I further charge that this violence and chicanery being practiced by the Government of Panama is known in high circles of the U.S. State Department and the administration and is being suppressed.

The neutrality treaty is already in shambles. There is no way Panama can maintain the Canal in safety and neutrality if they are to also be the largest mainland base for Cuban-style revolutionary foment in the Americas. Retaliation measures will always keep the Canal in jeopardy.

Now, Mr. Speaker, my words are strong but my proof is stronger, and it is time to wake up. It is time to identify the Torrijos regime for what it is and call it to accountability-and this can be done today while President Royo is in Washington,

D.C.

Mr. Royo and his mentor Torrijos are up to their ears at this very moment in a multimillion-dollar illegal revolutionary gun-trafficking operation which has now been exposed by the U.S. Bureau of Alcohol, Tobacco and Firearms with requests for some five criminal indictments being made before a grand jury today.

Mr. Royo should be called on to immediately account for the actions I am about to outline and the Panama Canal Treaties should be set aside and further implementation halted until Panama can definitely establish that they are a responsible and peaceful nation which will not be using the financial benefits of such treaties to generate revolution and undermine American interests among the nations of Central and South America and the world.

These are the facts. The Panamanian G-2 Intelligence has been buying arms in Miami and shipping these clandestinely to the Nicaraguan Frente Sandinista de Liberación Nacional (FSLN), the Cuba-backed terrorists attempting to overthrow the government of President Anastasio Somoza.

According to the Miami Herald (May 2), José A. Pujol, cargo manager for Air Panama, surrendered to authorities on gun-smuggling charges. This followed the filing of an affidavit in Miami Federal court on May 1 by special agent Don Kimbler of the Federal Bureau of Alcohol, Tobacco, and Firearms. According to the ATF affidavit, Pujol and Edgardo López, then the consul of Panama in Miami, shipped weapons to "Nicaraguan guerrilla forces" in late 1978. Miami arms dealers reported Pujol as saying he was prepared to place orders valued at $2 million.

On November 10, 1978, ATM agents interviewed Edgardo López, Panamanian G-2 agent and consul in Miami at that time, who admitted to directing seven shipments of arms on official orders of intelligence officers in Panama. Eighteen days later, on November 28, 1978, the U.S. State Department spokesman, Hodding Carter, said the Carter administration had been unable to confirm reports that Cuba and other Latin American governments had been supplying weapons to the Sandinista National Liberation Front.

The Associated Press on May 5, 1979 quoted extensively from an unnamed Nicaraguan official as saying that the Carter administration clearly had full knowledge that Panama was trafficking in arms on behalf of the Sandinistas but had taken no action to alert the Nicaraguan Government for fear of placing the Panama Canal treates in jeopardy.

On February 8, 1979, the Carter administration cut_economic aid to Nicaragua and reduced U.S. official presence in the country. Said the official statement: "We deplore any outbreak of terrorism or violence emanating from whatever we will continue to work * * to avoid widening the conflict." This statement was made with the full knowledge of Panamanian G-2 intelligence purchases and shipments of arms to the Nicaraguan Sandinsitas.

source

* * *

On March 13 and 16, 1979, two vans equipped with false compartments were intercepted at Peñas Blancas on the Costa Rica-Nicaragua border by the Nicaraguan National Guard. Seized were 90 M-1 carbines, 49 FAL 7.62 cal rifles and large quantities of ammunition and other materiel. According to Nicaraguan sources, from their serial numbers, 70 M-1 carbines were traced to Universal Arms of Florida and Johnson Arms of New Jersey who manufactured these weapons and had exported them to Caza y Pesca S.A. in Panama, a Panamanian front operated by the Panamanian G-2 intelligence.

According to Nicaraguan Intelligence, says the AP May 5 story, Panamanian G-2 agent Carlos Wittgreen was in Miami on February 1979 seeking to purchase 5,000 weapons. Arrested as he was attempting to leave by air with 22 weapons for which no export license had been issued, Wittgreen was suddenly released "on orders from higher up."

