8 A Brief History of Panama

Pre-Columbian Era

The pre-Columbian Indigenous societies of Parita Bay in the Central Region of Panama have been considered by many specialists in cultural evolution to be archetypes of ranked societies. In fact, early anthropological definitions of chiefdoms derive from these societies and from the discovery of the Sitio Conte cemetery in the 1930s.^[3]

The region known today as Panama was settled by several Indigenous groups, including the Monagrilo, Cueva, Chibchan, and Chocoan. Unlike many other ancient cultures, the Indigenous people of Panama did not build large cities, though it does boast being home to some of the first pottery-making peoples in the Americas. Excavation of the Spanish settlement at Panama Viejo revealed “several complete urn burials, as well as a burial of a woman who was laid on a bed of skulls and surrounded by nine more skulls,” a find that predated the settlement by three hundred years and was evidence of pre-Columbian occupation one thousand five hundred years prior.^[4]

Archaeological findings in the central region of the country have uncovered artifacts that speak to some of the social structures of these groups. For example, “social ranking was characterized by a strong focus on prestige goods display, elite sponsored feasting, and the burial of important individuals in deep-mound tombs at the central community.”^[5] Later reports from European conquistadores describe the use of trade routes throughout the region for inter-tribal exchanges, further evidenced by some of the burial objects that have been excavated: certain ceremonial figurines and jewelries suggest a trade relationship with metal-using cultures based in Colombia, and perhaps as far as Mexico.

Colonization, Spanish Rule, & Gran Colombia

Beginning in the sixteenth century, the Spanish used this route [the natural Panama Canal from the Atlantic to the Pacific] to supply Panama City and move gold and silver from the city to galleons in the Caribbean.^[6]

Spanish conquistador Rodrigo de Bastidas landed on the Isthmus of Panama in 1501 during his voyage along the eastern coast of the Americas. The following year, Christopher Columbus, an Italian navigator funded by the Spanish crown, explored the region on his fourth voyage. By 1509, the Spanish were colonizing the region, with the first permanent settlement established in 1510. The isthmus was used by the Spanish for transporting trade goods from galleons in the Caribbean to Panama City, which lent itself to being a target for pirating and sacking. “In 1671, famed English privateer Captain Henry Morgan took the largest pirate fleet in history to sack [Panama City, the capital].”^[7] So devastating was Morgan’s attack that the Spanish rebuilt the capital city “on a more easily defensible rocky promontory eight kilometers down the coast from the original site,” where it still stands today.^[8]

The Viceroyalty of New Andalucia, later renamed New Granada, was established in 1717, and included the Isthmus of Panama, as well as present-day Colombia, Ecuador, and Venezuela. The capital of New Granada was Santa Fe de Bogotá. Issues arose due to Bogotá’s distance and consequent inability to maintain a strong authority over the territory; challenges to Bogotá’s authority were made by the Viceroyalty of Perú, as well as by Panama. Tensions between Bogotá and Panama persisted until 1819, when Gran Colombia was established. Gran Colombia consisted of present-day Colombia, Venezuela, Ecuador, northern Peru, western Guyana, and northwest Brazil. Its first president was Venezuelan military leader Simón Bolívar. Panama gained independence from Spain in 1821, and was promptly annexed into Gran Colombia that same year.

Gran Colombia dissolved a mere ten years later in 1830. However, even following the collapse of Gran Colombia, Panama remained a department of the country of Colombia, together forming New Granada once again. In the mid-nineteenth century, New Granada and the United States struck a deal to construct the first transoceanic railway and give “U.S. citizens and cargo the right to free passage through the isthmus.”^[9] This railway was pivotal to the Gold Rush period in the United States, as it allowed quick transportation of gold from the west coast to the northeast. Construction began in 1850 and was completed by 1855.^[10] In 1882, the French-owned New Panama Canal Company attempted to construct their own canal across the isthmus. However, due to engineering challenges that could not surmount the environment’s geography, as well as many of the workers falling ill with disease and ultimately dying, the project was declared a failure by 1889.

