Panama became independent from Spain in 1821 as part of Gran Colombia – that is, in Union with Colombia, Ecuador and Venezuela. The last two weren’t too happy with the arrangement and bunked off the Union in 1830. Panama tried to do the same but only managed to be independent for 13 months in the course of the next ten years – which made it part and parcel of the now less grand Gran Colombia.
The failing construction works on the Panama Canal under French leadership from 1880 to 1889 did not change a thing. However, when Teddy Roosevelt convinced the US to take over the project, Columbia refused and, in 1903, the US sent soldiers to the not yet founded Panama to found it and to finish the Canal from 1904 to 1914. To secure the large-scale project, the Americans concluded a contract with the new country’s flawlessly democratic government – which they had installed themselves. The treaty granted the US sovereign rights over the Canal area as well as the right to military intervention.
Panama’s corporate law was based on the slipshod model of Delaware and complemented the new trade route surprisingly well. This made it easy for Americans to smuggle alcohol during the Prohibition and gained importance in the 1980s when General Manuel Noriega seized power with the help of the military and used the lax regulation to launder Colombian drug money. In 1989, the US invaded and the vicious circle of coup d’états that had prevailed since the 1940s ended in favour of an elite-dominated democracy. As a consequence of a deal from 1979, Panama took over the Canal in 1999 and thereby gained control of its entire territory – a mere 96 years after being founded.
