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EXECUTIVE PRIVILEGE

Jackson in the Youngstown case, that the President "might act contrary to an act of Congress.”234

When Rufus King, who participated in shaping much of the foregoing history—from the Continental Congress' preclusion of secrecy, through framing presidential participation in treatymaking, to selection of John Jay as plenipotentiary to Britain and programming his mission-stated that the Senate may “at any time call for full and exact information respecting the foreign affairs,"235 he knew at first hand whereof he spoke. The pattern had been set by the Hanoverian period, in which the “participation of parliament in foreign affairs and even its supervision of them was ... fully recognized. fully recognized.”236 The constitutional treaty-power

clause, Corwin truly said, “evidently assumed that the President and the Senate will be associated throughout the entire process of making a treaty, ,28237 the reason, in Hamilton's words, being that “the vast importance of the trust ... plead [s] strongly for the participation ... of the legislative body in the office of making them.” “Joint possession" of the treaty power, he continued, affords “greater prospect of security, than the separate possession of it by either” Senate or President.238 There can be no meaningful "participation" in the exercise of a “joint” power by a partner who is kept in total ignorance by the other. Presidential concealment of foreign affairs from the Senate finds no excuse in constitutional history; instead it thwarts the manifest intention of the Founders.

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habits of thought about international relations, about how they are conducted, about the ‘proper' role of courts in regard to them”; ibid. 272.

Neither Belmont nor Pink presented a conflict between Congress and the President. Were Congress to assert its constitutional powers, by statute or otherwise, the judicial function of policing constitutional limitations should impose the duty of adjudicating the conflicting boundary claims. See infra, Ch. 11.

234. 343 U.S. 635-636 n.
235. Supra, text accompanying n. 110.
236. Supra, text accompanying n. 40.
237. Supra, text accompanying n. 31; and see supra n. 63.

238. Supra, text accompanying n. 56. Henkin, 84, concludes with characteristic understatement that “the theoretical arguments for Congressional primacy (in the field of foreign relations], or at least concurrent authority, are not less persuasive than those for the President." And, he states: “The Executive must learn to conduct foreign relations with less secrecy and greater responsibility. Congress must have a timely, honest, meaningful role, and the flow of information to fulfill it"; ibid. 279.

PANAMA CANAL TREATY (DISPOSITION OF UNITED STATES TERRITORY)

TUESDAY, NOVEMBER 15, 1977

U.S. SENATE,
COMMITTEE ON THE JUDICIARY,
SUBCOMMITTEE ON SEPARATION OF POWERS,

Washington, D.C. The subcommittee met, pursuant to notice, at 10:05 a.m., in room 1114, Dirksen Senate Office Building, Senator James B. Allen of Alabama (chairman of the subcommittee), presiding.

Present: Senator Hatch of Utah.

Staff present: Quentin Crommelin, Jr., chief counsel and staff director, and Melinda Campbell, chief clerk.

Senator ALLEN. The subcommittee will please come to order.

OPENING STATEMENT OF CHAIRMAN ALLEN

The Subcommittee on Separation of Powers is convened this morning to continue the subcommittee's investigation of constitutional issues arising out of the proposed Panama Canal treaties. I am certain that most of those present this morning are aware of the two central constitutional issues under investigation; however, perhaps I should again state the propositions which are the focus of the committee's inquiry.

First, article IV, section III, clause 2 of the Constitution of the United States provides that Congress—that is, both Houses of Congress—"shall have power dispose of * * * the territory or other property belonging to the United States.” Many witnesses have testified before the committee that the power given to Congress in that clause is exclusive and therefore that the executive branch is prohibited from entering into a treaty disposing of U.S. territory or property except with express congressional authorization by statute.

Prof. Raoul Berger, of the Harvard Law School, and Prof. Charles Rice, of the Notre Dame Law School, both eminent scholars of the Constitution, have testified that the power of Congress to dispose of territory or property is an exclusive power and that a treaty disposing of property concluded without congressional authorization would be void insofar as it purported to transfer territory or property without congressional assent.

Second, members of the committee are also deeply concerned that the executive department has made certain financial commitments to the Government of Panama pursuant to executive agreement not included in the provisions of the canal treaties nor in the provisions of the other executive agreements which accompany the treaties. These separately consummated financial deals were apparently negotiated concurrently with the treaty provisions during the treaty negotiations, and certainly there is therefore reason to be concerned that these arrangements are properly a part of the proposed treaties or, at a minimum, a part of the executive agreements accompanying the proposed treaties. The committee will consider whether these extrinsic financial arrangements for some $345 million violate the doctrine of separation of powers—much as does the contemplated circumvention of the Congress on the property disposal issue-because these extrinsic financial deals deny to the Senate the right to give its advice and consent to all aspects of the new proposed treaty arrangements with Panama.

A related problem which has also been subject to investigation in the committee is the manner in which funds would be transferred to the Republic of Panama using a new Panama Canal Commission for the purpose of providing promised money to Panama without the necessity of seeking an appropriation from the Congress. The members of the committee, I am sure, are concerned that apparently the executive branch intends to transfer the assets of the present Panama Canal Company to a new Panama Canal Commission which would eventually be turned over to Panama but that the executive branch does not intend to transfer some $319 million in liabilities to the new Commission. That is the present debt of the Panama Canal Company to the U.S. Treasury.