Independence and the Panama Canal

Panama acquired its independence from Spain in 1821, beginning an ill-fated 80-year period of subordination to distant Bogota—first as part of Simon Bolivar’s Gran Colombia, then as a state of New Granada and, finally, as a restless appendage of the Republic of Colombia.^[11]

Prior to Panamanian secession, the United States signed a treaty with Colombia, called the Hay-Herran Treaty, first proposed in 1901 and signed in 1903. The treaty “authorized the United States to cut a canal across the Isthmus of Panama, then a part of Colombia, and it granted the United States for the period of one hundred years, subject to renewal by the United States as long as it might desire to do so, a zone from ocean to ocean through which the canal should run.”^[12] However, the Colombian Senate rejected some of the language in the treaty, which eventually led to U.S. support for Panamanian rebellion and secession: “When Colombia balked at U.S. terms for a canal treaty, the United States first sent Marines to occupy the Panama Railroad, and then prevented the Colombian government from halting Panama’s secession.”^[13]

Panama remained a department of Colombia until 1903, when it declared its independence and was officially separated from the South American nation. This separation was spurred by tensions between Colombia and the United States, as the United States had made bids for the territorial rights to Panama’s Canal Zone, which Colombia had refused. This led the United States “to circumvent the authority of the government of Colombia.… The United States encouraged and supported Panamanians to declare their independence in 1903, motivated by the hope of exercising direct influence” over the country, particularly the Canal Zone.^[14]

The United States bought the assets from the failed French New Panama Canal Company to get the project initiated; they also purchased rights to the Canal Zone from the Panamanian government for $10 million.^[15] Over the course of its construction, over seventy-five thousand people worked on the Canal. Many of these were laborers from the West Indies while others were from European countries, particularly Italy and Spain. After just over a decade of construction, at a cost of approximately US$387 million, the Panama Canal officially opened in August 1914.^[16]

In 1921, the United States and Colombia signed a treaty “to remove all the misunderstandings growing out of the political events in Panama in November 1903,” as well as to “define and regulate [the U.S. and Colombia’s] rights and interests in respect of the interoceanic canal.”^[17] The treaty additionally called for Colombia to recognize Panama as an independent nation and have its borders officially defined; this recognition would allow the United States and Colombia to be “in a position to meet as equals and to arrange their business upon a footing of equality, as is the case with other nations.”^[18]

Twentieth Century

Panama’s history is very different from that of the stereotypical Central American polity lurching from one military coup to the next. From the time of its founding as an independent state in 1904 up until 1968, it was an imperfect but evolving democracy. Its first military coup in 1968 marred a record of civilian political control that was unique in its region.^[19]

Although the U.S. and Panamanian governments had seemingly come to an understanding regarding the Canal, eventually Panama requested that negotiations be re-opened. In 1933, president Harmodio Arias travelled to the United States in order to discuss a new treaty in person. He was focused on mitigating the impact of the global economic depression by implementing a moratorium on the national debt and a reduction in civil service salaries, and by creating a savings bank. However, these were only stopgap solutions and didn’t fully address the issues caused by the depression, which the president was aware of: “Arias recognized that Panama’s economy was inextricably bound up with that of the Canal Zone. Only by [gaining control over] a greater share in the benefits of the canal could Panama solve her economic problems.”^[20] Arias originally proposed more participation and opportunity for Panamanian merchants in the Zone, and for U.S. subsidiary business activities related to the Panama Railroad—such as hotels in the area—to end.

Between 1933, when Arias visited the United States, and 1936, the United States and Panama drafted a mutually beneficial agreement. The Hull-Alfaro Treaty was signed in 1936 and included the following agreements: “1) to end the Panamanian protectorate; 2) to recognize Panama’s rights to a larger share of canal prosperity; 3) to increase the annuity from $250,000 to $436,000 dollars; 4) to recognize a joint commitment to canal defense; 5) to uphold the right of transit across the Zone for Panamanian citizens; and 6) to abrogate the treaty stipulation of intervention in Panama City and Colon.”^[21]

In 1968, Dr. Arnulfo Arias Madrid was elected as president for the third time; he had been previously ousted by the Panamanian military two times before, and after only ten days in office, he was ousted once more. The chief of the National Guard, Colonel Omar Torrijos, with the help of Major Boris Martínez, led a coup that “nullified controversial election results that had eventually led to Arnulfo Arias being sworn in as president of Panama.”^[22] This coup received the support of the United States, given its issues with Arias—he had “been perceived in Washington as pro-Axis during WWII and as a controversial, populist political figure that seemed to generate political turmoil.” The United States thus believed that the new military regime of Torrijos would maintain political stability and a regime that would follow U.S. interests.^[23]

