[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]



 
      POST-1999 U.S. SECURITY AND COUNTER-DRUG INTERESTS IN PANAMA

=======================================================================

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                        INTERNATIONAL RELATIONS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                               __________

                        THURSDAY, JULY 29, 1999

                               __________

                           Serial No. 106-73

                               __________

    Printed for the use of the Committee on International Relations


                               


                     U.S. GOVERNMENT PRINTING OFFICE
62-716 CC                    WASHINGTON : 2000




                  COMMITTEE ON INTERNATIONAL RELATIONS

                 BENJAMIN A. GILMAN, New York, Chairman
WILLIAM F. GOODLING, Pennsylvania    SAM GEJDENSON, Connecticut
JAMES A. LEACH, Iowa                 TOM LANTOS, California
HENRY J. HYDE, Illinois              HOWARD L. BERMAN, California
DOUG BEREUTER, Nebraska              GARY L. ACKERMAN, New York
CHRISTOPHER H. SMITH, New Jersey     ENI F.H. FALEOMAVAEGA, American 
DAN BURTON, Indiana                      Samoa
ELTON GALLEGLY, California           MATTHEW G. MARTINEZ, California
ILEANA ROS-LEHTINEN, Florida         DONALD M. PAYNE, New Jersey
CASS BALLENGER, North Carolina       ROBERT MENENDEZ, New Jersey
DANA ROHRABACHER, California         SHERROD BROWN, Ohio
DONALD A. MANZULLO, Illinois         CYNTHIA A. McKINNEY, Georgia
EDWARD R. ROYCE, California          ALCEE L. HASTINGS, Florida
PETER T. KING, New York              PAT DANNER, Missouri
STEVE CHABOT, Ohio                   EARL F. HILLIARD, Alabama
MARSHALL ``MARK'' SANFORD, South     BRAD SHERMAN, California
    Carolina                         ROBERT WEXLER, Florida
MATT SALMON, Arizona                 STEVEN R. ROTHMAN, New Jersey
AMO HOUGHTON, New York               JIM DAVIS, Florida
TOM CAMPBELL, California             EARL POMEROY, North Dakota
JOHN M. McHUGH, New York             WILLIAM D. DELAHUNT, Massachusetts
KEVIN BRADY, Texas                   GREGORY W. MEEKS, New York
RICHARD BURR, North Carolina         BARBARA LEE, California
PAUL E. GILLMOR, Ohio                JOSEPH CROWLEY, New York
GEORGE RADANOVICH, California        JOSEPH M. HOEFFEL, Pennsylvania
JOHN COOKSEY, Louisiana
THOMAS G. TANCREDO, Colorado
                    Richard J. Garon, Chief of Staff
          Kathleen Bertelsen Moazed, Democratic Chief of Staff
                Caleb McCarry, Professional Staff Member
                     Jill N. Quinn, Staff Associate




                            C O N T E N T S

                              ----------                              

                               WITNESSES

                                                                   Page

    General George A. Joulwan, Former Supreme Allied Commander in 
      Europe, Former Commander in Chief, U.S. Southern Command...     5
    The Honorable Thomas E. McNamara, President, Americas 
      Society, Former U.S. Chief Negotiator in Panama............     8

                                APPENDIX

Prepared Statements:

    The Honorable Benjamin A. Gilman, a Member of Congress from 
      New York and Chairman, Committee on International Relations    30
    The Honorable Dana Rohrabacher, a Member of Congress from 
      California.................................................    32
    The Honorable Thomas E. McNamara, Former U.S. Special 
      Negotiator for Panama......................................    36




