4. Security guarantees

Presumably, to protect the United States' vital security interests, a separate treaty provides for the permanent neutrality of the Canal. Thus far, this entire section has been enveloped in a conflict of interpretations between American and Panamanian negotiators. If disputes have arisen before the agreement is even ratified, this certainly bodes ill for its prospective implementation.

In the discussion thus far concerning American rights under the Permanent Neutrality Treaty, the Panamanians have made a much more convincing case for their position. Rather than a genuinely joint declaration, the Panamanians have insisted that since the main treaty acknowledges their sovereignty over the Canal, they alone can declare the neutrality of the waterway. And, under Article I for the second treaty, the language indicates only that "The Republic of Panama decleares that the Canal . . shall be permanently neutral." Thus, if Panama alone can declare neutrality, then unless other specific language indicates otherwise, the United States has no right under the treaty to proclaim unilaterally a threat to that neutrality and intervene to thwart such a threat.

In testimony before this Committee last week, Article IV of the neutrality treaty has been cited as a basis for the American right of intervention. This article does allude to both the United States and Panama agreeing "to maintain the regime of neutrality established under this Treaty." The last four words of this quote clearly mean the kind of neutrality that Panama has declared already in the treaty and not an American right to determine this. Thus, it is entirely understandable that the chief Panamanian negotiator has told his own national assembly that "The treaty does not establish that the United States has the right to intervene (that is send in troops) in Panama." Similarly, earlier this year, General Torrijos himself stated that after 31 December, 1999 "the duties and responsibilities will be assumed by our country solely and exclusively." The language of the Panamanian view of what this agreement does could hardly be more specific.

On this point, as well as many others, the most lucid discussion that has thus far appeared of the nature and direction of the negotiations has derived from the Panamanians. They have indicated that the original language proposed by American negotiators was unacceptable to them and, ultimately, on the crucial issues they have prevailed. I cannot help but conclude, as the Panamanians have, that the United States under the terms of the Permanent Neutrality Act has sacrificed all meaningful rights to maintain the security of the Canal.

5. The high cost

While most Americans oppose giving the Canal to Panama, they are literally livid at the prospect of paying Panama to take the facility off our hands. Thus, the economic arrangements require special attention by this Committee and some plausible justification must be provided to explain why, in the course of transferring this multi-billion asset to Panama, we must at the same time provide for payments to Panama of upwards of $50 million per year.

Of course, under the language of the treaty, the United States does not directly pay this money to the Panamanian government, but the net result is the same. Under Article XIII, dealing with the Economic Participation by the Republic of Panama, the agreement provides for Panama receiving $.30 per ton for each vessel transiting the Canal. Moreover, five years after the new treaty goes into effect, this figure will be adjusted upward each two years to reflect changes in the American wholesale price index.

Some have contended that this provision places a ceiling on the amounts that the tolls may rise for the next 22 years. But, more likely, the effect will be a rising floor for future toll increases. Coupled with the per ton figure, the United States also quadruples the annuity payment to Panama to $10 million and promises another $10 million if Canal revenues exceed expenses. This last provision may seem to provide an incentive for the efficient operation of the Canal, but more likely, this will simply encourage a rise in tolls that will permit the $10 million to be extracted.

All of this money derives from the revenues collected by the new Panama Canal Commission. The estimates of the total amount varies depending on the volume of cargo. But, on the basis of last year's volume of 117 million tons of cargo, this would have meant approximately $45 million, or about twenty times as much as Panama receives under the 1903 treaty. If the Canal has its anticipated rise in traffic this coming year, but still runs a deficit, this figure would rise to over $50 million.

In order to compensate for this huge new expenditure by the operators of the Canal, Ambassador Linowitz has already indicated that tolls will have to rise by 25 percent to 30 percent upon ratification of the treaty. This would represent the single largest increase in tolls since the Panama Canal began operations in 1914. This rise relates largely to compensation being provided the Panamanian government. But, as indicated in the analysis above, probably larger incentives will have to be provided to skilled workers to remain in Panama under the new treaty.

Despite the fact that the revenues going into the Panamanian treasury derive from the general operation of the Canal, the actual expense shall be borne by those ships that transit the Canal and through them the producers and consumers of the goods shipped. This could have severe repercussions on some products, such as American agricultural goods being exported from the Gulf Coast to the Orient or oil flowing from Alaska to our Gulf Coast. Therefore, although the payments to Panama are indirect, the American taxpayer will bear much of the burden of the increase which presumably will rise each year due to the indexing procedures.

