CIVILIANIZATION OF THE CANAL ZONE GOVERNORSHIP

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00803R000400030040-8
• Release Decision: RIFPUB
• Original Classification: C
• Document Page Count: 11
• Document Creation Date: December 19, 2016
• Document Release Date: January 3, 2000
• Sequence Number: 40
• Publication Date: September 7, 1973
• Content Type: MEMO

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DRAFT
NS C UNDER SECRETARIES CO' MITTEE
CONFIDENTIAL
NSC-U/SM-136B
MEMORANDUM FOR.THE PRESIDENT
Subject: Civilianization of the Canal Zone
Governorship
At my request, a study has been prepared for the
Under Secretaries Committee which reviews the desira-
bility and feasibility of appointing a civilian as
Governor of the Canal Zone and President of the Panama
Canal Company.
The Departments of State and Defense have divergent
dews on this question.
State favors appointment of a well--qualified
civilian-possessing the requisite diplomatic and. manage-
ment skills to deal with the delicate problems which are
certain to arise as the United States moves to change the
status quo in the Zone by treaty negotiations and/or
unilateral actions.
While Defense acknowledges the feasibility of appoint-
ing a civilian governor, it believes that this is not a
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significant issue in US-Panamanian relations. Defense
believes that officers from the Corps of Engineers, who
have served in positions requiring diplomatic skill and
are especially qualified. in engineering and management,
should continue to be the primary source for administra--
tors.of the Canal Zone Government and Company.
The Under Secretaries Committee recommends that when
a successor to the present Governor is considered, atten-
tion be given to the possibility of appointing a qualifie
civilian.
Kenneth Rush.
Chairman
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Subject:."Ciyilianizati:on" of the' Canal Zone Governorship
To study the desirability and feasibility of appointing
a U.S. civilian rather than a military officer as Governor of
the Panama Canal Zone and President of the Panama Canal
Company.
II. BACKGROUND
By a convention of 1903, as amended in 1936 and in 1955,
the U.S. has the right to Act "asif it were the sovereign,"
in perpetuity, over the 500 square miles of land and water
comprising the Panama Canal Zone.' This 50-mile--long,
10-mile-wide strip divides the Republic of Panama in two.
The U.S. has formally acknowledged on repeated occasions
that the Zone is the-territory o:f the Republic, but territory
under the absolute jurisdiction of the U.S.
For many years the Republic has been opposed to the con-
tinuing existence of this enclave in its present form. Since
1964, following riots in which American and Panamanian lives
were lost, the U.S. has been trying to negotiate a new treaty
with Panama designed to accommodate Panama's desire for a
modernized treaty relationship which would eventually give
Panama more effective sovereignty over the Zone while at
the same time preserving U.S. control over the'operation and.
defense of the Panama Canal. Panamanian frustration at the
continuing failure of the negotiations. has led to tensions,
heightened by the advent of a markedly nationalistic govern-
ment, which make the relationship between the U.S. and Panama
a fragile one. Recent Panamanian initiatives have brought.
this unresolved issue between the two countries to the at-
tention. of the world and resulted in criticism of the "colo--
nialist",character of the U.S. presence in Panama.
Three U.S. Government entities operate in the 'Lone. One
.is the U.S. Southern Command (SOUTHCOM), a unified command
under the Joint Chieis 7hn.cn embraces Army, Navy and Air Force
components.
Another is the Panama Can'al' Company. It is a corpo-
rate agency of the U.S. Government established by Congress.
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The sole stockholder is the Secretary of the Army, .as the
delegate of 'the President,.and he appoints the Board of
Directors. It operates the Canal and the commercial enter-
prises associated with it..
The third is the Canal Zone Government, also an indepen-
dent agency of the U.S. Government established by the Con-
gress, charged with governing the area in. which the waterway
is located.
The Company and Government are inextricably related in
management, organization and operation. Both are supervised
by the Secretary of the Army. That supervision is carried
out by the Secretary of the Army as personal representative
of the President and not in his capacity as Army Secretary.
Both are directed by the personage who, appointed by the
President with the Senate's consent, is at once the Governor
of the Canal Zone and the President ex 'officio of the Company.
The Governor/President is by tradition (since 1.907) an
officer (in recent times a Major General) of the U.S. Army
Corps of Engineers, and the Lieutenant Governor-is by tra-
dition an Engineer Colonel.
