Panama Canal treaty : disposition of United States territory : hearing before the Subcommittee on Separation of Powers o...

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Title:
Panama Canal treaty : disposition of United States territory : hearing before the Subcommittee on Separation of Powers of the Committee on the Judiciary, United States Senate, Ninety-fifth Congress, first session ..
Physical Description:
v. : ; 24 cm.
Language:
English
Creator:
United States -- Congress. -- Senate. -- Committee on the Judiciary. -- Subcommittee on Separation of Powers
Publisher:
U.S. Govt. Print. Off.
Place of Publication:
Washington
Publication Date:

Subjects

Subjects / Keywords:
Foreign relations -- Panama -- United States   ( lcsh )
Foreign relations -- United States -- Panama   ( lcsh )
Panama Canal (Panama)   ( lcsh )
Canal Zone   ( lcsh )
Genre:
federal government publication   ( marcgt )
non-fiction   ( marcgt )

Notes

Bibliography:
Includes bibliographical references.
Additional Physical Form:
Also available in electronic format.
General Note:
Hearings held July 22, July 29, 1977.
General Note:
Reuse of record except for individual research requires license from LexisNexis Academic & Library Solutions.
General Note:
CIS Microfiche Accession Numbers: CIS 77 S521-48 (pt.1), CIS 77 S521-49 (pt.2), CIS 78 S521-12 (pt.3), CIS 78 S521-19 (pt.4)
General Note:
Reuse of record except for individual research requires license from Congressional Information Service, Inc.
General Note:
"Second session"--V. 4.
General Note:
"First session"--V. 1-3.

Record Information

Source Institution:
University of Florida
Rights Management:
All applicable rights reserved by the source institution and holding location.
Resource Identifier:
aleph - 021387688
oclc - 03412990
lccn - 77603936
Classification:
lcc - KF26 .J874 1977
System ID:
AA00023987:00004

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PANAMA CANAL TREATY (DISPOSITION OF UNITED STATES TERRITORY)









HEARINGS
BEFORE TIE

SUBCOMMITTEE ON SEPARATION OF POWERS

OF TIlE

COMMITTEE ON THE JUDICIARY


UNITED STATES SENATE

NINETY-FIFTIJ (ONG RESS

FIRST SESSION



PART 3


SEPTEMBER 8: OCTOBER 13 AND 28;
NOVEMBER 3 AND 15, 1977


Printed for the use of the Committee on the Judiciary















U.S. GOVERNMENT PRINTING OFFICE 20-2660 WASHINGTON : 1977


For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C. 20402





























COMMITTEE ON THE JUDICIARY JAMES 0. EASTLAND, Mississippi, Chairman
JOHN L. McCLELLAN, Arkansas STROM THURMOND, South Carolina
EDWARD M. KENNEDY, Massachusetts CHARLES McC. MATHIAS, JR., Maryland
BIRCH BAYH, Indiana WILLIAM L. SCOTT, Virginia
ROBERT C. BYRD, West Virginia PAUL LAXALT, Nevada
JAMES ABOUREZK, South Dakota ORRIN G. HATCH, Utah
JAMES B. ALLEN, Alabama MALCOLM WALLOP, Wyoming
JOSEPH R. BIDEN, JR., Delaware JOHN C. CULVER. Iowa HOWARD M. METZENBAUM, Ohio DENNIS DECONCINI, Arizona
FRANCIS C. ROSENBERGER, Chief Counsel and Staff Director



SUBCOMMITTEE ON SEPARATION OF POWERS JAMES B. ALLEN, Alabama, Chairman ROBERT C. BYRD, West Virginia ORRIN G. HATCH, Utah
JAMES 0. EASTLAND, Mississippi WILLIAM L. SCOTT, Virginia
QUENTIN CROMMELIN, Jr., Chief Counsel and Staff Director Dr. JAM ES ICCLELLAN, Minority Counsel PAUL GULLER, Editorial Director MELINDA CAMPBELL, Chief Clerk ANN SAUER, Assistant Clerk DEIRDRE HouCHINS, Research Assistant

(II)















CONTENTS




CHRONOLOGICAL ORDER OF WITNESSES
THURSDAY, SEPTEMBER 8, 1977
Page
Hayakawa, Hon. S. I., a U.S. Senator from the State of California-----,---- 7
Reagan, Hon. Ronald, former Governor of the State of California -..... 7 Flood, Hon. Daniel J., a Representative in Congress from the State of
Pennsylwnia .33 Crane, Hon. Philip M., a Representative in Congress from the State of
I llin o i s . ... . . . .. .. .. . .... . . . .... ... . . ... . ...

AFTERNOON SESSION
MeCain, Adm. John S., U.S. Navy (Retired)- ----------------------------71

TitURSDAY, OCTOBER 13, 1977
Canada, Hon. A. Joseph, Senator of the Senate of the State of Virginia--- 192

FRIDAY, OCTOBER 28, 1977
Torrens, Capt. K. C., national president, Council of American 'Master
M mariners, Inc--222 Bendetsen, Karl R., former Under Secretary of the Army and Chairman of the Board of the Panama Canal Company-------------------------232

THURSDAY, NOVEMBER 3, 1977
Berger, Raoul, author of "Executive Privilege" and "Government by
Judiciary"---------------------------------------------............ 314

TUESDAY, NOVEMBER 15, 1977
Cooper, Richard N., Under Secretary of State for Economic Affairs ------ 423 Hansell, Herbert J., legal adviser of the Department of State- 426

PREPARED STATEMENTS OF WITNESSES
Allen, Chairman James B., opening statements------------ 1, 191, 221, 299, 421
Crane, Hon. Philip M., a Representative in Congress from the State of Illinois- 57
Roberts, Maj. Gen. J. Milnor, USAR, Retired, executive director, Reserve
Officers Association of the United States- 83
Canada, Hon. A. Joseph, Virginia State Senator- 201
Bendetsen, Karl R., First Chairman, Panama Canal Company- 253
Rice, Charles E., professor of law, University of Notre Dame -.-...------ 300
Berger, Raoul, author of "Executive Privilege" and "Government by Judiciary"- -342 (III)





IV

CO)NTE NTS-Continued

MATERIAL SUBMITTED IFOR THE RECORD
page
World Maritime Choke Points and United States and Soviet Fleets ---- 18 Letter to President Carter from Senator Jesse Helms, dated August 12,
1977, concern with State Department proposals 29
"Panama Canal Giveaway: A Latin American's View", by Mario Lazo--- 37
Bullet tin: The American Legion, National Security-Foreign Relations
Division, July-August 197--------------------51
Fact Sheet: Department of State. Basic elements of the agreement in
principle on the new Panama Canal Tets-------------93
Proposed treaties: Treaty Concerning the Permanent Neutrality and
Operation of the Panama CnL-----------------112
Memorandum from Senator Hatch to the U.S. Senate Steering Committee,
in response to White 1House mmrnu--------------179
Resolution drafted by the Virginia Port Authority. Concern over the need
to protect the continued use of the Panama Canal for free world shipping-. 195 Senate Joint Resolution 51, Virginia General Assembly. Expressed concern
over encroachments upon the sovereignty of the Panama Canal ----------198 Letters to the President of the United States, Members of Congress, and
the Secretary of Commerce, from Edward S. Reed, chairman, Mid-Gulf Seaports -Marine Terminal Conference, and Robert C. Engram, president, Gulf Ports Ascain-------------------230
Chapter 5, Presidential P~owers: Foreign Relations from Professor Berger's
book "Executive Privilege: A Constitutional M t"---------375 Questions suii)itted hy ~ Chairman Allen to the State D epartinient:
Herber J. Hansell,' legal adviser? to the Secretary of State -467 Richar I N. Cooper, Under Srtayof State for Economnic Affairs 471 Sworn statements of Leland L. Rtiggs, Jr., retired Special Agent in Charge
of the U.S. l)rug Enforcement Administration, date~d December 1, 1977- 481












PANAMA CANAL TREATY

(DISPOSITION OF UNITED STATES TERRITORY)

PART 3


THURSDAY, SEPTE1IBER 8, 1977
U.S. SENATE.
SUBCOMMITTEE ON SEPARATION 01'F P()WERS.
((3I[IT'TEE ON TIHE UJDICIARY.
W~ashington. D.C.
The subcommittee met. pursuant to recess, at 10 a.ni.. in rooiti 131S. Dirksen Senate Office Building. Hon. Jamines B. Allen of Alabama (chairman of the subcommittee) presiding.
Present Senators Scott of Virginia and Hatch of 1tah.
Also present Senator Jesse Helms of North Carolina.
Staff present: Quentin Crommelin. chief counsel and staff director: Dr. James McClellan. professional staff (minority) : Paul (inler. editorial director; and Melinda Campbell, chief clerk.

OPENING STATEMENT OF CHAIRMAN ALLEN
Senator ALLEN. The committee will please come to order.
The Subcommittee on Separation of Powers of the Judiciary Coimmittee is convened this morning to continue the subconmnittees investigation of constitutional issues arising out of the new proposed Panama Canal Treaties. I am certain that most of those present this morning are aware of the central constitutional issue under investigation: however, perhaps I should again reiterate the proposition which is the focal point of this inquiry.
Article IV. section 3. of the Constitution of the United States provides that Congress "shall have power to dispose of and make all needful rules and regulations respecting the territory or other property belonging to the United States." The power given to Congress in that clause appears to be exclusive and, if it is an exclusive power. then the Executive is prohibited from entering into a treaty disposing of U.S. territory except with express congressional authorization; that is. statutory authorization by both Ilouses of Congress in addition to separate Senate approval through the treaty ratification process.
Additionally, members of the subcommittee are also deeply concerned that the executive department has reached certain financial agreements with the Panamanians for substantial financial assistance outside of the context of the provisions of the treaty itself. These financial agreements, if not embodied in the treaty, will not be subjected to
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tlie nornial treaty ratification proce I'lle slibcoll-inlittee, lifts further leat-ned that the congiv -- ional appi-opriations process itself may in lar v measure be cii-eimivented in the i Ill 1)1(1 ITICTItatiOn Of pr0pOse4 financial arranovinents witli Pananittl bitt t1lat, neVOrthodess, substantial sums of nioneY aiv pi-opo -(,d to be 111ade aNailable; to Panaltia by unilateral execiltive 1)i-mwli action. Tli(, coll-imittee will t1lerefore diligently colitiltile to ',eek t-estimol) y oil tll( filll Intentions Of the (,X(w11tiN-e; departnient, with to 11eg-()t1;1T",(1 financial and hanging ai*rang( nients Nilli the R'( jml)llc ()f

EXECT.-TIVE AGREEMENTS
Finally, in continuing its work, fix, sitbconintiti-ee will seek to deter111ine the extellt to Avlilch tll(, provi -ions of the exectitive
(1(-Pai titient pi,(q)osal ',It-(, enibooli(,(l III the exe,,M lve .1 ri ('eltn'lits r"If1wi. !!,,Ill Ill actual treaty 1,111(r 1,1(r( 'J'jj(-I,( ()I' (-o-)jjj-<(,. fact tw o tnatles: the l)1-Oj)() -;o,(! PalIM 11(1 T lv lt v It-(,If, 111(1 all additional 1-1-(,aty which Purports to 1)1 1)\ ld fm tlw i)(-ittrahty ()f' i1j(, Ptii:iina ("111J. Unfortunately, these treaties are in no way o be construed as tlik, wholeti _(Tneinent.
-Both tiv.,Ij 11(l(loniptallicd 1)v vel-N- exectitive agivellients Nvllicli actilaI4 contain th(, substalicc of the (Ieil ti-iick iN-ith 1"llese, VVICutive acrreenieiit- once inlpleltlellt( kl, Avould lie S1J)je(-t to i ejic,(-,otiation and reN-is,1011-11111d find this astonishing-ex-(,ry 2 Vol: I 1' Z.
This Illwontinittee, I ain sure. a concern of nially that Conwill rellnqlw ll fol-ever aliv ('011T 1-id (wer this C01111t I.V s relation witli tlie Republic of Pall:11ila, if t1w ('xe( 11ti\v departillent is authorized to entel-into a, pleklm.Y lvlatlon -,,, IC: IlWi.ill reallt V.
F1 t F 111 V law but ratliv.- based on ex(,(-iitl\,(, a,(riveiii( nts aiithoi-lzed 1) V t I-eatV 11-INV but subject to chaticre at tlie NN-1-iiiii oftlie ExecutiN-e. In short, the 'sub(-olninitteo, wishes to establisli by its inquiry the extent to which the Executive would J_-)e (YiN-en a blank check by the new proposed ti-etities to ainend, interpi-et. abrogate,, oii replace entirely the lengtl-iN 1crW11panvlncr siil) -taiitive executive a (rl.e ,nleiits.
I have jiist rehired froni _.Xlabain-a where in the course of the Alignist recess I met witli citizens in 37 counties. These i-neetings were held in most instances at, I-lie county coiii-tlioii--(, ; theN- w(_ re widely announced and -well attended. One topic was ini-ariably i-aised. N-4withstandin(T drought. une employment, inflation. high energy prices, low f"11-111 ])rices, and a liost of other -nbjects A,.-lilch could easily have been foi-emost in mind. vii-tuzillv everv arom) I encountered wished to know the answer to one question: Would the T-nited States, in fact,
-crive away the Panalti., Canal Zone f the thousands I sl)ol--,e with.
almost no one favored a policy of si-irrender in Panama.
Nfanv al-e sayin(T that the people need education and that with education tbey will come to support the gii-eawav of the American canal in Panama. Tit inv jud(rinent. the true state of affairs is the. exact, opi-)oisite. Fiirtlier knowledge will only strenothen the., resolve of the. people: and. in niv judgi-tient. our all-wise Federal Establishment coidd itself well stand sonio, education front the American citizen who has the wisdoiti I o see the obviow; f act that the Pana in,"I C anal is vital to the economic stability and military security of the United States,







from the American citizen who has tlhe commonsense to recognize the lunacy of paying billions to ain unstable pro-.11arxist dictIatorshitip for taking over billions in property v belonlgi(lg to tle 1nite( States. from the American citizen who has thle clarity of thought to see the rea lity behind the shain and the traveling medicine show that has passed for an open discussion of tlhe actual pIrovisions of this Iroposed new arrangement with Pananma.
Perhaps. however. Americans do need education in the fine points of the Panama (Canal treaties. That education has beien hard to come by of late because tiroighouit thle treaty negoti nations a veil of secrecv prevented any useful information being made available le either to the public or, in large measure. to the Congress. Perfunctory briefinLs containingr no real substance and seeking no advice. to be sure. were conducted. However, until yesterday most of the information this subcommittee has been able to obtain on the new treaty has come fromni translations of speeches made by the PIanamanian negotiators in Pananma.
$2.262 BILLION IN CASI PAYMENTS
By that method we have learned that the Panamanians expect to receive during the next 22 years at least S2.262 billion in cash payments from the United States. The I)epartment of the Treasurv. when its representative testified before this subcommittee was apparently unable to advise the committee of any negotiations whatsoever with Panama. vet we could read from translated Panamanian documents that the Export-Import Bank plans to lend Panama 20() million, that the Agency for International Development is to guarantee-and no doubt pay off-housing loans in the amount of S'75 million, and that the U.S. Overseas Private Investment Corporation is to iarantee $20 million in loans for a new Panamanian development bank-everyone else has a bank in Panama. why should not the Pananmianians ?
Finally. the committee has learned-not from the Department of Defense, but from the Panamanians-that 83o0 million in military aid would be provided to prop up and guarantee the continuance of the military dictatorship now oppressing the people of the lRepublic of Panama.
But now that the proposed Panama Canal Treaty and Neutrality Treaty have finally been made public-and it has been signed by the President and the Panamanian dictator-there are disclosed even more items about which the American citizen should be educated. The American citizen should learn that in addition to all the other massive payments to be made to the Republic of Panama. as the ultimate insult, it is proposed that we pay to the Republic of Panama S10 million a year for providing police services within the territory which would be ceded to Panama. We trust that d(lurintg his education the American citizen will share our own disbelief and outrage that our great country proposes to cede I united States territory to Panama and then to paay Panama for performing the normal functions of government within that same land.

FOUR U.S. MILITARY BASES TO REMAIN IN CANAL ZONE
We hope, too, that the American citizen will soon learn that out of 14 military bases now in the Canal Zone, only 4 would remain after





4

impllemlentationl of this treatyv and thCat the 4 retained bases wvouldl be und(er dlirect panl'1al(IIIa ci 'il andl political u'sitlu ujc u thereby ouir Armted Forces to the, (dictatorial rule of the pr-esenit Panlamanian (iovernnient. Anud 'although it is truie that a status of forces agrTeemleint will provide some mrginial p~rotectionl to U .S. soldiers in the (7 tanal Zone, the Amlerican cit izent should learn that in essence our forc-es \vill b~e nia(ie subject to a (code of laws based on the aut oc rat Ic rule of oneiman .and d1evoid of any coiiA it iitional satfeguaird1s eveui remotely resening th pe~revious Amuerican rights-- iioxv enPoved within the Canial Zone.
Yes, I here is much to leaI i 1 aboutJ this proposal. P oes the average cit izen nlow knlow thait the( American flafo wili not be ipeii itteol to be flown In a place of 1honor. even at our iiilita rY ntltios and, according11( to the( speeches of the Pananialnian1 ileg(otiators. Will be pernuitted at out' own bases only when mnsile and~ when dislplavedl Jointly with a, Panamninan flag. in the, posit ion of 1101101. Perhaps this latter point, is trivial, lIut it typ)ifies this entire proposed agrement :Our flaov in a lbrooinl closet aiid our vfltal can-al at. tile mercy of a banana rejnil]iv.
So, the Subconimiittee of Separat ion of Powers does intend to continie its investigation of tliese issue> to instil'( that all tile facts are nII ade a vailable bo0th to tile (ongi'e<- and to the people. Ave will be. I ai >ire, great iv aided iii our efforts by- the witnesses:- Scliedle(l. to appear at today's ieaings.
Senator Hatch, do v\onl have anl opening statem-emit?
Senator 11Avivh. TIliamk voni. Mr. Chl1aia. I do not have a, prevparedI staiemeiit11. Butt T wvoul like to sayv that when I first. examninedl the iPanami a Canal issue. T wasi ea gel'r to learn al ont the reasons for this i real V. T l istenled to A ulasdrBtnker once anol to Amb~assador Lillowitz a- number of times. I read( 1,verythln (- T could gret myi hands oil. T did everyt hinge, I couldl to lookc at all of the( arrlllflents Inl anD01 oject lye miannler.
Th> lorningr T read in the Newv York Times- an editorial asserting that there has not b~een one( sulbstant iVe1 argumllent offeredl against the. treaty. T think this is typical of irres ponsible Journalism in today's \VoIldl. Ave have hleardl many. mnany re-iponlsille. ('arefufllV reasoned,
'-di)>tant ye l'guiie tsagauistthi trat v t'irht in the(,-e Ieaiiis.
LatevnngIme it neo temost knowledIgeable men in
AmrI(ll11 a n 'Who knows a, lot about foreign policy and foreign Ifalr>. Ie hadl not even he' ard of the constitutional issues and argulieits that have b~eenl raised in connection with this treaty. I think it is (lello1'aile that the pr1ess has icnoredl tile serious constitutional problem createdI by this treaty Evrbod1y in the House of Represelitat ives who has any constitutional understanding, at all knows that the hlous e is being ibypassed1 in contravention of tile Constitution of the U nited States.
lnI article TV. section 3. claulse 2 it says that the transfer of Aieri("tall prop erty reqiries the consent of both Houses of Conglress.
I ere is a situation where tilis provision of the Constitution is being sit -1)velte(l. Bresprepa red by the Aimerican Law Diviion of Congcres.ioia hesear-ci Service do0 lot sulmpolt, thle Sta te Depar'tmen~t's p051t ion. There hias not been one valid precedent presenteol iy the State IDeIartmlelit supporting the President's extraordinary exercise of power. Even these brief s indicate that.





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Yet we have had hardly a responsible report on this crucial topic in the American press or news media.
The second constitutional issue-and I think it is important to know this-that is being circumvented here is that all appropriations bills have to originate in the House of Representatives. It is specifically mandated by the Constitution. A treaty cannot appropriate funds. The Senate itself, as evidenced by our last session, just prior to the ending thereof, acknowledged that with great poip) and circumstance on the Senate floor.
Here we are entering into a treaty that is going to place a monumental burden upon the taxpayers of America. It 1as been suggested by the proponents of the treaties that the tolls will take care of everytfling. There is the misrepresentation that tihe tolls can cover all the payments to Panama under these treaties-about S70 million a year. Last year we operated at a $7.2 million deficit. How are the tolls going to pay for these increases unless Panama escalates them to such a degree that every country in Latin America is going to be seriously injured?
Every country that uses the canal. including our own and excepting Panama, which always has gotten to use the canal free. is going to be injured. I think it is important to note that we are going to be paying these moneys permitted by a State Department approach here without ever going to the House of Representatives, not only for the perminission to transfer $7 to $12 billion-and that is what we have had in testimony before this subcommittee--of American property. The House of Representatives is not even being asked whether they have any interest in the matter. The administration intends to bypass the House and deal only with the Senate.
In addition, we are going to give a total of about $2.25 billion more in cash payments up to the end of this century. Payments will include $350 million in loans, military aid, and other payments almost immediately. Then we will also guarantee 870 million a year to the Panamanians to b)e taken from canal revenue. The only way those moneys could be raised in addition to assimilating the Panamanians into the operation of the canal-which should be done-is either to drastically increase the tolls or to underwrite the whole giveaway with American taxpayer dollars.
These constitutional issues indicate another overreaching, overextension beyond the separation-of-powers doctrine provided in the Constitution by the executive branch of Government. through the State Department, to the detriment of the Congress and the Constitution.
I think this matter is so crucial that everybody in America ought to know about it. I think that ultimately the Supreme Court will be called upon to suppl)l)ort the Congress in this constitutional struggle.
I might also mention that I think that most of the l)roblems we have in this world today are caused bv an elitist foreign )policy philosophy that has dominated American for too long. It is an elitist philosophy that has made us appear to the world as imperialist colonializers, when the Soviet Union. the greatest imperialist colonializer in the history of the world. controls and dominates colonies all over the world. If the Soviet Union receives any criticism at all from the world. you would never know it from reading the newspapers or viewing television newscasts.





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Now we are in the posture of being imperialist colonializers who give up evweryting-this time the Panama Canal.
Another major foreign policy devel opmient that concerns me, is ti is Presidential release memorandum No. 10, which has indicated that we will use the force of world opinion rather than military aid and assistance to stop world aggression to protect not only Europe but also Korea.
This is the type of State IDepartment foreign policy to which this country is Subjected.
rTle fact of the matter is, as a r-esult of the diplomatic blunders involved in this treaty, we are going to have trouble 110 matter what we do. If we fail to ratify the treaty and the President does itot act firmly and responsibly and exp editioulsly,. we know there will be incidents and difficulties (lown there. We were also told in Panama that, if we do ratify it, within a short period of time wve will probably be shut off from the use of the canal.
We appreciate the witnesses that have conie before us in the past. ~We certainly appreciate those that are here, today. I shall, be very interested in listening to everything that is said here today.
Senator ALLEN~:. Senator Scott ?
Senator SCOTT. Thank you. Mr. Chairman.
I would commend you, MNr. Chairman, for holding these hearings and for the caliber of witness that we have appearing before us today and in the past.
I do not have a prepared statement. I would like to say that the proponents of the treaty speak of fairness. I believe this is a good word. I think it is a word that we should remember as we examine this treaty.
In the basic laws of contracts. we learn about consideration. We learn about mutuality. There should be benefits flowing in both directions. I do not find this to be true in an examination of the treaty. It seems to be oing one way-away from the United States and to Pananma.
Article 12 of the canal treaty, for example, forbids us from building Snew canal anywhere in the isthmus without the consent of Panama, well outside of their territorial limits. I see no benefit to the United States, no qulid pro quo there. It just seems to me that, in the interest of fairness to our own Government as well as to Panama. we should look very care fully at every provision of this treaty.
Again, I comment the chairman for what he is doing.
Senator ALLEN. Thank you very much, Senator Scott and Senator Hatch.
Our first witness is a man who was one of the first to alert the country to the dangers of the proposed Panama Canal Treaty. He has articulated in a most eloquent fashion throughout the Nation the (dangers underlying the treaty. We are very pleased that he is here today with his lovely wife Nancy.
He is to be presented to the committee and to those present by Senator Hayakawa, the distinguished Senator from California.





7

TESTIMONY OF HON. S. I. HAYAKAWA, A U.S. SENATOR FROM THE STATE OF CALIFORNIA
Senator HAYKAWa.. fMr. Chairman, it certainly is a great leasrhe to be here to introduce Ronald Reagan, former (Governor of ( 'alifornia.
He and I have been associated for a long tilme. I guess we both got acquainted with each other best of all during the days of the student uproar in 19)-6 and so on. From the point of view of the radical students, he was one of their most unfavorite people. I think he was. from their point of view. Fascist pig No. 1 in (alifornia. Laughter.
Thereafter, through a whole chain of circumstances. I was appointed, with his assistance, acting president of San Francisco State College. At that time I became not only governorr Reagan's puppet. but Fascist pi)g No. 2. Laughter.]
So. we have had a kind of paternal relationship over the years. I want to say right here that we did succeed in producing some kind of order at San Francisco State College which spread to other colleges. In all of that. I owe G(overnor Reagan a great debt of gratitude.
As you have said. MIr. Chairman, he hlas been in the forefront of explaining the Panama Canal treaties and the dangers involved therein in eloquent and impassioned terms. He brought the issue home to an awful lot of people. This results in one terrific stack of mail on my desk: I owe that to him, too.
So. it is with great pride and pleasure that I introduce my good friend Ronald Reagan.
Senator ALLEN. Thank you very much. Senator Havakawa. I would urge you to stay and listen to the G(overnor. I think possibly your thinking in this matter might be assisted by the G(overnor's remarks. [Laughter.]
We are delighted to have you. Governor Reagan.
Senator ScoTT. Mr. ('Chairmani, might I say that we are also glad that the Governor's wife can be with him.

TESTIMONY OF HON. RONALD REAGAN, FORMER GOVERNOR OF
THE STATE OF CALIFORNIA
Governor REAGAN. Mr. Chairman and members of the subcommittee and Senator Hayakawa, let me express my gratitude for Senator Hayakawa so graciously coming and introducing me here. It is true that we shared some battles together.
I could also say in his behalf that hlie followed a succession of acting presidents of San Francisco State in those hectic day. all of whom suffered combat fatigue until he arrived. At that time. the fatigue was transferred to the rioters and disturbers: and the people of California are very grateful to him for what he did ; so am I.
MIr. Chairman and members of the subcommittee. thank you for inviting me to appear before you this morning to testify. You are concerned, as I am, with constitutional and other issues arising out of the proposed Panama Canal treaties, and I appreciate this opportunity to share my views with you.




