Bitterness against U.S. colonial presence has been smoldering among Panamanians since the country’s very inception. At that time, in 1903, the U.S. government and a
French engineer named Buneau-Varilla
(whose company had a $40 million vested in-
terest in the proposed canal project) imposed
a treaty on Panama that it had had no part in
negotiating. Panamanians were forced to ac-
cept this blackmail as their only guarantee of
independence from Colombia.’ In short,
Panama gained national independence at the
expense of sovereignty over the transit route,
its principal natural resource.’
But while the entire nation has been united
in opposition to U.S. colonial domination of
the transit route, different and antagonistic
class interests have been behind this opposi-
tion. The bourgeoisie has been content to
bargain for economic concessions from the
United States. All the accords since 1903 have
been revisions to that treaty, serving the tradi-
tional oligarchy, and have not disturbed the
basic colonial relationship:
1926-Kellog-Alfaro Treaty: Bourgeoisie
would gain economic access to Canal Zone
market; the United States would bind
Panama to declare war should the United
States go to war (rejected by popular op-
position);
12Sept/Oct 1979
1936-The General Treaty of Friendship
and Cooperation: 1) United States gives up
right to unilateral intervention in Panama’s
political affairs (gained in 1903 Treaty) in
exchange for tax exemptions for imports
destined to Canal Zone market; 2)
Panama’s bourgeoisie gains additional ac-
cess to Canal Zone markets and to sell to
ships anchored in port cities in exchange
for U.S. access to further lands and waters
for defense and modernization of Canal;
1942-U.S.-Panama Base Convention:
United States obtains over 100 new military
and telecommunication facilities for war
effort;
1947-Filos-Hines Treaty: Attempt to legal-
ize U.S. military bases (defeated by popular
protest);
1955-The Treaty of Mutual Understand-
ing and Cooperation: In exchange for
huge military base in Rio Hato, United
States gives further economic access to
Canal Zone to local manufacturers and
agrees in principle to equalize wage scale
for Panamanian and U.S. workers. Panama-
nian state obtains right to tax non-U.S.
residents working in Canal Zone.’
For the professionals, technicians and
students who make up the majority of the
petit bourgeoisie, the Canal struggle has had
a dual meaning. Since the mid-1920s they
have played a progressive role challenging the
oligarchy’s sellout of patriotic interests to the
United States. It is also the vehicle for the
aspirations to expand their administrative
role in the state and broaden the economic
base of the public sector through control of
the transit route. Historian Ricaurte Soler
characterizes the role of these middle sectors
in forming Panamanian nationalist and anti-
colonial consciousness as follows:
. the petit bourgeoisie, especially its non-
productive salaried sectors, has provided the
[Panamanian] theory of nationality with its
philosophical, historical and political
texts. . . .
The popular masses, on the other hand,
have aspired for much more: the total with-
drawal of the U.S. military presence and the
total recuperation of Panama’s principle
natural resource so that it can be integrated
into the development of the country for the
improvement of its entire people.
Lacking independent political organiza-
tion, the popular sectors have largely chan-
neled their demands through middle class
political organizations. But over the last seven
decades of struggle they have gained in
organizational as well as political strength.
The most notable manifestations have been
the anti-U.S. demonstrations in 1947 that
caused the Panamanian National Assembly to
reject a new treaty on defense sites, the “Flag
Riots” in 1964 which first demanded com-
plete abrogation of the 1903 Treaty, and the
rejection of the so-called “3 in 1” Johnson-
Robles Treaty in 1967.
TOWARD A NEW TREATY-
ROUND ONE
According to a Joint Declaration of April 3,
1964, Panama and the United States agreed
to 1) reestablish diplomatic relations, 2) ap-
point special ambassadors with sufficient
powers to secure prompt “elimination of the
causes of conflict” between the two countries
and 3) begin immediate procedures necessary
to reach a just and equitable covenant. 5
However, the solutions for eliminating the
causes of conflict put forward by Johnson and
the Panamanian oligarchy were not quite
what the majority of Panamanians had in
mind. In 1967, after three years of negotia-
tion, Johnson and the new Panamanian presi-
dent, Marco Robles, agreed to 1) abrogate
the 1903 treaty; 2) legalize all U.S. bases in
the Canal Zone (which the 1903 Treaty did
not do), permitting their presence until 2004
with option to renew; and 3) replace the
Canal Zone government run by the United
States with a Canal Commission dominated
by the United States.