Overall this constitutes a radical alteration of the concept of the Panama Canal. While the United States has always viewed the Canal as facilitating world commerce, the Panamanians clearly view the waterway as their own OPEC in miniature, their monopoly over travel from one ocean to the other. And, given the veto power they hold over the American right to negotiate building another canal, Panama can effectively stymie any prospective competition.

Having expended an estimated $7 billion over the past 74 years in order to bring into existence and operate the Canal and all its related facilities, the American people have a right to ask why they must pay to have this enormous asset, run to efficiently and fairly for so long, taken off their hands by the Panamanian government. This is particularly true when sales of only several million dollars to other nations in Latin America have been suspended due to criticisms of the nature of their government.

Yet, with respect to Panama, no concern surfaces over the nature of the military dictatorship in the country that the United States will in effect be rewarding with one of the largest gifts ever bestowed voluntarily upon another nation. If the government of Panama appeared as a reliable friend of the United States, perhaps some justification for this enormous behest might be offered on foreign aid grounds. Instead, the Torrijos regime has constantly extolled Fidel Castro as a great Latin American leader and proceeded on its own social revolution that has substantially destroyed the Panamanian economy. In my judgment, if these treaties were to be ratified, the United States would be rewarding the wrong government, in the wrong place, at the wrong time, and in the wrong manner.

THE SALES JOB

In addition to my concerns about what these treaties represent and what they say, in closing, I would also like to express my concern about the manner by which they are being sold to the American public. Governor Reagan rightfully termed the whole affair a "medicine show." And, I can only accuse President Carter's chief political strategist, Hamilton Jordan, of understatement when he told the Baltimore Sun: "We are going to spend a tremendous amount of political capital to get the treaty ratified."

I have found one of the most intriguing developments resulting from the Panama Canal treaty issue to be the negative approach most proponents have adopted in their efforts to "sell" the document to the American people. Actually, "intriguing" is not a graphic enough description of the sales effort being promoted. "Insulting," although harsh, is probably a much more accurate description of a campaign which is calculated to frighten people into accepting a bad agreement by attempting to persuade them that because the Canal is vulnerable to attack by elements within Panama, this facility can only be insulated from destruction through acceptance of the current treaty.

This "argument" is the most prominently mentioned of the reasons for relinquishing control of the waterway. According to this line of reasoning, since the Canal is susceptible to attack, and the Panamanian government has raised the spectre of guerilla warfare unless we deliver-either our country accepts the treaty negotiated and turns the Canal over or it will be put out of commission with everyone losing in the process. Upon largely this basis, the Canal treaty proponents are mounting what they refer to as an "educational" program to appriseAmericans of the purported dangers.

Of all the approaches, those who favor ratification could have chosen to “educate" the people with, in my opinion, this is the least likely to succeed. It won't succeed because the American people will reject it. Treaty supporters have maneuvered themselves into the unenviable position of attempting to convince the American public that they should forego a valuable strategic asset because violent actions have been threatened if we don't knuckle under.

I personally do not believe that an "educational" program heavily resting on the foundation of the "violence argument" when there is ample evidence that the document itself is faulty, dangerous and inequitable will have any chance of success. Possibly this is the only really viable avenue of approach for treaty proponents because the treaty is so poor as to be indefensible on most other grounds.

Mr. Chairman, the whole concept of a propaganda campaign is disturbing in our American context. It is quite obvious that the Canal treaty is uniformly unpopular with the public. Polls show this to be the case as do recent political developments with the ratification vote being put off until sometime next year, maybe, when it is hoped more votes are found somewhere in the Senate.

Certainly, the Administration has the right, indeed even the obligation, to take its case to the people. But, the vehemence of their propaganda effort must be a function of the recognition that they have an uphill battle since the Panama Canal agreement certainly will not sell itself. This approach will, without doubt, be found wanting by our people. But what concerns me is the arrogance of those who, again, underestimate the capacities of the people and assume the role of pedagogue. What we have is the same tried, old coalition of elitists in government, business, and labor purporting to prescribe to the masses for their own good while each is determined to "sell" the document for its own reasons.

