The history of Panama

Panama is the narrow land bridge that joins North and South America and separates the Atlantic from the Pacific, and almost its whole history has turned on that position. Chibchan-speaking and other Indigenous peoples lived on the isthmus for thousands of years, creating gold-working chiefdoms in its central valleys. From the sixteenth century it was the hinge of the Spanish Empire, the route by which Peruvian silver crossed to the Caribbean, and in the nineteenth century, as a province of Colombia, it carried gold-seekers bound for California on the first railway between the oceans. Panama became independent in 1903 with American backing, at the price of a US-controlled Canal Zone that cut the country in two for most of the twentieth century. After a long nationalist struggle, the 1989 US invasion that removed General Manuel Noriega and the handover of 1999, Panama now runs the canal itself.

Hunters reached the isthmus by about 11,000 years ago, leaving spear points and stone tools at sites in central Panama, and people soon moved along its coasts and rivers between the two continents. By about 5000 BCE communities at sites such as Cerro Mangote on the Pacific shore were living on shellfish, fish and plants, and around 2500 BCE the Monagrillo culture of Parita Bay was making some of the oldest pottery in the Americas. Farmers in the central provinces grew maize, root crops and later cacao, while forest peoples combined farming with hunting and fishing.

In the first millennium CE the Gran Coclé culture of central Panama developed into chiefdoms ruled by powerful lineages. At Sitio Conte and El Caño, chiefs were buried with gold breastplates, ear spools and pendants in the form of animals, with richly painted polychrome pottery and with sacrificed attendants. In the western highlands of Chiriquí, the people of Barriles carved large stone statues, one showing a man seated on another's shoulders. Goldwork moved along trade routes linking Panama with Costa Rica and Colombia.

When the Spanish arrived, the isthmus was home to many peoples. The Cueva, who lived in the east and centre, were the most numerous, and others included the ancestors of the Ngäbe and Buglé in the west, the Guna on the Caribbean side and the Emberá and Wounaan in the forests of Darién. Estimates of the population at contact range from about 200,000 to two million. Chiefs, whom the Spanish called caciques, governed territories from villages of thatched houses, fought frequent wars with their neighbours and wore gold as a mark of rank, a sight that drew the Spaniards to the isthmus.

The Spanish navigator Rodrigo de Bastidas sailed along the Caribbean coast in 1501, and the next year Christopher Columbus explored Bocas del Toro, Veraguas and Portobelo on his fourth voyage. In 1510 Spanish settlers founded Santa María la Antigua del Darién, on the Gulf of Urabá near today's border with Colombia, one of the first European towns on the American mainland. Its leader, Vasco Núñez de Balboa, learned from Indigenous informants of a great sea to the south, and on 25 September 1513, guided by local people, he looked out from a mountain in Darién over the Pacific, which he named the South Sea.

The crown named the land Castilla del Oro, Golden Castile, and in 1514 sent Pedrarias Dávila with some 1,500 settlers as governor. Pedrarias had Balboa beheaded in 1519 and the same year founded Panama City on the Pacific coast. His expeditions raided chiefdoms across the isthmus for gold and slaves, and epidemics followed; within a few decades the Cueva had all but disappeared as a people. Other groups resisted. In Veraguas the chief Urracá fought the Spanish for about nine years in the 1520s and was never defeated. The survivors withdrew into the mountains, forests and islands, where the Guna, Ngäbe, Emberá and others kept their independence for centuries. From Panama, Spanish expeditions went north to conquer Nicaragua and south, under Francisco Pizarro, to begin the Spanish conquest of the Inca Empire in 1531.

After the fall of the Inca Empire, Panama became one of the most valuable places in the Spanish Empire. Silver from Potosí and the other mines of the Viceroyalty of Peru was shipped north to Panama City, carried across the isthmus by mule train on the stone-paved Camino Real or by boat along the Chagres River, and loaded at Nombre de Dios, and from 1597 at Portobelo, onto the treasure fleets bound for Spain. At the great trade fairs of Portobelo, European goods were exchanged for American silver. A royal court, the Audiencia of Panama, was set up in 1538.

