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Republic of Panama
República de Panamá

CAPITAL: Panama City

FLAG: The national flag is divided into quarters. The upper quarter next to the staff is white with a blue star; the upper outer quarter is red; the lower quarter next to the staff is blue; and the lower outer quarter is white with a red star.

ANTHEM: Himno Nacional, beginning "Alcanzamos por fin la victoria" ("We reach victory at last").

MONETARY UNIT: The balboa (b) of 100 centésimos is the national unit of account. Panama issues no paper money, and US notes are legal tender. Panama mints coins of 0.05, 0.10, 0.25, 0.50, 1 and 5 balboas which are interchangeable with US coins. b1 = $1.00000 (or $1 = b1) as of 2005.

WEIGHTS AND MEASURES: The metric system is official, but British, US, and old Spanish units also are used.

HOLIDAYS: New Year's Day, 1 January; Martyrs' Day, 9 January; Labor Day, 1 May; National Revolution Day, 11 October; National Anthem Day, 1 November; All Souls' Day, 2 November; Independence from Colombia, 3 November; Flag Day, 4 November; Independence Day (Colón only), 5 November; First Call of Independence, 10 November; Independence from Spain, 28 November; Mother's Day and Immaculate Conception, 8 December; Christmas, 25 December. Movable religious holidays are Shrove Tuesday and Good Friday.

TIME: 7 am = noon GMT.


The Republic of Panama, situated on the Isthmus of Panama, has an area of 78,200 sq km (30,193 sq mi). Comparatively, the area occupied by Panama is slightly smaller than the state of South Carolina. The Canal Zone (1,432 sq km/553 sq mi), over which the United States formerly exercised sovereignty, on 1 October 1979 was incorporated into Panama, with the United States retaining responsibility for operation of the Panama Canal and the use of land in the zone for maintenance of the canal until the year 2000.

Panama extends 772 km (480 mi) ew and 185 km (115 mi) ns. Bordered on then by the Caribbean Sea, on the e by Colombia, on the s by the Pacific Ocean, and on the w by Costa Rica, Panama has a total boundary length of 555 km (345 mi), of which 2,490 km (1,547 mi) is coastline.

Panama's capital city, Panama City, is located where the Panama Canal meets the Gulf of Panama.


Panama is a country of heavily forested hills and mountain ranges. The two principal ranges are in the eastern and western sections of the country, and a third, minor range extends southward along the Pacific coast into Colombia. The eastern Cordillera de San Blas parallels the Caribbean coastline, while the Serranía de Tabasará ascends westward, culminating in the Barú volcano (3,475 m/11,401 ft), formerly known as Chiriquí. Between these ranges, the land breaks into high plateaus, ridges, and valleys. The Panama Canal utilizes a gap in these ranges that runs northwest to southeast and averages only 87 m (285 ft) in altitude.

Panama has more than 300 rivers, most of which flow into the Pacific, with only the Tuira River in Darién Province of any commercial importance. Both coasts of the isthmus have deep bays, but the Gulf of Panama is especially well provided with deepwater anchorages. Panama also has more than 1,600 islands, including the Amerindian-inhabited San Blas Islands in the Caribbean (366) and the Pearls Archipelago (Archipiélago de las Perlas) in the Gulf of Panama (over 100). Its largest island is the penal colony Coiba, which is south of the Gulf of Chiriquí.

Panama rests upon the Caribbean Tectonic Plate near its convergence with the Cocos, Nazca, and South American plates. The same motion of these plates, which created the Isthmus of Panama, continues to cause frequent tremors and earthquakes in the region; most of these are of low magnitude and cause little damage.


Panama is tropical, but temperatures vary according to location and altitude. The annual average temperature on both coasts is 29°c (81°f), and it ranges from 10° to 19°c (50 to 66°f) at various mountain elevations. There is little seasonal change in temperature, with warm days and cool nights throughout the year. Humidity is quite high, however, averaging 80%. Rainfall averages 178 cm (70 in) in Panama City and 328 cm (129 in) in Colón. The period of lightest rainfall is from January to March.


Most of Panama is a thick rain forest, with occasional patches of savanna or prairie. On the wet Caribbean coast, the forest is evergreen, while on the drier Pacific side the forest is semi-deciduous. Species of flowering plants total over 9,900 and include the national flower, the Holy Ghost orchid. Mammals inhabiting the isthmus are the anteater, armadillo, bat, coati, deer, opossum, peccary, raccoon, tapir, and many varieties of monkey. Reptiles, especially alligators, are numerous along the coasts. Bird life is rich and varies according to the presence of migratory species. Fish abound, with the Pacific coast being a favored region for sport fishing. As of 2002, there were at least 218 species of mammals and 302 species of birds throughout the country.


Soil erosion and deforestation are among Panama's most significant environmental concerns. Soil erosion is occurring at a rate of 2,000 tons per year. During 19902000, the annual average rate of deforestation was 1.6%. Air pollution is also a problem in urban centers due to emissions from industry and transportation. In 2000, the total of carbon dioxide emissions was at 6.3 million metric tons. Pesticides, sewage, and pollution from the oil industry cause much of the pollution.

Agencies with environmental responsibilities include the Ministry of Health and Ministry of Rural Development. The Smithsonian Tropical Research Institute, in Balboa, conducts studies on the conservation of natural resources.

According to a 2006 report issued by the International Union for Conservation of Nature and Natural Resources (IUCN), threatened species included 17 types of mammals, 20 species of birds, 7 types of reptiles, 52 species of amphibians, 17 species of fish, 2 species of invertebrates, and 195 species of plants. Endangered species include the red-backed squirrel monkey, tundra peregrine falcon, spectacled caiman, American crocodile, and four species of sea turtle (green sea, hawksbill, olive ridley, and leatherback).


The population of Panama in 2005 was estimated by the United Nations (UN) at 3,232,000, which placed it at number 130 in population among the 193 nations of the world. In 2005, approximately 6% of the population was over 65 years of age, with another 29% of the population under 15 years of age. There were 102 males for every 100 females in the country. According to the UN, the annual population rate of change for 200510 was expected to be 1.8%, a rate the government viewed as too high; it was addressing the relatively high fertility rate with family life and sexuality education programs in primary and secondary schools. The projected population for the year 2025 was 4,239,000. The population density was 43 per sq km (111 per sq mi).

The UN estimated that 62% of the population lived in urban areas in 2005, and that urban areas were growing at an annual rate of 2.31%. The capital city, Panama City (Panamá), had a population of 930,000 in that year. Other major cities and their estimated populations include Colón, 187,705; and David, 112,000.


Immigration and emigration have been roughly in balance in recent years. In the 1990s, there were 61,400 foreign-born persons in Panama, of which 13,644 were Colombians. In 1999, the United Nations High Commissioner for Refugees (UNHCR) urged Panamanian authorities to take a more flexible approach toward Colombians who arrived after February 1998 and were under a Temporary Protection plan. The total number of migrants in the country in 2000 was 82,000. In 2004 worker remittances were $231 million. In 2004 there were 1,608 refugees in Panama and 271 asylum seekers. In 2005, the net migration rate was an estimated - 0.86 migrants per 1,000 population. The government viewed the migration levels as satisfactory.


The racial and cultural composition of Panama is highly diverse. According to recent estimates, about 70% of the inhabitants are mestizo (mixed Amerindian and white) or mulatto (mixed white and black); 14% are Amerindian and mixed (West Indian); 10% are white (mostly Europeans); and 6% are Amerindian. There is also a Chinese community of about 150,000. The indigenous tribes include the Embera-Wounaan, Ngobe-Bugle, and the Kona, all of which reside in tribal-led reservations within the country. The Bri-Bri and the Naso are smaller tribes found near the Costa Rica border.


Spanish, the official language of Panama, is spoken by over 90% of the people, but English is a common second language, spoken by most Panamanian professionals and businesspeople. The Amerindians use their own languages. Many Panamanians are bilingual.


At the last census in 1998, an estimated 82% of the people were Roman Catholic; 10% were evangelicals; and 3% were unaffiliated with any religious group. More recent, but unofficial, estimates suggest that the Catholic population is declining in favor of the evangelicals, which may account for up to 20% of the population. Mainstream Protestant groups include Lutherans, Southern Baptists, and Methodists (United Methodist and the Methodist Church of the Caribbean and the Americas). There are small groups of Latter-Day Saints (Mormons), Seventh-Day Adventists, Jehovah's Witnesses, Episcopalians, and other Christians. Buddhists, Jews, Muslims, and Baha'is also had small communities. Panama is home to one of the world's seven Baha'i Houses of Worship.

Although Roman Catholicism is recognized by the constitution of 1972 as the majority religion, it is not designated as an official religion of state and religious freedom, as well as separation of church and state, are guaranteed. The Panamanian Ecumenical Committee is a nongovernmental group that encourages interfaith dialogue and charitable service.


Motor vehicles transport most agricultural products. In 2002, there were 11,592 km (7,203 mi) of roads, of which about 4,079 km (2,534 mi) were paved, including 30 km (19 mi) of expressways. The principal highway is the National (or Central) Highwaythe Panamanian section of the Pan American Highwaywhich runs from the Costa Rican border, via Panama City and Chepo, to the Colombian border. The 80-km (50-mi) Trans-Isthmian Highway links Colón and Panama City. Panama's rugged terrain impedes highway development, and there are few good roads in the republic's eastern sections. In 2003 there were 266,900 registered passenger cars and 171,800 commercial vehicles.

As of 2004, there were a total of 355 km (220 mi) of standard and narrow gauge railway lines, all government-run. Of that total, narrow gauge accounted for 279 km (174 mi). The Panama Railroad parallels the canal for 77 km (48 mi) between Colón and Panama City. Other lines connect Pedregal, David, Puerto Armuelles, and Boquete and unify Bocas del Toro Province.

In 2005, the Panamanian merchant marine registered 5,005 ships of 1,000 GRT or more, totaling 122,960,929 GRT. Most of the ships are foreign-owned but are registered as Panamanian because fees are low and labor laws lenient. International shipping passes almost entirely through the canal ports of Cristóbal, which serves Colón, and Balboa, which serves Panama City.

Panama is a crossroads for air travel within the Americas. As of 2004, there were an estimated 105 airports, 47 of which had paved runways as of 2005. The most widely used domestic airline is Compañía Panameña de Aviación (COPA), which also flies throughout Central America. Air Panama International serves passenger traffic to the United States and South America. Internacional de Aviación (INAIR) is an international passenger and cargo carrier. Panama has two international airports: the largest, Tocumen International Airport is in Panama City; the smaller, Omar Torrijos International Airport, is 19 km (12 mi) east of Panama City. In 2003, about 1.264 million passengers were carried on scheduled domestic and international airline flights.

The Panama Canal traverses the isthmus and is 82 km (51 mi) in length from deepwater to deepwater and is part of the nation's 800 km (497 mi) of navigable internal waterways. The great technical feat involved in constructing the canal was to cut through the mountains that span the region, dam the Chagres Lake, and then design and build the three sets of double locks that raise and lower ships the 26 m (85 ft) between lake and sea levels. The first passage through the canal was completed by the S.S. Ancon on 15 August 1914. As of 1 October 1979 when the US-Panama treaties went into effect, the canal was administered by the joint Panama Canal Commission, on which the United States had majority representation through the end of 1989. The United States turned over complete control of the canal to Panama on 31 December 1999. The canal takes ships of up to 67,000 tons. An oil pipeline across the isthmus was opened in 1982 to carry Alaskan oil. Its capacity is 830,000 barrels per day. The Bridge of the Americas across the canal at the Pacific entrance unites eastern and western Panama as well as the northern and southern sections of the Pan American Highway. Panama, the United States, and Japan have commissioned a $20-million study to search for alternatives to the canal. The feasibility of building a new canal at sea level was to be examined. Alternatively, the Panama Canal Commission has indicated its intention to increase the width of the Gaillard Cut (Corte Culebra), since larger ships are restricted to one-way daylight passage due to the narrowness. Panama also plans to consolidate the ports of Balboa on the Pacific and Cristóbal on the Caribbean into a single container terminal system.


The isthmian region was an area of economic transshipment long before Europeans explored it. It was also the converging point of several significant Amerindian cultures. Mayan, Aztec, Chibcha, and Caribs had indirect and direct contact with the area. The first European to explore Panama was the Spaniard Rodrigo de Bastidas in 1501. In 1502, Columbus claimed the region for Spain. In 1513, Vasco Nuñez de Balboa led soldiers across the isthmus and made the European discovery of the Pacific Ocean. Despite strong resistance by the Cuna Amerindians, the settlements of Nombre de Dios, San Sebastián, and, later, Portobelo were established on the Caribbean coast, while Panama City was founded on the Pacific coast. In 1567, Panama was made part of the viceroyalty of Peru. English buccaneers, notably Sir Francis Drake in the 16th century and Henry Morgan in the 17th, contested Spanish hegemony in Panama, burning and looting its ports, including Panama City in 1671.

From the 16th until the mid-18th century, the isthmus was a strategic link in Spanish trade with the west coast of South America, especially the viceregal capital of Lima. In 1740, the isthmus was placed under the jurisdiction of the newly recreated viceroyalty of New Granada.

Panama declared its independence from Spain in 1821 and joined the Republic of Gran Colombia, a short-lived union of Colombia, Venezuela, and Ecuador, founded in 1819. In 1826, it was the seat of the Pan American Conference called by the liberator, Simón Bolívar. When Gran Colombia was dissolved in 182930, Panama still remained part of Colombia. Secessionist revolts took place in 1830 and 1831, and during 184041.

The discovery of gold in California in 1848 brought the isthmus into prominence as a canal site linking the Atlantic and Pacific oceans. After the French failed to build one in the 1880s, they sold those rights to the United States for $40 million. The United States then negotiated the Hay-Herrán Treaty with Colombia in 1903. After Colombia refused to ratify the treaty, Panama seceded from Colombia and, backed by US naval forces, declared its independence on 3 November 1903. Panama then signed a canal agreement with the United States and received a lump sum of $10 million and an annual rent of $250,000. The Hay-Bunau-Varilla Treaty (1903) granted the United States in perpetuity an 8-km (5-mi) strip of land on either side of the canal and permitted the United States to intervene to protect Panamanian independence, to defend the canal, and to maintain order in the cities of Panama and Colón and in the Canal Zone.

The United States intervened to establish order in 1908while the canal was under constructionand, after the canal had opened to traffic, in 1917 and again in 1918. In 1936, however, the United States adopted a policy of nonintervention, and in 1955, the annuity was raised to $1,930,000.

During the postwar decades, the question of sovereignty over the Canal Zone was a persistent irritant in Panamanian politics. On 9 January 1964, riots broke out in the Canal Zone as Panamanians protested US neglect of a 1962 joint Panama-US flagflying agreement. On the following day, Panama suspended relations with the United States and demanded complete revision of the Canal Zone treaty. Thereafter, Panama sought sovereignty over the Canal Zone and the elimination of the concept of perpetuity on any future arrangement. Diplomatic relations were restored in April, but negotiations went slowly thereafter.

The Panamanian government turned to dictatorship in October 1968, when National Guard Brig. Gen. Omar Torrijos Herrera deposed the elected president and established a dictatorship.

Final agreement on the future of the canal and the Canal Zone came on 7 September 1977, when Gen. Torrijos and US president Jimmy Carter signed two documents at OAS headquarters in Washington, DC. The first document, the Panama Canal Treaty, abrogated the 1903 Hay-Bunau-Varilla accord, recognized Panama's sovereignty over the Canal Zone (which ceased to exist as of 1 October 1979), and granted the United States rights to operate, maintain, and manage the canal through 31 December 1999, when ownership of the canal itself would revert to Panama. Panama would receive a fixed annuity of $10 million and a subsidy of $0.30 (to be adjusted periodically for inflation) for every ton of cargo that passed through the canal, plus up to $10 million annually from operating surpluses. The second document, the so-called Neutrality Treaty, guaranteed the neutrality of the canal for "peaceful transit by the vessels of all nations" in time of both peace and war. An additional provision added in October denied the United States the right of intervention into Panamanian affairs. The treaties were ratified by plebiscite in Panama on 23 October 1977 and, after prolonged debate and extensive amendment, by the US Senate in March and April 1978. When both treaties came into force in 1979, about 60% of the former Canal Zone's total area immediately came under Panama's direct control, including 11 of 14 military bases, the Panama City-Colón railway, and ports at both ends of the canal.

The Torrijos regime was populist, with a wide appeal to the neglected lower and lower middle classes of Panama. Moreover, Torrijos established nationalist credentials by standing up to the United States and demanding recognition of Panama's positions on the Canal Zone. Torrijos resigned as head of government in 1978 but continued to rule behind the scenes as National Guard commander until his death in a plane crash on 31 July 1981. Over the next few years, the National Guard, now renamed the Panama Defense Forces (PDF), came under the influence of Gen. Manuel Noriega.

On the civilian side, Aristedes Royo was elected president by the Assembly in October 1978, and was later forced out of office in July 1982. His successor was the vice president, Ricardo de la Espriella, who resigned in February 1984, just three months before scheduled presidential elections. In those elections, the economist and former World Bank official Nicolás Ardito Barletta, the military's approved candidate, won a close victory over former president Arnulfo Arias Madrid (running for the fifth time), in an election marked by voting irregularities and fraud. Barletta soon lost the confidence of the military and was forced out in September 1985. Vice President Eric Arturo Delvalle assumed power.

By 1987, Noriega had been accused by close associates and the United States of falsifying the 1984 election results, plotting the deaths of prominent opposition leaders and Gen. Torrijos, drug trafficking, giving aid to the Colombian radical group M-19 and Salvadoran rebels, and providing intelligence and restricted US technology to Cuba. Opposition forces, including the Roman Catholic Church, intensified and the government responded by banning public protest. The US Senate approved legislation cutting off aid to Panama in December 1987. In February 1988, following indictments of Noriega in US courts for drug trafficking, President Delvalle announced Noriega's dismissal. Noriega refused to step down, and the Legislative Assembly voted to remove Delvalle from office and replace him with Manuel Solís Palma, the minister of education. Delvalle went into hiding, and Panama entered a two-year period of instability and conflict.

Noriega also had problems within the PDF. Dissident military leaders, with either tacit or direct US approval, attempted coups in March 1988 and in October 1989. Unable to rely on the loyalty of the PDF, Noriega created his own paramilitary force, called the "Dignity Batallions," which were nothing more than freelance thugs called in at the dictator's whim. Domestically, Noriega suffered from a lack of support. In March 1987, a general strike occurred for several weeks. Emboldened by US efforts to remove Noriega, opposition forces coalesced, even as the government became more repressive. In elections held in May 1989, opposition candidates scored overwhelming victories, forcing Noriega to annul the elections and rely on intimidation and force.

Finally, the United States was engaged in a series of moves calculated to bring down the Noriega regime, which eventually led to a showdown. In March 1988, President Ronald Reagan suspended preferential trade conditions and withheld canal-use payments. In April, Reagan froze US-held Panamanian assets and suspended all private payments to Panama. Negotiations to allow Noriega to step down dissolved in May, when Noriega refused to abide by an agreement between the United States and Noriega's assistants. The administration of President George H. W. Bush continued pressure on Noriega, but itself came under criticism for its inability to resolve the problem. Finally, in December 1989, Noriega played his final card, declaring war on the United States and ordering attacks on US military personnel.

President George H. W. Bush responded quickly, ordering the US military into Panama. The troops remained for a week, delayed when Noriega sought sanctuary in the residence of the Papal Nuncio. Noriega surrendered and was returned to the United States for trial. Immediately, the Panamanian Electoral Tribunal declared the 1989 elections valid and confirmed the results. Guillermo Endara became president, Ricardo Arias Calderón first vice president, and Guillermo "Billy" Ford second vice president. Legislative elections were confirmed for most Legislative Assembly seats, and in January 1991 a special election filled the remaining seats.

Under President Endara, Panama made some strides toward economic recovery, but these were only impressive because the situation under Noriega had become so desperate. Politically, Endara lacked nationalist credentials, especially since he was installed by US military might. His administration was widely criticized for the continuing poor economic conditions.

In May 1994, a new president, Ernesto Pérez Balladares, was elected in the country's first free and fair elections since 1968. His opponent, Mireya Moscoso, entered political life in 1964 when she worked on the campaign of Arnulfo Arias, whom she eventually married. After Arias's death in 1988, Moscoso returned to Panama, where she formed the Arnulfista party, named for Arnulfo Arias. Balladares's Democratic Revolutionary Party (PRD) was closely associated with the Noriega dictatorship but the new president identified himself with the populist Torrijos regime. The years of Pérez Balladeres's rule were characterized by a multiparty cabinet that included several members who publicly denounced former dictator Manuel Noriega. Peréz Balladeres set in motion various economic reforms and continued close collaboration with the United States to implement treaties regarding the eventual turnover of the Panama Canal to Panamanian rule (which occurred 31 December 1999). A law ratified in 1997 created the Canal Authority to administer the Canal after the United States relinquished control. Though Pérez Balladeres worked to pass a referendum to allow his reelection, it failed.

Presidential campaigns ensued. The PRD, with its majority in congress, campaigned fiercely with its candidate Martin Torrijos Espino, son of the late dictator. The main opposition was the Arnulfista Party. Its candidate, Mireya Moscoso (who is the widow of Arias) swept the elections on 2 May 1999. Moscoso thus became the first woman to take the office. After having run in 1994 and lost to Pérez Balladeres), Moscoso defeated Torrijos in what was considered a fair election: 75% of the country's 2.7 million citizens voted. Moscoso took office on 1 September 1999.

As the end of the decade neared, the country prepared for the withdrawal of the US military on 31 December 1999, under the terms of the Panama Canal Treaty. Moscoso officiated, with former US president Jimmy Carter, at the formal ceremony where the United States relinquished power over the Canal. The Panama Canal was officially handed over to Panamanian rule on 31 December 1999; this marked an end to 80 years of US occupation. Though the accompanying ceremony took place a week prior to the historic date due to potential complications with millennium celebrations, the significance was nonetheless grand. The ceremony included King Juan Carlos of Spain and several Latin American leaders. Carter, who began the process to grant Panama control over the waterway more than 20 years prior under a treaty with then-president General Omar Torrijos, signed over the United States rule. President Bill Clinton declined invitations to attend the ceremony. The celebrations that ensued were overshadowed somewhat by concerns from US conservative politicians that the canal will not be secure in Panamanian hands. However, President Clinton pledged continued collaboration with Panama to ensure the canal's security.

In 2004, on a strong "zero tolerance" anticorruption platform that called for increased transparency, Martin Torrijos won the presidency, and his PRD party won a majority in the National Assembly over the Panameñista (formerly Arnulfista) party. After his inauguration in September of that year, he created a broad coalition of labor, religious, and civil society, as well as government leaders to form the Anti-Corruption Council to crack down on the corruption endemic to previous administrations.

Since regaining control of the canal, Panama has experienced difficulties turning the canal into an engine for economic growth. The economy expanded by less than 3% in 2001 and 2002, but GDP increased to approximately 4% in 2004 and 6% in 2005. Despite being the country with the highest per capita income in Central America, roughly 40% of Panamanians live in poverty.


Under the constitution of 1972, Panama is a republic in which the president, assisted by a cabinet, exercises executive power. Reforms adopted in April 1983 changed the election of the president from an absolute majority of the National Assembly of Municipal Representatives to a direct popular vote, and a second vice president was added. The president and the two vice presidents must be at least 35 years of age and native Panamanians; they serve for five years and are not eligible for immediate reelection. For the 2009 national elections the executive branch will be reduced to including only one vice president. The constitution was ratified to reflect these changes in 2004.

Legislative power is vested in the unicameral Legislative Assembly, which replaced the National Assembly of Municipal Representatives in 1984. The 78 members are elected for five-year terms by direct popular vote. However, as per the 2004 constitutional changes, assembly membership will be capped at 71 representatives for the 2009 elections. Regular sessions are from 11 October11 November annually, and special sessions may be called by the president. Suffrage is universal for Panamanians 18 years of age or over. The next national elections were scheduled to take place 3 May 2009.

The 1972 constitution conferred extraordinary decision-making powers upon the commander of the Panama Defense Forces (PDF), who was allowed to participate in sessions of all executive and legislative organs, to direct foreign policy, to appoint Supreme Court magistrates, and to appoint and remove ministers of state, among other responsibilities.

The PDF was subsequently converted into a civilian group called the Public Forces. Following a purge of PDF senior officials, the Public Forces were placed under the cabinet-level Minister of Government and Justice.


Personalities rather than ideological platforms tend to be the dominating force in Panamanian politics. The traditional political parties were the Liberals and the Conservatives, and their differences lay initially in the issue of church and state power. More recently, parties tended to be coalitions of the many splinter groups that had formed around local leaders. Military interventions frequently led to the banning of political parties. Such interruptions have led to an extremely splintered party system, which held together only insofar as they opposed the military regimes.

The coalition that came to power in 1990 consisted of President Endara's Arnulfista Party, led by Dr. Arnulfo Escalona, the National Liberal Republican Movement (MOLIRENA), led by second vice president Guillermo Ford; and the Christian Democratic Party (PDC), led by first vice president Ricardo Arias. Subsequently, Arias broke from the coalition, and the PDC, which held a plurality of seats in the Legislative Assembly, became the leader of the opposition.

With the election of Ernesto Pérez Balladares to the presidency in May 1994, the Democratic Revolutionary Party (PRD), which had been closely linked to the country's former military regime, was returned to power, as part of a coalition that also included the Liberal Republican Party (PLR) and the Labor Party (PALA). This coalition gained effective control of the National Assembly as well as the executive branch.

Although the PRD was defeated with the election of Mireya Moscoso in 1999, in 2004 the PRD came back with a victory fueled by a much-awaited anticorruption campaign, and a coalition with the Popular Party (PP). The other six constituted political parties are the former Arnulfista party of the Partido Panameñista (PA), MOLIRENA, Democratic Change (CD), Solidarity Party (PS), National Liberaly Party (PLN), and the Liberal Party (PL).


Panama is divided into nine administrative provinces, each headed by a governor appointed by the president, and one Amerindian territory. The provinces are subdivided into 67 municipal districts, each of which is governed by a mayor and a municipal council of at least five members, including all that district's representatives in the National Assembly. There are 511 municipal subdistricts in all.


Judicial authority rests with the Supreme Court, composed of nine magistrates and nine alternates, all appointed by the president (subject to approval by the Legislative Assembly) for 10-year terms. The Supreme Court magistrates appoint judges of the superior courts who in turn appoint circuit court judges in their respective jurisdictions. There are four superior courts, eighteen circuit courts (one civil and one criminal court for each province), and at least one municipal court in each district.

At the local level, two types of administrative judgescorregidores and night (or police) judgeswho hear minor civil and criminal cases involving sentences under one year. Appointed by the municipal mayors, these judges are similar to Justices of the Peace. Their proceedings are not subject to the Code of Criminal Procedure and defendants lack procedural safeguards afforded in the regular courts.

The constitution guarantees a right to counsel for persons charged with crimes and requires the provision of public defenders for indigent criminal defendants. Trial by jury is afforded in some circumstances.

The 1996 amendment to the constitution abolished the standing military and contains a provision for the temporary formation of a "special police force" to protect the borders. The Judicial Technical Police perform criminal investigations in support of public prosecutors. The constitution also provides for an independent judiciary; however, the judiciary is susceptible to corruption.

The legal system is based on the civil law system. Panama accepts the compulsory jurisdiction of the International Court of Justice with reservation.


The Panamanian Defense Force disappeared with the US intervention in 1989. The National Police Force numbers approximately 11,800 members, supported by a maritime service (estimated at 400 with 39 patrol boats) and an air service (400 staff, 12 aircraft, and 34 utility helicopters). In 2005, Panama's defense budge totaled $158 million.


Panama is a charter member of the United Nations, having joined on 13 November 1945, and participates in ECLAC and several nonregional specialized agencies, such as the FAO, IAEA, the World Bank, the IFC, UNESCO, UNIDO, and the WHO. Panama is also a member of the Inter-American Development Bank, G-77, the Latin American Economic System (LAES), the Latin American Integration Association (LAIA), the OAS, the Association of Caribbean States (ACS), and the Río Group. Panama is also a part of the Central American Parliament (PARLACEN). The nation is part of the Nonaligned Movement.

In environmental cooperation, Panama is part of the Basel Convention, Conventions on Biological Diversity and Whaling, Ramsar, CITES, the London Convention, International Tropical Timber Agreements, the Kyoto Protocol, the Montréal Protocol, MARPOL, the Nuclear Test Ban Treaty, and the UN Conventions on the Law of the Sea, Climate Change and Desertification. The nation is also a part of the Central American-US Joint Declaration (CONCAUSA).


Panama depends largely on its privileged geographical position: the economy is based on a well-developed services sector, including the Panama Canal, banking, insurance, government, the transPanamanian oil pipeline, and the Colón Free Zone. The Panama Canal and the monetary regime anchored in the use of the US dollar as legal tender spurred the rapid development of the service economy which offset markedly unfavorable terms of trade. The unique monetary system played a significant role in the creation of an International Banking Center and the Colón Free Zone.

Whereas many countries were characterized by a growing protectionism in the late 1940s, Panama launched the Colón Free Zone (the world's largest free zone, with Hong Kong as the largest free port). Panama also earned substantial rents through the construction of the trans-Panamanian oil pipeline and by the licensing of the Panamanian flag to merchant ships from around the world.

The economy generated annual growth of more than 6% during the period 195081. However, economic growth stagnated to 1.9% annually over 197787, caused by the aftermath of the second oil shock and the debt crisis. In the early 1990s, Panama rebounded from an excruciating recession brought about by a US embargo and subsequent military invasion. The US objective was the capture of General Manuel Noriega, who had installed puppet governments and was responsible for an increase in drug trafficking and money laundering. After Noriega was captured, extradited and condemned at a Miami federal court, Guillermo Endara assumed office. Nevertheless, his administration was widely criticized for not fulfilling Panamanians' hope for a rapid and bountiful recovery.

