The President's News Conference

THE PRESIDENT. Good afternoon. I have three or four brief announcements to make before I answer your questions.

SOUTH AFRICA

First of all, in response to our own direct inquiry and that of other nations, South Africa has informed us that they do not have and do not intend to develop nuclear explosive devices for any purpose, either peaceful or as a weapon, that the Kalahari test site which has been in question is not designed for use to test nuclear explosives, and that no nuclear explosive test will be taken in South Africa now or in the future.

We appreciate this commitment from South Africa and this information. We will, of course, continue to monitor the situation there very closely. We'll also renew our efforts to encourage South Africa to place all their nuclear power production capabilities under international safeguards and inspections and encourage them along with other nations to sign the nuclear nonproliferation treaty.

PANAMA CANAL

Another item is that, as relates to the Panama Canal treaty, we have become interested, after the original discussions were concluded, in assuring that some definite commitment be made about a possible future development of a sea-level canal. As you know, the existing canal facilities cannot be used for large warships or cargo ships. And if it becomes necessary in the future for a sea-level canal to be constructed, we want to be sure that we have an opportunity to be involved directly in this construction and not have some possible hostile nation supplant us with our influence in the canal area.

We have asked Panama for this assurance, and this will be part of the treaties that we will sign--that if any sea-level canal or modification of the present canal is concluded, that we will be part of it if we choose and also, in return, that any sea level canal to be built during the terms of the treaty will be built in Panama.

RHODESIA

A third item that I have to report to you is that in our effort to bring about a peaceful solution to the Rhodesian or Zimbabwe crisis, we have been trying to evolve, along with the British, a fair proposal that would be acceptable to the frontline nations, to the nationalist forces in Rhodesia, to the present Government of Rhodesia, to the South Africans, and others. And there will be a meeting of the frontline presidents in Lusaka, which is Zambia, beginning Friday.

And Ambassador Young, representing us, and Foreign Minister David Owen, representing the British, will be meeting with the frontline presidents in Lusaka on Saturday, the 27th of August. There they will go over our proposals on the Rhodesian question. And I believe this is a possible step toward a peaceful resolution of that question. We still have a lot of issues to resolve, but it is an encouraging thing.

PEOPLE'S REPUBLIC OF CHINA

The other I'd like to report is that Secretary Vance is continuing his discussions in China, primarily with Foreign Minister Huang Hua, and this evening he has been having a banquet sponsored by and hosted by Teng Hsiao-ping, who is the Vice Chairman of the Communist Party in China and who is also the Deputy Prime Minister.

We don't know what the results of these in-depth discussions might be yet. I won't be prepared to give you any detailed information until I hear from Secretary Vance at the conclusion of these talks.

I'd be glad to answer any questions.

Mr. Gerstenzang [James R. Gerstenzang, Associated Press].

QUESTIONS

PANAMA CANAL

Q. Mr. President, you have said that your foreign policy decisions should be made in consultation with the American people and that these decisions should reflect their thinking.

THE PRESIDENT. Yes.

Q. Yet there have been, so far, strong expressions of public disagreement with the Panama Canal treaty as we now see it.

How do you reconcile these differences, and what steps will be taken to convince the American people that you are right, that they are wrong, and that the canal treaty is in the best long-term interests of the United States?

THE PRESIDENT. We expect to conclude the drafting of the detailed language in the Panama Canal treaties within the next few days, but they have to be compared to be sure that the Spanish text and the English text are compatible and that all the elements have been expressed in legal and proper language.

As soon as that is done, the text of the treaty will be released to the Members of the Congress and also to the American people and the news media. At this time we are going on a fairly detailed expression of principles which will be the basis for the treaty itself. And that set of principles in some minute detail has already been released.

I think there's been a great deal of misconception about what is being concluded in Panama, which may be one of the reasons that there is not popular support for the Panama Canal treaty at this point.

