February 28, 1978
Page 4868
TREATY CONCERNING THE PERMANENT NEUTRALITY AND OPERATION OF THE PANAMA CANAL
The ACTING PRESIDENT pro tempore. Under the previous order, the Senate will now resume consideration of Executive N, 95th Congress, 1st session, which the clerk will report.
The assistant legislative clerk read as follows:
Executive N, 95th Congress, 1st session, treaty concerning the permanent neutrality and operation of the Panama Canal.
The Senate resumed the consideration of the Neutrality Treaty.
The ACTING PRESIDENT pro tempore. Under the previous order, the Senator from Maine is to be recognized and the clerk will state the pending question.
The legislative clerk read as follows:
The Senator from Virginia (Mr. SCOTT) proposed an amendment numbered 22:
At the end of Article I strike out the period and add the following: ": Provided, however, That this Treaty shall be void and of no effect unless and until the Panama Canal Treaty also executed by the parties hereto on September 7, 1977, shall be ratified on behalf of and in accordance with the laws of both the United States of America and the Republic of Panama.".
Mr. MUSKIE addressed the Chair.
The ACTING PRESIDENT pro tempore. Under the previous order, the Chair recognizes the Senator from Maine (Mr. MUSKIE).
Mr. MUSKIE. Mr. President, I ask unanimous consent that the following Budget Committee staff members and one from my personal staff have the privilege of the floor during the considerationof the Panama Canal treaties: Thomas Dine, Charles Flicker, Jacques Cook, and Madeline Albright.
The ACTING PRESIDENT pro tempore. Without objection, it is so ordered.
Mr. MUSKIE. Mr. President, the Constitution gives the Senate the power to "advise and consent" to treaties with foreign nations.
Sometimes this process is an easy task. In 1903, the Senate brushed aside the objections of a few and consented to the plunder of a new nation's most valuable resource. We have enjoyed the benefits from that great takeaway for 75 years now.
The Panama Canal helped our Nation grow. It helped American business prosper. It helped us to defend our shores. It saved us billions of dollars and uncounted lives in two World Wars and two Asian conflicts.
It helped us fulfill our manifest destiny.
It helped us become a nation rich and powerful enough to understand and teach the world the need to end colonialism, economic imperialism, and military dominance.
Sometimes, Mr. President, giving our consent is not such a pleasant task. Today we are being asked to consent to a treaty which commits us to the high-sounding promise of self-determination for all nations. We are being asked to begin to pay more fairly for a resource we have used for 75 years at the expense of the country which owns it.
We are being asked to replace a monopoly over the Panama Canal with a new agreement which merely assures us unfettered use and preferential treatment.
We are being asked to stop dominating a people and begin working with them in partnership.
We are being asked to treat another nation as an equal.
We are being asked to stop claiming that another country's sacrifice is somehow a symbol of America's greatness. We are being asked to commit ourselves to a new role in Panama.
We are finding that our consent is sometimes not as easy to give as it was in 1903.
HISTORICAL FACTORS
U.S. relations with Panama got off on the wrong foot from the beginning — at least as far as the Panamanians were concerned.
Ever since the signing of the Hay-Bunau-Varilla Treaty, our negotiations with the Panamanians can only be characterized as "unfair." It is only very recently that we have even had "arm's length" negotiations.
Consider the fact that the sole negotiator for the Panamanians in 1903 was a self-appointed spokesman, French entrepreneur Philippe Bunau-Varilla. He and the New York lawyer, William Nelson Cromwell, lobbied Congress so hard and effectively that Congress reversed itself to build a passageway not in Nicaragua but in Panama. Bunau-Varilla owned stock in the New Panama Canal Company whose rights across the isthmus were about to expire in 1904. And we paid the French $40 million for those rights.
The Panamanians themselves were never consulted — and indeed were blocked from any participation in the negotiations process.
Consider the fact that the fledgling Panamanian Government ratified the treaty within 20 hours of receiving it. The terms of the agreement were much less generous than those which the Colombian Senate had earlier turned down. The new nation of Panama was fearful that the United States would withdraw its military and political support.
Consider that even statesmen of that day admitted that the United States had not exactly made a fair trade. As Secretary of State John Hay wrote at the time to a Member of this body, Senator John C. Spooner:
The 1903 Treaty is ... "vastly advantageous to the United States, and we must confess, with what face we can muster, not so advantageous to Panama . You and I know too well how many points there are to which a Panamanian patriot could object."
