where there is smoke, there is fire. I would imagine, although I would suggest that you ask Mr. Grove from our Latin American Bureau about this tomorrow, that clearly an alert was on. But the two licenses which you have before you were issued, which I think presents de facto information to you that the press reports were

not accurate.

Mr. BAUMAN. I do not see what the issuance of the license has to do with the accuracy of the press reports. Quite obviously, these two particular applications may or may not have been part of the arms shipment which found their way into Nicaragua.

What I am asking is whether there was any concern or general policy decision on the part of the State Department to keep a close watch on arms shipments through Panama in the wake of these statements and charges that were made. It would seem to me that that would be prudent.

But what you are telling me is that in the normal course of submitting each application to the area desk, that was the only consideration, that there was no blanket warning to the agency. Is that correct?

Mr. ATWOOD. What I am telling you is that we watch these matters closely with respect to all countries. That is the decision process that we have that governs this procedure. It was adequate to make the proper decision in this case.

Mr. BAUMAN. There was no special concern toward shipments to Panama?

Mr. ATWOOD. I think it would be best for you to ask Mr. Grove that question tomorrow.

Mr. BAUMAN. Do you have any special concern-you are here now-about shipments?

Mr. ATWOOD. I am concerned about these reports, yes, obviously. Mr. BAUMAN. Were any applications for arms shipments to Panama during the last 12 months denied on the basis of the State Department's advice?

Mr. ROBINSON. We would have to research the record on that. Mr. BAUMAN. To your knowledge, were any denied?

Mr. ROBINSON. I feel almost certain that there was none denied but I can not be more specific than that.

Mr. BAUMAN. Perhaps you could provide the committee with an assessment of that.

Mr. ROBINSON. Yes, sir.

[The following was received for the record.]

APPLICATIONS FOR ARMS SHIPMENT DISPOSITION

The Department of State did not disapprove any applications for exports of this nature between June 6, 1978 and June 6, 1979.

Mr. BAUMAN. I do not want to take up the committee's time, and I know that others have questions to ask. I did want to respond, Mr. Atwood, briefly to your lecture to the committee about holding hearings of this nature.

I understand that it does concern the State Department that we would be so audacious to question matters of this nature, and I am quite sure the outcome of these hearings may have some impact on the implementing legislation.

I can say to you quite sincerely that it is not my desire to defeat this legislation. I realize what would happen on October 1 if there is no legislation in place, but I do think we have a right to direct our attention to these matters so that the legislation can be framed in an appropriate way to respond to eventualities that may occur. If Panama is engaged in this kind of activity, it seems to be a violation of the letter if not the spirit of the treaty of the United States, maybe even the letter of the spirit.

Mr. ATWOOD. Mr. Bauman, your support for the implementing legislation is the best news I have had all week.

Mr. BAUMAN. At one point in your comments, you talked about your concern about any efforts to damage our relation with a friendly government. Are you talking about Nicaragua or this committee's attitude toward Panama?

Mr. ATWOOD. In that reference I was talking about Panama. Mr. BAUMAN. Do you also count Nicaragua's status as that of a friendly Government?

Mr. ATWOOD. We have been friendly, yes, with Nicaragua. We have certain strains in our relationship now.

Mr. HUBBARD. The Chair now recognizes the Congressman from Mississippi, Congressman Bowen.

Mr. BOWEN. No questions at this time, Mr. Chairman.

Mr. HUBBARD. The Chair now recognizes Congressman Bonior from Michigan.

Mr. BONIOR. No questions.

Mr. HUBBARD. Mr. McCloskey from California.

Mr. MCCLOSKEY. I have no questions.

Mr. HUBBARD. Congressman Bill Carney from New York.

Mr. CARNEY. I would like to get back to the question about the strains.

What do you mean by, we have certain strains now?

Mr. ATWOOD. Let me just briefly touch on this, because Mr. Grove is prepared to testify at some length about the situation that has existed, in the relationship between our two countries in the past year.

