PANAMA CANAL IMPLEMENTING LEGISLATION
HEARING AND MARKUP
BEFORE THE
COMMITTEE ON FOREIGN AFFAIRS HOUSE OF REPRESENTATIVES
NINETY-SIXTH CONGRESS
FIRST SESSION
ON
H.R. 1716
APRIL 4 AND 5, 1979
Printed for the use of the Committee on Foreign Affairs
U.S. GOVERNMENT PRINTING OFFICE 45-853 WASHINGTON : 1979
COMMITTEE ON FOREIGN AFFAIRS CLEMENT J. ZABLOCKI, Wisconsin, Chairman
L. H. FOUNTAIN, North Carolina DANTE B. FASCELL, Florida CHARLES C. DIGGS, JR., Michigan BENJAMIN S. ROSENTHAL, New York LEE H. HAMILTON, Indiana LESTER L. WOLFF, New York JONATHAN B. BINGHAM, New York GUS YATRON, Pennsylvania CARDISS COLLINS, Illinois STEPHEN J. SOLARZ, New York DON BONKER, Washington GERRY E. STUDDS, Massachusetts ANDY IRELAND, Florida DONALD J. PEASE, Ohio DAN MICA, Florida MICHAEL D. BARNES, Maryland WILLIAM H. GRAY III, Pennsylvania TONY P. HALL, Ohio HOWARD WOLPE, Michigan DAVID R. BOWEN, Mississippi FLOYD J. FITHIAN, Indiana
WILLIAM S. BROOMFIELD, Michigan EDWARD J. DERWINSKI, Illinois PAUL FINDLEY, Illinois JOHN H. BUCHANAN, JR., Alabama LARRY WINN, JR., Kansas BENJAMIN A. GILMAN, New York TENNYSON GUYER, Ohio ROBERT J. LAGOMARSINO, California WILLIAM F. GOODLING, Pennsylvania JOEL PRITCHARD, Washington MILLICENT FENWICK, New Jersey DAN QUAYLE, Indiana
JOHN J. BRADY, Jr., Chief of Staff
ROBERT K. BOYER, Senior Staff Consultant GEORGE M. INGRAM, Staff Consultant NANCY M. CARMAN, Staff Associate
(II)
CONTENTS
WITNESSES
Tuesday, April 4, 1979: Page
Herbert J. Hansell, legal adviser, U.S. Department of State-------- 3
I-Ion. David H. Popper, Special Representative of the Secretary of
State for Panama Treaty Affairs__.------------------------------ 11
Hon. Ambler H. Moss, Jr., U.S. Ambassador to the Republic of
Panama ---.- __------------------------------------------------- 20
Lt. Gen. Wellborn G. Dolvin, Department of Defense Representative
for Panama Canal Treaty Affairs-------------------------- -- 49
Hon. H. R. Parfitt, Governor, Panama Canal Zone----------------- 52
Hon. Michael Blumenfeld, Acting Assistant Secretary of the Army
for Civil Works ..---..-------------------------------------------56
Wednesday, April 5, 1979:
Hon. John M. Murphy, a Representative in Congress from the State of
New York..._....------------------------------------------------67
MATERIAL SUBMITTED FOR THE RECORD
Statement of Hon. Warren Christopher, Deputy Secretary of State--------- 2 Questions submitted for the record by Representative Dan Mica and
responses by the Departments of State and Defense-------------------32
APPENDIXES
1. Statement of Friends of the Earth on Panama Canal Treaty implementation legislation----------- --------------------------------79
2. Questions submitted for the record by Chairman Zablocki and responses
by the Department of State.---------------.. -------------------- 86
3. Supplemental questions submitted for the record by the committee and
responses by the Department of State--------------------------88
4. Memorandum on costs of implementing the treaty submitted by the Department of State------------ ------------------------------ 92
5. Cost estimates of Representative George Hansen on the Panama Canal
Treaty--.--.-------------------------------------------103
6. Statement by Department of the Army concerning the value of properties to be turned over to the Republic of Panama------------------ 109
(III)
PANAMA CANAL IMPLEMENTING LEGISLATION
TUESDAY, APRIL 4, 1979
HOUSE OF REPRESENTATIVES,
COMMITTEE ON FOREIGN AFFAIRS,
Washington, D.C.
The committee met at 9:45 a.m. in room 2172, Rayburn House Office Building, Ion. Clement J. Zablocki (chairman) presiding.
Chairman ZABLOCKI. The committee will please come to order.
This morning we meet to begin the next phase of committee consideration of the Panama Canal Treaties, the implementing legislation. As the members will recall, the committee conducted extensive hearings a year and a half ago on the pros and cons of the Panama Canal Treaties immediately after they were signed by the leaders of the United States and Panama. Subsequently the treaties were debated and ratified by the Senate.
The task before us now is to proceed with the implementation of these treaties as expeditiously as possible in view of the fact that the treaties enter into force on October 1 of this year. We are not here to discuss the merits of the treaties themselves. That has been done, particularly in the other body. Our job is to determine the best means of effecting the continued operation and efficient management of the canal.
REFERRAL OF LEGISLATION
Legislation to accomplish this goal has been introduced which spans the jurisdiction of four authorizing committees-Merchant Marine and Fisheries, Post Office and Civil Service, Judiciary, and our coinmittee, Foreign Affairs.
The primary vehicles of consideration are H.R. 1716, a bill introduced by request by the Honorables Peter W. Rodino, Jr., John M. Murphy, Melvin Price, and myself ; and H.R. 111, a bill introduced by Hon. John Murphy, chairman of the Committee on Merchant Marine and Fisheries.
H.R. 111 was referred in its entirety to all four committees. These are the measures our witnesses will be addressing today.
Other related legislation which was referred to Foreign Affairs includes two bills introduced by Hon. George Hansen, H.R. 454 and H.R. 1958; a resolution introduced by Hon. Philip Crane, House Resolution 154; and a resoultion by Hon. Robert E. Bauman, House Concurrent Resolution.
INTRODUCTION OF WITNESSES
We are pleased to have before us today a very distinguished panel of witnesses: Hon. David H. Popper, the Special Representative of the
(1)
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Secretary of State for Panama Canal Treaty Affairs; Lt. Gen. Welborn G. Dolvin, Department of Defense, Representative for Panama Canal Treaty Affairs; Mr. Michael Blumenfeld, Acting Assistant Secretary of the Army for Civil Works who has been nominated to that post; Hon. Ambler H. Moss, Jr., U.S. Ambassador to Panama; Hon. H. R. Parfitt, Governor of the Canal Zone, and Mr. Herbert J. Hansell, Legal Adviser, Department of State.
Hon. David E. McGiffert, Assistant Secretary of Defense, International Security Affairs, was previously scheduled to testify before the committee. However, when the committee rescheduled its hearings, Mr. McGiffert was unable to appear because of a prior out-of-town commitment.
Hon. Warren Christopher, Deputy Secretary of State, will not be appearing before the committee today but has submitted a statement which he would like to have included in the record. The Chair would like to ask unanimous consent at this time that Mr. Christopher's statement, and any others submitted to the committee, be included in the record of the committee's proceeding. If there is no objection it is so ordered.
[Mr. Christopher's statement follows:]
STATEMENT BY DEPUTY SECRETARY OF STATE WARREN CHRISTOPHER
The hearings of this committee will make a valuable contribution to legislation enabling the United States effectively to exercise its rights and meet its responsibilities under the Panama Canal Treaty. Such legislation will help ensure that the Canal continues to operate dependably and efficiently. Like the Panama treaties themselves, this legislation can and should contribute to the improvement of our relations with the nations of Latin America and the Caribbean. Witnesses from the State and Defense Departments, and other interested agencies, will comment on the legislation in detail. I would like to comment from a more general perspective.
The Panama Canal Treaty will come into force on October 1 of this year. It establishes the terms and conditions under which the United States will operate and defend the Canal until the end of this century. It permits us to maintain and manage the Canal in a cooperative undertaking with Panama.
The Treaty provides a structure for this cooperation. It provides for Panamanian participation in the work of the Panama Canal Commission, the Canal's new operating agency. It also provides for a binational Consultative Committee, with equal representation for both countries, as a forum for recommending policy changes to the two governments. And it provides for binational working committees on the environment, Canal defense, and general coordination. We believe the implementing legislation should promote these cooperative mechanisms and should not materially alter the balance they represent.
We believe the implementing legislation should give effect to the following principles, among others:
The Panama Canal Commission should be organized in a way that promotes its financial responsibility and management flexibility.
The Canal should be operated on a self-sustaining basis and tolls held as low as possible.
The Canal work force, both Americans and Panamanians, deserves and should receive consideration for its loyal and efficient service in the past and its essential role in the Canal's future.
Panama should have the voice in Canal management envisioned in the Treaty.
A spirit of cooperation has emerged in planning for Treaty implementation. Panamanian and U.S. officials, both civil and military, are working closely in some 25 bilateral working groups to plan for the adjustments which will occur under the Treaty. The new civilian government of President Royo has given Treaty matters the highest priority. It has called on its most qualified citizens to work on Canal problems. As expected, differences have emerged, but we are working through the problems presented.
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For our part, early enactment of the implementing legislation is essential if we are to bring the Treaty into force in the most orderly and effective manner. We seek a transition on October 1 that continues Canal operations without discernible differences in services for those who use the waterway. We hope that in both Houses of Congress prompt treatment will be accorded to this legislation.
With the enactment of legislation ensuring the Canal's efficient and safe operation during the life of the Treaty and thereafter, we will begin a new chapter in the history of the Canal. With the cooperation and support of this Committee and the Congress, the U.S. Government can open that chapter with firm assurances that it will unfold to our own and the world's advantage.
Thank you.
Chairman ZABLOCKi. Gentlemen, it is a pleasure to welcome you here this morning. We look forward to hearing your testimony, after which I am sure the members would like to pose questions.
Our format this morning will be to hear the statements of witnesses, or summaries of the statements if they prefer, and then question the witnesses as a panel. We will begin first with the State Department witnesses. After we have completed the questioning we will hear from the Department of Defense witnesses and Governor Parfitt.
Mr. Hansell, I understand you have a tight schedule and will have to leave early. We will therefore begin with you-you may proceed, sir.
STATEMENT OF HERBERT J. HANSELL, LEGAL ADVISER, DEPARTMENT OF STATE
Mr. HANSELL. I do have a prepared statement which is quite brief and I will, with your permission, read just several portions of it and then submit the entire statement for the record.
Chairman ZABLOCKI. Without objection, it is so ordered.
Mr. HANSELL. Mr. Chairman and members of the subcommittee: I am grateful for the opportunity to appear before you this morning to discusss legislation implementing the Panama Canal Treaty of 1977.
Ambassador Popper will provide an overview of the legislation, and Ambassador Moss will describe the process of treaty implementation. I would like to f ocus on several related legal issues.
The committee has before it title I of H.R. 1716, the bill proposed by the administration, which deals with Panamanian relations and security matters. The title includes such important matters as providing for U.S. participation in the various joint committees established by the treaty and related agreements, defining the authority of the U.S. Ambassador in Panama with respect to other U.S. agencies including the Panama Canal Commission, and the adjustment of existing legislation related to the Panama Canal to conform to the Panama Canal Treaties of 1977.
As you are aware, Chairman Murphy of the House Merchant Marine and Fisheries Committee, in addition to introducing the administration's bill, has submitted a separate bill, H.R. 111 containing much that the administration can support. However, as reported by the Merchant Marine and Fisheries Committee, it includes a few provisions that are not consistent with the Panama Canal Treaty and which would cause serious operational difficulties.
These provisions, Mr. Chairman, are summarized in my prepared statement and I will not read that portion of the statement other than to indicate that there are several provisions of H.R. 111 as reported,
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which in our view do conflict with the Panama Canal Treaty and represent serious problems for the implementation of the treaties.
I appreciate the opportunity to appear before the committee this morning. I will submit the balance of my statement for the record and will be happy to respond to any questions, Mr. Chairman, which you or the other members of the committee may have.
[Mr. Hansell's prepared statement follows:]
PREPARED STATEMENT OF HERBERT J. HANSELL, LEGAL ADVISER, DEPARTMENT OF STATE
Mr. Chairman and members of the committee, I am grateful for the opportunity to appear before you this morning to discuss legislation implementing the Panama Canal Treaty of 1977.
Ambassador Popper will provide an overview of the legislation, and Ambassador Moss will describe the process of Treaty implementation. I would like to focus on several related legal issues.
The Committee has before it Title I of H.R. 1716, the bill proposed by the Administration, which deals with Panamanian relations and security matters. This Title includes such important matters as providing for U.S. participation in the various joint committees established by the Treaty and related agreements, defining the authority of the U.S. Ambassador in Panama with respect to other U.S. agencies including the Panama Canal Commission, and the adjustment of existing security legislation related to the Panama Canal to conform to the Panama Canal Treaties of 1977.
As you are aware, Chairman Murphy of the House Merchant Marine and Fisheries Committee, in addition to introducing the Administration's bill, has submitted a separate bill, H.R. 111. There is much in H.R. 111 that the Administration can support. However, as reported by the Merchant Marine and Fisheries Committee, it includes a few provisions that are not consistent with the Panama Canal treaty and which would cause serious operational difficulties.
For example, Section 250 (e) provides that any surplus of operating revenues over costs would be paid into the general fund of the Treasury to offset costs of Treaty implementation not related to Canal operations. This provision is in direct conflict of Article XIII(4) (c) of the Treaty which requires that up to ten million dollars of any surplus of Canal revenues over Canal expenditures be paid to Panama. Thus, were the Canal to generate a surplus within the meaning of Article XIII (4) (c), a statutory requirement to transfer the surplus to the Treasury would put the United States in breach of its Treaty obligations to Panama.
There are two provisions in H.R. 111 that in our judgment are inconsistent with the U.S. commitments to Panama in regard to operation of the Canal. Our negotiators obtained in the Treaties a wide range of discretion for the Congress to legislate with respect to all important aspects of Canal management, including the setting of tolls and the establishment of labor relations practices. At the same time, however, we made a commitment that U.S. rights to manage, operate and maintain the Canal would be exercised through a new United States agency, to be established by and in conformity with U.S. law and called the Panama Canal Commission. Our commitment to exercise our rights through this agency is particularly important in light of Treaty provisions which give the Republic of Panama a role-albeit a minority role-in this agency.
Sections 101 and 102 of H.R. 111 provide that the Commission and the bi-national supervisory Board will be subject to the "direction" of the Secretary of Defense. While the U.S. has the unquestioned right under the Treaty to direct the operation and management of the Canal, the structure carefully established in the Treaty requires that this direction he exercised through the mechanisms established therein. For example, we share the objective of H.R. 111 that the U.S. members of the Board vote together in accordance with coordinated USG policy and that the Secretary of Defense oversee the operations of the Commission.
However, in order to be fully consistent with the Treaty. such direction and oversight should be exercised through the controlling U.S. majority on the Board of the Commission rather than by subordinating the entire membership of that Board to another agency. I believe that the wording of H.R. 111 raises the implictation that the U.S. might exercise its right to oversee the Commis-
5
sion in a manner not contemplated by the Treaty. Suitable arrangements for assuring effective U.S. control of the Canal operation in accordance with the terms of the Treaty can be established, and we are prepared to work with the Congress in this regard.
A similar problem is raised by Section 108 of H.R. 111 which would continue in effect current U.S. law authorizing the President to appoint a military officer to assume exclusive jurisdiction and control of operation of the Canal during wartime. These provisions would be repealed by Section 103 of H.R. 1716 which is before you.
While the Administration concurs that the United States can and should ensure that its defense and operational responsibilities under the Treaty are closely coordinated, particularly in time of war, we cannot agree with the concept of removing the operational functions from the hands of the Canal Commission and transferring them to a military officer. Rather, we believe that the Treaty and the legislation introduced by the Administration provide ample authority to establish effective arrangements to assure close coordination of our responsibility for Canal operation and defense through the exercise of U.S. control over the Commission, and are prepared to work with the Congress to develop effective arrangements in this regard.
Finally, H.R. 111 prohibits the transfer of U.S. property in Panama except pursuant to law enacted by Congress, and authorizes only those transfers which, under the Treaty, will occur on the effective date. The Constitutional issue regarding the authority to transfer property through the treaty-making power was fully debated during last year's ratification process and has been decided by the courts. The Court of Appeals for the District of Columbia Circuit held in the case of Edwards v. Carter (580 F2d 1055 cert. denied 98 St. Ct. 2240 (1978) ), that the President and the Senate had the power to conclude and ratify a selfexecuting treaty transferring property of the U.S. The Court held that no further act of Congress was required to implement such a transfer.
The United States is obligated to respect the transfers provided for in selfexecuting provisions of the Treaty approved by the Senate. These obligations cannot now be overturned. Accordingly, we cannot support legislative provisions which would suggest that the United States might seek to violate U.S. international obligations.
I appreciate the opportunity to appear before you this morning. I will be happy to respond to any questions which the Chairman or other members may have.
INCONSISTENCIES WITH THE TREATY
Chairman ZABLOCKI. In view of Mr. Hansell's prior commitment, if there are any questions we will ask questions of him at this point.
[r. Hansell, as you well know, there are about four provisions in H.R. 111 as passed by the Merchant Marine and Fisheries Committee that would be in conflict with the agreements in the treaty. One is the wartime authority, also the placement of the Board of Directors of the Panama Canal Commission under the direction of the Secretary of Defense, the $10 million contingency payment to Panama, and the property transfer matter.
The first issue that I mentioned, wartime authority, would enable the President to appoint a military officer to assume exclusive control and authority over the operation of the canal in time of war or its imminency. The actual exercise of such authority by the President would be in violation of the treaty, and you have stated so in your testimony. That is the only amendment that would come within the jurisdiction of this committee, and we expect to give full consideration to amending that section.
We will have comments on the other matters in our report, but I doubt that our committee should act as the Merchant Marine and Fisheries Committee has acted, by amending the bill in areas which are not within the jurisdiction of this committee; at least this is the attitude of the chairman. My committee may disagree.
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PRESIDENTS WARTIME AUTHORITY
Is it not true, Mr. Hansell, that the President essentially has the authority to take the action that the provisions on the wartime authority in H.R. 111 provide for without explicit language in the legislation? The President does have that authority, is that not true?
Mr. HANSELL. Yes, sir, that is our view, Mr. Chairman. The President would have fully adequate authority to assure the necessary coordination of the operation and defense of the canal.
Chairman ZABLOCKi. Then what is our defense in striking the provision? I am asking the question because we have to have some reason. If he has the authority, what is the justification, the reason, for striking? I am being a friend of the court now, the devil's advocate. Why strike it if he has the authority?
Mr. HANSELL. If I may quote from the language that is included in my statement:
We are concerned with the concept of removing the operational functions of the canal from the Canal Commission and transferring them to a military officer.
While the President has ultimate authority to name the Secretary of Defense to oversee the activities of the Commission, our concern is that the language of the bill providing that the Commission will be subject to the direction of the Secretary of Defense, is inconsistent with the provision of the treaty through which the direction of the canal be exercised through the mechanisms established in the treaty. We are also concerned that direction and oversight be fully consistent with the treaty and be exercised through the controlling U.S. majority on the Board rather than by purporting to surbordinate the entire membership of the Board to another agency.
Consequently, we feel that that provision-H.R. 111-is on its face in conflict with the intent of the treaty. I might add that we have similar problems with the provision placing the Commission under the direction "of the Secretary of Defense."
Chairman ZABLOCKI. While I am in support of repealing or amending the provision that the Merchant Marine and Fisheries Committee has included, I do not think the argument is strong enough for us to possibly influence other members of this committee. We hope we will hear some more positive defense of the position from the executive branch to strike that section.
Are there any other questions? The gentleman from Kansas.
U.S. CONTROL OVER THE PANAMA CANAL COMMISSION
Mr. WINN. Thank you, Mr. Chairman. Right along that same line on page 5 down at the bottom of the first paragraph, I wonder if you could explain what you mean when you say that the * defense through the exercise of U.S. control over the Commission and are prepared to work with the Congress to develop effective arrangements in this regard." That does not sound like anything but baloney to me. What do you mean? Why do you not give some examples or tell how you are going to do it? Do you see where I mean?
Mr. HANSELL. Yes, Sir. Our view of it, Mr. Winn, is that we think that under the treaty, and under the legislation as we have proposed
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it, there is full U.S. control over the Commission through our majority on the Board of the Commission. If there are concerns within this committee or within the Congress that we will have adequate control over the Commission, we would like to be able to address those within the framework of the Commission conduct of the operation and management of the canal rather than to create a different structure or a different command arrangement than is contemplated by the treaty. As I say, if there are concerns about the adequacy of U.S. control over the operation, we would be glad to discuss those.
We do not have those concerns because we think the U.S. majority on the Commission will be adequate to deal with U.S. needs in terms of operation of the canal.
Mr. WINN. I understand that, but I do not know what you are trying to tell us except that you think the Commission has the strength, that the DOS has the power within the Commission, and so through that, not through a military direction, you are going to discuss that with Congress if we have any questions. Is that what you are saying?
STATEMENT OF HON. DAVID H. POPPER, SPECIAL REPRESENTATIVE
OF THE SECRETARY OF STATE FOR PANAMA TREATY AFFAIRS
Mr. POPPER. Mr. Chairman, may I make a comment?
Mr. WINN. Certainly.
EXERCISE OF U.S. AUTHORITY
Mr. POPPER. The quarrel, if any, with the formulation in Chairman Murphy's bill is not with its objective and not with the concept that the United States has the right under the treaty and in the neutrality treaty to exercise primary responsibility for the defense of the canal and to maintain its security indefinitely. That is not the problem. The problem is the way in which this authority is exercised.
Under the so-called war powers provision, which we are discussing now, as drafted in the other committee, the President of the United States could under this provision designate an American military officer to exercise complete authority over the operation in defense of the canal in time of war or imminent war; that is, when we were engaged in an international crisis anywhere in the world.
Our position would be that clearly we have to exercise authority sufficient to defend the canal under all conceivable circumstances but that that must be done in a way consistent with the treaty. It can be done in ways consistent with the treaty.
To give one or two examples, the Administrator is an American official running an American agency in the Canal Zone. The commanding officer, the commanding general and Southern Command is there with his forces for the defense of the canal. The President could, if he wished, discharge the five American Board members on the Commission and name military officers to sit in their place.
We find no reason to believe that the President would not be able to do everything he reasonably needed to do under a crisis or war situation. He can do it without appearing to convey to the Panamanians the message that they have been brushed aside when suddenly we decide there is a crisis. We do not want to send the message that what they think or do or how they act does not matter anymore.
Mrs. FENWICK. Will the gentleman yield?
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HELP DRAFT ACCEPTABLE LANGUAGE
Mr. WINN. I will in just a minute. I am referring to the last 15 words.
Mr. Chairman, I hate to take up this time but I do not know what you mean.
I understand all the first part and your explanation is very good, are prepared to work with Congress to develop effective arrangements in this regard." What do you mean by that? How are you going to work with Congress? Why do you not spell it out? That is what the Washington Post calls gobbledygook.
Mr. HANSELL. It obviously is not as clear as it ought to have been. What that language is intended to mean is that we would be prepared to work with you to insert in the legislation language that would clarify the arrangements that would apply in time of war, if the language in the bill as introduced was not satisfactory.
We have suggested a revised provision to deal with this problem. It is on page 12 of the markup bill that I think has been placed on your desk this morning. All that we meant to suggest by the language, Mr. Winn, was that if the new language is not adequate we will be happy to work with the Congress to develop other language to deal with this problem.
If you have a marked-up version of H.iR. 1716 before you, on page 12, line 18, please note the new section 105, captioned "Defense of the Canal."
Chairman ZABLOCKT. I am afraid we do not have the marked-up bill.
Mr. HANSELL. I am sorry, I thought that had been passed out.
Chairman ZABLOCKI. I might say, if the gentleman from Kansas will yield, it is my understanding that our colleague, who is also a member of the Merchant Marine and Fisheries, Mr. Bowen, has some modification of the language and we do have copies of it. Since the Merchant Marine and Fisheries Committee reported their bill out yesterday we do not have sufficient copies of their version.
I think what Mr. Hansell is saying is that if we are concerned with this particular section, as many of us are, we will write language which is acceptable to the department which they feel they can live with.
Am I stating the case correctly?
Mr. HANSELL. Yes, Mr. Chairman, thank you.
Mr. WINN. I appreciate your clarification, Mr. Chairman. I do say there has been a lot of work done by Mr. Bowen and the other committee and this is the type of thing that I wanted to find out, if we the members of the committee and Congress did have a chance to have input in these arrangements. That is just exactly what I was trying to clarify.
I yield to the gentlelady from New Jersey.
AMERICAN MAJORITY ON COMMISSION BOARD
Mrs. FENWICK. I thank you for yielding. It seems to me that the effective arrangement would be to make sure that the majority of the American members of the Commission will take orders from the U.S. Government and the appointment of those people is the effective arrangement that would be important here. Just make sure that those five or those
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members who can constitute the American majority are going to do what this Government tells them to do. That is the effective arrangement I would like to see.
Mr. POPPER. Mrs. Fenwick, that is exactly correct. I should point out that both bills under consideration, H.R. 1716 and H.R. 111, would do that. In the executive branch conception, we had intended that the five American members be officials of the five American cabinet departments mainly concerned with canal affairs and they would of course be subject to instruction.
Under H.iR. 111 there would be three representatives from private interests interested in the canal but they will be specifically enjoined under the terms of their appointment, to act under the Secretary of Defense. So that either way we would have a dependable American majority bloc in the Commission.
Mrs. FENwIcK. That is the effective arrangement?
Mr. POPPER. Yes.
Chairman ZABLOCKI. Let me state to the members, unless they have any questions of Mr. Hansell, we do have a star-studded witness team here and Mr. Hansell has to leave. Unless you have one specific question of Mr. Hansell, Ambassador Popper and Ambassador Moss and the others who will appear before us I am sure will be in a position to fully and adequately and completely respond to our questions.
Mr. Ireland.
CANAL OPERATION IN WARTIME
Mr. IRELAND. Thank you, Mr. Chairman. Mr. Hansell, I am having trouble getting through the gobbledygook here, particularly since I find that apparently not in your testimony is the fact that you have brought additional wording. If I can I'll try to wade through the gobbledygook and the part that we were just referring to concerning the operation of the canal in time of war. If I understand you correctly, you want to go to the wall and defend the conduct of the canal through the Commission even in the event of wartime rather than the proposed H.R. 111 where the Secretary of Defense takes over.
It seems to me that you are saying that the Secretary of Defense would, through the President, put people on the Commission if necessary and operate through the Commission under that arrangement. Most. wars that have been conducted by committee have not turned out too wel.
What is the real purpose of going through that and what justification in the time of crisis have you to say that it ought to be a commission and just throw another roadblock in a functioning organization at a time of crisis?
Mr. HANSELL. Well obviously it was not our intent to create a roadblock, Mr. Ireland. The thought was that in time of war the President, as Commander in Chief, ought to have the ultimate authority to give such orders to the Administrator of the Commission as might be needed. The new provision that has been proposed to deal with this matter provides that the Administrator shall, upon the order of the President. comply with such directives as the U.S. military officer charged with the protection and defense of the canal may consider necessary in the exercise of his duties.
There is nothing magic about that language either.
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Mr. IRELAND. Except that you have to hunt five guys to give them the orders and then have a commission. What if you cannot get a quorum for the Commission and we have American soldiers down there in jeopardy? This is hardly the way to conduct a military operation.
Mr. POPPER. I wonder if I could make a distinction which has guided us in our approach on this subject. There is a distinction between the operation of the canal-which is to say the normal process of getting ships through the canal-and the defense of the canal.
We do not think it is necessary to suspend entirely all ordinary operational channels when there is a crisis or a war so long as they are subject to the authority, the control that a military officer needs to exercise to assure the defense of the canal. In other words, as we look at the war powers language as it appears in the bill under consideration, H.R. 111, it seems to us a kind of case of overkill, of doing more than you need to do and therefore having some harmful implications.
We agree thoroughly with the objective but we think you can preserve the operational aspects of the canal enterprise as much as possible in the normal form while assuring its defense.
Mr. IRELAND. If I may ask one further question. What real harm does that overkill do? I mean, what do you see as a problem?
UNITED STATES HAS PRIMARY DEFENSE RESPONSIBILITY
Mr. POPPER. There is this basic problem, Congressman. As I was about to say in my statement. The treaty represents a balance of responsibities and a balance of authority. We have the primary responsibility for defense of the canal and we are operationally controlling it. However, Panama is a junior partner if you will, a partner in a subordinate status, and we believe therefore that we have an obligation under the treaty to maintain to the extent possible the kind of structure that was worked out in the treaty.