The Panamanian National Assembly was
pressured by mass protest and massive
demonstrations to reject this treaty. The
political accumulation of the popular
masses had led them to differentiate between
a treaty favoring U.S. political, economic and
military consolidation and one which really
would eliminate the causes of conflict be-
tween the two countries.
U.S. military bases, U.S. control over the
administration of the Canal, U.S. jurisdiction
over the Zone, all these were areas of conflict,
but the 1967 Treaty did not eradicate any of
them. Rather it tried to institutionalize them.
13NACLA Report
Furthermore the 1967 Treaty spoke of U.S.
rights over any new canal to be built in
Panama. This clearly showed that the United
States only sought to modernize and con-
solidate its economic and military power over
Panama.
TOWARD A NEW TREATY-
ROUND TWO
In 1977, Panama and the United States
signed another accord–the Carter-Torrijos
Treaty.
In negotiating this new accord with the
United States, the Torrijos civil-military
regime had the full support of the military.
Unlike President Robles, however, it had the
support as well of the middle classes, labor,
students, peasants and international finance
capital.
With the displacement of the oligarchy
resulting from the 1968 coup, middle class
sectors became increasingly entrenched in the
bureaucracy of the state and dependent on it
for their economic stability. The negotiating
role of these nationalistic administrators in
the treaty process lent Torrijos the legitimacy
to finally initiate Panama’s historic mission-
consolidating its national sovereignty– with a
real shot at success. Their leadership role
among the masses accrued to Torrijos in the
form of broad popular support, which he
used skillfully in maneuvering for a bold new
treaty. In his third anniversary address com-
memorating the “revolutionary” takeover in
1968, he warned, “If there isn’t a satisfactory
arrangement for our nation and our people,
something inevitable will happen…. As
leader of the National Guard Omar Torrijos
will only have two roads: to crush this
patriotic rebellion of the people or to lead it.
And I won’t crush it.” 6
NEW GUIDELINES
FOR NEGOTIATIONS
In 1973, when the United Nations Security
Council met in Panama City, Torrijos
brought the Canal issue up in the form of a
resolution demanding the restoration of
Panamanian sovereignty. To the surprise and
embarrassment of the United States, all other
countries save Great Britain, who abstained,
voted to pass the resolution. The United
States, which had been avoiding negotiations
for the past five years, was forced to veto it.
The following year Torrijos was able to
secure an agreement of principles, known as
the Tack-Kissinger Agreement, which would
serve as a guide to the Canal negotiations. A
brief analysis of the eight principles contained
in the agreement is illustrative of the new cor-
relation of forces between the two countries.
Articles one through three appeared favorable
to Panama. They affirmed that the 1903
Treaty would be abrogated and the
“perpetuity” concept eliminated, that the new
treaty would have a stipulated duration, and
that U.S. jurisdiction over the Canal Zone
would be promptly terminated.
On the other hand, articles four through
John Scali, unhappy Ambassador to UN Security Council
meeting. Signs reads: You may rest assured that in our
negotiations with the United States of America you will
always find us standing on our feet and never on our
knees. Never! Omar Torrijos (UPI)
14Sept/Oct 1979
In Panama City students protest emerging treaty elements in May 1976. Banner reads: Not one Yankee Base!Joint
Defense: A Betrayal of the People! (Dialogo Social)
eight limited Panamanian rights and jurisdic-
tion for this specified time period regarding
administration, benefits from and defense of
the Canal. The final point referred to a joint
agreement for new work on a canal. In
general the language of all eight points was
dangerously ambiguous.
THE LONG-AWAITED TREATY-
ANOTHER ACCOMMODATION
The final Carter-Torrijos treaties are the
product of a coincidence of interest between
transnational finance capital and the
Panamanian bourgeoisie. The military,
economic and political interests of these
groups were secured in the 1977 treaties, as
we have seen, while the interests of the
Panamanian peasants, workers and popular
classes were not.
While the 1977 treaties have to be analyzed
within the context of the eight principles, it is
also necessary to take into account an un-
favorable shift in the correlation of forces be-
tween Panama and the United States in the
1974-77 period. Along with increasing infla-
tion, Panama reached zero economic growth
by 1976 and accumulated the highest per
capita foreign debt in Latin America. As a
result, the civil-military regime lost much
political support and its ability for populist
maneuvering. It was forced to make conces-
sions to a dissatisfied bourgeoisie, transform-
ing the progressive 1972 Labor Code into an
instrument of capitalist control and thus
alienating support from labor and its
urban base.
