As heads of state gather in Panama for Dec. 14 ceremonies in advance of the transfer of the Panama Canal on the Dec. 31, the small Caribbean nation of 2.8 million prepares to step out of Washington's shadow. Since the U.S.S. Nashville guaranteed Panama's independence from Colombia in 1903, the U.S. has maintained a military garrison in Panama and kept administrative control of the canal it built across the isthmus. For decades, Panamanian nationalists rallied to the cry of "one flag, one territory," calling the 10-mile (16 km)-wide U.S.-controlled Canal Zone a "stake through the nation's heart." But when that stake finally comes out at noon on Dec. 31 and the 50-mile (82 km) waterway passes to Panama's control, it will wake up to the challenge of full nationhood.