To the extent that we can, we should maintain the normal instrumentalities in all agencies that are set up by the treaty. That is our concern. Since Congress has raised some question about the war powers problem we have, as the legal adviser has said, worked with Members of Congress to try to clarify and allay that concern. This is the basis on which we are operating.
Mrs. FENWICK. Will the gentleman yield?
Mr. IRELAND. Yes, ma'am.
Mrs. FENwICK. I would like to ask you in plain language, what would happen? Suppose the Commission is operating the canal in normal times and suddenly we discover that war or imminent war is on the horizon. The President has the power, as Commander in Chief, to send some troops down there with an Army commander of whatever rank he might think appropriate.
The Army commander says, "This has to be done," this being under the War Powers Act. Suppose the -Commission members cannot be summoned because they are on holiday in Alaska. Has that Army general, or commander, the power to do what needs to be done to defend the canal regardless of whether or not the Commission is able to sit?
Mr. PopPER. Yes. The United States has the primary responsibility for the defense of the canal.
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Mrs. FENWICK. But I am asking, in this particular situation would he have the power to act, would he?
Mr. POPPER. Yes, he would, for the defense of the canal.
Mrs. FENWICK. For the defense of the canal?
Mr. IRELAND. If I may, would the gentlelady yield? Yes, the defense of the canal, but he does not have as you pointed out earlier, unless that group meets and makes a decision, for some of the operations of the canal.
Mrs. FENWICK. If those operations were necessary for defense he would.
Mr. IRELAND. Apparently, according to the Ambassador, no.
ADVISORY ROLE OF COMMISSIONS BOARD
Mr. POPPER. As we see the role of the Board of Directors it is a policy advisory body. It is not in constant session any more than the board of directors of a corporation. It is a policy advisory body.
The day-to-day operation of the canal will be under the Administrator, who is an official of the U.S. Government. If there were an emergency situation, something had to be done immediately, we would carry out our treaty responsibilities under the Canal Treaty and under the neutrality treaty through our military commander. I do not think you would find any problem in doing so.
If there is a doubt we are, as Mr. Hansell has said, prepared to adjust that and clear it up.
Mr. IRELAND. Thank you.
Chairman ZABLOCKI. The Chair would like to advise that Mr. Hansell does have to leave although he is welcome to stay as long as he wants. We do have Ambassador Popper, Ambassador Moss, and others who will also be testifying.
Mr. Hansell, I mentioned earlier we would try to accommodate your schedule. Thank you very much.
Mr. HANSELL. Thank you, Mr. Chairman. I appreciate your courtesy.
Chairman ZABLOCKI. Ambassador Popper, you may proceed with your statement.
Mr. POPPER. Thank you, Mr. Chairman.
As requested I will be glad to summarize my statement. I hope it may be inserted in the record.
I am happy to appear today to discuss the pending legislation to implement the Panama Canal Treaty of 1977.
This committee is charged primarily with consideration of title I of the administration's proposal, which is H.R. 1716 and corresponding provisions of other bills, notably that introduced by Congressman John Murphy, chairman of the House Merchant Marine and Fisheries Committee. Nevertheless, the committee has a broader interest arising from its general stewardship of foreign policy problems in the House of Representatives.
Other committees dealing with the legislation from the standpoint of their respective concerns seek to insure that the finished legislation
12
contributes most beneficially to specific U.S. interests and objectives The Foreign Affairs Committee will, I imagine, wish also to consider how the legislation will affect the general foreign policy purposes sought by the U.S. Government in concluding the 1977 treaty.
The committee is familiar with the broad background of the treaty negotiations over a period of 15 years, and I will not review that history here. I would only like to say that the 1977 treaties launched our relations with Panama on a new course. Where the two countries had once been constantly at odds they now have every reason to work together.
Where the entire Western Hemisphere had once criticized our policies as alleged colonialists, the hemisphere now approvingly supports the new accord. There has been an undeniable change in atmosphere and in spirit.
Panama's energies and plans are now centered on making the treaties a success. While many problems remain to be resolved the auguries are encouraging. The treaties come into force on October 1 of this year. They will be part of the law of the land. They lay out at points in general terms and at points in great detail the nature of the future operation and defense of the Panama Canal.
Under the treaties the United States will continue to operate the canal and to have primary responsibility for its defense until the year 2000. It will thereafter continue to have the right to protect the canal against threats or acts of aggression in order that the canal may always remain open to transit, on equal terms, by the ships of all nations.
IMPLEMENTING LEGISLATION
Legislation is needed to provide the legal basis for carrying out the terms of the Panama Canal Treaty, in those areas in which the treaty is not self-executing. In many respects, the treaty tells the parties what to do but not how to do it. Thus under the treaty, the Panama Canal Commission-the U.S. Government agency charged with operating the canal-must be and I quote from the treaty, "Constituted by and in conformity with the laws of the United States of America."
Legislation is also needed for the establishment of other agencies created under the treaty; for a personnel system covering employees of the Commission; for the determination of toll rates; and for many other aspects of the new canal system.
The formulation and enactment of implementing legislation is of course a matter for our governmental authorities. As a matter of good faith, however, the legislation should be designed to carry out the terms of the Panama Canal Treaty fairly and without distortion. It should be couched in the same spirit of equity and mutual understanding which made the treaty possible.
Although the United States will continue to operate the canal. the treaty envisages important changes in the way we will do so. Where Panama was once essentially an outsider looking in, it now becomes an associate, a partner, in most aspects of treaty implementation. In canal management, Panama will be a junior partner, its representation increasing over the years until the end of the century where it assumes complete control. But Panama is certain to be an active part-
13
ner, not a passive one. Through its constitutional processes the United States has assented to that partnership, believing it to be mutually beneficial. We must do our part to put it into effect.
PRESERVATION OF TREATY BALANCE
To put it another way, the delicate balances established in the treaty should be preserved in the implementing legislation. This cn be done without sacrificing any legitimate American interest. It would be unfortunate if, in writing a new law, we should appear to alter or override the substance or the intent of treaty provisions.
If, under the legislation, justified Panamanian views were stifled or prerogatives that Panama obtains under the treaty were curtailed, then the treaty structure would have been unilaterally altered by the United States. The result would be to create suspicion in Panama, and this could jeopardize the spirit of cooperation which should prevail at the outset of the treaty's life.
We believe that such a development would be both unnecessary and unfortunate. Moreover, it would be counterproductive. We are convinc-d that the United States can effectively exercise its authority to manage the canal under the treaty in any foreseeable circumstances, without departing from the letter or spirit of its provisions.
EXECUTIVE BRANCH EXCEPTIONS TO H.RI. 111 LANGUAGE
For this reason we have taken exception to certain provisions of the bill, H.R. 111, introduced by Chairman Murphy. A number of the original concerns we had with that bill have been allayed as it has proceeded through consideration in the Panama Canal Subcommittee and the House Merchant Marine and Fisheries Committee, but there are others which remain undiminished.
PRESIDENTIAL WARTIME AUTHORITY
The first of these is the one which we have just been discussing in some detail, concerning the powers to be exercised by the President when war exists or war is imminent. I will not repeat the substance of the discussion we have just concluded.
CONTROL OF COMMISSION'S BOARD
Second, we have problems with the language in sections 101 and 102 of H.R. 111 which places the Panama Canal Commission and its Board of Directors "under the direction of the Secretary of Defense." Our control of the Commission and the Board is adequately protected, we believe, through the machinery established by the treaty. The Administrator of the Commission is a U.S. Government official removable at the pleasure of the President. A majority of the members of the Board of Directors will be Americans; we believe they should be officials acting in accordance with coordinated U.S. Government policy.
In fact, the administration has intended to lodge oversight authority on behalf of the U.S. Government in the hands of the Secretary of Defense or his agent, the Secretary of the Army. The language of
45-853-79- 2
14
the Murphy bill, which appears to reduce the status of the Board of Directors and its Panamanian members to a nullity, seems to us to be contrary to the sense of the treaty. We do not need it to attain our purposes, particularly if, as Chairman Murphy's bill now provides, tbe U.S. majority on the Board of Directors must cast their votes pursuant to U.S. Government instructions.
A $10 MILLION CONTINGENCY PAYMENT
A third legislative provision which we consider highly questionable under the treaty concerns the conditions to be applied before Panama can receive the contingent annuity of $10 million to which it is entitled under article XIII 4(c) of the treaty, it is entitled, to the extent that revenues exceed expenditures of the Panama Canal Commission.
In Senate reservations accepted by Panama, the conditions under which that annuity would be forthcoming have been very clearly established. Taken together, these stipulations, and the proposals contained in the administration's implementing legislation, would insure that Panama would not receive the contingent annuity unless revenues should exceed the total of all costs which could appropriately be termed canal expenditures. The United States would not be required to set tolls so as to produce such a surplus.
It is now proposed in H.R. 111, that all costs to the U.S. Government of implementing the treaty should be added to canal expenditures, and satisfied prior to the contingent payment to Panama. This would in effect eliminate the possibility that Panama would ever receive any funds under article XIII 4(c) of the treaty. Accordingly, it might well be maintained that we have unilaterally expunged a part of the treaty. The result would be unfortunate.
Any gains we might receive from such a provision of law would be outweighed by their prospective damage to cooperative treaty relationships.
PROPERTY TRANSFER
Finally, Chairman Murphy's bill would require congressional action for all transfers of property to Panama pursuant to the canal treaty, thus raising the possibility that the United States might not be able to comply with what we regard as self-executing treaty provisions. Mr. Hansell, in his capacity as legal adviser, has referred to this point in the statement he has submitted, and I will not expand upon it.
AUTHORITY OF THE AMBASSADOR
I should like to mention one other point which does fall within the ambit of title I of the bill and which may be of interest to the committee. Chairman Murphy's bill establishes the authority of the U.S. Ambassador to Panama in terms which conform very closely to those in the administration proposal. Both of the bills under discussion recognize the Ambassador's responsibility for coordinating the transfer of functions to be assumed by the Republic of Panama. They also recognize that the relationship among the principal U.S. authorities in the canal area is unique with each of the U.S. officials-the Ambassador, the Administrator of the Commission, and the Commander of the U.S.
15
Forces-being charged with authority in a specific area of operation.
Both the military commander-as in other parts of the world-and the Administrator and his personnel are not subject to the direction of the Ambassador as regards their own particular field of activity. But in other respects, the Ambassador's normal authority under American law would prevail. We think that that is a reasonable arrangement and we have worked out guidelines in the executive branch to insure that it is followed.
IMPORTANCE OF VERBAL RESTRAINT
Before concluding, Mr. Chairman, permit me to make a general comment relating to treaty implementation. Panama and the United States are equal in sovereignty, but each in its own way has to contend with the great disparity in population, size, wealth, and resources which separates them.
The effect of words we utter or actions we take is multiplied enormously in Panama. We on our side are highly sensitive to developments which occur there. Restraint and understanding are required if every difference between us-and there will be many-is not to be inordinately magnified. Nowhere is this more true than in comments about the internal structure of our respective Governments.
The Panama Treaties of 1977, like the treaty of 1903, are built to last. The treaties fill a common need of both Governments. They are not dependent upon the character of either Government at any particular moment. They assume that there is, and will continue to be, a common national interest in both countries in the successful operation of the canal.
In justice to Panama and in our interest, the debate on the implementing legislation should not be clouded by inaccurate attacks on the Government of Panama.
HUMAN RIGHTS IMPROVEMENT
The changes which have taken place in Panama in the last few years should be acknowledged. In developments which are not unrelated to the treaty exercise, Panamanian human rights practices have improved significantly. The country has mercifully been spared the internal disorders of some of its nearby neighbors.
At the conclusion of his term of office as leader of the Panamanian Government, General Torrijos has given way to an elected President. Representative institutions of Government have been strengthened, and the day-to-day management of affairs in Panama follows democratic forms. The annual human rights reports which the Department of State submits to Congress catalog in detail the liberalizing constitutional reforms which have occurred in Panama, as well as the greater openness within the country. Panama is a pluralistic society, with a functioning private enterprise sector and a wide spectrum of freely expressed opinion. Its stability and growth can only be enhanced by successful implementation of the canal treaty.
These positive developments should not be ignored. They will assist in the attainment of our basic objective, a sound canal operation, sup-
16
ported by the cooperative efforts of the two friendly Governments. The legislation Congress is now framing should reflect that friendship. The protection of our interests is not incompatible with that aim, and I hope this committee will act in that spirit.
Thank you, Mr. Chairman.
[Mr. Popper's prepared statement follows:]
PREPARED STATEMENT OF HoN. DAVID H. POPPER,, SPECIAL REPRESENTATIVE OF
SECRETARY OF STATE I OR PANAMA TREATY AFFAIRS
I am happy to have the opportunity to appear before your Committee to discuss the pending legislation to implement the Panama Canal Treaty of 1977.
This Committee is charged primarily with consideration of Title I of the Administration's proposal (H.R. 1716) and corresponding provisions of other bills, notably that introduced by Congressman John Murphy, Chairman of the House Merchant Marine and Fisheries Committee.
Nevertheless, the Committee has a broader interest, arising from its general stewardship of foreign policy problems in the House of Representatives. Other Committees dealing with the Legislation from the standpoint of their respectiv concerns will seek to ensure that the finished legislation contributes most beneficially to specific United States interests and objectives. The Foreign Affairs Committee will, I imagine, wish also to consider how the legislation will affect the general foreign policy purposes sought by the United States Government in concluding the 1977 Treaties.
The Committee is familiar with the broad background of the Treaty negotiations. Those negotiations were begun 15 years ago, in the conviction that, from the standpoint of both the United States and Panama, a new and more suitable arrangement for the future operation and defense of the Canal was required. Both countries recognized that the 1903 Treaty establishing the original Canal relationship had become outdated. Agreeing that the parternalistic institutions of the early 20th Century were no longer appropriate, they began a search for new arrangements more closely attuned to modern realities.
The task was not easy. On the United States side any suggestion that we might abandon our plenary jurisdiction of the Panama Canal Zone touched deep chords of pride and possession closely interwoven into our history as a nation. On the other hand, any restriction on the exercise of Panamanian soyereignty over Panamanian territory proved equally difficult for the young and proud nation of Panama to accept.
Eventually, success was achieved, with good will and persistence by both parties. Under the leadership of President Carter and General Torrijos the necessary basis of mutual trust was achieved. Skillful negotiation on both sides-on our side, under the direction of Ambassadors Bunker and Linowitzproduced the definitive texts ratified by the two countries last year.
That agreement launched our relations with Panama on a new course. Where the two countries had once been constantly at odds, they now had every reason to work together. Where the entire Western Hemisphere had once criticized our allegedly co'onialist policies, it now anprovingly supported the. new accord. There has been an undeniable change in atmosphere and in spirit. Panama's energies and plans are now centered on making the Treaty a success. While many problems remain to be resolved the auguries are encouraging.
The Treaties come into force on October 1, 1979. They will be part of the law of the land. They lay out, at points in general terms and at points in great detail, the nature of the operation and defense of the Panama Canal for the future. Under the Treaties, the United States will continue to operate the Canal, and to have primary responsibility for its defense, until the year 2000. It will thereafter continue to have the right to protect the Canal against threats or acts of aggression, in order that the Canal may always remain open to transit on equal terms by ships of all nations.
Legislation is needed to provide the legal basis for carrying out the terms of the Panama Canal Treaty, in those areas in which the Treaty is not sef-executinc. In many respects, that is to say, the Treaty tells the parties what to do, but not how to do it. Thus, under the Treaty, the Panama Canal Commission, the United States Government agency charged with operating the Canal, must be (and I quote from the Treaty) "constituted by and in conformity with the laws of the United States of America." Legislation is also needed for the estab-
17
lishment of other agencies created under the Treaty; for a personnel system covering employees of the Commission; for the determination of toll rates; and for many other aspects of the new Canal system.
The formulation and enactment of our implementing legislation is of course a matter for Governmental authorities. As a matter of good faith, however, the legislation should be designed to carry out the terms of the Panama Canal Treaty fairly and without distortion. It should be couched in the same spirit of equity and mutual understanding which made the Treaty possible.
Although the United States will continue to operate the Canal, the Treaty envisages important changes in the way it will do so. Where Panama was once essentially an outsider looking in, it now becomes an associate, a partner, in most aspects of Treaty implementation. In Canal management it will be a junior partner, its representation increasing over the years until at the end of the century it assumes complete control. But Panama is certain to be an active partner, not a passive one. Through its constitutional processes the United States has assented to that partnership, believing it to be mutually beneficial. We must do our part to put it into effect.
To put it another way, the delicate balances established in the Treaty should be preserved in the implementing legislation. This can be done without sacrificing any legitimate American interest. It would be unfortunate if, in writing a new law, we should appear to alter or override the substance or the intent of Treaty provisions.
The Executive Branch has had this point very much in mind in drafting the Administration proposal (H.R. 1716). It has been our purpose to reflect in the bill, as closely as possible, the types and levels of authority accorded to us and to Panama in the implementation of the Treaty settlement.
The Canal Treaty was designed to give the United States the determining voice in Canal operations, until the year 2000. But at the same time it leaves a very definite place for the expression of Panamanian views. If through our legislation these were stifled, or if Panama's prerogatives under the Treaty were curtailed, then the Treaty structure would have been unilaterally altered by the United States, without Panama's consent. The result would be to create suspicion in Panama, and to jeopardize the spirit of cooperation which should prevail at the outset of the Treaty's life.
We believe such a development would be both unnecessary and unfortunate. Moreover, it would be counter-productive. We are convinced that the United States can effectively exercise its authority to manage the Canal under the Treaty, in any foreseeable circumstances, without departing from the letter or spirit of its provisions.
For this reason, we have taken exception to certain provisions of Chairman Murphy's bill (H.R. 111), a number of them affecting Title I in which this Committee is particularly interested. Some of our original concerns have been allayed as that bill has proceeded through consideration in the Panama Canal Subcommittee and the House Merchant Marine and Fisheries Committee. Others remain undiminished.
Let me enumerate a few of them.
First, Chairman Murphy's bill retains existing law providing that in time of war, or when the President considers that war is imminent, a United States military officer should assume exclusive authority over the Canal operation.
Under the Canal Treaty the United States retains primary responsibility for Canal defense, and retains the defense areas and facilities needed for that purpose until the year 2000. Under the Neutrality Treaty, as amended, the United States will retain indefinitely the right to ensure that the Canal is protected against any act or threat of aggression.
But the Panama Treaties certainly do not envisage that the entire operational apparatus of the Canal would be placed under the exclusive authority of an American military officer, at United States discretion, whenever we were involved in an international crisis. In fact, the President, through his control of the United States officials operating the Canal and supervising its defenses, can always ensure that our security interests will be protected. His authority can be manifested in ways quite consistent with the Treaty. But perpetuating the present law in this regard is unnecessary and could be harmful. The Administration bill repeals it.
Second, we have problems with the language in Sections 101 and 102 of H.R. 111 which places the Panama Canal Commission and its Board of Directors "under the direction of the Secretary of Defense." Our control of the Commis-
18
sion and the Board is adequately protected through the machinery established by the Treaty. The Administrator of the Commission is a U.S. official removable at the pleasure of the President. A majority of the members of the Board of Directors will be Americans: we believe they should be officials acting in accordance with coordinated U.S. Government policy.
In fact, the Administration had intended to lodge oversight authority on behalf of the United States Government in the hands of the Secretary of Defense or his agent, the Secretary of the Army. The language of the Murphy bill, which appears to reduce the status of the Board of Directors to a nullity, is contrary to the sense of the Treaty. We do not need it to attain our purposes, particularly if, as Chairman Murphy's bill now provides, the U.S. majority on the Board of Directors must cast their votes pursuant to U.S. Government instructions.
A third legislative provision which we consider highly questionable under the Treaty concerns the conditions to be applied before Panama can receive thecontingent annuity of $10 million to which, under Article XIII 4(c) of the Treaty, it is entitled, to the extent that revenues exceed expenditures of the Panama. Canal Commission.
In Senate reservations accepted by Panama, the conditions under which that annuity would be forthcoming have been very clearly established. Taken together, these stipulations, and the proposals contained in the Administration's: implementing legislation, would ensure that Panama would not receive the contingent annuity unless revenues should exceed the total of all costs which could appropriately be termed Canal expenditures. The United States would not be required to set tolls so as to produce such a surplus.
It is now proposed that all costs to the United States Government of Treaty implementation should be added to Canal expenditures, and satisfied prior to the contingent payment to Panama. This would in effect eliminate the possibility that Panama would ever receive any funds under Article XIII 4(c) of the Treaty. Accordingly, Panama might well maintain that we have in effect unilaterally expunged a part of the Treaty and might react accordingly. Any gains we might receive from such a provision of law would be far outweighed by the prospective damage to cooperative Treaty relationships. The proposal should not be adopted.
In certain respects, Chairman Murphy's bill has been modified to remove proposals contrary to the letter or spirit of the Treaty. Thus, it is no longer contended that Panamanian members of the Board of Directors or the Panamanian Deputy Administrator should be subject to Senate confirmation.
The new post of Chief Engineer, established at the level of the Deputy Administrator, is no longer subject to Senate confirmation. (The provision in question is still, however, open to objection. It creates a new executive position, not mentioned in the Treaty, which could be seen as a check or offset to the post of Deputy Administrator, a position to be held by a Panamanian-thus potentially changing the balanced structure of Treaty administration.)
Furthermore, the latest version of Chairman Murphy's bill correctly implements for the United States the Treaty provision establishing the Consultative Committee as a diplomatic forum to consider policy problems. The earlierversion had seriously misinterpreted the intent of the Treaty.
Finally, Chairman Murphy's bill now establishes the authority of the United States Ambassador to Panama in terms which conform very closely to those in the Administration proposal. Both bills recognize the Ambassador's responsibility for coordinating the transfer of functions to be assumed by the Republic of Panama. They also recognize that the relationship among the principal United States authorities in the Canal area is unique.
Each of the three principal United States officials-the Ambassador, the Administrator of the Commission and the Commander of United States forcesis charged with authority in a specific area of operation. The limits of the authority of each must be clearly understood.
As head of a unified command, the military commander in Panama, like his counterparts elsewhere, is exempt from the normal authority of the Ambassador to the extent prescribed by United States law. Likewise, the Administrator and personnel under his supervision are not subject to the direction of the Ambassador as regards the Commission's responsibilities for the operation, management or maintenance of the Canal. In other respects, however, the Ambassador's: normal authority under American law would prevail. We think this is a reasonable arrangement.
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I should add that the role of the Ambassador in Panama has been considered in the Executive Branch, and satisfactory guidelines have been worked out. The Ambassador has been charged with assessing the effect of Panama Canal Commission plans and activities in light of United States objectives in Panama. He is expected to promote Panama's understanding and acceptance of these objectives. The Administrator has been asked to inform the Ambassador of the proposed initiation of major activities, operations or changes in policy of the Commission in reasonable time to permit the Ambassador to comment on such matters before their enactment. Similarly, the Ambassador will keep the Administrator informed about activities and policies of other U.S. agencies in Panama which may affect the management and operation of the Canal.
These organizational arrangements provide a rational and effective basis for the activities of the three major U.S. components concerned with activities related to the Canal.
While it is not covered in Title I, the Committee may wish to consider theimplications of establishing the Panama Canal Commission as an appropriated, funds agency, as Chairman Murphy's bill provides, rather than as a Government corporation like the present Panama Canal Company.
The Murphy bill proposal is avowedly designed to ensure the fullest measureof Congressional control over Treaty implementation.. The Executive Branch proposal also provides of course for Congressional control, but it affords a greater degree of flexibility to the Canal management. Congressional supervision would be exercised through review and approval of the Commission's budget, oversight by the Panama Canal Subcommittee of the Merchant Marine and Fisheries Committee, and auditing by the General Accounting Office. The issue is not control versus no control, but the best means of exercising control without hampering operations.
In our view there are substantial advantages to constituting the Commission. as a Government corporation.
It permits greater operational flexibility and managerial efficiency.
It facilitates the operation of the Canal on a self-sustaining basis and the maintenance of a proven financial and accounting structure.
It minimizes the shock of transition to the new treaty status, as it permits the conversion of the Panama Canal Company to the new Commission with the smallest alteration of existing practices. It thus retains the advantages of continuity and experience, at a time when the difficulties of transition are bound to be appreciable.
By maintaining the corporate form of organization, with its managerial and financial efficiencies, it will help to prepare the Panamanians to continue to operate the Canal on a business basis after the year 2000.
The record of the Panama Canal Company as a Government corporation has gained widespread praise. To make fundamental changes in its operating and accounting structure would be to assume that the Canal Commission cannot be trusted to maintain similar standards. Given the assurances of continuing United States control under the Treaty, this should not be the case.
Let me mention one additional element of the Murphy bill which we consider defective.
The Administration bill provides that the President shall appoint the American members of the Board of Directors of the Panama Canal Commission. It envisages that the five American seats on the Board will be filled with officials of the Departments of Defense, State, Treasury, Commerce and Transportation, respectively. In this way, coordinated United States policy guidance would be worked out in advance and executed through coordinated action by the American members.
Under Chairman Murphy's proposal, representatives from the private sectornotably representing shipping, port and labor interests-would be included among the American members. We do not think this would be helpful. It could encourage the pursuit of special interests rather than the national interest, even though the vote of the American majority would be a directed vote. There areother, better ways to ensure that the interests of these private sector groups are fully considered in policy formulation.
I should like to add a word with respect to the Joint Commission on the Environment, to be established pursuant to Article VI of the Panama Canal Treaty.
The Joint Commission is a body with equal representation on each side. It is to make recommendations on ways to avoid or mitigate the adverse environ-
20
mental effects which might result from actions pursuant to the Treaty, so as to protect the natural environment of Panama.
We regard the Treaty provisions on this subject as significant. They are indicative of a common desire fully to take environmental considerations into account in the operation of the Canal. The most obvious and immediate application of this theme concerns the protection of the Canal watershed, and the prevention of its further degradation through unauthorized deforestation and cultivation. Fortunately, both Governments are aware of the problem and are determined to deal with it effectively. United States Government resources will be made available in connection with an AID watershed management loan project designed in part to cope with deforestation problems.
The implementing legislation should provide that the President should appoint the United States representatives to the Joint Commission, leaving it to the two Governments, rather than the Canal Commission, to agree on its organization and procedures. As currently drafted, the bill does so.
Before concluding, permit me to make a general comment relating to Treaty implementation.
Panama and the United States are equal in sovereignty, but each in its own way has to contend with the great disparity in population, size, wealth and resources, which separates them. The effect of words we utter or actions we take is multiplied enormously in Panama. And we are highly sensitive to developments there. Restraint and understanding are required if every difference between us-and there will be many-is not to be inordinately magnified.
Nowhere is this more true than in comments about the internal structure of our Governments. The Panama Treaties of 1977, like the Treaty of 1903, are built to last. Because the Treaties fill a common need of both Governments, they are not dependent on the character of either Government at any particular moment. They assume that there is and will be a common national interest in the successful operation of the Canal.
In justice to Panama, and in our own interest, the debate on the implementing legislation should not be clouded by inaccurate attacks on the Government of Panama. The changes which have taken place in Panama in the last few years should be acknowledged. In developments not unrelated to the Treaty exercise, Panamanian human rights practices have improved significantly. The country is mercifully spared the internal disorders of some of its nearby neighbors.
At the conclusion of his term of office as leader of the Panamanian Government, General Torrijos has given way to an elected President; representative institutions of Government have been strengthened; and the day-to-day management of affairs in Panama follows democratic forms. The annual human rights reports which the Department of State submits to the Congress catalogue in detail the liberalizing constitutional reforms which have occurred in Panama, as well as the greater openness within the country. Panama is a pluralistic society, with a functioning private enterprise sector and a wide spectrum of freely expressed opinion. Its stability and growth can only be enhanced by successful implementation of the Canal Treaty.
These positive developments should not be ignored. They will assist in the attainment of our basic objective-a sound Canal operation, supported by the cooperative efforts of the two friendly Governments. The legislation Congress is now framing should reflect that friendship. The protection of our interests is not incompatible with that aim, and I hope this Committee will act in that spirit.
Chairman ZABLOCKI. Thank you, Ambassador Popper.
Ambassador Moss.
STATEMENT OF HON. AMBLER I. MOSS, JR., U.S. AMBASSADOR TO THE REPUBLIC OF PANAMA
Ambassador Moss. Thank you, Mr. Chairman. In accordance with your request and also in the interest of brevity, I would request that my statement be submitted in the record, and I would just like to make a few opening observations.
