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Stephen Frank Dachi, born in April 1933 in Budapest, Hungary, served in the US Foreign Service for 30 years.  Immigrating to Canada in 1948 to live with an aunt and uncle, he earned a degree in dentistry from the University of Oregon in 1956; founded a dental college at the University of Kentucky at Lexington in the early 1960s; becoming a deputy director of the Peace Corps in 1967; serving as a foreign service officer with the United States Information Agency (USIA) beginning in 1972.  As a diplomat, he has been stationed in and traveled extensively through Central America, South Asia, and the Middle East for more than 14 years. During his final two years in the foreign service, he served as USIA counterpart to the Assistant Secretary for the Middle East, North Africa, and South Asia. In 1995 he was Diplomat-in-Residence at the Institute for the Study of Diplomacy at Georgetown University.  He has since been active in Washington academic settings including as Diplomat-in-Residence at the Institute for the Study of Diplomacy at Georgetown University and has been teaching courses at the School for Continuing Education since then, including as Professorial Lecturer at the Elliott School of International Affairs at George Washington University.


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The Association for Diplomatic Studies and Training
Foreign Affairs Oral History Project Information Series

Stephen F. Dachi
Interviewed by: Charles Stuart Kennedy
Initial Interview date: May 30, 1997

Copyright 2001 ADST http://www.adst.org/OH%20TOCs/Dachi,%20Stephen%20F.toc.pdf

Q: You were in Panama from 1977 until 1978.

DACHI: I was there for about 14 months.

Q: How did you feel about going there?

DACHI: I certainly wasn't thrilled. It was not that I had my heart set on going to some other particular place, nor did I want to stay in Hungary any longer. I wanted to move on. But it was such a huge change in the agenda, the substance of what was involved, the culture, the people, the way things were done. So, I would have been happier to go to a lot of places rather than Panama. As it turned out, it was not too bad. There were some interesting and significant events to get involved in there.

Q: You were at a focal point of one of the keystones of the Carter administration.

DACHI: That's right. That was the time the Panama Canal treaties were signed. Whatever my experiences in Panama may have been, it laid the groundwork for eventually, 10 years later when my career came crashing down in flames over Panama.

Q: What were the dates that you were in Panama?

DACHI: I arrived there in August 1977 and I stayed until October 1978.

Q: What was the situation when you arrived?

DACHI: The same week that I arrived was when the Panama Canal Treaties were formally signed after all those years of negotiation and battle. They had a big signing ceremony in Washington with all the Latin American chiefs of state. That was the situation. That was, in essence, the curtain raiser for the next nine or 10 months' campaign for the ratification of the treaties.

Q: Your job was what?

DACHI: I was counselor for public affairs and head of USIS.

Q: Who was the ambassador?

DACHI: William Jorden.

Q: This was a very crucial time. I would have thought that one of the things you all would be doing would be trying to make sure that there was no bad news coming out of Panama.

DACHI: That's true. It was impossible to control General Torrijos, so nobody could “manage” him. But there wasn't that much bad news coming out of Panama. In fact, I think this nine month period was of great historical interest because, to my knowledge, it was the first time in our history that more than half the members of the United States Senate, which is constitutionally mandated to ratify treaties, had actually traveled to a foreign country to look over the situation before voting. One of our biggest tasks was to organize their program so that the senators would come away with a positive view of the treaties and a decision to vote for them.

Q: What was the line that the embassy and you specifically were taking when these senators came by? What were you showing them?

DACHI: We have to set the stage and the big picture. There were five elements with important interests in Panama. There were very distinct groups of players in this picture that the visitors were looking at. We at the embassy were presenting the rationale for why ratification was in the U.S. interest and, in essence, acting as lobbyists for President Carter. Another major interest group was the personnel of the Panama Canal Company and the American residents of the Canal Zone. Even they were divided between the administrators and employees of the Canal Company and the “Zonians” who were American citizens employed by the Zone administration. There was the Zone police, the Zone courts and others like the teachers at the American schools who had an enormous stake in maintaining the status quo. They were highly vocal in their opposition and held many agitated rallies and marches that were always widely covered by the U.S. media.
The Panama Canal Company itself was, at best, neutral in this matter. Deep down in their hearts, they were hoping the treaty would not be ratified. They were in a delicate position, however. They couldn't take that line with visitors; they were formally obliged to support administration policy, but they came very close.

