Panama Canal Treaty Signed - History

Panama Canal Treaty Signed - History

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The continued American ownership of the Panama Canal resulted in growing protests in Panama, which were echoed throughout South America. President Carter supported reaching a treaty with Panama to return control of the Canal.

On September 7th, the United States and Panama, under the leadership of General Omar Torrijos, reached an accord that would return full control of the Canal to the Panamanians by the year 2000. Under the terms of the treaty, the United States maintained the right to defend the Canal after that point. There was strong opposition in the Senate to the approval of the accord, but the president ultimately prevailed by a small majority.

History of Panama (1977–present)

On September 7, 1977, Carter and Torrijos met in Washington to sign the treaties in a ceremony that also was attended by representatives of twenty-six other nations of the Western Hemisphere. The Panama Canal Treaty, the major document signed on September 7, abrogated the 1903 treaty and all other previous bilateral agreements concerning the canal. The treaty was to enter into force six months after the exchange of instruments of ratification and to expire at noon on December 31, 1999. The Panama Canal Company and the Canal Zone government would cease to operate and Panama would assume complete legal jurisdiction over the former Canal Zone immediately, although the United States would retain jurisdiction over its citizens during a thirty-month transition period. Panama would grant the United States rights to operate, maintain, and manage the canal through a new United States government agency, the Panama Canal Commission. The commission would be supervised by a board of five members from the United States and four from Panama the ratio was fixed for the duration of the treaty. The commission would have a United States administrator and Panamanian deputy administrator until January 1, 1990, when the nationalities of these two positions would be reversed. Panamanian nationals would constitute a growing number of commission employees in preparation for their assumption of full responsibility in 2000. Another binational body, the Panama Canal Consultative Committee, was created to advise the respective governments on policy matters affecting the canal's operation.

Article IV of the treaty related to the protection and defense of the canal and mandated both nations to participate in that effort, though the United States was to hold the primary responsibility during the life of the treaty. The Combined Board, composed of an equal number of senior military representatives from each country, was established and its members charged with consulting their respective governments on matters relating to protection and defense of the canal. Guidelines for employment within the Panama Canal Commission were set forth in Article X, which stipulated that the United States would establish a training program to ensure that an increasing number of Panamanian nationals acquired the skills needed to operate and maintain the canal. By 1982 the number of United States employees of the commission was to be at least 20 percent lower than the number working for the Panama Canal Company in 1977. Both nations pledged to assist their own nationals who lost jobs because of the new arrangements in finding employment. The right to collective bargaining and affiliation with international labor organizations by commission employees was guaranteed.

Under the provisions of Article XII, the United States and Panama agreed to study jointly the feasibility of a sea-level canal and, if deemed necessary, to negotiate terms for its construction. Payments to Panama from the commission ("a just and equitable return on the national resources which it has dedicated to the . . . canal") were set forth in Article XIII. These included a fixed annuity of US$10 million, an annual contingency payment of up to US$10 million to be paid out of any commission profits, and US.30 per Panama Canal net ton of cargo that passed through the canal, paid out of canal tolls. The latter figure was to be periodically adjusted for inflation and was expected to net Panama between US$40 and US$70 million annually during the life of the treaty. In addition, Article III stipulated that Panama would receive a further US$10 million annually for services (police, fire protection, street cleaning, traffic management, and garbage collection) it would provide in the canal operating areas.

The second treaty, the Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal, or simply the Neutrality Treaty, was a much shorter document. Because it had no fixed termination date, this treaty was the major source of controversy. Under its provisions, the United States and Panama agreed to guarantee the canal's neutrality "in order that both in time of peace and in time of war it shall remain secure and open to peaceful transit by the vessels of all nations on terms of entire equality". In times of war, however, United States and Panamanian warships were entitled to "expeditious" transit of the canal under the provisions of Article VI. A Protocol was attached to the Neutrality Treaty, and all nations of the world were invited to subscribe to its provisions.

At the same ceremony in Washington, representatives of the United States and Panama signed a series of fourteen executive agreements associated with the treaties. These included two Agreements in Implementation of Articles III and IV of the Panama Canal Treaty that detailed provisions concerning operation, management, protection, and defense, outlined in the main treaty. Most importantly, these two agreements defined the areas to be held by the United States until 2000 to operate and defend the canal. These areas were distinguished from military areas to be used jointly by the United States and Panama until that time, military areas to be held initially by the United States but turned over to Panama before 2000, and areas that were turned over to Panama on October 1, 1979.

One foreign observer calculated that 64 percent of the former Canal Zone, or 106,700 hectares, came under Panamanian control in 1979 another 18 percent, or 29,460 hectares, would constitute the "canal operating area" and remain under control of the Panama Canal Commission until 2000 and the remaining 18 percent would constitute the various military installations controlled by the United States until 2000. The agreements also established the Coordinating Committee, consisting of one representative of each country, to coordinate the implementation of the agreement with respect to Article III of the Panama Canal Treaty, and an analogous Joint Committee to perform the defense-related functions called for in the agreement with respect to Article IV of the treaty.

Ancillary agreements signed on September 7 allowed the United States to conduct certain activities in Panama until 2000, including the training of Latin American military personnel at four schools located within the former Canal Zone provided for cooperation to protect wildlife within the area and outlined future United States economic and military assistance. This latter agreement, subject to the availability of congressionally approved funds, provided for United States loan guarantees, up to US$75 million over a 5-year period, for housing a US$20-million loan guarantee by the United States Overseas Private Investment Corporation for financing projects in the Panamanian private sector loans, loan guarantees, and insurance, up to a limit of US$200 million between 1977 and 1982, provided by the United States Export-Import Bank for financing Panamanian purchases of United States exports and up to US$50 million in foreign military sales credits over a 10-year period.

