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Panama's Modern History

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The canal treaty granted the United States rights in perpetuity over land on both sides of the canal and a broad right of intervention in Panamanian affairs. The treaty led to friction between the two countries for decades, partly because it was clearly favorable to the United States at the expense of Panama and partly because Colombia refused to acknowledge Panama's independence until 1921 when the USA finally paid Colombia 25 million dollars in compensation. The USA began to build the canal in 1904, and 10 years later, the first ship negotiated the engineering marvel. The US intervened in Panama's affairs repeatedly up until 1936, when it relinquished its right to use troops outside the Canal Zone. The two countries continued to argue over the canal contract until a new treaty was signed in 1977. Panama formally regained control of the canal in 1999 at a ceremony attended by Mexico's president, Spain's king and former US president Jimmy Carter, but not by any senior US officials.

General Manuel Noriega took control of the country in 1984. A former head of Panama's secret police and a CIA operative, Noriega’s principal concerns during the 1980s were murdering political opponents, quashing democracy, drug trafficking and money laundering, activities which eventually attracted US sanctions and the freezing of Panamanian assets. When the winning candidate of the 1989 presidential election was beaten on national TV and the election declared null and void, Noriega's administration became an international embarrassment. Noriega appointed himself head of government on December 15, 1989 and announced that Panama was at war with the United States. The following day the Pentagon claimed Panamanian soldiers killed an unarmed US soldier dressed in civilian clothes. The Panamanian version of events was that the soldier was not only armed but that he had shot and injured three civilians before running a roadblock.

The US called in 26,000 troops for Operation Just Cause. The intention of the invasion was to bring Noriega to justice and create a democracy, but instead left more than 2000 civilians dead and thousands more homeless.

Noriega escaped capture by US troops for six days by claiming asylum in the Vatican embassy. US forces surrounded the embassy and compelled the Vatican to release him. Noriega was sent to the US, where he was convicted on money laundering charges and is currently serving a 40-year prison sentence in Florida.

The legitimate winner of the 1989 presidential election, Guillermo Endara, was sworn in as president. But Endara proved to be an ineffective leader whose policies cut jobs and cost his administration the popularity it initially enjoyed. In the 1994 elections, the fairest in recent Panamanian history, Ernesto Pérez Balladares came into office. Under his direction, the Panamanian government implemented a program of privatization and focused on infrastructure improvements, health care and education. Pérez Balladares was not allowed to run for a second term, and in September 1999 Mireya Moscoso, the widow of popular former president Arnulfo Arias, Panama's first female leader and head of the conservative Arnulfista Party (PA), took office.

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