A new Panama Canal treaty - a Latin American imperative


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A new Panama Canal treaty - a Latin American imperative
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United States -- Congress. -- House. -- Committee on International Relations
Hamilton, Lee Herbert
Obey, David R
U.S. Govt. Print. Off. ( Washington )
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NOVEMBER 21-28, 1975
H. Res. 315

FEBRUARY 24, 1976

Print for the use of the Committee on International Relations






T40MAS R VORGAN, Pennsylvanla,*Obwkwao
L. EL FOUNTAIN, North. Carolin L ..R*ap, Ir"W144r; pt
DANTE19. VABOELL, Florida, JOAN H. BUCtU'NA xl*7
RoBUUT N2.,:jQ, NLX, wunsylvkwa JPIERRJE J& DU PQffj 1wal
LEE H. HAXILTON, Indiana .. ...
ROY A. TAYLOR, North Carolina
LEOJ,. RYAN) CaWorrda
DONALD W.-RlEdLE, Jn., Midagaft
STEPHEN J. 801[,ARZ, New York
HELEN S. MZTNFR,,:New Jersey.
PON BOXXXR, WoLghington

MAWAr-A. MA"MCK1, VW Of fit*#
MipHAxL.,H. VAN Dumw,. Subcommittee i9taff 0"",U"t
MzLxziDA 3juwny, Btaff As"statit




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Hourn oir R rsENTATxvxe,
Wawhington, D.C., Febnuary 04, 1976.
This report has been submitted to the Oommittee on International
bRtioms-by a special study mission which traveled to Panama dur-
ing Novemzber 1975 to examine the Panama Canal and the status of
tmty negotiations.
Thlie observations and findings in this report are those of the study
mimics and do not necessarily reflect the views of the membership
of the full Committee on International Relations.
TMoxAS E. MORGAN, Chairman.

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FKuRUARY 24, 1976.
Ohairma, Committee on International Relations,
Waehington, D.C.
Dra ML. CHAIRMAN: I enclose a report on a study mission to the
Republic of Panama which I conducted with Congressman David
Obey of the Committee on Appropriations from November 21 to 23,
This report deals with the ongoing negotiations between the United
States and the Republic of Panama to reach an agreement on a draft
treaty for the future operation and defense of the Panama Canal.
We believe this report will be useful to Members of Congress and
all persons interested in a background study of an important foreign
policy issue confronting the United States.
The findings and recommendations of this report are entirely ours.
Your comments and those of any of our colleagues would be most
Respectfully submitted,
Chairman. Special Subcommittee on Investigations.

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lorword --------------------------------------------------m
Letter of Transmlittal ------------------------------- ---------- v
Prefae .------------------------------------------------------------- x
L Oomtuulcou -----------------------------1-------------------------1
a Deommmndatina ------------------------------------------ 8
IIl. fluding:
Why a new Panama Canal Treaty is necessary -------------------- 5
What are the consequences If negotiations fail?------------------- 6
What are the principal issues In dispute In negotiations for a new
treaty? ------------------------------------------------- 7
1. Timetable for the treaty------------------------------- 7
2. Duration of treaty----------------------------- 8-------
8. Operation of the canal-------------------------------- 8
4. Defense of the canal----------------------------------- 8
& Lands and waters ------------------------------------- 9
6. Jurisdiction----------------------------------------- 9
7. Expansion of capacity--------------------------------- 9
& Compensation ---------------------------------------10
9. Future operation ----------------------------------- 10
What are U.S. Interests In Panama? --------------------------- 10
Economic Inportance----------------------------------- 11
Military importance ------------------------------------ 12
U.S. military facilities and presence In Panama---------------- 12
The Panama Canal Company and its operations--------------- 18
Resultant political interest------------------------------- 14
1. Schedule of activities .--------------------------------------- 15
2. Joint Statement of Principles, by Secretary of State Henry A. Kisslnger
and His Excellency Juan Antonio Tack, Minister of Foreign Affairs
of the Republic of Panama---------------------------------- 17
8. Address by the Honorable Ellsworth Bunker on December 2, 1975,
entitled, "The Panama Canal: Popular Myths and Political
BeaUties" ----------------------------------------------- 18
4. "Panama-United States Relationa" A statement by the Administra-
tive Board of the U.S. Catholic Conference---------------------- 28
L. Press release by the Chamber of Commerce of the United States,
November 12, 1975, regarding the Panama Canal Treaty------------ 30
6. 1908 Treaty Between the United States and Panama--------------- 31
7. Issue Brief on Panama Canal, update of Congressional Research Serv-
ice, October 14, 1975-------------------------------------- 38

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From November 21 to November 23, 1975, we undertook a study
mission to the Republic of Panama, the purpose of which was to learn
more about the Panama Canal and the status of negotiations for a new
Panama Canal Treaty.
During our visit we talked to scores of Panamanian and American
officials and visited the facilities of the Canal. This brief study mission
proved beneficial and useful. While some of our colleagues in Congress
may dissent from the findings and recommendations in this report,
we hope that this report will encourage members to examine this issue
carefully and, if need be, to travel to Panama. Without doubt, Con-
gress will soon confront the important foreign policy issues raised by
the proposed new treaty. The better acquainted we are with the com-
plicated and difficult issues involved, the better we will understand
and promote our Nation's best interest.
We were accompanied on this study mission by Michael H. Van
Dusen, staff consultant for the Special Subcommittee on Investiga-
tions of the House International Relations Committee, representatives
of the Departments of State and Defense, and a member of the White
House National Security Council staff.
We wish to acknowledge with appreciation the helpful and unfail-
ingly courteous support given to us during our visit to Panama by
many Americans, both in the Embassy and in the Canal Zone, and by
several Panamaniamns. Their many efforts on our behalf and their gen-
erous gift of time made this study mission successful. We are indebted
especially to William J. Jorden, U.S. Ambassador to Panama, and
John D. Blacken, Political Counselor to the Embassy.
The findings and recommendations presented here are our own. We
hope this report is helpful to our colleagues and will stimulate further
interest in this important foreign policy issue.
Respectfully submitted,
Chairman, Special Subcommittee on Investigations.
DAvID R. Ory,
Committee on Appropriations.

6h-242 0 76 2

Panama ..



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Tie following conclusions emerge from our trip:
;lfw mnew treaty is not negotiated, American interests in the
CmI will be Jeopardized.
..The choice for the United States on the Panama Canal issue is not
&3I choice between a new treaty and the present treaty, but a choice
bw a new treaty and what will happen if we fail to achieve a new
iqnpw treaty is the most practical way of protecting American
Mtinqta. The greatest danger to the national interests of the United
es would be a continuation of the present treaty. If there is no
neW treaty, we run grave risks, including damage to the Canal or
en closure of it and harm to broad American political and economic

&. A eA.m treaty arrangement between the United States and
Panma for the defense and operation of the Panama Canal is
required if the United States is to have good relations in Latin
America since Latin American countries see a new treaty as a
test of our attitudes toward the entire hemisphere.
Americans make a grave mistake if they see the Canal as only a
poftblem between the United States and Panama.
S& A m treaty is also required for the continued operation of
as o.em, sae. e.icnt Canal.
If a new treaty is not negotiated, we can reasonably expect both a
drioration of our relations throughout the hemisphere and real
ngersm to the continuous operation of the Canal.
4. The timing of the negotiations is very important.
Most Panamanian officials appear willing to differentiate between
concluding negotiations for a draft treaty and ratification of that
treaty in the U.S. Senate and the holding of a referendum in Panama
on it.
While they may be willing to wait until after the American elec-
tions for the presentation to the Congress of a draft treaty, they are
less willing to accept long delays in trying to reach agreement on a
draft treaty. The more we delay or attempt to frustrate negotiations
for a treaty, the greater the likelihood that negotiations will stall and
that the parties on both sides will be forced into extreme statements
which will make the situation more dangerous and the issues more
difficult to resolve.

5. A treaty which is mutually beneficial for the United States
and for Panama should include the following elements:
(a) It should replace the existing 1903 treaty with a new relation-
ship which:
(1) Gives the United States primary responsibility for the de-
fense and the operation, of the Canal for an extended period dur-
ing which Panamanians will play an increasing role in the opera-
tion and, eventually, the defense of the Canal; *4
(2) Insures the continuation of aEwopen, effije, i4., ere
Canal which is available for the trade and cnmmerceaos. fsl p
and COMM
(3) Gives Panama its appropriate political, economic, ap 9jar
isdictional role in what is now the Panama Canal Zone. '
(b) A new treaty should guarantee for American resident. if 4
Canal Zone and employees of the Panama Canal Company job& tt
for their working lifetimes and normal benefits therea .
should also seek to offer Canal Zone residents a lifestyle bconparai t
in as many respects as possible, their current Iife situation in a rei
now totally under U.S. jurisdiction. ..
(c) It should acknowledge Panamanian jurisdiction in the Ckiih
Zone (although for the duration of the treaty, it would guarants iad
specify the right of the United States to use lands, water, ad aaifrsace
which may be necessary for the defense and operation of the Pmmaui
Canal). :.
(d) It should provide Panama with a just and equitableshare:4f
the benefits derived from the operation of the Canal and any auxilsay
(e) It should also provide adequate authorities and proedu r
making improvements on the Canal, and for determining toll It is
assumed tolls may increase substantially in the coming years, flt-
ing inflation, increased operation expenses, and abnormally low t61
in the recent past. F !
6. While the Panama Canal is not as important strateiclt
as it once was, it remains a valuable economic and military afset
to the United States. v
During the Vietnam war, it served as an important logistical artery.
Many of the defense functions currently performed in the Canal Zene,
however, could either be performed efficiently and effectively ehe
where, or be eliminated or consolidated. '.0
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1. The debate over a new treaty in the United States should
concentrate on what is at stake for the United States.
aMym opponents of a treaty focus largely on debatable legal aspects
of the issue, claiming the Panama Canal is sovereign U.S. territory,
ut like Alaska or other parts of the United States. Ii fact, the United
Stats has neither ownerhip nor sovereignty in the Panama Canal.
Bather, the 1908 treaty gave us rights. Those rights are in jeopardy
now because over the last several decades Panamanians have increas-
inlf objecbd to their country being cut in half by a strip of land
where Americans have exclusive rights and where American law rules.
It is not difficult to imagine how Americans would feel if the United
States were forced to tolerate the existence of a 10-mile-wide strip of
laMd on each side of the Mississippi River which was under the juris-
dite of a foreign power. We would not tolerate such a partition and
neither will the Panamanians continue to accept it.
Soreignty and ownership are not at stake for us in the Panama
OaL We have never had either. The only sure course to preserve
rigte in the Canal Zone is to work with the Panamanians to negotiate
a new system of relationships which can allow for the continued effi-
ciet and secure operations of the Canal. The present treaty does not
ins~~urether a safe or a secure Canal, given Panamanian opposition to
the present treaty.
2. While it may not be possible to reach agreement on all sub-
stpnive issues in a new treaty before the 1976 elections, earnest
gotiationns should continue in an effort to resolve the major
outstanding issues and reach agreement on a draft treaty.
Such a course is preferable to waiting and drifting. The real question
is whether Panamanians, who are being provoked by anti-American
groups, will patiently await the results of our elections and subsequent
ratication of a treaty.
3. Supporters of a new treaty must work to educate the Ameri-
can people and Members of Congress about the need for it.
To date, most of the discussion has come from opponents to a new
treftaty who wish to preserve the 1903 treaty and the rights they feel
were guaranteed by it.
Three groups must be particularly active in support of a new treaty:
(a) The executive branch-particularly the State Department,
Defense Department, and the White House-must work to present
the merits of a new treaty. Spokesmen of all three groups should
leave adequate time to discuss the proposed treaty both before the
Congress and the American people.
(b) Members of Congress who support a new treaty need to
explain to their colleagues the importance of concluding a new
treaty and to indicate why a treaty is needed.
(c) Other Americans, especially those with important busi-
ness interests in Panama and Latin America. who see the npee

for a mutually beneficial treaty, must become better orgiI,
better led, and more vocal. The recent resolution of the U.S.
Chamber of Commerce supporting a treaty should be reinfo
by a campaign among those in: Co-ahgretupportive of the Amer-
ican business community's interests. Such an effort should Aps
on why a treaty is in our political and economcv- i i LetT ...
4. Over the coming months the U.S. military -o6 ad W W
Canal, SOUTHCOM, should intensify efforts to tonsolidatr ad
streamline operations and facilities in: the Canat Zone. - a::I 1: "
Many of the present facilities have martial utility 0r:our, V
purposes. The Commandant of SOUTHCOM Aid the i rj
the Canal Zone have begun a process of trying to remove ir..n. ..
dealings between Americans and 'Panamanians min the Cal 4ep
These efforts should continue and be expai&di a the com wg rnp|994
as we attempt to move closer to reaching an au.greemean. A0%:
treaty. x .:J ,. f:l .. ,
5. Members of Congress should examine this lssu er$fIZ
and consider visiting the Republic of Panama and tallndwritI
Panamanian officials and Americans working in Panana ,i.u
A treaty must be considered by the' Senate and both "yau
Congress will be asked to approve implementing'.legisltit d
to the Republic of Panama and to the Canal Zone dffer tti'cli
opportunity for members to educate themselves on an imporlih'ffth':
eign policy issue confronting this country. We suggest Tiat"tti IS'
include talks in the Canal Zone with American officials and: fe"ft&fith
with American Embassy officials, Panamanians, and America wu-'
nessmen who live and do business in Panama. .W
6. Members of Congress should be aware that their"e :oid
on the Canal are closely followed jind widely report-i n W 19
Panamanian press. .... .i
We are persuaded that it would be wise to refrain frim 0stta-O.6"
and actions in the next several months that might prejudice aA ti
tions and even hamper the ability of our negotiators to insure that:. odr
best interests are preserved in any new draft treaty. ..il
Both Houses of Congress will have ample time to take atioviN this
issue after the provisions of a draft treaty are presented to them ftr
consideration. To seek to prevent a draft treaty from even beiuA -
mitted to Congress serves no useful purpose and can only. harm p...
national interest. .,
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In 1908, the United States and the Republic of Panama signed the
Hsy-Bunau-Varilla Treaty which granted the United States a strip
of land 10-rmiles wide and 50-miles long for the urpe of construct-
aIg, operating, maintaining, and defending a Ianal between the At-
intic and Pacific Oceans and which gave the United States rights as
"it it were the sovereign" in perpetuity on Panamanian soil.
Today that treaty and the relationship that it produced is over 72
yers old. The treaty led to an engineering miracle, which has served
the United States and Panama well; it also led to an American gov-
ernmental presence on Panamanian territory which now causes seri-
otdffene to Panamanians.
While some Americans argue that the 1908 treaty has served the
test of time and there are no good reasons to replace it, the terms of
the 1908 accord do not reflect, the major changes that have occurred
in Panama, the United States and the world. In the 1970's no nation
can continue to accept a treaty which permits the exercise of extensive
extraterritorial rights in "perpetuity." We cannot expect Panama to
1tise to accept what no other state will accept. The reasons for
icteaing Ptnamanian opposition to the present treaty are apparent
a d. understandable.
dThee are several reasons for negotiating a new treaty. Among the
IloM hhportant are:
St j(a) In order for the United States to protect and promote its
i"Anly cruoil national interest in Panama-an open, efficient, and
Secure Canal-a new treaty is necessary, in part because of the
u united position of the Panamanians and in part because if we want
Sa secure access to the Canal, we need a cooperative arrangement
with Panama.
(b) The Republic of Panama, an important and staunch friend
&atd supporter of the United States, wants a new treaty. Four
American Presidents have been on record for 11 years as wanting
'to conclude a new treaty relationship. Without a new treaty, con-
nued friendship with Panama will not be possible. We will be
Itng for confrontation with all the risks that course can pose
for safe and open Panama Canal.
(e) The major concern of the Panamanians is an end to the
concept of America having rights in 'er 'ty" in Panama md
S US. jurisdiction over the Cnal Zone.This concern cannot be
-addressed in any reasonable fashion without a new arrangement.
If we choose not to deal with it we will have a confrontation with
Panaa. If we continue to init upon our rights in perpetuity in
Stoday's world, we are launched on a dangerous high-risk course.
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6S6-242 0 6 3

(d) Over the last several nmionths, Panama has ibtabfe:'
portant and diversified international support for a .n ew
The strong and unequivocal support of all Latin m:nerk az .'
for Panamanian aspirations, auo-nggess that serious pa
in our hemispheric relations will resultom a failure t coalit
new treaty. Rejection of a treaty that protects vital 7.8 interests.
will lead to a deterioration of our relations with all ain.Aatkb
can nations. ". .4 .; ..&..: ;: i
(e) The United States has a unique op amxtnty t Mtit:L
treaty on acceptable terms. If'this opportunity is lost .hdt.r.k
falter, there will likely be another wave of anti-Anle.aaSpa
Panama and resumption of treaty talks, a few years fdo M.it.
an atmosphere less favorable to the United States and1 iflliiA
ducive to preserving for us the essential that we want, nr%'
sponsibility for the operation and defense of the Canal for uk.. i
fled period of time. V .'.
In brief, a treaty which satisfies the legitimate interests oua -t
Panama and the United States is a realistic policy, ad a in
positive step toward a mature relationship: between the neW
and the countries of Latin America. ... I.
The issue before the United States i.. not betwee.t avgig
treaty and continuing the present treaty, but i tei 1eti. ,
tions that will lead eventually to a draft treaty d10 .w04
the likely consequences of no new treaty. , 1.i a.
The treaty of 1903 gave the United States certain rigts, n,-
tory and not sovereignty, in Panama. It is those rig hts tht sty,:.
subject of the current negotiations. The current A". t 41rPM R
nations has at times, produced a climate between the iTIA. .Stu. a
Panama that could undermine our rights there in the fhtultie 2 we
fail to reach a treaty that will redefine our .elatio'ship and i,,,4,M ,
the future, we run the risk of a confrontation that can on! eil ...
distrust and jeopardize our national interests in the CanaM it ....r
Such confrontations have occurred in the past because f this issue.
They occurred in 1957, 1964, 1975. In 1964, over 20 peope .id' in
events relating to Panamanian frustrations over the IO. ZaD. .
its inhabitants. More recently, demonstrations of a lare and incre
ingly vocal student population have become a pr$lJem. Wtte
students are not united and they represent polif'cal orgaztions
across the entire political spectrum, although mainly on h le de,
they are united in the view that a new treaty is nessary inow. It is a
matter of national pride and dignity to all Panamanians. ......
While negotiations have been in progress and there is h6p. that a
new treaty is possible, the Government of Panama hasbeiwllg to
deal with the more outspoken and violent activities of stuadent.gr.ups
But as each month..., passes the Panamanian. Government is under in-
creasing pressure to product, tangible signs of progress, If it peeives
a complete impasse in the negotiations, the Government might be
unwilling to pay the political price for containing demonstrators.

