for divestiture of U.S. property in the future. Personally, it is difficult for me to understand how previous relatively minor cessions of canal property merited the approval of Congress-and that includes the House of Representatives and now that the entire Canal Zone and all U.S. property in the Canal Zone are involved, the House is precluded from participation in deciding the fate of a multibilliondollar asset of the United States.

If the President and the Senate can dispose of the Canal Zone where we have a multibillion-dollar investment, by treaty alone, where would this power to dispose by treaty end? Could the President and Senate dispose of U.S. property in Alabama or New York or even Federal buildings, to a foreign government or to a local government?

In fact, a conveyance by the Federal Government of all U.S. properties in New York City to the city of New York and an economic package for New York similar to that afforded to Panama would solve New York City's economic problems.

Could U.S. possessions, such as Guam and Samoa, be disposed of by treaty alone? Whether or not such propositions seem farfetched, the precedent established by the proposed disposition of the canal and zone will determine the future of property dispositions.

The case for disposal of U.S. property by treaty alone, as presented by various Department representatives, has rested on various Indian treaties, boundary treaties, and exceptional cases, all of which should be examined in some detail during the course of these 2 days of hearings. Likewise, the chief tenets of the case for a congressional role in the disposition of property must be examined.

In the past few months a number of analyses have been prepared with respect to the constitutional issues involved in the canal treaties. The Chair asks unanimous consent at this time to insert into the hearing record a number of those studies, some of which have not previously been available to the public.

With respect to the question of Panama Canal Treaty payments and the constitutional power to make appropriations, Mr. Merrill Whitman, consultant to the committee, and former Secretary and Legal Advisor to the Panama Canal Co., has prepared a very cogent paper. The Chair would like to enter that paper into the record of the hearing, and without objection it will be entered with these other documents.

[The material may be found in appendix A on page 215.]

The CHAIRMAN. The exclusive power of Congress to make appropriations, the power of the purse, has always been the heart of the powers of the House of Representatives. The question of whether the appropriations power of the House is to be bypassed in connection with the canal treaties would also set a dangerous precedent for payments made to foreign governments in future treaties and agreements. In the next 2 days, then, we will examine whether the payments to Panama that are stipulated in the Panama Canal Treaty can be made in the absence of appropriations legislation by the Congress.

In concluding, I must repeat the criticism I have often voiced concerning the proposed canal treaties. These are documents riddled with ambiguity. The ambiguities are present because the treaties.

were written with undue haste. The purpose of many of the ambiguities was undoubtedly to sell the treaties to two peoples-the people of the United States and the peoeple of Panama-both of whom feel strongly about the Panama Canal. The result of these will be greater conflict between the United States and Panama and a deterioration of U.S.-Panamanian relations. These are treaties that create more problems than they solve.

I am pleased to note that in recent weeks some of these issues which I have previously raised, for example, priority of passage, right of U.S. intervention, the prohibition against United States negotiating with countries other than Panama, have received positive responses and will, I believe, be ultimately included in an amended or revised treaty agreement.

Today and tomorrow, however, we are focusing not so much on a substantive ambiguity as on the total absence of a provision in the treaties to provide for a congressional role in the disposition of U.S. property, and the failure of the Departments, to this point, to acknowledge the rightful role of the Congress to make appropriations in connection with the proposed canal treaties.

The Members of Congress are trustees for the powers vested in the legislative branch by the Framers of the Constitution, and as such we have the responsibility to preserve and protect those powers. Without the legitimate assertion of the rights of the legislative branch on the crucial Panama Canal question, we risk searing the fabric of the separation and balance of powers that is a basic safeguard for our freedom.

We are privileged this morning to have as our leadoff witness the very distinguished chairman of the Separation of Powers Subcommittee of the Committee on the Judiciary of the United States Senate, Senator James B. Allen.