Military Aspects: Xabier Gorostiaga and
Marco Gandasegui, Panamanian economists,
have characterized the 1977 treaty as the most
militaristic of all the bilateral agreements bet-
ween Panama and the United States. The
treaty legalizes, for the very first time, the
presence of U.S. military bases. Second, it
contemplates a closer relationship with
Panama’s National Guard, necessarily subor-
dinating the Guard to the U.S. military.
Third, the Treaty on Neutrality, as well as the
DeConcini Amendment, assures the right of
U.S. military intervention, even after the year
2000-that is, in perpetuity.
This reflects a new U.S. military strategy
for Latin America and a different, but not
less important, role for Panama. The most
salient features of the new strategy are a
greater role for local armies in defending the
interests of the empire and a lower visibility of
U.S. military.’ At the same time, however,
the United States was careful not to sacrifice
any of its capability for a direct role.
The Carter-Torrijos Treaty reflects this new
strategy in part in its stipulation of a new
function for the School of the Americas,
situated in the Canal Zone. Instead of train-
ing 42,000 Latin American soldiers, as in the
past, the school now will concentrate on turn-
ing out high-ranking Latin American mili-
tary officers.
Although the U.S. military bases will be
15NACLA Report
Vietnam-bound soldiers rehearsed at Jungle Warfare Center, U.S. Army School of the Americas, Panama Canal Zone.
reduced from 14 to three over the next two
decades, there is nothing in the agreement
which calls for a reduction in U.S. military
combat troops or military capability from its
present level. Further, the more than 21 so-
called “defense sites” and joint “areas of
military coordination” provided for in the
treaties on the one hand give the United
States exclusive control over strategic military
installations and, on the other, provide for
the sharing of subordinate training sites with
the Panamanian National Guard. 8
The bottom line is that the Neutrality
Treaty gives the United States the unilateral
right to intervene in the affairs of Panama
should the joint U.S.-Panama military
cooperation break down or prove inadequate
for defense of U.S. interests. The Treaty gives
the United States the further right to in-
tervene in Panama’s affairs under the guise of
supplying military hardware to Panama for
internal defense. 9
“The Pentagon must like this treaty,
or Bunker would never have agreed to
it. And if the Pentagon likes it, it
can’t be any good for us.”
A Panamanian professor
Economic Aspects: The single most impor-
tant economic aspect of the Carter-Torrijos
Treaty is its concern with the “security and ef-
ficiency” of Canal operations.’ 0 Economic ef-
ficiency, according to Article III of the
Neutrality Treaty, is defined thus: “The tolls
and other rights for transit and related ser-
vices will be just, reasonable and equitable
and consistent with the principle of Interna-
tional Law.”
The legal history of “just, reasonable and
equitable” in U.S.-Panama negotiations has
meant that the Canal tolls cannot be commer-
cial, that is, must be non-profitable.” If this
remains true, the Panamanian bourgeoisie
will never be able to operate the present of
any future canal on a profitable basis. All
foreign shipping will be assured of a
permanent subsidy and relatively low-cost use
rights of the present and any future waterway.
There are other economic aspects that
some might consider beneficial to Panama,
namely the $10 million annuity and the $345
million package of loans and grants which
Carter offered as a substitute for the $1 billion
indemnity Torrijos originally sought.12 But
there are several reservations to the relevant
treaty article, made by the U.S. Senate, which
nullify any hope that Panama would receive
large sums from the U.S. government. On the
contrary, the reservations, along with restric-
tions on toll increases, makes the economic
recuperation of the Canal Zone, even for the
Panamanian bourgeoisie, incomplete.
The bourgeoisie will of course benefit,
especially that fraction linked to U.S. banks
and transnational firms, as the “platform for
transnational services” extends its reach over
the Panamanian economy.* The local com-
mercial and industrial bourgeoisie will also
benefit from the $200 million from the
Export-Import Bank, the $75 million from
16Sept/Oct 1979
AID for housing, and the $20 million from
the Overseas Private Investment Corporation
which provides incentives to Americans cor-
porations investing in Panama for the first
time. The National Guard will also benefit
from the $50 million in military aid received
from the United States government.
But this $345 million aid package, designed
to stimulate the Panamanian economy, will
further increase the public debt which is
already over $2 billion, and “deepen and ag-
gravate the structural defects of an
underdeveloped Panama.”‘”
Labor Aspects: The role of the U.S. and
Panamanian workers in the treaty negotia-
tions was at best marginal. Therefore the
many uncertainties the treaty poses for
workers, primarily Panamanians, is
not surprising. 1 4
It is a certainty that workers will be dis-
missed as a result of the Treaty, but it is ques-
tionable whether jobs will be found for those
dismissed, or whether pre-existing terms and
employment conditions (salary levels, fringe
benefits, etc.) will be observed.
