Panama: Terms of the Treaty

Report Americas

Panama: Terms of the Treaty

October 24, 1977 31 min read Download Report
Jeffrey B.
Senior Associate Fellow

(Archived document, may contain errors)

40 October 24, 1977 PANAMA TERMS OF THE TREATIES SUMMARY The visit to Washington on October 14, 1977, by General Torrijos of Panama underscored the severe pr oblems that have arisen in the series of hearings held on the Panama Canal treaties Through the issuance of a new joint statement of clarifica.tion of some of the terms of the Neutrality Treaty, the two governments attempted'fo reassure the people of both Panama and the United States that the vital interests of both countries are adequately protected under the new agreement.

Howeve'r, the problems exemplified in this one section .of the treaties appear to reflect the general nature of the agreement itself and prospective difficulties with other sections. The following a'reas of controversy that have arisen, particularly in congressional hearings, are examined in detail in the main body of this paper The two new treaties simply follow the general outline of the agreements in principle reached by previous administrations. By not .taking into account the numerous objections raised over the years by the United States Congress 'over some of these principles, an inevitable conflict has arisen between the executiv e and legislative branches of government in the I: at if ication process At the center of the controversies over the new treaties is their fundamental purpose: transferring control of the Panama Canal and the Canal Zone to the Panamanian government over th e next 22 years The creation of a jointly run Panama Canal Commission to immediately replace the Panama Canal Company raises serious -2 problems over the continued efficient operation of the canal The treaty mandates more Panamanian participation in employ m ent A five-year limit on future non-Panamanian workers may lead to a lack of sufficient skilled workers to operate the canal Major control over the Canal Zone and its residents by the Pana manian gwerment takes place in a relatively short 30-month period i n contrast to the 22 years in which administration o the canal is transferred. American canal employees may leave the area rather than live under the jurisdiction of the military dic tatorship that presently rules Panama Prohibiting the United States from negotiating with another nation to construct a new canal without Panama's permission mav foreclose a necessary option if the new canal treaties leads to either extraordinarily inefficient operation with excessive tolls or the complete closure of the canal T?nder the economic terms of the new treaties, the Panamanian qovernment will receive approximately $60 million in revenue per year, or over a 2500% increase from their present direct benefits. Because Panama's share of revenue is tied to the American who l esale price index, the rate will rise at nine separate intervals over the next 22 years. A Panamanian economic minister has estimated that his government would receive a total of $2.262 billion in 1977 dollars Since the new payments to Panama are supposed to come out of operating expenses of the canal, an immediat.e increase in tolls from 25% to 40% will be requfred upon inauguration of the new treaties. This will be the largest sinqle increase in the history of the canal and could substantially affect Ame r ican export and import trade. If the increases still fail to cover expenses then the Panama Canal Commission, as a U.S. government agency, may have to seek appropriations from Cangress to make up for any possible deficit Conflicting interpretations of Ame r ican rights to protect the canal after the year 2000 reveal potential problems with the Panamanian government in the future over the languaqe of the treaty. while apparently resolvinq differences over the meaninq of "expeditious passage" the joint Carter- T orrijos Statement of October 14, 1977, raises other questions about the capability of the United States to act if denied access to Panamanian territory which, after 2000, will encompass all lands surrounding the canal and even the canal itself. -3 1 NTROD U CTION On September 7, 1977, President Carter siqned two nev Panama Canal treaties with General Omar Torrijos in Washington, D.C. If ratified by a two-thirds vote of the United States Senate and approved in a referendum in Panama, the treaties would establ i sh a new framework for the operation of .the Panama Canal for the next 22 years and after that period grant complete control over the canal and adjoining area to the Republic of Panama. The first treaty terminates or supersedes all previous treaties and a g reements with Panama and over a period endinq on December 31 1999, transfers control over the Panama Canal and Canal Zone to the government of the Republic of Panama. The second, much shorter, treaty provides for the Vermanent Neutrality and Operation of t he Panama CanaT.ul In late September and early October, both the Senate Foreign Relations and the House International Relations Committees hel extensive hearings on the new treaties. This analysis revic,ws the provisions of the two treaties, but focuses p r imary attention upon the various controversies that have the course of the congressional hearings. An earlier Heritage Backqroundeg Eo. 31) examined some of the broad general issues involved in the transfer of the canal to Panama. Another Backqr o under will later re-examine some of these same questions in the light of the new treaties: but this analysis deals only witn the specific pro visions of the proposed treaties and the controversies they have precipitated THE FRAMEWORK OF THE TREATIES The t reaties open with reference to both the Joint Declaration of April 3, 1964, and the Joint Statement of Principles of February 7, 1974, between Panama and the rTnited States as establishing the general framework of the new treat.ies.