8

It is necessary first to comment on the constitutional issue. Even though I am not a lawyer myself, I can appreciate the hours of researc.l lawyers put into these matters. In reading about the Panama ('anal, its history and its operation, as well as its national and internati onal significance, 1 found myself spending more and more of my time studying the legal cases and opinions whicii bear on the canal and our relations with Panama. There is a plentiful supply of logic and common sense in those cases and opinions.
Tile executive brancli argues that the President's treaty-making powers under the Constitution are enough to dispose of U.S. territory and property without aiv implementing legislation by the Congress, and that transfers of property as specified in a treaty become selfexecuting once the Senate ratifies the treaty. Iistorically, Congress has held to a different view, though there have been enough ambiguities over the years to revive the arg I-ent with each new case.
At a glance, the U.S. Constitution does seem to be ambiguous about the matter: article II, section 2. clause 2 gives the President authority to negotiate and enter into treaties.
Article VI, section 2 declares that treaties are the supreme law of the land.
But, the Constitution also places a congressional act and a treaty on the same footing.
Article IV. section 3, clause 2 grants "The Congress," meaning both houses, the power to lispose of territory and other federal property.
Treaties, of course. must not be in violation of the Constitution which grants various powers to the President, the Congress, and the States. All of these, at face value, are limited, but in reality they are subject to the limitations imposed by other sections of the Constitution, in the form of specific prohibitions, or by the fact that the Constitution vests concurrent or exclusive power in certain units of the Government.
Whether the proposed Panama Canal treaty neels implementing legislation in order to dispose of U.S. property lies in this question of concurrent" versus "exclusive" power. In his recent paper titled "The Treaty Power and Congressional Power in Conflict: Cession of U .S. Property in the Canal Zone to Panama," KennethlMerin, Legislative Attorney of the American Law Division of the Library of Congress, makes the point that, "The Constitutional issue is not. or should not be, involvement of the House of Representatives in treaty negotiations," but "whether, by virtue of article IV, Congress exercises exclusive or concurrent power over the disposal of territory and property."
Presumably, if it could be proved that Congress' power is concurrent, the proposed Panama Canal treaties would be complete and self-executing if ratified by the Senate. If, on the other hand, the weight of the evidence is for the other view-that the Congress holds exclusive power over the disposal of territory and property-then Senate ratification is not enough. Implementing legislation by the House of Representatives would be required. I believe that careful examination of legal cases as well as historical precedent leads one to the inevitable conclusion that Congress does hold exclusive power and that implementing legislation will be needed in the case of the Panama Canal treaties.





9

Now, the executive branch may cite as evidence to support its position the treaties we entered into iii the last century with a number of Indian tribes. In these treaties we appeared to be ceding land to the tribes without requiring implflementing legislation. Tie practice was stopped altogether more than a century ago with the passage of the. Indian Appropriations Act of 18s2, but a closer look at the Indian land treaties shows they were very different from this proposal to turn over Ir.s. property in the Canal Zone to a foreign government.
The American Indian tribes have always had a unique relationship) with the Federal Government and have not been considered foreign nations. When lands were turned over, the tribes were usually given
right of occupancy, with ultimate authority over the lands still to be held by the Federal G(overnnient. Even in cases where the treaties gave the tribes the land in fee simple, the Government reserved the right of eminent domain and sometimes the right to hold veto power over transfer of the land to third parties. Neither of these reservations would apply, of course, when turning property over to a foreign nation, such as Panama.
Other arguments will be put forward to support the contention that implementing legislation is not needed in order to dispose of our property in the Canal Zone. One may have to do with treaties which involved boundary claims. The United States has entered into boundary settlement treaties several times in its history. swapping pieces of land here and there without any imiplementin g legislation from Congress. Again, on closer examination, each settlement of a boundary dispute turns out to have been a matter of recognition of the rightness of the claim of our Nation or the other one involved, and not a matter of outright cession of territory.

RYUKYU ISLANDS
The case of the Ryukyu Islands might be cited, too. We turned these islands back to Japan in 1972, following ratification of a treaty without implementing legislation. In the 1951 peace treaty with Japan. however, the Japanese did not renounce their right or title to the Ryukyus, as they did to certain other pieces of territory ; so that when the time came to discuss the matter further there was no serious question of ownership.
So much for the flaws in the arguments that are put forth to support the idea that the new Panama Canal treaties can be used to turn over U.S. property without special implementing legislation. The strongest evidence to support the opposite assertion is the past record of disposal of U.S. property in the Canal Zone itself.
I have read thousands of words of newspaper and magazine copy and heard many television and radio broadcasts about the Panama Canal treaty issue, but have seen or heard nothing about these cases in the news media. Yet, their significance cannot be underestimated in establishing that legislation will be required of Congress because of its exclusive power to dispose of territory and property.
Back in 1932. our government wanted to build a new legation building on land inside the Canal Zone. It is not proper, of course, to build a legation on one's own territory. So, a bill was passed by Congress to authorize the Secretary of State to adjust the boundary between the





10

Canal Zone and the Republic of Panama in order to turn the land for the legation buildinor over to Panama.
Ten years later, the Senate debated approval b joint resolution of an Executive agreement to transfer some land and property in t1le, Canal Zone to Panmia. The very questimi ()f ivliether this shoii](1 be ,J()ne by treaty-re(juiring only enate i'atificatiOll-or bN' FXerl1t1\-Q ,ivoillent-requirm (r cwisont () f both hotl v
mo,t ure was aj)j)rON-ed, jjjj(j(q,-. (,Ojq
1"'arly the., next year. 194-1, tli( Hoti-( Con-imittee wl Folvign AtTairs held hearings on tl)e lan(I transfer in question. Its repm-t. adds N\,( Irht to the, argument. for requirina iniplementino, lecrislation in the current caso. It -,zald.
Con,,,ri ,<,,jnnal apl)ro\-,,tl (if t1o, F-xeeutivo, e(,,mnijtm(,ntg to P,innimt is ought in nie ,( )rm of legislation 1)(wm- f, thore i inv(dved : a., a di,- po.sitjwi of projwrty of TIle 'U1111f d "'I"ites: 111(L Ii.. nn ippropriatiiii ()I' finds. 1)()tlj requirlNg 111 ("X01*or file illdoileiid(-111 10, 11w I I.N-111 tkl 111, A rticle
i V of t I i (I ( '011<1 IT !11 i,111 I' !I i;it --rite ( ', I i,,tvo i I w 1),,w ( r to dispose of the t(,rritorv or other 1)roperty belonging tn tho United States."
Our tlvat.v \\1tIl for ()f re'al J)roptrl slatill(r I I a I-id III(. rest
li(tt ()ntc Nvwil(l be tran- fei-ivd ininw(I'atelY I lit D ill-Ill'r Ille

(1mi, \vmild be llee(le(l In on.lcr to illlpleili,( llt flic trallsfer of all the l,)l-ol)vrtv in. question.
A Illunber ()f Supreme Com-t decisions over the veai ; has
the exclusive nature of Confln,(-- power to Eq)os(1 of territory and prolwrt v tin(ler a rt ich, TV of I he Const itut ion.
'k,
J, f(,i(,(, ()f all flie historical and evidence indicatin!'r I-11'af 1!111)jelllellt il) I o from the C()" Will be lwce.-,- m, v ill G e
Of pl ()J)el ty III III(' Callal zon( it is 11.an'l for 1)1(' to believe
H1,11 the execiltive branch Avoll](1 Nv;lilf to (.11-cullivent t1w 1, f-r If oill. fore,
i,1-1its and responsibilities in this Intattel imliev is to
be flllIv effective, cw)I)eratioll of the Congress is a vital in(ri-edient.

I PUFFED BY AMK\ -Al)()RS BT--NKER AN1) LlNONN'l'YZ
Tlie c(Iii.-4 it llti()Il, I *SSIle is of (rle,
,It importance, but so is the seclirity
()f tlie T-im (A 'tatcsinil Western Hemisphere.
T liave not yet rec(ow("(l ,t copy of the treaty (Ii-aft to read. but ineillbers of 111A- if and I have been briefe(l oil its contolits by Bunker and Llno-\vitz and otlier ineniben4 of the T-.S. neyotiatiii(r team. 1 believe the. ainba- adors worked eai ii(,41v and litard illider difficult circim-,4ances and there tire. soine commendable ideas contained in the 1')r()j)(,)- (,J treaties. But. I also believe they have an overridin(y. indeed, n ft- ttl-flaw. Thei proceed from a false premise, that we (-,,in expect ] ("Iiable. 11111)(irtial, trouble-free. secure operations of the oajial in the filtilre by re1*111(illishing the rights we acquired in the 1903 treaty.
In that tro.itv we acquired the ricrlits of sovereilnity over the Canal Zone. to tll(, excliislon of the exercise of such rights by the Republic of Panania.
We diol not acquire the. Canal Zone under the sall-le circumstances as we did the Louisiana, Purchase or Alaska. -Many people think we didl but the fact is that the Canal Zone is unique.





11

It seems clear, from the language of the 1903 treaty, that the intention of our Giovernment was to acquire a firm, unshakable legal basis, for building, operating and defending the canal. We did not acquire the Canal Zone for the purpose of extracting ininerals, tilling the soil or establishing a mercantile colony. It was a single purpose enterprise, but the important thing to remember is that only one nation can exert sovereign rights over a giveii piece of land at one time; and the 1903 treaty made it clear that we would do so in the (anal Zone and that the Republic of Panama would not.
To this day, it is those rights of sovereignty which iindergird our ability to operate and defend the canal. We cannot be kicked out summarily on the whim of some Panamanian government.

NATIONALIZATION OF CANAL POSSIBLE
Once those rights are removed-and they will be removed immediately if the new treaties become effective-there is nothing to prevent a Panamanian regime from deciding one (lay to nationalize the canal and to demand that we leave immediately. That would present us with the very thing the treaty advocates say we want to avoid: confrontation, or its alternative, unceremonious withdrawal in the face of an arbitrary demand.
For more than 60 years we have operated the Panama Canal efficiently, impartially and on a not-for-profit basis. The nations of the Western Hemisphere have come to rely on our stable presence there to. make sure that their commerce would get through unhindered.
We cannot be certain, if these new treaties go into operation, that key personnel now operating the canal will not leave a great deal sooner than expected, thus bringing into question the smooth operation of the canal. We cannot be certain that, as the American presence withdraws from the Canal Zone, new demands for accelerated withdrawal will not be made under threat of violence. We cannot be certain that outside influences hostile to hemispheric security will not make their presence felt much greater than before in Panama. We cannot be certain that Americans operating the canal will not be harassed by an unstable and power-hungry dictator.
Fidel Castro, whose interest in exporting revolution is well known, has made quite a show of his friendship for the current military'regime in Panama. And, just this summer, a delegation from the Soviet Union visited Panama to look into trade, investigate possible plant locations and even the possibility of opening a bank in Panama. It should never surprise us that whenever the United States withdraws its presence or its strong interest. from any area., the Soviets are ready. willing and often able to exploit the situation. Can we believe that the Panama Canal is any exception?
Although the proposed second treaty would continue indefinitely beyond the expiration of the first. one in the year 2000, the question must be asked: Does it really provide what it says it will, which is the unilateral ability of the United States to step in to defend the canal if its neutrality is threatened ?





12

I believe we will make a very grave mistake if we let ourselves be inveighed into debating what the treaties do or do not say. Yes, on paper, we are told we have the right to step in-even after we have turned over control and removed our forces. But will we?
We are told by the treaty advocates there will be unpleasantness and trouble if we don't accept these treaties. The same people then assure us we can march back in if there is trouble. But once we have said, in effect, "We don't want trouble; we'll give up the canal," have we not also said, "If the government of Panama, encouraged by leftist allies, plays fast and loose with the treaty," we'll decide-since we're giving it i) anyway-"why bother?"
I don't believe such a concern is unjustified, given the recent history of our Nation. We have shown a reluctance to meet the responsibility of free world leadership. even on occasion to abandon allies.
We have been told the canal is declining in terms of military importance, and yet all but a handful of our Navy ships can transit the canal. The great bulk of material bound for our forces in Vietnam went by way of the canal. And who can say what shape our Navy will take 20 or 30 years from now? It may very well consist in this missile age of small, fast ships relying on quick accessibility from one ocean to another.
JOINT CHIEFS OF STAFF
President Carter cites a statement byv the Joint Chiefs of Staff that the treaty is satisfactory in terms of our defense needs. I mean no disrespect to those fine men. Yet, in a recent letter to the President, four former Chiefs of Naval Operuations-now retired and, therefore, free to speak out on this issue-underscored the importance of our keeping active control of the canal. Admirals Arleigh Burke, Thomas Moorer. Robert Carney., and George Anderson said, in part:
As long as most of the world's conmbatant and commercial tonnage can transit through the canal, it offers inestinible strategic advantages to the United States, giving us maximum strength at minimum cost.
By contrast, the Pnama (anal, under control of a potential adversary, would become an immediate crucial problem and prove a serious weakness in the overall U.S. defense capablility, with enormous consequences for evil.
Our continued presence at the canal inhibits potential adventurers from trying to make international trouble there far better than would a piece of paper granting us the right to return after we had once departed.
It is no secret that the Soviet Union believes control over some 16 vital sealane "choke points" means dominance of the world's oceans. Our presence at one of the busiest and most important of those "choke points" is a definite deterrent.
There is another factor at work which could be harmful to the security of the hemisphere because it could further question our willingness to maintain a leadership role. Let us remember that for much of the time while these treaties were being negotiated we were doing so-especially in the last 2 years-under repeated threats of violence. True, the threats slackened off this year, possibly because General Torrijos saw victory ahead. Some may believe the threats were a bluff, but the fact remains that we did continue to negotiate and. apparently, made concessions in the face of threats. The President seemed anxious to speed up and bring the matter to a conclusion in spite of his previous





13

declarations that he would never relinquish effect ive control of the Canal.
If we accede to a treaty under such circumstances, will this mark the end of further demands? If there are, indeed, radical guerrillas in Panama-as we are told-ready to blow up the canal if we don't ign a treaty, what assurance do we have that they will be satisfied with the terms of these treaties? Already, the Government-sponsored student federation in Panama has issued a manifesto supporting the treaties, but also indicating that "the struggle will continue" so long as there is any American presence at the canal. If they should press Torrijos to ignore these treaties, would we not hear the same arguments from the same people for giving in to those new demands that we are hearing today?
Whether or not these treaties ever go into effect. we can expect trouble from leftist elements in Panama and elsewhere. Yes. failure to ratify the treaty will offer an excuse for demonstrations and riots in Panama and very possibly in the United States. And, behind the scenes, the Russian Bear will do all it can to destabilize the security of the hemisphere and cause a global whirlwind of unfavorable press aimed at us. It is not because we didn't ratify the treaty but because that is their normal procedure where we are concerned.
The treaty advocates say failure to ratify and implement these treatties will harm our relations with all of Latin America. Is it possible they believe they are betting on a sure thing? Historically, our Latin American neighbors have felt the need to be somewhat on guard against a United States which to them is the "Colossus of t(he North." A natural reaction has been to vote as a group on inter-American mnatters in international forums. This does not mean. however, that all Latin American nations have identical interests or think alike. As a matter of fact. a surprising number have privately expressed concern about our possible withdrawal from the canal.
Frankly. I believe we can question not. only the warnings about possible deterioration in our relations with Latin America if we don't ratify the treaty, but also the glowing promises of a new era if we do.

U.S. LACKING COHERENT POLICY
The fact is we do not now have a coherent policy toward our WVestern Hemiisphere neighboi,,s. And we should because, over the next few decades, ourt continued prosperity-possibly even our survival-will be closely linked to that of our neighbors within this hemisphere. I do not believe these treaties are a substitute for such a policy. I (1do believe that the United States. negotiating from strength and not iieeklv yielding legitimate rights and responsibilities out of a desire to avoi(l unpleasantness, can be truly helpful to the people of Panama and to all the hemisphere.
Some of our neighbors need aid we are in a position to give. With others, the need is for increased technology and trade; and with some. unhindered access to capital for needed development. Once our G(overnment recognizes that we must all sink or swim together maybe we'll stop some of our self-defeating practices. It is self-defeating to throttle a friendly nation's ability to obtain capital because it doesn't run its internal politics precisely as we would like. It is self-defeating to keep a neighbor from buying weapons for its police force because


20-266 0 78 2





14

solneollO in 117asliinwton .ees terroi-l.i4s as liler( t politiefil dis -idents. 'I'llits we, oncourag(ll mor( terrorism, ajid 11111-f a, N"ation's clialice'-; foi. economic, re cover.
,)tit- neighbors in Latin America ask th. t w(%t learil el'icift,(01 abcmt t1leill to ]IaNx- smile lilidei-standing. Sometimes, tliell. problems a1V S11,11Ilar. Sometimes different but etacll nation is desei-N-iiig of miderstandWliat especially do the Patia it I -,tit I alls Wallt lsti t, -till ea ;\- question to aiiswer since tliere is no elecfed lo-m-ei'llille'llt, nor call, WO i)e sure a, plebiscite of the People oil t1le treaties would (YINT ,fth aCC1111tate answer. in of the ilature of tlie, Gm-ermilent.

PANAMA IIAS 11IGHEST PER-CAPITA I"N-COME IN CENTIZAL AAIERICA
We are, left witli some educated aliout tll(-, wants of the PanIi'llan people. TlitInks larov part to the callal tlie Paiiammiians ha -e 11te liiohest per-capita IlIo,.()I1w In Central America, and tll( third or fourtli highest, in -(ill (if Latin Ainerica. But illell, (11101,1011IN, I,,. near l)-tuiki-tiptoy. They axe pla,,rtted by inflation and IlI1c111ployIll(:nt while natui-al resources lie undex-eloped.
Confral--N- to N-bat has beell Implied al)(itit Illy own position. 1, do not be'll(w e tllat III, re*eo-t*11o. tllo.- e tre. I I atles NN-e sliould S*11'11)1 y demand t-lie
status (111() aild ]lot to pr(Jilems lv(nardill(r MIr r(l](116(ills
with t1le people, ()f I"111"tilla.
Early lit tliis ceiitury. NN-(, re.-Ilized our dream ()f -,i waterwa-y comiectill(y t1w hv() o-reat () I-ean -. Paliama. then -,I iie(de(.1-tcd proNince (if Colomhia, also realize(l. -,I dr(' be fre(, m(t independent. "I'll(' hl-o
dream-; were lilt Oriv] ated. -Mam- In OUr (",otill t rv tliotl(flit the caiial 41ollbl be in Nical-a( Im. 'I'lle Pantaiiianlaiis kile\N- tlieli- only climice to fiaxe independence and prosperity hay in t1w canal bellio. blult in Paii:ima. And so it was fliat, Panalma i"Itified Hie Tivai-N- lll()Iltlls before it Ava,-i ratified bN- ()lit- mi-ji G OVO I'll In C 11t.
We Ita\-e notlillitr to be fisliallu'd of and 11111(1-11 to be proud of. We Creat('d mle of the, cri-eat -\i-oiiders ()f t1u, worhl. an(I it 1,, doubtful anv (Alier nation could LaN-e, doiie so. -Morc iliall t1lat. 1,mve -er, NN-e llaN-el 'AAMMOV( 11 cl atlolj tt It(') pl'ofit to mln eh-es and
t the Call-al f. irlY for 11 ll.
witli (rivat, econotillo!. beiie.fit to Pamailia. 'Not omly did -\N-e deal fairly witli t1w (roN-ernments, of P.-Inama alid ("olombi'a, NN-e also I)OII(rll;t eN-erv piec(- of privatel-y mvned land in the Canal, Zone in fee sill-1ple front tbe hidivio-lual owners. And nlay I p)int otit the Caiial Zone i-, not flanked I)N- Berlin walls. The. people of Panania (-all cro, in alid out of the zone f reely tit ('111 times.
]lilt, fiuu s cliange, and flie. Panamanians have a (YIIONVM(r feelilig of natiomalisill. Ave, oil the otlier liand. cannot. weaken our ability to prm-ide Security foi- 0111. Nation and the entire We,-,tern ITemispliere.
all WaYs be follild to sat Isfy some of their national a,,,pirations wit1iout o,--omproinising otir ability to ineet. securit.x requirements.
Tlioilcrli T 1)elieve that the Nasic flaw of the proposed treaties requires t1l"A the N7 not N, ratified, there are altertiatives we shmild examine.
Let its explore, for exallmle. broadenincr participation in camd policymakinor. 'Flie propo sed basic treaty calls for a goNTer-ning I)oard
-\N- i t li five T1ilted States and four Pamainaman directoi-s until the Year 2000, when it expires. An alternative to consider -would lie a





15

board comprised of a group of perin.-Inent 'Illodwi. grolip
of permanent Panamaniall seat- a,10 -1 t1lird (rj-()jjp ()f* J(, I-jjj be rotated ammig jmtloll -. Allodler p()--1hj1itV III ".
to have that third yroup made ill) of ivpiv -( Iltativ(,- 0, mir ]I..1,L11bor:- the nations of -North aud South zm(t ((,ntral Am(,rik"t.
The prop() ,(,d treaties call I'm- m i)f tht, V P;1.%
Panama ammal1v froin millioll to an (,;Mtl
Operatlml ()f 1 much tas ,O millimi. Theiv is no Oil- v:willl
beiiefit the Paimmaiiian, people. A itiodernizatiOll minal Lake Third Lock plan--vould dtfinitelv 1w1j) 1-he would I)e approximately 10 years in the hull(fMar ztll(l cos-t )(1 NV(, Al .,I and b*11ion. AV( -ert'l III that V t 11,11 11(1Il*q11
I COUld I I I a ke
.md contractors were ell(rt(r( (l extellsiveh- In t1w -\vllick
dinetly bellefit the people (111d the eCol1()j11V ()f Palmill(I.
al w(mid 11 (4 11,111Such a mo(iernizat*on of the call.,
(11inir all but a few siipert-fM1-,-(,n-. It could have 1111P)IIml P)11for the cost of moving Alaskan oil to gillf increased speed of transit and general tr:01W Nvould iiwmi toll revenue., which could fiti-ther benefit Panama through t f ormul a.
There are two alternatives for T am ,me iiv wliei
ways foi- the Uiiited 'Stai,(,,-s to d() -\vIiat it c1mi for zi .11)(licating it", OIN-11 re.-tmilsibilit N, to perlwm( Iltl y ItIl ()1WIj waterway for all the wor](1%, shipping an(I t ()f
for the Westerii Hemisphere.

FREEDOM HOUSE DATING
In conclusion, I would like to touch on the subject of human right, The concept of individual litintan freedom is deeply ingri-ained ill 111 here in the United State Though I believe the best Avay to IwIl) human rights flour -h is to set t1w possible exaiLipb,
ill 0111, ()Wll country. I n"11,17o that some believe we -,ioiild
be more a ,ertive in creating others to follow our exalitple. -Now -Lilat a high stan(lard of -ensitivity to human rights has 1!W(,()III(1 *(I
-tolie of our Govermnent%, policy, I think it is II()t- ()Ill.v f,(,Ill, kit mandatory to rtlise the que-tion with reizard to the repress, Iv IVII,*111k, in Paiiain,-Cx with which we luave been neorutiafingy. A-nd, I do not our ne(rotiators' effort to characterize it as inerely authoritarian.
Human rights criticism, public and private, has been leveled It -ki number of natiou- in the Western Ilein-i-phere -\N-lileli have alxt v1)(,(,ii friend1v toward us. Yet I cannot recall a single word ()f (-I'll IkII-111 by any repre-4111t,(Itive of mir Government toward Paimiiizi in llii:regftr(l. Yet. Fivkdmil which Ii,-, D,('W"llized internnt'()nalh
ail iinptrtial momtor of flio status of himimi freedom. rau- PaiimiIzi '(IS Oil(, of 67 ii,. ttlons lit the world that is -*'not free." Tli(, v i,,ite 4 1 is "free" and 48 as "partly free". In its annual sm-vev. Fiv(,doiii HOII:-,,' rates political ri( rlltS oil l scale of I to 7. with 7 leltz4 free. They rate Panama as a 7. They rate civil i-11o-lits on a similar scale, and Panaina, receive t G.
Doemneill have been -\vl(lelv circulated in this country. with names, dates. place ,. and details of aileo-ed violation- of huinaii ri(rhts bv the re cr
,_mie in Pzm,,mia. 1. personally, have received (i letter frmll a Panizt-





16

NN-11() wa- forced, at gmipoiiit. froin Ili,,:, Mltonlol)ile 111with< ago and -ent into exile lie lia< dl ented.
in w(, all'w-(I a dotible standan'l in tlii.-- mo-_ t f mi(lameiital of aieas
I dmi't tliinb -(). t*()r to d() i v- to tli(, xv()H(t thit N\-(. :lre (-Ym cs, 11sillo' t1le il"11(1 Of 1111111all olll tl ,,I tactic to p1-()(111(.(, :Jwcific political results. Worse. it may say to those -\vho hold out hope, of redliced oppression and 111t,1111ately the restoration of freedom that AIII(IricamS are, Nvlwn voli ,vt m(rht down to it. hypocrites. The i ecent 111 torv of out- Ile-'rotiati()II with the Planainziwan dictatorship (toes 110thillo, to di -pel such C(QltTlll' 'So. I leave you Avith tlii- question: C, i i L NN- e 1),,i i -, it e canal nt -()tlatioii- f rom inan rights when those
I ilrlits a,_ N\- 1%uow them aiv s(,N-erely Iiniited iii Panama
Filially. wliat conclu- ioiis are to be drawn about these treaties?
Let Ine, reiterate tliat: The Panlaina Canal is vital to our security ,11-1d that of the Western we provide tl-i(, one sllie (ruar,uitek that the coinmerce of the Nvorld will haN*e cmitilitled to this wttelw(ay: Ille, rl(rllt,- of \\-(, liobl In, flic Caiizil Zone are
the foundation of our ability to reiiiam there to operate and defend the ("111,11 : Ole prolJ)"ed tlvatie,- 1,,dimquisli tlio- e ri Ldtt., mid do not provide adequate (ruarantee.- acraim t future threats to the canal; alternatlve, ; should lie souglit wlilch re(,o-),_,riiize the a -piratlons of the Panainanian people. witliout compt-onil- 111(r 0111, 11)ilitN- to ineet czecuritv i-equireillents.
TIms. the tre.ttl(,- i,_ 1)11()p).- ( l liotild not be ratified. Furthermore. it seelll--z t'i'mil ()p]WOIP land lll, Ztorleal precedent that the
,a t -atl()Il ti(, N\-'Il require legislation by the
Congre Z.
,rhank you again for Invitill(r ille, to 'Cippear before you.
Se'll'ator AiiY-_N-- Thank you VOrV Much. ("TOvernor Reagran. Your remarks (101114itIM, (t 1,01W ne and onefiil statement.

Governor REAGAN. Ye, ;.
;eiiator ALLFN_-. The niemhcr, decided that we would impose a 10illimite period for askiii(r qu(-_ tioil, z a I lid answering them. If that does "t (TIVO Sliflicient tiine. ilien we wmild have a seco nd round of -) mineacli.
t-lill, (rojllo,
to forcro for the time 1)eing my opportunity to ask que.stimis. I ani (roiMff to ask Senator 11 itch if fie wmild start.
elllltor GTON-el'1101', I wailt per lloiially to express my appreclation for your takincr time to chat -with our -committee'in tr-\-in(-r to ('1111(lidlite some of the more important aspects of the issues involved in Hie Pantima Canal.
You liave, indicated that the Russiaii< have been to Paii-mila. DO vou know wlien tliev were there ?
Governor R'
EAGAN. Yes: it was in the itionth of July. They were t Ilere f or over a week.
'* Nell'ItOr ITATCH. Just a month or so ago
(TON-01,11011REAGAN. Yes.





17

Senator HATCI. They were negotiating( various commercial agreements and so forthGovernor REA.GAN. And talking about locations for plants and so forth. Some, as I believe, were actually discussing buying. at way above the world pri(e, sugar. They were talking about putting in processing plants for sugar refinin.
Senator IIAT(aH. They asked about buying .1).0() metric toll-s of sugar at almost double the world price or double the world Iprice.
Do you have any idea as to why the Russians would do tis ?
Governor REAGAX. Oh. I have a very clear idea.
Senator HATCH. Please give us the benefit of your thoughts.
Governor RIEAGAX. We could go back, if we wanted to. and (jlote Lenin; he said that they would take Eastern Europe. They would organize the hoards of Asia. They would then move into Latin Amierica. The United States would be surrounded, and they would not have to take it;: it would fall into their outstretched hands like overripe fruit.
I do not believe there is any indication that they have ever c1hanged( in that overall strategic plan. They are moving into Latin America first by way of Cuba. That has been very evident. I think that does pose a considerable threat to us.

