The channel and the US presence were a source
of contradictions and concerns during the postwar
period. In the 1970s, an agreement was signed which
meant that Panama gradually took over control of the
channel from the United States. From 1968 to 1989,
Panama was a military dictatorship. In 1983 Manuel
Noriega took power but he was overthrown in 1989 when
the US invaded the country. His party PRD, which is now
considered social democratic, has won a couple of
presidential elections ever since.
The 1940s and 1950s were marked by great political
instability in Panama with constant shifts in the
presidential post. The Nationalists were strongly
critical of the Channel Treaty, which gave the United
States total control over the Channel Zone. Clashes
between Panamans and US police and military forces
placed in the zone were common. The unrest led in 1964
to a two-month long break in diplomatic relations
between Panama and the United States.
List of most commonly used acronyms containing Panama. Also includes historical, economical and political aspects of the country.
When elections were held in 1968, the nationalist
Arnulfo Arias won Madrid, which had twice won the
presidential election but was dismissed shortly
thereafter. This time it only took eleven days before he
was overthrown in a military coup by the National Guard.
The National Guard's strong man, Omar Torrijos
Herrera, now became the country's true leader. Arya's
successor as president was reduced to a puppet. Torrijos,
who eventually became a general, dissolved the National
Assembly and banned political parties. However, the
situation in the country became more stable and Torrijos
underwent a series of political and economic reforms,
including a popular land reform. In addition, he
succeeded in negotiating the so-called Torrijos-Carter
treaty that was signed in 1977 and meant that the United
States would gradually hand over control of the channel.
From 1979, Panamanian law applied in the canal area,
although the United States retained the right of use.
The channel was completely transferred to Panama at the
turn of the millennium (see Foreign Policy and Defense).
After Torrijo's death in 1981 in a plane crash, which
many suspected was an attack, a power struggle erupted.
Manuel Antonio Noriega Moreno won the power measurement
and became the national guard in 1983. By election
cheating, the presidential candidate he elected in the
election in 1984. Under the president's formal
leadership, Noriega took a firm grip on all important
Noriega was soon accused of involvement in drug
smuggling and money laundering. Opposition against him
grew and the United States imposed financial sanctions
in 1988. An American-backed coup in October 1989 failed,
after which Noriega declared that the country was at war
with the United States.
The United States invades Panama
In December 1989, the United States invaded Panama on
the pretext that American life was at stake. Noriega was
arrested and taken to the United States where he was
sentenced to a long prison sentence for drug smuggling,
money laundering and bribery. The invasion faced sharp
criticism in the region and was condemned by the UN.
After the invasion, democracy was restored. Guillermo
Endara, who won an election in May 1989 but was barred
from taking office, became president. But the crisis
years of 1987–1989 had disastrous economic consequences
for Panama. The invasion alone was estimated to cost the
country the equivalent of SEK 16 billion.
When the first free elections of over 25 years were
held in 1994, surprisingly, the overthrown Noriega
party, the Revolutionary Democratic Party (PRD),
returned to power. The PRD's presidential candidate,
businessman Ernesto Pérez Balladares, won a scarce
election victory. In Parliament, the PRD was forced to
form an alliance with smaller parties. With their help,
Pérez Balladares pushed through, among other things, the
liberalization of the labor market and the privatization
of state-owned enterprises.
In the 1999 presidential election, Mireya Moscoso,
widow of former president Arnulfo Arias, and candidate
for the populist Arnulfo Party (PA), won. In the
election to the Legislative Assembly, however, an
electoral union dominated by the PRD won. An unstable
period followed, where parties changed loyalty and the
political majority in Parliament changed several times.
Mireya Moscoso ruled largely through decrees. The
economy deteriorated and dissatisfaction with the
government resulted in violent demonstrations.
The Panama Canal is being expanded
The May 2004 elections brought the PRD back to the
government. PRD candidate Martín Torrijos Espino, son of
former military dictator Omar Torrijos, won by a good
margin in the presidential election and PRD got just
over half of the seats in the legislative assembly.
Torrijos initiated a restructuring of the state's
poor finances, including through a tax reform that would
increase revenues and sharply reduce the number of
public servants. However, an attempt to reform social
insurance systems aroused such strong protests that the
government was forced to back down.
