The Panama Canal Treaty Declassified

During a state visit to Washington, Panamanian President Roberto Chiari meets with President Kennedy at the White House regarding the status of the Canal Zone. Chiari presents the case for renegotiating the 1903 Canal treaty—arguments he has previously shared with Kennedy in a September 8, 1961, letter—suggesting that the original agreement has led to “misunderstandings” for many years. Chiari “asked in the name of Panama that the treaties be revised and not considered sacred just because they were signed 58 years ago.” According to this summary of their White House meeting, Kennedy’s response is diplomatic but negative. Kennedy “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.” The meeting summary notes that Chiari became “petulant and frustrated” with the conversation; his foreign minister, Galileo Solis, took over the presentation of Panama’s position. Solis “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.” Presciently, the former foreign minister, Octavio Fabrega reminded U.S. officials of “the intensity of the feeling of the present Panamanian generation with regard to the 1903 treaty.”

The CIA Daily Brief reports on January 9th riots that have led to death and destruction in the Canal Zone. The report notes that the violence broke out over “the issue of flying the Panamanian flag in the Zone…with the Panamanians insisting on this dual display.” The anti-American sentiment generated by the riots and the shooting of Panamanians by U.S. Canal Zone guards, according to the CIA assessment, “is likely to be prolonged.” The riots, deaths and injuries of dozens of Panamanians mark a turning point in the history of U.S. control of the Canal Zone. President Roberto Chiari responds by cutting diplomatic relations with Washington and demanding negotiations for a new Canal treaty as a quid pro quo for restoration of bilateral ties.

Top Johnson administration officials convene to address the first foreign policy crisis of Johnson’s presidency. CIA Director John McCone provides an initial briefing on the violent riots and the prospect of their continuation. Officials agree on a series of crisis management steps, including a call from Johnson to the president of Panama, Roberto Chiari, and the immediate launch of a fact-finding mission to Panama led by Assistant Secretary of State for Latin America Thomas Mann.

On January 9, 1964, violent riots in the Canal Zone and the heavy-handed U.S. response left four U.S. personnel and 20 Panamanians dead and more than 200 injured and led to Panama breaking diplomatic relations with the United States. The next day, President Johnson calls Senator Richard Russell to brief him on a phone conversation he has just had with President Chiari of Panama. Chiari told Johnson about the June 1962 meeting with Kennedy, complaining that “not a thing has been done” since then to address Panama’s demands for a new treaty. Johnson reports to Russell that he shut down Chiari’s efforts to press for treaty negotiations. “I told him that we couldn’t get into that,” Johnson states. “I was cold and hard and tough as hell.” Johnson appears to commend the toughness of the U.S. military commander who “had to order his people to start shooting,” killing 20 Panamanians. “I am not trying to unjustify it or justify it,” the President tells Russell. “I am just saying, it’s a hot [situation]—hot as a firecracker.”

Between January and April, President Johnson rethinks his “cold and hard” position and turns to diplomacy to address the Panama Canal crisis situation. On April 3, he places a call to Panamanian President Roberto Chiari to mark the restoration of diplomatic ties, and to inform him of the appointment of a “special ambassador,” Robert M. Anderson, to begin negotiations with Panama on the conflict over the Canal Zone. Chiari is recorded telling Johnson that it is time for “a complete revision of the treaty,” which has become “the source of dissatisfaction” for the Panamanian people. In the seven-and-a-half-minute telephone call, Johnson makes It clear that the U.S. is willing to negotiate but with “no pre-conditions.” Over the next three years, Ambassador Anderson negotiates a “package” of three treaties. But the treaty ratification process is aborted when the U.S. Congress rejects the accord and Panamanian President Marco Robles fails to sign the accord amidst political turmoil before the 1968 elections. In October 1968, Robles' successor, Anulfo Arias, is overthrown in a military coup that eventually brings a National Guard officer, Omar Torrijos, to power. Anderson continues as the special U.S. negotiator to Panama until June of 1973.

One day after President Johnson and Panamanian President Marco Robles announce agreement on three new treaties—the Lock Canal Treaty, the Sea Level Treaty, and the Defense Treaty—this memorandum to Secretary of State Dean Rusk summarizes the provisions in the new accords. The treaties replace the 1903 original agreement, establish a “Joint Administration of the Panama Canal” to operate the Panama Canal and administer the “Canal Area,” and grant the U.S. rights to construct a new sea-level canal within the next 20 years. Under the Defense Treaty, “the United States retains certain defense areas in which it may maintain its Armed Forces” and where it can act unilaterally to defend those areas. A breakthrough at the time, this package agreement was never ratified by the U.S. Congress; in Panama, it was overtaken by a military coup in 1968, which brought Omar Torrijos to power.

