Jimmy Carter forced
Congress to pass the Panama Canal
Treaties against the best
interests of the people of the
United States. 


Article from Penthouse Magazine, November 1979

I hope we never hear the word Panama again," said Jody Powell, Jimmy Carter's trusted aide. Supposedly this sentiment was shared by the "Deacon" the president himself. While sitting in his little study next to the Oval Office, listening to a Wagnerian opera, pondering communiqués from Tehran and Panama City Carter must have spent a lot of time wondering why one man he frequently called his "great friend," the shah of lran, had lied to him, and why his "friend Omar Torrijos" was trying to blackmail him politically

Carter's desire to forget Panama is understandable. As a presidential candidate, he said he would never lie to us. In regard to Panama, the question is whether he ever told us the truth.

To this day much of the real story about the two canal treaties (the first is meant to allow gradual Panamanian "control of the zone" through 1999; the second will completely relinquish it all to Panama in the year 2000) has been obfuscated by sophisticated propaganda.

In March 1978 the canal supporters gathered at the White House, opened bottles of champagne, cheered and patted each other on the back, and Jimmy let loose a four-square Baptist smile that signaled the salvation of his presidency The final count was in: the Senate, by one vote, endorsed the canal deal. They raised their glasses and toasted Panama: their first "foreign policy victory.”

Of course, no one is yet quite sure what, in fact, the Senate vote really meant: whether an international agreement, of doubtful legality distorted by propagan­da, political sloganeering, special-interest lobbying, presidential arm twisting, corruption, deception, and cover-up signaled the salvation of the Carter presi­dency or a continuation of dirty politics and executive deception.

But the champagne toasts were just the wishful thoughts of born-again politicians who hope to fool all the people some of the time and pray to succeed all the time. Panama has now returned to haunt the man who staked his political career on the issue.

On June 16, 1978, Carter visited Panama and ex­changed diplomatic documents giving that nation con­trol of the canal. Carter did this despite the Senate's having passed the Brooke Amendment, which said that any exchange of documents should not be effective earlier than March 31, 1979, and treaties should not enter into force prior to October 1,1979. Under interna­tional law the president's actions create a de jure situation that makes the symbolic exchange binding. Many legal experts feel that by symbolically transferring U.S. property to Panama, Carter violated the Constitution of the United States. Under Article IV Section 3, Clause 2, Congress has exclusive power to dispose of federal property and territory.

Over the past year the House of Representatives has blocked all legislation and funds needed to implement the treaties. Members of the president's own political party are turning against him. In January of this year Carter had told John Murphy a Democrat from New York and chairman of the House Merchant Marine Committee, to take care of the problem. At the time Murphy's committee was about to debate proposals for funding the canal deal approved by the Senate because the House of Representatives has final approval on appropriations. The mood in the House was strongly anti-Carter on the issue, and Murphy was worried. Mail to members of Congress was still running 70 percent against the Panama treaties. Debate was still raging over the president's disposing of federal property with­out congressional approval. So Murphy went to the White House for lunch with Carter carrying proposals and drafts of legislation reflecting opposition views as well as compromise agreements. After a short prayer and some political gossiping, Murphy began explaining the mood of the Congress on the Panama issue. He started to hand some of the revised legislation to the president. Carter waved it away "I don't care about these proposals," he told Murphy "Just get the legislation passed."

But shortly after the lunch, Rep. John Dingell, expressing the mood of his fellow Democrats, told Deputy Secretary of State Warren Christopher: "We in the House are tired of you people in the State Department. If you expect me to vote for this travesty you're sorely in error." Two months later, in April of this year the Con­gress dealt the president another setback by solidly rejecting $14 million in aid to Panama.

To be sure, there have been, and will be, winners and losers in the canal debate, as assuredly as Teddy Roosevelt and his big-stick diplomacy wrested the Panamanian isthmus from Colombian control in 1903. But they will not be the winners and losers that the orators and pundits suggested.

Despite the fact that the stage managers of the morality play pitted the proud American citizen against the oppressed Yanqui-go-home Latino, neither the Amer­ican taxpayer nor the Panamanian citizen is much of a winner. And the real story of the Panama Canal agreement of 1978 suggests that the treaties were not a negotiated revolution in United States pol­icy toward Latin America so much as they were the refinement of that policy - a policy created by and for the traditionally narrow interests that have always benefited by the exploitation and manipulation, whether at home or abroad, of the average citizen, the "outsiders," as Jimmy Carter used to call them.

What perhaps is most curious about the story is that, for all its rhetoric, the Carter administration from the beginning allied itself with the "insiders"- the bankers and entrepreneurs and Wall Street power brokers. And the story of the canal treaties becomes an enlightening glimpse at the machinations of insider politics orchestrated by the man who claimed to "owe special interests noth­ing," to "owe the people everything," and who promised "to keep it that way." Panama - the word that the Carter admin­istration would just as soon forget - reveals the hollowness of Carter's declaration about who his creditors are and the emptiness of his promise not to kowtow to special interests.


