Panama Canal Treaties Summary

  • Last updated on November 10, 2022

After seventy-five years of domination in Panama, the United States relinquished control of the Panama Canal.

Summary of Event

The U.S. Senate’s ratification of the Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal and the Panama Canal Treaty in the spring of 1978 was the culmination of a long and often dramatic effort to achieve mutually satisfactory new agreements between the United States and the Republic of Panama. Opponents fought the treaties with conviction and determination, leaving the outcome in doubt until the day of the vote. The Panama Canal had became a major political issue, and the debate was charged with emotion and intensity. Panama Canal Treaty (1978) Neutrality Treaty (Panama Canal, 1978) [kw]Panama Canal Treaties (Mar. 16 and Apr. 18, 1978) [kw]Treaties, Panama Canal (Mar. 16 and Apr. 18, 1978) Panama Canal Treaty (1978) Neutrality Treaty (Panama Canal, 1978) [g]North America;Mar. 16 and Apr. 18, 1978: Panama Canal Treaties[03190] [g]Central America;Mar. 16 and Apr. 18, 1978: Panama Canal Treaties[03190] [g]United States;Mar. 16 and Apr. 18, 1978: Panama Canal Treaties[03190] [g]Panama;Mar. 16 and Apr. 18, 1978: Panama Canal Treaties[03190] [c]Diplomacy and international relations;Mar. 16 and Apr. 18, 1978: Panama Canal Treaties[03190] [c]Transportation;Mar. 16 and Apr. 18, 1978: Panama Canal Treaties[03190] Baker, Howard Byrd, Robert Carter, Jimmy [p]Carter, Jimmy;Panama Canal treaties Ford, Gerald R. [p]Ford, Gerald R.;Panama Canal treaties Kissinger, Henry [p]Kissinger, Henry;Panama Canal treaties Tack, Juan Antonio Torrijos Herrera, Omar Vance, Cyrus

U.S. interest in a canal through the Isthmus of Panama grew following the Spanish-American War of 1898, and specific plans were developed. Before buying out the rights of the French company that had begun work on a canal and resuming construction, the United States intended to ensure its complete control over the future canal. At the time, the Panamanian territory was a part of the Republic of Colombia, which was unwilling to make the kinds of concessions sought by the United States. The United States thus saw its interests well served through its assistance to a Panamanian nationalist faction in forming the independent Republic of Panama in 1903. Two weeks after the independence proclamation, a treaty was signed between the new republic and the United States that granted the latter the use, occupation, and control of a ten-mile-wide strip of land across the isthmus in perpetuity. In return, Panama received ten million dollars and subsequent annual rent payments.

The building of the Panama Canal through the center of the Canal Zone required ten years, at a cost of more than $310 million and approximately four thousand lives, many of which were lost to sickness. The canal was formally opened to traffic on August 15, 1914. The construction of the canal was, and remains, one of the world’s greatest engineering marvels. Through a series of locks, ships are raised or lowered for crossing from one ocean to the other. The canal has been immensely important for maritime transport and enormously beneficial to the Panamanian economy. Thousands of Panamanians have been employed in the operation of the canal or support services for the canal; many others have worked for those living in the Canal Zone. The Republic of Panama, especially the cities of Colón and Panama City, also has benefited from the presence of thousands of U.S. civilian and military personnel living in the Canal Zone. Colón and Panama City are important centers of international banking and commerce.

The fact that Panama did not control its major resource became a fundamental issue in the country. A growing nationalistic sentiment generated vehement resentment of the “neocolonial enclave.” A bloody confrontation in January, 1964—precipitated by an attempt by Panamanian students to hoist their national flag in the Canal Zone and resulting in two dozen deaths and hundreds of injuries—convinced U.S. government leaders of the need to enter into negotiations with Panama for a new treaty. In 1967, after three years of deliberations, three treaties were drafted. They dealt with jurisdiction over the canal, defense and status of the military forces, and the possibility of a new sea-level canal. These tentative agreements subsequently were repudiated by Panama. The negotiations resumed in June, 1971, but remained intractable.