The speeches of Carter and Torrijos at the signing ceremony revealed the differing attitudes toward the new accords by the two leaders. Carter declared his unqualified support of the new treaties. The statement by Torrijos was more ambiguous, however. While he stated that the signing of the new treaties "attests to the end of many struggles by several generations of Panamanian patriots", he noted Panamanian criticism of several aspects of the new accords, particularly of the Neutrality Treaty: "Mr. President, I want you to know that this treaty, which I shall sign and which repeals a treaty not signed by any Panamanian, does not enjoy the approval of all our people, because the twenty-three years agreed upon as a transition period are 8,395 days, because during this time there will still be military bases which make my country a strategic reprisal target, and because we are agreeing to a treaty of neutrality which places us under the protective umbrella of the Pentagon. This pact could, if it is not administered judiciously by future generations, become an instrument of permanent intervention."

Torrijos was so concerned with the ambiguity of the Neutrality Treaty, because of Panamanian sensitivity to the question of United States military intervention, that, at his urging, he and President Carter signed the Statement of Understanding on October 14, 1977, to clarify the meaning of the permanent United States rights. This statement, most of which was subsequently included as an amendment to the Neutrality Treaty and incorporated into its instrument of ratification, included a declaration that the United States "right to act against any aggression or threat directed against the Canal . . . does not mean, nor shall it be interpreted as the right of intervention of the United States in the internal affairs of Panama." Despite this clarification, the plebiscite that took place the next week and served as the legal means of ratification in Panama, saw only two-thirds of Panamanians registering their approval of the new treaties, a number considerably smaller than that hoped for by the government.

Ratification in the United States necessitated the approval of two-thirds of the Senate. The debates, the longest in Senate history, began on February 7, 1978. The Neutrality Treaty was approved on March 16, and the main treaty on April 18, when the debate finally ended. To win the necessary sixty-seven Senate votes, Carter agreed to the inclusion of a number of amendments, conditions, reservations, and understandings that were passed during the Senate debates and subsequently included in the instruments of ratification signed by Carter and Torrijos in June.

Notable among the Senate modifications of the Neutrality Treaty were two amendments incorporating the October 1977 Statement of Understanding, and interpreting the "expeditious" transit of United States and Panamanian warships in times of war as being preferential. Another modification, commonly known as the DeConcini Condition, stated that "if the Canal is closed, or its operations are interfered with [the United States and Panama shall each] have the right to take such steps as each deems necessary, . including the use of military force in the Republic of Panama, to reopen the Canal or restore the operations of the Canal". Modifications of the Panama Canal Treaty included a reservation requiring statutory authorization for payments to Panama set forth in Article XIII and another stating that any action taken by the United States to secure accessibility to the Canal "shall not have as its purpose or be interpreted as a right of intervention in the internal affairs of the Republic of Panama or interference with its political independence or sovereign integrity". Reservations attached to both treaties made the United States provision of economic and military assistance, as detailed in the ancillary agreements attached to the treaties, nonobligatory.

The inclusion of these modifications, which were never ratified in Panama, was received there by a storm of protest. Torrijos expressed his concern in 2 letters, the first to Carter and another sent to 115 heads of state through their representatives at the UN. A series of student protests took place in front of the United States embassy. The DeConcini Condition was the major object of protest. Although the reservation to the Panama Canal Treaty was designed to mollify Panamanian fears that the DeConcini Condition marked a return to the United States gunboat diplomacy of the early twentieth century, this provision would expire in 2000, whereas the DeConcini Condition, because it was attached to the Neutrality Treaty, would remain in force permanently.

Despite his continuing concern with the ambiguity of the treaties with respect to the United States role in defense of the canal after 2000, the close Senate vote made Torrijos aware that he could not secure any further modification at that time. On June 16, 1978, he and Carter signed the instruments of ratification of each treaty in a ceremony in Panama City. Nevertheless, Torrijos added the following statement to both Panamanian instruments: "The Republic of Panama will reject, in unity and with decisiveness and firmness, any attempt by any country to intervene in its internal or external affairs." The instruments of ratification became effective on June 1, 1979, and the treaties entered into force on October 1, 1979.

Ironically, the successful conclusion of negotiations with the United States and the signing of the Panama Canal treaties in August 1977 added to the growing political difficulties in Panama. Virtually all observers of Panamanian politics in the late 1970s agreed that the situation in the late 1970s could only be understood in terms of the central role traditionally played by nationalism in forming Panamanian political consensus. Before August 1977, opponents of Torrijos were reluctant to challenge his leadership because of his progress in gaining control over the Canal Zone. The signing of the treaties eliminated that restraint in short, after August 1977, Panamanian resentment could no longer be focused exclusively on the United States.

The widespread feeling among Panamanians that the 1977 treaties were unacceptable, despite their being approved by a two-thirds majority in the October 1977 plebiscite, contributed to growing opposition to the government. Critics pointed especially to the amendments imposed by the United States Senate after the October 1977 plebiscite, which they felt substantially altered the spirit of the treaties. Furthermore, political opponents of Torrijos argued that the government purposely limited the information available on the treaties and then asked the people to vote "yes" or "no," in a plebiscite that the opposition maintained was conducted fraudulently.

Another factor contributing to the erosion of the populist alliance built by Torrijos during the early 1970s was the graduated and controlled process of "democratization" undertaken by the Torrijos government after signing the new canal treaties. In October 1978, a decade after the government declared political parties illegal in the aftermath of the 1968 military coup d'état, the 1972 Constitution was reformed to implement a new electoral law and legalize political parties. In the spirit of opening the political system that accompanied the ratification of the Panama Canal treaties, exiled political leaders, including former President Arnulfo Arias, were allowed to return to the country, and a flurry of political activity was evident during the subsequent eighteen months. Foremost among the activities were efforts to obtain the 30,000 signatures legally required to register a party for the October 1980 elections.

The 1978 amendments to the 1972 Constitution markedly decreased the powers of the executive branch of government and increased those of the legislature, but the executive remained the dominant branch. From October 1972 until October 1978, Torrijos had acted as the chief executive under the titles of head of government and "Maximum Leader of the Panamanian Revolution." After the 1978 amendments took effect, Torrijos gave up his position as head of government but retained control of the National Guard and continued to play an important role in the government's decision-making process. Before stepping down, Torrijos had agreed to democratize Panama's political system, in order to gain United States support for the canal treaties. In October 1978, the National Assembly elected a thirty-eight-year-old lawyer and former education minister, Aristides Royo, to the presidency and Ricardo de la Espriella to the vice presidency, each for a six-year term.

