The dispute with the United States for the jurisdiction over the Panama Canal and the Canal Zone found an outlet, after thirteen years of difficult negotiations, in the two treaties signed in Washington on 7 September 1977 by the President of the United States JE Carter and by the general O. Torrijos Herrera, head of the Panamanian government.
According to Homosociety, the first agreement (Panama’s Canal Treaty) repealed the Canal Convention of November 18, 1903 (Hay-Bunau Varilla Treaty) and its subsequent updates of March 2, 1936 and January 25, 1955, and recognized Panama’s full sovereignty over entire territory already belonging to the Canal Zone (which would therefore cease to exist with the entry into force of the treaty). However, it established that until December 31, 1999, the United States would maintain control and management of the Canal (with a growing participation by Panama and an increase in its revenues, which had stood at around two million dollars a year since 1955., up to over 70 million dollars a year), the “primary responsibility” for the defense of this last (maintaining its own forces and three military bases in the country) and de facto control of about 40% of the former Canal Zone (as necessary to carry out the aforementioned functions). At the expiry of the treaty (midday on December 31, 1999) Panama assumed full control of the Canal and the whole territory, as well as the exclusive right to maintain military forces and bases there. On the basis of the second agreement (Treaty on permanent neutrality and on the management of the Canal), closely linked to the first, the United States would however have guaranteed also later, together with Panama, the permanent neutrality of the Canal. The implications of the second agreement were further developed by the US Senate which, upon ratification of the treaty (March 1978),
Approved by Panama, by referendum, in October 1977, the two treaties met strong resistance in the United States: after a prolonged ratification process, accompanied by amendments and reservations (which were accepted by the government of Panama but aroused considerable protests in the country and the request for a new referendum), they finally entered into force on 1 October 1979. On the political level, the regime established in Panama by the coup of October 1968, which had brought the commander of the National Guard Torrijos to power, was formalized in 1972 with the launch of a new constitution (the fourth in the history of the country). On the basis of individual candidacies, given the prohibition of political parties since February 1969, a ‘ Asamblea nacional de representantes de corregimientos (505 deputies with a six-year mandate), who in turn elected a president of the Republic (DB Lakas Bahas) for six years with purely ceremonial functions, and conferred extraordinary powers on Torrijos with the provisional office of head of government, also six years old. After the subsequent elections for the Asamblea nacional in August 1978, the expiry of Torrijos’ mandate and the election of the new President of the Republic, A. Royo Sánchez, some constitutional amendments, the creation of a governing party (the Partido Revolucionario Democrático, PRD) and the return of the other parties to legality initiated a process of gradual liberalization.
In September 1980 the first multi-party consultations since 1968 took place for the 19 elective seats of a Consejo nacional de legislacion (also including 38 members appointed by the Asamblea nacional), ten of which were conquered by the PRD; in 1983 a new constitutional reform, approved in April by referendum, reintroduced the direct election of the President of the Republic, reduced his mandate to five years and established a new legislative assembly of 67 members, also elected for five years, to replace of the previous two chambers.
Inspired by a populist and openly progressive nationalism, the Torrijos regime conducted a relatively autonomous foreign policy from the United States, sought to promote economic development and some social reforms (such as agrarian reform), and built its own basis of consensus particularly among peasants., traditionally on the margins of political life, also through a network of mass organizations (trade unions, professional, youth, etc.) which since 1978 were linked to the PRD. In July 1981 the sudden death of Torrijos in a plane crash opened a phase of instability, which was accompanied by a conservative evolution of the country’s ruling groups.
Colonel F. Flores Aguilar (until March 1982), then General RD Paredes (until June 1983), finally General MA Noriega Morena. Meanwhile, political and social tensions and pressure from the military led to the resignation of President Royo first, replaced in July 1982 by vice-president R. de la Espriella, then the latter, replaced in February 1984 by J. Illueca. Finally, the new president elected in May 1984, N. Ardito Barletta, was forced to resign and was replaced, in September 1985, by the vice president EA Delvalle. The presidential and legislative elections of May 1984 confirmed the hegemony of the PRD.
The worsening of the country’s economic conditions, fueled by the international crisis of the 1980s, and the conflicts that broke out in Central America, with their repercussions on relations between Washington and Panama (where large US military forces remained) contributed to exacerbating the internal conflicts.. In an attempt to resolve the Central American crisis, Panama promoted a peace initiative, giving life, together with Mexico, Colombia and Venezuela, to the so-called “ Contadora Group ” (from the name of the Panamanian island where the first meeting between the four countries was held in January 1983); however, the group’s proposals had little success and until the end of the 1980s the situation remained very difficult throughout the Central American area.
On the economic level, the repercussions of the international crisis on Panama were further aggravated by the internal imbalances of the production system and its traditional dependence on relations with foreign countries and, above all, with the United States.
The substantial absence of a national currency (the balboa, whose value is linked to parity with the dollar, is issued exclusively as a divisional currency and the bulk of the currency is made up of dollars) effectively deprived the authorities of the country from controlling the money supply and the exchange rate and accentuated the dependence of the economy on the trend of the balance of payments (in particular, given the permanent deficit of the trade balance, on the assets recorded in the balance of services and on the inflow of capital from abroad).