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Senator THURMOND. I would have no objection to some new arrangement. The main thing I think we have to do is to maintain the control of that canal, and we have to be able to protect it.

EFFECT OF NOT MODERNIZING AGREEMENT ON MODERNIZING CANAL

Senator PERCY. If we did not make some new agreement, is it conceivable that we would be able to make major investments in the canal and modernize it, or even dig a sea-level canal sometime in that area, if we wanted to? What if we didn't modernize our agreement at the same time we wanted to modernize the canal?

Senator THURMOND. Well, of course, under the proposed treaties, the United States could not build a sea-level canal there without the permission of Panama. Naturally they would not agree because it would have a monopoly here. It would be after the year 2000 before that could even be considered, and then it would cost $5 billion.

I don't know that that is necessary.

Senator PERCY. But up until the year 2000, if Panama concurs with us, then we could go ahead in cooperation and partnership with Panama, couldn't we?

Senator THURMOND. But why would you need a sea-level canal so long as you had this canal ?

Senator PERCY. Certainly to take our larger warships and our supertankers.

Senator THURMOND. Why, 98 percent of the naval ships can go through there now; 96 percent of the world's ships can go through. Only the largest carriers cannot go through, so far as our military ships are concerned.

Senator PERCY. Are you saying that in your judgment at no time in the foreseeable future would we ever need to modernize the canal and enlarge it?

Senator THURMOND. Oh, indeed, I think it ought to be modernized now. That is what I favor. I advocated modernizing it and putting in the third locks to make it big enough to take the biggest ships. Senator PERCY. Say that we reject these treaties

and refuse to negotiate further, do you think it would be even conceivable that we would be able to go ahead and make that major investment with safety and security ?

Senator THURMOND. Not unless Panama would agree, acquiesce, and be pleased with it.

Senator PERCY. Yes. So, it does take agreement by the Panamanians. It is just a question of what they agree to and what we agree to.

Senator THURMOND. I think that before we spend that much money there, there ought to be a definite agreement that they would cooperate and not raise further points about it.

WHO CAN BEST PROTECT CANAL ?

Again, I will repeat: somebody has to protect this canal. Who can best do it-the United States or Panama?

Furthermore, Hanson Baldwin has written on this concerning our strategic position. Have you had occasion to read his statement on this? The CHAIRMAN. Yes; we have.

Senator THURMOND. Mr. Chairman, if there is no objection, I would ask unanimous consent that the article by Hanson Baldwin be placed in the record, if it has not already been done.

The CHAIRMAN. That will be done.
[The information referred to follows:]

[From the AEI Defense Review]

THE PANAMA CANAL: SOVEREIGNTY AND SECURITY

(By Hanson W. Baldwin) The future security and well-being of the United States are threatened by the administration's proposed abandonment of sovereignty over the Panama Canal and the Canal Zone.

Any such action would have global consequences, nowhere more adverse than in the Caribbean Sea-Gulf of Mexico area. The vital interests of a nation can be defined in territorial and regional terms or as political, psychological, economic, or military interests. By any and all of these yardsticks, the security of the Caribbean, the ability of the United States to control the Caribbean in war and to be a dominant influence there in peace, is vital to our country.

THE STRATEGIC IMPORTANCE OF THE CANAL

These southern seas have been considered essential to U.S. security since the time of Thomas Jefferson and the enunciation of the Monroe Doctrine. The great importance of the Caribbean has been restated in modern terms by Alfred Thayer Mahan and all succeeding generations of strategists. In fact, in a strategic sense the Caribbean-Gulf of Mexico area must be considered the mare nostrum of the United States. Unless we are capable of controlling it, we are, indeed, undone.

Yet that capability has already been gravely weakened; the turning point was the Communists' seizure of power in Cuba, the Caribbean's most important island, only ninety miles from our shores. Soviet Migs flying in Cuban skies, Soviet submarines calling at Cuban ports, and the hammer and sickle flaunting its red blazon of revolution across the area are both cause and symbol of the deterioration in the past fifteen years of U.S. security on our southern flank. Our own mistakes and weaknesses have cost us dearly; the infiltrators are within the outer walls, and what should be our island speckled ramparts are becoming today the soft underbelly of North America.