As the nation geared up for what the press was calling the "historic" Senate vote on the Panama Canal treaty in early 1978, Carter's year-old presidency was on the rocks and floundering badly The Bert Lance affair had only recently trauma­tized his administration and extinguished his luminous candle of executive integrity, and good old Bert was still hanging over the White House like a radioactive cloud of Iodine 131. In January Carter had been caught - on national television - lying about his part in the dismissal of Philadelphia DA. David Marston. A month before that, he had infuriated liberals - many of them his supporters - by letting "big shot" former CIA Director Richard Helms plea-bargain his way out of perjury charges, again trying to shade his own participation in the deal. Then conserva­tives were maddened by his signing a $200 billion Social Security tax increase - in the face of his promise not to raise taxes for middle-income wage earners. His "moral equivalent of war" energy program still languished in Congress, threatening to become nothing more than a ridiculed acronym - MEOW Unemployment had not slackened. And despite his promised assault on inflation, the consumer index had jumped another 2 percent since he took office. Members of Carter's own party were already look­ing for another standard-bearer for 1980

After 13 months of Carter in the White House, polls confirmed the worst: Car­ter's approval rating dipped below that of Eisenhower, Kennedy Johnson, and Nixon at the same stage of their presidencies. After 13 months of symbolism and plummeting popularity the fledgling president from Georgia seemed to be losing his hold on the reins of national power. He desperately needed some kind of victory and he chose Panama as the battlefield and set every big gun in his administration to the frantic task of bag­ging a treaty

So important did the treaty finally be­come to his credibility and his authority as a competent chief executive that the is­sues of Panama became secondary to the political problems of the president. Newsweek magazine reported that "for many undecided Senators, the most telling argument [for the treaty] had less to do with the virtues of the treaty itself than with the disastrous emasculation of the President's ability to conduct foreign pol­icy if we were repudiated on Panama." And New York Times political analyst Hedrick Smith concluded that a defeat on Panama would have been “almost as severe a blow to Mr. Carter as was the Senate's defiance of Woodrow Wilson in 1919, when it refused to ratify the Covenant of the League of Nations."

Carter was spared such a fate, but at what cost to the American taxpayer and the independence of Panama? Who are the real victors in Panama? And how and why was such a treaty negotiated and sold to the American public?


Although there were many assurances from both Carter and Secretary of State Cyrus Vance that the new treaties "would not cost the U.S. taxpayer one dollar" the first public money was spent long before the Senate agreed to turn over American property to Panama, in a White House propaganda war.

In February of 1978 word got out of the existence of what the Washington Post called "one of the most closely held, lim­ited circulation documents in the State Department." That document was a weekly report known to its select group of readers as the PITS - Panama Information Track Score. The reason why it was kept so secret is that PITS gave a blow-by-blow account of the Carter administration's efforts to sell the Panama treaties to the public, using the public's money to do so. It documented one of the most intensive tax-supported lobbying campaigns in memory And to many treaty opponents the PITS was solid evidence that the Car­ter administration was violating the law - a 1926 criminal statute forbidding the use of public money to pay for efforts to influence members of Congress.

From a small office in the State Department's Latin America Bureau, decorated with strategy maps of individual states and colored pins and charts, looking much like a "war room" in the Pentagon, two full-time staffers and a number of part-timers called in from other agencies monitored the progress of a Panama Canal treaty battle plan that had been drawn up by Carter's trusted strategist Hamilton Jordan in the spring of 1977-months before most senators had even begun considering the question.

According to the Post, the plan called for an attack in the best traditions of Madison Avenue. There were studies of senators' past voting patterns on similar issues; sophisticated market analyses to determine whom to hit the hardest and how best to hit them; formulation of six standard treaty speeches outlining the party line; and special two-day seminars for administration salesmen, which included strategy advice from professional psychologists on how to relate to different kinds of audiences and videotape prac­tice sessions.

By February of 1978, just four months after President Carter and Gen. Omar Torrijos of Panama signed the treaties in Washington, the administration’s tax-supported sales force had chalked up 476 live speeches to groups as scattered as senior citizens in Miami and boy scouts in Doylestown, Pa., and had conducted 388 media interviews (all of which were duly noted by the PITS). Carter himself had presented the case to a live, national television audience, and he gave 25 dif­ferent citizens' groups the privilege of meeting him in return for their attention to his treaty pleas.

Although the administration's army of speakers claimed never to have advised their listeners to write to their senators - obviously aware of the 1926 criminal statute barring such lobbying - that defense sounded a bit like, as candidate Carter once said of the Watergate culprits, "tiptoeing through a minefield on the technicalities of the law and then bragging about being clean afterwards." Most observers were well aware of the fact that neither boy scouts nor senior citizens would vote on the treaties and that their support was enlisted for no other reason than to influence the votes of senators, a point well understood by Jordan: "Some of those bastards [senators] don't have the spine not to vote their mail. If you change their mail, you change their mind." With Jimmy Carter's own political future at stake, the ethics - not to mention the legality-of using public money to lobby Congress was lost to the desire of saving political grace.