National Security Advisor Henry Kissinger requests an interagency study on prospects for negotiating a new Panama Canal treaty. Three issues are to be addressed: 1) Identifying U.S. interests in a new treaty, along with timing and options “to achieve those objectives;” 2) An evaluation of the treaties prepared in 1967, during the Johnson administration, and what changes should be made to them; and 3) evaluation of U.S. policy towards the government of General Omar Torrijos and the internal situation in Panama as it would relate to advancing a new accord on the Canal Zone.

In response to an interagency study on prospects for a Panama Canal treaty, President Nixon issues National Security Decision Memorandum 64, ordering his national security team to begin “exploratory and preliminary talks” with Panamanian leaders. Nixon cites several “nonnegotiable” issues: effective U.S. control of canal operations; effective U.S. control of canal defense; and “continuation of these controls for an extended period of time preferably open-ended.” Ensuing meetings with Panamanian officials result in extensive negotiations on those very issues, which eventually become the core of the new treaty.

In this national security directive, President Nixon authorizes his emissary, Special Ambassador Robert Anderson, “to undertake formal negotiations with Panama with a view to obtaining agreement on the text of a draft treaty this year.” Nixon’s instructions also provide more latitude to Anderson to negotiate a shorter time period for phasing out U.S. jurisdiction over the Canal Zone, a demand Panama has made.

In a third national security directive on Panama, President Nixon authorizes Special Ambassador Robert Anderson to negotiate “the possibility of a termination formula” for the treaty, “provided that the duration negotiated is a long one and that other provisions of the treaty package are satisfactory to the U.S.” Nixon prefers an open-ended treaty but is willing to agree to a 50-year duration “with provision for an additional 30-50 years if Canal capacity is expanded.” Nixon also wants a joint guarantee that “the Canal will be open to all world shipping without discrimination at reasonable tolls and that Panama would take no action that would hamper the efficient operation of the waterway.”

The CIA’s Office of Current Intelligence produced a comprehensive 13-page assessment that reviewed the history of negotiations on the Canal and provided substantive insight into the negotiating approach of General Omar Torrijos. “Torrijos’ efforts to demonstrate to Washington that he could be tough have always been balanced by signals that he was really quite reasonable,” the CIA analysis concluded. “If Torrijos' basic objectives are met, if he can get fairly complete jurisdiction over the Zone in a relatively short period of time, and if he can significantly shorten the duration period that was embodied in the 1967 drafts, then a treaty agreement may be possible in 1973.”

On February 7, 1974, Secretary of State Kissinger met in Panama with Panamanian Foreign Minister Juan Antonio Tack and, in a major ceremony, signed a framework for Canal negotiations known as the “Declaration of Principles.” The two countries agreed that the original 1903 Treaty, which the U.S. had essentially imposed on the Panamanian people, would be replaced by a new interoceanic canal treaty; the concept of “perpetuity” of U.S. control over the Canal Zone would be eliminated, and U.S. jurisdiction would come to an end. The territory of the Canal Zone would return to Panamanian sovereignty, and Panama would have “a just and equitable share of the benefits derived from the operation of the canal in its territory,” the joint agreement stated. “The Republic of Panama shall participate with the United States of America in the protection and defense of the canal in accordance with what is agreed upon in the new treaty,” according to a key principle. Both countries would also participate in the expansion of the canal should such development be needed in the future. The “principles” framework becomes the foundation for a renewed three-year effort during the Ford and Carter administrations to negotiate a new Panama Canal treaty.

The State Department sends the White House a “roadmap” on the status of Canal treaty negotiations, identifying decisions to be made and actions to be taken. “Now there has been a negotiating breakthrough: a new treaty is in sight,” according to the secret memorandum. But there are significant political obstacles to overcome. “A new treaty could constitute a striking foreign-policy achievement for the Administration,” the memo advises. “It will not be easy to move a treaty through the Senate. But the real problem derives more from ignorance than antipathy.”

The lead U.S. negotiator, Ellsworth Bunker, sends Kissinger material for President Ford, including a public relations plan to educate the Congress and influence opinion polls on the treaty. The memo to the President provides a comprehensive update on the status of negotiations that “have progressed to a critical point at which certain tradeoffs are necessary to reach an agreement.” Ambassador Bunker seeks a “certain flexibility” in his presidential instructions in order to finalize the treaty. If the U.S. does not move forward, the memo warns, “serious confrontation, possibly involving violence against the Canal Zone, would ensue, plus a consequent deterioration of our relations in Latin America and mounting world censure.”