The PRD—a potpourri of middle-class elements, peasant and labor groups, and marginal segments of Panamanian society—was the first party to be officially recognized under the registration process that began in 1979. Wide speculation held that the PRD would nominate Torrijos as its candidate for the presidential race planned for 1984. Moreover, many assumed that with government backing, the PRD would have a substantial advantage in the electoral process.

In March 1979, a coalition of eight parties called the National Opposition Front (Frente Nacional de Oposición, FRENO) was formed to battle the PRD in the 1980 legislative elections, the first free elections to be held in a decade. FRENO was composed of parties on both the right and the left of center in the political spectrum, including the strongly nationalistic, anti-Yankee Authentic Panameñista Party (Partido Panameñista Auténtico, PPA), which was led by the aged but still popular former president, Arnulfo Arias the PLN the reform-oriented PDC and the Social Democratic Party (Partido Social Democrático, PSD), which was left of center and reform-oriented. Three right-of-center parties—the Republican Party (Partido Republicano, PR), the Third Nationalist Party, and PALA—had also joined the FRENO coalition. The Independent Democratic Movement, a small, moderately left-of-center party, completed the coalition. Such diverse ideologies in the opposition party suggested a marriage of convenience. FRENO opposed the Panama Canal treaties and called for their revision on terms more favorable to Panama.

All qualified parties competed in the 1980 legislative elections, but these elections posed no threat to Torrijos's power base because political parties vied for only nineteen of the fifty-seven seats in the legislature. The other two-thirds of the representatives were appointed, in essence by Torrijos's supporters. The PRD won twelve of the available nineteen seats the PLN won five seats, and the PDC, one. The remaining seat was won by an independent candidate running with the support of a communist party, the Panamanian People's Party (Partido Panameño del Pueblo, PPP). The PPP had failed to acquire the signatures required for a place on the ballot. Despite the lopsided victory of the progovernment party and the weakness of the National Legislative Council (budgeting and appropriations were controlled by President Royo, who had been handpicked by Torrijos), this election represented a small step toward restoring democratic political processes. The election also demonstrated that Panama's political party system was too fragmented to form a viable united front against the government.

Torrijos died in a mysterious plane crash on August 1, 1981. The circumstances of his death generated charges and speculation that he was the victim of an assassination plot. Torrijos' death altered the tone but not the direction of Panama's political evolution. Despite 1983 constitutional amendments, which appeared to proscribe a political role for the military, the Panama Defense Forces (PDF), as they were then known, continued to dominate Panamanian political life behind a facade of civilian government. By this time, Gen. Manuel Noriega was firmly in control of both the PDF and the civilian government, and had created the Dignity Battalions to help suppress opposition.

Despite undercover collaboration with Ronald Reagan on his Contra war in Nicaragua (including the infamous Iran-Contra affair), which had planes flying arms as well as drugs, relations between the United States and the Panama regime worsened in the 1980s.

The United States froze economic and military assistance to Panama in the middle of 1987 in response to the domestic political crisis and an attack on the U.S. embassy. General Noriega's February 1988 indictment in U.S. courts on drug-trafficking charges sharpened tensions. In April 1988, President Reagan invoked the International Emergency Economic Powers Act, freezing Panamanian Government assets in U.S. banks, withholding fees for using the canal, and prohibiting payments by American agencies, firms, and individuals to the Noriega regime. The country went into turmoil. When national elections were held in May 1989, the elections were marred by accusations of fraud from both sides. An American, Kurt Muse, was apprehended by the Panamanian authorities, after he had set up a sophisticated radio and computer installation, designed to jam Panamanian radio and broadcast phony election returns. However, the elections proceeded as planned, and Panamanians voted for the anti-Noriega candidates by a margin of over three-to-one. The Noriega regime promptly annulled the election and embarked on a new round of repression. By the second half of 1989, the regime was barely clinging to power. Failed coups occurred in March 1988 and October 1989.

When Guillermo Endara won the Presidential elections held in May 1989, the Noriega regime annulled the election, citing massive US interference. Foreign election observers, including the Catholic Church and Jimmy Carter certified the electoral victory of Endara despite widespread attempts at fraud by the regime. At the behest of the United States, the Organization of American States convened a meeting of foreign ministers but was unable to obtain Noriega's departure. The U.S. began sending thousands of troops to bases in the canal zone. Panamanian authorities alleged that U.S. troops left their bases and illegally stopped and searched vehicles in Panama. During this time, an American Marine got lost in the former French quarter of Panama City, ran a roadblock, and was killed by Panamanian Police (who were then a part of the Panamanian Military). On December 20, 1989 the United States troops commenced an invasion of Panama. Their primary objectives were achieved quickly, and the combatants withdrawal began on December 27. The US was obligated to hand control of the Panama Canal her to Panama on January 1 due to a treaty signed decades before. Endara was sworn in as President at a U.S. military base on the day of the invasion. General Manuel Noriega is now serving a 40-year sentence for drug trafficking. Estimates as to the loss of life on the Panamanian side vary between 500 and 7000. There are also claims that U.S. troops buried many corpses in mass graves or simply threw them into the sea. For different perspectives, see references below. Much of the Chorillo neighborhood was destroyed by fire shortly after the start of the invasion.

Following the invasion, President George H. W. Bush announced a billion dollars in aid to Panama. Critics argue that about half the aid was a gift from the American taxpayer to American businesses, as $400 million consisted of incentives for U.S. business to export products to Panama, $150 million was to pay off bank loans and $65 million went to private sector loans and guarantees to U.S. investors. [1]

The entire Panama Canal, the area supporting the Canal, and remaining US military bases were turned over to Panama on December 31, 1999.

