national income (bananas and sugar are other
important resources). President Roosevelt’s
attempts to construct a ‘good neighbour’ policy
could not convincingly reconcile Panamanian
nationalism, resurgent in the 1930s, and US inter-
ests. The 1936 Canal Treaty was wonderfully
ambiguous. ‘The Canal zone’, it stated, ‘is terri-
tory of the Republic of Panama under the juris-
diction of the US.’ In the 1950s and 1960s
popular resentment against the US grew, and
1964 saw widespread riots.
After 1968 the political oligarchs lost power to
Panama’s National Guard. Any pretence at even a
corrupt democratic constitutional process was
abandoned and General Omar Torrijos emerged
as the undisputed authoritarian leader. He inau-
gurated harsh labour laws but also a radical pro-
gramme of land reform with a populist promise
that he would help the poor. He also gained sup-
port by adopting a stridently nationalist stance on
the issue of the US-controlled canal and canal
zone. After thirteen years of negotiating with suc-
cessive US administrations, carefully controlling
the pressure of mass nationalism and anti-
American feeling, Torrijos in 1977 concluded a
new canal treaty with the Carter administration,
which was ratified by the US Senate in the follow-
ing year only with considerable difficulty and the
addition of reservations. In stages the canal passed
under the control of Panama in 2000. Yet the US
is guaranteed passage of the canal in perpetuity for
its merchant ships and warships, and it is entitled
to use force to protect these rights after the year
2000 if Panamanian troops fail to do so. Panama
secured something less than total sovereignty.
The 1980s saw the nadir of Panamanian–US
relations. Torrijos died in an air crash in 1981,
which may have been arranged. General Manuel
Noriega, an unscrupulous and brutal soldier,
soon took his place. He had been recruited by
the CIA, which was anxious to make use of his
contacts to uncover the drug trade passing
from Colombia to Panama and on to the US.
Embarrassingly, Noriega himself drew huge
profits from the drug trade; indeed, in corruption
and brutality no previous Panamanian dictator
compared. He transformed the National Guard
into the Panama Defence Forces, with new
powers, to act as his tool of repression. Even so,
GNP per capita (the population was 2.3 million)
rose to $2,240 in 1987. The elections of 1984,
which allowed his nominee to become president,
were a farce. The US now tried to rid Panama of
the general. In 1988, Noriega was indicted for
drug trafficking in the US. He countered by
beating the anti-American nationalist drum.
President Reagan’s pressure and economic sanc-
tions were not enough to topple him, nor two
attempted military coups which enjoyed US
goodwill. In May 1989 Noriega held elections
again, but when the leader of the opposition,
Guillermo Endara, gathered most votes despite
intimidation from Noriega’s thugs, the results
were falsified. On 20 December 1989, President
Bush cut the Gordian knot and 24,000 US troops
descended on Panama City to arrest and over-
throw Noriega. He fled to the Embassy of the
Vatican but gave himself up in January 1990. He
was tried and sent to prison. Guillermo Endara
was installed as president of Panama.714 LATIN AMERICA AFTER 1945: PROBLEMS UNRESOLVED
Costa Rica, Nicaragua, Honduras, El Salvador, Guatemala and Panama, 2000
Population GDP GDP per GDP per head, Purchasing
(million) (US$ 1,000 million) head (US$) Power Parity (US$)Costa Rica 4.0 15.9 4,100 8,000
Nicaragua 5.5 2.4 580 2,100
Honduras 6.4 5.9 1,000 2,400
El Salvador 6.3 13.2 2,100 4,400
Guatemala 11.4 19.0 1,700 3,800
Panama 2.9 9.9 3,400 5,700