Then there was the large U.S. military establishment, stationed at more than a dozen bases, and the U.S. Forces Southern Command responsible not only for Canal security but covering all of Central and South America. The controversial U.S. Army School of the Americas was there, as was the U.S. Army anti-guerrilla jungle warfare training center. I doubt that very many of them favored the treaty, but none of them ever uttered a peep. In public, there was never any question of their loyalty to the Commander-in-Chief. Then, of course, there was the Panamanian government. And there was the Panamanian non-governmental sector, the businessmen, the Church, and so on, whose interests did not always coincide with those of the government.

On the U.S. side, there was tremendous division of opinion among those who wanted to ratify and the conservatives who were opposed to it. Very prominent among the latter was Ronald Reagan, who at the time was still a private citizen, but who was playing a very prominent role in opposing the ratification. John Wayne was another very actively engaged high-profile opponent.

I think altogether 54 or 55 senators visited Panama before the vote. They represented all the different factions. There were some people who were unalterably opposed when they got there and almost without exception left unalterably opposed. There were some who were in favor when they came and were in favor when they left. And then there was a middle segment of the undecided, perhaps less than a third of the total. There were a lot of congressmen, by the way, who also came who didn't have to vote on ratification but nevertheless got their oar in the water and gave press conferences. A total Panama schedule had to be put together for each visit and provide time for all the interested parties to get their licks in. Each side was trying to reshape their schedule to their own needs. The senators who were opposed to the treaty always landed at a military base in the Canal Zone and had the Panama Canal Company set up their schedule and we at the embassy were lucky if we got to participate in it. That was very definitely slanted in an anti-treaty way. We set up the schedule for the others. The Panama Canal Company had a yacht. They took the people out for cruises on the canal. That took two or three hours and that was the time when they did their lobbying. We also got to be pretty good at it. The ambassador played a very key role in all of this. He was very much an ideal person to be doing this kind of thing. He was an expert on every aspect of the treaties and was very influential. He was involved in the treaty negotiations for years before they were signed, knew all the key players and knew where all the skeletons were buried. He wasn't an institutional sort of person. But he was great for one on one personal massaging.

Q: What was his background?

DACHI: Bill Jorden started out as a journalist and later became a respected Japan expert. He was a personal friend of Lyndon Johnson. Johnson brought him into the Vietnam negotiations in Paris, for one of the early rounds when Ellsworth Bunker was still heading the team. This was one of the rounds that didn't lead to any results. This was pre- Kissinger. Then he became associated with the Panama Canal issue working for Lyndon Johnson at the National Security Council. I think he was Latin American Director there. Then he became ambassador to Panama and Ellsworth Bunker became the chief negotiator of the treaties. So, Jorden had already played a long and extensive role in lobbying earlier with Jimmy Carter's predecessors on the need for a Panama Canal treaty. Then he went down there as ambassador and was very much a part of this mix with Sol Linowitz and Ellsworth Bunker, who by then were the chief treaty negotiators. He worked on the treaty along with those two and Linowitz's principal assistant, Ambler Moss, who later succeeded Jorden as ambassador. Jorden remained in Panama through the ratification phase. Then he retired and went to Austin to the University of Texas and wrote a book about the history of the treaties. Very complete and comprehensive.

Q: What was your impression of Panama, how the country was running?

DACHI: Panama has never really been a country, to put it a little bit unkindly. It was always a financial trough surrounded by a bunch of operators and entrepreneurs feeding off of it in various ways. As in other Latin American countries, there was a small, wealthy oligarchy that controlled the economy. Then there was a majority of mestizo type people, most of them very poor. There was a constant alternation in power between the national guard, the only military force in Panama, and various civilian governments who

would get elected and then get overthrown, elected again, overthrown again. So, certainly, there was no institutionalized democracy nor really a functioning government.

