Following the destruction of the old city by Captain Henry Morgan in 1671, the Spanish moved their city 8km southwest to a rocky peninsula at the foot of Cerro Ancón. The new location was easier to defend as the reefs prevented ships from approaching the city except at high tide. The new city was also easy to defend, as a massive wall surrounded it, which is how Casco Viejo (Old Compound) got its name.
In 1904, when construction began on the Panama Canal, all of Panama City existed where Casco Viejo stands today. However, as population growth and urban expansion pushed the boundaries of Panama City further east, the city’s elite abandoned Casco Viejo and the neighborhood rapidly deteriorated into a slum.
Today Casco Viejo's crumbling facades have been mostly replaced by immaculate renovations. Declared a Unesco World Heritage Site in 2003, the area is getting international recognition. The newly restored architecture gives a sense of how magnificent the neighborhood must have looked in past years. Some developers, committed to mitigating the effects of gentrification here, are creating one affordable unit for each high-end one constructed, and working on interesting local cultural initiatives. Yet the consensus is that most of the neighborhood's former occupants have already been relegated to the periphery.
Change continues to prove tricky for the Casco. The expansion of the Cinta Costera, a coastal beltway, has ringed the peninsula with an elevated highway built some 8m above the sea and 200m offshore. With little regard for environmental concerns, the project threatened the area's World Heritage status. Worst of all, the US$189 million project, created to fix city traffic problems by providing an alternative route, has not been effective as it does not bypass the worst bottleneck areas.