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There is a longtime Chinese community, and a small Hindu community lives in the capital, Panama City.The largest demographic group is the interioranos ("interior people"), who are classified as "Hispano-Indians." This group is largely mestizo (mixed European and native American), and its members consider themselves the "real Panamanians." Some interioranos grade imperceptibly into an acculturated native American population known pejoratively as cholos, who refer to themselves as naturales ("natives").Survivors of the burning of Panama City in 1671 rebuilt a walled bastion on a rocky promontory to the west.This became the home of the colonial administration and the Creole elite, who lived in two-story mansions.

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These mostly white employees of the Canal Company lived an isolated life and were prejudiced against the Panamanian population.They speak English, French, or an English patois at home and are mostly Protestant. The official language is Spanish, but English is used widely in business, especially banking and tourism, and by some people of African descent. Some coins bear the image of Urraca, an Indian chief who resisted the Spanish conquests, but most coins depict Vasco Nuñez de Balboa, the discoverer of the Pacific Ocean. Panama became an autonomous nation because of its function as the custodian of the transisthmus shipping route—the "path between the seas." It gained independence in 1903 as part of an American-sponsored revolt against Colombia that led to the signing of a treaty granting the United States the right to build the Panama Canal.The Spanish discovered and conquered Panama between 15.After failing to build a sea-level canal in the 1880s, the French sold their concession to the United States, which conspired with the elite in Panama City to declare independence when they could not obtain a favorable treaty from Colombia.

From 1903 to 1978, the United States controlled the Canal Zone, a five-mile strip on both sides of the canal.

In 1977, after lengthy negotiations, President Jimmy Carter signed a treaty that abolished the Canal Zone as a colonial enclave, arranged for Panamanian ownership of the canal in the year 2000, and provided for the closing of American military bases.