The Panama Crisis was a military and political confrontation that occurred in November of 1957 in Colombia. The root of the crisis lay in the decision by Colombian President Gustavo Rojas Pinilla to nationalize the Panama Canal in July of 1957, which immediately triggered a crisis as various parties scrambled to prevent him from going through with his threat. After negotiations led by Sweden and Mexico fell through, the United States, along with the canal-reliant Confederate States and Costa Rica, launched an attack against Colombia.

The attack, while a military victory, was a political fiasco after the UBPR and Germany became involved along with pressure from the League of Nations. Costa Rica quickly cut a deal with the Colombians to settle border disputes that had remained since the early 1940s and withdrew crucial soldiers. Within days, the Costa Ricans demanded that the bi-national force withdraw from its territory and the United States wound up embarrassed. The incident soured Confederate-American relations, likely cost Progressive candidate Frank Clement the Presidency in that fall's Presidential election, brought Adlai Stevenson's political capital in his second term to an end and is regarded as the end of the "American Decade" of 1946-1957 in which the United States was the world's preeminent power in the postwar period, establishing Germany once again as the Western world's leader. The incident was cited as the "Panama Ghost" by the American military establishment for several decades on.

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