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away. It seems to me, having listened to most of the arguments that they have put forth to date, that they are easily refuted and that, as Americans become more apprised of the significance, economically and strategically of that canal, they will be hardened in their position of opposition rather than weakened.

Senator ALLEN. Why should the canal be given away and the Panamanians paid to take it?

Mr. CRANE. Well, if I were David Rockefeller, I could give you a very easy answer to that. That would be the servicing of my loans and the loans of many of those big New York banks. We are contemplating not only giving the canal away but, of course, reimbursing the Panamanian Government to the tune of $50 to $70 million a year on top of that.

I can clearly understand the banks' position. What I find it difficult to understand is the position of those who would side-maybe coincidentally—with the major banks in the United States. They are some of the same people who voted against the Lockheed bailout. They are some of the same people who also voted against bailing out New York City. I think they were right on those issues. The banks should have assumed the responsibility for bad loans they have made.

I think the banks in this instance should assume responsibility for bad loans that they have made. Beyond that very selfish and narrow interest of our big banks, frankly, I cannot figure out any valid reason why any elected Representative or Senator should be supporting this treaty.

Senator ALLEN. Is it carrying good-neighborliness too far?

Mr. CRANE. I think it is more than carrying good-neighborliness too far, Mr. Chairman. I think it is a demonstration of a point that Governor Reagan stressed earlier: American weakness. There is movement in the direction of fortress American in an era when no great nation of the world can afford to isolate itself.

Second, when I put this within the context of what we are doing with Cuba, what we have done thus far in Rhodesia, the cold war relationship we are setting up with the Republic of South Africa, the fact that we are no nearer solutions with Greece and Turkey over the hot issue of Cyprus, the fact that Italy and France are threatening internally to go Communist, and Great Britain is no longer a major component of NATO, that we are contemplating severing our ties with Nationalist China, and simultaneously contemplating withdrawing from South Korea, we are establishing a frightening and appalling foreign policy trend. I would say that we have gone, in terms of our foreign policy, from containment—when the boast was properly made that the President of the United States was the most powerful man in the world and we clearly controlled the air spaces of the world and the sea lanes and we had overwhelming missile superiority to détente which Frank Barnett has described détente as the word to describe the gravesite of containment. What appears to have followed détente is in many respects a very old policy; that is appeasement.

We seem to be doing the greatest violence to our friends and simultaneously seeking to make accommodations through appeasement with those people committed to our destruction.

DECLINING AMERICAN STRENGTH

Senator ALLEN. If the treaty is ratified, would this, in your judgment, foreshadow a declining influence and prestige around the world for the United States?

Mr. CRANE. I think, Mr. Chairman, we are already suffering a declining influence and prestige. I think, in fact, our performance in the Republic of South Vietnam was certainly one of the sorriest chapters in the American national record.

I think what has transpired since then in terms of the United States' unwillingness to exercise an appropriate veto to keep those people out of the United Nations, our great silence on the human rights question with Cambodia, where an estimated one-fifth of the population has been systematically exterminated since the Communists came to power, the betrayal of allies and then finally capitulation on a point here, where there is no dispute by responsible authorities over whether it is American territory, can only be viewed with great glee and satisfaction if one sits in the politburo.

The United States is either a crippled giant or a giant that lacks any will to stand up and be heard, to provide leadership against aggression. I think another evidence of this was the sorry performance of this country with respect to the most adventuresome action the Soviets have taken in the postwar era. That was to subsidize mercenaries in Angola to suppress an indigenous nationalist movement.

NO RIGHT TO INTERVENE TO REQUIRE NEUTRALITY

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Senator ALLEN. Much has been said about the preservation of the right of the United States to intervene to protect the neutrality of the canal after the year 2000. Do you find, in your study of the treaty, any provision granting to the United States a right to intervene to protect the neutrality of the canal ?

Mr. CRANE. Mr. Chairman, I do not.

I think, in that connection, one must examine the provisions of that treaty side by side with the statements made by Dr. Romulo Escobar Bethancourt before the Panamanian National Assembly on August 19. There, Dr. Escobar made this specific statement:

"We are not giving the United States the right of intervention.” He goes on to make further observations that I think have to be disproven by those American negotiators who are championing this treaty. They cannot disprove the statements based upon the contents of the treaty, as I have read it, and I think any other reasonable person

, would read it.