Although Torrijos led a corrupt government, he was also known for his socialist programs that were beneficial to marginalized populations: “Under a military corporatism model he furthered political participation of traditionally disenfranchised groups, fostered economic development by the creation of agricultural settlements on ‘underutilized’ lands, and promoted hierarchical leadership entities and community settlements among the country’s Indigenous populations.”^[24] He also re-visited the Canal agreement with the United States, wanting to update it from its 1936 revision, and initiated talks in 1971. But, “[b]y the end of 1972 the talks had collapsed, both sides unwilling to accept what had been agreed to previously,” especially with Torrijos’ staunch nationalist position, with which the United States refused to agree.^[25] Then, in 1977, the first of the two Torrijos-Carter Treaties was signed, which allowed for the “gradual return of the canal and the Canal Zone to Panamanian sovereignty.”^[26] It also converted the fourteen U.S. military bases that were placed in the Canal Zone into places for civilian use.^[27] However, before any of this happened, “the Carter administration . . . [was] concerned about the fact that the U.S. government had negotiated a new treaty with a repressive military regime. Therefore, General Torrijos was persuaded to agree to a restoration of democracy once the treaties were signed, ratified, and implemented.”^[28] Torrijos died in a plane crash in 1981 that has been suspected to be planned rather than accidental, an assassination by some unknown party.

Noriega and the 1989 U.S. Invasion

The December invasion represented the culmination of over two and a half years of acute political crisis within Panama and 22 months of high-level U.S. efforts to remove General Noriega from power. In the process, Panama’s economy was devastated, long existing class and racial divisions in its society were exacerbated, and traditional norms of political behavior, which had made Panama a relatively non-violent nation by regional standards, were destroyed.^[29]

Even after his death, Torrijos’ legacy of a military government persisted, with the Panama Defense Forces (PDF) continuing to control the political sphere behind the guise of civilian rule. In 1983, “General Manuel Noriega took control of Panama’s armed forces . . . after cunningly working his way through three other higher ranking officers.”^[30] Due to his high military ranking, Noriega became the de facto leader of the Panamanian government. Noriega was heavily involved with narco-trafficking: his rule has been called a “narco-military regime,” and he referred to himself as a “kingpin.”^[31] This made him particularly difficult to negotiate with due to his entanglement with the Medellin drug cartel based in Colombia: “The real threat to him is not the United States or the other countries that oppose him. It is not the indictments. It is the Medellin drug cartel. It was reported that in 1987, when Noriega was believed to be talking to the United States about his possible departure, a Colombian drug lord sent him a tiny coffin with his name engraved on it. There is no negotiating with Medellin. Noriega has no possible option but to cling desperately to power.”^[32] In May 1989, national elections were held, and Noriega ran against Guillermo Endara, the leader of the Democratic Alliance of Civic Opposition, a group that opposed Noriega. Unfortunately, the Noriega government annulled the election results when it was revealed Endara had won, claiming that there was U.S. interference and other forms of voter fraud.

Following this, the United States became intent on removing Noriega from power. Their attempts to achieve this were many and multileveled:

The U.S. government carried out a series of escalating actions against the Noriega regime, designed to pressure the general into stepping down from power. First, information was leaked to the press and to the U.S. Congress. Second, U.S. officials negotiated with Noriega for his exit from power, offering him safety and money. Next, the general was indicted, in hopes that playing hardball would encourage him to concede. Then, Washington once again attempted to broker a deal with Noriega. Once he refused, economic sanctions at ever-increasing magnitude were levied against the Noriega regime, in hopes that the Panamanian people would take to the streets and undermine the regime.^[33]

They also attempted to stage a coup to oust Noriega, but that also proved to be futile.^[34] Finally, when all of these approaches failed to have any impact on Noriega, the United States decided that an actual military invasion was their only remaining option in order to stop Noriega. Thus, in December 1989, the Bush administration authorized an operation—dubbed Operation Just Cause—where U.S. forces would “apprehend the general, dissolve the PDF and put in power the pro-U.S. government that was elected in the May 1989 elections.”^[35] The U.S. troops achieved their mission, extracting Noriega within a week.

The estimated civilian death toll of this operation is six hundred fifty, with hundreds more wounded and displaced.^[36] The invasion financially gouged the country, with property losses due to damage and looting estimated at nearly $2 billion; these losses resulted in a 25 percent increase in unemployment.^[37] All of this cost combined with the $5.5 billion debt from Noriega’s rule devastated Panama’s economy. The country also had to contend with a restructuring of their police and military, given that at the time of the invasion, the military’s forces were upward of fourteen thousand. There was a desire to decrease the force’s numbers significantly for fear of the nation returning to the situation where it was “not a country with an army but an army with a country.”^[38]

Since the invasion, Panama has been recovering politically and economically. Some view the 1989 intervention as somewhat positive: “Panamanians attribute their democratic era to the period post the U.S. invasion, with its independence confirmed by the U.S. departure on the final day of 1999,”^[39] with the signing and ratification of the second Torrijos-Carter Treaty, which officially gave over control of the Canal to Panama.

