FOREIGN RELATIONS: New Deals for the Big Ditch

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Ironically, the U.S. had assumed that the money question would be easy to resolve. Panama's ruler, General Omar Torrijos, has assigned what one U.S. diplomat describes as a "remarkably well informed and competent, highly professional group" of young economic experts to bargain for a package of more than $4 billion as a condition for signing anything. Specifically, Panama hopes to get some $1 billion in American aid at the outset, and then annual payments of $ 150 million for American rights to the Canal Zone and another $20 million for "rental" for the U.S. bases until the year 2000.

Big Break. American negotiators seem willing to agree to upwards of $200 million in initial lump-sum aid and suggest annual payments of between $30 million and $50 million. White House experts scoff at suggestions that the United States owes reparations for having paid Panama only $2.3 million a year out of canal tolls now totaling $160 million and point out that the Panama Canal Co. operates at an annual loss of $7 million. U.S. diplomats oppose any big break from the policy of operating the canal as an international utility open to all comers at the lowest rates possible.

Both sides have some reason to compromise rather quickly. American negotiators want urgently to have the twin treaties initialed before Congress recesses for a month beginning in early August. If the treaties are in hand by then, it would be possible to get the Senate to vote on both agreements before Congress adjourns in the fall for the rest of the year. Under the best of circumstances, committee hearings will be tough, and it will be hard to win the two-thirds majority in the Senate required for ratification. Some parliamentarians, moreover, argue that the House of Representatives must also approve the main treaty since it involves disposal of American property—the canal itself. But if a vote is delayed until 1978, a congressional election year, the treaties may encounter even stiffer opposition.

At the same time, General Torrijos has reasons to seek compromise. Though he is a strong nationalist, he has a tough time containing militantly radical students who are constantly threatening to sabotage or attack the Canal Zone unless Panama gets sovereignty over it. The longer the Americans remain there without a new treaty, the greater the possibility of anti-Yanqui violence that could also turn into a protest against his own regime's inability to reduce high unemployment and inflation.