I | INTRODUCTION |
Panama, republic in Central America, located on the
narrow strip of land that connects North and South America. Its position between
two continents and separating two oceans has played a defining role in Panama’s
history and the livelihoods of its people.
Panama is crossed by mountain ranges, covered
with large areas of rain forest, and bounded by two long coastlines studded with
islands and bays. At several places it spans less than a hundred miles from its
Atlantic coastline to its Pacific shores. Most of its people and economic
activity are located in the central region surrounding the Panama Canal, the
major waterway that has played a decisive role in the country’s history. Panama
City, the capital and largest city, is on the Pacific coast in this central
zone. The nation’s diverse population is largely of mixed Spanish, black, and
Native American descent, but includes indigenous people and immigrants from many
parts of the world.
As a land bridge between two continents,
Panama developed plant and animal life more diverse than almost anywhere else on
Earth. Prehistoric inhabitants of the Americas crossed Panama to reach South
America and continued to migrate back and forth, sharing trade goods and culture
and using the rich natural resources of the isthmus.
The earliest Europeans to explore Panama
recognized its value as a link between the Atlantic and Pacific oceans. For two
centuries, Spain used Panama as a major commercial center in its American
colonies, shipping trade goods and African slaves to Peru and thousands of tons
of silver and gold to Spain. In the 17th century Panama handled a significant
share of world trade.
By the 19th century, new technologies and
machinery, such as steam-powered shovels and trains, steel, and reinforced
concrete, made it possible to attempt to fulfill a longtime European dream of
building a canal across Panama. In the 1880s a French company lost a fortune and
thousands of lives trying unsuccessfully to dig a sea-level canal. In 1903 the
United States government helped Panama, then a province of Colombia, to become
an independent nation. The United States then acquired permission from the new
republic to build a canal.
The Panama Canal, completed in 1914,
represented a great engineering achievement. But a controversial treaty gave the
United States control over the canal and important segments of Panama’s
territory and economy. This prevented Panamanians from controlling a facility
they considered crucial for their well-being and national development. Much of
modern Panama’s history centers on the struggle of its people to benefit from
the Panama Canal and the lands through which it passed, the Panama Canal Zone.
While pursuing that goal, Panama developed its
own unique culture and system of government and built an economy that did not
depend solely on the canal. Issues concerning the canal caused tension with the
United States through much of the 20th century. In the 1970s new treaties
brought Panama's goal of controlling the canal, and its own destiny, within
reach. Under these agreements, Panama took possession of the Panama Canal on
December 31, 1999. Other conflicts between Panama's government and the United
States, however, led to a U.S. invasion in 1989 to overthrow the dictatorship of
Manuel Antonio Noriega.
II | LAND AND RESOURCES |
Located at the juncture of Central and South
America, Panama forms a land bridge between the two continents. Panama lies
within the tropics, and about one-third its area is covered with rain forest.
The rest has been converted to farmland and pastures or lies in the semiarid
Azuero Peninsula. Panama’s climate is warm and humid, moderated by the two
oceans that bathe its 2,490 km (1,547 mi) of coastline. Along each coast are
low-lying areas, but inland are mountains that divide the country into north-
and south-facing slopes.
Seen from above, Panama has the shape of a
reclining S and occupies 75,517 sq km (29,157 sq mi) of land. In
addition, Panama claims 200 nautical miles (370 km/230 mi) of territorial waters
along its shores. The country is bounded on the north by the Caribbean Sea, on
the east by Colombia, on the south by the Pacific Ocean, and on the west by
Costa Rica. At its widest point it stretches 650 km (400 mi) from west to east,
but at its narrowest, near the roughly north-south route of the Panama Canal, it
measures only 48 km (30 mi).
A | Natural Regions |
A discontinuous backbone of mountains runs
east and west almost the full length of Panama. A gap between the eastern and
western mountain ranges provided a natural passage for travelers. This gap,
located in the central region of the country, eventually allowed construction of
a railroad and canal to join the two coasts. The central region, known as the
transit zone, consists of narrow coastal plains and a mountainous middle
section. Half of Panama’s people, 90 percent of its industry, its largest
cities, and its major transportation routes are located in this area.
In the west, the mountain range is called
the Cordillera Central, and the highest section, with an average height of about
1,500 m (about 5,000 ft), is called the Serranía de Tabasará. The highest point
in the country, the Barú volcano (3,475 m/11,401 ft), is located in this range.
The mountains in the country’s eastern half are divided between the Serranía de
San Blas and the Serranía del Darién, with an average elevation of about 900 m
(about 3,000 ft). Panama is geologically stable and experiences only moderate
earthquake activity. None of its volcanoes are active.
West of Panama’s central zone is the
Interior, including the province of Coclé, with its capital at Penomoné, and the
province of Veraguas, centered on its capital of Santiago. This region produces
and processes agricultural commodities and livestock for the urban population.
Many of the country’s oldest Hispanic families come from here. In the far south
is the Azuero Peninsula, a dry area of rolling hills covered with grasslands and
scrub forest. This region is known for its ranching and crafts industries.
Bocas del Toro in the northwest of Panama
is a mountainous, densely forested region, centered on the provincial capital of
the same name. It is home to the Ngobe-Buglé (formerly known as Guaymí) and
several other native peoples, as well as many West Indians and other immigrants.
The Bocas region has historically been tied to the banana industry, but a banana
disease that appeared in the 1930s led the banana companies to move most
operations elsewhere.
In the southwest, centered on the capital
city of David, the province of Chiriquí has mountain slopes covered with rich
volcanic soils. The region’s rich agricultural industry produces strawberries,
coffee, and other temperate crops. On its Pacific coast, extensive banana
plantations produce the country’s single largest export commodity.
Eastern Panama contains the country’s most
extensive and dense rain forests and is very lightly populated. The eastern
province of Darién is home to the indigenous Chocó people and to a sprinkling of
immigrants from the rest of Panama and from Colombia. The principal economic
activities in Darién are logging and agriculture. Along the northern shore is
the San Blas Archipelago, which is inhabited by the indigenous Kuna people.
Both of Panama’s coasts are indented with
many lagoons, bays, and gulfs, including the Gulf of Panama on the Pacific side.
Major Pacific islands include Coiba Island, used as a penitentiary, and the
Pearl Islands (Archipiélago de las Perlas), in the Gulf of Panama, which are
being developed for tourism and fishing. The San Blas Archipelago is formed of
coral atolls inappropriate for development.
B | Rivers and Lakes |
Panama has several important rivers. The
Chagres drains a watershed of 326,000 hectares (806,000 acres) north of Panama
City and flows into the Caribbean just west of Colón. The Chagres has been
dammed in two places: in Gatún, to create a lake for the Panama Canal, and
upriver in Alajuela, for water storage and hydroelectric power. Gatún Lake, one
of the largest artificial reservoirs in the world, covers 43,000 hectares
(106,000 acres) and allows ships to transit the canal at an elevation of 26 m
(85 ft) above sea level.