Chairman ZABLOCKx. Mr. Popper's, as well as your statement, Ambassador Moss, will be made in its entirety a part of the record.
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Ambassador Moss. Thank you, Mr. Chairman. I would just like to make a few opening observations based on my statement and also based on some of the legislative events of the last few days.
Mr. Chairman, members of the committee, I am very grateful for the opportunity to appear before you today, and I just want to make a few remarks about the status of our planning for treaty implementation, which will begin when the treaty goes into effect on October 1. First of all, I think, as a general remark, it is of great importance to our planning efforts that the Congress act early to pass implementing legislation which supports both the letter and spirit of the Panama Canal Treaty. Completion of this legislation will enable us to go forward and put in place the plans necessary by the time the treaty comes into effect.
PLANNING FOR TREATY IMPLEMENTATION
Down on the Isthmus, officials of both Governments have shown a great sense of practicality and professionalism, in my opinion, in working out solutions. The treaties contain a number of mutual obligations to which both sides are committed, but there is a great deal of planning that necessarily has to go on in a wide variety of technical areas before the treaties can come into effect.
We are fortunate in one great respect, in that many of the leaders of the present Panamanian Government were personally involved in the treaty process over the last few years and therefore they are extremely knowledgeable about the treaties. President Aristides Royo is a young lawyer who became President of Panama last October 11. Ie was a chief treaty negotiator for Panama and he has shown great sensitivity not only for implementing the spirit of the treaties but also for the lot of the American citizens who live in the present Canal Zone, who work in the canal enterprise, and whose lives and jobs will necessarily be affected by the treaties.
We have been working in Panama in numerous subcommittees made up of representatives of our two countries, members of the Panama Canal Company as well as various ministries and the Panamanian Canal Authority charged with planning for Panama's implementation of the canal treaty. While there remains a tremendous amount of work to be done, work is progressive.
Certain portions of what we have had to do in planning for the treaties have been accomplished and dispatched in timely manner. I refer to three agreements which we signed in January, a new civil aviation agreement, a new agreement for establishing a permanent American cemetery at Corozal, and a new prisoner exchange treaty which will be submitted for Senate ratification. All of these steps, I think, represent a completion of those portions of our work ahead of time.
SPIRIT OF COLLEGIALITY
I would like to reiterate what Ambassador Popper said, that to build a good working relationship with Panama-which is the scheme that the treaty calls for-that we must develop a true spirit of collegiality and put aside some of the adversarial aspects of our relationship over the last 70 years. We see this spirit developing in the Isthmus.
The structure of implementing legislation will have a great deal to do with the further development of that spirit of collegiality and with
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the creation of a true working partnership with Panama. It is important in that respect that we be seen as keeping our side of the bargain and that the implementing legislation support the concept that the United States will live up to its treaty commitments, thereby enabling us to expect Panama fully to live up to its commitments. Members of this committee, I am sure, will be particularly sensitive to that particular set of concerns.
I would like to say in that respect that during the last few days I have been in Washington from my post in Panama and sitting in on the markup sessions in the House Merchant Marine and Fisheries Committee. Congressman Bowen is here today. I think he has performed an extraordinary service in the interest of preserving that spirit of a working partnership and enabling legislation to be structured to keep our side of the bargain. We deeply appreciate his contribution in that respect. I think this is one of the keys to the success in working out our implementation of the treaty.
HUMAN RIGHTS PROGRESS
Another thing which the Ambassador mentioned, which I think is terribly important, is recognition of Panama's accomplishments in certain areas. I am thinking in particular of its significant accomplishments in the improvement of its human rights situation over the last few years.
There was, in my opinion, an unfortunate vote on the part of the House to cut off foreign military sales credits on human rights grounds, which I think is unjustified in the light of Panama's human rights improvement. We support the improvement that Panama has made and continue to hope to see developed further development in the future.
In conclusion, I can say that there is every reason to be optimistic about our new relationship. If we are able to implement both the spirit and letter of the treaties and if we can help through coordinated efforts of our Government agencies to maintain this spirit of collegiality between our two countries, then the way the treaty functions and the important service that the Panama Canal represents to world shipping will certainly be assured well into the future.
Thank you, Mr. Chairman.
[Ambassador Moss' prepared statement follows:]
STATEMENT OF HoN. AMBLER H. MoSS, JR., U.S. AMBASSADOR TO THE REPUBLIC OF PANAMA
Mr. Chairman and Members of the Committee: My name is Ambler H. Moss, Jr., and I am the United States Ambassador to the Republic of Panama. I am grateful for the opportunity to meet with you and the members of the Committee this morning to discuss the proposed implementing legislation for the Panama Canal Treaty.
We are rapidly approaching the date of entry into force of the Treaty, October 1, 1979. In anticipation of that date, considerable effort in planning for treaty implementation has been made by responsible elements of the United States Government as well as by agencies of the Panamanian Government. This planning activity is necessarily a complex procedure, involving not only the coordination of the Washington agencies with each other and with the field, but on the Isthmus it involves the need for a closely-coordinated approach between the American Embassy, the Panama Canal Company/Canal Zone Government, and 'the United States Southern Command.
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It is of great importance to our planning effort that the Congress act early to pass implementing legislation which not only supports the letter and spirit of the Panama Canal Treaty but which enables the planning for treaty day to go ahead by completing the legislative framework within which the Panama Canal will operate.
This morning I would like first to comment on the work in planning for the implementation of the Treaty which has been accomplished to date. I would then like to state what I feel to be the most important elements of the role of the United States Government during the period under the new Treaty, and how the implementing legislation under consideration by the Congress relates to them.
There is a great deal still to be done between now and October 1, and there are numerous difficult decisions still to be made by the United States and by Panama individually as well as together. Thus far, officials of both governments have shown a sense of practicality and professionalism in working out solutions. The Treaty contains mutual obligations to which both sides are committed, and the work being done by both countries' planners represents an honest effort to be prepared for the new Treaty arrangements. The Panamanian Government, as well as our own, is well aware of the need for the smoothest possible transition in order to keep the operation of the Canal as efficient in the future as it has been in the past, for their own country's benefit and that of world commerce.
We are fortunate in that many of the leaders of the Panamanian Government today were personally involved in the treaty process over the last few years and are therefore extremely knowledgeable. President Aristides Royo, a young lawyer who became President of Panama last October 11, was a chief treaty negotiator for Panama. He has shown a particular sensitivity toward the needs and concerns of the United States citizens who live in the Canal Zone and who work on the Canal. President Royo has visited both the Atlantic and Pacific sides of the Canal Zone where he has met with American and Panamanian citizens who live and work there. As a gesture of goodwill, he recorded a television message in English to the American residents of the Canal Zone which was broadcast on the local Armed Forces television stations on New Year's Day this year.
Numerous subcommittees made up of representatives from our two countries have been working together since mid-1978 to plan for the implementation of the Treaty on a wide range of subjects from operational transfers, such as the ports and railroads, to areas of employee and community interests, including personnel, housing, social security, utilities, the environment, and police and fire protection. Similar binational committees are working in areas of concern to our Southern Command and the Panamanian National Guard.
Certain portions of our work have been dispatched in a very timely manner. In January we signed three agreements with Panama which were called for under the new treaty relationship. These are:
A new civil aviation agreement which provides for the phasing over of our present air traffic control in Panama's air space to Panama over a five-year period, which represents a considerable cost saving to the United States.
An agreement providing for a permanent United States cemetery at the present Corozal Cemetery in the Canal Zone, over which our flag will fly and which will be administered by the American Battle Monuments Commission; and
A prisoner exchange treaty which provides procedures whereby American citizens convicted of a crime in Panama can serve their sentences in the United States and Panamanians convicted of a crime by a United States court may serve their sentences in their homeland.
It is apparent that we are already beginning to realize the benefits of our new partnership with Panama in the military field. In January and February of this year, conventional warfare exercises were held by our 193rd Infantry Brigade at the Rio Hato Military Base in cooperation with Panamanian National Guard. This military area, large in size and ideal in terrain for such exercises, is deep in Panama's interior and would not have been made available to us except under the new treaty relationship. On February 16, I accompanied President Royo on a visit to the U.S. Army School of the Americas. Given full military honors upon 'his arrival, he stated in a press conference at the School that he wished it to continue in operation after the expiration of the five-year agreement which will come into effect October 1, and he encouraged the beginning of talks between the United States and Panamanian representatives for that purpose. He has re-
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marked to me that he is proud of the fact that there have been numerous Panamanian graduates of the School, and he hopes for greater Panamanian participation in it.
Let me now turn to four elements I consider to be critical in the role of the United States Government during the period of the new Treaty.
(1) We will have the responsibility to operate, maintain and defend the Panama Canal until the year 2000. Implementing legislation will enable the United States to meet its commitments. The principal new institution which must be created by this legislation is the Panama Canal Commission. In my view, it is of great importance to follow the Administration's proposal that the Coinmission be constituted as a government corporation, subject, as is the present Company, to continuing oversight by the Congress of its activities and budget. A government corporation would not only ensure continuity in the Canal's operation, but, from a foreign relations standpoint, it would also be instrumental in bringing Panama's minority representatives on the Board of Directors of the Commission into a genuine decision-making forum on policy matters. Sharing in the process of making important managerial decisions also means that the Panamanian members would share responsibility for them.
(2) It is essential to build a working partnership between the United States and Panama. The Treaty itself assures United States' control of the Canal's operation until the end of the century. It must be recognized, however, that during the period of our stewardship, there will be continuous need for full cooperation between both governments in numerous respects, and the Canal's operation will be necessarily affected by the degree to which such cooperation exists. Under the new Treaty arrangements. Panamanians will be brought into all levels of management so that they will be prepared to operate the Canal in the year 2000. Nevertheless, the Treaty will, in the long run, be successful only if both sides regard it from the beginning as creating a partnership between the two countries. That will require an added ingredient in addition to simple compliance with the Treaty's terms-the willingness of both sides to approach the task in a spirit of collegiality. We see that spirit developing on the Isthmus today, in the detailed work being accomplished by the technical experts of both countries. The Administration's proposed implementing legislation would foster such a spirit, to the benefit of the Canal operation and to a harmonious working relationship betwN een both countries. It is, of course, equally essential that the principal United States Government agencies on the Isthmus continue to coordinate their efforts fully and work together in a conscious endeavor to promote the spirit of collegiality between the two countries.
The corporate structure proposed by the Administration would best convey the concept that the Canal be operated as a business, on a self-sustaining basis, and that the proper provision for maintenance be made in its financial structure. Panama has a large number of highly qualified people both in technical and managerial areas, a great many of them with university degrees from the United States. It is important, however, that Panamanian personnel be given the opportunity to work as closely as possible with their U.S. counterparts in all aspects of Canal management so that the institutional knowledge that we have concerning the Canal's operation be transmitted to them well in advance of the year 2000. It is essential that our Embassy, the new Commission, and the U.S. Southern Command keep this long-range perspective in mind during the coming years as we phase into the new treaty relationship.
(3) We must safeguard the interests of United States citizens. Both the Administration bill (H.R. 1716) and the bill introduced by the Chairman of the House Merchant Marine and Fisheries Committee (H.R. 111) contain numerous provisions relating to the conditions of employment and to the quality of life of the U.S. citizens presently living in the Canal Zone. Governor H. R. Parfitt has given extensive testimony on this subject to the Post Office and Civil Service Conmittee and to the Merchant Marine and Fisheries Committee. I wish to associate myself with the Governor's testimony, and to state that I feel that these provisions are essential to preserve the morale of our citizens working in the Canal enterprise. Although the great majority of them did not favor the Treaty, they are devoted to their work on the Canal and wish to stay if the terms of their employment and the quality of life in their communities remain similar to those which they enjoy today. Many of them are apprehensive about the future, partly because they need to be assured of Panama's goodwill and sensitivity toward
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their concerns. Our Embassy, along with the Panama Canal Company and the U.S. Southern Command, is very mindful of this concern as are the representatives of the Government of Panama, and we are working together to provide our citizens with the assurances they desire. We must always bear in mind that these citizens are not like other Americans living in a foreign country, as their expectations have always been to remain under U.S. jurisdiction. The new treaty relationship involves a certain psychological adaptation. A second reason for their concern, however, is the notion that "Washington"-by which they mean both the Legislative and Executive Branches-may no longer care about them and may not provide for them in the ways promised in the Treaties. In this respect, the provisions in the proposed implementing legislation are of critical importance. It is in the best interest of the continued efficiency of the Canal that these loyal employees and citizens be treated fairly, in recognition of the significant role they played today as well as the valuable contributions they have made in the past.
Our citizens are undertaking an additional, and highly essentially mission; that of training Panamanians to assume increasingly greater responsibility in Canal organization. Many of the Americans in the Canal Zone, notably our Canal Zone pilots, have already indicated that they take this mission very seriously and have responded to the challenge in positive and creative ways. I should also point out that, for the first time, our Embassy will have a significant role to play in looking after the welfare of these citizens. In order to let them know that the Embassy will be safeguarding their interests in the future, we have been attempting over the last few months to increase our contacts with them and their civic organizations, and I have designated a recently-arrived officer, Mrs. Antoinette Marwitz, as my special assistant for community relations. We will be attempting to make sure that all of our citizens know her name and telephone number, and that they feel free to contact her at any time with any matter in which the Embassy may be helpful.
(4) We should support Panama's efforts to improve its economy. I feel it important that we recognize that the country of Panama, because it is the environment in which the Canal operates, is of increasing interest to us, and we should make a special effort to assist Panama's private sector and government, in a non-interfering way, to develop its economy. Part of these efforts will involve a close relationship between the Embassy and Panama's private sector, the continuation of a solid AID program designed to assist the development of the poorest sector of the population, and a continued program of working with and consulting closely with the many American business firms which operate in the Republic. At the same time, we expect that the Panama Canal will continue to be the country's largest single source of revenue in future years. The payments which Panama will receive under the new Treaty are dependent largely upon the tonnage which flows through it. Panama thus has a direct stake in the efficiency of the Canal. The cooperative relationship between the two governments, in turn, will have an impact upon that efficiency. Again, therefore, it is important that the Congress enact implementing legislation which will be conducive to the spirit of partnership which is implicit in the new Treaty. This would mean continuing to require that the Canal be operated as a self-sustaining business, but structuring the new organization to keep tolls at a reasonable level.
In conclusion, Mr. Chairman, let me say that I believe there is every reason to be optimistic about the success of our new treaty relationship. A new government in Panama took office last October which is composed of young, energetic, highly-educated people who are determined to make their country an economic and social success. They have expressed a policy of vigorous stimulation of the private sector and have extended an open invitation to private foreign investment. An important part of their program is continued cooperation with the United States. They have demonstrated sensitivity to the concerns of American citizens who live in the present Canal Zone. If we are able to implement both time spirit and letter of the Treaties both with respect to Panama and to our own employees, and if we can help, through the coordinated efforts of our government agencies, to maintain a true spirit of collegiality between both countries, the important service to our country and to world shipping provided by the Panama Canal will be assured well into the future.
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PROTECTION OF U.S. CITIZENS
Chairman ZABLOCKI. Thank you, Ambassador Moss.
Ambassador Popper, in your prepared statement you refer to the exemption of the Administrator of the Panama Canal Commission and' personnel under his supervision from the direction or supervision of the Ambassador with respect to the Commission's operation, management or maintenance of the canal. Considering this provision, that is section 102(b) of H.R. 1716, would this prevent the Ambassador from carrying out his responsibility for protection of U.S. citizens?
Mr. POPPER. No, sir, it would not. The intent has been to make sure that each of the three American authorities in the isthmus could devote himself to the proper exercise of his authority. As I have stated,. an arrangement has been worked out, that will permit the Ambassador to exercise his authority as regards the transfer of functions to Panama, and in general, with regard to his activities as the representative of the President of the United States in that country. That arrangement would at the same time, safeguard the particular interests of the other two officials.
Chairman ZABLOCKI. Under the provisions of both bills, who would' have the ultimate authority during war or when war is imminent to protect U.S. citizens if a dispute arose over the Ambassador's aim to protect U.S. citizens by an evacuation procedure versus the Administrator's claim that the presence of the personnel would be crucial to the operation, management or maintenance of the canal-who would prevail?
Mr. POPPER. In case of a difference of opinion in matters of that kind it would be normal for a decision to be made in Washington. That is to say, under our guidelines, full information will be ex-changed between these officers as to activities and steps being taken. If there were a conflict about a subject of that kind it would be a matter, in my opinion, for a Washington decision.
Chairman ZABLOCKI. Would this also apply under Chairman Murphy's bill where he provides for the Secretary of Defense, as the Chairman of the Commission that is if a conflict of authority were to arise that it would be resolved in Washington?
HUMAN RIGHTS REPORTS
Mr. POPPER. If there were a conflict which could not be settled on the isthmus there would be recourse to Washington.
Chairman ZABLOCKI. Mr. Ambassador, you mentioned in your prepared statement and you have also referred verbally to the human rights in Panama. Would you comment on the various human rights reports of Panama which differ markedly in their conclusions the Organization of American States (OAS), the Department of State, Freedom House and Amnesty International who are not in unanimity as you well know. If suddenly there were serious allegations of human rights violations, how would this affect the implementation of our treaties and our relations with Panama? First I would like your assessment of why these reports differ so much.
Mr. POPPER. Mr. Chairman, I suppose people looking at a complex political process can draw different conclusions from it. I do believe
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that one of the problems is a lag in appreciation by outside authorities,. particularly unofficial organizations, of changes which have taken place and are taking place within a country. It takes some time I think for that to get through to people outside.
For example, I note that Freedom House in its latest report has now changed quite substantially its estimate of the state of human rights in Panama, because the steps taken in 1977 and 1978 have made a distinct difference within the country. Freedom House in its latest report is catching up with that set of developments.
You will note the critical comments made by the Inter-American Human Rights Commission. Moreover, they refer in particular to the period 1968 to 1974. The Commission recognizes that there have been considerable improvements since that time. So I would say that the problem is one of lag in appreciation of things that have gone on in recent years.
The latest human rights report of the Department of State, one of the annual reports we submit on countries in which there are human rights problems, makes fully clear the broad sweep of the improvement that has taken place within the last 2 or 3 years in Panama.
I would suggest, Mr. Chairman, that perhaps Ambassador Moss who is familiar on the spot with these developments might wish to comment on this point.
DIFFERENT CATEGORIES OF HUMAN RIGHTS
Ambassador Moss. Yes, Mr. Chairman, I think one also has to separate the different categories of human rights considerations. If we look at such things, for instance, as respect for the integrity of the person of things such as arbitrary arrests, torture, things of that sort, we find that in all of these reports Panama comes out, in recent years, with very high marks. Certainly we do not know of any incidences of torture or anything like that which was practiced in Panama in 1978.
Another important aspect of human rights I think which should not be overlooked is the delivery to the population, particularly the poor sectors, of the means to meet vital human needs. I am talking about things like food, shelter, health, and education. That is an important consideration. I think Panama has a rather good record.
Freedom House and some other organizations center their attention on respect for civil and political liberties. Here again, while there is: some way to travel, Panama's record is rather good. It has taken specific steps during the last year to create a greater sense of openness and freedom of expression; it has mended its press censorship practices and permitted freedom of association. Political parties are now legalized and organizing and the legislative process is liberalizing to the point where at least by 1984 there will be a full popular direct election of the president.
Certainly the Panamanian Government's receptiveness toward human rights investigations and human rights visits has been notable. They have welcomed the Inter-American Human Rights Commission. They are always open and willing to discuss and show their prisoners in jails and things of this sort. That too certainly is an improving area.
Amnesty International, I might note again, in this year's report, as for several years, does not even contain a chapter about Panama. It
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does not consider Panama a serious human rights offender in that respect, although as you do note there are some other mixed reports in other areas. But I think we have to look at the different categories of human rights to examine that.
Political exiles is another area. Well over a year ago old political exiles were invited to return, and most of them have done so. Some of them in fact are antigovernment people who go around holding rallies and meetings apparently with complete freedom, although they complain sometimes about their access to the press and access to the media. Nonetheless, there is no attempt to silence them. So I think in that respect it is an improving picture.
I think it would be a great mistake to portray Panama as a great human rights offender in Latin America because I think in the whole Latin American panorama Panama comes out really at the rather good end of the spectrum.
EFFECT ON TREATY
Chairman ZABLOCKI. Just very briefly, if the situation should change what effect would it have on our treaty?
Ambassador Moss. If the situation changed, which I very much doubt, I think that it would obviously be more difficult to operate in Panama, simply because the atmosphere in which people live and work is terribly important. That is why, of course, we support the kind of progress the Government has made. I think that the living conditions, the quality of life, all of these things are terribly important to our citizens and employees who live there. The Panamanian Government has been and should be very sensitive to that.
Chairman ZABLOCKI. I have no other questions. My time has expired.
I might advise the members that at the time we began the meeting there were four members of our minority party. After Mr. Winn, since Mr. Ireland has left, I will have to call each one of them before calling on the majority side.
Mr. Winn.
SECTION 107. PAYMENT TO PANAMA; REPEALER
Mr.WINN. Tbank you, Mr. Chairman.
Either one of you gentlemen might care to comment on this question concerning section 107. As I understand it, under current treaty arrangements the annual annuity payment is subject to congressional authorization and appropriation.
Mr. POPPER. 107 of the administration bill?
Mr. WINN. Section 107, the repeal dealing with payments.
Mr. POPPER. That refers to the annual payment which is now made prior to the coming into force of the 1977 treaties. That payment made since the 1955 treaty was signed, amounts to total sum of about $2,300,000 a year. That will no longer be made. Payments to be made to Panama under the 1977 treaties will be different-coming from canal revenues-and of course considerably larger.
Mr. WINN. What I was mainly interested in, following my earlier line of questioning this morning, was in trying to figure out what role Congress vill play under the new treaty in the annual oversight of the payments to Panama. Do we still retain some jurisdiction or do we still play a part?
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CORPORATE VERSUS APPROPRIATED FUNDS AGENCY
Mr. POPPER. Yes, sir. In a portion of my statement which I did not use this morning because of considerations of time, I discussed the two different approaches to the question of congressional control of the operation of the Panama Canal Commission.
In the administration bill we have opted in favor of a continuation of the corporate form under which the Panama Canal Company now functions as a government corporation under the Government Corporation Control Act of 1947. The company has operated in a most praiseworthy manner for many years and has been subject, of course, to the controls which are exercised in the case of Government Corporations-oversight by the Panama Canal Subcommittee of the House Merchant Marine and Fisheries Committee; the company's budget subjected to the appropriations process in the Congress; and its finances audited by the General Accounting Office.
The House Merchant Marine and Fisheries Committee has preferred and adopted in its bill the thought that the Commission would be subject to greater congressional control as an appropriated funds agency. In general, under that system, as you know, all expenditures would be subject to appropriations and all income would go into the U.S. Treasury.
Mr. WINN. According to the February 17, 1979, congressional quarterly they said that there are still some main issues in dispute. They list the Canal Commission structure, the Commission membership, the transfer of U.S. property and the payments to the United States.
Now you have discussed between the three of you parts of that, most of which I read as I scanned your full-prepared text. Could you just give us a brief idea how you are coming along with the differences there and which ones you consider still to be the main problems.
Mr. POPPER. Yes; as the gentleman has indicated, there were a considerable number of differences between the original bill prepared in the House Merchant Marine and Fisheries Committee and the administration proposal. As a result of the hearings and the markups in the Panama Canal Subcommittee and the Merchant Marine and Fisheries Committee a number of those difficulties have been overcome. We felt, for example, that in some respects the Merchant Marine and Fisheries Committee did not fully understand the import of some of the treaty provisions or the way in which they ought to be applied in law.
DIFFERENCES RESOLVED WITH H.R. 111, TO DATE
Let me give just a few examples of points at which we had differences which are now overcome. Under the bill prepared in the House of Merchant Marine and Fisheries Committee there was a provision for a code of conduct which would have subjected Panamanian members of the board of directors to American law with respect to their conduct, their ethics, and so on.
The Merchant Marine and Fisheries Committee, has adopted, with our approval, a provision whereby the two governments will work out a mutually acceptable code which we think should be substantially equivalent to our own, and then each apply it to its own nationals. That is one area.
45-853-79-3
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As another example, the Murphy bill, H.R. 111, proposed in effect that the United States should manage and decide on the organization and procedures of what are basically binational deliberative committees, the Joint Commission on the Environment and the Consultative Committee to consult upon policy questions. Those should be two joint commissions with each country having an equal representation and an equal input. We now have managed to work out that sort of problem.
The original bill, H.R. 111, provided that the Senate of the United States should confirm the Panamanian as well as the American members of the commission's board of directors. It really is not appropriate for us to exercise a veto over the Panamanian members any more than it would be appropriate for the Panamanians to exercise a veto over ours.
OTHER ISSUES REMAIN UNRESOLVED
Those are examples, sir, of ways in which problems which we saw with the original H.R. 111 have been ironed out. I would not pretend that there are not still problems. You and I have mentioned some of them. There also is the question whether the agency, the Commission, should have a corporate form of organization or be an appropriated funds agency.
There are various other problems which we still have with the bill, but we have been working many of them out as the bill has proceeded through the congressional procedure.
Chairman ZABLOCKi. The time of the gentleman has expired.
Mr. Ireland.
Mr. IRELAND. Thank you, Mr. Chairman. I would like to yield the balance of my time to the gentleman from Mississippi, Mr. Bowen.
Mr. Bowen.
Mr. BOWEN. Thank you. Let me thank Ambassador Moss for his kind remarks about my efforts in the Panama Canal Subcommittee and the Merchant Marine and Fisheries Committee in attempting to draft legislation that is consistent with the treaties and at the same time establishes a substantial congressional role for oversight and for sound management.
SCENARIO OF NO IMPLEMENTING LEGISLATION
I have one question in particular that I would like to direct to Ambassador Popper. I have talked to several of my colleagues around the House. I think there is a general misunderstanding on the part of Members of Congress and certainly in the American public as to what exactly will happen if there is no legislation passed here. Unfortunately a great many of our colleagues still are acting under the presumption that if this legislation is defeated we will somehow get the canal back.
I wonder if you could simply give us a little scenario of what would transpire there, starting October 1 of this year, if we do not have legislation? What would be the fate of the Panama Canal for the next 20 years until the year 2000 if we fail to pass legislation in the Congress?
Mr. POPPER. Congressman, if there should be no legislation when October 1 rolls around we would be in most serious difficulties. The
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treaty has been ratified and the exchanges of ratification became effective on April 1 of this year so that we are now bound, as a sovereign nation, to fulfill the commitments laid out in the treaty. On October 1, 1979, that treaty will go into force.
If there were no legislation then we would find it most difficult to carry out our obligations and fulfill our responsibilities. That is why we need legislation.
Mr. BOWEN. In other words you are saying the Panama Canal Company will cease to exist on October 1, there will be no commission in existence to administer the canal, and therefore there will not be any management structure whatsoever to operate the Panama Canal?
NO MANAGEMENT STRUCTURE TO OPERATE COMMISSION
Mr. POPPER. There would be no management structure, and there would of course be the greatest difficulties with the employees, whose future would not have been arranged for under provisions of law. So it is difficult for me to see how the canal could continue to operate.
I would prefer that, perhaps you might want to ask that question of the Department of Defense and Department of the Army representatives who are more familiar with the actual day-to-day operations. They will, I am sure, outline for you a scenario of the enormous difficulties and problems which would occur as we tried to keep the canal going.
TREATY DOES MAKE PROPERTY TRANSFER
Mr. BOWEN. I think this is important for the members to understand that the treaty does make the transfer. The treaty has been ratified and the canal will come under the direct control of the Republic of Panama in the year 2000. There are 20 years lying before us which are subject to management by the United States. If we have no structure for management, it is very difficult for me to see how we could carry on the operation of the canal.
In fact, I see this issue somewhat as similar to one we have dealt with in this committee earlier, that is the Taiwan-People's Republic of China issue. There are a great many people who were unhappy about the decision that the President made with regard to the People's Republic of China, but once that decision was made, even those most proTaiwan partisans among us decided that the legislation before us had to be passed.
I am very hopeful that Members of Congress will view this legislation in the same sense, whether they are opposed to the treaties or not, and quite possibly a majority of the Members of the House was opposed to the treaties. I frankly happened to have been opposed to the treaties, but I happen to feel at the same time that the legislation is absolutely essential if the canal is to operate in the interests of national security and the commercial progress and the well-being of this country. So that is why I posed that question to you as what would happen if we do not get legislation.
Mr. BONKER. Would the gentleman yield?
Mr. BOWEN. Certainly.
