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It has been suggested that the new treaties could diminish our ability to maintain the neutrality of the canal, but in fact the Joint Chiefs of Staff are satisfied that the treaties enable us to keep the canal open indefinitely.

It has been suggested that we are "paying the Panamanians to take the canal away from us." But payments to Panama will come from canal revenues, not from American taxpayers.

Progress

HUMAN RIGHTS IN PANAMA

Finally, let me address briefly another question which has been raised: human rights in Panama.

The Panamanian Government has in the past been charged with abusing the civil and political rights of some of its citizens. And we have discussed this issue with that Government. The closer relations between our two countries that will grow out of the new treaties will provide a more positive context in which to express such concerns, should it be necessary to do so in the future.

Already, there are encouraging signs. On September 13 Panama invited the Inter-American Human Rights Commission to send a team to investigate human rights conditions in Panama. In addition, it has invited the United Nations to send observers to its plebiscite on the new treaties next month.

At the same time, the Panamanian Government has made continuing and real commitments to the economic and social rights of its citizens. Its economic development plans give priority to upgrading the housing, nutrition, health care, and education of the ordinary Panamanian citizen.

How we respond to an issue such as these Panama Canal treaties will help set the tone for our relations with the rest of the world for some time to come.

U.S. USE OF ITS POWER

Both we and others are under considerable pressure in our domestic economies. There is a tendency toward economic protectionism. And there is a question about the most appropriate ways to use our power in a world grown so complex.

Panama is a small country. It would be all too easy for us to lash out, in impatience and frustration, to tell Panama and Latin America, and other countries around the world, that we intended both to speak loudly and carry a big stick and to turn away from the treaties four Presidents have sought over so long a time.

But that, in my judgment, would not be conduct appropriate to a responsible world power or consonant with the character and ideals. of the American people.

Any nation's foreign policy is based, in the end, not just upon its interests, and in Panama our interests are clear and apparent. It is also based upon the nature and will of its people. I believe the American people want to live in peace with their neighbors, want to be strong, but to use their strength with restraint, want all peoples everywhere to have their own chance to better themselves and to live in self-respect. That is all a part of our American tradition.

That is why I am convinced that after the national debate they deserve, these treaties will be approved without reservation by the Senate with the strong support of the American people.

Thank you, Mr. Chairman.

The CHAIRMAN. Thank you very much, Mr. Secretary.

Hon. Ellsworth Bunker, Ambassador-at-Large and conegotiator of the Panama Canal Treaties, Department of State. Ambassador, I understand you do have a prepared statement. I have it before me. You may present it as you see fit.

STATEMENT OF HON. ELLSWORTH BUNKER, AMBASSADOR AT LARGE AND CONEGOTIATOR, PANAMA CANAL TREATIES, DEPARTMENT OF STATE

Ambassador BUNKER. Thank you, Mr. Chairman.

With the opening today of these hearings, the resolution of one of our Nation's most difficult and pressing foreign policy problems enters a new stage. Those of us who have participated in the negotiations have completed our task. It is now up to the Senate to examine the agreements and to make a judgment on them.

My first involvement with Panama Canal diplomacy came in 1964 when I was serving as Ambassador to the Organization of American States. From that vantage point, it was possible to see at firsthand how urgent was the need for the United States to modernize its relationship with Panama, and how important such a step forward was for our position in the hemisphere.

CANAL NEGOTIATIONS

My direct association with the Panama Canal negotiations began in 1973. At that time the two sides began working out a set of principles to serve as a guide in preparing new treaties. These principles, which have guided the subsequent negotiations, were embodied in the Joint United States-Panamanian Statement signed at Panama City in February 1974, by Secretary Kissinger and Foreign Minister Tack. In January of this year, these principles were reaffirmed by Secretary Vance on behalf of the Carter administration. This action followed a thorough policy review in which the incoming administration established its positions on the principal issues at stake in the negotiations.

The fundamental concept in the 1974 principles is that of U.S.Panamanian partnership. Throughout the discussions of the past 3 years, our objective has been to shape a close and enduring partnership between the United States and Panama in maintaining an open and efficiently operated Panama Canal. That is the concept which underlies the treaties you have before you today.

UNITED STATES-PANAMANIAN PARTNERSHIP ENVISIONED IN TREATIES

The partnership envisioned in the new treaties has three aspects. The United States and Panama will be partners in the operation of the canal through the end of this century. During this period the

United States will continue to shoulder the responsibility of managing the canal enterprise, building on a tradition of safety and reliability developed in over 60 years of experience. At the same time, we will be preparing Panamanians to carry on this tradition after the year 2000.

The United States and Panama will also be partners in protecting the canal. For the duration of the Panama Canal Treaty, the United States will have the primary responsibility for defense of the waterway and will retain bases and troops in Panama for that purpose. Panama will also contribute forces to canal defense. While the forces of the two countries will work in coordination, they will retain their separate lines of command. We will be able to act unilaterally to maintain canal security if need be.

Finally, the United States and Panama will share a long-term responsibility for maintaining the canal's neutrality. The U.S. role in assuring neutrality will continue for as long as the canal remains in operation, even after management of the waterway passes to Panama.

HOW UNITED STATES-PANAMANIAN CANAL OPERATION PARTNERSHIP

WILL FUNCTION

Let me now explain more specifically how the United States-Panamanian partnership in operation of the canal will function.

The Panama Canal Treaty provides for the creation of the Panama Canal Commission, which will manage and operate the canal through December 31, 1999. The Commission, which will replace the existing Panama Canal Company, will be a U.S. Government agency constituted in accordance with legislation to be sought from the Congress. The Commission will be supervised by a nine-man board consisting of five Americans and four Panamanians. The Commission's executive officers will be an administrator and a deputy administrator. Until 1990 the administrator will be an American and the deputy administrator a Panamanian. After that time, the administrator will be Panamanian and the deputy American.

