Docs 392-411
392. National Security Council Report/1/
NSC 6102
Washington, January 10, 1961.
/1/Source: National Archives and Records Administration, RG 59, S/S-NSC Files: Lot 63 D 351, NSC 6102. Secret. A January 10 note from NSC Executive Secretary James S. Lay, Jr., to the National Security Council, attached to the source text, states that at the 473d NSC meeting on January 5, the Council adopted the statement of policy in NSC 6026 subject to the amendments set forth in NSC Action No. 2368-b and that on January 10 the President had approved the statement as amended, which was enclosed as NSC 6102. NSC 6026 was dated December 29, 1960. (Ibid., NSC 6026) A memorandum of the NSC discussion on NSC 6026 is in the Eisenhower Library, Whitman File, NSC Records; NSC Records of Action are in Department of State, S/S-NSC (Miscellaneous) Files: Lot 66 D 95.
A note dated January 22, 1963, from NSC Executive Secretary Bromley Smith to all holders of NSC 6102, attached to the source text, indicates that the President had authorized the rescission of NSC 6102.
U.S. POLICY ON THE PANAMA CANAL AND A FUTURE INTER-OCEANIC
CANAL IN CENTRAL AMERICA
[Here follows discussion of general considerations concerning the Panama canal, a possible sea-level canal and the impact of such a canal on U.S.-Panama relations, and possible solutions.]
Objectives
19. Maintenance at a suitable site of an inter-oceanic canal adequate to meet world-wide commercial and Free World military requirements, as invulnerable to attack as possible, under a form of control adequately protecting U.S. interests and preferably organized on a self-financing basis.
20. A Panama which is politically stable, internally secure, progressing toward sound economic growth, and capable of taking an increasingly constructive role within the Inter-American system.
21. Preservation of at least the present measure of U.S. influence in Panama, and if possible increased influence, so as to (a) deny hostile influence over the region to any other power (especially a non-hemispheric power), (b) exert a constructive influence on radical nationalism and on social evolution in the area, and (c) promote the growth of democratic institutions.
22. Development of U.S. interests in the Isthmian region in a manner which will strengthen the Inter-American system, keep Panama securely therein, and create conditions necessary to successful negotiations for and subsequent operations of a sea-level canal.
23. Maintenance of a U.S. military base complex in Panama for so long as it is in the U.S. strategic interest.
Major Policy Guidance
24. Take steps, as outlined below, which hold the greatest hope for assuring the primary U.S. interest in the region--an adequate inter-ocean sea-level canal under conditions of control which are acceptable and advantageous to both the U.S. and the host country.
25. Recognizing that the present Canal will be inadequate in approximately 20 years, proceed on the basis that a sea-level canal should be constructed, that it should be completed by 1980, that a decision as to its preferred location and a construction plan must be made soon and that preferably it should be self-financed.
26. Undertake a comparative study of the economic feasibility of alternate sites for a sea-level canal, giving particular attention to the fact that the present Canal Zone represents territory over which the United States exercises sovereign rights, and to the economic impact upon the Republic of Panama of eventual replacement of the present Canal.
27. Proceed, as consistent with U.S. nuclear testing policy, with a program of research, development and testing to improve nuclear explosives available for excavation purposes; establish as accurately as possible the physical, biological and psychological effects of nuclear explosives under conditions to be encountered at the canal site; and determine the safety and over-all costs of the use of such explosives for a canal project.
28. Formulate promptly a comprehensive program for discussion with the Congress to create the most promising framework for the accomplishment of long-range U.S. objectives in the Isthmian region without relinquishing control of the Zone under existing treaty arrangements.
29. Continue programs to improve community relations between the residents of the Canal Zone and the Republic of Panama.
30. Continue to impress strongly upon the Panamanian Government the urgent necessity, in its own self-interest and the interests of the Panamanian people, of initiating a program of political and socio-economic development utilizing Panamanian resources to fullest possible extent in such fields as (a) land tenure and increased agricultural productivity, (b) housing, (c) taxation, (d) diversification of the economy, (e) public education and administration, (f) political reform, and (g) industrial development.
31. Manage our relations between Panama and the Canal Zone in a manner calculated to establish the politico-psychological framework in which to negotiate satisfactorily for a new canal and for ceasing the operation of the present canal.
32. In seeking to assure the accomplishment of long-range U.S. objectives in the Central American region and of keeping that region securely within the Inter-American systems and susceptible to U.S. influence, continue to contribute to the cost of favorably influencing socio-economic change in Panama.
33. With respect to the present canal:
a. Pending completion of a new canal, maintain in force to the fullest extent feasible, all the rights, power and authority granted the United States by the Convention of 1903 with Panama, as modified by the Treaties of 1936 and 1955./2/
/2/For text of the Isthmian Canal Convention signed at Washington November 18, 1903, see 10 Bevans 663. For text of the Treaty of Friendship and Cooperation signed at Washington March 2, 1936, see 10 Bevans 742. For text of the Treaty of Mutual Understanding and Cooperation signed at Panama January 25, 1955, see 6 UST (pt. 2) 2273.
b. Continue the current Canal improvement program with a view to completing it by 1968.
34. Permit no hostile or lawless actions by individuals or groups within the Canal Zone, and assure that the Government of Panama is made aware that the Zone authorities will take prompt, effective and continuing measures to prevent such disturbances from moving from the Panamanian territory into the Canal Zone and that their full cooperation is desired. To this end be prepared to use U.S. military forces to preserve order in the Canal Zone.
35. Continue to develop the Canal Zone as a center for Inter-American civil and military cooperation.
[Here follow annexes A-D, concerning various aspects of a possible inter-oceanic canal.]
393. Telegram From the Embassy in Honduras to the Department of State/1/
Tegucigalpa, July 22, 1961, 7 p.m.
/1/Source: Department of State, Central Files, 611.19/7-2261. Secret; Priority.
52. Limit distribution to Secretary of State, Assistant Secretary Woodward, the White House. From Goodwin. I was met at the conference of CA Finance and Foreign Ministers/2/ by David Samudio, Chairman of Panama's National Planning Commission. He said that President Chiari has sent him to the conference to see me and deliver a personal and private message from Chiari to President Kennedy.
/2/Reference is to an informal meeting of Foreign and Economic Ministers of Central America and Panama, held July 21-23 in Tegucigalpa.
The message was, it is necessary for Panama and the US to undertake a fundamental revision of their relations with respect to the Panama Canal. Panama feels that the US should continue to operate and defend the Canal: but the income from operations should go to the GOP (this means the income now devoted to general improvements in the Canal Zone). Chiari wanted to deliver this message to President Kennedy so that the actions of Panama in asking such a revision will not come as any surprise. They want to negotiate an entirely new treaty and not merely renegotiate the existing agreement. This is because the original agreement was made by Secretary Hay and Bunau-Varilla who was a Frenchman acting as the Minister of Interior of Panama in Washington (try that on Abe Chayes). He further stated that Panama would do nothing about this until after Montevideo/3/ so as not to embarrass the US by permitting the Communists to use this as a lever with which to attack the conference.
/3/Reference is to the meeting to be held in August at Punta del Este; see Documents 19 ff.
I told him that I would relay his message to the President.
Burrows
394. Telegram From the Department of State to the Embassy in Panama/1/
Washington, August 31, 1961, 10:18 p.m.
/1/Source: Department of State, Central Files, 611.19/8-2461. Confidential; Niact. Drafted by Katherine W. Bracken, Director of the Office of Central American and Panamanian Affairs; cleared in draft with U/PR, L, H, B, G; and approved by Woodward.
175. Deptel 157,/2/ Embtel 198./3/
/2/Telegram 157 to Panama City, August 23, instructed Ambassador Farland to discourage President Chiari from sending a letter to Kennedy requesting treaty negotiations, since a study was underway concerning the possibility of a sea-level canal, and the U.S. Government considered the study's completion a prerequisite to any decision to discuss new negotiations. (Ibid., 611.19/8-2061)
/3/Telegram 198 from Panama City, August 24, urged reconsideration of the decisions reflected in telegram 157, which it argued would lead to a deterioration of U.S.-Panamanian relations. (Ibid., 611.19/8-2461)
1. Assure Chiari we are sympathetic to his concern for social progress as evidenced his conversation with you reported Embtel 164./4/ We understand his belief, as also expressed in the past by Ambassador Arango, that increased annuity from Canal might provide source funds such purpose.
/4/Telegram 164 from Panama City, August 14, reported a conversation between Ambassador Farland and President Chiari in which the latter stated that talks about the canal were necessary because of Panama's need for additional revenues. (Ibid., 611.19/8-1461)
2. Discourage Chiari from sending letter requesting treaty negotiations. Inform him US Government is currently making study leading toward decision on sea-level canal and considers any treaty talks dependent on outcome this study; that we are attempting hasten decision. We do not believe mutual interests of either Government would be served by premature forcing of treaty issue leading to needless exacerbations.
3. In the meantime we would meet with an economic mission from GOP in late September to review social and economic investment plan and study best employment of all available resources for betterment Panamanian people. We believe such a review could result in material benefit to Panama in meeting social progress requirements in immediate future.
4. We understand Chiari plans personal vacation in Miami late September and return Panama for session Assembly opening October 1. You may indicate that should Chiari wish to visit Washington during his stay, President Kennedy would entertain him at informal luncheon. Because of heavy schedule of visits during September it will not be possible for several days to set date convenient to White House. Protocol difficulties inherent in even informal visit of this nature will be greatly diminished if President Chiari agrees to this rather than heading economic mission.
FYI only. We are exploring possibility of a unilateral increase in annuity to be deposited to fund for economic and social development along lines recommendation in your May 12 letter to the Secretary./5/ We will advise you further when necessary consultations in Washington have been completed. In meanwhile do not allow Panamanians become aware our efforts in this regard. End FYI.
/5/Not printed; it made a number of recommendations. (Ibid., 611.19/5-1261)
Since the approach outlined above is designed to meet President Chiari's, rather than the Foreign Minister's, motivations for reopening negotiations, we prefer you talk first with Chiari. However we leave to your discretion how best to discourage transmittal of the draft letter (Embtel 194)/6/ within limits of above guidance. Please report soonest./7/
/6/Dated August 23; it transmitted the text of a draft letter. (Ibid., 611.19/8-2361)
/7/Farland reported in telegram 231 from Panama City, September 2, that he had conveyed the U.S. position to Chiari and Foreign Minister Solis, but that Chiari said he intended to send the letter. (Ibid., 611.1913/9-261)
Rusk
395. Memorandum From the Deputy Secretary of Defense (Gilpatric) to President Kennedy/1/
Washington, September 2, 1961.
