Panama's history has been shaped by the evolution of the world economy and the ambitions of great powers. Rodrigo de Bastidas, sailing westward from Venezuela in 1501 in search of gold, was the first European to explore the Isthmus of Panama. A year later, Christopher Columbus visited the isthmus and established a short-lived settlement in the Darien. Vasco Nunez de Balboa's tortuous trek from
the Atlantic to the Pacific in 1513 demonstrated that the isthmus was, indeed, the path between the seas, and Panama quickly became the crossroads and marketplace of Spain's empire in the New World. Gold and silver were brought by ship from South America, hauled across the isthmus, and loaded aboard ships for Spain. The route became known as the Camino Real, or Royal Road, although was more
commonly known as Camino de Cruces (Road of the Crosses) because of the frequency of gravesites along the way.
Panama was part of the Spanish empire for 300 years (1538-1821). From the outset, Panamanian identity was based on a sense of "geographic destiny," and Panamanian fortunes fluctuated with the geopolitical importance of the isthmus. The colonial experience also spawned Panamanian nationalism as well as a racially complex and highly stratified society, the source of internal conflicts that ran
counter to the unifying force of nationalism.
Building the Canal
Modern Panamanian history has been shaped by its transisthmian canal, which had been a dream since the beginning of Spanish colonization. From 1880 to 1900, a French company under Ferdinand de Lesseps attempted unsuccessfully to construct a sea-level canal on the site of the present Panama Canal. In November 1903, with U.S. encouragement and French financial support, Panama proclaimed its
independence and concluded the Hay/Bunau-Varilla Treaty with the United States.
The treaty granted rights to the United States "as if it were sovereign" in a zone roughly 10 miles wide and 50 miles long. In that zone, the U.S. would build a canal, then administer, fortify, and defend it "in perpetuity." In 1914, the United States completed the existing 83 kilometer (50 mile) lock canal, which today is one of the world's greatest engineering triumphs. The early 1960s saw
the beginning of sustained pressure in Panama for the renegotiation of this treaty. (See discussion of U.S.-Panama relations and the 1977 Panama Canal Treaties below.)
Military Coups and Coalitions
From 1903 until 1968, Panama was a constitutional democracy dominated by a commercially oriented oligarchy. During the 1950s, the Panamanian military began to challenge the oligarchy's political hegemony. In October 1968, Dr. Arnulfo Arias Madrid, twice elected president and twice ousted by the Panamanian military, was again ousted as president by the National Guard after only 10 days in
office. A military junta government was established, and the commander of the National Guard, Brig. Gen. Omar Torrijos, emerged as the principal power in Panamanian political life. Torrijos' regime was harsh and corrupt, but he was a charismatic leader whose populist domestic programs and nationalist foreign policy appealed to the rural and urban constituencies largely ignored by the
Torrijos' death in 1981 altered the tone but not the direction of Panama's political evolution. Despite 1983 constitutional amendments, which appeared to proscribe a political role for the military, the Panama Defense Forces (PDF), as they were then known, continued to dominate Panamanian political life behind a facade of civilian government. By this time, Gen. Manuel Noriega was firmly in
control of both the PDF and the civilian government.
The United States froze economic and military assistance to Panama in the summer of 1987 in response to the domestic political crisis and an attack on the U.S. Embassy. General Noriega's February 1988 indictment in U.S. courts on drug trafficking charges sharpened tensions. In April 1988, President Reagan invoked the International Emergency Economic Powers Act, freezing Panamanian Government
assets in U.S. banks and prohibiting payments by American agencies, firms, and individuals to the Noriega regime. When national elections were held in May 1989, Panamanians voted for the anti-Noriega candidates by a margin of over three-to-one. The Noriega regime promptly annulled the election and embarked on a new round of repression. By the fall of 1989, the regime was barely clinging to power,
and the regime's paranoia made daily existence unsafe for American citizens.
On December 20, 1989, President George H.W. Bush ordered the U.S. military into Panama to protect U.S. lives and property, to fulfill U.S. treaty responsibilities to operate and defend the Canal, to assist the Panamanian people in restoring democracy, and to bring Noriega to justice. The U.S. troops involved in Operation Just Cause achieved their primary objectives quickly, and troop
withdrawal began on December 27, 1989. Noriega eventually surrendered voluntarily to U.S. authorities. He is now serving a 40-year sentence for drug trafficking.
Panamanians moved quickly to rebuild their civilian constitutional government. On December 27, 1989, Panama's Electoral Tribunal invalidated the Norieiga regime's annulment of the May 1989 election and confirmed the victory of opposition candidates under the leadership of President Guillermo Endara and Vice Presidents Guillermo Ford and Ricardo Arias Calderon.
President Endara took office as the head of a four-party minority government, pledging to foster Panama's economic recovery, transform the Panamanian military into a police force under civilian control, and strengthen democratic institutions. During its 5-year term, the Endara government struggled to meet the public's high expectations. Its new police force proved to be a major improvement in
outlook and behavior over its thuggish predecessor but was not fully able to deter crime. Ernesto Perez Balladares was sworn in as President on September 1, 1994, after an internationally monitored election campaign.
Perez Balladares ran as the candidate for a three-party coalition dominated by the Democratic Revolutionary Party (PRD), the erstwhile political arm of the military dictatorship during the Torrijos and Noriega years. A long-time member of the PRD, Perez Balladares worked skillfully during the campaign to rehabilitate the PRD's image, emphasizing the party's populist Torrijos roots
rather than its association with Noriega. He won the election with only 33% of the vote when the major non-PRD forces, unable to agree on a joint candidate, splintered into competing factions. His administration carried out economic reforms and often worked closely with the U.S. on implementation of the canal treaties.
On May 2, 1999, Mireya Moscoso, the widow of former President Arnulfo Arias Madrid, defeated PRD candidate Martin Torrijos, son of the late dictator. The elections were considered free and fair. Moscoso took office on September 1, 1999. She is term-limited to a single term in office. National elections were held May 2, 2004. The PRD’s Martin Torrijos won the presidency and a PRD
legislative majority in the Assembly. Torrijos will be inaugurated September 1, 2004.
During her administration, Moscoso has attempted to strengthen social programs, especially for child and youth development, protection, and general welfare. Education programs also have been highlighted. More recently, Moscoso has focused on Panama’s desire for a free trade agreement (FTA) with the United States. Moscoso's administration successfully handled the Panama Canal transfer and has
been effective in the administration of the canal.
Panama's counternarcotics cooperation has been excellent, and the Panamanian Government has expanded money-laundering legislation and concluded with the U.S. a counternarcotics maritime agreement and a stolen vehicles agreement. The Panamanian Government also has been paying increasing attention to maritime security issues. In the economic investment arena, the Panamanian Government has been
successful in the enforcement of intellectual property rights and has concluded with the U.S. a Bilateral Investment Treaty Amendment and an agreement with the Overseas Private Investment Corporation. The Moscoso administration has been very supportive of the United States in combating international terrorism.