Mr. BONKER. I would like to commend the gentleman from Mississippi for his eloquent plea for the implementing legislation. I have
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observed his work in another committee, Merchant Marine and Fish eries, which also has jurisdiction. I would like to ask the gentleman what he foresees as the likely impact if legislation passed yesterday in the Merchant Marine and Fisheries Committee is approved by the, House of Representatives.
Mr. BOWEN. There are some problems in that legislation.. There are some items in it which I think our witnesses this morning have already discussed, that I happen to agree with them on, as being inconsistent with the treaty. I offered amending language in Mei ehant Marine and Fisheries to a number of points in the bill. Several of these amendments were adopted; several of them were rejected. As to what the long-range legislative strategy might be for accomplishing some of those changes, that will have to be determined. But I think there is a lot that is good in that bill.
DEFENSE OF THE CANAL PROVISION
Insofar as the responsibilities of this committee are concerned, title I, I happen to agree completely with the recommendation of Ambassador Popper that the language which is in the draft before us be adopted. I am not sure everybody has a copy of that language. I know that Mrs. Fenwick was asking a question about it, and also Mr. Ireland. The language concerns the wartime authority provision. That is the most controversial item, and I think it is very sound language in that it helps to achieve what many of us want, which is a strong hand at the helm in time of war. But at the same time does not do violence to the treaties. I think this language is written just about as clearly as can be to authorize a military commander to exercise the authoritythat he feels necessary to secure the continued operation of the Panama Canal.
That would include keeping it open, whatever he might have to do to insure that it stays open.
I hope that answers Mr. Bonker's question.
Chairman ZABLOcKi. The time of the gentleman has expired.
The Chair will recognize the gentleman from Pennsylvania, Mr. Goodling.
Mr. MICA. Mr. Chairman, I would like to ask, without objection, to submit questions in writing. I will have to leave at this time.
Chairman ZABLOCKI. If there is no objection, yes; the gentleman from Florida does have that privilege of presenting his questions to the witnesses. They will be included in the record.
[Material subsequently provided follows:]
Question. What would be the effect on the treaties if this implementation legislation was not passed by the House?
Answer. The Panama Canal Treaty and the Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal were signed September 7, 1977 by President Jimmy Carter and Panamanian Head of Government Omar Torrijos. The Treaties were subsequently approved by the Senate of the United States according to our Constitution. The instruments of ratification became effective on April 1 of this year and the Treaties will enter into force on October 1, 1979. On October 1 the United States will have specific international legal obligations and rights under the Treaties. The absence of domestic legislation does not free the United States from the Treaties' obligations. It would, however, impair our ability to operate and defend the Canal.
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Without legislation:
(1) Our rights under the 1903 Treaty will have terminated and we would have no legal framework for the exercise of our right to operate the Canal under the 1977 Treaty;
(2) There would be no established U.S. agency to operate the Canal. The present Panama Canal Company would be prohibited from operating and the Panama Canal Commission called for by the Treaty would not be established;
(3) We could not transfer to the Department of Defense the three thousand Canal employees needed to operate the schools or provide health services for our personnel in Panama. Large numbers of employees would probably leave;
(4) Serious disruption of the Canal work force likely would occur, producing severe labor unrest and work stoppages; and
(5) Finally, Panama could charge the United States with bad faith and breach of our commitments; it might then refuse its cooperation under the Treaty.
Question. What action, if any, could the Foreign Affairs Committee take that would negate the treaties?
Answer. The Treaties do not provide for unilateral termination by either party. There is, therefore, no action which the Foreign Affairs Committee or the Congress can take which would "negate" the Treaties.
Question. If this legislation is approved, is there any chance for renegotiating the treaties before the year 2000?
Answer. Treaties can always be renegotiated if the parties thereto desire. However, the Administration does not contemplate renegotiating the Treaties before the year 2000.
Question. Could you suggest a new procedure in treaty approval which would allow for better coordination between the ratification of a treaty by the Senate and the implementing legislation of that treaty by the House?
Answer. While we have no specific suggestions we do wish to note that during the period in which the Senate was considering the Treaties prior to giving its advice and consent, the Administration's draft proposed legislation was made available to members of both Houses of the Congress and it was printed in the Congressional Record. The Administration's proposed legislation, H.R. 1716, which was sent to the Congress by the President on January 21 of this year, was identical in almost all material respects with this earlier draft.
Mr. MICA. Thank you,
COSTS OF TREATY IMPLEMENTATION
Chairman ZABLocKI. Mr. Goodling.
Mr. GOODLING. Ambassador Popper, from the very beginning I had no problems with coming up with a new Panama Canal Treaty. I indicated there were four areas that I would want covered: One, that we could go to the head of the line in case of war; two, that we would not only have the opportunity but the responsibility to keep the canal open; three, that we would not forget all of those faithful employees that were there; and fourth, that it would not cost the American taxpayers 1 dime.
I was assured time and time and time again in writing and by all of those who testified before this committee that all four of those provisions were met, and I specifically zeroed in on the fourth one. I have in writing from ambassadors negotiating, from the State Department, and then of course in the testimony, which will indicate their responses to those questions.
I had no trouble with the first treaty when the Senate approved it. Then we got to the second, and I became so confused as to what I had been told in all of our hearings and what I was hearing from the Senate hearings and their final ratification, that I would now like to know what does it cost the American taxpayer to implement the treaties which I was told would always come out of the toll? I ask
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that question because on page 9 you say, "It is now proposed that all costs to the U.S. Government of the treaty implementation should be added to canal expenditures." That was the way it was told at least a dozen times to us that it would definitely come from the tolls.
MISUNDERSTANDING REGARDING COSTS
Mr. POPPER. Congressman, may I review for a moment what happened in this regard last year. It is true, I think, that a misunderstanding arose as to what various representatives of the executive branch had said in 1977 with respect to the cost of implementing the Panama Canal Treaty. The formulation which it was intended to convey
Mr. GOODLING. Excuse me. May I just interrupt a second? There was no question in my mind as to what they were saying. They said positively it would come from the canal tolls. There was no question in my mind.
Mr. POPPER. Congressman, I am trying to explain what it was they intended to convey. Maybe they did not succeed.
Mr. GOODLING. That is different.
TREATY PAYMENTS FROM TOLLS
Mr. POPPER. What they intended to convey was that payments to Panama under the treaty, which is the first year of the treaty's operation might amount to, say, $75 million, would come from canal tolls. It was not intended to state that there would be no cost whatever to the United States for making those adjustments which we are going to make in our own interest in order to put the treaties into effect.
It is simply not reasonable to believe that you would without incurring some costs transfer jurisdiction back to Panama over the Canal Zone, move American military and other elements about within the more restricted area in which we will operate, establish a situation in which Panamanians gradually replace American employees over 20 years and American employees come down for fixed, temporary periods of time; and give the Department of Defense the task of running the Government services, schools, hospitals, and other community services, which the Canal Zone Governments previously did.
Unfortunately, we will have to meet some costs. I think, as I said, that the money will be spent for things which are in our national interest. The costs are by no means out of proportion to the political gains that we obtain from the settlement of the longstanding Panama Canal Treaty problem and the inauguration of a new phase in United States-Panamanian relations.
Mr. GOODLING. I have no problem with what you outline. I could not see how it could be done either. That is why the entire group always got the same answer; that all moneys would come from the tolls needed for implementation and for carrying out the Panama Canal Treaty.
All the testimony would indicate that and so I am anything but pleased that it was not told to us the way it was from the very
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Mr. POPPER. I understand, Congressman. We have been at pains because of the problem you have just indicated to work very carefully on the subject of costs and to estimate, as best we can, what this burden would be. We have a recent paper on the subject. I do nrt know whether this committee wishes to make it a part of its record or not but it is a part now of the record of the Panama Canal Subcommittee.
NATIONAL GUARD/MILITARY ASSISTANCE
Mr. GOODLING. I have one other question. Again, during the testimony I think the Ambassador Bonker and others time and time again referred to the National Guard as really being the National Police Force. If that is true then section 660 of the Foreign Assistance Act prohibits us from giving any funds for the purpose of training or improving police activities. It goes back to the human rights argument because they do not want it used to beat them over the head.
If we give $50 million in military aid to increase their ability to protect the canal, or whatever it is supposed to do, does that not then go to those National Guard "National Police" and then is there a conflict with the American law?
AID FOR MILITARY UNITS, NOT POLICE EQUIPMENT
Mr. POPPER. The National Guard is in effect a dual purpose organization. It has both the task of national defense and the task of exercising police authority.
The things that would be done with the foreign military sales credit money which you have mentioned, which is contained in a separate side agreement, would be related to the defense of the canal as the National Guard gradually prepared itself for the assumption of authority for that defense. The Guard will, at the end of the treaty period, have the task of local defense. It will increasingly prepare that task between now and then.
Our assistance under the $50 million provision will go only to the military units of the Guard, not for police equipment, not for that sort of thing.
Mr. GOODLING. Somehow or another we will do much better than we have ever done in any other country to make sure that is the only way it will be used and there will be no human rights problem.
Mr. POPPER. As a matter of interest, Congressman, the Guard has shown considerable interest in getting the kind of dual-purpose equipment that can be used for civic action purposes in helping the country along. Their intentions are completely honorable.
Mr. GOoDLING. Just one other statement. Don't worry about all of the noise that you hear. It is my colleague, Congressman Hansen, who is trying to break up the hearing.
BOARD OF DIRECTORS OF THE PANAMA CANAL COMMISSION
Chairman ZABLOCKI. Mrs. Fenwick.
Mrs. FENWICK. Thank you Mr. Chairman. I have a couple of questions.
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We are working, unfortunately it seems to me, with copies of the bills that are not similar to the ones you are working with. We suddenly have on page 12 a reference to a Board of Directors which will manage the affairs of the Panama Canal Commission.
Chairman ZABLOCK1. Will the gentlewoman yield? ) I should have announced earlier that we do have another set of witnesses and I would hope that the members would stay or come back.
Mrs. FENWICK. Well I am here.
Chairman ZABLOCKI. Well you and I are here. We count.
Mrs. FENWICK. Who are these directors? What are their powers? You have not discussed them as far as I know. I thought the Commission was going to run it with an Administrator.
Mr. POPPER. The Commission was considered as a successor to the Panama Canal Company, which is organized with a president, stockholders, a Board of Directors, and so on. Therefore it is organized in a similar form with a Board of Directors in which, as you noted earlier; the American contingent constitute a 5 to 4 majority.
Mrs. FENWICK. I am not making my question very clear I am afraid. Is the Board of Directors a separate body from the Commission? I gather from this that it is because it says here, "Working capital arrangements of the Commission as approved annually by its Board of Directors.
In other words the Commission is going to have a Board of Directors?
Mr. POPPER. The Commission is an operating agency which operates under the executive leadership of the Administrator and the Deputy Administrator, with a Board of Directors.
Mrs. FENWICK. I am not making my question clear.
As I understood the structure you said the Commission was to set policy and the Administrator was to supervise the day-to-day operations. You did not mention a Board :of Directors. Who are they and what are their powers?
Mr. POPPER. The Board of Directors is a policy board, as we conceive it.
Mrs. FENWICK. Are they separate from the Commission?
Mr. POPPER. As I see it, they bear the same relationship to -the Commission, as the Board of Directors of a large American corporation would bear to the corporation.
Mrs. FENWICK. Mr. Popper, what is the point of having both? You said earlier that the Commission was going to set policy and the Administrator would do the day-to-day operations. What are the directors going to do?
Mr. POPPER. I think what I said, Mrs. Fenwick, was that the Board of Directors was a policy board.
Mrs. FENWICK. You never mentioned Board of Directors.
Mr. POPPER. I am sorry. I should have in that case.
Mrs. FENWICK. The Commission is not going to set policy then?
Mr. POPPER. The Commission is the organization which operates the canal.
Mrs. FENWICK. What does it do?
Mr. POPPER. It takes care of the labor force, keeps the canal open and going.
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Mrs. FENWICK. In other words the Board of Directors is above the Commission?
Mr. POPPER. It is a part of the full structure but exercises its policy advisory- I am sorry if I do not quite understand.
Mrs. FENWICK. A policy board, generally speaking, is about an operating board and you are saying that the Commission is an operating board and the Board of Directors is a policy board. Is that correct?
Mr. POPPER. The Board of Directors is a policy board. The Commission is the operating agency which, as the Governor has just mentioned, has a total work force of some 8,000 people.
Mrs. FENWICK. We are talking about the Commission. That has how many members?
Mr. POPPER. The Commission is a word which is equivalent to the word "Panama Canal Company."
Mrs. FENwIcK. How many members will the Commission have?
Mr. POPPER. The Commission consists of the Administrator, the Deputy Administrator
Mrs. FENWICK. How many members?
Mr. POPPER. A total work force of about 8,000.
Mrs. FENWICK. But the Commission, they are not all members of the Commission.
Ambassador Moss. Maybe I can help clarify that. The Commission is simply the word which relates to the entire organization. The Commission is not a body of people. It is like a corporation. The Commission is like the present company.
Mrs. FENWICK. In other words, when we speak about those five Americans who are going to stand up for whatever the President tells them to do, they are going to be members of the Board of Directors, not members of the Commission?
Ambassador Moss. That is right. They are members of the Board of Directors of the Commission. The Commission itself is the operating agency.
It is a little confusing because it is called a Commission and that usually means a group of people.
Mrs. FENWICK. It does. It certainly did to me.
Ambassador Moss. In this particular case the Commission is a company.
Mrs. FENWICK. In the questions of Congressman Winn the Commission was referred to. We never heard the word "Board of Directors" before.
Ambassador Moss. Literally speaking, there are 8,000 employees in the Commission.
PRIVILEGES AND IMMUNITIES
Mrs. FENWICK. Why are we sending 20 officials down there? That sounds, to me, like a rather cushy job, when we are only going to have five members of the Board of Directors.
Mr. POPPER. The point of that particular proposal, Mrs. Fenwick, is a little bit different. The objective is to insure that the leading officials that we send down there should be free of the
Mrs. FENWICK. Yes; I am all in favor of that, but why 20 if we only have 5?
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Mr. POPPER. The question was, how far down the line you should go in granting these privileges and immunities. It is a question with every diplomatic organization as well. The general solution is just to cut it off at some point.
Mrs. FENWICK. Mr. Ambassador, what line are you going down? Are you going down from the Board of Directors into the members of the Commission? What line are you going down? That is what I I am trying to find out.
Ambassador Moss. Let me explain what we are willing to do in negotiating the treaty, which was to establish that a certain number of employees would have diplomatic status as if they were diplomats.
It would really be up to perhaps the Administrator and the Board of Directors to decide exactly what persons, what employees of the Commission, had that diplomatic status. It might be they should have it because of particular sensitive jobs which they hold.
These are not 20 additional people. It is simply that 20 of the people in the Commission, on account of the sensitivity of their work or on account of the vulnerability of their position, ought to have diplomatic status.
ATMOSPHERE IN PANAMA
Mrs. FENwIcK. Thank you, Mr. Moss. I understand.
One more thing I wanted to ask because my time is beginning to expire, at the time the treaty was signed there was a great deal of opposition in Panama, as I remember reading in the newspapers, and even a little rioting and a feeling that Panama had gotten the very small end of the stick.
Has the feeling improved at all among the people of Panama?
Ambassador Moss. Yes; it has. I would say the feeling has enormously improved. The treaty, not surprisingly, had difficulty in Panama for the same reason that they had difficulty here but for opposite reasons.
I think the difficulties the treaties had in both countries show that it was a pretty fair bargain. But the atmosphere is very good right now.
Mrs. FENWICK. Thank you.
ANY AID-LEVEL COMMITMENTS?
Chairman ZABLOCKI. Mr. Pease.
Mr. PEASE. Thank you very much, Mr. Chairman.
I would like to thank our two witnesses this morning for some really excellent testimony. It has been very helpful.
The question is often asked of me what commitments of any kind remain to Panama in connection with the treaty. My general understanding is that there were no commitments made. I would like you to tell me whether that is true or not and whether the administration, while not making a definite commitment, did undertake or represent that it would seek any particular level of aid, military or development, in connection with the treaty.
Mr. POPPER. There are no unpublished or secret commitments or anything of that kind. In connection with the Treaty, an exchange of notes was concluded with respect to a package of economic and military assistance composed of loans, credits and guarantees and in-
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cluding such things as guarantees for housing construction, overseas private investment corporation guarantees, military sales credits to which we referred a while ago, and so on.
Mr. PEASE. How about economic development aid?
Mr. POPPER. We have an ongoing program but there were no commitments as to the size of that program in the future.
Mr. P'EASE. Did the understanding which the U.S. administration reached with Panama specify any amounts of military aid or housing credits or whatever that the administration would seek to get from Congress?
Mr. POPPER. Yes, sir. As I indicated, the exchange, of notes does contain a maximum total, if you add it all up, of I think $345 million over a 10-year period, including Export-Import Bank loan authorizations, the OPIC guarantees, the housing guarantees, and the military assistance credits. Those are target figures, and it is quite clear at the moment that they may not be fully reached.
Mr. PEASE. Do the officials of Panama fully recognize that those are commitments by the administration to seek those levels of aid rather than a commitment by the United States to provide those levels of aid?
Mr. POPPER. The language of the notes is quite clear in that regard. I also should point out that none of this is grant money.
Ambassador Moss. Let me just add to that, Mr. Pease. Yes; the officials of the Government of Panama certainly do understand that point, that it is not a quid pro quo for the treaty. It has to come out of available funds and is subject to legislation. It is simply something that the administration would seek to obtain but that it had no obligation to obtain.
Chairman ZABLOCKI. Will the gentleman from Ohio yield for just one moment?
Mr. PEASE. I would be happy to yield to my chairman.
UPCOMING FLOOR VOTE ON ECONOMIC AID
Chairman ZABLOCKI. Since the gentleman had in his question inquired as to the economic and military assistance to Panama, I would like to pursue that matter further. As you know, we will be dealing with the economic assistance program on the floor this afternoon. It is very likely there will be an amendment to strike all the $12 million in economic assistance to Panama. What impact would that have ?
Ambassador Moss. Mr. Chairman, I think that would be an extremely unfortunate occurrence. I believe the AID program in Panama is one we can be very proud of. It delivers many services and basic human needs to the poorest sections of population. It is somethink that has been praised by Congressman Clarence Long when he was in Panama recently, as being an outstanding example of how AID programs should be run.
It delivers services to the people. I think that if it were to be deleted on any grounds which I can imagine, it would be really a gratuitous insult to Panama. The deletion of AID assistance would be seen by them obviously not as a commentary on the need for an AID program, or the way in which it has been handled, or the manner in which Panama has been cooperating-which has been in an excellent way.
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It would really be a most unfortunate signal from Wasington. I think would cause us serious problems in the atmosphere in which we are trying to plan for treaty implementation.
Chairman ZABLOCKI. I want to pursue this further. If for whatever reason this cut will be proposed. indeed it would not punish the Government of Panama it would punish the people.
Ambassador Moss. It would punish the people, that is correct. The moneys are being used for things such as the construction of housing, health facilities, family planning and activities which go to watershed protection.
I would also say, Mr. Chairman as Ambassador Popper has just reminded me, that it would be unfortunate from the standpoint of our own self-interest. There is a $10 million loan which we are in the process of authorizing, which would protect the watershed in the Panama Canal basin. This activity would arrest the deforestation in the Isthmus and replant trees. That program is terribly important from the standpoint of preserving the rainfall which we need to fill up the lakes and dams and keep the canal running.
So that watershed protection loan, which is a large AID item, is of direct benefit to the United States and to our operation of the canal.
TOTAL COSTS UNDER THE TREATY
Chairman ZABLOCK1. If the gentleman will further yield for the record.
Ambassador Popper, is the total amount over the lifetime of the treaty period $400 million?
Mr. POPPER. $345 million in total.
Chairman ZABLOCKI. Could that be interpreted as the total cost of the treaty ?
Mr. POPPER. No, sir, I do not think it could. This is a group of measures of assistance through loans, credits and guarantees, which was worked out as a best-efforts endeavor on the part of the United States in connection with the treaty. It stands apart from the Treaty, though negotiated at the same time. These are not costs under the Treaty. Chairman ZABLOCKI. Could you give us a ballpark figure? We will be asked that. Can you give a best estimate as to what will be the cost of the treaty?
Mr. POPPER. The cost of the treaty to the United States Treasury? Chairman ZABLOCKI. To the people really.
COST ELEMENTS
AMr. POPPER. Yes, or the United States people, of course. We have recently reexamined this question and have produced a study of that cost, estimating on the high side all the way through and assuming that we do not draw down or decrease our military forces there before the year 2000 and adopt no particular cost-cutting or cost-saving methods. Making those assumptions, estimating on the high side, we have come up with a figure which covers the following:
First, and principally, expenses to the Department of Defense-the base relocation program base operations, the takeover and operation schools, hospitals and other things of that kind.
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Second, "the personnel costs of early retirement benefits and that sort of thing, for employees entitled to receive them.
And third, various miscellaneous costs.
The total, estimating always high, reaches about .$870 million over 21 years, which figures out at something like $42 million a year. This, is a figure which, we feel, is not incommensurate with the gain.
Chairman ZABLOcKi. Thank you very much. The Chair also thanks the gentleman from Ohio. He is recognized for the remainder of his time.
Mr. PEASE. I thank the chairman for his contribution. He really anticipated the question that I was leading up to.
Chairman ZABLOcKI. I apologize.
Mr. PEASE. You phrased it much more eloquently than I could ever phrase it, Mr. Chairman.
MISTAKE TO CUT OFF AID
I think it would be a large mistake to reduce or restrict or cut off our economic aid to Panama and I think the only reason that Congress-would even consider doing it vould be to show some sort of displeasure in general with the Panama Canal Treaties.
Now I would hope, that Members of Congress today would recognize that the basic decision is behind us on the Panama Canal Treaties and that we ought not be sending gratuitous signals to the people of Panama 'at this late date.
I would appreciate it if you would discuss in more detail the cut in FMS sales or FMS credits that this committee made from $5 million down to $2.5 million. There is pending I think on the floor an amendment to cut that further. Could you tell us how that figure was arrived at and what the effect would be of further decreasing it?
Ambassador Moss. Mr. Pease, it is my understanding that the amendment offered on the floor did in fact eliminate the remaining $2.5 million of the FMS sales. I think this too is an unfortunate development as, we had not received any specific request from the Government of Panama for the use of those credits.
Mr. PEASE. We had not?
Ambassador Moss. Nonetheless we had been discussing it with then through our military group there. We had anticipated some sort of ai request I think that, the loss is beyond the practical effect of the loss of the funds, a loss which might impair Panama's ability to get started in beginning its program for sharing in some of the tasks of canali defense.
The greater part of the damage done was simply in the signal it transmitted to Panama, that we were going to be ungenerous and unforthcoming for reasons expressed in human rights terms, which they felt, and I feel too, are unjustified under the circumstances.
Mr. PEASE. To what extent is that information filtering down to the ordinary citizens of Panama and to what extent are they reacting, to it:?
Ambassador Moss. Of course, just as everything that happens on. the Isthmus tends to get known in Washington quickly, particularly on Capitol Hill, I think that the reverse is also true. We areIvery
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sensitive to what happens in each others country. Our two countries are further unique in this respect.
Several nights ago in fact the Panamanian Chief of Staff Col. Florenico Flores, went on television and explained what happened. I believe he did so in very moderate terms. The reaction down there has been calm but certainly the fact is known throughout government circles and in the public record. Frankly it does not do us any good.
TREATY RELATED COSTS
Mr. PEASE. I have one last question, Mr. Chairman.
This $871 million figure that you just quoted I think will be requoted by others from time to time. I would like to clarify that. Is that figure above and beyond, especially in the DOD area, what we would have spent in maybe the next 21 years had there been no Panama Canal Treaties.
Mr. POPPER. Yes, these costs are costs due to the treaty. They are not the ongoing costs we would have in maintaining present forces down there, that is true.
We have, as I say, a document which has been submitted to the other committee, and we would be very glad if it is helpful to provide it to this committee as well. It explains in detail the breakdown of the figures.
Mr. PEASE. Thank you very much.
Mrs. FENWICK. Would the gentleman yield for one question?
Mr. PHsz. If I still have any time I would be happy to yield to my colleague from New Jersey.
RETROACTIVE TAXATION
Mrs. FENWICK. I thank my colleague for yielding.
What about this proposal that I read here about American businesses being taxed retroactively for 7 years by the Panamanian Government? Is there anything in that?
Ambassador Moss. No, Mrs. Fenwick, there is not. Paragraph 1 of article 9 of the treaty, in fact, forbids it. The question became controversial when, during a congressional visit, an official of the Panamanian Government who was, as we say straying off the reservation, gave the wrong answer to a question. But that has since been clarified formally in an exchange of notes which Panama recognized and reiterated what has been its position, that they will not be taxed.
Mrs. FENWICK. I thank my colleague for yielding.
Chairman ZABLOCKI. Mr. Quayle.
NEED FOR LEGISLATION
Mr. QUAYLE. Thank you, Mr. Chairman.
Let me give you a little bit different perspective than the gentleman from Mississippi gave as far as what is going on here and as far as an attitude toward this implementing legislation. I agree with him that we do need legislation as we did need legislation on the Taiwan issue.
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The question is, what is going to be the content of that legislation? The administration proposal in Taiwan that was sent up here was lacking. Through the diligence of the chairman and other people on this committee and in the Senate, it was vastly improved. It was not improved as much as I would like to have seen but it was improved. This is the constitutional process.
We have been ignored on Taiwan and Panama, and now, the constitutional process forces you to come up here. I think we are going to have input and I do not think we are going to roll over and play dead to whatever requests the administration makes.
Disregarding the Panama Canal Treaty, that is over and done with-the question is how we are going to implement that-I think it is going to come down to basic economics and where we are going to put our tax dollars.
ITEMS TO BE TRANSFERRED
Let me just ask a couple of questions. What property is going to be transferred? Do we have an itemized list of what property is going to be transferred to Panama?
Mr. Moss. Yes; we do. Some of that is contained in the treaty. For instance, some of the larger items, the ports and the railroads, would go to Panama at the outset of the treaty, and in addition, some of the housing areas.
As far as land is concerned, under the Panama Canal Treaty approximately two-thirds of the land which presently comprises the Canal Zone would be returned to Panamanian use, whereas the remaining one-third would be kept for use in the canal operating area and in our defense area.
In addition to that real property, certain items of equipment would be transferred also, notably the equipment of the railroad and the equipment in the ports.
So in a general way, the treaty and the treaty annexes do spell out the scheme for the transfer of property.
Mr. QUAYLE. Are we going to be reimbursed for this, or is this just an outright transfer to Panama ?
Ambassador Moss. No; we would not be reimbursed for the items stated in the treaty. There are, of course, certain items of personal property which we would make available for sale to the Panamanians, items which they would be able to use in furnishing public service; for instance, garbage trucks and firetrucks. We would not be furnishing the ,equipment free of charge, but we would offer such equipment for sale to Panama. The equipment is that which they will need to purchase for the performance of their services.
Mr. QUAYLE. Those they will purchase from us?
Ambassador Moss. They will either purchase them from us or buy them elsewhere. They are not obliged to purchase from us.
Mr. QUAYLE. What was the dollar figure of the transfer in the treaty?
Ambassador Moss. I do not think we have ever come up with a dollar figure. Of course, it would be extremely difficult from an accounting standpoint to come up with any meaningful figure because the railroad, of course, was constructed back in the last century. I have seen tables showing the original cost of the equipment, but that does not mean much in terms of today's dollars.
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It would be difficult to come up, I think, with a realistic figure. We have, I remember-during" the course of the Senate debate, tried to come Up with various estimates based on original cost, inflated cost, things of that sort. I am just not sure.
Mr. QUAYLE. There must be some estimate floating around somewhere..
Ambassador Moss. The Department of Defense does have a sheet, I think, listing costs, attacked from certain angles, of property item which would be transferred. On the books of the Company, of course, there are the costs of most of these items listed at their original purchase value or original construction value.
PROJECTED TOLL INCREASES
Mr. QUAYLE. What do you think that the projected toll increases will be over the next 20 years or the next 10 years?
Do you have any idea what the toll increases are going to be?
Ambassador Moss. I would rather let the Department of Defense address that subject.
Mr. QUAYLE. Maybe we ought to give the Department of Defense more jurisdiction in this matter if we have to refer to them that much.
Ambassador Moss., They are, the operators and they recommend the toil settings.
