The canal was built using US money, but it was always seen as a symbol of the USA's colonial power. This caused friction in Panama, and in other Latin American countries.

On this day, US President Jimmy Carter signed a treaty to transfer the Panama canal to Panama by the end of the century. A US controlled area surrounding the canal (the 'Canal Zone') which bisected Panama was immediately abolished.

One of the terms of the treaty empowered the USA to use military force to keep the canal open if necessary. This term of the treaty was used in 1989 as a justification to overthrow Manuel Noriega who threatened to seize the canal.

Control of the canal passed over peacefully on 31st December 1999. Former President Jimmy Carter told the Panamanians, 'It's yours."