Until the building of the Panama Canal it was a province of Colombia - though with a long-standing independence movement representing a feeling of neglect. Its secession was engineered by the United States in order to provide a suitable site to build the canal and a state small enough to offer no resistance to the 1903 canal agreement by which the Canal Zone became, in effect, a territory of the United States. Panama itself became a client state with no freedom of action without US approval.

The coup by Omar Torrijos led to a progressive government and negotiations with the US.

Under the Canal Treaty of September 1977 the Canal zone and the ownership of the canal was due to revert to Panama on 31 December 1999.

From 1 October 1979 Panama gained jurisdiction over the Canal Zone which had been administered as a United States Territory (colony).

Torrijos died in a plane crash soon after Ronald Reagan became president. He was succeeded by Manuel Noriega, formerly a CIA employee and head of the army. But his alleged drug trafficking activities led to an invasion by US troops in 1979 in an apparent attempt to arrest him. Following the invasion a US approved government was installed. Noriega was tried and imprisoned in the US.

Is Panama still regarded as important by the US government? The canal itself is now too small for the largest modern ships, supertankers and the largest military vessels and so its strategic importance is less than when it was built. Moreover, air power has replaced sea power as the determining factor in world politics. Thus it may be less important to the US than before. However, it may be that right wing factions in the US objected to the Jimmy Carter canal treaty and acted to reverse its consequences by retaking control of the country.

There are tentative plans for a new canal through Nicaragua which would supersede the Panama Canal. Cutting of the rain forest by peasants seeking new farming land has damaged the water supply to the canal (the peasants had been controlled during the period of US control of the Canal Zone). There is a probability that because of lack of water the canal will not be able to pass all traffic wishing to pass through. A Nicaragua canal would probably be at sea level.

The Panama military bases were used to supply the anti-government guerrillas in Nicaragua (Contras).

In 1991 the US amended the treaty, giving US forces the right to remain in Panama in order to defend the canal, on the grounds that Panama no longer had an army (abolished by the post invasion government). Thus the effect of the Carter treaty has been reversed.

Spanish

English (in Canal Zone)

Amerindian Langs

At present the United States occupation forces are the effective government. However, when the US hands over control to the Panama government and withdraws forces this may change.

Until then the facade of a Panamanian president has been maintained but US advisors were in his office. In British Empire terms Panama has been a Protected State, in which the most important official is the US ambassador - what the British in the Arabian Gulf used to call a Political Resident. The US dollar was used as the national currency.

Elections held in May 1994 resulted in the election of a president, Ernesto Balladares, belonging to Noriega's former party.

In May 1999 the voters elected Maria Moscosa, the widow of the president Arias.

She has refused permission to the US military to re-occupy the former US bases.

John le Carré - The Tailor of Panama

The most important asset of the country is the Canal. However, if the water supply fails it will be worth less. If the size of ships increases the canal will lose business, perhaps to pipelines for oil. In the long run a canal through Nicaragua could bypass it. Drug smuggling seems to be an important business.

Loss of rain forest by peasants cutting it is reducing the water supply to the canal and altering the whole ecological condition of the country.

There is a system of courts. However, it must be doubted that there is a rule of law as the government owes its existence to the US forces, who have never been prosecuted for damage and deaths caused during the invasion. Previously the government was in reality a military dictatorship.

Warming is likely to increase the frequency of hurricanes, and possibly their intensity too. Rainfall probably won't decrease, which is good news for the canal, if the forest is not cut down.