STATEMENT OF HON. JAMES B. ALLEN, A U.S. SENATOR FROM THE STATE OF ALABAMA

Senator ALLEN. Thank you very much, Mr. Chairman and distinguished members of the committee. Thank you for affording me this opportunity to state to you and to the distinguished members of the Committee on Merchant Marine and Fisheries my reasons for opposing ratification of the proposed Panama Canal Treaty and the proposed so-called neutrality treaty.

Mr. Chairman, I have prepared a somewhat lengthy statement that I ask unanimous consent that it be inserted in the record as if given in full here at the committee, and I will testify from a lengthy, but less lengthy, statement that somewhat condenses the same arguments that I have made in the prepared statement.

The CHAIRMAN. Without objection, the entire paper will be included in the record at this time.

[The following was received for the record:]

STATEMENT BY HON. JAMES B. ALLEN, A U.S. SENATOR FROM THE STATE OF

ALABAMA

Mr. Chairman, thank you very much for affording to me an opportunity to state to you and to the distinguished members of the Committee on Merchant Marine and Fisheries my reasons for opposing ratification of the proposed

Panama Canal Treaty and the proposed so-called neutrality treaty. Although the defects in both documents are legion, in my judgment there are five major flaws, each of which on its own ground would warrant complete rejection of the arrangements negotiated, inasmuch as each would independently damage the national interest of the United States to such extent as to render it improper for the Senate or the Congress to give its consent.

The five major defects, at least as I see it, are (1) the failure of the Canal treaties to require Congressional authorization for the proposed cession to Panama of United States territory and property, (2) the decision embodied in the Canal treaties and related loan agreements to pay to Panama some $2.262 billion by means of various devices designed to circumvent the role of the House of Representatives or the Congress in appropriating funds from the Treasury of the United States, (3) the failure of the Canal Treaty to provide for an adequate defense of the Canal during its proposed 22-year term, (4) the failure of the neutrality treaty to provide for an adequate defense of the Canal thereafter, and finally (5) the astonishing provision of the Canal treaties which forbids the United States even to negotiate with another nation for the construction of any interoceanic canal in the Western hemisphere without the express consent of the Panamanian dictatorship.

THE CONSTITUTION IGNORED

The first major defect in the treaties is perhaps the most significant since it represents a direct assault by the executive branch on the prerogatives of the House of Representatives and since it would set a new precedent extending the authority of the executive branch far beyond the bounds contemplated by the authors of the Constitution of the United States.

As this distinguished Committee well knows, Article IV, Section 3 of the Constitution provides quite clearly that Congress, that is, the Senate and the House of Representatives acting together, "shall have power to dispose of and make all needful rules and regulations respecting the territory or other property belonging to the United States." Mr. Chairman, the Attorney General has advised that the proposed treaties do not in any respect violate this clause, but with all due deference to him as a very able lawyer, in this instance he is serving a client, and I cannot share his rationalization of the clear, unambiguous language of the Constitution on this subject, nor can I agree with his faulty characterization of consistent past practice in our dealings with Panama in matters of property transfer.

In 1936 and again in 1955, cessions of United States territory or property to Panama were expressly contingent on Congressional authorization. Yet now that a truly major cession of virtually all United States territory in the Isthmus of Panama is contemplated, the executive branch has seen fit to assert a novel theory by which the Administration would circumvent the Congress. The reason for development of this novel theory of Constitutional law is, I believe, a matter of practical politics rather than legal scholarship since public opposition to giving up the Canal is so overwhelming that any Congressional authorization of a cession of territory would be difficult, if not impossible to obtain. But beyond this immediate issue, if we in the Senate and in the Congress permit this circumvention of the role of the whole Congress in any cession of United States territory, we will be setting a very dangerous precedent which will surely be used again by this or future administrations to assert power in an area heretofore preserved exclusively to the Congress. My own guess is that we would next see this precedent applied to the Guantanamo Naval Base in Cuba, but perhaps other cessions of territory or property are also in the works. This new precedent would haunt us down through the years, and we cannot allow it to be established.

