IN ACCORDANCE WITH THE TORRIJOS–carter treaties to transfer control over the Panama Canal on 31 December 1999, General Lawson W Magruder of the United States army hands a symbolic key to the Panamanian president Ernesto Perez at Fort William Davis. Signed in 1977 by the US president Jimmy Carter and Omar Torrijos, the military dictator of Panama, the treaties mandated that the area around the canal would remain “permanently neutral.” This necessitated the withdrawal of the US military presence that had existed in Panama for most of the twentieth century. The first two bases—Fort William Davis and Fort Espinar—were handed over on 2 September 1995.
Construction of the canal, which links the Pacific and Atlantic oceans, began in 1880, when Panama was still part of Colombia. However, the French company digging the canal—run by Ferdinand de Lesseps, who had overseen the construction of the Suez Canal—soon ran into difficulty. The technological challenges ran up costs, and tropical diseases killed over 20,000 workers. The company eventually went bankrupt and sold its rights and assets to the United States in 1902. After Panama declared its independence following a US-backed revolution the following year, the new government signed the Hay–Bunau-Varilla treaty, granting the United States the right to build and indefinitely administer the canal in exchange for a sum of $10 million and an annual payment of $250,000.
The canal was opened for traffic on 15 August 1914. The SS Ancon, an American ship, was the first to officially pass through it. Since then, nearly a million vessels have done so. Tolls paid by ships and the tourism it generates make the canal one of the biggest sources of revenue for the central American nation. In 2017, the Panama Canal Authority earned record revenues of $2.2 billion, and contributed over a billion dollars to the exchequer.