Hay–Bunau-Varilla Treaty


The Hay–Bunau-Varilla Treaty was a treaty signed on November 18, 1903, by the United States and Panama, which established the Panama Canal Zone and the subsequent construction of the Panama Canal. It was named after its two primary negotiators, Philippe-Jean Bunau-Varilla, the French diplomatic representative of Panama, and United States Secretary of State John Hay.

Background

Bunau-Varilla was originally involved in the building of the Panama Canal under Ferdinand de Lesseps, who had built the Suez Canal. After the collapse of the de Lesseps efforts to build the Panama Canal, Bunau-Varilla became an important shareholder of the Compagnie Nouvelle du Canal de Panama, which still had the concession, as well as certain valuable assets, for the building of a canal in Panama. Although not Panamanian himself, Bunau-Varilla had provided financial assistance to the rebel side in Panama's independence from Colombia, which occurred two weeks prior to the signing of the treaty. He had not, however, been in Panama for seventeen years, nor had he ever returned. As part of the Hay–Bunau-Varilla negotiations, the U.S. bought the shares and assets of the Compagnie Nouvelle du Canal de Panama for US$40 million.

Text of the treaty

Article I

The United States guarantees the freedom of the Republic of Panama

Article II

The Republic of Panama grants the United States with the use of the land said canal be built, the surrounding land for construction purposes, and all islands within the limits of the zone

Article III

The Republic of Panama grants to the United States all the rights, power and authority within the zone mentioned which the United States would possess and exercise if it were the sovereign of the territory within which said lands and waters are located to the entire exclusion of the exercise by the Republic of Panama of any such sovereign rights, power or authority.

Article IV

The United States has the right to use lakes, oceans, and other bodies of water around Panama for transportation purposes

Article V

The Republic of Panama grants the United States a monopoly for the construction, maintenance, and operation of any system of communication dealing with the canal

Article VI

Any damages from the land before the date of convention will not all be charged to the United States nor the Republic of Panama

Article VII

The Republic of Panama grants the United States with any lands, buildings, water rights, or other properties necessary for construction or operation and protection of the Canal. This may include any works of sanitation such as the collection and disposition of sewage in said cities of Panama

Article VIII

The Republic of Panama grants to the United States all rights, which it now has or in the future may acquire to, the property of the New Panama Canal Company and the Panama Railroad Company

Article IX

The United States and the Republic of Panama agree there shall not be imposed or collected house tolls, tonnage, anchorage, lighthouse, wharf, pilot, or quarantine dues or any other charges of any kind upon any vessel using or passing through the canal

Article X

There shall not be any extra charges or taxes for either country, United States or the Republic of Panama

Article XI

United States agrees that the official dispatches of the Government of the Republic of Panama can be transported through the Canal services without any higher rates than other service officials of the United States

Article XII

The Government of the Republic of Panama shall permit the immigration of the free access to the lands and workshops of the Canal whatever the nationality

Article XIII

United States may import at any time into the said zone without any restrictions or obscene fees

Article XIV

United States agrees to pay Panama $10,000,000 in gold coins at the beginning of the settlement then an additional $250,000 nine years after the opening date

Article XV

The joint commission will be settled by the United States and the Republic of Panama both appointing two people to help settle all decisions. If both do not reach a common result, an umpire will be appointed

Article XVI

The two governments of each country are responsible for making adequate provisions for the pursuit, imprisonment, detention, and delivery within the Canal Zone to the authorities of either country

Article XVII

The Republic of Panama grants the use of the ports to the United States as places of refuge for any vessel employed by the Canal enterprises

Article XVIII

The Canal and its entrances shall be neutral in perpetuity and open given all the terms in the treaty

Article XIX

The Government of the Republic of Panama shall have the right to transport its vessels and troops over the Canal at all times without paying charges of any kind

Article XX

Any existing treaty involving the territory of the Isthmus of Panama shall be cancelled

Article XXI

The rights granted by the Republic of Panama to the United States are understood to be free of all debts or concessions to other governments and consequently, if a problem should arise, the claimants shall resort to the Government of the Republic of Panama and not to the United States for any required compromise

Article XXII

The Republic of Panama grants to the United States the participation in the future earnings of the Canal under the concessionary contract

Article XXIII

If it should become necessary at any time to employ armed forces for the protection of the Canal, the United States shall have the right to use its police and its land and naval forces

Article XXIV

No change in the Government, laws, or treaties of the Republic of Panama shall affect any right of the United States under the present convention

Article XXV

For the better performance of this convention and to the end of the protection of the Canal, the Government of the Republic of Panama will sell or lease land to the United States for naval or coaling stations

Article XXVI

The respective Governments shall ratify the treaty and the ratifications shall be exchanged in Washington at the earliest time possible

Terms

The treaty was negotiated in Washington, D.C. and New York City. The terms of the treaty stated that the United States was to receive rights to a canal zone which was to extend five miles on either side of the canal route in perpetuity, and Panama was to receive a payment from the U.S. up to $10 million and an annual rental payment of $250,000. Though legally, Panama never officially became a colony of the United States. Instead of full overbearing control, the Hay–Bunau-Varilla Treaty gave the United States governance only in the Canal Zone.

Aftermath

This treaty was a source of conflict between Panama and the United States since its creation. The Canal Zone became a racially and socially segregated area, set aside from the country of Panama. The push for environmental determinism seemed to be the best framework to justify American practices in Panama. The conflict from the treaty reached its peak on January 9, 1964, with riots over sovereignty of the Panama Canal Zone. The riot started after a Panamanian flag was torn during conflict between Panamanian students and Canal Zone Police officers, over the right of the Panamanian flag to be flown alongside the U.S. flag. U.S. Army units became involved in suppressing the violence after the Canal Zone Police were overwhelmed. After three days of fighting, about 22 Panamanians and four U.S. soldiers were killed. This day is known in Panama as Martyrs' Day.
The events of January 9 were considered to be a significant factor in the U.S. decision to negotiate the 1977 Torrijos–Carter Treaties, which finally abolished the Hay–Bunau-Varilla Treaty and allowed the gradual transfer of control of the Canal Zone to Panama and the handover of the full control of the Panama Canal on December 31, 1999.