I had come there from Hungary and the contrast to me was startling. For example, the Foreign Ministry in Panama was nothing. It hardly functioned at all. It had one or two people working on U.S. relations, but they had no role to speak of in these Panama Canal issues that we were working on. A lot of other ministries were one or two people and a bunch of bureaucrats. The thing was run single handedly by General Torrijos, the dictator and commander of the Panamanian national guard. He didn't even really have an office. He used to go to the beach where he had a cottage and laid in a hammock, a glass of whiskey in his hand and an assortment of women to cater to his every whim. That is where he would receive not only the ambassador, but the senators and the congressmen. Occasionally he would see them at his home in Panama. But, you usually would have to go to the beach to see him. My idea of some kind of institutional government didn't exist and there certainly was no political structure.

Q: What about the Panama Canal Company, what were the relations between it and the embassy and what was your impression of this entity?

DACHI: As an entity, the Panama Canal Company was an extremely competent and efficient operation without a doubt. It was run by top professionals. The head of the  Canal Company and the Governor of the Canal Zone were one and the same person. They had the most experienced pilots and professionals in charge of the operation of the canal. This was all a legacy of the way the thing was built to start with. It was an admirably efficient and modern operation in every respect. The basic premise of the people who had invested their lives into running that company was that we, the United States, could not afford to give that up and that the Panamanians basically would never be competent to run the zone much less the canal. Therefore, most of them felt deeply and often vehemently that to proceed with the treaty was totally contrary to U.S. interests.

Q: In a way, the world had gone through one of these before, the Suez Canal back in 1955/1956, where the conventional wisdom was that the Egyptians would never be able to run the canal. Therefore, it has to be in the hands of the British. Was the example of the Suez Canal something that came into the conversation and into the calculations?

DACHI: No, it never did. Neither the Panamanians nor the Canal company people were especially known for their global outlook. This was almost completely a dialogue of the deaf. To make a lame pun, it was like two ships passing in the night. There was no basis for conversation. When I got there, the treaty had already been signed. Perhaps before the treaty was signed, while it was still being negotiated, there may have been if not conversations, bitter debates about what we should do. But once the treaty was signed, the die was cast and there was no more point as far as the canal people were concerned.

The only hope they had was that some sort of passive resistance or subtle non- cooperation would somehow prevail and the treaties would not be ratified. That is where they placed their hopes. There were a lot of people in the Panama Canal police force who were saying, "Once Panama takes over, not only are we out of a job, but who is going to keep the Zone safe, who is going to keep these Panamanians in line? The people who work with the canal are going to be retained and work here, but there will be no protection for their homes. We'll have no legal protection. We will come under Panamanian laws. We will lose our commissary and so on. Our entire way of life, free housing, etc., will all come to an end." In their minds their very existence was seriously threatened. Everybody was dug in concrete on this issue.

Q: When you were talking to the senators, were you using as sort of a not very subtle weapon saying, "Look, these are a bunch of people who are hard working, but at the same time, their living pretty high up?" I'm talking about the Americans who had free housing and all that. So, their judgment is not one to prevail.

DACHI: I would characterize it as sort of an unspoken rule that nobody at the embassy, including the ambassador, would ever say anything, certainly speak no evil of anyone in the zone and no one in the zone would speak evil of the ambassador. There was never anyone there in a visiting delegation who would hear such comments from one side about the other. Each side was just trying to avoid antagonizing even one senator. It was really a rigid, tense, uncomfortable situation. Superficially, everyone was polite. But people were dug in on opposite sides of the issue. There wasn't what you would consider reasoned dialogue for one instant that I ever recall.

Q: How about with the senators? Did you find, by and large, they were asking the right questions?