Demonstrations against the United States last occurred in Septem-
ber 1975. At that time students demonstrated against our Embassy and
-ha proceeded to demonstrate outside the Panamanian Foreign Min-
"sry, two easy and natural targets for frustrations over the absence
Although only minor damage was done, the message was clear. If
we a unable to draft a mutually acceptable treaty, we run the risk
0f bec ming engulfed in an uncontrollable confrontation between
Americans and Panamanians in the Canal Zone. Such a situation
could easily produce bloodshed, as it did in 1964. If a confrontation
occurs, both Panama and the United States would lose precisely what
we both are intent upon preserving-an open, secure, and efficient
Canal available for the trade and commerce of all states.
Nxw TnATnI
Our discussions with American and Panamanian officials focused in
detail on nine specific issues involved in efforts to negotiate a new
Neaty. On some of these issues, differences between the United States
ad Pamma have been resolved and, on others, intensive negotiating
itill needed.
The nine issues are:
Since 1964, both the United States and the Republic of Panama have
bem committed to the concept of a new treaty and the necessity of a
eoumpnhesive modernization of their relationship. Between 1964 and
1967, three draft treaties were negotiated, but none were ever signed by
thei parties and no effort was made to seek ratification. In June 1971,
another effort to reach a treaty commenced at the request of the
Ttjoas Government which came to power in 1968. However, a new
U.S. treaty offer submitted to Panama in December 1971 was rejected.
One year later formal negotiations resumed. Little was accomplished
in this new round of talks until after Ambassador Ellsworth Bunker
wu appointed U.S. negotiator in late 1973. Since then, substantial
propss has been made.
hA fia stage of the negotiations ended in February 1974 when Secre-
t of State Kiiner went to Panama City to initial with
lbi Panamanian Foreign Minister a set of eight principles which were
to serve as guidelines in working out the details of a new treaty.1 The
simig of the eight principles had a significant and positive'impact
on Panama's confidence in this new effort to draft a mutually accept-
able treaty. Many Panamanians felt for the first time that they could
nsgotate on grounds where they knew they would get something new.
'Alr the delineation of these principles it was relatively easy for
the parties to identify the major issues that would be the subject of
detailed negotiations.
2m appoiaxn p. T.

For the past 20 months, %, o, Anba.d.Aor.mB'sa.
meeting periodically Vwt PaamapT.Sn 4*AA^
differences and pzapam.5 .fd.i- r
have resolve4.smprme.,.enms but q. ._. s iap: .,. .. I
From the Panamanian viewpoint, these negoti4:t a
not progressing fast enough toward t1oend of 197AT .
way had been made. They saw tha negotiatio as an LIMePai
ess, dating from 1964, with the major issues nresodved
manians question the sincerity and commitment pf thetnM .'?
to a new'treaty. 4. ,, ..II
Some Panamanians now appear willing to:4. Ay,.r&*
a new treaty until after the 1976 Presidential geletios i .
States, but they remain uneasy about what lies beyond. -,.g...W.'
the assurance the United States can give that it intends to negojia
earnestly toward the end of 1976, the greater thei.bility ad. NI
ness of the Panamanian Government to accept the delays and to I.l
with the political activists who argue that violence is a better patM p
achieving Panamanian rights in the CanalZne. i* ,,... ',,ri...
The United States needs to pay particularly close attentim to.n4m
timing,. momentum, and substance of the negotiating .proces. da
the coming months. Substance and progress c ai be given, otlAtb..
now without necessarily concluding negotiations and cata .g ji4
ical problems here in the United States. : .i.
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A key issue confronting United States and Panamanias negotiators
is the duration-of the, new treaty., Panamanian leaders wanbta mad
duration and oppose any treaty period extendi.g beyond .tii n
the century. They object strongly to -a 5O-ypa erm for tbe trxaV .
SSome progresshas been made on this ssue but further .larimjied
are needed. It remains possible to havi& a fixed term for the opeti
of the ..Canal, and some residual ability beyond t:iw ter -A- .. if4
United States coul4 retain certain rights, to defend tin C1a.' j
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The negotiations will also focus on the rights req red frtI$ U$
States to be alt, $Wring the term of the treAtw to ?4i a n -
tain an efficient Cianal .... : . , 7, .y
SDuring the course of &e niegotiaiions t t Waieiu i-QeMi
has been made on this issue. Te: UniWtd Sta -wi 1 Wti
sponsibility for the operation of the Cana dtrg f.e term of '
treaty, but as tin progresses .trained Painamanans will be 1r
ingly filling positions. Retiring A:merj .Cp empmo ees, W bere aq4
in an orderly manner by Pawnaelan citizens,: T prxedt -e
minimize loss of jobs anl. 1iirgdeale, dislocaiqsus ,O^*i41Pan
.. . .. ' '., 0 *' S-H
During the course of negotiations, Panamanian officials him ai-
pressed appreciation foi America's concern about the d6 fei6 the

anal. They appear willing to grant the United States primary respon-
sibility and necessary rights for the defense of the anal during the
duration of the treaty. Although Panama will be able to participate in
the defense of the Canal to the extent of its capabilities, the 8,300-man
Panamanian National Guard is a small force, incapable of dealing
with some of the threats our forces in Panama now are prepared to
handle. Our present military presence numbers about 22,000, counting
Although general progress has been made on this issue, there will
be several questions relating to personnel and base issues that can only
be resolved when negotiations on other substantive issues are
The size andti location of land and water areas the United States will
need to defend and operate the Canal during the term of the treaty
remain undetermined in the negotiations. Much of the land in the
Canal Zone and some of the facilities are not required for the defense
and operation of the Canal and could be returned to Panamanian
Jtirisd action.
This aspect of the talks may take considerable time, and will involve
redu ction, elimination and consolidation of some existing facilities,
bt, if otherr issues can be resolved, these geographic issues can prob-
ably be resolved expeditiously. It is uncertain whether the United
States will seek to retain control over the entire Canal and all areas
adjacent to the Canal or whether only isolated areas of control will be
sufficient. In any event, Panamanian jurisdiction would apply and
something like a status-of-forces agreement would provide the basis
for a continued American military presence.
During the course of negotiations, agreement in principle has been
reached that jurisdiction over the Canal Zone will pass to Panama
during the term of the treaty even though the United States will retain
the right to use certain areas necessary for the defense and operation
of ti Canal itself.
The major unresolved questions are when and under what pro-
cedures current U.S. jurisdiction will terminate and what functions,
if any, will be performed by the United States after its jurisdiction is
trmnated. With agreement reached on the principle involved here,
which has concerned Panama for decades, the format and technical
procedures for transfer can be worked out.
During the lifetime of the treaty there will be a need for additional
capital investment in the Canal and for the United States to have
normal operating rights for minor improvements.
In the negotiations, several questions need to be resolved, among
How would any possible enlargement of the Canal be achieved; who
would pay for it; what rights the United States has to make certain



changes; and what will. .e the .pr. .urf.,Ip.. r.q .-wg
.. .. . .~~~~~ ......... .....: : .: . .
In addition to the pi posal for jan.,.i i
cost of $5 billion, tee are less ]mbitii aor s. <
improve the ca i hee ex aip 6 h tin g UTan a. e
of third locks, for example, migt cost i the ii.
billion'. "" .. ..
i T -- -* """ti :' "; ....-': "**v *. ;- r- ..... .- t...*.: ~t : :: :SS!
However, given recent declines in Canal us- and ..iar i,
any major expansions, small projects to fac.'lit e..ane ip 4
annual number of ship transits to around b26,000p, frh! t, "
nearly 15,000, might prove mdie prcMtical $szce Iluent
suggest that 26,000 transit will be:ealized only in 200:" >"' .
Not enough is known about future patterns and trends i. ln
and what changes in Canal capacity night prove adva.aC.
treaty should leave open options for. needed alteratioi ig11kibg
& dot iii ',n,.j
? 'f : "" i. ..*: .*".i;;" *, ." : ,'*.::* [ i i' h
C ENSATIO ..... . ...
In return for use of the Canal: and athe prv g i& tlw C($fn
the United States has, over the years ine.1, p'rbvidq|
benefits to Panama. The unresolved questions in the nsw r
negotiations are the form anid th am;Ait of the 1. .fil
Under terms of the original treaty, Panaia Was pro'i. ..
amount of $250,000 annuy, Whicr raised t $1.9 milli
and has since been adjusted for inflation to $2.3 million. UnitE4tgiI
and Panamanian officials agree that thesi"e amounts do not re.
adequate compensation for the future, althi6uh recent ON
levels over $20.jmillion annually make aid .to tiii unry ot,,i s
2 million people, on a per capital basucivery higl. ,, ? 4&".i..,,,,
While no agreement has been reached on this matter, ..aMIA
have occurred and, like a few other issues, settlement should b. A s
when the crucial rights and duration questions are resolved. A ,i
** ,,. .. : .: ....,'* *:-...., ,<. .i ., .ii .-tA,( : ,
,: ,9. FVTU!E OFRAIIONS .. ,, ...
While the new treaty relates more directly to .S. riWi .ft
ileges for a fixed term of the new treaty, it will be jn m .
define in the treaty, or an annex, a mutually ah cpe betJW
cerning the Canal's continued neutrality aid nond Ncrinrat
ation beyond the duration of the new.treaty.. Such., a, ebnt "I.
amanian intentions for the future, it it can be pAd,.a a
a mutually acceptable foriuli can be ound.r its ar.iuls4
serve a useful purpose. An open, secure and efficient Pana..
as much in Panama's interest es any other state and' thet.t''
suasive reasons for Panama to be specific. in defining its .ong'.i
objectives. t. 01,O "i
Since the Panama Canal op0n'd im 1914, it has probd Pa. 'iii
tant economic and strategic asse t6 tflg Unlf& State6 i'.
although its value and significance have varied as the wobrd e
ment has changed. 7 . ,, 4,, .,,','l.. .:
s *? ,-*" ,I .:L

" ..:: :i~::ii~iiiiiil

,, ::, ii


F ,

The real intent of the United States in the Canal are to have a
COat that is open to the world's shipping and protected against inter-
kaal dispu, that operstes efficiently and profitably, and that is
AI'bl. Beyond that, we want fair treatment for the thousands of
Americans who have served fithfully in the Caal Zone.
The Panama Canal has long been a vital artery for world trade.
Of the total cargo tonnage transiting the Canal each year, about 35
per _t gos to, or comes from, ports in the United States. Put another
way, that tonnage in some years has represented about 17 percent of
ttl U.S. export and import tonnafe.
Panama also has benefited economically from the Canal More than
80 percent of Panama's foreign exchange earnings and roughly 18
'iea of its gross national product are attributable today to the
&7na. In recent years the sham of Panama's GNP attributable di-
stly or indirectly to the Canal has shrunk, as other sectors of the
Panmmanma economy have expanded more rapidly. At one time, for
ap ole, over one-third of Panama's GNP was derived from the
Thidy the Canal continues to have significance for the United
States, because of the extent to which our seaborne commerce uses it.
Th is true despite a declining need for the Canal in intercoastal
trade and the existence of competing modes of transportation.
SBut the availability of the Canal for commercial shipping is even
more important for several countries in Latin America and Asi
whose economies are more dependent than the economy of the United
States upon foreign trade.
Despite continuing commercial interests, two factors may affect the
continued economic importance of the Canal for world ti-rade. First,
for the Canal to be economically viable tolls will have to be raised
in the future. Tolls for the Canal, which had remained amazingly con-
tant since 1914, were first boosted by 20 percent in 1974, but still other
increase will be necessary. At some point, it will become more eco-
nmical to use alternative routes for several commodities that now
transit the CanaL In the United States, this could mean more trans-
continental shipments.
In brief, what may make economic sense for covering Canalopera-
tkmi and generating more income for Panama may not keep Canal
b snes and use at present levels. The number of Canal transit has
already decreased in the last couple of years, a result, at least in
part, of the worldwide recemon.
If tolls are one factor in the future economic importance of the
Canal. the sie of ships is another. Neither supertankers nor larw
cargo ships with bulk cargo or containerized commodities can use the
CanaL The economic of scale in shipping some commodities may mean
that the Canal will become less important in the years ahead
.T possibilities however,. do A les@ the continuinog economic
significance of the CanaL No sate kne. bettor than Panama the im-
potance of continuing to have an efficient, economically viable and


politically neutral Panama Canal. nyehauge:intf
Canal or its cloi.eoud cause spious.or*teAmtn
trade and eaoud4l1r..ei uns blow to P amu .r A zdrats
Because so many peoples and natimw sinihribICrit.
be hopeful .that baztg a calamity, tfi C iaalwMliWat a,
asset for years to come, whatever treaty arrangemnts exist: b i
the United States and Panam. i. .. i
'IC .. .ittx .. .. ...
s ," ;' '.: "fllT K "fp fS- H r ".** ""* 3 .ai i

The Panama Canal is also important t-tlhe security iwtSSI*
United States. : . *.,. ,. .. .. : 6 1-wn isd *'a w
During World War II, the Ken war .and teViet.azn .
Canal..made' easier the .ift militaryia, .aiaup
Atlantic to the PaEji.wu .. jias ., .... r. c 0::. ai..
In ..recent years i$.e favors haNi 4ijnisiahed *3 ta
portance of the.Canal. Thrqe areiwprti mintioni g: r ni i i a.a
.First, oier. the years the (Canaij .bias become mwr mul msnbl#
tile attaek. In-any qonfnMtion, Ir.+ared!< mn.iit`. .4'4L
easily. nd quiellybe ,elosad for apqriod of ma~j, t Eafl
or by sabotage. In an age of arms proliferation, international: M
and large-scale demonstrations a ripEd)itsnetd, j0 lt
tial disruption by only. a Ea klledi sbateurs.,: :i 4. -,.v,,, NI ,,
The increasing vulnenlab4ity o.-the.a, a.. I o$I4qd
development of alternative muites in 1lobuJcntiugen yIjUil
of military forces and supplies., .. ".' .: i
The likelihood, is that when we would needh th0 Oaal, tI
less likely to beavailable. .*. .. .:1. M .
Second, even though the Canal was originally a4vot. edOIN
of naval mobility, the United States has relied ls on u. a ia
and more on the development of faets that Qould &pente sp .b
the Atlantic and Pacific Oceanp. At ,.
The contribution of the Canal to naval mobility cOntimues q, ZJ
Vietnam war demonstrated, but its significance may fr. ,.,pq.
once was. Nevertheless, if the Canal become un.rPliable. f we., 9L
for indefinite period$, signifCant changes in nalai.m .gai
requirements could result [ : ..,-
A third factor impinging On the importance of the"ina: i.,.
purposes is the growing importance of aircratt,pav rs a
submarines. Lage' rc rftrMers cannot ue tlhe 04'An
submarines would have to surface during any 'twls.a!#*
fore not likely to use the fcilitytunder aty eiretdstm.ees
would tend to diminish the if"portatie tht.eajk iR. 1'WiM.
poses, but not necessarily for logisticflexi6 ..,, t I IC ,'
Despite these 'cobsfiieriti'o'ns WsthfCA Citill^ A &6tS
&onsiderable militaei and stei'' ik icane 0 1iieni
t S. C .M..L.T T R V"A::i <,SA rW:. : rW : 14 *'AI rfc, I
.. ".,"r' .; : .. r.::- *.-. '. "0. "0 "
The" United States Msg hak Military forced a)it,. h '..
Canal Zon. that form ait iw tant.part tf iuvr*%l
P anam a. i . *n: ... .:.....