So, Mr. Chairman, the Congress should not lightly endorse this proposed departure from sound Constitutional principles simply for the perceived political expediency of the moment. The Senate particularly should, instead, guard the prerogatives of the whole Congress by amending the proposed treaties at all appropriate points to make cessions of territory or property to Panama subject to the prior enactment of authorizing legislation by the Congress-in other words, no authorizing statute, then no transfer and a void treaty.

This distinguished Committee may be assured that I and other Senators will seek adoption of an amendment to the Canal treaty to preserve the Constitu

tional role of the Congress, particularly the role of the House of Representatives, in disposing of United States territory or property. Such an amendment could appropriately appear in Article I of the treaty by amending the language of that article to make the abrogation of the Treaty of 1903 subject to authorizing legislation of the Congress inasmuch as that abrogation is itself the primary means by which the property and territory of the United States is alienated and transferred to Panama. Additionally, any resolution of the Senate advising and consenting to ratification by the President should contain a specific reservation forbidding the President to exchange instruments of ratification with Panama until a statute is passed by the Congress authorizing the contemplated disposition of our territory and property in the Isthmus of Panama. My own hope, of course, would be that such a statute would never pass, and I would certainly work to see its defeat. But notwithstanding a member's position on the Canal giveaway, we are all sworn to uphold the Constitution, and in this instance the issue is clear and there can be no room for doubt but that the whole Congress must act before any transfer can legally occur.

Finally, Mr. Chairman, I wish to emphasize that I have not reached this conclusion without study. As Chairman of the Subcommittee on Separation of Powers of the Senate Committee on the Judiciary, I have heard the testimony of 34 witnesses over 7 days of hearings dealing almost exclusively with this very question, and the overwhelming evidence is that the Administration position is devoid of any substantive legal support and ought to be rejected out of hand.

$2.262 BILLION TO PANAMA FOR THE RIGHT TO CEDE THE CANAL ZONE TO PANAMA I regret to say to this distinguished Committee that the Constitution is ignored elsewhere in these treaties and related documents. Most citizens learn in eighth grade civics that bills for appropriation must originate in the House of Representatves and that the people's representatives in the House are charged with primary responsibility in matters regarding the nation's pursestrings. Yet, Mr. Chairman, our negotiators have somehow figured out a means for bilking the users of the Canal and the American taxpayers of at least $2.262 billion without any need to seek an appropriation from the Congress.

We are presented, gentlemen, with treaties which do not give the United States the right to guarantee its interests in the Canal, which do not provide for an adequate defense of the Canal, which do not allow the United States to initiate new Canal projects except with Panama's consent, but which do, on the other hand, give the Canal Zone entirely to Panama, which do also eventually give the Panama Canal Company to Panama, which do immediately give the most lucrative operations of the Panama Canal Company, which do give immediately 10 United States military bases to Panama, which do give Panama immediately political jurisdiction over 37,000 United States citizens living in the Canal Zone, and which do, finally, give to Panama $2.262 billion in 1977 dollars. And this last I find the most incredible part of all.

You know, Mr. Chairman, ordinarily the grantee pays the grantor, but our clever negotiators have figured out a way for us to give away the Canal Zone and pay the recipient at the same time. They have also figured out a way to make these payments without Congressional approval. I will not insist on going into great detail on how this $2.262 billion in 1977 dollars is to be paid to Panama because I know this Committee is fully familiar with the financial ramifications of this proposed arrangement. However, I would recommend to the Committee a careful reading of a speech given on August 19, 1977, before the Panamanian National Assembly by Panamanian Planning and Economic Policy Minister, Nicolas Ardito Barletta. Minister Barletta's analysis of the cash flow to Panama proposed by these arrangements is, in my judgment, highly accurate, and it is from his work rather than from the misleading Department of State estimates that I have drawn the figure $2.262 billion. Why are we proposing to pay these tremendous sums to Panama? Why would we permit these proposed toll increases which will surely burden commerce and inflate consumer prices in the United States? The only reason I can ascertain is a desire to provide Panama with funds to repay outstanding loans from the large international banks.