In May 1994, Armando Perez Balladares was elected president. The economy continued to grow, but at a slower pace during the first half of the 1990s. Panama's main engines of economic growth (the Panama Canal, the Colón Free Zone, and International Banking Center) continued to lose competitiveness in the context of an open economy throughout the world. The Balladares administration responded in 1996 with a solid program of economic reforms. These included the privatization of two seaports (Cristóbal and Balboa), the promulgation of an antimonopoly law, the renegotiating of foreign debt with commercial banks, the privatization of the electricity and water companies, and a banking reform law. These economic reforms were accompanied with the recovery of the majority of traditional sectors, with the exception of the construction sector.

Between 1988 and 1998, the economy grew at 5% annually. In 1999, Mireya Moscoso was elected to the presidency. She did not intend to privatize the few remaining state enterprises, and wanted to raise protectionist tariffs to help local farmers, but membership in the WTO forbade this action. In December 1999, in accordance with the 1977 Panama Canal Treaty, the Panama Canal and all American bases were returned to the Panamanian government, comprising 364,000 acres and estimated to be worth $4 billion. Real GDP growth fell to 3.2% in 1999 (down from 4.4% in 1998) and then to 2.5% in 2000. A major cause of the slowdown was a decline in foreign direct investment (FDI), which had run at about $1.3 billion in 1997 and 1998, but fell to $.65 billion in 1999 and $.60 billion in 2000. Real GDP growth fell to 2.5% in 2000.

In 2001, growth declined further as declining export demand and a dramatic drop in tourism following the 11 September 2001 terrorist attacks on the United States were added to declining domestic demand. Real GDP annual growth fell to 0.3% in 2001, and is estimated to have reached only 1.2% in 2002. Inflation has been held in control, falling from 1.5% in 1999 to 0.3% in 2001, and estimated at 0.8% for 2002. Unemployment remains in double digits, reaching 14.4% in 2001. In 2001 Panama was removed from both the United States and the OECD lists of noncooperating countries on money laundering, having been certified as compliant with 23 of 25 Basel Core Principles by the IMF Offshore Financial Center Module II assessment in August 2001. However, in 2002 and 2003, Panama remained one of 23 countries on the US list of major illicit drug producing and/or drug transit countries.

The economy expanded by 7.6% in 2004, up from 4.3% in 2003; in 2005, the GDP growth rate was estimated at 5.5%, while the GDP per capita, at purchasing power parity, reached $7,300. Most of this growth has been fueled by export-oriented services, and the construction boom, which in turn were backed up by tax incentives. The inflation rate was fairly stable and at 0.2% in 2004 it did not pose a major problem to the economy. The unemployment rate was modest in 2005 (8.7%), and as such was not a key concern for the government.


The US Central Intelligence Agency (CIA) reported that in 2005 Panama's gross domestic product (GDP) was estimated at $22.2 billion. The CIA defines GDP as the value of all final goods and services produced within a nation in a given year and computed on the basis of purchasing power parity (PPP) rather than value as measured on the basis of the rate of exchange based on current dollars. The per capita GDP was estimated at $7,300. The annual growth rate of GDP was estimated at 4.3%. The average inflation rate in 2005 was 2.5%. It was estimated that agriculture accounted for 7.6% of GDP, industry 17.9%, and services 74.5%.

According to the World Bank, in 2003 remittances from citizens working abroad totaled $85 million or about $28 per capita and accounted for approximately 0.7% of GDP. Foreign aid receipts amounted to $30 million or about $10 per capita and accounted for approximately 0.3% of the gross national income (GNI).

The World Bank reported that in 2003 household consumption in Panama totaled $8.07 billion or about $2,703 per capita based on a GDP of $12.9 billion, measured in current dollars rather than PPP. Household consumption includes expenditures of individuals, households, and nongovernmental organizations on goods and services, excluding purchases of dwellings. It was estimated that for the period 1990 to 2003 household consumption grew at an average annual rate of 4.9%. In 2001 it was estimated that approximately 22% of household consumption was spent on food, 18% on fuel, 14% on health care, and 4% on education. It was estimated that in 1999 about 37% of the population had incomes below the poverty line.


In 2005, Panama's workforce was estimated at 1.39 million. As of 2003, the services sector accounted for 65.2% of the labor force, with 17.51% in agriculture, 17.2% in industry, and 0.1% in undefined occupations. Panama's workforce is marked by an abundance of unskilled laborers, but a shortage of skilled workers. The unemployment rate rose from 11.8% in 1985 to 17% in 1990, and then declined to 13% by 2000. In 2005, the unemployment rate was estimated at 8.7%.

In 1999, Panama had over 250 unions with about 80,000 private sector members, organized into 48 federations and 7 confederations. The province of Panama is where more than two-thirds of the total number of unions are found. About 10% of the workforce was unionized as of 2001. The Confederation of Workers of the Republic of Panama, formed in 1963, is an affiliate of the ICFTU, and the National Center of Panamerican Workers is affiliated with the WFTU. Strikes are permitted, and collective bargaining is widely practiced.

The law provides for an eight-hour day, a six-day week, minimum wages, a month's vacation with pay, maternity benefits and equal pay for women, and restrictions on the employment of minors. The minimum wage ranged from $0.80 to $1.50 per hour in 2001. All employees are entitled to a one-month annual bonus in three equal installments, two of which the worker receives directly and one of which is paid into the Social Security Fund. The law prohibits children under the age of 14 from working, but child labor continues to be widespread.


About 9.3% of the total land area was classified as arable in 2003. Farming methods are primitive, and productivity is low. The best lands are held by large owners. Agriculture contributes about 7% to GDP and accounted for 34% of exports in 2004.

Panama is self-sufficient in bananas, sugar, rice, corn, and coffee, but imports large quantities of other foods. Bananas are the leading export product and the banana industry is an important source of rural employment; exports were valued at $108.2 million in 2004, about half destined for the German market. In 2004, crop production (in tons) included sugarcane, 1,650,000; bananas, 525,000; rice, 296,000; corn, 80,000; and coffee, 8,700.


The Panamanian livestock industry produces sufficient meat to supply domestic demand and provides hides for export. Most cattle and hogs are tended by small herders, and dairy farming has expanded in recent years. In 2005 there were 1,600,000 head of cattle, 272,000 hogs, and about 14 million chickens. Milk production in 2005 was reported at 187,000 tons. Panama imports a substantial amount of its dairy needs (powdered milk, butterfat, and cheese), primarily from New Zealand.


The offshore waters of Panama abound in fish and seafood, and fisheries are a significant sector of the national economy. There is freshwater fishing in the Chiriquí River and deep-sea fishing along the Pacific and Caribbean coasts for amberjack, barracuda, bonito, corbina, dolphinfish, mackerel, pompano, red snapper, sailfish, sea bass, and tuna.

In 2006, the fish catch totaled 229,652 tons, as compared with 131,514 tons in 1986. The main commercial species caught that year were Pacific anchoveta (78,618 tons), Pacific thread herring (55,730 tons), yellowfin tuna (28,694 tons), and skipjack tuna (11,474 tons). Exports of fish products were valued at nearly $412.3 million in 2003.


Forests cover about 39% of the country's area but have been largely unexploited because of a lack of transportation facilities. Nearly all forestland is government-owned. Hardwood, particularly mahogany, is produced for export in Darién and along the Pacific coast in Veraguas. Abacá fiber, which is obtained in Bocas del Toro and is used in the making of marine cordage, is a valuable forest product. Approximately 30% of Panama's natural forests are still unused. The average annual deforestation rate was 1.6% during 19902000. In order to protect and preserve native forests, the National Association for the Conservation of Nature has begun a vast reforestation program. Production of roundwood was 1,372,000 cu m (48.4 million cu ft) in 2004, 89% used as fuel wood.


Panama had a small-to-moderate mineral sector, with known deposits of copper, manganese, iron, asbestos, gold, and silver. Construction materials were a leading industry, including cement, clays, lime, limestone, and sand and gravel. There was no recorded gold or silver production from 2000 through 2003, nor was there any copper output that year. Salt, produced by evaporation of seawater at Aguadulce, was a major mineral product. Output was in 2003 was estimated at 23,000 metric tons. Cement production in 2003 was estimated at 770,000 metric tons in 2003.


Panama has no proven reserves of oil, natural gas, or coal, nor any oil-refining capacity. As a result, the country is totally dependent upon imports to meets its fossil fuel needs.

In 2002, Panama's petroleum imports, including crude oil, averaged 88,980 barrels per day, of which 28,000 barrels per day consisted of crude oil. Demand for refined oil products averaged 76,580 barrels per day. Refinery output that year averaged 19,790 barrels per day. However, in that same year, Panama closed its sole refinery. As a result, the country must import all of its refined petroleum products.

There were no recorded imports of natural gas in 2002, although Panama did import 50,000 tons of hard coal that year.

Panama had a total installed electric capacity of 1,260,000 kW in 2002, of which conventional thermal facilities accounted for 51.3% of capacity, with hydroelectric dedicated capacity accounting for the rest. Production of electric power that year totaled 5.162 billion kWh, of which 34.4% was from fossil fuels, 65.2% from hydropower, and the rest from other renewable sources. Consumption of electricity in 2002 was 4.786 billion kWh.


The performance of Panama's industry as a whole was negative during the 1980s, but garnered a 7% growth rate during the 1990s. Construction, manufacturing, mining, and utilities together accounted for 17% of GDP in 2000, but industrial activity decreased by 1.5% that year. The government and the private sector have invested large amounts in the construction of ports, roads, and bridges. Thus, the production of construction-related materials and finished wood products have all risen considerably in recent years. Construction activity itself rose 7.5% in 2000.

Limited by a small domestic market, Panamanian manufacturing represents around 8% of GDP. Growth in production reached an average 1.1% annually between 1978 and 1988, rising to 5.4% between 1988 and 1998 due to an import-substitution high tariff regime that ended in 1998. Manufacturing of mainly nondurable goods consists principally of food-processing plants and firms for the production of: alcoholic beverages, sugar, ceramics, tropical clothing, cigarettes, hats, furniture, shoes, soap, and edible oils. Other manufactured products include clothing, chemicals, cement, and construction products for domestic consumption.

Panama has potential to further develop its mining industry. The country has one oil refinery with a production capacity of 60,000 barrels per day. The government's privatization program was largely complete as of 2002.

The industrial production growth rate in 2005 year was 3.5%, lower than the overall GDP growth rate and an indicator that industry was not an economic growth engine. In 2005, industry accounted for 17.9% of the GDP and was bested by serviceswhich comprised 74.5% of the economy; agriculture was the smallest economic sector although it employed more people than the industrial sector. Panama currently suffers from a shortage of skilled labor, but has an oversupply of unskilled labor.


Although the shipping technology of the Panama Canal is owned and operated by the United States, technicians from the United States who operated the canal's facilities were replaced gradually by Panamanian personnel before the canal was officially turned over to Panama. The National Academy of Sciences of Panama (founded in 1942) advises the government on scientific matters, and the National Research Center (1976) coordinates scientific and technological research. The Smithsonian Institution has had a tropical research institute in Balboa since 1923. The University of Panama, founded in 1935 in Panama City, has faculties of agriculture, medicine, sciences, dentistry, nursing, and pharmacy. Santa María La Antigua University, founded in 1965 at El Doradom Panama, has a department of technology and natural science. The Technological University of Panama, founded in 1984 at El Dorado, has colleges of civil, mechanical, industrial, electrical, and computer-science engineering. The Nautical School of Panama, founded in 1959 at Paitilla, offers courses in nautical engineering. In 198797, science and engineering students accounted for 29% of college and university enrollments. The Museum of Natural Sciences, founded in Panama in 1975, is concerned with natural history and the fauna of Panama and other countries.

In 2001, spending by Panama on research and development (R&D) totaled $68.432 million or 0.37% of GDP. Of that amount, foreign sources accounted for the largest portion (55.1%), followed by the government sector (32.8%). Business accounted for 10.2%, with higher education and nonprofit organizations at 0.6% and 1.2%, respectively. In that same year, Panama had 95 researchers and 213 technicians engaged in R&D per million people. In 2002, Panama's high technology exports totaled $1 million, or 1% of its manufactured exports.


About 65% of the total national sales of consumer goods occurs in Panama City. The cities of David, Colón, Santiago, and Chitre sponsor nearly all of the rest. Marketing and distribution are generally on a small scale, with direct merchant-to-customer sales. Some wholesalers also act as retailers. Many shops in Panama City and Colón sell both native handicrafts and imported goods. Luxury items are generally untaxed in order to attract tourist sales. There are also US-style variety stores. In rural districts, agricultural products and meat are sold at markets. A 5% value-added tax (VAT) applies to most goods and services.

The usual business hours are 8 am to 5 pm, Monday through Friday; and 8 am to noon on Saturday. Government offices are open weekdays from 8:30 am to 4:30 pm, Monday through Friday. Banking hours in Panamanian urban centers are generally from 8:00 am to 3 pm, Monday through Friday, and most banks are open on Saturdays from 9 am to 12 noon.


The leading agricultural exportmainly controlled by foreignersis bananas, followed by shrimp. The decline in exports of almost 11% from 1997 to 1998 can be explained by quotas imposed on banana exports by the EU (bananas represent nearly one-fifth of all exports). Light industry exports (clothing and manufacturing textiles) have been increasing due to the free trade zone; but competition from Mexico starting in 1996 and the reduction of protective tariffs in 1998 stunted growth. All of Panama's main export

Country Exports Imports Balance
World 798.7 3,124.1 -2,325.4
United States 415.6 1,093.5 -677.9
Sweden 48.3 17.1 31.2
Spain 45.6 48.7 -3.1
Costa Rica 33.5 151.1 -117.6
Portugal 27.5 27.5
Nicaragua 24.8 24.8
Belgium 24.3 24.3
Netherlands 15.4 15.9 -0.5
Honduras 13.4 13.4
Guatemala 13.3 71.1 -57.8
() data not available or not significant.

commodities are foods, including bananas (19%), fish (18%), shrimp (10%), sugar (2.6%), and coffee (2.1%).

In 2005, exports reached $7.4 billion (FOBfree on board), while imports grew to $8.7 billion (FOB). In 2004, the bulk of exports went to the United States (50.5%), Sweden (6.6%), Spain (5.1%), the Netherlands (4.4%), and Costa Rica (4.2%). Imports included capital, food products, and petroleum products, and mainly came from the United States (33.3%), Netherlands Antilles (8.1%), Japan (6%), Costa Rica (5.7%), Mexico (4.6%), and Colombia (4.2%).


Panama's adverse balance of trade is largely made up by invisible foreign exchange earnings from sales of goods and services in the Colón Free Trade Zone and from the Panama Canal. Nonetheless, Panama has had one of the highest amounts of goods and services export earnings in the region, relative to GDP. A strong services sector and foreign direct and financial investments have usually offset large merchandise trade deficits. In addition, Panama's debt traditionally trades with less volatility and a lower risk premium than most other Latin American issues.

The US Central Intelligence Agency (CIA) reported that in 2001 the purchasing power parity of Panama's exports was $5.9 billion while imports totaled $6.7 billion resulting in a trade deficit of $800 million.

The International Monetary Fund (IMF) reported that in 2001 Panama had exports of goods totaling $5.88 billion and imports totaling $6.71 billion. The services credit totaled $1.82 billion and debit $1.14 billion.

Exports of goods reached $8.8 billion in 2004, up from $7.6 in 2003. Imports increased from $7.4 billion in 2003 to $8.4 billion in 2004. The resource balance was consequently positive in both years, improving from $171 million in 2003 to $395 million in 2004. The current account balance was negative however, reaching

   Current Account -408.0
   Balance on goods -1,092.0
     Imports -6,143.3
     Exports 5,051.3
   Balance on services 1,262.6
   Balance on income -819.9
   Current transfers 241.3
Capital Account
Financial Account 25.4
   Direct investment abroad
   Direct investment in Panama 791.5
   Portfolio investment assets -59.3
   Portfolio investment liabilities 139.6
   Financial derivatives
   Other investment assets 464.1
   Other investment liabilities 1,310.5
Net Errors and Omissions 228.1
Reserves and Related Items 154.5
() data not available or not significant.

-$408 million in 2003, and -$274 million in 2004. Foreign exchange reserves (including gold) reached $1.1 billion in 2004, covering more less than two months of imports.


Panama was considered the most important international banking center in Latin America in the late 1980s. In 1970, 28 banks operated in Panama's international banking center; by 1987 there were 120, with assets of nearly $39 billion. Liberalized banking regulations and use of the dollar made Panama one of Latin America's major offshore banking centers.

Since 1983, the year of the onset of Latin America's financial crisis, the Panamanian banking sector has contracted, both in number of banks and total assets. In 2001 there were about 85 banks in Panama, holding $38 billion in total assets. Fifty of the banks in Panama have general licenses, 25 banks have offshore licenses, eight foreign banks have representative offices, and two banks are government owned. The National Bank of Panama (Banco Nacional de PanamáBNP), founded in 1904, is the principal official (but not central) bank and also transacts general banking business. Banking activities are supervised by the National Banking Commission (Comisión Bancaria NacionalCBN).

The balboa is fully convertible with the dollar at a fixed rate of 1:1. The government cannot, therefore, implement a monetary policy. Most monetary developments are exogenously determined by the balance of payments.

Panama's banking center has allegedly been the main money laundering point for proceeds from international drug-trafficking. In March 1994, it was decreed that persons entering Panama had to declare money or financial instruments in excess of $10,000. For deposits and withdrawals in excess of this amount from local banking institutions, a form had to be completed, providing details about the person carrying out the transaction. In 1998, a banking law was enacted in order to modernize the banking system and increase government supervision. The International Monetary Fund reports that in 2001, currency and demand depositsan aggregate commonly known as M1were equal to $1.3 billion. In that same year, M2an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual fundswas $9.4 billion.

Panama's international stock exchange, the Bolsa de Valores de Panama, began operations in June 1990. In 2003, there were a total of 94 listed companies. Companies rarely issue stock on the stock market and investment is small because of a 10% withholding tax. Panama's Central de Custodia de Valores (Panaclear) began operations in November 1996. A rating agency began operations in early 1997.


There were about 41 national insurance companies in Panama in 1997. Domestic companies include the General Insurance Co., the International Insurance Co., and the International Life Insurance Co. For a firm to qualify as a national insurance company, 51% of the capital must be Panamanian. In Panama, third-party automobile liability and workers' compensation are compulsory insurance. Only the government provides workers' compensation, as it is a part of the social security scheme. All firms must be approved by the Superintendency of Insurance. In 2003, the value of all direct

Revenue and Grants 3,041 100.0%
   Tax revenue 1,093.4 36.0%
   Social contributions 594.9 19.6%
   Grants 23.5 0.8%
   Other revenue 1,329.2 43.7%
Expenditures 2,934.4 100.0%
   General public services 808.3 27.5%
   Public order and safety 195.6 6.7%
   Economic affairs 175.9 6.0%
   Environmental protection
   Housing and community amenities 107.5 3.7%
   Health 527.5 18.0%
   Recreational, culture, and religion 39.2 1.3%
   Education 476.7 16.2%
   Social protection 603.7 20.6%
() data not available or not significant.

insurance premiums written totaled $388 million, of which nonlife premiums accounted for $261 million. Panama's top nonlife insurer in 2003 was ASSA, which had gross written nonlife premiums of $44.8 million, while the nation's leading life insurer, Aseguradora Mundial had gross written life insurance premiums of $48.1 million.


Panama does not issue its own currency; US dollar notes circulate as the paper currency. Panama's local currency, the balboa, established in 1904, is issued only in coins. One balboa equals one US dollar.

The US Central Intelligence Agency (CIA) estimated that in 2005 Panama's central government took in revenues of approximately $3.4 billion and had expenditures of $3.9 billion. Revenues minus expenditures totaled approximately -$533 million. Public debt in 2005 amounted to 73.2% of GDP. Total external debt was $9.859 billion.

The International Monetary Fund (IMF) reported that in 2001, the most recent year for which it had data, central government revenues in millions of US dollars were 3,041 and expenditures were 2,934.4. Government outlays by function were as follows: general public services, 27.5%; public order and safety, 6.7%; economic affairs, 6.0%; housing and community amenities, 3.7%; health, 18.0%; recreation, culture, and religion, 1.3%; education, 16.2%; and social protection, 20.6%.


As of 2005, Panama's corporate tax rate stood at a flat rate of 30%. However, companies not declaring any dividends during the tax year are subject to a minimum dividend tax of 4% of taxable income, minus the income tax. For companies registered in Panama's tax-free processing zones (TFTZs), which are modeled after the long-standing Colón Free Trade Zone (CFTZ), a much-vaunted 0% rate is applied on all profits arising outside of Panama. The 0% corporate tax rate goes with an exemption from all export and import duties on reexports. Companies in TFPZs have tax liability only for sales within Panama's fiscal jurisdiction which, by statute, can make up no more than 40% of their business. Capital gains are generally taxed as income and at the corporate rate. Interest income and royalties are subject to withholding taxes of 15% and 30%, respectively.

Personal income tax in Panama, as of 2005, was taxed according to a progressive schedule that has a top rate of 30%. Dividends received by individuals are subject to a 10% withholding tax on nominative shares, and 20% if issued to the bearer. There are targeted deductions for mortgage interest, loans to pay school fees, medical expenses, health insurance, and donations to charity among others that reduce taxable income for individuals. Gift taxes depend on the amount, unless the gift was between linear descendants, in which case, the gift is tax-exempt.

The main indirect tax is Panama's value-added tax (VAT) with a standard rate of 5%, and a reduced rate of 0% applied to basic foodstuffs, trade and medical services. Tobacco-related products are subject to a 15% excise tax, with alcohol subject to a 10% rate. Other levies include license fees, stamp and education taxes, and property taxes. Property improvements are tax-exempt for the first five years.


Panama imposes tariffs ranging of 015% on most manufactured goods. A 3% rate is applied to industrial equipment, industrial production inputs and raw materials. Agricultural inputs, agricultural machinery and agricultural chemicals pay no import duties. However, automobiles are subject to a 1520% duty, while dairy products and rice are subject to duties of 40% and 50%, respectively. There is also a 5% value-added tax (VAT) on imports.

Panama has a free port in the Colón Free Trade Zone, the world's second-largest free trade zone, where foreign goods enter without going through customs. Goods may be stored, assembled, processed, or repackaged for sale or shipment to another country free of duty. Panama is a part of the Caribbean Basin Initiative and has bilateral preferential trade agreements with Costa Rica, El Salvador, Honduras, Guatemala, Nicaragua, and the Dominican Republic. The country also has special arrangements with Mexico, Colombia, and Chile.


Increased private sector investment and inflows from lending agencies should offset lower public expenditure and help to stimulate economic growth. The government sold the electricity generation and distribution utilities in 1996. In addition, the government partially sold the telephone company. The United Kingdom's Cable and Wireless bought a 49% stake in INTEL, the national telecommunications monopoly. Privatization of the state water utility was put on hold in 1998 due to violent protests. Other parastatal sales included the transisthmian railroad, both canal ports, two sugar companies, a casino, a cement company, a fruit company, and a horse racetrack.

The government encourages industrialization by granting special tax concessions to new enterprises and imposing protective duties on competing foreign manufacturers. The Industrial Development Bank, equivalent to the US Small Business Administration, promotes small industries and facilitates credit on a longterm basis. A 1986 law on industrial incentives grants industrial investors a wide range of benefits, the foremost of which is tax exceptions that vary according to whether all or part of the output is earmarked for the export or domestic market.

In 1997 and 1998, annual inflows of foreign direct investment (FDI) peaked at almost $1.3 billion a year. Total FDI reached 40% of GDP in 1998. In 1999, as sovereignty over the canal was transferred from the United States to Panama, FDI flows declined by more than half, to $652 million in 1999, $603 million in 2000, and $513 million in 2001. Major investors include the United States, the United Kingdom, Mexico, and Taiwan. The majority of foreign investments in Panama are in the transport, storage, services, and communication sectors.

In 2003, total capital inflows reached $792 million (or 5.72% of the GDP), up from $98.6 million in 2002. Most of the investments went to Colón Free Zone businesses and banks.


The Panamanian economy is the most stable and among the most prosperous in the region. But the economy is highly segmented between its dynamic, internationally oriented service sector and the domestically oriented sector, which is beset with policy-induced rigidities and low productivity. About 14% of the labor force is unemployed despite the preponderance of services in the economy, low growth of the economically active population and relatively slow rural-urban migration. The protected poor performance of the economy has impeded job creation and contributed to high poverty levels and income inequality.

Despite Panama's relatively high per capita income, distribution of the wealth is highly skewed and had become progressively more evident in the 1990s. In 1979, the poorest 20% of the population received 4% of income; in the early 1990s that share had plunged to 2%, leaving Panama with one of the most unequal distributions in the hemisphere. The government's strategy for mitigating poverty and inequality rests primarily on reviving sustainable growth; its economic program emphasizes reforms that will mitigate the bias against employment creation (unemployment surpassed 14% in 2002), increase agricultural productivity, and reduce the high cost of the basic consumption basket.

In 2000, the International Monetary Fund (IMF) approved a 21-month, $85.5-million Stand-By Arrangement with Panama, to support the government's economic reform program. Economic growth slowed in the early 2000s, due in part to the global economic downturn, and weak domestic demand that resulted from the completion of large investment projects and a decline in bank credit to the private sector. The government in 2002 invested in infrastructure projects and strengthened the banking system.

The economy expanded at healthy rates in 2005, due to strong world trade growth, and good performance in the primary sectors. By 2006 and 2007 this trend was expected to dampen following a slower world trade growth.


The Social Security Fund, established by the government in 1941, provides medical service and hospitalization, maternity care, pensions for disability or old age, and funeral benefits. Retirement is set at age 62 for men and age 57 for women. This program is financed by an alcohol tax, in addition to employee and employer contributions. Employed women receive 14 weeks of maternity leave at 100% pay. Compulsory workers' compensation legislation covers employees in the public and private sectors. This program is funded entirely by employer contributions.

Despite constitutional equality, women generally do not enjoy the same opportunities as men. While Panama has a relatively high rate of female enrollment in higher education, many female graduates are still forced to take low-paying jobs. Women's wages are, on average, 30% lower than those of men. Women also face sexual harassment in the workplace, although it is prohibited by the Labor Code. Domestic violence remains a widespread problem. Convictions for domestic abuse are rare; victims generally choose counseling over prosecution. The Ministry of Women, Youth, Family, and Childhood was established to focus national attention on social issues affecting women and families. In 2004, child labor and trafficking in children continued.

Indigenous peoples in Panama are increasingly demanding more participation in decisions that affect their land. Semiautonomous status has been given to some tribal groups. Despite these provisions, many indigenous groups feel that existing reserves are too small. Human rights abuses include prolonged pretrial detention, poor prison conditions, and internal prison violence.


Public health services are directed by the Ministry of Health, whose programs include free health examinations and medical care for the needy, health education, sanitation inspection, hospital and clinic construction, and nutrition services. Health care expenditure was estimated at 7.3 % of GDP.

In 2004, Panama had 168 physicians, 48 dentists, and 152 nurses per 100,000 people. In 2000 there were close to 2,000 beds in public hospitals at the national, regional, and municipal levels.

Proceeds from a national lottery support state hospitals, asylums, and public welfare. Assistance has been received from such organizations as the World Health Organization, the US Institute of Inter-American Affairs, the Pan American Sanitary Bureau, the Institute of Nutrition of Central America and Panama, and UNICEF.

During the first two decades of the 20th century, when the Panama Canal was being built, the major health threats were yellow fever, malaria, smallpox, typhoid, dysentery, and intestinal parasites. Through the efforts of Col. William Crawford Gorgas, a US military surgeon and sanitary officer, malaria was controlled and the yellow fever mosquito was virtually eliminated. In the early 2000s, the principal causes of death were cancer, heart disease, cerebrovascular disease, pneumonia and bronchopneumonia, enteritis, and diarrhea.

Col. Gorgas pioneered in providing Panama City and Colón with water and sewer systems; in some areas of Panama, poor sanitation, inadequate housing, and malnutrition still constitute health hazards. In 2000, 87% of the population had access to safe drinking water and 94% had adequate sanitation. However, in the same year, 18% of children under five years old were considered malnourished. The government of Panama is currently increasing distribution of vitamin A capsules to populations with high risk of vitamin A deficiency, mostly the Indians in the western region of Panama. Immunization rates for children up to one year old were: tuberculosis, 99%; diphtheria, pertussis, and tetanus, 95%; polio, 99%; and measles, 92%. Polio, measles, and neonatal tetanus were at extremely low numbers during 1994. Goiter was present in 13.2% of school-age children.

As of 2002, the crude birth rate and overall mortality rate were estimated at, respectively, 18.6 and 5 per 1,000 people. The infant mortality rate in 2005 was 16.73 per 1,000 live births. Maternal mortality was 70 per 1,000 live births in 1998. Average life expectancy in 2005 was 75 years.

The HIV/AIDS prevalence was 0.90 per 100 adults in 2003. As of 2003, there were approximately 16,000 people living with HIV/AIDS in the country. AIDS and pneumonia were the only communicable diseases among the ten leading causes of death in Panama.


Housing in urban areas has been a permanent problem since US construction in the Canal Zone brought a great influx of migrant laborers into Colón and Panama City. The government-established Bank of Urbanization and Rehabilitation began to build low-cost housing in 1944, and by 1950, it had built more than 1,500 units to house 8,000 people near Panama City. A 1973 housing law, designed to encourage low-income housing construction, banned evictions, froze all rents for three years, and required banks to commit half their domestic reserves to loans in support of housing construction projects. By the early 1980s, however, the shortage of low-income housing remained acute, particularly in Colón. A construction boom in the early 1980s was mainly confined to infrastructure projects and office space.

In 2000, there were 793,732 dwellings units nationwide with an average of 3.6 people per dwelling. Though most homes are made of brick, stone, or concrete blocks, about 4% of the total housing stock was made of straw and thatch.


Education is free for children ages 6 through 15. Primary school covers the first six years of compulsory studies. Secondary education has two stages, each lasting three years. At secondary, vocational, and university levels, fees may be charged for the development of libraries and laboratories. The academic year runs from April to December.