....... :g


'** III



' i-

. There is today in Panama an American military presence of approxi-
tfely 22,000 persons, including dependents. The actual military force,
both combst and support, of some 9,400 is both too large and too small
for most military contingencies, either in Panama or in another coun-
tr in the region. It is too small for most contingencies involving a
t nvasion in the region or for the protection of the entire
m hostile fire or sabotage.
.It is sufficiently large that it has the potential of creating several
peacetime problems in our relations with Panama.
Our forces in Panama have access to an extensive series of facilities
in h Cmanal Zone-several airfields, naval facilities, communications
eates and an advanced military training school for officers who come
to wtnama from friendly states throughout South and Central Amer-
Hict. Wlej6 many of these facilities are essential for the military to
naqf out its mandate in Panama of protecting the Canal, others are
not used and appear marginal for our needs. These facilities represent
ai substantial investment, reaching into the hundreds of millions of
dolls Several of them could be consolidated without adversely affect-
iwt ability to defend the Canal.
If under anew treaty,; arrangements are made for the close coordi-
nOSp& of United States and Panamanian military activities for the
dmf.n of the Canal, the military needs of the United States in
Panom will be changed dramatically and the character and deploy-
naifef U.. forces in the present zone or a new zone will be very
f:Wle the Panamanian National Guard, Panama's only military or
c tbulatry force, cannot today protect the Canal and perform its
Hks critical functions in Panama, it can, with modernization, de-
dop the capability of playing a greater role in the defense of the
Caal It is in our interest to play a major role in the trainingand
development of the national guard.
'VTh engineering miracle of the Canal and its efficient operation are
thework, in large part, of the Department of Defense and the Army
Cops 'of Engineers. The corps and its senior representative, the
emnor, run the Panama Canal Company and administer the Canal
Zse The Panama Canal Company is responsible for less than 4,000
American employees and their rough 1,000 dependents, most of
wom live in the Canal Zone. Some of these employees' families have
bes residents of the Canal Zone for almost three generations.
Those persons who maintain this remarkable operation and help
run the Canal Zone Government can be proud of their unique achieve-
mht. Their efforts have served the national interest of the United
States over a long period of time and under varying and changing
chacusanes.. 4
'The interests of these Americans require careful consideration in
s Sent negotiating procaL 'Above ulla new treaty should address
explicitly the unmedlat. eoomic and job-security concerns of these
atizngs lb,; in n some Ctse have already given their best and most
prilu yesft to the PasaSma Canal Company and who fear what
N;aypappeu to themselves T~1der a new treaty.

B6-E4 0 76 4


These Americans have the wright to eXpect that sthlvirM mtat 4
will be represented ii all discus between P.'wma *ad *1.
States but they should also recogietat there willbe hagei
coming years and that the lifestyle they have enjoyed ay be
significantly in the future .. .. '.
Many of the economic and social disparities that tueptlyi
guish the Canal Zone from Panama will be .t. 4wwjr.14aqIMvV)
cooperative arrangement, especially at those areas where. the AI
Zone presses against, and curtails the normal growth oIf, P.saa
two largest cities, Panama City and Colon.L. .
Over the years, the Panama Canal Company ..and its cijlMW:.
ployees have maintained the Canal. Under any mutually benqciaj
treaty, the continued, help, expertise and management .1.il4n.
ican personnel will be essential for the smooth. operation of the J
The humrn skills in the Canal Zone are even more iprVqrtt
facilities themselves. While the percentages of .Panam. in1 M .
Panama Canal Company and the number of hihesrjTeVi..
occupied -by Panamanians will increase in thecomp ing yei
the current employees should be dropped without Va4equate
tion and job alternatives because of a new treaty arr an T4
In short, the Panama Canal Company and its em is
portant interest of the United States which, should Npted*
new: treaty. The Panama Canal Company s nployees wll beeN
in the future to run and maintain the QanaJ train ..qahl4
nians for future positions, and preserve our national i. L.
Panama. At the same time, thpse Zq*nians, American rdwtttI
Canal, must realize that our nationa.injuterest and pnrpou& EtN
today includes a mutually acceptable new treaty for the pav1B i.ph.u.
~~ ~~~ . ,, . . ,, : ",: ....... a..,. ...
defense of the Canal and the developmentof a ner. and imatawe
tionship with Panama. .,., -0,. ,.-i.(.4 Ai
A critical need in protecting our interests in Panama the 'iY6Q
ervation of close relations between the United States andii.
based on mutual respect and trust, 1. ." ,-,.
Over the years, since 1903, the original Panama Cw Xreatqx
served to undermine gradually American-Panamnian goodir,
have seen that goodwill erode, to the point of brief, hostile, and4 b..i
encounters several tims.. Each .time we run greaterl4.iks in
ing our interests and friendships in Panama and thrugho.t t t.a*l
icas. The Panama Canal issue involves, not just the Uuite44tM#
Panama, but all of Latin America, and the shipping countries pf e
world. 4 ..
The continued operation of the Canal, in many rescts, Mis aela#
the degree of cooperation or auniosity which exists in Panazn-
viable Canal operation in the future depends in large part. ,
dence of Panama in our bilateral relation .sip. Erom the Fatmnu 4an
viewpoint; that trust and conljdence will depeu..n. i. vlsn .
of a new treaty. L.k.. b .r.. .: .. .. ** .i .:.: 1. .. .
There is, therefore, no reasonable altprxative tJi t ihivtoi frylag
to negotiate a new mutually acceptable treay thq, coatj.h
tion and defense of this vital artery. Inw t MP tM
we develop a more modern and mature relationship with one oour
best friends in Latin America.


SCMnNi or Acrnznsm
E L Is H. Hamilton, Member of Conres
BoB. David B. Obey, Member of Congress
Dr. Michael H. Van Dusen, Staff Consultant, Subcommittee on Investigations,
Committee on International Belations
X,, M eBad B. Howard, Department of State
Mr. Letle A. Janka, National Security Council
Mr. George M. Andricos, Department of Defense
Friday, November 21, 1975
1:10 p.m.-Arrived Tocumen Airport, met by Embassy Control Officer, John D.
Blacken and Liedo. Fabian Velarde, Information Coordinator for Canal
Traty Negotiations, Office of the Chief of Government
S:45 pj.-Called on Ambassador William J. Jorden, followed by briefing by
3-JI Staff Briefing, American Embassy:
Wiuan J. Jorden, United States Ambassador to Panama
Raymond B. Gonsales, Minister-Counselor, Deputy Chief of Mission
xoam D. Blacken, Political Counselor, American Embassy
oL Paul P. Ooroneos, Commander United States Military Group Panama
George Bubles, Acting Director, Mission of the United States Agency for
International Development
5 :15 pin.-Departed for Ambassador Jorden's Residence
5:80 pjL-Met with Ambassador Jorden
T7:10 pa.-Departed Ambassador's Residence for Presidential Palace
7 :80 p.m.-Dinner hosted by President of the Republic, Demitrios B. Lakas
PIrva- iw in. Attendano W4 Presidetial PaSoer
Ing. Demetrlo Baslilo Lakes, President of the Republic of Panama
Dr. Jorge Illueca, Foreign Policy Advisor. Ministry of Foreign Relations
ledft Jose de la Ossa, Minister of Housing
LieS, Luis Carlos Norlega, President of the Electoral Tribunal
Justice Julio U. Harris, Justice of Electorfal Tribunal
Iedot Nicolas Gonsales-Revilla, Ambassador to the United States
Licdo. Ricardo de la Espriella, Director General of the National Bank of
ledo. Lu!s C. Pabon, Director General of the Savings Bank of Panama
Uaedo. MIguel Angel Picard Amind, Member of the National Legislative Com-
n Amscanimo Vlllala, Director of La Victoria Sugar Mill
Lido Mario de Dlego, President of the Panamanian Chamber of Commerce
Mr. Augusto Boyd, Busineman
Saturday, November 2, 19M
9 .0 a.m.-Office call on Dr. Carlos Lopes-Guevara, Adviser to the Panamanian
Treaty Negotiators
1080 a.-Mesting with American Businessmen:
Mr. JoeqI* Qtlgle, Director, Bank of Boston
Mr. Alvin Robins, President, Metal Furniture Manufacturing Firm
Mr. Harold Sander, Architect, President, Sander Associates


12:30 p.m.-Luneheon at residence of John P. Blacken-Guqst iqcluOG:., ests
Guiermo Chapman, economic and Mangemept ConsauliWt :. -
Fabian Velarde, Ohief Information Coordinator for i ial Treaty NsS-
tions, Office of the Chief of Government, Omar TLbrf..o. : s J :: J:
Dr. Carlos Lopes-Guevara, Adviser to the Pasamwania Cak.ial ...
Dr. Jorge Illueca, Foreign Polty AdrA .Ministry ot Foreipn W :A "
Sherman N. Hinson, Political Section, American Embassy .
D. Stephen May, Political Section, Amerikan flbapy ; H :::':: I
3:00 p.m.-Briefing by Panamanian MinSter oft Pl6aring and EpnccncPle I,
Nicholas Ardito Barletta ,, ..,,
5:00 p.m.-Called on Archbishop of Panamk, Msgr. Marems McGrath
7:00 p.m.-Buffet Dinner at residence of the Deputy Chief of Missi' u.iu3er-
Counselor Raymond E. Gonzalez-Guepet included: .' 7 *. :
Mr. John D. Blacken, Political Counselor .... . ... .., ,i., it
Mr. Dean Butcher, Canal Zone Labor leader : ,. .*.* .. ...i.r.sI
Mr. Jorge Carraso, Journalist "'' *
Mr. Edwin Fabrega, Director of Pwer Com pawlforner R$* MWk
Minister W''
Mr. Roberto Gonzalez-Revilia, BusinesSman ''i ..*
Mr. George Rublee, Acting. Director,AAID :,

Sunday, November 23, 197 j (r
8:30 a.m.-Left for Canal Zone ..' ... ...
9:00 a.m.-Visits to Miraflores Locks and other Pacifi sieAe ii.t"ik 4& Ah
Panama Canal Company and meetings' with governor Il .M .
Lt. Gov. Richard Hunt, including a briefing on, te Pane y
and its operations. .. ,. .
12:30 p.m.-Luncheon hosted by Lt. Gen. Denis McAuliffe 7
United States Southeru Command .. .
1:30 p.m.-Activities planned By U.S.* Soutier u d nitnd .i.. ...
2:00 p.m.-Helicoptpr trip around the entire Canal Zone .. . ld,.
4:00 p.m.-Departed Howard Air lorce Base; Canal fnI S o frog.C.
S 4 . ,
.. *.* >.. .ti.:rw .. ,.t.. .*.. J ,
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<. '


"'1 f



Joint Statement by the Honorable Henry A. Kissinger, Secretary
of the United States of America, and His Excellency Juan Antonio Tack,
Minister of foreign Affairs of the Republic of Panama, on February ?,
1974, at Panama.
fle United Bttes of America and the Republic of Panama have been engaged
i Megotlations to conclude an entirely new treaty respecting the Panama Canal.
negotiations which were made possible by the Joint Declaration between the two
puntries of April ,& 1964, agreed to under the auspices of the Permanent Council
e the Organization of American States acting provisionally as the Organ of
(Coslntation. The new treaty would abrogate the treaty existing since 1908 and
Its subsequent amendments, estalishing the necessary conditions for a modern
relatonship between the two countries based on the most profound mutual
rnet Since the end of last November, the authorized representatives of the
two governments have been holding important conversations which have per-
nmitte agreement to be reached on a set of fundamental principles which will
serve to guide the negotiators In the effort to conclude a Just and equitable
treaty eliminating, once and for all, the causes of conflict between the two
jcqtrft -
The principles to which we have agreed, on behalf of our respective govern-
meats, are as follows:
1. The treaty of 1903 and its amendments will be abrogated by the conclusion
oftan entirely new interoceanic canal treaty.
t L The concept of perpetuity will be eliminated. The new treaty concerning the
lock canal shall have a fixed termination date.
& Termination of United States Jurisdiction over Panamanian territory shall
takeplace promptly in accordance with terms specified in the treaty.
4. The Panamanian territory in which the canal is situated shall be returned
to the Jurisdiction of the Republic of Panama. The Republic of Panama, In its
capacity as territorial sovereign shall grant to the United States of America, for
the duration of the new Interoceanic canal treaty and in accordance with what
that treaty states, the right to use the lands, waters and airspace which may be
nee ry for the operation, maintenance, protection and defense of the canal
and the transit of ships.
5. The Republic of Panama shall have a Just and equitable share of the benefits
derived from the operation of the canal in its territory. It Is recognized that the
geographice position of Its territory constitutes the principal resource of the
Reptc of Panama.
F Te Republic of Panama shall participate in the administration of the canal,
In accordance with a procedure to be agreed upon in the treaty. The treaty shall
also provide that Panama will assume total responsibility for the operation of the
and upon the termination of the treaty. The Republic of Panama shall grant to
the United States of America the rights necessary to regulate the transit of
shis through the canal and operate, maintain, protect and defend the canal,
and to undertake any other specific activity related to those ends, as may be
agreed upon in the treaty.
T. The Republic of Panama shall participate with the United States of America
in the protection and defense of the canal in accordance with what is agreed
upon in the new treaty.d
& "o. UW"ed .8tatsto Ameria and theRepublic of Panama, recognizing the
important services.:rendetqd by .the interoceadc Panama Canal to international
maritime trife, and bei.t in mind the poeiblity that the present canal could
beco Inadequate for aid af shall agree bilaterally on provisions for new
pr0e '*thlch will enlarge canal capacity. Such provisions will be Incorporated
In th.e ew traty. In aneod with Us e aepts established In principle 2.


... j:: :':.:. +

::.' ..... : .. . i " A ":~ V 5
"* "' .. .. i,
I am here today to' discuss t.th.you the Panama.gqO, ,
It is a controversial. ub Jet tt. has h oqm. oin
opposition. r .: J" .bt
But my travels in mthe United-States, the lett c r6t;t4,
concerned citizens. tie ar.,itic.s I read in "ope prss, *D:hu3
consultations with Congresfen have 'bnyi6r0 d 1 r Tha i.f`'J.
this oppositiocstems.fir ..a number of false-impresfos*U#Ul'I.
the basis for our presence in the Canal Zoqne. ,: ,,,,
Because of this, I would like today thik, abop t"ietW -
.*;.. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ k i h. -. A : "- *'" :si 3 *vi,^ ^ w
ground of the problem we face and comment on'tii'l
im-w f a, come -vn so- tij "I iiH
myths surrounding the canal treaty and negott4'!o,,,2,,:;',,,
And I want to talk about the political realities wb"clsb
it desirable, in my judgmiient, to bring the negoiaisoaW.#SAP
and satisfactory conclusion. -, .,1t
By speaking to you today I am depacting from W tpflt '*
have long followed. .. ,, ,' ... <. t flnk
Previously, while serving as a negotiator, I have av 4
, .. . * . ': ". : "[ ^ d L
making public statements. .,. if,. .,,. ii,
I am here today because, this egotiationigs uiqfl ,'"1t
., : ..,.. rr -, s ; .. *.+ .* <:: . .... l .::* i t; i }~
No effort to improve ouw policy concerning the .icariit
succeed without the ftilrl Understanding and SUportbttif C te
gress and therAmerican people. ., ,.' -.. 'T
Our presence in the.,cna, has .consttuen.y *anUMk.
American people but our negotiations to solve .... a i..r or
1 ft *3. 9" W
there do not. .. . ,, -.,-ti,'rfr ;1
So, if we ,are"to gairr support, W*emust fi444ftt ,
candid and reasonable public discussion. ^ ,Ai -dt
.. : ... ; . i *.. .. .. v j : ... : -*^ .t.J |lli
t.i ... *,i .-. *.:,, ; i '*. :H t
t gi ar ago ..... -,: ,.ft ",,.; : i14 < ,"j 1" ,T
Our story begins 72 years ago. sM, .::fl ,, 3
In 1903 the newlyrndependent IRepu.bic otk:daAaufl&
.... ,,i ***li.... :.= :- :. ; L .. ,, ,f "t .. . .;.:,.:.S~ '.., ) l !.: :,t. +;+.
granted to the United States i the .!iy- 1au-,r.Aa .-gy..
a strip of land 10 miles wide andO 50 mlstIe l.... r .lWM 9 r ,
..:,.* . .. ,. ,, <,, *^ *:.0< ';, ,.{ " i- n ,+,, :+ + n ;, *,, "' i !',"w- i
tion, maintenance, operation aod'proteoton:.ofatan.aIbotweet d ::l
the Atlantic and Pacific. :

.. ......