Spanish king Juan Carlos I (left) shakes hands with former U.S. president Jimmy Carter as Panamanian president Mireya Moscoso (seated) watches at a ceremony on December 14, 1999, marking the transfer of control of the canal to Panama.

(AP/Wide World Photos)

Meanwhile, Panama succeeded in drawing worldwide attention to, and critical scrutiny of, the canal controversy. In March, 1973, the United Nations Security Council held a special meeting in Panama, where a resolution calling for a just and equitable solution to the dispute and effective sovereignty for Panama over all its territory was introduced. The United States defeated the motion through the exercise of its Security Council veto power. Nevertheless, these actions gave Panama an important propaganda victory.

On February 7, 1974, Secretary of State Henry Kissinger and Foreign Minister Juan Antonio Tack of Panama met in Panama City and signed a joint statement of principle to serve as a framework for a new round of negotiations. The mutual goal was to arrive at a new treaty satisfying the basic concerns of both nations. This effort reached a successful conclusion on September 7, 1977, when the new Panama Canal Treaty and the Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal were signed in Washington.

One treaty governed the operations and defense of the Panama Canal through December 31, 1999; the other guaranteed the permanent neutrality of the canal. The treaties provided for the orderly and complete transfer of jurisdiction over the canal and the Canal Zone from the United States to Panama by the year 2000. A major point in the treaties was the removal of U.S. military forces, leaving Panamanian military forces as the sole guardians of the canal. A new U.S. government agency, the Panama Canal Commission, was to operate the canal for the rest of the century. Its board of directors would comprise five U.S. directors and four Panamanians. The plans called for a U.S. director to be the administrator until 1990 and a Panamanian the deputy; thereafter, the roles would be reversed.

The new treaties encountered formidable opposition from conservative and rightist elements and required an intense public relations campaign, as well as vigorous lobbying, to ensure ratification by the U.S. Senate. President Jimmy Carter, Secretary of State Cyrus Vance, and other leading administration officials made every effort to persuade the country that the treaties were in the national interest. The agreements were presented as constituting a better defense against possible sabotage and terrorist attacks, because they gave the Panamanian people a greater stake in keeping the canal open. Moreover, the treaties were designed to promote a constructive, positive relationship between the United States and the other nations of the Western Hemisphere; failure to ratify them could be expected to lead to an increasingly hostile, anti-American atmosphere. President Carter talked of “fairness, not force,” in U.S. dealings with other nations, positing such a policy not solely as a moral imperative but as an element of pragmatic foreign policy.

The Senate gave consent to ratification of the Neutrality Treaty on March 16, 1978, by a vote of sixty-eight to thirty-two. Two “reservations”—instead of amendments, which might have required a repetition of the ratification process in Panama—were added. The first, introduced by Senator Dennis DeConcini DeConcini, Dennis of Arizona, provided for U.S. armed intervention in Panama in the event the Panama Canal is closed. The second, introduced by Senator Sam Nunn Nunn, Sam of Georgia, allowed the United States and Panama to agree on stationing U.S. troops in Panama after 1999. Panamanian spokesmen indicated acceptance of these changes, but there was growing opposition in Panama to the Senate’s efforts to alter the negotiated terms. The Senate also gave consent to ratification of the Panama Canal Treaty on April 18, 1978, again by a vote of sixty-eight to thirty-two. The added reservations included another by DeConcini that allowed for U.S. troops to reopen the canal if operations are disrupted.

Relieved that the long and intense process had finally come to an end, President Carter and Panamanian leader Omar Torrijos Herrera hailed these decisions, ratified them, and predicted a new and amicable relationship between their countries. Both sides agreed to work toward making a smooth transition during the next two decades, allowing for Panama to work its way into running the canal and taking over the Canal Zone and the military installations.


The improved relations predicted by Carter and Torrijos were not immeditately realized, as the political stability of Panama deteriorated with each passing year. Political corruption and the growing influence of criminals resulted in widespread poverty and high crime rates. By 1989, the situation had become so severe that it was believed that U.S. civilian and military personnel were endangered. In December, President George H. W. Bush Bush, George H. W. [p]Bush, George H. W.;Operation Just Cause launched Operation Just Cause, Operation Just Cause sending U.S. military forces to arrest Panamanian dictator Manuel Noriega, Noriega, Manuel whose administration was involved in drug dealing, money laundering, and murder.

