Panama. Further, with USSOUTHCOM assistance, it has successfully planned and conducted three surveillance/intercept exercises, three counter-insurgency oriented exercises, and is presently engaged in planning its fourth surveillance/ intercept exercise to be conducted this September. It is a pleasure to report that we have almost worked ourselves out of having to assist COPECODECA in planning these exercises, as personnel of its staff are becoming increasingly competent. We have encouraged and supported regional conferences and seminars to consider ways and means by which Latin American security forces can improve their capabilities in such fields as intelligence, law, medicine, and communications. An example is the establishment, in early 1970, of the Permanent Commission of Inter-American Military Communications (COPECOMI). The purpose of COPECOMI is to coordinate communications matters among the armies of the American Republics and to establish a communications network connecting their respective headquarters.

Another highly effective means which has done much to promote regional cooperation, camaraderie and at the same time reduce existing animosities among the Latin American military is through the military school system in the Canal Zone. The U.S. Army School of the Americas, the Inter-American Air Forces Academy and the Small Craft Inspection and Training Team give instruction in Spanish, enabling us to reach thousands of outstanding students who are not able to speak English. These schools provide many technical skills needed in the internal development of Latin American countries.

SUMMARY

In closing, I think that the countries of Latin America generally have made substantial progress in recent years in coping with their problems of internal security and the threats of indirect communist aggression. We have contributed significantly to this progress through the military assistance program, advisory activities, and joint exercises.

The most important product of this success has been an atmosphere in which the economic and social progress that is so desperately needed could take place with relative freedom from the disruption and strife of terrorist tactics.

In all the years of the Alliance for Progress, the funds that the Congress has approved for military assistance in Latin America have amounted to about six percent of those approved for economic assistance. I am convinced that this has been a wise premium to have paid, and I believe that the officers and men who have served in our military missions during this period can take pride in the fact that some analysts are able to conclude that the communist threat has subsided. They have worked diligently to see that it did subside.

I recognize that my treatment of the current issues affecting the Panama Canal and the Canal Zone has been brief. I welcome the opportunity to respond to your questions concerning specific interests of the subcommittee on this topic. Thank you.

Mr. FASCELL. We will next hear from General Leber. (A biographical sketch of General Leber follows:)

MAJOR GENERAL WALTER P. LEBER

Maj. Gen. Walter P. Leber, U.S. Army, was born in 1918, and is a native of St. Louis, Missouri. A graduate of the Missouri School of Mines, he was commissioned in the Army Reserve in 1940 and in the Regular Army in 1942. Called to active duty in 1941 he served in the European Theater of Operations during World War II. In 1946 he was assigned to the Manhattan District, Oak Ridge, Tenn., as Chief, X-10 Project; from 1947 to 1949 he served as Chief, Technical Branch, Military Liaison Committee to the Atomic Energy Commission, in Washington, D.C. In 1949-1950 he served in the North Pacific Division of the Corps of Engineers in Seattle and Walla Walla, Washington, then moved to Fort Sill, Oklahoma. first as Engineer Battalion Commander and then Group Commander. From 1952 to 1955 General Leber was assigned to the Department of the Army General Staff in Washington, D.C. He then attended the Command and General Staff College at Fort Leavenworth, Kansas. From 1956 to 1957 he was with the Eighth U.S. Army in Korea, first as Deputy Engineer, then as Commanding Officer, 2nd Engineer Group. In 1958-1961 he served as Executive Officer to the Chief of Engineers in Washington, D.C. From June 1961 to April 1963 General Leber was in Panama as Lieutenant Governor of the Canal Zone and Vice President of the Panama Canal Company. In April 1963 he was assigned

as Ohio River Division Engineer for the Army Corps of Engineers, with headquarters in Cincinnati, Ohio. In July 1966 General Leber became Director of Civil Works, Office of the Chief of Engineers, Washington, D.C., assuming his present post as Governor of the Canal Zone in February, 1967. General Leber's awards and medals include the Legion of Merit (with 2 Oak leaf clusters), Bronze Star Medal, and Army Commendation Medal (with Oak Leaf Cluster).

STATEMENT OF MAJ. GEN. WALTER P. LEBER, U.S. ARMY, GOVERNOR OF THE CANAL ZONE

General LEBER. It is a pleasure to be here this morning. Mr. Chairman and members of the committee, I am Maj. Gen. Walter P. Leber, Governor of the Canal Zone and President of the Panama Canal Company. I was appointed Governor February 21, 1967. It is a pleasure to appear before you today for a discussion of the Panama Canal.

THE PANAMA CANAL AND CANAL ZONE

2. The Panama Canal is a lock canal 51.2 miles long from deep water in the Caribbean Sea to deep water in the Pacific Ocean. Pursuant to treaty with the Republic of Panama, the United States constructed the canal during the period 1904 to 1914, and has operated, maintained, and defended the canal continuously since the inaugural day, August 15, 1914.