The treaty also gave the United States in perpetuity -
the right to act within that strip of land "as if it were the
It was quickly and widely acknowledged that the treaty
favored the United States.
When Secretary of State John Hay submitted the treaty to
the Senate for ratification he said:
"We shall have a treaty very satisfactory, vastly advantage-
ous to the U.S., and we must confess, not so advantageous to
For many years Panama has considered the treaty to be
heavily weighted in our favor.
As a result, the level of Panama's consent to our presence
has steadily declined.
And by Panama, I mean not simply the government, but
the Panamanian people.
The Panamanians point out:
First, that the existence of the Canal Zone impedes
Panama's development.
The Canal Zone cuts across the heartland of Panama's ter-
ritory, dividing the nation in two.
The existence of the Zone curbs the natural growth of
Panama's urban areas.
It holds, unused, large areas of land vital to Panama's
It controls all the major deep-water port facilities serving
And it prevents Panamanians from competing with Ameri-
can commercial enterprises in the Zone.
And for the rights we enjoy on Panamanian territory, we
pay Panama only $2.3 million a year.

Second, that the Canal Zone infringes on Panama's
Panama says the privileges exercised by the United States
deprive their country of dignity and, indeed, of fuM independence.
Within the Canal Zone the United States operates a full-
fledged government without reference to the Government of Pana-
ma, which is its host.

.B. .. ..


It maintains a police force, courts, ard jails to enforMe > 1
United States laws, not only upon Americas, bt on P i
ian citizens as well. '. rw.
And, the Panamanians point. out, the treaty says; the
United States can do all these things forever, ,.... b.
Panamanian frustration over this situation:has indaseWad:'
steadily over the years. ; . :a
In January 1964, demonstrations and riots toOk ace: ::j
which cost the jives of 21 Panamanians and 3 A.e ricn.. q n n. cuo
Diplomatic relations were broken. I.
As part of the... settlement we rieachpe .with Pa'ima-hen,#:r
President Johnson, after consultation with Prnesidents.. Twuma.n a'
Eisenhower, committed the United States to negoati a .iew "

treaty. M.r .sd
In our negotiations we are. attempting to.ly the foanda- .....
tions for a new a more modern relationship whirtlsM tf4lj
Panamanian cooperation and better protect our interests. -
Unless we succeed, I believe that Panama's consent to buuri -
presence will continue, to decline --.and at an ever more rapid rate.:
Some form of conflict in Panama would seem virt.aqy1
certain and itwould be the kind of conflict which.woud .be d
costly for all concerned. ",
Sow some have held that the mere mention by United
//S~tates officials of the possibility of violence.pverthe,,::i
(?/rv Canal will help to assure that such violence occurs.
I am aware of that concern, but I believe the situation.:::,
demands candor.
It would be irresponsible to fail to point out to the Amerin- '.
can people the possible, indeed the likely,,. consequences of in-.
action 3
It is my firm belief that failure to conclude a raqksnable
treaty can only work to damage the interests we seek. to.t Ppropt04..:C1
As we contemplate this situation we should understand
that the Canal's physical characteristics make itwulnerable.
The Canal is a narrow channel fifty miles long. ,i.n
J t aperatesby 4,he. gravity flow of water Ari .ep..ds for its
efficient oparatiog on an. integrated systemof lqsk; d@av #o4
other vital *fci.ities. ..,j, :" t ..: .,.... ..t j
.,, / At best7 i s sus-eptible t -imierruptwn., .r. .b:t
And interruptions would mean not only..,d.Oed w -(|j
world shipping but lower revenues.


But the most enduring costs of confrontation over the
Canal would not be commercial.
Our Latin American neighbors see in our handling of the
Panama negotiations a test of our political intentions in the
Moreover, the importance of the Canal, and our contribu-
tion to it, are recognized throughout the world.
It is a measure of our standing and the respect in which we
are held that people everywhere-including, I am sure, yourselves-
expect the United States to be able to work out an arrangement
with4JananW that will guarantee the continued operation of the
Canal in the service-of the world community.
Were we to fail particularly in light of the opportunity
created by the negotiations we would in a sense be betraying
America's wider, long-term interests.
The plain fact of the matter is that geography, history and
tW economic and political imperatives of our time compel the
United States and Panama to a joint venture in the Panama Canal.
We must learn to comport ourselves as partners and
Preserving what is essential to each;
Protecting and making more efficient an important
international line of communication;
And, I suggest, creating an example for the world of a
small nation and a large one working peacefully and profitably
in sum, we are negotiating because we see a new treaty
/ arrangement as the most practical means of protecting
Sour interests.
If we try to maintain the status quo we will face mounting
hostility in both Panama and Latin America, and possible loss
of the very interest we want to preserve.
But a new arrangement based on partnership promises a
greatr assurance of safeguarding that interest a Canal that is
open. safe, efficient, and neutral ..,
The real choicee before us-is not between the existing treaty
and a new one but rather between a new treaty and what will hap-
pewif we:should fail to achieve a new treaty. .-
These, then, are some of the political realities we face in
Panama. ,' .. i ..

.**MYTH AND REAI'UTY:z. *.: 71
"- I... H
We must face political realities here at home aA .llI. nf
We know that a treaty must receive the advice and jtsenims
of two-thirds of the Senate of the United States. i.'.
And we expect that both Houses of Conress will be askedij
to approve implementing kegislatiorn. .
There is opposition in Congress to a new treaty it reflecamii
to a considerable degree the sentiments of many citizens. .I t1i ,qxs9
Our job is to make sure that thepubNc an d OnrWesu4d*Miw
the facts they need if they are going to. make wiredecisitrsaW N-i)-
the Canal.. :, *,, .- W ".
Unfortunately, the basis for our presence in the Zoneos ir;
widely m misunderstood. A..: ": ,, i. "..:." "' " A
Indeed, a number of ;myths have been uHttp.oer the:
years about Panama's intentions and capabilities, about the nesdi
for perpetuity, and most :important about Qwnershjp-daisdqrf
sovereignty. A-
We need to replace these myths with an accurate unt-r: I
standing of the facts. .. .:', :-,q., .
'" yirst, there is the matter of Panama's intentions and
-\ capabilities and the suggestion that a new treaty ...wil-ki
Cj somehow lead to the Canal's closure and loss.. ,
The fact is that Panama's interest in keeping the CanAi...,.
open is far greater than ours. ..1 k.
Panama derives more income from the Canal than from
any other single revenue-producing source.. -. .
Even so, some argue, Canal operations would suffer .
because Panamanians lack the technical aptitude and the inclina-
tion to manage the operation of the Canal... : s' Ci..A:
The fact is that Panamnanians already corptis overthme-Y
fourths of the employees of the Canal enterprise.. ; i
No one who hasbeen to Panama and seen its increasinglyr'A
diversified economy can persuasively argue that theoJnamaniansrso
would not be able to keep the Canal operating'effectively and
efficiently, *',. L ": : ..i -: bn ;
These considerations indicate thatPanama'&Iparticipatiow-s
in the Canal can provide it with a greater incentivoto help keep
the Canal open and operating efficiently. 'A


In fact, the most likely avenue to the Canal's closure and
loss would be to maintain the status quo.
SSecond, there is the notion that the Canal cannot be
adequately secured unless the United States' rights there are
guaranteed in perpetuity as stipulated in the 1903 treaty.
I can say this: to adhere to the concept of perpetuity in to-
day's world is not only unrealistic but dangerous.
Our reliance on the exercise of rights in perpetuity has
become a source of persistent tension in Panama.
And clearly, an international relationship of this nature
negotiated more than seventy years ago cannot be expected to last
forever without adjustment.
Indeed, a relationship of this kind which does not provide
forAhe possibility of periodic mutual revision and adjustment is
bound to jeopardize the very interest that perpetuity was designed
to protect.
Third, and finally, there are two misconceptions that are
often discussed together: ownership and sovereignty.
Some Americans assert that we own the Canal; that we
bought and paid for it, just like Alaska or Louisiana.
If we give it away, they say, won't Alaska or Louisiana be
Others assert that we have sovereignty over the Canal Zone.
They say that sovereignty is essential to our needs that
loss of United States sovereignty would impair our control of the
Canal and our ability to defend it.
I recognize that these thoughts have a basic appeal to a
people justly proud of one of our country's great accomplishments.
The construction of the Canal was an American achieve-
ment where others had failed.
It was every bit as great an achievement for its era as send-
ing Americans to the moon is for ours.
It is an historic success that will always be held to Ameri-
ca's credit.
But let us look at the truth about ownership and sov-
The United States does not own the Panama Canal Zone.
Contrary to the belief of many Americans, the United
S States did not purchase the Canal Zone for $ 10 million in 1903.

Rather, the money we gave Panama then was in return for
the rights which Panama granted us by the treaty. **.. :-- ,t
We bought Louisiana; we bought Alaska. In Panama we0
bought not territory, but rights. .i,
Sovereignty is perhaps the major issue raised by oppoher~ts:"
of a new treaty.
It is clear that under law we do not have sovereignty iM
The Treaty of 1903 did not confer sovereignty, but-speak:
of rights the United States would exercise"as if it were sovereign."
From as early as 1905, United States officials have ir,"
acknowledged repeatedly that ?anama retains at least titular soy-"
ereignty over the Zone. '
The 1936 Treaty with Panama actually refers to the Zotwe
as "Territory of the Republic of Panama under the jurisdiction of.
the United States." A
Thus, our presence in the Zone is based on treaty rights,
not on sovereignty.
It is time to stop debating these historical, and legal
questions. .- ,
It is time to look to the future, and to find the best means
for assuring that our country's real interests in the Canal will be
What are our real interests?
We want a Canal that is open to all the world's shipping.. -,;
a Canal that remains neutral and unaffected by international ?
We want a Canal that operates efficiently, profitably,
and at rates fair to the world's shippers.
We want a Canal that is as secure as possible from sabo-
tage or military threat.
And we want full and fair treatment for our citizens ,
who have so ably served in the Canal Zone. .
The negotiations we are now conducting with Panama for
a new treaty will ensure that all these interests of our country are
Let me now talk a bit about where we are in the negotia-
During the past two years, the negotiations have proceeded
step by step through three stages.


Stage 1 ended in early 1973 when Secretary Of State
Kissnger went to Panama to initial with the Panamanian Foreign
Minister a set of eight "Principles."
Since. then, we have used these principles as guidelines in
working out the details of a new treaty.
The best characterization of these principles came from
the Chief of Government of Panama.
He said they constitute a "philosophy of understanding."
Their essence is that:
Panama will grant the United States the rights, facilities
,and lands necessary to continue operating and defending the Canal;
The United States will return to Panama jurisdiction
omr its territory; and arrange for the participation by Panama,
over time, in the Canal's operation and defense.
It has also been agreed in the "Principles":
-That the nexttreaty shall not be in perpetuity but
rather for a fixed period;
That the parties will provide for any expansion of Canal
capacity in Panama that may eventually be needed; and
That Panama will get a more equitable share of the bene-
fits resulting from the use of its geographic location.
Stage 2 involved the identification of the major issues
under each of the eight principles.
Agreement on the major issues, concurred in by the De-
partment of Defense, provided the basis for substantive discussions.
Stage 3 began with our meetings in Panama in June of
1974 and continues.
For over 16 months now we have been discussing the sub-
stantive issues involved again, with the helpful support of the
Department of Defense.
Indeed, our most senior military officials regard the part-
nersl6iip we are attempting to form as the most practical means of
preserving what is militarily important to our country respecting
the Panama Canal.
We have reached agreement in principle with the Pana-
; manians on three major issues:
Jurisdiction: Jurisdiction over the Zone area will pass to
Panama in a transitional fashion.
? ** *: i ':i :, .


Th&Jrnttd4 Stes*Wm 1ftih.hthaidifalkIp.:utb wM.a
necessary for the opantion, maintenance amiiernse of theiM ,A
Canal Operatiqn: Dutrik.rtlthe ea.yItei.m 1ii
United States willI have $hepiipi resposbity otbntteera-
tion of the Canal. ..:' .I:
There wi I : be a growing participation of tPanamanian na-
tionals at all levels in day-to-day opptjonsin ptopat oiy
Panama's assumption of responsibility for Canal operation at the
treaty's termination. ....A *
The Panamanian negotiators understand thatitbr* aNrva0
great many positions for which training wiUl be.. required o | nv e-;j
long period of time, and that the only sensible course is for PaM *.
manian participation to begin in a mnodest:way and grow'gradually.
-Canal Defense: Panama recognizes the- importan-ast
Canal for our security. .o
As a result, the United States will have primary responsi-
bility for the defense of the.anal-duijg the life ll th, Treaty.
Panama will grant the United Statesj 'use rights" flor Pdei ;li
fending, the waterway; and Panama will I participate4p Canal
defense in accordance with its capabilities. s : i 1 4;J.1%
Several othfier issues remain to e resol
They concern: ,
,' _' 'J'. i t ' .. *. .. .. f s '" -,. *:; > B, l<".:
The amount of economic beriefits to Panama;
The right of the United States to expand the Canal
. / I .- ...'...* ::*^.: %: M.T : "I ,. .:.** .. ,.. 0: K. ....*
should we wish to do so; .... .
SThe size andI ocation of the T'a'nad water area4: w HIP
; ;w - " " ** : .." ; '.. *j ':-?
need for Canal operation and defense; .... '
A mutually acceptable formula.for ttiCanalj's neutrafTty
and npndicriminatoryoperion of the Canal after the treaty's
termination; and ..''..
Finally, the duration qf the new treaty.
Quite obvious, we st4i have much to do to resolve the
.. .: ., / ... '.. :., jr . *: ..t <* *o- : .I y ...\
Although we have no fik d timetables, we, are proceed 4
with all deliberate speed.
We are doing so with the full support othe L'' pariment of
suport otthe ...ppartmeqt o
. ,: ^ '*. ; :' .: .. *' ,,: : :', ; i* r t .'..., 1 b. ; " .; .
While I cannot predict when completion o a raft treaty
will be possible, I am persuaded that a new treaty which sattsTt
our basic interests is attainable.



Though a great deal of hard negotiating will be required to
complete a satisfactory agreement, we are confident that our ef-
forts will produce a treaty which will be judged on its merits and
will be approved by the people of both countries.
The stakes are large.
They involve not only the legitimate interests of both the
United States and Panama and the future contribution of this
important waterway to the world community.
They involve as well our nation's relations with Latin
America as a whole and the credibility and reputation of our
country as a force for creative leadership.
America has always looked to the future.
In the Panama Canal negotiations we have the opportunity
to do so again:
To revitalize an outmoded relationship;
-.... To solve an international problem before it becomes a
crisis; and
-To demonstrate-'the qualities of justice, reason and
ton that have made and kept our country great.