President Gerald Ford convenes an NSC meeting to discuss negotiations for a new Panama Canal treaty that would eventually cede control of the Canal Zone back to the Panamanians. The meeting not only covers key areas such as the duration of the treaty and U.S. defense rights to protect it, but also the conflicting domestic and international political pressures on Washington that, as Secretary of State Kissinger makes clear, necessitate the negotiations to conclude after the 1976 presidential election. The lack of support in the United States for returning the Canal Zone to Panamanian sovereignty is also a subject of the NSC meeting. Kissinger states that “from the foreign policy point of view, I favor going ahead. However, domestically I’ve already encountered enough opponents to know what a barrier exists.” Kissinger points out that abandoning negotiations for a new treaty would generate turmoil in the canal zone, upheaval in the region and world-wide condemnation. “We would have [a] real uproar…demonstrations, violence, and we would be dragged into every international forum. This is no issue to face the world on. It looks like pure colonialism.”

President Ford convenes his national security team to discuss the Canal negotiations, which have come to a stalemate as the two sides disagree on major issues. “Negotiations are stalled and everyone is getting itchy,” Kissinger reports to the President. “It is not difficult to foresee that unless we begin the negotiations again there will be increasing unrest and eventually all Latin Americans will join in and we will have a cause celebre on our hands.” The meeting to address the issue of whether the President should favor a new treaty, given its domestic unpopularity and the political risks for his election in 1976, exposed divergent opinions among top national security officials. “It is my feeling that yes, we want a treaty,” Ford tells his advisors. “We don’t want a blow-up here in the United States or down there either. We want the situation under control here and certainly not a renewal of the fighting from 1964 there where people were killed and we had a hell of a mess.”

President Ford issues a national security decision directive authorizing U.S. negotiators to “proceed promptly” to restart talks and address outstanding issues, among them the duration for both U.S. operational control and defense of the Zone before Panama assumes those duties. He also directs his negotiators “to obtain Panama’s agreement that the negotiations will remain confidential so that the Panama Canal issue will not be injected into the domestic political process in the United States in 1976.”

The NSC specialist on the National Security Council, Stephen Low, reports on the status of the treaty talks. His memo provides a brief overview of the history of the negotiations starting with the January 1964 riots in the Canal Zone which left four U.S. soldiers and 20 Panamanians dead. The memo also reports on the “threshold agreements” on U.S. jurisdiction, control and defense of the Canal that negotiations during the Ford administration have advanced. Key issues remain, among them the duration of time before Panama assumes control of the Canal Zone, the amount of territory the U.S. will cede back to Panama, compensation, and whether the U.S. will have a formal role in guaranteeing the future neutrality of the Canal.

NSC Latin America specialist Stephen Low sends National Security Advisor Brent Scowcroft an overview on the issue of whether the Canal Zone is actually U.S. property. “Whether we have full sovereignty or ownership over the Canal is not central to the issue,” he argues. “The argument can go on and become very complex, as well as sterile. The important point is that it is not central to continuing the negotiations which are based on an assessment of our national interests.” The public argument that should be made, he suggests, is that “We are continuing these negotiations because the last three Presidents have all examined the matter carefully and found that our national interest in preserving access to the Canal over the long term is better served by negotiating a new arrangement with Panama.”

During his staff meeting, Kissinger and his top aides discuss whether to send Ambassador Ellsworth Bunker back to Panama for another negotiating session. The presidential campaign is in high gear, and any finalization of the treaty will complicate Gerald Ford’s chances of re-election as well as create problems for pushing a finalized treaty forward if he loses. Assistant Secretary of State Harry Shlaudeman tells Kissinger that sending Bunker to Panama in September “would be a good step in keeping Torrijos quiet, more or less.” “I have no problem with the going,” Kissinger responds, “as long as he doesn’t do anything.”

One week after Jimmy Carter’s inauguration, his top national security aides hold a Policy Review Committee (PRC) meeting meet to discuss renewing negotiations on a Panama Canal treaty. The meeting addresses preparations for a visit from Panama’s foreign minister, Aquilino Boyd, for “informal talks” on the Canal treaty and how to set the diplomatic stage for reviving negotiations conducted by the Ford administration. The PRC concludes that the new administration should reaffirm the “Tack-Kissinger Principles” (a general outline of an agreement signed by then Secretary of State Henry Kissinger with the Panamanians) beginning with exploratory talks but with a goal to finalize a new treaty by mid-1977. The PRC also “suggested that a National Citizens Committee on the Panama Canal be set up to stimulate a national educational campaign” in order to shift public opinion in favor of returning the Canal Zone to Panamanian sovereignty. After the meeting, National Security Advisor Brzezinski transmits a summary of the conclusions to President Carter, advising him that he should mention Panama in his fireside chat, and/or State of the Union address.

