Panama

Panama A Central American country whose history has been conditioned by the Panama Canal, a seaway 50.7 miles (81.6 km) long dividing the country and connecting the Atlantic and the Pacific Oceans. It gained its independence from Colombia in 1903, when the canal's chief engineer, Philippe Bunau-Varilla, organized a separatist uprising which the Colombian troops were unable to overcome because of US intervention. On 3 November 1903 the USA immediately recognized the new country with the French citizen Buneau-Varilla as its official representative, with whom it concluded the Hay–Buneau-Varilla Treaty of 18 November 1903. The USA secured the right to complete the canal, whose construction had been interrupted by a financial panic in 1893, and received total autonomy in perpetuity over the canal and a ten-mile zone on either side. It was opened on 15 August 1914. Subsequently, life in the canal zone was marked by prosperity, in sharp contrast to that in Panama outside, which was characterized by political instability and poverty, with bananas becoming the main export goods. In 1936 the annual rent for the canal payable to Panama was increased, but public opinion became nevertheless increasingly hostile to the existence of the de facto US colony splitting the country.

In 1954 Panamanian rights over the canal were marginally extended and rent payments increased, and from 1960 the flag of Panama was raised for the first time in the canal zone, alongside that of the USA. However, the issue remained controversial and led to a brief breakdown in relations between the two countries in 1964. The re-election of the corrupt neo-Fascist Arnulfo Arias Madrid (b. 1901, d. 1988) as President in 1968 precipitated a constitutional crisis which was resolved by a coup led by the leader of the National Guard, Brigadier General Omar Torrijos Herrera (b. 1929, d. 1981). His subsequent leadership provided the country for the first time with the stability necessary for economic prosperity. From the 1970s Panama developed into an international centre of finance and trade, facilitated by the presence of the canal, its good infrastructure, and the use of the US dollar as the de facto national currency. The Torrijos regime also provided the continuity necessary for negotiations with the USA. Finally, in 1977 a deal was struck with US President Carter to hand over full sovereignty over the canal by the year 2000, with both countries guaranteeing the zone's neutrality.

Meanwhile, the 1972 Constitution gave Torrijos special powers and institutionalized his military regime. After his death in 1981, the state continued to be ruled by the military behind a façade of civilian Presidents whose function was to present an acceptable democratic face to international opinion (and creditors), and to provide scapegoats for unpopular measures at home. Power became concentrated in the hands of the military leader, General Noriega. Despite his former work for the CIA, he was increasingly opposed by the USA as evidence mounted about his involvement in the drugs trade. To force his resignation, the USA declared a trade embargo against Panama in 1988. In May 1989 Noriega annulled the presidential election of the oppositional Guillermo Endara (b. 1936) to declare himself President. To break Noriega's resistance, on 20 December 1989 President Bush dispatched more than 14,000 US troops to Panama. They captured Noriega on 4 January 1990 and took him to face trial in Miami, where he was subsequently sentenced to 40 years' imprisonment. In addition, they installed Endara as President. As a result of the US sanctions and invasion, GNP declined by 22 per cent between 1988 and early 1991, while the damage directly resulting from the invasion amounted to up to $2 billion.

Endara proved unable to cope with these economic problems, so that popular support for his coalition plummeted from 73 per cent in 1989 to 17 per cent in 1991. As a result, on 9 May 1994 a former associate of Noriega, Ernesto Pérez Balladeres, was elected President. He instituted a number of liberal economic reforms, which provided for substantial economic growth, but which also contributed markedly to a growing disparity between rich and poor. His attempt to change the constitution so that he could run again for President failed in a referendum in 1998. The ensuing elections were won by Mireya Elisa Moscoso Rodríguez, the widow of former President Arias Madrid. She won against Martín Torrijos, son of Omar Torrijos, whose Nueva Nación obtained most seats in parliament. On 31 December 1999, US control over the Panama Canal was relinquished, and Panama regained control over its entire territory.