Most of the details of the two agreements implement many of the qeneral principles laid out in these two previous agreements.

Rut compared to the 1967 draft of an agreement, never officially ratified by either side, the 1977 treaties propose terms that are much more favorable t o the Panamanian side In the prelude to the first treaty, the United States aqrees to abrogate the previous treaties by llacknowledginq the Republic of Panama's sovereignty over its territory.Il In several other places in the agreement, the United States a lso ggacknowledqesfl Panama's sovereignty rather than 8ggrantingnl it. Thus, the fundamental premise of the new treaty rests upon existing Pana manian savereiqnty and the terms of the treaty only change the 4 nature of Panama's sovereign power over the Ca nal Zone. Critics of the aqreement contend that the United States currer,tly pos sesses sovereignty, or at least all, the meaninqful attributes of sovereignty, and thus the new treaty actually tranfers American control.

Unlike the 1903 treaty, the Panama C anal Treaty of 1977 lasts for only 22 years. Thus, the treaty provides the mechanism for transferring all of the facilities and functions relatinq to the operation of the Panama Canal and Zone over to the Republic of Panama. At the termination of this tre a ty at noon, Panama tiw December 31, 1999, the Republic of Panama will assume completn authority over the area. Only the second treaty, dealing with neutrality, extends beyond this 22-year period ABOLITION OF THE PANAMA CANAL COMPANY Article I11 of the fir s t treaty provides for the rights which Panama grants to the United States under the new treaty. These rights relate largely to the operation of the canal under a newly established Panama Canal Commission. This organization, governed by a 9-member board wi t h an an American majority, would assume many of the functions previously performed by the Panama Canal Company. Provided that the American members of the board should vote as a unit, the United States would continue nominal control over the operation of t h e Canal until the year 2000 However, unlike the present arrangement, the activities of the new Commission are narrowly restricted under the treaty itself. Section 5, e.q.8 of Article 111 provides that tho Commission will reimburse the Republic of Panama $ 1 0 million annum for providing "police, fire protection, street maintenance street lightins, street cleaning, traffic management and garbacrr collection.f1 Every three years the payment will be readjustpd +o reflect inflation and other factors. Section 6 p r ovides that Panama Will also assume other functions, such as customs, post offices, courts, and licensing that previously were performed trv the Panama. Canal Company. In general Section 8 provides that Ifthere shall be a growing participation of Panamani an nat ionalsll at all levels of employment related to the canal A separate Panama Canal Consultative Committee is established under Section

7. This body, composed equally of Americans arid Panamanians, will "advise on matters such as general tolls policy , employment, and training polices of Panamanian nationals in the operation of the Canal land international policies on matters concerning the Canal.ff Given the even number of members 5 on this board, potential difficulties exist in the formulation of co ncrete recommendations DEFENSE OF THE CANAL UNTIL 1999 Article N provides the United States with the "primary responsibility to protect and defend the canal" until 1999.

Critics of this section contend that too much discretionary authority has been left wi th the President and that the United states needs to operate more than four bases in order to adequately defend the canal While the United States presently has fourteen bases in the Panama Canal Zone, the new agreement would reduce this number to only fou r . This is not included in the main body of the treaties, but instead has become part of an executive agreement that accompanies the treaties. And even the four bases will be jointly run with the Panamanians. Because the President can act freely under an e x ecutive agreement to reduce forces at his own discretion, Senator Allen objected that too much power was granted the President to effectively phase out credible American military force in Panama well before the year 2000 Moreover, under the treaty a board comprised of an equal number of American and Panamanian military representatives shall oversee military cooperation in defending the canal and Deriodically review the situation. The American forces could only take action outside the limits of their bases w ith the approval of this baord. This has led to concerns that pressurn for he removal of Americans from their existing four bases may mount we11 before 1999 Some military men have also strongly criticized the effec tiveness joint board governing defense d e cisions. They believe that defense of the Panama Canal concerns matters that reair instant decisions that can only be made effectively hv one supreme authority and that a coalition defense arrangement would introduce potential discord and thwart prompt ac t ion AMERICAN EMPLOYEES OF THE PANAMA CANAL Articles V, IX, X, and XI govern the rights of non-Panamanian employees of the Panama Canal. while the United States will continue to operate the canal until 1999, the Republic of Panama assumes official jurisdic t ion over the Canal Zone upon ratification of the treaty and complete legal jurisdiction over -6 the area in a 30-month transition period. Thus' Americans, who previously lived under the jurisdiction of the United States qoveriiment 8 will come under Panam a nian authority Under Article V, called the lfPrinciple of Nonintervention 1 employees of the Panama Canal Commission must 'Iabstain from any activity incompatible with the spirit of the treaty. Accordingly they shall abstain from any political activity In the Republic of Panama as well as from any intervention in the internal affairs of the Republic of Panama.11 This section has engendered great apprehension because the Canal Zone will be a part of the Republic of Panama under the treaty; hence, the milita r y govern ment of Panama will have complete discretion over interpreting what constitutes Itthe internal affairs" of Panama Article XI grants to the United States the primary right to exercise criminal jurisdiction over United. States citizen employees of t he Panama Canal Commission and their dependents and military forces for some offenses. But this right only exists for the 30-month transition period and grants to Panama a wide latitude in other areas. Similarly, the United States will only "retain police authority and maintain a police force" in certain specified areas for the transition period.

