1903: The Hay-Herrán Treaty is not ratified by the Senate of Colombia. The treaty would allow the US a 100-year lease on the Isthmus of Panama (then part of Colombia). The refusal of the Colombians to ratify the treaty prompts the US to support Panama's separation from Colombia. Panama declares independence later in 1903, and the US Navy is sent to protect the new nation from being retaken by Colombia. In exchange, Bunau-Varilla, the French diplomatic representative of Panama, grants the US perpetual lease on what would become the Panama Canal Zone. The zone is placed under US military control immediately.

The US commences construction of the Panama Canal, a project previously abandoned by the French. To that end, cheap labour is imported from the Caribbean, India, and Asia, resulting in the creation of a new racial underclass. Racial segregation policies much like those that are in place in the US are implemented by the US in the Canal Zone.

In 1913, construction of the canal nears completion. The US continues to expand its military presence. In the decades that follow, tension between the US and Panama flares up in violent conflicts repeatedly.

1968: Torrijos, at this point a lieutenant colonel of the Panamanian armed forces, is made de facto head of government after a successful coup against president Arias.

1977: Torrijos and US president Carter sign the Torrijos–Carter Treaties. The treaties guarantee Panama control of the Panama Canal by 1999. Although strongly opposed by conservatives, the treaties are ratified by the US Senate. As the most immediate consequence of their implementation, the Canal Zone ceases to exist in 1979.

1981: Torrijos dies in a plane crash. Noriega, who had been appointed head of intelligence by Torrijos, and is known by the US government to be involved in the drug trade, becomes head of the Panamanian armed forces (now named PDF, Panama Defense Forces) and thereby de facto ruler of Panama in 1983. Noriega had been a CIA asset even before he was made head of intelligence, and was put on the agency's payroll in 1971.

Noriega proves useful to the US government in various operations designed to further US security interests in Central America. He acts as a conduit in providing funds and weapons to the Contras, the US-backed right-wing insurgents against the Sandinista government in Nicaragua.

1986: After Noriega's criminal activities are exposed by journalist Seymour Hersh, the Reagan administration decides to indict Noriega with drug-related charges in the first time that a foreign leader is indicted before a US court. When Noriega shifts his allegiance to the Eastern Bloc, previously discarded plans to overthrow him take a more concrete shape, and the US government starts backing the Panamanian opposition. In the 1989 Panamanian national elections, opposition candidate Endara is elected President, but Noriega refuses to step down, citing US influence as the cause for the election result.

1989: The Panamanian general assembly declares a state of war between Panama and the US. Only five days later, the US starts its invasion of Panama. Bush Senior cites Panama's declaration as justification for the invasion. The unnamed but patent objectives are to seize back control of the Panama Canal, and to instal a US-friendly government.

US forces are expressly instructed to provoke the PDF. The invasion is eventually named Operation Just Cause, and General Colin Powell says that he likes the name because ‘even our severest critics would have to utter “Just Cause” while denouncing us.’ Endara accepts presidency, as he is urged to do by US officials, and Noriega surrenders in January 1990.

On 29 December 1989, the United Nations General Assembly votes 75-20, with 40 abstentions, to condemn the US invasion of Panama as a violation of international law. The civilian death toll of Operation Just Cause is estimated at 500-3,000, largely attributable to the US forces' deliberate assaults on residential areas. Nineteen reports on extrajudicial killings committed by US troops are filed with the Southern Command. All but two of them are dismissed.