"I think we have some more work to do in educating our Membership," said Rep. John Murphy, D-NY, Chairman of the Merchant Marine and Fisheries Committee and the Bill's floor manager.

Murphy blamed "deliberately inaccurate statements by the State Department" as well as gun running charges against the Panamanian Government for the defeat. He also blamed "the fallacious statements by (State Department Spokesman) Hodding Carter that there was any violation of the spirit of the Treaty in the legislation.'

The charges and evidence that the Panamanian Government was providing guns to guerrillas in Nicaragua hurt "obviously a great deal," Murphy said.

Although the vote keeps the Bill alive, it is a clear indication that the legislation is in serious trouble and may either be defeated or amended in a hard-line fashion that would be unacceptable to President Carter.

(By Jim Adams)

WASHINGTON.-House leaders today withdrew from final floor action legislation that would implement the Panama Canal Treaties. The decision followed a test vote indicating substantial sentiment against the measure.

Action on the bill was postponed after the House agreed by a margin of only two votes, 200 to 198, to take up the legislation next week. Approval of the Bill would require a majority of 218 votes, if all 435 House Members were present and voting. The Bill's floor manager, Rep. John Murphy, D-N.Y., told reporters he would go ahead with general debate on the measure Monday but would delay floor votes until he believes he can win approval.

Murphy said it was Speaker Thomas P. O'Neill's idea to delay action on the Bill. Opponents of the measure urged the House to use today's vote to demonstrate unhappiness with the legislation and arouse public sentiment against it. The Bill would carry out provisions of the Treaties, approved by the Senate more than a year ago, that relinquish control of the Canal to Panama by the year 2000.

"We ought to send a message that the United States is tired of being pushed around and that we're going to stand up for what is ours," said Rep. Steve Symms, R-Idaho.

Symms said a House vote against even taking the Bill up next week "might stir things up."

[From the American Legion Bulletin]

PANAMA BɅttle Shifts TO THE HOUSE.

News reports indicate that the upcoming Panama Canal battle in the House of Representatives will make the Senate battle seem like a Sunday school picnic. The issue is money. Implementing legislation will cost the U.S. taxpayers and tollpayers, an estimated $4.2 billion. Another more subliminal issue is hurt pride in the House over being ignored on Article IV, Section 3, Clause 2, which explicitly states the entire Congress is empowered to dispose of U.S. territory and properties-not just the U.S. Senate.

But the main obstacle to implementing the Panama Canal treaties remains the attitude of the American electorate who still regards the Senate action as contrary to U.S. national interests. This attitude of giving the Canal to Panama and paying Panama to take it, simply won't play in Peoria or anywhere else in the United States.

People remember Panama. They will continue to remember the U.S. Canal Zone in 1980 and they know the story of sacrifice, U.S. taxpayers funding, hard work and efficient management by the U.S. "Zonians" over the years. The House of Representatives tends to remain closer to the American pulse than does the Senate for House members must be reaffirmed by the people every two years instead of the six years for the Senate. The Panama Canal is vote-getting, or a loser, depending on the candidate's viewpoint. If any doubts remain on the sensitivity of the Canal issue, they need only check with the U.S. Senators who were defeated in 1978. The rumor circulates in Washington that Senators who supported the Canal treaties would just as soon not mention the word "Panama" in parlor discussions. It is not polite. The American Legion remains firm in its resolution: "That the U.S. House of Representatives be urged to continue its dynamic role as 'keeper of the nation's purse' and continue to assert its right to refuse funds which will be required by many agencies of the U.S. Government to implement the Panama Canal Treaties."

Battle Monuments Commission.......

U.S. Treasury: Loss of depreciation Canal Zone Government assets

3,700

3,800

5,000

12,500

900

54,360

Total.....

4,280,507

Note: The statistics quoted herein were provided to the U.S. House of Representatives Rules Committee by the House Merchant Marine and Fisheries Committee chairman, John Murphy, Apr. 24, 1979.

[From the Congressional Record, Vol. 125, No. 58, Wednesday, May 9, 1979]

PANAMA'S MULTIMILLION-DOLLAR GUN TRAFFICKING BRINGS CRIMINAL CHARGES IN U.S. COURTS

Mr. HANSEN. Mr. Speaker, the same people who broke the treaty between the United States and the Republic of China on Taiwan now say we must honor the new and yet unimplemented 1977 treaties with Panama.

The Carter administration apparently sees nothing immoral about breaking a treaty with our true and faithful friends in Taipei, but they persist in trying to honor a treaty with the lying and lawless regime in Panama City which calls for a $26 billion payaway of the Panama Canal.

Mr. Speaker, I today charge the Government of Panama and its President Aristides Royo with obvious and flagrant violations of the spirit and intent of the Panama Canal Treaties of 1977 and of providing a revolutionary base of operations for terrorizing and overthrowing its neighbor governments of Latin America.

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."

source

This statement was made with the full knowledge of Panamanian G-2 intelligence purchases and shipments of arms to the Nicaraguan Sandinsitas.

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 Isaid 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.