We engaged with the Governments of Guatemala and the Dominican Republic to mediate the situation, to attempt as best we could to resolve what has become an out-and-out civil war within Nicaragua.

We tried to work as best we could with General Somoza, the head of state of that Government; we tried to get the situation resolved.

The mediation effort collapsed, and the fact that the mediation effort collapsed has caused some strain. I do not believe that in open session I want to go into this question further.

But it is a matter of great concern to our Government.

Mr. CARNEY. My question is still: Do you consider them a friendly country, a friendly nation?

Mr. ATWOOD. I think I will stand on what I said on that.

Mr. CARNEY. That is par for the course for the State Department. Back home, we have an expression that is called "six two and even." You may know it as waltzing people around and I think that is what this three-page statement is, and that is par for the course for the State Department.

I take exception with the part where you say that you do not think that congressional-that we should have these hearings.

I would just like to ask you: You mentioned that there are international organizations that could conduct these hearings. Has the State Department asked, or requested, the OAS or the U.N. to look into the problems that we are discussing here, problems which you do not think we should be discussing.

Mr. ATWOOD. I am sorry that you misunderstood what I was saying.

I did not suggest that you should not be having this hearing. I was talking about the precedent of having a foreign government come in and accuse another government in a congressional hearing.

But let me make it clear that the Organization of American States considered this matter on Monday of this week; the Government of Nicaragua presented certain evidence to the OAS on Monday. And my understanding of the situation is that they did not accuse the Government of Panama of the issues that you are raising here.

Mr. CARNEY. One further question: Since the arrest in Florida 3 or 4 weeks ago, has the State Department issued any further export licenses for Panama?

Mr. ATWOOD. No, we have not.
Mr. CARNEY. Thank you.

Mr. HUBBARD. Congressman Wyatt.
Mr. WYATT. I have no questions.
Mr. HUBBARD. Congressman Lowry.

Mr. LowRY. Thank you, Mr. Chairman.

Mr. Atwood, the third paragraph of your testimony, you say, "Let me emphasize strongly that nothing could diminish our influence in that crucial area"-referring to Central America—“more than defeating the Panama Canal implementing legislation"-and then you go on with two more sentences along that same line. In your opinion, the opinion of the State Department and our people in Panama, how do you regard the attitude toward the United States and toward free enterprise in Panama since the signing of the treaty as opposed to prior signing of the treaty?

Mr. ATWOOD. The situation has improved considerably. The Panamanians have since had a free election and General Torrijos has moved out of the position as head of state.

They have permitted a free press, and judicial proceedings. So the human rights situation has improved dramatically.

Rather than sitting across the table from us, as they have over the past 13 years, debating over negotiating points and trying to get as much as possible, we now have a number of cooperative efforts wherein commissions have been formed in order to implement the treaties.

So I think the situation has improved dramatically. The President of Panama was here recently, and he issued an open invitation for foreign investment, and it is very clear that they have chosen the free enterprise course. The course is in the direction of a new partnership with the United States.

This obviously is in our interest, if we can work with them over the rest of this century, we will have an open and efficiently

operated Panama Canal, and one that we can defend under the terms of the treaty.

Mr. LowRY. What is the attitude of our American businesses in Panama and of other free enterprise businesses in Panama as to their treatment and the attitude of the Panamanian Government since the signing of the treaty, as opposed to prior to the signing of the treaty?

Mr. ATWOOD. I think they feel that Panama in fact is a good investment, and I think they have made that position clear.

I understand that the Council of the Americas, which represents several business enterprises which work in Latin America, have strongly supported the implementing legislation in a letter to Members of Congress. And I think you will see expressions of that support, and expressions of the fact that Panama is a going concern, as far as the business community is concerned.

Mr. LowRY. Thank you.

One more question, Mr. Chairman. What is the opinion of the Department of Defense in the southern command as to our ability to keep the canal open and operating now as opposed to prior to the signing of the treaties?

