[Excerpt from U.S. Naval Institute Proceedings, January 1977, Vol. 103/1/887, p. 43] CANAL DIPLOMACY AND U.S. INTERESTS

(By Capt. Paul B. Ryan, U.S. Navy (Retired)*)

From time immemorial, the 30-mile-wide isthmus of Panama has connected two continents and divided two oceans. In 1914, the United States completed a canal thereon which connected the oceans and divided the continents. The "Big Ditch" solved a transportation problem, but it created many new problemssome of which now seem almost unsolvable.

President Gerald Ford was reacting to the barbs of Republican challenger Ronald Reagan when he proclaimed last April, "I can simply say—and say it emphatically-that the United States will never give up its defense rights to the Panama Canal and will never give up its operational rights as far as Panama is concerned."

Only two days before, on 8 April, the President's special representative for the Panama Canal negotiations, Ambassador Ellsworth Bunker, appearing before a congressional committee in closed session, gave an account which did not square with Ford's two-fisted statement. Instead, Bunker testified that the President had instructed him in writing to negotiate a treaty which would "give up the Canal Zone after a period of time" and the canal after a "longer period of time."

The news media quickly noted that Fords statement varied from the eight principles pledged by Secretary of State Henry Kissinger to Panama's Foreign Minister Juan Antonio Tack in February 1974. In essence, the United States agreed that the forthcoming treaty would end after a fixed number of years. It affirmed that the United States would no longer retain its exercise of sovereign rights and jurisdiction in the Canal Zone. Further, the United States would share with tiny Panama the operation and defense of the waterway while Panama would grant to the United States the rights, facilities, and lands necessary to continue operating and defending the canal. Additionally, the two nations would provide for any future expansion of canal capacity as needed, and Panama would receive a larger share in the tolls and revenue accruing from the canal and the Canal Zone. Clause 6 of the agreement summed it up, “. . . Panama will assume total responsibility for the operation of the canal.'

Because the State Department had reckoned without the reaction of U.S. public opinion, the Kissinger-Tack pact must be regarded as less-than-adroit diplomacy. As President Ford learned two years later,a large segment of the American people was not psychologically prepared to “give up this cherished possession that for 60 years had represented a symbol of U.S. security and a boon to world trade. A leading opponent of the administration's policy, Representative Gene Snyder of Kentucky, had grilled Bunker at the congressional hearings. He announced that if a U.S.-Panama treaty were concluded, the United States would abolish the Canal Zone Government in six months, relinquish jurisdiction in the Canal Zone within three years, and turn over the waterway to Panama in 25 to 50 years. Out of the welter of conflicting statements, it seemed clear to many voters that the Ford administration was planning an eventual pullout from Panama. The question was whether the U.S. people would accept such a withdrawal, a concept which many Americans could not reconcile with the beliefs that they had been taught from childhood. Others doubted that the canal's security and operation would remain unimpaired under joint control.

During the next week, the President and his press aide Ron Nessen were put to the embarrassing task of explaining that since 1964 U.S. Presidents had accepted the premise that the United States should modify the old treaty of 1903 and thus give Panama a greater voice in canal operations and defense by recognizing its sovereignty in the zone. Nessen sweepingly declared that all of Latin America backed Panama and that the issue was too important to be made a political football. It was charged that violence and bloodshed would erupt if the United States broke off negotiations, a course of action termed irresponsible. The Democratic nominee, Jimmy Carter, remained clear of the Panama

*Captain Ryan is a research associate at the Hoover Institution on War. Revolution and Peace at Stanford University where he is currently working on a monograph dealing with the Panama Canal controversy. He has traveled widely in Latin America (including Panama) in connection with service as Naval Attaché, Havana, and as Latin-American desk officer in the Pentagon's division of International Security Affairs. He has held three commands at sea. A graduate of the U.S. Naval Academy in 1936, he holds two master's degress (international relations from Stanford and history from San Jose State University). Captain Ryan has written a number of Proceedings articles. His most recent was "USS Constellation Flare-up: Was it Mutiny?" in January 1976.

boil-up but publicly stated, "we've got to retain that actual practical control" but could "yield part of the sovereignty" over the Canal Zone and increase the U.S. annuity (now $2.3 million).