The Library of Congress did a study at my request which indicates that the external public debt of Panama is some $1.7 billion. Interest on that sum is a

tremendous burden on this small country of only 1.5 million inhabitants, and already 40% of current revenues in Panama go to carrying present indebtedness. Stating the matter bluntly, Panama is on the verge of bankruptcy and many of our large banks hold loans which may soon be bad debts, that is, of course, unless the United States taxpayer rescues the banks by providing the funds to Panama for repayment.

Mr. Chairman, sooner or later the Congress must draw the line and stop robbing American taxpayers to extend funds to bankrupt Third World countries so that international banks can collect principal and interest on shaky loans. In my judgment, the international banks should be required to write off their bad debts, to write off at least some portion of the loans they made in error, and the international banks should be put on notice that the American taxpayer will not always guarantee a profit in any loan transaction with unstable governments. Perhaps, rejection of the Panama Canal treaties would be a good method to send that message.

And another message ought to be sent. That message ought to be sent to the executive branch, and it ought to be that Congress will not permit its prerogatives to be trampled by clever devices designed to circumvent the power of Congress over appropriations. The plain fact is that we plan to give to Panama $2.262 billion. That being the case, Congress needs to say either "yea" or "nay”, as the people may wish. I know how my constituents feel on this subject, and I am sure the distinguished members of this Committee know their own constituencies. But the executive branch has structured these arrangements in a manner to prevent Congressional authorization or appropriation.

The executive branch proposes to establish a Panama Canal Commission which would be a United States government corporation structured much as is the present Panama Canal Company. This new proposed Panama Canal Commission would replace the Panama Canal Company and would acquire back from Panama for a term of years, until year 2000, use of the principal assets now owned by the Panama Canal Company, save certain lucrative assets immediately transferred to Panama but not returned. This new Commission would then operate the Canal, serving up off the top, so to speak, Panama's slice of the pie. And that slice is a pretty big slice which all admit would require immediate toll increases and no doubt later new borrowings from the United States Treasury to enable the Commission to pony up this proposed average $100 million annual payment to Panama.

But under this plan what happens to the existing Panama Canal Company? This question is one of the many not yet answered satisfactorily by the Administration. Also unanswered and more importantly, what happens to the existing $319 million debt of the Panama Canal Company to the Treasury-a sum which apparently would not be transferred to the proposed new Commission? What happens to the approximately $16 million in annual interest payments the United States receives on this debt? The answer is the same answer we've been giving people down through the years here in the Congress—the American taxpayer, as usual, will pick up the tab. That's right, Mr. Chairman, this section setting up this proposed Panama Canal Commission is a shell game fit for any carnival huckster, and it is going to cost our Treasury $319 million right off the bat and is going to deprive our taxpayers of some $16 - $17 million in annual interest payments that have amounted so far to over $600 million in payments into the Treasury.

But there is an ever greater surprise waiting for the American taxpayer of year 2000, because in year 2000 the Panama Canal Commission folds up and is out of business, much as the Panama Canal Company is now slated for collapse. And once again, Mr. Chairman, the Department of State would have us promise to Panama under these treaties that the Panama Canal Commission would leave Panama in year 2000 and turn over all of the operating assets of the Canal to Panama clear of any liens or encumbrances. In other words, American taxpayers in year 2000 are going to be forced to swallow one more defunct government corporation with massive liabilities and no assets. Mr. Chairman, we have no way of predicting what it will cost in year 2000 when the business of the Panama Canal Commission is wound up, but certainly if the experience of the last few years is any guide, that expense will be well above the $319 million the taxpayers are being asked to write off today.

Then there is the small matter of $345 million in various so-called soft loans which the State Department has seen fit to promise to Dictator Torrijos. I