Panama’s largest river, the Tuira, flows
south into the Gulf of San Miguel, draining much of the Darién region. The San
Pablo River in the south central portion of the country drains into the Montijo
Gulf. The Chepo River, which flows southwest into the Pacific near Panama City,
has been dammed to create Lake Bayano, an important hydroelectric power source.
None of Panama’s rivers are navigable by deep-draft ships.
C | Climate |
Most of Panama has a hot and humid
tropical climate, with cooler temperatures in higher elevations. Prevailing
winds carry moisture from the Caribbean Sea to the northern coast, making it
wetter than the Pacific side. The northern slopes of the mountains receive an
average of 2,970 mm (117 in) of rain a year, most during the wet season from May
to December. Pacific winds bring drier air to the southern coast, which receives
up to 1,650 mm (65 in) a year. The Azuero Peninsula is the driest region. Panama
lies outside the paths of Caribbean and Eastern Pacific hurricanes. The average
temperatures in coastal areas are 23° to 27°C (73° to 81°F); in higher
elevations they average about 19°C (66°F).
D | Plant and Animal Life |
Panama’s Darién jungle is the largest
tropical rain forest in the Western Hemisphere outside the Amazon Basin. The
entire north coast of Panama is densely forested and contains more than 2,000
species of tropical plants. This habitat also supports a wide array of animals
common to Central and South America, including ocelots, sloths, armadillos,
pumas, anteaters, spider and howler monkeys, deer, caimans, crocodiles, and many
snakes. It has one of the most diverse populations of birds in the world,
ranging from colorful tropical species to long-distance migrating birds. Due to
its unique location, Panama has several animal species found nowhere else, such
as the golden tree frog and giant tree sloth. In populated areas, however, most
of the native animals have been hunted or driven out.
E | Natural Resources |
Panamanians regard their country’s
location and narrow geography as its most valuable asset, making it appropriate
for rail, road, pipeline, and canal crossings. Other natural resources include
arable land (7 percent of the territory is regularly farmed), grazing lands, and
forests (57 percent of land area). Forested lands yield significant exports of
hardwood logs. Panama has manganese and iron-ore deposits, the world’s ninth
largest reserves of copper ore, and working gold mines. Its rich fish catch in
the Pacific (especially for prawn and shrimp) is being supplemented with shrimp
farming in ponds.
F | Environmental Issues |
Serious deforestation began with the
arrival of the Spaniards in the 16th century. European settlers preferred the
coastal lands in the south, because once cleared they did not quickly return to
jungle. Today the southern watershed has been mostly stripped of trees for
agriculture and cattle. This has not been seen as a problem until recently, and
modest efforts have begun to reforest endangered hillsides. Environmental
experts also point out dangers from growing settlement in the Darién jungle,
which cannot support intensive agriculture, and from selective logging of the
most valuable trees in that region. A number of organizations actively seek to
reduce these ecological threats, and public awareness is growing.
Soil erosion in the Chagres River Basin
constitutes a more immediate ecological threat in Panama. Penetrated by the
Transístmica Highway, this area has been occupied by about 25,000 families.
Clearing and planting has led to soil runoff into the rivers and eventually into
the Panama Canal. Stepped-up dredging operations have kept the canal open, but
continued clearing could jeopardize its operations. The Chagres National Park
was established to protect the fragile lands near the headwaters of the river.
Another conservation effort, Soberanía National Park, encompasses 22,000
hectares (54,000 acres) of forested land along the east bank of the Panama
Canal.
Long-term environmental hazards are
expected from disposal of hazardous materials and unexploded ammunition on U.S.
military bases in areas the United States controlled as part of the Panama Canal
Zone.
III | PEOPLE |
Panama has a population of 3,292,693 (2008
estimate), up from 2.4 million in 1990. The population is concentrated heavily
along the Panama Canal and in the cities on either end of the passage. It is a
highly diverse society, descended from native people and immigrants over
thousands of years.
For several centuries after the arrival of
the Spanish, the population size remained stable. The indigenous people declined
steadily because of disease and dislocation, as a growing number of Europeans
settled in the region, bringing with them African slaves. Beginning with
construction of the Panama Railroad between 1850 and 1855, however, Panama’s
population grew rapidly. The railroad and then the French and U.S. canal
projects, from 1881 to 1914, attracted huge numbers of immigrants, mostly from
the West Indies, seeking jobs and economic opportunities. Throughout the 20th
century, immigrants arrived from all parts of the world, especially the
Americas, Europe, and Asia. Today Panama’s cities, where most newcomers settle,
are melting pots of many nationalities and ethnic groups.
Panama’s population is still growing, at a
rate of 1.5 percent, with about 21 births and 6 deaths per 1,000 population
(2008). In addition, Panamanians are concentrated more and more in cities,
driven by desire for better jobs, education, government services, and urban
amenities. The transit zone contains well over 1 million people, living in
Panama City, Colón, and their burgeoning suburbs. In 2005 the urban population
was estimated to be 58 percent of the total, and it is projected to rise to 60
percent by 2010. Overall, Panama has 43 inhabitants per sq km (112 per sq mi),
but density is nearly three times higher in the transit zone and drops to fewer
than 3 persons per sq km (8 per sq mi) in the province of Darién, the least
populated region.
The largest cities are Panama City, with a
population of 813,097 (2005 estimate), and its suburb of San Miguelito. The
Panama City metropolitan area also includes the cities of Tocumen, Arraiján, and
La Chorrera. Other major cities, with 2005 populations, are Colón (198,551) and
David (138,241). Other regional cities include Santiago, Penonomé, and Chitré.
Panama City has grown so rapidly that it
has outstripped its urban services, especially transportation. New toll roads
were begun in the mid-1990s to alleviate traffic problems, and the government
began privatizing major utilities in the hope of attracting new investments.
Colón, which has been in an economic depression since the 1960s, shows high
rates of unemployment, crime, and social disorder. The other cities have not
experienced major problems.
A | Ethnic Groups |
About 70 percent of Panamanians are
mestizos, people of mixed European and Native American descent, or
mulattoes, those of European and African heritage. Exact percentages are
impossible to assign because of extensive racial mixing, but these groups form
the majority in most rural regions and in cities. Blacks, mostly from the West
Indies, make up about 14 percent of the population, whites are about 10 percent,
and Native Americans about 6 percent.
Panama’s cities contain sizeable
minorities of whites from Europe and North America, Asians, Jews, Caribbean
blacks, and people of Middle Eastern descent. In Colón and along the northeast
coast, Panamanians of African descent form the majority.
In some regions Native Americans
predominate. The largest group, the Ngobe-Buglé, live in the mountains of the
Bocas del Toro region, while the Chocó people live in the Darién jungle on both
sides of the Colombian border. The Kuna people live in the San Blas Archipelago
and the coast east of Colón, in an autonomous territory known as the Comarca of
San Blas.
Most of the indigenous peoples live apart
from the majority of Panamanians, and relations between the two groups are often
hostile. The Kuna have the most interaction but preserve their culture, even
when living away from their ancestral region. The native peoples, especially the
Ngobe-Buglé, tend to be taken advantage of by farmers and ranchers who encroach
on their lands. Most indigenous groups farm, hunt, collect hardwood and other
forest products, and sometimes produce crafts, such as the Kuna textiles known
as molas. But they are generally very poor compared to the rest of
Panama’s population.