On July 15, 1978, continues the AP story, 750 M-16 automatic weapons were exported to Panama aboard a Panamanian Air Force aircraft, ostensibly for a special 1,000-man military unit being trained in David in northwest Panama, only

80 kilometers from the Costa Rican border. Nicaraguan sources believe these weapons may have been destined for the FSLN terrorists.

A May 2, UPI wire story from Madrid reported Panamanian President Ariste-des Royo, on an official visit to Spain, as admitting that a Panamanian brigade is fighting alongside the FSLN Sandinistas in Nicaragua. Said Royo "This is not official intervention. We just do not stand in its way.'

Intelligence reports also show that Panama G-2 Intelligence continued to make arms purchases during the first months of 1979.

The Florida action of ATF shows several hundred M-1 carbines involved, some 30 AR-15's, many Winchester 7.42's largely used as sniper-type rifles, a large number of handguns, Browning high powers and Colt Commanders, and thousands of rounds of ammunition.

[From the Miami Herald, May 2, 1979]

ARMS SMUGGLED BY PANAMANIANS, INVESTIGATION SAYS

(By Joe Crankshaw)

Panamanian intelligence officials directed an airline official and the Panamanian consul in Miami to smuggle arms to the Sandinista guerrillas in Nicaragua, according to an affidavit filed Tuesday in Miami federal court.

The affidavit came to light when Jose A. Pujol, 36, Miami cargo manager for Air Panama, surrendered to authorities on gun-smuggling charges.

Pujol was released on a $25,000 personal surety bond after a brief appearance before U.S. Magistrate Charlene Sorrentino.

According to an affidavit given by Special Agent Donald Kimbler of the federal Bureau of Alcohol, Tobacco and Firearms (ATF), Pujol and then-Miami consul Edgardo Lopez, shipped a number of surplus military-type firearms, ammunition, telescopic sights and pistols to "Nicaraguan" guerrilla forces" in late 1978.

Kimbler, who is in charge of the ATF invetigation, said in his affidavit, that Pujol acted as the middleman for Lopez in making deals with the Carcia National Gun Shop on SW 22nd Avenue.

Employes of Garcia National Gun Shop are cooperating in the ATF investigation, ATF officials said.

The Kimbler affidavit states that Pujol told Garcia gunshop owners he was prepared to order more than $2 million in arms and ammunition for the guerrilla forces.

When gunshop employes told him he would need an export license to legally move the guns out of the country, Pujol said he would personally put the guns on an airplane without a license, Kimbler said the gunshop employes told him.

Pujol purchased guns-paying cash-on Sept. 20, 29 and Oct. 9, Kimbler said gunshop records show.

Kimbler and other ATF agents placed Pujol under surveillance and on Nov. 7 watched Pujol go into the gunshop, sign orders for the weapons and leave, Kimbler said in his affidavit.

On Nov. 9, the agent's watched Pujol go to the Tamiami Gunshop, buy seven pistols and one shotgun and hand them to Jose Antonio Alvarez, another Panamanian airline worker.

Alvarez took the guns to Panama aboard an Air Panama flight, Kimbler swore in the affidavit.

At 2 p.m., Nov. 9, Kimbler and other agents seized the weapons Pujol had purchased Oct. 17, Kimbler said. The Tamiami Gunshop also is cooperating with ATF officials in the investigation.

Employees and owners of both gunshops are reluctant to comment on the gun

sales.

"Talk to the federal agent in charge," urged Carlos Garcia, owner of the Garcia National Gunshop, "I don't think that I ever will (talk) because it is not in my interest to do so.'

The next day, according to Kimbler's affidavit, he interviewed Lopez and Lopez admitted directing seven arms purchases on order of intelligence officers in Panama.

