Department of State FACT SHEET August 15, 1977 Basic Elements of the Agreement in Principle Defense and National Security. - The United States will have primary responsibility for the Canal's defense during the basic Treaty's term (until the year 2000). Panama will participate, and at the treaty's end our military presence will cease. A Status of Forces Agreement similar to such agreements elsewhere will cover the activities and presence of our military forces. The United States will continue to have access to and the rights to use all land and water areas and installations necessary for the defense of the Canal during the basic treaty period. -- In a separate treaty Panama and the United States will maintain indefinitely a regime providing for the permanent neutrality of the Canal including non-discriminatory access and tolls for merchant and naval vessels of all nations. - United States and Panamanian warships will be entitled to expeditious passage of the Canal at all times without regard to the type of propulsion or cargo carried. - Our continuing freedom of action to maintain the Canal's neutrality will not be limited by the Treaty. Canal Operations. The United States will have responsibility for Canal operations during the period of the basic Treaty. It will continue to have access to and the rights to use all land and water areas and facilities necessary for the operation and maintenance of the Canal during the basic Treaty period. 20-266 - 78 - 7 It will act through a United States Government agency which will replace the Panama Canal Company. A policy level board of five Americans and four Panamanians will serve as the Board of Directors. Until 1990, the Canal Administrator will be an American and the Deputy Administrator a Panamanian. Thereafter, the Administrator will be Panamanian and the Deputy, American. Panamanian board members and the Panamanian Deputy Administrator/Administrator will be proposed by Panama and appointed by the United States. Panamanians will participate increasingly in the Canal's operation at all levels. Economic Factors. The treaty's financial provisions involve no congressional appropriations. Instead, during the treaty's life Panama will receive exclusively from canal revenues: - an annual payment from toll revenues of 30 cents (to be adjusted periodically for inflation) per Panama Canal ton transiting the Canal. - a fixed sum of ten million dollars per annum and an additional 10 million per year if canal traffic and revenues permit. In addition the United States will cooperate with Panama outside the treaty to promote Panama's development and stability. To this end, the United States has pledged its best efforts to arrange for an economic program of loans, loan guarantees and credits which would be implemented over the next several years under existing statutory programs. This economic cooperation program would use up to $200 million in Export-Import Bank credits, up to $75 million in AID houşing guarantees, and $20 million in Overseas Private Investment Corporation (OPIC) loan guarantees. Panama will also receive up to $50 million in foreign military sales credits over a period of ten years, under existing statutory programs, to improve Panama's ability to assist in the Canal's defense. No major increase is contemplated in AID loans and grants.. Private businesses and non-profit activities in the present Canal Zone will be able to continue their operations on the same terms applicable elsewhere in Panama. A joint authority will coordinate port and railroad activities. Employees. All U.S. civilians currently employed in the Canal Zone can continue in United States Government jobs until retirement. Present employees of the Canal Company and Canal Zone Government may continue to work for the new agency until their retirement or until the termination of their employment for any other reason. The number of present U.S. citizen employees of the Company will be reduced 20 percent during the first five years of the Treaty. All U.S. citizen employees will enjoy rights and protections similar to those of United States Government employees elsewhere abroad. Present U.S. citizen employees will have access to military postal, PX and commissary facilities for the first five years of the Treaty. New United States citizen employees will generally be rotated every five years. Terms and conditions of employment will generally be no less favorable to persons already employed than those in force immediately prior to the start of the Treaty. Hiring policy will provide preferences for Panamanian applicants. With regard to basic wages there shall be no discrimination on the basis of nationality, sex or race. The United States will provide an appropriate early retirement program. Persons employed in activities transferred to Panama will to the maximum extent possible be retained by Panama. Panama and the United States will cooperate in providing appropriate health and retirement programs. Panama will assume general territorial jurisdiction over the present Canal Zone at the Treaty's start. United States criminal jurisdiction over its nationals will be phased down during the first three years of the Treaty. Thereafter, Panama will exercise primary criminal jurisdiction with the understanding that it may waive jurisdiction to the United States. United States citizen employees and their dependents charged with crimes will be entitled to procedural guarantees and will be permitted to serve any sentences in the United States in accordance with a reciprocal arrangement. New Sea-level Canal. Panama and the United States commit themselves jointly to study the feasibility of a sea-level canal and, if they agree that such canal is necessary, to negotiate mutually agreeable terms for its construction. In addition the United States will have the right throughout the term of the basic treaty to add a third lane of locks to increase the capacity of the existing canal. Treaties. There will be two treaties: (1) a treaty guaranteeing the permanent neutrality of the canal, and (2) a basic treaty governing the operation and defense of the canal which will extend through December 31, 1999. The basic treaty will be supported by separate agreements in implementation of its provisions concerning defense and operation of the canal. BACKGROUND INFORMATION Purpose of the Treaties. The new treaties on the Panama Canal will provide an entirely new basis for cooperation between the United States and Panama in the operation and defense of the Panama Canal. They will replace the U.S.Panama Treaty of 1903, which has governed Canal operations since the waterway's construction, and subsequent amendments. The Existing System. Under the 1903 Treaty, the U.S. has total control of Canal operations. The U.S. also administers the Canal Zone an area of Panamanian territory five miles wide on either side of the Canal. In this area Panama has sovereignty while we have "as-if-sovereign" rights permanently. This arrangement is deeply resented in Panama and a liability in our relations with Latin America and with many other nations of the world. Basic U.S. Objectives. In negotiating a new treaty, the United States has proceeded on the basis that its national interest lies in assuring that the Canal continues to be efficiently operated, secure, neutral, and open to all nations on a non-discriminatory basis. Fundamental to this objective is the cooperation of Panama. History of the Negotiations The negotiations, extending over thirteen years, have been pursued by four Administrations of both Parties. They began in 1964, following a serious crisis in U.S.Panamanian relations created by rioting along the Canal Zone boundary in which 20 Panamanians and 4 Americans were killed. In December 1964, President Johnson, after consulting with Presidents Eisenhower and Truman, announced that the U.S. would begin talks with Panama on an entirely new Canal Treaty. These negotiations resulted in draft treaties that were not acted on by either country. The present series of negotiations began in 1973 with the appointment of Ambassador Bunker as Chief Negotiator by President Nixon and continued during the Ford Administration. President Carter decided to continue the negotiations after taking office in January 1977 and appointed Ambassador Sol Linowitz to serve as Co-Negotiator with Ambassador Bunker. The Department of Defense has been an active participant in the negotiations and has been represented by Lt. General Welborn G. Dolvin. Data on the Panama Canal Description. The Canal is 51 miles long. It is a lock canal, operating by gravity flow of water from specially constructed reservoirs. Cost. It is extremely difficult to provide a single figure for the cost of the Canal. The construction cost to the United States at the time of completion of the Canal in 1914 was $387 million. The amount of unrecovered U.S. investment in the Canal is $752 million. The current book value of the Canal and related facilities is $561.5 million. Work Force. The Canal enterprise employs 13,139 persons, of whom 27 percent are U.S. citizens. Almost all of the others are Panamanians. Defense. The United States maintains seven military base areas in the Canal Zone. Total United States military personnel are 9300. |