Given the present animosity between many Americans currently living in the Zone and the Torrijos government, the new treaties have raised serious questions whethe r sufficient skilled Americans will remain in Panama to run the canal if the new treaties are ratified. Many have already left simply in anticipation of the new agreement: other Zonians have purchased guns for defense. Violence may erupt if the agreement i s ratified and the government of Panama attempts to assert its new jurisdiction over the Canal Zone by attempting to collect the privately owned guns which then will be illeqal under Panamanian law In response to questions raised about prospective problem s that Americans citizens working in Panama may entail, the State Department points out that they I1will enjoy rights and protection similar to those of large concentrations of U. S. government employees elsewhere abroad Also, even if Americans are arreste d under Panamanian laws, they retain the right under the treaty to await trial and serve out their sentence, if convicted, in W.S cu stod y 7 EMPLOYMENT WITH THE PANAMA CANAL COMMISSION Under the treaty other changes pertain to future employees of the Pana m a Canal Commission, the agency given responsibility fox actually running the canal itself. As stated above (Article 111 Panamanians must be qiven increasing participation in the operations of the canal. In order to encourage this, Article X provides that " Within five years from the entry into force of this Treaty, the number of United States nationals employed bv the Panama Canal Commission...shall be at least twenty percent less than the total numberl' now employed by the Panama Canal Company. Thus, if Am e ricans do not voluntarily leave, they will be required to do so. At present a reduction of this size amears likely to occur naturally Moreover, under Section 5 of the same article, any new non Panamanian employees of the canal will only be allowed to work for a maximum of five years. This, mandated rotation will nresumably prevent the continuation of the present American community that has often provided several generations of canal employees. But at the same time, it may make it difficult to continue to f ill the most skilled positions, although some ex ceptions to the five-year policy may be granted. This requirement for a maximum service of five years is counter to the lessons of experience in the operations of the Panama Canal.

Employees have always sought jobs in the pack on the basis of a career of civil service rather than temporary assignment.

In order to accomplish this arbitrary reduction of non Panamanian personnel, the Commission will "periodically inform the Republic of Panama of available posit ionsqf that become open and Panama shall provide "Panamanian nationals claiming to have skills and qualificationsgn necessary for the jobs. In order tha certain skilled personnel will qualify for positions, the Tlnitd States Itshall recognize the professi o nal licenses issued bv the Remblic of Panama The ostensible control that t.he Panamanian qcwfrnment will exercise over the future employees of the canal has led to sow criticism by both Americans and Panamanians now workinq in the Canal Zone. American emp l oyees express the fear that people lacking sufficient qualifications may be placed in jobs simply to satisfy the requirements of the Panamazation formula for overall employment objectives. Moreover, black' Panamanians have voiced their concern that the cu rrent non-discriminatory hiring policies of the Panama Canal Company will be replaced by Panamanian qovernment prejudice in hiring.

Finally, Senator Griffin pointed out in the Senate hearinqs that some questions exist as to whether current procedures for 8 electing union representatives will continue and just what conditions may be imposed, under Panamanian. law, over nego tiations for new contracts. He expressed the fear that workers benefits may have the lowest priority in the allocation of revenues coll e cted by the Commission SEA-LEVEL CANAL OR A THIRD LANE OF LOCKS Of the various portions of the' proposed agr'eement, Article XI1 dealing with.the building of another canal contained one of the. most unexpected provisions. This very short section of the ma i n treaty provides for the joint study by Panama and the United States of possibly building a sea-level canal It also grants to t.he United States the right Yo add a third lane of locks to the existinq Panama Canal If the United States exercises this right , the new lane of locks would be governed by this same treaty and turned over to Panama in 19