The labour of the route was done largely by enslaved Africans brought through the Atlantic slave trade, who by the early seventeenth century outnumbered Spaniards in Panama City many times over. Many escaped and formed free communities of cimarrones in the forests. In the 1550s a Mandinka man named Bayano led some 1,200 maroons in a war against the Spanish for several years, and in 1573 cimarrones helped the English privateer Francis Drake capture a mule train loaded with silver. Pirates and privateers made the Caribbean coast dangerous, and in 1671 Henry Morgan crossed the isthmus and sacked Panama City, which burned. A new city was built in 1673 on a defensible peninsula a few kilometres away, now the old quarter of Casco Viejo; the ruins of the first city, Panamá Viejo, still stand.

In 1698 the Kingdom of Scotland tried to found a colony, New Caledonia, on the coast of Darién; disease, Spanish attacks and poor planning destroyed it within two years, and the financial losses helped push Scotland into union with England in 1707. By then the isthmus was declining. Spain abandoned the Portobelo fairs after 1739, as ships increasingly sailed around Cape Horn, and Panama was placed under the Viceroyalty of New Granada, governed from Bogotá.

On 28 November 1821, after the town of Los Santos had declared for independence earlier that month, Panama City proclaimed its separation from Spain without a battle and joined the Republic of Colombia, the Gran Colombia of Simón Bolívar, as part of the Spanish American wars of independence. In 1826 Bolívar chose Panama City as the venue for a congress of the new American republics. After Gran Colombia dissolved in 1830, Panama remained a province of New Granada, later Colombia, but its merchants resented rule from distant Bogotá, and the isthmus broke away briefly several times, notably as the Free State of the Isthmus in 1840 and 1841.

In 1846 a treaty gave the United States the right of transit across the isthmus in return for guaranteeing its neutrality and Colombian sovereignty. The California gold rush soon brought tens of thousands of travellers, and an American company built the Panama Railroad between Colón and Panama City, completed in 1855. Thousands of workers, many of them Chinese, Irish and West Indian, died of disease during its construction. In 1856 a quarrel over a slice of watermelon set off a riot between Panamanians and American travellers in which more than a dozen people died, and the United States sent troops for the first of many times.

In 1881 a French company led by Ferdinand de Lesseps, builder of the Suez Canal, began digging a sea-level canal. The jungle, the floods of the Chagres River, landslides in the mountains and, above all, yellow fever and malaria defeated it: some 22,000 workers, most of them from the West Indies, are estimated to have died before the company went bankrupt in 1889, ruining hundreds of thousands of French investors in a scandal that shook France.

Colombia's Thousand Days' War of 1899 to 1902, between liberals and conservatives, was fought partly on the isthmus, where the Indigenous liberal guerrilla leader Victoriano Lorenzo was executed in 1903. Meanwhile the United States decided to build the canal itself. When the Colombian senate rejected a canal treaty in 1903, a group of Panamanian notables, encouraged by the French company's agent Philippe Bunau-Varilla, declared independence on 3 November 1903. American warships prevented Colombian troops from landing, and President Theodore Roosevelt recognised the new republic within days. On 18 November Bunau-Varilla, acting for Panama, signed a treaty giving the United States a zone ten miles wide across the isthmus, to be held as if sovereign in perpetuity, for ten million dollars and an annual payment. Many Panamanians regarded the treaty as an imposition from the start.

American engineers built the canal between 1904 and 1914. Mosquito control directed by William Gorgas conquered yellow fever, and under George Goethals the Culebra Cut was blasted through the continental divide while a dam on the Chagres created Gatún Lake, then the largest artificial lake in the world, so that ships could be lifted over the isthmus by locks. Most of the workers came from Barbados, Jamaica and other Caribbean islands. The Canal Zone paid white Americans in gold and Black workers in silver, with separate housing, schools and shops, and over 5,600 workers died during the American construction. The canal opened on 15 August 1914, just after the start of World War I.

The Canal Zone became an American enclave with its own government, police and military bases, while the republic around it was dominated by a small elite of merchant families. The United States intervened in Panamanian politics repeatedly until a 1936 treaty gave up its right to do so. In 1925 the Guna of the San Blas islands, resisting government attempts to suppress their dress and customs, rose against the Panamanian police in what is called the Guna Revolution. An American diplomat mediated a settlement, and the Guna later won a self-governing territory, now the comarca of Guna Yala, a model for other Indigenous territories created later in the century. Nationalism grew under Arnulfo Arias, elected president in 1940, whose constitution of 1941 also restricted the citizenship of West Indian and other non-Hispanic immigrants and their children, and who was overthrown in 1941, 1951 and again in 1968. During World War II the canal was heavily fortified, and in the Cold War the Zone hosted US Southern Command and the School of the Americas, which trained Latin American officers.