For the past six years, Brigadier General Omar Torrijos, the chief executive and virtual dictator of Panama's approximately 1.6 million people, has generated mixed emotions in the United States. The U.S. administration evidently assumes that he can maintain law and order and can guarantee the terms of a new treaty. Perhaps because he controls the media, brooks no political opposition, and is likely to be in office for a long time, it is considered sound business to deal with him. There is little doubt that Torrijos knows that his political future is riding on the outcome of the treaty and that he desperately needs it in order to survive as chief of the Panamanian Government. Apparently, Washington holds him in some regard. The press reports that he has developed warm ties with Bunker and with William Jorden, U.S. Ambassador to Panama, in spite of the "war of nerves" that some observers feel he has conducted.

The 48-year-old National Guard officer, who frequently wears jungle combat garb and packs two guns, has predicted that "serious trouble could erupt" unless the United States turned the Canal Zone over to Panama. As reported in Newsweek, he has insisted that the U.S. military presence must be gone within 25 years and that "the year 2000 is a sacred number." If diplomacy fails, he is quoted as saying that in the event of an outbreak of violence, "either we crush the people or we support them. I am not going to crush the Panamanians."

On another occasion Torrijos warned, "There are two routes in the philosophy of liberation. One is the route of Gandhi. The other is the route of Ho Chi Minh. Until now we are following the route of Gandhi." Such remarks could be interpreted as political rhetoric tailored for Panamanian consumption. Less publicized is the fact that such chilling pronunciamentos are resented by many North Americans who regard them as the posturings of a banana-belt dictator. It is probably true that the counterproductive effects of his fiery blasts are indiscernible to Torrijos and to the Panamanian people.

Students of the technique of political negotiating note that, consciously or not, Torrijos is using the "can't lose" ploy practiced by Communists for years in their negotiations with the West. As they interpret his tactics, he makes "impossible" demands from which he refuses to budge, and he confronts the United States with predictions of dire consequences. However, some Latin Americanists claim that his bellicose behavior stems more from his precarious plight in walking a political tightrope between his radical supporters, on one side, and the moderates who want no part of violence, on the other.

Back in Washington, the advocates of a new treaty, in justifying their policy to the public, have placed a heavy emphasis on Panama's legal right of sov ereignty, coupled with a benevolent belief that times have changed and that nations are all interdependent on each other. Thus, the proponents of this view stress that if the United States is to retain the friendship of Panama, Latin America, and the rest of the world, it has no choice but to get out of the Canal Zone within the next three decades. Underlying the administration's policy is its foreboding that the canal is a time bomb which must soon be defused. Moreover, they believe that if Panama has a stake in protecting the waterway, terrorist attacks against the locks and dams could be held in check, an assumption fraught with uncertainty.

Briefly, the United States obtained the Canal Zone in 1903 by payment of $10 million to Panama. In addition, Washington agreed to an annual payment of $250.000 for assuming ownership of the Panama Railroad. Previously, the American financiers who ran the railroad had paid that annual fee to Colombia, so Washington continued the payments which have risen to $2.3 million per year. What did the United States obtain for the $10 million? The answer lies in Article III of the treaty which grants “all the rights, power, and authority . . . which the United States would possess and exercise if it were the sovereign . . . to the entire exclusion of the exercise by the Republic of Panama of any such sovereign rights, powers and authority."1 Article III is still very much in force.

