Panama

G

Noriega Dictatorship

In the years after Torrijos’s death, civilian and National Guard leaders maneuvered for power. In 1983 a winner emerged: Manuel Antonio Noriega, former head of the intelligence service, became head of the National Guard and took power. Although he did not hold a political office, as commander of the military he controlled the government. Astute and ruthless, Noriega built up the size of the military, which he renamed the Panama Defense Forces, and greatly increased its power over the nation’s political life and its economy.

The Noriega years witnessed widespread corruption, repression of political opposition, and a troubled economy. Noriega made little pretense of following the constitution and rigged elections. Noriega was accused of ordering the torture and murder of a popular figure, Hugo Spadaforas, in 1985, but when Panama’s president promised to investigate, Noriega replaced him with another civilian. Noriega used the military to imprison, torture, and sometimes kill his opponents. Noriega also was linked to the international narcotics trade. He was accused of helping smuggle drugs and launder money for Colombian drug cartels.

Relations with the United States deteriorated. Noriega had been a longtime informant for the U.S. Central Intelligence Agency, and he helped U.S. officials supply arms to conservative forces in Nicaragua. But by the late 1980s, Noriega’s dictatorship and his alleged links to the international drug trade caused the United States to withdraw its support for his government. At the same time, street demonstrations began to occur regularly in Panama City.

H

U.S. Invasion

The U.S. government gradually increased pressure on Noriega, trying to make him give up power. The United States imposed a trade embargo, vetoed international loans to Panama, and finally withheld its annual canal payments. In 1988 a U.S. court in Miami, Florida, indicted Noriega on drug-related charges. Panamanian president Eric Delvalle tried to dismiss Noriega but instead was removed from office. A presidential election was held in 1989, but Noriega nullified the results when the vote count showed that the opposition candidate, Guillermo Endara, was winning. Tensions rose between Noriega’s forces and U.S. troops based in Panama.

---

---

Finally, President George Bush decided to invade Panama, with the stated goals of arresting Noriega to face drug charges, of restoring democracy, and of protecting American lives. On December 20, 1989, U.S. troops invaded in the largest U.S. military operation since the Vietnam War (1959-1975). More than 27,000 troops took part, including 13,000 already stationed in Panama. With an overwhelming force of tanks, aircraft, and high-technology weapons, the U.S. forces defeated Panamanian troops within days and eventually captured Noriega, who was taken to the United States for trial.

The Panama invasion proved traumatic and controversial. It violated both international law and U.S. government policy against intervening in another nation’s internal affairs. Yet it was welcomed by many Panamanians as the only way to rid the country of a dictator that the United States had supported for many years. Noriega’s headquarters in Panama City was destroyed, but the surrounding poor neighborhood of El Chorillo caught fire and burned to the ground, leaving thousands homeless. Several hundred Panamanians, many of them civilians, died in the fighting. It was the low point in 86 years of rocky relations between Panama and the United States.

I

Gaining Control of the Canal

On the day of the invasion, U.S. forces swore a caretaker government into office. The new president was Guillermo Endara, the leading Arnulfista Party candidate in the election that had been annulled by Noriega. Behind the scenes, U.S. advisers wielded real power, arresting police officers and reestablishing order. A large U.S. aid program, amounting to nearly $1 billion, was assembled to help Panama recover from the invasion and years of economic sanctions. However, Endara never achieved much authority as president. The economy made a strong recovery, and the conversion of Panama’s military into a civilian police force restored public confidence and safety.

The 1994 presidential election brought a surprising victory to Ernesto Pérez Balladares, the candidate of Noriega’s former party. Pérez Balladares, a U.S.-trained banker, received a third of the popular vote. The new president embraced a program of economic reforms, including measures to reduce the size of government, sell public enterprises, create more jobs, and reduce some labor protections. He also sought to attract foreign investment, end protectionism so Panama could carry on more global trade, and renegotiate the large national debt.

Meanwhile, Panama created the Interoceanic Regional Authority to administer lands and buildings turned over by the United States. Designed to be nonpolitical and efficient, the agency is seen as an indicator of Panama’s ability to manage a major facility like the canal. In the mid-1990s, the Panama Canal Authority was formed to actually take over duties of managing the canal in 1999. Beginning in 1990, a Panamanian citizen served as chief administrator of the canal, and some 97 percent of the canal labor force was Panamanian. Both countries strove to achieve a smooth, trouble-free transition.

Pérez Balladares pushed hard to attract foreign, especially Asian, investment to develop the lands and military bases being turned over to Panama. His greatest challenges were to maintain public order and confidence, create new jobs while privatizing the economy, reduce corruption in his government, and maintain friendly relations with the United States.

In August 1998 Panamanian voters rejected a proposed constitutional amendment to allow Pérez Balladares to serve a second term in office. In May 1999 Mireya Moscoso de Gruber, widow of former president Arnulfo Arias, won the country's presidential election. On December 31, 1999, Panama completed the takeover of the canal, military bases, and all adjacent facilities, giving it control of all its territory for the first time in the nation’s history.

J

The 21st Century

The 2004 presidential election was the first one held after Panama had gained control of the canal and the United States had withdrawn its troops. In that election, Martín Torrijos Espino of the Democratic Revolutionary Party (PRD) won with almost 50 percent of the vote. Torrijos is the son of Omar Torrijos, the military general who ruled Panama from 1969 to 1981. During the campaign, Martin Torrijos pledged to fight government corruption, lower the country’s unemployment rate, increase trade with the United States, and improve the Panama Canal.

Torrijos followed through on his pledge to improve the Panama Canal, and in October 2006 voters approved a referendum to expand the canal by adding a new channel and more locks. The $5.2-billion expansion project was expected to create thousands of jobs. The current canal cannot accommodate many of the large new container ships, and heavy traffic has caused costly delays for many ships waiting to enter the existing locks. Construction on the expansion was expected to begin in 2008 and to be completed in 2014.

	More from Encarta
	•  Presidential Myths Quiz •  Coffee break: Recharge your brain