Panama Canal Zone

The Panama Canal Zone was a 1,430 km² unorganized U.S. territory located within the Republic of Panama, consisting of the Panama Canal and an area generally extending 8.1 km on each side of the centerline, but excluding Panama City and Colón, which otherwise would have been partly within the limits of the Canal Zone. Its border spanned two of Panama's provinces and was created on November 18, 1903 with the signing of the Hay-Bunau Varilla Treaty. When reservoirs were created to assure a steady supply of water for the locks, those lakes were included within the Zone.

On February 26, 1904, the Isthmian Canal Convention was proclaimed. In this, the Republic of Panama granted to the United States in perpetuity, the use, occupation and control of a zone of land and land under water for the construction, maintenance, operation, sanitation and protection of the canal.

From 1903 to 1979 the territory was controlled by the United States, which had built the canal and financed its construction. From 1979 to 1999 the canal itself was under joint U.S.-Panamanian control. The Canal Area was returned to Panama at noon (local Panama time) on December 31, 1999. The 1977 treaty established the canal as a neutral international waterway and even in times of war any vessel is guaranteed safe passage. After the 1999 hand-over, the U.S. and Panama jointly shared duties in defending the canal.

During U.S. control of the Canal Zone, the territory, apart from the canal itself, was used mainly for military purposes; however. U.S. military usage ended when the zone was returned to Panamanian control. It has now been integrated into the economic development of Panama, and is a tourist destination of sorts, especially for visiting cruise ships.