The United States will appoint all officials of the Commission, including the administrator, deputy administrator, and the nine-man board, Panamanian as well as American. The Panamanian appointees will, however, be proposed by Panama.

U.S. control of Panama Canal operations throughout the treaty period is fully assured. The United States will have a majority on the Commission board. It will appoint Commission officers. It can remove the Commission executive officer at will. Most importantly, the Commission will operate in accordance with U.S. law.

At the same time, the participation of Panamanians at the highest levels in the canal enterprise, both as board members and executive officers, will permit Panama to attain the managerial expertise to operate the canal after the year 2000. When Panama assumes responsibility for canal operation. Panamanians will have had the benefit of 20 years of involvement in the direction of the canal enterprise.

The treaty grants to the United States the rights needed to carry out its responsibility for operating the canal. These include the au

thority to establish and collect tolls, make and enforce rules pertaining to navigation and marine traffic control, and regulate relations with employees. The treaty also grants the United States use of all lands, waters, and facilities required for canal operation. The areas and facilities reserved for this use are specifically identified. They include the canal itself and related installations.

The Panama Canal Treaty encourages continuity and quality in the canal work force. The provisions governing employees are designed to encourage experienced personnel to remain with the canal under the new Commission. Salary levels, and the terms and conditions of employment, will remain generally as favorable as they are now.

An important difference for employees will be the change from United States to Panamanian jurisdiction in what is now the Canal Zone. For the U.S. employees, most of whom reside in the Canal Zone, and who will therefore be most deeply affected by the shift, the treaties provide special guarantees which commit Panama to apply specified procedural standards in criminal cases involving U.S. citizen employees. In addition, an agreed minute provides that Panama, as a matter of general policy, will, in such cases, transfer jurisdiction to the United States at the latter's request.

As with management, there is provision for development of a qualified Panamanian work force to man the canal enterprise. In hiring new employees, the Panama Canal Commission will give preference. to qualified Panamanians. The Commission will also provide training programs to develop Panamanian workers with all the requisite. skills needed by the canal enterprise. During the more than two decades of the treaty period, it should therefore be possible to build up a fully qualified Panamanian work force. We of course start from a strong base. Seventy-four percent of current canal employees are Panamanian.

ECONOMIC ARRANGEMENTS UNDER TREATY

A sound financial structure is also important to the success of the canal enterprise. We have kept this objective very much in mind in working out the economic arrangements under the new treaty.

At the start of these negotiations, in the 1974 Kissinger-Tack Joint Statement of Principles, both countries agreed that Panama should receive "a just and equitable share of the benefits derived from the operation of the canal in its territory." In line with this principle the United States consistently maintained during the negotiations that payments to Panama for its contributions to the canal enterprise. should be drawn entirely from canal revenues, that is, that the pavments should reflect the canal's economic value as measured by its revenue-generating capacity. Panama initially sought much larger payments, which far exceeded what could be financed by canal earnings.

The United States concept has been followed in establishing the payments to be made to Panama under the Panama Canal Treatv. These payments, as Secretary Vance explained, will come entirely from canal revenues. The amounts established are based on what

we consider sound and realistic projections of the canal's earning capacity.

The economic and military assistance, of up to $345 million, which, as Secretary Vance has stated, we have undertaken to provide Panama, has been kept entirely separate from the Panama Canal Treaty and from canal operations. This aid is not linked in any way to our rights and obligations under the new canal treaties and will not be a burden on the canal operation. At the same time it will, we believe, enhance the successful implementation of the new treaties by contributing to Panama's economic development, and thereby helping to foster a climate of stability conducive to efficient and secure canal operation. We are confident that the economic arrangements worked out will contribute to the success of the U.S.-Panamanian partnership. The payments Panama will receive from canal revenues will give it a stake in the success of the canal enterprise. At the same time, they are set at a level within the canal's projected earning capacity. And the economic assistance to be provided outside the treaty, while in no way tied to canal operations, will contribute to the success of the new arrangements.

CONFIDENCE IN TREATIES AND NEW RELATIONSHIP

I am confident that the treaties provide the basis for efficient operation of the canal under United States stewardship until the end of the century and with Panamanian management thereafter. They build on effective operating procedures already established. They provide for an orderly shift to Panamanian operation. They insure that over the long term the canal will have an effective management, qualified work force, and a sound financial base, three of the essential elements for any successful industrial enterprise.

I am also confident that the United States and Panama can work together effectively in carrying out all aspects of the new relationship which these treaties envision.

In our preoccupation with differences over the canal, both Americans and Panamanians tend to overlook the many positive elements in our long association. The United States and Panama have been working together for three-quarters of a century. It is fair to say that there is no other nation with which Panama maintains a closer relationship than the United States. This relationship has centered on the canal, but it has not been limited to that. Important ties of trade and investment link our two countries. For 30 years the United States and Panama have also been allies under a mutual defense treaty, the Rio Pact. And on a personal level, thousands of Panamanians have attended schools and universities in the United States.

The United States and Panama are well prepared to enter on an era of closer cooperation in the canal enterprise. They begin from a solid foundation of mutual understanding and concrete accomplishment. Without that, these treaties would never have been concluded. That is why I am convinced that the partnership envisioned in these treaties will be productive and successful. Thank you, Mr. Chairman.

The CHAIRMAN. Ambassador Linowitz, you have a prepared statement, I understand.