      POST-1999 U.S. SECURITY AND COUNTER-DRUG INTERESTS IN PANAMA

                              ----------                              


                        Thursday, July 29, 1999

                  House of Representatives,
                      Committee on International Relations,
                                                   Washington, D.C.
    The Committee met, pursuant to call, at 10:40 a.m., in Room 
2172, Rayburn House Office Building, Hon. Benjamin A. Gilman 
(Chairman of the Committee) presiding.
    Chairman Gilman. The Committee will come to order. This 
morning we will be examining post-1999 U.S. security and 
counter-drug interests in Panama. I will be brief as we have 
two excellent witnesses who have been able to join us this 
morning.
    At the end of this year, there will be no American troops 
in Panama for the first time since 1903. Yet, our own drug 
czar, General Barry McCaffrey, has called the narco-guerrilla 
crisis next door in Colombia a ``serious and growing 
emergency''. The United States military is turning over our 
facilities, valued at some $5 billion, to Panama on schedule. 
The Panama Canal Treaties will be implemented to the letter, 
and that is appropriate.
    What is not appropriate, however, is for the U.S. 
Government to turn our backs on Panama. Just as Panama is about 
to exercise full sovereignty over its territory, that country 
finds itself in a very dangerous neighborhood. The framers of 
the 1977 treaties could not have foreseen neighboring 
Colombia's drug-fueled agony; nor the sophistication of the 
drug cartels' corrupting, criminal reach. Nonetheless, under 
the treaties, our Nation will still protect the Panama Canal.
    Although the treaties provide that the United States and 
Panama can extend the U.S. military presence in Panama beyond 
1999, no agreement has been reached.
    Howard Air Force Base was the crown jewel in our fight 
against narcotics. Panama is a critical choke point in a region 
that produces all of the world's cocaine and three quarters of 
the heroin sold in our Nation. Sitting on the drug-producing 
nation's doorstep, Howard's 8,500-foot runway saw 15,000 
flights annually. That base could handle up to 30 helicopters 
and over 50 planes. Our Nation should not have put itself in a 
position of closing down Howard on May 1st. Our Government is 
now scrambling to conclude hasty agreements with the 
Netherlands Antilles and Ecuador for forward bases from which 
to deploy military and civilian antidrug forces. Quite simply, 
those plans cannot replace our strategic infrastructure in 
Panama.
    I closely followed former Ambassador Ted McNamara's 
considerable efforts to conclude an agreement for a continued 
U.S. presence in Panama. Regrettably, those efforts did not 
result in the promised Multilateral Counter-narcotics Center, 
the MCC. Those negotiations became entangled in Panama's 
internal electoral politics. We even met with the Foreign 
Minister about a year ago, who assured us that he was 
supportive of trying to bring the MCC into Panama.
    However, the Department of Defense, and in particular our 
Air Force, did not provide the support, the flexibility, and 
the creative diplomacy that were needed to secure this vitally 
important continued U.S. presence in Panama.
    Last October, I introduced H.R. 4858, the United States-
Panama Partnership Act of 1998, offering Panama the opportunity 
to join Canada and Mexico in forging a new, mature, mutually 
beneficial relationship with our Nation. In exchange, this 
legislation asked Panama to remain our partner in the war on 
drugs by continuing to be a host of our U.S. military presence 
after 1999.
    I note it is not too late. We can and we should extend 
America's hand to forge a new partnership in Panama in the 21st 
century.
    [The statement of Chairman Gilman appears in the appendix.]
    Chairman Gilman. Today we will be joined by two 
distinguished panelists, who we will introduce in just a 
moment. I ask our Ranking Minority Member, Mr. Gejdenson if he 
has any opening remarks.
    Mr. Gejdenson. Thank you, Mr. Chairman. It is a pleasure to 
have Ambassador McNamara here, and General Joulwan. It is clear 
that there has been a change in the region; Panama is regaining 
its control of the canal and the assets in the region. I am 
with Senator Helms on this one. It is better to sign no 
agreement than to sign a bad agreement. I think that some of 
what you are seeing in Panama today is that they are figuring 
out maybe they should have been a little more accommodating in 
their negotiations.
    I also understand that as we look at the options before us, 
that we will be able to handle in the plan that is presently 
before us between 110 and 120 percent of the operations that we 
previously had in Panama. So, I think that at the end of the 
day, we actually strengthen ourselves by broadening our 
positioning in the region, and by having the Panamanians 
recognize that they may have missed an opportunity here; that 
our ability to do drug interdiction will be just as strong; 
that we will, in future negotiations with the Panamanians, have 
Panamanians who recognize much more realistically the value of 
their assets. I think they thought we would pay any price and 
do anything they demanded in some kind of psychological panic 
over no longer controlling the area around the canal and having 
those assets.
    I think that the kinds of decisions you made in this 
process are the ones that will strengthen us in long-term 
negotiations, and inevitably will give us a much better 
agreement and relationship with the Panamanians. Their new 
authority gives them the right to say no to us, but that also 
means that American military personnel will not be there 
spending the dollars that keep their economy moving, and they 
are going to miss that.
    I look forward to hearing from our colleagues here and 
commend them on the work they have both done today.
    Chairman Gilman. Mr. Rohrabacher.
    Mr. Rohrabacher. Thank you, Mr. Chairman. The Panama Canal 
is still one of the world's key strategic waterways, and Panama 
itself is in a strategic position, and important to the United 
States of America in terms of our national security. However, 
the canal, for all practical purposes, is now, from what I can 
see, falling into the hands of Communist China through the Hong 
Kong-based Hutchison--and I think it is Whampoa--and I guess 
probably our witnesses will give me a good pronunciation of 
that company, which has close ties to the People's Liberation 
Army.
    In a controversial under-the-table deal with the Chinese, 
they were granted a 25 year lease with an additional 25 year 
option for control of the canal's Atlantic and Pacific Ocean 
ports and other facilities. The Chinese are currently 
conducting major construction and port facility expansion in 
Panama. In addition, Chinese companies tied to the People's 
Liberation Army are becoming alarmingly active in Panama.
    China's flagship commercial shipping fleet, the China Ocean 
Shipping Company, COSCO, is directly connected to the People's 
Liberation Army and the Chinese Communist Government. COSCO 
ships have served as carriers for massive smuggling operations 
around the world, including to the United States, where we have 
found weapons, automatic weapons, being smuggled into the 
United States by COSCO, drugs, even illegal aliens. This 
organization, COSCO, is deeply involved in the strategy in 
Panama.
    The war in neighboring Colombia, in terms of Panama, 
against well-armed narco-terrorist forces with ties to Cuba is 
escalating, threatening to spread throughout the region. This 
makes Panama's role even more important. Panama does not have 
an army or a navy or an air force. The Panamanian Government 
doesn't have the military, but it does have an ongoing 
reputation for corruption and mismanagement. Chinese organized 
crime organizations are active, and there is all kinds of 
evidence of drugs and gun smuggling and, as I said, even large-
scale illegal alien smuggling going through China. We also are 
aware that the Russian Mafia now is active in Panama, supplying 
weapons to Colombian narco-terrorists.
    This is not a pretty picture, Mr. Chairman. What was an 
inspiring story in Panama of enterprise and achievement for the 
United States is very slowly but surely turning into a horror 
story of peril and danger for the United States of America. Mr. 
Chairman, when there is a vacuum left by the United States, it 
seems that Communist Chinese and other very active elements in 
this world are ever more ready and willing to fill that vacuum, 
and as we move out of the Panama Canal, and out of Panama, we 
cannot let forces that are hostile to United States, who would 
do us damage, fill that vacuum.
    We can't even close our eyes to the fact that the corrupt 
nature of some of the deals that have been made down in Panama, 
that some people supposedly representing the Panamanian 
Government may actually be making deals that are contrary to 
the interests of the people of Panama itself, and especially 
contrary to the national security interests of the United 
States and Panama.
    We have had a very long history with the Panamanian people, 
and certainly I think that we have to consider the Panamanian 
people our friends. The alarm bells that I am sounding today 
are aimed as much at our security, but also at the security of 
the Panamanian people to control their own destiny. There are 
only a couple million Panamanians, and in trying to deal with 
forces as powerful and as wealthy as those within Communist 
China, and these narcotics terrorists down in Colombia, this is 
something that we should be very concerned about.
    We are facing this peril now, not only from Cuba, where the 
Communist Chinese are involved with building communications and 
intelligence facilities right adjacent to the Russian massive 
electronic spy center in Lourdes, Cuba, but now here in Panama 
as well. So this is a long-term danger to the United States, 
and it is right here on our doorstep. I applaud you, Mr. 
Chairman, for holding this hearing and calling America's 
attention to the situation in Panama.
    [The prepared statement of Mr. Rohrabacher appears in the 
appendix.]
    Chairman Gilman. Ms. Danner.
    Ms. Danner. Thank you, Mr. Chairman. I would very much like 
to associate myself with the remarks just made by Congressman 
Rohrabacher. I certainly agree with his comments. I question 
whether we have had, as a Nation, the forward-planning that 
some of the other nations have made with regard to their 
futures, not looking just at the present, but at the decades to 
come, and that is a concern that I have. So I am very pleased 
that we are going to be addressing that issue, and hope that we 
can find a solution that benefits not only those of us who 
reside here in the United States, but the global family as 
well. Thank you, Mr. Chairman.
    Chairman Gilman. Mr. Burr.
    Mr. Burr. I thank the Chairman. I thank my colleagues for 
their comments. Mr. Chairman, I thank you for this hearing.
    Welcome, General and Ambassador. I think the need for this 
hearing is evidenced from the comments of the Members of 
Congress and by your presence here today. Clearly this 
reversion of bases and the leaving of a military presence there 
is a challenge for us as it relates to our future in that 
region and how we handle the challenges that we know are 
present before us today, and those that are unforeseen today.
    Clearly, Congressman Rohrabacher has raised a concern that 
I think most of us share about the Chinese presence in the 
canal. But I think that our long-term interest is with, in 
fact, the canal's use and the access that we and others have to 
it for commerce and for other issues. Clearly, if the Chinese 
intent is for something else, we need to look at that and 
follow that extremely close.
    The comments, as they relate to the drug trafficking, are 
an issue that every American is concerned with. If, in fact, 
the Panamanian people would like to see U.S. military presence 
back in the region, I am hopeful that we can find something to 
accommodate that will of the Panamanian people. In the 
meantime, I know that we have not left any stone unturned where 
our presence can be felt in the region for the purposes of 
preparedness and stabilization.
    I hope that this will not be the last of the hearings that 
deal with Panama's participation or possible future 
participation in the trafficking of illegal drugs. There are 
many efforts--certainly General McCaffrey has spoken on them 
numerous times--but most importantly there is a will of the 
American people now to stop the use and the trafficking of 
illegal drugs. I hope, General and Ambassador, that you will 
use this Committee in any way that you feel is useful in the 
future to make sure that the U.S. presence in that region, and 
the U.S. interest in that region are, in fact, furthered 
through the use of this Committee and this Congress.
    I thank the Chairman once again for his willingness to hold 
this hearing to bring this issue into the forefront of people's 
minds. I yield back.
    Chairman Gilman. Thank you, Mr. Burr.
    Chairman Gilman. As I indicated, we are joined by two 
distinguished panelists. Our first witness is General George 
Joulwan, who is a 1961 West Point graduate, a decorated two-
tour Vietnam combat veteran, the former Supreme Allied 
Commander in Europe, and from 1990 to 1993 was the Commander in 
Chief of our U.S. Southern Command in Panama. When he retired 
from active duty, then Secretary of Defense William Perry 
called General Joulwan a warrior diplomat in the best 
traditions of General George C. Marshall. General Joulwan was 
instrumental in designing and implementing our Nation's Panama-
based counter-drug strategy. We welcome his testimony before 
our Committee this morning. Please proceed.

 STATEMENT OF GENERAL GEORGE A. JOULWAN (RET.), FORMER SUPREME 
  ALLIED COMMANDER IN EUROPE, FORMER COMMANDER IN CHIEF, U.S. 
                        SOUTHERN COMMAND