SEA LANE CHOKEE POINTS
Senator HATCH. In your statement today. you say that there is no secret that the Soviet Union believes control of over some 16 vital sea lane "choke points" means dominance of the world's (oceans. and that our presence at one of the busiest and most important of those choke points is a definite deterrent.
I)o you have any opinion with regard to the rest of the worldI choke points as to who really controls them today ?
Governor REAGAN. Yes- I think, if they don't already. they are very close.
They have a simpler problem than we have. Our naval ple
one of keeping the sea lanes open. It is absolutely vital to us. The Soviet Union, in the event of hostilities, has the simple point of .imply choking off those sea lanes. To do that. instead of foraging out in the open ocean. you simply have to intercept shipping in those various trade lanes.
Once upon a time in the history of the world. there were only al)out five such lanes. They were around the short east-west route around the world. They were the Panama Canal. the Straits of Gibraltar. the Suez Canal. the Mada!ascar. and the Malacca Straits. Now. of course, with the industrialization of other countries such as Ja)pan. there are north and south lanes. There are lanes up in the North Sea and so forth.
Their maneuvers, the largest naval maneuvers ever held by any nation, some time ago revealed that their strategy was based on the interception at those points.
[Map of aforementioned choke points follows :1









WORLD MARITIME CHOKE-'POINTS AND U.S. AND SOVIET FLEETS

O 0CEAN MArus

AN uOTOLD)
INDIA
12 OCEAN
C FORCE





















FLEETDWAviaPo to&ES10. DANIH
14
8 ~'

USSR















USAUS USSSR
ASIA3. MONA PASSA 11. MOZAIQ















MAJOR COMBAT
SHIPS 4 ICELAND STRAIT 12 STRAIT OF MALACCA
SUBMARINES 117 335 5. s. STRAIT 1 T (Korea STRAIT
SEVEN. BARENTS 14. CAPE OF GOOD HOPE
FLEET -vivasok 1 SEA SIXTH
USSA FLEET FLEET
















ARCCARRIERS TIC3 2 7. MEDIAN 15. STEZ CANAl
FLEET RED SEA 16. PANAMA CAN
USSRL















FARSOVIEAST FOO ARCTIC
FLEET OCEAN ICELANID















S ce: \AREA, from article published in OF U.S. Naval Itiue Proceedings,
















January .1977.
U.SS.R.
TLANTIC
u~s sesoN A~otFORCE X


FLEETTL

FLEET

CA1 GUYANA
O Ce




THE NAVAL BALANCE CHOKE POINTS
1t STRAITS OF FLORIDA 9. STRAff OF GIBRALTAR
1 WINDWARD PASSAGE 10. DANISH STRAITS UNITS -USA USSR
3. MONA PASSAGE T-. MOZAMBIQUE CHANNEL MAJOR COMBAT V
SHIPS 4 ICRAND STRAIT 12- STRAIT Of MALACCA

SUBMARINES 117 335 S. ILAND STRAIT -3a TSUSHIMA (Korea STRAIT
6. BARENTS STRArT 14 CAPE Of GOOD HOPE CARRIERS 13 2 7. PERSIAN GL.F TS. SUEZ CANAL

8. RED SEA 16. PANAMA CANAL SOVIET FOOTHOLDS

Soure: Autor, frorn article published in th U.S. Naval Institute Proceedings, january 1977.





19

Senator HATCH. One of the best arguments-at least those who are proponents of the canal-offered is that the treaty has a guarantee of neutrality.
Don't you find that a very good point?
Governor REAGAN. NO; ISenator HATCIi. Or do you find some matters of hazard with regard to that?
Governor REAGAN. Under that neutrality clause., guarantees to all nations in peace and war are given to use the canal. In other words, we have the spectacle of possible hostilities in which nations at war with the United States would be guaranteed use of the Panama Canal.
Senator HATCH. Are you aware, Governor, that there was a guarantee of neutrality with regard to Suez before it was shut down ?
Governor REAGATN. Yes. And I am aware that it was a phaseout plan that was to meet some of Nassar's demands on his theories of nationalism. The British and the French had a phaseout plan of withdrawing. Two years after the treaty was signed, Nassar walked in and took over the canal and did end neutrality with regard to Israel.
It is what I was referring to here. What would we do if we were out and faced with the prospect of coming back ? Britain and France took a look and said, "Well, we were going to give it away anyway; why bother?"
Senator HATCH. Some persons have indicated that this issue is a Republican issue and that the filibuster, if it occurs in the Senate. would be a Republican filibuster. Do you have any comments on that ?
Governor REAGAN. I have never seen an issue more bipartisan.
I just received a newspaper clipping from a paper in St. Louis, Mo., that has been running a poll on its front page. with a coupon to be clipped out and sent back to the paper. In the first few days of the running of that poll, it came back 5,460-I believe-votes against ratification and 71 for. I do not think that in St. Louis, Mo., that the Republicans outnumber the Democrats by 5,000 to 70.
Senator HATCHI. Do you have any comments about the recent Gallup poll showing that the percentage margin may be somewhat more narrow?
Governor REAGAN. I do. I have not seen the exact wording, but I heard from someone experienced in polling that the question asked, as sometimes they are in polls, including in effect, editorial comment. It was not a plain question of do we or don't we give up the canal. That editorial comment could have influenced that vote.
Senator HATCH. Governor, you and other witnesses have reminded this committee that there is no historical precedent for bypassing the House of Representatives in the present situation. In all previous agreements between the United States and Panama where property transfers were involved, the State Department always sought authorization and implementing legislation from both Houses of Congress. Yet, in this instance, the administration appears to be deliberately circumventing the House.
Why, in your judgment, is the administration doing this?
Governor REAGAN. Well, because I think the counsel and the advice coming from the State Department has been for giving up the canal for a number of years. I think there was an opinion in certain levels in the State Department, long before negotiations even were underway





20

that, we should follow the coill'se that ilow Nve 1mve followed. I think that, if the sf.rateurv of not haA-ill(r to (Yet (-ollo-l-e., -. iolial -jppl-oN-al AVerp
to 1)(11 SUCC(ISI-Iful. thex believe thev Avould have a better chance 'of orettillcr I-1-ItIfic(atioll.
Senator 11_k rcll. The Presiolellt is, ill in-v view. ti-viTig to
ille Alliericall people Into believing th -tit Ive I-1111 great I-isk if the tivat.v is not ratified. What. if Illiv, do I-oil pel-ceive to 1 e ]-P-k
TIOVel'1101' I thilik Nve are filll lll(r about the of
(list ill-Nallces, I'lots. "abottacre. and so forth ill the Canal ZoneSenator Ttvivii. I have another cluestion ill that. so you (-.,III an- \ver it all at olice.
Otllen<' includillo- nIv"eIf. are advocating th,, t. 1,ecau, v 4 the dip]()111-atic blllndel-.- NAXI 11,11V likely to min some (,rious ri-] s whether the treaty is ratified or not.
Governor That i,- ricrlit.
** ('Illllltoll 14-vi-cu. Please cm-vr both sides of that question.
GoVel'1401' I 'Z F. k GA-. I thillk that there NN-111 1)( t1-0111)'10. I thillk SOllie of tli(#S(, follienting the tnmble-l I-eferl-ed to (a of olle StIldont
They have alre:i(ly implied th. t. AvIlile they are Nvillill(r to 11ave
or I-Ike, trollbl(, (Is ]ojj(r
Torrijo sign the tivaty. they will contilille to 11 as
theiv is all klller4 all lWeselIC(l.

CAN T TIAVE IT 1,()TI1 AVA YS
But I think t lie main question that Ave litive to fic(., is, this. Tile treaty advocates cannot have it both ways. cannot tell iis that it is Avise
for 11-; to sign the ti.e.Itv-11leallimy (rettillo, ()lit of the Canal Zone. (yet"Ition of 11 11 eventlialiv-bec, lise theiv Avill be
t1lIL: out of tit(, opel t tile ca c a
trouble if Nve don't. 'But then they pi-omise ii:s at the same tinie that it I,; till riL1it becau ''e *II the fimire. lifted* NN-e .11,e (roll(,. if tanvolle should ill .III,\, NvaY violate the treaty or lilnd( r om- use or neutrality. we have the
1.14rllt to "0 1)'(Ick in.
-Ill you picture all administial-1011. OM-10 Out. then Suddenly lnobllizill" 1111(i selid1m). tile militarv folves of tile (rivat colossus of the 'North down to Panama becall- e they have done something ill violation of the treaty?
As I say. Ii-hich way do they waiit that arg-tin-lent
ITATCH. DO A-011 think there i any possibility if we ratify tlii tivatv that Ave will be shut out froin tit(, iisC, of the Panama Canal ?,
GoVel'1101' Ri -1m;-I.-\-. I think the possibility is there. I do ]lot. think Ave have the truarantees of secui-itv that llaVe llow.
Sentit-Or Rx-rcit. If we are out of Plinama ill obedience to this treaty. what do you think the opportunities Nvill be for iis to conie 4ack in and ('11 fol.(,(, oUr rl,__rIIt"
(_-TOA-V I'll 0 1' REW_\.N_-. Well. I think tile-\- 'are imich L- s: and I think thel-e is a inuch cri-e.-iter danger there than there is for us if Ave stav
1.1frIlt AvIlere Ave are.
;enatoi- ltvtvii. (-'all -\-oil tell us NN-liv vou think thzit*s -,I orreat daii(rer?
IZE.\GV.\-. The past recol-d of the cali'll. If I-011 look at it. \ve litave livarol, -ill sorts of stories Ziblmit sabotage.
Fli-st of all. it is (11flicult for III(, to believe that the Panamanian (IM-01,11DWIlt. would tolenite the sabolao-e of ,oniethim-r that
amount,'-, to 25 peivent of tli(,Il* O'llOss 11(litiolial 1woduct. It is their cr -eatest ecollomic





21

Second of all w e iave gone through four war-. I1 eiaci one of tl se wars. the enemy had every reason in the vorl to ald lock liat canal. The G iermans ill Worl{ War I were even able to olie 11it11 New York Harbor andl create the great Black Toni explsion in Nei Jer eV. In World War II. with the Pacific Fleet virtually dest roved. it ntst llave been very teliptl)11ilg to our enellmie- to try to cose t 1at canal.
In the Korean an11 1 Vietli coll flicts, we were uill it- as lia b een testified before this connittee by Admiral Moorer-for ateriel h ip -1 menit of the great bulk of war supplies. Iin a time of tres inl the M,editerranean and the Middle East, inl the midst of ihe Vietnam ar. it was, the presence of the canal that allowed us to l)Iace our tonnage in our naval forces ,o that we could respond quickly to a crisi either in the Pacific or in the Mediterranean.
The fact that, in wartime. with enemies wanting to cloe, it down1. it never has been closed down. it does not seem to me the canal is that subject to sabotage.
Senator ILtrCii. One of the biggest arguments offered really cones down to basically this argument about student uprisings and other disorders. There are about 1.700.000 people with only 1.300 trained as soldiers.
How do you answer the argument that this will show. by giving this canal, the greatness of America and that we are ending the colonialism of the past?
Governor REAGAN. Well. I think one of the great thing that is wrong with this is the whole timing. In this particular era. I do not think that it is going to be taken as a great. magnanimous gesture.
Panamna happens to have received the highest per capita aid from the United States of any nation on Earth. If. after all we have done for the world, beginning with the Marshall Plan, we have not earned the love of these other nations yet, I do not think that just giving away a canal is going to do it.
I think that in the present era. in view of what we have done. there is a very grave danger that the world will not see this as a magnanimious gesture. It will see it-and with some justification-as, once again, the United States. faced with the possibility of confrontation. backing away.
I think there could be a time when the United States--as I said here about alternatives-could negotiate from strength. But, we have not been negotiating. Ever since President Johnsons tatement in 1964 in which hle literally gave away everything, in his own opinion. to PIanama. we have simply been concedingr and trying" to get by with conceding as little as we have to. But it has not been a negotiation such as a nation of this kind should make.
Senator HAT.ir. I have one more question. What about the argumient about solidarity of the Latin American countries in favor of this treaty ? This is one of the big arguments that is advanced by the proponents of the treaty. They say all Central and Latin American nations are in favor of this treaty. and therefore it would be good grace on the part of the United States to go along with their desires.
Governor REAGAx. I mention that in my statement: I do not believe it is true. I think there are too many instances of AMembhers of the United States Senate who have had personal experience in talking to leaders in Latin American countries who have expressed their great concern as to what might happen at the canal if it is in the hands of





22

,]Forrijos alid if the T-nited States withdraws its control and its
operatioll.
I know one Latin Anlei lcan NA-ho nlmv h1mit. He
s I i(Ittil T W,
IIII)IN explv. ,(,Ilator ALLFN.
Thmil,-. -\-oil. All.. Chlil.111,111.
Governor. let Ine zlil(l Illy-expi-e<-lull (4 Nveli'mile to N-011 to(hy. I (10111111011(l. yOu foi, colillill"Ir till< distancee to te-tif.v lwfove'om ltbc'onl111 i t t e e. W e a. Ie ( e rt a I n I v U, I: I d t I, I t you ,I T.(, I I e I-e N- 'It I I II --.
you mentimled I momelit tO "I (111(, -tloii froill Seimtor 11at(.11. tlt lt %\,(, 11,111 L"I'to,111 111v 111- to Live W ll,
i (rl I t <. 0 f ('011 I'< 0. T t 1.- t (T] I I I I I I T ('(1 v t 11 e fi F P,11' ILraph 4 tll it. 111m il it- elill'Y ,Ill() t1,(.:It.v < ( O,(".tlv d an ,
tlli tivcttY '111(l tlle PW ",) ilv;tl V. Ihe tieat
the D .- .-) Th('11. 111-f zi-, 1 (6) 11()l w hat thOV
:11A OXCII(I or
of notes betiveell the Vllltk d 'Ind tll( RA.1)1111110, ()f Panama.~
So. I do not think Nve aiv to (YIN, it ill aw;lv hv
W o, aie not (YOIII(,r to ll,IN-e to -,till- 4rl%1(111 11

N \\.%T, BA! E IN I-I'.A
Let rne tsk voil. If you NN-111. GOV('!' I(Q. Wk "Ive the G1!,Mtl11itM() \Iilval P I-t, At Wk, al.e t1wiv it ttv'ltv. Bv vil-Tile 4 tilat
\v( haVe tii,1 -()nti-ol* Y et'. I till T()l(I th.1t
cill) t ]Iasilw
1)0 voll k)f t1liS tre, t-N- to tjjt
Pailaina Canal -NN-111 have an cihct oil the futui'(" of the Guantanamo Ntival ill Cuba
-r()%_('I-IIOr REAGAN. it ('0111 (1 In t! I I ,"A 'ZO.
if NVII-It we (Io I*- tl in the face
OT ii could. Guant:m:ono 1,. ;t dlil'tivnt -Mi ttion Ili that Nvo
lc i:-c. V Y l,- I 11"a it 1,. z a leaSe Ill. 1"(11,P 11 It is true thzlt
or(l(,i-, (t ii- ()lit. It is tnie Ml<() that, there are land Mld otm- points at ,acli other and 1)arbed Avire betv.-een Clilm anJ flic, Guantanamo I)ase.
Giumit-mamo 1 ;;. however. soverelcm Cuban territory. AW are talk.Ili '(1, *1bout a lc:ize. But Ili 1c not one i-iii)ve lla!z beell made to reMove Evi(lently Castro k-iiows that if 'lie tried to remove lis 1)y
force. with our forces there. lit, would be ill a confi-ontation Nviih the United tates.
The difference is here. in this treaty. that Nve ow--elves are Croillocr to i)hase out. Thei e -\vIll conle zl I)OPIL Ill 'Which We will not have any force We ivould be faced with the choice of whether to try to
*-4,11)(1 them back.
The oil]-\, thing that I could ;ee about Guantanamo. Ca ztro micylit
-ee tbi. as all opportililltv 1101-v 1)y saying, "Well. I am willincr to risk for(-eful ejection of theTniteJ States." with the belief t1lat there W01;I(I 1)(, im further troul)1(, t'rom u.-, and -\ve would withdraw. 1111111tol* ICOTT. Governor. ivould -\-oil share your thoual-its Avitli its
tll(, _jp (re-:ztioIj that has been inade that our rel-Ition-hir)
-\vith the Third World will be dama(red if this treaty is not ratified




4-vn

by the Semate? Do you ,ee am- daillacre Nvith our relationship Nvit-11 the Third World ? tn
Govenior REAGAN. Well. I doii't know bow it could 1.)e (1-mil'icred morc. I don't know of a Hirrle 111 -Utlice wheiv have N-ot(,([ witif III-; ill the United Natimis. 'Yht lr hostilltv z-eefl-is to he piettv (-vid( Ilt.
I do not think we t4iould -cttl( for that. I tliliik IIIIl- i pai't of ta much (ri (,atei- pn)hl( m. That 1 -- wimt J the f ffkl Wit p( I I,'\ 4 tile United Statc -' I tlmik oiwe we cv()Ive a foi-el-ii p(dicY tllM Ilize-, this pai'llculal. 'Ituati(m III the comtext of 0111' The Latin Anw1'Ii'M1 11,'Itions ,in([ NvIth th( Thirol Woild- ;m(t wt' 4y()
-it it froin z-tivngtli. then I t1mik wt, oml(t t110:7-t,
Senator Scum'. Governor, in your pivpared rcmai-111--. A-mi lniil' Itcd voti have not had an op port till it v to s ec the treat v- Z111 11() li'ril Voll li IN-0 been briefed aLout it. AV(- received cople
A -ti(,jk, 1- ) relzjt( ,, to -t callal or a thlr(t !' iw of I I t indicatt-- that Paimina tind the Umickt *-4ates ni i v v,- tni t,,) ntlgotliatt, for a -ea-level cam-tl sometime in tLe future. It 111 tT IT() IT(,\\interoceamc caiial ,Iiall he constructed in Rmaiiia tll(i 111 1 't k k I I i I tion of this treaty except in accordance with t1w (4 t" e
treaty.
Then it says that during the duration of the treaty that tho
States Jiall not iierrotmte with third states, for the Jiyllt to ''wt-1vitet an mtero( eanic camil on aii.y other route iii the AV(- tern except a the tNA-o pai-iie- may otherwise ,tgree.
In other words. this wo iil(l hind the -United States not to put a canal in 'Nicaragua or amplace along the -it all. But I do
not read where Panania cannot aiithorize --ome mher mition to put a caiial in. The Ctrticle is not clear on that point.
Do vmi feel there is any justification for the United Statp' z
ing that it will not (-oil. uct a canal anywhere within Pam'linl wit ll011t cojl -ent of Panama or an-vwhere outside of Pan,'1111 1 -\v'ti con- ellt of Panmizil I -pol k, of quid pi'n (juo a while ago. I I,1-1 do not -ee am- t1len'. 1 81-oll](1 1*1'- (' your t11o11-(r11t-- oil this.
t11011(ri
IT. I li"IAN To
thir(l lock p1mi. I have been Imable to mi(bn-tall(I thol illlpol.tal'c 4 talkiii(y- cahout anot-lier canal il-tat we w(mlkl I)IIII(I -whell we al'o, 710'\AI)eMpr fore(-A u-) glil-tl 111) the ()11(, wo aln"ItIv built.
It seemz, that li* -TOIW IS VvP',1t1I1fr 11:- eif on thi,; canal out-il, T'!Itl Panama a-poct. Panama hasteiied to ratify the orl(rim-0 treaty thev were fearful Of tl larcre I)cAv of opinion ill tii-' I-111t('(" that the cztiial in t1w k,(),1nnInL ,hoiild liave o.
ii-tavl)(, Hiev are just trying to make sure tliat t1iov to ve
the mmiopoly there in Paiiaimt Ily prevemincr u- 1)1111olo
'111.vplace eke.
Seiiator coTT. Fi'()m the N-i(,wpoiiit of the T-nited
,(rain am-thimy bv agreein(T that we will not build a cai.Lil ouv *I(, Of Panama

TRAN-SLATION OF BETHANCO'CRT (*(-)'-\FERE'-\('E
Governor R E -A G A N--. --N-o. Senator, we do not.
Th(,re i- another thin(r that I thinIN: Aiould cmicerii its. since tuk"Ities have to be in two lancruacr(--. I have ivceived ta tran -Iafion of a pIv





24

conference that was lield by Mr. Betlumeout-t, in Paiiftma receittlY. Ile was Illakillo, clalill to tile press of t1lell. colilltrv; it is sollietllilig t1lat I thillk i, -, kilid of (-I bollibsIlell.
.11e Av.-is inakin(r claliti tlilrtt flier is no substancI., In the rio'llt of expeditious passage for V.S. slill'.)s in the futuiv flirougli tit(,, canal: tllat tIle Nvord vxpeditlolls" w,,ts used because tliv I "nited States wanted "privilecred" passzige. Ile explained to tlieir press t1lat t Ile settled for t1le Avord "expeditious" becallse tIley realized t1lat here III this country t1le tl.e,,ItN- 'Idvocate,s had to sell the tre r
I (rreSS. -efore tli(,v litid t1i; t. ])tit It(,, in, de, it verv Sem-Ite and tit(, Col P I (" I a a
plain tll(,It "expeditlolls" did ]lot I'lleall IIIat if aII Ailleric'(111 warship, for exaitiple, asked for priority transit t1irou(Ji tlie, caiial. it Nvoidd get it. riei-e would be, no privil()1(yed transit provided for V.S. ships.
Sell'Itol. Sco I-I% Yoll In,'Ide some refel-elice. (J"rONT1,1101" III N,0111, JWITIcipt.ll relluarks With regtlrd to selling flie Aitierican people. I -Nvoiider wll(,tllel. voll NA-flilt to elaborate oil that III 11111V IT-Spect. It jil,-;t "-:(,(,Ms to ine that. 1111der oill. SN-steill of I-epreselli'afive, governi-tient the lilt will reside ill tile people of Hie coutitry collectively. The
SOverelgrilty is not In tit(' executive bl"'llicli. It is ]lot 111 t1le Cllief i ,XecllFit(, sovereiglity is ill tit(- people.
Perliaps they could do -,I little educating of the Presi dent. Perliaps Ile will learli ibat befoi-v this .-iction is takeii b.v tit(, Senate on. t1lis tre"Itv. I 11"Ive pen-ol)(.11 tliollo-lits. but I Avould still Ilke voill. thollorlits.
(TOV01,1101, Senator. I think flie viotation, of the sovereignty
of t1le people ]Ias beell evideiit -(I period of 1 3 oi- 14 yetai-s. It was onlv last vetll. ill tll(, caill pal (n). .1ild X-11-tualIv bv llcc i dent, t1lat tile people of tills couliti, V beC4111A, titat Nve: had, over .11 period of Veal's been iierotiatin(r to give aNvay the canal. Since then tit(, secrecy a o r I I 1, -; be e I I !ro I I e.
You 11(ave to ask Nvli'v. 'I'liere must liave beeii a, feeling on t1w part of t1lose NvIlo Avallted to give up tit(' callal tilat they inust, ]lot let t1le people k1low abolit it too Soon or tll(- people would rise 111) ill opposite 1011.
-Now. I believe that ill soille of the efforts to propagandize the result of Hie ti-eatv flier luive been distortions of Instorv craven the A-inerlc(an people. This is not a last vestige of colonialism, as it has beell called. We (lid not engineet- the revolution of Panallia. I think the Ainerican. people sliotild kno\v that we went, down in (rood faith to Ile"Otiate witli Cololl ibla.

COLO-MBIA WANTED $40 ATILLION
Panama liad wanted to free itself from Colombia for It long time. Colo,)tnbia. oil the other ]land, was stallinLy because their contract with tit(, Freiicli expired in -2 yetai-s. They knew that we were willing to pay tit(, Frencli 1, 40 million for tlieir rights in the French Canal Coitipaliv. CoAollibut w"Illted the IS40 million. Thev t1iought that. if they it by termination of the u t lield ()tit for ye-irs, until France was oi cojiti-act. tliei) tliey \vottld (Yet the $40 iiii,111011.
'I'llev rejected tit(, treaty. But. again, as I said, there was a large body of opliii(-)n in tlie Congress of the Vnited States that the canal s1lould be In N*caIa(rjIa
i_, ( Panaina saw its chance. Panama hastily, with it() provision, militarily ol. otherwise, announced its secession from
U
Colonib"t, Iiii-ed a Frenchman as Alinister Plenipotentiary to negotiate





25

immediately a treaty with the I united States, whicli he did. Panama signed that treaty. That was to stop nS frnn going to NicaragIua. Thly wanted the canal because it was the only economic base upon which they could have a nation to begin with.
All of this has been distorted to thlie American lpeop)le. I think tihe American people should know it. Now, again, I think the Ami(erican people are bein told that there will be no change, no difference in what hapl)ens to us if these treaties are signed.
I do not think the American people realize that, immediately in the loss of our rights of sovereignty in the Canal Zone, American citizens in Panama will be subject to the rule of a dictator. I have read here testimony pointing out there are really no political rights granted to the peol)le there and very few civil rights.
There will be a takeover of some 70 percent of the propertyy in l ie Canal Zone. There is no reason to believe that we have guaranteed. in perpetuity, our use of the canal. So. it is a case of, yes, educate the people. As Jefferson said, "If the people understand all the facts, the people will not make a mistake."
Senator Scor. Thank you, Governor.

NO POINT IN COMPLETING THIRD LANE OF LOCKS
You indicated also an opinion that it would take 10 years to construct a third set of locks in the canal. You might well look with favor on that. The treaty, however. Provides that the United States shall have the right to add a third lane to the locks. But. under the conditions that we will continue to occupy the entire Canal Zone. subject to everything that is in this treaty.
Since we have to be completely out of the Canal Zone with our forces by 1999 and it takes 10 years to complete, if we started now we would only have 12 years. Under those circumstances, would you feel that the United States should expend the money to put in a third set of locks ?
Governor REAGAx. No. Senator. That is why I suggested it as an alternative, to help the economy and also to make the canal more effective.
I understand that there are just 13 shins-there are others who could testify to that more accurately-but I understand there are only 13 ships in our Navy that cannot now transit the canal.
Senator SCOTT. I believe Admiral Moorer said something to that effect.
Governor REAGAN. Yes; but anyway, the whole fallacy of constructing the third-lock canal now would be in building that new canal in an area we are giving away and over which we will have no control-it is already rather unreal to me that we are talking about paying a country $80 million a year to take the canal off our hands.
Senator ScorrTT. Governor, you talk about binding ourselves not to construct a canal without Panama's permission anywhere in the isthmus within or without Panama. I think you indicated that you disagree with that provision of the treaty and the third locks. I would assume that you would also not want to see us construct any new canal within Panama that would have the limitations as contained in the treaty.