It is in this broad perspective—the future of the Caribbean-Gulf of Mexico area—that any basic change in the status of the Panama Canal must be judged, for any such change will profoundly affect our interests in the area and hence, ultimately, our political, psychological, economic, and military security. And, in an even larger, global sense, any retreat or major concession in Panama in the face of the threats of General Omar Torrijos, the Panamanian dictator, can only be interpreted around the world as scuttle-and-run, further proof of the weakening of the will and resolution of the United States. Faith in promises made, belief in the power of a nation and its will to use it in defense of its own interests, is the coin of international respect; since Castro, Vietnam, Angola, the credibility of the United States has been severely impaired and our international solvency in doubt.

Panama and the canal are therefore both cause and symbol; the canal is highly important in its own right, but far more so as a symbol of U.S. resolution and as one of the vital links in our vital interests in the Caribbean. Looked at in this light, the canal itself, contrary to the claims of its detractors, is in no way obsolete.

It is ironic, indeed, that in an era when the United States Navy needs the canal to a greater degree than at any time since the end of World War II, Washington is considering its abandonment. The navy today is in the same strategic bind it was in prior to World War II: it is a one-ocean navy (in size and power) with two-ocean responsibilities. We are outnumbered in submarines and surface ships by the Soviet Union, and, more than at any period since 1945, the navy must have a quick transfer capability between Atlantic and Pacific in order to meet sudden crises. To send the feet or individual ships around the Horn, as in the days of Fighting Bob Evans and Teddy Roosevelt, might be, in the modern age of speed, to lose a war.

General V. H. Krulak, United States Marine Corps (ret.), writing in the summer 1975 issue of Strategic Review, summarized the canal's naval importance: “In truth the Panama Canal is an essential link between the naval forces of the United States deployed in the Atlantic and in the Pacific. It is only because of the waterway that we are able to risk having what amounts to a barebones, one-ocean Navy."

It is ironic, too, that a major change in naval ship size, construction, and design is starting just at the time when proponents of a transfer of canal sovereignts justify their position by arguing that the locks cannot accommodate the navy's largest ships. The argument—true, though only for the momentis irrevelant. Only the thirteen giant aircraft carriers of the U.S. Navy have too large a beam to pass through the 110-foot width of the present locks. Yet the days of these behemoths of the seas are numbered : well before 2000 (one of the dates proposed for the transfer of sovereignty over the canal to Panama) a new generation of ships will begin to replace them--smaller, but more effective, with VSTOL aircraft, drones, missiles, or other new state-of-the-art developments like hovercraft and hydrofoils.

Even more important is the fact that every other ship in the U.S. Navy (except the thirteen carriers) can transit the canal, a fact of major importance in limited war, the type of crisis we are most likely to face. Our missile-firing and attack submarines (now deservedly called capital ships of the navy), all our antisubmarine and escort forces, our amphibious vessels, and our support and supply craft can transit the canal-a fact which has already proved of major importance in two recent instances.

During the Cuban missile crisis marines and supplies from the West Coast were ferried through the canal to the Caribbean. If they had had to pass around Cape Horn, they would never have arrived in time in influence the outcome. As it was, the threat of invasion helped materially to force Khruschev to change his mind. During the Vietnam War about 98 percent of all supplies for our forces were shipped by sea ; of this total, approximately 33 percent were loaded in East and Gulf Coast ports and transited the canal. The volume of military-sponsored cargo in the four years from 1964 to 1968 increased, for dry cargo, by some 640 percent and for petroleum products by about 430 percent. And the number of U.S. government vessels (chiefly naval) transiting the canal increased from 284 in 1965 to more than 1,500 in 1968.

The limitations of the current locks (though, indeed, the canal can handle much more traffic than the 12,000 to 14,000 vessels a year that now use it) have, in any case, little relevance. A third set of locks, larger than the existing ones was suspended because of World War II; the excavations (within the present ten-mile-wide Canal Zone) still exist, and whenever the need is demonstrated the new locks could be completed.

There is another military factor which bears on the present and future utility of the canal and deserves mention in passing. Nuclear weapons, it is said, have made the canal indefensible and vulnerable to sudden destruction. Actually other means of blocking or closing the canal existed long before the development of nuclear weapons. The point is, however, that this change is completely irrelevant. No sane enemy would waste a nuclear warhead on the Panama Canal with such decisive targets naked to his missiles as New York City and Washington, the industrial complexes of Pittsburgh and Cleveland, the huge urban, industrial, and naval-port complexes of Norfolk and San Diego. In a nuclear war, the Panama Canal would simply play no role whatsoever, either as target or as launching pad.