In the morning of December 20, 1989, a few hours after the beginning of the invasion, the presumptive winner of the May 1989 election, Guillermo Endara, was sworn in as president of Panama at a U.S. military installation in the Canal Zone. Subsequently, on December 27, 1989, Panama's Electoral Tribunal invalidated the Noriega regime's annulment of the May 1989 election and confirmed the victory of opposition candidates under the leadership of President Guillermo Endara and Vice Presidents Guillermo Ford and Ricardo Arias Calderón.

President Endara took office as the head of a four-party minority government, pledging to foster Panama's economic recovery, transform the Panamanian military into a police force under civilian control, and strengthen democratic institutions. During its 5-year term, the Endara government struggled to meet the public's high expectations. Its new police force proved to be a major improvement in outlook and behavior over its thuggish predecessor but was not fully able to deter crime. In 1992 he would have received 2.4 percent of the vote if there had been an election. [ citation needed ] Ernesto Pérez Balladares was sworn in as President on September 1, 1994, after an internationally monitored election campaign.

Pérez Balladares ran as the candidate for a three-party coalition dominated by the Democratic Revolutionary Party (PRD), the erstwhile political arm of the military dictatorship during the Torrijos and Norieiga years. A long-time member of the PRD, Pérez Balladares worked skillfully during the campaign to rehabilitate the PRD's image, emphasizing the party's populist Torrijos roots rather than its association with Noriega. He won the election with only 33% of the vote when the major non-PRD forces, unable to agree on a joint candidate, splintered into competing factions. His administration carried out economic reforms and often worked closely with the U.S. on implementation of the Canal treaties.

On May 2, 1999, Mireya Moscoso, the widow of former President Arnulfo Arias Madrid, defeated PRD candidate Martín Torrijos, son of the late dictator. The elections were considered free and fair. Moscoso took office on September 1, 1999.

During her administration, Moscoso attempted to strengthen social programs, especially for child and youth development, protection, and general welfare. Education programs have also been highlighted. More recently, Moscoso focused on bilateral and multilateral free trade initiatives with the hemisphere. Moscoso's administration successfully handled the Panama Canal transfer and has been effective in the administration of the Canal.

Panama's counternarcotics cooperation has historically been excellent (in fact, officials of the DEA praised the role played by Manuel Noriega prior to his falling-out with the U.S.) The Panamanian Government has expanded money-laundering legislation and concluded with the U.S. a Counternarcotics Maritime Agreement and a Stolen Vehicles Agreement. In the economic investment arena, the Panamanian Government has been very successful in the enforcement of intellectual property rights and has concluded with the U.S. a very important Bilateral Investment Treaty Amendment and an agreement with the Overseas Private Investment Corporation (OPIC). The Moscoso administration was very supportive of the United States in combating international terrorism.

In 2004, Martín Torrijos again ran for president but this time won handily.

In 2016, the Panama Papers, which is not to be confused with the 2017 public release of the Paradise Papers, were released. The Panamanian law firm of Mossack Fonseca (MossFon) was cited numerous times in these documents and later dissolved on March 14, 2018. [2]

Panama Canal Treaty Signed - History

Politics And Panama Canal During the Spanish-American War the warship Oregon was summoned from the West Coast. The trip took two months to travel 14,000 miles around Cape Horn to the Atlantic. (The American Journey 741) How was the United States supposed to defend it shores if it took ships that long to get between them? The United State had to build a canal through Central America national security depended on it. The Politics of the Panama Canal are confusing. This confusion includes the building, the economics and the operation of this facility.

The canal, began in 1881 and finished in 1914(Dolan 55), has caused one country to fail, another to triumph, and another to gain its independence. There was a need for a canal through the isthmus of Central America. The big question was who would step up and build it. France had just lost the Franco-Prussian War against Germany. The country felt that it had lost some prestige in eyes of other nations.

There seemed only one certain way to restore its glory, undertake and complete the most challenging engineering feat in history. Build a canal through Central America and link the worlds two greatest oceans. (Dolan 53) The French chose Panama to build its canal because it was far narrower than Nicaragua, its closet competitor. They obtained permission from Columbia to lay the waterway. (Dolan 53) A private company was founded in 1879 to raise the needed capital to undertake the construction. Appointed president of the company was Ferdind de Lesseps, who had guided the construction of the Suez Canal. (Panama) The French abandoned the project in 1889, due to a lack of funding.

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(Dolan 59) Now it was time for the Americans to get involved. But there was one problem they had signed a treaty with Great Britain that said, if one or the other decided to build a canal then the two countries would work together. This treaty was called the Clayton Bulwer Treaty. In 1901 the treaty was replaced with the Hay-Pauncefote treaty. It called for Great Britain to give the United States the right to act independently in the development of an Atlantic Pacific waterway.

Why did the British agree to the treaty? They were tied up in the Boer War in South Africa and didnt want to split the bill on a canal? (Dolan 63) Now congress had to decide on where to dig the canal. The two main choices were Panama and Nicaragua. Just days before the vote on the canal site, Philipee Benau-Varilla obtained ninety Nicaragua stamps that pictured a railroad dock with an active volcano in the background, and sent them to all of the senators with a message: “An official witness of the volcanic activity in Nicaragua. (Mcneese 78) Did it work? Panama got the go ahead. The United States now to get permission from Columbia to dig in Panama.

In 1902, John Hay, the U.S. Secretary of State began negotiate with the Colombian government. An agreement was finally reached in January 1903 in the signing of the Hay-Banau-Varilla Treaty, which granted the United States a strip of land 6 miles wide along the general route laid out by de Lesspes. The U.S. had the right to administer and police this zone. In return they would pay the Colombian government $10 million, and after nine years of operation Columbia would get an annual fee of $250,000. (Dolan 63) The treaty had to be ratified in both the U.S.

and Columbia before it could take affect. The U.S. gave its approval in March 1903, but the Colombian Congress said there was not enough money for the right to dig in Panama. They wanted an additional $5 million from the Americans. They also objected to many of the points on the administration of what was now known as the Canal Zone. (Dolan 64) When the Columbian Government refused to ratify the treaty, Panama revolted because they feared the United States would build through Nicaragua.