    General Joulwan. Mr. Chairman, thank you for the 
opportunity to appear before the Committee on International 
Relations to discuss Panama's importance both to U.S. national 
security and U.S. counter-drug operations. Although it has been 
6 years since I commanded U.S. forces in Panama, I will 
endeavor to give you my frank, candid and best views.
    But first, Mr. Chairman, I want to thank you for your 
constant, consistent and tireless efforts in our Nation's fight 
against the flow of illegal drugs into our country. There is no 
greater threat to our national security, and you have been on 
the front lines of this war for many years. I urge you, and all 
on your Committee, to continue your fight not only here in the 
United States, but also throughout the entire drug zone at the 
source, in transit, and along our borders.
    Mr. Chairman, as you know, over 14,000 drug-induced deaths 
were reported in the United States for 1996. Illegal drugs cost 
our society $110 billion last year. Illegal drugs are addicting 
our young, terrorizing our neighborhoods, and threatening our 
potential as a nation. Unfortunately, I said those same words 7 
years ago when I testified before congressional committees as a 
Commander in Chief of the U.S. Southern Command. At that time, 
10,000 Americans a year were being killed by illegal drugs.
    In 1992, I reported to Congress that the narco-traffickers 
were penetrating the fragile democracies of Central America, 
and paying those assisting them in the transit zone not in 
dollars, but in cocaine. I warned of crack babies, corruption, 
and crime, imposed on fragile democracies ill-equipped to 
handle these threats. Today, unfortunately, our southern 
neighbors are experiencing the hard realities of an ever-
increasing narco-trafficking threat.
    There is no easy way, Mr. Chairman, to reduce this clear 
threat to our people, our national security, and, more 
importantly, to the stability of the Americas, North, Central 
and South. It will take a comprehensive strategy by the United 
States in order to reduce the American casualties caused by the 
illegal transit of drugs such as cocaine and heroin. It will 
take political will and bipartisanship. It will require 
partnership with our friends and allies. Most of all, it will 
take U.S. leadership and perseverance to prevail against the 
narco-traffickers.
    It is against this backdrop of the counter-narcotic threat 
to our Nation that I want to address the issues before this 
Committee.
    In my opinion, Panama has been, and still is, critical, not 
only to counter-drug efforts, but also vital to the global 
strategy of the United States.
    Let me be more specific. I have already mentioned that 
Panama occupies a strategic location. It not only sits astride 
the transit routes used by the narcotics traffickers and other 
illegal drugs that come from the producing countries of the 
Andean Ridge in South America, in addition, Panama assists the 
United States in its global responsibilities by providing a 
water route for rapid reinforcement of most stable assets from 
either east or west coast facilities. During my 3 years as 
CINCSOUTH, I developed in Panama a very robust command and 
control capability at Howard Air Force Base in Panama. I would 
agree, Mr. Chairman, it is the crown jewel in our counter-drug 
efforts.
    As I mentioned, Panama sits astride the transit routes used 
by the narcotics traffickers. Panama is also ideally suited to 
launch aircraft and other assistance to those source countries 
of the Andean Ridge--Colombia, Peru, Bolivia and Ecuador. No 
other country provides the same degree of location and 
infrastructure as Panama. My concern at CINCSOUTH was for both 
the mission and for the safety of our troops, and the base at 
Panama was the best option for supporting both.
    During my time as CINCSOUTH, Mr. Chairman, it was clear to 
me that we had to attack the narco-trafficker simultaneously at 
the source, in transit, and along our borders. Concurrent with 
this simultaneous engagement, demand reduction, education 
rehabilitation and law enforcement had to be emphasized in the 
cities and streets of the United States, and the forward-
deployed base in Panama was key in implementing this 
comprehensive engagement strategy. Early on in my tenure as 
CINCSOUTH, I concluded that success in the counter-drug fight 
would require cooperation among numerous U.S. organizations and 
agencies as well as the willing support from the host nations 
of Central and South America. The challenge was to recognize 
that the counter-drug fight was primarily a law enforcement 
effort. Law enforcement was the lead agency, not the military, 
but military support was vital for success. Having a forward-
deployed base in Panama played a key role.
    I came up with the slogan, ``One team, one fight,'' to 
emphasize the teamwork required if we were to be successful 
against the very robust, determined, well-resourced and brutal 
narco-trafficking organization. My intent was to facilitate 
cooperation among the disparate U.S. organizations; to focus 
the efforts in the region on the narco-traffickers, not on 
needless turf squabbles among U.S. agencies. Policy directives 
would come from the ONDCP and the departments in Washington, 
but execution and implementation would be coordinated, 
harmonized and directed from the forward base in Panama. Mr. 
Chairman, it worked. The DEA, CIA, State, Customs and numerous 
other organizations came together in Panama as we built the 
team, and it was impressive and effective.
    Our first operation was called ``Support Justice,'' and it 
exceeded all our expectations. We pooled our assets--DOD, CIA, 
Customs, DEA, State, and others--and we developed a clear 
footprint of narco air activity between the coca growing fields 
of Peru and Bolivia and the refining of cocaine in Colombia.
    Chairman Gilman. If I could interrupt you a minute. We will 
continue our hearing right through the votes. If our Members 
would go and come right back.
    General Joulwan. Working with our Ambassadors--and we 
briefed with maps and charts this narco air bridge to the 
political and military leadership of the Andean Ridge 
countries--the host nations then joined us in our efforts. 
Customs forward-deployed their aircraft in Panama and invited 
host nation militaries and representatives on board, as we did 
with our airborne reconnaissance aircraft, the ARL. U.S. radar 
teams were positioned in Colombia, Peru and Ecuador. 
Information was downlinked in Panama and provided to all 
participants in the drug fight. We shared intelligence through 
tactical analysis teams. In a short period of time that narco 
bridge was interdicted, the Andean Ridge countries participated 
in the end games, and the kingpins of the narco organizations 
came under attack.
    The point I came to make is that this was a joint combined 
action, and that forward-deployed base in Panama was critical 
for its success. Not having that base, in my opinion, will 
reduce our effectiveness against the narco-traffickers. We also 
use the base for what we call fuertas caminos, our nation-
building exercises where our reservists would come to Panama 
and Central America in order to train and build roads and 
bridges and clinics. These exercises built goodwill and allowed 
us to interact with the militaries in promoting democratic 
institutions and ideals.
    I also, Mr. Chairman, worked with the Panamanians in 
developing a turnover of facilities. We respected their 
sovereignty, and it paid off. We gave every indication that the 
United States would comply with the Panama Canal Treaties. A 10 
year timetable for reverting of the canal zone properties was 
provided to the Panamanians. This timetable included the 
turnover of key facilities such as Fort Amador and the 
headquarters on Quarry Heights. We also made it clear in the 
early days of this decade that the United States was willing to 
remain, if the Panamanians agreed, at a much reduced level to 
carry on the fight against the narco-traffickers. Every 
indication at that time was that the Panamanian people 
overwhelmingly supported a continued United States presence 
beyond the year 2000.
    Mr. Chairman, I am sure other alternatives will be found to 
offset the loss of the Panama base. Indeed, the fight against 
the narcotics trafficker must continue. But to be clear, losing 
the infrastructure and operating base at Howard Air Force Base 
in Panama will effect the prosecution of this country's war on 
drugs. Therefore, I urge, as you have stated, continued efforts 
to build the strategic relationship between Panama and the 
United States. It is in Panamanian and Latin America's 
interest, as well as the United States, to eliminate this 
insidious threat to the democracies and their hope for the 
future.
    Mr. Chairman, Panama and the United States share common 
values and ideals, and in many respects a common history. 
Panama was, is, and will remain a strategic location for the 
United States. As such, it will be subject to threats from the 
border it shares with an unstable Colombia, from terrorism, 
from crime, corruption, and money laundering. Panama, as was 
mentioned, has no military and a fragile evolving police force. 
We, the United States, have every reason to do all we can to 
ensure not only the implementation of the Panama Canal 
Treaties, but the reforging of a strategic partnership with 
Panama based on mutual trust and respect for their sovereignty 
and their people.
    Again, Mr. Chairman, I thank you for your leadership in the 
war on drugs, and I am prepared to answer your questions. Thank 
you.
    Mr. Rohrabacher. [Presiding.] As you have seen, we have 
changed chairmen temporarily. When you have a vote on, you have 
to make these accommodations.
    Ambassador McNamara, you may proceed. For the record, our 
Members will be coming back from the vote as you testify.