This includes the flat-out refusal to guarantee the right of intervention to the United States to preserve the neutrality of the canal or to defend it after the year 2000, but even to guarantee the neutrality of the canal. They insisted that they could not make an absolute guarantee of the neutrality in time of internal insurrection, according to Dr. Escobar.

We backed off of that kind of a qualifying statement. We did not want that in the record as a spelled-out provision. So, the treaty is silent on that point. Dr. Escobar says, however, they flatly refused under that condition to guarantee the neutrality of the canal.

I think, in addition to that, there are other assurances that we have heard from some of the administration spokesmen that are refuted or challenged by Dr. Escobar. One of these is the assumption that we would have some kind of preferential treatment for passage of our war vessels or commercial vessels during time of war. Dr. Escobar rejects that. He says there is absolutely no such guarantee; we will be treated as any other country. That means, if we were at war with the Soviets, Soviet vessels in line would actually be going through the canal before our own.

In addition to that, the Panamanian Government would not guarantee that the canal will be kept open under any and all circumstances. They commented on the possibility of earthquakes and landslides; those are reasonable conditions under which one might not be able to continue to maintain the operation of the canal. But they said, further, that if it was not profitable, they would not maintain it. We responded by saying that, if that were the case, we or other nations could help bail them out. They still rejected putting any language in there giving a positive guarantee that the canal would be kept open.

It seems to me that the burden of proof is on the administration to take the Escobar speech and to demonstrate, by analyzing provisions of the treaty, the falsity of the remarks made by Dr. Escobar or else explain to us why he is very specific in his reference to these points and the treaty manages to be most elusive and vague in commenting on any one of them.

Senator ALLEN. Thank you very much for your fine testimony.
My time is up. Senator Hatch?
Senator Hatch. Thank you, Mr. Chairman.

JOINT CHIEFS NOT ALLOWED TO SPEAK FREELY

I have heard all these arguments that the Joint Chiefs of Staff support this and therefore we should support it. Do you have any comments with regard to that?

Mr. CRANE. Yes, indeed. I think that one of the most important points that was raised at the time of General Singlaub's removal was that, henceforth, nobody serving in the military would have the freedom to speak out forcefully on any issue contrary to an administration position.

In effect, what we have managed successfully to do is to gag the military on this point.

Senator Hatch. Do you have any other evidence that that has taken place in the military?

Mr. CRANE. I think one can speculate on the position of the Joint Chiefs, which I am doing. On the other hand, considering what happened to General Singlaub, I think it is reasonable speculation. The point was covered in many newspaper commentaries, both liberal and conservative. I think, if you look at the testimony of Adm. Thomas Moorer, former head of the Joint Chiefs of Staff, he specifically made reference to that point.

Senator HATCH. Can I interrupt you there for a second? I think the public has not been told how important Admiral Moorer's testimony is or the testimony of the other admirals who have testified here.

Moorer said in his statement :

My evaluation of this waterway is that it is an invaluable possession of the United States, which I testified in 1962. At that time, I was Commander of the 7th Fleet operating in the Western Pacific. Frequently, my fleet's capability depended on prompt arrival of supplies in the Atlantic Seaboard, supplies loaded on board ships which were using the Panama Canal.

Then he goes on to say: From the 7th Fleet, I went on to Commander in Chief of the Pacific; from there, to Commander in Chief of the Atlantic and NATO Supreme Allied Commander, Atlantic; from there, to Chief of Naval Operations; and from there to Chairman of the Joint Chiefs of Staff from 1970 to 1974.

Now, that is what the American people are not being told. Admiral Moorer is a man who really has no axes to grind. He is not subject to administration pressures. He cannot lose his pension. He and the three other admirals, all of whom are highly distinguished admirals, are saying this treaty would be very detrimental to the U.S. interests.

I am glad you brought that up. It gave me a chance to put that in the record. I think that is important.

