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.

Why did the Panamanian Government embark upon such a reckless course of action at such a sensitive time? Do you know the answer to that?

General MCAULIFFE. Sir, I don't have what I would consider conclusive evidence that these actions are other than the actions of individuals who are apparently trying to make money and capitalize on a situation. There is no evidence that the Panamanian Government as such is behind this.

Mr. HUBBARD. Today, the subcommittee has heard from retired Lieutenant General Sumner as to constraints he was under when he operated while on active duty with respect to Panama.

Have you been constrained in any way in preparing your testimony for this hearing?

General MCAULIFFE. None whatsoever. I can say that assuredly. My only constraint is respecting the bounds of sensitivity as they apply to classified information.

Mr. HUBBARD. In your professional opinion, as a senior ranking military officer, what is the military situation in Nicaragua at this time?

General MCAULIFFE. The situation is, first of all, a confused one, because I do not have timely and complete reports on what is going on within the country. Like most members of the committee, we look to news reports that are coming out of the country. I do have access to some information which comes to us from other countries in the region and which in many cases corroborates what we read about in the newspapers. But it would appear that the FSLN has mounted a series of hit-and-run type attacks in various parts of the country.

Mr. HUBBARD. General, could you please hold at that point and resume in about 10 or 15 minutes? Some of us cannot run as fast as others. We are about 7 minutes away from the deadline on this rollcall vote.

We will stand in recess.

[Brief recess.]

Mr. HUBBARD. We did have a quorum when we recessed. We will proceed.

General MCAULIFFE. Would you like me to continue my response to that question?

Mr. HUBBARD. I believe the last question was, in your professional opinion as a senior ranking military officer, What is the military situation in Nicaragua at this time? We had to be interrupted because of the vote, but now we are back.

Please do proceed.

General MCAULIFFE. Mr. Chairman, it is very difficult for me to know precisely what the situation is. It is somewhat confused. But in any event, we are unable at first hand to get accurate reports out of Nicaragua itself. We do have access to information coming to us from some of the neighboring countries, and from that, I can state that there is much turbulence within the country of Nicaragua. The FSLN very recently mounted a series of hit-and-run type attacks against-apparently aimed at the National Guard of Nicaragua, the armed forces of Nicaragua. These are attacks wherein they would seize a township or a small city for a short period of time, maybe a day, maybe a few days, and then when they feel

that the guardia nacional-the national guard-has mounted sufficient strength they will simply disappear into the countryside, and then attack some place else.

The strength of those attacks, as best I can gather it, is not very significant, although, within a particular area, it can be sufficient to carry that engagement until the guardia nacional can reinforce. The Nicaraguan forces of President Somoza are, in my judgment, entirely capable of dealing with this threat. They do have a sufficient supply of arms and force. They do have tactical mobility to be able to move their forces around the country; and they appear to have adequate command and control of their forces, better, I might add, than they did last September and October when this showed up as a major deficiency.

So, in summary, the Sandinista forces are quite active in the country, are retaining the initiative to try to keep the Nicaraguan forces off balance.

The Nicaraguan forces are reacting, in my judgment, adequately to the situation and are able to regain control in the contested areas fairly quickly.

Mr. HUBBARD. Thank you.

The next question, What would be the military implications if a Marxist-Leninist government took control of Nicaragua?

General MCAULIFFE. I think that that would be a situation that would split Central America and would open up access of Cuba and no doubt the Soviet Union into Central America, an access that neither country has been able to attain up until this time. It would be a bad situation. I am sure that it would affect us militarily. It would also affect the region economically, and I am sure in a sociological sense as well.

Mr. HUBBARD. Thank you, General.

Forgive me for this personal aside and for diverting from the subject at hand.

I have five constituents whom I have not been able to visit with yesterday or today. I have not even been able to speak with them because of this hearing and the running back and forth.

I would ask that the county executive judge of the largest county in my district, A. G. Pritchett, and also Landan Overfield, Mildred Wood Watson, Joe Nell Wilson, and Ruby Higginson all take seats in this area right in front of me, if you would. They do not even have seats in here. We can give them then a cordial welcome from their Congressman to the hearing.

Thank you, General McAuliffe, for permitting me to take care of constituents who have been ignored for 2 days.

The next question is, Have you ever identified Edgardo Lopez as an employee of Panama's G-2?

General MCAULIFFE. No, sir; I have not.

Mr. HUBBARD. Did you hear the testimony of Colonel Thomas this morning?

General MCAULIFFE. Yes, I did or, I should say, most of it, when a phone call interrupted some of the beginning.

Mr. HUBBARD. I have served in the Air Force and the Army and I listened to the testimony of both General Sumner and Colonel Thomas and admit I was very impressed by their testimony.