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from the American citizen who has the commonsense to recognize the lunacy of paying billions to an unstable pro-Marxist dictatorship for taking over billions in property belonging to the United States, from the American citizen who has the clarity of thought to see the reality behind the sham and the traveling medicine show that has passed for an open discussion of the actual provisions of this proposed new arrangement with Panama.

Perhaps, however, Americans do need education in the fine points of the Panama Canal treaties. That education has been hard to come by of late because throughout the treaty negotiations a veil of secrecy prevented any useful information being made available either to the public or, in large measure, to the Congress. Perfunctory briefings containing no real substance and seeking no advice, to be sure, were conducted. However, until yesterday most of the information this subcommittee has been able to obtain on the new treaty has come from translations of speeches made by the Panamanian negotiators in Panama.

$2.262 BILLION IN CASH PAYMENTS

By that method we have learned that the Panamanians expect to receive during the next 22 years at least $2.262 billion in cash payments from the United States. The Department of the Treasury, when its representative testified before this subcommittee was apparently unable to advise the committee of any negotiations whatsoever with Panama, yet we could read from translated Panamanian documents that the Export-Import Bank plans to lend Panama $200 million, that the Agency for International Development is to guarantee-and no doubt pay off-housing loans in the amount of $75 million, and that the U.S. Overseas Private Investment Corporation is to guarantee $20 million in loans for a new Panamanian development bank-everyone else has a bank in Panama, why should not the Panamanians?

Finally, the committee has learned-not from the Department of Defense, but from the Panamanians-that $50 million in military aid would be provided to prop up and guarantee the continuance of the military dictatorship now oppressing the people of the Republic of

Panama.

But now that the proposed Panama Canal Treaty and Neutrality Treaty have finally been made public-and it has been signed by the President and the Panamanian dictator-there are disclosed even more items about which the American citizen should be educated. The American citizen should learn that in addition to all the other massive payments to be made to the Republic of Panama, as the ultimate insult, it is proposed that we pay to the Republic of Panama $10 million a year for providing police services within the territory which would be ceded to Panama. We trust that during his education the American citizen will share our own disbelief and outrage that our great country proposes to cede United States territory to Panama and then to pay Panama for performing the normal functions of government within that same land.

FOUR U.S. MILITARY BASES TO REMAIN IN CANAL ZONE

We hope, too, that the American citizen will soon learn that out of 14 military bases now in the Canal Zone, only 4 would remain after

implementation of this treaty and that the 4 retained bases would be under direct Panamanian civil and political jurisdiction, subjecting thereby our Armed Forces to the dictatorial rule of the present Panamanian Government. And although it is true that a status of forces agreement will provide some marginal protection to U.S. soldiers in the Canal Zone, the American citizen should learn that in essence our forces will be made subject to a code of laws based on the autocratic rule of one man and devoid of any constitutional safeguards even remotely resembling those previous American rights now enjoyed within the Canal Zone.

Yes, there is much to learn about this proposal. Does the average citizen now know that the American flag will not be permitted to be flown in a place of honor, even at our military installations, and, according to the speeches of the Panamanian negotiators, will be permitted at our own bases only when inside and when displayed jointly with a Panamanian flag in the position of honor. Perhaps this latter point is trivial, but it typifies this entire proposed agreement: Our flag in a broom closet and our vital canal at the mercy of a banana republic.

So, the Subcommittee of Separation of Powers does intend to continue its investigation of these issues to insure that all the facts are made available both to the Congress and to the people. We will be, I am sure, greatly aided in our efforts by the witnesses scheduled to appear at today's hearings.

Senator Hatch, do you have an opening statement?

Senator HATCH. Thank you, Mr. Chairman. I do not have a prepared statement. But I would like to say that, when I first examined the Panama Canal issue, I was eager to learn about the reasons for this treaty. I listened to Ambassador Bunker once and to Ambassador Linowitz a number of times. I read everything I could get my hands on. I did everything I could to look at all of the arguments in an objective manner.