'.O.. :... .Jaa SJI 5*.Ma. 4. ? A
r'f 7 0 ^ 1r??. tW -'A n ^~ydi'-'- ai '1'acy~i p
Tim BOAin, tl4nnz 'SrAkTES Otikc'10if i
1975 ii J.t 4r '
The United States and the Republic of PanamaarkfetQe&ftte*Sytil a*&tw
negotiations regarding a *treaty 1 tiuv*Wing tipe &anhma.
imperative-a matter of elemental social jusdicea- & new anls Z JM
treaty be. negotiated. T2 f
The history of these negotiations spans a seventy-year yeii^ k
the original Treaty of 1908 by which the 'United States assumen vS MI M
eign and perpetual control over the heartland of the anamanalan IwLes Eard.
recently, in February, 1974, the two nations .igqed the K]ilnterTt
ment on Principles, which provides d' sigi aHte"s:::i
Why is a new treaty imperatiwilQ-ie. 0firstpta.1,of., "O".
of dubious moral validity, drafted as it was when internatinl afi
quently determined by precepts oW powir. SInc that thim, Mud tefiplB
years that have passed in this enturyiw htt opes ".:.
independence or have established fuhetiodal edntrol qver elr,
treaty has remained essentially unchanged at the insistence of the 1101,
of the two parties.
In the second place, a more ftiudameital Iofe Is th right of Stery it to
utilize its natural resources for htes 44e7elopinwt ltkts people I I Sgta-
cyclical Pacm In Terris, Pope John XXIII emphasized this ba jlo
international justice which had been strongly affirmed in the pre!
declaration otf the U.N. General Aqsmpnbly Rewsu Ofp 1 ,80%, DFl eI9 e M,
1962). nations the Holy rather stressed, Mhave the right to ayi
part in the process of their OtiMdeetpmBifa aentt ir io ,i4
oppress others or unduly meddle in their affairs."
The principal T natural resource of Panama is and always has been its geo-
graphic location and its configuration. The treaty of 190 established a monopoly,
rin perpetuity," in favor of another government over the principal natural Lb-
source of the RepubHe of Panama.
The question, therefore, lies in whether or not we accept .the fact that Panma
Is a a free and independent nation. As such, her claims over te Canal area .s..
simple consequence of her basic right. In other words, if we:aceept! thei right o
Panama over her territory, then instead of Panama negotiate ing with te United
States to obtain for herself some compensation for the use of the Canal and ft
Canal Zone, it might be reasoned that negotiations should be. the ot heru
around. The main benefits from 'the Canal should accrue to Panama, as a nation
with principal control over its natural resources, and a fair compensation shold
accrue to the United States for its investment in Panama.
Besides the political, social and cultural consequences of the 1 treaty' at
argue strongly for a fundamental revision of U.S.-PNanmanhn reriw eco-
nomic considerations are also considerable, It is worth reviewing, in this reg-fard,
some of the main benefits that accrue to each side as recently cited by the
Archbishop of Panama, Marcos McGrath, C.S.C.:
The Canal Zone, which measures roughly 10 by 50 miles in area, is the heat-
land, the most valuable economic area of Panama. Present use represuit. a
significant waste of this natural resource; only 3.6% of the land is occupied
by Canal installations; some 25% is not utilized at all, and 68% is desiMognated
for military use. For this entire territory, including 14 military bases etalhed
without any negotiations with Panama as to their location, the United States
pays an annual $1.9 million, as contrasted, for example, to the $20 million paid
annually for three bases in Spain. ,l .
Since 70% of the goods that transit the ( o ,al come from or go to U.S. ports,
the non-commercial fees, frozen until this year at the 1914 level, have repr esented
an annual saving to U.Sf. commerce of $700 million. In this woay, Panama, A poor
nation, is subsidizing the richest nation of the World an d world commerce Ifn
general.oi onn r as o e. t i .t .n t2. )


S The mvnlp to the U.B. Armed Forees in the use of the Canal in the sixty
RUan si.ne its inauguration are calculated Ln excess of $11 billion.
Tb. U.S. military Investment In the Canal Zone is more than double the total
'L Sei Investment an seW that goes far beyond any notion tof mere defense of
tboe CkanaL In fact, the U.S. Southern Command, located in the Canal Zone, is a
tralnin enter for military from all over latin America and a nerve center
of military contact throughout the continent. Surely military baue established
within a nation should be the obe at onetUato.
Nearly 20% of the grow national Income of the Republic of Panama derives
frm the Canal Zone economy, mostly In indirect form, through smalariee and
Mt rise and fall of thIs Income aeowgw to fluctuations in building and
a operations within the Canal Zone, factor beyond the control of the Re-
:puble, has a strongly distortingt effect upon the Panamanian eaomy.
'{li mSues property and Income in the Canal Zone are exempted from Panamanian
| taW1.*e wostnn of 1Panma Is deled a major sorce f revenue As a
reI i t, it has not been fully able to undertake programs of economic infrustruc-
^ ||iii tor- i- and noefo-economic development particularly for the impoverished rural
NI lftf Odfehe oboezr oinnf do it' attempt to treat MU questions rbnc to the
F Am a bans, tham kdo e to place the question within an oeralln m-
textaet laternatonal MocIdal justice.
rar vpeas Im t oe w d, which s come emly with Justice In the world, It I.
l essential that we etoea of the United States, Including our Eleted represents-
WvMp nttea tas Panama Camal IaeI with the same moral sensltilvty we
si wid apply to itoea l Jutle. within or own society.
'i| -OtitlmOel rI.e to the ew treaty will be a ewlfleazt test of that
_I BE. m tNlOat oeely the zo of the AmerIcas, but the whole world will be watch-
is- m:*Te amnmf rights at the people of Panama. -as weUll as the high Meals
a.td bu-ange Intonte of the United States, require a new and Just treaty. It
am beew. a dnIn of and a augmI*at contribution toward world peace based
uop Justice and fraternity between people.

II.. : .r

I' ii: .. i I . i

II i~


.... .. .... ..

*r : : "'- ... ; '" ? !i'I ^ "

APPENDIX': 5 :j :....r.'&,.,:[
..~. IF :.. : *! "


Subject: Panama Canal treaty. ". r '' .. .410

.. f > r .. .. ..'.... ... ,
* J ** .: .. M ." ." ...... ". .* .:* ] :I":iE', .. ....
C ... BE .: ,< Sm:-m r..E.:. ,*X:: It :
WASHINGTON, November 12-The Chamber of Ciammerce of the US
today announced it .p puttt of the. P At i
the Panama al. Treaty, reserving howen. be t l-' J ........ i
renegotiated treaty are made public. 11 NO .
The action came durjnf the meeting the MatlimaL Clt Bdfatfti:il4 l
Directors Nov;. 6-7.. "..* "I r' u. l -a: "*, ::
i The Chamber board called on Ithe Adlnistration to adhere tath sifl
Principles signed Feb. 7, 1974 by Secretary of State JHnurraiusigaeiifdls
Antonio Tack, Panama's Minister of flnign Affat. The pulsele&
that Panama is requited to grant the United Stdes th ooa aIll k
regulate the transit of ships through the canal andt ospflter fM
tect and defend the canal. ..... f"
The Chamber board listed the follow reasons intpport ai
treaty: 0.,
1. Terms of the 1903 Treaty do not reflect changes in Pa
relations which have occurred in the last 72 years, and no longer asim
U.S. nationatinterests as well as a modernized treaty which Wo*dv bt001
on the concept of partnership; V
2. President Ford is the third consecutive President to support ...
tions to achieve a modern relationship between the two countries;
3. General George Brown, chairman of the Joint Chiefs of Statf, l4'iS1
September, 1975, statement clearly expresed support for the current iegojf
tions; and ... "
4. The Association of American Chambers of Commerce in Latin A.aS
took a similar position earlier this year.' ,h

j .: S, .,".;.::.

K K itmA, ti i

K ..: : :....

. ',>* i t.

I.. ". . .. .' !:tI |
' *, ..:,... ". .:. : :. ,. *'*f::: iS

" ** *: ; .* , '. .. ", :.. .:: ~.* **^ .. .: ; j : <

[Treaty Berles, No. 431 ]


SfiMed at Washington, November 18, 1903; Ratifcaton advised by the
BeNe of the United Stat, February 23,1904; Ratted by the President
of the United States, February 25, 1904; Ratifed by Panama December 2.
1903; Ratlflcations exchanged at Washington, February 26, 1904; Pro-
ctaimed by the President ol the United Statee, February 26, 1904. (53
Stat. (Pt. 2) 2254.)
(Nos: Art 1 of this convention superseded by art. I of the treaty of March 2,
1IM (53 Stat. 1807; TJ 945); UJS. rights under art. II renounced in part by
art. II of the 1986 treaty; art. V abrogated in part by art. III of the treaty of
January 25, 195566 (6 USlT 22; TIA'S 8297); art. VI modified by art. X of the
1966 treaty; first sentence of art. VII amended and third paragraph abrogated
by art. VI of the 1936 treaty, and second paragraph abrogated by art. IV and
certain U.8. rights under the first paragraph relinquished by art. V of the 1965
treaty; art. IX superseded by art. V of the 1936 treaty; art. X modified by art.
XI of the 1955 treaty; art. XIV amended by art. VII of the 1936 treaty and art. I
of the 1965 treaty; certain Panama rights under art. XIX waived by art. IX of
the 9M6 treaty.)
(By the President of the United States of America)
Whereas a Convention between the United States of America and the Repub-
Ue of Panama to insure the construction of a ship canal across the Isthmus of
Panama to connect the Atlantic and Pacific Oceans, was concluded and signed by
their respective Plenipotentiaries at Washington. on the eighteenth day of No-
vember, one thousand nine hundred and three, the original of which Convention,
being In the English language, is word for word as follows:
The United States of America and the Republic of Panama being desirous to
insure the construction of a ship canal across the Isthmus of Panama to connect
the Atlantic and Patlflc oceans, and the Congress of the United States of America
having passed an eact approved June 28. 1902, in furtherance of that object, by
which the President of the United States Is authorized to acquire within a
reasonable time the control of the necessary territory of the Republic of Co-
lomaa, and the sovereignty of such territory being actually vested in the
Republic of Panama, the high contracting parties have resolved for that purpose
to concude a convention and have accordingly appointed as their plenlpotenti-
i arles,--
The President of the United States of America. Jon HaT, Secretary of State,
The Government of the Republic of Panama, P=xm BUNAU-VARJULL, Envoy
xtraordlnary and Minister Plenipotentiary of the Republic of Panama, there-
nato specially powered by said government, who are communicating with each


other their respective full powers, found to be in good and due form, have agreed
upon and concluded the following articles:
The United States guarantees and will maintain the independence of the
Republic of Panama.
The Republic of Panama grants to the United States in perpetuity the use,
occupation and control of a zone of land and land un4ec water,for the
tion, maintenance, operation, sanitation and protection of said Canal 'of tite
width of ten miles extending to the distance of five miles on each side of the
center line of the route of the Canal to be constructed: the said zone beginning
in the Caribbean. Sea three marine miles from mean low water mark and -ex-
tending to and across the Isthmus of Panama into the Pacific ocean to a distance
of three marine miles from mean low water mark with the proviso that the
cities of Panama and Colon and the harbors adjacent to said cities, which .i.
included within the boundaries of the zone above described, shall~not bq |
within this grant. The Republic of Panama fMther grants't t tAT T l
in perpetuity the use, occupation and 'control of any 'other lands af."out-
side of the zone above described which may ,be necessary and eoze*# or,
the construction, maintenance, operation;- sanitation and protection ofjhe said
Canal or of any auxiliary canals or other works necessary and Wdt.iii0fo
the construction, maintenance, operation, sanitation and protecetiO' of ti&aim
enterprise. : ... .. *w'"9,
The Republic of Panama further grants in like manner to.. the United .tpflu
in perpetuity all islands within the limits of the zone above 4descrkbeiAWt&i:t:s'
addition thereto the group of small islands in the Bay of Panama,4mamedPirey,
Naos. Culebra and Flamenco. t o :
The Republic of Panama grants to the United Stateg all the right po .r
and authority within the zone mentioned and described in Article'II, f,.
agreement and within the limits of all auxiliary lands and waters Ik t]
and described in said Article II which the United States would kossW
ercise if it were the sovereign of the territory within which saal Un aa
waters are located to the entire exclusion of the exercise by the Republic of
Panama of any such sovereign rights, power or authority.
As rights subsidiary to the above grants the Republic of Panama t
perpetuity to the United States the right to use the rivers, streams ls,
other bodies of water within its limits for navigation, the supply of wate&.6r
water-power or other purposes, so far as the use of said rivers, streams, lakpsl f1
bodies of water and the waters thereof may be necessary qnd conve.nit Otr
the construction, maintenance, operation, sanitation and protection of thbeWsaid

The Republic of Panama grants to the United States in perpetuity a monpn ly
for the construction, maintenance and operation of any system of eommi 0c-
tion by means of canal or railroad across its territory between the Cai "n
Sea and the Pacific ocean.. ...,
ARTICLE Vi .; ,,,

The grants herein contained shall in no manner invalidate the titles or rights
of private land holders or owners of private property in the said'iozne or ,n Or
to any of the lands or waters granted to the United States by the: provisions of
any Article of this treaty, nor shall they interfere with the rights of way over4
public roads passing through the said zone or over any of' the said lands.or waters
unless said rights of way or private rights shall conflict with rights berelg
granted to the United States in which case the rights, of the United fStas"Ill
be superior. All damages caused fo the owners of private lnds or private pre
erty of any kind by reason of the graiats cont ined in this treaty or by retalW
of the operations of the United States, its agents or employees, or by reason of
the construction, maintenance, operation, sanitation and protection of the said

ai!M or of the works of sanitaUon and protection herein provided for. shall
.b appnraidsed and settled by a Joint Commlislon appointed by the Governments
of the United States and the Republic of Panama, whose decisions as to such
damage. shall be final and whose awards as to such damages shall be paid solely
by the United States. No part of the work on said Canal or the Panama railroad
aor a any auxiliary works relating thereto and authorized by the terms of this
tnas1 shall be prevented, delayed or impeded by or pending such proceeding,
to ascertain such damages. The appraisal of said private lands and private
property and the assessment of damages to them shall be bned upon their value
before the date of this convention.
The Republic of Panama grants to the United States within the limits of the
cities of Panama and Colon and their adjacent harbors and within the territory
adjacent thereto the right to acquire by purchase or by the exercise of the right
of eminent domain, any lands, buildings, water rights or other properties neces-
sar and convenient for the construction, maintenance, operation and protection
of the Canal and of any works of sanitation, such as the collection and disposition
of sewage and the distribution of water in the said cities of Panama and Colon.
which, In the discretion of the United States may be necessary and convenient for
the construction, maintenance, operation, sanitation and protection of the said
Canal and railroad. All such works of sanitation, collection and disposition of
sewage and distribution of water in the cities of Panama and Colon shall be
madeo at the expense of the United States, and the Government of the United
States, its agents or nominees shall be authorized to Impose and collect water
mtae and sewerage rates which shall be sufficient to provide for the payment of
interest and the amortiUation of the principal of the cost of said works within a
period of fifty years and upon the expiration of said term of fifty years the sys-
team of sewers and water works shall revert to and become the properties of the
Stties of Panama and Colon respectively, and the use of the water shall be free
to the Inhabitants of Panama and Colon, except to the extent that water rates
may be necessary for the operation and maintenance of said system of sewers
and water.
The Republic of Panama agrees that the cities of Panama and Colon shall
comply in perpetuity with the sanitary ordinances whether of a preventive or
curative character prescribed by the United States and in case the Government
of Pamnama Is unable or fails in its duty to enforce this compliance by the cities
of Panama and Colon with the sanitary ordinances of the United States the Re-
public of Panama grants to the United States the right and authority to enforce
the same.
The same right and authority are granted to the United States for the mainte-
sae of public order in the cities of Panama and Colon and the territories and
harbors adjacent thereto in ease the Republic of Panama should not be, in the
Judgment of the United States, able to maintain such order.
The Republic of Panama grants to the United States all rights which It now
has or hereafter may acquire to the property of the New Panama Canal Corn-
pany and the Panama Railroad Company as a result of the transfer of sovereignty
frem the Republic of Colombia to the Republic of Panama over the Isthmus of
Panama and authorizes the New Panama Canal Company to sell and transfer
to the United States its rights, privileges, properties and concessions as well as
the Panama Railroad and all the shares or part of the hares of that company;
but the public lands situated outside of the zone described in Article 11 of this
treaty now included in the concessions to both said enterprises and not required
in the construction or operation of the Canal shall revert to the Republic of
Panama except any property now owned by or in the possession of said com-
panies within Panama or Colon or the ports or terminals thereof.
The United States agrees that the ports at either entrance of the Canal and
the waters thereof, and the Republic of Panama agrees that the towns of Panama
and Colon shall be free for all time so that there shall not be imposed or collected

custom hou-e lls, tznflage, anchboakE4 liHOnfh. A
dues or -any othboe3rdb *Hflet!sfm many .u o*ttmm Y =lo .
through the Canal or belontit to or employed b'# ff!l Sted d
or directly, in conniedtloniW th the otructio Mitnue 1a ......... .ip
tidon knd protection of the main Canal, or xilxW y works, br t* rttaa
officers, crew, or paissenger Of anr sueW vesist e&W t such toW ai neB
may be imposed by the United States.fr" tirh use of the 4Canal and S tfb l1
and except tolls and charges imposed by tW Republi eof tnama iip af-i
dise destined to be introduced for the consompti d f therest.oflhk q 0181"
Panama, and upon vessels touching at the ports 6f 0O4evnt'i ftaun.d.
do not cross the Canal. :R
The Government of the Republic of Panma shall have the right .to sl
Panama and. Colon such hom .. ..i: ..........
in such ports and in the towns qof Panama and Colon such ho es
as it may deem necessary to collect duties on Importations deined-W
tions of Panama and to prevent contraband trade. UTh nited 5At".W
the right to make use of the towns and harbors of Panama and lo. ......
of anchorage, and for making repairs, for loading, nlohdingf dep6
transshipping cargoes either in transit or destined for the savice o. f
and for other works pertaining to the Canal. ." .. "" ... :
" 'ARTCLE I ......i ., :,

The Republic of Paifitma agrees that there shall Nt: be i.p.d .0
national, municipal, departmental, or 'f any other class, upo Lhid:
railways and auxiliary works, tugs and other vessels employed it: :
of the Canal, store houses, work shops, offices, quarters fot la1ob s,
of all kinds, warehouses, wharves, machinery and other worh, .....
effects appertaining to 'the Canal or railroad a*nd autillafy w
officers or employees, situated within the cities of Panabai CVlll. ..
there shall not 'be imposed contributions ot charges of La persm'nal el
any kind upon officers, employees, labrers, and oter Iidiidtals ft .e..
of the Canal and railroad and auxiliary works. ... ......,..