Finally, the U.S. Panama Canal Zone offers facilities unavailable elsewhere under the U.S. flag for training troops in jungle warfare. More important, the zone is oriented towards the problems of Central and South America and the zone's army schools and training facilities have fostered and helped to develop a close and productive military liaison between the armed forces of many nations in the Southern Hemisphere and the United States. Most important, the zone is the southern and western anchor of our entire position in the Caribbean. Together with the southern Florida-Florida Keys area, Guantánamo Bay, which dominates the Windward Passage (one of the of the principal passages into the Caribbean from the Atlantic) and the Roosevelt Roads base in Puerto Rico (supplemented by Virgin Island ports), it offers naval, air, and land facilities which can strengthen the security of our southern flank. (Incidentally, it also has importance to the strategy of the Central Pacific, outward to the Galapagos.)

It is within this framework that the Panama position is of the greatest significance to the strategic control of the Caribbean and to the security of the United States in the area-already threatened by Castroism and communism-would probably be engulfed by a hostile sea. Thus, the Panama Canal, strategically significant in its own right, is far more important to the United States as a part of the vital whole of Caribbean-Gulf of Mexico security.

ECONOMIC CONSIDERATIONS

The economic factor is also of major importance in the canal-Caribbean equation. In the past four years, the canal, for the first time in its history, has lost money, despite its first toll increases in seventy years. Part of this loss appears to be due to a change in bookkeeping practice : for the first time amortization costs for the original excavations of the Panama Canal were charged off, apparently in anticipation of a treaty transferring sovereignty. But there were more impor. tant economic causes. The world recession and the reopening of the Suez Canal in 1975, currency devaluations, and rapid inflation which increased the canal's operating expenses from about $182 million to $260 million in four years, as well as the increase in “land-bridge” traffic (that is, the shipment of containers from Atlantic to Pacific ports by rail) all contributed materially to a recent period in which ship transits, contrary to the long-term trend, did not increase on an annual basis but stabilized or declined.

Nevertheless, in recent years, there have been some 12,000 to 14,000 ship transits annually ; vessels of all the nations of the world have been lifted from sea to sea economically and efficiently. Ships flying the Liberian and Panamanian flags-80called flags of convenience-many of them actually owned by U.S. citizens, ships of Latin American nations, and vessels flying the flags of Latin American nations, and vessels flying the flags of Great Britain and the United States are among the greatest users of the canal. The fees they pay (still only half as high as the Suez Canal fees) are a small price for the savings and convenience of the short transit. To the American economy, and particularly to U.S. overseas shippers and importers, the canal has major importance; it has been estimated that, of all cargoes transiting the canal in ships of all flags, about 60 to 70 percent are bound to or from U.S. ports. More than 1,000 transits annually are by U.S. flag ships, and an increasing number of them are “Panamax" vessels specially designed to fit snugly the locks of the canal. Many of these are engaged in the growing container-ship traffic from the East Coast and Europe to the Orient.

Some thirteen major trade routes funnel through the Caribbean Sea-Gulf of Mexico-Panama Canal region. The skies and waters of the Caribbean and the Gulf are vital arteries for U.S. industry and trade, through which pass coffee and fibers, manganese and iron ore, beryl and colombium from Brazil; oil and iron ore from Venezuela; bananas and other tropical fruits from Central America; copper from Peru and Chile; bauxite from Jamaica, Surinam, the Dominican Republic, and Haiti; antimony and tin and tungsten from Bolivia ; zinc from Mexico and Peru; sugar from the sugar islands of the Caribbean. These products and others are essential to U.S. industry, and Latin American markets help to maintain U.S. prosperity.

The so-called Sun Belt of the United States, that growing and prosperous region extending across the country from southern California to Florida and Georgia, is greatly dependent upon its gateways to the world. The most important of these are the Gulf Coast ports and the entrance to the mighty Mississippi River. All the approaches to this area lie through the Caribbean—Gulf of Mexico region. The seas that wash these shores also border Mexico, where newly discovered major reserves of petroleum add immeasurably to the importance of this vast southern region for our future security.

There is, too, in the Gulf of Mexico, extending seaward farther and farther from our shores, a resource that is increasingly more precious than gold-the offshore and undersea deposits of gas and oil, resources which require security for their development. And one of the plans for transporting the oil of Alaska's North Slope to the hungry markets of the “lower forty-eight” contemplates shipment by tanker through the Panama Canal to Gulf and East Coast ports.