By 1995, only five years before the final transfer of the canal, some questioned whether sufficient progress toward transition had been made. The United States had a timetable to turn over property so that by noon, December 31, 1999, it would all be under Panamanian control. There was hope of turning military bases into colleges, industrial parks, and tourist meccas. One of the first items turned over was the Panama Railroad, Panama Railroad Company which had been in operation since 1855. By 1995, however, the railroad no longer operated. Depots were boarded up, engines sat rusting on the tracks, and the jungle had overtaken much of the track in the interior. Former railroad employees were without jobs, adding to unemployment rolls and street crime. One military installation had also been turned back to Panama, but squatters occupied it.

Nevertheless, plans moved forward: On January 25, 1995, Panamanian president Ernesto Pérez Balladares Pérez Balladares, Ernesto created the Transition Committee for the Canal transfer, and in 1996 President Bill Clinton signed the law that made the Panama Canal Commission a government corporation. In May of 1997, the Panama Canal Authority Organic Act Panama Canal Authority Organic Act (1997) was approved, and in December the new Panama Canal Authority was created.

The new authority and the Panama Canal Commission Panama Canal Commission met for the first time in June, 1998, and in September of that year, Alberto Alemán Zubieta Alemán Zubieta, Alberto was sworn in as the first administrator of the Panama Canal Authority. The Canal Authority board of directors approves the regulations on procedures to revise Panama Canal toll rates and and measurement regulations. In June of 1999, the Panama Legislative Assembly approved the Panama Canal Authority’s budget for fiscal year 2000, and the Authority began to make job offers to Canal employees. In August, the Panama Legislative Assembly approved new boundaries of the Panama Canal Watershed, and finally, in October, the Panama Canal Authority’s contracting regulations were approved. On December 31, 1999, as agreed to in the 1978 treaties, the Panama Canal was transferred to the Republic of Panama. Panama Canal Treaty (1978) Neutrality Treaty (Panama Canal, 1978)

Further Reading
  • citation-type="booksimple"

    xlink:type="simple">Buckley, Kevin. Panama: The Whole Story. New York: Simon & Schuster, 1991. A seasoned reporter relates the story of Operation Just Cause. Includes chronology, bibliography, and index.
  • citation-type="booksimple"

    xlink:type="simple">Crane, Philip M. Surrender in Panama: The Case Against the Treaty. New York: Dale Books, 1978. Examines the arguments that were made in opposition to the Panama Canal treaties.
  • citation-type="booksimple"

    xlink:type="simple">Diaz Espino, Ovidio. How Wall Street Created a Nation: J. P. Morgan, Teddy Roosevelt, and the Panama Canal. New York: Four Walls Eight Windows, 2001. Argues that a combination of American imperialist attitudes and the prospect of financial gain led to the building of the Panama Canal. Closes with an epilogue that addresses the end of U.S. control of the canal.
  • citation-type="booksimple"

    xlink:type="simple">Koster, R. M., and Guillermo Sanchez Borbon. In the Time of the Tyrants: Panama, 1968-1990. New York: Putnam, 1990. Provides a look at internal politics in Panama and U.S.-Panama relations during the period examined.
  • citation-type="booksimple"

    xlink:type="simple">LeFeber, Walter. The Panama Canal. New York: Oxford University Press, 1978. Gives a brief history of the canal and closely examines the 1978 treaties.
  • citation-type="booksimple"

    xlink:type="simple">McCullough, David. The Path Between the Seas: The Creation of the Panama Canal, 1870-1914. 1977. Reprint. New York: Simon & Schuster, 2004. Presents a detailed account of the events surrounding the creation of the canal and a brief summary of the pre-1903 period. Includes extensive bibliography.
  • citation-type="booksimple"

    xlink:type="simple">Ryan, Paul B. The Panama Canal Controversy. Stanford, Calif.: Hoover Institution Press, 1977. Describes the U.S. Senate debates concerning ratification of the treaty. Presents questions of U.S. national security versus Panama’s sovereignty from the politically conservative point of view.

United States Intervenes in Panama

Categories: History