1 The issue of sovereignty has been a legal thicket since 1904 when Panama asserted its rights after the treaty. The facts are these. Panama granted (or conveyed) complete legal rights to the United States in perpetuity. The U.S. courts in some areas (extradi tion, tax collection, narcotics laws) treat the Canal Zone as part of the United States. But for other cases (mail, import, citizenship for children born of foreign parents), the courts treat the zone as non-U.S. territory. The House of Representatives and the State Department refer to the zone as "U.S. property." See Michael D. Simpson, "Panama: The Proposed Transfer of the Canal and Canal Zones by Treaty." Georgia Journal of International Law, Vol. 5, 1975, Issue 1, p. 198, footnotes 29, 30.

U.S. policy has been gradually revised from the sovereign-rights-in-perpetuity concept of 1903 to the acquiescence in 1974 in Panama's claim of total jurisdiction in the zone. This policy change stemmed from the worldwide rise of nationalism and the revolt against colonialism that erupted after World War II. Western powers such as Britain and France were compelled to yield up their long-held territories in order to retain the cooperation of Third World nations. Ironically, Soviet Russia, which loudly trumpets Panama's claim to the canal, has held onto Esthonia, Latvia, and Lithuania and maintained thousands of Soviet troops in eastern Europe. Panama was not long in sensing that it, too, could enlist Third World support by labeling the United States a colonial aggressor which was violating its sovereignty.

As the State Department points out, as early as 1905, U.S. officials acknowledged that Panama retained at least titular sovereignty over the Zone. "Titular," as construed then presumably meant the dictionary definition, that is, existing in title or name only. William Howard Taft, Secretary of War at the time, referred to Panama's titular sovereignty as a "barren scepter" and as a concession with a "poetic and sentimental appeal to the Latin mind." That is to say, Washington agreed to recognize "titular" sovereignty to placate Panama's sense of dignity and "face." Over the years, total-not titular-sovereignty became the primary cause of Panamanian discontent, even though the United States Government had acquired substantially all of the some 550 square miles of property in the Canal Zone by purchase from individual owners at fair prices.

One of the U.S. Navy's most vital responsibilities is the protection of the Caribbean-Gulf of Mexico sea frontier through which pass the maritime lifelines linking the United States with its allies and its sources of strategic commodities.

The U.S. goal of retaining unimpeded passage through the "choke-points" of the world becomes more critical as the limitations of territorial-sea boundaries continue to grow and politically-motivated interpretations of the right of free passage increase.

Scholars generally agree that, economically speaking we do not "need" the canal. Various studies show that if the canal were closed to traffic or if the tolls were raised excessively, the United States would survive. Admittedly, the costs and disruptions to world maritime trade would be severe, but probably could be accommodated, after a five- to- ten-year period, by acceptable but very expensive alternatives. That is, the United States, after vast initial costs, could use rail and trailer truck transit to carry commodities cross-country, thus eliminating need for the canal. In other words, if there had never been a Panama Canal, there still would be large-scale world trade-but at a greater expense to the consumer. It is in the more important area of national security that proponents of the treaty encounter opposition. While granting that in certain crisis scenarios, the canal is not essential to the survival of the nation, critics assert that such a line of reasoning ignores the international psychological consequences certain to follow if Washington announced an intended relinquishment of control. Consider the words of Hanson W. Baldwin, now retired from a distinguished career as the military editor of The New York Times.

Baldwin states that if Washington shows signs of abandoning the canal, we may be sure that such indications would cause worldwide political and psychological reactions damaging to the United States. Our allies, our adversaries, and the neutral Third World would see such a move "as renewed evidence that the U.S. is a paper tiger." Any announcement of a pullout from Panama measured against the American setback in Vietnam could "encourage penny-dictators and minor aggressions everywhere." So wrote Baldwin prophetically only two months before the Cuban-Soviet takeover of Angola in later 1975. He also sees a parallel in the status quo of the Canal Zone and the U.S. Naval Base at Guantánamo Bay, Cuba, which by implication could be extended to other U.S. land bases around the world. He notes that once a retreat is started (say, by a U.S. withdrawal from Panama), it would be hard to stop. Such would be the unaccept

able aftermath if the United States relinquishes "what many consider to be well-nigh vital [U.S.] interests in Panama under threat." 2

A second argument used by advocates for ultimate Panamanian control of the canal relates to its purported obsolescence in the sense that the waterway cannot accommodate the Navy's 13 aircraft carriers. In their utterances, the term "13 aircraft carriers" sometimes becomes "many major warships" or "our largest warships," expressions which lead to distortion of the facts. There are now 475 ships in the fleet.