The negotiations were begun 13 years ago when President Johnson was President, as a result of an altercation, bloodshed, loss of life by both Panama and American troops there. And in my opinion, the terms of the canal protect American interests very well. We will retain control of the Panama Canal throughout this century. We will have an assurance in perpetuity following the year 2000 that the Panama Canal will .be neutral, that our ships will have unlimited access to the canal, along with the ships of other nations. We have no constraints on the action that we can take as a nation to guarantee that neutrality. Our own ships and those of Panama will have priority for expeditious passage through the canal in a case--in a time of emergency.

And I think that this is an agreement that is very conducive to continued peace, to better relationships with nations and people in the Latin American area, and I think most of the objections that were raised earlier about a giveaway, a highly, exorbitant payment to Panama, loss of control, takeover by some other government, a prohibition against the free use of the canal--all those concerns, which were legitimate in the past, have now been answered successfully for our Nation within the present negotiations.

But it will be a major responsibility of my own, through my own statements and through those of others who support the Panama Canal treaty to give the American people the facts. I think that to a substantial degree, those who do have the facts and have studied this situation closely concur that these two treaties are advantageous for us. This is a bipartisan support. It does involve, of course, myself and the members of my administration. The Joint Chiefs of Staff, with absolutely no pressure, encouragement from me, unanimously believe that this treaty is in the best interests of our own Nation's security. President Ford supports the treaty strongly, Secretary Kissinger supports it strongly, and so do many others.

But my belief is that as the American people become acquainted with the very good terms of the treaty, they will shift their support to the treaty itself.

Q. Would you say, then, that those who are criticizing it are not fully informed on it yet?

THE PRESIDENT. Obviously there are some who are fully informed who just don't want to make any change in the present terms concerning the operation of the treaty. I wouldn't want to say that anyone who disagrees with me is ignorant, but I believe that the way to arouse public support for the treaty is to let the American people know the advantages to our country of its terms.

I'm convinced that it's advantageous. I was not convinced of this fact, say, a year ago. But I think that the terms that we hope to achieve in our negotiations for the benefit of our country have all been achieved.

ISRAEL

Q. Mr. President, twice in recent weeks the United States has said that Israel is in violation of international law in terms of the West Bank settlements, which some view as an annexation plan. My question is: What does the United States plan to do to protect the rights of the people in the occupied lands?

THE PRESIDENT. Well, it's been the position of our own Government, long before I was elected President, that the West Bank territory, the Gaza Strip, areas of the Golan Heights, Sinai region the occupied territories, in other words, were not a part of Israel. Our Government has expressed on several occasions---the President, our Ambassadors to the United Nations and otherwise--that the settlement of Israeli citizens in some of these areas was in violation of the Geneva Convention and that, therefore, the settlements were illegal.

We have private assurances and there have been public statements made by Mr. Begin that these settlements were not intended to show that Israel was to occupy these territories permanently, that the final boundaries to be established through mutual agreement between Israel and the Arab countries was to be decided without prior commitment, and negotiations would include these areas.

So, at this time, our pointing out to Israel that these three settlements that were just established are illegal because they were made on occupied territory, is the extent of our intention.

I concur with the statement that was made by Secretary Vance, the State Department, that this kind of action on the part of Israel, when we are trying to put together a Middle Eastern conference leading to a permanent peace, creates an unnecessary obstacle to peace. I believe that our opinion is shared by the overwhelming number of nations in the world, but we don't intend to go further than our caution to Israel, our open expression of our own concern, and the identification of these settlements as being illegal.

Q. But you don't feel that you have any leverage at all to move in any direction in terms of military aid to Israel to keep her from violating

THE PRESIDENT. Obviously, we could exert pressure on Israel in other ways, but I have no intention to do so.