Mi. QUAYLE. Have they told you what the projected figures may be? Ambassador Moss. Well, of course, the projected figures will depend On hat is in the implementing legislation. If you took the administratiof bill, which would not continue the interest payments made into the Treasuryout of the tolls, this would mean a toll increase of approximately 14 percent, I understand.
Now, if-you start adding on certain cost items t6 that, including interest payments and amortization, the toll increase keeps building lIp. So it will depend very much on the shape of the implementing legislation.
Mr. QUAYLE. Does the Cainal Zone operate at a surplus now?
Mr. POPPER. It is not designed to operate beyond anything but a self-sustaining basis, as I think our Defense witnesses will testify. At the moment it seems to be doing a little better than had been planned. So there is a temporary surplus.
Mr. QUAYLE. So there is a temporary surplus?
Mr. POPPER. Yes.
Mr. QUAYLE. Is it the design that during the next 20 years and then after the year 2000 that it should be operating at a surplus? What is the understanding about operating the canal?
Mr. POPPER. From the beginning the objective 'n running the canal, I1 think, has been that it be self-sustaining. It is a great public utility not designed to produce profits, but on the other handnot designed' to runn at a loss either.
A $10 MILLION CONTINGENCY PAYMENT
Mr. QUAYLE. Where does this annuity of $10 million come in? That has to come from the surplus, 'does it not, under the treaty?
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Mr. POPPER. Under the treaty terms it is available to Panama up to the amount of $10 million a year to the extent that there is such a surplus. In the course of the Senate debate and the development of the legislation, we have worked out with considerable care what are actual costs. Only after those costs have been met each year would any money become available for Panama under the contingent annuity.
Mr. QUAYLE. My time has expired. Thank you, Mr. Chairman.
Chairman ZABLOCKI. Mr. Bingham.
Mr. BINGHAM. I have no questions.
Chairman ZABLOCKi. Mr. Bowen.
Mr. BOWEN. Thank you, Mr. Chairman.
SUPPORT FOR VARIOUS PROVISIONS
I would like to say, in response to an observation made by the gentleman from Indiana, Mr. Quayle, that the record might be somewhat misleading unless we corrected it. The implication, I am sure perhaps not fully intended, was that I was in some manner simply buying the complete administration package with regard to this legislation.
That, of course, is not the case. I think the witnesses at the table would be happy to point out that I have supported a great many features in the legislation we reported out yesterday from the Merchant Marine and Fisheries Committee, which are very very substantial departures from the original administration legislation which they proposed.
In fact,. the veryiten which they are presenting to you for your eonsideration, and the one that we discussed earlier dealing with wartime authority over the canal, is certainly not the position they started out with originally. The administration bill was substantially different.
WARTIME AUTHORITY COMPROMISE LANGUAGE
It was because of our deep concern over the necessity of having effective unity of command and administration of the area in time of military.,crisis that we drafted-this legislation. This is not in the Merchant-Marine and Fisheries bill.
I do feel that this language which I assisted in drafting does meet the needs of the treaty in the sense that it does not do violence to the treaty, while providing greater military security.
What this represents, quite frankly, is taking the concept of having the President designate someone to. oversee the operations in that area in-wartime about as far as it can be taken without violating the treaty.
In other words, I might say in a certain sense that we perhaps had.to drag the administration kicking and screaming to accept this kind of language., This is not just the-administration's position. This i8 a heavy compromise position.
Mr. QUAYLE. Will the gentleman yield ?
Mr.13OwEN. Yes.
A1r. QUAYLE. I did, not mean to imply that, you would accept everything. that the administration had sent up there, because I know your activity not only in this legislationbut in the Taiwan legislation.,But
45-853-79--4
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I think it is a matter of degree that we have that fallback argument all the time, "Well we cannot do this because it is over and done with." I guess that is somewhat of the perception that I got from your opening statement something that we fought during the Taiwan legislation and we finally got a couple of important measures passed that the PRC did not like.
I think there was an editorial in the Washington Post, which I talked about in the committee, "Well welcome to America. This is the constitutional process."
So I was just trying to reassure the people that there is an active interest on the part of Congress and we really have been ignored. I think you did not say we should just fall over and play dead, but I do not want them to get the impression that a lot of people are going to. I did not mean to imply, if you perceived that, that you would fall over and play dead, because you are a very independent, thoughtful member of this committee.
UNITY OF COMMAND MAINTAINED
Mr. BOwEN. The only thing that cannot be undone is the treaty. We cannot get the Panama Canal back. In that sense it was parallel to the present recognition of the People's Republic of China. That was an executive function. He actually chose to recognize one country and derecognize another.
There was nothing that we in the legislative branch could do about that. In that sense there was nothing that we could do. What we could do was pass legislation and obviously there was a lively debate on the nature of that legislation. By the same token I am sure there will continue to be a lively debate on the nature of this legislation.
There will be some honest differences. My good friend and colleagues comprising a majority on the Merchant Marine and Fisheries Committee, happen to feel that it was necessary for the Preident to name one man who would, as they put it, "assure and have exclusive authority and jurisdiction over the operation of the Panama Canal and all of its adjuncts, appendants and appurtenances."
I happen to feel, and just by coincidence the spokesman for Defense Department and the spokesman for the State Department happen to agree, that that does some violence to the treaty and that it is not really necessary, that you can achieve the same degree of military control in a wartime situation with this language, which I think has now been distributed around and which I think I read briefly before.
In fact one or two members have asked me if I would pursue this subject a little further with the State Department spokesman and I think I would just ask one or two questions along this line to Ambassador Popper.
That language which says that in time of war when the United States is engaged or when an opinion of the President is that war is imminent, the Administrator of the Panama Canal Commission shall, upon the order of the President, comply with such directives as the U.S. military officer, charged with the protection and defense of the Panama Canal, may consider necessary in the exercise of his duties. That to me seems to be a broad enough mandate to allow that commander to do almost anything he.feels necessary to protect the canal, to see that it stays open and operating.
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Would you say, Ambassador Popper, that you would agree with that statement of interpretation on my part?
Mr. POPPER. Yes, Sir, I would agree with it. We also appreciate having had the opportunity to consult with you with respect to this rather complicated problem and we certainly accept this.
Mr. BOWEN. I think that the Department deserves some commendation for accepting and understanding the fact that the sentiment here in the House is that we wanted a stronger, more direct, more unified control in time of war than the Commission structure happened to provide and that you were willing to see our point of view on this language. I think that it very clearly does give that kind of control.
This is, as I say, the kind of differences that we are speaking of in which my point of view and my philosophy of the matter is that if I can accomplish the same end by taking an action that is constitutional or in this case, consistent with the treaty, than I would rather do it rather than take some other action which might look like a little more like a flag-waving exercise and have a knight on a white horse come riding down the hill to take charge but really does not accomplish any more.
I think that sums up my point of view on it. I am happy that the Department agrees. Thank you.
COMMENDATION OF BOWEN COMPROMISE
Chairman ZABLOCKI. The Chair has just two or three remaining questions.
Let us take this opportunity to commend our colleague from Mississippi for a very well thought out and very reponsible amendment on this very technical and controversial part of the bill. We thank you for your working out a compromise with which I hope everybody will be happy.
ENVIRONMENTAL ISSUES UNRESOLVED
Ambassador Popper, the Friends of the Earth submitted for the record testimony on the environment.1 There are a number of issues that are still unresolved in the minds of the environmentalists. Therefore, I would like to pose some questions to you regarding the Joint Commission on the Environment. I will provide these questions which you may answer for the record, for the purpose of saving some time at the moment, and would appreciate your responses concerning the source of funding for the Environment Commission, the relationship between the Panama Canal Commission and the scope of the geographic ,area within its purview-would it be restricted to the existin Canal Zone area or would they have a broader authority?
It is my understanding that the members of the Environmental Commission are not salaried, but do receive per diem and travel. In your opinion, should the Commission members be salaried and would this not attract a larger number of well-qualified candidates, which seems to be a concern of the environmentalists.
If you will supply the answers to those questions for the record, we would appreciate that.
See app. 1, p. 79.
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Mr. POPPER. I will be glad to subinit then for the record, Mr. Chairman.
FUTURE IMET/SCHOOL AGREEMENT
Chairman ZABLOCKI. I would like to ask Ambassador Moss to re spond. to some questions for the record with regard to a reference on page 3 of his statement, to the expiration of an agreement with Panama for the- School of the Americas, which is scheduled to terminate 5 years from October 1 of this year. What type of agreement do you envision will replace the current one? Will additional aid be necessary in return for military education and training schools, such as similar to a base-rights agreement?
Do you anticipate any problems with the negotiations such as an attempt to condition it to the existing treaties? And has any thought been given to possible relocationsites in Latin America of the School of the Americas.
If you will supply the answers to those questions, we would appreciate it.
Mrs. Fenwick.
Mrs. FENwICK. Thank you, Mr. Chairman.
That island that the Smithsonian Institution runs in the middle of the lake-could you refer to that question ?
Ambassador Moss. Certainly, Mrs. Fenwick, I would be happy to.
COMPARISON OF EXECUTIVE BRANCH AND HANSEN TREATY COSTS
Chairman ZABLOCKI. Finally, again for the record, because it would take too long this time, as you well, know, Mr. Ambassador, Congressman Hansen sent around a letter stating that the treaties will cost the U.S. taxpayer $4 billion. I will share with you the "dear colleague letter" that he has shared with all of the. members.
I would hope that you would supply the facts.. He, of course, says the first price tag of the Panama Canal transfer costs will be $4 billion. Price tag No. 2, Panama Canal Treaty contingency cost, $2 billion. Price tag No. 3, Panama Canal property to be transferred, $20 billion. Price tag No. 4, Panama Canal Treaty costs after the year 2000, $200 million per year.
I am sure you have the answer to that.
Mr. POPPER. By coincidence, Mr. Chairman, we have a paper on that point.
Chairman ZABLOCKI. If you have the paper, by coincidence, we would like to have it in the record at this point.1
Thank you very much, Ambassador Popper, Ambassador Moss. We thank you for your testimony and we appreciate you coming before the committee and giving your views on these very sensitive and cOntroversial issues.
OPERATIONS AND MILITARY ISSUES
'Our next group of witnesses will address the operations and mili tary aspects of the legislation. We will hear first from General Dolvin, who will discuss security and defense issues. The following witness
1 See app. 4, p. 92.
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will be Mr. Blumenfeld, who is prepared to discuss the DOD role in canal operations. The final witness from whom we will hear today is Governor Parfitt, who is intimately aware of the complexities of the operation of the canal from an on-the-scene perspective.
If our witnesses will come to the table, we will begin with General Dolvin.
STATEMENT OF GEN. WELBORN G. DOLVIN, DEPARTMENT OF
DEFENSE REPRESENTATIVE FOR PANAMA CANAL TREATY
AFFAIRS
General DOLVIN. Thank you, Mr. Chairman.
I would like to submit my prepared statement if it is agreeable to you, sir, for the record and then just summarize a few items.
Chairman ZABLOCKI. Without objection, it is so ordered. It is not only OK with me; we welcome your cooperative gesture.
General DoLvIN. I have been the Defense representative both in the negotiations and also in the treaty implementing phase. I would like to beg your indulgence for just a minute and discuss how Defense looks at, one, the treaties; and two, the implementing legislation.
DOD VIEW OF THE TREATIES
First of all, as you know, the Joint Chiefs of Staff evaluated the situation in Panama and fully support all the treaties. The reason is they are interested in the continued use of the canal for our naval ships and ships of commerce. They feel that the best way to maximize the probability of our continued use is through these treaties; which modernize our relations with Panama.
Hopefully, then we could operate and defend the canal for 21 years in a friendly environment, and that would give us sufficient time to train the Panamanians to operate and defend the canal after that time without any great drop in the efficiency of canal operations. That was the view during the treaty.
DOD VIEW OF LEGISLATION
Now, we are hopeful that the Congress will pass legislation which will implement the treaties in such a way that it will give the Department of Defense those things it requires to operate and defend the canal but at the same time give Panama a meaningful role in both the operation and defense of the canal.
Now, that brings me to the issue that has been discussed quite thoroughly this morning-U.S. military control in wartime, and under H.R. 1716, the repeal of title II of chapter 3 of the Panama Canal Code. There was a legal requirement for the transfer from civilian to military control when we had a zone there and the United States had jurisdiction. We do not feel that it is applicable now, since jurisdiction reverts to Panama, and our canal operations and defense rights are spelled out in the treaty.
I will say also that the canal treaty, does give us, in the opinion of the Department of Defense, those authorities that we need to carry out the terms of the treaty.
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As long as the Chairman of the Board is either the Secretary of Defense or someone appointed by him, the United States has a majority on that board and the Secretary of Defense is directly in the chain of command between the President and the U.S. Southern Command. We feel that this does give unity of command. Further, he or the President on his recommendation can remove the Chairman and the members of the board.
We do not see any difficulty in defending the canal during the life of the Panama Canal Treaty or carrying out the defensive responsibilities under the continuing authority or the Neutrality Treaty.
Therefore, we would hope that some modification to this wartime provision could be made. We do not require it and it will be difficult to get the Panamanians to agree completely with this change in the treaty text.
Now, there are some other things in the legislation which we would. hope to get modified. Some of them deal with personnel. I know Mr. Blumenfeld and the Governor will probably want to refer to those.
So with that background I would like to ask the other two members if they want to say anything and then we can respond to any of your questions.
[General Dolvin's prepared statement follows:]
PREPARED STATEMENT OF LT. GEN. WELBORN G. DOLVIN, USA (RET.), DEPARTMENT
OF DEFENSE REPRESENTATIVE FOR PANAMA CANAL TREATY AFFAIRS
Mr. Chairman and members of the committee, I appreciate the opportunity to meet with you today to discuss H.R. 1716, the administration bill to implement the Panama Canal Treaty of 1977 and its related agreements.
Other witnesses have covered the background leading up to the present consideration of implementing legislation. I will therefore concentrate on titles I and V of the proposed legislation. However, I would like at this time to make a few general remarks concerning the treaty environment and give the Department of Defense view on the implications of the proposed legislation.
The Department of Defense supported the treaties as approved and ratified by the United States and Panama. From the outset, the joint chiefs of staff stated that the canal was of military importance and that it gave us great flexibility in transferring our forces from one ocean to the other. It is especially valuable a-s it applies to our logistical and amphibious shipping. The interest of the Joint Chiefs of Staff in the canal are its continued availability to us for our naval ships and ships of commerce. Emphasis has always been placed on the free and unrestricted use of the canal, rather than precisely who owned a piece of real estate or claimed sovereignty over the Zone. This led the Joint Chiefs of Staff to evaluate the situation in Panama. They concluded that we would have the best possibility of continuing to use the canal, in both peace and war, if we stabilized the situation in Panama and entered into a new relationship with its people-thus enhancing the spirit of friendship and cooperation during the remaining years of our stewardship. The Department of Defense feels that the treaties provide adequately for the operation and defense of the canal for the next twenty-one years, and allows us time to train key personnel and integrate them into the management and defense of the canal so that Panama can assume complete responsibility in the year 2000 without any degradation in canal efficiency.
This is the way DOD views the treaties. It's now our hope that the Congress will pass the necessary legislation so that we might carry out our responsibility to operate and defend the canal in a friendly and stable environment. We would also hope that the final legislative package provides for a meaningful role by the Panamanians-as called for in the treaties ratified by both governments.
H.R. 1716, which is submitted to the Congress by the administration, would in our judgment provide a satisfactory basic on which we could carry out our heavy responsibilities, while at the same time providing for an oversight role by the Congress. However, we feel that H.R. 111 would have to be significantly
51
modified in order to create the type of environment we would hope to see in Panama. There are several specific items that I would like to mention: First, there is the organizational concept, the Panama Canal Commission. I note that others have emphasized the advantage of the corporate form over the appropriated fund form for the commission. I would like to refer to this also as it applies to our ability to carry out our responsibility in a friendly fashion. H.R. 111 would provide for a board of directors of five Americans and four Panamanians. The five Americans would be required to vote on all policy matters as a block.
This bill also puts them under the direction of the Secretary of Defense. This arrangement, coupled with the fact that under the appropriated fund concept, the results of their deliberation would be subjected to the authorization and appropriation review of our budgetary process, could not be construed as giving the Panamanians a meaningful role in the operation of the canal. It appears to us that if the chairman of the board is an individual appointed by the secretary of defense, that this would give us sufficient authority to carry out our responsibility. The chairman should not direct the board but rather, preside over it as is the case today.
Another key difference between H.R. 1716 and H.R. 111 deals with the transfer of property. Again, I know that others have covered this subject. However, I would like to emphasis that the terms of H.R. 111 would transfer on treaty day those items specifically spelled out in the treaty to Panama but would require Congressional approval of any other transfers throughout the life of the treaty. It would be most difficult to implement in a timely and efficient manner. Unwarranted delay in turning over to Panama excess areas and facilities could also prove costly, considering repair and maintenance costs in this tropical region.
Coordination of internal U.S. Government treaty implementation efforts is yet another critical factor. The proposed legislation exempts the Panama Canal Commission from the direction of the U.S. ambassador in Panama solely with respect to the Commission's responsibilities for operating the canal. However, it grants the ambassador the authority to fully coordinate the transfer of functions assumed by Panama under the Treaty. Ambassador Popper has already drawn your attention to the coordination between the Departments of State and Defense concerning the relationships between the U.S. ambassador and the Administrator of the Panama Canal Commission. The coordination was carefully worked out between State and Defense to ensure that each official would be able to carry out his assigned responsibilities and functions with full authority and that each would not only be fully informed of his colleagues' plans and activities but have the opportunity to make a timely input concerning them. The two departments have thus laid the groundwork for the necessary functional day-to-day working relationships and ensured that the desired coordination procedures necessary for the successful implementation of the treaties by senior U.S. officials in Panama will be undertaken. I would note, for the committee, that these procedures are operative now, and that Treaty implementation planning among the U.S. principals in Panama is an on-going coordinated effort. Along with our colleagues from State. We strongly support section 102, as written.
The proposed legislation would repeal a number of provisions in existing law which would not be fully consistent with the provisions and intent of the new Panama Canal Treaty. These include provisions concerning the authority of the President and the Governor of the Canal Zone with respect to military matters, as well as his authority to extradite persons to Panama, and provisions establishing a Canal Zone and its government. The issue of military control during wartime is one of the principal differences between the administration H.R. 1716 and H.R. 111, sponsored by the Chairman of the Merchant Marine and Fisheries Committee, Representative John Murphy. Secretary Duncan, as well as witnesses from the State Department, have affirmed that the President intends that the Secretary of Defense, operating through the Secretary of the Army, exercise the executive oversight responsibility for the new Panama Canal Commission. In our judgment, this will best provide for the continuation of the existing supervisory structure which has been so effective in the past, will enhance the coordination of overall policy concerning those activities with other cabinet level departments of the Executive Branch and also ensure that the Canal's operation and its defense will be carried out by one centralized authority. For these reasons, we consider that the proposed section 103(a) which repeals the separate authority of the President and the Governor of the Canal Zone
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over certain military activities within the canal is both appropriate and mandated by the Panama Canal Treaty.
It is for these reasons that we also consider the establishment, in H.R. 111, of a special wartime authority for the President to appoint a military officer with full directive authority over the Panama Canal Commission to be both unnecessary and a violation of at least the spirit of the treaty itself. One of the fundamental objectives of the Panama Canal Treaty is a relationship characterized by increasing Panamanian participation in the operation and management of the canal. We urge the Congress to ensure that the legislation implementing that treaty supports this relationship.
In summary, upon passage of the proposed legislation by the Congress, the Secretary of Defense is prepared to assume the oversight role with respect to the Panama Canal Commission and to carry out the related tasks of efficient canal management, training and integration of Panamanian managers into the commission, the maintenance of financial self-sufficiency, maintenance of tolls at the lowest practicable rates, close coordination of canal operations and defense and the maximum support for the official U.S. community which will remain to both operate and defend the canal.
We consider that H.R. 1716 provides the appropriate leigslation to enable us to carry out these difficult but necessary tasks. We need and request your earliest approval of this legislation.
I am ready to respond to your questions.
Mr. BLUMENFELD. If I may, Mr. Chairman, I would like to enter my statement in the record as well, and in the interest of time, yours as well as mine, since I must be in the other body at 12:15.
I would like to see if the Governor has any opening remarks he would like to make. Then I would simply respond to questions and perhaps make a couple of points extemporaneously when the Governor is through.
Chairman ZABLOCKIC. Without objection, the prepared statement of :Mr. Blumenfeld will be made part of the record. Governor, if you wish to summarize your statement as well, it will be made a part of the record in toto.
STATEMENT OF HON. H. R. PARFITT, GOVERNOR OF THE CANAL ZONE
Mr. PARFrrT. I previously testified at length before other committees at the House on both of the legislative proposals, H.R. 111 and H.R. 1716, especially with regard to employee benefits provisions contained in each, as well as those portions designed to establish the financial framework for the new canal agency.
It is my understanding that this committee is more concerned and interested in titles 1 and 5. Therefore, my opening statement is related to those provisions primarily. As I have reviewed the flow of events this morning I believe most of the items that I have covered in my statement have already been discussed. There are just a few that I would like to further amplify or perhaps include in the record.
DISINTERMENT AND REINTERMENT OF U.S. CITIZENS
One item which has not been discussed is the item concerning the exhumation and reinterment of remains. This is required and included in the implementing legislation because in ratifying the treaties last spring the U.S. Senate attached a reservation requiring the United States to remove the remains of certain persons from Mt. Hope Cemetery in the canal zone prior to October 1, 1979.
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On January 19 of this year President Carter issued Executive Order No. 12115 charging the Governor of the Canal Zone responsibility for that project subject to the availability of funds.
Accordingly the canal agency has requested a supplemental appropriation of $1.7 million to carry out the disinterment operation. Our appropriations committees may or may not act in that request before the implementing legislation is enacted and therefore the two bills contain provisions dealing with the financing of the project by the United States.
In that regard, and in many other respects, I would like to associate myself with the remarks concerning the need for timely passage of legislation. There are many reasons and I will not amplify them because they are covered in my statement.
I would like to again refer to the project which requires us to move bodies from Mt. Hope. Because of the mandatory 3-month waiting period after notification of next of kin we are already faced with the prospect of having to carry out the project during the rainy season which begins in April, this month. The adverse climatic conditions which will prevail will make completion of the projection within 6 months difficult enough.
So if funds are not approved by the end of this month, thus further delaying commencement of the project, it is doubtful whether this work can be completed prior to the entry into force deadline.
Mr. Chairman, I believe, that is the only item in my statement that would require further amplification. I am available at this time to answer any specific questions you might have.
[Mr. Parfitt's prepared statement follows:]
PREPARED STATEMENT OF HoN. H. R. PARFITT, GovERNoR OF THE CANAL ZONE INTRODUCTION
1. Mr. Chairman and members of the Committee, my name is Harold R. Parfitt, and I am Governor of the Canal Zone. I appreciate the opportunity to appear before you today and testify concerning legislation which has been drafted to implement the Panama Canal Treaties of 1977 and related agreements.
2. As you know, the new treaty will enter into force on October 1 of this year. When it does, the Canal Zone, which has existed under United States jurisdiction since its creation in 1904, will be disestablished and the Republic of Panama will assume plenary jurisdiction over that area in accordance with the terms of the treaty. That document requires that, upon entry into force, the present Canal agencies-the Panama Canal Company and the Canal Zone Government-cease operations in what is now the Canal Zone; it also states that the United States will carry out its responsibilities to manage, operate and maintain the waterway until the end of the century by means of a new U.S. Government agency called the Panama Canal Commission.
3. To date, two bills designed to establish this new agency and implement other non-self-executing provisions of the treaty documents have been presented to the Congress. The first of these, H.R. 111, sponsored by the Chairman of the Merchant Marine and Fisheries Committee, was introduced on January 15. The Administration, on January 31, submitted a draft bill introduced as H.R. 1716. I have previously testified at length before other Committees of the House on both of these legislative proposals, especially with regard to the employee benefit provisions contained in each as well as those portions designed to establish the, financial framework for the new Canal agency. It is my understanding that this Committee is especially interested in Titles I and V of the Administration's Bill and the corresponding provisions of H.R. 111 and, accordingly, I would like to confine my remarks today to those portions of the two bills.
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AUTHORITY OF THE AMBASSADOR
4. Both bills contain a provision which would define the authority of the U.S. Ambassador to the Republic of Panama vis-a-vis the Panama Canal Commission. These provision, which are substantially identical, would recognize that the nature of the Commission is such that its operations should not be subject to the direction and supervision of the Ambassador. Both bills would have the effect of requiring, however, that the Canal agency keep the Ambassador informed with respect to activities and operations of Commission officers and employees.
PRIVILEGES AND IMMUNITIES
5. Article VIII of the Panama Canal Treaty provides for the designation of twenty officials of the Commission who, along with their dependents, will be afforded the privileges and immunities accorded to diplomatic agents and their dependents under international law and practice. Consequently, both bills contain a provision making that designation mandatory. The Secretary of State would make the designation under H.R. 1716, while the Secretary of Defense would be the designating official under H.R. 111.
6. We consider this to be an extremely important provision in view of the fact that many Canal officials occupying key positions in the organization will be making decisions, literally on a daily basis, which inevitably will prove to be controversial from Panama's point of view. To the extent allowed by the treaty, these officials will need the insulation from the political pressures which their decisions might generate if they are to be able to function effectively. We consider the designation of twenty Commission officials to receive this diplomatic status to be a critical protective measure for the Canal agency.
CONTROL IN TIME OF WAR
7. Under current law, when the United States is engaged in a war, or when the President believes that war is imminent, he may designate a military officer of the United States to assume exclusive authority over the Canal and the Canal Zone. The Administration's bill would delete that provision because, under the treaty, the canal zone will be disestablished and because the role of the military with respect to the waterway is provided for in Article IV of the Panama Canal Treay. H.R. 111, on the other hand, would retain the substance of existing law, authorizing the President to place an officer of the Armed Forces of the United States in charge of the Canal and of those areas in Panama made available to the United States under the treaty. It appears to us that this provision would contravene at least the spirit, if not the letter, of the new treaty, since that accord requires the United States to carry out its responsibilities with respect to the operation of the waterway by means of an agency to be known as the Panama Canal Commission. The treaty makes no provision for special arrangements during periods of war, although the rights of the U.S. are further clarified and guaranteed in the treaty concerning the permanent neutrality and operation of the Panama Canal and amendments and conditions appended thereto.
EXHUMATION AND REINTERMENT OF REMAINS
8. There is one other area of the proposed implementing legislation on which I would like to comment. In ratifying the treaties last spring, the United States Senate attached a reservation requiring the United States to remove the remains of certain persons from Mt. Hope Cemetery in the Canal Zone prior to October 1, 1979. On January 19 of this year, President Carter issued Executive Order No. 12115 charging the Governor of the Canal Zone with responsibility for that project, subject to the availability of funds. Accordingly, the Canal agency has requested a supplemental appropriation of $1.7 million to carry out the disinterment operation. Our appropriations committees may or may not act on that request before the implementing legislation is enacted. In the event that they do not, the two bills contain provisions dealing with financing of the project by the United States.
TIMELY PASAGE OF LEGISLATION
9. I would like to take advantage of the Committee's invitation to testify here today to stress the need for timely enactment of the treaty implementation legislation. In our view, delay in its passage beyond early summer will
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impact adversely on our personnel administration, labor relations, financial management and relocation of activities. If I may take a few minutes to do so, I would like to review for you some of the more important problem areas which we have been able to identify.
10. In the field of personnel, for example, the Department of Defense and Canal agencies, as well as many Panama Canal employees, will be adversely affected if the early optional retirement provisions contained in both bills are not in force by July 1. Lack of the early-out retirement option will leave employees not otherwise eligible to retire little choice but to accept transfers to DOD agencies and placement offers within the Panama Canal Commission. However, many of these same individuals will retire as soon as the treaty legislation is passed. If this occurs after July 1, it may be too late for DOD to rework the reduction-in-force action it will have underway at that time and too late to recruit needed replacements for the employees who decline transfers in favor of early retirement.
11. It will also be too late for the Panama Canal organization to rework its complex reduction-in-force actions to retain employees scheduled for termination by placing them in the positions vacated at the last minute by the retiring employees. Moreover, this situation would have an inequitable effect on those former employees who might not have been otherwise terminated and who are subsequently rehired by the Commission, in that it would appear they would not be eligible for grandfathered pay or early retirement benefits.