3. The canal lies generally in the center of the Canal Zone, located 9 degrees north of the equator, which bisects the Republic of Panama and is under the jurisdiction and control of the United States pursuant to treaty. The Canal Zone extends generally 5 miles on each side of the Panama Canal, covering an area of 558 square miles, exclusive of tidal waters. Its population in 1970, including uniformed personnel of the Armed Forces, was about 45,000.

4. Residence in the Canal Zone is restricted by treaty to persons connected with the operation, maintenance, and defense of the Panama Canal. There is no private ownership of land. Facilities, except for a few belonging to oil and steamship companies and agents, churches, and employee organizations, are owned and operated by the U.S. Government. The residents of the Canal Zone, therefore, are mainly employees of the U.S. Government or members of the Armed Forces of the United States, and their dependents.

ORGANIZATION

5. The Panama Canal enterprise is divided into two agencies, both closely related in purpose, organization, and operation."

6. The Canal Zone Government is responsible for all civil government functions in the Zone. The Panama Canal Company is concerned with operation of the waterway and supporting installations.

7. Both agencies are under the direction of the Governor, who is charged with administration of the Canal Zone Government and is "ex officio" a director and President of the Panama Canal Company.

8. The Company is required by law to recover all costs of operation and maintenance, including depreciation. It also is required to pay interest to the U.S. Treasury on the net direct investment of the U.S. Government in the Company. The Treasury is reimbursed by the Company for annuity payments to the Republic of Panama under

the 1936 treaty. Also reimbursed is the net cost of operating the Canal Zone Government, including depreciation of fixed assets.

9. The Canal Zone Government operates on annual gross appropriations from Congress. All revenues of the Canal Zone Government are returned to the Treasury. The net balance of the cost of the Canal Zone Government is then paid to the U.S. Treasury by the Panama Canal Company which operates from its own revenues. This system makes the entire canal enterprise self-sustaining.

10. The Panama Canal enterprise employs about 16,000 peoplenearly 12,000 Panamanians and about 4,000 U.S. citizens.

SECURITY OF THE CANAL ZONE

11. The responsibility and authority of the Governor of the Canal Zone with reference to internal security or civil protection of the Canal Zone are prescribed by law and Executive order. The basic relevant provisions of the Canal Zone Code, enacted by the Congress of the United States, are sections 31-35 of title 2 which provide as follows:

"Sec. 31. Canal Zone Government; administration and functions generally "The Canal Zone Government, an independent agency of the United States, shall:

“(1) be administered, under the supervision of the President or such officer of the United States as may be designated by him, by a Governor of the Canal Zone; and

"(2) be charged, except as otherwise provided by law, with the performance of the various duties connected with the civil government, including health, sanitation, and protection, of the Canal Zone. 76A Stat. 7.

"Sec. 32. Appointment and term of Governor

"The President, by and with the advice and consent of the Senate, shall appoint the Governor of the Canal Zone. The Governor shall hold office for a term of four years and until his successor is appointed and has qualified. 76A Stat. 7.

"Sec. 33. General powers and duties of Governor

"The Governor of the Canal Zone shall:

(1) have official control and jurisdiction over the Canal Zone; and

(2) perform all duties in connection with the civil government of the Canal Zone, which is to be held, treated and governed as an adjunct of the Canal. 76A Stat. 7.

"Sec. 34. Army control in time of war or imminence of war

"In time of war in which the United States is engaged, or when, in the opinion of the President, war is imminent, such officer of the Army as the President may designate shall, upon order of the President, assume and have exclusive author ity and jurisdiction over the operation of the Panama Canal and all its adjuncts, appendants and appurtenances, including the entire control and government of the Canal Zone. During a continuation of this condition, the Governor of the Canal Zone shall be subject to the order and direction of the officer so appointed, in all respects and particulars as to:

"(1) the operation of the Canal; and

"(2) all duties, matters and transactions affecting the Canal Zone, 76A Stat. 8.

"Sec. 35. Assistance of Armed Forces

"The Governor of the Canal Zone may call upon the Commander of the Armed Forces of the United States in the Canal Zone for military assistance, whenever the Governor deems the assistance of the Armed Forces necessary to:

"(1) protect the Canal Zone;

"(2) preserve the peace;

"(3) quell or disperse routs or riots; or

"(4) disperse unlawful assemblies. 76A Stat. 8."

12. During World Wars I and II, the provisions of section 34 quoted above were activated by Presidential Executive order and the senior Army official, now known as the Commander in Chief, U.S. Southern Command, assumed the control and government of the Canal Zone. Except for those periods, the Governor is responsible for the internal security and civil protection of the canal and Canal Zone as distinguished from military security, protection and defense (35 Code of Federal Regulations 3.22).