BERT LANCE

Q. Mr. President, 2 weeks ago you said in an interview that you had faith that Bert Lance would resign if the Comptroller's report showed any illegality or impropriety. And the report has confirmed that, indeed, he had lingering or was involved in lingering overdrafts, that there were large advances to bank officials, there were advances to his campaign for Governor.

Could you tell us what in the Comptroller's report--what words in that report convinced you that Bert Lance should not resign?

THE PRESIDENT. I don't know the details of Bert's relationship with the Calhoun National Bank where the overdrafts did occur. But my information, as derived from the Comptroller's report, is that in his own private accounts--that of himself and the other members of his family, plus a certificate of deposit which I think was in excess of $100,000--there was almost always a surplus amount of money on hand; in other words, that the overdraft in his campaign account was less than the amount of money he had on deposit at the bank; also that there was an agreement between not only Bert Lance but the customers of the bank, as a general policy, that if you had more than one bank account and you were overdrawn in one, but had more than enough money to cover that overdraft in other accounts, that this was accepted by the bank and the checks were honored. This is a common practice in a small or country bank. That's no excuse for an overdrawn account.

I think it is accurate to say that on one occasion, when this did not apply, that the money was paid back very quickly, that interest was paid on the overdraft, and it was handled in a completely normal way as it would have had I been the person who had the overdrawn account.

I've spent a great deal of time trying to become acquainted with the charges or allegations against Bert Lance. It means a lot to him. It means a lot to me personally as a friend of his. It means a lot to me as a President, responsible for the integrity and reputation not only of my Cabinet officers but myself. I don't know of any allegation that has been made or proven that Bert Lance did anything illegal or even unethical.

Now, I think that there are some possibilities that have been revealed in the practices of personal loans by bank officials from correspondent banks that might be changed in the future. But at the time these personal loans were made with correspondent banks--and I understand from one of the periodicals this is done with 93 percent of the correspondent banks and bank officials throughout the country--it may have been advisable for Bert and all others like him several years ago to make those loans public. That was not required. At the time that Mr. Lance ran for Governor in 1974, at the time Bert Lance submitted his name for approval by the Senate committee for OMB Director, he made a public statement of his debts owed 'and his net worth and how the debts were secured. I think it's obvious that he complied with not only the law and the ethics required but common loan practices among bank officers.

Now, it may be, as I say, that as a result of these investigations that stricter requirements should be implemented by law and also by the Comptroller in his standard operating procedures, but I don't know of anything either illegal or unethical even that Bert Lance has ever done.

Q. Mr. President, how can the Lance case be closed, as you seem to see it, as long as these investigations go on, the Comptroller's and the probes in the Senate?

THE PRESIDENT. I would not want to hasten their conclusion, using my own influence. I've never met the Comptroller, so far as I know. I've never had any conversation with him, have never tried to influence him, and wouldn't.

I think it's also been announced that the Senate committees, maybe two committees, will look further into the allegations against Mr. Lance. I think in the fairly voluminous report that the Comptroller filed, which I did read, that all of the allegations against him were listed, the investigative procedures were outlined, the findings were described and the facts revealed.

There may be some facts that have not yet been determined. But I think that it's part of our governmental process not to discourage, but to encourage the most detailed analysis and investigation when an allegation is made against a public official.

But I also think it's part of our process that if allegations are unfounded or if there is no illegal or unethical conduct revealed, that the accused public official should be exonerated. And this is the way I assess, after great study, the Bert Lance case. I have no objection to Senator Proxmire continuing with an investigation. And I think this is very good. I'd have no objection to Senator Ribicoff continuing with the investigation. But I think that that's part of our political process that ought to he encouraged.

Q. You don't see it, then, Mr. President, to be appropriate, as President, to keep an open mind until all these probes are completed?

THE, PRESIDENT. I don't know how long the probes will be continued. So far as I know, the allegations with which I am familiar have been investigated and have been answered. And if any new information should be derived against Bert Lance or against the Secretary of State or the Secretary of the Treasury or anyone else in my administration, I would certainly have to assess new information as it arose.