12. Another problem is presented by the treaty requirement I mentioned earlier to remove the remains of deceased U.S. citizens from Mt. Hope Cemetery prior to entry into force. Because of a mandatory three-month waiting period after notification of next-of-kin, we are already faced with the prospect of having to carry out this project during the rainy season, which begins in April. The adverse climatic conditions which will prevail will make completion of the project within six months difficult enough. If funds are not approved by the end of April, thus further delaying commencement of the project, it is doubtful whether this work will be completed prior to the entry into force deadline.
13. While all of the impacts which we foresee will be adverse from an operational standpoint, I feel that the potential for employee discontent among the Canal workforce is likely to hold the most serious consequences. Our employees so far have continued to perform their jobs with remarkable efficiency, considering the circumstances. I fear, however, that if the provisions of the legislation containing employment benefits are not timely enacted, morale will deteriorate to such an extent that job performance will almost certainly suffer. This situation can be expected to worsen as October 1 approaches.
14. At this point, I would like to give you a brief explanation of the progress to date of the U.S./Panamanian committees which are engaged in planning for implementation of the treaty.
PLANNING FOR IMPLEMENTATION
15. Formal planning sessions between Panama Canal agencies and the Government of Panama began in early 1978. Joint working subcommittees, whose membership is made up of representatives from our two countries, were also established. Subjects being addressed by the subcommittees range from operational transfers, such as the ports and railroad to areas of employee and community interest including personnel, housing, social security, utilities, the environment, and police and fire protection.
16. In the early weeks of subcommittee work, Panamanian Government officials, Panamanian subcommittee members and their supporting advisors were afforded orientation briefings and field inspections to acquaint them with Panama Canal facilities and areas in the Canal Zone. Detailed listings of equipment and personnel presently employed in certain Canal operations have also been provided to Panamanian subcommittee members for their use in determining internal Government of Panama resource requirements. At the present time, the joint subcommittees are completing their first planning phase, which includes the finalization of a schedule for the accomplishment of actions necessary for treaty implementation.
17. Probably the most complicated area in our planning involves the Railroad and the Ports of Balboa and Cristobal which are scheduled for transfer to Panama upon entry into force. While Panama has stated repeatedly that it will assume operational responsibility for the ports and railroad on October 1, it has also
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indicated in recent weeks that it would like the Panama Canal Commission to assign certain of its employees on a temporary basis to work for that government and to have the Commission continue to perform certain supportive functions on a reimbursable basis.
18. As to whether the Commission will be able to assist Panama in running those operations that are turned over to that country pursuant to the treaty, the answer appears to be a qualified "yes". The Panama Canal Commission's fiscal year 1980 budget is based on the proposition that, effective October 1, Panama will perform those functions transferred to it by the treaty documents. There are, however, provisions in the treaty which would permit the Commission either to assign its employees to assist Panama in the operation of those activities, or to continue to perform them itself until such time as Panama can take them over. Availing itself of those provisions, Panama has now stated that it desires assistance and, accordingly, appropriate revisions will have to be made to the fiscal year 1980 budget to reflect the additional resources that will be required. As I have indicated, Panama will reimburse the Commission for any assistance provided by that agency. We have informed the Government of Panama that any further requirements it may have must be made known to us in the very near future if the Commission i to have the resources to provide such support on October 1, 1979.
19. Before leaving the subject of our planning efforts, it seems to me to be necessary to advise the Committee that we are beginning to encounter certain areas in: which our views concerning the rights and obligations of the two Governments under the treaty documents differ. In and of itself, that is not a surprising or alarming development; differences between the parties to any treaty as to the meaning of particular words in that document are probably inevitable. As Chief Justice Oliver Wendell Holmes once said-"A word is not a crystal, transparent and unchanging. Rather, it is the skin of a living thought, which changes its meaning depending upon the time and circumstances in which it is used". Accordingly, I am quite aware that human beings faced with establishing a working relationship based upon written rules and guidelines are bound to disagree sometimes as t& what was actually intended by the drafters of the words with which they must work.
20. On the other hand, it also seems to me that there comes a point, after the views of each party have been expressed and reiterated on an issue in dispute, when it becomes ncessary to lay that issue to rest once and for all. Unfortunately, there have been several instances where issues have been perpetuated rather than resolved. As a consequence, the progress of planning for implementation of the treaties is being impeded in some key areas. I am somewhat encouraged by the recent resolution of issues concerning retroactive taxation and the contingent payment to Panama. At the present time, U.S. officials involved in the planning process are working to reintroduce momentum into our binational efforts to achieve a posture of preparedness by entry into force.
CONCLUSION
21. In conclusion, Mr. Chairman, I would like to say that from the standpoint of the operator of the Canal that, except as noted above, there do not appear to be significant differences between those portions of the two bills in which this: Committee has a special interest. Accordingly, I would only reiterate the pressing need for timely enactment of the treaty legislation.
22. Mr. Chairman, that concludes my opening statement. I will now attempt to answer any questions which you or other members of the Committee, may have.
Chairman ZABLOCKi. Thank you.
Mlr. Blumenfeld.
STATEMENT OF HON. MICHAEL BLUMENFELD, ACTING ASSISTANT
SECRETARY OF THE ARMY FOR CIVIL WORKS
Mr. BLUMENFELD. Mr. Chairman, if I may I would just like to make a couple of points which are not covered in the statement, which have come up for discussion this morning and which might perhaps be helpful to the committee.
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One, on the issue of costs. As has been identified we can supply the paper detailing the estimated high side costs through the year 2000, those costs which are truly incremental that would not have been incurred without the treaty.
Let me say that Congressman Hansen's paper, to which you brought our attention before, when discussing costs lumps not only apples, oranges, and pears but also some fruits that, to my knowledge have no name and I have never seen them.
Chairman ZABLOCKI. I understand most of the fruits were bananas. [Laughter.]
Mr. BLUMENFELD. We are prepared not only to provide you with the incremental costs but also, as Congressman Quayle had requested, the best estimates as to the value of property transferred at the inception of the treaty, during the life of the treaty and the property that will remain at the end of the treaty. We will get that to this committee.1
Congressman Bowen has left. Let me associate myself with the remarks of Ambassador Moss and Ambassador Popper in how helpful he has been in working out some very significant differences of opinion. Let me add that from my point of view, and I know from the Governor's point of view as the operator of the canal, that some help which Congressman Bowen tried to give us in the Merchant Marine and Fisheries Committee and which unfortunately failed, which would have preserved some of the flexibility with which the Commission can operate in the course of the year, flexibility that is appropriate to an evolving agency with increasing Panamanian participation, an agency which has to make constant choices on the spot between filling a long-term need versus filling a short-term need with available funds, which undertake new programs as their need becomes evident without the time consuming process of going back through Congress.
His efforts, as well as those of others on the Merchant Marine and Fisheries Committee were unfortunately unsuccessful but clearly the administration in H.R. 1716 has preferred the corporate form which has worked so well over the course of the years. We would hope eventually to come out with something more approximating the flexibility that is given by the corporate form than what did emerge in 111.
Mr. Chairman, if I may, I would answer questions as well.
[Mr. Blumenfeld's prepared statement follows:]
PREPARED STATEMENT OF MICHAEL BLUMENFELD, ACTING ASSISTANT SECRETARY OF THE ARMY FOR CIVIL WORKS
Mr. Chairman, Members of the Foreign Affairs Committee, I appreciate the opportunity to appear before you today as you receive testimony regarding legislation to implement the Panama Canal Treaty of 1977 and related agreements.
As you know, the primary responsibility of the Secretary of the Army is the head of the Department of the Army. However, he also has a major responsibility for overseeing the effective operation of the Panama Canal. While the Administrations legislation does not explicitly assign an oversight role, I can tell you that the President plans that the Secretary of the Army will continue to have this oversight responsibility with the only change being that he will report through the Secretary of Defense rather than directly to the President. This will certainly be a smooth transition and will assist in coordinating, at the interagency level, the events to occur when the Treaty enters into force on October 1 of this year.
1 See app. 4.
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There are a number of differences in the two major pieces of legislation you are considering. However, Titles I and V of the Administration's bill and the corresponding provisions of H.R. 111 are very similar. I would like to highlight several of the important topics in my testimony here today. The Consultative Committee, as envisioned in the Administration's legislation, would advise the United States Government and the Government of Panama on matters concerning the operation of the Canal. The President would appoint and the Secretary of State would coordinate the participation of the U.S. representatives to the Consultative Committee between the United States and the Republic of Panama. We would expect the Committee to address such matters as general tolls policy and employment and training policies to increase Panamanian participation in Canal operations and other broad policy matters such as the desirability of a sea-level canal or the impact of changes in world shipping traffic on longrange Canal development programs. Most importantly, however, the Committee would have no authority to direct the Panama Canal Commission or any other agency of the United States to initiate or withhold any action. It would, therefore, not conflict with the authority and responsibility traditionally exercised by the Canal Agency's Board of Directors.
The entry into force of the Panama Canal Treaties will significantly change the environment and the purpose of U.S. Government activity in the Republic of Panama. As provided for in H.R. 1716, the Ambassador has full responsibility for coordinating the transfer of functions which are assumed by Panama under the Treaty. Further, the U.S. has the responsibility to assist Panama in preparing for its eventual assumption of the operation of the Canal. In this regard, our Ambassador to the Republic of Panama will have the responsibility to assess the effect of Panama Canal Commission plans and activities in light of U.S. objectives in the Republic of Panama. His concern will be with the effect of Panama Canal Commission activities on U.S. relations with Panama and not with day-to-day management, operation, and maintenance of the Panama Canal. Of equal importance, he will be responsible for assessing the impact of the Government of Panama's policies and activities on U.S. objectives and for promoting the GOP's understanding and acceptance of these objectives. The Ambassador, however, will have no authority to direct the Administrator or the Board of Directors of the Panama Canal Commission to initiate or to withhold policies or activities regarding the management, operation or maintenance of the Canal.
In order to enable the Ambassador to discharge his responsibility, the Administrator will keep him fully informed with respect to the official activities and operations of the Commission. He would, as a matter of course, inform the Ambassador of any proposed initiation of major activities, operations, or changes in policy of the Commission in reasonable time to permit the Ambassador to comment on such matters in Panama and in Washington, if required, prior to their initiation. Most importantly, the Ambassador will similarly inform the Administrator of all activities and policies of U.S. agences in Panama which may affect the management and operation of the Canal and provide the Administrator the same opportunity to comment. We believe that these policies, provided for under the Administration's legislation, will effect a cooperative team in the Republic of Panama.
H.R. 111 provides that the president, in time of war or when, in his opinion, war is imminent, an officer of the Armed Forces will be appointed and have exclusive authority and jurisdiction over the operation of the Panama Canal and all its adjuncts, appendents, and appurtenances. We believe this provision to be in violation of the Treaty in that the operating area of the Canal is a neutral area and ships of all nations will have equal right of passage. We would have no objection, however, to have a U.S. military officer in charge of the security of the Canal. He should not, however, have authority over the operation of the Canal. The Board of Directors must continue to exercise this authority; under the Administration's proposed legislation there is no impediment to the full coordination of Canal operations with U.S. security needs, given the U.S. majority on the Board.
Lastly, Chairman Murphy's Bill. H.R. 111, authorizes the President to negotiate an agreement with the Republic of Panama for administration of part of Corozal Cemetery and to transfer to the American Battle Monuments Commission the administration of that part of Corozal Cemetery covered by that agreement. Further, the bill authorizes the disinterment of remains of U.S. citizens from Mt. Hope Cemetery on the Atlantic side and reinterment of those remains in Corozal Cemetery on the Pacific side or in the United States, depending on the
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desires of the next-of-kin. The Executive Branch has no such provision since the President has, in Executive Order 12115 already tasked the Governor with the responsibility for carrying out the project provided funds are made available. As a matter of information, the agreement with the Republic of Panama concerning the permanent cemetery at Corozal has been completed and those plans are moving forward. It appears, however, that unless funds are made available by the Congress soon, the United States will be unable to carry out the requirements of the Randolph Reservation to the Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal.
Although the organizational form of the Commission does not appear in either Titles I or V being reviewed by this Committee, it does have relevance to relations between the U.S. and Panama concerning the Canal. The Administration's bill does provide a recommended position on the form of the Panama Canal Commission. As you know, H.R. 1716 would essentially continue the organizational form of the present Canal Company, which was created by the Congress in 1950 in recognition of the business activities inherent in the Canal operation. Under the corporate form, the Company has been able to maintain an amazing degree of stability in its toll rates and its service to shipping and has never needed a congressional appropriation.
While successful company operation is attributable in large part to the managerial and financial flexibility it enjoys in its corporate form, the Panama Canal Enterprise also has maintained a high degree of accountability to Congress. The 1950 legislation established the Company and set forth the guidelines for its operation; the budgetary controls imposed by the appropriations committees that annually review the budget assure that the Company is spending within its revenues; and audit by the GAO, which reports upon the Company's accounting procedures, and policies, further assures that the Congress maintains control over the corporation.
H.R. 111, on the other hand would change the present wholly-owned United States Government Corporation to an appropriated fund agency. This reversion to the pre-1951 mode of operation of the Canal would have, in my view a negative effect on United States-Panama relations. Panama would view this as a step backwards in terms of modern, efficient operating structure, financial flexibility to support necessary operational responsiveness, and an impediment to growing Panamanian involvement in the decision-making process of an entity for which they will eventually have responsibility. In addition, I believe that, as the years pass, and we approach the time for Panama to assume responsibility for the Canal, it will become increasingly important for U.S. interests in the Canal after the year 2000 that the Panamanians working in the Commission be part of an organization whose workings they completely understand, and which they my take over with the least possible disruption. The corporate structure, with its profit and loss accounting is the best form for the Commission to take.
PERSONNEL
Mr. Chairman, both the Administration's bill and H.R. 111 provide for a package of personnel benefits. As you know many of our personnel are awaiting the outcome of the legislation before they decide on their future. In any event, because of the great decrease in size of the Panama Canal Commission in comparison to the Panama Canal Company and the Canal Zone Government, we have projected that some 2,600 employees, both United States and nonUnited States, will lose their jobs through a reduction-in-force action. This is primarily because of the transfer of function to Panama such as railroads, operation of the ports, bunkering and others. This action, however, will be partially offset by an estimated 1,550 retirements occuring at the same time. Due to the size and complexity of this action, and in consideration of its impact on the lives of employees and their families, we seek passage of implementing legislation by May 31 so that critical preparatory actions can be completed by Treaty effective date.
From an operational point of view, the most critical problem that will develop by late passage of the proposed legislation involves the transfer of over three thousand employees to local Department of Defense activities. If passage is unduly delayed, this transfer would be seriously hampered because of the lead time required by law and regulation to effect such actions and to garantee observance of employee rights. If passage is delayed beyond October 1, the transfers will be prevented because the Department of Defense activities will not have
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been legally authorized to pay the transferred employees from appropriated funds for performance of functions it is scheduled to assume. This would cause transferred employees to be left on the rolls of the Canal organization, although that agency would be precluded by the Treaty from performing those functions. Mr. Chairman, this would be chaotic, not only for the Commission, but for all Federal Agencies operating in the area.
Thank you again Mr. Chairman for the opportunity to appear before the committee today. I will now take any questions that you or the committee may have.
JOINT UNITED STATES-PANAMA COMMISSIONS
Chairman ZABLOCKI. Thank you, gentlemen.
I would like to ask Governor Parfitt a question. How do you envision the various joint committees, both those specified in the legislation, which are the Consultative Committees, and the Joint Commission on the Environment, and those mentioned only in the treaty, the combined Board and the Coordinating Committees?
How do you envision their role and relation or interaction to the Panama Canal Commission?
Mr. PARFITT. I look at the committees you referred to first, Committee on the Environment and the Consultative Committee, as being committees involving high officials of both governments who meet in order to consider high policy questions. They would be making their recommendations in an advisory capacity to their respective governments.
The Coordinating Committee, on the other hand, would be an element of the Commission structure and would have the problem of resolving day-to-day difficulties between the Commission and Panama, and therefore, become very, very important in the dayto-day operations of the canal.
In the final analysis the canal will operate as it does now under the authority of a board. Only in the case of the Commission that board will be made up of five representatives of the U.S. Government and four representatives of the Panamanian Government, as opposed to the current board which is totally made up of American citizens,
Chairman ZABLOCKI. Will the United States be called upon for additional authorization or support for these various joint committees?
Mr. PARFITT. I would expect that the binational committees, Consultative Committees and the Committee on the Environment, that in those instances the United States would have to pay for its members to participate in those bodies.
Chairman ZABLOCKI. Will they not be receiving funding from both countries?
Mr. PARFITT. I would anticipate that the Panamanian Government would pay for participation of its members and the U.S. Government would pay for participation of its members.
COMBINED BOARD AND COORDINATING COMMITTEE
Chairman ZABLOCKI. General Dolvin, why were two of the joint commissions, the Consultative Committee and the Joint Commission on the Environment, included in the implementing legislation and two commissions were not included, the combined Board and the Coordinating Committee? Can you explain that?
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General DOLVIN. Yes; the combined Board and the joint committee, which are two boards that really apply to article, IV of the treaty and its implementing instructions, which is the SOFA (Status of Formal Agreements). We do not feel that the SOFA requires any additional authorizing legislation. The Board itself is an equal number of U.S. and Panama military people and they are. there on the spot with no additional funding required.
They deal with such things as day-to-day coordination of training areas, military plans and so forth.
The joint committee is the instrument that implements or works out with Panama all those things dealing with the SOFA. It is a standard SOFA similar to those we have with other countries around the world. So we did not feel that there was anything else needed.
Chairman ZABLOCKI. Given the duties for the combined Board set forth in article III, paragraph 3, regarding the contingency plans, military exercises and military operations and the recommendatory specifications in paragraph 4; and the Senate understanding, No. 1, to the Panama Canal Treaty-do you view the combined Board as more functional than advisory, or at least more functional than the Consultative Committee?
General DOLVIN. As a matter of degree it might be a little more functional when you speak of training exercises and the use of combined training areas on day-to-day operations. However, the command of the forces is national. Therefore they are advisory in the sense that they cannot order U.S. forces to do anything, and vice versa.
But I think it does have an operations element to it. Also, the Board coordinates the use of training areas and military exercises which perhaps is not true of the Consultative Committee, which just gives advice.
Chairman ZABLOCK. Under article IV, paragraph 4, the combined Board shall make appropriate recommendations to the two governments regarding, projected requirements, the efficient utilization of available resources of the two parties, and other matters of mutual interest with respect to the protection and defense of the canal.
General, would you please elaborate on these recommendations to be made?
General DOLvIN. That goes on to say, I believe, Mr. Chairman, in that same paragraph, "For example, such things as the development of contingency plans, the use of training areas, joint exercises," and so forth.
Chairman ZABLOciI. Are these examples illustrative?
General DoLvIN. Yes, illustrative.
Chairman ZABLOCKi. They are not at all inclusive?
General DOLVIN. No, sir, they are illustrative. We visualize Board membership to be about at the colonel level, two or three people offices on each side. The results of that would be fed into, in our case, the U.S. Southern Command. Then if for some reason the board came up with an issue that could not be resolved it would have to be referred to the respective governments. But we do not believe that that will be the case.
Chairman ZABLOCKI. Thank you, General.
Mrs. Fenwick.
45-853-79-5
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COST OF RAILROADS
Mrs. FENWICK. Thank you, Mr. Chairman. I only have two questions.
One, I hope, Mr. Blumenfeld, that when you give us costs you will give us the original costs also. One thing is going to be the railroads. NWhat did it cost originally, if you have those figures? If you give us what it is going to cost nowadays it is going to be astronomical. I think we ought to have both. It would be far more convincing to see actual figures.
NUMBER OF BODIES TO BE REINTERRED
Governor, I just ask you, how many bodies are there? Why is it :going to cost $1.7 million? Why could they not be left in peace? Why did the Panamanians insist on this action concerning the cemetery?
2Mr. PARFITT. The Panamanians did not insist on this. This was a provision of the treaty included by reservation of the Senate.
Mrs. FENWICK. Why?
Mr. PARFITT. The Senate, as is customary around the world, took the view that provision ought to be made to permit removal of U.S. remains from foreign territory. This has generally been a custom around the world.
Mount Hope Cemetery will be transferred to Panama effective October 1. So it was their view and their direction in the treaty that individuals, next of kin, be notified and informed that, unless they protest it or object to it, those bodies would be removed to another cemetery which will remain under control of the United States, and which Panama has agreed will remain under the control of the American Battle Monuments Commission forever.
Mrs. FENWICK. How many bodies are there?
Mr. PARFITT. There are approximately 1,300 bodies in Mount Hope, but the provision also extends to the other cemetery, Corozal where there are 3,095. In that case, the case of Corozal, individuals have until the .30-month transition period, during which time they can exercise the 'option to remove the bodies to the United States.
Mrs. FENWICK. Talking specifically now about the removal at Mount Hope.
Mr. PARFITT. We have some small amount of money for about 65 bodies that we expect may be transferred in the initial period from Corozal.
Mrs. FENWICK. Have you had any protests?
Mr. PARFITT. Protest was probably a misuse of the word by me. We have had several cases where the individuals have indicated their desire for the body to remain where it is.
Mrs. FENwICK. What are you going to do about that ?
Mr. PARFITT. That is certainly their option. We will honor those requests.
Mrs. FENWICK. Will the Panamanians allow you to leave them there?
Mr. PARFITT. There is not a problem in that respect, as f ar as I know.
Mrs. FENWICK. The cost is $1.7 million, and you are going to take them from one part of Panama to another? Why is it so high?
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Mr. PARFITT. It is not solely from one part of Panama to another. The individual has the option of having the body removed to the United States.
Mrs. FENWICK. Is that in the Senate reservation too?
Mr. PARFITT. Yes, ma'an.
Mrs. FENwICK. Thank you, Governor.
Chairman ZABLOCKI. I believe Mr. Blumenfeld was going to comment further.
Mr. BLUMENFELD. Just let me add that there is no guarantee that Mount Hope, when it reverts to Panama, will continue to remain a cemetery. There might well end up being a shopping center above the bodies remaining there.
Mrs. FENWICK. It seems very expensive to spend $1.7 million for 5,000 bodies. Roughly 4,695 bodies are going to cost $1.7 million?
Mr. BLUMENFELD. When you include disinterment, transportation and reinterment, we can supply for the record the basis upon which these figures were calculated but we did scrub them fairly closely and we did anticipate that that will be the cost.
The U.S. Government would not be paying for new caskets, for funeral services upon reinterment in the United States but strictly for the disinterment, transportation, reinterment. That is the way the numbers come out.
Mrs. FENWICK. About $30,000 each?
Mr. BLUMENFELD. No.
Mr. PARFITT. We have the average cost. Moving the bodies that we anticipate will go from Mount Hope to Corozal, is $979. The average cost of moving a body from Mount Hope to the United States is $1,517, the same cost for moving a body from Corozal to the United States. That is per body.
We do have a breakdown of that.
Mrs. FENWICK. It works out in the arithmetic, unless I am all wrong, to several thousand each, does it not.?
Mr. PARFITT. No, I do not believe so.
Mrs. FENWICK. I am just dividing five into 1 million 7.
Mr. PARFITT. We have a total of movements anticipated, and these are estimates. Of those who possibly could be moved we anticipate in this period, and during 1979, there will be
Mrs. FENWICK. But I am doing the arithmetic, Governor, and 5 into 1,700,000 turns out to about $300,000 each.
Mr. BLUMENFELD. I think you have three extra zeroes.
Mr. PARFITT. I think so.
Mr. BLUMENFELD. Take off the first three zeroes after the 5 and the last 3 zeroes after the 17 and you put 5 into 1,700 or $340.
Mrs. FENWICK. Each?
Mr. BLUMENFELD. Right.
Mr. PARFITT. In fact it is about $1,160 on the average each for a total anticipated movement of 1,468 bodies.
Mrs. FENWICK. Three zeroes do make a difference. Thank you.
WARTIME AUTHORITY IN PANAMA CANAL CODE
Chairman ZABLOCKI. Mr. Bingham.
Mr. BINGHAM. Thank vou, Mr. Chairman.
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I am here primarily to learn about these various issues. I was puzzled by what I thought I heard you say, General Dolvin, and that was with respect to a possible amendment to the War Powers Act, or were you only referring to the amendment that Mr. Bowen had suggested to the authority that would be contained in this legislation?
General DOLvIN. If I made that statement, Mr. Bingham I was incorrect. It really is titled, "Army Control in Time of War, Imminence of War." It is presently in the Canal Zone Code.
Mr. BINGHAM. Not the War Powers Act?
General DOLVIN. No.
Chairman ZABLOCKI. Will the gentleman yield.
The first time it was referred to I also lurched forward and almost wrenched my back.
Mr. BINGHAM. I might explain that the chairman and I both had played a very active role, particularly the chairman, in the development of the War Powers Act. Although it is sometimes considered that it was drafted in the Senate, actually it was mainly drafted in the House of Representatives.
Chairman ZABLOCI. The historians will so record it.
DESIGNEES FOR PRIVILEGES AND IMMUNITIES
Mr. BINGHAM. Governor, I understand that the Canal Zone Central Labor Union and Metal Trades Council of the AFL-CIO has expressed a concern with regard to the provision granting the privileges and immunities to 20 persons and requests that a minimum of 25 percent of the persons so designated be representative of U.S. organized labor unions.
I take it that they would like an amendment to reflect that. What is your comment on that?
Mr. PARFITT. The treaty provides authority to name 20 officials of the Commission plus their dependents. So it appears to be somewhat restrictive in that regard. Nevertheless there is the possibility of the inclusion in this official categorization of union officials who are employees of the Commission.
I would be opposed to having any particular prescribed percentage. I think that discretion ought to rest with the Commission.
Mr. BLUMENFELD. I would fully concur with that.
Mr. BINGHAM. Is there some way that we can give this group reassurance that they would have what they seem to be concerned about, unimpeded access to the Congress, news media, so on, without threat of reprisal?
Mr. PARFITT. All of our employees are afforded that under the terms of the treaty-the freedom of egress and ingress to their work in Panama. We have always encouraged and permitted the union employees to be heard and helped them to be heard before the committees of Congress.
Mr. BINGHAM. Thank you.
Chairman ZABLOcKI. Are there any further questions?
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HARASSMENT OF A UNION OFFICIAL
Mrs. FENWICK. I would like to say that I think we ought to be very careful in having any particular groups officially recognized, because if you leave out, for example, the shipping interests, the chambers of commerce, the conservation groups, we are going to have a group of 20 committed members. I think it would be a very great error for us to be committed to assigning any position to represent any special group.
All the citizens of the United States who happen to stay in the Canal Zone, including organized or unorganized labor, or conservationists or businessmen or anybody else ought to have free access to this Congress, to the media, and the protection of our Government.
I think there has been, it has come to my ears also, some harassment of someone who happened to be a labor official. I think we must resent that most strenuously. That man or woman who came and testified should be protected.
In fact there are laws to protect those who come before these committees from such harassment and such ill treatment.
I wonder, Governor, if you could give us any report on that particular incident? There was even a bombing, I think, of his car.
Mr. PARFITT. The particular incident to which you relate is that of an official of a union. He happened to be the president of the police union, Mr. Drummond by name, who was en route through Panama, en route to Washington to testify to a committee.
He was detained by Panamanian authorities and held for questioning for a period of time before being released. We protested that action most vigorously.
As I indicated before we have taken every measure to insure that all interested parties are afforded the opportunity to appear before Congress and we will continue to do so.
Mrs. FENWICK. What did they do in relation to that man? What happened to that individual?
Mr. PARFITT. That individual is still working in the Canal Zone, is still the president of the police union and is a member of the police force.
Mrs. FENWICK. The harassment has stopped?
Mr. PARFITT. There has been no harassment of any of our employees that I know of in recent months.
Mrs. FENWICK. Thank you.
Chairman ZABLOCKI. Governor, I might suggest, in further amplifying your record in response to questions by Mr. Bingham, that you fortify your response with some statistics or actual evidence in support of your reply.
Mr. PARFITT. I will be glad to, sir.
I would just like to clarify that the opportunity and freedom of individuals coming and going to the United States and to be represented before Congress is somewhat different and apart from the special immunities that are afforded to the 20 officials that I referred to.
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They would have additional privileges and benefits somewhat akin to what are provided to our diplomats around the world. Those are additional to the basic rights that are otherwise guaranteed.
Mrs. FENwICK. They do not have to go through customs and all that?
Mr. PARFITT. That is correct.
Chairman ZABLOCKI. On behalf of the members of the committee and certainly myself, I would like to thank the witnesses for their testimony this morning and the clarification of the issues before us.
