A nation occupying the Isthmus of Panama, which connects South America and Central America. Cuna Indians inhabited the region when Europeans arrived. The coast was first seen by navigators from Spain, Rodrigo de Bastidas in 1501 and then Christopher Columbus, who anchored near present Portobelo in 1502. Circa 1510 Diego de Nicuesa attempted to found a colony on Darien, the eastern part of Panama. He was followed by Martin Fernand ez de Encisco, but it was Vasco Nunez de Balboa, another conquistador, who stabilized the colony in 1510. In 1513 Balboa crossed the isthmus and on September 13 became the first European to see the Pacific Ocean. Panama City, founded in 1519 by Pedro Arias de Avila, became the transshipment port for Andean gold on its way to Spain.
The Darien Scheme was an attempt by a Scottish company to establish a colony on Darien. Two expeditions, in 1698 and 1699, founded New Saint Andrew, but the scheme was a disastrous failure. Until 1717 Panama was part of the Spanish viceroyalty of Peru but in 1739 it became permanently part of the viceroyalty of New Granada, which also included modern Colombia, Venezuela, and Ecuador. When independence from Spain was won in 1821, Panama became part of Gran Colombia, comprising the same territory as the viceroyalty. After Venezuela and Ecuador seceded in 1830, Panama remained part of Colombia.
A treaty between Colombia and the United States resulted in the building of a railroad across the isthmus between 1850 and 1855. The route was much used by Americans on their way to the California gold fields and the Oregon Territory. In 1903 another treaty with Colombia gave the United States the right to build a canal across the isthmus, but the Colombian senate refused to ratify the treaty. On November 3, aided by U.S. warships, Panama declared its independence from Colombia. The Hay-Bunau- Varilla Treaty quickly established the Panama Canal Zone and provided for a lump-sum payment and an annuity to Panama. The Panama Canal was constructed by the United States between 1904 and 1914.
In the early 20th century there were many changes of government; and in 1908, 1912, and 1918 the United States sent armed forces to Panama to restore order. By another treaty in 1936 the United States gave up its protectorate over Panama and increased the annual canal payments. This movement culminated in a treaty of 1978 by which, on October 1, 1979, the zone was returned to Panama and the canal itself became Panamanian property in 1999.
From the 1930s until late into the 1950s, first Arnulfo Arias and then Jose Antonio Remon dominated politics. In early 1969 Omar Torrijos Herrera emerged as ruler and remained so until August 1981, when he died in a plane crash, and was replaced as dictator by Colonel Manuel Antonio Noriega Moreno. Noriega ruled through a series of puppet presidents, and engaged in drug smuggling and money laundering with the Colombian drug cartel. In 1987 the U.S. government imposed sanctions on Panama that hurt the local economy. In 1989 the Panamanian legislature declared Noriega president and proclaimed that the United States and Panama were in a state of war. The United States invaded five days later, removed Noriega from power, and extradited him to the United States to stand trial for drug trafficking offenses. In 2004, Martin Torrijos Espino, the son of Torrijos was elected president. Panama City is the capital and largest city; Colon and David are the next largest.