The South and Central America headland has a strategic location in terms of transit traffic, but is otherwise very isolated from events elsewhere in Latin America. Before the Spaniard Vasco Núñez de Balboa crossed the Pacific Ocean in 1513, Panama was sparsely populated. Of the original indigenous people there are still cuna and guaymí.
From 1543, the wealth of the mines in Peru was transported via Panama to Spain. British pirates were the biggest threat, and in 1671 the port of Panama was robbed and burned to the ground by Henry Morgan’s men. After independence from Central America in 1821, Panama was administered by Colombia.
The railroad built across the narrow country in 1853 increased Panama’s strategic importance, and both the United Kingdom and the United States sought to gain the rights to build a channel to connect the two world seas. This was of great strategic importance to the United States after the annexation of California.
- Countryaah: Check to see the location of Panama on the world map. Also covers major mountains, rivers and lakes in Panama.
Colombia would not give the United States the necessary license to build the planned Panama Canal. To see more information other than history, please visit Abbreviationfinder to learn more about climate, population, government, and economy for the country of Panama. Theodore Roosevelt’s government therefore actively supported a liberation movement in Panama which, on November 3, 1903, declared the country independent. The new government surrendered a 16km wide land corridor to the United States, where construction of the canal was begun.
In 1914, the first ship sailed through the canal. In this way, the United States gained a great deal of influence in Panama, and the activities around the channel characterized the country’s economy. Contrary to the 1903 agreement, the US Channel Zone was heavily militarized, and in 1949 the most important officer school in Latin America (Fort Gulick) was established, where almost all military dictators received their education. There has long been a nationalist aversion to US domination of Panama.
In 1964, 22 students were killed trying to raise Panama’s flag in the canal zone, and diplomatic relations were broken.
The head of the Panama National Guard, General Omar Torrijos, made sure that the right-wing Arnulfo Arias was deposed for the third time in a coup in October 1968. A new constitution from 1972 gave him dictatorial power. Still, he enjoyed great popularity with his threatening tone to the United States. He won great sympathy in Latin America with his demand for nationalization of the Panama Canal and became a leading figure in the Alliance Free States movement. The Torrijos regime actively supported the independence claim to Belize and the Sandinist Front in Nicaragua.
In 1977, Torrijos achieved his greatest triumph by agreeing with US President Jimmy Carter that the channel should be transferred to Panama in 1999. Since 1979, the channel zone has been managed by a joint commission. Although Aristides Royo of the Torrijos Democratic Revolutionary Party (Partido Revolucionario Democrático, PRD) was elected president in 1978, it was Torrijos himself who had the unquestionable power until he perished in a mysterious plane crash in 1981. Although significant social progress during Torrijos, the economy was constantly deteriorating.
In addition to being a major producer of bananas and copper, under Torrijos, a banking law was passed that made Panama an important financial center in Latin America. A large part of the world’s merchant fleet utilizes Panama’s convenience flag.
Political power struggle
After three interim presidents resigned in a few years, the first Democratic election in 16 years was won by the UNADE coalition in 1984, with Nicolás Ardito Barletta as president. The following year, however, he resigned and was succeeded by Eric Delvalle.
The National Guard has always been an important element of power. General Manuel Antonio Noriega, as Commander-in-Chief, had a special mission to create a powerful national army capable of defending the canal in the year 2000. Noriega was regarded as the country’s de facto ruler in the 1980s. The revelations in 1987 that Noriega should have cheated in the 1984 election, and that he faced widespread corruption and drug smuggling, led to riots demanding his resignation and the appointment of former opposition politician Arnulfo Arias as president.
Noriega had for many years collaborated with the US intelligence service CIA and assisted with US military support for contras in Nicaragua. However, the general played several cards simultaneously and cooperated with Cuban intelligence and the guerrillas in El Salvador. He became famous for the fight against cocaine production in the Panama jungle, but this turned out to be the purge of his own competitors in this lucrative business.
The relationship between the United States and Noriega was particularly tightened after George HW Bush took over as US President in 1989, and the May 1989 election became the subject of violence. Anti-American sentiment was expressed in physical attacks on candidate Guillermo Endara, who was the United States’ hope in the election. The counting of votes was interrupted by the National Guard, and the election was canceled. Noriega took the political power, introduced the state of emergency, and accused Endara, who was considered the victor of the election, to go the United States errand and did not represent Panama’s national interests.
Noriega’s monotonous and strong anti-American outcome also threatened to humiliate President Bush with damaging leaks from his political past. There was a fierce tug of war between the United States and Panama to gain sympathy from the other Latin American countries. It all culminated in the US invasion of Panama in December 1989, where Noriega was deposed. 28,000 airborne soldiers were landed, and about 3,000 civilian Panamans died during the bombing of several boroughs in the capital.
