Office of the Historian

63. Memorandum From the President’s Assistant for National Security Affairs (Brzezinski) to President Carter1

Washington, July 21, 1977

SUBJECT

  • Whither a Panama Canal Treaty?

The Canal Treaty negotiations have reached an impasse, and unless there is a breakthrough soon, we will not be able to complete a treaty in time for Senate ratification by early 1978. If we permit the treaty negotiations or ratification process to extend beyond March 1978, the issue will get entangled in the campaign, and ratification might prove impossible.

Our negotiators have proposed the following economic concessions, which would be apart from a treaty:

1. The interest payments—$18 million (which will serve as security for a loan of $200 million.)

2. An Export-Import Bank pre-commitment to loan approximately $100 million.

3. An OPIC loan guarantee of $20 million.

4. An AID package of $80 million over five years.

5. Increased taxes on U.S. employees.

This package has not been put forward as a formal proposal, but the problem is that it still does not come anywhere near satisfying the Panamanians, who have asked for $150 million annually and $465 million in a lump-sum payment. While not enough for Panama, this economic package may, I fear, already be much more than what the Congress will accept.

I recommend that a meeting of the National Security Council be convened as soon as possible to consider the proposals on economic concessions, to review the final negotiating instructions and provide guidance to the Negotiators, and to decide on a final strategy for completion of the treaty. If we have indeed reached an impasse, then the options for trying to break it include:

• A phone call from you to Torrijos.

• A phone call from you to Presidents Oduber, Perez, and Lopez Portillo (of Costa Rica, Venezuela and Mexico, respectively).

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• And/or a meeting between Ambassadors Linowitz and Bunker and the Ambassadors from Costa Rica, Venezuela, Mexico, and Colombia to convey the urgency of the negotiations and solicit their help.

RECOMMENDATION

That a meeting of the National Security Council be called to consider final negotiating instructions and strategies.2

  1. Source: Carter Library, National Security Council Institutional Files, Box 63, PRC 027 Panama 7/22/77. Secret. Sent for action. Dodson wrote: “Mrs. Dodson’s ofc notified per Rick Inderfurth 7/21” on the memorandum, which was initialed by Carter.↩
  2. Inderfurth wrote at the end of the sentence: “Or a PRC under Vance,” and “N.S.C.” to the left of the recommendation. He added a second recommendation: “P.R.C. under Vance.” Carter checked the approve option for the second recommendation and wrote “J” beneath the recommendations.↩