The Panama Canal

United States and Panamanian relations on issues connected to the control, operation, and future of the canal were conducted within the framework of the 1977 Panama Canal treaties. The negotiation of these treaties took several years and aroused domestic political controversies within both nations. Negotiations were finally concluded in August 1977 and, the following month, the treaties were signed in Washington.

The treaties were ratified in Panama by slightly more than twothirds of the voters in a national plebiscite. Ratification by the United States Senate was much more difficult and controversial and was not completed until April 1978. During the ratification process, the Senate added several amendments and conditions, notably the DeConcini Condition, which declared that if the canal were closed or its operations impaired, both the United States and Panama would "have the right to take such steps as each deems necessary . . . including the use of military force in the Republic of Panama, to reopen the canal or restore the operations of the canal." Despite an additional amendment, which specifically rejected any United States "right of intervention in the internal affairs of the Republic of Panama or interference with its political independence or sovereign integrity," the Senate's changes were met with strong protests from Panama, which never ratified the new amendments. Formal ratifications, however, were exchanged in June, and the treaties came into force on October 1, 1979.

To implement the provisions of the treaties establishing the new Panama Canal Commission, to regulate the conditions for canal employees, and to provide for the handling and disbursement of canal revenues, the United States Congress enacted Public Law (PL) 96-70, the Panama Canal Act of 1979. Several provisions of this act immediately became a focus for ongoing controversy between the two nations. Panamanians objected to provisions for the use of canal revenues to pay for early retirements for United States employees, to finance travel for education by the dependents of United States employees, and to provide subsidies to make up for any loss of earning power when, as required under the treaties, United States employees lost access to United States military commissaries. By 1986 Panamanian authorities were claiming that such provisions had cost their nation up to US$50 million. The claim was largely based on the fact that Panama had not been receiving the up to US$10 million annual contingency payment from Panama Canal Commission profits provided for by the treaties. The commission explained that this was because the surplus simply did not exist, a fact that Panama, in turn, attributed to provisions of PL 96-70.

The level of Panamanian complaints about PL 96-70 and the intensity of government charges of noncompliance by the United States in other areas were often influenced by the overall state of relations between the two nations. As tensions increased during 1986 and 1987, Panamanian complaints became more frequent and passionate. United States executive and congressional pressures and the suspension of aid that followed the June 1987 disturbances were portrayed by the government and its supporters as part of a United States plot to block implementation of the 1977 treaties and/or to maintain the United States military bases in Panama beyond the year 2000. In the months that followed, the government stepped up this campaign, attempting to link the opposition with elements in the United States Congress who allegedly were trying to overturn the treaties. Such charges, however, seemed more an effort to influence domestic opinion than a reflection of actual concerns over the future of the treaties.

Article XII of the Panama Canal Treaty provides for a joint study of "the feasibility of a sea-level canal in the Republic of Panama." In 1981 Panama formally suggested beginning such a study. After some discussion, a Preparative Committee on the Panama Canal Alternatives Study was established in 1982, and Japan was invited to join the United States and Panama on this committee. The committee's final report called for the creation of a formal Commission for the Study of Alternatives to the Panama Canal, which was set up in 1986. Although there was a general perception that the costs of such a canal would outweigh benefits, the commission was still studying the problem in late 1987, and further action in this area would await the conclusion of its labors.

One continuing bone of contention related to the treaties was the presence and function of United States military bases in Panama. United States military forces in Panama numbered slightly under 10,000. The United States military also employed 8,100 civilians, 70 percent of whom were Panamanian nationals. In addition to the units directly involved in the defense of the canal, the United States military presence included the headquarters of the United States Southern Command, responsible for all United States military activities in Central and South America, the Jungle Operations Training Center, the Inter-American Air Forces Academy, which provided training for Latin American air forces, and the Special Operations CommandSouth . Until 1984 Panama also was home to the United States Army School of the Americas, which trained Latin American army officers and enlisted personnel, but the facility housing that institution reverted to Panama in 1984 and, when negotiations with Panama over the future of the school broke down, the United States Army transferred the operation to Fort Benning, Georgia.

Issues involving the United States military presence included the possible retention of some bases beyond the year 2000, the use of the bases for activities not directly related to the defense of the canal, most notably allegations of their use in support of operations directed against Nicaragua's government and, since June 1987, charges by the United States of harassment and mistreatment of United States military personnel by Panamanian authorities. There were also problems relating to joint manuevers between United States and Panamanian forces, exercises designed to prepare Panama to assume responsibility for the defense of the canal. These manuevers were suspended in 1987, in part because of a United States congressional prohibition on the use of government funds for "military exercises in Panama" during 1988.

Despite such problems, the implementation of the 1977 treaties has continued on schedule and the United States has stated repeatedly its determination to adhere to the provisions and transfer full control of the canal to Panama in the year 2000. An October 1987 effort to amend the fiscal year (FY) 1988 foreign relations authorization act to include a sense of the Senate resolution that the United States should not have ratified the treaties and that they should be voided if Panama refused to accept the DeConcini Condition within six months was defeated by a vote of fifty-nine to thirty-nine. Barring a much higher level of turmoil in Panama that would directly threaten canal operations, it appeared highly likely that the canal would become fully Panamanian in the year 2000.