DACHI: Some of them were. A lot of the conservatives like Jesse Helms and others came down, but their minds were already made up. There were some people on the other side, those in favor of ratification, whose minds were made up as well. But there were key people who kept an open mind. That included some very senior and major players in the senate like Howard Baker, Robert Byrd, Paul Sarbanes and Wendell Ford. We carefully and deliberately concentrated on those who were uncommitted and wasted little time on the hard line opponents who were obviously never going to come around. The key to the visits wasn't so much what the embassy or the Panama Canal people said, the senators knew those positions, but what their take on General Torrijos would be and what he did and told them. In the end, what it boiled down to in the minds of most senators was “Are we going to give the canal to this man, who is a dictator, this guy who may not be threatening us directly, but is making friendly noises with Fidel Castro and Qadhafi, and who may be involved in drug running and corruption. His brother, Moises, was widely believed to be involved with the narcotics trade.

Ronald Reagan, still a private citizen but with plans to run for President, played a big role in the anti-treaty campaign. He was brought into it in an interesting way. A man in Panama by the name of Arnulfo Arias had been elected President four different times.

Each time he was overthrown by a military coup. The last time, it was by Torrijos in 1968. Arias was a popular, demagogic populist who was sort of right-wing. After the 1968 coup he went into political exile in Miami and took his entire coterie of political aides with him. They turned into very skillful lobbyists for their cause. They got to people like Ronald Reagan and others saying, "Look, yes, there should be a Panama Canal treaty. We should get our canal and our canal zone back. It is the right thing to do. But don't give it to this military dictator who has overthrown a legitimately elected democratic government. Insist first that there be a return to democracy, have elections.

Then give the canal to me. Don't give it to Torrijos." Arias was sure he would get reelected easily. This is what carried the day with Ronald Reagan and other conservatives. They were dead set against “giving away the Canal” to Torrijos whom Ronald Reagan called "this tin horned dictator." They wanted Panama to return to democracy first and give it to Arnulfo Arias.

Anti-treaty senators always reminded Americans that Torrijos was a dangerous, out of control dictator who was posturing at the United Nations, denouncing the United States and boasting of being an ally of Qadhafi and Castro. In private, Torrijos would always claim that he did these things as a political ploy to pressure the United States into giving him the canal, without fully appreciating that this was like feeding raw meat to the treaty opponents. Many of the key conversations with senators while he was swinging inebriated in his hammock at the beach, consisted of vigorous give-and-take on these points. Some of the greatest anecdotes about that whole period originated there. On the whole, he managed to charm most of them, and win over quite a few. He was a crude, vulgar man, but he had great political instincts and he sure did know how to handle American senators, who were always impressed with his earthy style and shrewd debating skills, whether they agreed with him on the substance or not. Even Jesse Helms was impressed, although quite obviously he was not about to be won over.

I would say the balance sheet of these congressional visits was that of all the people who came, everyone who was opposed when they arrived left the same way. We didn't get a single pro-ratification vote from anyone who arrived there opposed. On the other hand, not a single senator who came there uncommitted or in favor ended up voting against the treaty. I think we were successful. The treaty was ratified by the requisite two-thirds majority, without a single vote to spare.

Q: Here was Torrijos as the man. As it turned out later, he died in a helicopter or airplane crash. Within the embassy, those who were having to look beyond the ratification, was there concern after Torrijos? Was there concern among yourselves about Torrijos if he took over the canal?

DACHI: I think it was always clear that after the treaties were ratified, nothing much would change right away as far as the canal operations. First of all, there was a long transition. This was back in 1978. There was a period of about 11 years where the majority of the board would be American and the minority Panamanian, then in 1989 that ratio would be reversed. The military bases were not going to be handed over until the year 2000. Back then I don't think there was anybody around down there who thought that the year 2000 would ever come around. So there was to be a long transition period.

We're talking about a 20 year period in which the Torrijos types would not be able to exercise full control and our military presence would continue. Torrijos always made it clear that he wasn't interested in a forcible political takeover. After all, Panama desperately needed the revenue from that canal. Any Panamanian would know, including Torrijos, that it had to be a professionally run operation or it would fall apart. And they would need U.S. help with that for many years. So there was no problem with that. His political stance was, "You want democracy? All right. You give me the treaty and I'll give you democracy afterwards." And, in a limited way, he kept his word.

