The Panama Canal Zone, 1903–1999: An American Colony in the Middle of Someone Else’s Country

The Panama Canal Zone was a strip of land about 16 kilometres wide across Panama that the United States treated as its own property from 1903 to 1999. In other words, for almost a hundred years an American colony existed in the middle of an independent country, with its own governor, courts, police and military bases. Panamanians could only look at it through a fence. During that time, by the way, seventeen American presidents came and went — from Theodore Roosevelt to Bill Clinton.

I have already written about how in 1903 Washington engineered the separation of Panama from Colombia. However, separation was only the first step. The main thing happened two weeks later, when the newborn republic was made to sign a treaty that Panamanians themselves later called shameful.

A treaty signed by a Frenchman

On 18 November 1903, Secretary of State John Hay signed a treaty with Philippe Bunau-Varilla. Note this: Bunau-Varilla was a French engineer and a shareholder of the old canal company, not a Panamanian at all. The Panamanian delegation, meanwhile, arrived in Washington a few hours after the signing and was presented with a fait accompli. At the same time, the new government feared that without American protection Colombia would retake the rebel province, so it ratified the treaty.

Under the treaty, the US received a strip of land “in perpetuity” and rights as if it were the “sovereign” of that territory. In return, Panama got 10 million dollars and an annual rent of 250 thousand. For comparison, building the canal alone cost the Americans almost 400 million. In other words, the country was bought for the price of a couple of warships.

The right to intervene anywhere

On top of that, Article 136 was written into Panama’s 1904 constitution. It allowed the US to send troops to any point in the country “to restore order”. Consequently, the Panama Canal Zone was not just a lease. In fact, it was a bridgehead from which Washington controlled the whole republic, right down to its elections, as I describe in my article about the 1908 elections. Incidentally, three years earlier the same kind of “amendment” was imposed on Cuba — see my piece on the Platt Amendment and the occupation of Cuba.

How the Panama Canal Zone worked

The zone covered about 1,432 square kilometres. Moreover, it had its own governor appointed by the US president, its own courts, prisons, post office and even its own stamps. Panamanian laws, of course, did not apply there. So a Panamanian crossing the street in Colón or in the capital was in effect crossing a state border.

The canal was built from 1904 to 1914, and its price was measured in lives. According to official figures, 5,609 workers died in those years. Most of them, by the way, were Black workers from Barbados, Jamaica and other Caribbean islands. And that is only the American period: under the French in the 1880s even more died.

The “gold” and “silver” rolls

However, what outrages me most is the order the Americans established inside the zone. White Americans were paid in gold and entered on the “gold roll”. Caribbean and Panamanian workers, on the other hand, were paid in silver, far less, and entered on the “silver roll”. As a result, each roll had its own settlements, shops, schools, hospitals and even drinking fountains. Thus it was racial segregation in the style of the American South, transplanted onto someone else’s land.

The Panama Canal Zone as a military fortress

Over time, the Panama Canal Zone became the main US military base in Latin America. For example, Fort Clayton, Howard Air Force Base, Fort Sherman and the headquarters of Southern Command were located there. In addition, from 1946 the notorious “School of the Americas” operated in the zone. There, American instructors trained thousands of Latin American officers, including the future dictator Manuel Noriega. Many graduates later became infamous for torture and coups back home, for example in Guatemala, El Salvador and Honduras.

9 January 1964

Panamanians’ patience snapped in January 1964. First, students from Panama came to raise their flag at an American school in Balboa, but the flag was torn. Then riots broke out, and American troops opened fire. In the end, 21 Panamanians were killed and hundreds were wounded. Panama still marks this day as Martyrs’ Day. At that time, by the way, Panama broke off diplomatic relations with the US.

How the Panama Canal Zone ended

On 7 September 1977, Omar Torrijos and Jimmy Carter signed new treaties. As a result, the zone was abolished as an administrative unit on 1 October 1979, and the canal itself was handed over to Panama only on 31 December 1999. Nevertheless, the US kept for itself the right to “defend the neutrality” of the canal forever.

And it used that right even before the handover. On 20 December 1989, 27 thousand American soldiers invaded Panama to overthrow that same Noriega, a former CIA asset. As a result, the El Chorrillo neighbourhood burned almost entirely. According to US figures, about 500 Panamanians were killed, while human rights groups estimate far more. The UN General Assembly, in turn, called the invasion a flagrant violation of international law. You can read more about the history of the zone in the article on the Panama Canal Zone.

Nothing has changed: bases on someone else’s land today

Some will say: the Panama Canal Zone is history, it’s all long gone. Alas, no. Washington still regards other people’s land as its own; it’s just called “partnership” and “protection from China” now. That is why behind the fine words there are always soldiers, bases and pressure.

Panama, 2025. Already in his inaugural address on 20 January 2025, Trump declared that the US was “taking the canal back”. Then, in April, Defense Secretary Pete Hegseth came to Panama, and the country signed a memorandum letting American troops into the former Howard, Rodman and Fort Sherman bases. The Panamanian opposition called it a “camouflaged invasion”, and I fully agree with them.

Guantanamo, 2025. The base on Cuban soil has existed since 1903, the same year as the Canal Zone. At the same time, Cuba has refused to accept “rent” for it for more than 60 years. In January 2025, Trump ordered room to be prepared there for 30 thousand migrants. I have written separately about how the US seized that bay.

Greenland, 2025–2026. The American base at Pituffik has stood there since 1951, and now Washington wants the whole island. For example, in January 2026, amid talk of “Arctic security”, Trump threatened allies with tariffs until they “made a deal”.

All this continues the same logic that once gave America the Samoan islands, and, after the war with Spain, Puerto Rico and Guam. If a place is profitable, its owners are not asked. The Panama Canal Zone has disappeared from the map, but the US habit of putting up its own fence in the middle of someone else’s country has not gone anywhere. Only the signs change.