99. Some have pointed out that under the 1903 treaty the United states already has authority for expansion and new construction81 for the existinq canal and thus no new permission is necessary. But beyond existinq American rights the new terms have raised other concerns The controversey has focused on the one section of this article that reads in its entirety as follows 2. The United States of America and the Republic of Panama agree on the following a) No new interoceanic canal shall be constructed in the territory of the Republic of Panama during the duration of this Treaty, except in accordance with the provisions of this Treaty, or as the two Parties may otherwise agree; and b) During the duration of this Treaty, the United States of erica shall not neg o tiate with third states for the right to construct an interoceanic canal on anv other route in the Western Hemisphere, except as the two Parties may otherwise agree Technically no sea-level canal can exist because of the variations of water levels caused b y the tides in the two Oceans Thus a sea-level canal actually would be a tidal-locks canal so that the differing levels could be adjusted. Thus one set of locks would still be necessary. -9 Section 2b clearly means that the government of Panama would have the power to prevent the United States from either buildinq or even negotiating to build another canal anywhere in the hemisphere without their consent. Critics have contended t.hat this provision locks the United states into the present treaty and conseq u ently regardless of what might transpire in the next twenty-two years, the United States has no alternative other than using the present canal. Thus even with a change in qovernment in Panama or the closing of the canal for whatever reason the United Stat es could not pursue an alternative route.

In exchanqe for this veto power, the United States presumably has the right under Section 2a of this article to prohibit Panama from bu.ilding a sea-level canal anywhere in her own territory with any other country. Supporters of the new treaty have pointed out that at present Panama could negotiate with thc Soviet Union to build a sea-level canal, but under this section of the new treaty the United States would have to assent.

During the Senate hearings on the trea ties, it was revealed hat supporting documents on Article XI11 indicated that under Section 2a the United States only had a riqht to "first denial of a proposal to build a sea-level canal in Panama. In other words, Panama could pose terms for a sea level canal unacceptable to the United States and in this manner would free herself of any restrictions on her course of action un33r sect.ion 2a.

Furthermore, if a nation such as the Soviet Union offered to simply lend the money to Panama to build a canal +hen this section would not apply The prospective role of a sea-level canal becomes importan in any discussion of havinq a canal that can accommodate Ithe largest supertankers and aircraft carriers. Senator Gravel poifited out in his testimony that the costs o f building a sea level canal (now estimated at $5.29 billion by the Army Corps of Ensineers) could be compensated for by the amount of money saved over several decades .of tranporting upwards of 500,000 barrels of oil per day from Alaska to the Gulf states area. Costs presumably would fall fran the present $2.83 per barrel for Pana manian transshipment to about $2.18 per barrel with a sea-level supertanker. Senator Gravel supported the proposed treaties as paving the way for a new sea-level canal agreement O n the other hand, Senator Thurmond dismissed serious d scus sion of sea-level canal because Panama would either lose all of her jobs related to operating the locks or charge prohibitively hi.qh tolls even for the sea-level canal. With the difficulties tha t - have arisen with the present canal, he contended that the United States should not enter any future canal arrangement with Panama. Others pointed out that even if Panama entered into an -1 0 agreement with the Soviets to build a sea-level canal, the Uni t ed States could satisfy her basic needs by simply maintaininq complete control over the present canal Another objection to this section arose among conservation and environmental groups who object to the principle of a sea level canal Congressman Leggett t estified before the Foreiqn Relations Committee that extreme marine biological hazards would be involved in having a salt water channel between the Oceans Yoreover, conservation groups do not believe that the present wildlife sanctuaries adjacent to the c a nal will be adequately protected when transferred over to the Panamanian government ECONOMIC TERMS OF THE NEW TREATY Aside from the defense and national security issues dealt with below, the new economic arrangements under the proposed treaty have probabl y generated the strongest opposition. The new formula for compensating Panama for the use of the canal over the next 22 years would mean an increase of direct revenue for the Panamanian qovernment of approximately $57 million or over a 2500% increase from t he present amount Article XI11 outlines these new, complicated economic arrangements and also provides for the transfer of the current physical assets of the Panama Canal Zone. This means all of the buildings, dock facilities, the Panama Railroad, and eve n tually all housing, schools, stores, and other properties currently belonging to the Panama Canal Company or the United States qovernment. Panama would take immediate title to most of these assets and others, such as the four military bases, by 1999 Secti o n 4 of Article XI11 provides. for three devices for com 1. Panama shall receive 30 cents .for each net ton for each vessel transiting the canal. This, however is only the base figure. After the first five years, this figure llwill be adjusted to reflect c h anges in the United States wholesale price index for total manufactured goods Each two years thereafter the figure .will be adjusted, presumably upwards Thus during the life of the treaty, this figure would rise on nine separate occasions by the amount th e United States wholesale price index rises every two years pensating Panama for the use of the .canal 11 2. The present fixed annuity of $2.3 million would immediately rise to $10 million and remain at that figure for the duration of the treaty Over the l i fe of the treaty this would amount to $220 million 3. Finally An annual amount of up to $10 million per year" would be paid to Panama out of operating expenses of the canal if any surplus exists. If no surplus in revenues exist in any given year then the u npaid balance shall be paid from operating surpluses in future years Thus the maximum amount collected under this section would be $220 million also In his testimony before the Senate 'Foreign Relations Com mittee, Secretary of State Vance estimated that I nPanama would initially receive about $60 million per year under this formula which would apply until the year 2000.'1 He further pointed out hat "All of these payments are made from Canal revenues. Panama will thus have a strong interest in insuring unim p eded and effi cient use of the canal The United States does not directly pay these amounts to Panama, but instead they must be derived from revenues generated hy traffic through the canal. Thus the United States Congress will never vote directly upon thes e payments to Panama: they .are incorporated in the expenses of operation of the canal by the new Panama Canal Commission. But since the Panama Canal Company currently operates the canal at a slight loss, the only manner in which these new expenditures can be met would be through sub stantial increases in the tolls of ships transiting the canal.