In 2001, about 50% of children between the ages of four and five were enrolled in some type of preschool program. Primary school enrollment in 2003 was estimated at about 100% of age-eligible students. The same year, secondary school enrollment was about 63% of age-eligible students. It is estimated that about 97.5% of all students complete their primary education. The student-to-teacher ratio for primary school was at about 24:1 in 2003; the ratio for secondary school was about 16:1. In 2003, private schools accounted for about 10% of primary school enrollment and 14.5% of secondary enrollment.

The leading institution of higher education, the state-run University of Panama, was founded in Panama City in 1935. A Catholic university, Santa María la Antigua, was inaugurated in May 1965, with an initial enrollment of 233. In 2003, about 43% of the tertiary age population were enrolled in some type of higher education program; (32% for men and 55% for women). The adult literacy rate for 2004 was estimated at about 91%.

As of 2003, public expenditure on education was estimated at 4.5% of GDP, or 7.7% of total government expenditures.


The National Library of Panama, located in Panama City, was founded in 1892 as Biblioteca Colón and reorganized as the National Library in 1942. It is a branch of the Ministry of Education's public library system and has over 200,000 volumes. There are more than 40 other public libraries and branches. The National Archives, established in 1924, contain historical documents, books, and maps, as well as administrative papers of government agencies and a judicial section with court records. The Biblioteca Pública Morales has 280,000 volumes, while the Simón Bolívar Library at the University of Panama has holdings of over 267,000 volumes. The Smithsonian Tropical Research Institute in Balboa has 44,000 volumes.

The Instituto Panameño de Arte, founded in 1964, displays excellent collections of pre-Columbian art. Newer museums in Panama City include the Museum of Nationhood (dedicated in 1974); the Museum of Colonial Religious Art (1974); the Museum of the History of Panama (1977), which exhibits documents and objects of historical value; and the Museum of Panamanian Man (1976), with archaeological, ethnographic, and folkloric displays. Panama City also hosts the Museum of Contemporary Art, the Afro-Antillean Museum, the Museum of Natural Sciences, the Postal Museum, and the Anthropological Museum Reina Torres de Arauz. The Museum of History and Tradition of Penonome is in Cocle.


The Instituto Nacional de Telecomunicaciones (INTEL) operates Panama's telephone and telegraph systems. In 2003, there were an estimated 122 mainline telephones for every 1,000 people. The same year, there were approximately 268 mobile phones in use for every 1,000 people. Telegraph cables link Panama to the United States, to Central and South America, and to Europe.

In 2004, there was one government-owned educational television station. The same year, there were 8 television stations and 120 radio stations that were privately or institutionally owned. In 2003, there were an estimated 300 radios and 191 television sets for every 1,000 people. The same year, there were 38.3 personal computers for every 1,000 people and 62 of every 1,000 people had access to the Internet. There were 149 secure Internet servers in the country in 2004.

There were five major daily newspapers in 2004. With their estimated circulations, they were: El Siglo, 42,000; Crítica Libre, 40,000; La Prensa, 40,000; La Estrella de Panama, NA; and El Panama America, 40,000. The constitution provides for freedom of speech and the press, and the government is said to respect these rights in practice.


The cooperative movement in Panama is limited. Producers' organizations are small, local, uncoordinated groups concerned mainly with practical education in techniques to improve production. The Chamber of Commerce, Industry, and Agriculture is in Panama City. There are some professional associations, including the National Medical Association.

National youth organizations include the Student Federation of Panama, the National Scout Association of Panama, and the YMCA. There are several sports associations organizing amateur competitions for such pastimes as baseball, tennis, squash, and track and field.

There are several associations dedicated to research and education in health and medicine, including the National Cancer Association and branches of Planned Parenthood. The Panama Association of University Women promotes career and education opportunities for women. Kiwanis and Lion's Clubs have programs in the country. There are national chapters of the Red Cross, UNICEF, and Habitat for Humanity.


Travel facilities within Panama are good; Panama City and Colón are only one hour apart by road or rail. In addition to the Panama Canal itself, tourist attractions include Panama City, beach resorts in the Pearls Archipelago and San Blas Islands, the ruins of Portobelo, and the resort of El Valle in the mountains. Water sports, tennis, golf, and horse racing are popular. Nature treks and historic tours also attract visitors to Panama. Citizens of the United States and Canada need only a valid passport and tourist card to enter Panama. Other foreign nationals are required to have a valid passport, and either a visa or tourist card; both card and visa are valid for up to 90 days.

The government encourages tourism through the Panamanian Tourist Bureau. In 2003, about 534,000 tourists arrived in Panama, with about 88% of travelers from the Americas. That year there were 16,766 hotel rooms with 33,532 beds and an occupancy rate of 44%. The average length of stay per visit was two nights.

In 2005, the US Department of State estimated the daily cost of staying in Panama City and Colón at $186.


Outstanding political figures of the 19th century include Tomás Herrera (180454), the national hero who led the first republican movement, and Justo Arosemena (181796), a writer and nationalist. The international lawyer Ricardo J. Alfaro (18821971) and the rector of the University of Panama, Octavio Méndez Pereira (18871954), were well-known Panamanian nationalists. The most important political leader of the 20th century was Omar Torrijos Herrera (192981), who ruled Panama from 1969 until his death and successfully negotiated the Panama Canal treaties of 1979 with the United States.

Important poets were Tomás del Espíritu Santo (183462), nationalist Amelia Denis de Icaza (18361910), Federico Escobar (18611912), Darío Herrera (18701914), and Ricardo Miró (18881940). Panamanian-born José Benjamin Quintero (19241999) was a noted stage director in the United States. Narciso Garay (18761953) founded the National Conservatory of Music and served as a foreign minister. Harmodio Arias (18861962) was the prominent owner of the newspaper El Panamá-America. Leading Panamanian painters include Epifanio Garay (18491903), Roberto Lewis (18741949), Sebastián Villalaz (18791919), and Humberto Ivaldi (190947). Noteworthy among Panamanian athletes is the former world lightand welter-weight boxing champion Roberto Durán (b.1951); the former baseball star Rod (Rodney) Carew (b.1945) is also of Panamanian birth.


Panama has no territories or colonies.


Buckman, Robert T. Latin America, 2005. 39th ed. Harpers Ferry, W.Va.: Stryker-Post, 2005.

Cadbury, Deborah. Dreams of Iron and Steel: Seven Wonders of the Nineteenth Century, from the Building of the London Sewers to the Panama Canal. New York: Perennial, 2005.

Calvert, Peter. A Political and Economic Dictionary of Latin America. Philadelphia: Routledge/Taylor and Francis, 2004.

Guevara Mann, Carlos. Panamanian Militarism: A Historical Interpretation. Athens, Ohio: Ohio University Center for International Studies, 1996.

Health in the Americas, 2002 edition. Washington, D.C.: Pan American Health Organization, Pan American Sanitary Bureau, Regional Office of the World Health Organization, 2002.

Major, John. Prize Possession: The United States and the Panama Canal, 19031979. New York: Cambridge University Press, 1993.

Zencey, Eric. Panama. New York: Farrar, Straus, and Giroux, 1995.

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Republic of Panama

Major City:
Panama City

Other Cities:
Balboa, Chitré, Colón, Cristóbal, David, Portobelo, Santiago


This chapter was adapted from the Department of State Post Report dated August 1996. Supplemental material has been added to increase coverage of minor cities, facts have been updated, and some material has been condensed. Readers are encouraged to visit the Department of State's web site at for the most recent information available on travel to this country.


PANAMA , because of its strategic position on the isthmus connecting the North and South American continents, was a major center for exploration and expansion during the 16th and 17th centuries. In 1821, some years after the decline of Spanish colonial power in the Western Hemisphere, the territory became part of Greater Colombia.

The question of a waterway across the isthmus, linking the Atlantic and Pacific oceans, and Colombia's refusal to ratify a treaty allowing construction, led to Panama's revolt and secession. The United States supported Panama with military forces, and recognized the new state on November 6, 1903. A treaty was signed, giving the U.S. perpetual control over what came to be known as the Canal Zone, a designation that no longer applies. The covenant was amended in 1977, and implemented in 1979, with provision for ending U.S. military presence in Panama on the last day of this century, and for turning over responsibility and operation of the canal to the Panamanians.


Panama City

Panama City, the capital and principal city of the Republic of Panama, is situated on the Pacific side of the country. In 2000, it had an approximate population of 1,088,00. Often called the "Crossroads of the World," it offers a uniquely international ambience and an active life with modern shopping centers, art expositions and many excellent NSrestaurants.


A wide variety of American and ethnic foods are available at modern supermarkets in Panama City. Seafood, meat, fruits, vegetables, and canned and packaged goods are readily available in Panamanian shops, although prepared foods which are imported from the U.S. or elsewhere can be expensive. Restaurants vary widely in both cost and cuisine. A full lunch can be had for seven dollars. There are also numerous top quality restaurants specializing in seafood, or any type of ethnic food, around the city. Pizza Hut, Dominos Pizza and other vendors offer home and office delivery.


Summer clothes are worn year round in Panama. Cottons are the most comfortable, but cotton blends are satisfactory. Fabrics that are 100% synthetic neither absorb moisture nor "breathe" and are uncomfortable in Panama's humid climate. Many office buildings are overly air-conditioned so a light jacket or sweater can come in handy.

All types of clothing suitable for the Panamanian climate are available in retail shops in the Canal area, although selection may be limited at any given time. Prices in the local retail stores can be higher than U.S. prices, and size ranges are limited.

Men: Normal attire for male staff during working hours is a suit and tie. It is also preferred by many Panamanians. Some men use either the "guayabera" or a short-sleeved shirt. Casual sports attire is the rule outside the office. The guayabera, a long, untucked embroidered shirt, is frequently worn for daytime or evening social functions and can be purchased locally.

Women: Female officers and staff members are most comfortable in lightweight suits or tailored or otherwise professional-looking one or two-piece dresses. A blazer, whether in a traditional color or something more tropical, is a useful addition to a working wardrobe. Casual outfits should be brought for general use, and beachwear, shorts, and slacks for recreational purposes. Shorts are not generally worn on the streets, but pants are acceptable. Sun hats are useful when outdoors. In recent years, the trend in female formal wear in Panama has been towards street-length rather than long gowns.

Children: Department of Defense schools do not enforce a dress code. Girls wear mostly shirts or blouses with slacks, jeans or skirts. Boys wear long pants (mostly jeans) or shorts with T-shirts or sport shirts. Private schools require school uniforms, which vary from school to school.

Supplies and Services

American brands of toilet articles, cosmetics, home medicines, drugs, tobacco products, cleaning materials, and household and entertainment accessories are readily available in retail stores in Panama City, but at prices higher than in the United States. Local brands are available at retail stores for very reasonable prices.

Panama City has good facilities for shoe repair, laundry and dry-cleaning, and radio and automobile repair. Beauty and barbershops are also available. You can take advantage of competent tailoring and dressmaking services here.

Religious Activities

Although Panama is a predominately Catholic country (approximately 85%), places of worship of all denominationswith services in both English and Spanishare located in Panama City and the Canal area. Sunday schools and church-related activities are numerous.


Department of Defense Dependent Schools (DODDS) operates a school system in the canal area including grades K-l2, as well as a two-year college curriculum. The schools are modeled on the U.S. public school system and are accredited by the Middle States Association of Colleges and Secondary Schools. Instruction is in English. The schools are modern and well-equipped. Special education is available for children ages three and older. DODDS also has a talented and gifted program. Bus transportation is available for students in grades Kindergarten through twelfth grade. The school year runs from late August until mid June.

La Escuela Internacional de Panama (the International School of Panama) is the alternative school most often attended by American students, and is increasingly used due to the gradual closure of the DODDS system in Panama. Classes presently include grades K-12. The school's academic program meets the requirements of the Panamanian Ministry of Education and it has been accredited by the Southern Association of Colleges and Schools of the United Schools. Instruction is in English except for a 40-minute class in Spanish each day.

Applications for admission to the International School are accepted at any time during the year. Classes are limited to a maximum of 24 students. All students are tested by the school counselor or other qualified staff member at the time of registration. If you would like to initiate the admission process before arriving in Panama, you may send your child's Iowa Test (ITBS) results or the equivalent. Following testing, the school's Admissions Committee will review the completed application to evaluate the student's potential and to determine whether acceptance will contribute to a balance of nationalities, transient vs. local population, language capability, personal interests, and personalities. The school year runs from early August to late June, with approximately seven weeks of vacation from just before Christmas until the end of January.

There are two other private schools: St. Mary's Parochial School and the Episcopal School of Panama both schools are well regarded in Panama. St. Mary's Parochial School, located in the canal area, offers classes for pre-school through the twelfth grade. Instruction is in English and Spanish. Registration is held one day during the first week of March. Preregistration is not possible.

The Episcopal School of Panama (Colegio Episcopal de Panama) is a small college preparatory school. Both English and Spanish are taught as first languages. This school has a waiting list. Both of these schools are in session from April through December.

There are several good nursery schools on the military bases, in the canal area, and in Panama City. Those located on the military bases conduct classes in English from September through June. All others, as a general rule, are bilingual with a preference toward Spanish, and are in session from April through December. It is best to postpone any decision until parents can visit the schools to determine which will best suit the needs and personality of their child.

For most schools you will need proof of age (for pre-kindergarten and kindergarten), a copy of the student's last report card, and an up-to-date immunization record. All schools that comply with the regulations set forth by the Panamanian Ministry of Education (all but DODDS) require that the birth certificate or a photocopy of the passport, and the previous year's school record be translated into Spanish and notarized.

Special Educational Opportunities

The Panama Canal College, part of the Department of Defense School system, offers a two-year college course with Associate degrees available in Business Administration, Accounting, Business Data Processing, and others, including Secretarial skills. Current full-time tuition is $716 per semester for sponsored dependents under the age of 21. Dependent spouses may attend on a part-time basis (up to eleven credits), at a charge of $65.00 per credit hour.

The Panama Canal branch of Florida State University is located at Albrook Air Force Base. The university offers Bachelor of Arts degrees in Interamerican Studies, International Affairs and Social Science. In addition, students may complete up to 90 semester credit hours towards the 120 required for a degree in Business Administration. The last thirty credit hours must be taken in Florida. Tuition at Florida State is $90.00 per semester credit hour.

Florida-based Nova University offers several degrees at the Panama Learning Center, which was founded in 1977. These include a Bachelor of Science degree in Professional Management, a Master of Arts degree in Applied Linguistics and Teaching English as a Second Language, and a Master's degree in Business Administration, and Computer Programs. The cost per credit hour ranges from $125.00 for undergraduates to $200.00 for graduate courses.

The University of Oklahoma has an extension campus at Albrook, offering a Master of Educational Psychology and a Master of Public Administration. Current tuition is $203.75 per credit hour.

The above institutions are fully accredited. For additional information, they may be contacted at the following addresses:

Panama Canal College
DODDS, Panama Area
Unit 0925
APO, AA 34002

Florida State University
Panama Canal Branch
Unit 0922
APO, AA 34002

The University of Oklahoma
Education Service Center
Unit 0924
APO, AA 34002

Nova University
Panama Center
Unit 0924
APO, AA 34002

The University of Panama is located in Panama City. In general, you must successfully complete a five-year course to obtain a degree. The University will accept certificates from recognized secondary schools. Many classes are held in the evening and all instruction is in Spanish. For further information contact the University of Panama at Urbanizacion El Cangrejo, Republic of Panama.

The YMCA in the Canal area holds classes in Spanish, cooking, art, oil painting, ceramics, design, jewelry making, bridge, swimming, scuba diving and a variety of other subjects.


Organized athletic programs for adults are limited, but you can participate on an individual basis in almost any warm-weather sport. A number of swimming pools, tennis courts, golf courses, and stables are found throughout the city and the canal area. You can purchase athletic equipment of all types locally or at the sport shops on the bases.

Several hotels offer memberships to use their pools and other recreational facilities. There are also several quality health clubs in the city, as well as the gymnasiums on the bases, that offer aerobics and weightlifting. A variety of private social athletic clubs in Panama include the Club de Golf de Panama, the Club de Montana Altos del Lago, the Club de Yates y Pesca, and the Club Union.

Canal area facilities for children (organized by the Youth Recreation Program) include swimming, bowling leagues, league baseball and softball (December through April), soccer (in the Spring), Little League football (August through October), and lessons in judo, scuba diving, karate, and gymnastics.

Deep-sea and fresh-water fishing in the waters in and around Panama are among the best in the world. You can use most types of freshwater and saltwater tackle. Fishing in Gatun Lake for Peacock Bass is a popular pastime. Private boat skiing, fishing, and cruising is facilitated by the availability of various water crafts from several different locations for modest fees.

For the hunter, a variety of wild fowl, small game animals, and some larger animals such as deer abound. Most hunters in Panama use a shotgun, but air rifles are also used occasionally. Panama has a trap-shoot club, as well as several rifle ranges in the canal area. Neither a hunting nor a fishing license is required in the Republic of Panama. The Panamanian Government does requires a gun permit. The canal area has some easily-met licensing requirements, although there are some restrictions.

Horse racing, boxing and baseball are the favorite spectator sports in Panama. A local track holds races each week.

Baseball, basketball, softball and soccer are played extensively on the amateur level, and facilities are available for squash, racquetball, volleyball, and weight training.

Touring and Outdoor Activities

One small zoo is located in the Canal area. The Panama Canal Experimental Gardens are a popular spot for visits or picnics. Barro Colorado Island is a biological research center and forest preserve that is located in Gatun Lake within the canal system; day trips are made to explore this site where the Smithsonian Institute researches local flora and fauna.

Museums include the Canal Area Museum, Museum of Contemporary Art, the National Museum of Panama, and the Museum of the Panamanian Man, with its interesting collection of pre-Columbian pottery and gold artifacts.

Another point of interest is the ruins of "Panama La Vieja," the first Panamanian city on the Pacific side of the isthmus, which was founded by the Spaniards in 1519. It was destroyed by the pirate Henry Morgan in 1671. The Church of San Jose, with its famous Golden Altar, is another well-known site located in the colonial sector of Panama City. According to legend, the altar was saved from the assaults of Morgan the Pirate in the year 1671 when it was painted with whitewash to look like wood.

You can find a moderate change of climate in El Valle (2,000 feet) in the Cordillera de Veraguas, 80 miles from Panama, where a fair hotel is available. Boquete and Volcan are 350 miles away. At elevations of 4,000 and 7,000 feet, they offer spectacular mountain scenery, a cool climate, and good hotels. Contadora Island in the Las Perlas Archipelago is seventeen minutes by air from Panama City. The resort-like island offers a hotel, private homes that may be rented, and beautiful beaches.

San Jose, Costa Rica, is accessible by air at a reasonable price. The Colombian island of San Andres, as well as Bogota, Medellin, Cali, Barranquilla, and Cartagena in Colombia are also within easy reach by air. Country clearance must be obtained from the U.S. Embassy in Bogota prior to any travel to Colombia. By car, San Jose, Costa Rica is about thirteen hours from Panama City.

Beaches are available on the Pacific side (Panama Bay) approximately 60-90 minutes from Panama City. Beaches on the Atlantic side (Carib-bean Sea) can be reached in a twoto three-hour drive. Both areas provide a number of good beaches and varied facilities.


Panama City has a number of fine indoor theaters, as well as those in the canal area, where first-run American films are shown. Those shown in the city are in English with Spanish subtitles. Video stores also abound. No professional theater exists, but a few small theater groups produce plays periodically in Spanish and English. The Ancon Theater Guild has an active production schedule and there has been high interest and involvement from the mission community. The Balboa High School drama department presents two productions per year.

Concerts are presented by visiting musical artists and dance groups, either under the sponsorship of the National Concert Association, The National Institute of Culture or various Embassies. The national symphony and the ballet company also perform periodically.

A few cocktail lounges feature small combos and the major hotels have Happy Hours with local variety artists.

During the dry season, folk dancing in native costumes can be seen at the picturesque ruins of Old Panama and in some interior towns. A number of small fairs and festivals are held in the provinces at various times during the year. The ATLAPA Convention Center attracts a few big name musical and dance groups; most of the productions charge big-city prices for tickets.

Social Activities

Ample opportunities exist for social contact with both Panamanians and American residents of Panama and the American civilian and military population in the canal area. Many resident Americans play important roles in business and professional circles.

There are a number of social, vocational and fraternal organizations in the canal area. The Panama Audubon Society offers unique bird and nature study opportunities, and a Junior Audubon Society was established in 1986 to sponsor monthly outings and activities for children ages nine and over. The "Who's New" is another active and well-organized club where Americans may meet and mix with people of other nationalities. This club offers a book study group, children's play groups, bridge, tennis and a variety of other activities in addition to monthly coffees.

Extracurricular activities for school age children include Boy and Girl Scouts and Little League sports as well as the activities organized by the Youth Recreation Centers on the military bases.

Apply the same techniques here to get to know people that you would to develop social contacts in any overseas community. While knowledge of Spanish helps considerably, many Panamanians speak English. Memberships in local international fraternal organizations such as the Lions Club and Rotary Club are available.


BALBOA , at the Panama Canal's Pacific entrance, is the largest town in the area formerly designated as the Canal Zone. It has a population of only 3,000, but is the administrative headquarters of the new joint Panama Canal Commission, which replaced the U.S. governing body in October 1979. An American naval base remains here, with military forces of more than 10,000. Balboa is the port for Panama City.

Situated 90 miles southwest of Panama City, CHITRÉ is the capital of Herrara Province. The Río de la Villa flows by, nourishing locally grown livestock and agricultural products. Chitré is a marketing center that produces ice and beverages. Transportation facilities for this city of approximately 34,700 include a road link to the Pan-American Highway and an airfield.

COLÓN is the second largest city in Panama, with a population of 141,000 (2000 est.) Located at the Caribbean entrance to the Panama Canal, Colón is situated at the northern terminus of the trans-Panama railroad. The city was founded in 1850 by Americans constructing the railroad, and was originally named Aspinwall after William H. Aspinwall, one of the builders. The name was changed to Colón ("Columbus" in Spanish), in honor of Christopher Columbus, in 1890. An important port and commercial center, Colón was made a free trade zone in 1953.

CRISTÓBAL , a suburb of Colón, is also an important port in this area. It has a population of about 12,000. Rainbow City, formerly called Silver City, with a population of 3,000, adjoins Cristóbal.

DAVID , 200 miles west of Panama City, is the fourth largest city in the country and the capital of mountainous Chiriquí Province. It dates to 1738, when gold prospectors set up camp here. David, though modern, maintains old traditions. San José Church has two bell towersone to call to worship, another to warn against Indian attack. This major commercial area's economy depends on industries such as meat-packing, food processing, and tanning. David may be best known for the saddles and harnesses made here. The city is located near Enrique Malek Airport and had a population of roughly 103,000 in 2000.

PORTOBELO (also called Porto Bello and Puerto Bello) is located on the Caribbean side of Panama, about 20 miles northeast of Colón. Founded in 1597 just west of Christopher Columbus' earlier colony of Nombre de Dios, Portobelo lies in a banana-growing region and has an excellent harbor. Once a thriving colonial city, Portobelo was linked to Panama City by a stone highway. As a port, it sent out and received the royal Spanish fleets and was a transshipment point for Spanish Pacific riches. Portobelo declined with the building of the trans-Panama railroad and the Panama Canal, and has a population of just under 3,000 (1992 est.) Sir Francis Drake died aboard ship near here in 1596, and was buried at sea.

SANTIAGO is one of Panama's oldest cities, situated about 110 miles southwest of Panama City. The capital of Veraguas Province, it thrived in colonial times, as many historic buildings indicate. Santiago is an agricultural marketing center with local gold deposits. The municipality has an airfield and is on the Pan-American Highway. Approximately 61,000 people live in Santiago.


Geography and Climate

The Republic of Panama, occupying the isthmus connecting the North and South American continents, is situated between 77° and 83° west longitude and 7° and °30 north latitude. Covering an area of some 29,208 square miles, the Republic of Panama is slightly smaller than South Carolina. It is bounded on the north by the Caribbean Sea, on the south by the Pacific Ocean, on the east by Colombia, and on the west by Costa Rica. Due to the configuration of the isthmus, in Panama City the sun rises over the Pacific.

The Panama Canal Commission, in conjunction with a binational board of directors, operates the 43-mile canal which passes through the isthmus between the Atlantic (Caribbean) and Pacific oceans. Under the Panama Canal Treaty of 1977, the Commission will remain a U.S. Government agency until December 31, 1999, at which time the canal comes under total Panamanian control.

Panama has two well-defined regions: the Atlantic Watershed, which is covered by tropical rain forest, and the Pacific Watershed, whose narrow valleys and coastal plains receive less rainfall. Mountain ranges form the backbone of the Isthmus. Although some peaks reach 11,000 feet, the "cordillera" descends in the canal area to a height of only 290 feet.

Panama has a year-round tropical climate. During the dry season, which runs from January through April, there is only sporadic rainfall. The rainy season extends from May through December, with heaviest precipitation between September and November. The average annual rainfall in Panama City, on the Pacific side, is 69 inches; in Colon, on the Atlantic side, 128 inches. Temperatures and humidity vary only slightly between the two seasons. During the rainy months, average relative humidity is 85%; in the dry season, only 55 to 75%. The average annual temperature in Panama City is 26°C (80°F), with an average maximum of 30°C (87°F) and an average minimum of 22°C 3°F). Colon's temperature and humidity are about the same. Nearly constant year-round breezes provide some relief from the heat, especially at night.


In 2000 Panama's estimated population was 2,821,085. Nearly half of the country's population is located in the province of Panama, with the next largest concentrations located in the provinces of Chiriqui and Colon. Approximately two-thirds of the population is located in these three of the country's nine provinces.

Rodrigo de Bastidas, one of the captains accompanying Columbus on his second voyage to America, discovered the Isthmus of Panama in 1502. Columbus visited Portobelo, a small bay on the Atlantic, on his fourth voyage in 1502. Panama City was founded in 1519, about 5 miles east of its present site. Because of its strategic position, Panama City became the crossroads of Spanish exploration and expansion in America.

At the time of Columbus, more than sixty Indian tribes were living on the isthmus. Today, however, Indians comprise only 6% of the population. While the majority of these are Kuna and Guaymi, a small group of Chocoe Indians remain in the southeastern part of the Darien Province.

Direct descendants of the Spaniards who colonized the country remain influential, but no longer dominate Panama's social, economic, and political life. Mixed-blooded Panamanians share prominent political and professional status with the Spanish-descendant group, and participate fully in Panama's diverse and influential social circles. Much of Panama's population is a mix of Spanish-Indian and black Hispanic ancestry. Immigrants from China, India, Europe, the Middle East, and South and Central America can be found in the growing middle class. Blacks of West Indian descent, whose ancestors provided most of the labor in digging the canal, tend to be concentrated in the provinces of Panama and Colon. While North American influence on Panama's basically Hispanic culture is evident in Panama City and Colon, the history and heritage of these distinct ethnic groups have combined to form the modern Panamanian way of life.

In the interior provinces, the ethnic makeup is more homogenous. The Spanish-Indian mixture is preponderant, and North American influence on customs and mores is relatively minor.

Spanish is the official language of the country. Although many Panamanians speak English, a working knowledge of Spanish is useful for shopping, communicating with servants, taking taxis, speaking with neighbors, and, especially, traveling in the interior.

Public Institutions

On November 28, 1821, the country declared its secession from Spain and associated itself with Colombia. This alliance existed in one form or another until November 3, 1903, when Panama was established as an independent republic.

Panama's constitution, which was adopted in 1972, provides for a representative democracy with direct popular election of the president and legislators, an independent judiciary, and a broad range of individual and civil rights. The constitution delineates the respective powers of the three branches of government, and contains extensive sections establishing broad economic, social and cultural rights and objectives for all its citizens. There have been several notable amendments. The last two, passed in 1994, abolished the Panamanian military and created an agency of the Panamanian government to deal with the reverted areas of the Panama Canal zone.

Operation Just Cause, which began on December 19th, 1989, ended years of political instability in Panama with the reinstatement of President Guillermo Endara's administration and the removal of Manuel Noriega as national leader. 1994 saw a return to free, fair, and violence-free elections for Panama, in which Ernesto Perez Balladares won the Presidency as the head of a multi-party coalition. Balladares won with only 33% of the popular vote, but his party, the Revolutionary Democratic Party (PRD), regained a near-majority in the Legislature. One of the first moves of this administration was to amend the Constitution to abolish the military, breaking with the tainted past of the Noriega era.

Legislators are chosen in a complicated process. Certain seats are granted to the party winning the plurality of the popular vote in the electoral circuits, while others are awarded by proportional representation in the more populous areas, and still others are reserved for Indian minorities. Legislators are nominated by a party and are subject to its discipline.

The 1983 constitutional reforms significantly increased the powers of the Legislative Assembly relative to the other branches of government. In contrast to the situation that prevailed between 1968 and 1984, the legislature now has a significant hand in budget matters and in establishing public institutions. Legislators are able to interpellate and censor Ministers and to impeach and try Presidents and Supreme Court justices. They may override a presidential veto of approved legislation with a two-thirds majority vote. The Assembly also has the power to declare war and to grant amnesty for political crimes. In addition, it must approve the appointment of Supreme Court justices, the Attorney General, the Solicitor General or Prosecutor, and other high administrative officials.

The Executive Branch is comprised of the President of the Republic, two Vice-Presidents, and the Ministers of State, or Cabinet Secretaries. The President and Vice Presidents and other elected authorities serve five-year terms. Voting is by direct and secret ballot, and a plurality is needed for election.

The President is responsible for appointing the Cabinet, coordinating the government, and maintaining public order. Along with the Cabinet, the President approves and promulgates laws passed by the Legislature and ensures their enforcement; appoints police, provincial governors and heads of various public agencies; prepares the national budget for submission to the legislature and conducts the country's foreign affairs.

The President, Vice Presidents, and Ministers of State together form the Cabinet Council, which appoints the Magistrates of the Supreme Court of Justice, the Attorney General, and the Solicitor General, or Prosecutor, subject to legislative approval.

The President and Vice Presidents may be removed from office for abusing their constitutional duties, for violent actions or coercion during an electoral process, or for preventing the meeting of the Legislative Assembly. The President and Vice Presidents need not belong to the same political party.