Q: Were you looking at the figures that the Panama Canal was ceasing to be as important as it used to be because of changes in transport?

DACHI: There are a number of factors which have been making the Panama Canal somewhat less important over time. You could argue that. But any way you cut it, the Canal continues to be of extraordinary importance. Even today in 1997, if you look at the number of ships and the tonnage that goes through there, that place is being utilized at full capacity. They just widened the Gaillard Cut so it can handle two-way traffic 24 hours a day. Even though there is an increasing number of ships that are too wide to go through the canal, the number of ships that can go through is also increasing. You may need other ways to transport goods across the isthmus, including a container line on land. But the canal is always going to be needed. It has been expanded, upgraded and modernized, because the need for it remains.

Q: What about the American press? They would play an important role in molding American public opinion and would help sway undecided senators. Did you find you had much American press coverage?

DACHI: Oh, yes, there was quite a large presence. We're talking about a nine month period in which there was almost a permanent presence, including television. They were usually looking for the spectacular, showy things. When anti-treaty senators came, Torrijos would always pull some kind of a stunt. He would organize demonstrations in front of the embassy for their benefit, and the media loved to cover those. When they came into Panama City, these senators would always be circumspect and never attacked or insulted Torrijos, but when they returned to the canal zone and held a press conference, they would call him all kinds of names. They were hoping to provoke some intemperate response from Torrijos. So, the senators were pretty good copy.

The question always was, what is going to happen if the Senate denies ratification? Is that going to cause violence, the breakout of some kind of revolution, or what? Torrijos always said that, no, there wouldn't be any violence. But a lot of the senators used the usual arguments and said, "We've got a lot of U.S. citizens living there and we're obligated to protect the lives of U.S. citizens." Of course, that is the code word for military intervention. Everybody knew that. There was always talk about whether Torrijos will be able to guarantee the safety of Americans after there is no more Panama Canal Zone and no more zone police, or conversely if the treaties were rejected in the senate. That was an explosive issue. As it turned out, one of the last amendments to the treaties and the one hardest for Torrijos to swallow was the clause retaining for the U.S. the right to intervene in Canal operations if our security interests were threatened even after the year 2000.

Q: Was there much contact between the embassy and yourself and the "Zonians," as they were called?

DACHI: Very little contact. I myself as public affairs officer had regular contact with the public affairs officers of the Panama Canal Company and the U.S. Forces Southern Command, which was very important and necessary. We were working together all the time, for different bosses and different purposes, but not at cross purposes. There was a certain courtesy in informing each other of what we were doing. But beyond that, there was very little dialogue between embassy people and Zonians and hardly any socializing.

Q: What about with the Panamanians?

DACHI: The Panamanian “friendlies,” such as they were, were mostly in the business community and among the well-to-do. A lot of them went to school in the United States and were overwhelmingly pro-American. But they were outnumbered, at least in terms of decibel power in the streets by a huge leftist element, the university students, the unions, the peasants, Torrijos' popular base. There was tremendous hostility at the universities.
That was where the demonstrators came from. The press was also very anti-American, very hostile. I can't think of more than a tiny handful of journalists who were even remotely objective. The inflammatory anti-American language which was used for years as they were fighting for the treaties was carrying over into the ratification process. That was one of the things that Torrijos had to deal with. He had to reign in and tame these so- called revolutionaries, the leftist extremists and the provocateurs. The same language they had to use to confront the U.S. and try to get the administration to give in to them on the treaty obviously wasn't going to work with the Senate and the ratification process.

With the business community, the professionals and the civilian leadership, we had good relations. The thing that united all Panamanians, everyone agreed, was that the treaty should be signed, approved, and ratified. There may have been some who felt that democracy should be allowed to return first, but at that point, that argument held a low priority in Panamanians' minds. It was only in certain circles in the U.S. where people felt that we should hold back on ratification until elections were held. Arias was certainly no role model for a democratic leader. In the end, some time after the treaty was ratified, elections were held and Arias came back. But he was getting very old by then. Then General Noriega got in the picture.

