Foreign Relations of the United States: Diplomatic Papers, 1942, The American Republics, Volume VI

711F.1914/424

Memorandum by the Chief of the Division of the American Republics (Bonsal) to the Under Secretary of State (Welles)

[Washington,] February 5, 1942.

Mr. Welles:

Current Negotiations With Panama

The Panamanian Government has now replied to our most recent proposal for a contract covering the defense sites. There are two principal points at issue:

(1) The applicability of Article II of the Treaty of 1936 and

(2) The amount to be paid to Panama as annual rental for the defense sites.

With regard to the first point, the present Panamanian administration takes almost exactly the same position as that assumed by Dr. de Roux¹³ in the course of his conversations with you last summer. That Government feels that the acceptance by Panama of our interpretation of Article II would mean an agreement to give the United States lands and territories on a permanent basis beyond that contemplated in the agreement under negotiation. Ambassador Wilson feels that reference to Article II might be omitted in the agreement, but that our position as to the interpretation of this Article might be made plain to the Panamanian Government through some other means. This matter has been discussed in RA¹⁴ and the proposal is made, subject to your approval, that the agreement on defense sites omit all reference to specific Articles of the Treaty of 1936 and that it be based upon the joint obligation of the two countries to take all necessary measures for the effective protection of the Canal. A draft along these lines is being prepared.

With regard to the second principal point upon which agreement has not been reached, the Panamanian Government now proposes that all lands occupied by the defense sites (with the exception of Rio Hato¹⁵), whether public or private, be paid for at a rental rate of $100 per annum per hectare. This would involve the payment of about $700,000 per year (which compares with the Canal annuity of $430,000 per year). On the basis of a Panamanian willingness to make available the defense sites, we have already stated that we would make concessions to Panama worth many millions of dollars (the railroad lots, the water works and the completion of the Rio Hato Highway, to say nothing of the fact that we are constructing at our expense a number of other highways in the territory of the Republic which will be extremely useful to the Panamanians).

It seems to me that Congress will be most unwilling to pass the necessary legislation to make effective the Department’s agreement on these specific points if, at the same time, it is confronted with a defense site agreement under which Panama is paid a most exorbitant sum for the sites themselves. My proposal, therefore, on this point is that we adhere to our original position, which is the same as that agreed to with the British in the case of the island bases, namely, to pay nothing for public lands and for private lands to reimburse the Panamanian Government for legitimate expropriation or other expenditures.

There are also a number of minor points at issue regarding such matters as jurisdiction, maintenance of roads, et cetera. I believe that these can be satisfactorily ironed out without troubling you about them.

We now have drawn up a draft of a message to Congress¹⁶ proposing legislation needed to transfer the railroad lots and the water works, and to reimburse Panama for her share in the Rio Hato Highway. I have had two conversations recently in the War Department on this subject, the last one with Mr. Harvey Bundy, the Secretary of War’s Special Assistant. My purpose has been to keep the War Department informed in general as to the progress of these negotiations and to assure myself that the War Department was fully aware of the extremely cooperative attitude of the present Panamanian Government. I believe that the War Department, while not highly enthusiastic about the twelve points,¹⁷ will be cooperative in the matter of the legislation which, I assume, in accordance with the President’s directive of last summer concerning the railroad lots will be introduced by the War Department when and if the defense sites matter is satisfactorily arranged.

Philip W. Bonsal

13. Ral de Roux, former Minister for Foreign Affairs.
14. Division of the American Republics.
15. Most of the defense sites were relatively small, from 20 to 25 acres; the Rio Hato area consisted of some 19,000 acres.
16. Not printed.
17. See note from the Panamanian Ambassador to President Roosevelt, February 18, 1941, Foreign Relations, 1941, vol. vii, p. 430.