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Panama Relations with the United States: The Panama Canal
United States and Panamanian relations on issues connected to
the control, operation, and future of the canal were conducted
within the framework of the 1977 Panama Canal treaties. The
negotiation of these treaties took several years and aroused
domestic political controversies within both nations
(see The Treaty Negotiations;
The 1977 Treaties and Associated Agreements
, ch. 1).
Negotiations were finally concluded in August 1977 and, the
following month, the treaties were signed in Washington.
The treaties were ratified in Panama by slightly more than twothirds of the voters in a national plebiscite. Ratification by the
United States Senate was much more difficult and controversial and
was not completed until April 1978. During the ratification
process, the Senate added several amendments and conditions,
notably the DeConcini Condition, which declared that if the canal
were closed or its operations impaired, both the United States and
Panama would "have the right to take such steps as each deems
necessary . . . including the use of military force in
the Republic of Panama, to reopen the canal or restore the
operations of the canal." Despite an additional amendment, which
specifically rejected any United States "right of intervention in
the internal affairs of the Republic of Panama or interference with
its political independence or sovereign integrity," the Senate's
changes were met with strong protests from Panama, which never
ratified the new amendments. Formal ratifications, however, were
exchanged in June, and the treaties came into force on October 1,
1979.
To implement the provisions of the treaties establishing the
new Panama Canal Commission, to regulate the conditions for canal
employees, and to provide for the handling and disbursement of
canal revenues, the United States Congress enacted Public Law (PL)
96-70, the Panama Canal Act of 1979. Several provisions of this act
immediately became a focus for ongoing controversy between the two
nations. Panamanians objected to provisions for the use of canal
revenues to pay for early retirements for United States employees,
to finance travel for education by the dependents of United States
employees, and to provide subsidies to make up for any loss of
earning power when, as required under the treaties, United States
employees lost access to United States military commissaries. By
1986 Panamanian authorities were claiming that such provisions had
cost their nation up to US$50 million. The claim was largely based
on the fact that Panama had not been receiving the up to US$10
million annual contingency payment from Panama Canal Commission
profits provided for by the treaties. The commission explained that
this was because the surplus simply did not exist, a fact that
Panama, in turn, attributed to provisions of PL 96-70.
The level of Panamanian complaints about PL 96-70 and the
intensity of government charges of noncompliance by the United
States in other areas were often influenced by the overall state of
relations between the two nations. As tensions increased during
1986 and 1987, Panamanian complaints became more frequent and
passionate. United States executive and congressional pressures and
the suspension of aid that followed the June 1987 disturbances were
portrayed by the government and its supporters as part of a United
States plot to block implementation of the 1977 treaties and/or to
maintain the United States military bases in Panama beyond the year
2000. In the months that followed, the government stepped up this
campaign, attempting to link the opposition with elements in the
United States Congress who allegedly were trying to overturn the
treaties. Such charges, however, seemed more an effort to influence
domestic opinion than a reflection of actual concerns over the
future of the treaties.
Article XII of the Panama Canal Treaty provides for a joint
study of "the feasibility of a sea-level canal in the Republic of
Panama." In 1981 Panama formally suggested beginning such a study.
After some discussion, a Preparative Committee on the Panama Canal
Alternatives Study was established in 1982, and Japan was invited
to join the United States and Panama on this committee. The
committee's final report called for the creation of a formal
Commission for the Study of Alternatives to the Panama Canal, which
was set up in 1986. Although there was a general perception that
the costs of such a canal would outweigh benefits, the commission
was still studying the problem in late 1987, and further action in
this area would await the conclusion of its labors.
One continuing bone of contention related to the treaties was
the presence and function of United States military bases in Panama
(see United States Forces in Panama
, ch. 5). United States military
forces in Panama numbered slightly under 10,000. The United States
military also employed 8,100 civilians, 70 percent of whom were
Panamanian nationals. In addition to the units directly involved in
the defense of the canal, the United States military presence
included the headquarters of the United States Southern Command,
responsible for all United States military activities in Central
and South America, the Jungle Operations Training Center, the
Inter-American Air Forces Academy, which provided training for
Latin American air forces, and the Special Operations CommandSouth . Until 1984 Panama also was home to the United States Army
School of the Americas, which trained Latin American army officers
and enlisted personnel, but the facility housing that institution
reverted to Panama in 1984 and, when negotiations with Panama over
the future of the school broke down, the United States Army
transferred the operation to Fort Benning, Georgia.
Issues involving the United States military presence included
the possible retention of some bases beyond the year 2000, the use
of the bases for activities not directly related to the defense of
the canal, most notably allegations of their use in support of
operations directed against Nicaragua's government and, since June
1987, charges by the United States of harassment and mistreatment
of United States military personnel by Panamanian authorities.
There were also problems relating to joint manuevers between United
States and Panamanian forces, exercises designed to prepare Panama
to assume responsibility for the defense of the canal
(see Canal Defense
, ch. 5). These manuevers were suspended in 1987, in part
because of a United States congressional prohibition on the use of
government funds for "military exercises in Panama" during 1988.
Despite such problems, the implementation of the 1977 treaties
has continued on schedule and the United States has stated
repeatedly its determination to adhere to the provisions and
transfer full control of the canal to Panama in the year 2000. An
October 1987 effort to amend the fiscal year (FY) 1988 foreign
relations authorization act to include a sense of the Senate
resolution that the United States should not have ratified the
treaties and that they should be voided if Panama refused to accept
the DeConcini Condition within six months was defeated by a vote of
fifty-nine to thirty-nine. Barring a much higher level of turmoil
in Panama that would directly threaten canal operations, it
appeared highly likely that the canal would become fully Panamanian
in the year 2000.
Data as of December 1987
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