For example, Panamanian workers who are
affected either as a result of closing U.S.
facilities in the Zone or because such facilities
are assumed by Panama will be given jobs to
the extent possible. However, the United
States will find employment for U.S. workers.
Panama guarantees, whenever possible,
that terms and conditions of employment for
Canal Zone workers will not vary when
Panama assumes certain Zone functions. For
non-U.S. citizens who are adversely affected
by the Treaty and who do not qualify for
retirement under U.S. civil service, Panama
will provide special employment services
for them.
As recently as May 1, 1979, Luis Anderson,
president of Local 907 (an AFSCME affiliate),
*Panamanian economist Xabier Gorostiaga has coined
the term to refer to areas of strategic importance to trans-
national interests. In the case of Panama it encompasses
the Colon Free Zone, the Canal itself, the dollar-tied
monetary system, its geographic position, the military
and economic presence of the United States, and its “tax
haven” legal system which includes the legalism of “flags
of convenience,” giving Panama the appearance of being
the third largest merchant fleet in the world. (Xabier
Gorostiaga, Los Centros Financieras Internacionales en
los Paises Subdesarrollados, ILET, Mexico, 1978.
representing 2,000 Panamanians working for
U.S. armed forces in Panama) was quite
pessimistic about the number of Panama-
nians facing dismissal as of October 1, 1979.
He was even more pessimistic as to whether
Panama will apply Law 95 (which suspends
collective bargaining and affects job stability
for Panamanian workers outside the Canal
Zone as of January 1, 1977) to Canal Zone
workers.'” Anderson, however, was among
those who, subordinating the interests of
workers in Panama, had given unconditional
support to the Carter-Torrijos Treaty.
Of equal detriment to the whole working
class, especially those in the Canal Zone, is the
possibility of a general decrease in wages in
the Canal Zone as a way of making the Canal
operations profitable, and of attracting in-
vestment to those areas of the Zone turned
over to Panama. This is a serious concern, for
Panama’s revenue from Canal operations
depends on the Canal’s profitability. With
decreasing Canal traffic and U.S.-imposed
low tolls, Canal profitability for the state can
come only as a result of a general decrease
in wages.
Lastly, the Neutrality Treaty and the
DeConcini Amendment have grave conse-
quences for the development of an effective
and class conscious workers’ movement in the
former Canal Zone. Since the Neutrality
Treaty does not define what type of action
constitutes a “threat to the security of the
Canal,” it leaves open the possibility that any
type of Panamanian mass political action that
seeks to break the chain of dependency,
poverty and hunger can be interpreted as
jeopardizing the operation of the Canal or
any future canal.
United States’ concern over an indepen-
dent, aggressive and militant labor force in
the Canal Zone dates as far back as 1856 when
West Indian Railroad workers rioted to pro-
test unemployment and adverse working con-
ditions. Since then, the history of the United
States in the Canal Zone has been one of re-
pression of black workers, busting up of in-
dependent labor unions, racially and eth-
nically based wage discrimination, and apar-
theid as public policy. These were all
mechanisms to control the Canal Zone work-
force while the U.S. military had a direct
presence. Now, with the physical departure of
17NACLA Report
the United States in the year 2000, the empire
reserves the right of unilateral and perpetual
intervention.
SLAM BAM PLEBISCITE
When Torrijos was in Washington, D.C.
for the signing of the treaties in September
1977, he acknowledged, in a way that he
hoped would preempt some of his opponents,
“I know the leftists will be on me like a pack of
dogs over the treaty. They are against it
because their goals were total liberation now
or death.”‘ 6
Torrijos gave the country just six weeks-
since the negotiations had been conducted
with a virtual news blackout in Panama–to
read, understand, debate and rally votes in
favor or against the signed treaties. No
amendments, as in the United States, just a
simple yes or no.
While the government controlled all mass
communications, including television sta-
tions, radio and the press, the opposition was
permitted one page daily in three newspapers.
Pro-treaty advertisements, posters, slogans,
editorials and broadcast speeches pro-
liferated. The state apparatus, teachers, the
military and even health workers in the most
remote regions of the country became pro-
moters of the treaties during those weeks.
Torrijos’ government was finally obliged to
permit treaty opponents to appear on televi-
sion during the last week before the plebiscite.
