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Panama Modern History

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.

  • ABBREVIATIONFINDER: 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.

Contemporary History of PanamaThe 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 institutions.

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 presidential candidate.

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.

Rapid reforms

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 trade zone.

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 decree.

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.

 
 

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