/1/Source: Washington National Records Center, RG 330, Records of the Office of the Secretary of Defense, OSD/ISA Files: FRC 64 A 2382, 821 Panama. Secret. Drafted in the Office of the Assistant Secretary of Defense for International Security Affairs.
SUBJECT
Relations with Panama and the Requirements for a Sea Level Canal
Reference is made to your memorandum of August 30, 1961,/2/ concerning the necessity for a sea level canal and current discussions with the Republic of Panama on our relations in connection with the present canal.
/2/This memorandum referred to recent technical studies indicating that a sea-level canal would not be needed until the year 2000 and requested an early recommendation as to its necessity. (Ibid.)
Recent technical studies completed under the aegis of the Panama Canal Company indicate that adoption of new techniques for lock overhaul and repair will almost double the present dependable capacity of the canal by 1965. However, recent studies also indicate that the previous forecasts of traffic requiring transit of the canal were conservative. These developments call for a re-study of the concept that commercial requirements necessitate the completion of a sea level canal by 1980, one of the premises upon which our present canal policy as embodied in NSC 6102 of January 10, 1961, is based. As a result, the Department of the Army has initiated an appraisal of these developments in connection with the requirements for a sea level canal as stated in NSC 6102.
With regard to the preliminary discussions with Panama, the Department of State has drafted a new paper on our policy toward Panama and on a sea level canal./3/ Comments of the Department of Defense have been requested. The paper will reflect the results of the review of recent developments and their effect on the need for a sea level canal, and should make possible final recommendations thereon. Every effort will be made to complete the study and the resulting recommendations at the earliest possible moment.
/3/Reference is to a draft Policy Guidelines paper drafted in the Bureau of Inter-American Affairs and discussed informally at the working level with the Department of Defense. The paper never received final approval. Drafts dated September 19, 1961, and March 1962, together with related material, are in Department of State, Policy Guidelines: Lot 67 D 396, Panama.
With reference to your question on the implementation of the "equal pay for equal work" provision of the 1955 Treaty, I am assured by the Secretary of the Army that there has been careful and conscientious compliance with each element of our commitment. Since Executive Order 10794 assigns to the Secretary of the Army primary responsibility for implementation of these aspects of our treaty obligations, as set forth in Public Law 85-550, I am asking him to prepare for you a statement of the actions taken.
Roswell L. Gilpatric/4/
/4/Printed from a copy that indicates Roswell signed the original.
396. Memorandum of Conversation/1/
Washington, September 15, 1961, 10:05-10:20 a.m.
/1/Source: Department of State, Central Files, 611.1913/9-1561. Limited Official Use. Drafted by Bracken and approved by the White House on September 27. The time of the meeting is taken from Kennedy's Appointment Book. (Kennedy Library)
SUBJECT
Call of Ricardo Chiari on the President
PARTICIPANTS
The President
Ambassador Arango of Panama
Mr. Ricardo Chiari, brother of President of Panama, Roberto Chiari
Assistant Secretary Woodward
Mr. Richard Goodwin, Special Assistant to the President
Mrs. Katherine W. Bracken, Director, Office of Central American and Panamanian Affairs
The President referred to Ambassador Arango's participation in the work of the OAS Subcommittee visiting the Dominican Republic. He expressed his hope that democracy could be developed there without the country's falling into a military dictatorship, that this was a difficult task, and that a favorable result would be an outstanding achievement.
Mr. Chiari conveyed the greetings of his brother, the President of Panama, and handed President Kennedy a letter from President Chiari./2/ The President read the letter and commented that he recognized that problems exist with regard to the canal, that he would like to discuss with Secretary Rusk and Mr. Woodward how best to go about the questions President Chiari's letter raised. He questioned Mr. Chiari on the principal causes for concern to Panama arising from the Canal treaties. Mr. Chiari mentioned first the sovereignty issue, that the in perpetuity provision was deprecating to the Panamanian people. He said that Panama's economy is in a precarious state and the country needed to exploit its resources, one of which is the canal.
/2/A translation of this letter, dated September 8, is filed with a covering memorandum of September 28 from Executive Secretary Battle to Goodwin. (Department of State, Central Files, 611.19/9-2861)
The President asked the amount of the annuity. Mr. Chiari replied $750,000; the Ambassador interposed a correction, to $1,930,000, and pointed out there were two sources: one the annuity, the other the contribution from Canal Zone operations which ran from $40 to $60 million a year, usually the latter, or 1/6 the gross national product of Panama. Mr. Chiari remarked that Canal tolls should be increased since they had remained the same since 1914. Mr. Woodward suggested a survey should be made to determine what the traffic would bear and at what point it would be cheaper to ship by trans-continental railroad or around the Cape.
In closing, the President said he would consult with Secretary Rusk and Mr. Woodward and would try to have a reply by October 1 since he understood there was some pressure on President Chiari because of the opening of the Assembly. He would like his reply to be responsive. However, he did not believe we should sit down to discuss negotiations without knowing how the discussions were going to come out. He did not want discussions to end in disagreement and felt it was preferable to wait until we were satisfied that we could come to a mutually agreeable conclusion.
397. National Security Action Memorandum No. 95/1/
Washington, September 15, 1961.
/1/Source: Department of State, NSAM Files: Lot 72 D 316, NSAM 95. Secret. A September 15 memorandum from NSC Executive Secretary Bromley K. Smith states that after Kennedy's memorandum had been distributed, it had been decided to include it in the NSAM series and to insert a subject line. Smith's memorandum is filed with a copy of NSAM 95, which includes the subject line, "Renegotiation of Panama Canal Treaty." (Kennedy Library, National Security Files, Countries Series, Panama, General)
MEMORANDUM FOR
The Secretary of State
As you know, the President of Panama has sent me a letter requesting that we re-negotiate our Panama Canal Treaties. It seems to me we should take a careful look at this problem with a view to analyzing what our basic interests are in the Canal Zone, what concessions we could make, and on what terms we could reasonably expect to get a long-term settlement. After we formulate our own views we should discuss them quietly with the Panamanians. We don't want to make a public announcement of negotiations until we have decided what the result of the talks will be.
I think we should establish a special working group with Assistant Secretary Woodward as Chairman,/2/ including representatives from Defense, the Budget Bureau, Jerry Wiesner/3/ and Dick Goodwin. I would like the recommendations of this group within the next two weeks. After that we can go ahead and begin some talks with the Panamanians. You might also bring Farland up for consultation with the group.
/2/A memorandum of September 27 from Battle to McGeorge Bundy indicates that the Department was making arrangements for Under Secretary Ball to chair the study; an attached note states that Bromley Smith had indicated White House approval. (Department of State, Central Files, 611.1913/9-2761)
/3/Special Assistant to the President for Science and Technology Jerome Wiesner.
John Kennedy
398. Memorandum From Secretary of State Rusk to President Kennedy/1/
Washington, October 9, 1961.
/1/Source: Department of State, NSAM Files: Lot 72 D 316, NSAM 95. Secret. No drafting information appears on the source text, but it was approved by Goodwin on October 18.
SUBJECT
Recommendations on Improving Relations with Panama
Your memorandum of September 15, 1961 requests the establishment of a special working group to prepare recommendations on improving relations with Panama.
Such a group, under the chairmanship of Under Secretary George W. Ball, and including representatives from Defense, the Budget Bureau and the White House staff has carefully examined this problem in the last two weeks.
The group has found that an analysis of our basic interests in the Canal Zone, a determination of the concessions we might make to Panama, and the terms on which we could reasonably expect to get a long-term settlement of our problems with Panama, are matters which require far more detailed study than is possible for the group to undertake in such a short period of time.
To formulate a workable policy governing our relations with Panama and the Canal will require an intensive study by a group of experts. To achieve this, it is recommended that you designate the policy group under Mr. Ball as an NSC Working Group and authorize the appointment of a special study group of experts, under the chairmanship of the Department, to examine in detail problems confronting us in our relations with Panama. The Department would propose to appoint Ambassador Muccio,/2/ who has had extensive experience in treaty renegotiation with Panama in 1955, as Coordinator of this study group. The study group's report would be submitted to Mr. Ball's policy group within 90 days.
/2/Ambassador to Guatemala John J. Muccio.
Suggested terms of reference for the proposed subgroup are enclosed./3/
/3/Entitled "Administrative Actions to Improve Relationships." None of the enclosures is printed.
Pending the completion of the report of the NSC Working Group, it is recommended that we proceed on a selective basis with certain administrative actions which can improve our relations with Panama without treaty change, as outlined in the second enclosure.
A draft reply to the letter from President Chiari, requesting that we renegotiate the canal treaties, is also enclosed.
Dean Rusk/4/
/4/Printed from a copy that indicates Rusk signed the original.
399. Memorandum of Conversation/1/
Panama City, January 19, 1962.
/1/Source: Department of State, Central Files, 611.1913/1-1962. Confidential. Drafted by Bracken and approved in U on January 23.
SUBJECT
Call of Under Secretary Ball on President Chiari at Casa Presidencial, Panama/2/
/2/Ball was in Panama to attend a meeting of the Panama Canal Company Board of Directors, on which he represented the Department of State.
PARTICIPANTS
President Chiari
Under Secretary Ball
ACCOMPANYING PRESIDENT CHIARI
Foreign Minister Galileo Solis
Finance Minister Gilberto Arias
David Samudio, Director General of Planning
Jorge Riba, Technical Director, Planning Bureau
Fabian Velarde, Presidential Press Secretary
ACCOMPANYING UNDER SECRETARY BALL
Ambassador Joseph S. Farland
Katherine Bracken, Director, Office of Central American and Panamanian Affairs
George Springsteen, Special Assistant to the Under Secretary
The Under Secretary conveyed the greetings of President Kennedy to President Chiari and indicated that Mr. Kennedy looked forward to seeing Mr. Chiari in Washington in the future.
The Under Secretary said that he had expressed to the Foreign Minister at the airport Secretary Rusk's appreciation of the vigorous action which the Panamanian Government had taken in connection with the Cuban problem and wished to repeat this to the President as well. President Chiari thanked Mr. Ball for his comments.
Mr. Ball then informed President Chiari that, as mentioned in President Kennedy's recent letter to him,/3/ a special study group had been set up to assess United States needs with regard to the Canal, and that Ambassador Muccio had been designated to head the group. The importance given the group and the seriousness with which the United States was pursuing the study, the Under Secretary said, was demonstrated by President Kennedy's selection of Ambassador Muccio to direct the activities of the group. Mr. Ball said that the report would provide a basis for a letter to President Chiari and it was hoped that this would come forward in a few months.
/3/Kennedy's letter, November 2, replied to Chiari's letter of September 8. For text, see Department of State Bulletin, December 4, 1961, pp. 932-933.