This morning I read in the New York Times an editorial asserting that there has not been one substantive argument offered against the treaty. I think this is typical of irresponsible journalism in today's world. We have heard many, many responsible, carefully reasoned, substantive arguments against this treaty right in these hearings.

Last evening I met with one of the most knowledgeable men in America, a man who knows a lot about foreign policy and foreign affairs. He had not even heard of the constitutional issues and arguments that have been raised in connection with this treaty. I think it is deplorable that the press has ignored the serious constitutional problem created by this treaty. Everybody in the House of Representatives who has any constitutional understanding at all knows that the House is being bypassed in contravention of the Constitution of the United States.

In article IV, section 3, clause 2 it says that the transfer of American property requires the consent of both Houses of Congress.

Here is a situation where this provision of the Constitution is being subverted. Briefs prepared by the American Law Division of Congressional Research Service do not support the State Department's position. There has not been one valid precedent presented by the State Department supporting the President's extraordinary exercise of power. Even these briefs indicate that.

Yet we have had hardly a responsible report on this crucial topic in the American press or news media.

The second constitutional issue--and I think it is important to know this that is being circumvented here is that all appropriations bills have to originate in the House of Representatives. It is specifically mandated by the Constitution. A treaty cannot appropriate funds. The Senate itself, as evidenced by our last session, just prior to the ending thereof, acknowledged that with great pomp and circumstance on the Senate floor.

Here we are entering into a treaty that is going to place a monumental burden upon the taxpayers of America. It has been suggested by the proponents of the treaties that the tolls will take care of everything. There is the misrepresentation that the tolls can cover all the payments to Panama under these treaties-about $70 million a year. Last year we operated at a $7.2 million deficit. How are the tolls going to pay for these increases unless Panama escalates them to such a degree that every country in Latin America is going to be seriously injured?

Every country that uses the canal, including our own and excepting Panama, which always has gotten to use the canal free, is going to be injured. I think it is important to note that we are going to be paying these moneys permitted by a State Department approach here without ever going to the House of Representatives, not only for the permission to transfer $7 to $12 billion-and that is what we have had in testimony before this subcommittee of American property. The House of Representatives is not even being asked whether they have any interest in the matter. The administration intends to bypass the House and deal only with the Senate.

In addition, we are going to give a total of about $2.25 billion more in cash payments up to the end of this century. Payments will include $350 million in loans, military aid, and other payments almost immediately. Then we will also guarantee $70 million a year to the Panamanians to be taken from canal revenue. The only way those moneys could be raised in addition to assimilating the Panamanians into the operation of the canal-which should be done-is either to drastically increase the tolls or to underwrite the whole giveaway with American taxpayer dollars.

These constitutional issues indicate another overreaching, overextension beyond the separation-of-powers doctrine provided in the Constitution by the executive branch of Government, through the State Department, to the detriment of the Congress and the Constitution.

I think this matter is so crucial that everybody in America ought to know about it. I think that ultimately the Supreme Court will be called upon to support the Congress in this constitutional struggle.

I might also mention that I think that most of the problems we have in this world today are caused by an elitist foreign policy philosophy that has dominated American for too long. It is an elitist philosophy that has made us appear to the world as imperialist colonializers, when the Soviet Union, the greatest imperialist colonializer in the history of the world, controls and dominates colonies all over the world. If the Soviet Union receives any criticism at all from the world, you would never know it from reading the newspapers or viewing television newscasts.

Now we are in the posture of being imperialist colonializers who give up everything-this time the Panama Canal.

Another major foreign policy development that concerns me, is this Presidential release memorandum No. 10, which has indicated that we will use the force of world opinion rather than military aid and assistance to stop world aggression to protect not only Europe but also Korea.

This is the type of State Department foreign policy to which this country is subjected.

The fact of the matter is, as a result of the diplomatic blunders involved in this treaty, we are going to have trouble no matter what we do. If we fail to ratify the treaty and the President does not act firmly and responsibly and expeditiously, we know there will be incidents and difficulties down there. We were also told in Panama that, if we do ratify it, within a short period of time we will probably be shut off from the use of the canal.