The Government and the Company are staffed by approxi-
mately 3,600 U.S. citizens and ?10,500 Panamanian citizens
who compare in terms of status and selection to career U.S.
civiiaservice personnel. Some 40 U.S. military officers on
active duty are assigned to the Government/Company, six in
executive positions and five in engineering ones. The re-
maining 29 are medical and dental officers assigned to
Gorgas Hospital.
There is no statutory requirement that the President/.
Governor be a military officer. The two must by statute be
the same person, however.
For at least a quarter of a century, official records
indicate, there has been interest in appointing a civilian
to the position. The Hoover Commission, the General Account-
ing office, individual members of the Congress and the
Departments of Commerce and State have recommended such a
change,. In late 1965, the President decided to appoint a
civilian Governor on the recommendation of the Secretaries
of State and Defense and the U.S. treaty negotiators. A
nominee acceptable to the President and both Secretaries was
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not found in the course of a year., however, and-the President
appointed another general officer, in 1967. The question was
again reviewed in'1971 at the time of the appointment of the
current governor but the traditional policy was continued
pending the outcome of the new treaty negotiations.
The Departments of State.and Defense have divergent views
on the desirability of appointing a civilian to administer the
Government/Company. However, all members'of the Inter-Agency
Group agree that appointment of a civilian Governor/President,
if such is decided, should not be made before ti'e end of the
current incumbent's term.
A decision to appoint a civilian Governor/President would
be considered as one of the unilateral actions contemplated
within,Option D and as such would be implemented by the Ex-
ecutive at such time and in such a way as the U.S. negotiators
consider most appropriate.
Department 'of' State's Views
The'Department of State believes that appointment of a
civilian!to had the Panama Canal Government/Company would
be an appropriate.and desirable initiative as the U.S. moves
to change the status quo in the Canal Zone by treaty nego--
tiatic5n.s and/or unilateral actions, as authorized by. the
President.
Civilianization of the Zone Governor, while in itself
not sufficient to placate Panama's antagonism toward what it
regards as the overwhelming U.S. military presence in the
Zone, would nevertheless constitute a signal to responsible
Panamanian officials that the U.S. is not insensitive to
Panamanian feelings. Together with other measures aimed at
reducing the U.S. military presence in the Zone to a point
commensurate with the basic requirements of canal defense,
a decision to appoint a civilian governor would help demon-
strate U.S. interest in creating a more propitious climate
for fruitful treaty negotiations.
Tl governmental functions of the Governor are essen-
tially those of a mayor of a medium-sized municipality com-
bined with those. of a $200 million per year industrial com-
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bine. They require expertise not so much in engineering or
military arts as in dealing with civil and urban problems,
financial management, public and labor relations. In the
delicate transitional period ahead, the Governor must have
diplomatic skills of a high order if he is to cope adroitly
and successfully with the myriad problems which are likely
to arise between U.S. personnel in. the Zone and hypersen-
sitive Panamanian officials.
Today and in the future significant frictions with
Panama tend to arise from the exercise of governmental func--
.tions by Canal, Zone authorities. Friction has seldom been
generated by the technical operation and defense of the
Canal as such. Future problems with Panama will require
resolution by accommodation and compromise. The period
during which the U.S. begins changing the status quo in. the
Zone will be even more replete with frictions, and will,
challenge the patience, the sensitivity, accommodating nature
and willingness to compromise of the Canal Zone authorities.
Zone residents will experience adjustments in their life
style as the status quo changes. In managing this problem
and the very delicate relationships engendered-by jurisdictional
,adjustments with Panama, a civilian governor, if carefully se-
lected,' wou~-d be better,equipped through prior experience in
civil government to cope with the many tensions which are
likely to arise. Although one of the Governor's assigned
functions is to protect the canal, such protection is limited
to the administration of police power. In event of a serious
security problem in the future, a civilian Governor would
continue to rely on the military commander of the Canal Zone
who is responsible for and has the necessary forces to protect
the security of the waterway. Indeed, from a practical view-
point, a well-qualified and experienced civilian Governor.
would be a great asset in helping the military command insure
that frictions between Panama and the Zone do not escalate to
the point where they precipitate incidents that might result
in a serious threat to the Canal.
In the Department's opinion the appointment of a civilian
Governor would not adversely affect technical management of
canal operations. The Lieutenant Governor could and should
remain a qualified Corps of Engineers officer. Under super-
vision of the civilian Governor, he would continue to provide
engineering expertise and whatever military skills might be
required in running day-to-day canal operations.