President Chiari indicated his pleasure at this information and noted that studies of the Canal had been under way for many years and inquired how this review might differ from already existing reports. The Under Secretary pointed out that there were in effect new conditions and that the present review was a more comprehensive analysis, particularly of the economic and strategic needs, and would take into account the technological advances that have made possible new methods of canal excavation.
President Chiari asked whether the United States was still considering a sea-level canal and the routes already explored. The Under Secretary replied that this is one facet of the total study. President Chiari remarked that he was happy to hear this since he and his Government had gathered from the extensive improvements under way to widen the cuts that a new canal was no longer considered.
The Finance Minister inquired whether the United States was contemplating a revision of the present canal treaties apart from a treaty regarding a new canal. The Under Secretary responded that this was a part of the total study of a total problem.
President Chiari referred to delay in getting projects implemented under the $9.9 million grant made in October 1961. Mr. Ball referred to the extensive reorganization of the aid programs which had taken place in Washington, but which was just about completed, and added that we could now press on to hasten implementation of the projects. He noted that funds were now allotted and the program could move forward.
President Chiari brought up the question of authorization for Panamanian firms to participate in the school construction projects, particularly since there were well qualified Panamanian firms who could operate in the rural areas to better advantage than foreign firms. The President stressed that Panama is now in the dry season and that unless construction can move forward now, a year of delay would result. The Under Secretary replied that preliminary consideration of the waiver proposal had already begun and that he did not anticipate problems in this connection.
President Chiari expressed his gratification and introduced Mr. Samudio, and Mr. Riba, who had just joined the group. Mr. Samudio described briefly a memorandum he had prepared on the steps, including self-help, taken so far by Panama and the country's expectations under the Alliance for Progress, which President Chiari passed on to Mr. Ball. The Under Secretary indicated he would read the memorandum with great interest.
The Under Secretary then mentioned to President Chiari that one point in the Panamanian scene which had caused some concern had been the inflationary budget just passed by the Assembly and he inquired whether this represented a departure from previous policies. The Finance Minister, at the President's direction, defended that budget as a one-year operation. He explained that while the budget was larger than anticipated, many of the increases in personnel expenditures had been caused by Panama's projects under the Alliance for Progress, mentioning the $600,000 required to set up an electrical authority and a similar sum to support the centralized water authority, both of which were necessary to qualify for hydroelectric and waterworks loans. The financing of the payments to Social Security by bonds in the amount of $2.8 million was, in his opinion, necessary only this year since by 1963 additional revenues possible under the new tax measures would have provided the additional sources needed. The Finance Minister referred to the Chiari Administration's good record in cutting down defaulted payments on current accounts, including the water bill to the Panama Canal Company, and expressed confidence that the improved tax law and better collection methods would begin to ease the situation during the year. He stressed the increase in tax rates, which he personally felt was an important step forward. In response to a question, the Finance Minister indicated that active steps were underway to improve tax collections, noting the addition of 16 internal revenue persons to his staff. He also noted that all Treasury personnel were under Civil Service. The President and the Finance Minister both noted that steps were underway to bring more persons from all branches of government under Civil Service in order to improve Government efficiency. This would be a slow process as standards had to be established and applied. All these added to the budgetary problem.
The Finance Minister explained that one of the problems in increasing revenues was the difficulty in controlling the contraband from the Canal Zone. He suggested that the commissaries in the Canal Zone increase the price of cigarettes, balancing this increase by reductions in other items, so that the Panamanian Government could increase its taxes on cigarettes. He said that as much as $2 million in additional revenue could be realized if this were done. He said that the Republic is faced with a rising volume of contraband each time it endeavors to increase the tax 2 or 3 cents. He noted that the contraband in whiskey had now been brought more or less under control by centralizing sales in certain locations in the Zone. The Under Secretary suggested that Ambassador Farland pursue the matter further with the Panamanian authorities to see what recommendations might be made. The Ambassador indicated that he hoped to have something definitive within ten days.
The Under Secretary inquired of the President whether he had other problems to raise. The President replied that at first he had intended to bring up many problems in connection with the Canal but he had changed his mind after hearing the Under Secretary's comments. Mr. Ball agreed that any attempt to discuss such matters at this time would be premature and would not serve either country's interest.
As the meeting terminated, the Under Secretary informed the President that he would be visiting the self-help housing project at San Miguelito on Saturday. The President expressed his appreciation and wished Mr. Ball well for the rest of his stay on the Isthmus.
400. Memorandum From the President's Press Secretary (Salinger) to President Kennedy/1/
Washington, March 12, 1962.
/1/Source: Department of State, Central Files, 611.19/3-1562. Secret. Filed with a March 15 covering memorandum from Charles E. Johnson of the NSC staff to Carol Moor of the Department of State Executive Secretariat, which states that it was to be treated as an unnumbered NSAM, so that the White House would be informed of actions relating to it. A March 12 memorandum from Kennedy's personal secretary, Evelyn Lincoln, to Ball, also attached to the source text, states that the President had asked her to send it to Ball and that he would like an up-to-date report on "these negotiations." A handwritten note indicates that Ball had talked to Special Assistant to the President Ralph Dungan, who would inform the President that the canal study was underway.
SUBJECT
United States-Panama Negotiations
Fabian Velarde, Press Secretary to President Chiari of Panama, came to see me today and said he had been directed to communicate with you, through me, rather than through normal diplomatic channels.
In November he said you sent a letter to President Chiari in which you said that you would look into the Panama Canal problem personally and as soon as the needs of the United States with regard to the Panama Canal had been determined you would respond promptly "in a few months."
Mr. Velarde said there had been soundings on the possibility of inviting President Chiari to the United States at which time there might be a chance to start discussions as well as a joint statement on a treaty.
Meanwhile, Velarde said there is a continuing discussion of a sea level canal and arguments as to whether to do it or/and when to do it. Such a canal, of course, would have serious economic consequences for Panama; that continuing discussion on this sea level canal is delaying the start of the negotiations.
Velarde said we should understand that next May schools and universities will open in Panama; he said there are key student groups that are controlled by the extreme left and any further delay would give them an opportunity to stir up problems for the present state of harmonious friendship between the United States and Panama. He said when the Foreign Minister of Panama saw Secretary Rusk in Punta del Este, the Secretary indicated the answer would be forthcoming in March. Velarde said there is impatience to get an answer and that much further delay would cause problems. Mr. Velarde said it is the feeling of the President that an answer must come before May.
Mr. Velarde said that the President should understand that he would be most welcome in Panama and throughout Latin America; it would be a source of great satisfaction if you could go to Panama and personally open negotiations. Mr. Velarde plans to remain in Washington for the next 24 hours and then go to New York for a few days. I assured him we would give him some kind of answer as soon as possible.
Pierre Salinger
401. Memorandum From the Under Secretary of State (Ball) to President Kennedy/1/
Washington, April 27, 1962.
/1/Source: Kennedy Library, National Security Files, Countries Series, Panama, General. Secret. No drafting information appears on the source text. Filed with an April 30 covering memorandum from Deputy Special Assistant for National Security Affairs Carl Kaysen, which commented: "The sum and substance of all this is that we recognize that any firm decision on a second canal cannot be made for as much as five years."
SUBJECT
Panama Canal Policy and Relations with Panama
The NSC Working Group on Panama has completed consideration of our relations with Panama and the related question of the need for a sea-level canal, pursuant to NSAM No. 95./2/ The Group recommends that the United States:
/2/Document 397.
1. Defer any decision and avoid any expressed or implied commitment on a sea-level canal for a period of approximately five years while completing those measures which must precede an informed decision, including:
a. a research program to determine the feasibility, costs and other factors of nuclear construction methods;
b. site surveys to determine the feasibility, costs and other factors of alternative canal routes;
c. economic studies to provide a more complete basis for determining our interest in and requirement for a new canal;
d. quiet preparations, including talks with Panama, and other interested governments as appropriate, to clarify the terms and conditions of a new treaty; and
e. studies to clarify the costs and problems of abandonment of the existing Canal, or retention under a new treaty relationship.
2. Defer any formal treaty negotiations with Panama affecting the present Canal until completion of the foregoing measures.
3. Contain Panamanian pressures for treaty renegotiation and strive to improve relations with Panama by:
a. focusing attention on the research and surveys to obtain data for an informed decision on a sea-level canal;
b. liberal interpretation of existing treaty provisions to satisfy Panamanian aspirations which are reasonable and consistent with the basic interests of the United States, including such unilateral measures as acceding to the Panamanian request for dock facilities in the Zone, and
c. accelerated assistance through the Alliance for Progress to help Panama improve economic and social conditions and reduce its depend-ence on the Canal.
The basic data and line of reasoning leading to these recommendations are set forth in the Report of the Coordinator, Special Study Group on Panama transmitted here as Enclosure I./3/
/3/Not printed. A undated copy is filed with a covering memorandum of March 28 from Muccio to Ball. (Department of State, NSAM Files: Lot 72 D 316, NSAM 95)
I believe that these recommendations, properly carried out, can provide a basis for improved relations with Panama. I wish, however, to introduce cautionary notes with regard to two aspects of the recommended actions.
First, a decision to undertake the construction of a sea-level canal will depend upon many factors, only one of which is that of the means of construction. There should, therefore, be no relationship openly expressed between Operation Plowshare and the construction of a sea-level canal. We have much to learn about the safety of construction by nuclear means and in the absence of demonstrable proof of its infallibility on a project of this scale we could, by over-emphasizing its potential now--and in the absence of an effective information program--provide a golden opportunity for Soviet propaganda throughout Latin America.
Secondly, although the paper correctly recommends deferment of any formal treaty negotiations with Panama for a period up to five years, while we study the need for a new canal, we should not be under any illusions that we can effectively maintain this position over this period. While every effort will be made to maintain our position by exploiting the various proposals outlined in the recommendations, it is doubtful that President Chiari or any chief executive of Panama can long resist normal political pressures to seek renegotiation. The key issue is United States sovereignty over the Canal Zone. Any proposal to abandon our traditional position with regard to sovereignty would obviously have to be preceded by a great deal of careful work with the Congress.
With these caveats, I submit for your consideration, with the recommendation that you sign or approve them, the following three documents required to carry out the recommended courses of action:
NSAM to carry out the policy decision in accordance with the recommendations;/4/
/4/See Document 402.
Suggested letter to President Chiari of Panama, together with copies of his letter of September 8, 1961, and your interim reply of November 2, 1961;/5/ and
/5/See Document 403 and footnotes 1 and 2 thereto.
Preliminary guidelines for discussions with President Chiari on the occasion of his proposed visit to the United States./6/
/6/Not printed.