We appreciate the witnesses that have come before us in the past. We certainly appreciate those that are here today. I shall be very interested in listening to everything that is said here today. Senator ALLEN. Senator Scott?

Senator SCOTT. Thank you, Mr. Chairman.

I would commend you, Mr. Chairman, for holding these hearings and for the caliber of witness that we have appearing before us today and in the past.

I do not have a prepared statement. I would like to say that the proponents of the treaty speak of fairness. I believe this is a good word. I think it is a word that we should remember as we examine this treaty.

In the basic laws of contracts, we learn about consideration. We learn about mutuality. There should be benefits flowing in both directions. I do not find this to be true in an examination of the treaty. It seems to be going one way-away from the United States and to Panama.

Article 12 of the canal treaty, for example, forbids us from building a new canal anywhere in the isthmus without the consent of Panama, well outside of their territorial limits. I see no benefit to the United States, no quid pro quo there. It just seems to me that, in the interest of fairness to our own Government as well as to Panama, we should look very carefully at every provision of this treaty.

Again, I comment the chairman for what he is doing.

Senator ALLEN. Thank you very much, Senator Scott and Senator Hatch.

Our first witness is a man who was one of the first to alert the country to the dangers of the proposed Panama Canal Treaty. He has articulated in a most eloquent fashion throughout the Nation the dangers underlying the treaty. We are very pleased that he is here today with his lovely wife Nancy.

He is to be presented to the committee and to those present by Senator Hayakawa, the distinguished Senator from California.

TESTIMONY OF HON. S. I. HAYAKAWA, A U.S. SENATOR FROM THE STATE OF CALIFORNIA

Senator HAYAKAWA. Mr. Chairman, it certainly is a great pleasure to be here to introduce Ronald Reagan, former Governor of California. He and I have been associated for a long time. I guess we both got acquainted with each other best of all during the days of the student uproar in 1967-68 and so on. From the point of view of the radical students, he was one of their most unfavorite people. I think he was, from their point of view, Fascist pig No. 1 in California. [Laughter.] Thereafter, through a whole chain of circumstances, I was appointed, with his assistance, acting president of San Francisco State College. At that time I became not only Governor Reagan's puppet, but Fascist pig No. 2. [Laughter.]

So, we have had a kind of paternal relationship over the years. I want to say right here that we did succeed in producing some kind of order at San Francisco State College which spread to other colleges. In all of that, I owe Governor Reagan a great debt of gratitude.

As you have said, Mr. Chairman, he has been in the forefront of explaining the Panama Canal treaties and the dangers involved therein in eloquent and impassioned terms. He brought the issue home. to an awful lot of people. This results in one terrific stack of mail on my desk; I owe that to him, too.

So, it is with great pride and pleasure that I introduce my good friend Ronald Reagan.

Senator ALLEN. Thank you very much, Senator Hayakawa. I would urge you to stay and listen to the Governor. I think possibly your thinking in this matter might be assisted by the Governor's remarks. [Laughter.]

We are delighted to have you, Governor Reagan.

Senator SCOTT. Mr. Chairman, might I say that we are also glad that the Governor's wife can be with him.

TESTIMONY OF HON. RONALD REAGAN, FORMER GOVERNOR OF THE STATE OF CALIFORNIA

Governor REAGAN. Mr. Chairman and members of the subcommittee and Senator Hayakawa, let me express my gratitude for Senator Hayakawa so graciously coming and introducing me here. It is true that we shared some battles together.

I could also say in his behalf that he followed a succession of acting presidents of San Francisco State in those hectic days, all of whom suffered combat fatigue until he arrived. At that time, the fatigue was transferred to the rioters and disturbers; and the people of California are very grateful to him for what he did; so am I.

Mr. Chairman and members of the subcommittee, thank you for inviting me to appear before you this morning to testify. You are concerned, as I am, with constitutional and other issues arising out of the proposed Panama Canal treaties, and I appreciate this opportunity to share my views with you.

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