Do we have a better or worse opportunity now, in the opinion of the Department of Defense in the southern command, to keep the canal open and operating?

Mr. ATWOOD. We have a much better opportunity, which is the reason that the Joint Chiefs of Staff, over the past several years, have strongly supported the treaty itself. You will be hearing tomorrow from General McAuliffe, and he will be able to answer for himself, but he feels that the joint defense operation, which is anticipated by the treaty, is going to make the job much easier over the next 22 years. He looks forward to the full implementation of the treaties.

Mr. LowRY. Thank you, Mr. Chairman.

Mr. HUBBARD. Before I recognize Congressman Davis for questions, I would call to each member's attention the paper that you have in front of you regarding an application for rifles. You have that in front of you, each member?

Let me ask you to review that. You will see that the applicant's name, on the front page, is Dynamic Merchandise Corp., doing business as Universal Firearms. According to the paper the quantity is 100; the commodity, 1,000 .30-caliber carbine rifles. Then down in box number 14, in response to the specific purpose for which the material is required, it says sporting goods store.

I am sure you find that interesting-100 M-1 carbine rifles for sporting, hunting, whatever.

Obviously, those who are familiar with guns know that these are military weapons and not hunting munitions or weapons.

Then on the second page we find the corporation, which is ironically named Public Safety Associates, Inc. They have applied for 150 sporting rifles and .30-caliber M-1 rifles. The purpose was commercial resale, and you will notice that the foreign consignee on both pages, in both applications, is Caza y Pesca, in Panama City, Republic of Panama.

I will let other members of the subcommittee or committee or Members of Congress who are present ask questions about these sporting rifles.

Mr. Davis?

Mr. DAVIS. I will pass, Mr. Chairman.

Mr. HUBBARD. Congressman Davis passes.
Congressman Hughes.

Mr. HUGHES. No questions.

Mr. HUBBARD. Congressman Anderson.

Mr. ANDERSON. Thank you, Mr. Chairman.

Mr. Atwood, we have been informed that witnesses were suppressed from providing proof of the political situation in Central America to the Senate during the Panama Canal Treaty hearings. last year.

Do you have any knowledge of any suppression of witnesses, and if so, by whom?

Mr. ATWOOD. Absolutely not, and it is the first time that I have heard that charge.

Mr. ANDERSON. What provisions do you think could be added to the treaty implementing legislation to insure a stable political situation in Nicaragua while not threatening our stability in Panama?

Mr. ATWOOD. Well, I think the issues are not related, and I therefore cannot see any provisions that might be added.

Mr. ANDERSON. In other words, if the Congress felt that we could add provisions to the treaty implementing legislation which would add stability to the political situation in Nicaragua, you do not feel such an amendment would be applicable to this legislation?

Mr. ATWOOD. I think it is terribly unfortunate that Panama seems to be on trial here today. And, as Mr. Bauman has indicated, it does have some relationship to the fact that the legislation is coming to the floor next week.

We have a number of other governments with whom we have good relations, Mexico, Venezuela, Costa Rica, all of whom are concerned about the situation in Nicaragua, and whose policies. toward Nicaragua are quite similar to those of Panama.

I do not think anyone would suggest that we go out and enact a law that would somehow punish one of those democratic governments because of their policy toward Nicaragua.

I find this proceeding to be quite-I suppose the timing is purely coincidental, but nonetheless, it raises certain questions in my mind.

Mr. ANDERSON. We are going to have to vote on this legislation. Mr. ATWOOD. Yes, certainly.

Mr. ANDERSON. How imminent a threat do you believe the present Panamanian Government is to the stability of the Nicaraguan Government?

By that I do not mean just direct government financial support, but policies which do allow the Sandinista guerrilla groups to operate and receive supplies from Panama.

Mr. ATWOOD. I think the stability of the Nicaraguan Government frankly is threatened by its own citizens, more than any outside force.