of the Soviet strategy-an excellent strategy and if I were there, I should do the same thing. They want the Kiel Canal, they want the Danube, they want the Strait of Malacca, they want the Suez Canal, they want the Panama Canal. They want to dominate and control the areas adjacent and contiguous to strategic maritime transportation arteries. Obviously, when that is done, they have a fait accompli, and the Panama Canal would be a jewel in their crown. They have the Suez Canal; the Kiel is under a shadow. They have the Danube and the Bosporus Straits. If they just squeeze, they have the Dardanelles. They are in the Mediterranean now, up to your you-know-what; that takes Gibralter. Also they are in the Caribbean in position to threaten the Atlantic approaches to the Panama Canal. The import of sovereignty is exactly the situation which exists in the Middle East today-confrontation with the United States. They don't want that. And with sovereignty, they have it. Without U.S. sovereignty over the Canal Zone, you know what will happen to Panama; like a dose of salts, bing, they go Red, and they would be invited in. As a matter of fact, Castro did send a hastily organized small expedition, you know, 2 months after he took over, to take the Panama Canal, but the local Indians took care of that with machetes. Mr. FASCELL. In your opinion, then, if the Soviets established an equal presence in the Caribbean, using Cuba as a military staging base, this would present some real problems for the United States, whether or not we had sovereignty over the canal. Mr. FLOOD. Of course. About 5 minutes after the British left the Suez, and Egypt took the Suez, Panama had emissaries in Cairo about 3 weeks later, saying, "How do you do this? How do you steal canals?" INTERNATIONALIZING THE PANAMA CANAL Mr. FASCELL. Do you feel that the same logic would apply if the canal-the operation of the canal-were internationalized? Mr. FLOOD. Oh, I think the last thing in the world that any of the nations of the world, including Panama, would want would be to internationalize the Panama Canal. That would be the last thing they would want. I think of the Japanese, who are now the great customers to the canal. You hear about the tremendous big oil tankers and other types that can't transit the canal. Well, by the year 1985, there would be probably about 33 million tons of cargo bypassing the canal in vessels too large to transit. I also think of the British, who are one of the greatest users of the canal. In our operation of the Panama Canal, we have meticulously met our treaty obligations for the vessels of all nations with tolls that are just and equitable. This is the reason why the users of the Panama Canal are so completely delighted with the way that we have managed it over the years. The last thing in the world that its biggest customers wish is that the canal be internationalized. Mr. FASCELL. Mr. Culver. Mr. CULVER. Thank you, Mr. Chairman. I also wish to commend our most able, articulate and eloquent colleague from Pennsylvania for his customary excellent presentation of his views on this very complicated and important subject. CONTROL OF THE PANAMA CANAL I would, if I may, like to pursue the chairman's line of questioning further, to the extent to which we attempt to estimate what cost the U.S. Government must pay to maintain its present status in the Canal Zone. For example, General Mather testified before this subcommittee that there is a deep undercurrent of resentment against U.S. sovereignty. He went on and called it "latent hostility," and I wonder, Mr. Flood, if you can envision an accommodation that could be formulated which would leave the United States in effective control of the canal for many of the important reasons you have outlined, but at the same time, be responsive to many of the Panamanian complaints, and avoid the kind of confrontation there that has characterized our overseas military presence in so many parts of the developing world, in view of the altered international situation. I share the implicit concern, I think, that the chairman expressed when he talked about the extent to which conceivably a continuation of U.S. presence, no matter how effected, might well in fact prove to be far more successful in implementing Soviet interests in that area, to the extent to which it contributes to a continuation of this unrest, and as a symbol of American "colonial imperialistic presence," and so forth; and I wonder in view of this kind of problem that we face there, and face with regard to our military presence elsewhere in the world, if you could conceive of a way in which we could work out an accommodation that is more compatible with the modern world. Mr. FLOOD. Well, let's see if I can give an analogy. I indicated the Soviet intent, and it is a naked intent, there is no secret there. They have been talking about it for 40 years, about interoceanic communications. But the Suez