What exactly was the agreement which so embarrassed Secretary Hay? We have all heard that in exchange for $10 million and a payment of $250,000 a year, we received "in perpetuity, the use, occupation, and control of a zone of land" for the canal. It is instructive to quote the treaty at greater length.
First. We were granted "A zone of land and land under water for the construction, maintenance, operation, sanitation, and protection of said canal." The zone would be 10 miles wide. It would begin 3 miles out to sea in the Caribbean and end 3 miles out to sea in the Pacific. It would include all islands in the zone, and a group of islands in the Bay of Panama lying outside the zone.
Second. Article 2 of the treaty goes on to grant us "in perpetuity the use, occupation, and control of any other lands and waters outside of the above-described zone which may be necessary and convenient" for building the canal or "any other canals or works" we saw fit to build. And who was to decide what was necessary and convenient? The United States, of course, by its own unilateral decision.
Third. Article 3 granted us access to "all rivers, streams, lakes, and bodies of water" if we deemed it "necessary and convenient" to use them for our water supply, for hydroelectric development, for navigation, or for any other purpose we wished.
Fourth. Article 5 of the 1903 treaty granted us a "monopoly" on "any system of communication by means of canal or railroad across Panama's territory," and not just within the Canal Zone.
Fifth. Article 6 granted us the right to purchase at favorable rates any private holdings we wished.
Sixth. Article 7 gave us the right of eminent domain outside the zone within Panama's two large cities over "any land, buildings, water rights, or other properties," specifically including any sanitation facilities. Again, we could exercise this right whenever we found it "necessary or convenient."
Seventh. We were granted the right to maintain public order not in the Canal Zone alone but in Panama and Colon and the harbors, if in our judgment the Panamanian Government could not.
Eighth. Articles 9 and 10 prevented Panama from levying charges, tariffs, or taxes on canal traffic or land, people, and buildings in the Canal Zone.
Ninth. Article 12 required Panama to allow immigration of any workers the United States saw fit to hire. This right was used to bring in cheaper West Indian labor, undercutting opportunities for Panamanians to seek such employment.
Tenth. Article 13 set up a tariff system whereby the United States was exempt from paying customs duties for all articles imported into the zone for the use of the employees and their families, while those same articles were subjected to a duty when imported into other parts of Panama.
Eleventh. In article 12, Panama renounced its valuable reversionary rights from its French relationship. The United States paid the French $40 million for those rights, which were to expire a year later. The 1903 treaty forced Panama to yield its reversionary rights in those French rights, for which we paid Panama $10 million.
In short, Mr. President, we were granted the right to do whatever we wanted in the Canal Zone or in the countryside, to the exclusion of the sovereign rights of Panama.
Let us look again at what we took — what we coerced from the insecure new government of a brand new country. We took their right to tax us.
We took their right to tax the goods coming into parts of their country. We took their right to profit from their most valuable resource.
We limited their police powers. We took first choice of their waterborne and rail transportation system.
We limited immigration power.
We took the right to develop their water power resources.
We took everything we felt was "necessary and convenient."
Convenient. The new Republic of Panama was little more than a convenience to us.
I have recited this history not to make a moral judgment but to remind all of us, the American people, of what the people of Panama in the 1903 treaty granted to us.
When the proposed new treaties are described as a "give-away," it is important to put into context what Panama gave to us in 1903. Let us say that we took what we believed was necessary to undertake the construction of a canal. But the question I raise is not whether or not that was a wrong judgment but whether or not we paid the Republic of Panama fair value for what the Republic of Panama gave to us.
I have recited those grants of power at length so that those who may be listening throughout the country may understand exactly what that new nation granted to us by way of land; by way of their water resources; by way of their sovereign powers to tax and impose tariffs and customs duties; by way of their right to impose harbor fees, dockage fees, and all the other sovereign rights that the United States would never yield to another country.
The Panamanian people granted us part of their sovereign rights as well as part of their sovereign territory. For that we paid them $10 million plus $250,000 a year, payments which were to begin 9 years after the 1903 treaty was signed.
Today we claim we must hold on to the canal because the canal has benefited us to the extent of billions of dollars since 1903, and yet I hear few voices raised to suggest that for those multibillion-dollar benefits to the United States we did not pay Panama fairly.
On the contrary, I have heard—
Mr. ALLEN. Mr. President, will the Senator yield?
Mr. MUSKIE. If I may finish my thought.
Mr. ALLEN. Yes.
Mr. MUSKIE. On the contrary, I hear that the proposal in the new treaties to raise our annuity to Panama is somehow unreasonable, particularly in light of the pessimism as to whether or not toll revenues can support those annuities. There is no thought given to the contribution that Panama has made over these years to our commercial prosperity, to our economic life, to our military security.