Less legal hairsplitting was required, however to detect the ethical problems of another kind of White House hard-sell tactic. In its effort to finance a $600,000 protreaty media campaign - in addition to the lobbying effort being financed with tax revenues - the White House in late 1977 directed the well-connected former chairman of the finance committee of the Democratic National Committee,
S. Lee Kling, to set up the "Committee of Americans for the Canal Treaties, Inc." (COACT). To anyone not aware of Kling's past or his mandate from the White House, COACT seemed like a grass­roots, nonpartisan effort on behalf of the treaties. By November, Kling and his committee, using the mailing address of a Washington-based insurance broker as cover were placing large ads in major American newspapers - complete with a persuasive list of 200 prominent Americans supporting the treaties - asking for funds.

Not surprisingly - except to those who believed that the treaty represented an ideological struggle between establish­ment conservatives and democratic liberals-the list of COACT members in­cluded David Rockefeller (chairman of Chase Manhattan Bank), John H. McCloy (former chairman of Chase who was affectionately referred to by many as "chairman of the establishment"), G. William Miller (named by President Carter to head the Federal Reserve Board and, later, the Treasury Department), Irving Schapiro of DuPont, Arthur Taylor of CBS, J. Wayne Fredericks of Ford Motor Company Armand Hammer of Occidental Petroleum, and soon. It was a good chance for anyone wishing to gain favor with the White House to chalk up brownie points for future reference. At a COACT fund-raising event in December, which fun­neled $80,000 into the canal coffers, Oc­cidental Petroleum and Braniff Airways had no problem finding $22,500 to contribute to the cause.

But the ease with which Kung managed to trade future political favors for hard cash must have gone to his head. Because he then devised a plan for some real arm twisting.

Enlisting the aid of Robert Strauss, national chairman of the DNC while Kling was its finance chief and now Carter's special trade representative, Kling sug­gested holding private fund-raising receptions for the biggest of corporate big shots at the Watergate apartment of Strauss. Strauss, the man who was then making crucial decisions about what kind of foreign competition American businesses would have to face, agreed. And the president himself even offered to invite those businessmen who would
contribute $15,000 or more to a special White House dinner as a token of his apprecia­tion. This was extortion at its subtle best. Los Angeles Times White House corre­spondent Robert Shogun later observed, "In the high-pressure atmosphere that pervades relations between business and government in Washington, corpo­rate executives regard any contact with top federal officials as precious." In this instance the businessmen were offered contact with the top of federal officialdom. And the message from the White House was clear: no money no meeting with the president.

Kling's assistant, Conrad Trahern, sent out 30 letters of invitation in December in which he outlined the scheme. In all, 40 invitations were slated for delivery but someone blew the whistle on the plan and complained to New York Times columnist William Safire of the "shakedown" operation.  At that point no amount of “tiptoeing through a minefield on the technicalities suffice to explain away the conflicts of interest and heavy-handed persuasion techniques being employed by the White House, and Satire's subsequent revelations immediately killed the project.


Together the massive, publicly funded White House lobbying effort, the apparent influence - peddling schemes, and, as the voting day approached, the deals made with key senators (Herman Tal­madge reportedly changed from opponent to proponent when the White House offered to support the Georgia senator's farm legislation and give him a dam or two) were a good indication of how badly Carter wanted a personal political victory and to what lengths he would go to achieve it.

Nevertheless, there was much more involved than the questionable political mo­tives on the president's part. Not every prominent American was strong-armed by Carter; and there were more subtle - and more revealing - reasons why so many standard-bearers of establishmentdom, Carter included, were lining up on the side of a supposedly anties­tablishment, liberal-leaning agreement.

Part of that story begins long before Jimmy Carter entered the national politi­cal arena, as influential East Coast "movers and shakers" were beginning to wrestle with the growing problem of keeping Latin America safe and secure for United States investments.

In early 1971 the Rockefeller dominated Council on Foreign Relations began turning its attention to the Panama Canal, the most symbolic target of Latino nationalism and anti-Americanism. After a series of lengthy meetings led by Rodman Rockefeller (Nelson's son), Douglas Dillon (a member of the Rockefeller Foundation and Secretary of the Treasury from 1961 to 1965), and William P. Rogers (one of Nixon's secretaries of state and later a foreign-policy adviser to the Carter presidential campaign), the CFR came to the conclusion that turning the canal over to Panama was essential if the United States was to maintain a climate condu­cive to continued American investments in Latin America.

Not so surprisingly CFR's policy deci­sion came just months after a deal was struck between leading New York banks and General Torrijos in which Torrijos agreed to reorganize Panama's banking laws. With that reorganization the general made his country a tax and regulation free haven for foreign financial institu­tions, and tiny Panama-smaller than the state of Maine, with a population of 1.7 million joined the Bahamas and Cayman Islands as an international refuge for the megabucks of the world's largest banks.