George W. Ball
402. National Security Action Memorandum No. 152/1/
Washington, April 30, 1962.
/1/Source: Department of State, NSAM Files: Lot 72 D 316, NSAM 152. Secret. A copy was sent to the Secretary of Commerce. Kennedy apparently revised the draft sent to him with Document 401. Kaysen reported at a May 2 White House staff meeting that the President "had signed off on his Panama papers but had modified them somewhat to indicate his judgment that we would probably be forced to renegotiate the treaty in the not too distant future regardless of any delaying action we might conduct." (Memorandum for the record by Colonel Julian J. Ewell of the White House staff, May 2; National Defense University, Taylor Papers, Box 24, Daily Staff Meetings)
TO
The Secretary of State
The Secretary of Defense
The Chairman, Atomic Energy Commission
The Director of Central Intelligence
The Director, Bureau of the Budget
SUBJECT
Panama Canal Policy and Relations with Panama
I have approved the following policy guidance governing the conduct of United States relations with Panama and future actions related to the present Panama Canal and a possible new sea-level canal.
1. The United States will undertake further basic economic and technical investigations to provide the basis for examining the question of the need for and the method of construction, location and cost of a sea-level, interoceanic canal in the Isthmian region. Such investigations will include research to determine within approximately the next five years the feasibility, costs and other factors involved in various methods of excavation.
2. Pending completion of such investigations, the United States is not now prepared to determine as a matter of policy, nor to accept a commitment expressed or implied, that it will at any particular time in the future actually construct a sea-level, interoceanic canal.
3. The United States will not accede at this time to a basic renegotiation of the existing treaties with Panama affecting the present Canal. The Government must recognize, however, that this question cannot be postponed indefinitely and may have to be faced before the studies discussed above are completed.
4. The United States will express a willingness and an earnest intent to consider with the Panamanians specific measures for adjusting our relationships through a liberal interpretation of the existing treaties in order to place U.S.-Panamanian relations on a more mutually satisfactory basis.
5. The United States will give serious consideration to accelerated assistance to Panama through the Alliance for Progress, particularly in support of projects which promise to develop new sources of livelihood for the Panamanian people and otherwise diversify the Panamanian economy.
6. In carrying out these policies:
a. The Secretary of State will:
(1) Consult, in coordination with the Department of Defense and the Atomic Energy Commission, with the appropriate committees of Congress to present and obtain concurrences in the policy guidance and the proposed implementing actions.
(2) Refine the draft set of guidelines for discussions with President Chiari based on the initial Panamanian reaction to my letter and the results of continuing normal diplomatic contacts up to the time of the visit.
(3) Following President Chiari's visit, obtain agreement of the Governments of Panama and Colombia for on-site surveys of potential sea-level canal routes in their respective countries.
(4) Based on the Panamanian reactions to the outcome of our conversations, develop in further detail the U.S. approach to considering with the Panamanians specific measures for adjusting our relationships through liberal interpretation of the existing treaties and for accelerating assistance through the Alliance for Progress.
(5) Assume leadership, with the participation of other agencies, as appropriate, in conducting in an appropriate time phase with other investigations related to the sea-level canal question: (a) broad economic studies to determine the U.S. interest in and requirement for a sea-level, interoceanic canal; (b) quiet preparations, including talks with Panama and other interested governments as appropriate, to clarify the terms and conditions of a new treaty, and (c) studies to clarify the costs and problems of abandonment of the existing Canal, or retention under a new treaty relationship.
b. The Chairman, Atomic Energy Commission, will establish within the Plowshare Program a research goal to determine within approximately the next five years the feasibility, costs and other factors involved in nuclear methods of excavation. The necessary research program will be a joint responsibility of the Atomic Energy Commission and the Department of Defense in accordance with the mutual agreement between these two agencies.
c. The Secretary of Defense will:
(1) Review, with the Joint Chiefs of Staff, the U.S. requirements for military facilities in the Isthmian region, including the Canal Zone, in the light of the U.S. defense mission in the Western Hemisphere and the need for protection of the present or a new canal.
(2) Arrange, under civil functions, for the participation of the U.S. Army Corps of Engineers in the joint research program with the Atomic Energy Commission as directed above.
(3) Have the Secretary of the Army prepare, as Stockholder of the Panama Canal Company, for submission to the current session of Congress authorizing legislation for on-site surveys by the Panama Canal Company of a limited number of potential sea-level canal routes, including at least one in Panama and one in Colombia. Preparations will be made to fund through normal legislative process survey activities in Panama and Colombia in FY 1963.
(4) Review with the Panama Canal Company the present commercial activities being conducted in the Canal Zone, to determine which of these activities could be discontinued.
(5) Survey with the Panama Canal Company the present land areas and Canal Company facilities and determine which, if any, of them are not essential to the protection, operation and maintenance of the Canal.
John Kennedy
403. Letter From President Kennedy to President Chiari/1/
Washington, April 30, 1962.
/1/Source: Kennedy Library, President's Office Files, Panama, General. No classification marking. Telegram 716 to Panama City, May 1, transmitted the text of the letter. (Department of State, Central Files, 719.11/5-162)
Dear Mr. President: In reply to your letter of September 8, 1961,/2/ concerning relations between our two countries, I wrote you on November 2/3/ that my Government would communicate with the Government of Panama as soon as the various responsible departments and agencies of the United States Government had made a complete re-examination of current and future needs with respect to Isthmian canal facilities. I expressed confidence that representatives of our two Governments, after a frank exchange of views and a careful assessment of mutual needs and interests, could reach fruitful conclusions which would promote the mutual welfare of both countries. A re-examination of current and future needs has just been completed, and I hasten to inform you of the results.
/2/See footnote 2, Document 396.
/3/See footnote 3, Document 397.
The central question has been the possible future need to construct a sea-level, interoceanic canal in the Isthmian region. I am sure you will agree that the answer to this important question has a fundamental, long-range significance for both Panama and the United States, as well as for all the other countries in the Hemisphere. Because of this fact, a decision should be made only after the most thorough exploration of the problem. In arriving at the answer, particular consideration must be given (1) to the role of Panama Canal traffic in world commerce and global economic development and the possible future impact of the limitations of the present lock canal; (2) to technological advances in transport which may bear importantly on the conveyance by sea of commodities; (3) to the most feasible means of constructing and financing any sea-level canal, route locations and costs; and (4) to the effect which the project itself would have on the countries directly concerned, especially Panama. The examination just completed within the United States Government indicates that much more information on these matters must be obtained before a decision is taken, and that programs should be initiated at once to obtain the necessary data.
We are today living in a world where each day brings new advances in technology and science, particularly in the field of transport. We have, in the last decade, witnessed radical innovations in the conveyance of both people and goods by all modes of transportation. Today we are only beginning to explore the frontiers of space; no one knows yet what impact this mode of travel may have on the future. It is my hope that the studies we propose to undertake will shed new light on the application of new developments to sea travel in the future and hence on the need for a new canal. From these studies we will be better able to reach decisions compatible with the world in which we live and which will further relations between our two countries. The effect of these recent technological advances must be fully evaluated before a decision can be made on the sea-level canal. Our best estimate is that scientific and engineering investigations over a period of years will be needed to complete the evaluation.
In the meantime, I believe that there are a number of interim meas-ures which might be fruitfully discussed by representatives of our two Governments in order to maintain and strengthen relations on a basis of mutual respect and sincere friendship. I would be most pleased and honored if you would accept an invitation to visit the United States early in June. I would suggest if convenient June 12-18. At that time we could personally exchange views on programs for obtaining data relative to a possible future sea-level canal and on areas for discussion by our representatives looking toward the mutual benefit of our two countries.
Sincerely,
John F. Kennedy/4/
/4/Printed from a copy that indicates Kennedy signed the original.
404. Memorandum of Conversation/1/
Washington, May 21, 1962, 12:55-1:03 p.m.
/1/Source: Kennedy Library, National Security Files, Countries Series, Panama, General. Confidential. Drafted by Martin and approved in the White House on July 2. The time of the meeting is from Kennedy's Appointment Book. (Ibid.)
SUBJECT
Visit of President Chiari
PARTICIPANTS:
Ambassador Arango, Panamanian Ambassador to US
The President
Dr. Carl Kaysen--Deputy Special Assistant to the President for National Security Affairs
Mr. Edwin M. Martin--Assistant Secretary of State for Inter-American Affairs
Ambassador Arango delivered to the President separately a letter from President Chiari and a memorandum./2/ In response to the President's request as to whether he had any comments to make, he said his President was very pleased to be able to accept the invitation to visit the United States and would leave it to us to select the precise dates between June 12 and June 18. He also called attention to the final paragraph of the memorandum in which reference is made to the fact that President Chiari hopes that a joint communiqu? can be issued in which reference is made to the subjects listed in the memorandum.
/2/Both dated May 17. The texts were transmitted in telegram 919 from Panama City, May 19. (Department of State, Central Files, 719.11/5-1962)
The President said that the Assistant Secretary would convey to the Ambassador our suggestions with respect to the date. He then went on at some length to indicate that he thought it extremely important to the success of this meeting, to which he was looking forward with a great deal of pleasure, that there be in advance an understanding of the purposes of the meeting. It would be most unfortunate if he and President Chiari approached the meeting with different purposes, as this would surely involve serious disagreement, and, if these differences became public, might even create bad relations between the peoples of the two countries, something he was sure everyone agreed should be avoided if possible.
President Kennedy said there were a number of things we might be able to do to meet some of the concerns President Chiari had about our relationships with regard to the Canal. On the other hand, there were other things, which required modifications in the treaty, which it would be difficult to do quickly. If it became known that this was even under discussion, there would be a lot of criticism from various US quarters which would create a very bad atmosphere for the visit. He said changes of this sort had to be discussed and fully prepared before it was possible to accomplish them. He did not want to bar discussing the things that were of interest to the Panamanians, but thought it very important to have agreement as to basic purposes so that the publics did not expect concrete results on a wider scope than those apt to be secured. He suggested that the Ambassador get together with Dr. Kaysen and the Assist-ant Secretary to prepare an agreed statement of the purposes of the visit which would be used for background briefing for the press in the two countries,/3/ so that undue expectations would not be aroused. He also indicated that he would cover this point in his reply to President Chiari's letter./4/
/3/Telegram 761 to Panama City, May 24, reported that Martin and Kaysen had met with Arango and prepared draft points, which described the subjects covered in Chiari's May 17 letter and memorandum and the line the conversations might take without any commitment by either side as to what action might be taken. Telegram 762 to Panama City, May 24, transmitted the draft points. (Ibid., 719.11/5-2462)
/4/In a May 24 letter to Chiari, Kennedy wrote that he welcomed "the opportunity to explore with you the many aspects of the relations between our countries and to review our mutual concerns and problems as Presidents." (Ibid., 719.11/5-2462)
Ambassador Arango said he understood the President's position fully and had made it clear to President Chiari that there were difficulties about getting concrete results immediately on some of the matters in which President Chiari was interested. He said he talked just Saturday/5/ with his President and told him it was a very good letter and that he was very glad he had accepted the invitation. He also said he thought the phrasing of the final paragraph of the memorandum left the way open for having these matters referred to as "under consideration" or "subject to further examination" without requiring that definitive results be achieved.
