Cuna Indian mola design of a Panamanian coin featuring Spanish explorer Vasco Núñez de Balboa

THE HISTORY OF the Panamanian isthmus, since Spaniards first landed on its shores in 1501, is a tale of treasure, treasure seekers, and peoples exploited of clashes among empires, nations, and cultures of adventurers and builders of magnificent dreams fulfilled and simple needs unmet. In the wake of Vasco Nuñez de Balboa's torturous trek from the Atlantic to the Pacific in 1513, conquistadors seeking gold in Peru and beyond crossed the seas and recrossed with their treasures bound for Spain. The indigenous peoples who survived the diseases, massacres, and enslavement of the conquest ultimately fled into the forest or across to the San Blas Islands. Indian slaves were soon replaced by Africans.

A century before the English settled Massachusetts Bay, Panama was the crossroads and marketplace of the great Spanish Empire, the third richest colony of the New World. In the seventeenth century, however, the thriving colony fell prey to buccaneers of the growing English Empire, and Panama entered a period of decline and neglect that lasted until gold was discovered in California.

The geopolitical significance of Panama has been recognized since the early 1500s, when the Spanish monarchs considered digging a canal across the isthmus. United States interest, intensified in the 1850s by the California gold rush, resulted in the construction of a trans-isthmian railroad. In 1879 a French company under the direction of Ferdinand de Lesseps, builder of the Suez Canal, began constructing a canal in Panama. The project fell victim to disease, faulty design, and ultimately bankruptcy and was abandoned in 1889.

By the turn of the twentieth century, the United States had become convinced that a canal should be built to link the two oceans. In addition to the geographic advantages of the isthmus, President Theodore Roosevelt was attracted by the separatist tendencies of Panama, then a department of Colombia. When Panama rebelled against Colombia in 1903, Roosevelt deployed United States naval vessels to discourage the Colombian forces and proudly claimed the role of midwife at the birth of the Republic of Panama.

Since its completion in 1914, the Panama Canal has been Panama's economic base, and the United States presence has been the republic's major source of frustration. The provisions of the treaty concluded in 1903 between John Hay and Philippe BunauVarilla (the Hay-Bunau-Varilla Treaty) granted the Canal Zone "in perpetuity" to the United States and made Panama a virtual protectorate of the United States. Relations with the United States in general, and the status of the Canal Zone in particular, long remained the overriding concerns of the formulators of Panama's foreign policy and strongly influenced domestic politics and international relations.

Despite the negotiation of treaty amendments in 1936 and 1955, limiting the freedom of the United States to intervene in Panama's internal affairs, vario 16d9 ous problems between the two countries continued to generate resentment among Panamanians. Aside from the larger issue of jurisdiction over the zone--which split the country into two parts--Panamanians complained that they did not receive their fair share of the receipts from the canal, that commissaries in the zone had damaged their commercial interests, that Panamanian workers in the zone were discriminated against in economic and social matters, and that the large-scale presence of the United States military in the zone and in bases outside the zone cast a long shadow over national sovereignty.

After serious rioting in 1964 that indicated the intensity of nationalistic aspirations concerning the status of the canal, the United States agreed to enter into negotiations for a new treaty. Meanwhile, studies relating to the construction of a new canal were undertaken. In 1971 after a four-year interlude, negotiations were renewed. In 1977 two new treaties were signed, one providing for Panamanian assumption of control over the canal in the year 2000 and the other providing for a permanent joint guarantee of the canal's neutrality.

The focal point of consensus in Panamanian political life, cutting across both social and partisan divides, has been nationalism. Nationalistic sentiments, directed primarily against the highly visible and dominant presence of the United States, have been catered to in varying degrees by all who have held positions of leadership or have sought popular support. Public demonstrations and riots, as occurred in 1927, 1947, 1959, and 1964, have been effective in influencing policy, especially in relation to the country's stance vis-à-vis the United States. National leaders have alternately responded to and contributed to an explosive climate of public opinion. They have carefully kept popular resentment narrowly focused on the United States presence lest discontent turn on the Panamanian elite, generally referred to as the oligarchy.

Until the National Guard seized control in 1968, power had been wielded almost exclusively by a small number of aristocratic families. The middle class was constrained from challenging the system because most of its members depended on government jobs. Also, the slow pace of industrialization had limited the political role of urban labor. The lower classes lacked organization and leadership. They had been distracted from recognizing common problems by the ethnic antagonisms between those of Spanish or mestizo background and the more recent immigrants, Antillean blacks from Jamaica and other parts of the West Indies.

Brigadier General Omar Torrijos Herrera, who in 1969 as commander of the National Guard assumed the role of head of government, had some initial success in building a popular base for his government among small farmers and urban workers. His domestic program emphasized public works--especially the construction of roads, bridges, schools, and low-cost public housing--and an agrarian reform program. In addition, he encouraged the entry of foreign banks and firms as part of his effort to create jobs and increase incomes.

In negotiating new Panama Canal treaties, Torrijos, like other leaders before him, walked the tightrope of taking a strong stand on the issue to maintain popular support, while keeping popular frustrations within controllable limits and without appearing so militant as to alarm the United States. Successful in this endeavor, by the time the new treaties were signed in 1977, Torrijos had held power longer than any other leader in Panama's history.

Nevertheless, by the late 1970s, clear signs appeared to show that Torrijos's populist alliance was eroding. Observers attributed the decline in support to a variety of factors, including severe economic problems that led to backtracking on social programs, opposition among Panamanians to the 1977 Panama Canal treaties, and the very "democratization" process that Torrijos initiated to gain United States support for the canal treaties.

In October 1978, the 1972 Constitution had been reformed to allow the legalization of political parties, and exiled political leaders were permitted to return to Panama. Torrijos formally stepped down as head of government, and a civilian president was elected. Torrijos, however, clearly remained the dominant force in the political system. Torrijos's shocking, sudden death in an airplane crash in July 1981 created a power vacuum in Panama. The newly erected democratic facade persisted, however, with a succession of civilian presidents controlled by the National Guard and its emergent leader, General Manuel Antonio Noriega Moreno, who (as of late 1987) had been in command since August 1983. Noriega successfully transformed the National Guard into the far larger Panama Defense Forces (Fuerzas de Defensa de Panamá--FDP), a formidable power base for his increasing political control.

Data as of December 1987