The United States agrees that the official dlspatchd tof Lt. o,-.rI
the Republic of Panamk shall be transmitted over any telegph*lilt
for canal purposes and used for public and private sines at rI'...M.W .
than those required from officials.in the Wervlee of the United Stat"s, 'a 'f IW
' : " .. ... ,.- .. .: i' :: ::'"i t 0, ml'" ...lt l
The Government of the Republic of Panama shaM per-midrthe.j i .
and free access to the lands' and workshops of the Canal fad its aufllh
of all employees and workmen of whatever nationalty iiderdofrttetw
upon or seeking employment upon or in any wise connected with the'aid"
and its auxiliary works, with theitrespective families, and all sOuh ". .
shall be free and exempt from the military service of the Republic of ipj .
.' A~~fICLEX \- "" y , ,, i.. .... *.'"
The United States may iptirt at any ,tiib into tlhe.tiflimie'.a*N 'f
lands, free of custom duties, impet, ta3res, or other ar&ia d w..f1m
restrictions, any and all vessels, dtedges, .nies, esa4 machinty,'.IsI
siVres, materials, supplies, and other art1EleA necessary and convbat '
construction, maintenance, operation, sa'iaittfd and proteetlo Of t Va1M
and auxiliary works, and all provisions, du dot g, sdppl!s mii i.
things necessary and .convehient for the officers; e.plyees, workoia^f L
laborers in the service and employ of the United States '. or ithe1 i t
If any such articles are disposed of for use outside of the t li and. k MY:
lands granted to the United States and within the territory of the "epsbt
they shall be subject to the same import or other duties as like articles imHnptt
under the laws of the Republic of Pana ,,.., :. T 1 :..s ...:*'.. ?, *4,* 'i i r;
. ..... A* W.A. ,QI . .... . ... .,.: i ,.!. w: r. '
-** * : -SI W X E .* : .: {' t' :." * :,:.. ::,n ..y ,:!* rw ir
As the price or compensation for the rights, powers and privilege gran"i
in this convention by the Republic of Panama to the United States, the Govern-


meat of the United States agrees to pay to the Republic of Panama the sum
a ten million dollars ($10,000,000) In gold coin of the United States on the
ethange of the ratification of this convention and also an annual payment
during the life of this convention of two hundred and fifty thousand dollars
(3f0,000) In like gold coin, beginning nine years after the date aforesaid.
The provisions of this Article shall be in addition to all other benefits assured
to the Republic of Panama under this convention.
But no delay or difference of opinion under this Article or any other provisions
of this treaty shall affect or Interrupt the full operation and effect of this con-
MvenUon In all other respects.
The joint commlssion referred to in Article VI shall be established as follow:
The President of the United States shall nominate two persons and the Presi-
dent of the Republic of Panama shall nominate two persons and they shall
proceed to a decision; but In case of disagreement of the Commission (by reason
ao their being equally divided In conclusion) an umpire shall be appointed -by
the two Governments who shall render the decision. In the event of the death,
absence, or Incapacity of a Commissioner or Umpire, or of his omitting, declining
or ceasing to act, his place shall be filled by the appointment of another person
It the manner above Indicated. All decisions by a majority of the Commission
or by the umpire shall be final.
The two Governments shall make adequate provision by future agreement
fOWthbe pursuit, capture, imprisonment, detention and delivery within said zone
mad auxiliary lands to the authorities of the Republic of Panama of persons
charged with the commitment of crimes, felonies or misdemeanors without said
mone And for the pursuit, capture, Imprisonment, detention and delivery without
said amoeto the authorities of the United States of persons charged with the
cmmitmat of crimes, felonies and misdemeanor within maid zone and auxiliary
The Republic of Panama grants to the United States the use of all the ports
of the Republic open to commerce as places of refuge for any vessels employed
In the Canal enterprise, and for all vessels passing or bound to pass through
the Canal which may be in distress and be driven to seek refuge In said ports.
Buch vessels shall be exempt from anchorage and tonnage dues on the part of
the Republic of Panama.
The Canal, when constructed, and the entrances thereto shall be neutral in
perpetuity, and shall be opened upon the terms provided for by Section I of
Article three of, and in conformity with all the stipulations of, the treaty entered
into by the Governments of the United States and Great Britain on November 18,
The Government of the Republic of Panama shall have the right to transport
over the Canal its vessels and its troops and munitions of war In such vessels
at all times without paying charges of any kind. The exemption Is to be extended
to the auxiliary railway for the transportation of persons in the service of the
Republic of Panama, or of the police force charged with the preservation of
public order outside of said sone, as well as to their baggage, munitions of war
and supplies.
If by virtue of any existing treaty in relation to the territory of the Isthmus of
Panama, whereof the obligations shall descend or be assumed by the Republic
o0 Panama, there maO be an privIlege or concession In favor of the Government or
the dcitizens and subjects of a third power relative to an interoceanic means of
communication which in any of its terms may be incompatible with the terms
of the present convention, the Republic of Panama agrees to cancel or modify
such treaty in due twm, for which purpose it shall give to the said third power
the iequsitte notifeation within the term of four months from the date of the
present oeaventiMn, and in case the existing treaty contains no clause permitting

its i.odi.catiionor IuInent tI e ..' ,fi O*w,.":.:p.
mddiflc&tek6h-r Attn iZit in toh b6A *thaWt ^4ye ^.
nso 'b- ftei,&V H0 ........ ....... t
with the stipulations of th.el eiet &ii 1' "'"""" .
-~~~~~~~~~~~~~ .i-i .,*- . .'"~ f ce .xi . .* *" .:*;: .A l *^i

The rights and privileges granted by the .eputlt,,ot.... ....
States in, the preceding Articles are understootod be free ,EM atM. L
liens, trusts, or liabilities, or eontdesions-'or iprivileeges to. oth
corporations, syndicates or individuals, and consequestly,i' fit liSW, ,
any claims on account of the present concessions and privileges or otlr"i
claimants shall resort to the Governmenf of the Republic of Panamt
the United States for any indemhfty or eompromik w~hie'im-al WNP".
-AMT a rX., s :I* ..
Thoe Republic of Panama. renounces ,and ..grants to tlbe e qf.tl .l
participation to which it migst be en#tledt in the future ea::,s w !.0I YT
under Article XV of the Concessionary contract with, Jancien B.. ,J.ta
owned by the New Panama Canal Companyiand apy and all other- i
of a pecuniary nature ariWg;, under or relating to: MJaid- comiceiq.....j-.
under or relating to the concessions to the Panama, RailrQs;do, p l
extension or modification thereof; and it likewise renounces, confirms *...
to the United States, now and hereafter, all the rights and prropet;.ty
the said concessions which otherwise would belong to Pa fafrat.tf'&
expiration of the terms -of ninety-naie year -of. the,;boessl.gr "
by the above mentioned party and. companies, and: all right' tiShHt
which it now has or may hereafter -have, in and to, the iands,. PiSW
property and rights held by the said companies undq saidrana
wise, and acquired or to be. acquired byl e Ucited Olatesfrtowx.d4rl
New Panama Canal Company, AvaCdinirguay tprqpestp' a1d uix tI
or may in the future either by lapse of time, forfeiture or otherwise,
the Republic of Panama under any contracts or concessions, with said WY1we'th"e
Universal Panama Canal Company, the Panama Railroad Company tnd 11'..
PanamayCanal Cqmpany. .. . .. : ,.t
The aforesaid rights and property shuailbe and are, freecundd tel
present or reversionary interest in or detim of 'Patmal f'dlfleP
United States thereto upon onusamnamtiowjf ',e mtmI tU pltiiah*
United States. from the: ew Panama OCgnal -ompauHy, shallfbfiqlr
as concerns the Republic of Panama, excepting always the .r -gts oY thi
specifically secured under this treaty. .
. . *^ TT i" '"* .. .: !" '*"' ,a : :tllMI:,
AuncI:tr] flux r .f .r,
*, .. .. .. ,.A.~x :: ,. . .Jt w :
If it should become necessary at any time to euIloy aurinealEoeStOWCab*
safety or protection of the Canl, or of the ships that'Bua e.MuuerAlbt.
the railways and auxiliary works, the United States shall have the riglat i
times and in its discretion, to use its police :and its land and naval fowe Owr:to
establish fortifications for these purposes. ,.
-".ArCtLE XXnIV .- : :'^:.9i
-. ,..., .,- .. ; :, .f i ,' ;***' .. /f .. ...... l
No change either in the Government or in the laws and tr, I o fVfA fletulit
of Panama shall, without the consent of the UiIted. States atffect.any tigMf*
United States under .te, present eonveatimn, ar u ner taiy Vtreat..yfiua
tween the two countries that now exists or may hereafter exist tewiiap
subject matter of this convention. ... : "
If the Republic of Panama shall hereafter enter as ap ,nstituent lW.9 y
Government or int yuion o ontdeation
soverefgaty or indtpendence' in sc to eOei tinet,' .ti... a -otiO. .. ft
rights of the United States under t Its' tiwi sl.a% beihttN
senea dr impaired ... 4 .r '. "'":
... T' ;r"r ,u/ ,' .i tqWj*if J ^l1 ". .
For the better performauee of the enpggements -of thian
end of the efficit ent protection of' the aalha and the ItB en .itkittsitU
the Government of the Republic Of Paama. Wlb *UJ:ior Ma ta4

i lands adequate and necessary for naval or coaling stations on the Pacific coaMt
and aon the western Caribbean coast of the Republic at certain points to be agreed
@ =pO with the President of the United States.
II Thbs convention when signed by the Plenlpotentiarie. of the Contracting Par-
ties shall be ratified by the respective Governments and the ratifications shall be
exchanged at Washington at the earliest date possible.
In faith whereof the respective Plenipotentlarle. have signed the present con-
vention In duplicate and have hereunto aixed their respective eals.
Done at the City of Washington the 18th day of November in the year of our
L4d nineteen hundred and three.
And whereas the amid Convention has been duly ratified on both parts, and the
r.ttfleations of the two governments were exchanged in the City of Washington,
on the twenty-sixth day of February, one thousand nine hundred and four;
Now, therefore, be it known that I, Theodore Roosevelt, President of the
Uited States of America, have caused the said Convention to be made public, to
tluMud that the same and every article and clause thereof, may be observed and
ft e w th good faith by the United Mtates and the citizens thereof.
wIn testimony whereof, T have hereunto set my hand and caused the seal of the
United States of America to be affixed.
Done at the Otty of Washington, this twenty-sixth day of February, In the year
of our Lord one thousand nine hundred and four, and of the Independence of the
United States the one hundred and twenty-eighth.
By the President:
JOHMX HA, elwetry of fStae,


S. : t

." .

.. .. . .. . .. .. .... ... .. ..... ...... L ..............

. . ..... ....dmM F : ,
...... ....
........ ......

..... C. ...kij, .
... A Q & SLA N J,; ... . , 'ihf *::.i

[Updated October 14,.1975, Issue Brief No. 174138] "" e-'iM
*. ... .... . .. .i i .:.: a ::*: B i.:::.*i|.*
(By K. Larry Storrs, Foreign Affairs Division, and Barry Sodar, "rH. ""V
Division of the Library of Congress, Congressional Research SeriMBr
Issues System) LAaU
Issue definition 41"'' .*
The 1906 Convention for the Coustruction of a .8hi Caln
States and Panama granted the United States& the right to. '
defend a canal across the Isthmus of PaTRhama and to exercise 'ViA. l i,
sovereign rights and authority within a specified zone..contiilO,.U.AO'
Over the years, Panamanian resentment. of what it onsidersi Hl .
terms of the treaty has made the canal issue a major irritant .in Ua. *
Panamanian relations. On December 18, 1964, President Josimn Rub
nation's willingness to negotiate new canal treaties to best a.........
United States and Panamanian interests. The NixonoFord admnitrat .,s
essentially adopted the same policy.. .... .- .*',-
Sentiment in Congress is divided between members who believe .tWt::, .
treaties are essential to the maintenance of good relations with PFm;I.aZI,
other Hemisphere nations, sympathetic to the Panamanian cause,' al.l.Wlt
oppose any change in the U.S. status in the Canal Zone area on -gmniWsW'.$
the rights now retained are essential to national interests. Recent i
action, however, seems weighted on the "status quo" side.
Background and policy analysis
The strategic geographical location of the Isthmus of Panama, affoqrdia
potential of a short-cut route between the Atlantic and Pacific Oceansi am e1:-
ated United States interest in a canal early in the 19th century. Durb ...::
period, the United States concluded treaties with various nations to ,i. w..
a U.S. interest in any canal constructed in Tie area. While the territory i:..q.
Isthmus was still a part of Colombia, the United States concluded a treaty witfh
that nation (the Hay-Herran Treaty, signed in January 1903) providing fip
U.S. construction and operation of a canal across the Isthmus. After ColomMa
rejected the treaty, the Panamanians, many of whom had long sought an isSae-
pendent Panamanian nation proclaimed their independence (November 3, 1901.
with U.S. military forces standing by offshore. : '.
On December 2, 1903, the new Provisional Government of Panama ratES
a canal pact titled the Convention for the Construction of a Ship Canal (Hy-
Bunau-Varilla Treaty), based substantially on the rejected Hay-Herran Treaty.
Its basic provisions (1) granted to the United States "in perpetuity the use, oc-
cupation and control" of a specified zone of land through Panamanian territory
for the construction, operation, and defense of a ship canal (Article I); ;4.
afforded the United States "all the rights, power and authority wili tbi e
zone . which the United States would possess and exercise if it *re ti.
sovereign of the territory ... to the entire exclusion of the exercise by 1the ft.i.
public of Panama of any such sovereign rights, power or authority" (Arficel
III); and (3) provided for payment of U.S. compensation to Panama os.1,)f|
initial $10 million and a yearly annuity (Article.XIV). .7,
Since 1908 treaty's inception, Panamanians have ch4ri$ ed that its basc trw,
involve concessions extracted from an immature new republic nden the =. io=
and influence of unscrupulous individuals and foreign interests. The prniiipal
Panamanian objections are the terms of Articles I and III, which afford the
United States full sovereign rights, control, and governmental jurisdiction over
.(8) .. .
'.. .. .i r ::.. .r h i.j 9 .


a portion of Panamanian territory for a limitless duration. Other primary ob-
Jeeois of Panama Include: (1) the size of the U.S. military presence and the
existence of U.S. military training facilities located in the Canal Zone; (2) the
amout of U.S. annuity to Panama and allegedly inequitable sharing of the
esuomie benefits derived from canal operations, and (3) the amount of land
r.n within the sone unused by the United States but not available for Pan-
aminMIan use.
The United States, In efforts to Improve its treaty relations with Panama,
has priodicall altered provisions of the 1908 treaty, primarily through two
adioMtnal treaties of 1986 and 1965; however, the sovereignty principle has
remnened unchanged. Mounting Panamanian nationalist sentiment over the canal
Jaw: erupted In serious demonstrations in 195i and culminated in the violent
anti-United Stat.. flag riots of January 1964. The Incident precipitated a major
diplomatic crisis between the two nations during which Panama broke relations
with the United States and put Its case before the United Nations and the Or-
ganation of American States.
On December 18, 1964, President Johnson announced the U.S. Intention to
flhutiate new treaties with Panama which would abrogate the 190B treaty.
leogalse Panammaiana sovereignty over the Canal Zone, and end the "in per-
petuity" provision, while still retaining "the rights which are necessary for
the effective operation and the protection of the canal and the administration
Of the areas that are necessary for these purposes." Bilateral negotiations began
t January IM6. culminating in the Joint announcement by the United States and
Pnama In June 1967 that three new draft treaties had been agreed upon. Action
was never taken by either nation, however, attributable in part to the premature
pubicatton of the treaty terms in the press (which touched off considerable op-
pestiont in both countries), and to the fact that both nations were then involved
in major election campaigns. In August 1970. the government of General Omar
Torrijo, in power as a result of a military coup In October 1968, formally rejected
the draft treaties while Indicating willingness to pursue the negotiations.
Talks resumed in June 1971, and on February 7,1974, Secretary of State Henry
Kissinger and Panamanian Foreign Minister Juan Antonio Tack signed a state-
ment of general principles which would serve as guidelines for the new Panama
onal treaties. Principal terms Include: (1) elimination of the 'In perpetuity"
provision of the former treaty, with provision for a fixed termination date;
(2) termination of U.S. sovereignty and Jurisdiction In the Canal Zone, with the
United States granted the rights, facilities, and land necessary for U.S. operation
and defense of the canal for the duration of the new treaty; (3) Panamanian
participation in the administration and defense of the canal, with provision for
the eventual reversion of canal operation and control to Panama upon termina-
tion of the new treaty; and (4) a Just and equitable sharing of the economic
benedts derived from the canal. At the present time, negotiations on the specific
terms of the treaty are said to be proceeding satisfactorily.
The basic principles at Issue In consideration of new Panama Canal treaties
are whether or not the United States should maintain Its current status of un-
limited sovereignty and full governmental Jurisdiction within the Canal Zone,
and whether the United States should continue to assume full responsibility for
operation and defense of the present canal indefinitely. Since canal negotiations
began, U.8. officials have been confident that an accommodation could be reached
which would meet the reasonable aspirations of Panama while safeguarding U.S.
vital Interests In the canal and Canal Zone and In no way weakening the United
States posture in the area.
In the view of the United States Government, some members of Congress, and
other proponents of new treaties, reaching a reasonable and mutually acceptable
atcord with Panama on this highly sensitive issue Is essential to U.S. foreign
pelcy and security concerns with regard to Panama and to the Latin American
region as a whole. They see the issue cast In the context of the changing nature
of international political relations wherein the Inreasing economic and political
Interdependency of nations is causing the United States and other nations to
forge new relationships based on mutual equality, cooperation, and respect Pro-
ponents argue that in today's world the 1903 treaty is an anachronism which
will continue to serve as a rallying point for Panamanian and other Latin
American nationalist sentiment directed against the United States. In like man-
ner, the treaty provides a ready target for elements hostile to the United States
outside the region.
A further fatoer bearing on the Issue of new treaties relates to future U.S.
and world commercial Interests and to '.S. and allied defense concerns. The