/5/May 19.
The President welcomed this and said that he hoped in the next 24 hours we could work out the background document to which he referred. He then went on to say he would like Dr. Kaysen to make a visit to Panama sometime in the next few days to discuss with Ambassador Farland and other people the situation there and get a first hand feel for the various political aspects of it and an appreciation of the physical situation in the Canal Zone. The Ambassador said he was sure he would be most welcome.
405. Memorandum of Conversation/1/
Washington, June 12, 1962, 4:45 p.m.
/1/Source: Kennedy Library, National Security Files, Countries Series, Panama, General. Confidential. No drafting information appears on the source text, but it was approved in U on July 21 and by the White House on August 8. The meeting was held at the White House.
SUBJECT
United States-Panamanian Relations
PARTICIPANTS
For Panama:
President Roberto F. Chiari/2/
Foreign Minister Galileo Solis
ex-Foreign Minister Octavio Fabrega
Ambassador A. Guillermo Arango
/2/President Chiari visited the United States June 11-16. A memorandum of a brief conversation between Kennedy and Chiari on June 13, when they signed a joint communique, is ibid. The text of the joint communique is printed in Department of State Bulletin, July 9, 1962, pp. 81-82. Memoranda of two conversations between Chiari and Rusk on September 13 are in Department of State, Central Files, 611.19/6-1362. Related material is ibid., Conference Files: Lot 65 D 533, CF 2118-2119.
For the United States:
President Kennedy
Under Secretary Ball
Ambassador Farland
Assistant Secretary Martin
Mr. Carl Kaysen, The White House
Mrs. Katherine W. Bracken (rapporteur)
President Kennedy welcomed President Chiari and suggested President Chiari proceed with any points be wished to make.
President Chiari repeated the burden of his September 8, 1961, letter to President Kennedy on the Panamanian case for renegotiation of the Canal treaties. He suggested that the two countries, in order to bring about a revision of relations, should get to the very bottom of the question and eliminate the clauses that have caused misunderstandings between the two peoples for a great many years. He pointed out the Canal was built not just for one party but to aid international maritime commerce and the security of the United States, as well as to develop the welfare of Panama. He quoted from President Kennedy's letter of November 8 ("When two friendly nations are bound by treaty provisions which are not fully satisfactory to one of the parties arrangements should be made to permit both nations to discuss these points of dissatisfaction") and asked in the name of Panama that the treaties be revised and not considered sacred just because they were signed 58 years ago, that he was certain that with President Kennedy's backing, Congress would agree to renegotiation.
President Kennedy responded that he well understood that the situation was different today than it was in the early 20th century when the treaty was signed and that if the treaty were written today it would be written differently. "The difficulty arises," the President said, "because of our long experience with the Canal. Sovereignty of the Canal by Panama has been recognized; we are there for operating, maintaining and defending it." He continued that he could not see the end of the road in sitting down to rewrite the treaty nor how he could demonstrate to two-thirds of the Senate that such a course had advanced the United States interest. He suggested that since sovereignty is the principal issue and we have recognized Panama as sovereign that we attempt within this framework to work out operation of the Canal along with mitigation of frictions. For example, the contraband problem had been mentioned to him by Finance Minister Arias as well as the problem of Panamanian employees. He noted we were dealing with a tenderly sensitive issue over which any bankrupt politician could arouse emotion. He added that should he try to take any treaty changes through the Senate and fail it would be worse for both countries.
Under Secretary Ball pointed out that the fact that the Canal is 50 years old presents the United States with recognition of changed conditions; that we are seriously preoccupied with the possibility of a sea-level Canal; that it will be some time before we are prepared to make a decision on a sea-level Canal; at that time we would approach Panama for a new treaty and such treaty for a sea-level Canal would be of a different kind. From the point of view of the State Department, Mr. Ball said, an attempt to negotiate on the basis of renegotiation at a time when we are looking toward the strong possibility of going ahead with a sea-level Canal would create greater confusion.
President Chiari noted that studies on a sea-level Canal have been going on for many years, that one must think of the good will of the Panamanian people later toward a sea-level Canal, and repeated his claim for a terminal date, noting that a revision of relations is impossible within the framework of the "in perpetuity" of the present treaty. He described the national feelings involved in seeing the Panamanian flag flying with that of the United States at every place in the Zone.
President Kennedy said he recognized the problems of Panama, how these matters of national sovereignty were sensitive ones and how easily these feelings may be aroused. He stated that he was aware we should take appropriate action but not "at the point of a mob." He pointed out that free movement through the Canal was a part of the folklore of the United States on which there were feelings in this country as well. He asked what was considered unsatisfactory in the present arrangement.
President Chiari replied "to recognize sovereignty in the right way" and President Kennedy responded that that had been done in Eisenhower's time. President Chiari repeated that it was a Panamanian right to have flags at every point but this would not mean Panama had jurisdiction over that particular place. President Chiari became frustrated and petulant in his speech at this point. He said his words were misunderstood, that not for a single moment does Panama wish to participate in the maintenance, operation and protection of the Canal, that Panama cannot do it and what happens to the Canal happens to Panama.
Foreign Minister Solis interrupted to state the case more clearly: That Panama would not now attempt to sign a treaty, but that Panama should bring up for discussion points of dissatisfaction over the way the basic treaty now operates; further, that any problem Panama puts up for discussion be subject to thorough consideration and just negotiation. A committee formed of representatives should try to find solutions on points agreed upon. Perhaps the points agreed upon will not need a treaty; what Panama wants is discussion of its point of view.
President Kennedy asked Foreign Minister Solis to clarify his statement, whether he had in mind treaty negotiations or a discussion of issues arising under the treaty.
Foreign Minister Solis, replied: The treaty stipulates all the authority and powers granted by Panama to the United States for the specific purpose of operation, maintenance, sanitation and defense of the Canal. There are manufacturing activities in the Canal Zone that do not relate to those purposes. President Kennedy suggested that in such cases a revision of treaties was not necessary, only an analysis to determine how Panama could benefit more from the market offered by the Canal Zone. Foreign Minister Solis then passed to the demand that jurisdiction over land areas not used should be returned to Panama. President Kennedy replied that if we are holding areas outside treaty purposes, this should be discussed during coming months and resolved in a way that is mutually satisfactory.
Foreign Minister Solis repeated his point that Panama wants consent to discuss all points and to try to find solutions. President Kennedy reiterated his reluctance to become involved in formal discussions which implied renegotiation of the treaty. He repeated his suggestion that we should attempt to see what are major points of concern under present treaties, indicating that 1964, 1965 or 1966 would be a better time to go about a "basic document."
Foreign Minister Solis repeated his suggestion for discussion on points of difference, adding that, if there is agreement, "no harm will be done." President Kennedy replied that an appropriate group should be set up to discuss the problems of Panama. It should not be designated a committee to set the basis for renegotiation; rather it should have as terms of reference improvement of relations with Panama with respect to the Canal Zone. The President repeated his earlier statement that he did not want "to start along a road and three-quarters along the way not see where" he was going. He would like to see the committee set up, to see where we are and start formal treaty negotiations in, say, five to ten years when both the American people and Congress would understand the problem better. If we go ahead with a sea-level canal we would have an entirely different kind of negotiation.
Ex-Foreign Minister Fabrega then presented his version of Panama's case. He said we should be frank and candid; that President Kennedy had stated his problem with regard to Senate confirmation of a treaty but that in Panama there was also a problem of national sentiment that it was difficult to control and postpone. This generation of Panamanian youth does not have the mentality of 1903; new leaders are more aware of rights and are demanding they be granted. Panama should be given a new deal in substantial recognition of its rights. A new treaty would not hamper or limit the need to run or operate the Canal. President Kennedy inquired of Dr. Fabrega what he would like to propose for a treaty. Dr. Fabrega replied : recognition of Panamanian sovereignty and a terminal date.
Foreign Minister Solis repeated the demand for recognition of Panamanian sovereignty with the flying of Panamanian flags, use of Panamanian postal stamps, acceptance of Panamanian exequaturs in the Canal Zone, and mixed courts. Dr. Fabrega interrupted to say that for a clear manifestation of sovereignty it will not be enough to have this done by unilateral act. He then went into the annuity request, noting that Panama was not getting its share of profits, that the annuity is minor compared to the major Panamanian contribution, that Panama has a joint and vital interest in the Canal and that the Canal should be a source of labor in all categories, not only in lower levels.
President Kennedy repeated his offer to begin discussions, particularly to seek to work out a solution of the commissary problem. President Chiari supported Dr. Fabrega's request for more equal opportunity for Panamanian labor in the Canal Zone.
President Kennedy said he desired a just administration of employment policies to bring about improvements within the next twelve months. On the question of mixed courts he said he would have to study the Panamanian proposal. He went on to say that the basic question is the timing, that he was concerned about becoming involved in discussions where there was "no turning back" and public opinion in either country might become overly upset. When we can make a final decision on a sea-level canal it will provide a basis for a more satisfactory arrangement. He asked again whether or not we could work out some immediate improvements.
President Chiari repeated the doubt expressed earlier that any improvement could be worked out without changing the perpetuity clause. President Kennedy asked what time limit Panama suggested and President Chiari suggested a term of something like 50 years.
Foreign Minister Solis repeated his suggestion that Panama put up a list of points for discussion by the joint committee, that the committee would solve those items which could be solved by executive measures, that discussion would not mean a commitment to solutions, that he was not looking for solutions immediately on any point.
President Kennedy suggested that we explore solutions to problems by a more liberal interpretation of present treaties and mentioned the flag issue. President Chiari interrupted to object to the manner in which the Panamanian flag was raised in Shalers Triangle,/3/ whereupon President Kennedy countered that although it might have been "raised in the dead of night and in the middle of the woods it was still recognition" of Panamanian sovereignty.
/3/The United States announced on September 17, 1960, that the Panamanian flag would thereafter be flown together with the U.S. flag on a daily basis in an area known as Shalers Triangle in the Canal Zone. For text of the announcement, see Department of State Bulletin, October 10, 1960, pp. 558-559.
