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First, they have provided materiel support to the Government of Costa Rica in the form of two helicopters to be used for medical evacuation purposes in the event of an invasion from Nicaragua;

Second, they have provided moral support to the anti-Somoza elements in Nicaragua through the news media and through diplomatic channels;

Third, the Panamanian Government permitted the formation of the International Brigade in Panama and provided it some support in the way of training, use of government lands, and transportation;

Finally, consistent with its long-standing policy of providing asylum and aid to refugees from all Latin American countries, the Government of Panama has accepted refugees from Nicaragua, as well as FSLN members who had fled Nicaragua into Costa Rica and Honduras.

Generally, refugees have been provided with food and shelter, and FSLN members have been assisted in onward travel to third countries such as Venezuela, Mexico, and Cuba.

Furthermore, the Governments of Panama, Costa Rica, Venezuela, and more recently, Mexico, have continued a public condemnation of President Somoza.

The Panamanian involvement appears directed more against the Somoza regime, which is perceived by Panama as repressive, than toward advancement of the Sandinista cause. General Torrijos and President Somoza have made no secret of their hostility toward each other.

Since the FSLN is dedicated to the removal of Somoza, Panamanian sympathy supports that group. Within the Government of Panama, spokesmen have stressed the humanitarian nature of Panama's support to the FSLN. This has manifested itself in helping refugees and maintaining an embassy in Managua so that those who believe they are politically persecuted can find immediate refuge.

It is also worthy of note that, within the Central American region, there is a lingering hostility toward the Somoza family by those who have felt harassed as far back as the original Somoza regime of 1936.

Some Panamanians have been instrumental in the transfer of some arms and personnel into Nicaragua. Concerning the specific charge of the illegal transfer of arms from Florida to Panama for eventual use by the FSLN in Nicaragua, the case is now in the U.S. courts and several individuals, including Mr. Carlos Wittgreen of Panama, have been indicted.

Obviously, any public discussion of the case would be imprudent until the judicial process has been completed.

With regard to the Florida case, President Royo has assured the United States that a full investigation would be made to determine if a crime had been committed. It should be noted, however, that due to its geographical location, Panama is a natural crossroads for commerce and contraband as well.

We fully expect public statements by officials of various Central and South American countries to be supportive of anti-Somoza elements in Nicaragua. Undoubtedly, civilian volunteer groups

from Panama and other Latin American countries will continue their support to the forces that oppose the Somoza regime.

Thank you, Mr. Chairman.
I will now pass to Mr. Brandon Grove.
Mr. HUBBARD. Thank you very much, General McAuliffe.

Now we have Hon. Brandon Grove, Jr., Deputy Assistant Secretary for Inter-American Affairs, Department of State.

Mr. GROVE. Mr. Chairman, I welcome the opportunity to appear before this committee. My areas of responsibility include Mexico, Central America, Panama, and the Caribbean.

I shall be testifying on the question of Panama's relationship to the Nicaraguan crisis, on the foreign policy and other issues that exist as a result of the polarization in Nicaragua, and on the bearing of those factors upon the Panama Canal Treaty implementing legislation now under consideration in the House of Representatives.

Panama, together with Costa Rica, Venezuela, Mexico and a number of other democratic countries, has not hidden its dislike for the regime of President Somoza.

Mexico and Costa Rica have gone to the extreme of breaking diplomatic relations with Nicaragua.

The Chiefs of State from Bolivia, Colombia, Ecuador, Peru and Venezuela, attending the Andean Pact Summit in Cartagena, Colombia, on May 27 through 28, 1979, called for an end to the systematic violation of human rights in Nicaragua and expressed their deepest concern that the political situation in that country could represent a threat to peace in America.

The attitudes of various countries toward the Somoza government have led to charges of intervention in the Nicaraguan conflict. There have been charges of Panamanian involvement in Nicaragua, arising in particular from the recent seizure in Miami of a shipment of arms and ammunition, and the resultant indictment handed down in Florida implicating five persons in a conspiracy to export arms illegally to Panama.

