How a strip of land across Panama was signed away and taken back

How the isthmus became Spain's treasure road

On 25 September 1513 the Balboa expedition confirmed what indigenous people had told it, that the isthmus had a second coast on another ocean, and Vasco Núñez de Balboa named that ocean the South Sea. Six years later, on 15 August 1519, the governor Pedro Arias Dávila, known as Pedrarias, abandoned the Caribbean settlement of Santa María la Antigua del Darién and moved the capital of Castilla del Oro to the Pacific shore. The town he founded there, Nuestra Señora de la Asunción de Panamá, is the origin of Panama City.

The move put the seat of government at one end of a road. Pedrarias began the portage routes known as the Camino Real and the Camino de Cruces, which joined Panama City to Nombre de Dios and later to Portobelo on the Caribbean, and in 1519 the crown paid for a cobbled track between the two oceans. By 1534 the Chagres River had been dredged far enough to carry traffic for two thirds of the way. Peruvian silver was landed on the Pacific side, hauled overland and loaded at the Caribbean ports for Spain. Of all the gold that entered Spain from the New World between 1531 and 1660, an estimated 60% had come through the treasure fleet and fair system of Nombre de Dios and Portobelo.

The road ran on forced labour. The encomienda system and repeated campaigns collapsed the populations of the Guna, Ngäbe, Buglé, Emberá and Wounaan; the Guna largely withdrew to the San Blas archipelago, and Emberá and Wounaan communities moved into the Darién. Enslaved Africans, drawn mainly from Senegambia and the Congo-Angola basin, carried the loads and worked the ports. A census of Panama City in 1610 counted 3,500 enslaved Africans against 548 white male citizens, and by 1625 the Afro-Panamanian population of the isthmus had reached about 12,000.

Some of them left the road and fought it. Bayano, a Mandinka man brought to Panama in 1552, commanded up to 1,200 fugitives from a fortified palenque called Ronconcholon and waged a guerrilla war against Spanish forces for more than five years before his capture in 1556.

The Real Audiencia of Panama, established in 1538, began with appellate jurisdiction from Nicaragua to Cape Horn. Wealth on that scale drew attack. The privateer Henry Morgan sacked and burned the city on 28 January 1671, and it was refounded on 21 January 1673 on a peninsula 8 km from the original site, whose ruins are known as Panamá Viejo.

The decline came from the sea. Once ships could round Cape Horn to reach the Pacific, a short portage that required loading, unloading and a laden trek between the coasts lost its advantage, and in the late eighteenth and early nineteenth centuries migration to the countryside shrank Panama City and moved the isthmus's economy from trade toward the land. Spain placed the isthmus under the Viceroyalty of New Granada, governed from Santa Fe de Bogotá, and the uneasy relationship between Panama and Bogotá that began there lasted a century.

Why Panama joined Colombia and not Central America

Independence came in two steps, eighteen days apart, and it came from the provinces inward. On 10 November 1821, in the Grito de La Villa de Los Santos, the residents of the Azuero peninsula declared their separation from the Spanish Empire. Royalist Veraguas called it treason. The separatists in the capital thought it irregular and accelerated their own plans.

The man who could have crushed it had already changed sides. Colonel José de Fábrega controlled the isthmus's military supplies and had been left in charge when the governor-general sailed for Quito in October 1821, and the separatists in the capital had converted him. Royalist troops were bribed, and no fighting followed. On 28 November 1821 a national assembly in Panama City declared the Independence Act, with Fábrega as head of state.

The act did two things at once. It severed the isthmus from Spain, and it joined Panama to Bolívar's Republic of Colombia, alongside New Granada and Venezuela. Panama had considered union with Peru or with a Central American federation and chose the southern one, although its economic and political ties had run closer to the Viceroyalty of Peru than to Bogotá. Bolívar, who had taken no part in its independence, answered Fábrega's letter by calling Panama "the center of the Universe". In his Jamaica letter of 1815 he had already imagined the isthmus becoming "the emporium of the universe", with canals that "will shorten the distances of the world".

The union was unstable from its first decade. General José Domingo Espinar separated the isthmus in September 1830. The Venezuelan general Juan Eligio Alzuru overthrew him, declared the isthmus independent again in 1831, and was defeated and executed that August by forces under Colonel Tomás de Herrera. During a civil war in November 1840 Herrera declared independence once more, and the Estado Libre del Istmo, the Free State of the Isthmus, drew up a constitution by March 1841 that allowed a return to New Granada only as a federal district. It lasted 13 months and rejoined on 31 December 1841. The main Wikipedia account counts more than 80 attempts by the people of the isthmus to secede from Colombia.

Inside the province, power stayed where colonial rule had left it. Administration and politics were controlled by a group of fewer than ten extended families, and the derogatory term rabiblanco, white tail, has been used for generations for their members. In 1852 the isthmus adopted trial by jury in criminal cases, and it declared and enforced an end to slavery thirty years after abolition.

How a railway made the crossing American

In 1846 New Granada and the United States signed the Mallarino-Bidlack Treaty. It gave the United States a right of way across the isthmus and the power to intervene militarily to keep the crossing neutral, and in return the United States guaranteed New Granada's sovereignty there. Two years later gold was found in California, and the isthmus became the short way between the American coasts.

