1939: Panama

Financial Matters.

After three years' delay the United States Senate, on July 25, ratified the treaty with Panama, signed March 2, 1936, which replaces the pact of 1903. The stumbling-block to earlier ratification has been Article X, which called for consultation in case of threat to the Canal. The United States will now pay Panama an annual rental of 430,000 balboas in perpetuity, instead of $250,000, which sum, since 1934, the United States has offered in depreciated dollars and which Panama has refused to accept. This new gold basis of payment was made retroactive to 1934, and on Sept. 20 it was announced that payment of $2,580,000 had been made in complete settlement of annuities in arrears. The added income of 180,000 balboas a year will make a great difference to the Panama budget, and will help to realize the external debt readjustment program authorized by the Government of Panama in April, by which new bonds of lower interest rates will be issued in exchange for the $18,500,000 dollar bonds outstanding.

Defense of Canal.

Strengthening of the Panama Canal's defenses, under consideration before the outbreak of hostilities in Europe, has been realized. The Canal Zone was put under military control Sept. 6, and increases in the Panama garrison make the Canal the most heavily defended military position of the United States, with the possible exception of Oahu. A new, third set of locks, to be reserved chiefly for the United States fleet, has been approved by Congress, as a 'purely defensive' measure, but the appropriation to implement the plan has not yet been authorized. Canal tolls for the year ended June 30 totaled $23,661,121, netting a return of nearly 3 per cent on the cost of the Canal. Traffic for the year was the heaviest in a decade.

Elections.

The death of President Juan Demóstenes Arosémena on Dec. 15 brought the vice-president, Dr. Augusto S. Boyd, in line for succession. Dr. Arnulfo Arías, Minister to Great Britain and France, has been nominated as presidential candidate in the elections scheduled for June 1940. He has the support of the Conservative and National Liberal Parties and of the National Revolutionary Party, of which he was founder, and will probably be unopposed.

Panama Conference.

Under the shadow of the European war and its threat to the peace of the Western Hemisphere, Pan American solidarity and cooperation assumed some semblance of reality when an Inter-American Consultation Conference, representing all the American Republics, met in Panama Sept. 23 to Oct. 3, summoned in accordance with the principle of consultation established in Buenos Aires in 1936 and implemented at the Lima Conference in 1938. The delegates were unanimous in desiring 'to keep war out of the Americas.' The agenda of the Conference included three main headings: neutrality; defense of the peace of the Western Hemisphere; and economic cooperation. A declaration of general neutrality was adopted, leaving to the individual republics how to make the general principle effective. A noteworthy departure from international law is to be found in the Declaration of Panama, formal notification of which was sent to Great Britain, France and Germany on Oct. 4. This establishes a 'safety zone,' averaging 300 miles in width, about the American republics, within which the warring nations are asked to refrain from all belligerent activity and the American states claim an 'inherent right' to exclude hostile acts. None of the belligerents has conceded such an 'inherent right.' On Oct. 13, the British Admiralty stated that it did not recognize any extension of territorial waters beyond the commonly accepted three-mile limit. President Roosevelt said in September, however, that American territorial waters extend 'as far as our interests require,' and the idea of the safety zone was the United States' chief contribution to the conference. (See also INTERNATIONAL CONFERENCES; INTERNATIONAL LAW.)

On Dec. 23 a joint protest of all the American republics was sent to the three belligerents against the violation of the safety zone in the Admiral Graf Spee incident and others, which have brought the war into American waters. Replies received from all the warring nations give no definite indication of acceptance of the zone. Although the protest was unanimous, divergent views were revealed in the framing of it. Uruguay and Argentina both advocating diplomatic sanctions with regard to the internment of belligerent warships. Fear of too long delay of the protest led to the mere statement that the matter of enforcing the sanctity of the safety zone would be the subject of a later communication. Enforcement presents very grave questions of practicality and risk of involvement in the European War. Thus the underlying objective of neutrality and isolation might be defeated. The declaration states that the American republics 'may carry out individual or collective patrols, whichever they may decide through mutual agreement.' It provides only for 'joint representation' and 'consultation' in the case of hostile acts within the zone. The zone covers 5,000,000 square miles of open water and applies to 8,500 miles of Atlantic Coast and 5,300 miles of Pacific coastline.

Another innovation resulting from the Panama Conference is the creation of a permanent Advisory Committee of 21, to sit in Washington for the duration of the war, to consider the financial and economic effects of the war on the Western Hemisphere and to deal with emergency problems. The first meeting was held on Nov. 14. Whether the formidable list of projects under consideration will lead to any such international economic organization as they contemplate is questionable, but they are patent evidence of an awareness of the value of economic cooperation in this hemisphere.