But my judgment is that the investigation has been very complete. There's been a Comptroller's investigation in Atlanta. There's been, I think, two Department of Justice investigations, I think two Senate investigations, and now the U.S. Comptroller investigation. And as I say again, to repeat myself, there has been no evidence of either illegalities or unethical conduct and no conduct that was contrary to the normal practices that exist in the banking circles in our country.

Q. Mr. President, could I follow up? If the Comptroller's report had been made on, say, Mike Blumenthal or some assistant secretary in your administration, would you have found it acceptable for that person as you did for Lance?

THE PRESIDENT. Yes, sir.

Q. Mr. President, without belaboring this, during the transition, you and many of your top spokesmen said you wanted to avoid not only conflicts of interest in your top appointments but also the appearance of conflicts.

THE PRESIDENT. Yes.

Q. Mr. Lance has many loans out. And although they're held in a private trust, it is theoretically possible that someone who holds such a loan could come to him and ask a favor and without mentioning the loan, just ask the favor. Does that to you represent avoidance of the appearance of conflict? Isn't there the appearance of conflict here?

THE PRESIDENT. I don't know any alternative to that. As you know, Secretary Blumenthal was an official, for instance, in the Bendix Corporation. And he has put his holdings in a blind trust and instructed them over a period of time to dispose of those holdings or either to retain some of them.

I think that our Assistant Secretary of Defense has similar holdings in Coca Cola Company. I have holdings in Carters Warehouse and in my own farms. You can't expect a public official to dispose of all their net worth before they come to government.

And the legal framework of having those holdings put in a trust where the owner of that stock or property does not control the action concerning it, whether it's completely adequate or not, is the best that we can contrive.

There is also a complicating factor in the holding of bank stock. There's a U.S. law that prevents this resale of bank stock, I think within 6 months or 9 months after it's purchased. And this is designed to prevent the buying and trading and negotiations with bank stocks just for a profit motive in a transient way. And so there has been a time limit on when the Lance bank stock could be sold.

So, I do think that the appearance of impropriety or illegality or unethical conduct has been honored. But obviously, there could be those who say that because I still own several hundred acres of land in Georgia, that I have a conflict of interests relating to agricultural legislation. But I've done the best I could to isolate myself from it.

I think that's the best we can do, and I really believe that it's adequate.

Q. Mr. President, do you think the American taxpayer has reason to question the competence of a man in charge of the Federal budget who, after he has taken that job, wrote seven overdrafts on his own account?

THE PRESIDENT. I didn't know--you are referring to Mr. Lance?

Q. Yes. It's in the Comptroller's report.

THE PRESIDENT. I see. Well, obviously it's better not to write overdrafts. [Laughter]

I can't deny that I have written overdrafts on my own bank accounts on occasion and so has my wife, not deliberately, but because of an error or because of higher priorities that I assigned to .other responsibilities that I had at the time. I think that there's no doubt that Bert Lance is one of the more competent and intelligent people that I have ever known in my life.

I realized 8 or 9 months ago, and I still realize, that the management of the Office of Management and Budget is one of the crucial assignments that will determine the success or failure of my own administration. And I cast about in my mind about who, among all those that I knew or knew about, would more competently fill that position.

My choice, without any competition, I might say, was Bert Lance. I still have that much faith in his honesty and his competence. And the fact that he has had overdrafts, I think--is obviously better had he not had them, but is no reflection on his basic judgment or competence.

He, like many other successful business leaders, has a multiplicity of bank accounts, stockholdings, business investments. And he has tried to sever himself from all those management responsibilities by placing his holdings into the hands of a trustee. And I can't answer the question about private bank account overdrafts. But my guess is that when an overdraft has occurred in a particular account, that his deposits in other accounts in that same bank were more than adequate to cover them.