Before the committee adjourns, the chair would like to remind the members that we will meet tomorrow morning at 9:30 to receive testimony from our colleague, Hon. John M. Murphy, chairman of the Committee on Merchant Marine and Fisheries and sponsor of H.R. 111. After Congressman Murphy's testimony we will begin markup of the legislation. It will be in room 2172. We will have a large audience and I hope the full complement of our committee.
The committee stands adjourned.
[Whereupon, at 12:30 p.m., the hearing was adjourned, subject to the call of the Chair.]
PANAMA CANAL IMPLEMENTING LEGISLATION
THURSDAY, APRIL 5, 1979
HOUSE OF REPRESENTATIVES,
COMMITTEE ON FOREIGN AFFAIRS, Washington, D.C.
The committee met in room 2172, Rayburn House Office Building, Hon. Clement J. Zablocki (chairman) presiding.
Chairman ZABLOCI. The committee will please come to order.
We meet this morning to hear testimony from a very important Member of Congress, Hon. John M. Murphy, chairman of the Committee on Merchant Marine and Fisheries who is the principal sponsor of H.R. 111, one of the implementing legislation measures on the Panama Canal Treaty. If the chairman will please come to the witness table we will hear his testimony.
We welcome you Chairman Murphy.
STATEMENT OF HON. JOHN M. MURPHY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF NEW YORK
Mr. MURPHY. Thank you Mr. Chairman. I certainly appreciate the courtesies you extended to our committee on all matters involving international affairs.
I would ask unanimous consent that my statement be placed in the record and I will just briefly mention the fact that in H.R. 1716, as reported by our committee, the provisions track the parallel provisions of H.R. 111 which is legislation that I introduced.
TWO DIFFERENCES BETWEEN HFAC AND M.M. & F. BILLS
The Foreign Affairs Committee language in title I of H.R. 1716 and the Merchant Marine Committee language in H.IR. 111 is identical with exception of two areas. Of those two areas, one involves the war time and national emergency powers that the Merchant Marine Committee felt should be in here in one respect, that is, in time of war or national emergency the President should put one person in command of the Panama Canal for obvious reasons. The authority the committee wants to provide is the same contingency that existed throughout the entire history of the canal and worked well through World Wars I and IT,
(67)
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The second difference in our language is really more ceremonial. The issue is who designates certain privileges under article VIII? Does the ambassador and the State Department or does the Secretary of defense designate those people who would have certain diplomatic immunities. Those two areas are the only differences between the versions and proposals of the two committees.
Chairman ZABLOCKI. Without objection your prepared statement Mr. Chairman will be part of the record.
[iLepresentative Murphy's prepared statement follows:]
PREPARED STATEMENT OF HON. JOHN M. MURPHY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW YORK
Mr. Chairman, members of the committee, thank you for this opportunity to present to you my general views on Panama Canal Treaty implementing legislation and my views on the particular matters before this committee.
I understand that the committee print before members of this committee for markup today contains language which, execpt for two sections, is identical to the language in H.R. 111 which the Committee on Merchant Marine and Fisheries ordered reported on Tuesday. I commend this language to your consideration because it protects U.S. interests to the maximum extent practicable. I also believe that the language will be acceptable to most of our colleagues.
CONSULTATIVE COMMITTEE
Members of the Committee on Merchant Marine and Fisheries have had a concern that the Consultative Committee envisioned in Article III of the Panama Canal Treaty of 1977 would impede the operations of the Panama Canal Commission. The Consultative Committee will have equal representation from the U.S. and Panama, whereas the Panama Canal Commission, which is to be a U.S. Government agency, will have a majority of U.S. nationals on its board.
The language in section 105 of H.R. 111, language identical to that which will be before you, makes it clear that the Consultative Committee will have no authority whatsoever to direct the Panama Canal Commission, or any other U.S. agency. However, even if this language is enacted, the Congress will have to be vigilant in the next twenty years to insure that real control of canal operations remains with the United States. If our country is to have the operational and financial responsibility for the canal to the year 2000, we must exercise concurrently our rights under the Panama Canal Treaty. In making this assertion, I am not taking the position that we should exclude the advice and concerns of Panamanians-since they will be our cohorts in the canal operation to the year 2000 and will run the canal thereafter.
JOINT COMMISSION ON THE ENVIRONMENT
In hearings on treaty implementing legislation, testimony before the Panama Canal Subcommittee gave clear indication that degradation of the canal watershed was a major threat to the future operational viability of the Panama Canal. In view of this threat, the Joint Commission on the Environment, which is envisioned in Article VI of the Panama Canal Treaty, can perform an important service if it will monitor the status of the watershed during the life of the Panama Canal Treaty. To carry out its legitimate functions, there is a need for staff, and accordingly authority to appoint staff is contained in the language of the committee print, which is identical to section 106 of H.R. 111 as reported.
As chairman of the Committee on Merchant Marine and Fisheries, I along with the chairman of the Panama Canal subcommittee, felt that the status of the environment in the canal area was of major importance to the canal's operation, and to the preservation of important species of fauna and flora. That is why the late Chairman Metcalfe and I authorized the Office of Technology Assessment to do a working paper for the committee on the environmental issues affecting the Panama Canal. The paper presented to our committee is available to you. After reading it I am sure that you will be convinced of the importance of the surrounding physical environment to the Panama Canal.
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AUTHORITY OF THE AMBASSADOR
Section 109 of H.R. 111 as reported contains language identical to section 104 of the committee print. This language concerning the authority of the U.S. Ambassador in Panama strikes a balance between maintaining the administration independence and integrity of the Panama Canal Commission while at the same time keeping the Ambassador fully informed, as consistent with the law authorized -by the Foreign Affairs Committee on Ambassadorial Authority. The language as written will allow for flexibility in the choice of who within the commission may keep the Ambassador informed.
REPEALS
All of the repeals that would be effected by the Foreign Affairs Committee print of title I of H.R. 1716 are likewise provided for in chapter 3 of title III of H.R. 111 as reported. The termination of United States jurisdiction over the Canal Zone makes these repeals necessary.
PRIVILEGES AND IMMUNITIES
As the Committee on Merchant Marine and Fisheries ordered reported H.R. 111, The Secretary of Defense is the officer designated to choose the officials and other persons who would enjoy the privileges and immunities bestowed in accordance with article VIII of the Panama Canal Treaty of 1977. This designation of the Secretary of Defense in H.R. 111 was in accordance with the authority invested in the Secretary of Defense 'or his designee to provide direction to the commission H.R. 1716 as introduced designated the Secretary of State to choose those who would enjoy privileges and immunities.
CONTROL OF CANAL IN WARTIME
Throughout the period of consideration of Panama Canal Treaty, There has been strong debate on the issue of how the United States should secure control of Panama Canal operations during wartime. H.R. 1716 as introduced repealed in toto the present statutory provision for control of the canal during war or when war is imminent. H.R. 111 as introduced, and as reported, continues the present provision that authorizes the President when a wartime situation arises, to designate a military officer to assume exclusive authority over the operation of the canal. This present provision dates from 1912 and has been utilized by presidents during the First and Second World Wars.
Continuation of the present authority of the President to defend the canal is based on the fact that integrated operation and defense of the canal in time of danger is absolutely necessary to the canal's continuous functioning. Unity of Command is a basic military principle which would be damaged by the concept of 5 IJ.S. and 4 Panamanian Board Members attempting to decide how to defend the Panama Canal.
The contention has been made that the present provision in H.R. 111 for defense of the canal is inconsistent with the Panama Canal Treaty and Neutrality Treaty. The provision is consistent with the assertions of executive branch officials at the time of the treaty debates that the United States, with primary responsibility for operation and defense of the canal to the year 2000, had a right to take all actions necessary to defend the canal and protect its neutrality. The DeConcini amendment lent further authority to the exercise of defense rights by the United States. I know of no provisions 'of the Panama Canal Treaty which restrict the authority of the United States to enact laws providing for operation of the canal with appropriate consideration of the circumstances affecting that operation in time of war.
CONCLUSION
Thank you again for the privilege of presenting my views, Mr. Chairman. I thank you for sending your staff personnel to all of the hearings and markups of the' Panama Canal subcommittee. I thank you for your cooperation with and consideration of the views of the Committee on Merchant Marine and Fisheries.
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AUTHORITY DURING WARTIME
Chairman ZABLOCKi. As far as the first issue you mentioned is concerned, regarding the wartime authority section of your legislation, the testimony we have heard, is that the President does indeed now have that authority and we were assured that he would carry out that testimony we have heard, is that the President does indeed now be construed as inconsistent with the terms of the treaty. Would you care to comment?
Mr. MURPHY. The language adopted by the Committee on Merchant Marine is clearly within the letter of the treaty. The treaty specifically states applicable U.S. laws will apply. The question I think is one of judgment and the lessons of history.
Wherever we have had a divided authority, I would say a Commission of five and four cannot make quick decisions that would be necessary in a time of national emergency or wartime-we have a problem. Yes; during other times the Commission-type operation is certainly adequate, but where we have the lessons of history before us, I certainly think unity of command and that single voice is necessary.
Chairman ZABLOCKI. The staff will give you a copy of our committee print. On page 12, subsection 105 entitled "Defense of the Canal" presents compromise language prepared by our colleague, Mr. Bowen. It reads:
In time of war in which the United States is engaged, or when, in the opinion of the President, war is imminent, the Administrator of the Panama Canal Commission shall, upon the order of the President, comply with such directives as the U.S. military officer charged with the protection and defense of the Panama Canal may consider necessary in the exercise of his duties.
Would this satisfy you, Mr. Chairman?
Mr. MURPHY. Mr. Chairman, I don't think that in time of war or national emergency, under conditions in the world as they are today,. with the weaponry in the world today, that we need two voices, and I think this language still has two voices, the administrator, of course subject to a commission of nine persons and then the military officer.
I think it should be clear that the military officer has the wartime power in that operation.
Chairman ZABLOCKI. If I may point out on lines 21 to 24 it clearly states that the administrator must comply with the directives of the U.S. military officer charged with the protection and defense of the Panama Canal. It would be his say-so, not the administrator's-I think it would do the same thing your language does, Mr. Chairman.
Mr. MURPIY. I would like to see a copy of our bill.
The language as we reported it makes crystal clear-the language here I think in your legislation does not. make crystal clear-the lines of command in that emergency situation. We state:
When in the opinion of the President war is imminent, such officer of the Armed Forces as the President may designate shall, upon the order of the President, assume and have exclusive authority and jurisdiction over the operation of the Panama Canal and all its adjuncts and appendants and appurtenances,
That is clear and I think we don't want a debating society to question the necessary timely movements in this canal enterprise during a national emergency or time of war. I think the adoption of the DeConcini amendment in the Senate pointed out how critical this defense issmme was in the ratification of the treaty, and the treaty arrangement would not have been ratified without that DeConcini reservation.
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I think this issue is also going to be one of the key issues brought up on the floor when we are going to face a very strong movement to nullify completely the implementing legislation we have drawn.
Chairman ZABLOCKI. Mr. Chairman, we indeed want to cooperate with you. And that is the reason I asked the questions I had on this particular proposal, in order to further make it crystal clear what language in the report be acceptable.
Mr. MURPHY. Mr. Chairman, I have been dealing for years with report language in legislation that has been passed and an issue that is economic, an issue that is not critical such as a wartime or a national emergency, it might be all right, but I would prefer to make it crystal clear in the legislation itself and not have a lot of corporate lawyers going to a Court of Appeals over report language that gives people the opportunity to circumvent the true intent of Congress.
Chairman ZABLOCKI. Mr. Chairman, the DeConcini language in the other body did not change the treaty. It was merely an addendum to interpret what is intended in the treaty. So it was similar to a report, was it not?
Mr. MURPHY. In 1990, the Administrator of the Panama Canal will be a Panamanian national. Then we run into the further problem of the President, under your language, calling on the Administrator who is a Panamanian to submit to certain orders, let us say, of the southern area commander, and I just think that the compromise is faulty in its practical application of what we must expect to do in a time of emergency or wartime.
We must have a unity of command and a single voice. That is why we tried in our recommendation to the House to make it tight so there would not be that, call it looseness, in the language.
Chairman ZABLOCKiT. Thank you, Mr. Chairman. My time has expired.
Mr. Winn.
Mr. WINN. I have no questions.
Chairman ZABLOCKI. Mr. Bingham.
Mr. BINGHAM. I have no questions.
Chairman ZABLOCKI. Mr. Yatron.
Mr. YATRON. Thank you, Mr. Chairman. I have no questions.
Chairman ZABLOCKI. Mr. Gilman.
EFFORTS ON BEHALF OF LEGISLATION
Mr. GILMAN. Mr. Chairman, while I have no questions, I do want to commend the gentlemen from New York for taking the time to express the views of his committee with regard to this issue. We thank the gentleman for appearing before our committee.
Chairman ZABLOCKI. Mr. Ireland.
Mr. Pease.
Mr. PEASE. No questions, Mr. Chairman.
Chairman ZABLOCKI. Mr. Pritchard.
Mr. PRITCHARD. Having also been on Chairman Murphy's other committee, I want to say that while I did not agree with Chairman Murphy's bill as it is written, the committee did a tremendous amount of work, and the bill is not that f ar off the mark.
I hope we can work out the differences here, but I do want to say to Chairman Murphy that this was not some light operation. I know the work he put in and it was substantial.
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Mr. MURPHY. I thank my colleague for supporting the legislation as it was reported from the committee.
Mr. PRITCHARD. Unfortunately, I was unable to be at the meeting when the final vote was cast, but I did indicate a no vote with my proxy.
Mr. MURPHY. We have not received our dissenting additonal minority views yet, Mr. Chairman. I am sure the gentleman from Washington will be in those.
Mr. PRITCHARD. I don't have violent opposition to where you were, where you came out. I think the bill does raise some question as to whether we have fully carried out the intent of the treaty and I think this is one of the things we have to be very careful about.
Mr. MURPHY. Mr. Chairman, the treaties are very vague. The President acknowledges that the treaties were vague and probably they would not have passed the Senate had they been as distinct as our legislation must be because they did not face what I think you will face and the rest of us will face when we go to the floor and are questioned in great detail on the implementing language, which of course is our responsibility.
Tightening up on vague language sometimes permit some sides to say: "Oh, you are violating the spirit of the treaty." We have not violated the language of the treaty in any instance in the language that was reported from the Merchant Marine Committee.
Mr. PRITCHARD. You say we have not violated any language. Do you think we violated any of the spirit?
Mr. MURPHY. I think there are a number of spirits flying around the treaty ratification. There will be some elements that will use that exercise to get their own way on different amendments. The true intent of the treaty arrangement is being carried out by H.R. 111.
Mr. PRITCHARD. I have no questions.
Chairman ZABLOCKI. Since the lifting of prohibition spirits are not really important any more.
Mr. Barnes.
Mr. BARNES. I have no questions, Mr. Chairman.
Chairman ZABLOCKI. Mrs. Fenwick.
ABILITY TO DEFEND THE CANAL
Mrs. FENWICK. Thank you Mr. Chairman. I have some questions.
We heard yesterday about the Neutrality Act and the powers that evolved under that act. I presume your lawyers have looked into that and found this is in accord with that also. I would like to get a better understanding of it. Nobody wants to do something irrational and dangerous here and certainly the defense of the canal is important, but doesn't that new Neutrality Act allow us to defend the canal.
Mr. MURPHY. Yes it does-but what we are dealing with here is the practical application that has worked for 60 years.
Mrs. FENWICK. But we are moving into another era, under a new act. We are not living 60 years ago. Mr. Chairman, it seems to me it would be terrible if we, in this implementing legislation, do something to damage what has been achieved.
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You speak of the different spirit. The spirit here has to be justice and it has to be with regard to the law. If the Neutrality Act permits us under that act to move in defense of the canal when the President decides that war is imminent or present, it would seem to me that that ought to be adequate.
I don't understand-maybe you could explain it to me-what deficiency is there.
DEFENSE UNDER THE NEUTRALITY ACT
Mr. Murpi-y. History is replete with examples of loosness of authority in critical times that have caused major defeats.
We can go to the Vietnam war and realize we did not have unity of command or a single voice directing the operations there and, of course, the outcome was an example of divided authority. We go back through thousands of years and do this.
What we do is wholly within the law, wholly within the Neutrality Treaty. What we do is insure the practical application of the defense of that area. We insure that the United States is involved in a war or a critical national emergency situation we do have that unity of command, and that single voice that is so necessary to direct operations.
Mrs. FENWICK. You explained that so eloquently, Mr. Chairman. Where do you find the Neutrality Act deficient?
Mr. MURPHY. I think what we are dealing with is a special situation in the Panama Canal. That is also the reason we have such a difference of opinion.
This will be a Commission which in 10 years will be controlled by a non-American national. I th nk the language that I recommended is necessary under the circumstances.
Mrs. FENWICK. Could you tell me-or perhaps I am asking too much-about the deficiencies of the Neutrality Act?
Mr. MURPHY. In this instance how does the United States tell an Administrator who is a foreign national, who has already been instructed to vote his four out of nine members en bloc in an area, and then have a division exist on that Commission, to expedite defense operations in this area.
Mrs. FENWICK. It seems to me under the Bowen amendment we would have a military officer arriving with armed personnel, with ammunition, in that small country and the act would require that his orders be obeyed.
Mr. MURPHY. That is not the case, Mrs. Fenwick. What happens is that it is much like the nationalization of the railroads in other periods of emergency within our country.
Under our language, the Administrator merely changes a hat but the fact is that lie speaks as a single entity in order to control what is there already, and that is precisely what we are trying to do.
Mrs. FENWICK. But the Bowen amendment says under those conditions the military officer can do anything he may consider necessarV in the exercise of his duties. Now it might mean he has to put. the Administrator in prison if he is not obeying the orders of the military officer.
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Mr. MURPIIY. I think that is an extreme case.
Mrs. FENWICK. Of course it is. We hope it would not happen but there is that protection. No?
Mr. MURPHY. We are not worrying about the Administrator complying with orders. We are worrying about the defense of a vital installation.
Mrs. FENWICK. But that is brought about by the Administrator obeying the orders of the military commander sent by the President.
Mr. MURPI-LY. I think we just have a basic difference of opinion in this case.
Mrs. FENWICK. Thank you, Mr. Chairman.
Chairman ZABLOCKI. Mr. Bowen.
Mr. BOWEN. No questions.
Chairman ZABLOCKI. Mr. Broomfield.
Mr. BROOMFIELD. No questions.
Chairman ZABLOCKI. Mr. Mica.
HOPE IN FUTURE FOR ADVANCE INFORMATION
Mr. MICA. Mr. Chairman, notwithstanding the fact that my constituency is 5,000 or 10,000 to 1 in opposition to the treaties and feel strongly any vote against this will negate the treaties, I commend both chairmen for the work they have done.
I would say as a freshman Member it appears to me that all of this legislation that we are considering might be done with some additional ease if there were some way to do it in concert with the treaties.
I don't know what this would take with regard to changes in legislation and so on but we handled Taiwan legislation after the treaties were signed and in fact 'after they were negotiated without much knowledge given to the House of Representatives.
We are handling the Panama Canal Treaties now after the fact. It just 'appears-I am sure I will be inundated with staff who will tell me why we can't do this-if we were given more information, as the Treaties were negotiated, in this committee and possibly the House, and maybe the Senate also, it might make it easier when we come to these decisions. That is the only comment I have.
Chairman ZABLOCKI. Mr. Lagomarsino.
Mr. LAGOMARSINO. No questions.
Chairman ZABLOCKI. Mr. Wolpe.
Mr. WOLPE. No questions.
Chairman ZABLOCKI. Mr. Fithian.
Mr. FITHIAN. No questions.
Chairman ZABLOCKI. Mr. Gilman.
REGULATION OF TOLL RATES
Mr. GILMAN. Thank you, Mr. Chairman. If the gentleman from New York could advise me, one issue that has been troubling me is where in all the legislation do we provide for some proper regulation of toll rates that will be charged to make sure they are not exorbitant.
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While I recognize this is not within the area of joint consideration at the moment, is there some place in the legislation we are protecting American shipping going through at reasonable rates?
Mr. MuRpHY. It is not just American shipping for which the canal was built. The shipping of all nations and the toll formulas have traditionally been set equally to all ships that transit. The Commission itself will have the responsibility to set toll rates and I think the Commission, of course, will be representive of both countries, the United States having a majority on that Commnission to the year 2000.
The toll fomulas, although they will go up-21-percent increase is scheduled for October 1 to meet additional payments required by the treaties-I think that the Commission will be able to keep under control and on a joint basis the size of the increases over a period of time until the year 2000.
Mr. GILMAN. What happens in the year 2000 to the complexion of the Commission?
Mr. MURPHY. The canal goes to the Panamanians completely.
Mr. GILMAN. What happens then with regard to our input with regard to toll rates. Do we have any mechanism?
Mr. MURPHY. The only inechanisni then would be international economics and usage of the waterway.
Mr. GILMAN. What you are telling us is by the year 2000 we have to hope we will come out with a reasonable toll rate, is that correct?
Mr. MURPHY. At that time the philosophy will be that tolls will be representative of all that the traffic will bear.
Mr. GILMAN. That is not a very satisfactory answer. I thank the gentleman for his response.
REFERRAL OF LEGISLATION
Chairman ZABLOCKI. I want to join my colleagues in commending you, Mr. Chairman. I know your committee and your subcommittee of the Merchant Marine Committee have given much time and effort.
I know the sincerity in which you support your proposal. As you know, Mr. Chairman, only title I was referred to our committee. Titles II, III, and IV were not referred to this committee.
We may have some views on it, but we are not going to try to amend the other titles. We may put it in the report, and since your committee has amended title I, which is within our jurisdiction, I hope you won't feel offended if we are going to insist on some of the amendments we think should be in title I.
Mr. MURPHY. There was referral of specific titles of H.R. 1716 to specific committees and then there was a concurrent referral of other areas. We did not intrude in the jurisdiction in H.R. 1716 of this committee.
In H.IR. 111, however, which we had introduced, which is a comprehensive piece of legislation. we felt that that bill was referred specifically to our committee so it was within our purview to amend within the areas of H.R. Ill.
Chairman ZABLOCKT. Portions of 11.R. 111 are now included in II.R. 1716 including title I.
Mr. MURPHY. Yes. And that is a function of the iRules Committee .and what the House adopts as a working document.
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Chairman ZABLOCKI. My concern is you won't feel offended if we voice our opinion.
Mr. MURPHY. We have thick hides on that other committee, Mr. Chairman.
Chairman ZABLOCKI. Believe me we don't have thin hides either. Thank you very much. We deeply appreciate your coming before the committee.
MARKUP OF COMMITTEE PRINT
We will now go into the markup of the committee print. Before each member is a copy of the markup document with which we will be working this morning and a section by section analysis on H.R. 1716, as introduced is before each committee member.
The markup document is a product of discussions among the staffs. of the four committees involved, Foreign Affairs, Merchant Marine and Fisheries, Post Office and Civil Service, and Judiciary, and legislative counsel in the executive branch.
At this point the Chair would like to emphasize, under the terms of the Speaker's referral, section 2 and title V of H.R. 1716 was referred to all of the committees involved jointly. Title I of the bill was referred only to the Committee on Foreign Affairs except for section 106. Therefore under the terms of the referral this committee can take action only on those parts of the bill specifically referred to it.
The italicized language in section 2 and titles I and V reflects, with one exception, compromise language approved by the other committees and the executive branch pursuant to the staff discussions I mentioned' earlier. The one exception is the new section 105 of the print entitled "Defense of the Canal."
The executive branch testified that language on this issue adopted in the Merchant Marine and Fisheries Committee would be in violation of the treaty. That issue was a matter of discussion this morning with the chairman of the Merchant Marine Committee.
The language in the committee print represents a compromise between the original executive branch draft and the Merchant Marine, and Fisheries Committee language and is supported by the executive branch.
The only other difference in the Merchant Marine and Fisheries Committee markup and the committee print before us involves section, 107 on page 13 entitled "Privileges and Immunities."
The committee print retains executive branch language which provides that the Secretary of State shall define who shall enjoy the privileges and immunities accorded pursuant to the treaty.
The language adopted in the Merchant Marine and Fisheries Committee names the Secretary of Defense as the person with that responsibility.
Therefore, I have taken their very brief explanation in order to hopefully expedite the markup of the committee print H.R. 1716 before you. I will ask the clerk to read.
Mr. BOYER [reading]:
Committee print, April 5, 1979, H.R. 1716, House of Representatives, January 31, 1979, a bill to implement the Panama Canal Treaty of 1977 and related agreements, and for other purposes.
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Be it enacted by the Senate and House of Representatives of the Uni ed States of America in Congress assembled, That it is the purpose of this Act to provide legislation necessary to or desirable for the implementation of-the Panama Canal Treaty of 1977 between the United States of America and'-the Republic of Panama and of the related agreements accompanying that treaty.
Chairman ZABLOCKi. The gentleman from Michigan asks unanimous consent that the bill be considered as read and printed in the record and open for amendment at any point. Is there objection?
The Chair hears none. Are there any amendments to section 2 on page 5?
Are there any amendments to those sections of H.R. 1716 which were referred to the committee? I understand Mr. Bowen's amendment is incorporated in this committee print, is that correct?
Mr. BoYEI. That is correct.
Chairman ZABLOCKI. If there are no further amendments, the Chair would entertain a motion that those sections of H.R. 1716 which were referred to the committee be favorably reported with the amendments that are included in the committee print.
The gentleman from Michigan moves that those sections of 1.1. 1716 which are referred to the Committee on Foreign Affai-s be favorably reported.
All those in favor signify by saying, "Aye."
[A chorus of "ayes."]
Chairman ZABLOCKI. Opposed, "No."
The ayes appear to have it. The ayes have it. Those sections of the committee print which were referred to the committee, are favorably reported with amendments.
The Chair is instructed to take the steps necessary to expedite consideration of the action taken by the Foreign Affairs Committee.
The Chair would like to advise the members that we would hope that, if they have any suggestions for the report or additional, supplemental, or minority views in opposition, that they be made available by noon next Tuesday. That is the last day before our spring recess.
Is there objection to the Chair's request.? The gentleman from Mississippi?
Mr. BowEN. I have one observation I would like to make. I thought there might be some debate on the wartime authority section but there was not. I had reserved my remarks at that time rather than enter into a debate with my good friend and chairman, Jack Murphy.
I would simply like to point out, so the record might be clear, that in Chairman Murphy's testimony he does accurately point out that legislation does exist on the statute books now to provide for a military officer to assume exclusive authority for the operation of the canal in wartime.
In both World War I and II, the method of exercising that authority was to work through the Governor, for the military command to issue its directives through the Governor of the Panama Canal Company, which is precisely, of course, the language that this conmittee has just reported out.
That military commander appointed by the President should work through the Administrator. I think Chairman Murphy also made reference to the fact after the year 1990 that there would be a Panmanian Administrator andI this might present a problem.
45.-85 -7-- 6
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I would like to point out also for the record that that Administrator is appointed by the President and would be removable by the President, and for that reason I think it is clear he would be carrying out the instructions of the military officer named in this language.
Frankly, I would have to tell the chairman that if I were simply voting on what I thought would be the best kind of language to have in the treaty, I would accept that recommended by Chairman Murphy. But we are not writing the treaty.
It is my feeling though, and apparently that of the majority of this committee, that that language is in violation of the, treaty. For that reason we arrived at this compromise language which, as I pointed out, does attempt to maximize the influence of a single military commander in time of crisis, while at the same time retaining consistency with the treaty. Thank you, Mr. Chairman.
Chairman ZABLOCKI. I want to thank the gentleman and our colleague from Mississippi for his comments. The Chair would hope that the gentleman from Mississippi will assist the staff in providing language for the report. We will have the transcript of exactly what you have. said and that will, be incorporated in the report, which will be very helpful.
I thank the gentleman. Any further business before the committee?
The committee stands adjourned, subject to call of the Chair.
[Whereupon, the committee adjourned at 10:20 a.m., subject to call of the Chair.]
APPENDIX 1
STAMrr OF F1ni.:Ns OFr Tm: EARTh ON PANAM CAX TREATY IMPLEMENTATION LEGISLATION My name is David E. Ortman, a Research Associate with Friends of the Earth. Friends of the Earth is a national environmental organization with approximately 20,000 members. In addition, we have sister organizations in twenty foreign countries. Environmental and conservation organizations have long been concerned about the preservation of the Canal Zone in Panama. We have also continued to voice opposition to a Sea-level Canal across the Isthmus. These concerns were made recently in a letter to President Carter on the implementing legislation and we ask that it be included in the record. The provisions of the legislation before the Committee on
-Foreign Affairs (International Relations) are Section 101 (U.S.-Panama Joint Committees) of H.R. 1716 and Section 106 (Joint Commission on the Environment) of H.R. 111.