Mr. CRANE. There is testimony also by Gen. Daniel Graham, former head of the Defense Intelligence Agency. General Graham's testimony is equally forceful on this point. I think, as Admiral Moorer observed and this, of course, is brought home strongly to anyone who still wears the uniform and is serving—one must think twice about the possibility of speaking out in objection to policy decisions made by the Commander in Chief, unless one is prepared to contemplate the possibility of being forced into early retirement and maybe even some humiliation. It will be my expectation that you will have, publicly, a very compliant Joint Chiefs of Staff.

Senator Hatch. You make some very serious allegations about the conflict of interest problems here. Mr. Linowitz told me personally that he did not feel he had any conflict of interest, although he was on the board of directors of Marine Midland Bank. If I recall right, he also joined the board of directors of PanAm. Both of them reputely have huge interests down there in the debt structure of Panama. Do you

have any comments with regard to that?

DEBT OBLIGATION

Mr. CRANE. I cannot help but feel that, where your treasure is, there will your heart be also. That's what the Bible says. The banks have quite a treasure down there, and in this instance I fear that their hearts are in Panama and not in the United States.

Imagine a community of roughly 1.5 million population taking on a $1.5 billion debt obligation just from these banks here in the United States, mostly centered in New York. I think that is an insurmountable debt burden.

My understanding is that they are faced with the prospect of defaulting in Panama on just some of the interest payments on that debt. So, obviously, they have got to figure out how to come up with new income from some source. I am sure the banks know what their situation is like. The banks are undoubtedly salivating to see new revenues pumped into Panama to service those debts.

I would hope that maybe here in the Senate there might be some more intensive investigation of who serves on the boards of those banks. What are the kinds of business connections that some of those board members have with other major corporations that are pumping aggressively for treaty ratification ? Find out particularly who within government

Senator Hatch. Do you recommend this to this committee?
Mr. CRANE. I would very definitely recommend that.

Senator HATCH. When I was down there, I met with the President of Panama and Mr. Barletta, who is the Minister of Planning and Economic Affairs, if I remember the title correctly. They admitted to me—and I have a document provided to me by the American Ambassador, who told me that Mr. Barletta—and Mr. Barletta confirmed in our meeting with him that they have at least $1.4 billion in public debt owed to banks. In fact, the largest of the banks were the First National City Bank of New York and Chase Manhattan Bank in New York.

As I understand it, you are indicating here that you believe that part of the reason for the rush in the last few hours of Mr. Linowitz' 6-months appointment—and, of course, he has been criticized in some conservative magazines I have read—that his appointment was premeditated so that he would not have to appear before the Senate during the normal confirmation process to justify his credentials-you have indicated that the reason that was so and the reason that they finally came to this conclusion in the last few hours of the 6-months appointment was because they had the deal of a lifetime and that there are other interests that are to be very much benefited from this canal treaty, much to the detriment of the American taxpayers.

Mr. CRANE. I remember when I served on the Banking and Currency Committee in the House at the time of the hearings on the Lockheed bailout. I witnessed the spectacle of 38 heads of the biggest banks in the U.S. sitting there before our chairman, Mr. Patman. They were like schoolchildren with one mike servicing all 38. They had questions put to them, and they raised their hands if they agreed or disagreed.

They put up with that for 1 full day to get the guarantee of the backup by the U.S. Treasury of the loans they wanted to extend to Lockheed.

So, I know that the banks are willing to suffer—at least in that instance-I think a great deal of humiliation as a means of trying to get that kind of Government guarantee. If they were willing to do that on a paltry sum involved, relatively speaking, with the Lockheed Corp., I cannot help but feel that they would go to much greater lengths to try and salvage a $1.5 billion investment that they have made in tiny Panama.

Senator HATCH. You have also indicated, have you not, that Mr. Linowitz has direct interest as a result of legal affiliations, banking affiliations, and otherwise in this treaty going through in a favorable manner?

Mr. CRANE. My understanding is, in the face of heat and criticism, he stepped down from the board of Marine Midland in March, but well after his appointment. On the other hand, if this treaty were very quickly ratified, I am sure that, if Marine Midland viewed his talents to be so considerable then it would not be very long before he were retendered an offer to sit on the board of Marine Midland or maybe Chase Manhattan.

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