 STATEMENT OF THOMAS E. McNAMARA, PRESIDENT, AMERICAS SOCIETY, 
             FORMER U.S. CHIEF NEGOTIATOR IN PANAMA

    Mr. McNamara. Thank you, Mr. Chairman. I also want to thank 
the Committee for the invitation to testify today. I hope I can 
assist you in some way in understanding the evolution of the 
negotiation in 1997 and 1998 that attempted to reach agreement 
with Panama for continued United States presence in Panama 
beyond the year 2000. This is a possibility that was envisioned 
in the 1979 treaties, but only provided that both countries 
negotiate an agreement for that continued presence.
    My own role was a limited one at the time, both in time and 
scope. I was the last of several U.S. negotiators, and I took 
over late in the process, in what can accurately, I think, be 
portrayed as the final months before circumstances would 
preclude an agreement.
    I came to the negotiations with the background of having 
participated in the first State Department study of the post-
2000 presence in the early 1980's, and throughout the 1980's I 
worked on Panamanian and Central American political and 
military issues and counter-narcotics and counter-terrorism 
here in the hemisphere. I finished out the decade as the 
Ambassador to Colombia from 1988 to 1991, and I also served on 
the National Security Council and as Assistant Secretary of 
State before leaving government late last year. In those 
positions I also was involved in hemispheric political, 
military, counter-narcotics and counter-terrorism affairs.
    Let me say, by way of introduction, that my understanding 
of the situation we faced in these negotiations begins with an 
understanding of a century of U.S. involvement in Panama. While 
the United States has solidly favorable remembrances of that 
involvement, Panamanians have very mixed feelings about it. 
Most Panamanians have friendly and favorable attitudes about 
Americans, and they realize that Panama owes much to the 
American involvement in the country. But many, even among those 
so favorably disposed, have strong unfavorable memories of 
times when a sovereign zone split their nation in half, and 
when Americans lived among them in a separate, privileged, and 
culturally segregated society. There is, therefore, a certain 
ambiguity and resentment about the American role in Panama, 
particularly among the educated elite of the country, and it is 
unfortunately true that Panama is a country where the political 
elite determine the outcome of important issues. In short, we 
cannot discount the century of intense, emotional, and complex 
history that is a part of any negotiation that we may undertake 
with Panama, in the past or in the future.
    Hence, my first observation on the negotiation is that the 
Panamanian Government approached the table with a very 
ambiguous attitude about a continued United States presence in 
Panama after the year 2000. The political parties in the 
government coalition were divided. In particular, the lead 
party of the coalition, the Democratic Revolutionary Party, the 
PRD, was divided. Any attempt to negotiate a continued United 
States presence was bound to create powerful strains and 
conflicts within the party and within the government.
    As for the public in general, despite years of unrelenting 
negative press coverage of the counter-narcotics center and 
similarly unrelenting negative coverage of the negotiations, 
despite the few and unenthusiastic statements of support made 
by the government during the course of the negotiations, 
despite all that, there was a very strong, stable majority of 
public opinion in favor of a continued American presence in 
Panama. The polls consistently showed from 65 to 80 percent of 
the public wanted a Multinational counter-narcotics center, an 
MCC, and a U.S. military presence that would be a part of that 
MCC.
    This difference in attitude between the educated elite and 
the average Panamanian is not surprising. First, the average 
Panamanian saw the counter-narcotics center as a source of jobs 
and commerce which would provide substantial, reliable economic 
benefits for many years to come. Second, the average Panamanian 
distrusts Panamanian politicians, and a continued United States 
presence was thought to be, therefore, a hedge against the 
instability, conflict, corruption, and authoritarianism that 
have marked Panamanian political life, and which is resented 
and feared by the average citizen.
    Opinion here in the United States was also divided, and 
there were different opinions about whether a continued 
presence in Panama was necessary or desirable. Outside the 
government, those who opined on this issue were divided. Some 
saw little strategic interest to the United States and were 
willing to see the special relationship end. Others were 
supportive of a counter-narcotics center because of the 
importance of the counter-drug fight and the value of military 
monitoring and interception of drug flights.
    Within the executive branch, the White House, the 
Department of State, and the Office of National Drug Control 
Policy were strong supporters of a counter-narcotics center and 
of the negotiations. The law enforcement agencies were 
agnostic. The attitudes in the military were more complex.
    In large measure the attitude of the U.S. military, it 
seemed to me, was a result of the heavy focus in the 
negotiation on creating a drug center rather than a traditional 
military facility for the conduct of traditional military 
operations. SOUTHCOM, the operational command in the region, 
was strongly supportive because it saw the MCC as a very 
powerful tool in carrying out its mission in drug monitoring 
and drug interdiction, and, as General Joulwan mentioned, he 
was a very powerful and strong advocate of the position that we 
should have the drug center, as were his successors. Other 
elements of the military considered that they could accomplish 
the counter-drug mission without remaining in Panama. Still 
others wanted a wide range of missions performed from the 
center in Panama, or if that were not possible, then no 
presence in Panama. In the end, the U.S. military position was 
that they could fulfill their mission for less money by relying 
on U.S. bases and forward operating locations in the region as 
substitutes. It remains to be seen if this is a correct 
calculation.
    Let me turn to the negotiating strategy briefly. In the 
summer of 1997, when I was asked to lead the negotiations, I 
concluded that time was short, but that it would be possible to 
negotiate an agreement. To be successful we would have to have 
very intensive talks that would finish before the end of the 
year 1997. There were two reasons for this: First, Panama was 
quickly approaching a referendum campaign that would determine 
whether President Perez Balladares could run for a second term 
of office. This national referendum was to be initiated by a 
vote in the Congress early in 1998. I believed that unless the 
Multinational counter-narcotics center was settled quickly, it 
would be interjected into that domestic political debate. The 
longer the negotiations continued, the greater danger of this 
happening.
    The second reason for speed was that the United States had 
to make decisions on drawing down personnel and activities from 
Panama to comply with the 1979 treaties. Recall that no 
agreement meant that we must leave. That withdrawal would 
involve expenditures to build and modify facilities in the 
United States as well as other expenses, and the military 
wanted to move quickly on alternatives to Panama if it was to 
prove necessary to withdraw completely. I felt certain that as 
substantial funds were expended to withdraw, we would lose 
support for the Multinational Counter-Narcotics Center. We 
needed, by the end of 1997, a negotiated text demonstrating 
that a concrete solution that did not involve complete 
withdrawal was possible.
    I therefore spoke with my counterpart, and we agreed that 
both sides would benefit if a successful agreement could be 
concluded before the end of 1997. We then outlined to each 
other the major issues which would have to be settled, and we 
agreed to a schedule of meetings and negotiation that would 
allow time to reach a conclusion.
    Without going into the details of those negotiations, I can 
say that between early September and late December 1997, we had 
successfully negotiated all of the essential points of the 
agreement. When we broke for Christmas, on December 23, 1997, 
there were a few details that needed to be addressed, as well 
as some technical issues remaining. The largest issue 
unresolved was to decide how to transform a bilateral text into 
a multilateral agreement. Hence, there was no reason in 
December to think that the remaining details could not be 
settled. It was, in fact, on the basis of that December 23rd 
text that President Perez Balladares announced the following 
day that an agreement had been reached.
    During the Christmas holiday period we understood that the 
negotiated text had been shown to government and other leaders 
in Panama, and that the reaction of some of them was strongly 
negative. By late January the government appeared deeply 
divided. Foreign Minister Ricardo Arias assured us that we 
should come to Panama nonetheless to initial the text and 
discuss it with other Latin American states he had invited to a 
meeting in Panama. Despite this assurance, at that meeting, on 
January 20th, the Foreign Minister refused to confirm the 
essential agreement or to initial the text.
    In subsequent weeks, Panama suggested major changes that 
amounted to a renegotiation of the December text. The United 
States' position was that we were willing to consider small 
changes that would make the agreement acceptable to Panama, but 
we were not, at that late date, able to renegotiate a text that 
had been all but finally agreed. Indeed, we were all in the 
situation that I tried to avoid. The referendum campaign was in 
full swing by May, and the matter, it seemed to me, could not 
be successfully settled in the atmosphere that prevailed in 
Panama.
    Let me mention a few miscalculations and some contradictory 
attitudes that had an influence on the negotiations. There were 
several. The Panamanian miscalculation was a virtually 
universal belief in Panama that the United States would never 
leave our facilities in Panama. Panamanians believed that we 
would pay an extremely high price to remain because we were 
totally committed to having a base in Panama. This led them, I 
think, to overestimate the leverage available to them to gain 
concessions from the United States. On the United States side 
there was a miscalculation prevalent, particularly among the 
military, that the Panamanians would, in the end, accept a 
large U.S. military presence despite the intense opposition 
within the ruling elite of Panama. Both of these 
miscalculations made negotiations more difficult.
    The contradictory attitudes are also interesting because 
they tended to mislead the other side. Let me mention two. 
Initially there was a substantial amount of posturing in Panama 
to the effect that the United States must leave, that it was a 
matter of national pride and sovereignty that Panama have back 
the bases, and that all foreign forces, all U.S. forces, be out 
of Panama by the year 2000. Yet later, Panamanians took the 
position that the United States could remain, and some form of 
bases might be possible if the United States paid rent.
    Then, in June 1996 Panama suggested a multilateral counter-
drug center to avoid the base and the rent issue. But, in fact, 
the residue of this inconsistency remained throughout the 
talks, and it caused some on the United States side to discount 
the seriousness of the opposition in Panama, and to think that 
Panama would go further than, in fact, it could.
    The U.S. military also had a paradoxical position in the 
negotiations. They insisted that we must have a facility at the 
MCC that would be capable of a wide range of counter-drug and 
nondrug-related operations; that is, that we needed a large 