There is almost a feeling of deja vu today as, one after the other, familiar names and faces of those who ran our foreign policy in the 1960s reenter the scene to bless the Panama Canal treaty. I get the distinct impression they have once again found it comfortable returning to the arena where many programs they designed a decade ago are now being carried out. Yet, this is not particularly comforting since the era of "the best and the brightest" was not one renowned for its foreign policy successes.

It looks like Big Business is concerned enough about ensuring its investments in Panama to back the treaty. It is no secret that the Torrijos regime is teetering close to the edge of financial collapse. If the walls caved in on this government, American dollars heavily invested in the country would be lost. With this treaty and its extravagant pay-off plans, the Panamanian economy would be pumped up and many American businessmen saved from a financial drubbing. Additionally, I think the business community has bought the "violence argument" and is willing to have taxpayer dollars bail them out of imagined Latin difficulties.

The third leg of the establishment triad offering support for the Panama Canal treaty is Big Labor. There is so much politics tied in with their endorsement that I am not sure the merits of the treaty were a consideration. But then, I have never been close enough to labor circles to be party to their concerns. Suffice it to say that George Meany has found ways to thank the Carter Administration for its support of the labor reform package.

So, what we have it seems to me is a classic case of establishment arrogance. The power blocs which deal in this town have decided to "educate" the masses on the necessity of ratifying the Panama Canal treaty. Such patronizing is insulating to the American people.

Mr. Chairman, I sincerely doubt that any propaganda campaign, no matter how skillfully handled, could "sell" this very dangerous and inequitable treaty to the American people. The fact that there is nothing really positive to commend it has led to a campaign based largely on simple scare tactics. Mr. Chairman, Americans will not buy it. We have responsibilities which must be met now and in the future and such responsibilities will not be dismissed by threats of blackmail which carries with them undesirable precedents. It will be impossible to "educate” our people to accept something that is wrong.

STATEMENT BY SENATOR BOB DOLE

Mr. Chairman and Members of the Committee: I appreciate this opportunity to appear before the Committee today, to comment on the two Panama Canal Treaties now pending before the Senate.

You gentlemen have already had an opportunity to hear from a series of Administration witnesses on this important issue. As one who shares the responsibility of deciding whether or not these two Treaties should be ratified, I can appreciate your desire to gain as many perspectives on the issue as possible.

I, too, hope to learn a lot more about all that is involved here in the weeks ahead. But I cannot agree with many of the key assessments and conclusions about these Treaties which the Administration's spokesmen offered to you last week.

I cannot agree, for example, that our ability to continue to use the canal, and to defend the canal, is adequately guaranteed under the provisions of these Treaties. I cannot agree that our nation's economic interests are protected by granting exorbitant annuity payments to Panama, and by giving Panama a major chunk of toll revenues. I cannot agree that the United States Canal Zone territory should be turned over to Panama without the express consent of both Houses of Congress. I hope to offer some helpful perspectives at this time on how we should properly approach these Treaties in order to protect our vital interests.

On September 23, I became the first Member of the Senate to introduce amendments and reservations to the Panama Canal Treaties. I want to explain why I feel this is a responsible approach to this Treaty issue. In doing so, I will review the details of the Treaty modifications I have proposed, and explain why I disagree with the Administration's spokesmen on these critical points.

A SENATE RESPONSIBILITY

Article II of the United States Constitution gives the President the power to make treaties with other nations "by and with the advice and consent of the Senate." Our advisory role is clear. And our responsibility to scrutinize treaties before giving our consent is evident.

Yet, the Administration seems bent upon forcing the Panama Canal Treaties through the Senate without modification. We are told that anything less than "unqualified" Senate approval will jeopardize the Treaties. General Torrijos takes the same narrow view. "The negotiations are over," he says. "The Treaties have been signed. I'm not interested in what is said."

The Treaties have been signed, but the debate has only started. Our Constitution guarantees that we, on behalf of the American people, will have the final say on Treaty proposals, and I don't think we should shirk our responsibility.

MAKING MODIFICATIONS

The State Department tells me that amendments or reservations to the Canal Treaties would be fatal. It is unlikely that legally binding modifications like these would require renegotiation, at least on those particular portions of the Treaties.

But I do not think that proposing amendments should be equated with efforts to "kill" the Treaties. In fact, it is not an effort to destroy, but to improve these documents which bear so heavily on our national interests. I studied both Canal Treaties in detail, and found them grossly unacceptable in certain areas. I have offered reasonable proposals to modify those portions, in line with our Constitutional responsibility.