A referendum on expanding the Panama Canal was held
in 2006. Nearly 80 percent of voters supported the
proposal and work began in 2007 (see Economic overview).
In August 2008, President Torrijo presented plans for
a series of police reforms that aroused strong
opposition. In particular, criticism was directed at the
creation of a new security service, Senis, with
extensive powers and alleged similarities with Noriega's
notorious security service G-2. Torrijo's reform plans
were interpreted in many ways as an attempt at
militarization, which disadvantaged the PRD ahead of the
2009 presidential election.
New party wins election
The PRD appointed Balbina Herrera as its candidate in
the election. Her main opponent was the millionaire
Ricardo Martinelli, who represented the party he founded
himself: Democratic Change (CD). Just a few months
before the election, the Panamist Party (PPA, formerly
the Arnulfo Party) withdrew its candidate Juan Carlos
Varela, who instead became Martinelli's vice
The election became a landslide victory for Ricardo
Martinelli, who received a full 60 percent of the vote.
CD in alliance with a few small parties also got
majority in the National Assembly.
Martinelli, a multi-millionaire and owner of, among
other things, a supermarket chain, invested large sums
out of his own pocket in the electoral movement and won
the votes of many poor people by accusing the incumbent
government of doing too little for them. Upon his entry,
he stated that he wanted to invest in market economics
and "defy the ideological pendulum" in Latin America - a
mark against left-wing presidents such as Hugo Chávez in
Venezuela and Evo Morales in Bolivia.
Several election promises were quickly fulfilled.
Police salaries were raised by $ 100 a month, the same
monthly amount was introduced to people over 70 without
pension, and the design of a subway system in Panama
City was started. Promised changes were also soon
introduced to the tax system, which aimed, among other
things, to improve Panama's reputation as a tax haven
(see Financial overview). For the first time, some
taxation was also imposed on companies in the Colón free
Martinelli also wanted to show serious promise to
deal with the corruption, and investigations into
bribery charges against individuals in the two previous
governments were initiated. In January 2010, former PRD
President Pérez Balladares was placed under house
arrest, on charges of money laundering. He was released
a little over a year later.
The president also invested in market reforms that
would facilitate foreign investors. Panama was rewarded
with higher credit ratings (easier loans in banks), but
reform attempts soon encountered popular dissatisfaction
and resistance. The government was repeatedly forced to
back down and withdraw already clubbed decisions.
This included a legislative package that included
labor law and environmental legislation, efforts to make
mining and power projects more accessible to investors,
and attempts to sell parts of the state's ownership in a
telecom company and land in the canal zone. Violent
protests from indigenous peoples, environmental
activists and others led to deaths several times and the
government was forced to retreat.
Breaking in the wire
Gradually, it will happen between Martinelli and the
Panamist Party, the largest support party in the
government coalition. In August 2011, the wrestling
became total when Martinelli resigned Vice President
Varela from the post of Foreign Minister and accused him
of having set his own presidential ambitions prior to
his assignment. Varela remained as vice president and
announced that he was now thinking of taking on the role
of opposition leader. Other ministers who, like Varela,
belonged to the Panamist Party resigned in protest.
However, the CD's position in Parliament had been
strengthened by the resignation of both the largest
opposition party PRD and the Panamist Party, so the
government retained a scarce majority in parliament.
In 2012, corruption charges against Martinelli grew.
Most serious was information that he received bribes in
exchange for valuable construction contracts, from a
former employee to Italian former Prime Minister Silvio
Berlusconi. The scandal was the hardest hit on
Martinelli's government and, as a result, was striking
that the president sued his vice president for slander,
at $ 30 million. The lawsuit was later withdrawn.
Another consequence of the scandal was that the
former presidential candidate Balbina Herrera at the end
of 2013 was sentenced to three years in prison, although
the verdict was subsequently withdrawn by a presidential
The scandal also meant that Martinelli had failed to
consolidate the image he painted of a business-friendly
government that took power against corruption. It became
clear when Panama fell a full 19 places in the
organization Transparency International's corruption
index for 2013, to 102nd place in the world.