is not in Central America. Neither is the Kiel. The Panama Canal is. The Panama Canal is the jugular vein of the hemispheric defense, and say what you will, and with all the poses that they strike, in many of these Latin countries-and the smaller the country, the more elaborate the uniform-you know as well as I that anybody who strikes the Western Hemisphere at any part of it strikes us. This is hemispheric defense. This, I repeat, is the jugular vein for such defense. We have experienced problems with the Pacific before. We had two divisions, one through the canal, one en route, when World War II ended. You have this can of worms in South Vietnam or Southeastern Asia, whatever it is going to be, and I can envisage, as can you, that part of the Communist chain from Australia through the Islands through Alaska, and we must have a zone of defense to fall back on, what? The Philippines? The Islands? Maybe back to Hawaii. Now, the canal is a means not only of economic communication, which was the real basis for its birth-the defense structure has developed since then, with the development of this Nation-but to work out an accommodation, why, of course, you are a legislator, your business is the art of compromise, to work out; but when you say that there is unrest in Panama, that has nothing to do with the canal. There would be unrest in Panama with or without this canal, with a new sealevel canal, with a half dozen canals. Panama is that sort of a place. It is unfortunate, as is Poland. Its worst enemy is geography. And there she is. SITUATION CHANGED SINCE 1903 TREATY Mr. CULVER. Would you not agree that the ability of the United States to maintain its control and its influence and protect all its very real military and strategic and economic interests there, as originally envisioned in 1903, is markedly different than the world in which we are required to operate today. Further, that Panama today, politically speaking, is an entirely different atmosphere in which to work out relations with this hemisphere generally? Mr. FLOOD. I would like to borrow your argument. The only thing wrong with your argument is that I didn't think of it. That is the strongest statement I have heard made at this table today for my position. Precisely. It isn't 1903, it is 1970, and the horizon-there is no horizon. The situation has changed but has changed for the worse. Instead of surrendering the Canal Zone, it should be extended to include the entire watershed of the Chagres River. Mr. CULVER. Wouldn't that call, though, for an entirely different formulation with regard to U.S. presence and the nature of it and the extent of shared control and influence, on something as sensitive to their own national interest? Mr. FLOOD. I am very fond of these people. I have known them all my life. When you say they are "Gringo, get out!" types, that is not the people of Panama. You go to the Indians. You have trouble in the city. You have troubles in all cities. We have them within two blocks of here. Panama City is not Panama. "Have you ever been to the United States?" I say to an Englishman; "Oh, yes, I have been to New York." And somebody says to me, "Have you ever been to China?" "Yes; I was in Shanghai." Now, New York is about as much America as Shanghai is China. The city of Panama is not the people of the Republic of Panama. Mr. ČULVER. But you take the recent example, if we could turn to it for a moment, you mentioned the South Pacific. Take the case of Okinawa, and the recently concluded arrangements there, concerning the revised nature of U.S. continued military presence on that particular Mr. FLOOD. I have no quarrel with that whatsoever. Mr. CULVER. And the direct correlation and link-up to the domestic political consequences within the nation of Japan in the absence of making some sort of a modification, even though admittedly, we would argue that in the abstract, it is contrary to our national interest. Mr. FLOOD. I agree, I agree, but there is the development of time, and we can see the element of time there. And our need is at this time. I find no quarrel with that. I wouldn't do it, but I find no quarrel. But I see no analogy with my jugular vein, my southern flank, wide open. Mr. CULVER. I think the analogy I would submit might be that this was a very enlightened accommodation, very much in the strategic national interests of the United States, and in the absence of which, an alteration of that kind or similar to it, we ran the very real risk, in case of a major confrontation with China, for example, or some other situation in Southeast Asia, that we would be denied the utilization of even Japan itself. In some mutual security endeavor, if we didn't work out some way to bring about a damping down of the political unrest that was being stirred up by this mutual security arrangement of Okinawa, and may well be responsible in bringing about the type of government in Japan, politically