However, in the Senate hearings on the treaty, Senator Griffin indicated that if a deficit does occur then the United States government may be forced to provide the balance of funds because he Panama Canal Commission is a United States government agency The American treaty negotiator Sol Linowitz has already estimated that the tolls under the new treaty would probably rise immediately by 25% to 30% to cover the new e xpenditures and avoid a further deficit. An increase of this amount would constitute the largest single increase since the canal began operatinq in 1914 and still might only temporarily cover anticipated expenditures. The Panama Canal Company has projecte d an increase of 40% to meet the new expenditures. The escalator clause in the 30 cents per ton levy coupled with the Panamanian incentive to guarantee a surplus of $10 million each year would probably produce further increases. -12 Various projections hav e been calculated in order to estimate the total economic benefits that the new treaty bestows upon the Panamanian government. Using Secretary of State Vance's estimate of $60 million per year over the life of the treaty would lead to a +otal of $1.32 bill ion coming into the Panamanian treasury.

Senator Harry Byrd has similarly estimated an ar.ount of $1.15 billion, but both of these figures are in 1977 dollars. In a speech to the Panamanian National Assembly on Auqust 19, 1977 Panamanian Planning and Econo mic Policy Minister Nicolas Ardito Rarletta estimated that his government would receive a total of 82.262 billion in 1977 dollars. The variations undoubtedly reflect differing calculations of anticipated volume of t.raffic through the canal and future cha nges in the toll structure as well as benefits Panama will receive from other operations they w5ll assume in the Canal Zone.

Supporters of these new arrangements contend that the previous payment of $2 3 million constituted inadequate cornomsation for Pana ma's major asset, her geographic location 117 the hearings Senator Percy pointed out that the United States pays other nations comparable amounts of money in order to lease military bases on their territory. Others recalled that last spring Panama demande d $5 billion, including an initial $1 billion lump sum down payment, for the American right to operate the canal for the next 22 years. Thus Panama substantially moderated her demands and therefore the $60 million per year figure is not unreasonable. But m ost.importantly, as Secretary Vance stated, the payments should derive completely from canal revenues and therefore "the treaties require no new appropria tions, nor do they add to the burdens of the American taxpayer."

Opponents of the payments point out that the $2.3 million annuity figure only represents a small part of the total revenues the canal pumps into the Panamanian economy. Includinq waws retirement benefits, purchases of uoods and other items, the estimated gross amount of income flow into Pan ama from the Canal Zone last year amounted to $243.2 million. They further note that only through the construction of the canal by the r'nited States did Panama begin to benefit substantially by her location.