I yield to my good friend.
Mr. ALLEN. I thank the distinguishedSenator from Maine for yielding to me.
The Senator has spoken of the United States having gained billions of dollars from the Panama Canal. I am sure the distinguished Senator understands and realizes that the canal has been operated on a nonprofit basis from the very start, and that the United States pays the very same amount in tolls for its ships, even our warships, as other nations pay.
We derive no benefit that is not available to all the nations of the world that have shipping. I am sure he realizes further that the canal has not even been paid for; that approximately $319 million is still owed to the Treasury on our original investment.
So I am just wondering how the Senator takes a dim view of the fact that the canal has been of benefit to the entire world, and why he refuses to say it is well that the United States has gained benefit from it. What is wrong with gaining this benefit?
Mr. MUSKIE. I have not suggested there was anything wrong, may I say to the Senator.
Mr. ALLEN. Yes.
Mr. MUSKIE. I pointed to the fact — and the Senator now has underscored my point — that there were these benefits.
I simply raised the question as to whether we made fair payment to Panama for these extensive benefits.
We operated the canal at the tolls calculated to cover nothing more than operating expenses. We could have recovered the original investment long ago. An increase of 3 percent a year or less in toll revenues could have retired our investment. As a matter of fact, may I remind the Senator that we did not even begin charging interest on the investment until the 1950s, almost 50 years after this treaty was negotiated in 1903.
Mr. ALLEN. Yes, I realize that.
Mr. MUSKIE. We did not intend to charge interest.
The reason I understand we began to charge interest in the 1950's was to begin to siphon off profits that were generated by the increase in traffic during the Korean war.
But when we began to siphon off those profits by way of interest, we did not offer to share—
Mr. ALLEN. Is there anything wrong—
Mr. MUSKIE. May I finish? It is my floor.
Mr. ALLEN. Yes, sir.
Mr. MUSKIE. We did not even offer to share those profits with the Republic of Panama. On the contrary, a few years later in 1955 we increased the payment to Panama to $1.9 million, and that was less in real dollars than the $250,000 that we agreed to pay them as an annuity in 1903.
The only question I raise, may I say to the Senator, is not even whether or not we needed the extensive grants of land, water and sovereign rights that were granted us in 1903, but whether or not we made fair compensation. My point is that we did not. My second point is that we could have retired our investment long ago if we had wished, thus eliminating today the issue of interest payments.
But we chose not to do it. And why? Because we wanted to see the benefits of the canal distributed in terms of increased commercial traffic. We wanted to see the world's consumers benefit. We wanted to see those benefits materialize in terms of our military security. And those are laudable, understandable national objectives. But if that is the way we chose to reap the benefits, we ought not to refuse to count those benefits as part of the value we receive from the canal, and for which the people of Panama had the right to expect just compensation.
So now, finally, in the late 1970's, we are moving toward fairer compensation. But there are those in the Senate who say that that is too much. I say that compared with what Panama has given us — and the Senator agrees with me that those benefits were extensive — we have not made fair compensation over the years.
There is no way that we can fully restore the balance of equities. Nor am I suggesting that. But when we say what these treaties are likely to cost, and talk about the reasonableness of the payments to Panama, we ought to take into account Panama's contribution since 1903 to this vastly successful enterprise. I find it difficult to grasp the notion that $250,000 or $430,000 or $1.9 million or even $2.3 million a year for 65 years is adequate compensation. For what? For the benefits that the Senator and I have both referred to.
Mr. ALLEN. Mr. President, will the Senator yield further? I find myself at a distinct disadvantage in asking the question, and the Senator, of course, has a right, having the. floor to make a detailed answer.
Mr. MUSKIE. May I make a suggestion?
Mr. ALLEN. I would like to put one additional question, if I might.
Mr. MUSKIE. I will take the question,but may I make a further suggestion? I would be glad to be interrupted at an appropriate point; if I can finish my statement, I am willing to stay on the floor the rest of the day to engage in colloquy.
Mr. ALLEN. It is right at the point the Senator is making about fair compensation. I would like to ask one question.
Mr. MUSKIE. All right.
Mr. ALLEN. If the Senator thinks fair compensation would embrace giving the canal, this great investment, this great public service that the United States has given to the world, if he feels that making adequate compensation to Panama would embrace the entire canal to Panama, and then, according to Minister Baretta of Panama, giving them, over the next 22 years, the $2.62 billion he talked about, would that not be a little unfair to the United States, if we are worrying about fair compensation? I merely ask that question.