B | Language and Religion |
Spanish, the official language of Panama,
is spoken by all but a few Native Americans. About a quarter of the population
also speaks English, the language of the West Indian minority and the
international business community. Many other languages can be found in immigrant
communities.
Seventy-seven percent of Panamanians are
Catholic, although the proportion that practices is smaller. Protestant
denominations account for 12 percent of the people. The constitution does not
specifically separate church and state but guarantees freedom of worship.
Religious faith and practice have not created conflict in Panama.
C | Education |
Education is compulsory for 6 years and
is provided free by the government through the university level. The government
spent 16.6 percent of its budget on education in 2000. Wealthier families
usually send their children to the numerous private schools in the cities. In
2000, 400,400 elementary and 234,200 high school students were enrolled in the
country. School attendance by elementary-age children is nearly universal.
Panama has one of the highest literacy rates in the region, 93 percent.
In the early 1990s about 60,000 people
attended the national University of Panama (founded in 1935), its associated
Technological University, and the University of Santa María la Antigua (1965), a
Roman Catholic institution. Many others enroll at the private colleges and trade
schools that have sprung up in recent years.
D | Way of Life |
Panamanians work hard and take part in
public affairs, but they also enjoy leisure activities. Traditionally,
Panamanians have preferred to work in commerce, finance, brokerages, and
services in general. Government employment, teaching, journalism, and careers in
law, medicine, religion, and the arts also attract many who are able to secure
appointments or the necessary training. To work in the upper echelons of
government and business, study in Europe or the United States is essential. The
military has rarely been a popular calling.
Leisure time is spent in family outings
to the beaches, at country homes (often where the family originated), or in
social clubs in the cities. Family gatherings provide frequent opportunities for
parties, with music, dancing, food, and conversation.
The biggest festivities in Panama occur
at Christmas—usually within the family—and during Carnival, the celebration
analogous to Mardi Gras and Brazil’s Carnival that occurs before the Christian
season of Lent. Carnival includes parades, street dancing, parties at private
clubs, and special religious services. Other important holidays include
independence day on November 3 and Firemen’s Day on May 5.
Participatory sports draw fewer people
than do spectator ones, and Panamanians support fellow citizens who have
successful careers abroad. U.S. sports, especially baseball and basketball, can
be followed on local cable television stations.
Typical meals include sancocho (a
chicken soup with native cereals and tubers), tamales (made with mashed corn),
plantains, and native fruits. In addition, meals usually include rice, beans,
broiled meat, potatoes, and fried bananas.
E | Social Issues |
Panama’s society became complex in the
20th century, due to the influx of foreigners, the global reach of its commerce
and services, and its strategic political importance. The oldest elite families,
descended from colonial times, control wealth, power, and prestige to a far
greater degree than those in most Latin American countries. These people, mostly
light-skinned and of European descent, are called the rabiblancos
(Spanish for “white-tails”). Most presidents, cabinet officials, and governors
have come from this class. Since the 19th century, foreigners, especially
educated immigrants, have become part of this class through marriage or business
partnerships. The upper-class population is small and concentrated in several
cities, so members all know each other and keep abreast of one another’s
activities. Membership in the exclusive Union Club is roughly the same as this
elite class.
About a quarter of Panama’s society
enjoys a middle-class standard of living, which includes owning a home or
apartment, one or two automobiles, and modern appliances. These people usually
live in Panama City, are mostly of European descent, and work for the
government, the canal, or major foreign corporations. Middle-class families send
their children for university training, usually in Panama. Some middle-class
families operate rural businesses and are well off, although they lack access to
urban amenities. They produce food and raw materials for urban markets and for
export.
Wealth is highly concentrated in the
hands of the elite, so the majority of working-class people have very little
property and income. Some families managed to acquire land or homes and are
fairly comfortable. But millions of Panamanians live in severe poverty, working
as day laborers, domestics, and menial employees. The government has subsidized
construction of thousands of modest homes on the outskirts of the leading
cities. The working classes tend to come from mixed racial background, either
mestizo or mulatto.
Panama has low rates of violent crime,
yet families with substantial property take great pains to protect it, often
hiring private security. Businesses also employ thousands of guards, especially
since the army was dismantled in 1989.
F | Culture |
Panamanian culture derives fundamentally
from European musical, artistic, and literary traditions brought by the Spanish.
Important African and Native American influences have been added to these,
however, creating hybrid forms unique to Panama. The traditional dance,
tamborito, for example, is descended from Spanish folkways, yet it also
incorporates native rhythms, themes, and dance steps. Popular music, while
influenced by international recordings, draws heavily on Afro-Caribbean music.
Verse and prose are composed and published in Spanish but incorporate themes,
characters, and plots that arise out of Panama’s complex experience. Generally
speaking, art for the elite stays closer to European models, while that for the
lower classes contains strong African and Native American overtones.
The best overview of Panamanian culture
is found in the Museum of the Panamanian, in downtown Panama City. Its
collection documents the evolution of human life on the isthmus from the
earliest native settlements to the present. Other cultural institutions (all in
Panama City) include the Museum of Panamanian History, the Museum of Natural
Sciences, the Museum of Religious Colonial Art, the Museum of Contemporary Art,
the Museum of the Interoceanic Canal, and the national institutes of culture and
music.
IV | ECONOMY |
Since colonial times, Panama’s location has
made it a crossroads for trade and transit. This role assumed worldwide
significance in the 20th century with the completion of the Panama Canal, which
dominated Panama’s economy for decades and tied it closely to the United
States.
Panama’s gross domestic product (GDP) was
$17.10 billion in 2006, equal to $5,200.60 per person. Commerce, finance, and
business services constituted the core of Panama’s economy, contributing 73
percent of the GDP. Most economic activity was concentrated in the urban area of
central Panama surrounding the canal. In the 1990s the rural economy accounted
for 10 percent of the GDP and was primarily agricultural, producing farm and
ranch commodities. Spending by the United States on military bases added another
5 percent, or $366 million, to the GDP, but that ended when Panama assumed
control of the canal in 1999.
Business related to the Panama Canal plays
a major role in this sector, but its importance has declined as the economy has
become more diverse. International banking, maritime services, manufacturing,
and shipping combine to provide more jobs and tax revenue than the canal.
Economic growth planned in the late 1990s was expected to further reduce the
country’s dependence on canal-related business.
The economy suffered a serious decline in
the late 1980s, when the United States imposed a series of restrictions on trade
and financial dealings with Panama and eventually invaded the country to
overthrow the government of Manuel Noriega. The embargo caused a sharp drop in
the GDP and higher unemployment. It also hurt tourism, manufacturing, and
commerce, and made it difficult to maintain roads, power utilities, and
communication equipment. Since the 1989 invasion the GDP has grown
substantially, fueled by U.S. reconstruction funds, an end to the embargo,
restored international credit, and the return of investor confidence.
