Panama City and the Panama Canal share August 15th as their founding date, and it’s no coincidence that the historical influence each has had on the other has been so significant that one could not grow and develop without the other, and vice versa. Below is a review of this shared history of vital importance to Panama.
Panama City’s Influence on the Canal
Panama City played a fundamental role during the construction of the Panama Canal, both during the French (1881-1889) and American (1904-1914) periods. As the country’s capital and main urban center, it served as a logistics base for both the French and the United States.
Strategic Link between Both Oceans
Its proximity to the narrowest point of the isthmus made it a strategic link between the Pacific and Atlantic Oceans, facilitating the transport of materials and the establishment of technical and administrative offices. It was also the location where many key decisions were made for the development of the project.
Events that Changed the Course of the Canal
The city was the epicenter of protests and nationalist movements demanding Panamanian control of the Canal, such as on January 9, 1964, when Panamanian students attempted to raise the national flag in the Canal Zone, sparking clashes with US troops. These events contributed to the signing of the Torrijos-Carter Treaties in 1977, which agreed to the transfer of the Canal to Panama in 2000.
During the Canal expansion (2007–2016), the city played a vital role by attracting investment, housing technical personnel, and strengthening its infrastructure.
Influence of the Panama Canal on Panama City
The construction of the canal (first by the French in 1881 and then by the Americans from 1904 until its opening in 1914) attracted a large number of workers from around the world, which led to a population increase in Panama City. Basic infrastructure (roads, hospitals, aqueducts) was developed to support the canal activity and the population.
Social Division and Modern Growth of the City
The presence of the Canal Zone, a strip controlled by the United States, marked a clear socioeconomic and territorial divide with respect to Panama City. However, the city’s economy benefited indirectly from the services provided to canal personnel and from growing international trade. Modern neighborhoods emerged, and the city consolidated its position as an administrative and commercial center.
Transfer of the Canal to Panama and the Great Economic Boom
With the transfer of the canal to Panama, the city experienced an unprecedented economic boom. The revenue generated by the canal began to be reinvested in infrastructure, education, and healthcare.
The area formerly occupied by the Canal Zone was integrated into urban development, allowing for the expansion of residential neighborhoods, commercial areas, and projects such as the City of Knowledge.
The expansion of the canal in 2016 consolidated Panama’s position as a global logistics hub, international financial center, free trade zones, modern ports, and a constantly growing real estate market.