New Deals for the Big Ditch

One of the most protracted and politically sensitive diplomatic disputes in American history is rapidly reaching a turning point. U.S. and Panamanian negotiators in Washington hope to initial the draft of the first major agreements on the Canal Zone since the U.S. extracted jurisdiction over the area in a treaty forced upon the fledgling Republic of Panama in 1903. Very soon, perhaps within the next two weeks, a new deal can be struck--if one final, formidable obstacle can be overcome. That issue is how much money the U.S. should pay Panama before relinquishing the last remnants of control over the canal by the end of the century.

Negotiators have already hammered out not one but two treaties. The main document totally erases the old treaty under which the U.S. could exercise authority "as if sovereign"--a contentious phrase that provided for colonial power over the zone. Instead, Panama would gain full jurisdiction over the zone within three years. Meanwhile, the U.S. would operate the canal itself until Dec. 31, 1999--and then turn it over to Panama. Some 3,500 Americans working for the Panama Canal Co., which is entirely owned by the U.S. Government, would lose such perks as subsidized housing and bargain shopping at official stores; they would simply live as foreigners subject to Panamanian laws and customs as soon as Panama began governing the zone in 1980 or 1981.

It is on the topics of defense and "neutrality" of the zone that American negotiators have scored their most notable breakthrough. Despite cries of Panamanian radicals for a total American pullout, the treaty calls for a gradual military reduction. The number of U.S. troops, now 9,000, presumably would decline and the 14 U.S. military bases would be reduced to four or five by the year 2000. At that time, the U.S. would have to pull out the last of its troops--or negotiate yet another treaty.

Quiet Urging. The second agreement provides for defending the permanent neutrality of the canal--that is, some U.S. military guarantee that the Big Ditch will be open to ships from any nation. A number of the Latin American governments most openly in favor of turning the zone over to Panama have quietly urged the U.S. to insist on this guarantee. Otherwise, ask representatives from such heavy canal users as Ecuador, Colombia, Chile and Peru, how could they be certain that some future Panamanian ruler might not shut off the canal to their ships in a totally unforeseeable squabble? Largely because of this agreement, General George Brown, Chairman .of the Joint Chiefs of Staff, says he is "satisfied" with the negotiations so far and supports rapid conclusion of both treaties.

But the two top American negotiators--voluble, persuasive Lawyer Sol Linowitz, 63, former Ambassador to the Organization of American States, and icy-calm Ellsworth Bunker, at 83 a veteran of crises from the Dominican Republic to Viet Nam--admit they are temporarily stymied on the question of money.

Ironically, the U.S. had assumed that the money question would be easy to resolve. Panama's ruler, General Omar Torrijos, has assigned what one U.S. diplomat describes as a "remarkably well informed and competent, highly professional group" of young economic experts to bargain for a package of more than $4 billion as a condition for signing anything. Specifically, Panama hopes to get some $1 billion in American aid at the outset, and then annual payments of $ 150 million for American rights to the Canal Zone and another $20 million for "rental" for the U.S. bases until the year 2000.

Big Break. American negotiators seem willing to agree to upwards of $200 million in initial lump-sum aid and suggest annual payments of between $30 million and $50 million. White House experts scoff at suggestions that the United States owes reparations for having paid Panama only $2.3 million a year out of canal tolls now totaling $160 million and point out that the Panama Canal Co. operates at an annual loss of $7 million. U.S. diplomats oppose any big break from the policy of operating the canal as an international utility open to all comers at the lowest rates possible.

Both sides have some reason to compromise rather quickly. American negotiators want urgently to have the twin treaties initialed before Congress recesses for a month beginning in early August. If the treaties are in hand by then, it would be possible to get the Senate to vote on both agreements before Congress adjourns in the fall for the rest of the year. Under the best of circumstances, committee hearings will be tough, and it will be hard to win the two-thirds majority in the Senate required for ratification. Some parliamentarians, moreover, argue that the House of Representatives must also approve the main treaty since it involves disposal of American property--the canal itself. But if a vote is delayed until 1978, a congressional election year, the treaties may encounter even stiffer opposition.

At the same time, General Torrijos has reasons to seek compromise. Though he is a strong nationalist, he has a tough time containing militantly radical students who are constantly threatening to sabotage or attack the Canal Zone unless Panama gets sovereignty over it. The longer the Americans remain there without a new treaty, the greater the possibility of anti-Yanqui violence that could also turn into a protest against his own regime's inability to reduce high unemployment and inflation.

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