Still & Forever

A blessing of geography and the pugnacious foresight of Teddy Roosevelt gave the Republic of Panama its No. 1 asset--the Panama Canal. Under a historic treaty, signed in 1903 and renegotiated in 1955, the U.S., which has spent more than $1.5 billion to build and improve the canal, retains control over the vital Atlantic-Pacific seaway "in perpetuity." This point has long galled the nationalistic Panamanians and has touched off anti-American riots throughout Panama.

Last week Panama's President Roberto Chiari, 57, a businessman with a knack for negotiating, flew into Washington to discuss the issue with President Kennedy.

After a 21-gun salute at the airport, Chiari told Kennedy: "I believe that frankness is the only way two friendly nations can attempt to solve their problems." Friendliness he found--and frankness too. Kennedy offered to settle many of those grievances that do not affect U.S. sovereignty: more employment and higher wages for Panamanians in the Canal Zone, the right to have the Panamanian flag flown next to the U.S. flag everywhere in the Canal Zone, a U.S.-enforced system to withhold the income taxes of Panamanian and non-U.S. workers in the Canal Zone. But the concessions President Chiari had really come to bargain for he did not receive.

Expand & Improve. The Panamanians want a substantial increase in tolls. Arguing that the charges (about $4,700 per ship on the average) are out of line with modern shipping costs, Chiari would like the U.S. to raise tolls and give Panama 20% of total revenues. The U.S. spends all of the $5,000,000 annual profit on canal expansion and improvement.

Chiari also wanted, but did not get, an increase in the $1,930,000-a-year fee the U.S. pays for the Canal Zone. The U.S. maintains that while it may be paying a low annuity, Panama benefits in other ways. Canal Zone employees and various U.S. agencies spent well over $70 million in Panama last year, $10 million more than Panama's national budget. The figure will probably rise this year. Under Panamanian pressure, Canal Zone commissaries, which have supplied most foodstuffs needed by local residents, may soon cut back.

Zone stores are even now buying heavily from Panamanian producers.

A Second Canal. During his talks with Kennedy, Chiari repeated his theme that "Panama will always insist it has sovereignty over all of our territory, and this is something we shall never surrender." But as an accomplished bargainer who knows more or less what to expect before he sits down, he was prepared for the U.S.

answer: though Panama owns the land, the U.S. must retain effective control.

Nor did he press too hard.

Returning home after a visit to New York where he was welcomed in a blizzard of ticker tape ("What a wonderful, remarkable thing"), Chiari could report good news on a project that would mean much more to Panama than any haggling over current fees and tolls. When the present canal reaches its capacity sometime between 1980 and the year 2000, the U.S. intends to build another one, and it will probably be in Panama. Of all possible new routes (see map), the two most favored are in eastern Panama above the Colombian border. The U.S. Atomic Energy Commission, which has studied the border area, thinks that it would be just the place to blast out a canal with a string of nuclear charges. The cost would come to just $1,250,000,000 compared with nearly $3 billion by conventional methods. When and if the nuclear canal is dug, Panama will be certain to have its full say in how things are run.

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