26

CI
-TONT1,11,01, Rl;,.\c,,,yx. Not under- the terms of this treaty.
Senator S(,(n-i,. 'I'liank vou. Af I-. Cha *1 1,114all.
Sell ato I. A T'I lalll Nro 11. 'Sellatol. Scott.
Selltttor Jes,-ie Ifelills of -North Ctlrolitm, thou.rh not a rilember of the Subcommittee, Is present. Kilowilig of his vital Interest in this important missile. I aill goillo- to ask Seiiator 11elins if lie would like to askmly questiolll_ .
Sellator I S. Mr. Clia I thank vou vvrv much. I will tv brief.
I welcome Goverimi- Reagaii.
GO XT, 1,110 r 'I'll .-Ink \-oil. Senator.
Sellator Mr. Chall'illan, I deeply appreci,(Ale voill. courtesy.
Govetiioi- Rteaoan. I commend flent Statement with
t Volt MI (1111 ex(T
11(1(ya 11(l to I I I is I I la t ter.
Goverimr. (hirim- the nloilth of All(rust thel-e Nvelv wv ;- reports 1*11 Illv State to the efl "ect I hat you had assllred President ( ,11.1 er that voll Would not- be particularly active III 1,0(raild to tlll that press I.epm.t In erlol.?
GoVC1,1101.
Yes. Sellator: it Nv, I
'I"lle Presidellt called Ille aiid expi o<-e(t the NvIsh that I would be oll Illell. Side III the callal tall I to](1 111111 t1lat III prMeMle it Nva, ohvimis 1 \vas mmosed to this. 1-fe told me that. of course. t1le liegotiatiolls had beell (Y011111 Oil fOr 1.) veai s. I -ald that fov 13 1 think theY Should llot- Ilave 1well.
I (11(l tell 111111 th4at, 11ot havill(y Seel) t1le tivatv. ]lot beill(v briefe(l (Is to what Nvas ill it. kiiowing ()Ill.\- what T liad seen in the he'adliiies. that I cel"taill1v Nvollhl hohl 111v fire 1111til 1 lla(l had tm opportunity to know (,X.I(,tl-\- \vIlat Nva: In the tivaty. Ile thaiike(I ill(, wi(I said that was vt ,ry OTaCiOlls Of me. S114"equelitly. I Nvas briefe(l by Allibassa(lol-s B11-111.,-er all(I 1,111mvitz. Seven-11 houls later, T stated in 'New York that they Ila(] not chaii(red my mind.
Sellatol '111.at pei-haps fall,-, in the saine catecrory, a the repeated repolls ill ille press aii(I some othei- media that Seiiator TTa-\-,'I1 a\va \va" (YO111o, to vote foi- tlie treaty. I called Sen,Iiol*
Havakawa ill Califol-Ilia. -,I cmiple of Saturdav nicrlits a(ro. He to](I me at that tillie that lie had ]lot seeii the treat-v and had not made ill,) Ills milid oil it.
I liope the pre s will not(, that Senator Hayal awa lias not Plade III) bis mflid oil the treat\- aiid that Ronald Reag-11,11 will contilme illfol-11-1111(). the Aillericall people.
Let me ask vou abmit the possibility of violence if the treaties are i-iot ai)pmved. Deaii Rusk m-as lier- not lomy a( Yo. Fraiiklv, I Nvas appalled at Ill,, comillent oil television that. in effect. put 111111 in the position of NN-living a bloody --,birt, and. to be b1mit about it. borderii-io, Oil Condolillicr violelice if the Sell(, te does not ratif y these treaties. Tt s(leilled alitiost inflammatory. Others have, inade similar statenlents.
L, ,t Ille ask I-oil, Governor. The A-loleiiee that Occurred in the inid1960's-wllo la),gely Nvas responsible for that ? 11"here did it o6ginate?
Govel-1101. Welli it liad been my understanding from shIdymo, that 19.64 demonstration that went oil for almut 8 da-vs and -vas total violelice (ION\-]I there NvIth iliachetes, rocks. (rims, and evervthin(y beiiil(y used aiid evvii destruction of 1),amanianian property by the Pana1.
111al'i tills theelliselves; the kind of riots -with NN-hich we are all too familiai- these days. Tt, is niv understanding that those were verv





27

largely engineered and stirred up and kept going by political leaders of the left.
Senator HELMS. On the university campus in Panama; is that not correct?
Governor REAGAN. Yes.

CHIEF NEGOTIATOR BETHANCOURT
Senator HELMS. W111ho was the head of that university at that time
Governor REAGAN. Now, you have me on that, Senator.
Senator HELMS. Dr. Escobar Bethancourt ?
Governor REA.\G'x. I thought so and was going to say so, but I was afraid to take the chance.
Senator HELMS. WThere is that gentleman today ?
Governor REAGAN. He is the No. 1 aide of General Torrijos.
Senator HELMS. That is correct, and the chief negotiator of this treaty, as well.
Governor REAGAN. That is right.
Senator HELMS. IS it not a fact that this gentleman is widely recognized-now, I am not making this accusation, but it has been made by many responsible observers and he does not deny it; that he is a dedicated Marxist.
Governor REAGAX. Well, this is also true. The Minister of Education of Panama, the Secretary of the Treasury, and, I believe, the Minister of Labor-but don't quote me on that because I might be wrong on that one-they are each memers of what is called the People's Party. The People's Party is basically the Communist Party of Panama. and it is the only political party which is still allowed to operate in Panama.
Senator HELMS. So, it is not jingoism, it is not seeing a Communist under every bed to suggest that-as many of us have-it is obvious that the Soviet Union has a direct and active interest in this treaty ?
Governor REAGAN. Oh, I think they have a very direct interest in the treaty.

PRESIDENT COMMITTED TO PRIOR AUTHORIZATION BY CONGRESS
Senator HELMNS. Let me mention one aspect of your concerns, as contained in your opening remarks-the matter of this treaty being the duty of Congress and not just the Senate alone. Both the House of Representatives and the Senate must act on this matter.
On June 30 I visited with President Carter for about 40 minutes. I offered him an alternative to this unwise treaty. It was very similar to the alternative that you have presented today-the modernization of the locks and so forth. We discussed it in some detail. I presented it on behalf of three other Senators and myself: Senator McClellan. Senator Harry Byrd of Virginia, and Senator Thurmond.
There was a cover letter signed by the four of us stating our opposition to the treaty and enclosing a letter signed by four former Chiefs of Naval Operations who warned of the catastrophic potential of this treaty.
Subsequent to that, Governor, I had two telephone conversations with the President. He called me twice in North Carolina in August.





28

1 hiad p)reviouly~ Inqul~iredl of thle White Ihouse relative to the (Illestioll of wheel e thlerye W( )l ld 1be anyi attenp 111) 1 the P residen~i t to cil"reiiu I venit thle ( lo1rc s ii l tis iiat ter.
Ite gav. mle Inls word1 that there would nlot he. le sa~i(l, '"Jesse I
8 2'rev thIiat it is the d it y o)f the Hous allS81 th I IClCHate." SublsequientlyI 1believe it Wvas ti e next da V I1 w rote Cto( the P president. I cited(Iln
unestnin as I perceived it to be). I (Thliiiieli~edl liii ii as t g~enitle11an1 for 1)klota ositio 1%)1 1cCUUSC it is tile, c( Ist it I t 101181 )oslt 1011 as \,oil kiiow.
ililluch1(1 as thle Pr~esidenCt has niot, wr itteni Ill- Cof- othI erwXise Cont acted
Ilie ~ ~ ~ ~ ~ ~ ~~S Iail2Ihtii iitrtanju ssae inl mtt letter to huim, was i errn So. I ac(cept hs ssi aie i jo 1 18O~ fibt. 1 do0 not I )lI eve that Ite wo ul i ee' oii thiat assure anI ce. I NN( ii he1 ver dCVP(isappoinlted if he did. Aira inl I commlend voil. MI rOCIOF 1 our finle test imony.
Mr. ChIai rmni I ask that a copyV of iy Jetlter to the P resident be inchided inl tile record at tinls polit.
ThIan11k y ouI v ery mI IIIc1i. Al r. ( "I'hIa,1 11* I 1ma.
Senator ALE.Thank you, Senator Ilelns.
Ilihe letter follows :]





29


1nifeb ziales enate
WASHINGTON. D.C. ZA0510


August 12, 1977






President Jimmy Carter .The White House
Washington, D. C. 20500
Dear Mr. President:

I would once again express my gratitude for your thoughtful telephone'calls yesterday concerning the proposed Panama Canal-Treaty.

As I mentioned during our conversations, there were efforts during previous Administrations to circumv'ent the.very clear Constitutional responsibility of Congress in connection with the Panama Canal. Insofar as I know, these proposals, -emanating from the State Department, were not approved by the President; indeed, the. .-President may not even have been aware of what. was -going: on.' : In any 'case;'-there was----serious concernKlast week among several Senators that such efforts-may again be made---.without your knowledge. That was why.. I presumed to telephone you.'..-
.. . ,- - 4L
Needless to say,-I was gratified by your assurances to. the 'effect that there is no intention on your part, or-on the part of your representatives, to circumvent Congress via interim efforts to transfer U.-S. property, or surrender in anyway U. S. control or authority over the Cgnal. -. .20-266 0 78 3





30

Moreover, I was immensely comforted by
your comment that both houses of Congress,
not just the Senate, must approve any transfer
of U. S. property or territory, and that none
of this will occur unless and until such
Congressional approval is given, and both
countries have signed a new treaty.

Let me say again, Mr. President, that
you have gone out of your way to be a gentleman. I admire and respect you for your forthrightness,
even though we do not agree on this particular
issue.

Thank you, sir, for your consideration.

Respectfully,






JESSE HELMS:s

Senator ALLEN. Governor learan. I am concerned that there is much more involved in this issue than giving the Panamina Canal away and 1)Vi n" the Panamanians to take it.
I feel that this is symlptonatic of a trend in this country to give away our very substance to foreign countries, to back down when confronted around the globe. I would like to ask if you feel that, if we mlake these concessions-when it is not necessary that we do so-that or I Conces>sions would encourage other nations to confront us at various points throughout the world and that these concessions would make it liarder for us to resist suchll confrontations in the future.
governorr REAGAN. Senator. 1 could not agree more.
We are in a climate where we abandoned an ally in Vietnam after we had forced that ally literally to accept the terms of the Paris accords. which were then broken by the enemy. We are withdrawing our troops from Korea. It looks as if we are trying to find a way out of our alliances with the long-time ally. the Republic of China on Taiwan. There is the situation in Puerto Rico. There is Guantanamo, as Senator Scott mentioned.
All of these things are there. It just seems to me that there is no way that this will be seen as a magnanimous gesture: it will be seen as furtlier retreat into isolationism by the United States.
Senator ALLEX. I think it is interesting that full control of the canal being given to Panama purports to be postponed for 23 years. I assume t hat it was not felt that an immediate giving away of the canal would ha ve had no chance at all of passing.
I)o you feel that merely delaying the full operation of the gift of the canal for 23 years changes the principle ? Is it not just as wrong





31

to crive the canal aw(av fulIN- 2." x-ear fr()iii iiow as it is to !-rl vk it (I Nva v illillIedlatelv ?
(io -ernor Ry.w I i : (rive ('( M I I J kJ( 1Y. I a I i o 1I fl( I t I lat [I It, 1*(,, 1 Im, threat that. oi-ice ,-oil 1-itive aimomiced N-mil. williTILI111- 10 It :tV. ztV. it 1- the sam e Is ill the Sliez I'lWillelit. thi. pel.-I)II vm t '11.0 2-k it I')
(1a 11 a V. "W ell 110A"- Ill 11('11 t 1 m I I I lk w Ill t he v I I I L I t I I t I t 'f I k
ta k I it of it'?
'ni(IN, have t lmiiit Once yOu have ai(J tilm N-4)11
are (rojjl(r to give it 111) mlywaV.
-No. I do not think Hie time lal) ,c aiiY Jt
Semitor ALLEN. AnOther thlll, : tll lt k:0lWk'1'l1- IlW []lit 111 tlllv w I am siiiv is our agreement tollittinutill the 11( ,IltralltV ut, ti(, it that perinit and require ii, to c ee that. lit the eA-ent of' NNwe Would have to afford acc(- s to the canal to of Ila, 'So\ IVI
Union ?
Governor Vyk (i TL a t h t lie Pa na i i I a it i z i ii I lit erl) I -t, Itt I () 11, () f T 1 1,11
I nll_(rht ad(l. diat. v.hell I I)v tlI(1
theY told inc zm(l I a, ked si).-cifically vlio woid(! W1110 Would
determine wh it was a A-lolation of nelltralItN% 11-01114 T11(tt 1)(,
-we C0111d CIO
I was assured that all of this wa z takeii care. of. But. now. ill t_ 'W translation. acrain of that press confereiiee in Panama. that questi(Al was also a -4 ed of Bethancourt. The rej)l y iva, that there wa- 110 ance or no prm-i -I*()n lit the treaty wllat "(wvier that would Z111cm- tl'w T-111ted 'tates unilaterally to decide that the iieutralit li i(i violated.
So. a(rain. we come down. to which version of the tivaty are we (yoing to look at.
senatorr ALLE__\. I \va!- ah o llnPle '__41 ill Your I 111(r out V1,11.
_. (I 1)0*11t*
while the full delivem- of the carial to the Panainmians ji postpolled for 23 Years. the fact that we are lit at this time woull k!ncourage thein to present the .--;ame arcrunients. the, zaiiie -khreats of f(-)ive. the sai-ne demonstra'ioi-iz.; to accelerate thi process, of NN'thdrawa'
Do vou feel that thl- I)i-incTal is -oiiiethlno- in the natm-e of the camel putting its nose in ,lde the tent wid then graduallyly oil
in to take 1)os- esm;ioii of the f ull tent

NO PRACTICAL CONTROL 01-ER 2 3-1-EAR TERM
Governor Yes: bec-aii-e. if we ai-e 2oincr to listen. to the
argument-z al)out 23 Years. we had better aet hack- and look at ]low fast the pliaseout takes )lace. 11-liat takes 1)'l aco in the first ,))t) montLz The assumption by them of control over the Panal Canal Zone.
For example. the Afinlstrv of Housincr of Rinama will taixil M-01, the American liou-e z in -\N-hich American employees art, iicmThev will take over the schools.
'01 of this is in there early. So. it is i-lot a ca-C-a- thin imlillpeople tend to believe-thzit'for -_1:1) ykm- z 1)II-11le- Croes Oil a,-; 11-11M except that we are ()rolll(,- to be tezi('111111-'r thrill lio-mv to"rull the calizil.
Business does not go oil a- iiziial. It linine(liately -\i-ltli
being inade. including the provision that. ex-en whell -\*e 11ave a iolilt comilland in those latter 23 Years. on1v one American fl i r -\N-ill be allowed to fly in the Panama* Caiial Zone. But that will not be the





32

primarN flag: that NN-111 be III a s(?('011darv position. Tlieir tku, will. fly
first.
Tliere are a great Tnany details irt liere. i)()ne of -\vbich seem to favor us, includintr tlie iniplicit un(len4andin-(r that at a ccl't tijl pollit wlr f orces cannot oxce(,(l t1wirs. Well. t1w1v have (.1we to Q)00 111ell. -ilppose _Ilv. in their national (riiar(l. But T.1)(0) ()f tll() 'e tl.(, p(dic('111('11.
_U the v have to ([o i tlicill as poll(VIIA111. :111d Nve "11v do% 11
to 1.,51H) itien.
elWtOr _XLLE-N. I ll()t*(-e too t1lat t1le
'1111 1- tectioll
of our American soldler- Nvlio are there w0ii1d be dainag(-(l I gt e tt 1111es ('01111-11itted bv
deal. Their position Avoiil(l (10t 'riol' ttt' 1W('ZL1U-:(' (. r. or agaillst Our s(IIINACC jw()plV -wmil([ hc tried iindvr Pananianian Ia1v witliout the protection- ihlt are alk)nled 1111(ler our G)IIQt1tution. A'11 oilr courts would llave iIII.I.wzJtIctloll over 'would be o11'vw-;es between sel'\ ic(IIII('11. So. it would ileny tlli protection to out- sol(liel.- "llel'o: W0111"I it not
jo-)k-(,Tjjo-)j- I' I
%-(TV
('Ilator It(
Tf flier are ()tbei, It- Illw -11111111te rout 110w.
R tcll
w, I Lvi-cii. Th:tnk.ywi. Mr. (""liairnian.
T reall-(, fliat nll() I Ier ('1ppomtiii(,nt T do not
11iink 1w 'I :I -z tl,,it Tim cl, I I iolv 1 11-10. 1 llavfl -W HO IIIM V T W-T i0ll )I It I t w itll(tr;ov III(),
Your -- itteinent lia, lwk i" I til*'nk it Ila, (I Int ()f t1w
11 IT I have lwt ll
1 '11 11111: v w ir ;111.'11 N IW O11 ('X (' e I It.
P;111'1111A Rinaina
P1,111111II1z ."Ind A fl'air -. 1- ke(l Ille
I C"'mLIlt Tile "11V torrcat.'Iwatloll ilitIte Senatc. I -aidtliat
O it '()ii because
lit)pk' th(,v are nou i III ('111-01--notil III-"' P11*01) i
do 11()t h(:1 Wvc tl)at it will i 1w rzit M -d ill tl-,(, vJ11011 the 1110 ''MI -TI11IT-on-ti '1--- ii(-- Ciat 1,,ive lwen i-aised. 10()i\ 1110 P()_'Tioll ti1ZO Voll ll ive taken hen,
. 1 () f
toil tV. \_0111(1 J 2- I'Ok' t 11, t t W (- I t' (I (I to C4Xallillit, the po -IbilitN
I', I I I v. I I o evervtll in lat w(- c A 11
11(,)t on1v Nvith Panallia but witli (All of our

One of t1w niajor poiiit-4 that yoli make ill N-wir teiStillioliv ti-oday11'4 I think one of the most valid. point, -ls tLat we do not have a
1 'L'
pro(miiti of foreman policy vltl-i n,(raI-d to wir Latin Ameri(-an I NAm"IJ _'nl-lllnend you fnr brinLJn,-,r tliat forth. Goveriior.
I want to tli,tnl you, for your condiments here To(lov. I t1iink Jiev liave been inforiiiative ancl well rea-z:oned.
Governor Tliinl-l-, V011.
Z senator ScoTT. 'Mr. C_' I have no further questions for the
Governor. One(, T personally am z1ad that You were Nvith us.
Wi llave otlier Nv11'T'IIesQes and Nve could ramble on for a lon(r tinie. but it is not iiecesczary.
;enator ALLEN. riani- you verv much. Governor Rea(r-ln and Senator lVe tliwii_):1it tliat no debate on this question WMIld be
complete witliout havino- vou express your viewis. We appreeiate you botll C0111111(r before the colninittee. AW feel CIA your statement, Gov-





33

ernor Reagan, has been very fine indeed. We hope that we, will see tile hoped-for, much-desired result of VoIll. Wise testimony Oil t1lo (.)I) 111 i oil s and judgments of the distliigtilslied junior Seitator front Call fornia, our good friend, Senator I IayakaWa.
Governor REAGAN. Mr. Chairittail and Senators, thank yoit very much.
Senator ALLEN. Our IleXt, WitlIeSS Will t)e Coilgicssinail, Flood. .1, understand th, t there "Is ta vote ill tile
C1 Ilouse and that you Will have
to leave shortly.
Mr. FLOOD.Yes; there, *s.rt 11-1, bomber vote over there.
Senator ALLE'N. Yoit may liandle yottr statement asi you wish.
I wolldel. if Coligressiliali ('Xaiie Woiild also come, 111). it, Illaly be t1lat, W(11 could hear front both of you before lunch, and qiie -floll you joilitly.
We are delighted that you both have coili( lwfore the coillmittev to give us your views. Both of yott are recogilized, authorities oil this issue. We certainly appreciate your preselice here before the colilitlittee.
I might state to vou both that the committee certaillly stij)ports your position that t lis matter needs to be decided by bot,11 lloli-;(,- of Congress lit addition to the ratification vote lit the Senate.
Please proceed, Mr. Flood.

TESTIMONY OF HON. DANIEL J. FLOOD, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF PENNSYLVANIA
Alr. Fio(:)i). Mr. ('I)aintiail, I aj)l)reCIate tile to bc heie.
I (lotibt very j)iticl) fliat, I caii addallythiii(y iiiaterial to NN-11at-yoll talld the colitillittee 11(ave lleard. 1-nder tlie circiinistai-ices. f do feel fliat I should be liere.
.All-. ('11airiiiaii. ()it III] v 9, as voii will recall. I stibinitte(I to flils stibcolititilttee a stateineilt siiiiinlailizill" 111V VieNN's ()It H)c lwotflenl of, tlie Pailattia Caiial ajid wit1flied a prograiii of actloii foi- the Viijted states. I'llere is little of collse(Illelice 1-11tit coiled bo, a(lded lo tl)(' 1)(mits I)i-esented lit tl)at. testinioiiy. 1;01- tlle 1)ellefit of those N -Jlo Ilot seell illy Jidy 29. stateineitt, I liave placed additiolial coj)les oil tile
tAle.
7171u aimomiceineiit, oil Xiigust 11, 1 )77, of till. "aOT(TIllelit ill ciple" for new Panania Tivatles Avas no sill-1)].1se to those
licave closely followed tile caiial q1lestioll. and these 111chale Inally _-Wellibers of the Comyress. That iiews was a hloji polia In a J flall lollo- ill preparatioll to preselit the Xation all(l. t1le Coilgress witli a I'alt accollipli. As slich it represents a real challellov to tile, 0)JI(ri-ess Ill Hie exercise, of its colistitutiolial, powers -Rs regards tile disposal of tei-i-ltory and other pi-operty of the T-inted States ill the V.S. ('allal zolle. which the Collorress lias not authorized. For this aiid otlier reasoii,,-,, tile Congress must face tile challeiloe liead ()it.
Since August 11, the niaJOI, IAVAVS 111("dia of the Xatioji. liave featured the Paliallia (aiial (piestion with all ellonllolls coverage. a 1)(arf le I)rojected Slll .rell(jer of T-7-.S. SoX_( ,.of which has been in support of t1 1;
eighty over the. Caiial Zone and ultimately, the a\N-aN of the
Panailia Caiial itself, a] I witlioiit compensation.
Over a period of years. distili(mislied MeitIbers of the Coiioress lit IIIaIIN addresses 'it the Con(rressioiial Reconl and (listilio-lils witnesses ill heariiigs before counlizant coiiiinittees have provided -lit ex-





34

tensive and authoritative documentation on all significant aspects of the canal question; and these have been widely distributed. Prepared by such information to detect and evaluate deceptive propaganda. d(iplomatic sophistries and other skulduggery., the people of the United States and the C(oniress are not likely to be stampeded into approving any treaty that surrenders 1.S. sovereign control over the Canal Zone or gives away the Panania C'anal to any other country or international organization.
One of the most flagraint examples of fallacious prosurrender prop.anda so often stressed is that, if we do not surrender the Canal Zone t0 Panama. the relations of the U-nited States with all of Latin Anierican will be seriously impaired. There could be no greater deception. for ntiajor Latin American countries, especially those oni the west coast, know Panama well.
Their leaders from Presidents down know what the consequences of such surrender would be for their own economy iI the way of increased transit tolls. Attention is invited to the perceptive 1976 article by Dr. Mario Lazo on "Panamia Canal Gvena wa : A Latin Amnierican s View." which I request be included with nmy remarks.
As stated many times i in my advdreses in and out of Congress, the most crucial issues involved are nmut local q-( est ions between thie Inited States anid Panama nimost of which sIhoild be handled administratively by responsible oftlicials of the Canal Zone. In contrast, the crucial questions are matters of global significance a tect ine the sectrllitv not only of the United States but as well that of the Western Hemisphere and, indeed, of the entire Free World.
In this light. the Panama Canal problem transcends all partisan considerations: a11id must he considered on the hiilghest plane of national interest if our course is to be sound and our future well-being protected.
As to this aingle. Soviet power. understanding the vacuum that would be created by the projected relinquishment by the United States of its sovereignty over the Canal Zone. has already moved toward establishing a beachhead in Panama by means of a July 19. 1977. T.S.S.R.Panama economic pact. This matter was discussed at length in the Aimerican Legion National Security-Foreign Relations Bulletin. JulyAluigst 1977. major excerpts of which I ask be included in my remarks.
Mr. Chairman, the pact. I believe. is most significant for it includes provision for the Soviet Union to utilize the Panama free zone in Colon, which in turn now includes Old France Field in the Canal Zone, a World War IT airfield located within the zone territory and is thus within our defense perimeter.'

PREDICTION FULFILLED
When first learning on March 13. 1975. about the lease of Old France Field to Panama. which was not authorized by the Congress, I l)promptly protested it to the Secretary of the Army as "part and parel" of the State Department's program for "piecemeal erosion" of the Canal Zone that would invite greater demands. I have had the sterile satisfaction of seeing that prediction and many others fulfilled.
Surrender of the 17.S. Canal Zone would undoubtedly have serious
SCongressional Record, August 4. 1977. D. H8704.





35

faraway consequences, which would include the loss of U.S. naval bases at Guantanamo in Cuba and in Puerto Rico. These two bases, with the Panama Canal, form the defense triangle foi- protectingg the strategic Caribbean. which Admiral Mahan and other eminent strategists longT ago -described as the Mediterranean of the A mericas. Upon the outcome of the projected giveaway will depen(l whether the advantageously located Caribbean Sea and Gulf of Mexico shall be transformed front peaceful avenues for ocean commerce into red lakes, thereby bisecting the Americas with enornmous potentials for evil for the United States, Latin America. and the entire Free World.
Senator ALLEN. Excuse me, Mr. Flood. We have a vote in progress now. As soon as five lights come on, we will have to go.
I would like to address this inquiry to both of you. Would you like for us to come back immediately and conclude yours and Mr. Crane's testimony ? Or would you prefer to have a recess to lunch ?
Mr. FLOOD. Mr. Chairman, I can finish mine in 11/ minutes.
Senator ALLEN. Please proceed.
Mr. FLOOD. In the past, the responsible leaders of the United States always safeguarded and defended the territories over which it had sovereign control. They and the Congress never surrendered U.S. sovereign territory under threats of foreign military or mob assaults, however large the country, biut stood up for American rights under international law.
Yet, since World War II, through a succession of administrations, certain leaders have sought to surrender our sovereign control over the U.S. owned Canal Zone and, eventually, the Panama anal itself to the Republic of Panama.
A small, weak and industrially primitive tropical country, it simp1l)ly does not possess the resources, the manpower, or technical skills required for the efficient. maintenance, operation, sanitation, and protection of the most vital waterway of the Americas. The satisfactory performance of these crucial functions requires the combined technological, industrial, military, and naval might of the U nited States, or that of some other great power-if you know what I mean.
Mr. Chairman, though my statement on July 29 and its attachments cover the more important, aspects of the canal situation and need no elaboration, as a member of the Subcommittee on Defense of the House Committee on Appropriations, I wish to stress a major point.
The historic Isthmian canal policy of the United States has always been to safeguard our economic and broad national interest investments involved in the construction, maintenance, operation, sanitation, and protection of the Panama Canal enterprise by insisting upon sovereign control in perpetuity over the area in which it is located. I feel sure that many MNembers of the Congress still share this view and will demand adlerence to that policy.
There is a vast difference between managing a canal with sovereign control over the territory in which it is located and one in an area over which the United States has only "treaty rights" and is beholden to a weak Central American country.





36

As to the reactions of Latin Americans to the projected U.S. surrender at Panama, which have been so falsely used by its advocates, I have seen no better statement than that of the late Dr. Mario Lazo, the distinguished Cuban lawyer and author who, in his 1976 paper wrote: The almost universal reaction among the educated people of Latin America who are not politicians to a promulgated Kissinger-Bunker giveaway treaty would be, at first, incredulity, then sadness and eventually ridicule and even contempt for the once greatly respected nation that had shown itself no longer to have the will to maintain its prestige and discharge its responsibilities.
The Panama 'Canal now contributes the grave issue that can serve as a catalyst to restore the courage and willpower of the American People.
Thank you very much, Mr. Cia irman.
Senator ALLEN. Thank you very much, Mr. Flood.
The material to which you referred will be made a part of the record, without objection.
[Material follows :]





37


Special Study No. 1
Council for [nter-Amarican Secuiity

1977





PANAMA CANAL GIVEAWAY: A LATIN AMERICAN'S VIEW BY MARIO LAZO


Panama Canal Giveaway: A Latin American's View was
written shortly before Mario Lazo's death in 1976. Mario Lazo went to Cuba after receiving his law degree from Cornell and serving as a Captain in the U.S. Army in World War I. He took a law degree from the University of Havana and later founded and headed on of Latin America's most prestigious law firms.
Through the years his firm represented the U.S. Government,
major corporations, and a distinguished Cuban clientele.
After the fall of Batista, Dr. Lazo valiantly continued his law
practice in Havana. Imprisoned and threatened with execution by the Castro regime, his wife, Carmen, saved his life and helped him escape to the United States. For the next seven years Dr. Lazo set himself the task of writing Dagger in the Heart which even The New Republic has called "the best account to date of Castro's victory," bringing to the undertaking the investigative skills of a great lawyer, and a reputation that permitted him to reach into the highest official circles in
Washington.