Both supporters and opponents were
heterogeneous groups whose arguments in
favor or against the treaties reflected underly-
ing concerns that went beyond accords. As
one critical magazine put it:
The plebiscite did not manage to polarize
“pure” votes around the treaties (i.e., votes con-
cerning solely the content of the treaties) since,
in a complex dependent and underdeveloped
society such as ours, the liberation of the word
turns into an explosion of vital and heartfelt ne-
cessities. The electoral process “rediscovered the
profound class antagonisms of our social forma-
tion.” 7
Supporters gave arguments that ranged
from praise for the treaties as an improve-
ment over the 1903 Hay-Bunau Varilla Trea-
ty, to those who saw them as an anti-
imperialist achievement, to others who sought
to support the government and still others
who perceived in them a stabilizing economic
advance to protect their investments in the
country. Notwithstanding the class interests
reflected in these arguments, all groups
believed economic improvement of the coun-
try would necessarily follow from the im-
plementation of the new treaties.
Opponents displayed a similar diversity in
the class composition of their ranks. At times
marching together were those who opposed
the treaties from a genuinely anti-imperialist
and anti-interventionist premise, critical of
the continuation of military bases and
political control by the United States, along
with impoverished sectors opposing the
treaties under the illusion that the continued
presence of the United States would mean a
“secure” source of employment. A naive ad-
miration for the North American lifestyle was
a strong factor. Oligarchic sectors that had
been displaced by the 1968 coup joined the
opposition mainly as a way to criticize and
weaken the military regime, albeit with clear
capitalist interests.
The final approval of the treaties in the Oc-
tober 23rd plebiscite revealed the already ap-
parent weakening of Torrijos’ reformist-
populist politics. While 90% of the eligible
voters participated, the government’s projec-
tions of victory by at least 73-90% were pro-
ven deceptively optimistic. Only 67.6% voted
for the treaties and 32.4% voted against.
“I would prefer a generation of
Castristas (Pro-Castro types) to a
generation of castrados (castrated
ones). They may vote no, but I want
them to vote.”
Brig. Gen. Omar Torrijos, August 1977
Opposition reflected more than anything
widespread dissatisfaction with the Torrijos
regime on domestic questions. The provinces
of Veraguas, Bocas del Toro, Colon and the
Indian reservation of San Bias, for example,
voted overwhelmingly against the pacts due to
the fact that their predominantly working
class, peasant and Indian populations had
been ill-served by the regime, as much as by
all its oligarchic predecessors.”
The next article takes the long view of the
Torrijos decade just past, examining how the
masses were ill-served and why, as well as
what alternatives are emerging.
PART TWO: PANAMA
1. Walter LaFeber, The Panama Canal: The Crisis in
Historical Perspective (New York: Oxford University
Press), 1978.
2. See Article 1 of the “Hay-Buneau Varilla Treaty,”
November 18, 1903.
3. “The General Treaty of Friendship and Coopera-
tion,” March 2, 1936.
4. Guaykucho-NIR (PRT), “Las capas medias y el
proceso de las relaciones entre Panama y los EEUU,” p.
35.
5. “Declaracion Conjunta del 3 de Abril 1964,” in
Enrique Jaramillo Levi, Una explosion en America: El
Canal de Panama (Mexico: Siglo XXI), 1976.
6. Ministerio de Relaciones Exteriores, Departamento
de Informacion, Nuestra Revolucion: Discursos fun-
damentales del General Omar Torrijos Herrera
(Panama), Dec. 1974.
7. Xabier Gorostiaga and Marco Gandasegui,
“Panama solo un Canal?” Cuadernos de Coyuntura, No.
2 (Panama: CELA), 1978.
8. Dialogo Social (April 1978), p. 40.
9. “Acta convenida sobre el Tratado del Canal de
Panama,” No. 21, 25, Revista Loteria, No. 258-260
(August-October 1977).
10. Gandasegui-Gorostiaga, “Panama solo un Canal?”
11. Ibid.
12. “Tratado del Canal de Panama, Art. XIII, No. 4,
Para. 2, 3, 6.”
13. Gandasegui-Gorostiaga, “Panama solo un Canal?”
14. “Tratado del Canal de Panama, Art. X.”
15. Speech by Luis Anderson, General Secretary,
Local 907, Army Employees, on May 1, 1979 in the Canal
Zone, Panama.
16. Speech by Gen. Torrijos during Treaty signing,
Washington, D.C., September 1977 as quoted in Revista
Loteria.
17. Dialogo Social (November 1977), p. 3
18. Ibid., p. 8
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