A major factor in Panama’s industry and
foreign commerce is the Colón Free Zone, an international trade facility that
allows businesses to operate without paying import duties or taxes. Established
in 1948 near the northern terminus of the canal, this zone is the largest of its
kind in the Western Hemisphere and second only to Hong Kong in the world. In
1995 its 1,600 businesses generated $11 billion in sales and employed 14,000
people. Companies in the zone import raw materials and other components for
manufacturing, or operate warehouses that break down large shipments from Asia
and distribute them in nations bordering the Atlantic. In the 1990s the free
zone doubled its area and has benefited from new container ports at Manzanillo
and Coco Solo.
Since the 1970s, when it borrowed large
sums for social and economic programs, Panama has had one of the highest levels
of debt per capita in the world. In 1995 the nation’s foreign debt was $7
billion, or $2,600 per person, much of it overdue. In 1996 the government
settled outstanding commercial debt claims against Panama through negotiations,
reducing pressure on the government and allowing it to seek new credit. However,
payments on the debt were the largest government expenditure in 1995, taking 28
percent of the $1.9 billion budget.
Since taking office in 1994, President
Ernesto Pérez Balladares has relaxed labor controls, reduced government
regulation of business, and sold off major public enterprises. These actions
aimed to reduce spending on state-run industries and payrolls, curb the power of
unions, and encourage private enterprise and investment, in hopes of
revitalizing the economy.
A | Panama Canal |
The Panama Canal continues to generate
more jobs, contracts, and government revenues than any other single source in
the nation. It contributes more than 10 percent of the nation’s GDP.
From 1979 to 1999 the canal was operated
jointly by the United States and Panama, with four Panamanians serving on the
nine-member board of directors of the Panama Canal Commission. After 1990 the
canal administrator was also Panamanian. After Panama assumed control of the
canal in 1999, the commission became the Panama Canal Authority, a public
Panamanian corporation, and took over the operation of the canal.
B | Labor |
Panama’s labor force includes about 1.5
million people. The largest group, 67 percent, works in services, including
government, finance, and trade. Agriculture, forestry, and fishing employs 16
percent. Industry, including manufacturing, mining, and construction, employs 17
percent. Unemployment was 12.3 percent in 2004, and underemployment has also
reduced the earning power of workers.
The leading labor federations are the
National Council of Organized Workers (CONATO) and the Workers Confederation of
the Republic of Panama (CTRP).
C | Agriculture |
Agriculture employs one in four
Panamanians, but much of that labor is absorbed in subsistence farming. Panama’s
productivity is too low to export many agricultural goods. The only crops sold
abroad are bananas, coffee, and sugar, which is protected by a U.S. quota
system. Among the more important products are fruit, corn, rice, timber, some
vegetables, and livestock. A large percentage of these goods are processed in
towns and cities outside the transit zone. Panama imports cereal and fresh
vegetables.
In 1994 agriculture grew at a rate of 3.9
percent, more slowly than industry and services. Principal problems facing the
rural sector are concentration of land ownership in the hands of few farmers,
high labor costs, and low levels of mechanization on all but the largest farms.
Some 7 percent of the land is cultivated, with another 20 percent used for
grazing.
D | Forestry and Fishing |
Logging and fishing are significant
activities in some parts of the country. The Darién area produces a large amount
of mahogany for export, and teak is grown in plantations in other regions. Most
construction lumber used in Panama, however, is imported from temperate-zone
producers.
Panama’s fishing fleet works the rich
grounds in the Pacific Ocean, using refrigerated ships. Most of the large shrimp
and prawn catch is frozen and exported to the United States. A wide variety of
other fish are harvested in the rich currents offshore.
E | Mining |
Panama has a small mining industry, which
contributes only 0.2 percent to the GDP and employs about 2,000 people.
Activities include some gold mining, silver mining, and quarrying. Major copper
reserves have been identified at Cerro Colorado in western Panama and could be
developed by international firms if world prices warranted. Panama imports crude
oil for processing and electric generation near Colón, and it exports some
refined petroleum products.
F | Manufacturing |
Manufacturing, amounting to 9 percent of
the GDP, is mostly light and destined for construction and domestic markets.
Products include fabricated metal, petroleum products, building materials,
cement, chemicals, paper and paper products, printing, household consumer goods,
processed food and beverages, furniture, and clothing. Virtually all the
products manufactured in the Colón Free Zone are exported.
G | Energy |
Hydroelectric power is generated from
dams on Lake Bayano, Lake Alajuela, and a few smaller dams, and supplies 51.78
percent of Panama’s electricity requirements. The remainder is generated from
imported petroleum.
H | Foreign Trade |
Panama’s foreign trade in 2004 included
exports worth $890 million. Some 84 percent of exports were food products such
as bananas, shrimp, sugar, and coffee. The major buyers were the United States,
Germany, Costa Rica, Sweden, and Belgium.
Panama imported $3.1 billion in goods in
2003. Manufactured goods accounted for 72 percent percent of imports, fuels were
12 percent, and food 14 percent. Sellers were the United States, Ecuador, Japan,
and Mexico.
Panama traditionally resisted joining
tariff-reducing organizations, in particular the Central American Common Market.
In 1995, however, the new government decided to subscribe to the General
Agreement on Tariffs and Trade (GATT) so it could join the World Trade
Organization (WTO). This required pledging to reduce duties on a wide range of
protected items. Panama is one of the founding members of the Union of Banana
Exporting Countries and belongs to the Inter-American Tropical Tuna
Commission.
I | Currency and Banking |
Panama’s financial sector has more than
100 banks, with combined assets of more than $30 billion. This sector arose
after a 1970 law permitted secret bank accounts and advantageous tax terms. Over
the years, the banks have been alleged to handle illegal cash operations, a
practice called laundering, on behalf of narcotics organizations in South
America. The United States has pressured Panama into tightening rules regulating
bank accounts and transfers. Panama has not given full access, arguing that the
money would simply be moved to other protected havens, such as The Bahamas and
Grand Cayman.
Panama’s official monetary unit is the
balboa, whose value is fixed at one U.S. dollar. Panama has no paper
currency of its own; the only paper money is the dollar. Fractional coins, based
on 100 centesimos per balboa, are almost identical in denomination to
U.S. coinage.
J | Transportation |
Panama has a reasonably good
transportation system, especially in the transit zone. Some 11,643 km (7,235 mi)
of roads exist, and about 35 percent are paved; the remainder are finished in
gravel and graded earth. Main thoroughfares include the Pan-American Highway and
the Transístmica (Trans-Isthmian) Highway; the latter was built by U.S. troops
during World War II (1939-1945). Other highways include the Corredor Sur, a
19-km (12-mi) toll road completed in 2000 to provide an alternate and less
congested route between downtown Panama City and Tocumen International Airport.
The Panama Railroad, whose route
parallels the canal, was run by the government from 1979 to 1996, but it lost
money, and the government curtailed service. In 1996 it was leased to a private
company, which planned to restore freight and passenger operations. Two longer
narrow-gauge lines in the western provinces of Chiriquí and Bocas del Toro
mostly serve the banana industry.
Three of Panama’s busiest ports are
located in Colón to serve the free zone: Cristóbal, Manzanillo, and Coco Solo.
