonej Mwriaan Hw*dM xxvil IM) P. 72.
D. "Philippe Dun"-Varft: Now Ught on ive Pona a
M Av4riwn HWarical Rmm, XLVI (February
quote$ ta vd*ergmi, P. Is.
t iduotod in 14y p
4ww in w. L Veiiander m unaw staim in Panamanian Pauties
lutaraUte Nfi;" and Publishers, Inc., 1971),t p. 40.
Rourfon Ux*od &afts JUWkw Wdh Panama, Subooinmittee
ma Alftixs o( the Committee on Foreip Affairs, US. Homw of
Congress, Seeond Session, pp. 10-11.
As qu In T&
I we Bunau-V rifla M Grod Advontum of Panama
yorl Pvve & Con 19", P. K .
pars and
isam% Howen F."a Sdoilk Iqu Economic value or as PAMMS
4 %aft'al
f6eWr Amdateoh, PWo Alto, Californtw (December
p4wl 4.
fiffum Is devived from Tame 4 on page 25 of the IRA study.
Solomon, 31,
Baku 0. Law "The anama Caud Tiesty In FerspecUvell The Overeeas
---&-:D.C. (1976)g .4.,
VFz".
128 &ad
In wb the P"ama. Canal Worth 10"l Busine" W"k (Deasm-
8010MOZ6 P. W,
21L
0mvel from Jdw P. She-EMbey ril 25
21. to SMMM mom 9Mj p., 4.
Mt to Utter to Se"tor Mike Orl"d from nd Z;" ;4 W.
SpeeiAl Assistant, Panama CAnal Treaty 0 110 of the Anifft-
19pereLary of Defens% Interw4onal Sem* (April 16, 19M.
Genesiat G;M Wo "On the Deteme Posture of the. Untbed States
0* FUMI Yew MnUMCNYry- 1976), p. 2&
Utter d Transmitt*4 I*Aovmmk Cowd Mudiso-4M, Report o( the
Intero"MIAM Qkna f1twy r va
ig Ofilee 1971).
Sk ciaw studho 1070, P. 93.
2L Aatwdly. U& tbrou& tbom ftnafa& C*%d we ebmsed an
ratber fli" "awip tow." ToMa per earp Un can be --* u4ned only an an
A AP ve "As." Effecave rates vW
_jV sud tkv U-sh the
vur over time. Thus, a vv AIMMM per cup vw Jod
KW to Samar CW*V41 bm Gow" ft's I N k Gravok Uafted states
Car
pe 0%= IWAL buxaw
ltii swunft VWA of $40 to
ham swk pw 11 'Me M ;rt"ko COMMA to lry.*::::.
tons the tou Me woWd JWTV MOM
m Traft In 1*MMVv,1akk do* as a ;;Wgrw W04"






46M.

in 1974 twffw through the coma re cw
have produced revenue of $56.9
rate to be chwged is flexible and will
alternative means of cargo t
29. Data in Table 4 are derived from "'Economic Of
port Systems for the Die of 8 1 Aljwkan Crude OWI
1). Little, Inc. for the ()a1ifornia'
Long Beach, California (April 1977).
30. Thewfigures wav prqw'ckd by _Vhu A
the e compu*x modei asthose iv -4r InA
31. Mxb figure ia dexived as kiows-
Asswelthatthp-se*-Ievelei4igwo 14
be 6 percent, and that mual tralfic gro
lavel.nrojected1by the Interooeanic Can*
may &;; calculate a tollof 1 $0.96 per ka at
that inflationlin'sustainable toll levels, is,
costs which w esthnsted 0 be $O pe ht
we get $1,73. To this awount mwt bo ood bi,
as discusbed vaidier in the text.. Tix proviwdomk, a ,
are 7.46 barrels in a long ton, so the toll per
laden transit must be matched by a ballast tronsit.
proportionate amount to derive total transit
ballast and ladou tnwisitaM' a new moleVd'
one another.as inthe prooent canA the,,
barrel of off will be, $0.19 since the curxe4, tqa
vesgelD and.11.03: for vessels in ballast, 17
oil will be $0.44.
It should be noted that the asErimplions upon
tbrough the a" am based dd'rer fkon
e projects discussed in this
s for North Slope crude transportifion
i 1 .1 rt ifttion perkod, .19 -percent interest
pipeline woul&. eaft... 14 permut, preta*,retum on
Canal Study CC) mission, on the- other hand,
6 percent iitterefton debt, sod asawned that the
paying an operating royalty to Paiiarixa. These
appear to result in an:applks to orAngespom V 4
that the functions and flexibilit), of ^ canal are
pipeline. The latter can be used to move only one "X
at'a time. TU formw.cwloe wwd4oUwagport Fy
multi-directional, does not depreciate, and has U
in no way attributable to a pipeline. Therefore not
impossible to use exactly the same assumptions m
tariffso 4; IV Irr4'kft** 4w








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