Senator 3rd estimates that the canal and assets in the adjoininq zone constitute a $7 billion investment in itself, and thus ad ditional payments may bring to $10 billion "the overall cost of the Panama Canal treaties Opponents simply deny that Panama had any riqM to demand any amount of money and tha t American rights over the zone exist in the 1903 treaty and this makes the situation fundamentally different from other military base agreements. Finally, the method of payment is considered a sub terffige in that the consumers and producers of all goods p assinq through the canal will have to pay the costs of the increasing tolls. With 68% of all shipping either originating or termi- -13 nating at united States ports, American citizens will ultimately pay a substantial percentage Of the costs involved in t h e new treatv CONFLICTING INTERPRETATIONS OF 'TEE NEYYTRALITY TREATY While the first treaty, examined above, deals extensively with the arrangements for operating and transferring the canal end Canal Zone over to Panama over the next 22 years, the second t r eaty has engendered the most controversy, eventually promptinq another visit to Washinqton by General Torrijos on October 14th and the issuance of a joint clarification statement. The second treaty entitled Vreaty Concerning the Permanent Neutrality and O p eration of the Panama Canal" is designed to provide for the security of the canal after the termination of the first treaty However, even before the initial appearance of the text of this treaty, conflicting interpretations of its key provisions arose A. T he Right of Intervention In particular, attention has focused on two key articles of the treaty dealing with the right of the United States to act unilaterally to maintain the neutrality of the canal and the right of the United States warships to priority passage throuqh t.he canal Article IV reads as follows The United States of America and the Republic of Panama agree to maintain the regime of neutrality estab lished in 'this Treaty, which shall be maintained in order the Canal shall remain perman e ntly neutral notwithstanding the termination of anv other treaties entered into by the two contracting Parties The Carter Administration has contended that under this article the United' States has the authority to intervene uni laterally to protect the n e utrality of the canal. Secretary Vance maintained in his prepared statement to the Senate Foreiqn Relations Committee that after the year 2000 the United States will have a permanent right to maintain the canal's neutrality, including the right to defend t he Canal if necissary.n The language of Article IV %cans there is no limit under the Treaty on the freedom of the U.S. to assure the Canal's neutrality 14 However, on August 19, 1977, Dr. Romulo Escobar Bethancourt the Head of the Panamanian n egotiating team, provided a different version of the neutrality treaty in an address to the Panamanian National Assembly. He examined at length the negotiating process and maintained that it remained %stalled until the United States qave up the idea of it s guaranteeing the Canal's neutrality He alluded back to the first article of the second treaty which states that "The Republic of Panama declares that the Canal shall be permanently neutral I By denyinq the United States the right to join in this declarat i on Escobar maintained that declaring "the Canal's neutrality was an act relating to Panama's sovereignty Therefore, he concluded that "we are not giving the United States the right to intervene.n In a press conference on August 22, Escobar flatly .stated t hat I'The neu trality pact does not provide that the United States will say when the neutrality is violated.1 When confronted at the hearings with Escobarls statements 4mbassador Linowitz asserted that he thought "too much is being made of a statement tha t was made by the negotiator in Panama which has not been repeated It But he also asserted that IrW are under no obligation to consult with or seek approval from any other nation or international body before acting to maintain the neutrality of the canal W h en General George Brown testified before the same committee, he expressed a view similar to Linowitzls, but with less assurance In my 'judgment, these Drovisions insure that the U.S. ability and unilateral right to defend the canal against any external th r eat remain unimpaired B. Expeditious Passage Similar difficulties developed over the meaning of Article VI of the t.reaty which provides that "vessels of war and auxiliary vessels1q of the United States and Panama will be entitled to transit the canal exp e ditiously In his national assembly Fpeech, Escobar asserted that in the course of the negotiations he United States sought preferential rights of passage, but after long discussions they (the American negotiators) accepted the U.S. warships could not be g r anted preferential rights He maintained that by granting any preferential right to United States warships would violate "the neutrality treaty and was contrary to the objective of the treaty we were negotiating when asked about this at a press conference, Escobar rather inelegantly stated, wif...the gringos with their warships say I want to go through first then that is their problem with the other ships there In the Senate hearings, Secretary Vance indicated a differinq interpretation of this section. Whe n asked what the right to -15 transit the canal expeditously meant, Vance responded that "in practical terms, as I understand it, this means our ships will go to the head of the 1ine.l' Ambassador Linowitz admitted that he was disturbed by the statements o f Escobar, but asserted that vlsome people very high in the Panamanian government has assured us that we will not hear similar statements in the future."

But only one week later still more disconcerting statements emerged from Panama. Senator Dole released the text of a confi dential State Department cable that indicated the two views of Escobar had been confirmed by another Panamanian negotiator Carlos mpez Guevara told American Embassy officials that he found discussions of the treaty in the U.S. Senate hearinqs disturbing and that neither preferential passaqe nor intervention were granted to the United States under the neutrality treaty.

In a major televised address on October 3, Guevara elaborated at length on the same points raised in the cable. On the auestions of intervention he stated the following It is sad to see highly responsible officials in the United States say that this neutrality treaty grants the right of intervention. It is sad to note this in consistency, not only because there is nothin g in this treaty to serve as a basis for such a claim, but also because the term tfinterventionlf has been left out of international diplomatic jargon since world War 11 since the time when the UN Charter was signed.