Balboa is the port at the Pacific end of the canal. Puerto Armuelles and
Almirante handle banana exports. Shallow-draft vessels can navigate 800 km (500
mi) of inland rivers, not including the 82 km (50 mi) of the Panama Canal.
Tocumen International Airport, located on
the outskirts of Panama City, serves as the country’s principal gateway for
airline passengers and air freight. Many smaller airstrips exist, most built by
the U.S. military for defense purposes. The largest national airline, COPA,
provides international flights.
Panama has the largest merchant marine
registry in the world, with 7,605 ships with a capacity of 168 million gross
registered tons. Shipping firms from other countries prefer to register as
Panamanian because Panama charges low fees, has lax regulation, and offers
access to maritime services.
K | Communications |
As a financial and transport nerve
center, Panama has a well-developed system of communications. Its telephone
company, INTEL, operates ground lines for hundreds of thousands of telephones
and satellite connections to the rest of the world, including the Internet.
Cellular telephone service is also available; some 418 of every 1,000 persons
subscribed to this service in 2005.
The electronic media include four
television broadcast stations and 18 cable stations. Virtually every urban
household has a radio and a television, but phones are scarcer. In the capital,
most businesses have become automated. The use of personal computers and
Internet connections is becoming more common in middle- and upper-class homes
and through schools, universities, and businesses.
The print media are dominated by daily
newspapers, which have large circulations in the major cities. The largest are
Panama America, Critica, La Prensa, La Estrella, and El
Siglo, all published in Panama City, with combined daily circulations of
more than 150,000.
L | Tourism |
The nationalist and dictatorial regimes
of the 1970s and 1980s made Panama unattractive to U.S. citizens and Europeans
who could afford to travel there. More recently, however, the country has
actively promoted tourism. The number of tourist arrivals more than doubled in
the 1990s. In 2003, 566,000 tourists (not including stopover arrivals) visited
Panama, generating $960 million in revenue. The construction of new hotels,
tourist villas, and resorts has coincided with the growing tourism industry. The
Panama Canal is the major tourist attraction within Panama, and many major
cruise lines include a trip through the canal as part of their itinerary. In
October 2000 the country inaugurated its first cruise-ship terminals, one at
either end of the Panama Canal, to promote more stopover tourism.
V | GOVERNMENT |
Panama has well-rooted democratic traditions
dating back to independence from Spain in 1821. Panama adopted constitutions in
1903, 1946, and 1972. These have been amended to fit changing times, and major
revisions were made in 1983. All citizens 18 years of age and above are required
to vote in elections.
Despite Panama’s democratic traditions, the
military has been heavily involved in politics since the 1930s and controlled
government from 1968 to 1989. Panama officially had no army after granting the
United States defense powers in 1903, but it has maintained a military police
force called the National Police (1903-1953), the National Guard (1953-1983),
the Panama Defense Forces (1983-1989), and the Public Forces (1990- ). By the
late 1940s, the commander of the police, José Antonio Remón, effectively
selected and removed presidents, and in 1952 Remón himself became president.
Only after he was assassinated in 1955 did the police pull back from active
involvement in government.
In 1968, however, two colonels led a coup
that overthrew the president and initiated a 22-year dictatorship. The dominant
figures were Omar Torrijos Herrera (1969-1981) and Manuel Noriega (1984-1989). A
U.S. invasion in 1989 removed Noriega, disbanded the military, and restored
civilian government.
A | Executive |
The president is the single most powerful
figure in government, running the executive branch and wielding influence over
the legislative and judicial branches and the many autonomous agencies of
government. The president governs with the help of two elected vice presidents
and an appointed cabinet. Presidents are elected by popular vote, serve
five-year terms, and may not be reelected.
B | Legislature |
The Legislative Assembly is made up of 72
members elected for five years. The legislature writes and passes laws, ratifies
presidential appointments, amends the constitution as necessary, and generally
shares power with the president.
C | Judiciary |
An autonomous judicial branch is headed by
the nine-member Supreme Court of Justice. The president nominates and the
legislature ratifies appointees to the court, who serve for ten-year terms. The
Supreme Court oversees five superior courts, three courts of appeal, and all
other tribunals, including municipal courts. An independent Electoral Tribunal
supervises voter registration, the election process, and the activities of
political parties.
D | Local Government |
Panama’s nine provinces are administered
by governors appointed by the president. Local government is organized around 65
districts and 505 subdistricts. Voters in these jurisdictions choose mayors and
councilors to administer local business. In the cities, mayors wield significant
power, but in rural areas their influence is strictly limited by lack of funds.
Most local government depends on securing help from provincial and national
authorities.
Leaders of Native American groups,
especially the Kuna and Ngobe-Buglé, negotiate directly with the national
government. The Kuna enjoy special authority to conduct affairs in their own
reservation, the Comarca of San Blas.
E | Political Parties |
Panama’s parties traditionally revolve
around the personalities of their leaders, rather than philosophies or
organizations. As such, they operate in an unpredictable, discontinuous fashion.
During the last 50 years, about half a dozen parties have achieved real
prominence, while a dozen more have come and gone. As elections approach,
peripheral parties usually fold into coalitions with stronger ones in order to
win favors. Many parties were not founded until the 1990s, because the military
leaders who took power in 1968 banned politics for more than a decade.
The Democratic Revolutionary Party (PRD)
won the 1994 presidential election, with its candidate, Pérez Balladares, and
the 2004 election, with its candidate Martín Torrijos Espino, the son of Omar
Torrijos. The PRD was founded in 1978 by civilian collaborators of Omar Torrijos
to give his rule political legitimacy. It selected candidates for all major
offices and easily dominated elections while the military was in power. The PRD
was removed from power by the 1989 U.S. invasion and was thought to be
destroyed, but it made a surprising recovery. An urban party, it draws its
strongest support from government employees, labor unions, and the educational
system.
The Arnulfista Party was founded in 1936
as the Panamenista Party by . As the name suggests, it took its direction from
its longtime leader. Although its policies varied, it usually emphasized
nationalism, an independent foreign policy, and help for Panama’s working
classes. The party was centrist and drew its strongest support from provinces
outside the metropolitan area. Arias’s widow, Mireya Moscoso de Gruber, took
over the party and ran for president in 1994, coming in second. In 1999 Moscoso
was elected president, the first woman to win that office in Panama's
history.
The Christian Democratic Party (PDC) led
the opposition to the military in the 1980s, under the leadership of Ricardo
Arias Calderón. It is regarded as the closest Panama has to a European-style
party, with a defined ideology, a membership base, support from international
Christian Democratic parties, and elections for party leaders. It is generally
concerned with social programs, health, and education, and is nationalistic but
favors close ties with the United States.
Other noted parties include Papa
Egoró, a reform group founded by well-known Panamanian singer and actor
Rubén Blades, and the National Liberal Republic Movement (MOLIRENA). Blades ran
for president in 1994 and finished third, gaining support among young people and
the urban poor by promising to improve conditions for the poor, clean up corrupt
politics, protect the environment, and encourage the common people to
participate in government. MOLIRENA, made up of traditional politicians,
represents wealthy families who wish to exert political influence, and most
members are government employees favored by these families. Its proposals are
generally pro-business.