The facts of this case are contained in the indictment and an accompanying affidavit, both of which have received wide publicity. A representative of the Treasury Department has testified here on this case, and I will not expand further except to set forth our understanding of the case and of Panamanian reactions.

On October 27, 1978, Treasury's Bureau of Alcohol, Tobacco and Firearms informed the Department of State that it had initiated an investigation of allegations of illegal arms purchases in Miami. In a subsequent conversation on November 7 between officers of the State Department and the Bureau of Alcohol, Tobacco and Firearms, the latter were told that the Department favored a thorough investigation, and prosecution, of all persons concerned if our laws had been broken.

In December 1978, the Panamanian Embassy protested in writing the seizure of a number of small arms. The Embassy assured the U.S. Government that arms purchased were for the exclusive use of the Panamanian National Guard, and that those weapons purchased which had arrived in Panama were, and would remain, under the control of the national guard.

In April 1979, the Office of Munitions Control of the Department of State requested that the U.S. Customs Service investigate individuals and corporations involved in the exportation of weapons from Miami to Panama.

One of those to be investigated is Mr. Carlos Wittgreen, a Panamanian. Since some of the weapons sold to Mr. Wittgreen were seized at the Nicaraguan border, the Department asked that the Government of Panama determine if there had been any violation of Panamanian law while these arms were on Panama's territory. The Government of Panama has informed the Department that it has initiated an investigation in order to make such a determination.

The matter of arms supplies to the Sandinistas is of grave concern to the State Department. The flow of such supplies is a symptom of the deeper problem in Nicaragua: Polarization and its attendant violence that day by day are contributing to the growing alienation of the Nicaraguan Government from its people, and that day by day pose a growing threat to peace in the region.

The crisis in Nicaragua can only be resolved by Nicaraguans. The real cause for concern today should be the breakdown over the past several years of the trust between government and people essential for the democratic process to function.

The result has been a political polarization in Nicaragua separating the declining number of Nicaraguans who support the Government from those who see armed insurrection as the only answer.

You will recall, Mr. Chairman, that this form of social and political breakdown led to the widespread strikes and violence of last September in Nicaragua. The OAS, in its resolution of September 23, 1978, noted the willingness of the Government of Nicaragua to accept the friendly cooperation and conciliatory efforts of member states to help resolve the internal crisis.

In response, the United States, Guatemala, and the Dominican Republic, offered their cooperation.

This offer was accepted by both the Nicaraguan Government and the moderate opposition coalition, known as the Broad Opposition Front.

The international negotiating group began its work on October 6 in an effort to help the sides find a means for allowing the Nicaraguans to decide their future. That effort reached an impasse by mid-January, leaving the major issues in Nicaragua unresolved.

The tragedy is that elements of the moderate opposition, who, if given a choice, would support a peaceful democratic solution, are slowly and reluctantly being driven into positions of support for the violence and civil warfare that is once again tearing apart the very fabric of Nicaraguan society.

Formerly moderate Nicaraguans, and especially their teenaged children, are joining the ranks of Sandinista guerilla groups, two of which have avowedly Communist goals. Thus, the absence of a peaceful Nicaraguan solution to its internal crisis is playing into the hands of forces that are inimical to the interests of the United States. The centrist, democratic elements in Nicaragua must find new strength and new hope.

We are opposed to the introduction of arms into Nicaragua and we lament the bloodshed to which these arms contribute. Only 3

days ago, at a special meeting of the Organ of Consultation of the Organization of American States, our representative, Ambassador Gale McGee, not only made the above points, but offered once again the good offices of the United States to assist in the achievement of an overall solution in Nicaragua.

In addition to condemning external intervention in the Nicaraguan situation, Ambassador McGee called upon all OAS member states to join in a serious effort to cooperate in resolving the crisis in Nicaragua in order to prevent the domestic conflict from emerging into an international war.

He urged member states to stand ready to help Nicaragua develop and implement a legitimate process for political transition to a functioning democracy in which the Nicaraguan people can realize just aspirations

Before concluding, Mr. Chairman, I would like to comment on the view that congressional decisions on Panama Canal Treaty implementing legislation should be influenced by Panamanian activities in relation to Nicaragua, and that possibly the Panama Canal Treaties themselves should be reconsidered in light of the Nicaraguan situation.