The Judicial Branch is comprised of the Supreme Court of Justice, the Electoral-and other Tribunals. The latter are created by the Legislature, while the first two are constitutionally decreed.

Under the 1983 constitutional amendments, Supreme Court Magistrates are appointed by the Cabinet Council and confirmed by the Legislature for staggered ten-year terms, with two magistrates appointed every other year, or as present magistrates resign or retire. The nine-member court is divided into three-judge panels for civil, criminal and administrative cases.

Its decisions are final and binding. The Judicial Branch is the ultimate interpreter of the Panamanian constitution and of the constitutionality of the laws and decrees of the Executive and Legislative Branches.

A separate three-judge Electoral Tribunal oversees elections, with one member chosen by the Supreme Court, the Legislature, and the Executive, respectively. Supreme Court justices choose the magistrates who sit on other tribunals, and the magistrates in turn choose the judges who sit on the lower courts. All sitting judges are prohibited from engaging in any other employment except as law professors, and from participating in political activities, except as voters. Although the Constitution provides for the right to trial by jury, the Legislative Assembly is empowered to determine whether this right will apply in cases against the President, Supreme Court Justices or members of the Legislative Assembly.

The Public Ministry, or Attorney General's office, is separate from the Ministry of Government and Justice and is constitutionally a part of the Judicial Branch. The Attorney General is appointed for a 10-year term. The Constitution mandates setting aside at least 2% of the annual government income for the Judicial Branch, thereby establishing its financial independence from the Legislature and the Executive. The Attorney General also oversees Panama's criminal police investigative agency, the Judicial Technical Police (PTJ).

Panama is a civil law country, with most law created by legislative codes rather than judicial decision. In 1983, the Legislature enacted new criminal and administrative codes. Implementation of some of these reforms has been delayed, however, for budgetary reasons.

Panamanian Public Forces. On December 20, 1989, the former Panamanian Defense Forces (PDF) were neutralized by U.S. armed forces during Operation Just Cause and, over the next several days, were diminished as an effective military force. As a result, the PDF was disbanded.

Panama no longer desires a military, and in 1994 the Constitution was amended, abolishing the standing army. The Panamanian Public Forces (PPF), a civilian law enforcement organization comprised of police, air, and sea services was created in the wake of Operation Just Cause. It drew heavily on the ranks of the former PDF because of the urgent requirement to reestablish law and order throughout Panama.

The PPF, the Panamanian civil police force, remains Panama's national security force. Challenged by rising international crime and narco-trafficking activity, the PPF continues to adapt to Panama's security concerns. Its efforts in this direction are aided by the U.S. Department of Justice, as well as other agencies. Resource limits are placing financial constraints on the PPF's ability to face up to dynamic crime challenges.

The Panamanian National Police (PNP) is charged with maintaining law and order nationwide. Directed by a civilian attorney, the PNP falls under the control of the Minister of Government and Justice. The police draw heavy criticism from opposition groups and the media for a variety of reasons related to its own transitional problems. The PNP still has no organic law upon which to establish itself firmly. In the meantime, and with U.S. assistance, it strives to build confidence, establish institutional roots, andmost importantlyserve the Panamanian public.

The Panama Canal Treaty. The Panama Canal Treaty was negotiated by four different U.S. Administrations over a period of thirteen years. This treaty, along with a separate treaty pertaining to the neutrality of the Canal, and a host of ancillary agreements, was signed on September 7, 1977. The U.S. Senate gave its consent to ratification of the Canal Treaty on April 18, 1978.

As a result of the treaties, control of the Canal is presently in the process of being turned over to the Government of Panama. On December 31, 1999 Panama assumed ownership of and full operational responsibility for the Canal. The Panama Canal Commission, which operates the Canal, is a U.S. Government agency; however, its administrator is Panamanian.

The Department of Defense, under the terms of the Carter-Torrijos Treaty of 1977, is in the process of withdrawing U.S. forces from Panama. This process is scheduled to be completed by the year 2000. The U.S. military drawdown will include the closure of U.S. Military PX and Commissary facilities, Gorgas Hospital, DODDS schools and other social facilities and services to which embassy personnel now have access.

In 1994 the newly elected government amended the Constitution to create the Interoceanic Regional Authority (ARI) to plan for and implement the reversion of all lands formerly belonging to the U.S.

The U.S. Embassy in Panama has the responsibility of ensuring that the treaties and their related agreements are carried out smoothly and effectively and to ensure that the rights of the U.S. Government and of American citizens in Panama are respected.

Arts, Science, and Education

Panama's intellectual and cultural life largely revolves around activities sponsored by the Instituto Nacional de Cultura (INAC), the National Concert Association, and, from time to time, the University of Panama. INAC sponsors the National Theater, School of Dance, School of Plastic Arts, Symphony Orchestra, and Ballet.

Architecture is rich and varied, ranging from colonial to modern in private homes, public buildings, commercial office buildings, and high rise condominiums.

A fairly active art colony is to be found here, and several Panamanian artists have achieved international recognition. Accomplishments in music, drama, dance, and literature have been less notable in the last few years.

In the Canal area, research projects conducted at Gorgas Hospital (renowned for its work in tropical medicine), by the Middle America Research Unit of the National Institutes of Health, the Smithsonian Institution's Tropical Research Institute on Barro Colorado Island, and the Gorgas Memorial Institute are of international import. And, of course, the Panama Canal represents one of the greatest engineering feats of modern times.

Panamanians have historically attached great importance to education. This is reflected in its literacy rate of 83%one of the highest in Latin America. There are a number of very good private schools in the country. Many graduates of the Instituto Nacional, a public school known throughout the country, have subsequently entered Panamanian political life. The Ministry of Education is working hard to improve instructional facilities and teacher preparation throughout the country.

The University of Panama consists of a main campus in Panama City and branches in three provincial capitals. Total enrollment is approximately 45,000. The Technological University of Panama, also based in Panama City, has branches in seven provinces and an enrollment of 8,000. A private Catholic university, Santa Maria la Antigua, has an enrollment of 4,500. American officers receive a cordial welcome at these universities, and many opportunities exist for exchanges and cooperative programs. Instruction is in Spanish.

The Panama Canal College, a two-year institution linked to the U.S. Department of Defense, is open to all qualified individuals. Several other U.S. institutions, including Nova, Florida State and Oklahoma universities, also offer courses in Panama. Instruction in these universities and at the Panama Canal College is in English, and course credits can be transferred to institutions in the United States.

Commerce and Industry

Panama's economy is based primarily on a well-developed services sector that accounts for 76.5% of GDP. Services include the Panama Canal, banking, insurance, government, the Colon Free Zone, and the transisthmian oil pipeline. Manufacturing, mining, utilities, and construction together account for 16.5% of GDP. Manufacturing is principally geared to production of items such as processed foods, clothing, chemical products, and construction materials for the domestic market. Agriculture, forestry, and fisheries account for the remaining 7% of GDP. Principal primary products include bananas, shrimp, sugar, coffee, meat, dairy products, tropical fruits, rice, corn, and beans. The sectors of the Panamanian economy with the greatest potential for substantial growth are mining, tourism, and maritime services.

From 1968 until 1989, Panama was governed by a military regime which implemented a statist plan of economic development. The government nationalized various private enterprises and instituted price controls on many goods, some of which still exist today. In 1990 the newly reinstated democratic government embarked on a reform program to liberalize trade and modernize government operations. These reforms were diluted, however, by entrenched special interest groups.

In 1994 a new government was elected and took office with an even more ambitious program of reforms, including GATT/WTO accession and labor code reforms. The Government of Panama has recently taken initial steps toward privatization of the state-owned telecommunications company and has revoked the government-owned electricity utility's monopoly on electricity generation. Reform of the national labor code, although one of this administration's top priorities, is being met with strong opposition by the various labor organizations.

The use of the U.S. dollar as Panama's currency means that fiscal policy is the government's principal macroeconomic policy instrument. Because Panama does not issue its own currency, government spending and investment are strictly bound by tax and non-tax revenues and the government's ability to borrow.

Panama Canal business rose in 1994 over the previous year. Ocean-going transits increased 2.6% to 12,671 or 34.7 vessels daily, and net tonnage, on which tolls are assessed, jumped 7.9%. Toll revenues rose 3.1% to US$425 million. The near-term outlook is for continued moderate to strong growth in both tonnage and toll revenue projected for 1995 and 1996. Work on expanding the canal's capacity by widening the Gaillard Cut through the continental divide continues and numerous other maintenance and upgrade projects are constantly in progress.

The development of areas reverting to Panama under the Panama Canal Treaties will present many opportunities for the Government of Panama, as well as investors. Projects in tourism, industry, and environmental areas will be possible. The exact nature of these projects will be determined by a development plan which is being prepared by Panama's Interoceanic Regional Authority (ARI).

The Colon Free Zone is the largest of its kind in Latin America and rivals Hong Kong in overall activity. Total imports to the Free Zone reached US$5.0 billion in 1994, an increase of 11.5% per 1993. Free Zone trade is expected to show solid growth during 1995 as it has already made many of the adjustments necessary to deal with market liberalization in Latin America. U.S. exports to the free zone totaled approximately US$370 million in 1994. The free zone's contribution to real GDP increased to 9.2% in 1994.



Taxi service is readily available and generally adequate. City buses are often very poorly maintained however, and riding them is not recommended for safety and security reasons.


Panama has two major highways. The Transisthmian Highway links Panama City to Colon. A Branch of the Inter-American Highway extends from the Costa Rican border to the town of Chepo, about 35 miles beyond Panama City. Both roads are two-lane and paved. There is also a recently finished road between Chepo and Colombia. Streets within Panama City and Colon are adequate. Many are subject to flooding during the rainy season.

American Airlines and Continental Airlines, COPA, and other major foreign carriers operate daily flights to the United States and other parts of the world from Panama's Tocumen International Airport. All flights to or from Panama enter and exit the U.S. from either Houston or Miami. AERO-PERLAS and ALAS-CHIRICANAS are local carriers that provide service to Panama's provinces, Contadora and the San Blas Islands. These flights operate from Paitilla Airport, a ten-minute drive from the city center.


Telephone and Telegraph

Telephone service in Panama City is good, although in some sections of the city residents must wait long periods for initial installation of a telephone.

Long-distance service is available to all parts of the country. Facilities are excellent for overseas calls to the United States (with direct dialing from Panama City) and to other parts of the world via radio or satellite. Rates vary depending on country and time zone.

Telegram facilities are excellent and provide worldwide service.

Radio and TV

There are both English and Spanish-language AM and FM radio programs and commercial TV stations (including one educational channel), some of which broadcast sporting events and reruns of American feature programs and movies (all dubbed).

The Southern Command Network (SCN), an affiliate of the Armed Forces Radio and Television Service, broadcasts on AM and FM radio in English on a 24-hour basis. SCN-TV presents news programs, sports events, old movies, reruns of U.S. feature programs and Saturday-morning children's programs in English. SCN-TV broadcasts daily: the weekly schedule is published in the base newspaper, The Tropic Times. American variety and series programs are broadcast in English. Live TV coverage via satellite of some news programs or sporting and special events is also provided. The station broadcasts Monday through Sunday from 6:00 a.m. until midnight, plus additional late night movies on weekends.

Cable TV is available in Panama City and provides a variety of satellite programming, including the Disney Channel, HBO/Showtime, CNN, and ESPN. There is usually an installation fee; monthly fees are upwards of $40.

Local cinemas are comparable in quality to those in the U.S., yet prices are much lower. First run movies are shown in English with Spanish subtitles. Local video stores rent both VHS and Beta tapes at reasonable prices comparable to stateside, usually with Spanish subtitles.

Newspapers, Magazines, and Technical Journals

Six Spanish-language newspapers (including three tabloids) are published on a daily basis. The English-language international edition of The Miami Herald is published locally.

Airmail editions of USA Today are available on the bases. Copies of the New York Times and the Wall Street Journal are occasionally available at the major hotels. Along with the Washington Post, they are also available through subscription, but rates are higher than in the U.S. Home delivery of U.S. newspapers is available, but delivery is one day late.

The Latin American issues of Time and Newsweek are sold at most newsstands, drug stores, and in major hotels, usually within days of their domestic editions in the United States. Other U.S. magazines (on topics such as cars, sports, and outdoor hobbies) are available on the bases. Prices are comparable to those in the United States, although tax must be paid when purchased off the bases.

Health and Medicine

Medical Facilities

Health care services for U.S. citizens residing in Panama are generally excellent. Nearly all medical and surgical specialties are represented. Many of the local dentists and orthodontists are considered to be on a par with those in the United States, and prices are slightly lower than U.S. prices.

In conjunction with the U.S. military drawdown in Panama Gorgas Hospital is scheduled to close in 1998; however Paitilla Hospital is up to U.S. standards. Many Americans have been very pleased with the quality of care received there.

Many standard medications are available from Gorgas Hospital or from local pharmacies in Panama.

Community Health

For a tropical region, Panama's community health standards are good. With normal precautions one can avoid most health hazards. The cities of Panama and Colon have potable and fluoridated water supplies, although water should be boiled before drinking for 24 hours following water cutoffs. Travelers to more remote parts of the country should boil their water or use a water purifier. Milk is pasteurized and bottled under sanitary conditions, as are locally produced beers and other beverages. Domestically produced meats are packaged and sold under generally sanitary conditions in the larger grocery stores. Local fruits and vegetables should be thoroughly washed before eating. Fresh fish and seafood are plentiful and inexpensive. Between the local markets and bakeries there is little one cannot find in Panama.

Trash is collected daily in most areas of Panama City. Roaches, ants, and other insects as well as mice and rats are ever present in this tropical climate, but, with vigilance, they can be kept under control. Until recently, Panama City had an active mosquito control program.

Common medical complaints include colds and other upper respiratory infections. Sinus and asthmatic conditions may be aggravated by the humidity, molds, and pollens. Swimmer's ear is a common complaint among both children and adults.

More serious illnesses such as malaria and yellow fever are virtually nonexistent in Panama City, but persons travelling to the interior of the country may be at risk. Hepatitis is considered a significant health threat, and individuals are encouraged to keep their gamma globulin inoculations current. Tuberculosis is endemic and common among residents of the poorer areas. Dengue fever cases are on the increase.

Preventive Measures

Persons being assigned to Panama should ensure that their Yellow Fever, Typhoid, and Tetanus/Diphtheria immunizations, as well as a TB skin test are current. Hepatitis-A vaccine or gamma globulin is also recommended.

Immunization requirements for Panamanian schools vary. The Department of Defense schools require the following immunizations:

Oral Polio Vaccine 3 doses of Trivalent, at least one of which was administered after the fourth birthday.

Diphtheria/Tetanus/Pertussis* 3 doses, given singly or in combination, at least one dose of which was administered after fourth birthday and the last dose was given within ten years.

Measles (Rubeola) Mumps Rubella 1 dose of live attenuated vaccine given singly or in combination on or after 15 months of age. Individuals immunized after one year of age but before 15 months need not be reimmunized.

*Pertussis immunization is not required for individuals after their seventh birthday.


Passage, Customs & Duties

U.S. citizens are encouraged to obtain a U.S. passport before traveling to Panama. Although entry into Panama is permitted with any proof of U.S. citizenship (such as a certified birth certificate or a Naturalization Certificate) and official photo identification (such as a driver's license), travelers may experience difficulties entering and/or exiting Panama when not in possession of a valid U.S. passport. Panamanian law requires that travelers must either purchase a tourist card from the airline serving Panama or obtain a visa from a Panamanian embassy or consulate before traveling to Panama. Further information may be obtained from the Embassy of Panama, 2862 McGill Terrace, N.W., Washington, D.C. 20009, tel. (202) 483-1407, or the Panamanian consulates in Atlanta, Chicago, Houston, Los Angeles, Miami, New Orleans, New York, Philadelphia or Tampa.

U.S. citizens transiting the Panama Canal as passengers do not need to obtain visas, report to customs, or pay any fees. U.S. citizens piloting private craft through the canal should contact the U.S. Embassy in Panama City for details on required procedures.

Panamanian customs authorities may enforce strict regulations concerning temporary importation into or export from Panama of items such as firearms and ammunition, cultural property, endangered wild-life species, narcotics, biological material, and food products. It is advisable to contact the Embassy of Panama in Washington or one of Panama's consulates in the United States for specific information regarding customs requirements.

U.S. citizens living in or visiting Panama are encouraged to register at the Consular Section of the U.S. Embassy in Panama and obtain updated information on travel and security within Panama. The Consular Section of the U.S. Embassy is located on Panama Bay, Panama City, at Balboa Avenue and 39th Street. The international mailing address is Apartado 6959, Panama 5, Republic of Panama. The U.S. mailing address is U.S. Embassy Panama, Department of State, Washington, D.C. 20521-9100. The telephone number of the Consular Section is 011-507-207-7000/7030 (after hours, 011-507-207-7000); fax 011-507-207-7278; web site and e-mail is [email protected].


Panama requires a veterinary certificate of health and certification of vaccination against rabies, distemper, hepatitis, leptospirosis, parvovirus (dogs) and feline panleucopenia (cats) for each arriving pet. Each certificate must be authenticated by a Panamanian consul to be acceptable. This can be done by sending your pet's health certification to the following address for a consular stamp. There is a fee for this service.

Consulate General of Panama
2862 McGill Terrace NW
Washington, D.C. 20008
202-483-8413/8416 (fax)

All incoming pets are placed in quarantine. If your pet arrives on a commercial flight to Tocumen Airport it must be examined by a Panamanian vet at the airport prior to being moved to quarantine. If your pet arrives on Friday it may not be examined and released until Monday. There is a transportation fee of $13.50, as well as admission and importation permit fees.

The following documents are required for your pet to enter Panama: a health certificate for the animal (good for only ten days), a rabies vaccination certificate, a stamp from a Panamanian Consulate as outlined above, and a copy of your travel orders. These documents are to be attached, in an envelope, to the outside of the animal's cage.

Currency, Banking, and Weights and Measures

The official currency of Panama is the Balboa (B/) which is on par value to the U.S. dollar. The Balboa exists only in coin form and, in Panama, is interchangeable with U.S. coins. The official paper currency of Panama are U.S. dollar bills.

Both the U.S. system of weights and measures and the metric system are used in Panama. Speed limits are posted in miles per hour in some places, kilometers per hour in other places, some signs give both miles and kilometers per hour, and in many areas the limits are not posted.

Complete banking facilities are available at many banks in Panama City, including branches of Chase Manhattan, Citibank, Bank of Boston and American Express. Many local retail outlets accept personal checks drawn on U.S, banks.

You can purchase or cash travelers checks locally without difficulty. To deposit or cash U.S. checks in Panamanian banks, a service charge is assessed. Major U.S. credit cards are widely accepted in shops, hotels and restaurants.


Jan. 1 New Year's Day

Jan. 9 Day of Mourning

Feb/Mar Carnival*

Mar/Apr. Good Friday*

Mar/Apr. Easter*

May 1 Panama Labor Day

Nov. 3 Independence Day from Colombia

Nov. 4 Flag Day

Nov.10 Uprising of Los Santos

Nov. 28 Independence Day from Spain

Dec. 8 Mother's Day

Dec. 25 Christmas Day



The following titles are provided as a general indication of the material published on this country. The Department of State does not endorse unofficial publications.

Abbot, W. Panama and The Canal (1976) . Gordon Press Publications.

Anderson, Charles L.G. Old Panama and Castilla del Oro. Sudwarth: 1911 0. Narrative history of the discovery, conquest, and settlement by the Spaniards of Panama, Darien, Veraguas, and other parts of the New World.

Anguizola, Gustavo Phillipe Bueneau-Varilla: The Man Behind The Panama Canal (1980). 480p. Nelson-Hall, Inc.

Avery, R. America's Triumph at Panama (1976). Gordon Press Publications.

Bair, Frank E., ed. Countries of the World and Their Leaders Year-book 1993. Detroit, MI: Gale Research, 1993.

Barry, Tom. Panama: A Country Guide. Albuquerque, NM: Inter-Hemispheric Education Resource Center, 1990.

Behar, D., and G. Harris. Invasion: The American Destruction of the Noriega Regime in Panama. Los Angeles, CA: Americas Group, 1990.

Bennett, Wendell C. Ancient Arts of the Andes (1954). Museum of Modern Art, New York. This book discusses the Indian art of Panama which is related to the pre-Columbian art of the Andes.

Biesanz, John and Mavis. The People of Panama (1955). Columbia University Press: New York. A readable introduction to the people and an analysis of the social conditions in Panama and the canal area.

Billard, Jules B. "Panama, Link Between Oceans and Continents." (March 1970) National Geographic Magazine. Vol. 137, pp. 402-440.

Chidsey, Donald Barr. The Panama Canal, an Informal History. (1970) Crowan: New York.

Cobb, Charles A. Jr. "Panama, Ever at the Crossroad." (April 1986). National Geographic Magazine.

Coniff, Michael L. Black Labor on a White Canal: Panama. 1904-1981.

. Panama and the United States: The Forced Alliance. Athens, GA: University of Georgia Press, 1992.

Crane, Philip M. Surrender in Panama: the case against the treaty (1978). 180p. Green Hill Publications.

Dinges, John. Our Man in Panama: The Shrewd Rise & Brutal Fall of Manuel Noriega. New York: Random House, 1991.

Donnelly, Thomas, et al. Operation Just Cause: The Invasion of Panama. New York: Free Press, 1991.

Du Val, Miles P. And the Mountains Will Move. (1947) Stanford University Press: Stanford, California. Scholarly account of the digging of the Panama Canal from the start of the French effort through the successful American achievement.

Flanagan, Edward M., Jr. Battle for Panama: Inside Operation Just Cause. McLean, VA: Brasseys, 1993.

Gordon, Burton A Panama Forest and Shore (1983). Boxwood Press.

Hogan, J. Michael. The Panama Canal in Americas Politics: Domestic Advocacy and the Evolution of Policy (1986). 304p. Southern Illinois University Press.

Howarth, David A. Panama: 400 Years of Dreams and Cruelty (Also called The Golden Isthmus.) McGraw: New York, 1966. Readable history of the isthmus from Balboa's exploration in 1513 to 1964.

Jorden, William J. Panama Odyssey

Keeler, Cylde E. Land of the Moon Children: The Primitive San Blas Culture in Flux (1956). University of Georgia: Athens, Georgia. An account of the findings of Dr. Keeler after four summers spent with the Cuna Indians in the San Blas Islands.

Keeler, Cylde E. Secrets of the Cuna Earth Mother: A Contemporary Study of Ancient Religions (1960). Exposition: New York. 1st ed. Notes on the religion and lives of the Cuna Indians and a comparison of the religion with some in the Far East.

Keller, Ulrich, ed. The Building of the Panama Canal in Historic Photography (1983). 176p. Dove Macmillan Publishing Co. Inc.

Kempe, Frederick. Divorcing the Dictator: America's Bungled Affair with Noriega (1990). 352p. Putnam Publishing Group.

Koster, R.M., and Guillermo Sanchez. In the Time of the Tyrants: Panama: 1968-1990. New York: Norton, 1990.

LaFeber, Walter. The Panama Canal: The Crisis in Historical Perspective. New York: Oxford University Press, 1990.

Langstaff, Eleanor D. Panama (1982). 184p. ABC-Clio, Inc.

Liss, Sheldon B. The Canal: Aspects of The United States-Panamanian Relations (1967). University of Notre Dame Press: Notre Dame, Indiana. A history of the relations of the two nations from 1903 to 1966, with emphasis on the post-World War II years.

Mack, Gerstle. The Land Divided (1944). Knopf: New York Documented history of the Panama Canal and other isthmian canal projects, embracing the entire concept of the interoceanic communication of Panama.

Marsh, Richard O. White Indians of Darien (1934). Putnam: New York. Account of an exploratory trip in the Darien.

McCullough, David. Path Between the Seas (1977). Simon & Schuster: New York,. Perhaps the best book written on the construction of the canal.

Melditz, Sandra W. and Dennis M. Hanratty, eds. Panama: A Country Study (1989). 4th ed. 1989. USGPO.

Mellander, Gustavo Adolfo. The United States in Panamanian Politics: The Intriguing Formative Years. The Interstate Printers & Publishers, Inc.: Danville, Ill., 1971.

Minter, John E. The Chagres, River of Westward Passage (1948). Rinehart: New York. The Chagres River as it influenced the history of the Isthmus of Panama.

Moore, Evelyn. Sancocho (1947).Star & Herald Co.: Panama, 2d ed. Stories and sketches of Panama. Drawings by Jan Koerber.

Navarrete Talavera, Ela. Panama: Invasion o Revolucion (1990) 356p. Group Editorial Planeta.

Nyrop, Richard F., ed. Panama: a Country Study (1990). 3rd. ed. 300p. USGPO.

Oliver, Carl R. Panama's Canal. New York: Franklin Watts, 1990.

Panama Canal Company. The Panama Canal Fiftieth Anniversary (1964). Panama Canal Information Office: La Boca, Canal Zone. The story of a great conquest. This book celebrates the 50th anniversary of the operation of the Panama Canal.

Pirer, Rene. The Fifteen Wonders of the World (1961). Random: New York. A history of the Panama Canal. Translated by Margaret Crossland.

Priesley, George. Military Government and Popular Participation in Panama (1985). 200p. West-View Publishing Co.

Ropp, Steve C. Panamanian Politics: From guarded nation to National Guard (1982). 174p. Greenwood Press Inc.

St. George, Judith. The Panama Canal: Gateway to the World. New York: Putnam Publishing Group, 1989.

Sanchez Borbon, Guillermo and Richard Kosyer. In the Time of the Tyrants (1990). Norton.

Scranton, Margaret E. The Noriega Years: U.S.-Panamanian Relations, 1981-1990. Boulder, CO: Lynne Rienner, 1991.

Simon, Maron. The Panama Affair (1971). Scribner: New York An account of the French Isthmian Canal venture.

Summ, G. Harvey and Tom Kelly, eds. The Good Neighbors: America, Panama, and 1977 Canal Treaties (1988). 135p. Ohio University Press.

The Americas Group Invasion: The American Destruction of the Noriega Regime in Panama (1990). The Americas Group.

The South American Handbook. Rand McNally, Chicago, Illinois. Issued annually, this handbook provides detailed current information on central and South American and Caribbean countries.

Vazquez, Ana M. Panama. Chicago, IL: Childrens Press, 1991.

Wali, Alaka. Kilowats and Crisis: A Study of Development and Social Change in Panama (1988). 250p. West View Publishing Co.

Weeks, John. Panama: Made in the U.S.A. New York: Monthly Review Press, 1990.

World Bank. Panama: Structural Change and Growth Prospects (1985). 384p. World Bank.

Zimbalist, Andrew, and John Weeks. Panama at the Crossroads: Economic Development & Political Change in the Twentieth Century. Berkeley, CA: University of California Press, 1991.

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Republic of Panama

República de Panamá



Panama is located in Central America between Costa Rica to the north and Colombia to the south. It is at the southern end of the Central American isthmus (a narrow piece of land that connects two larger land areas) and forms the land bridge between North and South America. The nation is S-shaped and runs from east to west with a length of 772 kilometers (480 miles) and a width that varies from 60 to 177 kilometers (37 to 110 miles). Panama has an area of 77,381 square kilometers (29,762 square miles) which makes it slightly smaller than South Carolina. This area consists of 75,990 square kilometers (29,340 square miles) of land and 2,210 square kilometers (853 square miles) of water. The nation borders the Caribbean Sea on one coast and the Pacific Ocean on the other. The 80-kilometer (50-mile) Panama Canal cuts the nation in half and joins the Atlantic and Pacific Oceans. The combined coastlines of Panama are 2,857 kilometers (1,786 miles) long. The nation's border with Costa Rica is 330 kilometers (205 miles), and its border with Colombia is 225 kilometers (140 miles) in length. Panama's capital and largest city, Panama City, with a population of 827,828, is located on the Pacific coastline of the country. The second largest city is Colón, located on the Atlantic coast. Colón has a population of 140,908.


The population of Panama was calculated to be 2,808,268 according to a July 2000 estimate. The country's population growth rate was 1.34 percent in 2000. The Panamanian population is growing rapidly. In 1970, the nation's population was approximately 1.5 million, but by 1990, the population had grown to about 2.2 million. Current estimates have the population expanding to 3.2 million by 2010. There were 19.53 births per 1,000 people, and the Panamanian fertility rate was 2.32 children born per woman. The nation's mortality rate was 4.95 deaths per 1,000 people. Panama has a high infant mortality rate due to the rudimentary health-care system and high incidence of poverty. In 2000, there were 20.8 deaths per 1,000 live births. The country has a high emigration rate and in 2000, 1.16 out of every 1,000 Panamanians emigrated to other nations. Emigration is frequent because of the lure of higher-paying jobs in places such as the United States (the main destination for Panamanian emigrants). Life expectancy in Panama is 72.74 years for males and 78.31 years for females.

The majority of the Panamanian population is young. In 2000, the largest age group in Panama was the 5 to 14 age group with about 550,000 people. In comparison, those over the age of 60 number only 240,000. By 2025, the demographics of the nation will have shifted, and the largest single group of people will be in the age group 30 to 39, and by 2050, the largest group will be over those over the age of 55.

The majority of the population is mestizo (mixed ethnic backgrounds, mainly Spanish and Native-American). Mestizos makeup 70 percent of the population. Other ethnic groups include Africans (14 percent), whites (10 percent), and Native Americans (6 percent). Members of ethnic minorities and the nation's Native American population face discrimination in employment, housing, and politics. The culture and society of Panama is mainly Spanish-Caribbean. Spanish is the official language, but much of the population also speaks English. This is especially true of West Indian descendants. English is also commonly used in business. Almost 85 percent of the population is Roman Catholic; the remaining 15 percent are Protestant.

The majority of the population is urban; almost 60 percent of people live in towns or cities, especially in the metropolitan areas around Panama City and Colón. About 50 percent of Panamanians live in the corridor that runs from Colón on the Caribbean Coast to Panama City on the Pacific. Only about 25 percent of the land is inhabited. The nation has a population density of 36.6 per square kilometer, compared to that of the United States which is 28.4 per square kilometer.