F | Social Services |
Most of Panama’s social services are
administered by the Social Security system, founded in 1941. It provides
retirement and disability pensions for most workers, lifelong health care, and
payments for dependents. The hospital system works well, and Panama has
relatively good health statistics: life expectancy of 75 years, 1 physician per
595 inhabitants, and infant mortality of 16 per 1,000 live births. A number of
private charities also provide assistance to the poor.
G | Defense |
The country’s defense is entrusted to the
Public Force, a police organization that is subordinate to civilian government
officials. This agency was created after the 1989 U.S. invasion to replace the
Panama Defense Force, the military force that had repressed political opposition
and violated human rights under the Noriega dictatorship. Personnel strength has
been cut from 16,000 to about 13,000, and service is voluntary. The Public Force
consists of four independent units: the national police, the national maritime
service (coast guard), the national air service, and the institutional
protective service (security for important officials). The Public Force absorbs
0.9 percent of Panama’s GDP.
H | International Organizations |
Panama is a member of the United Nations
(UN) and most major UN agencies, and it has served three terms as a member of
the UN Security Council. It maintains membership in several international
financial institutions, including the World Bank, the Inter-American Development
Bank, and the International Monetary Fund. Panama is a member of the
Organization of American States, and was a founding member of the Latin American
Economic System (known informally both as the Group of Eight and the Rio Group).
Panama was suspended from the Rio Group in 1988, due to its internal political
system under Noriega, but was readmitted in September 1994.
Panama often participates in Central
American regional meetings and is a member of the Central American Parliament
and the Central American Integration System (SICA). The government is also
taking steps to join the Central American Development Bank.
VI | HISTORY |
The first humans entered Panama at least
10,000 years ago. They were descendants of migrants who had crossed a land
bridge from Asia to North America. Some of these first people remained in
Panama, while others continued to South America. After the beginning of
agriculture and stone toolmaking, Panama’s native population grew and developed
an impressive culture. The early indigenous people are best known for their
beautiful gold jewelry, beads, and multicolored pottery, left behind in
huacas, or burial mounds. In addition to farming, they hunted and fished
for food, and traded goods among villages. Most lived in thatched-roof huts,
similar to those in which many of their descendants live today.
A | Spanish Colony |
In 1501 Spanish explorer Rodrigo de
Bastidas, sailing west from Venezuela, was the first European to reach the
Isthmus of Panama. A year later explorer Christopher Columbus visited the
isthmus. In 1508 the king of Spain, Ferdinand V, awarded settlement rights in
Panama to explorer Diego de Nicuesa, and within a few years colonies were
established along the Atlantic coast. Panama became important to the Spanish
Empire in 1513 when explorer Vasco Núñez de Balboa led an expedition across the
isthmus from the Atlantic and became the first European to see the Pacific Ocean
from the Americas. He named it the South Sea and claimed it, and all the
territories it touched, for Spain. In 1519 Pedrarias Dávila, the Spanish
governor of the area, founded Panama City on the Pacific coast. Many of the
region’s native peoples were killed by Spanish colonists or by diseases brought
by the Europeans, while others fled to remote areas.
Panama quickly became a crossroads and
marketplace of Spain’s empire in the Americas. From Panama, soldier Francisco
Pizarro sailed south to conquer the great empire of the Inca in Peru in the
1530s. The silver and gold of the Inca, spices, and other commodities were
shipped from South America to Panama City, carried across the isthmus, and
loaded onto fleets of treasure ships bound for Spain. The route to the Caribbean
harbor of Portobelo became known as the Camino Real, or Royal Road. The
riches stored in Panama made it a frequent target of pirate attacks, while its
importance in trade led to development of a wealthy merchant class. Panama also
became a major shipment point in the slave trade, sending most African captives
on to other colonies. But slaves who remained in Panama formed the beginning of
its black population.
Because of its close trade ties with
Peru, Panama was originally part of the , the Spanish government unit for most
of its South American colonies. After 1718, however, Panama was put under the
newly created , which covered present-day Colombia, Venezuela, and Ecuador. The
viceregal capital in Bogotá was distant, and its authority was weak. As a
result, Panama largely governed itself. The treasure fleet, meanwhile, sailed
less frequently and then stopped altogether as other routes were used, so that
Panama no longer enjoyed the riches of the empire.
B | Colombian Rule |
In the early 1800s Spain’s American
empire broke apart as the movement for Latin American independence swept through
the colonies. Panama declared independence from Spain in 1821 and decided to
become part of the newly independent Republic of Colombia. For the next 82 years
the Panamanians lived in uneasy isolation from the central government, often
making their own laws, frequently staging revolts, and occasionally declaring
their independence. They grew apart culturally and materially from the rest of
Colombia, becoming less religious, more liberal in politics, and more open to
outside influences than Colombians.
By the mid-1800s events from beyond the
region began to affect Panama. The dominant maritime power of the age, Britain,
and the rising power in the hemisphere, the United States, began to compete for
the rights to control transit across Central America. The preferred route for a
canal was in either Panama or Nicaragua. American businessmen took the lead in
1848 when they gained rights to build a railroad across Panama, which was
completed in 1855. The discovery of gold in California brought a flood of
prospectors seeking quick access, and for years the Panama Railroad was the most
profitable in the world. Businesses to serve travelers flourished, providing a
boom for Panamanian merchants.
With the railroad came U.S. intervention.
Rebellions against Colombian rule and violence between local factions occurred
frequently. In addition, an increase in the number of U.S. citizens and
businesses created tensions with Panamanians. During this period the United
States frequently sent its Marines to Panama to preserve law and order and to
protect U.S. lives and property. Although still a province of Colombia, Panama
was on its way to becoming a U.S. protectorate.
C | Independence and the Canal |
In the late 1870s, French diplomat
Ferdinand de Lesseps, who had built the Suez Canal in Egypt, called a conference
in Paris to design and raise money for a Central American canal. Deciding on a
sea-level canal in Panama, he began to raise money privately, and started work
in 1882. But the project was dogged by equipment delays, tropical diseases,
financial problems, and poor planning. The canal design turned out to be
impossible to build with the technology available at the time. The enterprise
went bankrupt in 1888 and was replaced with a holding company to protect the
interests of investors. The project, however, had brought Panama a more diverse
population, including many Caribbean blacks who came to work on it.
During the 1890s some U.S. leaders urged
their government to take over the effort to build a Central American canal. The
United States had for some time wanted a shorter sea route between the Atlantic
and Pacific for trade and military purposes. It also stood to benefit from a
canal more than any other country. Several land surveys were conducted, and some
construction even began in Nicaragua. In 1902, however, a complex set of
developments led the U.S. president and Congress to favor buying and
rehabilitating the French route in Panama.
The United States negotiated a treaty
with Colombia for rights to build the canal, but the Colombian senate refused to
ratify it. Representatives of French and U.S. investors, the railroad, and the
U.S. government then conspired with Panamanians to declare the isthmus
independent from Colombia. President Theodore Roosevelt, who wanted to make the
Panama Canal the centerpiece of his administration, made sure the conspiracy
succeeded. When the Panamanians rebelled, U.S. troops prevented Colombian forces
from moving in to suppress the revolt. The Republic of Panama became independent
on November 3, 1903.
