When the country sold part of itself

By Hernando Calvo Ospina, Le Monde diplomatique, December 2003

PANAMA was part of Colombia, then called New Granada, at the time of Colombian independence in 1821. But this did not deter the European powers from plans to build a canal linking the oceans on either side of the isthmus. The project officially began in 1835: four Frenchmen succeeded each other in charge of it, each falling victim to mosquitoes and tropical diseases.

The Colombian and United States governments signed a treaty of friendship, commerce and navigation in 1846, granting US companies the right to carry goods across Panama with little formality. In 1849 Colombia granted the US a concession for the construction and exploitation of a transcontinental railway to facilitate the transport of Californian gold to New York. In return, as a buffer against British and French interest in the territory, article 35 of the treaty stated that the US would positively and effect ively guarantee the total neutrality of the isthmus and guarantee the rights of sovereignty and property held by Colombia over the territory (1).

In 1878 Lucien Bonaparte Wyse from France obtained exclusive privileges over the execution and exploitation of the mooted canal for 99 years. He persuaded a compatriot, Ferdinand de Lesseps, already famous for building the Suez Canal, to take charge of the works. Their Compagnie Universelle du Canal Interocéanique won not only official backing but also financial support from more than 100,000 French backers who bought state bonds in the project.

The US was not pleased by these developments. The Franco-Colombian agreement was only two years old when the US president, Rutherford Birchard Hayes, publicly opposed it: Our commercial interest is greater than that of any other country, likewise the strength of the canal's relationship to our power and prosperity as a nation, and the US has the right and the duty to affirm and maintain its right of intervention on any kind of transoceanic canal across the isthmus. Work began in January 1882. De Lesseps mistakenly attempted to build at sea level, failing to take into account the mountainous terrain. By July 1885 only a tenth of the route had been dug. Faced with this, the company replaced de Lesseps with Gustave Eiffel (he of the Parisian tower), who decided to use a system of locks. But corruption and theft of capital, rife among executives in Paris and Panama, scuppered the project. Construction was suspended in 1889. In the ensuing scandal, the Compagnie Universelle's assets were taken over by the courts.

In 1893 the Colombian government signed another contract with the French to resume construction. The Compagnie Nouvelle du Canal de Panama took over the project, and the French appointed the American lawyer and lobbyist William Nelson Cromwell as a counsellor. Work resumed in 1894. A shareholder, Philippe Bunau-Varilla, decided to stake his all on it and planted articles aimed at encouraging investment in the French press, especially in the newspaper Le Matin, which he owned.

With the support of a French minister, Casimir Perier, Bunau-Varilla travelled to Russia, convinced that he would find financial backing there. But the bid was undermined by a political crisis that led to the resignation of the entire French cabinet in May 1894. The chances of saving the project fell away. The Compagnie Nouvelle had either to give up or sell up. In December 1901, without consulting either the Colombian government or the terms of its agreement with the French, the shareholders of the Compagnie Nouvelle authorised the sale of its shares to the US.

Washington favoured Nicaragua as the best site for a canal, having examined possibilities there since 1886. Bunau-Varilla and Cromwell set about convincing the US Congress that the Panamanian plan was better. They distributed $60,000 among members of the Republican party (2). On 29 June 1902 Congress ratified President Theodore Roosevelt's decision to buy the shares of the Compagnie Nouvelle for $40m, instead of the $109m asking price. At no point was Colombia consulted, although that country was also a shareholder and, more importantly, the territory's sovereign power.

The decision was welcomed by Panama's small oligarchy, engaged in maritime trade and other tertiary industries. The combination of French incapacity to build the canal, with attendant corruption, and Colombia's thousand-day war between ruling conservatives and insurgent liberals (3) had led to an economic crisis. At the best of times, Panama had no major source of revenue, since US controllers of its transcontinental railway sent all profits to New York. Build the canal or emigrate to the US became the slogan of the oligarchs.

Colombia's conservative government was indebted to the US for keeping it in place during the war and had been presented with a fait accompli. Its representative in Washington signed an agreement with the secretary of state, John Hay, legalising the Franco-American project. In January 1903 a treaty was signed authorising the French to hand over their rights to the US and giving the US near-sovereign control of the canal and areas either side of it for 100 years.