Resentment of the Zone came to a head on 9 January 1964, when Panamanian students tried to raise their flag at a high school in the Zone. Rioting spread, more than twenty Panamanians and four American soldiers were killed, and Panama briefly broke diplomatic relations with the United States. The day is still marked as Martyrs' Day.

In October 1968 the National Guard overthrew Arnulfo Arias eleven days after his inauguration, and General Omar Torrijos emerged as the country's ruler. A populist military leader, he carried out land reform, expanded schools and health care and made the return of the canal his great cause. On 7 September 1977 he and President Jimmy Carter signed the Torrijos–Carter Treaties: one provided for the canal to pass to Panama at the end of 1999, the other guaranteed its permanent neutrality and allowed the United States to defend it. The US Senate ratified them in 1978 by a single vote more than the two-thirds required, and the Canal Zone was abolished in 1979. Torrijos died in a plane crash in 1981.

By 1983 General Manuel Noriega, the former intelligence chief who had long worked with the CIA, commanded the renamed Panama Defense Forces and controlled the government behind civilian presidents. He also worked with Colombian drug cartels. The murder of the opposition figure Hugo Spadafora in 1985 and a mass protest movement from 1987 turned Washington against him, and in 1988 US courts indicted him for drug trafficking. When the opposition candidate Guillermo Endara clearly won the election of May 1989, Noriega annulled it, and his paramilitary Dignity Battalions beat opposition leaders in the street. After a failed coup against him in October, Noriega's assembly declared that a state of war existed with the United States in December, and an off-duty US Marine officer was shot dead at a checkpoint.

On 20 December 1989 the United States invaded Panama with some 27,000 troops in Operation Just Cause. The Panama Defense Forces were defeated within days, 23 American service members were killed, and fighting and fires destroyed much of the poor neighbourhood of El Chorrillo around Noriega's headquarters. The number of Panamanian civilians killed is still disputed: the US military estimated 202, while the United Nations and human rights groups gave higher figures of around 300 to 500, and some Panamanian groups believe thousands died. Endara was sworn in as president on a US base on the night of the invasion. The UN General Assembly condemned the invasion as a violation of international law, while the US government justified it as protecting American lives, restoring democracy and bringing Noriega to justice. Noriega took refuge in the Vatican's embassy and surrendered on 3 January 1990. He was convicted in Miami in 1992 and died in Panama in 2017.

After the invasion Panama abolished its army, replacing it with police and border forces, and since 1989 it has held regular elections with peaceful transfers of power between rival parties. At noon on 31 December 1999 the canal and the last US bases passed to Panama under President Mireya Moscoso, Arnulfo Arias's widow. Run by the autonomous Panama Canal Authority, the canal became more profitable than under American control, and after a referendum in 2006 a third, larger set of locks was built and opened in 2016. Banking, the Colón Free Zone, shipping registration and trade made Panama one of the fastest-growing economies in Latin America, though inequality remains high, Indigenous regions remain the poorest, and the 2016 Panama Papers leak from a Panamanian law firm exposed the country's role in offshore finance. In 2017 Panama switched its diplomatic recognition from Taiwan to the People's Republic of China.

In late 2023 weeks of mass protests against a new contract for the Cobre Panamá copper mine, the largest open-pit mine in Central America, ended when the Supreme Court unanimously declared the contract unconstitutional on 28 November and the mine was shut. Drought in 2023 and 2024 lowered Gatún Lake and forced the canal to restrict transits. José Raúl Mulino became president on 1 July 2024. In December 2024 and January 2025 the American president Donald Trump claimed that the canal was charging the United States unfair rates and falling under Chinese influence and refused to rule out taking it back by force; Mulino rejected the claims and insisted that the canal belonged to Panama, and in March 2025 a Hong Kong company agreed to sell its ports at either end of the canal to a consortium including the American firm BlackRock. More than a century after the treaty of 1903, the canal remains at the centre of Panamanian national identity.