The Panama Railway was completed in 1855 from Aspinwall, the town now called Colón, to Panama City. In April 1856 an American traveller bound for the gold fields stole a watermelon from a fruit vendor, and in the Watermelon Riot that followed a crowd attacked the American passengers. United States troops arrived in September 1856 to protect the railway stations, the first of many landings. When Theodore Roosevelt defended his Panama policy to Congress on 7 December 1903, he listed the revolutions, riots and outbreaks of the previous half century and wrote that "they number fifty-three for the fifty-three years".

The French came next. Ferdinand de Lesseps, who had built the Suez Canal, began a sea-level canal across Panama in 1881. About 40,000 people worked on it in 1888, nine tenths of them from the West Indies. Landslides, mud and disease defeated it, and the company went bankrupt in 1889 after reportedly spending US$287 million. The Wikipedia account of the canal estimates that 22,000 men died and that the savings of 800,000 investors were lost; the US State Department's historians give approximately 20,000 lives. A successor company formed in 1894 acquired the rights of the bankrupt one, and the abandoned French machinery could still be seen in Panama into the twenty-first century. Its chief lobbyist, and a major stockholder, was the French engineer Philippe Bunau-Varilla.

How the republic was made at a railway station

In 1903 the United States and Colombia signed the Hay-Herrán Treaty for the canal, with US$10 million down and US$250,000 a year, and the Colombian Congress rejected it on 12 August 1903. The rejection left the shareholders of the French company, due US$40 million under the treaty, facing the loss of everything.

In September 1903 Manuel Amador Guerrero, who led the separatist movement, travelled to New York and met Bunau-Varilla in a suite at the Waldorf-Astoria hotel. Bunau-Varilla wrote the conspirators a cheque for US$100,000 to fund a revolt, and in return he would represent Panama in Washington. Roosevelt, whom Amador then met, avoided endorsing the plan but said the United States would view a revolt as a positive development. The warship USS Nashville landed at Colón on 2 November 1903.

Colombia sent about 500 men of the Tiradores Battalion, who reached Colón on the morning of 3 November. The plan that saved it came from María de la Ossa, Amador's wife: separate the Colombian generals from their troops and arrest the generals. James Shaler, superintendent of the Panama Railway, persuaded Generals Juan Tovar and Ramón Amaya to go ahead to Panama City by train while cars were gathered for their men, and the railway delayed the troops. In Panama City General Esteban Huertas, commander of the Colombia Battalion, had Tovar and his aides arrested.

The leaderless soldiers in Colón surrounded the American troops garrisoned in the railway yard and were persuaded to leave under threat from the Nashville. That night the Colombian gunboat Bogotá shelled Panama City and mortally wounded Wong Kong Yee, of Hong Sang in China, the only recorded casualty of the separation.

The United States formally recognised the republic on 13 November. On 18 November John Hay and Bunau-Varilla signed the Hay-Bunau-Varilla Treaty, and no Panamanian signed it. Bunau-Varilla had not lived in Panama for seventeen years, entered the negotiation without formal consent from the Panamanian government, and signed the night before Panama's own delegation arrived in Washington, against instructions to make no canal treaty without consulting it. The treaty granted the United States rights "as if it were sovereign" in a zone roughly 16 km wide and 80 km long, to build a canal and then administer, fortify and defend it "in perpetuity". Panama received US$10 million and an annuity of US$250,000, and the United States guaranteed its independence. The new government, fearing the alternative, ratified it.

Colombia was slower. A treaty signed by the government of Rafael Reyes on 5 January 1909 to recognise the loss of the province failed in the Colombian Congress, and in 1921 the Thomson-Urrutia Treaty committed the United States to pay Colombia US$25 million, in return for which Colombia recognised Panama. Panamanians themselves do not date their independence to 1903. They celebrate independence from Spain on 28 November 1821 and mark 3 November 1903 as Separation Day.

What the Canal Zone meant inside the republic

The United States took control of the canal property on 4 May 1904, having bought the French equipment and excavations, the Panama Railroad included, for US$40 million. William Gorgas, chief sanitation officer from 1904, drew on the work of the Cuban epidemiologist Carlos Finlay and others, which had shown yellow fever and malaria to be mosquito-borne, and water, sewage and refuse systems were built for the Zone and for the cities of Panama and Colón. Workers from the Caribbean came in large numbers and many settled permanently. The canal opened on 15 August 1914 with the passage of the cargo ship SS Ancon, after the United States had spent almost US$500 million on the project.

Beside the Zone sat a republic that a commercially oriented oligarchy dominated from 1903 to 1968. Its currency was the balboa, which replaced the Colombian peso in 1904 and was fixed at par with the United States dollar, and dollars served as its paper money. The treaty was the central question of its politics. A protocol of 1936 ended the United States' right to seize additional land for the canal and raised the annuity, and the Remón-Eisenhower Treaty of 1955 revised the terms again. Both left the Zone in place.