The Sandinista guerrillas, who take their name from Gen. Cesar Augusto Sandino who was killed fighting the U.S. Marines in the early 1930's have had the vocal and material support of the Panamanian government.

Efforts to contact the Panamanian consul in Miami and its embassy in Washington, were unsuccessful Tuesday, because both offices were closed for the Labor Day holiday in that country.

Officials in the Nicaraguan Embassy in Washington said they would have no comment on the matter until they could receive more information.

Panama's strongman, Gen. Omar Torrijos has made no secret of his opposition to the regime of Nicaraguan President Gen. Anastasio Somoza. In January, Carter administration officials had to dissaude Torrijos from sending toops to aid the Sandinista guerrillas.

In March, it was revealed that Hugo Spadafora, Torrijos' vice minister of health, had resigned his post to fight with the Sandinistas against Somoza.

Mr. HANSEN. And now, Mr. Chairman, if I may, I would like to recap, for 2 or 3 minutes, and we will put it to bed.

It has not been brought out, Mr. Chairman, but there has been some activity regarding the 1,000 machineguns in Texas. Those people have been incarcerated, and charged so it is not confined to Florida. This is something broader than perhaps the picture here. Mr. Chairman, some of my attachments will show the parallel between the Panama Canal situation and the Suez Canal situation, where we had a government some years ago, the Government of Egypt, which was in a warring stage with some of its neighbors; namely Israel, and because of the retaliation-type problems, that canal remained closed for a number of years.

The Panama Canal is much more complex than the Suez Canal. The Suez Canal is similar to a big dish. The Panama Canal is complete with locks and dams, and all of this.

The point is, if they could close the Suez Canal because of military, or aggressive action of one nation, if they could do that in the Suez Canal, certainly the Panama Canal is vulnerable.

There are, based on the fact that Panama has been acting in such an aggressive way, and because they are acting in a way in which they are inviting retaliation-it states here that they have set the climate. So there is no possibility that the Neutrality Treaty has any chance of succeeding. The Neutrality Treaty and the Panama Canal Treaty are contingent upon one another. The language says one cannot go into effect without the other. This means if you are not honorable to the Neutrality Treaty or the Panama Canal Treaty-if Panama is in such a state that we cannot have neutrality, then it means that the other treaties also are not capable of being implemented.

I think this is critically important to us, as we go into the implementing legislation, because the point is we have been, as has been stated here several times-that all the onus is on the United States. We are the one that has to produce. We are the ones that have to be honorable.

I think that any agreement is a two part agreement. If there is honor demanded of the United States, if there is compliance, certainly that same compliance should be demanded of the other parties. In this case it appears that Panama, as we witnessed by General Sumner and others, has never had an attitude of really complying with the terms of the treaty, or any conditions where neutrality could be maintained.

In fact, as was stated in testimony throughout the hearings, we have the big dog/little dog game, in which the little dog can get out in a feisty way, and the big dog has to be patient and understanding.

The Ambassador to the United States has stated that because he did not that this gunrunning behavior has nothing to do with the Panama Canal Treaty, because the United States was going to be responsible for the next 20 years. In a sense he was saying that we have to follow the terms, and they can do whatever they want, and we will be responsible for putting it together.

To conclude, I think it is important that we note that we have a constitutional process, as Congressman Dornan brought out a moment ago, that has to be fulfilled. He is right, we are not to be considered hostage in the House of Representatives to work our will. This may be somewhat legal and somewhat a matter of international law, and somewhat political, but I do not think the House of Representatives wants to act with a gun at its head, and that is what we seem to be hearing. It seems we have other options. We can say that we feel that the canal treaties have been irreparably damaged, and on that basis international law, or any other kind of law would support us.

It is a political decision, no doubt about that, but it could support us, if these treaties are not to be carried out-then the old agreement goes on, and this means that, contrary to what General McAuliffe said, it is defensible, and that thing will go on, the employees will be paid, and all things will remain as they are.