After they declared their independence from Columbia, President Theodore Roosevelt ensured the success of the revolt when he ordered a U.S. warship to prevent Colombian troops from entering the isthmus. (Panama) Now Panama had its independence and the U.S. had the right to build the canal. The Canal Zone was ten miles wide and 50 miles long it embraced an area of 553 square miles- an area that, totaling 5 percent of the nation’s landmass speared its way directly through the heart of Panama.

The Panamanians complained that it chopped their already small country into smaller pieces. The split made it difficult, if not impossible for Panama to grow as a single united nation and with the Canal lying in their path, the people would have trouble moving from one side of the country to the other. Families and friends would be separated. Business would be difficult to conduct across the waterway. Political views might grow too different on each side.

In the end, Panama could end up being two countries. (Dolan 101) But these concerns would have to wait the treaty had already been signed, in fact the Canal was already nearing completion. When the canal was finished in 1914(McCullogh 609) it was approximately 51 miles long. Passage through it by a ship sailing from New York to San Francisco saved 7, 872 miles and it the same plans of operation that the canal has today. It was also very costly.

The canal had cost the Americans $352 million. When added you that to the French expenditures the total peaks out approximately at $639 million. In 1914 this made the Panama Canal the greatest single construction project in American History. In, lives the canal cost the Americans 5,609 workers, added to the French, the total swells to nearly 25,000. (McNeese 85) Another cost to the United States was an indemnity to Columbia of $25 million during the Wilson administration. Apparently this was to smooth out tensions between the two countries.

As can be expected Columbia was infuriated by the aid Panama received from the United States. Now Columbia was evolving into one of the most important countries in South America, really only second to Brazil. It was a neighbor to the United State’s canal and it had power. The payment was to insure Americas investment. However this still angered former President Theodore Rooseve …


Conniff, Michael L. Panama and the United States. Athens: University of Georgia Press, 1991.

Farnsworth, David N., and James W. Mc Kenney. U.S.-Panama Relations, 1903–1978: A Study in Linkage Politics Boulder, CO: Westview Press, 1983.

Jaén Suárez, Omar. Las negociaciones sobre el Canal de Panamá, 1964–1970 Bogotá: Grupo Editorial Norma, 2002.

Jorden, William. Panama Odyssey. Austin: University of Texas Press, 1984.

On September 7, 1977, President Jimmy Carter and Panamanian dictator Omar Torrijos met in Washington, D.C., to sign a treaty that would authorize the immediate termination of the 10-mile wide Canal Zone and cede control of the canal over to Panama at end of the 20 th century.

Carter’s move to give up the canal caused a lot of consternation at the time, particularly among conservatives. Ronald Reagan, while seeking the Republican presidential nomination in 1976, made the canal a key issue in his campaign against Gerald Ford, claiming, “We dug it, we own it.”

But that’s a very simplistic view of the canal’s history.

A need to rapidly get settlers and workers to the U.S. west coast provided the initial impetus for a U.S. desire to build canal to facilitate travel. In 1855, the U.S. built a railroad across the Isthmus of Panama – which at the time was part of Columbia – in order to move people more quickly. But talk of a canal continued.

In 1879, Columbia awarded the rights to build canal to the French entrepreneur, Ferdinand de Lesseps, who had completed the Suez Canal 10 years before. After a couple of years of surveying and other preliminary work, the work of canal-building began under the leadership of de Lesseps and his son. But technical difficulties stemming from work in the wet tropics immediately reared their head.

The excavation project was marred by landslides and cave-ins, and the workers suffered a high death rate from tropical diseases. In a few short years de Lesseps filed for bankruptcy and his Panama Canal Company was liquidated by the French courts.

After the U.S. expanded its empire into the Pacific with the wartime acquisition of Philippines and Guam, there was an increased need for a canal that would expedite the movement of American warships. So the U.S. Congress authorized the purchase of the Panama Canal Company’s assets for $40 million in 1902, pending a treaty with Columbia. In 1903, the Hay-Herran Treaty was signed with Columbia that granted the United States the use of the territory in exchange for financial compensation. The treaty was ratified by the U.S. Senate, but the Columbian Senate, fearing a loss of sovereignty, refused to sign on unless the U.S agreed to pay the country $10 million.

President Theodore Roosevelt declared that a bridge too far, and called it a “holdup.” Why would the U.S. balk at paying an additional $10 million to Columbia for the rights to build the canal when, in fact, the $10 million was to be taken out of the $40 million for the Panama Canal Company’s assets? Because, as Murray Rothbard explained, the French company was no longer French. It had secretly been bought out by syndicate of Wall Street bankers headed by J.P. Morgan and Company. Working for the syndicate was Wall Street lawyer William Nelson Cromwell, who was lobbying for the project and writing President Theodore Roosevelt’s dispatches and orders on the transaction from the White House. Also part of the syndicate was Roosevelt’s brother-in-law, Douglas E. Robinson.

So Roosevelt instigated a rebellion in Panama – by encouraging the America-paid railroad employees to revolt and declare the Panama section of the country independent — to free it from Columbia, and assisted the effort by removing its trains from the region, stranding Columbian troops sent to quash it. The U.S. also dispatched the warship Nashville to prevent other troops from marching on the Panamanians.

In essence, the U.S. used its military and commercial assets to wrest control of territory from Columbia, a country that posed it no threat, in order to facilitate the expansion of its empire. In doing so, it enriched the Morgan syndicate and installed a puppet government in a Latin American country it created.

