Panama's history has been shaped by the evolution of the world economy and the ambitions of great powers. Rodrigo de Bastidas, sailing westward from Venezuela in 1501 in search of gold, was the first European to explore the Isthmus of Panama. A year later, Christopher Columbus visited the isthmus and established a short-lived settlement in the Darien. Vasco Nunez de Balboa's tortuous trek from the Atlantic to the Pacific in 1513 demonstrated that the isthmus was indeed the path between the seas, and Panama quickly became the crossroads and marketplace of Spain's empire in the New World. Gold and silver were brought by ship from South America, hauled across the Isthmus, and loaded aboard ships for Spain. The route became known as the Camino Real, or Royal Road.
Panama was part of the Spanish empire for 300 years (1538-1821). From the outset, Panamanian identity was based on a sense of "geographic destiny," and Panamanian fortunes fluctuated with the geopolitical importance of the isthmus. The colonial experience also spawned Panamanian nationalism as well as a racially complex and highly stratified society, the source of internal conflicts that ran counter to the unifying force of nationalism.
BUILDING THE CANAL
Modern Panamanian history has been shaped by its trans-isthmian canal, which had been a dream since the beginning of Spanish colonization. From 1880 to 1900, a French company under Ferdinand de Lesseps attempted unsuccessfully to construct a sea-level canal on the site of the present Panama Canal. In November 1903, with U.S. encouragement and French financial support, Panama proclaimed its independence and concluded the Hay/Bunau-Varilla Treaty with the United States. The treaty conceded rights to the United States "as if it were sovereign" in a zone roughly 10 miles wide and 50 miles long. In that zone, the U.S. would build a canal, then administer, fortify, and defend it "in perpetuity." In 1914, the United States completed the existing 83-kilometer (50-mile) lock canal, which today is one of the world's greatest engineering triumphs. The early 1960s saw the beginning of sustained pressure in Panama for the renegotiation of this treaty. (See discussion of United States-Panama relations and the 1977 Panama Canal Treaties below.)
MILITARY COUPS AND COALITIONS
From 1903 until 1968, Panama was a constitutional democracy dominated by a commercially oriented oligarchy. During the 1950s, the Panamanian military began to challenge the oligarchy's political hegemony. In October 1968, Dr. Arnulfo Arias Madrid, twice elected president and twice ousted by the Panamanian military, was again ousted as president by the National Guard after only 10 days in office. A military junta government was established, and the commander of the national guard, Brigadier General Omar Torrijos, emerged as the principal power in Panamanian political life. Torrijos' regime was harsh and corrupt, but he was a charismatic leader whose populist domestic programs and nationalist foreign policy appealed to the rural and urban constituencies largely ignored by the oligarchy.
Torrijos' death in 1981 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 Force (PDF), as they were then known, continued to dominate Panamanian political life behind a facade of civilian government. The PDF's hand-picked candidate won the presidential election in 1984. Pro-government parties also won a majority of Legislative Assembly seats, in races tainted by charges of corruption. By this time, General Manuel Noriega was firmly in control of both the PDF and the civilian government.
The rivalry between civilian elites and the Panamanian military, a recurring theme in Panamanian political life since the 1950s, developed into a grave crisis in the 1980s. Prompted by government restrictions on media and civil liberties, in the summer of 1987 more than 100 business, civic, and religious groups formed a loose coalition that organized widespread anti-government demonstrations.
Panama's developing domestic crisis was paralleled by rising tensions between the Panamanian Government and the United States. The United States froze economic and military assistance to Panama in the summer of 1987 in response to the political crisis and an attack on the U.S. embassy. The Government of Panama countered by ousting the U.S. Agency for International Development in December 1987; before the end of the year, the U.S. Congress cut off all assistance to Panama. 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 and prohibiting payments by American agencies, firms, and individuals to the Noriega regime.
When national elections were held in May 1989, Panamanians voted for the anti-Noriega candidates by a margin of over three-to-one. Although the size of the opposition victory and the presence of international observers thwarted regime efforts to control the outcome of the vote, the Noreiga regime promptly annulled the election and embarked on a new round of repression.
By the fall of 1989, the regime was barely clinging to power. An unsuccessful PDF coup attempt in October produced bloody reprisals. Deserted by all but a small number of cronies, and distrustful of a shaken and demoralized PDF, Noriega began increasingly to rely on irregular paramilitary units called Dignity Battalions. In December 1989, the regime's paranoia made daily existence unsafe for U.S. forces and other U.S. citizens.
On December 20, President Bush ordered the U.S. military into Panama to protect U.S. lives and property, to fulfill U.S. treaty responsibilities to operate and defend the Canal, to assist the Panamanian people in restoring democracy, and to bring Noriega to justice. The U.S. troops involved in Operation Just Cause achieved their primary objectives quickly, and troop withdrawal began on December 27. Noreiga eventually surrendered to U.S. authorities voluntarily. He is now serving a 40-year sentence in Florida for drug trafficking.
Panamanians moved quickly to rebuild their civilian constitutional government. On December 27, 1989, Panama's Electoral Tribunal invalidated the Noreiga 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 Calderon.
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 political force under civilian control, and strengthen democratic institutions. During its five-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. Its overall record was not enough to convince a skeptical public that it deserved re-election in 1994.