The fate of the Panama Canal deserves a prominent place among the issues facing the Congress of the United States and the New Administration. The American people should be informed and alerted on the subject. What are the basic facts? By the treaty of 1903 the United States bought from Panama for cash plus an annuity, a strip 50 miles long and 10 miles wide through a pestilential tropical zone wracked by fevers but containing .iie most lasile pass between the Atlantic and Pacific oceans. The treaty ,ranted the United States perpetual sovereignty over the Canal Zone :'to the entire exclusion of the exercise by the Republic of Panama of any such sovereign rights, power or authority."





38


The Americans who went to work in this inhospitable environment wrought a miracle in 11 years. They created a disease-f ree inter-ocean waterway which remains to this day one of the wonders of the world. For more than 60 years the United States has operated the Canal for the benefit of the commerce of all nations, lifting in recent years more than 15,000 ships annually across the continental divide, moving them quickly, safely and economically from one ocean to the other.
This achievement forms one of the most inspiring records in history-and those who have profited most from it are the people of Panama. Had it not been for the United States they would still be crossing the Isthmus on muleback, as they did for centuries under Spain and Colombia, for only the United States could have undertaken the great and costly venture.
In fact, for over 60 years Panama has lived off the Canal. The annuity paid by the United States to Panama is by now many times the amount originally agreed upon. More than two-thirds of the approximatelv 24,000 workers in the Canal Zone are citizens of Panama. The public vessels of Panama are put through the locks free of charge, but the ships of the United States and of other nations pay a standard toll that has only been raised once in 62 years. Various properties in Panama, worth many millions, have been deeded back to Panama by the United States without charge. A trans-1lsthmian. automobile highway on Panamanian territory, paralleling the Canal Zone, was constructed by the United States for Panama without cost, but Panama has failed to keep it in good condition. A great bridge, also built at no cost to Panama, connects Panama City with the western half of the co un try.
The United States has thus been more than fair and generous to Panama. Yet every modification of the 1903 treaty' has provoked progressively more extravagant demands. Panamanian politicians portray Americans within the Canal Zone as monsters, and Communists and other leftists throughout the Hemisphere make common cause with them against the United States. The lesson of history that appeasement rarely appeases has not been learned by the State Department as it continues a-mis-guided effo-rt to turn off the spigots of hatred and defamation. in Panama against the nation that has converted deadly swamp-l1and into a great garden surrounding the maonificent waterway.
Since Nasser got away with seizing the Suez Canal in 1956, Panamanian politicos have dreamed of little else than taking over the Panama Canal. They have continually vilified the United States and incited their population against it. Some American liberals have applauded these tactics, arguing that in a "newN world order" unilateral control of the Canal is obsolete.


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The unhappy Suez experience under Egyptian control, however, hardly recommends Panamanian domination of an interoceanic waterway indispensable to world commerce and to the security of the United States and its allies. During a conventional war 90% of bulk tonnage to support committed forces moves by ship. The demonstrated value of the Canal in World Wars I and 11 was fully confirmed by its use during the Korean War, the Cuban Missile Crisis and the Vietnam War. Between 1964 and 1968 the military-sponsored cargo through the Canal increased by 640% for dry cargo and by 430% for petroleum products. In time of peace 70% of Canal cargoes originate in or are destined for the United States. The rights of the United States to the Panama Canal were bought and paid for and the nation is under no obligation to renounce or modify those rights. American taxpayers contributed more than 350 million gold dollars to build the Canal, a sum worth many times that amount in the depreciated currency of 1976. This includes the cost of digging through Culebra Cut and erecting the locks and dams and hospitals and machine shops needed for the gigantic enterprise. As of today the United States has invested nearly seven billion dollars in the purchase of land from private owners and in the construction, administration and defense of the Canal. The treaty on which U. S. ownership rests is as clearly final as the purchase of Louisiana from France in 1803 or of Alaska from Russia in 1867. Amazingly, however, the U. S. Administration is engaged in an all-out effort to obtain Congressional approval for surrendering the Canal to Panama. No similar surrender has been attempted since the nation was founded in 1776.
Does this sound incredible? Here are the facts.
On February 7, 1974, in Panama City, the Panamanian Foreign Minister, Juan A. Tack, and Secretary of State Henry A. Kissinger, acting in behalf of the United States, initialed a document in which the United States agreed to negotiate a new treaty containing the following "principles 1) The original 1903 treaty, by which the United States acquired perpetual sovereignty over the Canal Zone, would be abrogated, 2) The 46 concept of perpetuity 99 of the U. S. ownership would be eliminated, and 3) U.S. jurisdiction over the Canal would be terminated at a date to be fixed in the new treaty..It was also agreed that from the moment the ne w treaty became effective, the operation and defense of the Canal would be a joint undertaking by the two countries, so that the United States would be unable to act without the consent of Panama. Every concession contained in the 1974 agreement was made unilaterally by the Executive of the United States, all without the authorization of the Conoress.

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Since a treaty cannot bind the United States without the approval of two-thirds of the Senate membership, the Secretary of State and his chief negotiator, Ambassador Ellsworth Bunker, had consulted Congressional leaders before leaving for Panama. They were advised that surrender of U. S. sovereignty was not a negotiable item. Consequently, when it became clear that they had chosen to ignore this advice, there was an immediate reaction in the Senate. On April 5, 1975 a sense-of-the-Senate resolution calling for continued and undiluted U. S. sovereignty was introduced. It now carries the signatures of 37 Senators, over one-third of the membership, most of them collected in a single afternoon.
But the White House did not accept defeat. During the summer months of 1975 it stepped up its well-organized campaign to break down Congressional opposition. The President knew that if Pentagon support could be obtained, it would be much more difficult for the treaty opponents on Capitol Hill to emphasize the military security aspect of the controversy.
Defense Secretary James R. Schlesinger, subsequently fired by the President, and the vast majority of high-ranking military officers, sharply opposed the giveaway treaty. The United States was being driven out o~f Southeast Asia at the time and they were in no mood for another surrender. But the White House and the State Department held some high trump cards. For one thing, the President. as Command er-in-Chief of the Armed Forces, could promote and demote officers. Also, the State Department had a few allies at the Pentagon on this issue. notably' the [then] Deputy Secret ary of Defense, William P. Clements, Jr.
In July 1975 Dr. Kissinger convened a meeting of the National Securitv Council to press the issue, but it took a second meeting on Augoust 9, and a directive from President Ford the same day to all the agencies involved, to break the Pent agon deadlock. "W,%e were asked to bo ack and be as forthcoming as wve could be," a Defense official explained. On September 16, 1975 the Newv York Times headlined the news: PENTAGON YIELDED TO FORD ON CANAL-DIRECTIVE BROKE DEADLOCK. The Times had been the leader of the liberal press in supporting the surrender. In a leading editorial at the time, titled Brec-lbrouigh in Panumci, it said, "A formidable roadblock to a new Panama Canal treaty has been removed."I
General George S. Brown, Chairman of the joint Chiefs, flew to Panama with Ambassador Bunker and announced the Pentagon commitm-ent after a talk with General Omar Torrijos. Panama'Is dictator.
rTw() months earlier, in June 1975. the House of Repr-esentatives, by the decisive vote of 246 to 164 had denied funds for conducting the surrendere. The Times called this action "6a disgraceful exhibition of


4





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chauvinism and irresponsibility" and referred sarcastically to opponents of the giveaway treaty as "amateur strategists on Capitol Hill". Under State Department pressure the denial of funds barrier was subsequently rescinded.
In its elation over these successes, however, the State Department blundered. Believing that in the long, emotional and at times bitter controversy the big-business world might be the key element in selling the new treaty to Congress, it tried to enlist its support by having representatives of American corporations and banks doing business in Latin America invited to a meeting at the State Department. The purpose was to have them organize a 46 steering committee" to raise a half-million dollar fund for use over a two-year period in lobbying members of Congress, mounting a national campaign through advertising, public speakers and business-academia serninar and for setting up an information clearing center. Those invited were to be reminded of the anti-American riots in Panama in January 1964 and warned that unless the proposed treaty became effective, renewed and increased violence was virtually certain to occur. Also, unless they got behind the proposed treaty their investments in Latin America would be in danger!
The meeting at the State Department took place on October, 30, 1975. Some who attended were shocked when a State Department official raised a trembling finger and asked, "What would you do if 100,000 Panamanians, including women and children, marched on the Canal Zone?" One participant said later he had asked himself if the United States bad run out of high pressure hoses. Some were lawyers and every lawyer knows, as every diplomat should know, that an agreement cannot be negotiated under duress. The exploitation of f ear by high officials of the world's wealthiest and most powerful nationa form of bla ckmail- a stoni shed and infuriated many of those present.
Althouch the State D'epartment's publicity claimed otherwise, the meeting proved to be a total failure. No fund materialized and some of those who had impulsively volunteered to serve on the steering committee later withdrew.
What motivates those who would surrender a possession which is the strategic center of the Americas and is indispensable for Hemispheric defense?
The spokesman for the Slate Department and also its chief negotiator is Ambassador Ellsworth Bunker. In speeches across the country he gives this explanation:
1) The United States did not acquire sovereignty over the Canal
Zone in 1903 but onlv 46 rights" and "it is time to stop debating
this legal point."

5





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2) The Panamanians argue that the Canal Zone, curbs the
natural growth of Panama's urban areas" and "impedes Panama's development."9
3) The Panamanians will be able to keep the Canal operating
effective' and efficiently.
4) World opinion expects the United States to work out a new
arrangement with Panama and "our Latin American neighbors see in our handling of the Panama negotiations a test of
our political intentions in the hemisphere."
Ambassador Bunker never speaks critically of the government of Panrama with which he is negotiating and never mentions Communism. Let us examine the reasons which have been advanced to justify the surrender.
1) Un ited Stoics Sovereignty.
This is the pertinent language of the 1903 treaty;
"Article 11: The Republic of Panama grants to the United States in perpetuity the use, occupation and control of (here the Canal Zone is described) .........
"Article III: Tie Republic of Panama grants to the United States all the rights, power and authority within the zone mentioned and described in Article 11.. which the United States would possess and exercise if it were the sovereign ... to the entire exclusion of the exercise by the Republic of Panama of any such sovereign rights, power or authority." Aside from the certainty that the United States would never have undertaken to build the Canal unless it had unquestionable ownership and sovereignty over its protective zone, Ambassador Bunker must surely know that two U. S. Supreme Court decisions confirm the nation's ownership of and sovereignty over the Canal Zone. The first of these, given in 1907 (Wilson v. Shaw, 204 US 24) states:
It is hypercritical to contend that the title of the United States (to the Canal Zone) is imperfect and that the territory described does not belong to this nation because of the omission of some of the technical terms used in ordinary conveyances of real estate ... It is too late in the history of the United States to question the right
of acquiring territory by treaty."
The second decision in 1974, 65 years later (United States v. HusItand R. Roach 406 U. S. 93-5) is, if any thing. even more explicit. It held that "The Canal Zone is an unincorporated territory of the Linited S, al es. "
Moreover, there have been a great many' administrative rulings, opinions and memoranda to the effect that the language employed in


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the 1903 treaty is neither obscure nor ambiguous and that plain and sensible words should be taken to mean what they say. Secretary of State Charles E. Hughes summed them up in 1923 when he declared that the United States would never recede from "its full right to deal with the Canal Zone ... as if it were sovereign ... and to the entire exclusion of any sovereign rights or authority on the part of Panama." He added that "it was an absolute futility for the Panamanian Goyerment to expect any American Administration .... any President or any Secretary of State ever to surrender any part of these rights which the United States had acquired under the treaty of 1903."
Until the advent of Dr. Kissinger and Ambassador Bunker, therefore, the uniform position of the United States Government has been that its sovereignty over the Canal Zone is not an open or doubtful question. For State Department spokesmen to argue otherwise defies understanding. Their specious reasoning ma y be pleasing to some State Departm-ent colleagues but it is deceptive and fallacious. It illustrates the extremes to which they have gone in presenting their case.
2) Contention that the 1903 treaty curbs Pan ama's urban growth and impedes her development.
On the first count, the opposite is the case. The United States has spanned the Canal Zone with bridges and highways which are open and available unrestrictedly to Panamanians, making the two parts of the nation divided by the Zone closer to each other than to their own interior territories.
Secondly, the Canal has been the economic base that has raised the living standards of the Panamanians to a higher level than that of any country in Central America. It provides, directly and indirect ly, onefourth of the Panamanian gross national product (GNP). more than one-third of Panama's foreign exchange and about one-fifth of total national employment. According to the Panama Canal CompanyCanal Zone Government, gross payments to Panama from the Canal Zone in 1975 amounted to S253,130,000, an increase of some 5 percent over the previous year. And according to the State Department Bulletin of April 23, 1973, U. S. foreign assistance loans and grants to Panama represent the highest per capita level of American aid anywhere in the world!
3) Panama's capability to operate the Canal.
Ambassador Bunker argues that the proposed treaty will not lead to closure of the Canal because "Panama's interest in keeping the Canal open is far greater than ours." This is so, he says. "because Panama derives more income from the Canal than from any si ngle revenue producing source." Its "increasingly diversified economyy" he adds, af-





44


fords a guaranty that in Panamanian hands the Canal would be operated "effectively and efficiently". In fact, he goes so far as to say that the Canal's closure is more apt to be brought about if it continues under U. S. control and management!
Ironically, the answer to these absurdities comes from the New York Times itself, the champion advocate of the giveaway treaty among the news media. An article published on October 8, 1975, which must have slipped in when someone was looking the other way, reports the "m-an-in-the-street"f attitude in Panama on this subject. "Despite the impatient and fiery rhetoric of its military government," it attests, "there is a mood of apathy and cynicism in the Panamanian population .. Many Panamanians have difficulty sustaining anger or impatience over the American presence ..they worry more about their daily lives."
The Times reportedly recounts a conversation with a lottery vendor in the slum district of Chorillo "where rows of rotting wooden tenements look across John F. Kennedy Avenue to the green slopes of the .. Canal Zone. 'The Canal is just a pretext to divert our attention from the real problems,' the lottery vendor says. 'What's going to happen if we get the Canal? The government will keep the money and in no time the Zone will be as filthy as Panama City.'"9 Dictator Torrijos, according to that Times dispatch, has his political opponents, one of whom is quoted as saying, "The Government desperately needs the money from a new treaty in order to stay alive. They believe that a system of joint defense will merely insure indefinitely the military rule which Panama has now." Alberto Quiros de la Guardia, a Panamanian radio broadcaster, puts it this way, "More than any thing, Torrijos wants to stay in power and, for that, he needs a new treaty for face-saving. But a system of joint defense will strengthen Panamanian militarism in the name of defending the Canal."
4) "World Opinion" and "Our Latin American Neighbors."
Liberal officials in Washington have a pathological dread of world opinion. A classic example of how this fixation produces decisions for disaster is the Bay of Pigs debacle. The United States had recruited, armed, trained and transported to the Cuban coast an assault brigade composed of Cuban patriots. But American involvement was supposed to be secret, undercover. Hence, when the joint Chiefs chose an ideal invasion site that would permit the invaders to melt into nearby mountains if anything went wrong, President Kennedy vetoed the plan, claiming that a landing which had the earmarks of an invasion mounted by the United States a few miles from a coastal town would give everything away. World opinion, in other words, required the choice of another invasion site, even though strategically inferior.





45


Later, for the same reason, he ordered the first of three planned air strikes by the Cuban Air Squadron cut in half and the second and third cancelled altogether. When the tide of battle turned against the invaders because they lacked air support and the only chance for victory lay in the use of American power just over the horizon, it was denied. Promised supplies to the beaches were never delivered. The Cuban Brigade was abandoned to its fate and Castro's boast of how little Cuba, in three days, had defeated mighty Uncle Sam was heard around the world, relayed by Moscow. U.S. prestige in Latin America dropped to an all-time low. The invasion, instead of overthrowing Castro, entrenched him. "World opinion" for which the Washington liberals had been willing to sacrifice national honor now turned sharply against the United States. When patriotic Americans became aware of what had taken place, and wA7hy, their sorrow was compounded by humiliation and shame. Those who fear "world opinion"' seem never to realize that any adverse opinion subsides quickly in the face of accomplishment and strength. History never argues with success and a showing of strength9 but rarely forgives weakness and failure. The Soviets by contrast are entirely indifferent to world opinion. They never permit adverse publicity to deter them from actions they consider beneficial to their nation. America's allies are inevitably appalled by a display of weakness on the part of the United States. For any Administration spokesman to say that peoplee everywhere expect the United States to be able to work out an arrangement with Panama" giving up exclusive U.S. control and eventually surrendering the Canal is a calamitous misjudgment of realities. Exactly the opposite is the case. People everywhere in the Free World expect the United States to stand its ground against the threats of a Communistoriented dictator of a tiny, weak and politically unstable country. What about "our Lot in American neighbors?" Again, State Department officials, from Dr. Kissinger down, grossly misjudge Latin Amnerica and its people. They do not seem to realize that none of the nations to the south have "democratic representative government" in the American sense. Eight of the ten major countries are ruled by military men. In no case do their politicians reflect constituency opinions. Where the United States is involved in an issue, they publicly assume the stance of "David" in a DavidGoliath confrontation, to show their courage and independence. But privately, among trusted friends, they talk otherwise. On such issues as the Panama Canal. the opinions they express, publicly are so much demaoog ery. usually unrelated to their true opinions. Mv wife Carmen and I are of pure Latin American lineage on both sides of both families and the roots of our families go back to the

9
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earliest colonial times. Carmen's ancestors arrived in the New World 28 years after Columbus and 100 years before the Pilgrims stepped on Plymouth Rock. Mine came 15 years later. We feel we know our people.
The almost universal reaction among the educated people of Latin America who are not politicians to a Promulgated Kissinger-Bunker giveaxav treaty xould be. at first, incredulity, then sadness and eventually ridicule and even contempt for the once greatly respected nation that had shown itself no longer to have the will to maintain its prestige and discharge its responsibilities. M- oin and my w ife's con ictions on this score are supported by a distinguished military analv st. Gen. V.H. Krulak (Ret.) now on the edii ria staff of the Copli newspapers. Writing in the summer 1975 issue of S :!, i c c Re'view he stresses that the importance of I .S. control of the Panina Canal to the entire Hemisphere is "appreciated th(unhout Latin America. ,here all but far left go ernments see it as something quite different from the issue of anti-colonialism that has swept around the world."
MIost Latin Americans he believes. "in their n interest realize that the critical strip ... must never be permitted to fall into irresponsible hands." At a recent meeting of the Inter-American Press Association in Sao Paulo. Brazil. Gen. Krulak pointed out, "the attitude of Latin American publishers and editors was bold and clear." It was expressed by a Chil an delegate who told the United States: "You would be doing yourself and us a major disservice if you backed off one centimeter fiom your present position in Panama. This view is particularly strong among Latin Americans aware of the Coinmmunist menace to our hemisphere. A Venezuelan at the Sao Paulo meeting. referring to he concessions to the Panamanian dictat 1,snip a, dad offered by Washington. stressed the futility of trying to -po ase Communism. by 1uoting Alexander Sol:zenitsyn's warning against "short-sighted concessions. a process of giving up and giving up..."
Ambassador Bunker recently wrote: "Our job is to make sure that the public and Congress have the facis they need if they are going to make wise decisions
about the Canal."
But in the speeches across the country State Department spokesmen withhold from their audiences the fact, a) that the Panama Isthmus is one of the most politically unstable areas in the world, and, b) that the ITnited States is negotiating with a de facto government whose chief is a Communist-oriented military dictator. Here is what the American people need to know, about these vitally inport ant aspects of the issue:

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1) The sorry record of political turmoil on the Isthmus ante-dates the Panama revolution of 1903 by a great many years. During the 57 years preceding the founding of the Republic there were 53 political uprisings. One civil war lasted nearly three years, another nearly one year. The killings included Americans. On four occasions the Colomnbian government, then the sovereign, asked the United States to land troops to restore order and, in fact, Marines landed from U.S. ,warships on five occasions.
Since then the Republic of Panama has had 32 presidents in 72 years, an average of one every 2.25 years. The last upheaval occurred in 1968, when the duly elected President was overthrown by the National Guard which today rules the country under General Omar Torrijos. Like many former Panamanian politicians, the deposed President fled to the sanctuary of the Canal Zone, which has often served as a haven of refuge for Panamanian leaders seeking to escape assassination.
2) On J anuary 10, 1978 dictator Torrijos publicly embraced dictator Fidel Castro in Havana, identifying his regime with that of the CubanSoviet axis. He announced that he welcomed Castro's backing in the attempt to wrest sovereignty over the Canal from the United States. Before his departure for Cuba, State Department officials urged Torrijos not to mention the Panama Canal issue during his 5-day visit. Senator Jacob Javits, one of the leading pro-treaty advocates, was in Panama at the time and he added his coaching on how to avoid stirring increased hostility in Congress. Shamefully, these Americans were advising a foreign pigmy despot how to help the U.S. Government divest the United States of an asset of incalculable value to the security of their country, and to the maritime commerce of the world. The Torrijos-Castro embrace came as no surprise to some of us, including Governor Ronald Reagan, who had issued the following statement four months earlier (September 12, 1975):

"The incubation of the present Marxist government goes back a long way. When the Communist Party of Panama was founded in 1930, its charter spelled out two key goals; 1) Gain control of the Government through the Armed Forces; and 2) Nationalize the Canal Zone via treaty negotiations.
Goal 1 was realized when, on October 11, 1968,
the Armed Forces (called the National Guard) overthrew the newly inaugurated government of President Arnulfo Arias ... who had been an outspoken critic of Soviet designs on the Canal since his
first election in 1940.





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"4Slowly, over the years, a cadre of young, carefully
indoctrinated Marxist military officers grew in size in the National Guard until it was strong enough to
bring off the coup.
"On seizing the government they immediately disbanded the National Assembly, censored the press and suspended civil rights. There hasn't been an election since. Today, the government speaks, not for the people of Panama, but for the guns of the National Guard. So far, it has succeeded in intimidating our State Department."
And the Panamra-Cuba embrace could have come as no surprise to the State Depai~rment. In 1964 Ambassador Bunker announced that an assault on the Canal Zone which had taken place shortly before had been led by "persons tralined in Communist countries for political action of the kind that took place 1 and that "the Government of Panama, instead of attempting to restore order, was, through a controlled press, television and radio,. inciting the people to attack and to v iolen ce. I
Joseph A. Califano, Jr., then Deputy Secretary of Defense, put it this way in 1964:
"We know, that some of the leaders were known
and identifiable Communists, members of the Communist Party of Panama, and people who belonged to the vanuard of National Action, which is openly and proudly- the Castro Communist Party in Panama.
Nor should the Panama-Communist Cuba embrace have come as any surprise to President Ford himself. In 1967, as House GOP leader, he had warned of the Communist menace to the Panama Canal from nearby Cuba. That was the time when the Johnson Administration, bowing to the coercion of the 1964 Panamanian riots, had offered to negotiate a treaty substantially similar to the present KissingerBunker giveaway treaty. Here is what Congressman Ford said:

"With Cuba under the control of the Soviets
through its puppet Castro, and with increased Communist subversion in Latin America, a Communist threat to the Panama Canal is clearly a grave danger. The American people will be shocked by the terms of this (Johnson Administration) treaty"
But that was nine years ago and Congressman Ford is now President Ford and he has as his advisor on foreign affairs Dr. Henry Kissinger.

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Today America has bec lome immobilized by the spirit of detente, while the Soviets push forward confidently and successfully on all fronts. Ambassador Bunker in his speeches across the nation has indulged in eloquent silence on the possibility of any Communist threat to the Canal. I charge that by withholding these important facts, certain to influence the judgment of his hearers, the spokesman for the U.S. Government commits a fraud.

SUMMARIZING

1) The giveaway advocates argue that it may be impossible to operate the Canal in a hostile environment. Hence, if we cannot make the Panamanians love the United States, we might as well kiss the Canal goodbye, gracefully, before we are kicked out. Opponents say, "No!" The armed forces of Panama consist of a national guard, which serves as a police force. TheUnited States defense establishment is so formidable that if anyone damages a single U.S. property in the Zone-let alone tampers with locks, dams and spillways-he should be remanded to the nearest Canal Zone police court to be removed from mischief
2) The State Department believes that meeting threats and insults with a smile is a mark of practical statesmanship. Opponents say, "No!" It is a mistake to raise the hopes of Panamanian politicians with bribes of promised concessions. Appeasement by the United States has become the order of so many days that Isthmian politicos take it for granted.
3) The State Department wishes to surrender exclusive American control over the Zone. Opponents say, "No!" It was a mark of wisdom that the great Theodore Roosevelt and his Secretary of State John Hay included in the Treaty of 1903 the provision for exclusive and perpetual American control. Without it, there could have been no stability in the operation.
"Perpetuity" does not seem so long when we remember that political stability has not emerged in the Isthmus during the 400 years that elapsed between the arrival of the great explorers and the arrival of American engineers and doctors who converted a deadly swampland into the finest man-made waterway in the world. Exclusive control is at least a's important today as it was in 1903.
4) The claim that the Panama Canal has lost its strategic importance defies the facts and common sense. A few of our combat shipsonly 13 of some 480-are too big to get through the Canal locks. But, to quote General Krulak again. "In truth the Panama Canal is an essential link between the naval forces of the United States deployed in the Atlantic and in the Pacific. It is only because of the waterway that we

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are able to risk having what amounts to a bare-bones, one-ocean navy.
The Soviet Union has been acquiring ports of strategic importance all around the globe. Its latest effort in that connection is in Angola. Communist domination of the Canal, whether open or camouflaged, is a key objective of the Soviet navy master plan. If accomplished, Moscow and its puppets would be able to divide U.S. naval strength almost at will.
5) Within the framework of the retention of sovereignty, the United States should continue to deal with the people of Panama in friendship and fairness, as it has for 73 years. It should continue to make adjustments on the spot in non-essential treaty provisions, as it also has in the past. But the United States must negotiate with a Panamanian Government only on a no-nonsense basis. And let the word go out to "Torrijos & Co." that our solicitude for the Panamanians does not extend to a government that threatens, vilifies and incites its population against the United States.





























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NATIONAL SECURITY *FOREIGN RELATIONS


160 K TRET, N.W., WASHINGTON. D.C. 20006 -(202) EX3-411

Foreign Relations Commission National Security Commissiton
G. MICHAEL SCHLEE, Director
Frank A. Manson, Counsellor James B. H-ubba rd, Asst. Director
for Foreign Relations for National Security
National Security-Foreign Relations Division


8-77 JULY-AUGUST 1977



PANAMA ENTERS PRESIDENTIAL SWEEPSTAKES FOR 1980:President Carter's entry last week into the Panama Canal sweepstakes certifies there must be more to the new treaty with Panama than is publicly known.
Plus, there must be some urgency or something Presidential involved. President Carter has urged the negotiatbors; to get on with the new treaty. What could it be?
W hat is there at the end of the Panama rainbow? What is the connection?

The Banking Connection: Banks and bankers have a way of influencing
Presidents and nations. United States and their foreign branches banks have invested
$2. 77 billion in the Torrijos government. No one but Torrijos and his bookkeepers
know the full extent of his government's indebtedness to banks other than the U.S.
Could the total indebtedness run to $50 billion? Presumably the U. S. money was
loaned on the strength of the Tack-Kissinger agreement of 1974 whose key provision
is ceding all U. S. territory id~ the Canal Zone to the Republic of Panama.

If this happens, if the U.S. gives up its legal sovereignty and ownership, the rest of
the agreement actually becomes irrelevant. The U.S. will do exactly as it is told
by Torrijos. Treaty discussions have actually become so ludicrous in recent weeks that Torrijos is now asking $5. 0 billion f rom the U.S. taxpayers in order to get him
to take the $7. 0 billion investment off our collective backs. How ludicrous can things
get? Only a few months ago, Torrijos threatened force if the U.S. didn't come
across. Now he wants payment to accept the heavy responsibility, or more likely,
the banks who have loaned all the money want their interest--now!

One new bit of raw data has become available on the banking connection. The Republic National Bank of New York was listed until June 10, 1976 by the Department of
Justice as Registered Agent #2604 for the Republic of Panama. If government investigators were searching for some real scandal, they could most likely find bags full of it in the banking connection. But the odds are against such an investigation. This
may be one of those rare exceptions where money does not talk! So far, the banks have kept a stiff upper lip, despite the doubts they sometimes express about their
billion dollar blunder.