facility. We also told Panama and others that we could dispense 
with the facilities in Panama and operate from relatively small 
forward locations and from substitute facilities in the United 
States. This convinced the Panamanians that we could, in fact, 
do our drug-related operations from a small facility, but that 
we were driving them toward a base disguised as a counter-
narcotics center so that we could conduct other missions and 
yet not have to pay rent.
    There are several reasons, some of which I have outlined 
above, that caused these negotiations to fail. I want to 
emphasize the history of the relationship and the resentment 
that it left among a small but vocal minority of Panamanians 
that caused them to adamantly oppose any U.S. military 
presence. Additionally, as I have suggested, there was an 
unwillingness on the part of the Panamanian Government to 
support publicly and to explain to their public the course of 
the negotiations, the issues, the elements that were being 
discussed, and the ultimate outcome that could result. This 
left the field wide open to the opponents of an MCC, and it 
resulted in a correct perception of a lukewarm support by the 
Panamanian Government for an agreement. This was matched, of 
course, by the lukewarm support of the U.S. military for a 
continued military presence in Panama.
    The bottom line, I think, is that maintaining an MCC in 
Panama was too difficult a political step for the Government of 
Panama to take. For the U.S. Government it was one of only 
several alternative ways of conducting military missions in the 
region.
    Now, a suggestion. Having failed to reach agreement, I 
strongly recommend that both countries adopt a cooling-off 
period of several years before addressing again the issue of 
whether Panama would agree to the presence of U.S. military in 
the country. Both countries tried hard, came close, but failed. 
The political and military value of the presence was not strong 
enough to overcome the alternative of doing without it.
    In that regard, I believe that the negotiations reflected 
the real world has evolved since the end of the Cold War. A 
continued United States presence in Panama would have been a 
beneficial outcome for both countries, but it was not essential 
to either. I see no value and much danger in one side or the 
other pressing, in the next few years, for another agreement. 
The Panamanians need to see that we will fully implement the 
1979 treaties, that we will completely leave the country 
without any intention of returning. On the other hand, the 
United States must learn to function in the region in a very 
different way than in the past. Conditions have changed. Having 
spent the money to move out of Panama, I think now we should do 
just that, leave. We must then commit whatever resources are 
necessary for the conduct of equally effective counter-
narcotics missions from bases in the United States and from 
forward-operating locations in the region. As I said earlier in 
my remarks, it remains to be seen if we can.
    That, Mr. Chairman, concludes my prepared statement.
    Mr. Rohrabacher. Thank you very much.
    [The prepared statement of Mr. McNamara appears in the 
appendix]
    Mr. Rohrabacher. I will just assume--as I am the Chairman 
temporarily--I will just proceed as the Chairman until Chairman 
Gilman returns.
    Mr. Ambassador, it sounds like what you are saying is that 
when you mentioned the lukewarm support of that, and the 
contradictory signals here and there that we were giving and 
the other side was giving as well, it sounded like this 
Administration wasn't paying much attention to this very 
serious negotiation.
    Mr. McNamara. I wouldn't say that. I got, as I said in my 
statement, very strong support from the White House, the State 
Department, from the Office of National Drug Control Policy. I 
also got support from the Office of the Secretary of Defense, 
very strong support.
    Mr. Rohrabacher. When you say strong support, do you mean 
strong support, or did you get guidance, the type of guidance 
you need and policy direction from these people, or did they 
just take you out to lunch at the White House mess?
    Mr. McNamara. No, I got very strong support in the sense of 
policy guidance and instructions. In fact, it was strong enough 
for us to reach a conclusion to actually negotiate an essential 
agreement with the Panamanians. I do not think the essential 
problem was the inability of the Administration to formulate a 
policy or to implement the policy. The critical element that 
caused this agreement to fail was internal Panamanian politics.
    Mr. Rohrabacher. Your suggestion that 70 percent--and 
actually I am not sure exactly what--what was your specific----
    Mr. McNamara. It ran from 65 to 80 percent. The public 
polling that was done supported a continued United States 
presence, yes.
    Mr. Rohrabacher. So we have a situation where 70 to 80 
percent of the people of a country are supporting basically a 
position that would be positive toward the United States, but 
we were not able to handle the diplomacy of the situation with 
the powers that be to get a more favorable result.
    Mr. McNamara. I would contest whether it was diplomacy that 
failed, but rather it was internal politics within the 
Panamanian Government.
    Mr. Rohrabacher. Let's focus on the internal politics for a 
moment. Do you think that--most politicians in the United 
States, when they see a poll and it says 70 to 80 percent of 
the people are on one side of an issue, they would generally 
tend to go in that direction. Now, I know you described the 
cultural manifestation of, I guess, the need to demonstrate 
one's independence from the United States in Panama. Do you 
think that bribery played a role in this or other negotiations 
dealing with the facilities or bases, or the agreement with the 
United States? Was there any foreign bribery or domestic 
bribery going on with the Panamanian officials?
    Mr. McNamara. Not that I am aware of in these negotiations. 
I can't talk about other negotiations or other situations, but 
in this one I do not believe there was any indication of either 
domestic or foreign bribery playing a role.
    Mr. Rohrabacher. General, do you know, are you--do you 
calculate that there was some type of skullduggery going on 
behind the scenes that might have played an outcome and what we 
are now having as a total withdrawal of American presence in 
Panama?
    General Joulwan. Chairman, I am not privileged to that sort 
of information. I will tell you that, as you have stated, the 
vast majority of Panamanian people--and that did not include 
just those who wanted to have us there for money--there was a 
genuine, I think, desire by both the elites and the people to 
continue to have a strategic relationship with the United 
States. Somehow, that desire was not able to manifest itself in 
an agreement. But that support is there, still there, today.
    Mr. Rohrabacher. I certainly understand people's 
willingness, or unwillingness I should say, to cast aspersions 
on the motives of people you have been negotiating with. But 
this seems to me to be a very alarming situation. But it is a 
fairly alarming result when you have the support of the 
population in a country like Panama, that--and we have a 
country that is strategically so important, both the canal and 
the location of the country as a choke point between the 
Americas--that we have a result that seems to be detrimental to 
the United States and our ability to exercise influence in that 
part of the world. Somewhere there seems to be a breakdown. 
Please feel free to comment.
    Mr. McNamara. Mr. Chairman, yes, I don't refrain from being 
critical of those I negotiated with. In fact, if I have a 
criticism, it is that the Government of Panama did not 
undertake to build the support for the policy that it was 
following with respect to the negotiations; that is, a policy 
of attempting to construct a counter-narcotics center. As I 
said in my remarks, by not trying to build that national 
consensus and understanding about what it was doing in the 
negotiations, it left the field open to the naysayers and the 
negative.
    To the extent----
    Mr. Rohrabacher. On that point, let's just look at it. We 
are talking about an anti-narcotics center that would also 
serve as a United States presence in terms of our military 
presence, something that was considered vital by many people 
fighting the drug threat here in the United States. We have 
billions of dollars of money being made in profits from drugs 
with the terrorists right next door in Colombia. We have got 
what I pointed out in my opening statement as what seems to be 
a demonstrable Chinese influence going on down there. You don't 
think that these forces played a role in the outcome of these 
negotiations as well as other agreements that were made that 
determine the future of the Panama Canal and the Panamanian 
Government?
    Mr. McNamara. I don't mean to discount a whole range of 
influences that played a role in this, including the ones you 
are mentioning. I think the overwhelming influence, the 
overwhelming factor that in the end caused these negotiations 
to fail, was the split within the government on grounds, 
essentially, of nationalism, that is whether or not Panama 
needed to, as some of them referred to it, ``cut the umbilical 
cord'', establish its own identity, separate itself from the 
United States in order to demonstrate that it was capable of 
functioning without a United States presence.
    There were a whole series of attitudes in Panama. They were 
generally referred to, or sometimes referred to, as the 
dependency syndrome and that there needed to be a break. Even 
some of the opponents were willing to see, after a lapse of 
unspecified length, a return to examine the possibility of the 
United States coming back into Panama. But among the very hard-
core opposition within the government, within the parties that 
made up the government coalition and, above all, among that 
political elite that was the vocal minority, there was a 
powerful, very, very powerful national sentiment that said we 
must break, we must comply with the 1979 treaties. When one 
examines the situation, I think that was the overwhelming 
factor that led to the situation we are now in.
    Mr. Rohrabacher. With the indulgence of the Chairman, who 
has just returned, I have two more questions to ask. General, 
what do you believe would be the minimal useful U.S. security 
and counter-narcotics presence in Panama, and do you believe 
that we should continue to seek a United States presence at 
Howard Air Force Base, Rodman Port, and Fort Sherman?
    General Joulwan. What I described back in 1990, in this 10-
year plan we developed, was a location around Howard and an 
estimate between 2,000 and 2,500 personnel. This would operate 
the air field and be able to coordinate the activities of all 
the other agencies. Remember, we had Customs, DEA, and other 
agencies that were involved in the drug fight. The coordination 
of these organizations is what needs to be understood as to why 
Howard Air Force Base was so important. But about 2,000 to 
2,500 military personnel.
    Mr. Rohrabacher. Let me just state for the record, when you 
have a situation where 70 to 80 percent of a population is 
supportive of a United States presence, and we have an outcome 
that has been so abysmal to our country and abysmal in the 
sense that we no longer will have a presence in what was 
considered one of the most strategic important areas of our 
country--for our country, this area that ties both the Pacific 
and the Atlantic together, this area that--it is the choke 
point between North and South America. The fact that we had the 
support of 70 percent of the population and now we are not 
going to have that presence, I would suggest that the outcome 
was not just based on some sort of historical anomaly of ego. I 
would suggest that what we are talking about here is the 
corruption of a small number of elite politicians in that 
country and the determination by narcotics traffickers and 
terrorists from Colombia and elsewhere, as well as the 
