Panama-U.S. Relations

Publication Date: March 2001

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Government

Type:

Coverage: Panama

Abstract:

The December 20, 1989, U.S. military intervention in Panama, known as Operation Just Cause, heralded a new period in U.S.-Panamanian relations. In the aftermath of the intervention, U.S. policymakers immediately faced a new range of challenges including assistance for economic recovery, support for the development of a civilian police force, cooperation with the new government on counter-narcotics measures, and support for fragile democratic institutions.

Panama has made abundant progress in all these areas, although the country still faces challenges. U.S. policymakers maintain an active concern about these issues because of continued U.S. interests in Panama, particularly the Panama Canal, which continues to be important to the United States for its commercial value.

Over the years, U.S. officials consistently affirmed a commitment to follow through with the Panama Canal Treaty and turn the Canal over to Panama at the end of 1999. That transition occurred smoothly on December 31, 1999. The Panama Canal Treaty terminated on that date and the Panama Canal Commission (PCC), the U.S. agency operating the Canal, was succeeded by the Panama Canal Authority, a Panamanian government agency established in 1997. All U.S. troops have been withdrawn from Panama and all U.S. military installations have reverted to Panamanian control.

Under the terms of the Neutrality Treaty, which has no termination date, Panama now has responsibility for operating and defending the Canal. However, the treaty gives the United States the right to use military force to reopen the Canal or restore its operations.

For several years, U.S. policymakers faced the issue of a potential U.S. military role in Panama beyond the end of 1999, when Panama assumed control of the Canal. Talks on a U.S. military contribution for a new Mult inational Counternarcotics Center led to a draft U.S.-Panamanian agreement in December 1997, but in September 1998, the two countries announced that a final agreement had not been reached and that talks were being terminated by mutual agreement. Some believe that Panama's internal politics appear to have influenced the MCC negotiations.

In 1999, some Members of the U.S. Congress and politicians in Panama suggested that the United States negotiate the use of facilities in Panama for U.S. antidrug flights, similar to arrangements negotiated with Ecuador, Aruba, and Curacao. But in late March 2000, the United States signed a 10-year agreement with El Salvador for anti-drug flights, making the potential of negotiating such an agreement with Panama unlikely.

Other U.S. interests or concerns in Panama have included a controversy over whether the United States will clean up three firing ranges in Panama; and allegations by some that China could threaten the operation of the Panama Canal because of its links to a Hong Kong company operating ports at both ends of the Canal. Both the State and Defense Departments and the Panama Canal Commission asserted that the operation of the ports by a Hong Kong company does not constitute a threat to the Canal.