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The Business Connection: Apart from the banking connection, there are also the business interests which surface from time to time, Although'Ambassador Sol Linowitz has publicly denied that oil pipelines and Alaskan oil have crept into the treaty discussion, there is a growing suspicion that Alaskan oil and the 4-Navy pipelines are very much involved in a business connection.

Recent announcements of a joint U. S. -Panarranian business venture to build a $40 million oil storage facility on Panamanian soil, is indicative of business activity. U.S. citizens do not object to any good business deals, but why keep secrets and especially if publicly owned property is in involved? Why increase the credibility gap between the government and the people?

The recent $100, 000 contract between the Republic of Panama and Butler Associates of Tulsa, Oklahoma for a study on the transfer of oil by pipelines is indicative of more than passing interest in the commercial aspects of the developing oil situation. Butler Associates' lips are sealed and Torrijos is not talking, but many oil men know that John D. Rockefeller made a bigger fortune in transporting the oil from Ohio than in the actual pumping of it from the ground.

To make the business and banking connection even more plausible, Mr. Irving S. Shapiro, Board Chairman of Dupont, is also on the Board of Directors of Citicorp, a heavy lender to the Torrios dictatorship. Also John D. Debutts, Board Chairman of AT&T, serves on the Board of Directors for Citicorp. The Torrijos regime is heavily indebted to Citicorp. Now, whether these business leaders, or others like them, ever discuss business, banking and international treaties at the same time, is not known. But it would seem reasonable that they would occasionally take more than a passing interest in the bankrupt condition of the Torrijos government and might even go so far as twist the arm of a President.

The Public Relations Pay-Off: Surely it can be said that never in U. S. history has so much public money been spent in an effort to convince the American people it was in '.heir best interest to give away a territory in which they have in;-esged some $7.0 billion. The U.S. State Department has sponsored a nation-wide speakers bureau sending Panamanians, as well as U.S. speakers, across country all pumping out the same party line. This is the last U.S. colonial enclave, so-called by the Department of State's Alger Hiss shortly after WW II. Hiss listed the U.S. Canal Zone as occupied territory, and the Hiss judgment has filled the lecture halls of civil and college audiences from the mouths of tax paid lecturers.

Since September 1974, Ambassador Ellsworth Bunker has received an annual salary of $57, 500 with the sole purpose of supporting the Canal give away. Ambassador Bunker's salary and expenses are al! at tax-payers expense. Then two of America's brightest PRmnen, F. Clifton White, PR adviser to Senator Barry Goldwater; and Joseph Neopoitan of Vice President Humphrey's campaign for the Presidency, were hired at $200,000 for a 6-months final effort to put the give away idea across on the basis that it served the national interest.
fo rme r
Meanwhile, on the other side,/Chairran of the Joint Chiefs of Staff, Admiral Thomas H. Moorer, USN Ret. said, the U.S. Canal Zone and Canal are absolutely vital to the security interests of the United States. No one knows and it would be difficult to

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estimate how much of the Taxpayers money has been spent by the U. S. State Department, to consummate an idea which was created by a few bureaucrats, and once created, had to be supported to the bitter end, however wrong the original idea might have been.

The Corm-unist Connecti-on: Time was when many U.S. Congressmen thought the Soviet Union might be the prime mover behind the Panama Canal give away. Soviet strategists have made no secret of their ambition to control the four narrow sea passages which interconnect the worlds oceans. These are the Straits of Malacca and Bering, the Suez Canal and the Panama Canal.

Torrijos has visited Castro. These two have offered each other cooperation and support. Exactly what Castro has sent to Panama is anyone's guess. Our intelligence agencies don't tell us and neither does Panama G-2 Chief Colonel Manuel Norne ga.

The Economic Pact signed on July 19, 1977 between the Soviet Union and the Republic of Panama is prima face evidence of the Soviet Union's and Torrijos' common, long-range objectives. Thus far, there has been no U.S. publicity on the Soviet Panama treaty whose provisions include establishing a Soviet bank in Panama, the building of a hydro-electric plant and comparable economic ties.

The American people do not know if there is a communist connection. They do know there are grounds for suspicion. The most recent polls indicate that 86% of our U.S. citizens oppose a give away of the Canal, the prime objective of the new treaty. Surely 86%7 of the American people can't be wrong and, in "the final analysis, the American people will be heard.

SOVIET UNION AND PANAMA SIGN HISTORICAL PA CT:For years, conservative organizations and prudent leaders have said,
"The Russians are coming to Panama sooner or later."1 These prophecies have now been fulfilled. On July 19, 1977, according to a press story appearing July 20 in a Panamanian newspaper, the CRITICA&the Soviet Union and Panama signed an Economic Pact involving millions of rubles. This is significant since the Soviet Union and Panama do not have "official" diplomatic relations. According to the Soviet Panama Treaty, some of the agree conditions include the following items:

1. The Soviet Union will construct in Panama a hydro-electric plant to provide a base for improving the Panamanian economy;

2. The Soviet Union is permitted to build, open and operate A bank on Panamanian territory;

3. The Soviet Union may utilize Panama's "Colon Free Zone" as an outlet for Soviet merchandise-,which includes Old France Field in the Canal Zone;

4. The Soviet Union has agreed to purchase 50, 000 tons of sugar from Panama under conditions described in the Pact beginning in 1978.






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Torrijos' brother-in-law signed this pact for Panama and stated, "the signing of this document has great historical significance; not only for our country but for the American continent, who are always facing strong forces that represent a philosophy that is contrary to the destiny of ILatin America." Thus, as if foriordained, in some medieval d rarna, the con-umunist villain has a rrived, as many Ame rican leade rs had forecast. The play has begun, Soviet trade, power and influence are expanding in the Western Hemisphere. Cuba was phase one. Panama is phase two.

Former Commander-in-Chief, Pacific, Admiral John S. McCain, USN Ret., in his statement for the U.S. Senate Subcommrittee on the Separation of Powers, candidly stated on July 29 that a Soviet naval task force will be operating in the Gulf/Caribbean area in the not too distant future. The floating guests will be most unwelcome visitors we have had in our nation's history. McCain went on to say that the United S'ates should reclaim "Old France Field" in the U.S. Canal Zone, and develop it along with the U, S, Naval Air Station located nearby to establish an air capability to deal with this type of Soviet naval power in lieu of the U.S. Navy's steadily diminishing aircraft carrier capabilities.

Senate hearings on Panama Stir Fmotions: During the hearings before the Senate Subcoinnittee on the Separation of Powers Committee on Judiciary on July 22, 1977, hca rings which Senator t el ris accurately forecast would most likely remain secret because the news media iould not see fit to report it, the four Senators: Allen, Hatch, Iie'-ns and Scott, pressed each witness for the logic behind the "give-away" of the Panama Canal.

During the testimony of former Chairman of the Joint Chiefs of Staff, Admiral Thomas H Moorer, USN Reto one Senator blurted in a not so senatorial manner and more out of frustration than in anger, What the Hiell is wrong with the State Department?" Admiral Moorer replied natter-of-factly that this was not his jurisdiction.

Moorer was called the best qualified man in the United States to speak on the Panama Canal, and he was an itnpresslve witricss. Senator Allen called Moorer's testimony "Kranswerable and .n ssailable. '1 Moorer stated simply that any Chairman of the Joint Chiefs of Staff "will ir- rndiately perceive that it is vital to the United States' interest to retain ownership and control of the Panama Canal."

Moorer recalled how he, as Commander-in-Chief, Pacific had relied on the Panama Canal for support of his forces in Vietnam. Without use of the Canal, 'The war in Vietnam would have been much more difficult and costly to conduct," he said. Then as Commander- in-Chief, Atlantic, he said the Panama Canal was especially needed for rapid transfer of troops and amphibious lift during one of the Caribbean crises and also during the Middle Fast war of that period. As Chief of Naval Operations, Moorer said, he looked to the Panama Canal as a means of equalizing the strength and providing the balance between the Atlantic and Pacific Fleets. Without the Canal, the United States would have to build a two-ocean Navy costing billions of dollars.

Speaking of the danger of Soviet sovereignty by proxy through Cuba, Moorer said, "I was convinced as Chairman of the Joint Chiefs of Staff--and I remain convinced today-that if the Soviet Union ever gained even proxy sovereignty through Cuba, the U.S.

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security as well as U.S. prosperity would be placed in serious jeopardy." Moorer's testimony followed by three days the Soviet-Panama Pact which would indicated Soviet involvement may come in a more direct manner than by proxy.

After listening to Moorer, one Senator recalled that General George Brown IRa d told him the Panama Canal was "important" but not "vital" to U.S. security. Moorer replied that, in his judgment, "it was vital," and the point is, said Moorer, "there ;s no point in surrendering this vital interest."

The constitutional issue on the separation of powers should be ignored according to one witness, Senator Gravel, and the United States ought to give the "old and obsolete" Canal to Panama and dig a new one at sea-level in Panamanian territory, so that Alaskan oil would have a better flow rate to the U.S. East Coast. "The new ca-,al would also be built for about $5.9 billion. This would be done at U.S. taxpayers expense and then given to Panama to insure Panama's friendship and gratitude, "' said Gravel. He said Secretary of State Vance was enthusiastic about building a new canal at sea-level.




































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Senator ALLEN. Your statement previously given to the coimittee appears on page 53 of part 2 of these hearings. They have just been printed.
Would you prefer that we come back immediately after the vote or break for lunch ?
Mr. CRANE. I think, Mr. Chairman, since I have a conflict with a lunch. too, that if it suits the ("hair I would prefer to continue after vou have voted.
Senator ALLEN. We will continue your testimony then. Mr. Flood, if you can come baek. we would like to address a few questions to you; but we will leave that up to you.
Mr. Fi-oon. I believe the B-1 Noting will keep me busy.
Senator ALLx. We appreciate your appearance here Mr. Flood. We appreciate your leadership on this issue. Your leadership has been except ionally hine. We hope that ,ou will be able to exert your leadership T in the House whn ths is sue is brought before the House.
MIr. FLO(. I am just a pale shadow of vou, Mr. airmana.
Senator AuLL Well. you have done a great job.
WV are coin back immediately after the vote.
Icess taken.]
0 11a8tr AllEN. li tlflii111ttee w1ll be 111 order.
MIr. Crane, w are ielighted to have you come before the committee to give us the benefit of your views. Please proeed.

TESTIMONY OF HON. PHILIP M. CRANE, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ILLINOIS

Mr. Cr lNE. Thank von very much. MNr. Chairman.
I am1 inded tot fill to von ad to the subeonit1?ee for permitting
me to appear and testify today.
I woul like to make a reference to my distinguished colleague who left the room earlier who was appearing today jointly with me. I am r ft ril n to Collfressmn I-a1 Flood. who. as vou know. has had a lon-tine active interest in this issue. undoubtedly more so than any 01 her Member of the Hose. His counsel on this question carries greater v ight certainly th1n mv own and probably more than any of my colleagues in the House.
I might relate a quick anecdote. if I may. Before doing so. I would make a unanimous consent request that my prepared statement might be a part of the record.
Senator ArEl. Without objection. so ordered.
[Material follows:]






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CONGRESSMAN CRANE'S PREPARED STATEMENT

"THE PANAMA CANAL TREATY: A QUESTION Or JURISDICTION
SENATE SUBCOVIITTEE ON SEPARATION OF POWERS SEPTEMBER 8, 1977


Mr. Chairman:

I am indeed grateful to you and the other members of this

subcommittee for having me here this morning. To y way of thinking, the proposed Panama Canal treaty is one of the, if not the, most irrportant issues to come before Congress in recent years and not the least of the problems with it is this question of jurisdiction. Unquestionably, the President had the right to negotiate the treaty and without doubt the Senate has an obligation to either ratify or reject it; the question is, will the House of Representatives have the opportunity to pass on it also.

As a sponsor of a resolution calling for authorization by both

the House and Senate before any giveaway ,f U.S. territory or property in the Canal Zone is implemented, I am not exactly an objective, disinterested party to the debate over this question. Moreover, as one who feels that there are enough things wrong with this treaty to warrant its rejection regardless of the jurisdiction question, I have a vested interest in seeing this treaty brought to a vote as many times as possible thereby increasing the chances of its defeat. But, having thus identified my biases, let me stress my real belief, based on the language of Article IV, Section 3, Clause 2 of the Constitution, subsequent Supreme

Court decisio'fi and past pi dnt, that mJ 1,q I jl -rusnt cn be made for Housc participation in the qreat conArl dcbitc.

Just for the record, Articlc IV, Section 3, Clause 2 states that:

"Congress shall have power to dispose of, and make all Rules and Pegulations









respecting the Territory or other property belonging to the United States; and nothing in this Constitution shall be so construed as to prejudice any claims of the United States, or of any particular State." While it has been argued that, when read with Article 1I, Section 2, Clause 2 (giving the President the poer to neotetc treaties and Article V, Section 2 (making treaties the supreme law of the land), this clause constitutes a ccncurrcnt grant of power (thus making it unnecessary for the President to consult the House), the Supi me Court has recognized Article IV, Section 2, Clause 2 as an cxclusivw 91nt t pow"' t", C{nwpc'. vis-a-vis federal-state relations and has never circums(ribcd that power in a treatymaking context. Moreover, the Congress has repeatedly asserted its exclusive right under the clause in question -nd both the President and the Senate have recognized that right in the past. in fact, on at least three occasions, the House, as well as the Senate, has been involved in relatively minor territorial matters involving the Canal Zone. Admittedly, none of these episodes quite parallels the situation we face today, but if it has been deemed appropriate for the House of Representatives to be involved in relatively minor matters -- such as the temporary cession of a small plot of territory to Panama so that the U. S. government could buid a legation -- then it stands to reason that it should be involved in what could turn out to be the biggest giveaway in American history.

All rhetoric aside, the facts of the matter are that the United States has spent $163.7 million to acquire rights and title to the Canal and Canal Zone, to say nothing of the S366 million in construction costs and the $6.35 billion over the years that went for operation, administration and defense. Just the $163.7 million for title and rights










represents more money than it cost the U.S. to acquire all the rest of its territorial additions combined. And now it is proposed that we not only give this entire investment away but that we pay Panama almost $2 billion more between now and the yeat 2000 4uv tokinq it. The very thought of such an incredible arrangernunt simply boggles the mind,and the American taxpayers who have footed rwost of the bill, and who will be expected to continue to do so, have every right to be upset at the prospect. In fact, they have every right to hold each and every one of us personally-accountable -- which is yet another reason why the House of Representatives should pass judgment on this unparalleled example of misguided generosity.

Actually, misguided getierosity may be too kind a term -- boondoggle is more like it. It is no secret that one reason the Panamanians insisted that we a s'oti anntjity otid qnttuity pym, t [ , .3 mi lion a year to at least $50 mill ion and perhaps as hi(lh .s $/0 wi 11 in, is that 39/ of Panama's annual budget goes to servicing their national debt and they have almost $325 million in debt coming due this year. Significantly, much of the debt is held by banks in the United States and the $50 million, plus perhaps some of the economic aid money also promised Panama, would come in handy in paying them off. So, what it appears we really have here is not just aid to a tinhorn dictator but a bailout of a number of banks which should have known better than to invest in Panama and, in any event, should not escape responsibility for having done so. If liberals can oppose bailing out Lockheed and conservatives are opposed to bailing out New York City, then there is no reason why all of us should not oppose bailing out Panama and those bankers who inadvisedly lent financial support to its dictator. Certainly, the Anerican taxpayer should not be made to bear the burden for the mistakes of others.






On



Perhaps the most frequently used argument in favor of the proposed treaty is that, if we don't ratify it, there will be violence, sabotage and perhaps warfare and the canal will be shut down. In support of this logic, treaty proponents point to statements by military leaders to the effect that, in the event of violence or sabotage, they cannot guarantee that our armed forces could keep the canal open all the time. However, I feel sure that if you asked those same leaders if they could guarantee that Metro would never fall victim to sabotage, they would also have to say no -- as they would in the case of almost any other major transportation facility. Maybe the answer is to give Metro to the Panamanians as paymien~t u t oki nqj i cauro I tivco btit tit' l'",S youl hc I i eve t hat, the v io1 ence amnd sabotagec iiguinent s simply dt-n 't holdi wiLr. Ju L because there is a little risk in an investment such as a transportation system does not mean we should give it away.

Finally, I suspect that if we -go through with such a giveaway, it will not be viewed as a gesture of generosity but as a sign of weakness.

For all their talk about "Yanqui go home" -- talk that has been staple political fare for generations -- Latin Americans respect us more when we show our strength. Instead of Aminetican prestige sinking to a low ebb in Latin America after the missile crisis of 1962 or the Dominican crisis of 1965 just the reverse occurred and so it will be in the future if we demonstrate the willpower that made us a world power.

Willpower -- that is the key. More than anything else, this canal treaty is a test of American willpower, if we are willing to give up our legitimate, and long since paid for,claim to sovereignty over the Canal Zone, others will wonder if there is anything we won't be willing






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to give up. On the other hand, if we reject this treaty, we will have demonstrated that we have not entirely lost our intestinal fortitude and that we are still capable of standing up for what is rightfully ours in the face of criticism. In this context, we should keep in mind that America has nothing to be ashamed of relative to the canal; without the original canal treaty (of 1903) Panama would, most likely, still be a province of Colombia and it certainly wouldn't have the fourth highest per capita income in Latin America.

Mr. Chairman I beg your pardon for I have gone on too longbut I feel very strongly about this issue and about the fact that it is time for the Congress to stand up and be counted. And while I can't speak on their behalf, I think you will find a number of other Members of Congress who feel much as I do and want to have a chance to vote on this matter. With all due respect, I believe that we are entitled to have such a vote, and I hope that this subcommittee will see fit to make that very recommendation.

Again, thank you for your indulgence. if you have any questions I will be more than happy to try and answer them.




































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Mr. CRANE. Congressman Flood( appeared with meon "The Advocates," the public service television program, back about 3 or 4 years ago. I believe it was 1974. We argued this question of whether to give aw-Nay the Panama Canal. Dan Flood was, of course, the most eloquent witness that we had on our side.
The returns of that program were most intriguing. The program appealed to listeners to send communications to the station indicating which side, they supported. By the very lopsided margin of 89 percent support for our position,-they upheld the position that I would advance today 'in opposition, to alienating any portion of the canal 01r the zone.
Trhe thing that was intriguing about the return was that the producers of the show acknowledged to us that their viewing audience was more liberal philosophically than conservative. So, th returns were doubly surprising to them.
I think, Mr. Chairman, that this is an issue that is neither ideological nor partisan. It is a question of what is in America's interest. In that connection, I would only put some stress on a couple of points. One is the national strategic interest of the canal. As we all know, Congress seems ill-disposed to beef up our national defense, notwithstanding the evidence that the Soviets are enga gedi in the most massive military buildup since H-itler's Germany.
That being the case, we are potentially creating a situation that would necessitate, having a two-ocean navy if we did not, have absolute control over the canal and the Canal Zone. Contrary to the impression left by the President-and it is a point that probably already has been referred to-there are only 13 of our combat naval vessels that cannot pass through the canal ; those are the aircraft carriers.
think there is also, f rom an economic point of view, a point that needs stressing. That is that almost 70 percent of the shipping that passes through that canal is bound for or originates in U.S. ports. This takes on added significance when we realize that the President made the decision not to permit any of the Alaskan oil to be sent to Japan in a tradeoff with Japanese oil from Persian Gulf. This means that great quantities of oil will be passing through the Panama Canal for refining in our eastern States.
I think that is one of the reasons why we have found such pronounced objections to the treaty coming f rom the Governors of such great St ates as Texas and Louisiana, major port States.
In addition to that, Mr. Chairman, there is one other point that I would stress. That is the potential conflict of interest represented by Mr. Linowitz' interest in Marine Midland Bank and the loans of that bank to the. Republic of Panama. There is also Mr. Kissinger's potential conflict of interest serving on the board of Chase Manhattan Bank, and that major bank's interest in loans that it has extended to the Republic of Panama.
In fact. I think, when one examines the magnitude of loans by both domestic U.S. banks and their foreign branches, that the total amount of loans to that tiny country of Panama amounts to about $1.5 billion. TIhirt y-nine percent of Panama's budget right now is being extended to service debt.
Very frankly, I find it hard to believe that the banks, with that magnitude of interest there, have not attempted to exert some influence





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not only on people in government, but I stispeet that in the business community as well. I even wonder whether conceivably there may not be some interest that they have exerted over some of out- national TV networks.
Last night I heard Howard K. Smith come out editorially for ABC in support of the canal giveaway; the night before, Et-ic Severeld very forthrightly came out in support of the treaty. I do not know yet what NBC's position is. But it does seem to me that that is an area of potential conflict of interest that warrants serious investigation.
The only other point I would make, Mr. Chairman, has to do with this question of separation of powers and the primary concern of the subcommittee. I would cite and read from the, testimony by the legislative attorney foi- the American Law Division of the Library of Congress, Mr. Kenneth Merrin.
It is clear that Congress has often asserted an exclusive right to dispose of Federal territory and property. It is also apparent that both the Executive and the Senate have recognized that claim in past dispositions of property in the Canal Zone to Panama. Therefore, while it is impossible to make a categorical assertion that article IV, section 3, clause 2 is either exclusive or concurrent. it appears that those powers have been recognized as exclusive for purposes of disposal of property in the Canal Zone to Panama.
Of course, those were inconsequential dispositions of property in contrast to what we are contemplating here today.
I think the virtue of guaranteeing that the entire Congress cast a vote on this is that the Founding Fathers, in their wisdom, initially assumed that you gentlemen in this body would be representing States and simultaneously that those of us serving in the House would be representing people. Both entities should have a voice on so serious a subject.
POLLS CONSISTENT
If one examined the polls on this subject, they show overwhelming opposition to ratification of this treaty.
Opinion Research, for example, conducted one recently indicating 76 percent opposition. The American Conservative Union polled senatorial offices just about a week and a half ago; 66 Senators responded to that poll. The opposition to the treaty was running about 94 percent.
I have spoken to colleagues in both the House and the Senate who have put this question on questionnaires to their districts. The opposition runs about 90 percent.
The Council on Inter-American Security, which has been polling on this subject for the previous 3 months, has had consistent returns in the neighborhood of 90 percent opposition.
So, I would hope andDray that the House indeed would be forced to render a judgment on this. General Torrijos, the dictator of Panama, indicates that there will be some kind of national plebiscite or referendum to determine whether Panamanians support it. I would not trust any referendum conducted by any dictator.
On the other hand, I think that we can have, the closest thing to a national referendum if we guarantee that those people who are represented in government, the American electorate, have an opportunity to render a judgment on the merits of this treaty. They can do that with their votes in the congressional elections of 1678.





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It seems to me that, based not only on the historical precedence, but I think the unequivocal language of the U.S. Supreme Court, from IVih~on v. Shaw in 1907 down through the last decision in 1.974, that the Supreme Court has clearly upheld the fact that the United States owns that Canal Zone. We are sovereign in that zone.
We could never even have begun the construction of the zone had that not been the case from a constitutional point of view. That being the case, the article IV, section 3, clause 2 provision of the Constitution it seems would clearly indicate that the Senate and the House should both render a judgment. It would be my hope and prayer, very frankly, that that judgment would be consistent with what are in America's long term best interests.
Tain my judgment, is not running away from this situation but facing up to it foursquare, acknowledging that we have not only economic and national security interests involved, but so does the entire free world for that matter. In that sense, the United States would be doing a disservice to free world interests to contemplate y iel ding up this canal to probably one of the tiniest countries in Christendom that is not even in a situation to exercise self government or enjoy human rig-hts so long as it is under the repressive regime of General Tornj os.
Senator ALLEN. Thank you very much. Mr. Crane. You made a fine statement.
Does the administration give any indication, other than holding briefing sessions, that it is going to submit any portion of the treaty or the conveyance of the property to the House?
Mr. CRANE. To the best of my knowledge, no, sir.
Senator ALLEN. What (10 you feel the sentiment of the House is on this question?
Mr. CRANE. I think sir, that at the present time-an overwhelming majority would vote against alienation of the canal.
I think that that majority is going to grow with the, increasing conmmu ni cations f rom constituents. My mail-and I have not yet solicited any input. from my district through a quest ion naire-hias run about 7' 000 letters. So f ar, I have two letters supporting alienation of the canal. All of the rest are violently opposed.
During the August recess when I was home, I had people coming up to me identifying themselves as Democrats and Republicans indicating that it was their sincere hope that we would not consider giving up our canal. I did not have one individual approach me (hiring the August recess supporting alienation.
As best I can determine in the House. as in the Senate, that sentiment is overwhelming in opposition to alienation. I think House Members, of course all being up for election in 1978, will be a lot more accountable to the views of their constituents.
Senator ALLEN. DO YOU feel that a delay in the taking of action by the Senate and the House would improve the treaty's chances of being ratified? Or would it harm the chances?
Mr. CRANE. My own feeling, Mr. Chairman, is that time is not on the. side of the. State Department or the administration on this question.
The argument has been advanced by the administration that they will educate the public to an understanding of the merits of the give-





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away. It seems to me having listened to most of the arguments that they have put forth to date, that they are easily refuted and that, as Americans become more apprised of the significance, economically and strategically of that, canal, they will be hardened in their position of opposition rather than weakened.
Senator ALLEN. Why should the canal be given away and the Panamanians paid to take it?
Mr. CRANE. Well, if I were David Rockefeller, I could give you a very easy answer to that. That would be the servicing of my loans and the loans of many of those big New York banks. We are contemplating not only giving the canal away but, of course, reimbursing the Panamanian Government to the tune of $50 to $70 million a year on top of that.
I can clearly understand the banks' position. What I find it difficult to understand is the position of those who would side-maybe coincidentally-with the major banks in the United States. They are some of the same people who voted against the Lockheed bailout. They are some of the same people who also voted against bailing out New York City. I think they were right on those issues. The banks should have assumed the responsibility for bad loans they have made.
I think the banks in this instance should assume responsibility for bad loans that they have made. Beyond that very selfish and narrow interest of our big banks, f rankly, I cannot figure out any valid reason why any elected Representative or Senator should be supporting this treaty.
Senator ALLEN. Is it carrying good neighborliness too far?
Mr. CP,%..N.,E. I think it is more than carrying good -neighborliness too far, Mr. Chairman. I think it is a demonstration of a point that Governor Reagan stressed earlier: American weakness. There is movement in the direction of fortress American in an era *hen no great nation of the world can afford to isolate itself.
Second, when I put this within the context of what we are doing with Cuba, what we have done thus far in Rhodesia, the cold war relationship we are setting up with the Republic of South Africa, the fact that we are no nearer solutions with Greece and Turkey over the hot issue of Cyprus, the fact that Italy and France are threatening internally to go Communist, and Great Britain is no longer a major component of NATO, that we are contemplating severing our ties with Nationalist China, and simultaneously contemplating withdrawing from South Korea, we are establishing a frightening and appalling foreign policy trend. I would say that we have gone, in terms of our foreign policy, from containinent-when the boast. was properly made that the President of the United States was the most powerful man in the world and we clearly controlled the air spaces of the world and the sea lanes and we had overwhelming missile superiority to d,6tente which Frank Barnett has described detente as the word to describe he graveside of containment. What appears to have followed detente is in many respects a very old policy; that is appeasement.
We seem to be doing the greatest violence to our friends and simultaneously seeking to make accommodations through appeasement with those people committed to our destruction.







