Jimmy Carter gave Panama control of the canal. It's one of his most controversial achievements

It was a territory known to some who lived there as a tropical utopia. The Canal Zone in Panama had been under U.S. control for nearly 75 years. But in 1977, President Jimmy Carter signed treaties with Panama's leader, Gen. Omar Torrijos.

With a stroke of the pen by each leader, they agreed to gradually hand back control of the narrow, but critical strip of land to Panama.

"It was like if you'd taken a slice of Ohio and transplanted it in Panama," says Ed Scott, an entrepreneur and former U.S. government official, who grew up in the Canal Zone.

The stretch of land 50 miles long and 10 miles wide in the middle of the Panamanian isthmus had been under U.S. control since 1903, with construction of the canal starting in earnest the following year.

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The U.S. Canal Zone had its own government, court system, schools, police force, fire department. It had its own governor, appointed by the president of the U.S. Living in the zone meant access to free housing, free schools, state-of-the-art medical facilities, manicured lawns, clean streets, little-league football and Fourth of July parades.

But when Panamanians set foot in the Canal Zone, their citizenship rights were void and they could be prosecuted under different laws and regulations.

Panamanian resentment

Panamanian resistance to U.S. control of the Canal Zone had been growing for some years. By the 1960s, the canal had become a major flashpoint, with frequent protests against the U.S. This antipathy came to a violent head on Jan. 9, 1964. Zone authorities had decreed that neither U.S. or Panamanian flags would be displayed in schools in the Canal Zone. But a dispute over this burst into violence and led to the deaths of over 20 Panamanians and four U.S. soldiers.

The Canal Zone was constructed following Jim Crow policies of segregation. Privileged white U.S. citizens and their dependents were granted certain rights based on race. Black Panamanians and migrant laborers, mostly from the Caribbean, took the bulk of low-paying jobs and lived in the Canal Zone's segregated neighborhoods.

"It was one of the most clear examples of taking a very specific U.S. racial hierarchy at a legislative level system to another part of the Americas and sort of implementing it there," says Kaysha Corinealdi, historian and author of Panama In Black.

"So it very much created a road map of inequality," Corinealdi says.

The treaties that unraveled U.S. control

But President Carter alongside Panamanian military leader Torrijos upended everything when they negotiated and signed the Panama treaties in September 1977.

The Panama Canal Treaty promised to give control of the canal to the Panamanians by midnight Dec. 31, 1999. The Treaty of Permanent Neutrality and Operation declared the canal neutral and open to vessels of all nations and allowed the U.S. to retain the permanent right to defend the canal from any threat.

Together both these treaties acknowledged the Republic of Panama's sovereignty over its nation and full operational control of the canal connecting the Pacific and Atlantic Oceans.

Some Zonians — as Canal Zone residents were often referred to — and conservative legislators in Washington were not happy about the new treaties, says Scott, who later worked for the Carter administration.

"There were concerns that Panamanians didn't have the skill sets to do the heavy-duty engineering work and supervise the locks overall," Scott says.

More critically, there were many more who viewed Carter's signing as capitulation to a Panamanian government led by a military dictator, and harmful to both American military and economic interests. The Carter administration faced a battle in the U.S. Senate to get the treaties ratified.

"The canal is ours, we bought and we paid for it and we should keep it," Republican Sen. Strom Thurmond said.

But one of the Democratic president's staunchest supporters in this battle came from a surprising corner. Movie star and Republican John Wayne was a friend of the Panamanian leader and wrote countless letters to senators in support of President Carter. The efforts of the Carter administration finally prevailed and by the following year, both treaties were ratified by the Senate.

Breaking down the barriers

The Torrijos-Carter Treaties played a major role in breaking down inequalities and opened the door to career opportunities for Panamanians.

The two countries worked together to lay out a 20-year staggered transition plan that Scott claims "was a huge success."

The divided worlds between the Canal Zone and Panama started to dissolve slowly over the next few years and blend together. And the comfortable lifestyle of many Americans living in the zone started to slowly decompose.

Resentful Zonians mourned the loss of their privileged lifestyle. Some youngsters took to wearing a T-shirt showing a green monster raising a middle finger, with the legend "To Jimmy from the Canal Zone."

Some changes were effective immediately. Canal Zone buildings were required to fly the Panamanian flag alongside the Stars and Stripes. A basketball court-size Panamanian flag was raised on top of the highest hill overlooking Panama City.

The Panamanian government assumed full control over the police, prison and the courts. The U.S. military gradually withdrew. Movie theaters, bowling alleys, pools and recreational facilities started to close and as a result many service-industry laborers lost their jobs.

White neighborhoods in the zone became more racially diverse as Panamanians moved into homes there.

The treaties also required the U.S. to set up training programs in order to increase the number of Panamanians qualified for higher-level jobs.

Carter in Panama

A year later, after the initial signing in 1977, President Carter paid a 23-hour visit to Panama in June the following year to formally exchange the documents ratifying the treaties with Gen. Torrijos. In a speech after the signing, Carter said the moment marked a renewed commitment to "the principles of peace, nonintervention, mutual respect and cooperation" between the United States and Latin America.

To President Carter, the treaties signified the removal of "the last remnant of alleged American colonialism" in Latin America.

By the time the handover was completed on Dec. 31, 1999, Panamanians had developed the skills and expertise to assume full responsibility for the management, operation and maintenance of the Panama Canal and the Canal Zone.

According to historian Corinealdi, Carter leaves a lasting legacy in Panama. He was the first U.S. president who recognized the urgent need to review the outdated Panama Canal Treaty and the U.S. presence in the Canal Zone.

"Carter was the one who started it," she says. "He really took this on more than any other president in history."

President Jimmy Carter died December 29.

Rolando Arrieta grew up in Panama City and went to Canal Zone schools.