demands of rapidly increasing world commerce and the advent of modern sAhip-
building technology resulting in vessels of much greater size will require mjar
expansion of the capacity of the present canal and probably eventual construc-
tion of a sea-level canal in the area. The United States option to expand and
modernize the present canal and to construct a sea-level canal in Panama along
the route recommended by the Atlantic and Pacific Interoceanic Canal Stidy
Commission are both issues in the current canal treaty negotiations. :
Negotiation of new Panama Canal treaties has met substantial opp o n in
the U.S. Congress, the Department of Defense, and among a variety of int
groups in this country. The principal argument advanced by opponents 'is that
if vital U.S. commercial and strategic interests are to be safeguarded thllbtMd
States must continue to exercise sole responsibility for the operation, control,
and defense of the canal, and must retain sovereignty and U.S. juris4ietion
within the Canal Zone area. Also of major concern is United States acceptance
of treaty provisions which would limit or reduce the current U.S. military
presence in the Canal Zone. Opponents cite the vital strategic function per-
formed by the U.S. military in the Canal Zone in terms of protecting Us.. in-
terests in the canal directly and in serving as deterrent to the ambitions of
powers hostile to the United States, thereby safeguarding national security and
hemisphere defense interests as well.
Other arguments advanced by opponents of new treaties include: (I)i the
mandate for permanent U.S. sovereignty and control of the canal and Canal Zone
was legally vested in the United States by the 1903 treaty, duly signed wad
ratified by Panama, and all rights and titles to lands now under United States
control were justly purchased by the U.S. Government; (2) under terms of the
treaty the United States undertook to construct, and for the past 60 years: has
continued to effectively maintain, operate, and defend the canal to the benefit
of all the world's nations and at a U.S. taxpayers net investment of almost $6
billion; (3) the continued efficient U.S. operation of the canal has resulted in
major economic benefits for Panama, providing a major contribution to the
Panamanian economy and affording it the highest per capital income in Central
America and the fourth highest in Latin America; and (4) Panama's history of
political instability and its lack of technical and managerial expertise and other
required resources demonstrates that Panama does not possess the capacity to
effectively manage, operate, and defend the canal.
Congressional and other opponents of new treaties believe that the United
States can continue to make adjustments to improve its relationship with Pan-
ama under the existing treaty. Concern for U.S. retention of sovereignty and
complete jurisdiction and control of the canal and Canal Zone has resulted in
the introduction of numerous resolutions in this and prior Congresses calling
upon the United States Government to retain the full rights and status which it
now enjoys. 'r.
One legislative approach by opponents of new treaties has been the introduc-
tion of legislation to implement an earlier proposal to modernize the existing
lock canal in lieu of construction of a sea-level canal through Panamanian
territory, one of the chief areas of negotiation in the current treaty talks. They
argue that implementation of the Terminal Lakes-Third Locks Plan, a project
partially authorized by Congress in 1939, would provide for a major Increase
of capacity and operational improvement of the existing lock canal under.present
treaty provisions. Such action, supporters believe, would afford the United States
the best operational canal at the least cost. It would also obviate the need for
new treaties with Panama, thereby eliminating a confrontation with Panama
over demand for major concessions that would almost certainly be made in
negotiations for a sea-level canal through its territory. Critics of the existing
treaties contend that this approach overlooks the basic issue, which is Panama-
nian dissatisfaction with the status quo.
Meanwhile, the State Department remains hopeful that the draft of a new
treaty can be completed by the fall of 1975.
The following bills are a sample of the many that have been introduced
recently on the Panama Canal Treaty issue.
S. Con. Res. 78 (McGee) Apr. 1,1974, 93d Congress:
Expresses it to be the sense of the Congress that negotiations for a new
Panama Canal Treaty are necessary in the interests of both the Republic of
Panama and the United States. Affirms that, with reference to the promulgation


oCitAh a treaty, the Oongress of the United States endorses specified principles
d to by the United Statres of America and the Republic of Panama on Feb. 7.
=197. at Panama city.
No-.aefton was taken on the bill by the Senate Committee on Foreign Rela-
MAl 18 (Flood), 94th Congress:
Paama Canal Modernsation Act. Directs the Governor of the Canal Zone,
under the supervision of the Secretary of the Army, to prosecute the work neces-
sary to Increase the capacity and Improve the operations of the Panama Canal
threuO the adaptation of the Third Locks Project (House Doc. No. 210, 76th
O=g0aw) at a total cost not to exceed 8M0 million.
tabiehe the Panama Canal Advisory and Inspection Board, composed of
five members appointed by the President, by and with the advice and consent
of th* $erat%, to study and review plans and designs for the Third Locksl Proj-
ect. Gives the Board powers to carry out the provisions of this Act. Requires
S the Board to submit an annual report to the President and Congress on the
rp eo c its wodK.
.IL 1i8 was Introduced on Jan. 14, 1975, and referred to the Housen Merchant
Marine and Fisheries Committee.
S Rae. 07 (Thuarmond):
Declares itto be the sense of the Senate that: (1) the Government of the United
States should maintain and protect its sovereign rights and Jurisdiction over the
Canal Lone, and should in no way cede, dilute, forfeit, negotiate, or transfer any
of these sovereign rights, power, authority, Jurisdiction, territory, or property
that are indispensably necessary for the protection and security of the United
States and the entire Western Hemisphere; (2) there be no relinquishment or
surrender of any presently vested United States sovereign right, power, authority,
or property, tangible or intangible, except by treaty authorized by the Congress
and duly ratified by the United States; and (3) there be no cession to Panama, or
other divestiture of any United States-owned property, tangible or Intangible,
without prior authorization by the Congress (House and Senate), as provided
in Article IV, Section 3, Clause 2 of the United States Constitution.
S. Re. 97 was Introduced on Mar. 4, 1975, and referred to the Senate Foreign
Relations Committee. (Similar to S. Res. 301 (Thurmnond), 93d Congress, and
HJ. Res. 136 and House Resolutions 23, 24, 40, 61. 63, 74, 75, 92, 106, 127, and
18, 94th Congress.)
Amendment to H.R. 8121 (Snyder):
An amendment to State Dept. Appropriations Bill, Sec. 104: "none of funds
appropriated ... shail be used for the purposes of negotiating the surrender
ot relinquishment of any U.S. rights in the Panama Canal Zone," passed 246-164,
on June 26,1975.
The Senate struck the Snyder amendment from the Appropriations bill which
passed September 3, 1975.
On September 18, 1975. the House-Senate Conference, In lieu of the Snyder
amendment, reported a compromise to the effect that: "It is the sense of the
Cohgres that any new Panama Canal treaty or agreement must protect the vital
internatsof the United States In the operation, maintenance, property and defense
of the Panama Canal."
The House, on September 24, 1975, failed (197-208) to recede from its disagree-
ment with the Senate and Insisted on the Snyder amendment.
On September 26& 1975, the Senate refused to accept the Snyder amendment
and further conference negotiations were scheduled. The House, on October 7,
1975, approved (212-201) a second conference compromise stating the sense of
Congrea "that any new Panama Canal treaty or agreement must protect the
vital Interests of the United States in the Canal Zone and in the operation, main-
tenanea property and defense of the Panama Canal." The Senate accepted the
eompromle the following day.

U.S. Congress. Houe.' Committee on Appropriatlons. Subcommittee on the De-
partment of Transportation and Related Agencies Appropriations. Depart-
menut of Tmansportation and Related Agencies Appropriations for 1976.
Hearings, 94th Congress, let session. Washington, U.S. Govt. Print. Off.,
1915. Hearings on Panama Canal, Apr. 17,1915. p. 1-218.
U.S. Coness. House. Committee on Foreign Affalrs. Subcommittee on Inter-
American Aftfar. Panama Canal. 197. Hearings, 92d Congress. lst session.

r---------------------------. ....... .,,. ..., ..


on H. Rc. 74, 15. 156, and other r$ ".itios. ., ...rf ,.. ,
Washington, U.S. Govt. Print Off., 971t 1l3 p. : ... ::
United States relations with Panama. HiqaflW,: 04
Feb. 20,1973, Washington, VI Govt. Print. Off., f lp.: I" .
U.S. Congress. House. Committee on Foreign AfaJi. 44...9t....
American Affairs and International Organipations asM4
mittee on Merchant Marine and Aeheie. Su aion.tfxilt
United Nations Security Council meeting.in Panaa afla*g .
1st session. Apr. 3, 1973. Washington, U.S. "ov, Prin 0 |ft
U.S. Congress. House. Commi ttee o Mereha* Marinq: s.: ".."
mittee on Panama Canal. Panama Canal brefings eai
1st session Apr. 13, 1973. Washington. U.S. Govt. Print iMfi
Briefings concerning treaty negotiations and cpru1t. aIi' -
Panama Canal and Canal Zone .a. *>., : k.'
"Serial no. 93-8" ...* :Iti
--Panama Canal treaty negotiations. Hearings, 92d C00"eflB 1: o f*t
sessions on treaties affecting the operations of the Pansam CaI
ington, U.S. Govt. Print. Off., 1972. 371 p. A* ..,1jfjl,
Hearings held Nov. 29, 30; Dec. 2, 6, 10, 1971; Jan=, f:lN Ig f 3;
Aug. 10, 1972. ..*4.. ,ii .. ... ..-,i : ,|
"Serial no. 92-30" .f.. f 8... .., l .
- Panama canal treaty negotiations. Hearings, 92d Oongras 3.i
Washington, U.S. Govt. Print. Off.; 1972. 373-511 p. .., *
Addendum to hearings held Nov. 29. . Der- 10, 171; Jbn.I if
Aug. 10, 1972. w,:
Reports and congressional documents
U.S. Congress. House. Committee on .Foreign Affairs. Snbeoin ,,:in
American Affairs. Report on United States relations with Priu.'i|
suant to H. Res. 113, 86th Congress, 2d session. Washfligtou4ij.
Print. Off., 1960. 98 p. r... ::; ...i.
(86th Congress, 2d session. Houte. Report no. 2218) yI .4
Other congressional action ,. H H
According to U.S. legislative procedure, new treaties would be'sid itta
to the Senate for ratification; however, manr opponents of Inew P.. ..... .....
treaties in the House of Representatives have raised the issue that
proval is necessary before any U.S. territory or property under UV.S.",.
within the Canal Zone can be ceded to Panama. HUpuse me ..e.s ,l
justification for their position the United States Constitution, 'AtI$..'
tion 3, Clause 2, which states "The Congress shall have power to ,
make all needful rules and regulations respecting the territory or i :.
erty belonging to the United States." House members who support ths i
contend that "Congress" must be interpreted as both the Senate and"fibei
of Representatives, and therefore any new canal treaties providing 4 j0
posal of U.S.-controlled territories or properties wo0ldbe in'al i4
required approval of both Houses were obtained. Language to .ant
jurisdiction had been included in House and Senate resolatons.
duced. Furthermore, te issue was examined at length'during .$.
December 2, 1971, by the House Merchant Marine :and ahles C.i
Subcommittee on the Panama Canal concerning "PAana i... i|
tiations" (pp. 95-447). .... .r'. ;
(hronologg of evn-ts *. tA:
October 7, 1975---Backing off from effort to ban funds for Parama COS T:i*
tiations, the House approved (212-201) a' second cdiference eompItO
on State Department appropriations stating the sense of Congriess "'stat
new Panama Canal treaty or agreement must protect the vital inite.r.t
the United States in the Canal Zone and in the operatiep, min.tenn...
property and defense of the Panama Canal." The new compromise ad af
reference to protecting U.S. vital interest in "the Cnal Za.e! t: liltM
nating a principal House objection expressed on Septemit 24. The Senate
accepted the compromise the .following day. State Departunht o581dalfid
they were pleased with the vote removing thle cloud Ove ne Ution "di
September 26, 1975-By voice vote the Senate reject thed o s .d
amendment" ban on funds for Panama Canal negoAtios and asked fr
negotiations with the House.


leptimber 24, 1975--Panama's President and the Foreign Ministry formally
aploglasd to the U.8. embassy for the incident ofat the previous day.
hiee ome voted 208 to 197 to reject the House-Senate conference corn-
plomse on State Department appropriations for Panama Canal negotiations
Whit stated the sense of Congress that any new agreement "must protect
tde vtal Interests of the United States In the operation, malntenanee, prop.
oty and defense of the Panama Canal." Instead, It restored the "Snyder
SIm1dme4t," passed June 26, barring the use of funds to negotiate the
"Msumrrender or relinquishment of any U.S. rights in the Panama Canal Zone."
Sesimber 28, 1#15-Abont 800 left-wing Panamanian students, demonstrating
againstt U.S. military bases In the Canal Zone. attacked the U.S. embassy in
iPanam with rocks and Molotov cocktails In the most serious Incident since
the "fl riott of 1964. The U.S. embassy delivered a "strong note" of protest
t* Panama, alleging that the National Guard hesitated before dispersing the
eCowd wit tear gas.
Sepamber 20 1975-Crltlceling U.S. demands for the right to defend the Canal
"for an Indefinite time, which Is tantamount to perpetuity," Panama broke
nigtatlaUon secrecy and publicly disclosed the divergent positions. The report
aid the United States accepts Panama's desire for a 25-year Ulimit on a
new treatyr, however, the U.S. seeks rights to defend the Canal for 50 years
ntidally and then for a time which Is tantamount to perpetuity. The United
States wishes to retain 85% of the Zone and all 14 of the military Installa-
ions, while Panama wants a reduction of the Zone to 10% of present sloe
and three military Installations. Both parties were reportedly agreed that
..t joint administration would replace the Panama Canal Company, and
Pflhmanian police, postal, and Judicial Jurisdiction would take effect in
the Zone three years after the new treaty.
September 17, 1975-As Ambassador Bunker ended the latest 10-day round of
Snegotiatlons In Panama, claiming that Kissinger's remarks had been "dis-
torted and misinterpreted." he gave Foreign Minister Juan Antonio Tack
a statement which said "I am sure that the Secretary meant to say that
o country could not renounce our right to defend the canal from foreign
Senemfes until we have achieved with Panama effective agreements for the
anams defense.... As we both know, we are working toward a situation
in which the defense of the Panama Canal will be a Joint operation, in
: whldh the Panamanian National Guard will play an important role." Panama
announced that "very little progress" had been made in the recent talks.
September 10, 1975-In response to a question by Governor George Wallace at
the Southern Governors' Conference in Orlando, florida, Secretary Kissinger
stated that "the United States must maintain the right, unilaterally, to de-
fend the Panama Canal for an Indefinite future, or for a long future. On the
other band, the United States can ease some of the other conditions In the
Canal Zone." In Panama, Kissinger's remarks, particularly the terms "uni-
laterally" and "indefinite," were denounced as completely contrary to the
February 1974 Jointly agreed principles. Bus and taxi drivers went on strike
to protest the remarks.
September .3, 10975-Senator Harry Byrd also announced he was delaying an at-
tempt In the Senate to block funds for negotiations on the Panama Canal
In response to a request from State Department officials to wait until Am-
bassador Bunker returns from hin September 7 trip to Panama for further
tal ca
S the Washington Post reported that an 'Internal administration comn-
Sp.ron... was reached within the executive branch which essentially will
meet Panama's Insistence on making the year 2000 the termination date of
U.S. authority over the CanaL The Department of Defense had been arguing
for extending U.S. authority for 5O more year. There would be continued
participation of U forces in the deftene of the Canal. In what was Inter-
,preted a symbolof agreement between the Department of State and De-
j DepySecrtarf or Detense Clemetn. Chairman of the Joist Chiefs
t Stff Generl jrown, aind Alssistant Secretary of State for Latin Amer-
lea An aiw tllamRD. Bagel ltt (September 2) for a Oneday vist to
S6D bere 1, WI'-te New Tort lMes reported that Ambassadar BUnker.
cehed tt eaeorPaMvaU to ,pen another round of talk after a day
Proposed not the"United State. turn over opert ion
ofrth c b e 2000 while askig Panama to "eMt paortiipation
of American forest In the defense of the canal for a longer period.