Panama has a long history as a trading area. In 1501, the Spanish began exploring the area that is now Panama in search of gold and silver. Panama soon became one of the main crossroads for the trade between Spain and its colonies in Central and South America, including Mexico, Peru, and Cost Rica. Gold and silver were transported to Panama and then shipped to Spain abroad ships. This route became known as the Camino Real or Royal Road.

The modern economic history of Panama has been dominated by efforts to construct a canal across the isthmus. The Panama Canal currently forms the backbone of the Panamanian economy. In addition to revenues from the tolls, maintenance work, and general operations of the canal, a variety of businesses and industries have emerged to support the trade goods going through the canal, including storage warehouses, refueling stations, and repair facilities. In order to capitalize on the importance of the canal, the government has long supported the establishment of free trade areas where goods can be transshipped without tariffs or taxes. The U.S.-built 80-kilometer (50-mile) canal opened in 1914. The United States paid Panama US$10 million for the rights to construct the canal and then a base of US$250,000, plus inflation , annually for the right to operate the canal. In 1999, the United States turned control of the canal over to the Panamanians. Ships going to Japan from the east coast of the United States save 3,000 miles by using the canal, and ships sailing from Europe save 5,000 miles traveling to Asia.

Because of the Panama Canal, the nation's small geographic size, and small population, Panama's economy is centered on services. The main elements of this sector include services related to the transshipment of goods across the canal: banking, insurance, and international trade. The Colón Free Zone is the world's second largest free trade area after Hong Kong. The agricultural sector is small, but it accounts for the majority of the country's exports. The main Panamanian industries are construction, petroleum refining, brewing, paper and paper products, clothing, furniture, the production of cement and other construction materials, and sugar milling. While the Panamian economy is structured around the services in the Canal Zone, the nation does have a variety of economically-advantageous natural resources including timber, precious minerals, and seafood.

Since 1991, the Panamanian economy has been increasing by 5 to 8 percent annual growth (as measured by the GDP). However, growth slowed toward the end of the decade. In 1997, the GDP grew at a rate of 4.5 percent. The rate slowed to 3.2 percent in 1999 and to 2.6 percent in 2000. Economic growth was greatly affected by the economic and political reforms which followed the restoration of democracy in 1991. The nation's per capita GDP has increased from US$3,198 in 1997 to US$3,513 in 2000 to give Panama the highest GDP per capita in Central America. Panama's prosperity is directly attributable to the canal.

In 1999, the United States withdrew from the 50-mile wide Canal Zone that it had maintained since 1914. This withdrawal provided the Panamanian government with 364,000 acres of land and 5,000 buildings. In 2000, the canal provided the government with $569 million in tolls. However, the U.S. withdrawal also meant the loss of numerous jobs and $175-350 million in funds that were spent by U.S. military forces in the region. Most of the lost jobs were service sector jobs that had provided for the U.S. forces. Examples include domestic help, restaurant workers, and retail employees. After the withdrawal of the United States from the canal, many Panamanians found that their own government paid less than the Americans had. Unemployment and underemployment continue to cause problems for the economy. In 2000, unemployment in Panama was 11.6 percent, down from 13.6 percent in 1998. Underemployment affects approximately 25 to 30 percent of the working population.

There is also a large informal or black market economy. Estimates are that the informal economy may be worth as much as US$2 billion annually. Among the main components of this sector of the economy are the illegal drug trade and various types of personal services including maintenance work, household help, and transportation.

Panama is dependent on foreign trade. In 1996, the nation joined the World Trade Organization (WTO). Membership allowed Panama to export goods to other members of the WTO with substantially reduced tariffs and import duties . During the 1990s, there were broad efforts to privatize government-owned companies and firms; however, the current administration has slowed or halted these programs in order to prevent further increases in unemployment. In addition, to the withdrawal of U.S. forces, which created an increase in unemployment, the slowdown in the U.S. economy has also caused an economic slowdown in Panama since the United States is one of the nation's largest trading partners.

Panama is a net recipient of foreign aid. Each year the country receives approximately US$200 million in aid. Panama has a substantial foreign debt which in 2000 was US$7 billion. When the nation joined the WTO, it renegotiated some of its debt and reduced interest rates. However, payments on the debt continue to be a drain on the government's revenues. Currently, about 15 percent of the budget to devoted to debt management.


For most of the 20th century, Panama was a constitutional democracy. However, a coup in 1968 brought the military to power. During the 1980s, Panamanian General Manuel Noriega assumed control of the government. After diplomatic and economic pressure failed to remove Noriega, U.S. president George Bush used American troops to remove the dictator from power and restore democracy in 1991 in a military operation known as "Just Cause."

Panama is now a constitutional representative democracy. The government is divided into 3 branches: executive, legislative, and judicial. The executive branch is led by an elected president who serves as both the head of state and the head of the government. The president is elected for a 5-year term and appoints the national cabinet. There are also 2 elected vice-presidents who also serve 5-year terms. The legislative branch of government is made-up of a 1 chamber legislature. It has 71 members who are elected for 5-year terms. The judicial branch consists of a national supreme court, 5 superior courts and 3 courts of appeal. The judicial system is plagued by corruption and inefficiency.

The largest political party in Panama is the Democratic Revolutionary Party (PRD). The PRD is conservative on economic matters and appeals mainly to the country's young and urban poor. The Arnulfista Party (PA) is the party of the nation's current president and its base is among the Panama's rural population. The Popular Block is a coalition of former Christian Democrats and pro-business groups, as is the National Liberal Republican Movement and Democratic Change. These parties appeal to the middle and upper classes and tend to have strong ties to the business community.

In 1997, the government's budget was US$2.4 billion and it had revenues of US$2.4 billion. Government spending accounts for about 30 percent of the nation's GDP. In 1999, Panama's official foreign debt exceeded US$7 billion. Currently there are over 50 different forms of taxes, but plans are underway for reforms to reduce that number to 10. These reforms are designed to simplify the tax code in order to increase efficiency and make the tax system more friendly to business with reductions in some forms of corporate taxes. The maximum personal income tax is 33 percent, and the maximum corporate tax rate is 30 percent. The government's tax collection system is very inefficient, and collection rates of some forms of taxes fall below 50 percent.

Because of its history of military interference in the government, the nation adopted a constitutional amendment in 1994 which abolished the military. Security is now in the hands of the national police force, the coast guard, and a national air service. In 1997, the government spent 1.9 percent of the nation's GDP on security or about US$132 million. About 150,000 people work for the government in some capacity.

During the 1990s, the government was engaged in a variety of programs to liberalize the economy. It enacted reforms in banking, labor regulation, and taxes. In 1996, the government passed the first anti- monopoly laws. This legislation created 4 special commercial courts to hear cases related to patent, trademark, and anti-trust cases. It also created a consumer protection agency known as the Free Competition and Consumer Affairs Commission. New laws levy fines against companies that engage in practices that are harmful to consumers, including the sale of expired products and price fixing. However, there remain a number of problems in Panamanian business law. For instance, there is no bankruptcy law that allows companies to restructure themselves rather than go out of business.

A number of previously government-owned businesses were privatized. These include the ports of Cristobal and Balboa; the nation's telecommunications company, INTEL; power generation facilities; and a cement company. In addition, the government has privatized the nation's 17 casinos and slot-machine companies. Plans to privatize the electric and water companies were halted by a new government in 1999. Because the nation uses the U.S. dollar, it cannot control its monetary policy .


The nation's infrastructure is relatively well developed. Roads in the urban areas are generally good, but in the rural areas of the nation they remain poor. Panama has 11,258 kilometers (6,996 miles) of roads, but only 3,783 kilometers (2,350 miles) are paved. Plans are underway for the construction of 2 major superhighways that will be funded through tolls. In addition, there are 355 kilometers (220 miles) of railways. The government is in the midst of a program to privatize the nation's main railway, the Panama-Colón Railroad. In addition, a joint venture between the U.S. companies, Kansas City Southern Industries and Mi-Jack Products, is investing US$73 million to rebuild a rail line parallel with the canal and across the nation. There are 105 airports in the country, but only 41 have paved runways. The withdrawal of the Americans from the Canal Zone has provided the government with a former military airfield that can serve as a major international airport. There are 130 kilometers (81 miles) of crude oil pipelines in Panama.

In addition to the 80-kilometer (50-mile) Panama Canal, the country has 800 kilometers (497 miles) of navigable waterways, although most of these can only be used by shallow-draft vessels. The major ports in Panama are Balboa, Cristobal, Coco Solo, Manzanillo, and Vacamonte. The international shipping terminal in Manzanillo is the largest container port in Latin America. Hutchison Port Holdings of Hong Kong has initiated a $150 million port project to develop a port facility on the Pacific side of the Panama Canal. Panama allows ships of other nations

Country Newspapers Radios TV Sets a Cable subscribers a Mobile Phones a Fax Machines a Personal Computers a Internet Hosts b Internet Users b
1996 1997 1998 1998 1998 1998 1998 1999 1999
Panama 62 299 187 N/A 29 N/A 27.1 2.97 45
United States 215 2,146 847 244.3 256 78.4 458.6 1,508.77 74,100
Mexico 97 325 261 15.7 35 3.0 47.0 23.02 1,822
Costa Rica 94 271 387 13.8 28 2.3 39.1 10.41 150
aData are from International Telecommunication Union, World Telecommunication Development Report 1999 and are per 1,000 people.
bData are from the Internet Software Consortium ( and are per 10,000 people.
SOURCE: World Bank. World Development Indicators 2000.

to register themselves under the Panamanian flag. In 2000, there were 4,732 ship registered under Panamanian registry, including ships from 71 different nations. Given these ships, Panama has the largest merchant fleet in the world, followed by Liberia with 1,644 ships.

The nation's telecommunications company is in the midst of a multi-million-dollar upgrade and expansion of the country's phone system. INTEL employs about 3,400 people, and the government retains 49 percent of the company's stock. Panama's telephone density is close to 200 phone lines per 1,000 people. The U.S. firm, Bell South, paid $72.6 million for the rights to offer cellular service. Both Bell South and the national telephone company have begun to offer cellular phone service, and the country has about 200,000 mobile phones in use. By 1999, Panama had 3 Internet service providers.

Electric production in the country in 1998 was 4.523 billion kilowatt hours (kWh). Electric consumption was 4.3 billion kWh. The excess production was exported. The majority of production (73.78 percent) was done by hydroelectric plants. Fossil fuel provided the majority of the rest of production (25.56 percent). That same year, Panama imported 136 million kWh of electricity and exported 13 million kWh.


The Panamanian economy is dependent on trade. The canal provides the main source of economic activity, although efforts to diversify the economy are ongoing. The service sector is the dominant part of the Panamanian economy and continues to grow. In 1997, the service sector accounted for 67 percent of the nation's GDP, but by 2000 that percentage had grown to 80 percent. As such, the country's economy is geared toward banking, commerce, and maritime services. Services provide 67 percent of employment.

Agriculture, including forestry and fisheries, only accounts for about 7 percent of the nation's GDP. However, they provide 25 percent of the country's employment and provide the main exports. Among the country's major crops are bananas, coffee, rice, and sugar cane. Like agriculture, industry only accounts for a small percentage of the GDP when compared to the service sector. Industry provides about 25 percent of the country's GDP and 8 percent of employment. Panamanian industry includes manufacturing, construction, mining, and processed foods.


Agriculture employs such a large number of Panamanians (in relation to its percentage of the country's GDP) because many farmers are engaged in subsistence farming and only produce enough for their family to consume. Concurrently, agricultural products also provide the nation's main exports. In 1998, agricultural exports were valued at US$409.3 million (out of the nation's total exports of $640 million), while imports totaled US$397.7 million. That same year bananas accounted for 33 percent of the nation's exports, shrimp 11 percent, sugar 4 percent, and coffee 2 percent. About half of the land in Panama is used for agriculture.

Several large international companies dominate Panamanian exports, especially when it comes to export crops such as bananas. For instance, the U.S. company, Chiriqui Land Company, which operates under the brand name Chiquita, is one of the largest landowners in Panama, as well as the main banana exporter. Other major foreign agricultural companies include Del Monte Corporation and Dole Foods.

The primary crops are bananas, cocoa beans, coffee, coconuts, corn, potatoes, rice, soybeans, and sugar cane. Throughout the 1990s, agricultural production increased by an average of 5 percent per year, with the exception of 1998 when Hurricane Mitch caused extensive damage to crops. In 1999, sugar cane production was at 2.05 million metric tons, bananas at 650,000 metric tons, rice at 232,370 metric tons and corn at 89,806 metric tons. The main export crop was bananas with exports worth US$182 million in 2000. There has been a steady increase in tropical fruit exports which were worth US$14 million in 2000.

The main livestock products in Panama are beef, veal, chicken, and pork. Panama has the highest rate of chicken consumption per capita in Latin America. The main fishing product is shrimp, both sea-caught and farm-raised. Although the industry has suffered from the outbreak of disease, in 1999 it was worth US$69 million.

Panama has significant stocks of timber, mainly mahogany. There are also 61,000 hectares of planted forests, mainly teak and pine. However, concerns over deforestation have led to increased regulation of the timber industry. During the 1990s, Panama annually lost 2.1 percent of its forested areas to logging. However, after 1996, timber production dropped by 50 percent. There are 3 major timber companies which own 41 sawmills. Annual output is now around 60,000 cubic meters of forest products.


Industry in Panama is dominated by mining, construction, and milling. The sector's growth rate was 4.6 percent in 1999. Mining continues to expand in importance. In 1999, mining was worth US$25 million. In 1991, there were only 20 mining operations in the nation, but by 1999 there were 120 mining projects. The key mineral produced was gold. In 1997, 1,550 kilograms of gold were mined. The nation has 2 billion tons of proven copper reserves. There are 2 major copper mines set to begin operations. At Cerro Colorado, the mine is estimated to be worth US$150 million and another, at Petaquilla, is estimated at US$800 million.


Construction rose 12 percent in 1999 as the government initiated a series of infrastructure programs, including highway construction and expansion and the renovation and expansion of port facilities. In 2000, the total private construction market was worth US$336 million. Clay and cement are produced for the construction industry. Production of building materials was worth US$150 million in 2000.

After the privatization of 2 of the nation's main sugar mills, production increased 13.1 percent in 1999 and is now worth US$25.5 million. However, the refining industry suffers from excess production of at least 15,000 metric tons per year. As a result, many mills are closing, and some producers have begun shipping raw sugar overseas for processing and then re-importing the refined sugar. The government has also sold an orange processing plant to private investors for US$5 million.


The U.S. company Texaco operates an oil refinery in Panama that has a capacity of 60,000 barrels per day. The refinery provides all of the nation's gasoline and a majority of its fuel oil. In addition, about 8,000 barrels of refined petroleum are exported from the refinery. There are plans to implement a US$400 million project to build a pipeline from Colombia which will bring substantial natural gas into Panama and reduce the nation's dependency on oil. The government is engaged in negotiations with other Central American nations to join their electrical grids which would increase the nation's electricity exports.


Services make up the largest share of the Panamanian economy and are the country's largest employer. The largest segments of this sector are financial services and trade services related to the Canal. Service exports amounted to US$585.3 million in 1999. The nation's retail sector caters mainly to the middle and upper classes, and it experienced a 3.4 percent decline because of the country's continuing high level of unemployment. The strongest segment of the retail sector is new car sales. While there is no local production, new car sales were worth US$74 million in 2000. Franchising of businesses is increasing dramatically and there are 50 different franchises operating in Panama. Among those franchises experiencing the greatest growth are McDonald's, Chevron, Coca-Cola, and Sherwin Williams. Franchising is expected to provide US$3 to US$6 million annually in new investment.


In 1999, there were 82 licensed banks in Panama with assets of US$37 billion. This number included a number of foreign firms such as Citibank, Chase and Bank Boston. Panama has endeavored to establish itself as an international banking center, but instability and economic problems have impaired this effort. The total number of banks has declined from a high of 104 in the mid-1990s, and total assets declined by US$400 million in 2000. Foreign businesses may incorporate in Panama for the small sum of US$200. Doing so provides a way to escape high corporate taxes in certain countries. In 2000, there were over 400,000 companies incorporated in Panama.


During the 1990s, tourism experienced strong growth. However, much of the tourist trade was based on visits by relatives of U.S. military personnel to the country and concurrently, tourist trips within Panama by U.S. troops and their dependents. In 2000, the number of foreign visitors who stayed overnight had declined to 300,000 from a peak of 420,000. Nonetheless, foreign and domestic tourism is worth US$300 million annually. Each year, 276 cruise ships shop in Panama. In order to promote tourism, the government exempts all new tourist businesses from income and real estate taxes . The government plans to use many of the former U.S. Army facilities as tourist areas, including Fort Amador which already has extensive golf courses, boating facilities and buildings which can be converted into hotel space. The area is also home to the Smithsonian Institute for Tropical Research laboratories.

The form of tourism that is expected to experience the most dramatic growth is ecotourism . Panama has the most comprehensive wildlife management systems in Central America. About 29 percent of the nation's territory is protected by a series of 15 national parks, wildlife refuges and reserves. Panama has over 10,000 varieties of plants and at least 933 bird species (more than the total of Europe and North America combined).


On average, 50 ships per day travel the Panama Canal. In 1999, there was a total of 14,336 ship crossings of the canal. The largest commodity that is shipped through the canal is grain. However, the canal is a major shipping route for oil, the number-two commodity in volume (17 percent of total volume). Each day, approximately 600,000 barrels of oil are shipped through the canal. A large amount of coal is also transshipped. Coal accounts for 6 percent of total volume. That same year, the canal generated US$569 million in tolls and an additional US$50 million in revenues for the government. About 10,000 people work for the Panama Canal Authority, the company that oversees the operations of the canal.

A special, but distinct, part of the service sector is the Colón Free Trade Zone (CFTZ). This area was established in 1948 at the Atlantic entrance of the Panama Canal. The CFTZ is a trans-shipment area where foreign companies import products to be re-exported to other nations. In 1999, the CFTZ received US$4.9 billion in imports of which US$4 billion were re-exported. Most exports are sent to Latin America. The largest exports to the CFTZ were Hong Kong (27 percent), Japan (13 percent), the United States (11 percent), South Korea (10 percent), and Taiwan (8 percent). The majority of exports went to Colombia (27 percent), Ecuador (9 percent), Panama (6 percent), and both Venezuela and the United States (5 percent each). These figures are not included in the overall trade statistics for the nation. The products that were imported to or exported from the CFTZ included electronics (22 percent), apparel (17 percent), textiles (7 percent), footwear (5 percent), and jewelry (5 percent). The Panamanian government received US$899 million in revenues from the CFTZ in 1999.


Because of the Panama Canal, the country's economy is heavily reliant on international trade. The entry of Panama into the WTO opened new trade opportunities. Panama now has the lowest tariff rates in Latin America. Despite these expansions, the United States remains the nation's main trade partner. In 1998, the United States provided 40 percent of the nation's imports and exports. Other major export partners are Sweden, Costa Rica, Spain, the Benelux nations (Belgium, the Netherlands, and Luxembourg) and Honduras. Besides the United States, Panama's main import partners are Japan and other nations in Central America.

As a result of entry into the WTO, the government lowered tariffs on imported goods to a maximum of 15 percent. The average tariff on goods is now 12 percent which is the lowest in the region. The higher tariff rates are maintained on agricultural products in an effort to protect the nation's farmers from foreign competition. However, negotiations continue under WTO auspices to lower the agricultural tariffs. Panama and the United States are engaged in a longstanding dispute with the EU over banana imports. The EU places high tariffs on imported bananas and the United States has led an effort to force the EU to lower these trade impediments.

Improvements and renovations in the Canal Zone and the CFTZ have expanded capacity. The nation's container handling capacity has been expanded from 250,000 containers per year in 1997 to 1 million per year in 2000. An American firm, Kansas City Southern, is building a

Trade (expressed in billions of US$): Panama
Exports Imports
1975 .283 .892
1980 .358 1.449
1985 .334 1.392
1990 .340 1.539
1995 .625 2.511
1998 .786 3.350
SOURCE: International Monetary Fund. International Financial Statistics Yearbook 1999.

railway across the isthmus that will further expand trade by allowing shipment of goods between the coasts.

In addition to the WTO, Panama has a variety of agreements that regulate its trade. Panama also has a variety of agreements with individual countries; among the most significant are those with the United States, the United Kingdom, France, Germany, Switzerland, and Taiwan. It also has preferential trade agreements with most of the nations of Latin America. In 2000, it signed an accord with Mexico to ultimately allow complete freedom of trade. Panama has also sought to negotiate agreements with nations to establish country-specific free trade zones. The first of these was signed in 2000 and grants Taiwan an area of the former military base at Fort Davis. It has also entered into negotiations to join the Andean Pact and the Central American Market.

In 1998, direct foreign investment in Panama totaled $3.76 billion and was responsible for 13.2 percent of the nation's GDP. The United States was the largest investor with 40 percent of all investments ($1.5 billion). The United Kingdom ranked second with 23 percent of investments ($880 million), Mexico was third with 19 percent ($700 million), and Taiwan fourth with 8 percent ($300 million). Transportation and maritime services accounted for 33 percent of investment ($1.29 billion), services 31 percent ($1.15 billion), manufacturing 11 percent ($400 million), and real estate 11 percent ($400 million).


Panama uses the U.S. dollar as its currency, calling it the balboa. Although its value fluctuates freely on world markets, the dollar has remained relatively stable. The use of the dollar as the nation's currency has provided a number of benefits for the Panamanian economy. The dollar has provided monetary stability, since the Panamanian government cannot devalue the currency or print new supplies. However, it also means that the government has no control over monetary policy and that the

Exchange rates: Panama
balboas (B) per US$1
Jan 2001 1.0000
2000 1.0000
1999 1.0000
1998 1.0000
1997 1.0000
1996 1.0000
Note: Currency is fixed at 1 balboa per US$.
SOURCE: CIA World Factbook 2001 [ONLINE].

nation is dependent on the U.S. economy. Many goods which are imported into Panama are more expensive than they would be in the United States. This has created local inflation that is slightly higher than that of the United States: the U.S. inflation rate is 3.4 percent, that of Panama can be up to 10 percent higher. Panamanian banks are overseen by the Superintendent of Banks, a government agency whose head is appointed by the president. The agency regulates mortgages, loans, and liens.


Panama has extremes of wealth and poverty. The wealthiest 20 percent of Panamanians control more than 50 percent of the country's wealth, while the poorest 40 percent only control 12 percent. The wealthiest Panamanians live a lifestyle that is similar to that of many Americansthey have access to consumer goods such as cars, televisions, cellular phones, and so forth. However, the majority of the nation's people live in poverty. Government estimates in 1999, classified 48 percent of the nation as living in poverty and 9.8 percent as living in extreme poverty. The Human Development Report 2000 by the United Nations ranked Panama number 59 out of 172 countries. This places Panama in the middle rankings of countries. The survey measures nations' GDPs, education levels, and standard of living to rate them in comparison with other countries. Many Western, industrialized countries such as the United States, Canada, Norway, and Luxembourg, usually rank among the highest in the survey, while lesser developed nations in the poorer areas of the world rank toward the bottom of the survey. Although Panama has a high GDP per capita, the reality is that most of the income in the country is concentrated among the wealthy few. For instance, in 2000, the nation's per capita GDP was US$3,513. However, most poor people earn less than the average. A worker making minimum wage in some areas of Panama would only earn US$2,080 per year. Regulations on the minimum wage, social security provisions, and working conditions are rarely enforced by the government which means that many workers are unable to earn even the minimum wage.

GDP per Capita (US$)
Country 1975 1980 1985 1990 1998
Panama 2,572 2,709 2,887 2,523 3,200
United States 19,364 21,529 23,200 25,363 29,683
Mexico 3,380 4,167 4,106 4,046 4,459
Costa Rica 2,231 2,482 2,176 2,403 2,800
SOURCE: United Nations. Human Development Report 2000; Trends in human development and per capita income.
Distribution of Income or Consumption by Percentage
Share: Panama
Lowest 10% 1.2
Lowest 20% 3.6
Second 20% 8.1
Third 20% 13.6
Fourth 20% 21.9
Highest 20% 52.8
Highest 10% 35.7
Survey year: 1997
Note: This information refers to expenditure shares by percentiles of the population and is ranked by per capita expenditure.
SOURCE: 2000 World Development Indicators [CD-ROM].

Poverty in Panama tends to be concentrated in specific geographic regions. For instance, the nation's second largest city, Colón, has the highest rates of poverty and crime in the Panama. Unemployment among youth (ages 15 to 25) in Colón is estimated to be 50 percent. There are also high levels of drug use, and Panama is often cited as one of the main areas for the shipment of drugs from South America to the United States.

Among the poorest in Panama are the indigenous native peoples, who make up about 8 percent of the population (194,000). Native Americans suffer from malnutrition and higher levels of disease and illiteracy. This minority tends to live in the more remote areas of the nation where access to education and health care is limited. In addition, the Native Americans face discrimination in hiring and educational opportunities. Minority groups, including ethnic Chinese and Indian, also face discrimination.


A 1995 law significantly expanded the right of workers to establish unions. However, only about 10 percent of the workforce is unionized. There are over 250 active unions with approximately 80,000 members. Many employees in the public sector , including police and health-care workers, are not allowed to strike. In addition, the 10,000 employees who work for the Panama Canal Authority are also not allowed to strike.

There are laws against child labor, but children between the ages of 12 and 14 may work on farms or as domestic workers. In addition, children as young as 9 are employed in occupations such as street vendors, car washers, or baggers in grocery stores. Nonetheless, the government estimates that the worst excesses of child labor occur in agriculture, especially on coffee, sugar cane, and banana plantations. Children between the ages of 14 and 16 may be employed with a 36-hour workweek. The national workweek is 48 hours with a minimum one day rest period per week. The Ministry of Labor is responsible for overseeing worker health and safety issues.

Panama has the highest minimum wage in Central America. The nation's minimum wage varies from province to province and ranges from US$0.80 percent per hour to US$1.50 per hour. The highest wage is in the capital region, the lowest is in the rural regions. The government of President Mireya Elisa Moscoso Rodriguez plans to increase the minimum wage by 40 percent by 2005. In spite of the minimum wage, most workers in the rural areas only earn between US$3 to US$6 per day. Government estimates are that as much as 39 percent of the population earns less than the minimum wage. Women earn an average of 20 percent less than men do in similar occupations. Women also face discrimination in hiring and promotion.


10,000-20,000 B.C. Panama is settled by Native-Americans.

1501 A.D. Rodrigo de Bastidas is the first European to explore the isthmus of Panama.

Household Consumption in PPP Terms
Country All food Clothing and footwear Fuel and power a Health care b Education b Transport & Communications Other
Panama 22 8 18 14 4 7 27
United States 13 9 9 4 6 8 51
Mexico 30 6 4 2 7 5 46
Costa Rica N/A N/A N/A N/A N/A N/A N/A
Data represent percentage of consumption in PPP terms.
a Excludes energy used for transport.
b Includes government and private expenditures.
SOURCE: World Bank. World Development Indicators 2000.

1510. First Spanish colony is established at Nombre de Dios.

1513. Vasco Nunez de Balboa reaches the Pacific Ocean by crossing the isthmus.

1534. Charles I of Spain orders the first survey for a potential canal through Panama.

1538-1821. Panama is the crossroads of Spanish trade in Central and South America. The region is known as the Camino Real or Royal Road since it is the point of departure for gold and silver shipments to Spain.

1821. Panama gains independence from Spain as part of the new nation of Colombia.

1846. Colombia signs treaty with the United States to allow the American construction of a railway across the isthmus.

1848. The discovery of gold in California leads thousands of Americans to travel across Panama in an effort to shorten their trip to the gold mines.

1870. U.S. President Ulysses S. Grant appoints a commission to examine the possibility of constructing a canal across Central America.

1880-1900. A French company undertakes an unsuccessful effort to build a canal across Panama. During the attempt, some 22,000 people die as a result of malaria and other tropical diseases.

1903. With U.S. support, Panama becomes independent. The United States begins work on the Panama Canal.

1905. Yellow fever is eradicated in Panama.

1906. Theodore Roosevelt becomes the first president to leave the continental United States while in office when he visits Panama to observe progress on the canal.

1914. The canal is completed at a cost to the United States of US$375 million making it the most expensive construction project in the nation's history at the time.

1921. The United States pays Colombia US$25 million in compensation for American support of the Panamanian revolution. The completed canal has 4 times the volume that was envisioned by the original French plan.

1968. The civilian government is overthrown by a military coup.

1972. A new constitution is adopted.

1977. The United States and Panama conclude the Torrijos-Carter Treaty to turn control of the canal over to Panama. Under the terms of the Treaty, the United States retains the right to defend the canal. Also under the terms of the accord, tolls are increased by 29.3 percent.

1983. Reforms are enacted to the constitution.

1984. Manuel Noriega becomes dictator of Panama.

1987. In response to Noreiga's actions, the United States suspends aid to Panama.

1989. After invalidating legal elections, Noriega is ousted from power by a U.S. military invasion. Noriega is taken to the United States and tried for drug-smuggling. He is convicted and sentenced to 40 years in prison. The legally-elected president is restored to power.

1993. The Interoceanic Region Authority is established to promote commercial development in the Canal Zone.

1994. The military is abolished through a constitutional amendment, and additional reforms are added to the constitution to ensure democracy.

1996. Panama joins the WTO.

1999. The canal is transferred to Panamanian control.


The potential economic benefits of the Panama Canal are substantial. However, in order to capitalize on this potential, the nation needs a significant amount of investment. This is problematic since the current government has announced an end to privatization programs and many foreign firms are unwilling to invest new monies into Panama until there is further privatization. The loss of income from American forces in the Canal Zone will continue to impact the economy for some years. There is also widespread domestic pressure to increase tariffs that were lowered in order to join the WTO. A rise in tariffs could significantly harm foreign trade. The wide gaps between the rich and poor in the nation may mean future political instability. The country's high unemployment rate poses the same threat. The nation's high foreign debt also continues to constrain the economy by forcing the government to pay over US$740 million per year in debt payments.

