December 1999

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. The early 1960s saw the beginning of sustained pressure in Panama for the renegotiation of this treaty.

Panama has centered on the Panama Canal since the beginning of the century. Under the 1903 treaty, the United States acquired unilateral rights to build and operate a canal in perpetuity. It also acquired the Canal Zone--a 553 square-mile area in which the United States exercised the rights, power, and authority of a sovereign state. In January 1964, Panamanian dissatisfaction with this relationship boiled over into riots. A three-month suspension of diplomatic relations followed.

The growing bilateral tension in the 1960s gave weight to the views of those who believed that a new Canal Treaty was needed to replace the 1903 treaty and to establish a new relationship with Panama.

Treaty negotiations led to a declaration of principles signed in 1973 by Secretary of State Henry Kissinger and his Panamanian counterpart, Juan Antonio Tack. On September 7, 1977, President Carter and General Torrijos signed the Panama Canal Treaties at the headquarters of the Organization of American States in Washington, DC. The Panamanian people approved the new treaties in a plebiscite held on October 23, 1977. The U.S. Senate ratified the Neutrality Treaty on March 16, 1978, and the Panama Canal Treaty on April 18, 1978. The treaties entered into force on October 1, 1979. The protocol to the Neutrality Treaty is open to accession by all nations, and more than 35 have subscribed.

The 1977 Panama Canal Treaties entered into force on October 1, 1979. They replaced the 1903 Hay/Bunau-Varilla Treaty between the United States and Panama, and all other United States-Panama agreements concerning the Panama Canal which were in force on that date. The treaties comprise:

• A basic treaty governing the operation and defense of the Canal from October 1, 1979, to December 31, 1999 (Panama Canal Treaty); and
• A treaty guaranteeing the permanent neutrality of the Canal (Neutrality Treaty).

The United States has primary responsibility for the operation and defense of the Canal until December 31, 1999. After that date, the United States and Panama will maintain a regime of neutrality for the Canal, including nondiscriminatory access and tolls for merchant and naval vessels of all nations. A U.S. Senate condition attached to the instruments of ratification allows the U.S. and Panama to negotiate a post-1999 defense-sites treaty, if both countries find such a treaty in their mutual interest.

In order to meet its treaty responsibilities, the United States has the right to use specified land and water areas and facilities in Panama necessary for the operation, maintenance, and defense of the Canal until December 31, 1999. U.S. warships will be entitled to expeditious passage through the Canal at all times, however, and the United States will continue to have the right to ensure that the Canal remains open and secure.

The United States operates the Canal through the Panama Canal Commission (PCC), which is a U.S. Government agency supervised by a Board of Directors consisting of five American and four Panamanian members, appointed by the President.

During the life of the treaty, Panama receives the following payments from Canal revenues:

• A fixed annual payment of $10 million;
• An annual payment of $10 million, adjustable for inflation, for public services provided to Canal operating areas by the Government of Panama (the Canal Zone and its government ceased to exist when the treaties entered into force, and Panama assumed jurisdiction over Canal Zone territories and functions);
• An annual percentage of toll revenues assessed at $0.39 (since October 1, 1996) per Panama Canal net ton transiting the Canal, worth $84.6 million in 1996; and
• A payment of up to $10 million in the event that revenues exceed PCC expenditures in a given year.

Under U.S. implementing legislation (the Panama Canal Act), the PCC must be self-sustaining; its costs may not exceed its revenues, nor may U.S. taxpayer funds be used for Canal operations or payments to Panama.

Remarks by Ambassador Peter Romero, Acting Assistant Secretary of State for Western Hemisphere Affairs to the Association of American Chambers of Commerce in Latin America (AACCLA). Panama City, Panama.
November 16, 1999.
Text: English

"This is absolutely a great moment to be in Panama. As we enter into a new bilateral relationship, the transfer to Panama of the canal and all U.S. military installations, coupled with the withdrawal of the U.S. military presence means that for the first time in history, Panama will completely control its own destiny; the full responsibility for its own success or failure."

Remarks by U.S. Ambassador Simon Ferro to the Association of Latin American Chambers of Commerce in Latin America (AACCLA). Panama City, Panama.
November 15, 1999.
Text: English

"In less than two months, the United States will transfer the Panama Canal completely to local control. The last U.S. military forces will have left, the last military properties will have been handed over. It will be the beginning of an entirely new relationship between the United States and Panama..."

Statement by General Charles E. Wilhelm, Commander in Chief of United States Southern Command before the Senate Armed Services Committee.
October 22, 1999.
Text: English

"...the Canal must always be regarded as a potential target for both conventional and unconventional forces, given its importance to global commerce and for military transits."

