The Bryan–Chamorro Treaty was signed between Nicaragua and The United States on August 5, 1914. The Wilson administration changed the treaty by adding a provision similar in language to that of the Platt Amendment, which would have authorized United States military intervention in Nicaragua. The United States Senate opposed the new provision; in response, it was dropped and the treaty was formally ratified on June 19, 1916.
The democratically elected and reform-minded Liberal Party president José Santos Zelaya López had incurred the wrath of the United States by negotiating with France, Germany and Japan to resurrect the proposed Nicaragua Canal, which might constitute potential future foreign competition with the newly built US-owned Panama Canal. After supporting an insurgency against the government led by Conservative Party insurgents Emiliano Chamorro and Juan José Estrada with arms, funds, troops, warships and economic measures, the United States eventually forced the popular previous liberal presidents José Zelaya and his successor Jose Madriz to flee the country. The United States then installed the conservative governments of first Juan José Estrada (soon deposed by the powerful Secretary of War Luis Mena) and then the former vice president Adolfo Diaz. When General Luis Mena convinced the National Assembly to name him successor to the unpopular pro-US Adolfo Diaz, the United States invaded and occupied Nicaragua militarily from 1912 to 1933, wrote a new constitution for the country, changed the National Assembly, and propped up successive conservative regimes under the presidents Adolfo Diaz, Emiliano Chamorro, and Diego Manuel Chamorro. Luis Mena fled into the countryside to start a rebellion, which continued under various leaders for the next 60 years. In exchange for political concessions from Adolfo Diaz, the United States provided the military strength to suppress popular revolt and ensure the conservative regime maintained control over the Nicaraguan government. For much of the 20th century Nicaragua remained controlled under the hereditary dictatorship of the Chamorro and after 1936 the Somoza dynasties, until widespread rebellions forced them out of power in the 1970s.:111, 197:143
The Treaty was named after the principal negotiators: William Jennings Bryan, U. S. Secretary of State; and the then General Emiliano Chamorro, representing the Nicaraguan government. By the terms of the treaty, the United States acquired the rights to any canal built in Nicaragua in perpetuity, a renewable 99 year option to establish a naval base in the Gulf of Fonseca and a renewable 99-year lease to the Great and Little Corn Islands in the Caribbean. For those concessions, Nicaragua received three million dollars.
Most of the three million dollars was paid back to United States creditors by the United States officials in charge of Nicaraguan financial affairs, which allowed the Nicaraguan government to continue to collect internal revenue. The debt had been quickly amassed in a two year period by the Nicaraguan government of Juan José Estrada under the American "dollars for bullets" scheme, in order to retard infrastructure development funding from rival powers, as well as lingering debts from earlier indemnities Nicaragua was forced to pay the foreign occupying powers of the United States and Great Britain, and repairing the devastation inflicted from the war with Great Britain, war with the United States and the civil war of Luis Mena's Rebellion.:143
At the request of Nicaragua, the United States under Richard Nixon and Nicaragua under Anastasio Somoza Debayle, held a convention, on July 14, 1970, which officially abolished the treaty and all its provisions.
At various times since the Panama Canal opened in 1914, the Nicaragua route has been reconsidered. Its construction would shorten the water distance between New York and San Francisco by nearly 800 kilometers (500 mi). The Bryan–Chamorro Treaty kept Nicaragua and stopped any potential European powers from competing with the Panama Canal.
The provision of the Bryan–Chamorro Treaty granting rights to United States to build a naval base in the Gulf of Fonseca was contested by El Salvador and Costa Rica. The Central American Court of Justice saw in the favor of the two countries. The United States ignored the decision, contributing significantly to the court's collapse in 1918.
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