I submit I think it is time to get the paranoia out of this, the emotional stuff out of this. The House of Representatives has to act on the basis of the merits of the case, the merits of whether there is gun running or not, whether the cost of transfer is too high, or whether it is not, whether there has been misrepresentation in the amount of money, or whether there has not been, and we make our decision in good faith, with ourselves and the people of the United States.

I might say that it is important for us to know that not only George Hansen presented a certain price tag of over $4 billion, which I consider to be conservative-I have received, partially, thanks to this committee and subcommittee, and the chairman of this committee, and the subcommittee, have arrived at a figure of $4 billion plus. I would like to bring to your attention that the State Department, in some retaliation, has come out with some figures that they say are $981 million discounted to $871 million.

I would like to point out that when you take the State Department figures that they say are appropriate, and add them to the figures they acknowledge, such as interest payments, such as amortization payments, their figures come up to $4 billion.

The General Accounting Office has now come out with a report, and their figures are in the same ballpark, the figures are billions and billions of dollars which I think in this day and age of concern over money is uncalled for.

My amendment to the legislation that will be coming up, I call it the honesty amendment, because the fact is when the Senate approved the treaty they said that there will be no costs, that tolls would be kept down, and the money. So it simply states that the taxpayers are continued to be exempt, that all taxpayers will have the promises kept to them of a minimum amount of money, and that under article III those payments-any payment or implementation and transfer, and the ongoing expenses of the United States

after T-Day, if the treaties are implemented, would be all paid by the Republic of Panama, that the payments are deemed appropriate under article 13 and other places of the treaty.

I think everything is on course for a decision next Tuesday. There is, of course, H.R. 111. There is the honesty amendment, taking the money out, taking the payoff away. There is another amendment because of what we have seen today, and that would be an amendment that would set aside, or delay implementation until we can have more assurance that the Republic of Panama is responsible, and of course, the fourth option is you could vote no on implementation.

I think it is there. I think it is a rational decision that we will be called upon to make, and I hope we will stop having the paranoia expressed by the White House and the State Department, and those who have thought this out, that we are forced to act with a gun to our heads, or we have all kinds of Panama.

I do not think there is any way to avoid trouble in Panama, certainly since they are gun smuggling and encouraging terrorism in other Latin American countries. I do not think the United States should have to take responsibility for that. I think we would identify what they are, and insist they clean up their act, if they are going to do business with us.

With that, I thank you for the opportunity to testify.

Mr. HUBBARD. Thank you for your statement. You and Congressman Bauman were the ones who requested the hearings. We have been through 2 days of extensive hearings, with many interesting witnesses, and comments by Members of Congress. Right or wrong, I realize that you do express the sentiments of many Americans. You may not have as many facts about the treaty as others, or Congressman Studds, or whoever favors the treaties, or other Members of Congress, but you do express the sentiment of Americans who are tired of bragging that we are the strongest and best, and yet have North Vietnam, Cuba, and Panama push us around. Congressman Carney?

Mr. CARNEY. Thank you.

I would like to make a note for the record that Colonel Thomas mentioned that he was in the Air Force for 30 years, and it might have been the assumption of the members of this panel, and the assumption of the people listening to the testimony that Colonel Thomas retired because he had to after 30 years of service.

Colonel Thomas told me that he was entitled to stay in the Air Force for an additional 4 years, but he felt that he could not, as a good American, stay in the military, because of the actions of the military, and the restraints he was under, being responsible to the President of the United States. So he opted to get out of the career that he enjoyed for 30 years so that he could express what he feels to be a very important opinion as to the wrong direction that this Nation is taking pertaining to the Panama Canal issue.

I see that the colonel is still here, and perhaps I might ask him, if it would not be out of order, if what I have said is correct. Colonel THOMAS. Yes.

Mr. CARNEY. Thank you.

I think that is worthy of the record. I would like to also take the opportunity, in closing, and I realize the late hour, I would like to