There is international support to widen the canal to allow 2-way traffic by large vessels which is expected to increase traffic by 20 percent. The government has a US$1.3 billion fund as a reserve to provide increased social spending to compensate for the loss of funds associated with the American presence in the Canal zone. In addition, the government has received loans from the Inter-American Development Band to help develop rural areas (the most significant being a US$18 million loan to improve infrastructure in the Darien province). The commitment of the government to the development of new, and the expansion of existing, free trade areas means that the nation will continue to attract new foreign investment and new businesses.


Panama has no territories or colonies.


Economist Intelligence Unit. Country Profile: Panama. London: Economist Intelligence Unit, 2001.

Major, John. Prize Possession: The United States and the Panama Canal, 1903-1979. New York: Cambridge University Press, 1993.

U.S. Central Intelligence Agency. World Factbook 2000. <>. Accessed August 2001.

U.S. Department of State. Background Notes: Panama. <>. Accessed April 2001.

. FY 2001 Country Commercial Guide: Panama. <>. Accessed April 2001.

. "Panama." 1999 Country Reports on Human Rights Practices. <>. Accessed April 2001.

Zimbalist, Andrew, and John Weeks. Panama at the Crossroads: Economic Development and Political Change in the Twentieth Century. Berkeley: University of California Press, 1991.

Tom Lansford


Panama City.


Balboa (B). One balboa equals 100 centésimos. Panama only issues coins in denominations of 5, 10, 25, and 50 centésimos and 1 and 5 balboas. The U.S. dollar is distributed freely throughout the country and is legal tender.


Bananas, shrimp, sugar, coffee.


Capital goods, crude oil, foodstuffs, consumer goods, chemicals.


US$21 billion (purchasing power parity, 1999 est.).


Exports: US$4.7 billion (f.o.b., 1999). Imports: US$6.4 billion (f.o.b., 1999).

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Basic Data

Official Country Name: Republic of Panama
Region (Map name): North & Central America
Population: 2,845,647
Language(s): Spanish (official),English
Literacy rate: 90.8%
Area: 78,200 sq km
GDP: 9,889 (US$ millions)
Number of Television Stations: 38
Number of Television Sets: 510,000
Television Sets per 1,000: 179.2
Number of Cable Subscribers: 290
Cable Subscribers per 1,000: 0.1
Number of Radio Stations: 235
Number of Radio Receivers: 815,000
Radio Receivers per 1,000: 286.4
Number of Individuals with Computers: 105,000
Computers per 1,000: 36.9
Number of Individuals with Internet Access: 90,000
Internet Access per 1,000: 31.6

Background & General Characteristics

Panama has been both blessed and hindered by its geography and geopolitical location. It is home to some of the least densely populated terrain on earth (the Darien rain forest region) but also hosts the busy Panama Canal, which has brought the world to the country's doorstep. The building and control of the Canal has influenced Panamanian society including the important role the United States has played in Panamanian affairs, population distribution (concentrated in the canal zone), and the economy. In the early 2000s, the capital, Panama City, located on the eastern bank of the Canal, which runs a course almost directly through the middle of the country, hosted a population of 465,000.

At the beginning of the twenty-first century, the official language was Spanish, while approximately 14 percent of the population claimed English as their first language. According to Goodwin, most of the citizens (70 percent) were considered mestizo (a mix of European and indigenous heritage). Fourteen percent were West Indian (many of whom came to Panama to build the canal in the beginning of the twentieth century), 10 percent were European (Caucasian or White), and 6 percent were Amerindian (indigenous). Panama's indigenous populations numbered about 194,000 and they had the same political rights as other citizens. Some Amerindians, such as the San Blas Kuna, lived in self-governing districts. In 1992, the Kuna petitioned for the creation of an additional reserve to prohibit incursions by squatters into areas traditionally considered their own.

Panama was predominantly Roman Catholic (85 percent), although Protestantism was becoming more popular, as in many Latin American countries. Literacy rates were rather high for a developing country (90.8 percent), and education was compulsory and provided by the State between the ages of 6 and 15. Suffrage was universal at 18 years of age.

There were approximately 366,000 main telephone lines serving a population of 2.8 million. Daily newspaper circulation was 62 newspapers per 1,000 persons. There were 13 television sets per 1,000 residents. Panama had six Internet service providers as of the year 2000.

President Torrijos died in a plane crash in 1981, but during his administration he elevated the National Guard to a position of supreme power in the state. The 1984 elections appeared to bring to fruition the process of political liberalization initiated in 1978. While civilian rule was officially restored, the armed forces remained the real power in the country. The news that the Defense Forces chief general Manuel Noriega rigged the 1984 elections surfaced in 1987. He was also accused of drug trafficking, gun running, and money laundering. Efforts by then-president Eric Arturo Delvalle and the United States failed to remove Noriega from power. U.S. troops ultimately invaded in 1989 after Noriega called elections to legitimize his government.

While there was a new leader in power, Panama was still experiencing the same problems. The country was characterized by extremes of wealth and poverty, and corruption was endemic. The economy was still closely tied to drug-money laundering, which has reached even higher levels than during Noriega's reign.

The 1989 U.S. invasion created anti-U.S. sentiment, which was reflected, for example, in the 1994 elections. Three-quarters of the voters supported politicians who had risen in opposition to the policies and politics (including economic sanctions) imposed on Panama by the U.S. invasion.

The elected president, Ernesto Pérez Balladares, an economist and businessman and a former supporter of Noriega, promised "to close the Noriega chapter" in that country's history (Goodwin 45). He supported privatization, development of the Panama Canal Zone, and restructuring of the foreign debt, and he designed initiatives to enhance tourism. However, he seemed to also have the authoritarian tendencies of Noriega; in 1998 he supported a constitutional change that would have allowed him to run for reelection. However, the Panamanians resound-ingly defeated his ideas in 1999. Mireya Moscoso won the 1999 elections, and became Panama's first woman president.

An active and often adversarial press and a broad range of print and electronic media outlets existed, including newspapers, radio and television broadcasts, and domestic and foreign cable stations. Six national newspapers, 4 commercial television stations, 2 educational television stations, and approximately 100 radio stations provided a broad choice of informational sources. All were privately or institutionally owned except for one government-owned television station. A 1999 law prohibited newspapers from holding radio and television concessions, and vice versa. While many media outlets took identifiable editorial positions, the media carried a wide variety of political commentaries and other perspectives, both local and foreign. There was a concentration of control of television outlets in the hands of close relatives and associates of former President Pérez Balladares, who was a member of the largest political opposition party.

In July 2000 the Panamanian legislative assembly passed a bill mandating that all school textbooks in Spanish be written by Panamanian authors. However, on August 1, the president vetoed the bill.

The most read newspapers in Panama were América Panamá, CríticaLa Prensa and El Siglo, all published in Panama City. There were also the weeklies Crítica Libre and La Crónica, as well as the dailies Dario el Universal de Panamá, El Panamá América, and La Estrella de Panamá (see or www.kidon. com for the Internet links). All of these were published in Spanish and based in the capital, Panama City.

La Prensa was created in 1980 to fight Panama's military dictatorship. It later became a thorn in the side of President Pérez Balladares because of its "take-no-prisoners muckraking of his government's officials," according to CPJ.

According to Law 22 from 1978, the publication of printed media was not subject to permits or licenses. It was only required that the Ministry of Government and Justice be notified about the name of the publication, how often it was published, where it would be printed, the names of the owners, and who would edit the paper.

Generally speaking, the constitution provided for the right of association, and it generally respected this right in practice. Panama allowed a Journalists' Union. All citizens had the right to form associations and professional or civic groups. Application for official acknowledgment as an association could be denied (as happened in 2000 with an informal gay rights organization), and might register instead as a nongovernmental organization.

Economic Framework

The Panamanian economy was based on the service industry, concentrated in banking, commerce, and tourism. Activities centered on the Panama Canal were the backbone of the national economy, and the canal was turned over to Panama on December 31, 1999 after U.S. ownership from its completion in 1914. The government relied heavily on the direct and indirect revenues generated by the canal, ignoring other types of national development. Much of Panama's economic success in the 1980s was the result of a strong service sector associated with the presence of a large number of banks, the Canal, and the Colón Free Zone. While a minority of U.S. citizens and military residing in the Canal Zone enjoyed a high standard of living, the average Panamanian lived in poverty. President Omar Torrijos became a national hero in 1977 when he signed the Panama Canal Treaties with the United States, which provided for full Panamanian control over the canal and its revenues in 1999.

The canal treaty provisions led to both optimism and concern. Officials were optimistic because they would inherit military bases, universities, ports, luxury resorts, and retirement communities. Others, however, worried about the estimated $500 million that the U.S. citizens and U.S. troops had poured in the Panamanian economy. By 1995, more than 300 poor, landless people a day were moving in the Canal Zone and were clearing forest for crops.

Mireya Elisa Moscoso de Arias, elected president on September 1, 1999, initiated some changes in economic and social policies, which directly affected freedom in the media. Her predecessor, Ernesto Perez Balladares Gonzalez Revilla, developed a rather liberal economic philosophy, attracting foreign capital, privatizing state institutions, establishing fiscal reform, and creating labor laws to stimulate employment. She opposed many of her predecessor's free-market policies and was critical of plans to further privatize state-owned industries. Her goals included issuing in a new era for Panama's poor, who constitute one-third of the population. Diversification of the economy was still needed, as Panama was overly dependent on canal revenues and traditional agricultural exports. Panama had a relatively high unemployment rate of 13 percent, which may have resulted from too much emphasis on the Canal Zone.

As is the case in most Latin American nations, Panama's constitution gave the state substantial power. It allowed the state to direct, regulate, replace, or create economic activities designed to increase the nation's wealth and to distribute the benefits of the economy to the greatest number of people. Moscoso had the constitutional authority to push for social changes, but the opposition dominated the legislature, which probably made the imposition of meaningful changes difficult.

Women gained the right to vote in 1940, and were granted equal political rights under the law. They also held a number of important public positions. However, women did not enjoy the same opportunities for advancement as their male counterparts in the domestic sphere. Panamanian law did not recognize community property. Therefore, divorced or deserted women had no protection and could be left destitute, if that were the will of their former spouses.

Press Laws

While theoretically free, the press and broadcast media experienced harassment from government officials and businesses. The Supreme Court ruled in 1983 that journalists did not need to be licensed by the government. Nevertheless, both reporters and editors still exercised a calculated self-censorship. Press conduct was regulated by the Commission on Morality and Ethics, whose powers were broad and vague. In 2001, some journalists complained that the government used criminal anti-defamation laws to intimidate the press and especially its critics.

Gag laws were an infamous element of the journalistic landscape and were a holdover from the military dictatorship. Moscoso repealed some of these gag laws implemented and enforced by Pérez Balladares. The first gag laws were introduced following a 199 coup. After that, a series of laws, decrees, and resolutions were used to stifle independent journalism in Panama. Law 11, for example, that prohibited the publication of false news, facts relating to a person's private life, or comments, references, and insinuations about a person's physical handicaps. Laws 67 and 68 gave government the authority to license journalists. (The licensing requirement was subsequently repealed.) Pérez Balladares, who left office in September 1999, promised on several occasions to repeal the laws. Instead, he used those gag laws to prosecute journalists who criticized his administration. The filing of legal actions against journalists remained an issue in the early 2000s.

Moscoso was required to submit a bill in 2000 that brought Panama's press laws up to international standards. One of the more notorious laws to be repealed was Decree 251, which authorized the National Board of Censorship. As of 2002, the pres laws provided for the establishment of a censorship board. The board monitored radio transmissions and had the authority to fine stations that violate norms regarding vulgar, profane, or obscene language.

To combat the intensification of prosecution of journalists, the Committee to Protect Journalists (CPJ) issued a letter on March 4, 1999, to the president urging him to repeal the laws. A month later, a government ombudsman published a report criticizing the "systematic and permanent campaign to silence, gag, and persecute journalists." Santiago Canton, the special rapporteur for freedom of expression of the Organization of American States, called the gag laws a "tool frequently used by public officials to silence their critics."

Perhaps in response, Pérez Balladares proposed onerous new provisions that masqueraded as an effort to reform the gag laws. CPJ wrote in a letter addressed to the president "expanding the legal means for repressing journalists is not a fitting legacy for a president who came to power pledging to strengthen Panamanian democracy."

The Inter-American Press Association noted the absence of Panamanian participants at its biannual meeting in March 2001. The Inter-American Commission on Human Rights (IACHR) delegation visited Panama in June 2001 and asked the president to eliminate all existing vestiges of them. In addition, the IACHR recommended that the OAS amend its report on the status of freedom of speech in Panama to emphasize the repressive attitude of the country's judicial system toward the media.

Some sources characterized Panama's press scene as a roller coaster and Moscoso's administration as a "onetwo punch" where it seemed that one year more freedoms for the press were being granted, while the following year they were being taken away. In July of 2001 Reuters news service reported that the special Rapporteur for freedom of expression from the Organization of American States had concluded a five-day visit to Panama and found "notable" gains in freedom of expression in the country's 10-year-old democracy.

The Rapporteur noted that "democratic advances in Panama contributed notably to the development of freedom of expression." He praised the abolishment of longstanding gag measures limiting media freedom in 1999. He also expressed concern regarding the "anachronistic" contempt laws that remained on the books more than a decade after the 1989 U.S. invasion ended 21 years of military rule.

However, the OAS 2000 report characterized the Moscoso Administration's approach toward freedom of expression as a setback, while the previous report characterized the country as making progress in this area. One of the most onerous press laws was article 386, which allowed the attorney general of the country to impose prison sentences of up to eight days for attacks against honor. In several cases he filed suit under article 175 of Panama's Penal Code, which states, "Whoever publishes or reproduces, in any media, offences to an individual's good reputation shall be penalized with 18 to 24 months in prison." The regulation had its basis in the Panamanian constitution, which held that "public servants who exercise authority and jurisdiction can pass sentences without due process according to the law, and impose fines." [emphasis added]. The judiciary system in Panama appears neither independent nor necessarily fair. The involvement of the attorney general in defamation cases indicated that conflicts of interest were not taken into account when the courts reached their decisions.

Some of the more notorious censorship cases in the late 1990s involved Attorney General Sossa and the papers El Siglo and La Prensa. In June of 2001, the Technical Judicial Police raided the offices of the daily El Siglo with orders to arrest its editor, Carlos Singares. Sossa ordered the action after the publication of an article whose contents allegedly violated and offended his "dignity, honor, and decency."

On the same day as the raid, El Siglo published an article in which a lawyer accused Sossa of frequenting a Panama City brothel. Sossa said that Singares was to be arrested and imprisoned under article 386 for eight days. The Supreme Court overruled Singares's appeal and upheld the eight-days sentence.

This particular case caused concern among the press and international rights organizations. First, the decision ignored the fact that a lower court had not yet ruled on the veracity of the lawyer's allegations in the El Siglo article. Secondly, there were fears over the failure to enforce a separation of powers. In this case, Sossa, who allegedly suffered at the hands of Singares, held the ultimate power over whether Singares should serve the sentence.

Singares's problems with the state continued when in August of 2000 the Second Superior Tribunal of Justice upheld a 20-month prison sentence against him for having allegedly defamed former President Pérez Balla-dares in 1993. The prison sentence was commuted to a US $1,875 fine. In most defamation and libel cases, jail sentences have been commuted to fines.

CPJ highlighted a July 2000 decision made by the Tenth Criminal Court, which sentenced journalist Jean Marcel Chery, from the newspaper Panamá América, to 18 months of incarceration. The sentence stemmed from criminal defamation charges due to a 1996 article in El Siglo, in which he reported that a woman accused law enforcement personnel of stealing $33,000 worth of jewelry in the course of a raid on an apartment. The appeal to the conviction for criminal libel and sentence of 18 months in jail or a fine of $1,800 was pending at the end of 2001.

Also in July, President Moscoso enacted Law 38 to restrict access to information in the country. Article 70 of the law regulated access to public information and stipulated "information which may be confidential or restricted for reasons of public or special interest, cannot be distributed, as doing so could cause serious harm to society the state, or the individual in question." This protected information is broad in scope, as it could relate to "national security, someone's health, political opinions, legal status, sexual orientation, criminal records, bank accounts and other such data which are of a legal nature." The intention seems to be to prevent information from surfacing that would embarrass public officials.

Violence against journalists continued. In one case in October 2000, an editor and photojournalist from the Liberación daily in Lima, were assaulted during an interview. They were interviewing Jaime Alemán, a lawyer for Vladimir Montesinos, the former intelligence officer to President Fujimori of Peru. The attorney threatened the reporters when they arrived. They were then attacked by six individuals who wrestled the camera away from them. The camera was later returned to the journalists.

Sometimes the charges of slander and libel were filed and judged without the defendant even knowing. One such case occurred on February 18, 1999, when Judge Raul Olmos held a preliminary hearing on charges of slander and libel filed against José Otero of Panama's leading daily, La Prensa, even though the journalist had not been notified. The suit was filed by a dentist who was incorrectly identified as being on the Health Ministry list of professionals who relied on false diplomas to practice in the field.

La Prensa, Panama's leading daily, and its associate editor, Goritti, a Peruvian citizen, were the target of other defamation suits brought by the Panamanian government. President Pérez tried to deport the editor in 1997, after La Prensa reported that a drug trafficker had helped finance the president's campaign. The president backed down under international and domestic pressure. Gorriti and Rolado Rodriguez, a reporter for the paper, were charged on January 20, 1998, with "falsification of documents, refusal to disclose the source of a story, and libel" and ordered to stand trial for alleging that Panama's attorney general had accepted laundered drug money.

Another 1996 article stated that Sossa received a US $5,000 check from a Colombian drug trafficker as a donation to his campaign for re-election to the attorney general's post. Goritti and Rodriguez refused to reveal their source for that story. Panamanian law protected the confidentiality of journalists' sources. The editor Gorriti called the move "an affront by a blatantly abusive prosecutor's office to try to compel journalists to identify a confidential source."

In 1999, an organization called Comité por la Libertad de Expresión en Panamá (Panamanian Committee for Freedom of Expression) posted flyers of Gorriti around Panama City that read (rather ironically), "Get to know the assassin of press freedom in Panama." He was accused of being a foreign spy.

Many Panamanians resented the prize-winning journalist for his revealing and confrontational investigative reports. In 1997, President Pérez Balladeres's administration tried to keep him out of Panama, refusing the journalist's application for renewal of a one-year work permit and serving him with deportation orders. However, bowing to international pressure, the government reversed its decision.

The defamation campaign appeared to have started after La Prensa published a series of articles in 1999 stating the suspicious links between the Panamanian attorney general, two U.S. drug traffickers, a naturalized Panamanian, and a local lawyer. La Prensa reported that other Panamanian journalists were offered money to write negative articles about the paper. The attorney general accused La Prensa 's editor of waging "a campaign of loss of prestige and lies" against him. The Frente de Abogados Independientes (Independent Lawyers Association) branded the editor a marked person and asked him to leave Panama. The association even claimed that the editor "is more than journalist. He's an infiltrated agent disguised as a journalist."

In another defamation case, a columnist and radio journalist was charged with defaming former national police director during a February 4, 1998, broadcast of the news program TVN-Noticias. During the broadcast, Bernal blamed the police for the decapitation of four inmates at the Coiba Island prison.

On December 28, 1998, Panamanian police raided the offices of La Prensa and attempted to arrest Herasto Reyes, an investigative reporter, according to the Committee to Protect Journalists. Journalists from around Panama City went to the newspaper's offices to stand in solidarity with Reyes. The police could not gain entry to the building as protesters blocked it. The police said they had orders to take Reyes to the prosecutors' office in connection with criminal defamation charges pending against him for defaming President Balladares in an August 1998 article in La Prensa. In the article, a former civilian member of Manuel Noriega's military dictatorship told Reyes that Pérez Balladares, who was a government official at the time, had tried to force him to cover up major financial woes. One of the results of La Prensa 's investigations into Sossa was that the Supreme Court urged that he be dismissed from his position.

Because of these existing cases against investigative journalists, in 2001 the Inter-American Committee on Human Rights recommended that the government change the existing legal process and place libel and slander under civil, rather than criminal, law. In September 2001 an OAS report on the status of freedom of speech in the hemisphere emphasized the repressive attitude of Panama's judicial system toward the media.

In July 2000, Bishop Romulo Emiliani left the Darien region following anonymous death threats; he had criticized publicly Colombian paramilitaries, guerrillas, and drug traffickers. He remained outside Panama. In 2000, there were at least 70 cases of journalists who had been accused of defamation under the criminal justice system. In March 2001, the president of the National Association of Journalists, the secretary general of the Journalists' Union, and the Editorial director of the daily newspaper El Panama America organized a protest in front of the Supreme Court to protest the Ministry of Justice's handling of freedom of speech issues. Over 100 journalists participated, maintaining that they were victims of harassment by the national government.

In 1998, Miguel Antonio Bernal, a respected journalist and human rights activists, challenged the constitutionality of the Penal Code provisions on which criminal defamation charges were based. The Supreme Court refused to hear his appeal.


During the 1999 presidential election, authorities banned the publication of electoral results until technical data had been registered. The daily El Panamá América, for example, was fined US$10,000 because it did not comply in due time with this requirement. The same code also banned the publication of opinion polls ten days before elections.

Press censorship has even influenced publication of political poll results. On April 22, 1999, La Prensa printed an opinion poll that showed then-opposition candidate Mireya Moscoso leading for the first time in the race for the May 2 presidential elections. Twenty thousand copies of the paper were purchased en masse by supporters of the government party, who paid distributors more than the sale price in an effort to hinder circulation of that day's edition, according to the then-editor of La Prensa.

State-Press Relations

According to the U.S. Department of State, the government of Panama generally respected the human rights of its citizens in 2001. The media reported that problems continued to exist in several areas, however. The Panamanian National Police (PNP) were suspected in the deaths of two men. Abuse by prison guards was a persistent problem of the prison system, where overall conditions remained harsh, with occasional outbreaks of internal prison violence. Prolonged pretrial detention still existed as did arbitrary detentions. The criminal justice system was considered inefficient and subject to political manipulation. The media were subject to political pressure, libel suits, and punitive action by the government. Violence against women remained a serious problem. Women held some high positions in government, including the presidency; however, discrimination against women persisted. Discrimination also persisted against indigenous people, blacks, and ethnic minorities (such as Chinese). Worker rights were limited in export processing zones (also known as free trade zones). Both child labor and trafficking in persons were problems.

Some estimates concluded that one-third of journalists faced criminal defamation prosecutions. Self-censorship became rampant, and even protests provoked by media stories of government injustice and corruption during the military years became subdued.

Domestic and foreign journalists worked and traveled freely throughout the country. The law required directors and deputy directors of media outlets to be citizens. One case presented below concerned a world-renowned journalist, editor Gottori of La Prensa, was denounced by the Panamanian attorney general who tried to deport him, based in part on his citizenship status. Foreign journalists needed to receive one-year work permits to carry out reporting in Panama. The weekly La Cáscara news had been closed and the three employees denounced for slander and libel.

The newspapers and radio stations were subjected to various repressive governmental acts. For example, on March 16, 2001, Rainer Tuñón, former journalist at Crítica, and Juan Díaz, from Panamá América, were sentenced to 18 months in prison, which was commuted to a fine of US $400, for a "crime against honor" after they published information about a magistrate.

Beyond gag laws, the government continued to use other methods that resulted in media censorship. For example, the government restricted access to information sources that could allege or divulge state secrets. It also prohibited publishing certain news such as the identity of people involved in crimes.

The International Journalists' Network made clear, however, that in Panama there was a combative press, created by journalists dedicated to the advancement of the profession and social change. Consequently, there was in the early 2000s a boom in investigative journalism of high quality in this country, a positive step towards achieving the higher levels of media freedom.

Attitude toward Foreign Media

Foreigners may work in Panama on a one-year work permit, assuming there are no Panamanians available to fill the post. Rescinding work visas has been one way the national government has censored some members of the press.

Broadcast Media

In December 31, 1999, after 58 years, the U.S. military forces withdrew from Panama and the Panama Canal was passed to Panamanian control. As a result, the U.S. military broadcast, the Southern Command Network (SCN), ended its radio and television transmissions. The SCN had provided news, sports, and entertainment to millions of Panamanians and Americans, and gained attention when it remained on the air in December 1989 during the U.S. military invasion of Panama City.

Radio and television acquisition require the prior permission of a frequency for which the solicitor must meet a series of technical requirements that vary according to the place where the transmitters and signal strength are located.

On July 5, 1999, the Gaceta Oficial de Panamá published a new radio and television law, which in its Article 54 made licensing for the radio and television broadcasters more stringent, thus restricting the freedom of press.

After SCN disbanded, those frequencies that had been left without ownership were put up for auction. Later frequencies to be appropriated for commercial uses were the Ente Regulador de los Servicios Públicos (ERSP), which was sold to Channel 7, and the company Telecomunicaciones Nacionales, S.A. (National Telecommunications, Inc.), which won the rights to television Channel 9 in the province of Panama.

Several radio stations could be heard through the Internet or have links to their stations through the Internet. These included, among others, Estereo Panamá, La Mega, WAO 97.5. A variety of formats from traditional music to newscasts were provided, primarily in Spanish.

Four television stations were linked to the World Wide Web: FE TV Canal 5, RPC TV, Telemetro Panama, and TV Nacional Canal 2. Both RPC TV and Telemetro Panama had Real Player videos on their Internet sites.

Electronic News Media

In the early 2000s, the use of personal computers and Internet was becoming available to more and more households considered to be in middle or high socioeconomic classes, as well as in schools, universities, and businesses.

There was no law that limited Internet access, and the majority of the newspapers and magazines in Panama had an electronic version. The news agency Panafax also had an Internet site, while the Panama Times was only accessed electronically. Panama News was an English language paper for the expatriate community, tourists, and Panamanians. It was considered a good source for rentals, housing, vacation tips, and related expatriate resources. Panamatravel was an Internet travel magazines about Panama, and many sites existed catering to expatriates living in Panama, business opportunities, and tourism promotion. It should also be noted that many indigenous groups were successful at using these media to promote their cultures, tourism in their territories, and their products.

There were also various international news channels that had links to information about Panama on the Internet. HeraldLink Panama covered Panamanian news from the Miami Herald newspaper. In addition, Reuters/ Infoseek, BBC online, and the Internet service provider Yahoo! provided information about the country.

Education & Training

Article 40 of Panama's constitution stated that "every individual is free to practice any profession or office subject to the regulations established by the law toward morality, social provisions and security, licensing, public health, and obligatory unionization" [author's translation]. The journalist or broadcaster may also possess an equivalent degree from a foreign universities and revalidated at the University of Panama (Law 67 from 1978). They could work in Panama with a work visa.

However, Article 7 of Title II, of a law proposed on June 7, 2001, established that a professional journalist must be a "Panamanian citizen with a degree in journalism, communications, or information sciences, granted by an accredited university and recognized by the University of Panama and registered before the Ministry of Education in the Registration Book of Professional Journalists of the Republic of Panama" [author's translation].

Decree 189 of 1999 imposed mandatory licensing on radio and television newsreaders in Panama. The country's Public Services Regulatory Body announced that it would start cracking down on violators of the law. Sources at the Public Services Regulatory Body told CPJ the government had asked all broadcast media owners to submit a list of all their newsreaders by April 1, 2002. Radio stations faced fines of up to US $500 per day for each unlicensed newsreader that appeared on the air. Television stations could be fined up to US $25,000 per day for the same offense.

After Decree 189 was adopted, newsreader license requirements included attending a six-week seminar open to anyone who had completed at least four semesters of any university degree program. More than 2,000 licenses had been handed out under this system, according to official sources. In the early 2000s, newsreaders had either to hold a university degree in a relevant field or attend an eight-month course at the University of Panama. The course was set to begin around June 2002. The executive director of the CPJ stated that "A press licensing regime compromises freedom of expression by allowing a limited group to determine who can exercise this universal right and who cannot." In 1985, the Inter-American Court of Human Rights ruled that mandatory licensing of journalists violated the American Convention on Human Rights.

The issue of requiring licenses for reporters was a point of contention on the Panamanian press scene, as it was in many countries in the region. The Interamerican Press Agency cited its disagreement with the bill presented by the Panamanian Journalists Union. The law stated that only those with a university degree in communications could engage in journalism. The president of the Commission on Freedom of Press and Information of the IAPA said that this initiative was a step backwards in assuring the freedom of journalists by trying to regulate newspaper activity.

If approved, the law would create a Superior Council of Journalism that could impose "moral sanctions" on broadcasters, reporters, and anyone else that committed ethical infractions. Beyond that, the press would have as its purpose the publication of the truth, which would be controlled through a body comprised of journalists and members of government. If the information divulged was found to be false, the reporter would be obligated to publicly acknowledge the source. The council would comprise representatives from local press organizations and include at least one press union official. It would also require identification cards for local journalists and be in charge of accrediting foreign correspondents. The bill also proposed the legal limitation of foreign journalists working in a medium. Foreign journalists could join a staff only when national journalists could not fill a position.

The IAPA worried that if this law was approved, it could undermine the accomplishments of the gag law repeals in December 1999. This new bill did not respect the 10 basic freedoms of expression and freedom of the press acknowledged in the Declaration of Chapultepec. Additionally, it contradicted aspects of the Declaration of Rights on Freedom of Expression from the Inter-American Court on Human Rights. All of these documents rejected mandatory licensing of reporters and the obligation of revealing information sources.

The Consejo Supremo de Periodismo de Panamá (Supreme Council of Journalism in Panama) drafted the original text. The president of the Panamanian Commission of Communication and Transportation assured that Law 127 constituted a subsequent effort to eliminate the infamous gag laws. However, not everyone was satisfied with this new law. Interestingly, students from the Faculty of Communications at the University of Panama asked that the law to be vetoed since they considered it harmful to the job market.