The argument came to be about a flag. After serious disorders in 1958 and 1959 over flying the Panamanian flag in the Zone, Dwight Eisenhower declared that titular sovereignty over it resided with Panama and ordered both flags displayed at specified places. On 9 January 1964 Panamanian students entered the Zone to raise their flag beside the American one at Balboa High School, under an agreement of 1963. They were jeered and harassed by American school officials, students and parents, and in the scuffle the Panamanian flag was torn.

The riot that followed killed more than 20 Panamanians and injured about 500, most of the casualties caused by fire from United States troops called in to protect Zone property, and four US soldiers were also killed. Panama broke off diplomatic relations on 10 January; the United States charged Panama with inciting the riot, and an International Commission of Jurists later largely upheld the American case. Relations resumed on 3 April 1964. January 9 is a national holiday in Panama, Martyrs' Day.

How a general negotiated the Zone out of existence

Negotiations after the riot produced three protocols in June 1967, which would have abrogated the 1903 accord and provided for joint operation of the canal, and they were never ratified. Arnulfo Arias Madrid took office as president on 1 October 1968 and was ousted by the National Guard on 11 October. Omar Torrijos, its commander, emerged from the junta as the principal power in the country, and redistributed 180,000 hectares of uncultivated land.

Torrijos took the canal to the world. In September 1970 he rejected the 1967 agreements. In March 1973 Panama brought a session of the United Nations Security Council to Panama City, and the United States vetoed the resulting resolution urging continued negotiation. A set of principles agreed in 1974 provided that United States control would be limited in duration.

The Torrijos-Carter Treaties were signed in Washington on 7 September 1977. Panama approved them in a plebiscite on 23 October 1977 with 67.4% of the vote and a turnout of 96%, after restrictions on the press and on political parties were lifted several weeks beforehand. The United States Senate consented on 16 March and 18 April 1978, by 68 votes to 32 each time, and attached reservations extending American rights to defend the canal after the handover. The Canal Zone ceased to exist on 1 October 1979.

Why the United States invaded before the handover

Torrijos died in a plane crash on 31 July 1981, in circumstances that produced charges that he had been assassinated. Constitutional amendments in 1983 appeared to remove the military from politics, but the Panama Defense Forces continued to dominate behind a civilian government, and by then General Manuel Noriega controlled both. The United States froze aid in the summer of 1987, indicted Noriega for drug trafficking in February 1988 and in April 1988 froze Panamanian government assets in American banks and withheld canal fees. Because Panama used the dollar, it was forced to default on its IMF debt in 1987.

In the election of May 1989 Guillermo Endara won by more than three to one, and the regime annulled the result. On 15 December 1989 the assembly gave Noriega the title of chief executive officer of the government and declared that a state of war existed with the United States. The next day Panamanian soldiers killed an unarmed US Marine officer. The invasion, Operation Just Cause, began in darkness on 20 December, with nearly 26,000 combat troops by the US Army's own count, and Endara was sworn in that day at a United States military installation in the canal area.

The deaths are recorded as a dispute between sources. The United States estimated 202 civilian deaths, Americas Watch 300 and the United Nations 500; Britannica gives 200 to 300 combatants and more than 300 civilians, with 23 US soldiers killed. About 20,000 people lost their homes in the fighting. On 29 December the UN General Assembly voted 75 to 20, with 40 abstentions, to condemn the invasion as a flagrant violation of international law. Noriega took refuge in the Vatican nunciature and surrendered on 3 January 1990.

The armed force that had governed for two decades was then dissolved. The Endara government abolished the Panama Defense Forces on 10 February 1990 and replaced them with the Public Force, a national police, and a constitutional amendment prohibiting a regular military was ratified in October 1994. The Bertelsmann Transformation Index describes that amendment as removing the most important potential veto power in Panamanian politics.

What changed hands at noon on the last day

The handover kept its date. After negotiations failed to allow a continued American military presence, the United States withdrew rapidly in the 1990s, and by late 1999 all its troops had gone. Symbolic ceremonies were held on 14 December 1999, and at noon on 31 December Panama assumed full control of the canal. By 2000 nearly 1,500 square kilometres of land and some 7,000 buildings had been transferred, managed from 1993 by a temporary Interoceanic Region Authority.

The constitution now carries the outcome. Its Title XIV declares the canal "an inalienable patrimony of the Panamanian Nation", creates the Panama Canal Authority to administer it outside the general state budget, and fixes the fees paid to the treasury and the labour conditions of canal workers at no less than those of 31 December 1999. It also requires that any treaty concerning the canal, and any proposal for a third set of locks or a sea-level canal, go to a national referendum.

That clause has been used. In the first decade under Panamanian control the authority invested nearly US$1 billion in widening and modernising the canal, and on 22 October 2006 about 80% of voters approved an expansion with new and larger locks, estimated to cost US$5.25 billion. Work began in September 2007, and the expanded canal opened to Neopanamax ships in 2016. The question of 1903 returned in December 2024, when the incoming United States president criticised the tolls and raised the possibility of demanding the canal back, and the Panamanian government rejected each point. Panama: politics covers the state that the handover left and Panama: economy what the canal now earns.