The Panamanians have understood our ratification system all along. They were aware of the Senate's responsibilities of review, and its right to modify, if necessary.

I say that we should amend if necessary, and register reservations if necessary, and at that point the ball is in Panama's court. If they refuse to reconsider these points, then the blame is theirs, not ours. But I suspect that they will be ready to renegotiate rather than to lose these Treaties which give them so much.

BEGGING OUT WITH "UNDERSTANDINGS"

One thing should be made very clear: simple "understandings" by the Senate will have no legally binding effects on the Canal Treaties. Understandings merely constitute interpretations of this or that point in the Treaties, and do not necessitate renegotiation.

However, they are our interpretations, not Panama's. When an issue or dispute arises in years to come, we will point in vain to our "understanding." The Panamanians will say: "That may be the way your Senate interpreted it, but this is what the Treaty says, and we interpret that differently."

If we really feel strongly about weaknesses or ambiguities in these Treaties, we should be bold enough to correct them in a straightforward and non-apologetic manner. If we must amend a Treaty provision to remove all doubt about its meaning, then so be it.

If we simply "buy time" now by deceiving ourselves with "understandings” that have no binding impact, the next generation may have to bear the consequences. It will, of course, be easy to soothe our consciences by attaching weak. "interpretations" to the Canal Treaties. Politically, it may be a very easy thing

to do.

But I say this: If we end up next year ratifying these Treaties with nothing more than a bunch of meaningless, half-baked "understandings" attached, we will have failed our Constitutional duty to the national interest and the American people.

Mr. Chairman, I would ask the Committee's permission to insert, at the end of my prepared statement, excerpts from several authoritative sources comparing the effects of Treaty amendments, reservations, and understandings.

AMENDMENTS TO TREATY

Mr. Chairman, in accord with my feeling that the Senate has a responsibility to modify these Treaties where necessary, I have introduced a series of six amendments and two reservations. The amendments would directly modify or add to the language of the Treaties, while the reservations express specific conditions under which our agreement to ratify would be made. All of these would, in my opinion, better protect the nation's vital interests and substantially improve upon both the basic Canal Treaty and the Treaty on permanent neutrality.

I will not spend a lot of time describing these proposals, since I believe you have all had an opportunity to review the statement I made on September 23, at the time of introduction. I do want to emphasize, however, that I feel very strongly about the Treaty defects which prompted each of these proposals. My amendments and reservations represent sincere and earnest efforts to correct these problems, in a manner that is legally binding. Without these corrections, I think both treaties jeopardize our interests and are therefore unacceptable.

MILITARY INTERVENTION AND PRIORITY PASSAGE

Mr. Chairman, I am positively convinced of the Canal's importance to the United States' defense interests. If there was ever any question in anyone's mind about this importance, I would think that the letter to President Carter last June, signed by four former Chiefs of Naval Operations, would remove that doubt. One of those officers, Admiral Thomas H. Moorer, testified persuasively on this point before the House International Affairs Committee last week, and I would commend his testimony to the attention of this Committee. Therefore, with respect to the Treaty on permanent neutrality, I propose to amend Article IV to specifically guarantee our authority to intervene militarily whenever we determine the Canal's neutrality to be threatened. In addition, I propose to amend Article VI to guarantee that U.S. vessels of war will have "priority passage" rights through the Canal whenever our nation is at war. Both of these points are ambiguous within the Treaty, and have been interpreted differently by American and Panamanian negotiators. It is clear that clarification of the language is badly needed. An "understanding" will not do the job.

Last week, Secretary of Defense Harold Brown testified that "we felt strongly [during Treaty negotiations] that the United States should take whatever action was necessary to maintain neutrality," and "it is for the United States to make the determination as to how we should respond and how we should defend our rights ***

However, the Chief Panamanian Negotiator, Escobar Bethancourt, was quoted in an interview on August 24 as saying that the United States will not determine when neutrality is violated, and that the Treaty "does not establish that the United States has the right to intervene in Panama."

Secretary of State Cyrus Vance testified to you that, "in practical terms, as I understand it, our ships can go to the head of the line" in gaining passage through the Canal. This is under the "expeditious passage" clause in the Treaty. The Panamanian negotiator, on the other hand, specified that "expeditious passage does not mean privileged passage," and that if "the Gringos with their