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Both politically and psychologically, the tradition of
having a U.S. military Governor exercising absolute govern-
mental powers over the Canal Zone is increasingly objection-
able to the Panamanians and is reminiscent of a colonial
era which has since vanished in other areas of the world.
In Panama's view the U.S. military's control of all three
entities in the Zone -- the Canal Zone 'Government, the Company
operating the Canal and the Southern Command with its respon-
sibilities for hemispheric as well as canal defense, repre-
sents an "overwhelming U.S. military presence on Panamanian
territory." In recent years, it has become an important
symbol contributing to Panama's charge that a significant
part of their country is in effect under U.S. military occu-
pation.
Indicative of Panama's growing -antipathy toward what it
considers a "military" Governor is the fact that senior
Panamanian officials of the Torrijos government have often
refused either to deal with the Governor officially or to
recognize formally the existence of the Canal Zone Government
which he heads.
Recent statements by Panamanian officials. clearly indi-
cate that a U.S. initiative in appointing a civilian Governor
would be welcomed. On January 20, 1973, Foreign Minister Tack
told the American Ambassador in Panama that, in the Ambassador' s
words,.a change to a civilian Governor "would help considerably"
to improve the relations between the two countries. In July
.Torrijos himself reportedly told hip Ambassador to the U.S.
that a civilian "mayor" in the Zone would help improve rela-
tions with the U.S.
In the face of Panamanian and international sensitivity
toward the symbolic significance of a military governor, there
no longer seem to be any compelling reasons - in contrast to
the conditions of 1903, 1917, and 1941-which would justify
continuing the practice of appointing a military officer as
Governor/President of the Canal Zone.
During the United Nations Security Council meeting in
Panama City (March 15-21) members of the Council as well as
other governments participating in the meeting deplored.
U.S.. insistence in retaining an unnecessarily large U.S.
military presence'in a territory which the U.S. has recog-
nized as Panamanian. The fact that the Canal Zone Governor
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is also a military officer served to intensify their criti-
cism of the..." colonialist" nature of the U.S. administration.
As the. United Kingdom's representative commented,."It all
seemed. like India 50 years ago except that in India the
Governor would have worn his uniform."
The domestic political reaction to appointing a civilian
Governor is, or course, an important consideration. Leading
members of the House Merchant Marine and Fisheries Committee
would support the concept of a civilian as Governor. As
noted earlier, the appointment of a civilian has been seri-
ously considered on numerous occasions since the 1930s - most
recently in 1971 - when the present Governor was appointed.
in the House, the Chairman of the Merchant Marine and
Fisheries Committee, who is the primary Congressional overseer
of the Canal Zone operations, has herself recommended such a
change and her views on any Canal Zone-related subject also
carry..weight in the Senate. Although hard-core congressional
opponents of any U.S. concessions to Panama might question
this change as they would any other, it is not the kind of
measure which would provoke them into frenetic opposition
es peciall_y ' since Canal operation and defense would not be im-
paired. I
Recapitulating, _civilianization of this position would
have significant foreign-policy benefits as well as benefits
in terms of civil administration-of the Canal Zone.
'-- it would ease the painful transition over time
from total U.S. control of the Zone to increasing
Panamanian participation in the Zone's, activities.
--- As a noteable gesture of good-will toward the present
Panamanian government -- and one that government has
sought -- it could contribute to lessening day-to-day
tensions in U.S.-Panama relations, and thereby con-
tribute to improving the climate for successful treaty
negotiations.
-- It would help reduce international criticism of the
U.S. "military government" on Panamanian soil, and
thereby help restrain further criticism embarassing
,to the U.S.
-- It has been proposed since the early 1950s and would
probably be politically acceptable to most members of
the present Congress.
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Department of Defense' Views
The Department of Defense believes that it is feasible
to appoint a civilian to head the Panama Canal Government/
Company, but as there are no proven advantages to be gained
therefrom, there is no cogent reason for charging an arrange-
ment that has worked so well for so long.
Although senior Corps of Engineer officers have headed
the Government/Company throughout its 60 years of operation,
there is no reason that a qualified civilian could not per-
form as Governor/President in a satisfactory manner. How-
ever, as is evident by the 40-year consideration, of civilian-
ization, the difficulty lies in finding a civilian who has
the combination of necessary skills and is willing to serve
at a relatively modest salary in a position where he will be
required to carry out U.S. policies that might well subject
him to strong Panamanian and U.S. public criticism to the
detriment of any. personal political ambitions. U.S. Army
Corps of Engineers officers are a source of highly profes-
sional engineers, both skilled and experienced in management.