PANAMA CANAL

Q. Mr. President, going back to the Panama Canal, do you favor a widening of the canal to make it usable for the largest modern warships and perhaps an American investment in a sea-level canal, as you mentioned earlier?

THE PRESIDENT. It's obvious to me that over a period of time the Panama Canal in its original conformation has become inadequate. I think in the last 12 months, only four or five Navy warships have been through the canal at all. Any large ship, an aircraft carrier, for instance, would have to go around the southern area of South America.

Standard oil tankers that would bring oil, say, from Alaska to the gulf coast area, or the Atlantic area, could not possibly go through the Panama Canal. That oil, if transported through the canal, would have to be off loaded into small, lighter small ships and taken to the canal and then up to, say, New Orleans or some other gulf coast port.

Over a period of time, I think that the canal needs to be expanded. I think it's premature now, though, for me to decide whether or not a sea-level canal would be advocated or whether an expansion of the present canal facilities would be best. There has been a very elaborate study made of this, I think concluding only .a year or two ago, and, I think, initiated when President Johnson was in office, that showed that if a sea-level canal was needed, that it ought to be placed in Panama. That was before we had the additional opportunity to haul Alaskan oil and natural gas through the canal. So, that's an option for the future. I just want to be sure that we don't foreclose the option, if a sea-level canal is built, of our Nation playing a role in it, in harmony with and in partnership with Panama.

But whether we need it at this time, I doubt; in the future I think we will--

Q. Mr. President?

THE PRESIDENT. Yes, Judy [Judy Woodruff, NBC News].

Q. Mr. President, when you met with Secretary Kissinger last week, you told him in the presence of reporters that you had told President Ford that morning that you had what you called an absolute continuum of what you--referring to Secretary Kissinger--and President Ford had started on southern Africa, the Middle East, Panama, and Chile.

THE PRESIDENT. No, I didn't mention those things, but go ahead with your question.

Q. This is according to a report that was written by reporters who were present.

At any rate, if you used the words "absolute continuum," what did you mean by that, and were you saying that the voters had no choice on those issues between you and President Ford?

THE PRESIDENT. I didn't mention any specific areas of the world where there was an absolute continuum. What Secretary Kissinger came to talk to me about was the Panama Canal. In some areas of foreign policy, there is 'a complete continuum as Presidents change. I have a different emphasis that I have placed on foreign affairs questions than did President Ford or President Nixon or their predecessors.

I think in the case of the Panama Canal negotiations, there was a complete continuum. We did appoint Sol Linowitz to help Ellsworth Bunker, and we added to the discussions a concept of guaranteed neutrality of the canal after the year 2000. That was an innovation. But the negotiations with the Panamanian officials continued without interruption.

Ambassador Ellsworth Bunker, who was the lead negotiator when President Ford was in office, continued as my lead negotiator. We added on Sol Linowitz. But I never mentioned anything about Chile or any specific nation in that comment.

BERT LANCE

Q. Mr. President, have you tried to ascertain, or have you ascertained that no one who worked during the transition for you was in contact with the U.S. Attorney's Office in Atlanta or the regional office of the Comptroller and discussing with them the inquiries into Mr. Lance that were extant at that point?

THE PRESIDENT. I have never heard of that before. And if there are any people who worked in the transition time who made an inquiry about Mr. Lance's affairs, they did it without my knowledge and without my authority, and it would have been contrary to my inclinations.

Q. May I follow that up? With all of your Cabinet appointments, before the nominations were made you had benefit of an FBI report, with the exception of Mr. Lance. Do you regret that now, that you made that nomination without the FBI report?

THE PRESIDENT. No, that has not been the case in every instance. For instance, my most recent appointment of Judge Frank Johnson to head up the FBI was made without an IRS and FBI check. There have been a few instances when this was not done because of the pressure of time and because we needed to move aggressively to make the decision or when I had absolute trust in them. But I don't have any regret about that.

MR. GERSTENZANG. Thank you, Mr. President.