Two weeks later a treaty was signed
giving the United States the rights to build a canal on terms that made Panama a
virtual U.S. protectorate. The United States received a perpetual lease for a
section of central Panama 16 km (10 mi) wide, stretching from ocean to ocean,
for the canal. Within this zone, the United States would exercise complete
control, as if it owned the land. It also was granted the right to military
intervention in Panama to maintain order, and the right to take over more
Panamanian land if necessary. In exchange, the United States guaranteed Panama’s
independence and paid $10 million, plus an annual payment of $250,000. On
Panama’s side, the treaty was negotiated and signed not by Panamanians but by
Philippe Bunau-Varilla, a French citizen who represented the French canal
company. The treaty terms were resented by Panamanian nationalists and became a
source of continuing controversy in Panama’s history.
From 1903 on, Panama had two governments,
one for the republic and another for the canal zone. The republic was
subordinate to the government of the U.S. zone in every way—financially,
militarily, and administratively. Panama adopted a constitution and elected its
first president, Manuel Amador Guerrero, in 1904. But in fact, the chief
engineer of the canal construction works and then the governors of the canal
zone oversaw affairs in Panama. They made sure that nothing impeded the
maintenance, security, and operation of the canal.
Panama’s independence was strictly
limited: With no military, it was vulnerable to intervention by U.S. troops from
the canal zone. It had limited resources and had to borrow money from banks,
using the canal annuity as guarantee. Virtually all the country’s trade and
immigration came through the zone and was therefore subject to U.S. control.
Panama depended on the zone for water, jobs, revenues, imports, transportation,
and even security. Panama’s relationship was both unequal and subservient to the
United States. See also Panama Canal; Panama Canal Zone.
Construction of the canal, from 1904 to
1914, brought more than 150,000 people to Panama. These immigrants changed the
country’s ethnic and cultural composition. They included a large number of black
West Indian laborers, some European workers, and some Americans.
During Panama’s early years, President
Belisario Porras led efforts to build the nation, constructing roads, hospitals,
schools, and other facilities. Porras, leader of the Liberal Party, achieved a
working relationship with the U.S. authorities and dominated the country’s
government until the late 1920s. However, resentment of U.S. domination grew
among some Panamanians.
D | The Arias Years |
In 1931 a secret nationalist
organization, Acción Comunal (Common Action), carried out a coup and held
new elections for president. A group of reformers, headed by Harmodio Arias
Madrid, took control of the government and sought to make it more effective. In
contrast to the elite families that had always ruled Panama, Arias and his
family came from a modest rural background, and their success marked the rise of
middle-class Panamanians into government leadership. Under Arias’s presidency
(1932-1936) and those of his successors, the police force became stronger, the
economy began to diversify, the university was established, and Panama took on a
new sense of national pride. In 1936 the United States and Panama negotiated
treaty changes that ended the U.S. right to intervene in Panama’s affairs and
its right to appropriate more land. The treaty also increased the annual
payments the United States made to Panama.
Arias’s younger brother, Arnulfo Arias,
became president in 1940 and intensified policies to strengthen the nation and
oppose U.S. power. He fostered a greater sense of nationalism among Panamanians,
stating that Panama was more than a canal and had a national destiny beyond
serving the United States. Arias insisted that the United States negotiate as an
equal with Panama for new treaty concessions and resisted U.S. efforts to
establish new military bases in Panama during World War II (1939-1945). Arias
was sympathetic to some European fascist governments of that time. He also
introduced a new constitution that gave him a longer term in office and revoked
the citizenship of non-Hispanic immigrants.
Arias’s initial term in power was brief,
however. Under his presidency, the National Police were given more weapons and a
bigger role in politics. Ironically, the police deposed him in a coup in 1941,
and in later years would overthrow him twice more and rig elections to defeat
him. By the mid-1940s, the commander of the police had the power to choose and
depose presidents as he wished.
E | Increasing Unrest |
The culmination of increased police
involvement in politics came in 1952. Police commander José Antonio Remón, after
years of deciding who would hold the presidency, became convinced he could do a
better job than the civilians. He ran for office and was elected honestly. Remón
continued many of the policies of the Acción Comunal reformers. He pushed to
diversify the economy, developing industry and agriculture to reduce Panama’s
dependence on the canal. He further strengthened the police, making it more like
a military force and renaming it the National Guard. New treaties were
negotiated to give Panama more benefits from the canal. Remón also built a
strong coalition of political parties. He was assassinated in 1955.
Relations with the United States
deteriorated in the late 1950s. Panamanians grew increasingly frustrated over
U.S. control of the canal zone and their country’s lagging development. They
were inspired by the successful revolution in Cuba and events in 1956 in Egypt,
where the government seized and nationalized the Suez Canal. Anti-American
demonstrations increased, during which U.S. flags were torn down, U.S. agencies
were stoned, and Panamanians clashed with canal zone troops. These protests led
to a more serious confrontation in 1964 known as the flag riots, in which
violence broke out over attempts to fly the Panamanian flag in the canal zone as
a symbolic gesture. More than 20 people were killed, most of them Panamanians,
and the United States and Panama temporarily broke off relations. The
confrontation persuaded the United States to begin negotiations to replace the
unpopular 1903 treaty, but the effort took 13 years to complete.
Public order declined during the
mid-1960s, as the economy stagnated and government seemed incapable of
administering the nation. Public frustration with the situation helped Arnulfo
Arias win the 1968 election. When he threatened to dismiss some leading officers
of the National Guard, they overthrew him after ten days in office. Two
officers, Boris Martínez and Omar Torrijos Herrera, led the coup and formed a
ruling council, or junta. By early 1969 Torrijos assumed full control of
government and announced a revolutionary program.
F | The Torrijos Regime |
The Torrijos era brought Panama a mixture
of military rule, social and economic reforms, and a more vigorous, left-wing
foreign policy. Torrijos suspended the constitution and eventually replaced it
with one that gave him full powers as head of state for six years. Disbanding
the National Assembly, he governed by decree, outlawed political parties, and
used the National Guard to repress opposition. However, he won popularity for
his social and economic policies and, more importantly, for confronting the
United States over control of the canal. He also established ties with Cuban
leader Fidel Castro and the rebel Sandinistas, who were fighting the dictator of
Nicaragua.
Under Torrijos, the government intervened
more strongly in the economy, introducing land reform and prolabor policies, and
encouraging international banking to establish a base in Panama. Openly
attacking the wealthy upper class of Panama, Torrijos recruited middle- and
lower-middle-class citizens to staff the upper ranks of government. Because
foreign banks were eager to lend money and Panama’s international banking
industry was growing, Panama was able to borrow a great deal of money during the
1970s. Torrijos used it to create state-run industries and utilities; to expand
social services, building schools, clinics, and housing; and to aid farmers.
These measures, while popular, contributed to a large national debt, and
economic growth slowed.