Then, in the modern version of Teddy Roosevelt’s Rough Riders and his swinging stick, into Panama marched a Bank of America, Bankers Trust, Chase Manhattan, the First National Bank of Chicago, Marine Midland, First National City Bank, and at least 60 other banks, which brought with them over $8 billion of assets and sugar-coated promises of money to a general needing to consolidate his power. At least three of the banks-First National City the Rockefellers' Chase, and Marine Midland-at various times helped Panama secure loans by acting as the government's fiscal agents.

Torrijos's biggest payoff came, appropriately in massive increases of foreign bank loans. In 1968, when the general seized power; Panama's foreign debt was less than $200 million; but by 1977 its debt to American banks alone stood at $1.8 billion. And by the time treaty negotiations between the Carter administration and the Torrijos regime began, the gen­eral and his friendly American bankers were inextricably locked in a tight em­brace of mutual interest. Torrijos, his country on the verge of bankruptcy and by that time in debt to the Americans by almost $2 billion, was in no position to reject any United States proposal. At the same time, however; should he refuse to negotiate and repudiate his loans, American banks would immediately lose $323.6 million in loans coming due and several billion dollars more farther down the road.

These scenarios were perhaps anticipated by the Council on Foreign Relations in the early 1970s as it began gearing up for a formalization of its economic stranglehold on the small but strategic Central American country But the best place to legitimize financial interests was in the political arena of international diplomacy The best stamp of approval would be a treaty; and for groups like the Council on Foreign Relations, from whose roster of bankers, lawyers, and corporate executives have come hundreds of high-ranking government policymakers, the Panama Canal treaties of 1978 would provide the stamp.


Within a few years of the CFR's initial deliberations on Panama, the corporate and financial elite was moving its lobbying ef­fort to Washington. In 1974 it established the Commission on United States - Latin American Relations, a group that was to become one of the most significant influences on the protreaty crusade. The commission was largely funded by the Ford Foundation and the Rockefellers; its chairman was Sol Linowitz, a former am­bassador to the Organization of American States and a dynamic corporate fellow traveler. Other members of Linowitz's commission were W. Michael Blumenthal, who was Jimmy Carter's first secretary of the treasury; Samuel Huntington, now an aide to the National Security Council; Peter Peterson, chairman of Lehman Brothers, atop Wall Street brokerage firm; and Elliot Richardson, former attorney general and later an ambassador at large for Jimmy Carter.

At about the same time, then - Sen. Gale McGee of Wyoming was opening even more doors for Wall Street entrepreneurs and Big Business by enlisting their counsel and financing in another protreaty drive. He called a planning meeting in October 1975, held at the State Depart­ment, with lobbyists from Chase Manhat­tan, the Bank of America, Gulf Oil, and Rockwell International attending. With lit­tle arm twisting, McGee reportedly re­ceived as much as $500,000 in contribu­tions. In subsequent meetings other large corporations, including Pan American World Airways (on whose board sat Sol Linowitz and the future secretary of state, Cyrus Vance), and banks were asked to help plan and fund an effort to pressure politicians and business groups into supporting a treaty with Panama. Con­sidering the time and effort that the busi­nessmen and bankers had already de­voted to a treaty on their own, the McGee parleys were less a case of corporations lobbying Congress than a politician's recognition of the power and influence of private capital.

Sol Linowitz's commission, meanwhile, continued its progress toward even more direct influence on policy Just after Carter's election, in December 1976 the commission's staff director; Dr. Robert A. Pastor; wrote a report urging a new canal treaty and an increase of funds for Panama. The CFR immediately called a special colloquium to give its endorsement to the Linowitz Report. And the fol­lowing month Zbigniew Brzezinski, a former adviser to David Rockefeller and then Jimmy Carter's national security adviser; appointed a special assistant on Panama to the National Security Council. The assistant was none other than Dr. Robert A. Pastor.

In his new government position, Pastor quickly drafted an NSC memorandum recommending a new Panama Canal treaty His plan received Brzezinski's ap­proval, was shown to another longtime (Nelson) Rockefeller adviser; Henry Kissinger; and was then endorsed by Jimmy Carter.

If Pastor's quick rise out of the waters of an influential financial think tank to the halls of political power is cru­cial to the story of the Panama treaty's evolution, the role of Pastor's boss at the commission proves even more intriguing. At the same time that Pastor was moving to the NSC, Linowitz was visiting the White House. He accompanied Panamanian Ambassador Aquilino Boyd to a meeting with President-elect Carter in December; and there the two men asked Carter to initiate plans for a U.S. withdrawal from the canal. No one is quite sure what Carter said at that meeting, but the question soon became academic when just two months later Carter named Linowitz a special ambassador of the United States to join the aging Ellsworth Bunker as leader of the Panama Canal negotiating team.

