Hay-Bunau Varilla Treaty

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The Hay-Bunau-Varilla Treaty was signed on November 18, 1903 (two weeks after Panama's independence from Colombia). Phillipe Bunau-Varilla went to Washington, D.C. and New York City to negotiate the terms with several U.S. officials, most prominently, Secretary of State John Hay. The two men negotiated the terms of sale for the building of a Panama Canal and for a Panama Canal Zone surrounding the Canal. No Panamanians signed the treaty.

Bunau-Varilla was a Frenchman originally involved in the building of the Panama Canal under the same man that built the Suez Canal, Ferdinand de Lesseps. 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. 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.

The Hay-Bunau Varilla Treaty is also called The Treaty No Panamanian Signed, though Panama later agreed to the terms including: the United States was to receive rights to a canal zone which was to extend ten miles on either side of the canal route in perpetuity; Panama was to receive a payment from US up to $10 million and an annual rental payments of $250,000.

This treaty was a source of conflict between Panama and the United States since its creation, that reached its peak on the January 9, 1964 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. The U.S. Army units became involved in suppressing the violence after Canal Zone police were overwhelmed, and after three days of fighting, about 22 Panamanians and four U.S. solders were killed. This day is known in Panama as Martyrs' Day.

The events of Martyrs' Day are 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.