DECLINING AMERICAN STRENGTH
Senator ALLEN. If the treaty is ratified, would this, in your judgment, foreshadow a declining influence and prestige around the world for the United States ?
MIr. CRANE. I think, Mr. Chairman, we are already suffering a declining influence and prestige. I think, in fact, our performance min the Republic of South Vietnam was certainly one of the sorriest chapters in the American national record.
I think what has transpired since then in terms of the United States' unwillingness to exercise an appropriate veto to keep those people out of the United Nations. our great silence on the human rights question with (Cambodia. where an estimated one-fifth of the population has been systematically exterminated since the Communists came to power, the betrayal of allies and then finally capitulation on a point here, where there is no dispute by responsible authorities over whether it is American territory, can only be viewed with great glee and satisfaction if one sits in the politburo.
The United States is either a crippled giant or a giant that lacks any will to tand up and be heard, to provide leadership against aggression. I think another evidence of this was the sorry performance of this country with respect to the most adventuresome action the Soviets have taken in the postwar era. That was to subsidize mercenaries in Angola to suppress an indigenous nationalist movement.

NO RIGHT TO INTERVENE TO REQUIRE NEUTRALITY
Senator ALLExN. Much has been said about the preservation of the right of the United States to intervene to protect the neutrality of the canal after the year 2000. Do you find, in your study of the treaty, any provision granting to the United States a right to intervene to protect the neutrality of the canal
Mr. CRANx E. Mr. Chairman, I do not.
I think, in that connection, one must examine the provisions of that treaty side by side with the statements made by Dr. Romulo Escobar Bethancourt before the Panamanian National Assembly on August 19. There. Dr. Escobar made this specific statement:
"We are not giving the United States the right of intervention." He goes on to make further observations that I think have to be disproven by those American negotiators who are championing this treaty. They cannot disprove the statements based upon the contents of the treaty. as I have read it. and I think any other reasonable person would read it.
This includes the flat-out refusal to guarantee the right of intervention to the United States to preserve the neutrality of the canal or to defend it after the year 2000. but even to guarantee the neutrality of the canal. They insisted that they could not make an absolute guarantee of the neutrality in time of internal insurrection, according to Dr. Escobar.
We backed off of that kind of a qualifying statement. We did not want that in the record as a spelled-out provision. So, the treaty is silent on that point. Dr. Escobar says, however, they flatly refused under that condition to guarantee the neutrality of the canal.





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I think, in addition to that, there are other assurances that we have heard from some of the administration spokesmen that are refuted or challenged by Dr. Escobar. One of these is the assumption that we would have some kind of preferential treatment for passage of our war vessels or commercial vessels during time of war. Dr. Escobar rejects that. He says there is absolutely no such guarantee: we will be treated as any other country. That means, if we were at war with the Soviets, Soviet vessels in line would actually be going through the canal before our own.
In addition to that. the Panamanian Government would not guarantee that the canal will be kept open under any and all circumstances. They commented on the possibility of earthquakes and landslides: those are reasonable conditions under which one might not be able to continue to maintain the operation of the canal. But they said, further, that if it was not profitable, they would not maintain it. 'We responded by saying that, if that were the case, we or other nations could help bail them out. They still rejected putting any language in there giving a positive gLarantee that the canal would be kept open.
It seems to me that the burden of proof is on the administration to take the Escobar speech and to demonstrate. by analyzing provisions of the treaty. the falsity of the remarks made by Dr. Escobar or else explain to us why he is very specific in his reference to these points and the treaty manages to be most elusive and vague in commenting on any one of them.
Senator ALLEN. Thank you very much for your fine testimony.
My time is up. Senator Hatch ?
Senator HATCH. Thank you, Mr. Chairman.
JOINT CHIEFS NOT ALLOWED TO SPEAK FREELY
I have heard all these arguments that the Joint Chiefs of Staff support this and therefore we should support it. Do you have any comments with regard to that ?
Mr. CRAINE. Yes, indeed. I think that one of the most important points that was raised at the time of General Singlaub's removal was that, henceforth, nobody serving in the military would have the freedom to speak out forcefully on any issue contrary to an administration position.
In effect, what we have managed successfully to do is to gag the military on this point.
Senator HATCH. Do you have any other evidence that that has taken place in the military?
Mr. CRANE. I think one can speculate on the position of the Joint Chiefs, which I am doing. On the other hand, considering what happened to General Singlaub, I think it is reasonable speculation. The point was covered in many newspaper commentaries, both liberal and conservative. I think, if you look at the testimony of Adm. Thomas Moorer, former head of the Joint Chiefs of Staff, he specifically made reference to that point.
Senator HATCH. Can I interrupt you there for a second? I think the
-public has not been told how important Admiral Moorer's test imonv is or the testimony of the other admirals who have testified here. Moorer said in his statement:





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My evaluation of this waterway is that it is an invaluable possession of the United States, which I testified in 1962. At that time, I was Commander of the 7th Fleet operating in the Western Pacific. Frequently, my fleet's capability depended on prompt arrival of supplies in the Atlantic Seaboard, supplies loaded on board ships which were using the Panama Canal.
Then he goes on to say:
From the 7th Fleet. I went on to Commander in Chief of the Pacific; from there, to Commander in Chief of the Atlantic and NATO Supreme Allied Commiander, Atlantic; from there, to Chief of Naval Operations; and from there to Chairman of the Joint Chiefs of Staff from 1970 to 1974.
Now, that is what the American people are not being told. Admiral Moorer is a man who really has no axes to grind. He is not subject to administration pressures, lie cannot lose his pension. He and the three other admirals, all of whom are highly distinguished admirals, are saying this treaty would be very detrimental to the U.S. interests.
I am glad you brought that up. It gave me a chance to put that in the record. I think that is important.
Mr. CuR NE. There is testimony also by Gen. Daniel Graham, former head of the Defense Intelligelnce Agency. General Graham's testiniony is equally forceful on this point. I think, as Admiral Moorer olbserved-and this, of course, is brought home strongly to anyone who still wears the uniform and is serving-one must think twice about the possibility of speaking out in objection to policy decisions made by the Commander in Chief. unless one is prepared to contemplate the possibility of being forced into early retirement and maybe even some huniiliat ion. It will be mv expectation that you will have, pul)liciv. a very ('ompliant Joint Chiefs of Staff.
Senator i.v(I. Youi make- some very serious allegations about the conflict of interest problems here. Mr. Linowitz told me personally that he did not feel he had any conflict of interest, although he was on the board of directors of Marine Midland Bank. If I recall right. he also joined the board of directors of PanAm. Both of them reputely have huge interests down there in the debt structure of Panama.
Do you have any comments with regard to that ?

DEBT OBLIGATION
Mr. CRANE. I cannot help but feel that, where your treasure is, there will your heart be also. That's what the Bible says. The banks have quite a treasure down there, and in this instance I fear that their hearts are in Panama and not in the United States.
Imagine a community of roughly 1.5 million population taking on a 81.5 billion debt obligation just from these banks here in the United States, mostly centered in New York. I think that is an insurmountable debt burden.
My understanding is that they are faced with the prospect of defaulting in Panama on just some of the interest payments on that debt. So, obviously. they have got to figure out how to come up with new income from some source. I am sure the banks know what their situation is like. The banks are undoubtedly salivating to see new revenues lumped into Panama to service those debts.
I would hope that maybe here in the Senate there might be some more intensive investigation of who serves on the boards of those banks. What are the kinds of business connections that some of those





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hoard members have with other maj or corporations that are. pumi~ping aggressively for treaty r-atification ? Find out particularly who within govern men t
Senator HATCH. Do you recommend this to this committee?
Mr. CRANE. I would very definitely recommend that.
Senator HATcn. When I was down there, I met with the President of Panama and Mr. Barletta, who is the Minister of Planning and Economic Affairs, if I remember the title correctly. They admitted to me-and I have a document provided to me by the Americani Ambassador, who told me that Mr. Barletta-and Mr. Barletta confirmed in our meeting with him-that they have at least $1.4 billion in public debt owed to banks. In f act, the largest of the banks were the First National City Bank of New York and Chase Manhattan Bank in New York.
As I understand it, you are indicating here that you believe that part of the reason for the rush in the last few hours of Mr. Linowitz' 6-months appointment-and, of course, he has been criticized in some conservative magazines I have read-that his appointment -was premeditated so that he would not have to appear before the Senate during the normal confirmation process to justify his credentials-you have indicated that the reason that was so and the reason that they finally came to this conclusion in the last few hours of the 6-months appointment was because they had the deal of a lifetime and that there are other interests that are to be very much benefited from this canal treaty, much to the detriment of the American taxpayers.
Mr. CRANE. I remember when I served on the Banking and Currency Committee in the House at the time of the hearings on the Lockheed bailout. I witnessed the spectacle of 38 heads of the biggest banks in the U.S. sitting there before our chairman, Mr. Patman. They were like schoolchildren with one mike servicing all 38. They had questions put to them, and they raised their hands if they agreed or disagreed. They put up with that for 1 full day to get the guarantee of the backup by the U.S. Treasury of the loans they wanted to extend to Lockheed.
So, I know that the banks are willing to suffer-at least in that instance-I think a great deal of humiliation as a means of trying to get that kind of Government guarantee. If they were willing to do that on a paltry sum involved, relatively speaking, with the Lockheed Corp.. I cannot help but feel that they would go to much greater lengths to try and salvage a $1.5 billion investment that they have made in tiny Panama.
Senator HATCH. You have also indicated, have you not, that Mr. Linowitz has direct interest as a result of legal affiliations, banking affiliations, and otherwise in this treaty going through in a, favorable manner.
Mr. CRANE. My understanding is, in the face of heat and criticism, hie stepped down from the board of Marine Midland in March, but well after his appointment. On the other hand, if this treaty were very quickly ratified, I am sure that, if Marine Midland viewed his talents to be so considerable then it would not be very long before he were retendered an offer to sit on the board of Marine Midland or maybe Chase Manhattan.





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Senator HATCH. Our research shows that, when General Torrijos, took over the government in 1968, that Panama had a total debt structure of about $139 million. You have indicated here, today that they owe some $2.7 billion to just the, banks. I have indicated-and there is no question about it-that their leadership has admitted-to a public debt alone of about $1.5 billion.
D)o you have any reasons that you can give how that- public debt could have jumped f rom $139 million to $1.5 billion or as high as $2.7 billion?
Senator ALLEN. Excuse me for interrupting, but they have just started to vote over at the Hiouse.
Mr. CRANE. I can respond quickly and then vote on the B-i bomber.
I would say that that very question is what warrants the investigation that T would hope, the Senate might take up. I have spoken to members of the Banking and Currency Committee in the House. Unfortunately, they feel that. the prcsrects are rather remote of getting hearings and an inquiry into that subject.
But the figures I have seen include approximately $850 million of loans by domestic banks and through their foreign branches, though, the additional loans total $2.7 billion. It could conceivably be higher than that.
There have also been rumors, of course, that some of those moneys have been siphoned off by Torrijos himself and spirited away into unnamed Swiss bank accounts to feather his own nest. Knowing the moral quality of the nin I find that easy to believe.
This is what ogtto beibought o, Itikinany public discussion before either the House or the Senate acts on this question of alienation of that canal.
Consider two other quick poins. One is, if we relinquish sovereignt y, then that canal becomes, in effect, a. multinational corporation. The United Nations has already upheld the right of expropriation.
So, I think we would be very hard pressed to argue that it is ours in the face of criticism that we would receive if they simply wanted to abrograte, any terms or any agreements that they made with us up to that point.
I think this, coupled with the fact that gunboat diplomacy started priimarily because one illegitimate government-by illegimate, I mean an unconstitutional government; one that came to power by forcewould negotiate loans with a major foreign country such as Great Britain. A coup would take _place, and one illegitimate government would be replaced by one that~ claimed to be legitimal-e and represent the interests of the people and that they were not responsible for the agreements made by a previous administration because it was an unconstitutional government.
Of course, what happened was Great Britain would send the gunboats in, take over the customs house, and put their affairs in order, and service their debts.
All I am suggesting is this. Since Torrijos is not a constitutional leader down there, since Torrijos came to power by violence and he retains his position by violence and repression, there is the very real prospect that a succeeding government, a truly representative government, might have a powerful case to repudiate any obligations as-





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surned by one iiian, a single dictator not speaking for the people of Panama.
Senator Scorr. Mr. Chairman, I would like to respond~ to thalt.
Time will not permit mne to examine my former colleague and( friend during the time hie is before us. But you mention lorrijos and how he came to power.
Do you feel that, withI his background, t hat hie has a right to lecture the Senate as to looking to the future rather than to the next election. as he did last night at the signing of the treaty? Is hie in a position to (10 this?
Mr. CRANE. I think that man has no moral qualifications to lecture, any body on anything unless they want a little locker roomn dissertation on prostitution in Panama, living off the backs of oppressed working people, stealing from the citizenry of the Republic of Panama, and imposing violence and repression against innocent people there.
That is hardly a man that I would dignify by even acknowledging his existence, much less by negotiating with him to give away a precious $7 billion American possession.
Senator ALLEN. Thank you very much.
Mr. CRANE. Thank you, sir.
Senator ALLEN. We are now going to recess for lunch until 2 o'clock.
At 2 o'clock the hearing willI be continued.
[Recess taken.]
AFTERNOON SESSION
Senator ALLEN. The meeting will please come to order.
Our next witness is Adm. John S. McCain, Jr., U.S. Navy, retired, former Commander in Chief of the Pacific Fleet.
Admiral McCain, we re delighted to have you come and give us the benefit of your views. We regard you as a great American patriot and we are certainly interested in learning of your views for the record. We invite you to proceed in such a way as you see fit.

TESTIMONY OF ADM. JOHN S. MoCAIN, U.S. NAVY (Retired)
Admiral MUCAIN. Thank you, sir. Senator, I consider it a great honor and a privilege to have been invited up here before your distinguished committee to make any comments or statements I want to make as far as the Canal Zone in Panama is concerned.
I would like to make a couple of comments before I go into my statement. One, the United States is in grave danger. The Panama Canal and the Canal Zone problem is a lot broader than just the use of that body of water. We are faced worldwide with advancing communism. Just to give you an example, in the last 4 or 5 years of my naval career-I've now been retired about 4 years-it has become inlL)055i1le to go into Southeast Asia. It has become impossible to go into the Middle East with impunity. We have the problem of Castro in Cuba in our backyard. We now also have the problem of Torrijos and the Canal Zone.
What is actually happening is that the United States is becoming more and more constrained and constricted to the continent of North America. You might in one sense say that the Berlin wall is being taken brick by brick and moved around the continent of North America. The United States is being restricted to this area.





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I cannot emphasize this enough. It is a process that is going on day after day, night after night. Unless the United States itself begins to take a strong stand-and the Republic of Panama and Canal Zone is one-then we are going to lose this battle.
It is incredible to me that men who should understand these matters apparently do not. The business of an obsequious approach to nations throughout the world-I speak for example of Peking, of Moscow, and of the handling of the United States in the case when our own helicopter was shot down in Korea. and many others I could mention to VOU.
I also would like to mention that concurrently we have difficulties in the Philippines. That is the two bases. Subic Bay, the naval base, and Clark Air Force Base. If we lose those two bases that is a further retraction from the Far East. Though we were successful in getting through approval of the use of Diego Garcia which is in the middle of the Indian Ocean. The Indian Ocean has become increasingly important because of the tremendous amount of raw materials that exi' in Africa. The U.S.S.R. knows this and it is moving there. In fact, is infiltrating al over the world. It is infiltrating into Southeast Asia which is a matter of great concern to the Red Chinese. for example.
The subject of the Panama Canal cannot be discussed without putting it in its overall global perspective because this is exactly the type of operation we are faced with.

DEFENSE ESTABLISHMENT DECLINING
As far as the response of the United States from a global viewpoint, first. of course. i Defense Establishment of some strength and some standing. I can as ure you. Mr. Chairman. that our Defense Establishment has been in a state of decline. When I was Commander in Chief of the Pacific which included Army. Navy, Air Force, and Marine Corps. just for an example. we had 900 ships. Today we have someplace in the neighborhood of 425 ships in our active fleet. The same thing Ia heen happening as far as our Air Force and our Army are concerned.
In the Air Force we have had this continuing deterioration under which we are constrained to use the B-5"2 which is antiquated and over 20 years of age. We need the B-1 and we need it badly or we are not g1ins to have the bomber capability which is so necessary.
I have not heard this mentioned except referred to this morning, but very recently there was a treaty signed between the Soviets and Panama. The criteria of this particular treaty was that the Soviet Union would construct in Panama a hydroelectric plant to provide a base for improving Panamanian economy: second. the Soviet Union has been permitted to build and open a bank in Panamanian territory: three. the Soviet Union may utilize Colon's free zone as an outlet for Soviet merchandise which includes Old France Field in the Canal Zone: and. fourth, the Soviet. Union has agreed to purchase 50,000 tons of sugar from Panama on the conditions described in the pact beginnina in 1978.
So the point I'm trying to emphasize and reemphasize is that the Soviet Union is moving into Panama. One of the greatest and foremost objectives that these people have is to move into Panama. You might





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say in one sense that the use of this canal is a secondary problem. What their real objective is is to surround the Unite(l States which tqnis does. It takes in our southern flank.
Castro is a man of dubious character to say the least. My language in discussing this man's character is not perissible in a forinal hearing of this sort. He is working hand-in-glove with Moscow.
We have a new axis, Senator. It is the Panama axis to Cul)a an to Moscow. All three of these parties are lined up hand-in-glove in the future of the United States and what they want to do. You can rest assured that in the Caribbean we will see soviet submarines. Ie have already seen Soviet destroyers operating in that area.
You might also be interested to know that at the time of the beginning of the actual operation on construction of the Panama Canal, foresighted individuals in the U.S. Government kept a naval presence there.
When I was executive officer of a submarine operating out of the submarine base at Coco Solo in 193(6, we had six submarines that we deployed to the Caribbean on exercises. We had a special service squadron that came down from the United States and continually patrolled through that area. Of course, we had the Army Air Corps in those days. Our Air Force today has bases in Panama in the event matters became more tenuous or dangerous.
Finally, I have heard remarks made this morning about there being 16 so-called "choke points" in world trade. That is so but there are four that stand out above the others. The first one is the Strait of Gibraltar. The second one is the Suez Canal. The third one is the Strait of Molacca off of Singapore. The fourth one of course is the Panama Canal. The British have withdrawn, retired, and gone back into their own shell for reasons which are evident when you study history. Their best blood died in both -World Wars I and IT. It becomes understandable that we now have a situation in the United States Wvhere we do not have the British in between us and the enemy.
When the next war starts we're going to have to be ready to go. There will be no time to prepare under any circumstances.
Everything that I am saving to you, sir, and the committee, is involved with this Panama Canal which right now is the keystone of many of the points which I have made heretofore.
In my statement to this subcommittee on July 29. 1977, I stressed the strategic importance of the Panama Canal and described it as a vital element in U.S. seapower that should be retained without any dilution of sovereign control by the United States over either the canal or its absolutely necessary protective frame, the Canal Zone. To that end. I urged a six-point program for the United States as follows:
First, reaffirmation by the Congress of the sovereign rights, power. and authority of the United States in perpetuity over both the Canal Zone and canal, as provided in H.R. 82: second, major modernization of the existing canal under existing treaty provisions. as provided in H.R. 1587; three, authorization for a delegate in the Congress to represent U.S. citizens residing in the Canal Zone as provided in H.R. 1588.
To digress just a moment, Senator. I think it is very important that the U.S. citizens in the Canal Zone have a representative or delegate here in the Congress.





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The very presence thereof carries great weight. The next point, four, is the restoration of the pre-World War II, U.S. Navy's Special Service Squadron; five, stationing of a unit of U.S. submarines at Coco Solo; and, six, recovery of Old France Field and retention of the naval air station at Coco Solo.
In these connections, I wish to reemphasize the importance of the statement by the late Maj. Gen. Thomas A. Lane, a distinguished strategist with Canal Zone experience, that was quoted in my July 29 testimony. The very idea that surrender by the United States now or in the future of its sovereign control over the canal enterprise would remove the causes of friction is a calamitous misjudgment. Instead, Marxist-Leninist subversion would increase., and probably involve the United States in the use of force to retain its position.
Mr. Chairman, of all the points in the previously outlined program, that of retention of our undiluted sovereignty is the crucial one. Without sovereignty all other matters. including the neutrality arrangement, become inconsequential. We simply do not wish a Suez Canal type of crisis at Panama.
In view of all the facts involved in the complicated situation, the Senate should reject the proposed treaties; and then the way would be open for the major modernization of the existing canal for which project the United States now has full authority under the maintenance factor of existing treaties.
From nmy combined military experience, which includes Europe, Asia, the Pacific, the (Caribbean and the United Nations, it is my conviction that U.S. interests are best served by keeping the canal and by retaining undiluted sovereignty over the U.S. anal Zone, for reasons of defense as well as economic security.
Finally. I would like to reemphasize the importance of the June 8, 1977 letter of the four distinguished Chiefs of Naval Operations to the President that was quoted in the testimony of Admiral Moorer. Their conclusions reflect a vast background, including combat experience, and are more pertinent today than ever. Retired military officers are completely free to voice their innermost convictions. Active duty officers have an obligation to support the policies of their Commander in Chief.
I want to digress just a minute on that, Mfr. Chairman, if I may.
As far as officers on active duty, they must obey the orders of the Commander in Chief. If we ever get into a position in this country, the United States, this great nation of ours, where the military circumvents or disobeys the orders of the Commander in Chief as established by the Constitution of the United States, namely, the President of the United States. we are in for real trouble in every sense of the word.
Of course, any officer on active duty always has the prerogative of resigning.
I might say to you also that there have been times when I have disagreed radically with the high command, both military and civilian, in my naval career. Sometimes it has crossed my mind whether or not I would be serving the country better by staying or resigning.
The only reason I digress into this is because of so much conversation especially in the Washington Post among other fine newspapers that I read.





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Mr. Chairman, thank you for this oppo)rtunfity to express liy v1CW5V. I welcome any questions that YOUi ma : have so that I inav discuss. other aspects of the canal probIlem in greater detail. Thank you.
Senator ALLE-N. Thank you very much, Admiral McCain. We appreciate your fine testimony and youir previous statement oni July 29, 19 V7,. as contained in the record of these hearings iii part, 2 oni page 256. We will furnish you with a copy of that document for your files.
I think you made a very interesting point when we consider the very fine and very forceful letter written by four former Chiefs of Naval Operations taking a very strong stand against the treaty. These four former Chiefs of Naval Operations take this stand whereas we hear nothing from those on active duty. I think you have given an explanation for that. A contrary position would not be viewed with favor by the Commander in Chief.
To me it is significant that as soon as these Chiefs of Naval Operations have been released from these inhibitions that they (10 take this very strong stand-Admiral Carney, Admiral Moorci', Admiral Burke, and Admiral Anderson are each strongly opposed to these treaties.
We very much admire your own distinguished record in the U.S. Navy and we note that you also see the danger and are willing to point it out to this committee and to the Senate and to the Congress Iand the country.
I would comment that unity of command is a key principle of Military organization recognized by all soldiers and seamen. I am wondering if you foresee any problems in providing ani adequate defense for the Panama Canal under the proposed treaty if the defense policy for the canal is designed by a joint military board with equal membership from both the United States and Panama.
Admiral.MCCAIN. Yes, I see grave dangr connection with an organization of that sort and the undermining thereof. It is my firm conviction both from experience and also contact with the armed forces of many foreign countries that there are very few if any that have the discipline and morale and the high degree of integrity that our own officers have.
I would suggest to you, sir, that if we were to go to an organization such as that the members of the Panamanian Armied Forces would be playing a game in some fashion which would be most difficult for us to meet.
Senator ALLE.N.. Would the Panamanians not be able to check any initiatives that our people wanted to take in defense of the canal?
Admiral MCCAJ-N. Yes, but the big point about it is this: If it is established on the basis of a body comprised of officers from Panamamian Armed Forces and officers from our own Armed Forces, and let's say they vote on a particular proposition, and it is to the disadivantage of the United States, the Panamanian Government, under the circumstances existing, from my viewpoint and the fact that it is Marxist oriented, would go against the United States to implement whatever that might be even though those U.S. officers have informed Washington, D.C., of the exact details thereof.





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I do not trust these people at all, Mr. Chairman.
Senator ALLEN. IS there a danger that the canal would in the first instance be taken over by Panama or in another instance that it would fall into the hands of C(ommunists either in Cuba or in Russia?
Admiral McCAIN. Yes, sir. There is grave danger of it.
I think that the very point that I made before about the axis from Moscow to Cuba to Panama would give the impetus and the encouragement for such to happen.
One thing I did not mention. Mr. Chairman-I'm delighted that you brought this up-among other things Soviet Russia is building a large navy. This navy is the means by which she is going to get around the world. This is why we are going to see Soviet naval ships in the Caribbean and we're also going to see them off the Atlantic and pacificc coastlines.
Senator ALLE,. One of the portions of the tremendous amounts of money that Panama would receive under this treaty is $50 million in military aid. This supposedly is to help defend the canal. Is there not dangcrer that this money would be used simply to prop up the military dictatorship in Panama ?
Admiral McCAuN. Absolutely: without question or doubt. I am glad to have been at this hearing this morning because for the first time. I have heard in 1)oth forthright and strong terms the aspects of the whole problem. Believe me. Panama is going to be a cesspool into which the United States would have to put billions and billions of dollars as time goes on if we want to maintain some sort of position of rationality.
Senator ALLEN. ()ne of the justifications for the treaty that has been offered has been that this treaty is necessary to prevent the Panamnanians from engaging in sabotage. violence, riots. or demonstrations.
Is there any assurance that this treaty. which postpones full delivery of control over the canal to Panama for a period of 23 years, will satisfy the same perpetrators of sabotage and violence and demonstrations ?
Admiral McCAIN. My prediction to you is that it would not in any sense of the word. The business of sabotage and terrorism that have become a part of human life worldwide will continue. But I also say to you that the Panamanian Government is not about to engage in such activities because the canal is a gold mine to her-the operation of the canal itself-she needs the operation because she needs the money because of the debt that has been talked about before.
Another point about it is that we cannot under any circumstances. Senator. allow ourselves to be governed in our decisionmaking processes by a fear that second-rate characters will use weapons to destroy whatever it may be that they have their eyes set on.
I want to speak more to that point.
In the Korean War General MacArthur was forbidden to cross the Yaloo River because of a fear of what the Red Chinese might do. You might be interested to know that we could not send soldiers beyond the borders of South Vietnam because we were afraid of what the Red Chinese might do. Now I return and I read that we are afraid to do anything positive as far as the Panama Canal is concerned because we are afraid it is going to irritate the Latin American countries.