It is a mistake, I submit, to attempt to link these matters. If this is done, the results will be self-defeating.

There are several points to consider in this regard.

The treaties have been approved in accordance with our constitutional process. They will enter into force on October 1 of this year.

The purpose of the implementing legislation is to establish the framework for the exercise of rights and the discharge of responsibilities by the United States under the Panama Canal Treaty.

The subject matter under discussion today, although important, bears no legal or practical relation to that purpose. Neither the Panama Canal Treaty nor the Neutrality Treaty governs the conduct of relations by Panama or by the United States with third countries.

Obviously, we would not tolerate an attempt by Panama to seek to use the treaty as leverage to influence U.S. policy in other areas. Panama will, with justification, reject such an attempt on our part if the issue before the subcommittee is injected into this legislation.

It would be contrary to the interests of the United States to allow Panamanian attitudes with respect to Nicaragua to jeopardize the prompt passage of effective implementing legislation.

In the absence of legislation, it would be extremely difficult for the United States to exercise its right to run the canal. Operation of the canal would be impaired and perhaps suspended. Failure to perform our obligations under the treaty could place in jeopardy the continuation of our right to remain in Panama.

The passage of legislation which would in effect change the terms of the Panama treaties would be equally ill-advised and counterproductive. We have no right to dictate new treaty terms to Panama.

We are disturbed by actions taken by the Nicaraguan Government, including the violation of human rights. And we are also disturbed by the activities of outsiders-whether Panamanians or of other nationalities—who are feeding the flames of violence in Nicaragua

It is important to recognize that the Panama Canal Treaties were designed to protect the neutrality of the canal, regardless of the particular position of either government at any given moment. Panama and the United States will not see eye to eye on all the issues during the next 21 years. Panama will pursue its national interests, and we will pursue ours.

The only requirement is that the two governments cooperate faithfully to maintain the neutrality of the Panama Canal and to facilitate its operation in accordance with the arrangements of the 1977 treaties.

The Department of State is prepared, to the extent possible, to cooperate with appropriate committees of Congress in exploring the situation in Central America and any steps which may usefully be taken to deal with it in terms of our national interest.

But to do so by attempting to make the Panama treaties, or the implementing legislation, hostage for unrelated matters would result in creating enormous problems for the United States, and in destroying the basis for successful Panama Canal operations so carefully worked out in the treaties themselves.

Thank you, Mr. Chairman and members of the committee.
Mr. HUBBARD. Thank you, Mr. Grove.
We are under a rollcall vote in the House at this time.

General McAuliffe, in your capacity as the commander of the southern command, you are exposed to a variety of intelligence data; is that correct?

General MCAULIFFE. That is correct, sir.

Mr. HUBBARD. During the period March 22 through 25 of this year, members of our subcommittee visited Panama. During that visit, members were briefed by you in a classified setting at your headquarters, is that correct?

General MCAULIFFE. That is correct, sir.

Mr. HUBBARD. During that briefing, was there a discussion which you can relate for us in open session of the introduction of foreign weapons into Nicaragua by Panamanian citizens? I presume that your intelligence officer takes cognizance of data from both classified and unclassified sources; is that correct?

General MCAULIFFE. There is very little that I can say beyond what I have included in my opening statement concerning allegations of the specific transfer of arms between Panama and any place else. The subject was, as I recall, generally discussed at my headquarters, but I would beg your indulgence, sir; that I cannot get into that in detail in this open session.

Mr. HUBBARD. From unclassified sources, General, are you aware of the reported transactions involving weapons purchased by Panama and destined for guerrilla groups in Nicaragua?

General MCAULIFFE. Yes, I am. That is part of the indictment against Mr. Carlos Wittgreen and certain other Panamanian nationals—the Florida case, which is before the U.S. courts.

Mr. HUBBARD. This subcommittee heard some testimony yesterday to the effect that the U.S. Government itself, through its enforcement agencies, is seeking to prosecute individuals who have allegedly shipped arms through Panama to Nicaragua.

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