So the committee is greatly interested in examining in depth each of these issues, and we feel that substantial progress has been made in understanding the facts involved. Today we expect to make even greater progress in our inquiry since today we will have the benefit of hearing the testimony of Secretary Richard Cooper, Under Secretary for Economic Development. Secretary Cooper took part in some of the negotiations involved in concluding these financial arrangements and has intimate knowledge of the process by which these commitments were made. Secretary Cooper is accompanied by Hon. Herbert Hansell, legal adviser to the Secretary of State, who has previously appeared before the committee to give the committee the benefit of his expertise on certain of the legal issues now subject to inquiry.

I might say that I am very pleased that Secretary Cooper has made arrangements to appear before the committee today because I know that his schedule is very demanding, as is that of Mr. Hansell

. I do feel that the administration might have avoided some of the pitfalls in the negotiation of these treaties by advising with the Senate during the negotiating process because I believe that some of the many defects which have arisen in connection with these proposed treaties might thereby have been precluded. But now that the treaties have been signed, I am gratified that the administration is developing a more open attitude in explaining the provisions adopted. Certainly Secretary Cooper's testimony and that of Mr. Hansell will be of assistance to the committee and to the Senate in furthering the process of understanding these proposed treaties.

Secretary Cooper, we look forward to hearing your testimony. You may proceed in such fashion as you deem appropriate.

TESTIMONY OF RICHARD N. COOPER, UNDER SECRETARY OF STATE

FOR ECONOMIC AFFAIRS

Secretary COOPER. Thank you, Mr. Chairman.

As you have indicated, I am here at your invitation to discuss arrangements for economic cooperation betwen the United States and Panama which will complement the process of implementing the new Panama Canal Treaties signed by President Carter and Panama's General Torrijos on September 7. Since the subcommittee's hearings are directed primarily toward the legal and constitutional implications of these arrangements, Mr. Herbert Hansell, the Department of State's legal adviser, is also present and will make a brief statement following my own. As requested in your October 28 letter to Secretary Vance, I will direct my remarks to the substance of the economic cooperation arrangements rather than to the related legal and constitutional questions.

The program of economic cooperation developed out of the canal negotiations but is separate and independent from the Panama Canal Treaty.

Perhaps it would be best to start with the background. At the start of the negotiations which led to the new canal agreements, the United States and Panama agreed, in the February 1974 Kissinger-Tack statement of principles, that Panama should receive a "just and equitable share of the benefits derived from the operation of the canal in its territory.” Consistent with this principle, the United States maintained during the negotiations that Panama's share of the economic benefits from the canal should be drawn entirely from canal revenues; that is, that payments to Panama should reflect the canal's economic value as measured by its own revenue-generating capacity.

Panama's negotiators proposed that the United States pay Panama a large initial lump-sum payment and a very sizable annuity, either of which far exceeded the most optimistic estimates of gross canal revenues. The Panamanian negotiators sought to justify these proposals by assigning high economic value to the economic and security benefits derived by the United States from the canal, without comparable benefits to Panama. They further suggested that as a counterpart to U.S. investment in the Panama Canal, Panama had provide its unique geographic location and much of its prime land and water resources, as well as the labor of its people, to the canal effort. Panama also cited the low remuneration received by Panama under the present treaties and the value to our security interests of the military bases and the new neutrality arrangements.

Finally, the Panamanian negotiators stressed the importance to Panama of being able to obtain the resources to undertake rapid social and economic development with wide distribution of benefits to its people.

The final result, as you know, was that the new Panama Canal Treaty embodied the U.S. position. With regard to the canal enterprise, Panama is to receive annual payments which will be drawn entirely from canal revenue.

At the same time, the U.S. negotiators recognized that there was considerable merit, from the standpoint of the future U.S. interest in the canal, to giving attention to Panama's development needs. The United States and Panama under the new treaties would share a special relationship created by mutual interest in the canal. Panama's development could foster the stability which is the underpinning for an open, safe, efficient, and accessible canal before and after the expiration of the Panama Canal Treaty.

The U.S. negotiators therefore arranged for their Panamanian counterparts to meet with representatives of the Departments of State and the Treasury, the Agency for International Development, and the Export-Import Bank to consider Panama's development needs. In doing so, it was clearly understood that any arrangements to assist with Panama's development were to be separate from the canal agreements and were in no way to be tied to the rights and obligations of the United States under the Panama Canal Treaty and the Neutrality Treaty.

Out of these discussions emerged a program which was set forth in a diplomatic note signed by Secretary of State Vance on September 7. This program was designed to utilize financial assistance programs that are suitable to Panama's stage of development and directed at meeting Panama's present economic needs for low income housing and a revived private economic sector. It is undertaken on a best-efforts basis. It introduces no special assistance devices and is subject to all applicable procedures under existing programs. All of its elements fit within existing statutory authorization.

The components of the economic cooperation program are as follows:

First, up to $75 million in AID housing guarantees over a 5-year period.

Second, up to $200 million in Export-Import Bank loans, loan guarantees, or insurance over a 5-year period subject to approval by the Bank.

Third, a guarantee by the Overseas Private Investment Corporation of $20 million in U.S. private capital to the Panamanian National Finance Corporation, COFINA, for the use in productive projects in the private sertor.

In addition to these economic programs, the Secretary's note of September 7 also proposed issuance of repayment guarantees under our foreign military sales program not to exceed $50 million over a 10-year period. These guarantees are to assist Panama in meeting its responsibilities to contribute to canal defense under the Panama Canal Treaty.

Let me add a few comments about each of the components in the cooperator program.

The AID housino nrorram is directed toward housing for lower-tomedium income groups in less developed countries. The program provides full faith and crerlit U.S. Government guarantees to private U.S. lenders who make loans for housing projects in less developed countries.

The 5-year program for Panama would fit within existing anthorization. The guarantee program, which began in the 1960's, is designed to be self-sufficient and has not required congressional ap

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