JOINT ENVIRONMENTAL CO>1M&ISSION
Section 101 of H.R. 1716 and Section 106 of H.R. 111 both attempt to carry out the intent of paragraph 2 of Article VI of the Panama Canal Treaty of 1977:
Article VI Protection of the Environment
1. The United States of America and the Republic of Panama commit themselves to implement the Treaty in a manner consistent with the protection of the natural environer.nt of the Republic of Panama. To
this end they shall consult and cooperate with each other in all appropriate ways to ensure that they shall give due regard to the protection and conservation of the environment.
2. A Joint Commission on the Environmcnt shall be established with equal representation from the United States of America and the Republic of Panama, which shall periodically review the implementation of this Treaty and shall rccmmaend as appropriate to the two Governments ways to avoid or, should this not be possible, to mitigate the adverse environmental impacts whicn maght result from their repective actions pursuant to the Treaty.
(79)
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3. The United States of America and the Republic of Panama shall furnish the Joint Commission on the Environment complete information on any action taken in accordance with this Treaty which, in the judgement of both, might have a significant effect on the environment. Such information shall be made available to the Commission as far in advance of the contomplated action as possible to facilitate the study by the Commission of any potential environmental problems and to allow for consideration of the recommendation of the Commission before the contemplated action is carried out.
"l. 716 makes -reference only to the appointment of U.S. Representa.
tion to the Commission. H.R. 111, on the other hand, outlines in
more detail the role and make up of the Cormmission:
a) limiting the number of representatives on the Commission to
three each from the U.S. and Panama; b) charging the joint commission to oeriodicallv review the implement tion of the Treaty;
c) to make rocor nndations to the U.S. and Panama with respect to ways to avoid or i adverse environmental iMpOcts; d) appointing recrosnttives of the U.S. by the President, bX and with the advi -_ of th _Snat ;
e) U.S. Coecmission mae1er servina without comoensation, except for travel expenses in accordance with Section 107.
H.R. 111 therefore sets within the legislation the minimum requirements of Article VI of the Panama Canal Treaty of 1977.
However, several aspects of the JEC need to be resolved. First
is the question of funding. As a matter of policy and to insure
as much independence as possible, the JEC should receive appropriated
funding from both governments. While the environmental impacts may
logically be assesed as part of the canal operations and therefore
recovered from tolls, we feel that to tie the Commission to such
funding at this point would be unwise. However, we- would encourage
a study.after the establishment of the JEC to determine-the relative
impact to tolls should funding be attached to this source.
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Second, we feel that U.S. Commission members should be salaried in order to attract a larger number of candidates, not just those who could afford to undertake such a position without compensation. We ask that this portion of H.R. 111 be amended. Third is the question of scope. The Joint Environmental Commission should have the broadest possible latitude to insure that the Treaty is implemented in a manner consistent with the protection of the natural environment of the Republic of Panama. In otherwords, there should be no attempt to restrict the JEC to impacts only within the existing canal zone. This is particularly important since only 1/20 of the entire Canal watershed is within the Canal Zone.
Fourth is the matter of the relationship between the JEC and the Panama Canal Commission. We favor complete independence for the JEC from any influence, either financial (tying the JEC to tolls for example without adequate financial independence) or political. At the same time however, we would like to see the maximum possible involvement with the Panama Canal Commission at the earliestpossible time in the decision making process to adequately carry out the requirements of paragraph 3 of Article VI and to insure that adverse environmental impacts are avoided or mitigated. One way to do this might be to have the Chairman of the JEC be a permanent member of the Consultative Committee set up in Sec. 105 of H.R. 111 persuant to Paragraph 7 of Article III of the Treaty.
Thank you for allowing these comments, specific responses to questions on the Joint Environmental Commission submitted to us by the Subcommittee on Panama Canal are also attached for the record0an pur consideration.
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82
Q. What views do you have as to the environmental ramifications of the Panama Canal Trcaty and related aereemants? How should the implementing legislation deal with sucn ramifications, particularly the detrimental ones? What provisions should be added to the
legislation?
A. First, paragraph 1 of Article VI commits the U.S. and Panama to implement the Treaty in a manner consistent with the protection of the natural environment of the Republic of Panama. Section 2 of H.R. 111 (Purpose of Act) should include the wording, "to insure that implementation of the Treaty is carried out in a manner consistent with the protection of the natural environment of the Republic of Panama. (No such section exists in H.R. 1716). The final implementing legislation should include the above wording
as a purpose of the act.
Second, the environmental ramifications of the Panama Canal Treaty range from protection of the Canal Zone and its wildlife and forests, to environmental aspects of running the canal, such as dredging and chemical and biological control of weed populations. It is hard to forsee all the possible impacts that implementation of the Treaty will bring. That is why the JEC should have the staff and capability to undertake a wide range of studies on a variety of issues. These should include:
a) continued baseline studies of Atalantic and Pacific populations to help determine the effects of possible sea-water pumping into the present canal;
b) studies to determine the impacts of deforestation and to monitor the effectiveness of the Watershed Management Project which the U.S. AID is funding with a loan of $10 million; c) studies to determine the impacts of dredging and chemical and biological control of weed populations. 2,4-D Amine Salts and Diquat are currently being used for weed control in the canal. 2,4-D Amine Salts are now under EPA's R-PAR process and may be taken off the market while Diquat is largely ineffective in turbid waters. The implementation legislation can clarify, by incorporation into the purposes of the act, that the intent of the legislation will be to protect the natural environment of the Republic of Panama.
83
Furthermore, the Panama Canal Commission as set out in Sec. 101 of H.R. 111 should be requried to promulgate rules and regulations to carry out the intent of the various environmental laws of the U.S.
Q. What role do you see for the Joint Commission on the Environment under the new- treav arranverent? In r ference to the role vou do envision for the cint Co::ission on tnu 'Environnment, w.ich elements should be oiaced in te le islative provision ,or the Joint Commission and whicn should be adopted bv administrative rule?
A.. The role of the JEC has been discussed previously. It should be independent of the Panama Canal Commission, with a secure funding source with paid staff and Commissioners. At a minimum the elements outlined in Sec. 106 of H.R. 111 should be placed in the legislation except for U.S. Commission members serving without compensation. Legislative provisions should be made for a funding source and perhaps some tie in with the Panama Canal Consultative Committee.
0. What projects should the U.S. undertake, particularly in connection with the imelemuntation of the Panrma Canal Treaty, to protect the environment? how snould initiatives be financed_.
A. The most obvious vehicle is the Watershed Management Project. While it does not meet all the needs of the watershed and is still somewhat incomplete as to final planning, we fully support this effort and urge that AID make available the $10 million dollar loan. Further consultations should take place to make sure that adequate monitoring of the project is undertaken and to assess steps which still need to completed to insure that institutional development, educational activities, watershed management activities, forest reserves establishment and maintenance, reforestation, soil conservation and pasture improvement are carried out. Ideally, these initiatives should be financed either through tolls, international financing or the Panamanian government. We should not hesitate, however, to make monies available to Panama directly, especially in view of the low payment for use of the Canal Zone in the past by the U.S., for projects to protect the environment of the Canal Zone.
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FRIENDS OF THE EARTH
620 C STREET, S.E., WASHINGTON, D. C. 20003 (202) 543-4313
DAVID BROWER, President 30 January 1979
President Jimmy Carter
The White House
Washington, D.C. 20500
Dear mr. President:
The recently ratified Panama Canal Treaties call for the establishment of a joint feasibility study of a Sea-level Canal in Panama (Article XII) and a Joint Environmental Commission (.Article VI).
Conservation and environmental organizations voiced their opposition to a Sea-level Canal in 1975 andagain in 1977. A $24 million dolThr, six-year study (built on four previous studies) completed in 1970 generated information on the engineering and route selection of a Sea-level Canal. Major shortcomings of that study concerned the lack of ecological information needed to make a determination of the environmental effects of such a project.
The Norwegian Association for Ecology has expressed concern about proceeding, stating,. "Expertise of marine biology must ensure that the final decision about realizing the project is firmly based upon adequate ecological knowledge". If decisions are to be made on the feasibility of such a project, the first order of business should be a long-range scientific effort to assess the environmental impacts and ecological effects of a Sea-level Canal.
In general,. however, we see no need for haste-and recommend that a derision concerning a Sea-level Canal study not be made part of the current implementing legislar ion and that the ;Aministration oppose all Congressional efforts to legislate such an effort at this time.
Concerning the Joint Environmental Commission, we view this body
as one similar in fashion 'to our own Council on Environmental Quality,, 'that is, a body clearly charged with addressing ecological concerns and advising on environmental problems such as deforestation, the pumping of sea-water into the existing canal, and the protection of the natural resources of the Canal Zone. We urge that the strongest possible environmental committee be created, staffed by persons from private life committed to environmental protection.
Sincerely,
David R. Brower Russell E. Train President President Friends of the Earth World Wildlife Fund U.S.
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TobyCooper
Program Director Defenders of Wildlife
Pamela Deuel Legislative Coordinator Environmental Action, Inc.
Brent Blackwelder Washington Representative Environmental Policy Center
Douglas W. Scott Northwest Representative Federation of Western Outdoor Clubs
Dr. David S. Claflin President
International Society for the Protection of Animals
T. Destry Jarvis Administrative Assistant National Parks and Conservation Association
Brock Evans Washington Representative Sierra Club
Marni Holbrook Environmental Associate Izaak Walton League of America
Lewis Regenstein Executive Vice President
The Fund for Animals, Inc.
APPENDIX 2
QUESTIONS SUBMITTED FOR THE RECORD BY CHAIRMAN ZABLOCKI AND
RESPONSES BY THE DEPARTMENT OF STATE
Question:
What would be the source of funding for the Joint
Commission on the Environment and should its members
be salaried in order to attract a larger number of
qualified candidates? What should be the relationship
between the Environmental Commission and the Panama
Canal Commission? Should the scope of the Environmental
Commission be limited to the Canal area?
Answer:
We visualize that the Commission, including a modest staff of salaried employees, would be jointly supported
by the United States and Panama. We propose funding the US share of the expenses of the Environmental Commission from the State Department budget. The Joint Commission with Canada is handled in this way. Commission members
from the United States should be paid, in our judgment, consultants' fees and expenses while actively engaged in the Commission's work. This would help to attract highly qualified candidates.
The Environmental Commission should be independent
of the Canal Commission, although the two should cooperate closely. From time to time the Environmental Commission may find it necessary to criticize Canal Commission activities and should therefore not be dependent upon it.
Since the impact of Treaty actions may well fall outside. the Canal operating area, we do not believe the Environmental Commission's responsibilities should be defined in geographic terms, except as used in the Treaty, i.e. in the Republic of Panama.
Question:
Will additional aid be necessary in return for the military education and training school? (Such as
a base-rights agreement?)
Answer:
We do not favor any agreement which would require payments to Panama, such as a base-rights agreement, to continue the operation of the School of the Americas in Panama.
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87
Question:
Do you anticipate any problems with the negotiations
(such as an attempt to condition it to the existing
Treaties?)
Answer:
Since we have not entered into any discussions with the Government of Panama on this subject, we have no way
of knowing how the negotiations might proceed.
Question:
What type of agreement do you envision will replace
the current one covering the School of the Americas?
Answer:
In a supplementary agreement concluded at the same time as the Panama Canal Treaties, the United States and Panama agreed that the United States would have the authority to conduct schooling of Latin American military personnel in the U.S. Army School of the Americas for five years after the entry into force of the Panama Canal Treaty, unless the two Governments should agree otherwise.
Accordingly, our authority to operate the School will continue until 1984. We have not yet addressed the question of the School's future beyond that date.
Question:
Has any thought been given to possible relocation
sites in Latin America?
Answer:
Consideration has been given to possible relocation of USARSA to Puerto Rico and to the continental United States. Panama remains the preferred location on the basis of costs, geographical benefits and Latin American cultural milieu.
APPENDIX 3
SUPPLEMENTAL QUESTIONS SUBMITTED FOR THE RECORD BY THE COMMITTEE AND RESPONSES BY THE DEPARTMENT OF STATE
Question:
In H.R. 1716, the language currently in effect
is repealed which permits the President to designate
a military officer with full authority over the
Panama Canal operation during time of war or
when war is imminent. In H.R. 111, the provision
is retained.
Does the language of H.R. 111 constitute a violation
of the Treaty?
Answer:
If the President should exercise the authority
proposed in H.R. 111, a violation could result. Article
III (3) of the Treaty provides that the U.S. shall carry out its responsibilities through the Panama
Canal Commission, supervised by a Board composed of
nine members, five of whom shall be nationals of the
United States of America, and four of whom shall be Panamanian nationals. Placing the operations of the
Canal under the direct control of a military officer
is inconsistent with this provision.
Question:
What would be the reaction of the Government
of Panama to this provision?
Answer:
We believe that the Government of Panama would
object to the exercise of this provision because it
would eliminate or substantially diminish the role
of the Commission under the Treaty.
Question:
Would not the President essentially have the
authority to take the action envisioned in H.R.
111 without the explicit language?
Answer:
The President could accomplish the same objective
through means consistent with the Treaty. The U.S.
has ample authority to defend the Canal under Article
IV of the Canal Treaty and under the Neutrality Treaty.
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Specifically, Article IV (2) of the Panama Canal
T-reaty provides that "For the duration of this Treaty,
the United States of America shall have primary responsibility to protect and defend the Canal" and in the
Neutrality Treaty, which extends beyond the life of the Panama Canal Treaty into the indefinite future,
the United States and Panama have agreed to maintain the permanent neutrality of the Canal. In doing so,
each party may take whatever means it considers necessary,
including the use of force, to meet threats to the
neutrality of the Canal.
In addition, the President retains the authority
to appoint a new Administrator when he deems the circumstances
are appropriate.
Question:
Section 102(b) of H.R. 1716 exempts the Administrator of the Panama Canal Commission and personnel
under his supervision from the direction or supervision of the Ambassador with respect to the
Commission's operation, management or maintenance
of the Canal. Would this section prevent the
Ambassador from carrying out his responsibility
for protection of U.S. citizens? Who would have
the ultimate authority during war, or when
war is imminent,to protect U.S. citizens, if
a dispute arose over the Ambassador's aims
to protect the U.S. citizens by an evacuation
procedure versus the Administrator's claim that the presence of the personnel would be
crucial to the operation, management or
maintenance of the Canal?
Answer:
Section 102(b) of the proposed implementing legislation concerning the authority of the U.S. Ambassador is not intended to diminish the Ambassador's authority for the protection of United States citizens. If, in time of war or imminence of war, an Ambassador's decision to evacuate United States citizens is objected
to by a Canal Administrator, the matter would be referred to Washington for decision in accordance with the
guidelines established within the Executive Branch. If time did not permit referral of the question to Washington, the Ambassador, in exercise of his statutory
responsibilities under P.L. 93-475, dated October 26, 1974 (22 U.S.C. 268a), would have the authority
to order evacuation.
90
QuestionIn the case of H.R. 111 where the Chairman of the Commission, the Secretary of Defense, has
the authority to direct the Board which in turn
directs the Commission, would the Ambassador
be permitted to act to safeguard the employees,
or would the Secretary of Defense be able to
block such an occurrence in the name of continuing
operations?
Answer:
While we do not know the intent of H.R. 111 in this regard, we believe the Ambassador's statutory responsibility would be overriding. Both officials are responsible to the President and their actions
would be coordinated.
Question:
It is reported that there are various Treaty
violations in the legislation reported by the
Committee on Merchant Marine and Fisheries.
Would you please elaborate on this report?
Answer:
We believe that the Merchant Marine and Fisheries
Committee, under the leadership of Chairman John Murphy,
acted responsibly in attempting to develop.legislation consistent with the terms of the Panama Canal Treaties.
While we disagree with a number of provisions of H.R.
111, our differences on-most issues are based on policy
or operational grounds. However, a few provisions
of H.R. 111 as amended are, in our view, potentially
inconsistent with provisions of the Panama Canal Treaty
of 1977 or raise doubts about the willingness of the
United States to carry out our Treaty obligations.
Three examples are given below:
1. The Treaty provides in Article XIII(4) that
Panama will receive payments from tolls of 30 cents per ton on Canal traffic, and a $10 million annuity.
In addition, "to the extent that (Canal operating)
revenues exceed expenditures of'the Panama Canal Commission",
Panama is to receive up to $10 million more annually.
(The $10 million ceiling would be increased to the extent that Canal operating revenues in past years
were not sufficient to cover this payment.) Section 250(e) of H.R. 111 as amended would require that all
costs of the U.S. Government related to programs undertaken
in connection with Treaty implementation, including
costs which are not legitimate Commission expenses
(e.g., the cost of relocation of U.S. military bases
and the value of property transferred to Panama),
be paid out of surplus revenues before Panama could
receive any of its $10 million contingent annuity.
The U.S. is not obligated to attempt to generate
a surplus in establishing toll rates, and the legislation
91
would require that rates be set at levels no higher than necessary to cover the expenditures of the Commission.
It is therefore unlikely that any substantial surplus would be generated by the Commission. However, were a "windfall profit" of Commission revenues over expenditures
to be generated in a given year, it would be payable to Panama up to the limit established by the Treaty. Legislation requiring the application of such surplus to the payment of expenses not legitimately attributable to the operation of the Commission would, however, preclude this Treaty-required payment from being made.
3. Section 108 of H.R. 111 as amended provides
that in time of war or when war is imminent the President
of the United States may order a U.S. military officer "to assume and have exclusive authority" over the operation of the Canal. Were this authority to be exercised in accordance with a literal interpretation of the proposed statutory provision, it would involve displacing the Panama Canal Commission from its function as the Canal operating agency. This would be inconsistent with Article III of the Panama Canal Treaty which provides that U.S. rights to operate the Canal will be carried out through a particular U.S. agency, the Panama Canal Commission. Although it is recognized
that the intent of the sponsors of H.R. 111 is to assure close coordination of the operation and defense of the Canal in wartime, we believe that the language of Section 108 is over-broad and should be revised
to conform more closely to the terms of the Treaty.
3. Section 373 of H.R. 111 would overturn the self-executing provisions of the Panama Canal Treaty which transfer title to property to Panama at the entry into force of the Treaty, during its duration, and at its termination. Section 373 would require prior Congressional approval of such transfers.
Section 374 of H.R. 111 authorizes the transfer to Panama of that property transferred by the Treaty on the date of its entry into force. It is silent with regard to the subsequent transfers of property
effected by the Treaty, thereby leaving the implication that the U.S. has an option whether or not to make such subsequent transfers. Under the Treaty, we do not have any such option. Thus, the proposed legislation
raises a question as to the willingness of the U.S. to respect the provisions of the Treaty in this regard.
APPENDIX 4
MEMORANDUM ON COSTS OF IMPLEMENTING THE PANAMA CANAL
TREATY SUBMITTED BY THE DEPARTMENT OF STATE
During Congressional Hearings on the Panama Canal Treaty implementing legislation, questions were raised regarding the cost to the US taxpayer.of putting the Treaty into effect.
The Executive Branch has reviewed and refined the preliminary estimates of such costs presented to the Senate early in 1978, during its consideration of the Panama Treaties. The results of the review are contained in this Memorandum.
Certain points will be helpful in setting this subject
in proper perspective.
As stated from the outset, payments of annuities to
Panama under Article XIII of the Canal Treaty will be drawn entirely from Canal revenues. Reimbursement to the Republic
of Panama for public services provided in Canal operating and housing areas pursuant to Article III, Paragraph 5 of the Treaty will likewise, be a charge against the income -of the Panama Canal Commission from Canal operations.
In the first year of operations under the Treaty
(US Fiscal Year 1980) these payments to Panama should be in the neighborhood of $75 million, the exact amount depending upon the volume of Canal traffic. Tolls will be set to include all required payments and reimbursements, but not the contingent annuity to be paid pursuant to Article XIII 4(c) if a surplus of revenues over expenditures should exist at the end of the year.
Certain expenses will have to be borne by the US
Government in making the changes and fulfilling the commitments arising from conclusion of the Canal Treaty. The expenditures involved are in the national interest. They are in no way disproportionate to the advantages gained by the United States from the Treaty settlement.
The benefits to this country of efficient and dependable Canal transit, secured by our military facilities, by our permanent defense rights, and by our association with Panama for these purposes, are not susceptible to dollars-and-cents evaluation. What is certain is that alternatives to the Treaty settlement--prospective unrest and insecurity at the Canal, the possibility of a massive military effort there, and the certainty of embittered Hemisphere relations--would
be incalculably more costly to us.
In addressing this subject in a letter dated February 10, 1978, Secretaries Vance, Brown and Alexander made 'this point
in the following terms:
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"In the last analysis, the U.S. security and commercial interests these new Treaties are
designed to serve cannot be measured in dollars.
Under the past arrangements, the benefits that
we have received from the Canal have far outweighed the costs of construction, security and
the nominal annuity paid to Panama. We feel the
costs associated with U.S. operation of the Canal
between now and the year 2000 will be more than
offset by the benefits derived from our continued
use of the Canal during an orderly and efficient
transition to Panamanian management, and from
the continued maintenance of U.S. troops and facilities in Panama for the next 22 years."
The principal expenses incurred by the United
States in carrying out the Canal Treaty will be borne by the Department of Defense. By October 1, 1979, it must relocate certain military facilities and take over the operation of schools, hospitals and certain community services from the present Canal Zone Government. Thiswill entail a net increase in expenditures.
Based on its budget projections, the Department of Defense estimates that its net additional financial requirements through the 1984 fiscal year, as a result of the Treaty, may reach a figure of $277 million. The Department of Defense suggests that for the remaining Treaty years there would be additional costs which might reach $480 million. These estimates have been made on the assumption that there will be no changes in Defense elements, or their support requirements, until the Treaty has terminated. Its actual costs will, according to the
Defense Department, almost certainly be significantly lower. For details, see Annex A.
Other federal agencies will also have additional
costs. The largest of these would result from the special retirement benefits to be offered to currently employed members of the Canal work force. These expenditures would compensate employees whose careers are interrupted as a result of the Treaty, and would provide an incentive to others to continue to lend their skills and efforts to ensure the efficient operation of the Canal.
The Office of Personnel Management estimates the
cost of measures it will administer over the next 30 years at more than $200 million in all. A descriptive table is included at Annex B.
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In addition, the Department of State will need to provide consular services to federal employees who will, for the first time, be serving in territory under Panamanian jurisdiction. The U.S. Government will also have to share the expenses of the Joint Environmental Commission and the Consultative Committee, both established under the terms of
*the Treaty. Moreover, we must comply with the Senate's desire that we assure dignified permanent care of the remains of U.S. citizens buried in the Canal Zone. The total cost of these activities to the United States over the life of the Treaty will be about $10..7 million. Finally, an amount not to exceed $5 million will be required for a special reserve account to be maintained by the United States for the Foreign Military Sales portion of the economic a'nd military cooporation program which was concluded separately from the Treaty, though at the same time. Details are provided in Annex C.
While an effort has been made to estimate as accurately as possible the size of the outlays involved, this becomes progressively more difficult after the first few years of. the Treaty's life. The variables include not only the rate of inflation over the years but also the uncertainties in forecasting the relative costs of various types of services, or the intentions of individuals--for example, with respect to the rate of retirement of Commission personnel as the years go by.
Accordingly, the estimates contained in this Memorandum are subject to a sizable margin of error. For comparability purposes, costs are expressed in terms of constant dollars, as of Fiscal Year 1980. For Department of Defense costs, budget figures for the planning cycle FY 79-84 have been used, and a constant level of expenditures at the 1984 figure has been assumed for the remainder of the life of the Treaty.
it should be reco'gnized that the figures are on the
high side. No allowance is made, for example, for a possible reduction in the size of the U.S. military presence at the Canal, which might reasonably be expected to take place as the United States and Panama create and strengthen the structure of association and trust under which the Canal should operate in the future. Nor is there an allowance for the introduction of new cost-cutting measures.
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. Finally, there will be savings under the Treaty as well as expenses. $1.8 million of the current $2.3 million annuity currently paid to Panama is funded from the US Treasury as part of the Department of State appropriation. This payment will now cease. Over a 20-year period, this will result in a $36 million saving. Similarly, when Panama assumes the operation of Panama's air traffic control system, five years
*hence, the saving to the United States will amount to $5 million annually--a total of $75 million for the remainder of the Treaty term.
Taking all the above into consideration, and in the
light of the details included below, the level of additional appropriations for Treaty implementation purposes should not exeeed an average expenditure of $42 million per year, in 1980 dollars.
With the qualifications indicated above, the following table presents a summary of the anticipated net costs to the US arising from the 1977 Treaty. Details are set out in the accompanying annexes. While the totals exceed the estimates provided to the Congress in February 1978, they now reflect the best available analytical judgment in the Executive Branch. Considered on a year-to-year basis, the net outlay to the US is of the same or a lesser order of magnitude than that now expended in maintaining each of a number of major foreign base establishments in other parts of the world. It is far lower than other estimates now in circulation.
If Congress should accept the Administration's
proposal to terminate the annual interest payment on the net direct investment of the U.S. Government in the Canal, the revenues of the Treasury would be reduced by approximately $20 million per year.
Attachments:
Table
Annex A Annex B Annex C
96
Net Additional Cost Requirements to the U.S. Government, Payable from the General Fund of the Treasury through the Life of the Treaty*
Amount
($ Millions)
DOD implementation requirements:
-- FY 1979-84 277.0 -- FY 1985-1st Quarter, FY 2000 480.0 Personnel requirements:
-- Preferential retirement arrangements 205.0
-- Potential liability for interest on
retirement benefits transferred 2.0
Non-appropriated fund employees'
retirement 2.0 Other requirements:
-- Consular services 3.7 -- Expenses of Joint Committees 3.8 -- Relocation of remains of US citizens 3..2 -- Foreign Military Sales Reserve 5.0
Gross Amount of Additional Appropriated
Funds (FY 1979-99): 981.7 Less:
Annuity payments to Panama (36.0)
Operational cost of air navigation control
and facilities (75.0)
Net Amount of Additional Appropriated
Funds (FY 1979-99): 870.7
*Early retirement estimate is costed over a period of thirty years.
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Annex A
DOD TREATY IMPLEMENTATION COST ESTIMATES
The Department of Defense has estimated that for the FY 1979-84 period an additional net $277 million would be required:
Base Operations 1/ Commissary Ops 2/ Port Operations Communications Disposal of Remains Criminal Investigation Medical Operations 3/ Postal Operations School System 4/ Military Pay Military Construction 5/ Equipment Procurement 6/
-Less Credits (Hosp. Ops) 7/
FY 79 FY 80 FY 81 FY 82 FY 83 FY 84 FY 79/84
3.8 16.5 16.6 16.6 16.6 16.6 86.7
.4
.1
1.6 ..I
3.4 .9
.8
.2
1.1 .9
.5
.2
1.1 .9
.5
.1
.7
.9
.5
.1
1 .1 .1.. 1 .1 i .6 14.6 16.3 16.7 3.5 .5 1.5 1.4 1.3 1.3
-- 6.0 6.0 6.0 6.0
-- 3.5 3.5 3.5 3.5 40.6 6.0 .13.'6 12.2 .5
-- 10.0 6.6 2.4 2.8
-- (7.5) (7.5) (6.7) (5.8)
.7 7.4 .9 4.6 .5 4.4 .1 ..8
.1 .6
3.8 55.5 1.3 7.3 6.0 30.0 3.5 17.5
-- 72.9
.8 22.6 (5.8) (33.3)
TOTAL 47.8 56.0 59.3 54.7 30.7 28.5 277.0
1/ The term base operations includes support or housekeeping activities, such as supply and maintenance, transportation, property repair and maintenance, and operation of utility plants and systems.
.2/ Commissary patrons currently number 26,000. The number is expected to rise to 35,000 on October 1, 1979, and not to exceed that level during the five-year period.
3/ Medical population to be served is estimated at 88,500 as of October 1, 1979, dropping to 44,00 by April 1, 1982, and remaining at that level for the remainder of the period.
4/ The population of the DOD school system is not expected to vary significantly during this period.
5/ All military construction results from relocation of military units.
6/ Initial and replacement equipment related to functions transferred from the Panama Canal Company, e.g. cargo handling equipment, administrative vehicles, communications and hospital equipment.
7/ Revenue gathered as a result of medical care provided persons authorized to receive such-care, but required to pay for it at established rates. These amounts exclude that portion of the revenues returned to the O&M, Army Appropriation, and include only those amounts returned
to the Military Personnel, Army Appropriation and to Miscellaneous Receipts, Treasury account.
Source: Department of Defense.
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