The importance of the Linowitz ap­pointment to the interests of the banking and corporate establishment is difficult to underestimate. Linowitz was a much more integral part of the establishment orbit than his chairmanship of the Rockefeller-financed Commission on U.S.- Latin American Relations suggested. He was also a member of the Council on Foreign Relations as well as of the Rockefeller-founded Trilateral Commission. (For Jimmy Carter; the presidential candidate who said he owed the special interests nothing, this exclusive club of powerful business and financial leaders, which he joined two years before announcing his intentions toward the White House, was a godsend. According to his media consultant, Gerald Rafshoon, The Trilateral Commission was "one of the most fortunate accidents of the early campaign and critical to his building support where it counted." As it turned out, the favor was returned. The Trilateral, instituted with the express intention of influencing U.S. foreign policy, counted among its alumni so many Carter administration appointees - besides Carter himself the list included Vice-President Walter Mondale, Secretary of State Vance, National Security Affairs Adviser Brzezinski, former Treasury Secretary Blumenthal, Defense Secretary Harold Brown, and others - that even die-hard skeptics of conspiracy theories were whispering rumors of a secret Trilateralist cabal.) Linowitz could also be found on the boards of Time, Inc. (whose leading magazine, Time, was saying to its millions of readers, "The Panama Canal treaty... is an idea whose time has come"), Pan Am, and Marine Midland Bank at the time Carter named him to represent the United States at the treaty talks. Though any one of these many special-interest connections would have been enough to undermine Linowitz's credibility as a nonpartisan representative of American public interest, his ties to Marine Midland alone were evidence of out-and-out conflict of interest: not only was Marine a corre­spondent bank for the Banco Nacional de Panama, a Torrijos government appendage and a fiscal agent for the Panamanian government, but the government of Panama also owed Marine almost $8 million. It was no coincidence that Linowitz went arm in arm to the White House in December 1976 with the Panamanian ambassador. It was no coincidence that Carter greeted him warmly.

So blatant were Linowitz's ties to the Torrijos regime and the American corpo­rate and banking establishment that had taken up residence under the general's benevolent hand, and so insistent was Carter on keeping him on as treaty negotiator that Congressman George Hansen and Sen. James McLure had to file a suit in April1977, asking for a temporary restraining order against Linowitz as canal mediator. But the only compromise Carter and Linowitz made was agreeing to have Linowitz give up his Marine Mid­land ties, and even then only until after the treaty was finalized. He refused to relinquish his Pan Am board membership, the airline that had already contributed to Senator McGee's protreaty campaign, provided Carter with a secretary of state, and could ill afford to lose Panama as its Latin American headquarters.

What did all this mean to the document being negotiated with Panama? Put simply it meant that after the new treaties were signed - final agreement appropri­ately being reached just four hours and 40 minutes before Linowitz's term as negotiator expired-it was clear that whatever else the treaties might do, they committed the American taxpayer to supporting the Torrijos regime and the special interests of multinational banks and corporations, and to indirectly sub­sidizing their efforts to retain control of Panama.


When one considers what the Linowitz-Bunker negotiating team finally achieved, the high-level political and corporate finagling becomes all the more interest­ing. We have already seen how Carter dipped into the public purse to mount a legally questionable propaganda campaign on behalf of the treaty and how he used, and was used by major banks and corporations wishing to safeguard their own large investments in Panama. It shouldn't be surprising, then, to find the American taxpayers picking up the tab - a large one - for the vested interests. This despite administration promises that it wouldn't cost them a dollar and despite Linowitz's assertions that all costs of transferring the canal to Panamanian authorities would be paid by canal tolls.

According to United States Comptroller Elmer B. Staats, a Government Accounting Office study showed that initial U.S. government expenditures required by the new treaties would be at least $400 mil­lion. It would cost the United States $46 million to reequip three military bases, more than $32 million to pay Panama for the "transfers" of army personnel, $3 million for the "transfer of graves," $10 million annually to reimburse Panama for the costs incurred in providing police and security services (over the course of the 22-year life of the first treaty that alone represents U.S. expenditures of $220 mil­lion). Staats believed that the costs could reach $1 billion if lawmakers accepted all the Carter administration plans for implementing the treaties. (Some of the costs, such as the annual payment to Panama for security services, are written into the treaties themselves, and, though subject to interpretation, are not altogether open to further debate; many of the costs, however; are only implied by the treaties and therefore still need the ap­proval of both houses of Congress before the money can be spent. Thus the crucial importance of the implementing legisla­tion being debated by Congress: the treaties could still be "sabotaged" if Congress refuses to appropriate any money for seeing them through.)

The Carter administration continually held out against revealing the expenses it had committed the American taxpayers to covering. In a letter to Sen. Richard Stone a month after the Senate approved the first treaty Staats came about as close as any government bureaucrat could come to calling a high-ranking Carter ap­pointee a liar. "We should point out," said Staats in his long analysis of treaty costs, "that the Secretary's [Cyrus Vance's] statement to you that ... 'the [Panama Canal] Company will have no outstanding long-term obligations' is not completely accurate." And Staats then went on to include another $114 million of taxpayers expense for the treaties, which was con­veniently omitted from administration projections.