Q: Was there concern at this time about narcotics in Panama?

DACHI: Yes, absolutely. Torrijos' brother had been widely considered to be involved in narcotics trafficking. Colonel Noriega, who at the time was head of security and intelligence for Torrijos, was also strongly suspected of being involved in narcotics. That plus all the other things he was subsequently accused of, playing both sides, playing footsie with the Cubans while playing footsie with us. That was all going on then. There was also widespread corruption in the Colon free zone on the Caribbean coast with involvement of National Guard officers up to their eyeballs.

Q: What did we do? We couldn't sit on it. Did you explain this problem away?

DACHI: It was not convenient for us to focus on this at that point in time. But everybody on the U.S. side who was involved in this thing knew what was going on. Jimmy Carter wanted his treaty, and it was now or never. Everybody figured we'll deal with these other problems later. The Cuban intelligence agencies were using Panama as their number one center of operations for all of South America. It was a safehaven for guerrillas being trained in Cuba transiting to and from South American countries. Panama provided safehouses, false documents, all kinds of other support. All this stuff was known. The question was, what can we do about it? You had a treaty and it had to be ratified. It just couldn't be put off any longer.

Q: What about after the treaty was ratified? You had been there about nine months. Did that change things at all?

DACHI: It calmed things down, yes. Win or lose, the game was over. Everyone went back to the locker room, showered, dressed and went home. It calmed things down considerably. The next thing that happened was that Jimmy Carter came down for a formal ceremony to exchange the instruments of ratification. That created a great public event, of course. In Panama City, he was received very well. Torrijos organized a huge public gathering where he and Carter spoke to a huge crowd. Carter was welcomed there as a hero. Then, much to his credit, he went into the Zone. He visited the locks and observed canal operations. He had a meeting with Zonians at a stadium to answer questions. They were polite with him. It was tense, but correct. There were no incidents. Shortly thereafter, they switched their efforts to lobbying to make sure that, as they lost their jobs, their benefits would be paid, they wouldn't lose housing, they could retain their commissary for another couple of years, the schools passed over to the Defense Department and kept open. There was no bitter aftertaste that expressed itself.

After Jimmy Carter left, Bill Jorden retired and Ambler Moss became the ambassador. I had one last job there, introducing him to Panama. I set up a slightly unorthodox schedule for him in the sense that, parallel with making all the customary calls of a new ambassador, I took him all through the canal zone and had him spend quite a bit of time there. He visited schools and canal installations, met with workers, teachers, the police, the military. It was like a political campaign for Congress. He made a lot of speeches and stressed that all of us as Americans now have to respect and cooperate with what the administration has signed and Congress has ratified. Moss then concentrated on this and did an excellent job of getting the implementation process underway. As for myself, I was transferred.

Q: You left there in 1978. Where did you go?

DACHI: I went to Washington and spent the next six years there.


FROM The Association for Diplomatic Studies and Training Foreign Affairs Oral History Project (ADST)

Stephen Frank Dachi, born in April 1933 in Budapest, Hungary, served in the US Foreign Service for 30 years. Immigrating to Canada in 1948 to live with an aunt and uncle, he earned a degree in dentistry from the University of Oregon in 1956; founded a dental college at the University of Kentucky at Lexington in the early 1960s; becoming a deputy director of the Peace Corps in 1967; serving as a foreign service officer with the United States Information Agency (USIA) beginning in 1972. As a diplomat, he has been stationed in and traveled extensively through Central America, South Asia, and the Middle East for more than 14 years. During his final two years in the foreign service, he served as USIA counterpart to the Assistant Secretary for the Middle East, North Africa, and South Asia. In 1995 he was Diplomat-in-Residence at the Institute for the Study of Diplomacy at Georgetown University. He has since been active in Washington academic settings including as Diplomat-in-Residence at the Institute for the Study of Diplomacy at Georgetown University and has been teaching courses at the School for Continuing Education since then, including as Professorial Lecturer at the Elliott School of International Affairs at George Washington University.

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