Foreign Minister Solis reiterated his desire for a revision of relations between the two countries to try to reach just solutions. President Kennedy proposed that agreement be sought on some language that would give guidance to a committee. Dr. Fabrega remarked that to revise relations, one must revise treaties; without new treaties there could be no change in relations.
Under Secretary Ball asked what special points of concern the Panamanians had in mind. He added that in his opinion within the framework of cooperation voiced by President Kennedy solutions can certainly be found for some of these problems.
Foreign Minister Solis then interjected that unless they could agree on a revision of all relations and publish it in the communiqu? the visit would be a failure.
President Chiari referred again to the perpetuity clause and cited a 19th century example of the United States asking great Britain for a revision of a treaty on the basis conditions and circumstances of date of signing were temporary. He then emphasized Panama's objection to consideration of internationalization of the Canal, that Panama would rather deal with the United States than with 40 or 50 people they did not know, and then launched into a statement of other dissatisfactions about the Canal Zone--the fact that officials did not speak Spanish, that cigarettes sold for 15 cents in the Canal Zone, gasoline for 17 cents per gallon, that Canal Zone residents were given houses and were a "privileged oligarchy." He continued that Zone residents live better than Panamanians and that it hurt Panama's economy, referring to contraband of liquor.
Under Secretary Ball suggested that the matters President Chiari was describing were a matter for solution under the present treaty. President Chiari repeated his request that negotiators not argue about how sacred this or that clause might be, pointing to the 20 months of negotiations for the 1955 treaty. He went on to say that Panama and the United States have a common destiny, that when bombs were expected to blow up the Canal in the last war, the bombs would also have destroyed Panama City, that cooperation in the defense of the Canal was something the Panamanians understood and accepted. However, he urged a new approach to revise relations and then began describing the "filling stations, bakeries, repair shops, furniture factories," etc. operating in the Zone. President Kennedy noted that he understood the problem of contraband from the PX. President Chiari replied that he did not mean "PX-es" which are "international" and that on "military bases the world over the same rules apply."
Dr. Fabrega proposed a procedure similar to that followed in the 1932 joint Roosevelt-Arias statement where there was a general statement or agreement to revise treaties, together with a statement of general principles and general guidance, which was followed by 4 years of discussion culminating in the 1936 treaty. He suggested that if the Presidents announce plans for a revision that would not be adopting an extreme position. He repeated his earlier statements on the intensity of the feeling of the present Panamanian generation with regard to the 1903 treaty.
Under Secretary Ball pointed out that one of the main problems in this procedure is that, in the case of whatever revisions President Kennedy submits to Congress, one of the first questions to be asked is the status of plans for the Canal, that it is very difficult to present revisions until there has been a decision on a sea-level canal. One of the things to be done now is go ahead with plans for the study of Canal needs in which Panama might participate. He reiterated his belief that many problems can be solved without revision of treaties.
President Chiari then said that people in Panama were not thinking about a sea-level Canal since it might be built in 2000, may not be built and perhaps not in Panama; for this reason he wanted a change in the 1903 treaty. He then described the importance of symbolism to the Latins, noting that even though a terminal date of 50 years were set the Panamanians would be happy because a date had been set. He then addressed himself to Mr. Ball's comments on studies for a new Canal and said that there is a general impression in Panama that the more money the United States spends in enlarging Culebra cut or improving the Canal the more the suspicion grows that the United States is "going for the third locks" and that the intention to consider a sea-level Canal is not serious.
Dr. Fabrega reiterated his insistence on a "political" solution, asking why Panamanian postal stamps could not be used as they were until 1924.
Foreign Minister Solis interrupted to say that in his opinion the question of presentation of a treaty to the Senate is not an issue since President Kennedy would never sign a treaty he knew would not be ratified and restated the case for discussions of Panama's points, which might end in a treaty and might not. He repeated that President Chiari cannot go back to Panama without agreement to discuss in a negotiation committee all the claims Panama may present; otherwise he will face a political crisis.
President Kennedy replied that he was not in a position to give any commitment that the United States could at this time agree to, sign or ratify a new treaty. He said that he understood the sentiments which the Panamanians expressed, and that passing of time did not improve the features of the 1903 treaty to which the Panamanians objected. He then elaborated on the United States political problem related to any renegotiation of the 1903 treaty and stated that he was not prepared to revise the 1903 treaty, particularly the perpetuity clause, and that he did not intend that we should give the impression that we are engaged in the process of revision. He repeated his belief that we should see what matters could be settled over the next 12 months. He then directed that Assistant Secretary Martin explore with Foreign Minister Solis language for a joint communiqu? which would be satisfactory to both sides. He noted that the Panamanian group would be discussing with Secretary Rusk the next morning some of the items that had not been covered in the present conversation. He said he understood there was a division of feeling, that the Panamanians wanted to begin real renegotiation and he was reluctant to begin renegotiation at this time. The key issue was how to deal with the problem so that it did not become explosive, that the best time to deal with the matter of treaty revision was when there was a proper decision on a sea-level canal. He explained that if the canal could be built by nuclear means there was a certain advantage because of the lower costs and, therefore, economic feasibility was easier to establish. Some time was needed for research to establish the practicality of this technique. In addition there was a question of justification of a new canal because of increasing traffic which the present canal could not handle and some additional time was needed to study this factor.
Under Secretary Ball underlined President Kennedy's remarks, and said that the United States proposed to study the problem thoroughly so that within the next four to five years we could reach a decision on whether to build by nuclear or conventional means.
President Kennedy concluded by indicating that the United States would explore and decide the questions brought up with regard to the return of unneeded lands, control of contraband, flying more flags, increased employment opportunities, use of Panamanian postage stamps in Canal Zone post offices, and reduction of commercial activities in the Zone. Foreign Minister Solis said that if action is taken on interim measures they could wait long for the "main purpose."
406. National Security Action Memorandum No. 164/1/
Washington, June 15, 1962.
/1/Source: Department of State, NSAM Files: Lot 72 D 316, NSAM 164. Confidential.
TO
The Secretary of State
The Secretary of Defense
The Secretary of the Army
1. As a result of President Chiari's visit we are now committed to a continuing discussion of the problems arising out of our relations with the Republic of Panama from the Canal and the Canal Zone and a search for ways of dealing with them constructively. These discussions should, over time, produce an appropriate flow of concrete results in order to contain Panamanian pressures for immediate and radical treaty revision. This will require some extra attention by the responsible Departments.
2. As our representatives for the discussions with Panama, I have decided to appoint the Ambassador to Panama, Joseph Farland, and the Governor of the Canal Zone, Major General Robert Fleming.
3. I request the Secretary of State to take the leadership in organizing a small review group from the appropriate agencies to follow up the discussions between the two governments. This group should also be charged with the responsibility of examining what can be done on all the specific questions which the Panamanians have raised in their recent visit. In examining these questions, I think it important to distinguish what can be done by executive authority alone, what can be done by ordinary legislation, and what requires revision of the treaty. In considering specific problems, I think it is desirable to explore methods of dealing with them which could by-pass the traditional concern with the formalisms of sovereignty and concentrate on meeting legitimate Panamanian complaints while maintaining the practical arrangements necessary for the operation of the Canal and for our military activities in the Zone.
Some of the particular points on which the Panamanians have pressed us most are the flying of Panamanian flags on ships going through the Canal, the use of Panamanian stamps in the Canal Zone postage system, change in the jurisdiction of American courts over Panamanian citizens, and the issuance by us of exequaturs to permit Consuls accredited to Panama to function in the Zone. With the exception of the court question, these are largely symbolic matters. In addition, of course, we must continue to examine the more practical problems of U.S. commercial activity in the Zone, labor questions involving equality of treatment for Panamanians, unneeded lands, and direct Panamanian benefits from the Canal.
John Kennedy
407. Memorandum of Conversation/1/
Panama City, October 12, 1962.
/1/Source: Department of State, Central Files, 611.19/10-1262. Confidential. Drafted by Farland.
PARTICIPANTS
President Chiari, Under Secretary Ball,/2/ Foreign Minister Sol?s, Ambassador Farland
/2/Ball visited Panama to make an address dedicating a bridge across the Panama Canal and to attend a meeting of the Board of Directors of the Panama Canal Company.
SUBJECT
U.S.-Panamanian Relations
Under Secretary Ball opened the conversation by referring to certain difficulties being encountered in the discussions between appointed representatives of the two Governments./3/ He said that he understood that the heart of these difficulties lay in insistence by the GOP representatives that the fundamental difficulties between Panama and the United States should be resolved immediately by what amounted to renegotiation of the 1903 Treaty. President Kennedy, the Under Secretary declared, had made very clear the U.S. position on this score during the June meeting in Washington; namely, that the United States could not undertake at this time to renegotiate the basic Treaty until studies were completed which would permit the United States to reach decisions regarding the possible need for a new canal. These studies and surveys might require as much as five years to complete. Furthermore, internal problems with respect to the U.S. Congress made it impossible at this time to successfully put through a new treaty in the U.S. Senate.
/3/The discussions between Ambassador Farland and Governor Fleming and Foreign Minister Solis and former Foreign Minister Fabrega began on July 13. Documentation concerning them is in Department of State, Central File 611.19.
President Chiari responded that he understood this fully but had not realized the studies and surveys would require this long a period of time. He said he understood completely, however, that the United States must have all the facts at hand before a decision of such transcendental importance to the United States as well as Panama could be made.
President Chiari then went on to express his keen disappointment over the lack of progress and the absence of results to date of the talks between U.S. and GOP representatives. It was absolutely essential, he said, that progress be made on specific matters within the framework of the agreement reached in Washington, as set forth in the joint communique. He had the impression, he said, that the decisions which were being taken in Washington on these matters did not reflect the views of President Kennedy and others at the highest levels of the United States Government who had participated in the June meeting. The Foreign Minister interjected at this point that U.S.-Panamanian relations historically reflected that when discussions were conducted at the highest level between both Governments satisfactory conclusions had always been reached. Conversely, however, when matters were referred to a lower echelon in the United States Government there ensued a lack of progress, further misunderstandings and endless delays. The Foreign Minister also said that the GOP failed to see why matters discussed by the representatives of both Governments could not be mentioned publicly as the talks progressed since, in accordance with the agreement reached in Washington, there was no limitation on the range of subjects which could be brought up by either party.
There then ensued a general discussion of some of the more important matters presently under discussion by the representatives of the two Governments; namely, (1) raising Panamanian flags in the Canal Zone; (2) recognition of Panamanian exequaturs in the Canal Zone; (3) use of Panamanian stamps; and, (4) increased wages and more employment opportunities for Panamanians in the Zone.