Social Movements

As in many other Latin American countries, Panamanian-style racism denies the very existence of racism. Instead, it characterizes Panamanian society as a perfect ‘melting pot’ of Spanish-speakers, in which white people, Indigenous people, and Black people of colonial origin merge without distinction into a single nation.… The notion of a racial melting pot . . . promotes racial mixing and ambiguity, and minimizes the presence of the Black population in the country.^[40]

As is an unfortunately common theme throughout much of Central America, the Afro-descendant population in Panama faces discrimination. What discrimination already existed was amplified following the 1989 U.S. invasion and the subsequent adoption of neoliberal policies to further align Panama with U.S. interests—under Pérez Balladares, unemployment was at 13 percent, with the rates of poverty and extreme poverty at 38 percent and 20 percent respectively.^[41] Because Afro-Panamanians experience higher rates of unemployment and poverty compared to the national average, they suffered the brunt of such reforms. In response to this, in 1995, MODESCO (Movimiento de Desempleados de Colón or Colón Unemployed Movement) protested against these labor reforms, demanding the creation of temporary government jobs in an effort to alleviate some of the Colón province’s poverty. MODESCO was predominantly made up of Afro-Panamanian men and women, and although they did not organize specifically around racial issues, their lived experiences as Black Panamanians living on or below the poverty line certainly intersected. This mobilization of Panama’s Afro-descendant population has continued into the twenty-first century: at a meeting in Costa Rica in 2004, Panama’s delegates outlined a “Plan of Action for the Advocacy of Afro-Panamanians” which sought to achieve “authentic equality in the face of the law and society for Afro-descendant men and women, as well as getting state institutions to guarantee their social inclusion.”^[42] The following year, 2005, Black movement groups were successful in pressuring the Torrijos government to create a Special Commission for the Inclusion of the Black Ethnicity, which would eventually evolve into the National Council for the Black Ethnicity in 2007. The National Assembly also approved the right for Panamanians abroad to vote, which had been a goal of Panamanians in the diaspora for over thirty years.^[43]

Another ethnic group that faces marginalization in Panama are Chinese Panamanians. Panama has the largest Chinese population in the Central American region but this group is still a considerable minority, estimated to be between one hundred fifty and two hundred thousand people, or about 4 percent of Panama’s total population. Chinese people began immigrating to Panama in the 1850s as contract laborers for the trans-Panama railroad. The 1980s saw a large increase in Chinese immigration following China’s post-Maoist reformations that eased travel restrictions. In July 1990, police raided the homes of Chinese immigrants in three cities, claiming they were suspected to be undocumented. The consequent outrage led to a mobilization of the Chinese community, with major organizational efforts coming from the Chinese Panamanian Association, which not only began a petition among ethnic Chinese to protest inhumane treatment of Chinese immigrants, but also directly petitioned President Guillermo Endara to formally investigate the raids.^[44] Many Chinese shopkeepers also organized their own nationwide strike, closing their shops and effectively denying many rural communities throughout the country access to their usual source of food and household items. The result was the formation of a Special Commission, which led to the re-documentation of Chinese immigrants who had had their rights stripped.

As in much of Central America, extractivism—the systemic identification and extraction of valuable natural resources on a mass scale for capital benefit—is a core issue to the environmental movement in Panama. Extractivist projects particularly impact Indigenous communities, which largely occupy land rich in mineral, petroleum, and lumber reserves.^[45] Between the mid-twentieth century and the early twenty-first century, six comarcas have been established, which are regions occupied by substantive Indigenous populations, demarcated and officially recognized by the government. Four of the comarcas are large enough to be functionally equivalent to provinces: Emberá-Wounaan, Guna Yala, Naso Tjër Di, and Ngäbe-Buglé. The remaining two—Kuna de Madugandí and Kuna de Wargandí—are subdivisions to the Panamá and Darién provinces, respectively. The Indigenous populations legally possess exclusive land rights within their comarcas, as well as significant administrative a utonomy. This grants the Indigenous people important legal standing to defend themselves against pressures from the Panamanian government. For example, in 2011 and 2012, hundreds of Indigenous Ngäbe protested reforms to Panama’s mining law that would allow foreign enterprises to invest in the country’s mines. The Cerro Colorado, one of the world’s largest copper deposits, is located on Ngäbe land. Ultimately, they were successful in convincing the government to reverse the reforms.^[46] However, despite this win, the government moved forward with a related project: the construction of a hydroelectric dam, the Barro Blanco, which was presumably intended to provide electricity for the Cerro Colorado mine. The Ngäbe protested this project, as well, by blocking the Pan-American highway. They were repressed by the National Border Service and consequently several Ngäbe were killed, as well as suffering the loss of religiously significant artifacts that existed in the river on their land, which were completely destroyed by the water from the dam.^[47] The movement for protection of Indigenous lands continues to be a fight, especially as the government persistently pushes for development of roads, mines, and other construction projects to appease and attract foreign investors.

