"We bought it, we paid for it, we built it, and we intend to keep it."
— President Ronald Reagan
The Panama Canal Zone is an unincorporated territory of the United States surrounding the Panama Canal. First established in 1903, the military bases in the Zone help protect American interests in the canal, such as the transit of Sea Dragon rockets from Cape Kennedy to their launch sites near Guam. American control of the Zone was contested by nationalist Panamanians, who viewed the American occupation as illegal.
After his election in 1977, American President Ronald Reagan reversed the conciliatory policies of his predecessor, Ted Kennedy, and signaled his unwillingness to negotiate over the Canal Zone. In response, anti-American riots gripped the country, and Panamanian dictator Omar Torrijos, aligned Panama with the Soviet Union.
Behind the scenes
In real-life, the United States withdrew Panama Canal Zone as a result of the Panama Canal Treaty of 1977, signed between Torrijos and President Carter; the treaty was signed over the objections of conservatives like Ronald Reagan.