No Objection To Declassification 2008 06 02 N LC-128-3-34-3-6 MEMORANDUM S c fllPT yi iiul · THE WHITE HOUSE WA HIN TON SECRET August 6 1977 MEMORANDUM FORs THE PRESIDENT FROM HAMILTON JORDAN WILLIAM r SUBJECT 'f l HYLAND Status of Canal Negotiations Ambassadors Linowitz and Bunker have drafted a statue report on the negotiations for you and it is attached at Tab A The provision on the eea--level canal which Linowitz and Bunker recomm end was in fact drafted in Bogota last night by Torrijos and the Presidents of Venezuela Mexico Costa Rica Columbia and Jamaica It may conceivably cause some problems with the Senate since it gives Panama the option of excluding the United States and inviting other countrie • e g the USSR to join with Panama in building the canal Our negotiators tried to· get the Panamanians to give us a veto over third-country canal construction in Panama along the lines of the following sentence No new interoceanic canal will be constructed on the territory of the Republic of Panama during the lifetime of this Treaty except as herein provided or as the two governments may otherwise agree 11 11 Panama's negotiators said that the principle of reciprocity required that we in turn accept a prohibition from ·building a sea-level canal through any other country Their suggested sentence made with the strong support of the Presidents of Mexico Venezuela Colombia and Costa Rica is as follows During the li etime of the canal treaty the United State • will not negotiate with third countries any interoceanic canal through any other route in the territ_ory of the Western Hemisphere 11 SECRET SECRET No Objection To Declassification 2008 06 02 N LC-128-3-34-3-6 SECRET SECRET 2 The 1970 Canal Studies Conunission explored more than a dozen routes through Nicaragua Colombia and Mexico as well as Panama and recommended the #110 route through Panama There is little likelihood that if we chose to build a sea-level canal it would be anywhere else but Panama Although it might be argued that the option to build a canal in a third country gives us added leverage over Panama any hint of using such leverage would provoke such an adverse reaction in La tin· America that in effect we couldn't use it We suggest you might want to speak directly with Ambassadors Bunker and Linowitz on this Essentially the question at issue is whether to adopt the provision in the status report or the proposed two additions U S and Panamanian We should add that the Panamanian Ambassador just told us that the four Latin American Presidents of Vene z uela Costa Rica Mexico and Colombia personally request you to accept the Panamanian · sentence if we insist on ours and that our refusal would lead to a break in the negotiations I am also attaching a copy of the latest vote count in the Senate which the State Department did Hyland spoke with Brzezinski who believes that on-balance we can accept the orlglnal Panamanian position without adding any further sentences on veto rights or prohibition against a canal in other countries 1 e the language as presented in the attached status report In any case Ambassadors Linowitz and Bunker will need your guidance before they depart for Panama tomorrow Sunday at noon SECRET i · ' No Objection To Declassification 2008 06 02 NLC-128-3-34-3-6 tt it I t - 11 SECRET August 6 1977 Status of Negotiations Last n ght Ambassadors Bunker and Linowitz at the residence of Panamanian Ambassador Lewis talked by telephone with Panamanian Negotiators in Bogota and in Panama City These conversations lasted from about 6 30 to 11 30 p m involved discussion of all outstanding issues and brought us even closer to agreement on a new reaty As the U S Negotiators leave for Panama the status of negotiations is as follows 1 Economic Arran9ements Panama will accept our proposal including use of an appropriate U S inflation index applied to the 30¢ per ton annuity and including the fixed payment of $10 million per annum plus another $10 million if available from Canal earnings subject to making up deficits from surplus in future years 2 Lands and Waters Most issues have now been settled on the basis of our recent negotiating position We have agreed to explore under the treaty settlement of remaining issues which have been in our discussions and expect no major difficulty in their resolution 3 Sea-level canal The Panamanians this morning proposed the following sea-level canal provision instead of the one we had put forward earlier Bunker and Linowit2 believe it to be acceptable The Republic of Panama and the United States of America foreseeing the possibility that in the future a sea-level canal in Panama may have importance for international navigation commit themselves after the Panama Cana1 treaty enters into force and during its lifetime to study jointly the feasibility of a new interoceanic waterway on Panamanian territory Therefore if the parties agree that such waterway is necessary in the interest of the Republic of Panama the OSA and world commerce both countries will undertake to negotiate mutually agreeable terms pertaining to the construction of the new waterway SECRET SECRET I • No Objection To Declassification 2008 06 02 N LC-128-3-34-3-6 SECRET SECRET 2 4 Miscellaneous A few minor issues remain such as the display of flags coordination of port management etc No major difficulties are expected The outlook ic that barring quite unforeseen problems we will Ee able to reach and that an announcement Panama The negotiation quickly and final texts conceptual agreement early next week to that effect will be made in of treaty texts is also proceeding will be ready before long SECRET