Regarding raising Panamanian flags in the Canal Zone, (1) aforesaid, the Under Secretary said he was under the impression that a satisfactory agreement had already been reached on flags. President Chiari replied that there remained the matter of Panamanian flags on military bases and on ships transiting the Canal. He did not pursue the latter point but did go on with respect to the former by expressing his view that the United States could at least agree to flying the Panamanian flag outside the entrance of military bases without in any way affecting adversely its rights or jurisdiction over the bases. President Chiari remarked that all the issues between Panama and the United States had been well known to the United States for years as a result of prior treaty negotiations and he could not understand why it was still necessary for the United States to commit them all to such lengthy study and consideration at this point. It led him to wonder what the United States Government has been doing while it has been studying these matters for well over a year now.
In the matter of exequaturs, (2) aforesaid, Foreign Minister Sol?s stated that the GOP saw no reason for the USG's insistence that the word "formal" precede the word "exequatur" in the proposed draft communiqu?. He characterized such insistence as unnecessary preoccupation with words and as being too legalistic. He also said that the proposed new language on exequaturs which Ambassador Farland had shown him briefly at the October 10 meeting of the representatives did not meet GOP requirements.
Regarding use of Panamanian stamps and Canal, Zone wages, (3) and (4) aforesaid, Ambassador Farland remarked that the U.S. had a proposal to make on stamps which he hoped the GOP would find acceptable, and gave a brief account of what had already been accomplished by the United States Government in the wage and labor field and commented on some of the improvements under consideration.
President Chiari then moved on to another subject, namely, Panama's need for additional direct revenue from the Canal operation. The President said that under the Alliance for Progress program Panama was engaging in what were, for Panama, extensive projects of a social nature, such as school construction, establishment of new hospitals and public health centers, all of which placed an increasingly heavy financial burden on Panama to operate and maintain. In addition, the needs and demands of the people for services of this kind were increasing, requiring the commitment of further funds for these unproductive although worthwhile projects. He declared that Panama had increased taxes and had improved greatly its tax collections. Further increases in the tax system were under consideration and would probably be proposed in this session of the National Assembly. However, Panama was rapidly reaching a point where further tax increase would be out of the question and its resources were being strained to the breaking point. In view of this and in view, furthermore, that Panama considered the present payment for Canal rights as unjust and antiquated, the GOP felt that it must insist upon a more just and fair compensation from the United States for the Canal rights. President Chiari said that he hoped the Under Secretary would understand Panama's problem and that the United States Government would be sympathetic to it.
408. Memorandum of Conversation/1/
Washington, November 8, 1962.
/1/Source: Department of State, Central Files, 611.19/11-862. Official Use Only. Drafted by Fisher on November 13.
SUBJECT
US-Panama Conversations in Panama on Points of Dissatisfaction Concerning the Canal Zone
PARTICIPANTS:
A. Guillermo Arango, Panamanian Ambassador to the U.S.|
ARA--Edwin M. Martin, Assistant Secretary
ARA/OAP--John W. Fisher, Acting Director
Ambassador Arango produced a handwritten personal letter sent to him by President Chiari, parts of which he read in translation to Mr. Martin.
President Chiari's letter instructed Ambassador Arango to see the Secretary if possible to apprise him of President Chiari's disappointment in the talks taking place in Panama on points of dissatisfaction concerning the Canal Zone.
President Chiari said that President Kennedy conveyed to him the clear understanding that these talks would proceed rapidly to dispose of Panama's dissatisfactions under the treaty arrangement between the two countries. However, in the months since he saw President Kennedy, only the question of flying Panamanian flags over civilian installations in the Canal Zone has been settled. There has been no progress in flying Panamanian flags over military installations or on ships transiting the Canal. There had been talk but no agreement on exequaturs, stamps, and labor. President Chiari was not satisfied with the argument that the U.S. must wait about 5 years for studies on a sea level canal to be completed before undertaking revision of the treaties on the Canal. He emphasized the urgency of prompt action, asserting that his people cannot remain patient much longer.
Ambassador Arango added his own view that dangerous pressures are building up in the absence of satisfaction of Panama's desires concerning the treaty. He referred to the danger of an extremist like Castro getting control of the situation.
Mr. Martin said that President Kennedy made it very clear in his conversation with President Chiari that he would not be able to get the U.S. Senate to agree to changes in basic treaty relations with Panama, such as questions of sovereignty and jurisdiction, perpetuity, etc., at the present time. It would take perhaps five years for the U.S. to prepare itself to make a decision on a sea level canal, which would create a different situation.
Mr. Martin said it had also been made clear in the Washington discussions that the flying of the Panamanian flag on ships transiting the Canal is not an negotiable one. On other questions taken up in the Panama talks, we are now awaiting Panama's response to our proposals. We made suggestions on exequaturs several weeks ago and are prepared to move forward when Panama desires. We understand that the difficulty has been in the wording of the joint announcement of the exequatur arrangement, although there has been prominent public mention made at various times by representatives of both governments concerning adoption of new exequatur procedures.
We made a proposal several weeks ago on stamps and are awaiting Panama's response. On October 16, we made some suggestions on labor practices for further discussion at later meetings. We have announced our readiness to transfer a pier to Panama, and to implement income tax deduction procedures and have had no response from the Panama side at all./2/
/2/An interim joint communiqu? concerning the discussions in Panama was issued by the U.S. and Panamanian Governments on January 10, 1963. It stated that it had been agreed that the Panamanian flag would be flown together with the U.S. flag on land in the Canal Zone where the U.S. flag was flown by civilian authorities, that private organizations and persons in the Zone were free to display flags at will over their places of residence or business, and that other aspects of the flag question would be discussed later. The text is printed in Department of State Bulletin, February 4, 1963, pp. 171-172.
Mr. Martin thought that President Chiari had a political problem which could be better handled by playing up the solid achievements which can result from the current talks, and playing down the point of basic treaty revision, rather than by doing the reverse.
Mr. Martin said that he provides a detailed monthly report on the progress of the talks to President Kennedy./3/
/3/Monthly reports on actions pertaining to NSAM 152 and NSAM 164, sent from the Department of State to the White House, include brief summaries of the status of the discussions. (Department of State, NSAM Files: Lot 72 D 316, NSAM 152)
409. Memorandum of Conversation/1/
San Jose, March 20, 1963, 3:05 p.m.
/1/Source: Department of State, Central Files, POL 7 COSTA RICA. Secret. Filed with an April 2 covering memorandum from Department of State Executive Secretary William H. Brubeck to McGeorge Bundy. Drafted by McManus, approved in S on April 2 and in the White House on April 4.
SUBJECT
Meeting Between the President and President Chiari of Panama at San Jose, Costa Rica/2/
/2/President Kennedy met with the Presidents of Central America and Panama in San Jose, Costa Rica, March 18-20; see Documents 58 ff.
PARTICIPANTS:
U.S.
The President
Panama
President Roberto F. Chiari
There follows the pertinent portions of a Memorandum for the Record dated March 26, 1963 and prepared by Ambassador Farland:
"MEMORANDUM FOR THE RECORD
FROM
Joseph S. Farland, American Ambassador, Panama
SUBJECT
Re Conversation Between President Kennedy and President Chiari at San Jose and Subsequent Developments Appertaining Thereto
During the initial conferences at San Jose President Chiari indicated that he was desirous of having a private conversation with President Kennedy. This request was honored and President Kennedy and President Chiari met alone at the temporary White House (Embassy Residence San Jose) at 2:30 p.m. on Wednesday, March 20. The conversation lasted for approximately 30 minutes.
After the President concluded the conversation with President Chiari and farewells were exchanged, he asked me to return with him to the conference room where we were joined by Secretary Rusk, Assistant Secretary Martin and Mr. Ralph Dungan. There ensued a brief discussion during which the President asked numerous questions pertaining to political, economic and social conditions in Panama. The President also directed his attention to the present financial and economic benefits to Panama ensuing from the Canal, and indicated his preoccupation with the problem posed by the current payment by the United States to Panama of $1,930,000.00 as annuity. This discussion was concluded after the President directed me to return to Washington during the latter part of the month of April for consultation on the question of U.S.-Panamanian relations. In this connection the President asked that I meet with as many Congressmen as possible for the purpose of sounding congressional opinion regarding the problems posed by the Government of Panama. The President also requested that thereafter I meet with him to discuss U.S. policy as related thereto.
During the public exchange of 'farewells' at the airport Secretary Rusk indicated to me that the President had requested him to give particular attention to Panama. In this connection the Secretary expressed his concern lest President Chiari in his public statements upon returning to Panama jeopardize the effort of the Executive Branch to view sympathetically Panama's aspirations. I later spoke with Foreign Minister Sol?s, Ambassador Arango and other Panamanians to emphasize the importance of Chiari handling with restraint and discretion his public account of his conversation with President Kennedy. In a brief conversation with President Chiari, I said that I was encouraged by the direction Panama's problems had taken and received his assent to my proposal that I call upon him immediately upon his return to Panama.
On Friday, March 22 at 2:30 p.m. accompanied by Mr. V. Lansing Collins, Director Office of Central American and Panamanian Affairs, I met with President Chiari and Foreign Minister Sol?s at the Presidencia for the purpose of discussing the program for Panama as set forth in CAM/B-6a of March 13, 1963./3/ This conversation ensued for an hour and a half and ended on a constructive note with President Chiari indicating that his report to the Panamanian people on the developments ensuing from the San Jose Conference would be moderate and judicious and would not be used as a vehicle for local political advantage. This conversation will be the subject of a separate memorandum."/4/
/3/Reference is to a talking paper prepared in the Department of State for Kennedy's meeting with Chiari. It stated that the United States was prepared to consider financial assistance for further acceleration of Panama's industrial development and to propose a major new program in rural development to support Panamanian efforts at agrarian reform. (Department of State, Conference Files: Lot 66 D 110, CF 2228)
/4/Not found.
410. Memorandum of Conversation/1/
Washington, May 7, 1963, 10:30 a.m.
/1/Source: Kennedy Library, National Security Files, Countries Series, Panama, General. Confidential. Drafted by Collins.
