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From the very beginning of the Panama Canal's existence, several political and economic issues have strained relations between the United States and Panama. Two major issues of conflict--U.S. intervention and the question of sovereignty of the canal zone--were a direct result of the terms of the Panama Canal Treaty of 1903.

Some of the articles of the hastily drafted treaty were vague and ambiguous and the actions of the United States based on U.S. interpretation of the treaty quickly lead to resentment by the Panamanian government. From 1903 through the early 1920s, U.S. intervention took several different forms and with one exception, resulted from a request of the Panamanian government. Nevertheless these interventions caused resentment to grow among Panamanian nationalists. The issue of sovereignty became a sore point with the Panamanian government in 1903 and continued to be a point of contention until 1977 when the Torrijos-Carter Treaty was signed. During that time span, there were many confrontations between the Panamanians and U.S. citizens. One confrontation was particularly destructive and centered on an issue of national pride.

Panamanian nationalists resented the fact that only the U.S. flag was flown within the canal area. Flying the Panamanian flag in the canal area was a complicated issue for the United States. On one hand, the Department of Defense felt that flying the Panamanian flag in the canal area would undermine U.S. control and set a dangerous precedent to future relations. On the other hand, the Department of State felt that flying the Panamanian flag was a small concession for U.S. presence in Panama. The U.S. eventually made the decision to fly both flags at one location in the canal area. On September 21, 1960, a ceremony was held and for the first time both flags were raised and flown together.

Panamanians nationalists continued to resent the fact that their flag was only flown in one location while the U.S. flag was flown at multiple locations. Another agreement was reached and the Panamanian flag was to be raised along with the U.S. flag at several locations.

U.S. citizens living in the canal area, likewise resented the presence of a "foreign" flag being flown in a "U.S. territory." On January 8 and 9, 1964, with the consent of adults, U.S. students raised only the U.S. flag in front of their high school. News of the action spread and in the evening of January 9th approximately 200 Panamanian students entered the canal area with their flag. A battle broke out in which the Panamanian flag was torn. The torn flag ignited the smoldering resentments of the Panamanian people. The resulting mob violence lasted for three days causing the death of at least 20 people and the destruction of $2 million worth of property. Panama accused the United States of aggression and appealed to the Organization of American States and the United Nations.

The only action taken by the United Nations was to appeal to both nations to exercise restraint. When Panama could not obtain a satisfactory resolution to the problem, they severed relations with the United States and tension between the two nations remained high. Panama appealed to the Organ of Consultation and a committee was formed to investigate the dispute. A recommendation was presented by the committee and signed by both Panama and the United States and relations were restored. That same year,1964, U.S. President Lyndon B. Johnson announced that plans were being made for a new canal, which would necessitate the negotiation of a totally new treaty. Attempts to negotiate a new treaty met with strong opposition from Panamanian nationalists.

The issues resented by the Panamanian government and nationalists in 1903 were still present. Many Panamanians wanted U.S. military presence and intervention gone, and they wanted sovereignty of the canal zone. Unable to obtain sufficient votes to ratify the treaty and fearful that signing the new treaty would cost him the 1968 election, President Marcos Robles decided that further negotiations would have to be made.

Those negotiations did not begin again until 1971 and they continued for nearly two years without any progress being made. In frustration, Panama turned to the UN Security Council to put pressure on the United States. In March of 1973 a resolution from the United Nations called on the United States to negotiate a "just and equitable" treaty but it was vetoed by the United States.

During the latter part of 1973 the United States renewed their interest in renegotiating the terms of the treaty. Negotiations continued for nearly a year but progress was slow because of U.S. preoccupation with the Watergate scandal (1974). After the resignation of President Richard Nixon, President Gerald Ford stepped up the treaty negotiations only to have them become deadlocked over four major issues: treaty duration, the amount of revenues paid to Panama, the amount of territory used for U.S. bases for the duration of the treaty, and a 40-50 year lease for U.S. bases.

The United States felt compelled to maintain a presence in the canal zone in order to protect its interests in the canal. The issue of how that presence was to be maintained became an issue during the U.S. elections of 1976. Meanwhile, in Panama economic conditions were deteriorating and increased revenues from the canal became more and more important to Panama.

Finally, on August 10, 1977, after several more months of negotiations, an announcement was made that terms for a new treaty had been reached. On September 7, 1977, President Jimmy Carter of the United States and President Omar Torrijos Herrera of Panama signed two new canal treaties: the Panama Canal Treaty (also called the Torrijos-Carter Treaty) and the Neutrality Treaty. The Panama Canal treaty replaced all previous agreements between the United States and Panama concerning the Canal.

Under the Panama Canal Treaty, Panama was given an increasing amount of responsibility for the operation and management of the Canal until the termination of the treaty at noon on December 31, 1999, Panama time. At that time, the United States would transfer full control of the Canal to Panama. The treaty also specifies that the flag of the Republic of Panama shall be given a place of honor in the canal area--including those areas occupied by the United States--for the duration of the treaty. Other issues addressed in the treaty are the principle of nonintervention by the United States or its citizens in Panamanian affairs, and the possible future need for a sea-level canal or another lane of locks in the existing canal, which would be negotiated between the two parties and built by the United States.

The Neutrality Treaty guarantees that the Canal will remain neutral, and therefore open to ships from all countries even during times of war. This Treaty grants Panama the sole right to operate the Canal and to maintain military forces within its national territories. Although the United States is given authority to use its military to defend the neutrality of the Canal the excerpt (below) from the treaty emphasizes the point that the United States cannot intervene in Panama's internal affairs.

"The correct interpretation of this principle is that each of the two countries shall, in accordance with their respective constitutional processes, defend the Canal against any threat to the regime of neutrality, and consequently shall have the right to act against any aggression or threat directed against the Canal or against the peaceful transit of vessels through the Canal. "'This does not mean, nor shall it be interpreted as, a right of intervention of the United States in the internal affairs of Panama. Any United States action will be directed at insuring that the Canal will remain open, secure, and accessible, and it shall never be directed against the territorial integrity or political independence of Panama.'"



The Panama Canal
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