The hallmark of the Torrijos years was
the negotiation of new treaties with the United States to replace the
controversial 1903 canal agreement. The new treaties, signed by Torrijos and
U.S. president Jimmy Carter in 1977, provided that the canal would be turned
over to Panama on December 31, 1999. More than 60 percent of the canal zone was
to be turned over to Panamanian control in 1979 under the treaty, but it allowed
the United States to retain some military bases until 2000. The treaty also
provided that more money from canal tolls would go to Panama. The agreements
provoked opposition in both countries; some Panamanians objected that the
treaties did not go far enough, while many Americans felt the canal was U.S.
property that was being given away. However, both nations ratified the treaties,
which took effect in 1979.
Once the treaties were signed, Torrijos
stepped down as head of government and began to reinstate civilian rule in
Panama. He formed the Democratic Revolutionary Party (PRD), which provided
backing for his civilian figurehead president. But Torrijos retained control of
the National Guard and remained the dominant figure in Panama’s politics until
he died in a plane crash in 1981.
G | Noriega Dictatorship |
In the years after Torrijos’s death,
civilian and National Guard leaders maneuvered for power. In 1983 a winner
emerged: Manuel Antonio Noriega, former head of the intelligence service, became
head of the National Guard and took power. Although he did not hold a political
office, as commander of the military he controlled the government. Astute and
ruthless, Noriega built up the size of the military, which he renamed the Panama
Defense Forces, and greatly increased its power over the nation’s political life
and its economy.
The Noriega years witnessed widespread
corruption, repression of political opposition, and a troubled economy. Noriega
made little pretense of following the constitution and rigged elections. Noriega
was accused of ordering the torture and murder of a popular figure, Hugo
Spadaforas, in 1985, but when Panama’s president promised to investigate,
Noriega replaced him with another civilian. Noriega used the military to
imprison, torture, and sometimes kill his opponents. Noriega also was linked to
the international narcotics trade. He was accused of helping smuggle drugs and
launder money for Colombian drug cartels.
Relations with the United States
deteriorated. Noriega had been a longtime informant for the U.S. Central
Intelligence Agency, and he helped U.S. officials supply arms to conservative
forces in Nicaragua. But by the late 1980s, Noriega’s dictatorship and his
alleged links to the international drug trade caused the United States to
withdraw its support for his government. At the same time, street demonstrations
began to occur regularly in Panama City.
H | U.S. Invasion |
The U.S. government gradually increased
pressure on Noriega, trying to make him give up power. The United States imposed
a trade embargo, vetoed international loans to Panama, and finally withheld its
annual canal payments. In 1988 a U.S. court in Miami, Florida, indicted Noriega
on drug-related charges. Panamanian president Eric Delvalle tried to dismiss
Noriega but instead was removed from office. A presidential election was held in
1989, but Noriega nullified the results when the vote count showed that the
opposition candidate, Guillermo Endara, was winning. Tensions rose between
Noriega’s forces and U.S. troops based in Panama.
Finally, President George Bush decided to
invade Panama, with the stated goals of arresting Noriega to face drug charges,
of restoring democracy, and of protecting American lives. On December 20, 1989,
U.S. troops invaded in the largest U.S. military operation since the Vietnam War
(1959-1975). More than 27,000 troops took part, including 13,000 already
stationed in Panama. With an overwhelming force of tanks, aircraft, and
high-technology weapons, the U.S. forces defeated Panamanian troops within days
and eventually captured Noriega, who was taken to the United States for trial.
The Panama invasion proved traumatic and
controversial. It violated both international law and U.S. government policy
against intervening in another nation’s internal affairs. Yet it was welcomed by
many Panamanians as the only way to rid the country of a dictator that the
United States had supported for many years. Noriega’s headquarters in Panama
City was destroyed, but the surrounding poor neighborhood of El Chorillo caught
fire and burned to the ground, leaving thousands homeless. Several hundred
Panamanians, many of them civilians, died in the fighting. It was the low point
in 86 years of rocky relations between Panama and the United States.
I | Gaining Control of the Canal |
On the day of the invasion, U.S. forces
swore a caretaker government into office. The new president was Guillermo
Endara, the leading Arnulfista Party candidate in the election that had been
annulled by Noriega. Behind the scenes, U.S. advisers wielded real power,
arresting police officers and reestablishing order. A large U.S. aid program,
amounting to nearly $1 billion, was assembled to help Panama recover from the
invasion and years of economic sanctions. However, Endara never achieved much
authority as president. The economy made a strong recovery, and the conversion
of Panama’s military into a civilian police force restored public confidence and
safety.
The 1994 presidential election brought a
surprising victory to Ernesto Pérez Balladares, the candidate of Noriega’s
former party. Pérez Balladares, a U.S.-trained banker, received a third of the
popular vote. The new president embraced a program of economic reforms,
including measures to reduce the size of government, sell public enterprises,
create more jobs, and reduce some labor protections. He also sought to attract
foreign investment, end protectionism so Panama could carry on more global
trade, and renegotiate the large national debt.
Meanwhile, Panama created the
Interoceanic Regional Authority to administer lands and buildings turned over by
the United States. Designed to be nonpolitical and efficient, the agency is seen
as an indicator of Panama’s ability to manage a major facility like the canal.
In the mid-1990s, the Panama Canal Authority was formed to actually take over
duties of managing the canal in 1999. Beginning in 1990, a Panamanian citizen
served as chief administrator of the canal, and some 97 percent of the canal
labor force was Panamanian. Both countries strove to achieve a smooth,
trouble-free transition.
Pérez Balladares pushed hard to attract
foreign, especially Asian, investment to develop the lands and military bases
being turned over to Panama. His greatest challenges were to maintain public
order and confidence, create new jobs while privatizing the economy, reduce
corruption in his government, and maintain friendly relations with the United
States.
In August 1998 Panamanian voters rejected
a proposed constitutional amendment to allow Pérez Balladares to serve a second
term in office. In May 1999 Mireya Moscoso de Gruber, widow of former president
Arnulfo Arias, won the country's presidential election. On December 31, 1999,
Panama completed the takeover of the canal, military bases, and all adjacent
facilities, giving it control of all its territory for the first time in the
nation’s history.
J | The 21st Century |
The 2004 presidential election was the
first one held after Panama had gained control of the canal and the United
States had withdrawn its troops. In that election, Martín Torrijos Espino of the
Democratic Revolutionary Party (PRD) won with almost 50 percent of the vote.
Torrijos is the son of Omar Torrijos, the military general who ruled Panama from
1969 to 1981. During the campaign, Martin Torrijos pledged to fight government
corruption, lower the country’s unemployment rate, increase trade with the
United States, and improve the Panama Canal.
Torrijos followed through on his pledge
to improve the Panama Canal, and in October 2006 voters approved a referendum to
expand the canal by adding a new channel and more locks. The $5.2-billion
expansion project was expected to create thousands of jobs. The current canal
cannot accommodate many of the large new container ships, and heavy traffic has
caused costly delays for many ships waiting to enter the existing locks.
Construction on the expansion was expected to begin in 2008 and to be completed
in 2014.
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