7.

The plain fact is that Panama is rejecting the Senate's significant changes precisely because they are significant. The key points rejected by Panama are as follows:

--The Nunn Reservation to the Neutrality Treaty, modifying
Article V so as to permit negotiations for the stationing
of U.S. troops in Panama after the year 2000; Panama says,
"With total emphasis, the Foreign Ministry declares that
Article V cited previously has not been changed."
--The DeConcini Reservation to the Neutrality Treaty authori-
zing U.S. troops unilaterally to enter Panama to put down
a threat to the neutrality of the Canal. Although the sub-
subsequent leadership amendment to the Panama Canal Treaty
merely restated long-standing U.S. policy on intervention,
Panama says:
"It is necessary to stress that the Senate's
definition of U.S. policy in this reservation covers both
treaties, which are mentioned specifically in the reserva-
tion, so that there would not be the slightest doubt that
the DeConcini amendment added to the Neutrality Treaty
would not continue in force."

--The Hollings-Heinz-Bellmon Reservation to the Panama Canal
Treaty, providing that the U.S. is not obligated to pay any
outstanding balance under the annual $10 million contin-
gency payment (Article XIII, 4, c) when the Canal is turned
over in the year 2000.
Administration officials testified

that the contingent payment would not be included in the

estimated toll base, would never be earned, and never paid,

8.

Panama states it to be her understanding that the contingent payment would be included in the toll base, would be paid in subsequent years if not earned in a particular year, and that "Paragraph 4 C is not symbolic or worthless; the two countries, in good faith, must give it practical

content."

--The Brooke Reservation, providing that the instruments of ratification be exchanged effectively not earlier than March 31, 1979, and the treaties not enter into force prior to October 1, 1979, unless the implementing legislation is passed earlier; Panama says that October 1, 1979, instead of being the earliest possible date, is "the deadline for the treaties' entry into force."

--The Cannon Reservation that the Panama Canal Commission reimburse the U.S. Treasury for interest on investment and amortization of assets. Although all financial studies have shown that the Canal cannot generate enough revenue to make such payments, Panama says that "this reservation does not alter what was agreed upon. To the extent that the United States does not violate the principle of honoring the treaties in good faith, Panama cannot present claims to the United States.

--The Danforth Understanding that toll rates need not be set at levels to cover payment of the contingency payment. Panama threatens violence if the Danforth Understanding prevails: "To the extent that the Panamanian people are satisfied with the canal administration due to the products

9.

they derive from it, they will continue protecting their
canal. But if a stingy spirit prevails, aggravating the
injustice suffered by Panama since 1903, then a circle
of friendship will not have been built around the canal,
but rather one of hatred, with possible grave consequen-
ces if a crisis occurs, which the national government would
be the first to deplore."

Mr. President, the attitude of Panama on any one of these points would be enough to invalidate the agreement. I repeat that Panama has a right to reject the agreement if she so desires; but the President has no right to ratify on the basis of Panama's conditions without once more sending it back to the Senate. With Panama's understanding of the treaties now on the record, it is clear that these are not the treaties which the Senate approved. Either the Panamanian people must agree to the Senate version by plebiscite, or the U.S. Senate must agree to the version of the Panamanian Foreign Ministry.

As already pointed out, the communique is a carefully premeditated statement by Panama's legal experts, issued only after authorization by the President and the Head of State of Panama. These contradictions cannot be allowed to stand without resolution, or the future operation of the Canal and our continuing relationship with Panama will be placed in grave jeopardy. The issue is important enough to analyze each of the affected Senate amend

ments, the legislative history, and the context of Panama's

objections.

10.

A. THE NUNN RESERVATION TO THE NEUTRALITY TREATY

The Nunn Reservation was passed by the Senate on March 15, 1978, by a vote of 82-16, as an amendment to the resolution of ratification of the Neutrality Treaty. The substantive portion reads as follows:

V

"Nothing in this Treaty shall preclude Panama and
the United States from making, in accordance with their
respective constitutional processes, any agreement or
arrangement between the two countries to facilitate their
performance at any time after December 31, 1999, of their
responsibilities to maintain the regime of neutrality es-
tablished in the Treaty, including agreements or arrange-
ments for the stationing of any United States military
forces or maintenance of defense sites after that date in
the Republic of Panama that Panama and the United States
may deem necessary or appropriate."

The Nunn Reservation was deemed necessary because of Article

of the Neutrality Treaty, which reads as follows:

"ARTICLE V

"After the termination of the Panama Canal Treaty, only the Republic of Panama shall operate the Canal and maintain military forces, defense sites and military installations within its national territory."

On its face, Article V prohibits the stationing of any military forces not maintained by Panama; obviously that would include U.S. military forces as well. Although the Neutrality Treaty is of permanent duration, i.e., in perpetuity, the Treaty would have to be re-negotiated and re-ratified to enable the United States to maintain military forces in Panama, even if the Panamanian government so desired. The Nunn Reservation would avoid that uncertain and unsettling process, allowing a mere government-to-government agreement. As such, it was a considerable softening of the iron-clad language of Article V.

1.

THE INTENT OF THE NUNN RESERVATION

11.

The Nunn Reservation was regarded as a significant change, both by its sponsors and by the treaty floor managers. On March 14, Senator Nunn said:

"I have sought to strengthen the treaties through amendment. As I stated last November, I could not support the treaties as originally submitted to the Senate last November. The Treaties' vague and equivocal language concerning U.S. defense rights beyond the year 1999 and the priority passage of U.S. vessels in times of emergency would have laid the foundation for conflicting interpretations...

"Accordingly, I join many of my colleagues in cosponsoring the amendments of Senators Byrd and Baker....

"I am also dissatisfied with article V of the Neutrality Treaty, which prohibits the United States from retaining any military installations in Panama beyond the year 1999. In my view, a small but select U.S. military presence in Panama beyond 1999 would be highly desirable for both of our nations and for all who use the canal....

"Accordingly, I have sponsored a change in the treaties specifying that the United States and Panama in the future, could, by mutual consent begin negotiations for an extension of a U.S. military presence in the Canal Zone beyond the year 1999. I have been assured by both the leadership of the Senate and the executive branch that this significant change is now acceptable...."

On March 15, the distinguished assistant treaty manager,

Mr. Sarbanes, responded in kind:

"The reservation he has offered does provide the opportunity that would be to some extent closed under the existing language of the treaty because then to accomplish this objective you would have to have actual amendments to this treaty or a new treaty; whereas, the reservation which the Senator from Georgia has offered would make it possible to act by mutual agreement other than a treaty arrangement."

On the basis that it was a significant change, many Senators voted to approve the treaty.