August 11, 1975--An article in thi Jou'li;jt0. fi g.r.e.. ...t...
to Panama's amunl-geneiaa.lii.New Xork4T3Arnat....
formerly ,a negotiator In the t reatj T1,.tour "
resolved between the tited-Iftgi$ *^ra. n Trfna
-the year mast reqiengty.e& etoed..w..,
*necessary to operate and defend tlat 'Ca .tt PW.44
level canal-Peanama will gie thitvid tat. a fl^5optB E
a newcanarlbut the U.nited Stated No
compensation. Aecerdink to Stagg, thi U4peQtae 0vi.y
tary presence, in tlbt ebna Laeuutrljezb
August 2, iSIS-Sena'tor HarY Hyrd11 uiAMA R4th
tive attempt to block funds for f.rther ne ui
Treaty. The Senator had' intende thndN b".
Snyder amendment whi: pa1 a sd ie House on J3'u . .....t
Officials said that 59 of the 98 Sepator: we t "It t
to a move to table the Byrd'resoliui .. *.. ..." ;r
July 24, 1975The headd"f *the Panam meiikena.emnt4 1a i..
warned that further delay in treaty netolations t .ai..
Panama that could not be' contained, and might ewM at. .,
throw. Torrijos accused the Ford Adintration o_ f uta f 0-
becaulhe of political' pressures in the UTuftd. Stes, .
July 23, 1975-An articleA in the Miamiflerail wItte s t.M
.Government, in displeasure over the status: f t ..at E
to public disclosure of differences betOwh t. i.tl ...al
a .position paper circulated among '" aianaiafld tj it'l':u
and discussed by Panamanian negotiate's the Natail
action came after General Torrijos charged' tjat the..Uied
the secrecy actd by leaking inforatkiz to the i .gress'e
civilian' residents of the Canal Zone. A.og t0e disctosres "
Herald were: the Pentagon wants to, Iid on tku nic' j
purposes than Panama is willing to code; thd I.:8.wants
land for the operation of the Canal n thaPVana il allw ;
a new treaty to expire after 25 years, With ftil controlo'ff..11e gi
ing to Panama, while the United States wants a 50-year, !
additional years if it ihilds a see-level canal; both c.untrili .
integration of the Canal'Zone intb the Repub1 Pan"amai
Panama would agree initially to allow the United States tO6e' k
14 military installations in the Ofinal Zone and then Ord
those three; Panama is dissatisf1&l 'tth' a U.S. oer to increa
$2.3 million annuity to $44 million. :: '. ..::.
June 26,1975-In a significant si6w of congressional Vndim t6ever ..
Canal treaty negotiation issue, an kmendirent 1I1edl
Snyder to the State Department appropriatiou1 bill de#64
treaty negotiations passed 246-164. : .: .. 1.
February 7, 1974-Secretary of' State HIenry 'KissiBnger-. id'PaPifli
Minister Juan Tack signed, a State.ment ofr: Princt.es t i
guidelines for new canal treaties.. ....
September 13, 1973-U.S. Ambassador-at-iLarge Ellsworth Binker W4 : 1
confirmed as the new ehief U.S. Panama Cana.l ieg6t0atr.( ( fln
sentative Robert Anderson resigned in July 1973). '. "- t.!|i6
March 21, 1973-The United States vetoed a U.,. Security Condl *3
referring to a new Panama Clanal treaty Mtt would" _tilntee f
fpr Panama's effective. sovereignty over all of its titory," n

for Sye Pau^ ovr all 0^
the t,,aty negotfiatiohs 1iv!elseia matt15.jt.. f' t
member, 13evoted. i" favoo ...."u.....' :"nd &
Junee29 I9-The United ,tt n a
440 .... 0.......
eangla:treatjes. J
in its final4 rpod, recoi menn!,td r
and ua.ged tb.r.S.:Goveinm A :t X o t R
the existing 'cinal and seae-ldvovel bIovliin ...t ,
louse 'ip. a n equita bl and kmif t . .. % F pt. .. . ..r .... .
....+ ......
United eSt sat nd Psi m. ; r...afl'1
September 1, 197O-Theqaajnzp S"1
the three drat. Paxip Ca~qji rea.
for reauininztreatv neufoltittflba

rq ..

Aiii usMt 20, 1970O-The United States announced the termination of an agree-
:. must with Panama permitting it free and exclusive use of the Rio Hato region
for military training. (Rio Hato was the only area in Panama outside the
: Canal Zone being used by U.S. troops).
October 11, 19088-Colonel Omar Torrijos, head of the Panamanian National
Guard, led a military coup which overthrew President Armulfo Arias, and
S. .a. umwed leadership of the nation.
June 25, 1067-President Johnson and Panamanian President Robles announced
d- that agreement had been reached on the "form and content" of three new
i canal treaties, governing administration of the existing canal, the defense
anM neutrality of the existing canal, and the possible construction of a sea-
lo ecanaL
S September 24, 1965--President Lyndon Johnson and Panamanian President
Marceo A. Robles issued a joint statement announcing that three new Panama
Oanal treaties would be negotiated and outlining certain principles to Ibe
't Included in the new treaties. (United States and Panamanian negotiators
began talks concerning the terms for a new Panama Canal treaty in
January 1965.)
tpu22ber 1904-The President signed P.L. 8R-009 authorizing the establish-
ment of the Atlantic-Pacific Interoceanic Canal Study Commission to investi-
gate the feasibility of a more suitable site for the construction of a sea-level
canal. (Cammisslon members were appointed on April 18, 1965P.)
A"i %t 1964-The Organisation ofAmericin States published a Joint declars-
di. taa of the Governments of Panama and the United States In which they
".: nseed to reestablish diplomatic relations and to designate Special Ambassa-
dorm to seek the prompt elimination of the causes of conflict between the
two countries. ( Diplomatic relations were established and the ambassadors
appointed on April 4, 1964)
hbruary 4,1984-The OA8 Council voted to invoke the Inter-American Treaty of
Reciprocal Assistance (Rio Treaty) in the dispute between the United
States aad Panama (the first time that the regional defense machinery
I had been utilised In a dispute involving the United States).
January 29, 1964-The Panamanian Government called upon the Council of the
Organization of American States to take up its charges of aggression against
the United States a a resulmit of the Canal Zone flag riots.
January 10, 1964-Panama suspended relations with the United States, charged
the United States with aggression at the United Nations, and filed a corn-
plaint with the Inter-American Peace Committee of the Organization of
American States, following rioting over the display of the U.S. flag. (Rela-
I ,tioos were officially broken on January 17. 1964.)
January 1%, 1968-United States and Panamanian conferees announced agree-
meat concerning the flag Issue in the Canal Zone to the effect that the Pana-
manian flag would be Sown in the Zone at all points where the U.S. flag
is Eown by civilian authorities.
J=ne IS. 102-President Kennedy and visiting Panamanian President Roberto
Chiari issued a joint communique stating that representatives of the two
nationslem would be named to discuss points of dissatisfaction concerning the
Panama (Canal and Canal Zone within the perimeters of the existing canal
treaties. (Talks began In July 1962 and ended In July 1968.1
November 16. 1961-The Panamanian National Assembly unanimously adopted
a resolution calling for the abrogation of canal treaties with the United
SStates and the negotiation of a new treaty to include affirmation of Pans-
msnian sovereignty overthe Canal Zone and a fixed date for the turnover
of the canal to Panama.
Salember 8. 1961--Pananmanian President Roberto Chiari, in a letter to Preis-
Sdent Kennedy, requested a revision of the Panama Canal treaty. (President
Chiari fonnally announed his goverment's.desire to negotiate a new
anal treaty an September 11, 1961.) ..
Ftsbruary 3, I960-The- Houseo f Reprsseatatives passed H. Con. Res. 409. ex-
pressing the sense of Congress that any vaitnee In the traditional inter-
|M|Mt" at the Panama -al treaties, pelay with respect to terri-
tls savereiguty, should be made onldy by treaty.
leinIaWher 2& iO0-116tIw I broke out -M Pammanlan dsuu0st0a8lfs attempting
second time to enter the Canal Zone to Implant the Panamanian tflag were
t te rt P1aaal bm u amUi .US. fteeem.
"l"W2ea10t UWk -Jg B ety Under. Sbwtary of State LUvWutone Merchant, on
an official lsdon to fanama declared that the Inited States "'recogies



that titular sovereignty over the Canal Zone remains i. 0tie ..t...t
of Panamna." 4 ' .....
November 3, 1959-The Governor of the Canal Zone Ca.1 .foe. ".i
Forces to quell a riot resulting .from Panamanian demonstrators ti
to implant the Panamanian lag within the Zone. .. l
September 25, 1959-The Government of Panama formally requests
Panamanian flag be flown in the Canal Zone.. T N ..
January 25, 1955-The United States and Panama signed the treaty *fiej
Understanding and Cooperation which revised, redefine or renoul
tain rights of the United States and Panama provided in the i. 5A*
canal treaty and the 1936 treaty, and increased the annual A .I. to
Panama to $1,930,000. ....
March 2, 1986-The United States and Paama sig ....the General w J1** .
Friendship and Cooperation which revised, redefined or renounwe ttfi
rights of the United States and Panama provided in the original IWDi3!
treaty, and increased the annual annuity to Panama to $430,00. .:.
March 1, 1922-The United States and Colombia exchanged raticatin. e
Thomson-Urrutia Treaty. (signed on April 6, 1914) whereby Coldnmna So
nized the exclusive U.S. title to the Panama Canal. ...... :,
August 15,1914-The Panama Canal was opened tonavigatioz. .- .
April 18, 1906-Secretary of War William H. Taft, in testimony beforetk'Sen-
ate Committee on Interoceanic Canals, stated: "(Article II of thq a m
Canal treaty) is peculiar in not conferring sovereignty directly.u nfl.
United States, but in giving to the United States the powers which ebaicidE
have if it were sovereign. This gives rise to the obvious implicationoratA
mere titular sovereignty is reserved in the Panamanian Government." ..
February 23, 1904-The U.S. Senate approved the Hay-Bmau-Vara Trty.
(The treaty was officially proclaimed by President Roosevelt on Fehruavp;a
1903.) ,;
January 20, 1904-Secretary of State John Hay, in a letter to Senator sp
concerning the Panama Canal treaty, wrote: "We shall have a tfe i.i, if.
vastly advantageous to the United States, and, we must confess .. .
advantageous to Panama .... You and I know too well-.how many Snts
there are in this treaty to which a Panamanian patriot could object" '.r
December 2, 1903-The provisional government of Panama ratified thejii
Bunau-Varilla Treaty. .
November 18,1903-The United States and Panama signed the.Convention-AWrthe
Construction of a Ship Canal (Hay-Bunau-Varilla Treaty) granting^ the
United States sovereign rights and authority "in perpetuity" over a sPUfiN
zone of land in Panamanian territory for the construction, operation 'td
protection of a ship canal. -
November 6, 1903-The United States recognized the new Republic of PaamA,
which had declared its independence from Colombia three days earlier
August 12, 1903-The Colombian Senate unanimously rejected the Hay-Herwm
Treaty. ::
January 22, 1903--The United States and Colombia signed the Ha-Baitn
Treaty granting the United States a 100-year lease (with option for renWal)
on a specified zone of land across the Isthmus of Panama, with the en4ittsne
right to construct, operate, and protect a ship canal. :
June 2, 1902-The U.S. Congress enacted the Spooner Act authorizing the Presi-
dent to acquire the assets of the former French canal company sad to
acquire a specified strip of land and additional rights and territory from
Colombia for the construction and operation of a ship canal. P- :. ....
November 18, 1901-The United States and Great Britain signed ,the fli
Pauncefote Treaty granting the United States-the exclusive righ:'t t con-
struct, regulate, and manage a ship canal across' Central -anmTemdf t "1
1899--In 1899 the U.S. Congress passed a law directing the Presrident to me a
commission to examine all practical routes for the constktloa Ofw td p
canal across Central America. '.. *" ... ....
1898-In 1898 President MeRinley, in a message to Ongress, statettat emwai-
time highway across the Central Ameuiean isthmus B tsbtrM hby the
United States was. indispensable tO U. S. comment t Ol
expansion. .... .. .
May 18, 1878-In 1878 a French intereceasxe Amaaa eoman ltd *e co-
cession from the Governmfnit of Gllabitit&: l h.alaati emtms qsft a
its territory. IThe flrench -aal enterprise cofpsed in.4 18S 0

Dsember 132, 186-In 184I the United States and New Granada (Colombia)
.. ,In f the Teaty of Peace, Amity, Navigaton, and Commerce guaranteeing
tke rihts of sovereignty and property possessed by Colombia over the
bthmus of Panama and the neutrality of the Isthmus, and guaranteeing to
the United States free right of way or transit across the Isthmus.
March 2,183-In 1809 the House passed a resolution requesting the President
to negotiate with other Interested nations concerning the construction of a
ship canal across the Isthmus of Panama. This followed by tour years a
similar Senate action.
May 18, 18826-In 1826 Secretary of State Henry Clay proposed that delegates
from the United States and the newly Independent South American republics
meeting at the Congress of Panama consider a Joint undertaking to con-
struet a canal across the Central American isthmus.
AddeeoaW rcfrresce sources
A gathering storm over that other canal. New York times, Jan. 6, 1974: 12-18,
A Latin American Vietnam. Foreign Service Journal, v. 51. Jan. 1974: 15-17.
Bunker, Ullsworth. Panama and the United States: a design for partnership.
Speech before the Center for Inter-American Relations at New York City.
Mar. 19, 1974. Dept. of State bulletin, v. 70, Apr. 29, 1974: 453-457.
Constitution of Panama, 1972. Washington, Organization of American States,
1974. 45 p.
Cox, Robert G. Choices for Partnership or Bloodshed in Panama. In Commission
on United States-Latin American Relations. The Americans in a changing
world. New York, Quadrangle, 1975k p. 132-156.
Forty-fifth annual report of the work and operation fiscal year 1978. Communica-
tion from President transmitting the 45th annual report... purusant to 22
U.S.C 278a, together with a report on the research activities of the Gorgas
Memorial Insitute-Middle America Research Unit, and the Comptroller
General's examination of the financial statements of the Institute for
fiscal years 1972 and 197. Washington, U.S. Govt. Print. Off., 1974 60 p.
Georgetown University. Center for Strategic Studies. Panama: canal Issues and
treaty talks. Washington, Georgetown Univ. The Center for Strategic Studies.
Mar. 1967 (Special Report Series: No. 3) 89 p.
Hammarskjold Forums. The Panama canal; background of the sixth Ham-
marskjold forum. New York, May 28. 1964 [by] Richard R. Baxter and
Doris CarrolL Dobbs Ferry, N.Y., Published for the Association of the Bar
of the City of New York by Oceana Publications, 1966. 118 p.
Langley, Lester D. U.S.-Panamanian relations since 1941. Journal of inter-
American studies and world affairs, v. 12, July 1970: 889-366.
LIcler, James P. Panama Canal: focus of power politics. Strategic review, v. 2,
spring 1974: 34-43.
Panama. NACLA's Latin America and empire report, v. 8, SeptL 1974: 1-16.
Panama's struggle for Independence. Current history, v. 66. Jan. 1974: 19-22, 38.
Panama: the proposed transfer of the Canal and Canal Zone by treaty. Georgia
journal of international & comparative law, v. 5, winter 1975: 195-215.
ising public sector investment In Panama spurs many new projects. IMP sur-
vey, v. 4, Feb. 3, 1975: 45-47. RS-5
Rosenfeld, Stephen S. The Panama negotiations-a close run thing. foreign
affairs, v. 54, Oet. 195: 1-18.
Should U.S. yield control of the Panama Canal? Congressional quarterly weekly
report, v. M, Mar. 2,1974: 594-581.
U.S. Atlantic-Pacific Interoceanic Canal Study Commission. Interoceanic canal
studies, 190l Final report of the Atlantic-Pacific Interoceanic Canal Study
Commissionc to the President, Dec. 1, 1970, as required by P.L. 88-600,. 88th
Congress. (Washington, U.S. Govt Print Off., 1971. 1 v. (various pagings).

U w..:

U.S. Department ot State. Bureau of Public Affairs. O o cef qa 4... 1
Panama agree on principles for canal, negotiations; (togethe-t,
ground and status of the Panama Canal treaty ne .ta. 1
U.S., Department of State, News. Release, F*,7, 1,974..... '' ,.*.ip-
U.S. Library of Congress. Congressional :Rese irch evp *ego
Panama Canal treaties: background and pros and ce0s .(b[i.
Hagen. [WashIngten] Nov. 23, !l.0ep. ./ ,.., ..
Multilith 71-250 F .. ,:: ....
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