When Warren M. Christopher; deputy secretary of state, testified before the House Merchant Marine and Fisheries Subcommittee, he finally admitted that the treaties would cost American tax­payers "only" $350 million, explaining that Carter's promise the year before was misunderstood: when the president said that taxpayers would not have to pay he meant that the costs would be incurred by the Panama Canal Commission. Of course, Carter hadn't mentioned the fact that, as Elmer Staats pointed out, "because the Panama Canal Commission is a United States Government agency it is clear that the financial obligations of the Commission are also obligations of the United States."

By February of 1978, with the Senate vote less than a month away the adminis­tration had been forced to concede that the treaties would cost an additional $633 million in appropriated funds and lost rev­enues to the treasury But even this esti­mate was scoffed at by now-figure-punchy skeptics and those, like Staats, who had submitted the treaty to close scrutiny. A frustrated Congressman George Hansen angrily charged that the treaties' cost, not including the $10 billion replacement value of U.S. canal property Carter had promised.

In all of this, the government of Panama emerges smelling rather good. It will pay nothing for the management, operation, maintenance, protection, or defense of the canal and will still receive an addi­tional 30 cents per net ton shipped through the locks. This toll payment means even more cost for Americans. Because of the fact that many of the pay­ments to Panama will be contingent on revenue raised by tolls - Linowitz was at least half right in asserting that payments to Panama would come from toll revenues - and because the canal even now operates at a deficit, there will be consid­erable pressure to increase the toll charges in an effort to meet payment obligations. Although a toll increase will have no effect on the billion dollars (or $4 billion, using Congressman Hansen's estimates) that the Carter administration is committing the U.S. to pay from direct tax revenues, it will act as an indirect tax as increased freight charges are passed on to the consumer. Thus, in the end, the American taxpayer will lose on three counts: he gives up $10 billion of prop­erty; he absorbs the enormous cost of transferring the canal to Panama; and he pays for the increased price of goods that results from increased toll charges. The only beneficiaries of this Linowitz­ negotiated scheme are the Panamanian government and the American banks and corporations that have a huge financial stake in Torrijos's continued solvency


And what about Panama? Even if the American citizen is paying for a treaty that, from his point of view, is little more than a subsidy to giant corporations, at least the little country to the south gets its territory back. Or does it?

Again, it seems, the exigencies of a real politik have been clouded by the rhetoric of ideologues. If one accepted sovereignty then liberals and leftists at least could solace themselves with the thought that the Panamanians would receive the sovereignty Unfortunately for that line of reasoning, however; the gift was diverted in transit.

First of all, and more academic than real, some doubts can be raised about both American and Panamanian rights to the canal. After all, it was Colombian rebels who, in 1903 with the inspiration, insis­tence, and aid of Teddy Roosevelt, "liber­ated" the isthmus from the Bogota gov­ernment and then turned the rights to the canal over to the United States. The aggrieved party in this whole debate is really Colombia, but it is doubtful at this late stage that anyone would listen to yet another plaintiff in the case.

More to the point is whether the U.S. has any intention of abandoning its control over the canal. Symbolically the Reaganites and John Birchers are right: America has deeded title to the canal to Panama and has thus given up American property.  But this is a far cry from relinquishing either American interests in Panama or American sovereignty. Ellsworth Bunker said it best when he pointed out that "it is not ownership but use that is important." The real question is whether the U.S. can control the canal without owning it.

The banks, as we have seen, have been amazingly adept - even before receiving the imprimatur of the Carter treaty-negotiating team - at increasing their power over Panama with subtle financial deals. And they seemed not the least concerned with losing anything with the signing of a treaty-in fact, they lobbied strenuously for it.

Politically and strategically the U.S. has given no indication that it intends to let Panama push it out of the isthmus. On the contrary as Henry Kissinger has stated, "the new treaty marks an improvement over the present situation in that it assures continuing, efficient, non­discriminatory and secure access to the Panama Canal with the support of the countries of the Western Hemisphere instead of against their opposition and eventually their harassment." In other words, the U.S. has given up none of its domination over Panama. It has simply exchanged the big stick for the velvet fist.

President Carter was even more specific about what the treaty would mean for continued American presence in the Canal Zone. "We will have," he assured the nation after announcing the agree­ment, "operating control and the right to protect and defend the Panama Canal with our military forces until the end of the century" And after that? "We will have the right," he continued, "to assure the maintenance of the permanent neutrality of the canal as we may determine necessary. Our warships are guaranteed the perma­nent right to expeditious passage without regard to propulsion or cargo.”  In other words, should the velvet fist prove ineffective, we won’t hesitate to swing the big stick.

However; chief Panamanian negotiator Romulo Bethancourt completely rejected Carter's claims. During a news confer­ence in Panama, which was published by the CIA's Foreign Broadcast Information Service, Dr. Bethancourt stated. "The treaty does not establish that the United States has the right to intervene in Panama." Neither; in his view, do United States vessels have the right of expedi­tious passage during times of national emergency As Bethancourt put it, "If the gringos with their warships say, 'I want to go through first,' then that is their problem with the other ships there." Faced with Panama's refusal to allow "privileged passage, the Americans finally ac­cepted the term "expeditious transit."