In 1907, after accepting the resignation of the second ci-
vilian head of the Canal 'organization -- who was an out-
standingengineer, manager, and leader -- the President de-
cided to appoint a military officer who could not leave until.
he was relieved.
The Panama Canal is a major engineering and transpor-
tation activity that requires stroiccj and competent manage-
ment and leadership, not only to keep it operating but to
cope with technical and operational changes which lie ahead.
Government/Company governmental'functions are dissimiliar
from that of a city mayor in that the Governor has.the equiva-
lent of Federal, state, and local government. responsibilities
over a nonvoting population which is entirely associated with
.the operation and defense of the Canal and where all facilities
and housing are government owned.
In the present political environment even if some in-
definable advantage vis-a-vis Panama were to be gained, the
gain would be o,fset by loss of the technical advantages the.
traditional practice has provided to the primary mission of
the Panama Canal, that is, to operate and maintain a water-
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way for the transiting of ships from one ocean to the other
in peace and war. This mission has the dual purpose of serv--
ing both national defense and interoceanic commerce. The ap-
pointment of technically qualified Corps of Engineers' officers
to head the Canal enterprise, usually after an earlier tour of
duty with the Canal organization, has contributed significantly
to the successful accomplishment of that task. Additionally,
the presence of a military officer has also greatly facili-
tated the Canal's protection through coordination and inte-
gration of assets for the defense of the Canal during times
of local and international crises.
Significant frictions with Panama do result from the
exercise of governmental functions by Canal Zone authorities
in territory which Panama contends should be under its full
and effective jurisdiction. What is at issue for Panama are
the functions, powers, and title of a Governor as head of
a Canal Zone Government, and not whether his origin is ci-
vilian or military. Panama objects to a "colonialist enclave"
manifested in the exercise of governmental functions in the
Canal Zone by a U.S. official who bears the title "Governor."
For these reasons Panama has in recent years been reluctant
to use the title "Canal Zone Government" or "Governor" in of-
ficial correspondence or contracts. The low-key Panamanian
preference for a civilian governor made by Foreign Minister
Tack on 20 January 1973 to the American Ambassador and the
statement reportedly made in July by General Torrijos to the
Ambassador to the U.S., are of little significance when viewed
in the context of vociferous and voluminous Panamanian com-
plaints about the basic issue of the'exercise of U.S. govern-
mental and military functions in the Canal Zone. Rather this
appears as an item Torrijos hopes to use. to gain some fancied,
propaganda advantage. In fact, Torrijos told Ambassador
Robert Anderson two years ago he preferred dealing with a
military man rather than a civilian. On 25 August 1973
Torrijos made a statement, which was carried in Panamanian
news media, critical of the Governor's action in the pilots
slowdown. Although harsh terms were used, Torrijos did not
mention in any way the Governor being-a military man.
During the period ahead in which the U.S. seeks to
establish a new relationship with Panama with regard to the
Canal and at the same time provide for its continued efficient
operation and security, the head of the Canal organization
must be an individual with exceptional personal qualities and
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varied skills. The essence of the problem is to find a
civilian possessing the necessary qualifications who is also
willing to accept the position.
U.S. Army Engineer Corps officers.are specially quali-
fied in engineering and management. This is an unquestion-
able fact as evidenced by the manner in which the Corps has
performed its civil works mission in the U.S. and its pos-
sessions since 1824 to the present.,,Many of the Corps' of--
ficers have served in positions requiring diplomatic skills.
Traditionally Canal Zone Governors have been selected from
among officers who served in the Government/Company at some
earlier time. With the Secretary of Army retaining responsi-
bility for Governor appointments, the management of the ' Canal
can be facilitated and prior experience of personnel exploited.
This will serve to provide stability of leadership and con-
tinuity of operations which could not be assured with a ci-
vilian appointee who is free to resign at any time.
Recapitulating, a military officer as head of the Canal
Zone Government/Panama Canal Company is not asignificant
issue inU.S.--Panama relations. This notwithstanding, in-
dividuals selected for the post should be chosen on the basis
of their,per.sonal attributes and skills. While civilians
having the requisite, qualities could fill this position, the
President should continue to look to the Corps of Engineers.
as the primary source for qualified Government/Company ad-
ministrators.
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