speaking, that would deny us the utilization or access of any facilities, which are of paramount importance to our national security interest. So turning again to Panama, is it possible at all, to your way of thinking, that if we continue to allow what is admittedly a source of friction and political instability and military instability to fester, without any initiative or enlightened concession by the U.S. Government, that this may bring about an increased likelihood that this very vital economic and military link would no longer be available to us a handful of years down the road? Mr. FLOOD. Well, of course, this is a matter of degree. When you look at the original treaty, when you look at the arrangements with the Republic of Panama, when you look at the pots of gold that have fallen from this rainbow into this totally technologically ignorant, endemically unstable people, the employment rates, the thousands and thousands of people, Panamanians, that we employ, the wage scales they get, do you think those people want to see some of these Graustarkian generals in Panama take over that place? Neither do we. Mr. CULVER. Well, in terms of national pride and self-interest, which has a very irrational and emotional power all its own Mr. FLOOD. Oh, yes. Mr. CULVER. It is probably the most powerful— Mr. FLOOD. The Latino is very sensitive. Mr. CULVER. Undoubtedly the most powerful political movement in the world today. Mr. FLOOD. We have it here, in our country. Mr. CULVER. But this chauvinism, therefore, I wouldn't underestimate, and, turning to cost, what do the Panamanians now get for the United States presence in the zone and U.S. control over the canal? Do we have some figures? Mr. FLOOD. Their very economic existence-period. Their life's blood. Their existence. We gave birth to them. We have nurtured them, trained them, educated them, fed them, paid them. In fact they call the canal their "lunch counter." Mr. CULVER. Mr. Flood, do you think someone could possibly provide income figures for the record? Mr. FLOOD. I would think so. Mr. FASCELL. We either have it in the record or we will get it for you. The actual revenues, I think, are in the order of $212 million a year. Mr. FLOOD. Just a few years ago Mr. CULVER. But it is $2 million a year in the canal; their share of canal tolls, for example, is $2 million a year. Mr. FASCELL. I don't remember the exact figure. Mr. CULVER. That is the figure I am familiar with. (The United States pays Panama an annuity of $1.93 million pursuant to the provisions of Article I of the 1955 Treaty of Mutual Understanding and Cooperation between the United States and Panama.) Mr. CULVER. How much does the United States collect from toll fees? Mr. FLOOD. You mean in dollars? Mr. CULVER. Yes, sir. Mr. FLOOD. Well, everything we collect, by the millions a year, we turn back to the General Treasury. The Canal Company and the Panama Canal Zone are two separate and distinct things. The zone is a governmental agency, and the company is commercial concern, operated on a self-sustaining basis. Mr. CULVER. But does the U.S. Government Mr. FLOOD. It all goes back to the U.S. Treasury. It is a self-paying thing; we do not subsidize this thing. Mr. CULVER. That's the thing I wanted to bring out. Mr. FLOOD. It is self-paying. Mr. CULVER. The United States is making money now off the canal's operation; we don't subsidize it? Mr. FLOOD. We never did, except the original investment. We have a $5 billion investment. But you can have that much in, no matter what you do. The fact remains that that investment is there. But as far as the dollar by dollar, month by month, week by week, ship by ship, that washes itself out, and reverts to the Treasury. So in other words, there is no millstone around our neck, as a cost, as a debt of any kind. Moreover, U.S. isthmian activities, directly or indirectly, inject more than $100 million annually into the Panamanian economy. Mr. CULVER. Thank you, Mr. Chairman. Mr. FASCELL. Mr. Roybal. STANDARDS OF EMPLOYMENT IN THE CANAL ZONE Mr. ROYBAL. Mr. Flood, the Panamanians that I have had the opportunity of talking to complain that there are two standards in the zone. Mr. FLOOD. The silver and gold standard? Mr. ROYBAL. No, sir. That is the employment standards, that the Panamanians do not get the same salary doing exactly the same work as an American. Now to what extent is this actually helping or hurting relations? Mr. FLOOD. Well, of approximately 16,000 employees of the Panama Canal, say, 12,000, as of this afternoon, are Panamanians; 4,000, say, are Americans. Now they are getting a wage scale, paid by us, far greater than what they would get for the same kind of work any place in Panama, for the Government or private contractor, doing the same kind of things. Mr. ROYBAL. But the American who is doing exactly the same kind of work, then, is getting a salary that far exceeds the amount that a Panamanian receives? 47-893-70- -15 |