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Panama The Treaty Negotiations
During the first two years after the overthrow of Arias, while
the Guard consolidated its control of the government and Torrijos
rooted out his competitors within the Guard, the canal issue was
downplayed and generally held in abeyance. By 1971, however, the
negotiation of new treaties had reemerged as the primary goal of
the Torrijos regime.
In the 1970s, about 5 percent of world trade, by volume, some
20 to 30 ships daily, were passing through the canal. Tolls had
been kept artificially low, averaging a little more than US$10,000
for the 8- to 10-hour passage, and thus entailing a United States
government subsidy. Nevertheless, canal use was declining in the
1970s, because of alternate routes, vessels being too large to
transit the canal, and the decline in world trade.
The canal, nevertheless, was clearly vital to Panama's economy.
Some 30 percent of Panama's foreign trade passed through the canal.
About 25 percent of the country's foreign exchange earnings and 13
percent of its GNP were associated with canal activities. The level
of traffic and the revenue thereby generated were key factors in
the country's economic life
(see Role of the Canal From 1903 to 1977
, ch. 3).
Under the 1903 treaty, the governor of the Canal Zone was
appointed by the president of the United States and reported to the
secretary of war. The governor also served as president of the
Canal Zone Company, and reported to a board of directors appointed
by the secretary of war. United States jurisdiction in the zone was
complete, and residence was restricted to United States government
employees and their families. On the eve of the adoption of new
treaties in 1977, residents of the Canal Zone included some 40,000
United States citizens, two-thirds of whom were military personnel
and their dependents, and about 7,500 Panamanians. The Canal Zone
was, in effect, a United States military outpost with its attendant
prosperous economy, which stood in stark contrast to the poverty on
the other side of its fences.
By the 1960s military activities in the zone were under the
direction of the United States Southern Command (SOUTHCOM). The
primary mission of SOUTHCOM was defending the canal. In addition,
SOUTHCOM served as the nerve center for a wide range of military
activities in Latin America, including communications, training
Latin American military personnel, overseeing United States
military assistance advisory groups, and conducting joint military
exercises with Latin American armed forces
(see United States Forces in Panama
, ch. 5).
Negotiations for a new set of treaties were resumed in June
1971, but little was accomplished until March 1973 when, at the
urging of Panama, the UN Security Council called a special meeting
in Panama City. A resolution calling on the United States to
negotiate a "just and equitable" treaty was vetoed by the United
States on the grounds that the disposition of the canal was a
bilateral matter. Panama had succeeded, however, in dramatizing the
issue and gaining international support.
The United States signaled renewed interest in the negotiations
in late 1973, when Ambassador Ellsworth Bunker was dispatched to
Panama as a special envoy. In early 1974, Secretary of State Henry
Kissinger and Panamanian foreign minister Juan Antonio Tack
announced their agreement on eight principles to serve as a guide
in negotiating a "just and equitable treaty eliminating once and
for all the causes of conflict between the two countries." The
principles included recognition of Panamanian sovereignty in the
Canal Zone; immediate enhancement of economic benefits to Panama;
a fixed expiration date for United States control of the canal;
increased Panamanian participation in the operation and defense of
the canal; and continuation of United States participation in
defending the canal.
American attention was distracted later in 1974 by the
Watergate scandal, impeachment proceedings, and ultimately the
resignation of President Richard M. Nixon. Negotiations with Panama
were accelerated by President Gerald R. Ford in mid-1975 but became
deadlocked on four central issues: the duration of the treaty; the
amount of canal revenues to go to Panama; the amount of territory
United States military bases would occupy during the life of the
treaty; and the United States demand for a renewable forty- or
fifty-year lease of bases to defend the canal. Panama was
particularly concerned with the open-ended presence of United
States military bases and held that the emerging United States
position retained the bitterly opposed "perpetuity" provision of
the 1903 treaty and thus violated the spirit of the 1974 KissingerTack principles. The sensitivity of the issue during negotiations
was illustrated in September 1975 when Kissinger's public
declaration that "the United States must maintain the right,
unilaterally, to defend the Panama Canal for an indefinite future"
provoked a furor in Panama. A group of some 600 angry students
stoned the United States embassy.
Negotiations remained stalled during the United States election
campaign of 1976 when the canal issue, particularly the question of
how the United States could continue to guarantee its security
under new treaty arrangements, became a major topic of debate.
Torrijos replaced Foreign Minister Tack with Aquilino Boyd in April
1976, and early the next year Boyd was replaced by Nicolás González
Revilla. Rómulo Escobar Bethancourt, meanwhile, became Panama's
chief negotiator. Panama's growing economic difficulties made the
conclusion of a new treaty, accompanied by increased economic
benefits, increasingly vital.
The new Panamanian negotiating team was thus encouraged by the
high priority that President Jimmy Carter placed on rapidly
concluding a new treaty. Carter added Sol Linowitz, former
ambassador to the OAS, to the United States negotiating team
shortly after taking office in January 1977. Carter held that
United States interests would be protected by possessing "an
assured capacity or capability" to guarantee that the canal would
remain open and neutral after Panama assumed control. This view
contrasted with previous United States demands for an ongoing
physical military presence and led to the negotiation of two
separate treaties. This changed point of view, together with United
States willingness to provide a considerable amount of bilateral
development aid in addition to the revenues associated with
Panama's participation in the operation of the canal, were central
to the August 10, 1977 announcement that agreement had been reached
on two new treaties.
Data as of December 1987
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