Panama has been influenced by U.S. presence since the construction of the Panama Canal in the early twentieth century, as well as authoritarian regimes during the middle and latter parts. Press freedoms in Panama have been characterized as a roller coaster and President Moscoso's administration as a "one-two punch." Both of these descriptions came from the fact that the freedom of expression was guaranteed, but the government continued to enforce defamation and libel laws, otherwise known as gag laws. In Panama, contempt and defamation laws have been the favored methods of the state to coerce and pressure journalists. The country still maintained some regulations that were created under dictatorships and, at times, fortified these old laws with an array of new ones. As a consequence, journalists in Panama faced long-term imprisonment for writing articles that exposed the actions and behaviors of those in power, even though Panama was considered a democratic, market-oriented nation. Journalists were subject to licensing and could be jailed for up to two years for defamation. The attorney general still had the right to jail journalists for eight days with no trial if he found cause.

While investigative journalism was of high quality in Panama, it remained to be seen whether that strength would continue in the face of self-censorship and economic downturns that were affecting much of the print media in Latin America.


Committee to Protect Journalists. Attacks on the Press 2001. Panama. ., 2002.

. Panama: Authorities seek strict press licensing regime., April 11, 2002. . Panama: Journalist goes on trial for defamation., May 13, 2002.

. The Americas 1999: Panama. ., 2002.

. The Americas 2001: Panama. ., 2002.

Fitzgerald, Mark. "Panama goes on press law 'reform'." Editor & Publisher, 132 (31): 6, 10, 1999.

Goodwin, Paul. Global Studies: Latin America, Peru. 10th ed. Storrs, CT: University of Connecticut, 2002.

Gorriti, Gustavo. "Tough journalism." New York Times, 146 (50897): A23, 1997.

International Journalists' Network. Country Profile-Panama., 2002.

. "Aprueban ley de periodismo en Panamá." IJNet, June 8, 2002.

. "SIP rechaza proyecto de ley contra la prensa en Panamá." (April 23, 2002).

IPI World Press Freedom Review. Panama., 2001, 2000, 1999, 1998.

"Panamanian Insults" (August 21, 2000). Editor & Publisher, 133 (34): 16-19, August 21, 2000.

U.S. Department of State. Country Reports on Human Rights Practices2001, Panama. , 2002.

Cynthia K. Pope

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Basic Data
Official Country Name: Republic of Panama
Region: North & Central America
Population: 2,808,268
Language(s): Spanish, English
Literacy Rate: 90.8%
Number of Primary Schools: 2,849
Compulsory Schooling: 6 years
Public Expenditure on Education: 5.1%
Foreign Students in National Universities: 708
Educational Enrollment: Primary: 371,250
  Secondary: 221,022
  Higher: 80,980
Educational Enrollment Rate: Primary: 105%
  Secondary: 69%
  Higher: 32%
Teachers: Secondary: 12,239
  Higher: 4,979

History & Background

Panama has a total area of 30,420 square miles and, as of 1998, a population of 2.77 million. The four largest cities are Panama City, San Miguelito, Colón, and David. The country is located between Costa Rica in Central America and Colombia in South America. The Spaniards first arrived in Panama in 1501, and Balboa discovered the Pacific Ocean when he visited the country in 1513. In 1821 Panama became free from Spanish rule but chose to be part of Colombia. In 1903 Panama won independence from Colombia with the help of the United States, which wanted to construct a canal linking the Pacific and the Atlantic oceans. From 1880 to 1900 the French had unsuccessfully tried to build a passage between the two oceans but the Americans succeeded, and the canal was opened on August 14, 1914. Panama signed a treaty with the United States, giving it rights to administer an area 10 miles wide and 50 miles long. The Canal Zone, as this strip of land was known, would play an important and controversial role in the country for most of the twentieth century. In 1977 General Torrijos signed two treaties that would determine the future of the Canal Zone. The canal was finally transferred to Panama on December 31, 1999.

Although the Panamanian governments operated under a constitutionally democratic framework from 1903 to the late 1960s, the military took over in 1968 and deposed elected President Arnulfo Arias, installing the commander of the National Guard, Omar Torrijos, as president. Torrijos died in 1981 and his notorious military successor, General Noriega, was indicted in 1988 for drug trafficking. In fact, Noriega surrendered to the United States and was sent to prison in Florida, where, as of 2001, he still serves a 40-year sentence.

The majority of the population (70 percent) is mestizo (a combination of Indian and Spanish). But there are sizeable numbers of whites (10 percent) and West Indian Blacks (14 percent). Among the indigenous populations (6 percent) there are seven distinct groups, which have pride in their separate languages and cultures and constitute nearly ten percent of the population.

Education began in Panama with the arrival of the Jesuit priests in 1519, the year the city of Panama was founded. Jesuits were in charge of the primary schools, and they founded a high school in 1744 and the University of San Javier in 1750. But this Institution of higher learning did not last long because in 1767 the Jesuits were expelled from the country. Education, as a national and governmental endeavor, did not prosper until after 1903. Panama was economically and politically dependent on the United States, and, as a result of American influence, education was given a national priority.

Primary and secondary education as well as adult literacy programs flourished during the twentieth century. Panama has one of the highest literacy rates in Central America. While the literacy rate was less than 10 percent at the beginning of the twentieth century, it grew to over 90 percent by the 1990s. In the 1990s more than 83 percent of students aged 10 to 14 attended schools.

Constitutional & Legal Foundations

The 1972 constitution, which, has been revised several times, establishes compulsory (and free) education between the ages of six to fifteen (article 91). While recognizing the right to private education, it grants the State the prerogative to supervise the curriculum and to intervene in private schools in order to help fulfill cultural and social goals and promote the best human, intellectual, moral, civic, and physical development of the students (article 90). Article 103 allows the teaching of the Roman Catholic religion in public schools, though students are not compelled to attend or participate in religious activities and ceremonies. Article 96 specifies that only Panamanian citizens teach national history and civic education in both public and private schools. Article 87 gives the right to parents to take an active role in their children's education. Articles 99 to 101 deal with University governance. Universities enjoy autonomy and academic freedom; they receive a generous budget, which, in turn, allows for a very low tuition. Article 102 recognizes the need for, and support of, special education programs while article 104 provides for educational programs for indigenous groups. Article 93 establishes State support for vocational educational programs, aimed at the working sector (educación laboral ).

Educational SystemOverview

The school year runs from April to December, and Spanish is the language of instruction. The duration of compulsory education is 11 years, including preschool education from four to five years of age. Panama has a high rate of literacy, exceeding 93 percent of the total population in the year 2000, though a high percentage of the indigenous people (four times as much as the national average) were illiterate in the 1980s. The educational budget is normally larger than the one allotted to other ministries.

After students successfully complete all six grades of primary school, they register for secondary school. The grading system is one to five and three is passing. If students do not pass a course, they must repeat it the next year. If they fail four or more courses within the same year or if they fail the same course twice consecutively, they cannot be promoted to the next level and are transferred to another school or to another class section within the same school.

Retention rates have been one of the biggest challenges facing the Panamanian educational system. Many students drop out when, after making progress in the primary grades and the first cycle of secondary education, they are forced to pay tuition to register for higher studies.

As stipulated in the 1972 Constitution, the government (and in practice, the Ministry of Education) regulates the school curriculum. In primary education students are taught science and mathematics, language and social studies as well as some elements of art and technology. The Ministry is in charge of writing the course syllabi and the textbooks.

The Panamanian government has established special education courses for handicapped children. The most well known special education center is the Instituto Panameño de Habilitación especial. This institution is vocational in nature and offers courses that help the handicapped pursue useful activities and acquire job related skills. There they learn activities that include, but are no limited to, sewing, cabinet making, binding, horticulture, and office work.

Preprimary & Primary Education

Students can attend school after attaining the age of three. Parents can choose from either public or private kindergartens but must pay fees. Preprimary school is not obligatory; it includes, and besides kindergartens, daycare centers. Some of the most well known preprimary centers are run by the Methodist affiliated Instituto Panamericano and by the Roman Catholic La Salle and Javier schools. The most popular centers are the daycare centers (Centros de Orientación Infantil Familiar COIF), which help students develop all areas of their personalities. An overwhelming percentage (over 80 percent) of the children who attend COIFs come from urban areas. The number of preprimary schools grew dramatically from 130 in 1970 to 1086 in 1996, while the number of students in preprimary education increased from 6,921 to 46,245 during the same time period.

Primary education lasts six years (ages 6 to 12). In the primary schools (2,900 of in 1999) students must learn natural sciences, social studies, Spanish, and English (compulsory). But the curriculum includes practical subjects as well, such as hygiene, agriculture, and artistic and manual studies. After successfully completing their studies they are awarded a certificate, which allows them to enter the first stage of secondary school or common cycle (ciclo común ). At the beginning of the 1990s there were 351,000 students who attended primary school.

Secondary Education

The ciclo común (ages 12 to 15) is equivalent to the American junior high school. In 1996 the number of students who attended the first level of education rose to 371,250. In 1997, over 31 percent of the education budget was earmarked for preprimary and primary education.

After completing the common cycle, students take an exam that allows them to enter a secondary school or academic cycle (ciclo académico ). The most well known secondary school at this level is the National Institute in Panama City. At the secondary school they spend three years (ages 15 to 18), after which they are required to pass a final examination to get a high school degree (bachillerato ). According to the chosen curriculum, students are awarded one (or more) degrees: sciences, arts, or business. Between 1990 and 1996 the total number of students enrolled in the second level of education rose from 196,000 to 221,022. In 1997 almost 20 percent of the education budget was used for secondary education. The government agencies in charge of secondary education are the Directorate of Professional and Technical Education and the Directorate of Secondary Education.

Higher Education

The first Panamanian University (the Royal and Pontifical University of San Javier) offered a curriculum heavily dependent on religion and theology. But this situation did not last long because the Jesuits, who founded the University in 1749, were expelled from Panama by royal order in 1767. The next institution of higher learning was the College of Istmo, founded in 1824 and closed in 1903, as Panamanians won their independence from Colombia. The University of Panama started in 1935 and was the only full fledged University until 1965, when the University of St. Mary started. By 2000 there were more institutions of higher learning: the Technological University of Panama, Nova University, University of Florida, Panama Canal College, Chiriquí Autonomous University, and the University of Istmo. The total number of institutions of higher learning is 14, and the number of students who attended them surpassed 91,000 in 1998.

The University of Panama is the leading institution of higher learning. It is composed of faculties, which are divided into schools; degrees are offered in medicine, law, architecture, education and other subjects. To enter the university students must have completed high school (bachillerato ) and passed entrance examinations. Students register for courses that apply to their chosen career; they have already fulfilled general education requirements in high school. After four year of studies, University students are awarded a bachelor's degree (licenciatura ). Further studies and the approval of a thesis enable students to obtain a Ph.D. (doctorado ).

As in many other countries, higher education in Panama does not guarantee job placement nor does it train students to master their chosen fields. Therefore, many students are opting out from the universities, either dropping out to get employment or registering for short-term vocational education programs.

Administration, Finance, & Educational Research

The overseeing body, the Ministry of Education, is divided into directorates that not only supervise primary and secondary programs but also regulate educationally related activities in the fields of adult and vocational studies, fine arts, planning, and teacher training programs. The Ministry has a complex bureaucratic structure that includes directorates for supervising vocational, literacy, adult, and technical education. In addition, it contains directorates of a more administrative nature that control budget and auditing activities. The state monitors private education and exercises control over its curriculum. Since 1975 public education has been radically decentralized and much authority has been shifted to the ten provincial directorates.

The constitution gives education budgetary priority, and the government allows certain taxes to be used for educational programs. In the 1930s one-fourth of the government budget went to education and in 1998 the government spent 7.1 percent of the GDP on education. In 1997 expenditures were distributed as follows: preprimary and primary education (31.1 percent), secondary (19.8 percent), and higher education (26.1 percent).

Besides the Ministry of Education, other institutions play a key role in the administration of public education. They include the National Institute of Culture, the Institute of Special Rehabilitation, and the Institute for Training and Development of Human Resources as well as the National Institute of Sports.

Academic and scientific research is not a high priority in Panama. The Ministry of Education encourages research to upgrade the curriculum and to introduce new methodologies and technologies in the classroom. However, politics and the bureaucracy that permeate these efforts thwart implementation.

Nonformal Education

Panama boasts the best literacy rate in Central America (90 percent in the late 1990s). Adult education serves those who could not finish primary or secondary school and/or those who are functionally illiterate. It provides training by offering vocational courses. Panama's aggressive adult education programs are offered in over five hundred centers, including penitentiaries. Courses for workers (educación laboral ) are very popular and give incentives for professional development and promotions. Also, adults can enroll in schools and institutes that offer technical and vocational studies. After spending from two and a half to three years in school, graduates become technicians (técnicos ) and are qualified for better jobs. Or adults can take courses that enable them to get jobs sooner, rather than later, in the fields of banking, commerce, or office work. Older students can take advantage of distance education by enrolling in University programs. The Universidad Interamericana de Educación a Distancia offers distance education. The Instituto Nacional para la Formación Profesional was created during the Pérez Balladares government and offers vocational training with funding from private businesses.

Teaching Profession

Normal schools for secondary teachers started when Panama was becoming an independent country (1903). Currently, prospective teachers obtain their teaching certificate (Certificado de Maestro Normal ) after successfully completing a three-year program. They attend a teaching training college (Escuela Normal ) after finishing their secondary education. Secondary teachers must attend a university for four to five years and, if successful, after a year of further study, will be awarded a secondary teaching degree (Título de Profesor ).

The Ministry of Education evaluates teacher performance annually. The evaluators include the principal, the supervisor, and the provincial director. Teachers themselves submit self-evaluations.


The 1970s educational reforms yielded positive results as literacy rates increased, the dropout rate decreased and more educational opportunities became available in the rural areas where many students were exposed to agricultural technology and the business market. In the 1980s and 1990s the forces of reform took a back seat as conservative politics dominated the country. In the immediate future, Panama has to attract better teachers and offer more educational opportunities for students living in the rural and poorest areas. It has to provide more technology and promote the use of the Internet in the classroom.


Culiolis Bayard, Andrés. 500 años de educación en Panamá. Panamá: Editora Escolar, 1992.

Meditz, Sandra W. and Dennis M. Hanratty. Panama, a Country Study. Washington: United States Government, 1989.

Soto Blanco, Ovidio. La educación en Centroamérica. San Salvador: Publicaciones de la Secretaría General de la Oraganización de Estados Centroamericanos, 1968.

Tello Burgos, Argelia. "Sinopsis del desarrollo de la educación en Panamá dentro del contexto histórico de la república." Panamá, 90 años de República, vol II, 209-250. Panamá: Instituto Nacional de Cultura, Presidencia de la República, 1993.

World Higher Education Database 2000. Available from http://www.usc.dept/.

Jorge Rodríguez-Florido

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Official name: Republic of Panama

Area: 78,200 square kilometers (30,193 square miles)

Highest point on mainland: Volcán Barú (3,475 meters/11,401 feet)

Lowest point on land: Sea level

Hemispheres: Northern and Western

Time zone: 7 a.m. = noon GMT

Longest distances: 772 kilometers (480 miles) from east to west; 185 kilometers (115 miles) from north to south

Land boundaries: 555 kilometers (345 miles) total boundary length; Colombia 225 kilometers (140 miles); Costa Rica 330 kilometers (205 miles)

Coastline: 2,490 kilometers (1547 miles)

Territorial sea limits: 22 kilometers (12 nautical miles)


Panama is an isthmus in Central America, a narrow strip of land that connects the larger land masses of Costa Rica and Colombia. The country lies between the Caribbean Sea and the Pacific Ocean. With a total area of about 78,200 square kilometers (30,193 square miles), the country is slightly smaller than the state of South Carolina. Panama is administratively divided into nine provinces and one territory.


Panama has no outside territories or dependencies.


Panama has a tropical climate with temperate areas at the higher elevations of 700 to 1,500 meters (2,297 to 4,921 feet). There are two seasons: a rainy "winter" from May through December, when humidity is 90 percent to 100 percent, and a drier "summer" from January through April, when the northeast trade winds arrive. Panama's average temperature is 29°C (84°F) on the coasts and 18°C (64°F) in the highlands.

Rainfall patterns are different on Panama's Caribbean and Pacific coast regions. The Caribbean coast and mountain slopes get rain throughout the year, receiving from 150 to 355 centimeters (59 to 140 inches) annually. The Pacific coast experiences a more distinct dry season and has annual rainfall of 114 to 229 centimeters (45 to 90 inches).

From year to year, Panama has considerable variation in the amount of rainfall, since the country is affected by El Niño and La Niña weather patterns. Panama is not in the path of Caribbean hurricanes.


Panama, an S-shaped isthmus, divides the Pacific and Atlantic Oceans. The country's narrowest point is just 48 kilometers (30 miles) across, and its widest is 185 kilometers (115 miles).

Two parallel mountain ranges traverse Panama; between the mountains are valleys and plains. The highest lands are toward the Costa Rican border; the interior of the country, where the Panama Canal is found, has the lowest elevation.

Panama is seated on the Caribbean Tectonic Plate, but just offshore there are three other plates that bump into the Caribbean Plate: the Cocos Plate to the west, the Nazca Plate to the south, and the South American Plate to the southeast. During the Miocene Epoch, these plates collided, causing the Isthmus of Panama to rise out of the ocean. As the plates kept pushing against one another, the mountain ranges and volcanoes of Panama also rose. Today, the continued interaction of the Cocos, Nazca, and Caribbean Plates causes frequent earthquakes in Panama. Its volcanoes, however, have not erupted in hundreds of years.


Seacoast and Undersea Features

The Pacific Ocean lies to the south of Panama while the Caribbean Sea (an extension of the Atlantic Ocean) is to the north. Coral reefs are found along the coastlines; one notable example is the protected coral reef at Isla Bastimentos National Park of Bocas del Toro. This reef, located off the northwestern coast, serves as a nesting site for sea turtles. Panama claims the seabed of the continental shelf, which has been defined by the country to extend to the 500-meter submarine contour.

The waters of Panama's Pacific coast, especially within the Gulf of Panama and the Gulf of Chiriquí, are extremely shallow (with depths less than 180 meters/590 feet), with extensive mud flats. Because of this, the tidal range in this area is extreme. The tidal range (the difference in sea level between high and low tide) on the Pacific coast exceeds 700 centimeters (275 inches), while on the Caribbean coast it is only 70 centimeters (27 inches).

Sea Inlets and Straits

The Caribbean coastline is marked by several good natural harbors; however, Cristóbal, near the Panama Canal, is the only one with significant traffic. The major port on the Pacific is Balboa.

From the Costa Rica border to the west, Panama's Caribbean coastline is indented by the Chiriquí Lagoon, and then by the broad Mosquito Gulf, before curving north to the city of Colón and the port of Cristobal on Limon Bay, which is the Caribbean entrance to the Panama Canal. Past the Canal, this coast sweeps south to the Gulf of Darién (Golfo del Darién) and the border of Colombia.

On Panama's Pacific coast, the Gulf of Chiriquí lies between the southwest Point Burica on the Burica Peninsula and the Azuero Peninsula (Peninsula de Azuero). The Gulf of Panama, the largest of the country's Pacific inlets, contains Panama Bay at its apex. There, the capital, Panama City, marks the Pacific entrance to the Panama Canal. The Gulf of Panama is indented on the west by the Gulf of Parita, and on the east by the Gulf of San Miguel, where rivers flow down from the highlands of Darién.

Islands and Archipelagos

On the Caribbean side, the 366-island San Blas Archipelago stretches for more than 160 kilometers (100 miles) down the eastern Panama coast. The Bocas del Toro Archipelago extends along the west of Panama to the border of Costa Rica.

The Pacific coast has many more offshore islands than the Caribbean. Within the Gulf of Panama are the Pearl Islands, Isla Del Ray, and Contadora Island. Coiba, Panama's largest island at 271 square kilometers (104 square miles), sits in the Gulf of Chiriquí along with Jicarón Island, Cébaco Island, Parida Island, and hundreds of much smaller islands and islets.

Coastal Features

The Burica Peninsula is located at the western edge of the Pacific coastline. The Azuero Peninsula juts out into the Pacific and separates the Gulf of Chiriquí from the Gulf of Panama. Point Malta is located on the southeast corner of the Azuero Peninsula.


Gatún Lake, formed by damming the Chagres River, is Panama's largest lake, with an area of 418 square kilometers (161 square miles). Located in the center of Panama at 26 meters (85 feet) above sea level, Gatún Lake is an important bird habitat and includes the Barro Colorado wildlife refuge. Gatún Lake and Lake Alajuela (also known as Lake Madden) are supplied by rainwater and provide the water for the Panama Canal and the drinking water for Panama City. Lake Chepo is another large reservoir in central Panama.


Panama has more than five hundred rivers, most of which are quite short. Rivers flowing into the Pacific include two of equal length that both are the longest rivers on the country. The Chucunaque and the Chepo are each 215 kilometers (134 miles) long. The Chepo has been dammed to produce hydroelectric power. Other rivers with Pacific outlets are the Santa Maria (168 kilometers/104 miles), Chiriquí Viejo (161 kilometers/100 miles), and the Tuira (127 kilometers/79 miles).

More than 150 rivers draining into the Caribbean, including the Chagres (125 kilometers/78 miles), Changuinola (110 kilometers/68 miles), Indio (92 kilometers/ 57 miles), and Cricamola (62 kilometers/38 miles). There is a hydroelectric dam on the Chagres, which has its source in mountain cloud forest. The Chagres waters run into Lakes Gatún and Alajuela.


There are no desert regions in Panama.


Some regions of natural savannahs exist on Panama's Pacific coast. There are also cattle ranches on the country's central plains, where most of the pastureland is located. Invasive grass species have taken hold in areas deforested by burning and in abandoned pastures.


As much as 30 percent of Panama's land is under some degree of official protectionas forest reserves, national parks, or wildlife refuges. Darién National Park is an UNESCO World Heritage Site and Biosphere Reserve extending along most of Panama's border with Colombia. The park's 5,970 square kilometers (2,305 square miles) of mountains and river basins are covered with primary and secondary tropical rainforests, dwarf and cloud forests, and wetlands. Darién National Park is home to jaguars, ocelots, giant anteaters, tapirs, howler monkeys, and many other wildlife species.

In Panama, there are three sites that have been designated as Wetlands of International Importance under the Ramsar Convention on Wetlands. Punta Patino in Darién (where there are extensive swamps) is a private nature reserve on a coastal plain with mangroves, salt flats, and reefs; it also is a seabird habitat. The Golfo de Montijo on the Pacific coast is a complex of coastal marshes, mangrove forests, and seasonally flooded grassland. San San-Pond Sak, in Bocas del Toro on the Costa Rican border, is a river basin complex of shallow lakes, mangrove forests, and peat bogs. It is an important bird habitat.

Hills dominate Chiriquí Province in the west, particularly in the Boquete district, where coffee is grown on the hillsides. The Azuero Peninsula and much of the country's center are hilly and are occupied by farming communities.


A spine of mountains formed by an undersea volcanic chain divides Panama into its Pacific and Caribbean (Atlantic) regions. These two main ranges are the Serrianía de Tabasará in Panama's west and the Cordillera de San Blas in the east. A gap between them in the center of the country is where the Panama Canal was built. A third mountain system, Cordillera Talamanca on the Costa Rican border, contains Volcán Barú (formerly known as Volcán Chiriquí). It is the highest point in Panama at 3,475 meters (11,401 feet). The peak of Barú, a long-extinct volcano, has views of both the Pacific and Caribbean on clear days. In the east, there are three other smaller mountain ranges. The Majé Mountains run parallel to the Gulf of Panama shore. Entering Panama from Colombia along the Pacific and Caribbean coasts, respectively, are the Sapo Mountains and the Darien Mountains.

The tropical rainforests on the Caribbean region mountain slopes, particularly in the Darién region near Colombia, have an extremely high level of biodiversity, with species from both North and South America. In addition to the rainforests, there also are dwarf forests and cloud forests in the mountains.


The rugged terrain of western Panama contains narrow river canyons. Erosion has carved gorges in Darién, the thickly forested region in the east.

Though not fully explored, the Cerro Colorado copper mine in Chiriquí Province has the potential to be one of the largest copper mines in the world. Another copper mine is located west of Panama City in Petaquilla.


The El Santuario Plateau rises 400 meters (1,212 feet) in the Boquete district of Chiriquí Province, near the border with Costa Rica.


Since its opening in 1914, the Panama Canal has been an extremely important link between the Pacific and the Atlantic Oceans. Before the canal was built, ships carrying passengers and goods between the western coasts of North and South America and Europe had to travel all the way around the coast of South America to reach their destination. French and American companies built the canal, beginning its construction in 1881. The Panama Canal route shortens a boat trip from New York to San Francisco by an incredible 7,872 miles.

The canal channel is 82 kilometers (51 miles) long, with entrances at Limón Bay on the Atlantic side and the Bay of Panama on the Pacific side. A ship entering Limón Bay is raised by a set of three locks (known as the Gatún Locks) to an elevation of 25.9 meters (85 feet) above sea level. It then crosses Gatún Lake and a stretch known as the Gaillard (formerly Culebra) Cut before reaching the Pedro Miguel Lock, which lowers the ship into Miraflores Lake. Once across Miraflores, a set of two locks (known as the Miraflores Locks) lowers the ship to sea level. On the return trip, the ship undergoes the same process in reverse. It takes about eight to ten hours for a ship to complete its passage through the canal.

A number of dams have been constructed in order to regulate the flow of water through and around the canal. The Gatún Dam on the Chagres River created Lake Gatún. The dam was built with soil and rock that was excavated as the canal was being built. The two Mira-flores Dams created Miraflores Lake. One of them is an earth-fill dam. The other was made of concrete. An earth-fill dam near the Pedro Miquel Lock helps to regulate the water used in its operation.

The United States government owned and operated the canal and the area surrounding it (known as the Canal Zone) until December 31, 1999. On that date, the U.S. government turned over the entire operation to Panama.



Espino, Ovidio Diaz. How Wall Street Created a Nation: J.P. Morgan, Teddy Roosevelt and the Panama Canal. New York: Four Walls Eight Windows, 2001.

Friar, William. Adventures in Nature: Panama. Emeryville, CA: Avalon Travel Publishing, 2001.

Rau, Dana Meachen. Panama. New York: Children's Press, 1999.

Ventocilla, Jorge, et al. Plants and Animals in the Life of the Kuna. Austin: University of Texas Press, 1995.

Web Sites

Canal Museum Online. (accessed May 6, 2003).

Smithsonian Tropical Research Institute. (accessed May 6, 2003).

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Panama (country, Central America)

Panama (păn´əmä´), Span. Panamá, officially Republic of Panama, republic (2005 est. pop. 3,039,000), 29,760 sq mi (77,081 sq km), occupying the Isthmus of Panama, which connects Central and South America. To the west and east of Panama, respectively, are Costa Rica and Colombia; the Panama Canal bisects the country. The capital and largest city is Panama City.

Land and People

In the west are rugged mountains (Volcán Barú is 11,401 ft/3,475 m high) of volcanic origin, which yield in the middle of the country to low hills; there is a low mountain range in the east. Lowlands line both the Caribbean and Pacific coasts, and there are numerous offshore islands. The climate is generally tropical with abundant rainfall. Colón, a major port, is the second largest city, and David is the third largest city. More than half the population is urban. The population is primarily mestizo, although the building of the canal brought large numbers of people from the West Indies and other parts of the world, many of whom stayed and intermarried with the indigenous population. Spanish is the official language, and many Panamanians also speak English. About 85% of the population is Roman Catholic; there is a Protestant minority.


Panama's economy has become largely service-based, with the operation of the Panama Canal, banking, insurance, container ports, flagship registry, and tourism all playing important roles. Less than a quarter of the land is used for agriculture. On the upland savannas cattle are grazed and subsistence crops such as rice, corn, coffee, and sugarcane are grown. Bananas are grown on the Pacific coast. The country has various light industries, including construction, brewing, and sugar milling. The Colón Free Zone, established in 1953, is a center for foreign investment in manufacturing.

Bananas are the leading export, followed by shrimp, sugar, coffee, and clothing. Capital goods, foodstuffs, consumer goods, and chemicals are imported. Much of the trade is with the United States. In recent years the country has become a nexus for the shipment of illegal drugs from Colombia to the United States, as well as a center for drug-related financial transactions.


Panama is governed under the constitution of 1972 as amended. Executive power is held by the president, who is both head of state and head of government and is popularly elected for a five-year term. A person may serve three terms as president. The unicameral National Assembly has 78 members who are also elected for five years. Administratively the country is divided into nine provinces, plus an autonomous territory for indigenous people.


Early History and Spanish Control

Panama was densely inhabited by different indigenous peoples before the arrival of the Spanish. The first European sighting of Panama was by the Spaniard Rodrigo de Bastidas in 1501, and Columbus dropped anchor off the present-day Portobelo in 1502. Martín Fernández de Enciso and Diego de Niuesa failed in their efforts at colonization in Darién. Vasco Núñez de Balboa established the first successful colony in 1510 and became governor of the region. The indigenous population was soon devastated by the Spanish and by the diseases they carried from Europe.

In 1513, Balboa made his momentous voyage across the isthmus to the Pacific, thus highlighting the dominant factor in the nation's history—the short distance from sea to sea. Under the governorship of Pedro Arias de Ávila, Panama City was founded (1519). Soon the isthmus became the route by which the treasures of the Inca empire were transferred to Spain, attracting the unwelcome attention of English buccaneers—such as Sir Francis Drake, William Parker, Sir Henry Morgan, and Edward Vernon—who swooped down on the gold-bearing galleons and the treasures of Portobelo. Panama was subordinated to the viceroyalty of Peru and remained in this status until 1717, when it was transferred to New Granada.

Attempts at Scottish settlement in the Darién Scheme of the 17th cent. failed wretchedly. With the decline of the Spanish Empire, Panama lost much of its importance in the carrying trade. Panama became a part of independent Colombia in 1821. Its significance as a crossroad was enhanced again when U.S. settlers bound for Oregon and the goldfields of California passed through Panama. W. H. Aspinall built (1848–55) the Panama RR, and the question of a canal across the isthmus became paramount. The project ultimately led to a revolution against Colombian sovereignty and the establishment of Panama as a separate republic (see Panama Canal).

