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Panama was part of Colombia.
The French tried and failed to build a canal in the 1880s. US President Theodore Roosevelt picked up the idea. He wanted Colombia to sign a treaty allowing American companies to build the canal. Colombia refused. The US invaded, stole Panama from Colombia, set up a puppet government and created the US-controlled canal zone.
For the next 65 years the US kept friendly dictators in power. They repressed the Panamanian people and supported the CIA and US big business.
In 1968 things changed. A coup removed the current leader from power. General Omar Torrijos came to power. Torrijos was popular with the lower classes. He tried to assert Panamas independence. He worked to get US repression training centers out of Panama. He worked to get the canal zone out of US hands and under Panamanian control. In 1977 he and Carter signed a treaty that would turn over the canal zone to Panama at the end of 1999.
In short, Torrijos and his neighbor Jaime Roldos in Ecuador, weren't playing along with the US imperial agenda. Both were killed in fiery plane crashes in 1981, just after Reagan came to power in the USA. After the death of Torrijos, eventually Manuel Noriega became Panama's leader. Noriega cooperated with the US imperial agenda in some ways, and apparently was in the pay of the CIA. However, in other ways he apparently crossed Washington.
In 1989 the US invaded in full force, killing at least hundreds, perhaps thousands. They ousted Noriega, and eventually took him to Florida to stand "trial" in US courts. They placed a new leader in charge of Panama.
At the end of the 1990s the US began turning its bases over to Panama. At the end of 1999 it turned the entire canal zone over, at least in name, in accordance with the 1977 treaty. Martin Torrijos (son of Omar Torrijos) was elected president in 2004. Panama is persuing plans to expand the canal. In 2006 Panama signed a "free trade" agreement with USA.
sources:
Perkins, John. Confessions of an Economic Hit Man. Plume, 2006.
Blum, William. Killing Hope: US Military and CIA Interventions Since World War II. Monroe, ME: Common Courage Press.
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