Communist Chinese, to influence what was going to happen in 
that country, and we were paying much more attention to it than 
our own Administration.
    So with that rather hefty statement, I will return the 
Chair to the Chairman.
    Mr. Gejdenson. Mr. Chairman.
    Chairman Gilman. [Presiding.] Mr. Gejdenson.
    Mr. Gejdenson. I would hope that our colleague from 
California, if he has evidence of these allegations, would 
share them with Members of the Committee and the 
Administration. Others may have this evidence. Lots of people 
may have these suspicions, but it seems to me that when you are 
a Member and you make these kinds of allegations that are very 
serious, and if you have the evidence, you ought to make it 
available.
    Mr. Rohrabacher. Would the gentlemen yield? I would be very 
happy to share this evidence, and I would suggest that people 
who are deeply involved in that part of the world know what is 
going on, and they just will not state in public hearings what 
is happening. So I would share that evidence.
    Mr. Gejdenson. If the gentleman would get that to this 
Member in a timely manner.
    I think we have this syndrome in America, trying to figure 
out who lost China and trying to figure out who to blame for 
losing China. I am not sure China was ours. I am not sure 
Panama was ours. I think it is not surprising that the 
political structure in Panama may have some resistance or some 
desire, frankly, to have that separation that you talked about, 
to kind of have a concrete expression of their separation. I am 
hopeful, as there is popular support by most people's estimates 
for an American presence there, that the leadership, once they 
have exercised their independence, will feel less threatened by 
an American presence, and we will return there.
    I guess my question is that so much of what we do here 
deals with interdiction. Interdiction is an important part, but 
the demand is what keeps these folks running drugs in our 
direction, and the paths that they deliver the drugs here are 
so variable in a sense, should we be simply putting more of our 
effort into trying to reduce demand? Are we adequate in the 
interdiction effort, recognizing that in an open society like 
ours it is easy to get stuff in here, sadly to say, especially 
when there is this kind of demand? Are there things that we 
should do on interdiction that we are not doing? Are there 
goals we ought to be seeking, are there activities that we 
could undertake, whether it is from Panama or elsewhere, that 
would give us an ability to be more effective in interdiction? 
Gentlemen, I ask both of you.
    General Joulwan. I can take a try at that, Congressman. I 
looked very hard at that question when I went to Panama in 
1990, and I am looking very hard at it again today. As I said 
in my statement, I truly believe you need a comprehensive 
strategy. Demand reduction alone is not going to work. The 
figures tell us that despite interdiction, 700 metric tons are 
unaccounted for. That is a hell of a lot of cocaine that is 
getting into the United States.
    In the analysis I did in trying to come up with this 
strategy I used a very simple analogy. What happens when the 
coca paste goes from Peru and Bolivia to Colombia and is 
refined into cocaine. The drug cocaine is then distributed many 
different ways, as you say, to come into the United States and 
elsewhere. I asked, do you go after the bees or the beehive? I 
think you need to do both, but just going after the bees is not 
going to solve the problem. We have to attack the beehive--and 
we know where the beehive is. It is very limited in area and 
scope. We need to get the affected nations--Colombia, Peru, 
Bolivia, Equador--to join us in this fight, and it is tough 
work to do so.
    We have had very good success in Peru. They are working 
well with us, but we have seen some back-sliding now. I am not 
sure whether that is linked to the lack of command and control 
out of Panama or not, but it needs to be looked at. But if you 
don't have a comprehensive strategy at the source, in transit, 
and interdiction, and on-demand reduction, I really don't think 
you are going to attack the problem.
    Mr. McNamara. I concur quite heartily with what General 
Joulwan has just said. It is, as we all know, the law of supply 
and demand. It is not the law of supply, and it is not just the 
law of demand. The demand element is a major factor in the drug 
trade. If we can't reduce the demand, if we can't, ourselves as 
a country and as a Nation, and our citizens individually and 
collectively, exercise some self-control and bring that demand 
under control, then the supply will always be there.
    As you noted, we are an open society. We can't close the 
borders, but that doesn't mean that, in fact, we shouldn't go 
after the supply, because, in fact, if we don't go after the 
supply, one of the most--as I have observed over the last 15 to 
20 years of deep involvement in the counter-narcotics effort--
that the single most important element in whether or not a drug 
is used, any drug, whether it is aspirin or cigarettes or 
cocaine, is availability.
    Mr. Gejdenson. Let me just ask you, my time is running out, 
General McCaffrey has suggested $1 billion for Colombia to try 
to wipe out the source of some of this. $1 billion, is that 
realistic? Does it take that kind of money? If we wipe it out 
in Colombia, will we just end up destabilizing the next country 
where they move to or----
    Mr. McNamara. Congressman, I think that $1 billion in 
assistance for Colombia, if properly distributed to a number of 
programs in a number of ways, is a realistic amount, if the 
Congress can find that within the budget parameters that it has 
to work with. But it is not just Colombia. It is also Mexico 
and the other Andean countries besides Colombia. It is a plague 
that is affecting those countries. It happens at the present 
time, as a result of an unfortunate 4 year period in Colombia 
when they had a President of, at the very best, third-rate 
capabilities in this regard, that Colombia is suffering more 
than some of the other countries. I think President Pastrana is 
fully committed to working to end, to the best of his ability, 
the narco-trafficking in Colombia. I think we ought to join him 
in that effort.
    General Joulwan. If I could just comment briefly, again, I 
think putting money into Colombia is important. But--and I am a 
soldier--however so, I will say that diplomatic, economic, 
political, as well as military elements of this strategy need 
to be developed. When you look at how the narco-trafficker 
operates, you need a comprehensive strategy. You need all the 
nations in the region to come together to understand that this 
is a clear threat to their security, to their children, as well 
as to the United States. That is why you need, I think, all the 
nations to understand that, because if you put the heat on in 
Colombia or Peru, and they slip out through Brazil, illegal 
drugs are still getting out.
    So it is that comprehensive approach, Congressman, that I 
think is needed, and we need it for the long haul, not for 1 
year or one President's term. It needs to be a constant effort, 
and that is why I applaud what Congressman Gilman has been 
trying to do in keeping the pressure on. Because it is going to 
take perseverance and persistence as well as money in order to 
end this threat. It is a fight.
    Chairman Gilman. Thank you, Mr. Gejdenson.
    Mr. Ballenger.
    Mr. Ballenger. Thank you, Mr. Chairman.
    And, General Joulwan, I am with you 100 percent, as the 
Chairman here.
    The one thing I would like to ask each of you, you were 
there, obviously the problem was still there--I mean, it was, I 
guess, just before Samper that you were there, General, or, Mr. 
Ambassador, and somewhere along the line were we doing anything 
to fight it except being organized, as you said, General, 
before Samper came in? Just a question.
    Mr. McNamara. Let me address the Colombia aspect of that. 
The answer is yes. In fact, Chairman Gilman and I met for the 
first time in Bogota, Colombia, in 1989, when he came with a 
congressional delegation and witnessed the terrible devastation 
that the mafia was wreaking on the country of Colombia. I think 
President Barco and President Gaviria, the two predecessors of 
President Samper in Colombia, did an extraordinary job and, in 
fact, turned around the country psychologically, and in many 
other ways during the period I was there to confront the 
problem of narco-trafficking.
    When I arrived in Colombia, in fact, when I left the United 
States to go to Colombia, both in the United States and in 
Colombia the general attitude was finger-pointing. The 
Colombians were saying, it is your fault up in the United 
States because you people are consuming these drugs; and the 
people in the United States were turning to the Colombians and 
saying, it is your fault because you are supplying them. By the 
time I left 3 years later, the Colombians had come to recognize 
that the drug supply operations that were going on in Colombia 
were destroying their society, and I think that, thanks to Mrs. 
Reagan starting with her very simple but effective ``just say 
no'' campaign which followed in succeeding Administrations, the 
United States recognized that, in fact, the consumption of 
drugs is part of the problem, and we have to face up to that.
    I thought the turning point was probably just about 1990, 
more or less the time that Chairman Gilman was in Colombia.
    Mr. Ballenger. You were building an effort at that time. I 
don't know, it sounds like both you all did a terrific job, and 
all of a sudden we just cut out and forgot the whole damn 
thing.
    General Joulwan. What was impressive to me is what I 
mentioned in my opening remarks. To attack this we had all 
these different U.S. agencies working together. We brought them 
together, and Howard was the key point, Howard Air Force Base. 
When I went to Colombia with Ambassador McNamara, we went in to 
see the President, and I rolled out this map that showed what 
our AWACs had picked up of narco aircraft tracks that went back 
and forth from Colombia, Peru, and Bolivia. I would say: Mr. 
President, it is not the Americans that are violating your 
sovereignty, it is being violated every day by these narco-
traffickers. These narco-plans have no flight plans, and they 
are bringing paste back into your country that is made into 
cocaine.
    I did that with President Fujimori, with the President of 
Ecuador, Venezuela, et cetera, and they started to see the 
problem. I made it clear that it was in their interest to 
protect their sovereignty, and we started to get very good 
cooperation, particularly with the Peruvians. The Peruvians 
really started to attack the narco planes, and it had a 
dramatic impact on this air bridge. Therefore, the coca leaf 
and paste in Peru started to stack up, and it couldn't get 
through, and the price, therefore, went down, and therefore the 
price of cocaine in the United States started to go up. So we 
started to have that effect.
    But it takes perseverance. But in my view our military is 
not enamored with this mission. It never has been. That is part 
of the challenge in the post-Cold War period. I think we need 
to get military support for this as a clear mission that 
affects 14,000 deaths every year in this country caused by a 
chemical called cocaine.
    Mr. Ballenger. The reason I was asking this point of both 
of you--because you were there--obviously there was an effort 
on your part and our Government's part to do something about 
the trafficking, the drug problem and in protecting the Panama 
Canal and so forth, but it appears it didn't take about a year, 
and Samper gets elected, and the whole kit and caboodle got 
thrown out. This is no longer our problem. We are not going to 
take care of it.
    Our Administration, I wouldn't say they cut and run, but 
they just decided that we aren't going to be involved down 
there. Sadly, General Joulwan, you had a great effort on our 
part, on the part of our Government in Bosnia, at the same time 