Statement by General Charles E. Wilhelm, Commander in Chief of United States Southern Command before the Senate Appropriations Committee.
July 14, 1999.
Text: English

"When negotiations with Panama for a Post-1999 presence were terminated, Southern Command conducted a strategic analysis and determined that a series of Forward Operating Locations (FOLs) would be necessary to provide the capabilities required to achieve our counterdrug mission objectives. While they will allow us to remain fully engaged in the multilateral effort to combat narcotrafficking, they are not bases to be constructed at U.S. expense nor are they intended to replace Howard Air Force Base."

Statement by Philip Kensinger, Commanding General for the U.S. Army South. Last of U.S. Army Bases in Panama To Be Turned Over Nov. 30.
July 1999.
Text: English

"Panama is many things but mostly it is a pathway, a nexus connecting the world. It is a place where the U.S. Army has spent nearly 100 years, first defending the Panama Canal and then bringing peace and stability to the region."

Panama Canal Transit Milestones. Panama Canal Commission.
October 1999.
Text: English

A chronology of the events that starts on September 7, 1977, with the signing of the Panama Canal Treaty (Torrijos-Carter), to the most recent happenings.

Panama Canal History Overview. Panama Canal Commission.
[1998?]
Text: English

Brief account of the international work force that participated in its construction, and the treaties related to its management, operation and defense.

A History of the Panama Canal: French and American Construction Efforts. Prepared by the Panama Canal Commission.
1998.
Text: English / Spanish

It provides a detailed account that encompasses the construction, operation, and maintenance of the Canal, but does not include its political, economic, strategic, commercial or social implications.

Background Notes: Panama. U.S. Department of State. Released by the Bureau of Inter-American Affairs.
March 1998.
Text: English

Provides an overview of the country which includes some social and economic statistical data, as well as history, government and political conditions, an explanation of the Panama Canal Treaties, and the U.S.-Panamanian relations.

U.S. Proclamation by the President of the United States of America.
September 24, 1979.
Text: English

President Carter´s proclamation that explains the reservations and understandings after the U.S. Senate advice and consent to ratification of The Panama Canal Treaty of 1977.

1977 Panama Canal Treaties. Department of State. International Information Programs.
Text: English / Spanish

In 1977 a process started after the ratification of the Torrijos-Carter Treaty that will ultimately put the Canal in Panamanian hands by December 31st, 1999.

Protocol to the Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal. Organization of American States (OAS). Adopted at Washington, D. C. September 7, 1977.
Text: English / Spanish

Full text of the treaty with signatories and ratifications as well as declarations made at the time of accession.

Constitutional Title of the Panama Canal.
Text: English / Spanish

This site provides the text of articles 309-317 of the Political Constitution of the Republic of Panama that specifically deal with the Canal.

Panama Canal Treaty Implementation: Issues and Update. The Atlantic Council of the United States Bulletin. August 24, 1998, Vol. IX, No. 8.
Text: English

This article discusses several issues, including the Canal security and U.S. troop withdrawal. The author states that Panama and the United States are committed to full implementation of the Panama Canal Treaties and the future continuous and neutral operation of the canal.

Panama and the Canal at Century´s End / Neal Creighton. National Strategy Reporter.
Spring 1997, Vol. 6, No. 2.
Text: English

Creighton takes a look at the twenty years since the signing of the Carter/Torrijos Treaty to offer some insight into how things have gone so far and how successful the Panamanians might be as owners and operators of the Canal. He also discusses how the importance of the Canal has changed for the United States in those years and how it might change in the future.

In Focus: U.S.-Panama Policy: Canal, Bases, and Dollars. Foreign Policy In Focus / Martha Honey and Tom Barry, editors.
November 1996, Vol. 1, No. 14.
Text: English

In this paper the editors review the following key points: the U.S. and Panama have convergent interests in safe and efficient interoceanic commerce. Though the Panama Canal Treaties clearly specify the removal of all U.S. troops and bases by the turn of the century, the retention of some U.S. military presence in the canal area is under discussion; and although the canal is not owned or operated by the U.S. military, the Pentagon has always had a role in canal policy.

Department of State. International Information Programs. Transfer of the Panama Canal.

This page provides the latest news and texts, web sites and Internet documents, treaty texts, and U.S. policy towards this transition.

Panama Canal Commission

The Panama Canal Commission is an agency of the Executive Branch of the United States Government that was established to carry out the responsibilities of the United States with respect to the Panama Canal under the Panama Canal Treaty of 1977. In fulfilling these obligations, the Commission manages, operates, and maintains the Canal, its complementary works, installations, and equipment, and provides for the orderly transit of vessels through the Canal.

Autoridad del Canal de Panamá

La República de Panamá cumplirá sus responsabilidades a través de una entidad gubernamental, denominada Autoridad del Canal de Panamá, creada por la Constitución Nacional y organizada por la ley 19 del 11 de junio de 1997.