There are in fact two Panama Canal treaties-the treaty itself and an additional treaty that purports to provide for the neutrality of the Panama Canal. Unfor­tunately these treaties are in no way to be construed as the whole agreement. Both are accompanied by very lengthy ex­ecutive agreements that actually contain the substance of the deal struck with Panama. For example, the major defense provisions for the Panama Canal are not in Article IV of the Canal Treaty entitled "Pro­tection and Defense," but in the Executive Agreement in Implementation of Article IV - an agreement several times as large as the entire canal treaty Article IV does not cover a complete printed page; the Agreement in Implementation of Article IV is 53 pages long, excluding annexes and excluding an additional 22 pages of min­utes, which have their own annexes.

And they are subject to renegotiation every two years. That means the treaties could be completely nullified in two years without the consent pf Congress. What has transpired is that President Carter has entered into a legal agreement with Panama based not, in reality on treaty law but on executive agreements authorized by treaty law but subject to change at the whim of the Panamanians or the president. And, of course, the American people were never informed of this.

Furthermore, at the Department of Defense Gen. George C. Brown, chairman of the Joint Chiefs of Staff, guided by President Carter and Secretary of Defense Harold Brown, coerced fellow officers to mount a campaign to convince the public that the canal was not vital to the security of the United States. However; secret testimony by Adm. James Holloway chief of naval operations, was completely con­tradictory. During secret hearings he told a handful of senators that the U.S. was giving up an irreplaceable communications facility used in tracking enemy sub­marines. The intelligence installation is on Galeta Island, at the Atlantic end of the U.S. Canal Zone. It is manned by 50 naval personnel and is the southern anchor in the U.S.’s sophisticated detection and tracking system for Soviet submarines. According to Admiral Holloway its mis­sion is of the highest priority. The station's unique position also makes it important for Pacific operations, especially in cases where Soviet submarines are operating in U.S. waters off the West Coast.

Careful steps were taken to prevent the leaking out of knowledge of the station's existence and overriding strategic importance. Any mention of Galeta Island was kept out of public debate. Testimony in closed secret sessions was "sanitized" to prevent leakage to the press. In fact, the campaign to keep the installation's existence secret was so successful that only two or three senators were aware of the installation.

This attitude on the part of American policymakers raises interesting questions about internal Panamanian politics. Why would Panama accept continued domination - both strategically and economically - by the United States? The answer rests in part with the person of Gen. Omar Torrijos, the heavy-handed military man who assumed control of the country after a1968 coup and has since been variously labeled "Maximum Leader of the Panamanian Revolurion" (his own choice), Communist, dictator; and drug peddler.

Even the U.S. State Department, normally cautious in its criticisms of countries in which the U.S. has a stake, in early 1978 accused the Torrijos regime of suppressing freedom in Panama. In its "Country Reports on Human Rights Practices," which wasn't released until after the treaty had been signed in Washington, the State Department said that Torrijos's National Guard (his police) physically abused prisoners, kept them in "primitive" jails, and "in certain public order and state security cases... interrogated, judged, and sentenced [the accused] without internationally recognized standards of due process."

If Panamanians disagreed with the terms of the treaty - which they did - their opposition was effectively muted by an intensive Torrijos propaganda campaign in which the government let it be known that dissent was "treason against our fatherland." Opposition parties had long been banned, newspapers and television and radio stations were either owned by the government or closely watched by it, and many of Torrijos' harshest critics had been exiled. The window dressing of freedom was allowed for only  40 short days prior to the Panamanian plebiscite on the treaty but even in that short time the criticism came from both the Left and the Right. The conservative Movement of Independent Lawyers of Panama denounced the treaty for allowing the "first American interven­tion in our country of the twenty-first century" and asserted that "the ordinary Panamanian will easily understand that …. There will be a new version – perhaps slightly less grotesque than before – of the hated American perpetuity on the canal issue." The Christian Democratic and Social Democratic movements; as well as the Trotskyist Revolutionary Socialist League, all voiced strong objections to the treaty.  But Torrijos refused to grant any more time for debate, and, with the most outspoken opponents already having been deported to Miami, Mexico, and Venezuela, he maneuvered the treaty narrowly but safely through the plebiscite.

Torrijos was not without his American enemies as well. But with the ignominious fall of Richard Nixon, the Maximum Leader had lost his strongest adversary: As much as Nixon wanted a new treaty to safeguard American interests in the canal, he wanted even more to be able to negotiate it with someone he could trust. Nixon thought Torrijos was a dangerous Communist and knew he was a drug peddler and Nixon was always at his Draconian best when Commie hunting or fighting his "war on drugs." His plumbers had even hatched a plot to assassinate Torrijos, the Nixonian version of big-stick diplomacy revealed by White House operative E. Howard Hunt in 1977: "I believe the feeling was that if Torrijos didn't shape up and cooperate, he was going to be wasted."