13. The Canal Zone Government's principal civil protection force is the Canal Zone Police, numbering about 265 men, and an additional guard force of about 100 men employed in the security of the Panama Canal locks, piers, and the two dams. These forces perform all the usual civil law enforcement functions in civilian area of the Canal Zone pursuant to the Canal Zone Code and other laws enacted by the Congress for application in the Canal Zone. Among such other laws, for example, is section 191 of title 50 of the United States Code, pursuant to which the President has delegated to the Governor or the Canal Zone the authority and responsibilities provided by that law for the safeguarding of vessels, harbors, ports, and waterfront facilities in the Canal Zone (35 CFR Part 129).

14. The Canal Zone Police, in the performance of their ordinary police functions, work closely with the military police attached to the various military posts in the Canal Zone and also are in daily liaison with the Guardia Nacional of the Republic of Panama, which is that country's police force and military force combined.

15. To react to and control civil disturbances in the Canal Zone, specifically riots or demonstrations originating in Panama and directed at the Canal Zone at the open boundaries between the two jurisdictions, the Canal Zone Government and Panama Canal Company have a civil disturbance plan which is coordinated with and concurred in by the Commander in Chief, U.S. Southern Command. Under this plan, civil disturbances are controlled by the Canal Zone Police to the extent of that force's capability, with such cooperation as can be obtained in the specific circumstances from the Panamanian Guardia Nacional. If the disturbance is of such nature and magnitude as to threaten injury to persons or property in the Canal Zone beyond the protection capability of the limited Canal Zone Police force, the plan provides for the Governor of the Canal Zone to obtain such military assistance as is necessary pursuant to section 35 of title 2 of the Canal Zone Code, quoted above. Pursuant to this plan, full assistance of the military was sought and obtained by the Governor in disturbances in 1959 and 1964, for example. Under the plan, the civil and military authorities coordinate and cooperate fully and adopt varions alert postures as required by circumstances whenever from time to time a situation requires such action.

16. In addition to daily close working relationships between military and civilian authorities, the Governor of the Canal Zone, the Commander in Chief, U.S. Southern Command, and the American Ambassador to Panama meet formally on a regular weekly schedule, and at other times on special call, to discuss and coordinate fully all aspects of their mutual responsibilities, plans, and activities bearing upon the canal and Canal Zone and relations with the Republic of Panama.

CANAL TRAFFIC

17. Since its inauguration in August of 1914, the Panama Canal has served as a major international utility, open to ships of all nations at all times on equal terms. The canal has also served to strengthen the security of the United States and the free world.

18. Through the 30th of June 1970, over 434,000 ships, carrying over 2 billion tons of cargo had transited the canal.

COMMERCIAL TRANSITS

19. Ocean-going commercial transits have accounted for over 80 percent of the canal's total traffic, and bulk commodities have made up about 80 percent of the commercial cargo.

20. Over the years, the types of commercial cargo important to the canal have changed as have the trade routes and the direction of the dominant flow of cargo. In 1929, for example, the U.S. intercoastal trade route was the primary route, and the principal commodity was petroleum and products (mainly refined) moving from our west coast to the eastern seaboard. Today, petroleum and products are still the dominant commodity group in canal traffic, but the direction has changed, with movement from the Caribbean to such diverse points as the west coast of South America, the west coast of the United States, and the Far East. Another northbound movement of 1929, Chilean nitrates, which accounted for 12 percent of Pacific to Atlantic traffic is now a negligible factor in canal traffic having been largely supplanted by synthetics.

21. Significant changes in commercial traffic have occurred since World War II. Ocean-going commercial transits in fiscal 1969 totaled 13,150, compared to 4,678 in fiscal 1948, an annual increase of approximately 5 percent. In the same period, cargo carried increased by 7 percent annually, rising from 24.1 million to 101.4 million long tons. The growth in cargo outstripped growth in number of transits as a result of increased average size of vessels using the canal and the movement of more dense cargoes.

22. Another phenomenon of the postwar period has been the sharp rise of the Japanese economy and its concomitant importance to canal traffic. Approximately 40 percent of commercial cargo transiting the canal in 1969 had Japan as its point of origin or destination, placing that country in second rank after the United States in canal use. In recent years, about 65 percent of the cargo going through the canal has had its origin or destination in the United States. Of the 41.0 million long tons of cargo on the Japan route, 15 million, or 37 percent, consisted of coking coal from the United States. In 1948, just 11,000 tons of coking coal moved along this route, and even prewar shipments were less than 150,000 tons per year.

U.S. GOVERNMENT TRANSITS

23. Over the years, U.S. Government transits have fluctuated widely. These include ships of war, cargo ships in the Government fleet, and MSTS chartered vessels. During emergencies, most Government cargo has been moved in chartered bottoms.