Similarly he stated quite simply that n expeditous does not mean priority or preferential treatrne_nt He noted that the term priority appeared in the 1967 treaty but was "rejected by the Panamanian negotiatinq team" in the 1977 treaty. He directly contradicted Secretary Vance by. saying 1 have h eard it said that. exueditious means 'ahead of the liner (quoted phrase spoken in English) at the front of the line. And from where does thJs interpretation come, when the history of the negotiations reveals that every notion of preferential treatment was re jecterl?'f Senator Dole brought the cable to the attention of the Forej.qn Relations Committee and Senator Stone elaborated upon the Guevara's speech. This led to demands by many members of the committee for some clarification of the terms of the Neutr a litv Treaty. Senator Church stated tersely Let it. be clear that the Senate is not likely to ratify these treaties if crucial pro visions are being interpreted differently by the principal parties, the governments of the United States and Panama Senator C l ark attempted to dismiss the points raised by Dole by asserting that only General Torrijos, as the dictator of -16 Panama, should be listened to in regards to how Panama interprets the treaty. He referred back to the statement by General Torrijos in Washi n gton that the new treaties "places us under the Pentagon's defense umbrella Ambassador Linowitz had earlier referred to this same quotation to ward off qustions raised by Escobar's comments. However, the same night that Lopez Guervara repudiated Vancets i n terpretation of the neutrality treaty, a third Panamanian negotiator, Aristides Royo, attempted to clarify the lrumbrellanl quotation He noted that "it has been said that Panama is placing itself under the Pentagon umbrella, as if this umbrella had been o p ened by these treaties--which are precisely treaties that for a 22-year period will be closing the Pentaqon umbrella over the Republic of Panama C. The Views of General Torrijos While a consistent pattern of answers has emerged from +he three Panamanian n e gotiators, General Torrijos himself has had few public comments on the various disputed portions of the treaty until he made his second visit to Washington. This is no surprising because in the United States Ambassadors Bunker and Linowitz have been the p r incipal interpretors of the new treaty and President Carter has made few public statements about +he treaties other than in response to questions However, the few remarks by General Torrijos before his visit to Washington on the question of the right of i n tervention appear to be consistent with the views of his negotiators. In a report to Panama made while travelling in Yugoslavia on October 1, 1977 he related that while in Washington for the signing ceremony in September, he saw Linowitz testifying on tel e vision He was saying the United States has a right to act freely if the canal is threatened in any way, and unilaterally, that is, whenever they decide to do-so and permanently, that is per saecula saeculdrgm. Religions have a right to speak about perpetu i ty. This is t.he ingredient they use to promote their product. 1 did not want to listen any more. My position in this regard is clear and public. For there to be intervpntion, there must be a people who want to be intervened The Panamanian leader clarifie d this somewhat. further in a speech to a student federation congress in Panama on September 15, 19

77. He commented on some misconceptions that have developed about the treaty I am not afraid, nor am I.denying, that we signed a clause which if misinterpre ted by future U.S I -17 generations could give place to intervention. But I am not afraid because I know the youth that we are producing. And in order for there to be intervention there must be a people willing to accept intervention and these people have no intention of accepting it Much earlier this year, presumably even before any final draft of the neutrality section could have. been completed General Torrijos already spoke confidently about Panamanian rights after the year 20

00. In an interview with a Yexican news Daper in March, Torrijos related the following Some Americans feel that certain canal riqhts should be preserved after 1 January 2000, but they forget that the agreement signed by the Panamanian and U.S. governments clearly states that the treaty will be valid only until 31 December 19

99. After that moment the duties and responsibilities will be assumed by our country solely and exclusively With differences in interpretations threatening the passage of the treaty, t he Carter Administration invited General Torrijos to return to Washington. This lead to the issuance of new statement of understanding of the two most controversial sections of the neutrality treaty. The Carter-Torri jos statement of October 14th indicate d that The correct interpretation of this principle Article IV) is that each of the two countries shall, in accordance with their respective constitutional processes, defend the Canal against any threat to the regime of neutrality, and consequently shall h ave the right to act against any aggres.sion or threat direct.ed against the Canal or against the peaceful transit of vessels through the Canal This new interpretation, by referring to