Mr. MUSKIE. I will get into an analysis of those claims, which I consider outrageous, later. For one thing the figure Baretta used includes revenues from all national users.
But let me point out in immediate response that in the 1903 treaty, Panama granted "in perpetuity" what I have described here at some length. The question that occurred to me was this: Did the United States, in return guarantee to operate a canal in perpetuity? Not at all. As a matter of fact, it is argued on this floor that we have the right to build another canal anywhere we choose, unless we ratify both treaties.
So Senators are today insisting that we have a right to convert the Panama Canal to a piece of junk by building another canal elsewhere, and leaving Panama with nothing but the deteriorating hardware — much of it has been in place since 1914 — and that we can leave them there that way, with their major river system harnessed to a canal which by that time will have no economic utility.
The Panama Canal is not a commodity that you can pick off a grocery shelf, put in place, and then sell to somebody else when you are through with it. What is useful in the canal is its use; not the right to sell it to somebody else, not the right to store it as a monument; but the right to use it. What we are talking about here is not who ought to have the right to sell the canal, but who ought to have the right to use it.
In these treaties we are assured the right to use it. Whether or not that right is better protected under the treaties than without them is the subject of legitimate controversy in the Senate. To argue that a relevant point is whether or not somebody is giving away a piece of tangible property to somebody else, one should keep in mind that Panama gave us 647 square miles of land and water, which apparently the Senator does not regard as important, and in perpetuity.
So we built a canal, but we did not guarantee to operate it in perpetuity. The Panamanians might well have guessed over the past several decades, when we talked about a sea-level canal, that we might leave them with the canal as a worthless piece of outdated technology. They had no assurance from us that that would not be the case, and there are Senators here today who do not want to give them that assurance even now.
Mr. ALLEN. Will the Senator yield?
Mr. MUSKIE. Yes.
Mr. ALLEN. I wonder why the Senator feels that building another canal would render the Panama Canal just a piece of junk. At the same time, I wonder if he does not realize that if the United States builds another canal in Panama, the same thing is going to happen to that canal that is happening to the present Panama Canal: Panama would insist on that, so that they would end up with two canals, under that set of facts.
Mr. MUSKIE. The Senator chooses to focus on one option. Another option that the United States has considered for a hundred years is the option of building another canal in Nicaragua. As a matter of fact, at the time the Panama Canal was negotiated, Congress had expressed a preference for a canal across Nicaragua. It was only because Mr. Bunau-Varilla and Mr. Cromwell got together and negotiated the agreement that we shifted to Panama. I realize, however, there has been talk about a Nicaragua Canal in this country in recent decades.
My point is not to prophesy where another canal would be built, but that we reserved our rights to build another canal outside of Panama if we wished, and Panama would have to take the consequences, if those consequences happened to include the obsolescence of the Panama Canal as against a more up-to-date and modern competitor.
I have not heard anybody argue yet that two canals could operate profitably across the isthmus. Indeed, I have heard a lot of argument that the one canal is going to face increasingly stiff competition, and that the Panama Canal Commission will be unable to afford the payments to the Republic of Panama delineated in article XIII of the Panama Canal Treaty because the traffic might not bear the burden.
Now the Senator is asking what is to say that two canals could not operate profitably. Either they could or they could not. What I am saying, however, is that in exchange for rights Panama granted us in perpetuity, we did not assure Panama that we would operate that canal, or a replacement of that canal, or a third line of locks, in perpetuity. Not at all. We reserved the right to walk out on the deal any time our economic interests dictated. That fact is very clear from the language and thrust of the 1903 treaty.
We were able to hold Panama to its bargain. But Panama, if we chose to walk out, had no recourse.
Mr. ALLEN. I am pleased that the distinguished Senator from Maine emphasizes the perpetuity that characterizes the Panama Canal Treaty. Most of the proponents of the treaties are rejecting the word "perpetuity."
Mr. MUSKIE. I have not heard that. Proponents rejected the word "sovereignty," which is another proposition entirely, Senator. I reject the word "sovereignty."
Mr. ALLEN. Very well. If the Panama Canal Treaty is supposed to be in perpetuity, which means forever, why, then, are we seeking to change the terms of the treaty? That is not much perpetuity, if it has just lasted for some 75 years. That is hardly perpetuity.
Mr. MUSKIE. The distinguished Senator, of course, chooses to focus on points other than the central issue. The central issue here is that we were granted these rights in perpetuity for the purposes of building and operating a canal.