By the 1970s, Panama was deep in debt to the U.S. When General Torrijos seized power in a coup in 1968, the country’s national debt was $167 million. By the late 1970s its estimated debt was more than $3.5 billion, of which $1.7 billion was owed to U.S. banks. As Rothbard writes:

Leading the parade of American banks involved in Panama are the First National City Bank and the Chase Manhattan Bank, the flagship bank for the far-flung Rockefeller financial interests. Both of these banks serve as fiscal agents for the government of Panama. In one advertisement for a $115 million loan to Panama, for example, the First National City Bank is listed as the agent for the loan. Other participating banks included the Bank of America, Bankers Trust, Chase Manhattan, the First National Bank of Boston, the First National Bank of Chicago, the Republic National Bank of Dallas, and the Marine Midland Bank.

We might well ask, why did the New York banks pour all these loans into Torrijos’s Panama? It seems clear that the money was a quid pro quo for Torrijos’s decision — on the advice of leading New York banks — to reorganize Panama’s banking laws in July 1970. This reorganization provided a favorable haven, free of taxes and onerous regulations, for foreign banks in Panama, much as Panama has long provided a flag of convenience for world shipping. Since the 1970 legal change, total banking assets in Panama have expanded enormously from a few banks with a few million dollars to 73 banks with total assets of $8.6 billion conducting transactions throughout the world. Prominent among the US banks expanding rapidly in Panama since the 1970 legislation are the First National City Bank, the Bank of America, Chase Manhattan, and the Marine Midland Bank.

It was a deal that benefited the US banks and the Torrijos regime, which could thereby expand its wealth as well as its political power in Panama. But now the US taxpayer is being subtly asked to pick up the tab.

If a handful of large US banks will be the major beneficiaries of the Panama Canal treaty, have they also had any role in lobbying for or negotiating the treaty itself? Or will their gains be merely a lucky windfall from decisions made by the US government for very different reasons? Let us see.

What we see is the heavy influence of the Council on Foreign Relations and the Trilateral Commission on Carter’s staff as being the major beneficiaries of the Panama Canal Treaty. Carter’s Panama Canal Treaty was, in effect, a bailout of the big banks. And the American people, as usual, were left holding the empty bag.

But the banksters made out like bandits on both ends of the canal-building scheme.

A Guide to the United States’ History of Recognition, Diplomatic, and Consular Relations, by Country, since 1776: Panama

The area that became Panama was part of Colombia until the Panamanians revolted, with U.S. support, in 1903. In 1904, the United States and Panama signed a treaty that allowed the United States to build and operate a canal that traversed Panama. The treaty also gave the United States the right to govern a ten-mile wide Canal Zone that encompassed the waterway, which was completed in 1914. In 1979, the United States transferred control of the Canal Zone to Panama, and in 1999 transferred control and responsibility for the Canal to Panama.


United States Recognition of Panama, 1903 .

The United States recognized Panama on November 6, 1903, after Panama declared its independence from Colombia. On November 3, 1903, Panamanians had revolted against the Colombian government, declared an independent Republic of Panama, and established a provisional government junta. On November 6, Secretary of State John Hay instructed U.S. Vice-Consul-General at Panama City Felix Ehrman to “enter into relations” with the Government of the Republic of Panama when it appeared to meet conditions of a de facto government having the support of its own people. On the same day, Hay sent Colombian Charge d’Affaires Tomas Herran a copy of a cable dated November 6 in which Hay explained to the U.S. minister at Bogota, Colombia, that the people of Panama had created an independent republican government “with which the…United States…has entered into relations.”

Consular Presence

Establishment of Consular Relations, 1823 .

Consular relations in the part of Colombia that later became Panama were established in 1823 with the appointment of David Craig as Consular Commercial Agent at Panama.

Diplomatic Relations

Establishment of Diplomatic Relations, 1903 .

Diplomatic relations were established on November 13, 1903, when President Theodore Roosevelt accepted the credentials of Philippe Bunau-Varilla as Panama’s Minister to the United States.

Establishment of U.S. Diplomatic Mission, 1903 .

The U.S. diplomatic mission in Panama was established on December 25, 1903, when William Buchanan presented his credentials as Envoy Extraordinary and Minister Plenipotentiary on special mission to Panamanian authorities.

Diplomatic Relations Interrupted, 1931 .

On January 2, 1931, a coup d’état was carried out against the Panamanian government and forced the resignation of President Florencio Arosemena . Secretary of State Henry Stimson on January 5 instructed Minister at Panama Roy Davis not to reply at that time to a representative of the new government who had written seeking continuity in relations with the United States. Stimson informed Davis that he would not receive instructions concerning recognition of the new government until the Department of State was satisfied it could survive and maintain control of the country.

Diplomatic Relations Resumed, 1931 .

Secretary Stimson wrote to Minister Davis on January 15, 1931, that the Department was satisfied with the legitimacy and viability of the new Panamanian government. Accordingly, Stimson instructed Davis to attend the inauguration of President Ricardo Alfaro “and carry on normal diplomatic relations thereafter with his government.” Davis attended the inauguration on January 16, 1931.

Legation Raised to Embassy, 1939 .

The Legation in Panama was raised to Embassy status on July 14, 1939, when AmbassadorWilliam Dawson presented his credentials to Panamanian authorities.

Diplomatic Relations Interrupted, 1949 .

The Panamanian National Police on November 24, 1949, forced the resignation of President Chanis who was succeeded by Arnulfo Aria . On November 25, U.S. Assistant Secretary of State Edward Miller announced that, in view of the circumstances surrounding the change of government, “diplomatic relations between the United States and the Arias regime in Panama do not exist.”

Diplomatic Relations Resumed, 1949 .

Secretary of State Dean Acheson announced on December 14, 1949, that “the United States today is renewing diplomatic relations with Panama,” and U.S. Ambassador Monnett Davis delivered a formal notification to the Government of Panama. Acheson explained that this decision was made after consultation with other American Republics and upon receipt of assurances that the new government would fulfill its international obligations.

Diplomatic Relations Severed by Panama, 1964 .

Panamanian President Roberto Chiari broke off diplomatic relations with the United States on January 10, 1964. Chiari accused the United States of “unprovoked aggression” during clashes between Panamanians and U.S. troops in the Canal Zone that followed violence sparked by a flag-raising incident between Panamanian and American students.