The Colombian Congress rejected the last point in August 1903, not so much because the agreement encroached upon national sovereignty as because the fee offered to Colombia was only $10m, with $250,000 a year in compensation. The interested parties, French, Americans and Panamanian separatists, began to pull their weight. The US ambassador in Bogota had already threatened that if the treaty were not ratified, friendly relations between the countries would be so gravely compromised that the US Congress could have to take measures that any friend of Colombia would regret.

If the US did not obtain the land for building the canal through negotiation, wrote Bunau- Varilla in his newspaper, President Roosevelt planned to use force against Colombia and no one would stand against him. The audacious Frenchman met a Panamanian separatist representative, Manuel Amador Guerrero, and paid him $100,000 to lead an independence movement that, he promised, was assured of US and French recognition. Bunau-Varilla handed Guerrero a declaration of independence and a flag similar to that of the US, designed by his wife, possibly to be adopted by the future republic of Panama. In exchange, Bunau-Varilla gained a plenipotentiary ministerial post in the new republic's government, with special responsibility for negotiating the canal treaty with the US.

On 3 November, through a spontaneous rebellion, separatists declared Panama independent from Colombia, with the backing of US troops. Panama's only home-grown army was drawn from its fire brigade (4). When Colombian armed forces heard the news, they attempted to invade but the US warships lined up along the coast had no difficulty in holding them back. On 7 November, the US officially recognised the new republic. France followed suit a few days later. Britain refrained from protesting, not wishing to jeopard ise the US support it needed for its Far Eastern colonial expansion.

On 18 November 1903 the Hay/Bunau-Varilla Treaty, making Panama a protectorate, was signed in New York. Bunau-Varilla used two seals belonging to the US secretary of state to authenticate his signature on the document in Panama's name: the seal of shame, some called it (5). Fearing that the provisional junta might not ratify the treaty, Bunau-Varilla immediately cabled to say that Panama risked being re-conquered by Colombia if approval of the treaty were delayed. His argument had the desired effect: on 2 December the junta ratified the text without even having it translated into Spanish.

The US received full, indefinite sovereignty over 10 miles either side of the canal's route. It was also granted a permanent right of intervention in internal Panamanian affairs, with the option of military intervention in the case of public order disturbances. This clause became law when it was included in the Panamanian constitution, drafted with the participation of the US consul William Buchanan and validated on 20 February 1904 (6). The canal opened on 15 August 1914. The US got what it wanted: to retain control over the canal and 916 square miles of Panama until the end of the 20th century.

When the Colombian president, José Maria Marroquín, finally replied to all the insults he received for allowing an important part of his country to break away and sell itself to foreigners (7), he joked: What are Colombians complaining about? They gave me one country, I gave back two!

But the name of Bunau-Varilla disgusts Panamanians even today. And whenever the Hay/ Bunau-Varilla treaty is mentioned people always add which no Panamanian signed (8).

Notes

(1) Gregorio Selser, Diplomacia, Garote y Dolares en América Latina, Editorial Palestra, Buenos Aires, 1962. See also Eduardo Lemaître, Panama y su Separación de Colombia, Ediciones Corralito de Piedra, Bogotá, 1972.

(2) Samuel Eliot Morisson and Henry Steele Commager, The Growth of the American Republic, Oxford University Press, New York, 1940.

(3) Officially there were 23 civil wars in Colombia in the 19th century; respected historians say there were more than 60.

(4) Claude Julien, America's Empire, Pantheon, New York, 1974.

(5) Jorge E Illeca, 7 Septiembre de 1977 in El Panamá América, Panama City, 3 September 2001.

(6) Patricia Pizarro and Celestino Araúz, La Actuación de la Junta Provisional de Gobierno y la Constitución de 1904, Editoria Panamericana, Panama.

(7) Colombia recognised the Republic of Panama in 1921 and received $21m from the US.

(8) José Quintero de León, Lo uno y lo otro en la historia del Canal, La Prensa, Panama City, 15 December 1999.