Mr. ALLEN. But that—
Mr. MUSKIE. Let me finish.
The purpose of it was for the purpose of operating a canal. Panama could not terminate that, but we could. We could hold them to the terms of the treaty in perpetuity for that purpose. But if we chose to walk away from the canal, to build one elsewhere, or because this one became uneconomic, we reserved the right to do so and Panama had no recourse. That is the simple point of it.
Mr. ALLEN. If the Senator feels so strongly that the United States should not abandon the Panama Canal, I am wondering why he does not offer an amendment to the treaty saying that we shall not abandon the canal. Also, for the Senator who has taken such a dim view of the circumstances under which we started building the canal and how we had the canal treaty signed by a Frenchman, Bunau-Varilla, who was commissioned to sign it by the Panamanian junta there, I am wondering why he would feel that it would be so bad if we were to abandon the canal and get out of there since our presence there is charged with being colonialism.
It looks like that would be setting aright the circumstances under which we went into possession of the Canal Zone, of which the Senator is so critical.
Mr. MUSKIE. I will say to the Senator if his question is a summary of his understanding of what I have been saying, then either I am remarkably inarticulate or the Senator chooses not to meet the points I have made.
In terms of the points I have been making, there is no question that they are the clearest non sequitur. I have not taken a dim view of anything. I have tried to recite the facts with respect to the treaty, and I have read from the 1903 treaty. If the Senator believes I have misread it, he should say so and point out my errors. But to take my reading of the 1903 treaty and characterize it as my dim view of what happened, I may havea dim view of what happened, but my purpose was not to express a dim view or a bright view, but simply to recite the facts so that the American people can understand the Republic of Panama gave us substantial grants of land, water rights and powers as if we were sovereign. And that they had a right to be compensated for what they gave up. And we ought to take that into account. My purpose is not to rewrite the 1903 treaty but to put the present treaties in perspective. That is my only purpose.
The Senator chooses to say that somehow if I have this dim view I ought to correct what happened by an amendment to these treaties. I do not know of any way to do that.
With respect to the canal, the Senator will learn, if he listens to the rest of my speech, that I have a very high valuation of the value of the present canal. I can see problems, as everyone else can, coming down the road. But those problems will come whether or not the pending treaties are ratified or not. I can see those problems. But I still regard the Panama Canal as a valuable national resource, so valuable that we ought to be willing to take into account Panama's right to fair compensation.
I do not regard that as a dim view at all, may I say to the Senator. I regard that as a very positive view.
I would like to go on and finish what I have to say and then engage in questions.
Mr. ALLEN. The Senator very courteously allowed me to break in. I hope he will allow me to answer what he has said.
Mr. MUSKIE. Of course.
Mr. ALLEN. The Senator first says that in this agreement with Panama they gave us so much and we gave them so little. Now he says that since we have not agreed to keep the canal there, we could come out any time we want to, and, therefore, that is not a proper set of affairs.
It seems to me if Panama was short changed so in the original treaty, it would be doing a service to them for us to pull out and leave the canal to them in that eventuality.
That is not going to happen. That is merely a hypothetical thought on the part of the distinguished Senator.
If this is colonialism, as some proponents of the treaties charge, would we be setting the stage aright then by abandoning this colonial aspect of our presence there in Panama by pulling out? Why would that be so bad?
Mr. MUSKIE. May I say to the Senator if the Senator is persuaded to that conclusion, then he ought to offer that kind of an amendment. That is not my conclusion.
Mr. ALLEN. The Senator did offer one amendment but it was not thought well of.
Mr. MUSKIE. I do not like to repeat statements that are already clearly part of the RECORD, but I say that we cannot rewrite the 1903 treaty today. All we can try to do today is to take into consideration the situation in which we find ourselves. We have been influenced greatly by the 1903 treaty. We should try to work out an equitable arrangement now. I do not think we can rewrite the history of the last 75 years. I would not be foolish enough to offer an amendment designed to accomplish such an impossibility. I can take into account the history of these last 75 years. I think we can work equity and I think that, for all practical purposes, is what we have in the pending treaties. I will go into that at greater length.
Mr. ALLEN. I thank the Senator for his courtesy, and I promise I shall not interrupt him any further.
Mr. MUSKIE. I want to assure the Senator I always enjoy participating in a dialog with him. He does have a knack for raising sharp questions and engaging in useful debate. He puts his points in perspective. I believe the American people need that. I do not object at all.
Mr. ALLEN. I thank the distinguished Senator.