Diplomatic Relations Reestablished, 1964 .

Panama wanted to renegotiate the 1903 Bunau-Varilla Treaty before resuming diplomatic relations, while the United States promised to discuss all issues after relations were restored. On April 3, 1964, the two states signed a Joint Declaration in which they agreed to reestablish diplomatic relations and to immediately designate “Special Ambassadors with sufficient powers to seek the prompt elimination of the causes of conflict between the two countries, without limitations or preconditions of any kind.”

Diplomatic Relations Interrupted, 1968 .

On October 11, 1968, President Arias was deposed in a National Guard coup and a “Provisional Junta of Government” was established on October 13. On October 15, the Department of State spokesman announced that diplomatic relations were suspended as a result of events in Panama.

Diplomatic Relations Resumed, 1968 .

On November 13, 1968, the Embassy at Panama City informed the Panamanian Ministry of Foreign Affairs that the United States was resuming diplomatic relations. The Department of State announced that the decision was made after consulting with OAS member states and receiving assurances from the new Panamanian government as to its future conduct.

Criticism [ edit | edit source ]

The treaties were the source of controversy in the United States, particularly among conservatives such as Strom Thurmond and Jesse Helms, who regarded them as the surrender of a strategic American asset to what they characterized as a hostile government. In the year preceding the final transfer of canal assets there was an effort in the United States Congress, notably House Joint Resolution 77 (HJR 77) introduced by Helen Chenoweth-Hage, to declare the Carter–Torrijos treaties null and void. Despite the fact that the pullout of the United States is now complete, there are still organizations (primarily conservative ones such as the John Birch Society) that urge the United States to declare the treaty null and void, saying that the Spanish text is different from the English text. Support of HJR 77 was part of the 2000 platform of the Texas Republican Party but no longer appeared in the 2004 platform. Β] Γ] Further criticism arose when journalists revealed that the Canal was allegedly surrendered to Panama in order to allow Torrijos to service the debt on his American bank loans. Δ] In 1968, before the general seized political control, Panama's foreign debt was less than $200 million. By 1977, its debt to American banks alone stood at $1.8 billion. The United States's surrender of the Canal would allow American banks to receive payments from its debtor.

The Panama Canal: Connecting two oceans

American interest in linking the Atlantic and Pacific oceans by means of a canal across Central America had existed for many years. With the signing of the Clayton-Bulwer Treaty, the U.S. and Britain agreed not to act unilaterally on such a project, but by the end of the century the dynamics had changed. The United States had emerged as a world power following the Spanish-American War. Experiences during the conflict had underlined the need for more rapid deployment of the fleet. More than two months were required to sail from California to New York by way of Cape Horn. Completion of a canal would reduce that voyage by 8,000 miles. France had begun a canal project in the Panama region of Colombia during the 1880s, but progress was brought to a halt by tropical diseases, engineering problems and a dwindling treasury. The French effort, headed by Ferdinand DeLesseps—engineer for the Suez Canal—declared bankruptcy and was taken over by a group whose sole intention was to sell the defunct company’s assets to the United States. The French difficulties also served to direct attention toward an alternative location—Nicaragua. Although the northern route was longer, it offered the advantages of a more amenable climate and easier terrain than found in Panama. Britain, diverted by a growing rivalry with Germany, had given the United States a free hand to develop the canal under the terms of the Hay-Pauncefote Treaty in 1901. At this juncture, two interesting characters entered the picture, William Nelson Cromwell, an American lawyer and promoter, and Philippe Bunau-Varilla, the agent for the original French construction company. Cromwell made a huge contribution to the Republican Party and set about countering Congressional interest in Nicaragua. In the spring of 1902, backers of the Panama route gave each member of Congress a Nicaraguan postage stamp depicting Mount Monotombo in full eruption, casting doubt on Nicaraguan government officials who had claimed that no active volcanoes existed within the country. Congress responded by passing the Spooner Act (June 1902), authorizing $40 million to purchase French rights to canal construction in Panama, but stipulating further that if the Colombian government failed to provide the necessary land, then the U.S. would open negotiations with Nicaragua. The secretary of state hastily negotiated the Hay-Herrán Treaty in 1903, a proposed agreement that would have given the U.S. the necessary lease rights for canal construction in the Panama. The Colombian Senate, however, refused to ratify the treaty, causing the president to berate the Colombians for blocking a major “highway of civilization.” Secretary of State John Hay and President Roosevelt let their wishes be known. The United States would smile favorably upon an independent Panama. Bunau-Varilla, with a large commission in the balance, stepped up his activities and orchestrated American aid with the plans of revolutionaries in Panama. In November 1903, with U.S. warships standing by, a bloodless revolution broke out in Panama City. Firefighters and railroad workers secured government facilities while the U.S. fleet prevented Colombian soldiers from arriving. Independence was declared on November 4 and American diplomatic recognition followed two days later. Bunau-Varilla was named by the new republic to handle the negotiation of a canal treaty in Washington. The resulting Hay-Bunau-Varilla Treaty secured American rights to construct and maintain the canal in Panama. Bunau-Varilla, now a wealthy man, returned to his native France. Roosevelt would later boast about the signal event of his presidency by proclaiming, “I took Panama.” Colombia was understandably outraged by the United States' naked manipulation and other Latin nations viewed the northern giant with mounting suspicion. Work began on the canal in 1904. Roosevelt, eager to view his pet project, visited the construction site in 1906 and became the first president to leave the country during his term of office. Colonel George W. Goethals was the overall project supervisor, but was assisted by the amazingly successful efforts of Dr. William C. Gorgas to combat yellow fever and malaria. Despite a nevertheless heavy toll inflicted by disease and a cost of more than $360 million, the canal was completed in 1914, a testament to American single-mindedness and engineering skill. In 1977, President Jimmy Carter signed the Panama Canal Treaty, which provided for the return of the canal to Panama in the year 2000.