Independence, the United States, and the Canal

The new state, proclaimed in Nov., 1903, was under the aegis of the United States, and the canal and American interests in it became the determinants of Panama's history. The Hay–Bunau-Varilla Treaty with the United States established the Panama Canal Zone, controlled by the United States, and authorized U.S. intervention in Panamanian affairs if necessary to protect the zone. The internal politics of the republic have been stormy, with frequent changes of administration. U.S. forces were landed in 1908, 1912, and 1918. A controversial figure in Panamanian politics was Arnulfo Arias who was elected president in 1940 and ousted a year later for being pro-Fascist. He seized power in 1949 but was overthrown in 1951. José Antonio Remón, elected in 1952, was assassinated in 1955; Ernesto de la Guardia, Jr., inaugurated the following year, survived disturbances in 1958 and 1959.

In the meantime, a new canal treaty was concluded in 1955, as political unrest developed in Panama over the Canal Zone issue. In 1958 and again in 1960 further steps were taken to assuage Panamanian discontent by establishing uniform wages and employment opportunities in the Canal Zone and by reaffirming Panama's titular sovereignty over the zone. Roberto F. Chiari, a conservative landowner, was elected president in 1960. Marco A. Robles defeated Arias for the presidency in 1964. When U.S. high-school students illegally displayed an American flag in the Canal Zone (Jan., 1964), serious riots broke out. Diplomatic relations between Panama and the United States were briefly suspended. New treaties were negotiated (1967), providing for Panamanian sovereignty over the Canal Zone, joint operation of the canal, and possible construction of a new, sea-level canal, but Panama refused to ratify them (1970).

In early 1974 Panama and the United States agreed in principle for the first time to the eventual end of U.S. jurisdiction over the canal and the Canal Zone. Arias was again elected president in Oct., 1968, but was deposed 11 days later in a military coup. Gen. Omar Torrijos Herrera emerged as the dominant figure shortly thereafter. Torrijos conducted enormous public works projects that gained him considerable popularity while plunging the country into debt. In 1977, he concluded a treaty with the United States that provided for a gradual transfer of jurisdiction over the Canal Zone and the canal to Panama by the end of 1999. A second treaty guaranteed the permanent neutrality of the canal.

The Noriega Years and Modern Panama

After the death of Torrijos in a plane crash in 1981, Colonel Manuel Antonio Noriega Moreno slowly gained power, and in 1983 he took complete control of the national guard and of the country. Throughout the 1980s Noriega manipulated elections, ruling Panama through presidents who were mostly mere puppets. In 1987 a former officer of the Panamanian Defense Force (the expanded National Guard) publicly accused Noriega of ordering the murder of a prominent political opponent, manipulating election results, and engaging in drug smuggling with Colombian drug producers. As a result, the United States imposed strict sanctions that severely damaged Panama's economy and resulted in large protests against Noriega in Panama City.

On Dec. 15, 1989, the Panamanian legislature declared Noriega president and proclaimed that the United States and Panama were in a state of war. The same day a U.S. marine was killed by Panamanian soldiers. On Dec. 20, the United States attacked Panama City with a combined military force of more than 25,000 soldiers in an effort to remove Noriega from power.

Noriega surrendered on Jan. 3, 1990, and was taken to the United States, where he was later tried, convicted, and jailed on charges of drug trafficking. Guillermo Endara Galimany, elected to the presidency in May, 1989, but prevented by Noriega from taking office, was sworn into office during the invasion. The invasion resulted in considerable loss of life as well as significant damage to Panama City. In 1994, Ernesto Pérez Balladares, a former associate of Torrijos and the candidate of the political party that had once supported but later repudiated Noriega, won the presidential election. He introduced a sweeping economic reform plan and pledged to fight corruption and drug trafficking. In Oct., 1994, the constitution was amended to abolish Panama's military.

Mireya Moscoso Rodríguez, a coffee company owner and the widow of Arnulfo Arias, was elected president in 1999. The son of Gen. Omar Torrijos, Martin Torrijos Espino, who had lost to Moscoso in 1999, was elected president in 2004. In 2006 Panamanian voters approved an expansion of the Panama Canal that would add an third, larger set of locks to the existing canal; construction is planned for 2008–14. The presidential election in May, 2009, was won by Ricardo Martinelli, one of Panama's wealthiest persons; a pro-business conservative, he was the candidate of the multiparty Alliance for Change. Juan Carlos Varela, a conservative businessman and Martinelli's vice president (from the Panameñista party) but an opponent of the president from 2011, was elected president in May, 2014.


See L. L. Pippin, The Remón Era: An Analysis of a Decade of Events in Panama, 1947–1957 (1964); D. A. Howarth, Panama: Four Hundred Years of Dreams and Cruelty (1966); R. F. Nyrop, ed., Panama: A Country Study (1981); R. M. Koster, In the Time of the Tyrants: Panama, 1968–1990 (1990); A. S. Zimbalist, Panama at the Crossroads (1991); K. Buckley, Panama: The Whole Story (1991). See also bibliography under Panama Canal.

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77,080sq km (29,761sq mi)



capital (population):

Panama City (463,093)


Multiparty republic

ethnic groups:

Mestizo 60%, Black and Mulatto 20%, White 10%, Native American 8%, Asian 2%


Spanish (official)


Christianity (Roman Catholic 84%, Protestant 5%), Islam 5%


Balboa = 100 cents

Republic on the Isthmus of Panama, connecting Central and South America; the capital is Panama City.

Land and climate

The narrowest part of Panama is less than 60km (37mi) wide. The Panama Canal cuts across the isthmus. The Canal has given Panama great international importance, and most Panamanians live within 20km (12mi) of it. Most of the land between the Pacific and Caribbean coastal plains is mountainous, rising to 3475m (11,400ft) at the volcano Barú. Panama has a tropical climate, though the mountains are much cooler than the coastal plains. The rainy season is between May and December. The Caribbean side of Panama has about twice as much rain as the Pacific side. Tropical forests cover c.50% of Panama. Mangrove swamps line the coast. Subtropical woodland grows on the mountains, while tropical savanna occurs along the Pacific coast.


Christopher Columbus landed in Panama in 1502. In 1510, Vasco Núñez de Balboa became the first European to cross Panama and see the Pacific Ocean. The indigenous population was soon wiped out and Spain established control. In 1821, Panama became a province of Colombia. The USA exerted great influence from the mid-19th century. After a revolt in 1903, Panama declared independence from Colombia. In 1904, the USA began construction of the Panama Canal, and established the Panama Canal Zone. Since it opened in 1914, the status of the Canal has dominated Panamanian politics. US forces intervened in 1908, 1912, and 1918 to protect US interests. Panama has been politically unstable throughout the 20th century, with a series of dictatorial regimes and military coups. Civil strife during the 1950s and 1960s led to negotiations with the USA for the transfer of the Canal Zone. In 1977, a treaty confirmed Panama's sovereignty over the Canal, while providing for US bases in the Canal Zone. The USA agreed to hand over control of the Canal on December 31, 1999. In 1979, the Canal Zone disestablished. In 1983, General Noriega took control of the National Guard and ruled Panama through a succession of puppet governments. In 1987, the USA withdrew its support for Noriega after he was accused of murder, electoral fraud, and aiding drug smuggling. In 1988, the USA imposed sanctions. In 1989, Noriega annulled elections, made himself president, and declared war on the USA. On December 20, 1989, 25,000 US troops invaded Panama. Noriega was quickly captured, and taken to the USA for trial. Pérez Balladares became president in 1994 elections. In 1999, Mireya Moscoso, Panama's first woman president, succeeded Balladares.


The Panama Canal is a major source of revenue, generating jobs in commerce, trade, manufacturing and transport (2000 GDP per capita, US$6000). After the Canal, the main activity is agriculture, which employs 27% of the workforce. Rice is the main food crop. Bananas, shrimps, sugar, and coffee are exported. Tourism is also important. Many ships are registered under Panama's flag, due to its low taxes.

Political map

Physical map


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Panama (city, Panama)

Panama, city (1990 pop. 584,803), central Panama, capital and largest city of Panama, on the Gulf of Panama. Founded in 1519 by Pedro Arias de Ávila, the city flourished in early colonial times as the Pacific port of transshipment of Andean riches to Spain. After it was destroyed in 1671 by Sir Henry Morgan, it was refounded (1673) 5 mi (8.1 km) west on a rocky peninsula. The city declined as the Andean sources of gold disappeared but revived briefly during the California gold rush and the building (1848–55) of the trans-Panama railroad. Construction of the Panama Canal brought assured prosperity, and American sanitary measures and disease control made Panama a clean and healthful tropical city. The political, social, and cultural nucleus of the nation, it expanded rapidly after World War II into a polyglot metropolis, creating new residential districts, improved recreational facilities, and such educational centers as the Univ. of Panama (founded 1935), important because of its inter-American organization and curriculum. Panama City is no longer a port; commerce is handled through neighboring Balboa. Although the city has a diverse manufacturing base, its primary economic activities are providing services for the canal employees and serving as a center for international banking. The city has had a reputation as a drug transshipment point between South America and the United States and as a center for money-laundering. In Dec., 1989, Panama City was invaded by U.S. troops (see Panama), resulting in serious municipal damage and substantial civilian casualties. Panama City continues to experience rapid growth and ensuing social problems.

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Culture Name


Alternative Names

Panameño (Spanish)


Identification. The Republic of Panama is a former Spanish colony in Central America with a mixed population of Creoles, mestizos, European immigrants, Africans, and indigenous Indians.

Location and Geography. The country is a natural land bridge connecting the South American continent with Central America. The isthmus runs east-west in the form of an inverted "S." Low mountains run through most of the country, leaving a gap in the center that is nearly at sea level. The Pacific coastline, with the Azuero Peninsula jutting south to define the Gulf of Panama, is longer than the Atlantic coastline. The area of the country is 25,590 square miles (74,046 square kilometers).

Demography. In 2000, Panama had approximately 2.816 million inhabitants, 700,000 of whom lived in Panama City, with another 300,000 in the immediate suburbs. The urban elite is primarily Creole, mostly of Spanish descent. There are also populations of Spanish, Italian, Greek, and Jewish origins. There is a longtime Chinese community, and a small Hindu community lives in the capital, Panama City. The largest demographic group is the interioranos ("interior people"), who are classified as "Hispano-Indians." This group is largely mestizo (mixed European and native American), and its members consider themselves the "real Panamanians." Some interioranos grade imperceptibly into an acculturated native American population known pejoratively as cholos, who refer to themselves as naturales ("natives"). Together, these two groups constitute 70 percent of the population. There are four officially recognized Indian ethnic groups (the Kuna, Guaymi or Ngawbe, Embera, and Waunan), which number fewer than 200,000. People of African descent account for 15 percent of the population. These "Afro-colonials" descend from slaves who were imported in colonial times. They speak Spanish and are Roman Catholic. The "Afro-Antillean" group descends from Caribbean residents who came to work on the construction of the Panama canal. They speak English, French, or an English patois at home and are mostly Protestant.

Linguistic Affiliation. The official language is Spanish, but English is used widely in business, especially banking and tourism, and by some people of African descent.

Symbolism. Some coins bear the image of Urraca, an Indian chief who resisted the Spanish conquests, but most coins depict Vasco Nuñez de Balboa, the discoverer of the Pacific Ocean.

History and Ethnic Relations

Emergence of the Nation. Panama became an autonomous nation because of its function as the custodian of the transisthmus shipping routethe "path between the seas." It gained independence in 1903 as part of an American-sponsored revolt against Colombia that led to the signing of a treaty granting the United States the right to build the Panama Canal.

The Spanish discovered and conquered Panama between 1502 and 1519. At that time, it was referred to as the Castilla de Oro, a source of gold and potential converts. From 1519 through 1538, the area that is now Panama was a base for soldiers sent to conquer the Andean civilizations in South America. After 1538, it was used as a land route to Spain's South American colonies and a transshipment point for Andean gold. From 1568 to 1671 there was series of pirate raids, and in 1671 Panama City was sacked by buccaneers under the command of Sir Henry Morgan. Local traders engaged in smuggling until Spain shifted the official gold route to Cape Horn, and the area entered a period of commercial decline.

After independence from Spain and union with Colombia in 1821, the isthmus again became an important transit route. Slavery was abolished in 1852. The United States completed a railroad across the area in 1855 to expedite movement to the gold fields in California. After failing to build a sea-level canal in the 1880s, the French sold their concession to the United States, which conspired with the elite in Panama City to declare independence when they could not obtain a favorable treaty from Colombia.

From 1903 to 1978, the United States controlled the Canal Zone, a five-mile strip on both sides of the canal. Residents of that area were called "Zonians" and remained American citizens even after three generations of residence. These mostly white employees of the Canal Company lived an isolated life and were prejudiced against the Panamanian population. In 1977, after lengthy negotiations, President Jimmy Carter signed a treaty that abolished the Canal Zone as a colonial enclave, arranged for Panamanian ownership of the canal in the year 2000, and provided for the closing of American military bases.

In 1925, the United States intervened in a revolt by Kuna Indians on the northeast Atlantic coast and established a tribal reserve. The Kuna enclave has been successful. In the 1930s, the United States' military hired Kuna laborers to work at army bases. After the transfer of sovereignty over the canal, those workers migrated to Panama City.

National Identity. Panamanians do not consider themselves former Colombians. From 1578 to 1751, Panama was the seat of a Spanish real audiencia (court of chancery), with Spanish lawyers and a governor or captain general. The presence of this judicial-legislative-executive government body led to the building of a sense of independent nationhood.

Ethnic Relations. Unlike the former Canal Zone, the government has always repudiated racism and segregation. Because of its nationalistic policies, the government also forbade the use of English in public schools, thus discriminating against the black population.

Urbanism, Architecture, and the Use of Space

Survivors of the burning of Panama City in 1671 rebuilt a walled bastion on a rocky promontory to the west. This became the home of the colonial administration and the Creole elite, who lived in two-story mansions. Outside the city walls was a neighborhood of free blacks living in thatched structures. Farther out were the cattle ranches and farms of the elite, which were staffed by slaves. The walled city survives as the Casco Viejo, and the areas adjacent to it are now densely populated slums. Because the former Canal Zone abuts the old city on the north and west, the growing population was forced to fan out along the bay to the north and east. On the Panamanian side, city blocks were plotted along radial avenues. Bella Vista, a gracious area of Art Deco mansions for the elites grew up in the 1920s along the bay. Farther inland there were working-class tenements. On the "Zone" side there was parkland, with occasional housing clusters. The government is transferring that housing to private owners but is committed by treaty to conserve the natural rainforest areas of the former Zone to prevent the canal from silting.

A few neighborhoods of upper-class walled villas have appeared. Large middle-class subdivisions are being built away from the city center. There are scattered apartment blocks of public housing for workers. Several shopping malls cater to the needs of a city with heavy traffic and an extensive bus system. The major downtown center is the banking district along Via España just past the old aristocratic Bella Vista and next to the first luxury hotels. This and nearby areas have high-rise offices, hotels, and apartments.

Colon on the Atlantic side is now a lower- and underclass settlement abutting the free trade zone. The largely Jewish, Italian, and Arabic entrepreneurs of that zone live in Panama City high-rises and commute daily in small airplanes.

The dominant architectural structure remains the Panama Canal. Inaugurated in 1914, it is still an engineering wonder in which Panamanians take pride.

Food and Economy

Food in Daily Life. Unlike other Spanish colonies, Panama's subsistence agriculture never depended on corn. Game and fish were always sources of protein, and corn is eaten mainly in the form of thick cakes called arepas and maize gruel. The Kuna roast bananas and boil them in a soup dish that consists of water squeezed through grated coconut meat, fish, and fowl or a game meat. This dish resembles the sancocho eaten by many non-Indian Panamaniansa soup of poultry or meat cooked with root vegetables and corn. All the towns and cities have Chinese restaurants, a legacy of the Chinese who came to work on the railroad in the 1850s.

Food Customs at Ceremonial Occasions. Upper class families are likely to serve fresh seafood at weddings, baptisms, and other celebrations. Their cooking style tends to be continental. Interioranos, in contrast, value beef. Their traditional Sunday meal is tasajo, smoked and cured beef with the flavor of ham.

Basic Economy. Before 1502 the native populations practiced slash-and-burn agriculture, growing a variety of root crops. When the urban elite bought rural property, they turned to cattle raising and exported the meat and hides. Livestock production is still an important economic activity, even on very small landholdings, and parts of the rain forest have been converted into pastureland. The naturales and Indian groups still practice slash-and-burn agriculture and do not raise cattle. Afro-colonials engage in coastal horticulture and fishing, as do the Kuna. The unit of currency is the balboa, which is pegged to the United States dollar.

Land Tenure and Property. The San Blas Kuna have had a tribal land reserve since the 1930s. The government is in the process of setting up large reserves for the Guaymí, the Embera, and the Kuna of the Bayano. Interioranos tend to divide up their holdings among many heirs, so that over time properties become quite small, intensifying migration to the cities and to northern and western frontier areas to clear the rain forest and to claim government forest lands through "squatters' rights." Urban migrants are similarly involved in large scale land invasion in idle lands on the periphery of the city. Some of these are planned, others are spontaneous.

Commercial Activities. Interioranos have a system of rural markets and fairs in which locallyowned shops are tied to Chinese shopkeepers and wholesalers in the towns. Since the 1960s, Panama has become an international banking center.

Major Industries. Panama never had a plantation economy. Today agribusiness specializes in the production of sugar and bananas.

Trade. The economy relies on transit, transhipping, and banking to earn foreign currency. Panama exports coffee, bananas, beef, and tropical hardwoods. As a major international transshipping center, all types of the world's industrial goods pass through Panama, which keeps or imports electronics, automobiles, and a wide variety of luxury goods. Panama also imports petroleum, as it has no oil fields.

Division of Labor. As of 1997 estimates put 18 percent of the labor force in agriculture, another 18 percent in industry, and 67 percent in service. Of these sectors agriculture is the least productive, accounting for only 8 percent of the gross national product, with industry at 25 percent and services at 67 percent.

Social Stratification

Classes and Castes. The urban Creole upper class, known as the rabiblancos ("white butts"), mingles socially with Americans, Spaniards, Italians, and the oldest segment of the Jewish community, the Sephardic Jews, who came to the country in the 1890s. Prosperous merchants in the small Hindu community worship at a prominent hilltop temple. The Chinese community includes a few wealthy commercial families, members of the professions, a middle class of shopkeepers, and a few very poor recent immigrants. It is perceived as monolithic. People from the interiorano community, other mestizos, and some blacks have also risen to wealth and prominence through the professions, government, and business and services. These people do not intermarry with the old elite. The large urban middle classes consist of interioranos, mestizos, blacks, and educated Indians, especially Kunas.

Symbols of Social Stratification. Class division is not rigid, and the elite is not resented. It is closely linked to the symbols of the republic through its descent from illustrious ancestors and the founding fathers of independence from Spain and Colombia, many of whom have streets named after them.

Political Life

Government. The republic is a constitutional democracy. Panama inherited from Colombia a binary system of liberals versus conservatives, both of which agreed on opposition to the presence of the United States in the Canal Zone. In 1940, these were eclipsed by a nationalist movement led by Arnulfo Arias, who employed fascist rhetoric and methods and was deposed during World War II. Elected again decades later, Arias was deposed again. Omar Torrijos, a military leader, instituted a corporatist, welfare-oriented state with a new constitution that declared him as head of government above a subservient president and cabinet. Although there was a legislative assembly and local councils throughout the republic, the regime was largely a command structure. It borrowed funds from abroad to build an infrastructure, including electrification and education, and united the public behind its effort to gain control of the canal. Torrijos died in a plane crash in 1981, and shortly after his death the military leader Manuel Noriega took over the civil government. After refusing to recognize the results of the 1989 elections, Noriega had the legislature declare him president. Five days later, the United States invaded to protect the Canal, restore democracy, and eventually arrest Noriega for drug trafficking.

Leadership and Political Officials. In the aftermath of the invasion, the Defense Forces were abolished, and Panama has come to have a lively and openly debated political life. Political leaders include members of the old elite. Most persons in public life tend to be middle class, of urban or interiorano origin.

Social Problems and Control. Crime is scarce outside of certain slums in Panama City and Colon, where robberies are common. International drug smuggling is a problem in jungle areas near the border with Colombia. Drug cartels, however, are not reputed to maintain bases within the republic. Panama has never had a leftist guerrilla movement. All the regimes have been able to contain social tensions without endemic violence.

Military Activity. The armed forces have become a police force with a limited defense role. Although the United States vacated its bases, it retains the right to defend the canal against an attack from any source.

Social Welfare and Change Programs

Many social welfare programs were initiated by the Torrijos regime in the 1970s. Today there is a social security system of public hospitals and rural clinics, and the bureaucracy encourages local people to seek outside aid for development projects. The retirement policy for civil servants is very liberal, providing a modest pension after age fifty. The current trend has been to favor privatization and self-help programs.

Nongovernmental Organizations and Other Associations

Many international organizations, including the United Nations Educational, Scientific, and Cultural Organization (UNESCO), the Food and Agricultural Organization of the United Nations (FAO), and the World Health Organization (WHO), operate locally. Fundación Dobbo Yala was founded by indigenous professionals to represent the native American groups and channel foreign aid funds for educational and development projects. Native Lands attempts to protect indigenous land holdings and reserves.

Gender Roles and Statuses

Division of Labor by Gender. The current president is a woman, and women have reached the top levels of all the professions, especially government service and education. However, there is almost no feminist movement, and relations between the sexes are traditionally Hispanic, with a double standard for sexual relations. Prostitution is legal, and workers in highly visible urban brothels claim to have been secretaries or schoolteachers from other republics whom hard times forced to emigrate in search of economic survival.

Relative Status of Women and Men. In the role of Carnaval Queens, young unmarried women enjoy the very highest symbolic status in almost every municipality in the republic, since all celebrate carnival. Similarly the Kuna Indians revere adolescent girls, and celebrate their coming of age in an elaborate three day ceremony, the inna suid, which culminates in the young woman's hair being cut off down to the scalp. Women enjoy public equality with men, and are seen on the job and in public places such as restaurants, mingling freely with male family members, while being accorded deference and respect.

Marriage, Family, and Kinship

Marriage. Although Guaymí Indian leaders may have more than one wife, other Panamanians marry only one spouse at a time. Divorce is permitted under liberal terms by the Civil Code. Couples of African descent on the Atlantic coast tend to live together without marrying. These unions frequently dissolve as men and women may find new partners during the weekly pre-carnival Congo dances.

Domestic Unit. The ideal family unit for most Panamanians is the nuclear family of a married couple and their children. The Kuna Indians, however, prefer to have new husbands go to live with their brides in the latter's house. These then become extended families around a grandmother, her husband, and her married daughters and their husbands.

Inheritance. Kuna Indians inherit their houses from their mothers. All other property is inherited equally among all heirs from both parents. In the rest of Panama the Civil Code provides for a similar system. In the absence of a will, a deceased widowed man's property goes equally to all his children, male or female.

Kin Groups. Kindreds, networks of related nuclear families, are very important to the urban elites. Upper class persons are likely to give parties, for example, attended only by relatives. Interioranos and naturales also value similar extended family networks. One man will be a pioneer in frontier areas, for example and his and his wife's relatives will follow. Such extended families are opening up the frontier areas.


Infant Care. Increased rural-to-urban migration has emptied some villages, especially those of coastal blacks and some interioranos, of young adults. Children live with their grandparents; in extreme cases, there are villages that skip a generation. Among the Kuna, male labor migration has left wives behind in matrilocal households to raise children.

Child Rearing and Education. The educational system is effective through the primary school level. Official literacy rates are as high as 90 percent, and an assumption of literacy prevails in daily interactions in the cities.

Higher Education. The University of Panama is state-supported and has a long history. The Catholic University of Santa Maria la Antigua is its major competitor.


Panamanians are formal in dealings with strangers. There is a minimum of greeting behavior in public, and manners tend to be stiff and not courtly. Once included in family and friendship groupings, a stranger can be incorporated into a party-going network quickly. Dress tends to be formal despite the tropical climate.


Religious Beliefs. Panama is 85 percent Roman Catholic. Traditional beliefs and practices have been maintained among the native American groups despite a history of missionization.

Rituals and Holy Places. The most important ritual is Carnaval. The capital closes down the five days before Ash Wednesday, and a young queen chosen by charitable organizations presides. A competing "more authentic" celebration takes place in Las Tablas in the interior. Coastal blacks celebrate the Congo, which starts in January and also is presided over by a queen in each community. Its male and female dance groups perform each weekend. The colonial port city of Potrobelo on the Atlantic coast is the site of a shrine to an icon of the Black Christ, an object of great veneration and of an annual pilgrimage that attracts great numbers during Holy Week.

Medicine and Health Care

The construction of the canal led to the conquest of yellow fever and advances in public health. A legacy of that period is safe drinking water throughout the republic. Gorgas Memorial Hospital specializes in tropical medicine. There is one world-class private hospital, Clinica Paitilla, and several crowded public hospitals.

Secular Celebrations

Panama celebrates two independence days, on 3 November from Colombia and on 28 November from Spain. Festivities tend to be low-key, however, although school children parade in most localities. New Year's Eve and New Year's Day are occasions of much merriment, with children burning effigies of Father Time at midnight in many areas. Larger towns in the central provinces hold rodeos for cowboys almost every Sunday.

The Arts and the Humanities

Support for the Arts. Funding from banks has helped art galleries thrive, and local artists are in great demand. The National Institute for Culture (INAC) and the school system both support graphics arts education. Other than that support mainly stems from the open market in art and native and local crafts. A private group, the National Association for Concerts, contracts with local and foreign performers for classical music concerts. The best museum is the Museo del Hombre Panameño in the former railroad station.

Literature. Panama has a number of writers producing short stories, novels, and poetry. Rogelio Sinán is a successful poet and novelist who has acquired an international reputation, but most writers produce for the local market, where they are well received.

Graphic Arts. The Kuna Indians are world-famous for their molas, applique textile panels in geometric or representational designs. The Embera Indians produce basketry of very high quality, as well as wood carvings in tropical hardwoods.

The State of the Physical and Social Sciences

Smithsonian Tropical Research Institute runs Barro Colorado Island, a wildlife station inside the canal waterway. There are numerous social scientists, but none has fully described the overall national culture.


De St. Malo, Guillermo and Godfrey Harris. The Panamanian Problem: How the Reagan and Bush Administrations Dealt with the Noriega Regime, 1993.

Doggett, Scott. Panama, 1999.

Drolet, Patricia Lund. "The Congo Ritual of Northeastern Panama: An Afro-American Expressive Structure of Cultural Adaptation." Ph.D. dissertation, University of Illinois, Urbana, 1980.

Figueroa Navarro, Alfredo. Dominio y Sociedad en el Panamá Colombiano (18211903), 1978.

Gasteazoro, Carlos Manuel. Introducción al estudio de la Historia de Panamá. I: Fuentes de la Época Hispana, 1956.

Howe, James. A People Who Would Not Kneel: Panama, the United States, and the San Blas Kuna, 1998.

Joly, Luz Graciela. "One Is None and Two Is One: Development from Above and Below in North-Central Panama." Ph.D. dissertation, Gainesville, 1981.

McCullough, David. The Path between the Seas: The Creation of the Panama Canal, 18701914, 1977.

Moore, Alexander. "From Council to Legislature: Democracy, Parliamentarianism, and the San Blas Cuna." American Anthropologist 86 (1): 2842, 1984.

Salvador, Mari Lynn, ed. The Art of Being Kuna: Layers of Meaning among the Kuna of Panama, 1997.

Wali, Alaka. Kilowatts and Crisis: Hydroelectric Power and Social Dislocation in Eastern Panama, 1989.

Young, Philip D. Ngawbe: Tradition and Change among the Western Guaymi of Panama, 1971.

Web Site

U.S. State Department, Central Intelligence Agency. World Factbook: Panama

Alexander Moore

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The people of Panama are called Panamanians. About 70 percent of the population is mestizo (mixed white and Amerindian or native) or mulatto (mixed white and black); 14 percent are black; a little more than 10 percent are white (mostly Europeans); and 5 to 8 percent are Amerindian (native people).

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PANAMA. Languages: Spanish (official), English (a common second language because of US influence), and Chibcha. The region was under Spanish control from 1538 to 1821, was part of Colombia until 1903, and with US backing has been distinct ever since. See CARIBBEAN ENGLISH CREOLE.

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pan·a·ma / ˈpanəˌmä/ (also panama hat) • n. a wide-brimmed hat of strawlike material, originally made from the leaves of a particular tropical palm tree, worn chiefly by men.

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panama name of a town and state in Central America and of the isthmus joining N. and S. America, misapplied to a hat which originated in Ecuador. XIX.

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SeeLatin America

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Panamaaargh, Accra, afar, ah, aha, aide-mémoire, ajar, Alcazar, are, Armagh, armoire, Artois, au revoir, baa, bah, bar, barre, bazaar, beaux-arts, Bekaa, bête noire, Bihar, bizarre, blah, Bogotá, Bonnard, bra, cafard, café noir, Calabar, car, Carr, Castlebar, catarrh, Changsha, char, charr, cigar, comme ci comme ça, commissar, coup d'état, de haut en bas, devoir, Dhofar, Directoire, Du Bois, Dumas, Dunbar, éclat, embarras de choix, escritoire, fah, famille noire, far, feu de joie, film noir, foie gras, Fra, galah, gar, guar, guitar, ha, hah, ha-ha, Halacha, hurrah, hussar, huzza, insofar, Invar, jar, je ne sais quoi, ka, kala-azar, Kandahar, Khorramshahr, knar, Krasnodar, Kwa, la-di-da, lah, Lehár, Loire, ma, mama, mamma, mar, Mardi Gras, ménage à trois, mirepoix, moire, Navarre, noir, objet d'art, pa, pah, Panama, papa, par, Pará, Paraná, pas, pâté de foie gras, peau-de-soie, pietà, Pinot Noir, pooh-bah, poult-de-soie, pya, rah, registrar, Saar, Salazar, Sana'a, sang-froid, scar, schwa, Seychellois, shah, Shangri-La, shikar, ska, sol-fa, spa, spar, star, Starr, Stranraer, ta, tahr, tar, tartare, tata, tra-la, tsar, Twa, Villa, voilà, waratah, yah

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