Offhand dismissal of the canal in strategic importance for the U.S. Navy has prompted a sharp rejoinder from Admiral David L. McDonald, Chief of Naval Operations in 1963-67:

"The fact that carriers cannot transit the Canal is a typical know-nothing State Department view. Carriers, as such, do not operate independently but as core of striking forces; and all other units of these striking forces can transit the Canal including the very vital logistic support forces [oilers, ammo and provision ships]. And with Angola plus USSR actions in general I certainly do not think we should permit our presence in the Canal to be diluted." "

That is to say, fleet operational flexibility will be maintained in the Atlantic and Pacific so long as some 460 "smaller" ships can transit the canal to beef up a task force on the other side of the waterway.

Admiral McDonald is mystified by the administration's reported proposal for joint operation and defense of the canal by Panama and the United States. Such an arrangement he feels is patently unworkable. He warns that the United States should reject any agreement "which deals with matters way out in the future." For the United States to contemplate naval operations without full control of the canal is inconceivable to this former member of the Joint Chiefs of Staff. A third critic of any proposal to dilute U.S. operational control of the waterway is Admiral Thomas H. Moorer, Chairman of the UCS during 1970-1974 and a former Chief of Naval Operations and Commander-in-Chief successively of the Pacific and Atlantic Fleets. Admiral Moorer has expressed to the author his belief that the United States should never accept a weakening of U.S. control or defense of the canal.

Writing in Strategic Review, a retired Marine officer, Lieutenant General Victor H. Krulak, declared:

"In truth, the Panama Canal is an essential link between the naval forces of the United States deployed in the Atlantic and in the Pacific. It is only because of the waterway that we are able to risk having what amounts to a bare bones, one-ocean navy.

"However, without absolute control of the Canal and the essential contiguous land, the United States could not accept the hazard of a one-ocean navy. It would be essential at once to initiate construction of fleets independently able to meet a crisis in either the Atlantic or the Pacific-a massive expenditure which we are now spared only because of our control of the Canal."

These several opinions do not imply that the treaty of 1903 cannot be changed or replaced. Like other man-made instruments, treaties eventually wear out and must be modified, but the modification should not be done at the expense of basic U.S. interests.

At the root of the extreme reluctance to relinquish control of the canal is the time-tested precept that the nation's security is inseparably linked to that of the Western Hemisphere. Consequently, it is a principal mission of the U.S. Navy to control the sea-lanes of the Caribbean-Gulf of Mexico sea frontier as well as the South Atlantic narrows between Brazil and Africa." The huge

Letter to author. 21 October 1975, Baldwin's views on the canal's impact on maritime strategy are described in Cuba and the United States: Long-Range Perspectives, John Plank, editor (Washington: Brookings Institution, 1967), pp. 200-222; also Strategy for Tomorrow (New York, Harper and Row, 1970), pp. 121-129.

Admiral David L. McDonald. USN (Ret.), letter to author, 19 April 1976.

Lieutenant General Victor H. Krulak, USMC (Ret.), "Panama: Strategic Pitfall," Strategic Review, Winter 1976, p. 70.

For a full analysis of the strategic value of Latin America, see Captain Raymond A. Komorowski, USN (Ret.), "Latin America-An Assessment of U.S. Strategic Interests." U.S. Naval Institute Proceedings, May 1973 (Naval Review issue), pp. 150-171. I have drawn freely on Captain Komorowski's excellent summary. For a second valuable analysis, see Captain John W. Haizlip's (USN) unpublished thesis, Panama Canal Defense-Influence of International Law (U.S. Naval War College, Newport, R.I., 1968).