The Panamanian general's corrupt ties to drug trafficking continued to threaten plans for a canal treaty even after Nixon became absorbed with Watergate and Torrijos made friends with Wall Street and big business. As early as 1972 Con­gressman John Murphy's Panama Sub-committee of the Merchant Marine and Fisheries committee claimed that "the United States is negotiating a treaty that involves a 70-year; $5 billion U.S. commitment, not to mention the security of the United States and this hemisphere, with a government that condones or is actually involved in a drug-running operation into the United States." The subcommittee said three Panamanians were arrested in New York City in 1971, while trying to smuggle 70 kilos of heroin into the U.S. One of the three waved a diplomatic passport in the face of U.S. authorities that had been issued by Panamanian Foreign. Minister Juan Tack. Another was a Iong time friend and bodyguard of Moises Torrijos, one of the general's brothers and holder of various governmental positions. In a later confidential report Murphy's committee documented the involvement of other Panamanian offi­cials in the drug trade: the director of Panama's Tocumen Airport was arrested by U.S'. drug agents, and it was later revealed that Omar Torrijos himself orches­trated a protest campaign against the arrest; the Torrijos-controlled Banco Nacional de Panama and various interna­tional banks were cited as depositories for large sums of drug trafficking money; a secret Warrant for the arrest of Torrijos's  information in Panama, Moises didn't at­tend the treaty-signing ceremony in Washington); and Omar Torrijos himself, even aside from offering protection and positions of power to known drug dealers, was reported to have hidden interests in drug-peddling businesses.

By the time Jimmy Carter assumed re­sponsibility for the canal treaty deliberations, however; Torrijos had consolidated his grip on the reins of power in Panama, had earned the confidence of U.S. big business, and had enjoyed the position of negotiating with an American president who wanted a canal treaty at all costs.

Carter himself was well aware of the Panamanian government's corruption. In Senate confirmation hearings on his ap­pointment of Robert Sayre as new am­bassador to Brazil, Sayre was asked about his knowledge of officially condoned Panamanian drug dealing while he was ambassador to Panama during the Nixon administration. At one point

Sayre related this amazing story:

"I learned on or about 12/6/72 from the CIA that Moises Torrijos planned to return to Panama from Spain by ship on or about December ninth. Reportedly, Moises planned to disembark at the port of Cris­tobal in the Canal Zone [in U.S. juris­diction]. I asked the CIA station chief in Panama [Joseph Yoshio Kiyonaga, who was under State Department cover as an International Relations Officer] to be sure that State Department officials saw the intelligence reports [on Moises Torrijos's movements]. Subsequently, I was in­structed by the department to contact General Torrijos and let him know that we were aware of Moises's plans, which I did. I [later] learned that Moises Torrijos left the vessel in Venezuela and did not enter the Canal Zone."

Despite the objections that came from Sen. Jesse Helms, who charged Robert Sayre with obstructing justice, Sayre was confirmed as ambassador to Brazil. The State Department, in a letter to Helms, reasoned that Sayre's "conduct was entirely proper” because Moises Torrijos’s arrest would have undoubtedly “have provoked a most severe incident between the two governments."

Thereafter, the Carter administration tried to classify all government material on Panama as confidential and decided on only limited disclosure of "national security material" to key senators. On October 7,1977, Drug Enforcement Administration chief Peter Bensinger warned his employees that any "leaks" on Panama would be grounds for immediate dis­missal and criminal prosecution. That same day all Panama files were reportedly moved under tight security from their normal storage area to the tenth-floor offices of Gordon Fink, assistant DEA administrator for intelligence. And when Sen. Robert Dole, frustrated in his attempts to obtain information from the Carter administration, filed a Freedom of Information request with the DEA on October 14, he was stalled until the following February Even then, the senator complained that the 75-page report he received contained none of the information he had requested. He charged the DEA with giving him nothing but “heavily censored" and "almost totally sanitized" material.

What Dole was not given was a suppressed study called the DeFeo Report, initiated by the Justice Department in 1975. According to the report, two DEA agents actually suggested killing Torrijos and Manuel Noriega, chief of military intel­ligence. Nothing came of the DeFeo Re­port, however. Although it was commis­sioned by Attorney General Edward H. Levi to report on instances of corruption within the DEA, Levi ultimately decided not to publish it. (The suppression of the DeFeo report, which also enumerated instances of the Torrijos regime's involvement in international drug trafficking, may be illegal under Senate Resolution 21; under this resolution Congress is empowered to investigate "illegal, improper; and unethical activities" engaged in by intelligence agencies.)

That seems to have been the canal treaty story from the beginning: heavily censored and sanitized. The agreement with Panama has become, finally something of a catch-22 symphony orchestrated by special interests for the benefit of banks and multinational corporations and unpopular presidents and corrupt generals.

For those sympathizers believing that the agreement represented a long-awaited recognition of Panamanian autonomy and an abandonment of gunboat diplomacy, the treaty has become a dense cloud camouflaging the more subtle imperialism of dollar diplomacy The United States has not relinquished control.

In the end, both the American and Panamanian populace were made silent and exploited parties to the agreement, pushed unwittingly into a no-win situation by the once-populist Democrat and “outsider,” Jimmy Carter, born-again representative of the ruling class.