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In 1977, after lengthy negotiations, President Jimmy Carter signed a treaty that abolished the Canal Zone as a colonial enclave, arranged for Panamanian ownership of the canal in the year 2000, and provided for the closing of American military bases.In 1925, the United States intervened in a revolt by Kuna Indians on the northeast Atlantic coast and established a tribal reserve. In the 1930s, the United States' military hired Kuna laborers to work at army bases.They speak English, French, or an English patois at home and are mostly Protestant. The official language is Spanish, but English is used widely in business, especially banking and tourism, and by some people of African descent. Some coins bear the image of Urraca, an Indian chief who resisted the Spanish conquests, but most coins depict Vasco Nuñez de Balboa, the discoverer of the Pacific Ocean. Panama became an autonomous nation because of its function as the custodian of the transisthmus shipping route—the "path between the seas." It gained independence in 1903 as part of an American-sponsored revolt against Colombia that led to the signing of a treaty granting the United States the right to build the Panama Canal.

From 1903 to 1978, the United States controlled the Canal Zone, a five-mile strip on both sides of the canal.At that time, it was referred to as the Castilla de Oro, a source of gold and potential converts.From 1519 through 1538, the area that is now Panama was a base for soldiers sent to conquer the Andean civilizations in South America.The government is transferring that housing to private owners but is committed by treaty to conserve the natural rainforest areas of the former Zone to prevent the canal from silting.A few neighborhoods of upper-class walled villas have appeared.

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