This secret cable transmits President Carter’s first message to Panamanian chief of state, General Omar Torrijos, agreeing to re-open negotiations on a Canal treaty. Carter’s letter comes in response to a communique Torrijos sent the new U.S. president in late February asking to continue negotiations that had started during the Ford administration. “I can assure you that the United States wishes to proceed cooperatively to meet the proper concerns of both Panama and the United States,” Carter writes. “My purpose lies in assuring that the Canal will remain permanently open and of use to the ships of all the world. The treaty should provide for an arrangement which allows the United States to meet its responsibility to operate the canal during the treaty's lifetime and which recognizes our security interest in the continuing neutrality of and access to the canal after the termination date of the treaty.” Carter’s letter concludes that “I will be pleased if we can agree on a new treaty and meet personally to sign it on behalf of our two countries.”

In this dramatic memorandum, Zbigniew Brzezinski advises President Carter on the “momentous” decision he faces to finalize the Panama Canal treaties. The Panamanians want a significant financial “package” of U.S. payments as part of the accord. But if Carter accedes to this demand, Brzezinski argues, it is unlikely that the Senate will ratify the treaty, with serious consequences for U.S. security and Carter’s own political interests. “A defeat in the Congress on this issue will not only jeopardize the Canal and our relations with Panama and Latin America; because you will have to invest so much of your political capital in this effort, a defeat might strike a significant blow at your overall effectiveness.” But denying the Panamanians the sizeable economic payout they sought also carried major risks of the negotiations breaking down. “With equally high probability,” Brzezinski counsels, “there will be rioting in Panama, which will spill over into the Zone. The Canal would be jeopardized and relations with Panama and all of Latin America and the developing world would be seriously, perhaps irreparably, harmed.” As Carter prepares for a meeting with General Torrijos’ emissaries, Brzezinski suggests he “convey directly to them and indirectly to Torrijos your strong commitment to a new treaty and your equally strong feelings about what the United States can do economically to help Panama and more importantly what the U.S. cannot do.”

To seal the deal on the Canal treaties, President Carter agrees to meet with two emissaries of General Omar Torrijos to explain his administration’s final proposals after more than a decade of negotiations on the future of the Canal Zone. In preparation for that meeting, Secretary of State Cyrus Vance provides Carter with this briefing memorandum on the remaining issues to be resolved. Vance also provides a draft of a letter for Carter to give to the emissaries for General Torrijos. In his letter, Carter advised Torrijos that U.S. negotiators would soon return to Panama with final proposals on annual payments to Panama that “we truly believe to be fair and just,” even if they were “less than you had expected or wished.” Carter asked Torrijos to understand the political pressures and widespread opposition the treaties faced in Washington that threatened ratification by the U.S. Senate. “With understanding and patience,” Carter concludes, “I believe we can move quickly forward and achieve the goal that has eluded past governments and leaders in both our countries.”

U.S. negotiators Ellsworth Bunker and Sol Linowitz report on a five-hour negotiating session on final points of contention on the treaty. At issue is the language that would prevent Panama from drawing on third countries to help it construct a second Canal—a provision the U.S. opposes—and restrictions on the U.S. from building a second canal through another Central American nation. Despite disagreement on this issue, Bunker and Linowitz predict that “barring quite unforeseen problems, we will be able to reach conceptual agreement early next week” and “final texts will be ready before long.”

Just two weeks before the formal signing of the canal treaties in Washington, President Carter places a call to General Torrijos to discuss final arrangements for the ceremony. The discussion focuses mostly on how invitations will be made to all the heads of state in Latin America. Torrijos suggests inviting Canadian Prime Minister Pierre Trudeau. It was only with great moral courage that our ends could be achieved,” Torrijos tells Carter at the end of the conversation. “I am proud of the progress we have made,” Carter responds.

One day before the treaty-signing ceremony, President Carter holds a bilateral meeting with General Torrijos at the White House to discuss coordinating statements during the campaign in both countries to obtain ratification of the new accords and to evaluate the importance of this international accomplishment. Torrijos, according to the memorandum of conversation of their meeting, expressed “profound admiration for the President's honesty and political valor.” He compared Carter’s “act of valor” to bring a decade of negotiations to fruition to “jumping from an airplane without a parachute to take on this battle.” For his part, President Carter called the treaty “the right, fair and decent thing to do” and predicted “it would eventually prove to be a popular accomplishment for him and his Administration.” Carter said “the climate would improve as the American people came to understand the terms of the treaty and to realize the unfairness of the past.” According to Carter, “the treaty opened the way to a new era of mutual respect, equality and friendship between our peoples.”