we are making no effort in Panama or Colombia. It is just a sad 
situation to be able to say I wish somebody somewhere had cared 
a little bit.
    The one thing I noticed differently, Congressman Gilman and 
I have been working on this thing for 2 or 3 years, but I have 
never seen anything in the news media anywhere that showed that 
the situation was going on until last week on Washington Week 
in Review they finally brought a reporter in that said Panama 
is a disaster; we have got to do something about it. I only 
wish that somewhere along the line the two of you all had 
stayed in office and we had backed you up. It is water over the 
dam now, but we are going to have to go back from where we 
started from with you guys.
    I was down and met President Pastrana, and maybe he made a 
mistake in trying to do something with his land giveaway. Maybe 
it was an effort on his part to buy some time. But somewhere 
along the line we are going to have another war, and whether it 
involves Panama or Colombia or both of them or us, we have a 
very sad, as far as I can tell, something to look forward to as 
far as that area of the world is concerned. I don't know if 
that strikes you all. I think my time has run out.
    Chairman Gilman. Thank you, Mr. Ballenger.
    Dr. Cooksey.
    Mr. Cooksey. Thank you, Mr. Chairman.
    Ambassador McNamara, I would like to pose two questions to 
you and then one to you, General Joulwan. Would you clarify for 
me the legal entity or commercial entity or government entity 
from China that is going to have a presence in the Panama Canal 
zone; and supposedly for shipping purposes, and since the PRC, 
the People's Republic of China still has a Communist political 
model and a Socialist economic model, convince me that this 
Chinese shipping entity is not a part of the Chinese Government 
or the Chinese Army.
    First, General Joulwan, and you can space this time 
accordingly, how can we know that our commercial and military 
shipping will have access to the Panama Canal for purposes of 
transit? And how important is the Panama Canal to the U.S. 
military from a global strategic standpoint with today's means 
of transportation in terms of aviation and shipping? Ambassador 
McNamara.
    Mr. McNamara. I am afraid I am not quite the one to ask the 
question about the legal and commercial structure of the 
Hutchison-Whampoa organization and the relationship between it 
and the Chinese Government, except that I know enough to know 
that there is such a relationship and that it is a--if you 
will, a parastatal type organization, that is to say a 
commercial organization in which the Government of China has a 
major and possibly a controlling interest. But I am not expert 
enough to be able to go beyond that rather general statement.
    Mr. Cooksey. Who is Hutchinson? Who are they as players? 
Are they just Chinese with English names?
    Mr. McNamara. If I am not mistaken, there is a Hong Kong 
connection, and I believe Hutchison--I would have to refresh my 
memory, but I believe it is a Hong Kong corporation or a Hong 
Kong entity with that name, and that is where the English name 
comes from, but I am not 100 percent certain.
    Mr. Cooksey. If you, as the Ambassador, if you are not the 
source of that knowledge, who would be able to get this 
information?
    Mr. McNamara. I was not the Ambassador in Panama, I was 
simply the Ambassador for the negotiations. I had other duties 
and responsibilities here in Washington at the time. I would 
say that either our Ambassador in Panama or possibly someone in 
the Department of Commerce, Department of Treasury, or 
Department of State that is now intimately involved in looking 
at Chinese commercial operations around the world.
    Mr. Cooksey. Thank you, General.
    General Joulwan. I will try to answer, Congressman: I think 
the essence of your question is how do we assure that 
commercial and military shipping will have safe transit through 
the canal. I believe that the Panamanians for some time have 
been working on the management of the canal. I don't know the 
exact number of the work force now that is Panamanian, but over 
the last, I would say, 7 or 8 years, it has been becoming more 
Panamanian. The leadership of the canal is Panamian. I have 
every confidence that the running of the canal by the 
Panamanians will be in accordance with the right standards.
    Military passage is still very important for our global 
strategy, not just some of the larger aircraft carriers that 
can't get through. But primarily most of the shipping of our 
logistics and submarines and other ships such as cruisers and 
destroyers use the canal. The canal allows us to have two swing 
capability from predominant naval ports, one in San Diego and 
one in Norfolk. They are on each coast. If you have to 
reenforce, the canal still is extremely important. We need to 
take a hard look at the security of our ships passing through 
there. Though I hesitate to mention it, we should always 
understand that it is a terrorist target in the canal, and I 
think adequate measures must be taken to ensure that it is 
protected from those sorts of threats. But it is still very 
important in our military strategy, the use of the Panama 
Canal.
    Mr. Cooksey. Let me ask you this question. If we--and I 
don't have this China phobia that some of my colleagues on this 
side have, and I have been to China, some years ago--but let's 
say we bombed a couple more of the Chinese embassies or did 
some more dumb things, we were at war with China, and I don't 
want to be at war with the Chinese. I am convinced the Chinese 
people are warm, wonderful people, just with questionable 
government. But let's say, worst case scenario, we are at war 
with China. Would you feel safe riding on a ship--and I know 
you are in the Army, and I am ex-Air Force--through the Panama 
Canal while we were at war with China? Or would you rather fly 
over in an Air Force plane?
    General Joulwan. I think we will have no choice but to use 
the canal. I think there are provisions in the 1977 treaties 
that still make the United States responsible, in a strategic 
way, for the canal. So without getting into any sort of 
contingency planning, I would assume that contingency planning 
does exist to ensure that we can use the canal; not just us, 
but world traffic as well. That is already in the 1977 treaties 
that the United States, even after the year 2000, would have 
that strategic responsibility.
    Mr. Cooksey. If I could throw in one bit of history. I am 
sure I don't know if you ever had occasion to visit the Garber 
Museum, which houses 80 percent of the Air and Space Museum's 
airplanes. There is a Japanese airplane that was designed to be 
carried in a submarine. There was a submarine en route from 
Japan to the Panama Canal when we bombed Hiroshima and 
Nagasaki. Those planes were going to be launched from a 
submarine, believe it or not--the plane is over there, you 
ought to see it--those planes were intended to obstruct the 
Panama Canal so our troops in Europe who had a victory in 
Europe could not get to Asia. So, 50 years ago, the other 
Asians thought it was important strategically, and there is one 
surviving airplane. The submarine pushed those planes off from 
the Pacific and headed back to Japan. But the Garber Museum has 
one. It is an interesting bit of history.
    Thank you, Mr. Chairman.
    Chairman Gilman. Thank you, Dr. Cooksey.
    Again, I want to thank our panelists who have done such an 
outstanding job today in reviewing the issues. I have just a 
few questions, and I regret we were interrupted by the voting 
that took place.
    Ambassador McNamara, a couple of quick, brief questions. 
Isn't it true that in late 1995, Ambassador Bill Hughes and 
Panamanian Foreign Minister Gabriel Lewis Galindo virtually 
reached a consensual agreement on a deal in which the United 
States would be able to retain seven of our military bases in 
Panama, including Howard, and keep about 7,000 of our U.S. 
military personnel in Panama in exchange for a modest 
compensation package? Did that occur?
    Mr. McNamara. I would prefer that Ambassador Hughes or 
somebody else answer that question. I was not intimately 
involved in that in 1995. I do know, however, that there was an 
in-principle agreement to discuss the modalities for setting up 
an arrangement, in fact, for an agreement that would include up 
to seven facilities. I do not know whether Gabriel Lewis 
Galindo, the Foreign Minister, was speaking with complete 
authority for his government at the time, but it was certainly 
an in-principle understanding that that would be the basis for 
discussions. That changed subsequently.
    Chairman Gilman. Mr. Ambassador, we understand that deal 
fell apart after our Administration categorically rejected any 
form of compensation to the Panamanians for letting us stay 
after 1999. Is that your information?
    Mr. McNamara. What was categorically rejected was the idea 
of paying rent for staying behind. Indeed, in December 1995, I 
believe it was the President of Panama, President Ernesto Perez 
Valladares, who suggested to us as a solution to the problem 
that there be instead a counter-narcotics center established, 
and that that counter-narcotics center, because it would not be 
a base, and because it would be there to conduct essentially 
counter-narcotics operations (but there would have been a 
possibility of some other ancillary operations also) that that 
would not require rent. We got by the problem by redefining 
what it was that would remain behind after 1999.
    Chairman Gilman. It was, I think, part of that concept that 
there would be some U.S. military presence in absence of any 
compensation and relationship to that.
    So it was the Panamanians' proposal for this United 
States--for this Multilateral Counter-narcotics Center, is that 
correct?
    Mr. McNamara. That is correct, it was a Panamanian idea.
    Chairman Gilman. Then in retrospect, isn't it clear that we 
did make a serious mistake in not trying to conclude that kind 
of an arrangement with the Panamanians before their Foreign 
Minister, Gabriel Lewis, passed away in 1996? It seemed to me 
we made a serious mistake in not taking advantage of that 
proposal. What are your thoughts about that?
    Mr. McNamara. My thoughts are that, quite frankly, I think 
Gabriel Lewis Galindo was ahead of his government and ahead of 
the Panamanian public. He was a visionary man, an individual 
for whom I have the very highest respect and regard. Whether or 
not had he remained healthy and in office, neither of which 
happened unfortunately, for Panama and for the United States, 
whether we would have been able to take this in-principle 
understanding and turn it into a concrete, definitive, 
negotiated agreement remains--and will remain, I think--one of 
the mysteries of the process. The fact is that he became 
seriously ill, left office, and subsequently died, and his 
influence, his vision, was lost to the Panamanian Government.
    Chairman Gilman. General Joulwan, would you like to comment 
about the kind of a negotiation that was going on?
    General Joulwan. Before I left command in 1993 I suggested 
that we shrink back into Howard Air Force Base as a minimalist 
sort of position and establish a counter-drug center. I also 
urged that the Panamanians take credit for the role they were 
playing in the counter-drug fight. Panamanians were suffering 
also from crack babies and addiction, as were other countries 
in Central and South America, so this was to be their 
initiative that the Panamanians should get credit for what they 
are doing. Illegal drugs were not just going to be a concern of 
the United States. So what I started back in the early 1990's 
perhaps can help us followup even today to get the Panamanians 
to be part of the solution to this very difficult threat that 
faces all Americas, North, Central and South.
    Chairman Gilman. Thank you.
    Ambassador McNamara, the compensation package along the 
lines that we proposed in our U.S.-Panama partnership probably 
would have been enough to clinch the deal if we had offered it 
back in 1995 or 1996; is that correct?