The direct cause of the invasion was the killing of an American soldier at a military checkpoint in the capital, Panama City. Furthermore, there was a desire to bring Noriega to court in the United States for cocaine smuggling. Noriega sought refuge in the Vatican Embassy, but surrendered without dramatic New Year’s Eve 1989 to the US troops. He was flown to Florida where he was sentenced to 40 years in prison for drug trafficking.
The imprisonment of Noriega and the dismantling of the Panamanian military forces put Panama virtually under US control from 1990. The presumed winner of the 1989 canceled election, Guillermo Endara, was inaugurated as president and ruled on the US premise. Promises of extensive financial support were downplayed in the US Congress, and the modest support that was eventually granted was not even sufficient to repair the direct damage the invasion had inflicted on the country.
Endara felt ridiculed by the United States and was under intense pressure from the people to fulfill the promises. Desperate attempts at economic reform only led to increased criticism, and Endara was accused of widespread corruption. He ended his presidential term in 1994 as a failed puppet for US plans in Panama.
Elections 1994 and 1999
The revolutionary Democratic Party of the PRD, which, among others, had belonged to Noriega, emerged ahead of the 1994 elections as the foremost exponent of national sentiment in Panama and opposition to the United States. It was no surprise that PRD candidate Pérez Balladares emerged victorious from the election, after pledging to strengthen the economy and prepare for the transfer of the channel to Panama on December 31, 1999. In addition to agreements with the United States to combat the influence of Colombian cocaine cartels on Panama’s financial system, also landed willing to receive 10,000 Cuban refugees.
Shortly after the inauguration, the president pardoned more than 200 Noriega staff and declared that the controversy surrounding Noriega and the US invasion was a closed chapter. Requirements for Noriega to be extradited and brought to court in Panama have not been prioritized by the new government.
In January 1995, a coup and assassination attempt against the president was averted. The country, under Pérez Balladares, had not received the economic recovery many had hoped for, and the country was characterized by labor conflicts and riots in protest against the adjustment policy the government led to gain entry into the International Monetary Fund (IMF) and hopes of membership in NAFTA.
The May 1999 presidential election was won by Mireya Moscoso, who got 44.9 percent of the vote; Martín Torrijos from PRD (Partido Revolucionario Democrático) got 37.6 percent and Alberto Vallarino from Christian Democratic PDC (Partido Demócrata Cristiano) 17.5 percent of the vote. Moscoso – the country’s first female president – led the Arnulfist Party (Partido Arnulfista), named after her late husband, former President Arnulfo Arias Madrid (1901–88).
She won a populist program with promises to further the political legacy of Arias by working to improve the living conditions of Panama’s many poor. On December 31, 1999, the agreement to revert control of the Panama Canal and the Channel Zone was implemented.
Panama in the 21st Century
Martin Torrijos of the Democratic Revolutionary Party (PRD) won the presidential election in 2004. He is the son of the country’s former dictator Omar Torrijos, who in 1977 negotiated the agreement with the United States on sovereignty over the channel. The main goal of the new president was to conclude the settlement with the dictatorship, and to continue the fight against corruption and money laundering that started under Moscoso. The same was true of the fight to remove Panama’s reputation as a key transit country for drugs and illegal immigration to the United States. During his presidency, Torrijos strengthened trade relations with the United States and at the same time normalized Panama’s relationship with Cuba.
In a 2006 referendum, 78 percent said yes to a comprehensive plan to expand the Panama Canal, and during a major ceremony, construction work started the following year. The channel contributes significantly to the country’s economy, but the financial industry, industrial development, shipping and tourism have become equally important sources of income, along with the canal city of Colón – which holds 2000 different companies and economically appears as the world’s second largest free trade area.
In the last three years before the international financial crisis hit in 2008, Panama increased its economic growth from 6.4 percent to around 11 percent, the strongest growth curve in Latin America. But the distribution policy was also a major challenge in the new century, when power and wealth were still gathered in few hands and 40 percent of the population lived below the poverty line.
The May 2009 presidential election provided an overwhelming victory for right-wing candidate Ricardo Martinelli. Martinelli’s four-party coalition The Alliance for Change also won a majority in the parallel election to a new National Assembly, with 37 of the 71 seats. Martinelli, who began his five-year term on July 1, 2009, is among the country’s richest. His success in business and finance was considered a success factor in the election as well, with a view to guiding the country through the financial crisis. Poor results in poverty reduction and allocation policy in the economic boom ahead of the crisis were a major point of criticism against Torrijos.
For Martinelli, increased tourism investment was a key measure for new economic growth, as well as free trade and a further expansion of trade with the United States – following an election that, with its right turn, countered the main trend in Latin America in the first decade of the 2000s. Martinelli was not re-elected in 2014, and his former Vice President, Juan Carlos Varela, assumed the presidency that year.