Panama

In 1977, the United States and Panama signed treaties calling for the transfer of the Panama Canal to Panama and the withdrawal of U.S. troops from Panama by December 31, 1999. This is an unclassified version of a classified report GAO issued in 1994 on the U.S. military drawdown in Panama. GAO discusses (1) the potential for a post-1999 U.S. presence, (2) the status of transfers of Defense Department (DOD) properties and Panama's preparedness to accept them, (3) the coordination needed to address treaty-related issues, (4) DOD environmental and property valuation policies, (5) DOD efforts to address employee terminations due to the drawdown, and (6) the cost of the U.S. military drawdown.

GAO found that: (1) Congress has stated a U.S. military presence should be maintained in Panama after 1999 and that the President should begin negotiations with the government of Panama to consider whether the two countries should allow permanent stationing of U.S. forces in Panama; (2) both governments have indicated a willingness to consider a post-1999 U.S. military presence, but negotiations have not yet begun and U.S. executive branch officials have not reached agreement among themselves on (a) what U.S. interests would be served by keeping U.S. forces in Panama or (b) how or when to proceed on this matter; (3) DOD is positioning itself to retain some forces in Panama after 1999 if instructed to do so by the President under any negotiations that might occur and, according to DOD, an early decision on this matter is important to maintain an orderly process and avoid incurring unnecessary costs; (4) although DOD's treaty implementation plan has been revised several times, generally to postpone some transfers, DOD is proceeding with the drawdown according to its revised schedule; (5) the transfer of Fort Davis and Fort Espinar to Panama, planned for October 1995, will end the U.S. military presence on the Atlantic Ocean side of the isthmus, except for the Jungle Operations Training Center at Fort Sherman and operations at Galeta Island; (6) the transfer of some properties on the Pacific side has been postponed because U.S. requirements have changed and Panama does not have a plan for using these properties; (7) Miami has been selected as the new location for the U.S. Southern Command (SOUTHCOM) headquarters with the move planned for 1998; (8) a number of committees, some with only U.S. officials and others with both U.S. and Panamanian officials, have been established to coordinate specific treaty implementation matters; SOUTHCOM and U.S. Embassy officials noted that, as a number of critical issues pertaining to the transfer of properties need to be resolved, the need for all parties to be kept fully informed and engaged on treaty implementation actions will become more important; (9) DOD has approved policy guidance for the transfer of DOD installations to Panama, including property condition and valuation; (10) DOD has been planning for its employee termination liability in Panama since 1989, and incentives such as early retirement and job placement offered by the U.S. Panama Area Personnel Board should help minimize the effects of severence pay and other potentially costly personnel issues; and (11) DOD reported that, as of September 30, 1994, its cumulative treaty-related cost was $813 million and expects future treaty-related costs to be about $554 million, but these costs are not offset by estimated savings that may accrue.