In American History

The idea of building an isthmian passage linking the Pacific and the Atlantic coasts dates back to the time of the conquistadores, but the issue was slowly narrowed down to a rivalry between the United States and Great Britain. In the Clayton-Bulwer treaty of 1850, both Britain and the United States pledged to collaborate on the building of the future passage on a nonfortification and nonexclusive basis.

However, this agreement only settled the issue on the surface. In the following years, both governments contrived to obtain exclusive rights from the states of Central America, especially those which were considered the ideal location for the future canal and vital to its security.

The United States obtained a treaty with New Granada (later Colombia) in 1846 guaranteeing the “perfect neutrality” of the Isthmus of Panama. The Panama railroad was completed by the United States in 1855. Nicaragua also signed a treaty in 1867 granting privileges, but these were not exclusive.

The issue came back to the fore when it was announced that the French Panama Canal Company, under Ferdinand de Lesseps, the famous builder of the Suez Canal (1869), had undertaken to build a canal in Panama (excavations had even started in 1883 but were later abandoned).

There remained the diplomatic obstacle of the Clayton-Bulwer treaty but it was modified in the second Hay-Pauncefote treaty of 18 November 1901, which gave the United States the exclusive right to build and fortify a canal, provided its use was accorded to all nations on equal terms (the first treaty, signed on 5 February 1900, had been rejected in March 1901).

Once this obstacle was removed, a choice had to be made between the Nicaragua route and the Isthmus of Panama (a province of Colombia) route. Meanwhile the French Panama Canal Company had ceded its assets to the New Panama Canal Company for $40 million in 1901, which lobbied actively for the Panama route.

A treaty was signed with Colombia, the Hay-Herran treaty (22 January 1903), whereby they granted the United States a ninety-nine-year lease over a 6-mile-wide zone in the province of Panama, in return for $10 million in cash and an annual rental of $250,000 beginning nine years after the ratification of the treaty. The U.S. Senate ratified the treaty, but the Colombian Senate refused for nationalistic reasons (Colombia had recently gone through a civil war) and also because they hoped to obtain better terms.

The Colombians made a series of miscalculations, by misjudging U.S. President Roosevelt and Secretary of State John Hay’s commitment to the canal, and by underestimating the New Panama Canal Company and the separatist feelings of the inhabitants of the province, who saw their hopes of economic prosperity thwarted by the central government of Bogota, against whom they had often rebelled.

These revolutionaries were manipulated by external forces—U.S. government and private interests—including Philippe Bunau-Varilla, a lobbyist for the company who assured the revolutionaries of U.S. support, understanding that Roosevelt preferred that course to open land grab.

Meanwhile, invoking an obscure treaty signed with Colombia in 1846, Bidlack’s treaty, by which the United States was supposed to help maintain “free and uninterrupted transit” across the isthmus, the United States dispatched a fleet to Central America with express orders to prevent Colombia from landing troops on the isthmus if a revolution started. However, at the time it was signed, this treaty was not meant to be used against Colombia, but rather to maintain security in the area if Colombia found itself incapable of doing so.

The chronology of the revolution clearly points to active U.S. complicity and a priori knowledge of the events to come. So the revolutionaries, who sparked off their revolt on 3 November 1903, were successful because of the presence of U.S. troops. Roosevelt’s role in this affair was extremely important, since he recognized the new republic within seventy-six minutes.

A 2001 book by Oviodio Diaz claims that a cabal of Wall Street interests led by the lawyer William Nelson Cromwell and the banker J. P Morgan worked behind the scenes, first to buy up the shares of the French Panama Canal Company (for only $3.5 million), second to persuade Congress to shift the route from Nicaragua to Panama, and then to reap the profit when the U.S. government backed the New Panama Canal Company. It is also alleged that in order to succeed in making Panama the preferred route, Cromwell helped maneuver Panama into seceding from Colombia.

What is certain, however, is that Bunau-Varilla, the newly appointed foreign minister of the independent Republic of Panama, negotiated a more favorable treaty, the Hay-Bunau-Varilla treaty, two weeks after the revolution, on 18 November 1903.

It granted to the United States in perpetuity the use of a canal zone 10 miles wide, and transferred to the United States government the properties of the New Panama Canal Company and the Panama Railroad Company.

In exchange, Panama was awarded $10 million and an annuity of $250,000 for its concessions. When the canal was completed in 1904, the canal zone had become an “unorganized possession,” with a government fixed by executive order and run by U.S. naval officers serving as appointed governors, while the rest of Panama was a de facto protectorate.

International Communist Conspiracy

With the transfer of U.S. control of the port facilities at either entrance to the canal in December 1999 to a company called Hutchison Whampoa, right-wing groups such as the John Birch Society warned that what they term the International Communist Conspiracy had finally succeeded in its mission of gaining control of such strategic routes.

The argument was that Hutchison, a Hong Kong–based company, was in fact controlled by the Communist Chinese. The John Birch Society and other groups warned that this was the latest in a long series of attempts by the Communists to gain control of the zone.

These include the long history of Communist agitation in the region, and the attempt by Alger Hiss, the former state department official who was convicted in the anticommunist trials in the late 1940s and early 1950s, to interest the United Nations in taking over the zone as a protectorate in the aftermath of World War II.


The treaty laid out a timetable for the transfer of the canal, leading to a complete handover of all lands and buildings in the canal area to Panama. The most immediate consequence of this treaty was that the Canal Zone, as an entity, ceased to exist on October 1, 1979. The final phase of the treaty was completed on December 31, 1999. On this date, the United States relinquished control of the Panama Canal and all areas in what had been the Panama Canal Zone. [7]

As a result of the treaties, by the year 2000 nearly 370,000 acres (580 sq mi 1,500 km 2 ), including some 7,000 buildings, such as military facilities, warehouses, schools, and private residences, were transferred to Panama. In 1993, the Panamanian government created a temporary agency (Autoridad de la Región Interoceánica or "Interoceanic Region Authority", commonly referred to as ARI) to administer and maintain the reverted properties. [ citation needed ]

Watch the video: Jimmy Carters Remarks During the Panama Canal Treaties Signing September 7,1977


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