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We just cannot live that way. Human beings don't live that way among themselves.
Senator ALLE.N. Isn't this going to encourage other nations to test our will to defend ourselves and our will to resist aggression and to resist unreasonable demands upon the United States all around the globe?
Admiral MCCAI, N. If we take a firm, forthright, and direct stand as a strong man should on this proposition in the Republic of Panama, it will discourage other nations throughout the world from doing the same. What is tragic is that we did not win the war in Vietnam as we should have. That will always be a point that will encourage some nations to continue to do so although I think that reaction is going to pass into the graveyard too.
'While we are talking about this, one of the worst things we can do is take those 20,000 troops out of South Korea. I know what I'm speaking about. I was out there for 4172 years. I was in intimate contact with the leaders of all the countries and the many problems involved. What we are going through with Taiwan at the present time and the possibility of selling it down the river is also bad.
When you consider the Philippines with those two bases that I mentioned to you, I think that one of the biggest objectives on the part of Marcos, who is the President of the Philippines, is that what he really wants to get out of United States is $1 billion or more. I'm not so sure he would ever want the United States to give, up those bases because he knows the future of the Philippines also depends on our presence.
Senator ALLEN. Would not it be much easier to defend the canal if we maintain an adequate military presence in Panama than if we withdraw and then have to have an amphibious landing there to protect the canal at a later date?
Admiral MCCAIN-. If I may be so bold and without appearing disrespectful. I could not agree with you more. If we pull out of any of these places to move back would be practically impossible. I will predict to you that going back would be very near impossible under these circumstances.
Senator ALLEN. Thank you very much, Admiral McCain, for your very fine testimony.
Admiral MCCAI1N. Thank you, sir.
Senator ALLEN. Senator Hatch?
Senator HATCHi. Thank you, Mr. Chairman.
Admiral McCain, I am very happy to welcome you here.
You seem to be indicating that if we ratify this treaty and pull out and turn it over then we are very likely to lose access to the canal anyway within a short period of time.
Admiral MCCAIN.-. I agree.
I do not have to tell you what happened to the British in the Suez. First, the Egyptians raised the tolls and then they closed the canal.
It so happened that in one of my many trips that I was in the Republic of South Africa. They took me out to the Cape of Good Hope. You cannot imagine the swarm of seagoing freighter ships going around the Cape of Good Hope because the canal was closed at that time. You can rest assured that we would be sending them



20-266 0 78 6





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around the horn in equal numbers in order to get tlemn from the east to the west coast.
Senator tHAiCii. That is if the (oiiinounists dolont start patroling that water of the ('ape of Good Ilope because of the policies that we are pursuing in Africa rilit now. specifically with respect to Rhodesia a:nd South Africa.
Admiral McCaIx. If I had my way over again, when I was putting in a strong recommiendat ion wIlichl was successfull-thanks to such very fine individuals as Admiral Moorer who also saw the need--when we got Diego Garcia. I wish now that I had(I strongly recommended the Sil ionstown NavIal Base on the southern tip of Africa.
What the Uinited States does not understand is that we are the leader of the free world and we have to he worldwide in our thinking and in our objectives anid goals. We llave to meet these obligation.
EXClse me. Slr.
Senator ILATCri. Thlats fine.
Here is a lot of conversation in this administration about giving up the DieGo Garcia in the Indian Ocean.
Admliral McCAIX. I know that. But I have found out that when you retire from active duty they pull down the blinds and lock the door. Nobody will let you into the inner councils on a matter of this sort, not that I have really tried.
Witli Diego Garclia thle illp)o'ortance of it strategically is that it puts is right in touch with the oil routes cooking out of the Persian Gulf. It puts us into easy reach of the trade routes coming down out of the Red Sea and past Somnalia in which the Russians have set up a large base. I might add also-thus the need for the Navy and the need for a B-1, which I previously mentioned.
Senator IATC1. Plus the need to maintain the worldwide integrity of the world waterways.
Admiral McCAIx. Yes. sir.
Senator HATCh. There is a desire to normalize relations with Red China and to turn our backs on Taiwan. and to pull the ground troops out of Korea. and to normalize relations with Vietnam. Cambodia. andl Laos. and to do away with Diego Garcia. Then there is the mess that we have created in the Middle East. Now there seems to be more controversy in the Middle East than has ever existed there. In Europe the Communists are out of hiding.
We are supporting Jamaica and its Marxist regime. We are normalizing relations with Cuba.
It seems to me that the last link in the international position of the United States in naval trade or maritime trade is the Panama Canal.
Admiral McCAIX. I agree that your points have great and tremendous weight. Of course. we cannot forget some of our frontiers like Hawaii and Guam and other territories out there.
I agree with every statement you made. I think they are very pertinent and to the point.
I also wanted to add something. The United States itself for reasons that I do not know-and I have done a lot of public speaking on this subject all over the country-people applaud .9,nd then when I get off the stand they say. "Sure. there goes a military mind a.ain"
Senator HATCH. We have had the Ambassadors going all over America and saying that the canal has diminished in value and that it's not important anymore because we don't really use it very much.





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What is the effect of the Panama Canal on commercial shippin, not on the United States but on other nations as well? Wlhat will bev the effect of a dramatic increase in tolls. and what effect is that going to have on other nations as well as ourselves ? What is the coiimicrcial importance of the canal?
Admiral MCCAIN. The commercial use of that canal is highly imnportant.
Let's speak to the United States. There are something like 1,3.00 merchant ships that go through that canal each year. The-e are not all American flags 'by any stretch of the imagination because stupidly we have allowed our merchant marine to deteriorate, in value, as you know, and in numbers of ships. In any event, of these 13.000 to 14.000 ships that pass through this canal 70 percent of them either originate or terminate either on the east or west. coast, of the United States just to give you an example.
As for the other nations that use this canal, it is a lifesaver to them.

CANAL ESSENTIAL I.N VIETNAM WAR
I might say to you too, just to digress a minute, that while I was in command in the Pacific during the war in Vietnam that canal was absolutely essential to us because through that canal came the logistic support for all these very fine young boys we had fighting on the beaches.
Senator HATCH. While you're at it, I have heard that we have only sent very few military ships through the canal in the last couple of years, and that therefore, it's not important militarily. Could you comment on that?
Admiral MCCAIN. I have heard that comment. We are not now at war.
Senator HATCH. I have heard that. also, all over the country. These Ambassadors are claiming that when the American people hear the truth they are going to be for the treaty. I am suggesting that this is not true.
Admiral McCAIN. I agree with you, sir. They do not know what they are talldng about.
One reason there has been a decremse in the number of naval ships. and it has not been as radical as what these. Ambassadors are telling people, is because of the tremendous dropoff in numbers of our fleet that I mentioned.
Senator HATCH. And we don't have the war in Vietnam now and there is not the need for support right now.
Admiral MCCAI.N. No, but we need a bigger fleet because the presence of a fleet does things that you can't do with any other type of instrument of warfare, that is its mere presence has an effect.
I will tell you an interesting story. When I was commander in chief of the Pacific there was a Russian cruiser and two Russian destroyers anchored south of the Island of Lanai which is southwest of Oahu where my headquarters were. They anchored there overnight and replenished. This was in international waters where they anchored incidentally. They got underway next. morning and of course we were following them very closely. They went on to the northwest and later they turned up toward Vladivostok.





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The point I want to make is this. The presence of just a iMaIn-of-war can have an astonishing effect without firing a gun or any other action. What amuses me in life too is that I read in all the newspapers- that they are going to be able to finish off ship~ by planes in a very short time. I heard that when I was an ensin. It was firit stated(l in the days of World War I when planes first came in.
Em not against plane> because 1my father had command of the carier task force under Halsey in World War II when you had to have planes. It was absolutely esential to us. My son was a naval aviator in the Vietnam war. It hurt us badly in the war in Vietnam when President Johnson stopped that bombing in 1968. We finally got it reinstituted in 1972.
The point I'm trying to make is that you need all these elements but ships play and will always play a very important role and it's not understood.
Senator HAxTCH. IS it true al-o that our Navy is going to smaller and quicker. more efficient ship that will be, able to utilize the canal nullifying the argument that the aircraft carriers cannot go through? This argument about our ships not being able to transit the canal really does not make much sense does it ?
Admiral McCAIN. No.
Furthermore. I would hope that oince the problem is settled on the Panama Canal itself and the United States retains sovereign rights thereof that there will be a modernization of that canal so that would take care of all situations.

SUPERTANKER ARGUMENT A SHAM
One of the other points. Senator. is this. It is the supertankers. One of the big points of these treaty proponents is that the supertankers will not go through there. Supertankers can't even go into our harbors. The supertankers anchor out. They pump oil ashore either through barges or through oil lines that go out to the tankers. It was never intended that these big tankers go through the canal.
Senator HATCH. What you seem to be saying is that during the Korea and Vietnam wars that canal had tremendous use.
Admiral McCAIN. It did. sir.
Senator HATCH. Militarily?
Admiral McCAIx. Right.
Senator HATCH. It has always had tremendous use commercially. in war and peace. and it is still a very viable 14.000-ships-a-year canal?
Admiral McCMAIx. Yes. sir.
Senator HATCH. Without it this country will be seriously hurt commercially and militarily.
Admiral McCAIx. Absolutely.
Senator HATCH. If we are going to depend upon the Middle East for transportation of oil which has to go around to Cape of Good Hope to come to our eastern and gulf refineries, if that lane-to use Governor Reagan's term-is "chocked off" by the Russian Navy. then how are we going to get our oil to the west coast unless we have the Panama Canal ?





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Admiral MNCCAIN. In one sense it's easy to say that we can't do it. In the first place I do not think that Russia. despite the number of ships that she is building, that they are goo0d sailors. I do not think they know how to go to sea yet. They got licked in the Tsushima Straits in 1905 by the Japanese. I do not believe that Ruia itselfthe Soviet Union. they told me not to say Russia I might add-the Soviet Union itself has not arrived at the technological advanced state that they have such as the kind of light we have overhead here and the switches that turn it on and other operations. They are backward.
I do think, however, that they are trying to make up in numbers of planes and tanks and soldiers and ships what they lack in technological capability.
But believe me we need that canal and we need it badly. Furthermore, the war in Vietnam was bad enough as it was but it would have been horrendous if we had not been able to bring our supply ships through that canal and on out through the Pacific.
Senator HATCH. A few U.S. warships were not able to use the canal. What would be the effect on the U.S. Navv regarding increased cost to maintain a two-ocean fleet, and the ability of the U.S. Nav-y to move expeditiously to Africa in the event of military involvement or to other areas?
Admiral McCAICN. It would have a deleterious effect. Senator. if that were to happen. On the other hand. I want to say to you that the United States is ultimately going to have to build a bigger Navy. we're going to have to have a two-ocean Navy. Ships cannot be in both places at once because of the Indian Ocean prospect that is coming up.
As you know. we have always kept a fleet in the "Mediterranean.
Incidentally, about the Mediterranean. I have had command of two different ships over there and at no time did I run into a Russian ship. You talk to some of these young captains of these cruisers now-I never though I would call a captain of a cruiser young-they will tell you that when they go into the Mediterranean they never fail to run into a Russian ship. The Russians keep some place in the neighborhood of 60 ships in the Mediterranean Sea. They have a fleet of about 20' in the Indian Ocean.
We're living in a tough, hard, competitive world. Of all the nations that should be standing up. the United States is it by virtue of its background, its history, and its individuals in the lead-like it or not.
When I was commander in chief of the Pacific I used to go out to the Far East once a month. particularly to Vietnam. I used to sit lown in the DMZ and fire-support bases and talk to the soldiers just like I'm talking to you right now. Of course these young American boys are the finest in the world. I was sitting there one day talking to about 40 of them when a sergeant produced a bunch of papers which had been dropped on our lines by balloons from tip in North Vietnam which were quotes from certain characters back in Washington and how they were deriding the war and the policies of the United States.
He said to me, "Admiral, what do you think of that ?" Every soldier was really looking at me. I said, "Sergeant, you know the only reason were out here is to make sure that the United States is so secure that such damn fools can make such statements in security back home."





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S~enato 01 I rIAt(' I couildn'lt la2Tev wVith you V mtIore.
It's aii azinj, to me, how itiani Vret iried Armyl and Navy otheerIls and peopPle wh-lo have had int iimate (oultactt With Ii le o'aiia ant(i who ha Vt.' cuit thle orders~ to u)Ise it and~ who)i know h1ow it works are all ttal lv opp)osed to these I realles.
I support youi a fter lo king at ta most, evry asIpect of thle t Veal jes'. It isg(ood to 5('' i niiiitti IIaledVs like -\,o1il who )are wvill iii to) (o01 ill1 ant~d tell its the truth of these inat ters.
.Adirlal AcmoCxI. I antl jrivile-ce(1 and honored to be here as I said b before, -e' tO.IwsaCI ~e~]() I'l a -01oie ft ") years. ( )ne of
he, finest, as.-ooiations I have, ever had inl mY life has been with SenatoV5 like yolursel.f and the ( h'airmni and ot hers that were here ait that tiline start in~c with IiSelat or thrsn.Ile ( 'hiairina.ii of the 'ArmedI services ( onilittee. Senate or Russell. and~ Senator St ennis and ot hers.
I think tis colnutriv is roln~r to) ho well leecanse of I is~-tiuised si atesit ei like yoiirsel f.
Senator' IIvrc I 1. I hiope you're right. Tihan~k you, sirl.
Senator' ALLEN:. Thank von)I V(1111 11tiuCl. Adniii'a Ma m.W pe
t'iate youlV fine, test iilioiiv andi yourP .oOjpelat l011 With the t'onimittee.
Adill ii'al A-M( ( N. Thaink yolu. Senator. I a ppreciat e it very much.
Senator Aml i,: N. I Insert for' the r'ecor d a stlat ei ment of Mla j Geui. J. Miul R Iobe-t s. I-SAR r~et ired executive di rect or. Reserve O officers Association of t he U nitetd St ates inl opposit ion to the t reaty.
[AMaterial follows :1







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Major General J. M OR 8 USAR, Executive Director Colonel FLOYD H. HA JR- USAt (Ret I, Deputy Executive Director Colonel ROBERT L USA (Ret., Director, Army Affairs
-, Rear Admiral JOHN f. JOHNSON, USNR (Pet), Olector Navy, Marine Corps, and Coast Guard Affairs
Colonel BENJAMIN 5S CATLIN I11, USAF (Ret), Director, Air Force Affairs Colonel A. H. HUMPHREYS, USAR, Director, Retirerpent Affairs Colonel THEODORE N. 'CANAS, USAR, Director, Membership Affairs Captain WILLIAM G. BARNSON, USAFR, Legislative Assistant National Headquarters- MINUTE MAN MEMORIAL BUILDING, I CONSTITUTION AVENUE, N.E. WASHINGTON, D.C. 20002, 20/5/474 300









STATEMENT OF

MAJOR GENERAL J. MILNOR ROBERTS, USAR RET.

EXECUTIVE DIRECTOR RESERVE OFFICERS ASSOCIATION OF THE UNITED STATES


BEFORE THE

SENATE JUDICIARY COMMITTEE SUBCOMMITTEE ON SEPARATION OF POWERS



PANAMA CANAL TREATY




8 SEPTEMBER 1977






84



STATEMENT OF MAJOR GENERAL J. MILNOR ROBERTS, USAR-RET., EXECUTIVE DIRECTOR, RESERVE OFFICERS ASSOCIATION OF THE UNITED STATES, BEFORE THE SUBCOMMITTEE ON SEPARATION OF POWERS OF THI SENATE COMMITTEE
ON THE JUDICIARY CONCERNI14G THE PANAMA CANAL TREATY 8 SEPT. 1977. Mr. Chairman and Members of the Committee:

I wish to thank you for the opportunity to testify before your committee and In such distinguished company. I am Major General J. Milnor Roberts, Army Reserve Retired, Executive Director of the Reserve Officers Association of the United States. The Reserve Officers Association is a professional association of officers of all the armed services, regular and reserve, but primarily consisting of citizens who dedicate extra time and effort to the national defense over a full time civilian career In your local communities. Twice in the last four years, these reservists have expressed their opposition to any arrangement which would result In diluted control, operation, and defense of the Panama Canal and Canal Zone. We believe that this particular treaty that Is before you today Is appeasement In phases which can only whet the appetites of those who would disrupt the peace and freedom of the nations of the Caribbean aftrGeatralteand .South Anerica; asiwell ia dlsrupt-the defense of the United States.

We recognize that the Panamanians are less than happy with the 1903 Treaty. It Is not hard to see why. The Panama Canal cuts through their country like an Interstate Highway through 1'rhome town. It Is a highly visible barrier, even though It Is the major source of Income. On the other hand, we built It, we paid for It three times. We paid off the French Company, the Panamanians and the Columbians. It Is ours In any real sense of the word.






85



The question Is therefore one of giving It up or sharing It. The proponents of the treaty ask, why keep the Cana17 And say that there Is no good reason to keep It. We would rather ask, why should we give It up7 And we say, there Is no good reason to give It up.

We have been told, In essence, that the Canal Is not vital to

our economy or our national defense. and that we cannot defend the Canal against a presumed Panamanian Viet Cong. The evidence used to substantiate these allegations Is presented in a manner which classically Illustrates the old propaganda trick called "card stacking." Much of the evidence Is misleading. flimsy, even Irrelevant. For example, for -what earthly -roason would a submarine officer desire to submerge his submarine while in the Canal. All warsh Ips are vulnerable while In the Canal and always have been.

In a more serious vein, It Is alleged that we have a two ocean j navy and therefore we do not need the Canal. It is also pointed i out that very few naval ships have used the Canal In recent years i and several ships such as the super carriers and super tankers are too large to use the Canal.

In response to this seductive but spurious argument, we point

out that we have had a "two ocean navy" since the Canal was built-and which Is dependent on the Canal for wartime logistical support. Heavy bulk cargoes such as ammunition, fuel, food, and vehicles are used In prodigious amounts In a combat zone. Ninety six percent of the tonnage that went to Vietnam went by ship, over seventy percent of which went through the Panama Canal. A peacetime force uses less than one tenth of the wartime tonnage requirements, much of which Is procured locally, hence the smaller number of ships.






86



We also point out that there have been serious discussions of making the Navy a "one-ocean Navy" because of the high cost of ships which also would be of smaller size.

The risks and costs of a 6,000 mile detour around South America in the event of the denial of the Canal to US shipping would be devastating to overseas military combat operations, particularly In the Pacific. First, the increase in mileage would cut the amount of tonnage received in a combat zone by half or require a doubling of the size of the cargo fleet. Secondly, the detour Itself would Increase the vulnerability of the shipping lanes to submarines, commerce raiders, land based aircraft, and missile armed fast patrol boats. This.In turn would require more naval assets to be spent on sea control missions In lieu of missions related to the strategic projection of national power.

The fact that many of the super tankers and super carriers

cannot use the Canal Is more a liability of the ship than of the Canal. We would also point out that a super tanker of 100,000 tons Is both a lucrative and vulnerable target for military action.

In addition to the naval and shipping aspects of the Panama

Canal, the Canal Zone also features the only major US alrbases for ready access to Central and South America. These facilities are significant not only for the defense of the canal, but for the defense needs of the Southern Hemisphere. We may have need for the Panama Zone air facilities that are related to problems In areas outside Panama. At the same time, we may lose the fields themselves or have restrictions on their use resulting fromirenegottations

of our military presence In the former Zone such as has happened In Italy, Libya, and Spain.






87



On the economic side, we find It hard to believe that the Canal Is not vital to the national economy at the very time that Alaskan oil Is being shipped to a fuel hungry Northeast. We should also note that as much as three quarters of the shipping of some of the Central and South American nations goes through the Canal.

We believe that there can be no doubt that the Canal Is vital

to both our national economy and particularly our national defense. The administration has used the Joint Chiefs of Staff to present evidence of the Canal's non essentiality and Indefensibility. What you hear from the Joint Chiefs Is what the administration wants you to hear and should be viewed as evidence of the discipline and obedience of the Joint Chiefs to their civilian bosses.

The Joint Chiefs tell us that It will take 100,000 US troops, the equivalent of an Army Corps with supporting Naval and Air Forces, to defend the Canal against a determined guerilla threat. The annual costs of an Army combat division In a Vietnam style war Is approximately one billion dollars; therefore the costs of defending the Canal, according to the JCS estimate, Is approximately two or three billion dollars a year.

We must also examine the nature of the internal threat to the Canal. By Internal we mean, from Panama by largely Panamanian forces. It must be conceded that many of the key Ingredients of another Vietnam are there. The high school students form a vocal, articulate, and Influential nucleus with widespread popular support. There are outside groups who would be more than happy to fund, train, and equip Panamanian guerilla forces. There Is a visible symbol of what some consider "colonialism," the Canal Itself.






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One major Ingredient is missing, however. It clearly Is not In the Panamanian national Interest to destroy the Canal. Forty percent of the national income comes from the Canal. Destruction of the Canal would be an unparalleled'd;saster to the Panamanian economy outrivaling crop failure, drought, or a drop In the price of bananas.

A more likely threat to the Canal by Panamanians Is a threat of selective Interdiction or blockade of American shipping by a threat to the ships In the Canal. This threat can be accomplished by relatively conventional landbased forces using short range combat weapons including tanks, antt-tank systems, light artillery, and small arms. The size and shape of the zone as a buffer around the Canal prevents ttils type of action short of actual Invasion of

the zone I tsel f .

Selective Interdiction may also be accomplished by guerilla forces equipped with anti-tank weapons and special demolitions. This military capability will exist regardless of who runs the Canal and must be regarded as a constant threat to guard against. We must take into consideration the fact that as long as Old Glory flies over the Canal In any capacity, there will be those In and out of Panama who will desire to use the threat of closing the Canal to achieve political leverage over the US.

It Is against this latter threat that the friendliness of Panama I s extremely Important. On the other hand, placing Panamanian military forces In close proximity as a matter of treaty right, Increases the capability of Canal Interdiction by unfriendly Panamanian Interest. World public opinion might cause us to hesitate ro move against Panamanian troops blockading the Canal, If those troops were there by treaty right.






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The Canal Zone, as 3 military buffer area Is affected the most by the treaty. If the Zone Is abolished, most of the military Installations and Can&) facilities under the control of the US or ,the US Canal Corporation until the year 2000 will be left In an exposed position. We note that the Canal Zone is unique In the

sense that not only Is It US territory, an agency of the US Government holds the title to the land. This Is clearly Illustrated by the fact that no one may own his own home In the Zone. All those who live in the Zone live In government owned housing and are either Panama Canal Company employees or US military personnel and their dependents.

Much has been said about the Americans who live In the Zone.

Proponents of the treaty say that these citizens have caused considerable unrest by their so-called colonial prIveleges of low cost stores, housing, etc. Some opponents of the treaty Imply that these citizens will be abandoned to some horrible fate at the hands of the Panamanians. We believe that the status of those who live and work In the Zone will not change substantially as they will be covered In a Status of Forces Agreement (SOFA) like American military and civilian government employees are In places alli over the world.

We are also concerned over the financial arrangements of the treaty. We note that some $50-70 million will be paid to Panama from the proceeds from the Canal. This Increase Is allegedly to come from an Increase In tolls of thirty cents a ton. With ships weighing many thousands of Canal tons, the increase In tolls Is expected to be substantial. An upper limit on Canal tolls Is placed In the fact that the tolls must be less than-the costof.a trip






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around the Horn. Since the Canal runs at a $7 million deficit. we

ask whether the American taxpayer Is going to pay di rectly Into the coffers of the new US Government Corporation that replaces the Canal Company? If such Is to be the case, vie have a case of a direct payment to Panama using the treasury of the Canal Corporation as a laundry or conduit.

We should also examine the Inflationary Impact of Increased

Canal tolls on our own economy, which needs no Inflationary I I" I I., pressures, and those of our neighbors to the South who need Inflation even less.

In summary, we find no good reason to give up the Canal and its Zone, and the pro-treaty arguments are unsound, fallacious or frivolous. Finally, we wish to point out that this treaty appears to bo a form of appeasement In phases. It appears to be appeasement to a conjured threat of a Panamanian Viet Cong; a threat which Is more spectre than substance. We know, and the world knows, that appeasement, even the appearance of appeasement Is too tempting a morsel to the hungry hounds of war. It Is also particularly humiliating to the American public to appease anyone so soon after our misfortunes In Vietnam and Angola.

We caution the Senate to examine carefully the exact wording of this treaty and the subtle nuances of the words used therein that describe our rights to keep the Canal open, accessible, efficient, and under our control.





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Senator ALLEN. We are now going to recess subject to further call by the Chair. We are going to hold additional hearing. We feel that the committee is an appropriate forum for the expression of views by leading citizens of our country for or against the treaty and on bothI sides of the constitutional issues.
We invite any representatives of the country to Iiake arrangEein'nts with the staff for possible appearance before the committee to express views for or against the treaty. for or ag-ainst the proposition that the entire Congress, in addition to action by the Senate on the treaty. take action with respect to the disposition of the property of the 17nited States in the Isthmus of Panama.
The administration has suggested that an educational caiiij)aign will be undertaken to sell the idea of the treaty to the American people. We feel that this subcommittee, as I have stated, is an appropriate forum for this educational effort. We do not know when the treaty is going to be presented to the floor of the Senate or when it will be acted on or when hearings will be held by appropriate committees.
I understand the Committee on Armed Services has set hearings on the military aspects of the treaty. I am sure that the Committee on Foreign Relations at an early date will also set hearings.
We believe that we cannot have too many forums for the expression of views by citizens on this important issue. So we do welcome expression of views on both sides of all of these important questions.
Senator HATCH. Mr. Chairman, I certainly agree with you, especially on these constitutional issues. We have actually offered a challenge to anybody who can refute these constitutional points. We would like to hear from you. It is a matter of great importance.
Also I second your statement, Mr. Chairman, that we would like to hear people on both sides of every one of these issues because it is going to help everybody concerned if we do.
I have one other observation, Mr. Chairman. I am hoping that Mr. Solomon of the Treasury Department, who did not show up, will again be asked to appear before this subcommittee. Apparently we have not been able to get him. I think his testimony is crucial.
Senator ALLEN. Very well. At such time as we have a quorum of the subcommittee present, this matter will be considered further. But in the meantime we will ask the staff to make a stronger effort to obtain the presence of this witness from the Treasury Department.
Senator HATCH. I appreciate that and I think we should look into that.
In the interest of presenting both sides of this issue I would ask unanimous consent that the August 15, 1977, Department of State factsheet containing the basic elements of the Panama Canal Treaty be incorporated in the record at this time, and that the proposed treaties be incorporated into the record at this time as well as the miriad accompanying documents.
I also ask unanimous consent that a memorandum prepared by my office to the Senate Steering Committee concerning misrepresentations by the administration as to the Panama Canal be inserted into the record at this time.
Senator ALLEN. Without objection, these insertions in the record will be made.
Senator HATCH. Thank you, Mr. Chairman.





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Senator ALLEX. Thank you.
The subconminittee will stand in recess subject to the call of the Chair. We will probably have another meeting within a week or 10 days.
Whereupon, at 2:55 p.m.. the meeting was recessed.]
[Aforementioned material was subsequently sllpplied for the record :1





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August 15, 1977


Department of State


FACT SHEET


Basic Elements of the Agreement in Principle
on the New Panama Canal Treaties


DefQnse and National Security.

The United States*will have primary responsibility for the Canal's defense during the basic Treaty's term (until the year 2000). Panama will participate, and at the treaty's end our military presence will cease.

-- A Status of Forces Agreement similar to such
agreements elsewhere will cover the activities and presence oil. our military forces.

-- The United States will continue to have access to and the rights to use all land and water areas and installations necessary for the defense of the Canal during the basic treaty period.

-- In a separate treaty Panama and the United States will maintain indefinitely a regime providing for the permanent neutrality of the Canal including non-discriminatory access and tolls for merchant and naval vessels of all nations.

-- United States and Panamanian warships will be
entitled to expeditious passage of the Canal at all times without regard to the type of propulsion or caro carried.

-- Our continuing freedom of action to maintain the Canal's neutrality will not be limited by the Trealty.

Canal Operations.

-- The United States will have responsibility for Canal operations during the period of the basic Treaty.

-- It will continue to have access to and the rights to use all land and water areas and facilities necessary for the operation and maintenance of the Canal during the basic Treaty period.

















20-266 0 78 7





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-- It will act through a United States Government agency which will replace the Panama Canal Company. A policy level board of five Americans and four Panamanians will serve as the Board of Directors. Until 1990, the Canal Administrator will be an American and the Deputy Administrator a Panamanian. Thereafter, the Administrator will bePanamanian and the Deputy, American. Panamanian board members and the Panamanian Deputy Administrator/Administrator will be proposed by Panama and appointed by the United States. Panamanians will participate increasingly in the Canal's operation at all levels.

Economic Factors.

The treaty's financial provisions involve no congressional appropriations. Instead, during the treaty's life Panama will receive exclusively from canal revenues:

-- an annual payment from toll revenues of 30 cents (to be adjusted periodically for inflation) per Panama Canal ton transiting the Canal.

-- a fixed sum of ten million dollars per annum and an additional 10 million per year if canal traffic and revenues permit.

In addition the United States will cooperate with
Panama outside the treaty to promote Panama's development and stability. To this end, the United States has pledged its best efforts to arrange for an economic program of *loais, loan guarantees and credits which would be implemented over the next several years under existing statutory programs. This economic cooperation program would use up to $200 million in Export-Import Bank credits, up to $75 million in AID hou.5ing guarantees, and $20 million in Overseas Private Investment Corporation (OPIC) loan guaranteesPanama will also receive up to $50 million in foreign military sales credits over a period of ten years,under existing statutory programs, to improve Panama's ability to assist in the Canal's defense.