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Panama A New Accommodation
In the late 1920s, United States policymakers noted that
nationalist aspirations in Latin America were not producing desired
results. United States occupation of the Dominican Republic, Haiti,
and Nicaragua had not spawned exemplary political systems, nor had
widespread intervention resulted in a receptive attitude toward
United States trade and investments. As the subversive activities
of Latin American Nazi and Fascist sympathizers gained momentum in
the 1930s, the United States became concerned about the need for
hemispheric solidarity.
The gradual reversal of United States policy was heralded in
1928 when the Clark Memorandum was issued, formally disavowing the
Roosevelt Corollary (see Glossary)
to the Monroe Doctrine. In his
inaugural address in 1933, President Franklin D. Roosevelt
enunciated the Good Neighbor Policy. That same year, at the Seventh
Inter-American Conference in Montevideo, the United States
expressed a qualified acceptance of the principle of
nonintervention; in 1936 the United States approved this principle
without reservation.
In the 1930s, Panama, like most countries of the Western world,
was suffering economic depression. Until that time, Panamanian
politics had remained a competition among individuals and families
within a gentleman's club--specifically, the Union Club of Panama
City. The first exception to this succession was Harmodio Arias
Madrid (unrelated to the aristocratic family of the same name) who
was elected to the presidency in 1932. A mestizo from a poor family
in the provinces, he had attended the London School of Economics
and had gained prominence through writing a book that attacked the
Monroe Doctrine.
Harmodio and his brother Arnulfo, a Harvard Medical School
graduate, entered the political arena through a movement known as
Community Action (Acción Communal). Its following was primarily
mestizo middle class, and its mood was antioligarchy and anti-
Yankee (see Glossary).
Harmodio Arias was the first Panamanian
president to institute relief efforts for the isolated and
impoverished countryside. He later established the University of
Panama, which became the focal point for the political articulation
of middle-class interests and nationalistic zeal.
Thus, a certain asymmetry developed in the trends underway in
the 1930s that worked in Panama's favor. While the United States
was assuming a more conciliatory stance, Panamanians were losing
patience, and a political base for virulent nationalism was
emerging.
A dispute arose in 1932 over Panamanian opposition to the sale
of 3.2-percent beer in the Canal Zone competing with Panamanian
beers. Tension rose when the governor of the zone insisted on
formally replying to the protests, despite the Panamanian
government's well-known view that proper diplomatic relations
should involve only the United States ambassador. In 1933 when
unemployment in Panama reached a dangerous level and friction over
the zone commissaries rekindled, President Harmodio Arias went to
Washington.
The result was agreement on a number of issues. The United
States pledged sympathetic consideration of future arbitration
requests involving economic issues that did not affect the vital
aspects of canal operation. Special efforts were to be made to
protect Panamanian business interests from the smuggling of cheaply
purchased commissary goods out of the zone. Washington also
promised to seek appropriations from Congress to sponsor the
repatriation of the numerous immigrant canal workers, who were
aggravating the unemployment situation. Most important, however,
was President Roosevelt's acceptance, in a joint statement with
Harmodio Arias, that United States rights in the zone applied only
for the purposes of "maintenance, operation, sanitation, and
protection" of the canal. The resolution of this long-standing
issue, along with a clear recognition of Panama as a sovereign
nation, was a significant move in the direction of the Panamanian
interpretation of the proper United States position in the isthmus.
This accord, though welcomed in Panama, came too early to deal
with a major problem concerning the US$250,000 annuity. The
devaluation of the United States dollar in 1934 reduced its gold
content to 59.6 percent of its former value. This meant that the
US$250,000 payment was nearly cut in half in the new devalued
dollars. As a result, the Panamanian government refused to accept
the annuity paid in the new dollars.
Roosevelt's visit to the republic in the summer of 1934
prepared the way for opening negotiations on this and other
matters. A Panamanian mission arrived in Washington in November,
and discussions on a replacement for the Hay-Bunau-Varilla Treaty
continued through 1935. On March 2, 1936, Secretary of State
Cordell Hull and Assistant Secretary of State Sumner Welles joined
the Panamanian negotiators in signing a new treaty--the Hull-Alfaro
Treaty--and three related conventions. The conventions regulated
radio communications and provided for the United States to
construct a new trans-isthmian highway connecting Panama City and
Colón.
The treaty provided a new context for relations between the two
countries. It ended the protectorate by abrogating the 1903 treaty
guarantee of the republic's independence and the concomitant right
of intervention. Thereafter, the United States would substitute
negotiation and purchase of land outside the zone for its former
rights of expropriation. The dispute over the annuity was resolved
by agreeing to fix it at 430,000 balboas (the balboa being
equivalent to the devalued dollar) which increased the gold value
of the original annuity by US$7,500. This was to be paid
retroactively to 1934 when the republic had begun refusing the
payments.
Various business and commercial provisions dealt with longstanding Panamanian complaints. Private commercial operations
unconnected with canal operations were forbidden in the zone. This
policy and the closing of the zone to foreign commerce were to
provide Panamanian merchants with relief from competition. Free
entry into the zone was provided for Panamanian goods, and the
republic's customhouses were to be established at entrances to the
zone to regulate the entry of goods finally destined for Panama.
The Hull-Alfaro revisions, though hailed by both governments,
radically altered the special rights of the United States in the
isthmus, and the United States Senate was reluctant to accept the
alterations. Article X of the new treaty provided that in the event
of any threat to the security of either nation, joint measures
could be taken after consultation between the two. Only after an
exchange of interpretative diplomatic notes had permitted Senator
Key Pittman, chairman of the Foreign Relations Committee, to advise
his colleagues that Panama was willing under this provision to
permit the United States to act unilaterally, did the Senate give
its consent on July 25, 1939.
Data as of December 1987
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