    Mr. McNamara. You are referring to the trade benefits?
    Chairman Gilman. Yes.
    Mr. McNamara. The NAFTA equivalency, that certainly would 
have made the negotiations a lot easier had that been part of 
the package. Whether it would have clinched it or not is very 
difficult to say. It is history in the conditional, what if.
    Chairman Gilman. Mr. Ambassador, tell us, even after 
Gabriel Lewis died and you had taken over the negotiations for 
our Nation, would a compensation package like we had proposed 
in our bill, would that have been helpful to you in reaching an 
agreement for a post-1999 United States presence in Panama?
    Mr. McNamara. Since it was something the Panamanians were 
asking for, usually if a negotiator can give somebody what they 
are asking for, that helps.
    Chairman Gilman. Helps a great deal, I should imagine.
    General Joulwan, we have lost several Americans, 
regrettably, in a plane crashed in the FARC-infested zone of 
Colombia in the last few days. The search and rescue mission 
was delayed for several days due to bad weather. I understand 
we had to rely heavily on the Colombian National Police and 
Colombian military to provide air assets for this search and 
rescue. Our own supporting assets had to be flown into Colombia 
from the continental United States How long would it have taken 
us to deploy proper search and rescue equipment, had we been 
able to able to operate out of Howard Air Force Base?
    General Joulwan. It would have taken hours, Mr. Chairman. 
Search and rescue was part of the mission every time we flew 
into source regions. We always had that contingency.
    Chairman Gilman. General Joulwan, General Serrano, the 
highly respected Colombian drug warrior in Colombia who is 
leading the front line and has lost so many of his own police--
over 4,000 police--has warned that after we leave Panama we 
will see even more drugs moving north and more arms being 
shipped south to destabilize the region. Do you share his 
opinion?
    General Joulwan. Yes.
    Chairman Gilman. Earlier this week our Drug Czar, General 
Barry McCaffrey, who also served as SOUTHCOM Commander--I 
guess, after you left office--it was good seeing you over in 
Bosnia when we got over there--said the situation in Colombia 
is, and I quote, ``a serious and growing emergency in the 
region''. So with all of that, is it time for us to be leaving 
Panama?
    General Joulwan. Absolutely not, Mr. Chairman. But we are 
faced with the situation that the mission must continue, and 
until we have an alternative--or until we have some settlement 
with Panama beyond what we have today, I think we need to find 
ways to continue. I hope we can someday get back into Panama, 
because I think it is very important.
    Chairman Gilman. Ambassador McNamara, the electoral season 
in Panama that bedeviled your own good efforts, and a new 
President has now been elected. We are hearing some sounds that 
he would be interested in further negotiations, and a strong 
majority of Panamanians apparently favor a continued United 
States presence. If you were given a task of negotiating a 
presence now, and I hope you would, do you believe conditions 
are favorable for a successful mission of that nature?
    Mr. McNamara. As I said in my opening statement, I think it 
is time for a bit of a cooling-off period. I would say that if 
the Panamanians came to us, then that would be one set of 
circumstances. But for us to take an initiative at this 
juncture I think would simply open up many of the debates and 
the wounds there--and there were wounds in Panama. There 
weren't that many up here in Washington, but in Panama there 
were. They became apparent in late--in early 1998 and later in 
1998. It is difficult to say absolutely yes, but if the 
Panamanians came to the United States and said that they wished 
this to happen, or that they wished to begin to discuss that 
possibility, I certainly think that we ought to respond 
positively.
    Chairman Gilman. General Joulwan, what is your impression; 
do you think the environment, the atmosphere is appropriate now 
to renegotiate?
    General Joulwan. Mr. Chairman, yes. I think that what must 
happen in Panama is what I have tried to do during my 3 years 
as CINSOUTH. We must make it clear that what we are trying to 
do in Panama, as the United States, is in Panama's interest. I 
believe Panama will find and is finding out that there are 
threats to its stability, sovereignty, and to its people. These 
threats come from the FARC on its border in Colombia, and 
transiting of drugs and through the Darien and San Blas. To 
combat there threats is in Panama's interest as well as the 
United States. Indeed it is in the interest of all of Central 
and South America. So I think we have to demonstrate these 
threats and the Panamanians have to realize that it is in their 
interest, and therefore we need a strategic partnership. We 
don't want to dominate Panama, we don't want to occupy Panama. 
What we want to do is work with Panama. I think if we approach 
it in that way, the leadership of not only Panama, but all of 
Central and South America will have this strategic relationship 
with the United States based on mutual trust and confidence and 
shared interests.
    Mr. McNamara. If I may add--.
    Chairman Gilman. Yes.
    Mr. McNamara [continuing]. That General Joulwan has put it 
very, very well. That is precisely what the Panamanian 
Government has to decide. If it decides that, then I would 
suggest that the next thing, the next step, is to convince and 
to educate--I suppose you would have to say to educate the 
educated elite in that respect, because the general population 
in Panama is very strongly in favor of seeing the counter-
narcotics center and the United States presence. So there is an 
education effort that would have to be undertaken by the new 
Panamanian Government to ensure that they don't fall into the 
problems that the preceding government fell into.
    Chairman Gilman. General Joulwan.
    General Joulwan. Mr. Chairman, just briefly, the fight 
continues. The narco-trafficker is not going to take a pause in 
this fight. He is going to take advantage of what is happening 
now. I think we have to understand that that is going to equate 
to more crack babies, to more Americans dying, to more Central 
and South Americans being corrupted and addicted. So I think we 
have to look at it from the threat side of it. It will 
continue. It will accelerate. We need to be able to handle this 
threat every bit as well as we are doing elsewhere in the 
world. This is a threat to the American people, to our way of 
life, to our children, and we have got to address it.
    Panama is part of that equation, but it is a much larger 
issue. Panama is central to it, but it is a much larger threat 
we have to face.
    Chairman Gilman. It is an emergency to the national 
security interests of our Nation as well.
    I would like to recommend that both of you be made part of 
a new team to go down and negotiate, and as a matter of fact, I 
probably will make that recommendation to the Administration.
    Ambassador McNamara, in your judgment was it only the 
Panamanian side that was inflexible in the negotiations, or did 
we have something to do with the inflexibility of the 
negotiations?
    Mr. McNamara. As I said in my statement, there were 
miscalculations on the part, I believe, of the Department of 
Defense, in just how far the Panamanians would go to meet what 
the Department of Defense felt was its minimum requirements. 
The minimum requirements were for a larger presence than, in 
fact, was politically acceptable in, at least in 1997 and 1998 
in Panama. Whenever negotiations fail, then it means that the 
necessary flexibility on both sides was not there, because if 
it were there, we would have had a successful outcome.
    Chairman Gilman. Mr. Ambassador, who back in the State 
Department was supervising the negotiation? Who was overseeing 
it?
    Mr. McNamara. I was overseeing it in its day-to-day phases. 
The Secretary of State, the Deputy Secretary of State, and the 
Assistant Secretary of State for Latin American Affairs, or now 
Hemispheric Affairs, were deeply involved. I saw them 
frequently, as well as the Undersecretary of State for 
Political Affairs. I saw all of them.
    Chairman Gilman. Who were they, Mr. Ambassador?
    Mr. McNamara. During my time as negotiator that was 
Secretary of State Albright, Deputy Secretary of State Talbott, 
Undersecretary of State Pickering, and Assistant Secretary of 
State Jeffery Davidson, and then subsequently Acting Assistant 
Secretary Romero.
    Chairman Gilman. Ambassador McNamara, when the State 
Department was negotiating a Multilateral Counter-narcotics 
Center with the Panamanian Government we understand that the 
Defense Department set forth a series of red-line threshold 
negotiating positions, including quality of life assurance for 
our personnel, full United States legal jurisdiction over our 
soldiers, and among other requirements, multiple missions 
beyond counter-narcotics operations. Can you tell us which of 
those red lines were met in your temporary agreements with 
Curacao and Ecuador?
    Mr. McNamara. I left government service before we began 
those arrangements with Curacao and Ecuador, and I am not 
privy, therefore, to whatever agreements were reached. I would 
note that in the negotiations I conducted that reached 
essential agreement in December 1997 all of those red lines 
were met.
    Chairman Gilman. In your opinion, Ambassador, are 
negotiations with Panama ever given a priority position by the 
Administration? Do you get a sense that the senior U.S. 
officials cared whether or not you succeeded or failed in your 
negotiations?
    Mr. McNamara. I think we were given priority, and yes, 
senior officials in the White House and the other agencies were 
fully involved. I think the failure was not one of lack of 
attention within the Administration. As I said earlier, both in 
my statement and in answer to other questions, I think the 
Panamanian Government simply could not take the political heat 
that it would have had to take in order to stand by what was 
negotiated in December 1997. When you sort of strip away the 
many and complex influences in the negotiation the core problem 
was a particular problem in Panama, a domestic political 
problem in Panama.
    Chairman Gilman. Both of our panelists have pointed out the 
priority of the issues involved here and focused attention for 
this Committee on what we should be doing and what we should 
have been doing, and we look forward to continuing in our 
efforts. I might note for you that this Committee has conducted 
some eight hearings on the problems of narcotics policy in and 
around this region, particularly with regard to Colombia. I 
remember full well when we went and we took a look at the 
burned-out Supreme Court in the Plaza, Bogota, that left a 
long-burning impression on our minds of what can happen to a 
country that virtually becomes a hostage to the drug 
traffickers. We don't want to see that happen anymore, 
anyplace.
    Just one more question of General Joulwan: With regard to 
the bad weather, did that stall our effort to try to get that 
downed plane? Were there assets at Howard that could have 
gotten around those hurdles, the bad weather and the inability 
to reach these people?
    General Joulwan. I am not really sure what would have been 
there today, Chairman. Weather is always a problem, 
particularly in that area. It has always been a problem. I am 
not sure we would have had the assets that could have gone 
there in what I would call all weather. The response time, 
though, would have been much faster from a forward-operating 
base like Howard.
    Chairman Gilman. Again, I want to thank our panelists. You 
have given us a great deal of food for thought, and we hope to 
continue in our efforts to persevere and make sure we have a 
good multilateral drug center in that part of the world. Thank 
you very much. Our Committee stands adjourned.
    [Whereupon, at 12:20 p.m., the Committee was adjourned.]
      
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