Present Day

Economic growth rates in Panama for much of the last decade have been between 5–10 percent (World Bank, 2012) attracting tourism and investment. The country’s high growth rates, political stability, dollarized economy, and historically prominent use of the English language have attracted investment, particularly in the forms of infrastructure development, retiree recruitment, lifestyle migration, and tourism. International tourist arrivals almost tripled between 2000 and 2010 (ibid.) and tourism growth rates have been 15 percent in the last two years (Gacs, 2012).^[48]

In 1999, the country’s first female president, Mireya Moscoso, was elected. She focused on strengthening social programs, particularly education and child development. In 2002, she created a commission to investigate political corruption and crimes committed by government administrations between 1968 and 1989.

Aside from the Canal, Panama’s economy also generates a large portion of its revenue from the flourishing banking sector. In fact, in recent times, “the Canal’s significance has dwindled gradually compared to banking, which now employs more people in Panama (12,800) and generates a larger share of its GDP (11% in 2000, compared to 2.5% in 1960 and 4.1% in 1970).”^[49] This has been encouraged by the government reworking the tax system to benefit foreign investors, including offshore business being exempt from national tax and overall reduction in tariffs and quotas. Overall, Panama’s banks “generate around $180 million annually in net external interest earnings.”^[50]

In 2015, an anonymous source leaked 11.5 million documents that disclosed information on nearly 215,000 offshore entities. “The Panama Papers” implicated many public officials in be ing in volved wi th sh ell co rporations th at we re be ing used for illegal actions such as fraud and tax evasion; among these public officials were United Arab Emirates president Khalifa bin Zayed Al Nahyan and Prime Minister of Iceland Sigmundur Davíð Gunnlaugsson. The documents were called the Panama Papers because they were leaked from Mossack Fonseca, a corporate service provider based in Panama. Although the leak had a global impact, the fact that it was connected directly to Panama as the provider’s homebase added to the narrative of Panama as a fiscal paradise, one that Panamanian officials publicly refuted and attempted to move away from.

In 2019, Laurentino Cortizo of the center-left Democratic Revolutionary Party was elected president, beating out conservative Democratic Change Party candidate Romulo Roux by just 2 percent of the vote. Cortizo previously served as Minister of Agricultural Development under Martin Torrijos, but resigned in 2006 because he did not support the concessions Torrijos made during negotiations for the U.S.-Panama Free Trade Agreement. He campaigned on promises to address the wealth disparity and inequality in the country, making particular promises to the Indigenous Ngäbe-Buglé people to build a University of Panama in their comarca as well as other health clinics and schools.

Recommended Reading

Biesanz, John, and Mavis Hiltunen Biesanz. The People of Panama. New York: Columbia University Press, 1955.

Delgado, James P, Tomás Mendizábal, Frederick H. Hanselmann, and Dominique Rissolo. The Maritime Landscape of the Isthmus of Panama. Gainesville: University Press of Florida, 2016.

González, María Victoria. La invasión a Panamá: Un relato, un testimonio. Panama: Ríos Editores, 1992.

Koster, Richard M., and Sánchez, Guillermo. In the Time of the Tyrants: Panama, 1968–1990. New York: W.W. Norton, 1990.

McCullough, David G. The Path between the Seas: The Creation of the Panama Canal, 1870–1914. A Touchstone Book. New York: Simon and Schuster, 1977.

Parker, Matthew. The Panama Fever: The Epic Story of the Building of the Panama Canal. New York: Anchor Press, 2009.

Ropp, Steve C. Panamanian Politics: From Guarded Nation to National Guard. Politics in Latin America. New York: Praeger, 1982.

Tice, Karin E. Kuna Crafts, Gender, and the Global Economy. Austin: University of Texas Press, 1995.

Zien, Katherine. Sovereign Acts: Performing Race, Space, and Belonging in Panama and the Canal Zone. New Brunswick: Rutgers University Press, 2017.

Zimbalist, Andrew, and John Weeks. Panama at the Crossroads: Economic Development and Political Change in the Twentieth Century. Berkeley, CA: University of California Press, 1991.