Other Aspects of Panamanian-United States Relations

Panamanian relations with the United States, in areas other than those related to the canal, have undergone increasing strains since the 1985 ouster of President Ardito Barletta. The United States protested this action by reducing economic assistance to Panama and began pressuring Panama to reform its banking secrecy laws, crack down on narcotics trafficking, investigate the murder of Spadafora, and reduce the FDP's role in the government. When these points were raised by United States ambassador-designate to Panama, Arthur Davis, in his confirmation hearings, Panamanian officials issued an official complaint, claiming that they were the victim of a "seditious plot" involving the United States Department of State, Senator Jesse Helms, and opposition politicians in Panama.

Additional problems continued to arise throughout 1986 and early 1987. In April 1987 the United States Senate approved a nonbinding resolution calling for a 50-percent reduction in assistance to Panama because of alleged involvement by that nation's officials in narcotics trafficking. The Panamanian legislature responded with a resolution of its own, calling for the withdrawal of Panama's ambassador in Washington. Hearings on Panama held by Senator Helms produced further controversy, especially when a Senate resolution called on the United States Central Intelligence Agency to investigate narcotics trafficking in Panama. Again Panama protested. The FDP issued a resolution accusing Helms of a "malevolent insistence on sowing discord," and the Panamanian representative to the Nonaligned Movement's meeting in Zimbabwe charged that the United States was not fulfilling the Panama Canal treaties.

Continued United States pressure in such areas as human rights, political reform, narcotics trafficking, and money laundering, as well as conflicts over economic matters, including a reduction in Panama's textile quota, kept relations tense during the first months of 1987. In March Panama issued an official protest, charging the United States with exerting "political pressures damaging to Panama's sovereignty, dignity, and independence." This, however, did not deter Senate passage, a few days later, of a nonbinding resolution rejecting presidential certification of Panamanian cooperation in the struggle against the drug trade. President Ronald Reagan's certification that Panama was cooperating in the struggle against drug trafficking was based on some Panamanian concessions on bank secrecy laws and a highly publicized narcotics and money-laundering sting operation.

The deterioration in relations accelerated following the outbreak of disturbances in June 1987. United States calls for a full investigation of the allegations made by Díaz Herrera and for movement toward "free and untarnished elections" led to Panamanian charges of United States interference in its internal affairs.

The Legislative Assembly adopted a resolution demanding the expulsion of the United States ambassador, and the head of the PRD charged that United States pressures were part of a plot "not to fulfill the obligations of the Carter-Torrijos Treaties," and were also designed to "to get Panama to withdraw from the Contadora Group." Panama took its protest over United States policy and the Senate resolution to the Organization of American States (OAS), which on July 1 adopted, by a vote of seventeen to one with eight abstentions, a resolution criticizing the Senate resolution and calling for an end to United States interference in Panama's internal affairs. On June 30, a government-organized mob attacked the United States embassy, inflicting over US$100,000 in damages. The United States responded by suspending economic and military assistance until the damage was paid for. Panama apologized for the attack and, at the end of July, paid for the damage, but the freeze on United States assistance remained in effect as a demonstration of United States displeasure with the internal political situation.

Relations between the two nations failed to improve during the balance of 1987. Attacks on United States policies by progovernment politicians and press in Panama were almost constant. The actions of the United States ambassador were an especially frequent target, and there were suggestions that he might be declared persona non grata. There was also a growing campaign of harassment against individual Americans. In September the economic officer of the United States embassy was arrested while observing an antigovernment demonstration. The following month, nine American servicemen were seized and abused under the pretext that they had been participating in such demonstrations. United States citizens driving in Panama were repeatedly harassed by the Panamanian police. Restrictions also were increased on United States reporters in Panama.

For its part, the United States kept up pressure on Panama. In August the secretary of state announced that the freeze on United States aid would remain in effect, despite Panama's having paid for the damage done to the embassy. In November the United States cancelled scheduled joint military exercises with Panama. In December Congress adopted a prohibition on economic and military assistance to Panama, unless the United States president certified that there had been "substantial progress in assuring civilian control of the armed forces," "an impartial investigation into allegations of illegal actions by members of the Panama Defense Forces," agreement between the government and the opposition on "conditions for free and fair elections," and "freedom of the press." The same bill suspended Panama's sugar quota until these conditions were met. Panama responded by ordering all personnel connected with the United States Agency for International Development mission out of the country.

At the end of 1987, United States-Panamanian relations had reached their worst level since at least 1964. On the United States side, there was a high degree of agreement between the executive branch and the Congress that fundamental changes in both the domestic and international behavior of Panama's government were needed. There was little sign of movement toward resolving any of the basic issues that divided the two nations, and it appeared that this deadlock would continue until there was a change in the Panamanian leadership's position or composition.

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Source: U.S. Library of Congress