leach" country, appeared to indicate a right by the United States to u nilaterally act to keep the canal open However, at the same time the second part of the statement ernghasized that This does not mean, nor shall it be interpreted as a right of'intervention of the United States in the internal affairs of Panama. Any Unite d States action will be directed at insurinq that the Canal will remain open, secure and accessible, and it shall never be directed against the territorial integrity or political independence of Panama 18 This restatement of the Panamanian view of interfer e nce may once again cause some difficulties because after the year 2000 the present Canal Zone and the canal itself will by definition be Panamanian territory with the rights of the United States limited to the provisions of the Neutrality Treaty. Yoreover , even assuming a distinction between the canal and Panama, it raises the further question of how the United States could act to defend the canal if prohibited from using Panamanian territory, or the land adjacent to the canal, particularly defending it fr o m Panama The final portion of the clarifying statement directly repu diated the earlier view of Guevara presented above and provided that llexpeditious passagell meant that "in case of need or emergency,11 United States vessels of war could "go to the hea d of the line of vessels in order to transit the Canal rapidly.f1 This riqht apparently woald be guaranteed bv the Panamanian operators of the canal after the year 2000 While most Senatcrs lauded these clarifying statements, some have raised further questi o ns about the new language and what precisely it means. Some questioned the status of the statement since neither President Carter nor General Torrijos even siqned it. Senator Dole, who had highlighted these problems, proposed that the new clarifying langu a ge be directly incorporated in the text of the treaty in order to prevent future conflicting interpretations of this portion of the treaty. But this may only reflect the kinds of problems that may arise in other sections of the treaty not yet subject to s u ch fastidiotis analysis C. Other Considerations in the Neutrality Treaty Beyond the two articles examined above some questions have arisen over two other sections in this treaty. Under Article IIT the treaty provides that 'Wessels of war and auxiliary ves s els of all nations shall at all times be entitled to transit the canal This requirement has created a concern as to whether in time of war enemies of the United States would have equal rights of passaqe through the canal as do America ships. According to t he Panamanians, for genuine neutrality to exist this right must be qranted General George Brown has acknowledqed this interpretation but dismisses Ft.s significance as follows We would depend on our military power on the approaches to the canal to prevent a nation belligerent to us from passing. The treaty says th.ey can pass I 1 9 through the canal but there is nothing that says they can pass to it This assertion has raised the broader question of the capacity of the United States to protect the sea lanes wit.hout having access to any base of support or surveillance in Panama Similarly, if the United States can adequately defend the canal from a posture at sea, then why has the United States maintained 14 bases in the Panama Canal Zone. In his testimony, A dmiral Moorer, former Chairman of the Joint Chiefs of staff, maintained thak only by remaining in Panama with military force can the TJnited States satisfactorily protect the sea lanes and her vital interests in the entire southern Caribbean region.

Finall y, despite the strong assertions of neutrality thak nermeate the treaty, particularly as interpreted by Panama, one section conspicuously asserts discriminatory treatment amonq nations using the canal. Part 2 of Article VI allows Itthe Republic of Columbi a toll-free transit through the canal for its troops, vessels and. materials of war Yoreover, Panama may crrant he Republic of Costa Rica with the right of toll-free transit.1 These two nations have been among the the strongest supporters of a new treaty a n d under it they obtain special privileges. This obviously sets a precedent for granting special rights to the rJnited States, however, Panama has consistently maintained that such privileges would violate the neutral spirit of the agreement CONCLUSION Thi rteen years of sporadic negotiations preceded the final drafting of the new Panama Canal treaties. Nonetheless, the final provisions of the agreement have raised an enormous ranqe of questions before the Senate Foreign Relations Committee.

Since much of th e skepticism focuses on major provisions of the treaties, many Senators have already proposed amendments, or changes, in the actual text of the treaties which would require rensaotiations with the Panamanian government. At. present it appears that neither the Carter Administration nor the Panamanian government would be amenable to any substantive changes in the actual agreement. Thus possibly only a direct vote by the Senate against the treaties would precipitate new negotiations.

In most of these areas of concern, no simple clarifications Qr restatements of the meanings of the language can resolve the difficulties. The attempted clarification of parts of the neutrality treaty have resolved some doubts, especially -2 0 concerning the meaning of expeditious passage. Nonetheless, the definition of Panamanian territorial integrity may prevent effective action by the United States without Panamanian consent and no riqht exists to defend the canal from a threat from Panama itself, such as a strike closing the ca nal Et the most fundamental level no convincing case has been nresented that the new treaties can protect America's vital security and economic interests better than the present treaty.

Instead the current confrontations with the Panamanian uovernment may lead to a much broader range of conflict under the new treaties. But once the treaties are ratified the United States loses control over the Canal Zone and thus most of her leveraue in dealing with the Torrijos regime The new treaties will prcbably precip i tate serious problems involving the continued employment of skilled workers necessarv to run the canal, a substantial rise in tolls that will have severe repercussions on world commerce and particularly the price of goods in the United States, and eventua l ly a conflict with Panama cver American security rights in protecting the canal The new treaties would transform the concept of the Panama Canal from its operation as a vital artery of world commerce into an enterprise designed to satisfy the economic and nationalistic desires of one nation. Other considerations will certainly figure in the final decision of the Senate on ratification, but the specific terms of the treaties have certainly raised, rather than resolved prospective problems inherent in transf erring the canal over to Panamanian control By Jeffrey B. Gayner Policy Analyst


Jeffrey B.

Senior Associate Fellow