POLITICAL AND PSYCHOLOGICAL FACTORS

Even more compelling than the military and economic importance of the canal are the political and psychological considerations. Since the failure at the Bay of Pigs, U.S. foreign policy has suffered a series of severe defeats; we have been in retreat in many places around the world; human errors, gloomy Spen. glerian indecisiveness and confusion, poor leadership, and a lack of mobilized national will have led to the loss of Vietnam and our retreat from Southeast Asia, the debacle of Angola, the substitution of Communist for U.S. influence in Ethiopia—and, in the Caribbean, the transformation of a friendly Cuba into a springboard for Soviet imperialism in the Western Hemisphere. As the Pueblo, Mayaguez, and other incidents have shown, even second- and third-rate powers now dare to tweak Uncle Sam's nose.

This process of losing not only face and prestige but also control has gone far in the Caribbean; it will accelerate greatly if we abandon the canal. The muchmaligned domino theory was valid for Southeast Asia ; along with Vietnam, Cambodia and Laos fell to Communist governments; Thailand expelled our forces; the Philippines immediately announced a shift away from the United States and demanded a revision of our base agreements; and all over the world, U.S. resolution and will were questioned. The domino theory is equally valid for the Caribbean: if Panama goes, all our positions there may eventually follow.

This is particularly true of Guantánamo Bay at the western tip of Cuba, a base important for training and, because of its geographical location, commanding the Windward Passage. The treaty that governs our use of the base is remarkably similar in some ways to the Panamanian treaty. We enjoy at Guantánamo Bay "complete jurisdiction and control,” or de facto exercise of sovereign rights, over some 29,000 acres of land and water. (There is a major difference; we concede in the Cuban case that "ultimate sovereignty”—not defined in the treatyresides in Cuba, but our "complete jurisdiction and control" continue indefinitely until the United States voluntarily “abandons” the base or agrees mutually with Cuba to revise the treaty.) In other words, we lease the Cuban base and under the terms of the lease, which can be terminated only by mutual agreement, we hold sovereignty over it. But we do not-as we do in Panama-own the land or water.

If we give up our sovereign rights in Panama and abandon the canal, it seems certain that Castro-who long ago cut off the Guantánamo Bay reservation from the rest of Cuba-will reassert his past demands that the United States get out.

Nor is “Gitmo,” as the Navy calls it, the only threatened point d'appui. Castro has never made any secret of his ambition to be, in his own right, a dominant figure in the Caribbean and, with help from the Communist bloc, to make the neighboring island and mainland countries safe for Marxism. Indeed, his Communist and Third World alinement has led him with Moscow's encouragement and support far afield from the Caribbean, to the African continent, where Cuban troops armed by the Soviet Union have been operating in various countries for years. By far the largest and most ambitious manifestation of Castro's determination to make the world safe for communism was, of course, Angola, where a leftwing faction in a three-way civil war took over the country only because some 12,000 to 20,000 Cuban troops, transported chiefly by Moscow and armed and supplied by the Soviet Union, easily overran the primitive guerrillas that opposed them. Castro must be judged by his actions as well as by his words, and his actions-endorsed and supported by the Soviet Union--are clear. Indeed, Castro and Brezhnev jointly reiterated during Castro's visit to Moscow in the spring of 1977 their determination to continue to support revolutions around the worlda public statement that seemed to cause few ripples in Washington, intent on normalizing" relations with Cuba.

At Russian urging, Castro abandoned some years ago his overt attempts to subvert other Latin American countries; his strategy is now more insidious being largely, though not entirely, covert. His Russian-trained agents operate secretly in numerous countries, through propaganda, subversion, and infiltration of key government positions. He has encouraged and supported all left-wing governments in the Caribbean, with training missions, agents provocateurs, guerrillas. His spore, which is to say the spore of Soviet communism, is everywhere in the area; his agents have appeared in Jamaica, Guayana, Puerto Rico, and Panama. Nor would “better relations” between Cuba and the United States halt these subversive manipulations; any Communist program includes, alongside the formal and overt implements of policy, their unofficial and covert counterparts.

Even more important, a U.S. retreat from Panama would probably put the last nail in the coffin of the Monroe Doctrine. Until Castro took power and Cuba became a Soviet protectorate, this 150-year-old policy-that the Western Hemi.

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