SUBJECT
Panama
PARTICIPANTS
The President
Mr. Ralph Dungan, Special Assistant to the President
The Honorable Joseph S. Farland, United States Ambassador to Panama
Mr. V. Lansing Collins, Director, Office of Central American and Panamanian Affairs
Ambassador Farland opened the conversation by informing the President that Foreign Minister Solis had visited Washington April 23/2/ and that the most important result of his visit was his declaration that President Chiari wanted to stop the United States-Panamanian Commission on July 31 because of the Panamanian political campaign and because Chiari believed it had not accomplished as much as he had hoped. Foreign Minister Solis also said that no Panamanian Government could obtain public support for the building of a sea level canal in the Darien region because of the effect on real estate and other values in Panama and Col?n. Ambassador Farland went on to say that through diplomatic negotiations during the past week the Panamanian position on both of these two points has been considerably softened. The President asked whether the Panamanian desire to end the work of the Commission was due to dissatisfaction and he was told that this was partly correct. The President indicated that the key question seemed to be the studies on whether the present canal would handle the traffic in the future. He indicated he wanted to know who was going to do the study and was told that the Panama Canal Company would undertake to have the study made but we do not know what specific action is planned by the Company. The President asked whether we had any information on the limitations on leasing piers in Cristobal to Panama based on a proposed bill by Mrs. Leonor Sullivan, Chairman of the House Subcommittee on the Panama Canal of the House Committee on Merchant Marine and Fisheries. Ambassador Farland explained that this had been the sense of the Subcommittee when he testified at the hearings, but that we did not have the details of the most recent amendment which was apparently made yesterday. [It has since developed that no new amendment was entered.]/3/ Discussing the question of leasing piers Ambassador Farland pointed out that in the 1936 treaty we agreed to go out of the bonded warehouse business as soon as Panama had facilities of its own and that in the 1955 treaty we agreed to turn Panamanian traffic through the piers over to them when they had their own piers in Colon. These treaty obligations mean that if Panama builds a pier of its own we will, under item 10 of the Memorandum of the 1955 treaty, have to give "prompt consideration to withdrawing from" handling cargo for transhipment. We will be left in the Canal Zone with lots of unused pier facilities. Therefore, the leasing of the piers to Panama is a feasibly sound idea. The President indicated that we should find out what Mrs. Sullivan was objecting to and if we could not get her agreement to go ahead. Ambassador Farland noted that the Directors of the Panama Canal Company at their most recent meeting had decided they could not go along with the leasing of the piers to Panama unless they received a Presidential directive to do so.
/2/A memorandum of an April 23 luncheon conversation between Rusk and Sol?s is in Department of State, Central Files, POL PAN-US.
/3/Brackets in the source text.
The President indicated that in his opinion the annuity of $1.93 million we paid Panama every year for the Canal was not enough. Ambassador Farland expressed his agreement with this and stated that the amount of annuity (a treaty provision) had been a major source of conflict over the years; it had been discussed in all previous treaty renegotiations. He went on to state that in lieu of a treaty modification we have perhaps three alternative methods which could be used in adjusting our relationship with Panama: a) a very active AID program; b) funds obtained by a special Congressional appropriation; or c) funds from the contingency fund. The discussion then centered on the possible renegotiation of the treaty when a decision by the United States had been reached on the question whether or not to build a sea-level canal. The Ambassador reported that the Review Group had met on April 23 and that the consensus is that we should be ready to begin discussions leading to a renegotiation of the treaty to cover present operations in the Canal Zone by late 1964 or early 1965. At this juncture the President indicated his interest in ascertaining what form the Ambassador thought such a treaty might take. The Ambassador stated that the basic aspirations of Panama over the years had been to acquire for Panama a treaty comparable in its provisions to that which the United States had offered Colombia, i.e. the Hay-Herran Treaty./4/ The Ambassador stated that there was good reason to believe that the Panamanian position continues to reflect that view even today. The Ambassador then briefly discussed the points of difference between the Hay-Herran Treaty and the Hay-Bunau Varilla, i.e. 1) a 100-year term; 2) Colombia would retain sovereign rights; 3) zone only six (not ten) miles wide; 4) court system in zone would provide for U.S., Colombian, and mixed courts.
/4/Reference is to a convention between the United States and Colombia, signed at Washington on January 22, 1903, but never ratified by Colombia. The text is printed in Christian L. Wiktor, ed., Unperfected Treaties of the United States of America (Dobbs Ferry, NY: Oceana Publications, Inc., 1977), vol. 3, p. 449.
The President then indicated that there was some feeling that Congress might balk at raising the annuity in a special appropriation and asked the Ambassador what had been his observations following his discussion with members of Congress. Ambassador Farland replied that these explorations had convinced him that provided the executive branch kept Congressional leaders completely informed of policy objectives there was good reason to believe there would not be as much opposition as had been previously suspected.
The President then noted that if we are going to have to renegotiate in a couple of years there is not much point in raising the annuity now or trying to get anything like that through Congress now and he asked Ambassador Farland what the Ambassador recommended. The Ambassador said that we should move ahead rapidly on the things under discussion by the Commission that do not cost any money and consider using the mentioned alternative sources of funds for development of, for example, a feeder road program and/or building of a port at Aguadulce and Panama City. Returning to the things that do not cost any money the Ambassador noted that the question of a corridor should be settled soon; that the lease of piers could move ahead once Mrs. Sullivan's objections were met; that we had gone as far as we could in offering to use Panamanian stamps in the Canal Zone and the problem was up to the Panamanians to solve now; that we could look into the question of excess lands in the Canal Zone and we could do something about commercial activities in the Canal Zone. The President noted/5/ all of these. The discussion moved on to commercial activities in the Canal Zone. The President noted that the Governor should look into the possibility of having the prices of cigarettes and liquor which he understood were the items the Panamanians complained most about sold in the Canal Zone at prices comparable to those in the United States. There followed some further discussion of the possibility of financing a port at Aguadulce, using either contingency funds or funds especially appropriated by Congress or AID funds. The President felt that this could be done in a way to connect it vaguely to the Canal and make it very clear that this was in effect compensation for the Canal. He directed that this question be looked into. He said that we do not want an explosion in Panama, we must keep the lid on the next couple of years the best way we can. He requested that the possibility of some kind of a Panamanian retail outlet in the Canal Zone such as a store or a cooperative be looked into.
/5/The sentence originally read, "The President agreed to all of these." On the source text, the words "agreed to" are crossed out and the word "noted" is handwritten, apparently by Dungan, who initialed his approval on the memorandum of conversation.
411. Telegram From the Department of State to the Embassy in Panama/1/
Washington, July 23, 1963, 9:15 p.m.
/1/Source: Department of State, Presidential Correspondence: Lot 66 D 476. Secret; Priority; Limit Distribution. Drafted and approved by Collins; cleared by Martin, Springsteen, Kent, and Dungan at the White House.
49. You are instructed, provided results your efforts required by Embtel 42/2/ satisfactory, to deliver following letter at Foreign Office from President Kennedy to President Chiari:/3/
/2/Not found.
/3/Farland was to deliver this letter if he determined through discussions with Chiari that a plan to provide approximately $3 million in special assistance funds to Panama would be acceptable. Telegram 63 from Panama, July 25, reported that Chiari's reaction was positive, but a handwritten note on telegram 63 states that Farland had been told by telephone not to deliver the letter. (Department of State, Central Files, AID (US) 9 PAN) Telegram 58 to Panama, July 31, transmitted revisions in the letter. (Ibid.) Farland reported in telegram 91, August 14, that he had delivered the letter after further discussion with Chiari and consultation with the Department by telephone. (Ibid.)
"Dear Mr. President:
I am pleased to have the opportunity to exchange views with you again on some of the matters which have been the subject of our previous correspondence and our meeting in San Jose which I recall with such pleasure. Ambassador Farland's special consultations in Washington following the San Jose meetings were helpful and I am pleased at the progress which has been made in the resolution of some of the outstanding questions which have been before us.
I know that you continue to share a concern about the threat of Cuban Communist subversion of the Isthmian countries and others throughout the Hemisphere and I noted with gratification the work which was carried on by the representatives of the various governments who met in Managua in April./4/ While certain progress has been made as a result of the follow-up meetings held during April and May in the six countries of the Isthmus, I believe that there are many steps which remain to be taken and I certainly hope that you will be continuing your leadership in this important area.
/4/Reference is to a meeting held in Managua April 3-4 to draw up agreed measures against subversion; see Document 165.
I recognize the special needs of Panama for assistance in the development of those parts of its economy which have not benefited directly from the operation of the Canal. While Panama's foreign exchange receipts for goods and services sold to the Zone have been sizable, reaching an estimated $84 million in 1962, we are aware that most benefits from the Canal have accrued to that part of the Panamanian economy located close to the Canal.
Your Government has made substantial effort in drawing up a long-range Development Program, and we look forward to discussing it with your representatives after it has been evaluated by the panel established by the Organization of American States. In the interim, as we have already indicated to your Director of Plans, Mr. David Samudio, during his visit to Washington in early May, we are prepared to consider substantial amounts of loan assistance on liberal terms for a number of sound projects. During Mr. Samudio's visit, as you know, the various projects listed in the enclosure to your letter were discussed in some detail, in an effort on our part to provide guidelines on the type of projects that would be eligible for United States financing.
I can understand your desire to draw a conceptual distinction between our cooperative efforts to advance Panama's well being under the Alliance for Progress, and any special measures we undertake to adjust our relations in matters concerning the Canal Zone. I would expect, however, that assistance for the purposes described above could be of great and specific benefit to the peoples of Panama, and contribute to the enhancement of friendship between our two countries. Compensation more directly related to our special relationship in connection with the Canal has also been a continuing matter of concern to me. Though the details will have to be worked out, I believe that we may be able, for this year, to provide some special assistance. I have asked Ambassador Farland to discuss with you in detail what we can do.
We were glad to receive your Minister of Foreign Affairs, Dr. Galileo Solis, when he came on your personal instructions to Washington in late April. He left a memorandum with Secretary of State Rusk to which was attached a list of 8 major and 5 subsidiary points which are being or might be discussed by our Special Representatives./5/ I issued instructions that the work on these points, on the United States side, be accelerated with a view to having possible solutions ready by the end of July. The United States Representatives have been discussing these matters with yours and I am confident that constructive progress can be made on most of the major points and several of the subsidiary points. Foreign Minister Solis indicated to Secretary Rusk that it was then your wish to recess the work of the Special Representatives in July. I have since received, in this respect, your letter of July 9/6/ requesting an earlier dissolution and as you know I have agreed to do so by means of a joint communique./7/ Following such action I would expect that our diplomatic representatives would maintain the forward momentum in finding solutions to the remaining problems which confront us.
/5/Translations of the memorandum and the list, both dated April 24, are in Department of State, Central Files, POL PAN-US.
/6/Transmitted in telegram 17 from Panama City, July 9. (Ibid.)
/7/For text of a joint communiqu? issued by the U.S. and Panamanian Governments on July 23 announcing the conclusion of the discussions and some of their results, see Department of State Bulletin, August 12, 1963, pp. 246-247.
With cordial good wishes,
Sincerely,
John F. Kennedy"/8/
/8/Printed from an unsigned copy.
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