At the very core of Washington's diplomatic and political consciousness is an issue-the Panama Canal-that is providing a severe and illuminating test of America's post-Vietnam global intentions and of the U.S. government's post-Watergate capacity to compose a responsible foreign policy. The issue centers on the effort, conducted intermittently for the 11 years since the Panamanian "flag riots" of 1964, to negotiate a new treaty replacing the Hay-Bunau-Varilla Treaty of 1903. Signed for Panama by a French commission agent at Secretary of State John Hay's home two hours before the arrival of the official commission Panama had sent to negotiate, that agreement granted the United States "in perpetuity the use, occupation and control" of a ten-mile-wide zone to build, run and protect a canal. "We shall have a Treaty," Hay said, "vastly advantageous to the United States, and we must confess, not so advantageous to Panama."
In Panama no one disputes this judgment. In Washington, however, an intense argument has raged both within the executive branch and the Congress, and between them. The dispute goes to the question of how the Panamanian tie should be modernized-whether by small U.S. concessions that would leave the substance of the 1903 relationship intact, or by a new treaty that would restore the Zone to Panama within a fixed term yet would ensure to America the continued use of what remains an "indispensable international waterway." On the outcome of this contest rest not merely substantial foreign policy interests but, in some measure, President Ford's prospect for reelection. This is what has made the Panama issue so singular and so hard.
The frustrations that boiled up into the riots of 1964 were those of a classical colonial situation-colonial not just in the objective American treatment of Panama but in the subjective failure of many Americans to perceive that the situation was and is of that character. The Canal Zone cuts Panama in half. The U.S. Army entirely runs the Zone: canal, civilian administration, defense. Even for Panamanians, only
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