Background Notes: Republic of Panama

Contributed By RealAdventures

Nationality: Noun and adjective--Panamanian(s).
Population (1997 est.): 2.82 million.
Annual growth rate: 2%.
Ethnic groups: Mestizo (mixed Indian and European ancestry) 70%, West Indian 14%, Caucasian 10%, Indian 6%.
Religions: Roman Catholic 85%, Protestant (Evangelical) 15%.
Languages: Spanish (official); 14% speak English as their native tongue; various Indian languages.
Education: Years compulsory--6. Attendance--95% for primary school-age children, 96% for secondary. Literacy--about 90% overall: urban 94%, rural 62%.
Health: Infant mortality rate--17/1,000. Life expectancy--74 yrs.
Work force (910,000): Government and community services--32%; agriculture--27%; commerce, restaurants, and hotels--16%; manufacturing and mining--9%; transportation and communication--6%; construction--3%; finance, insurance, and real estate--4%.

The culture, customs, and language of the Panamanians are predominantly Caribbean Spanish. Ethnically, the majority of the population is mestizo (mixed Spanish and Indian) or mixed Spanish, Indian, Chinese, and West Indian. Spanish is the official and dominant language; English is a common second language spoken by the West Indians and by many in business and the professions. More than half the population lives in the Panama City-Colon metropolitan corridor.

Panama is rich in folklore and popular traditions. Brightly colored national dress is worn during local festivals and the pre-Lenten carnival season, especially for traditional folk dances like the tanborito. Lively salsa--a mixture of Latin American popular music, rhythm and blues, jazz, and rock--is a Panamanian specialty. Indian influences dominate handicrafts such as the famous Kuna textile molas. Artist Roberto Lewis' Presidential Palace murals and his restoration work and ceiling in the National Theater are well known and admired.

More than 65,000 Panamanian students attend the University of Panama, the Technological University, and the University of Santa Maria La Antigua, a private Catholic institution. Including smaller colleges, there are 14 institutions of higher education in Panama.

The first 6 years of primary education are compulsory, and there are about 357,000 students currently enrolled in grades one through six. The total enrollment in the six secondary grades is about 207,000. Nearly 90% of Panamanians are literate.

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.

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.

President--Mireya E. MOSCOSO Rodriguez
First Vice President--Arturo VALLARINO Bartuano
Second Vice President--Dominador "Kaiser" BAZAN
Ministry of Foreign Affairs--Jose Miguel ALEMAN Healy
Ambassador to the United States--Guillermo FORD

Ambassador to the United Nations--Aquilino BOYD
Ambassador to the Organization of American States--Lawrence CHEWNING Fabrega

Panama is a representative democracy with three branches of government: executive and legislative branches elected by direct, secret vote for 5-year terms, and an independent appointed judiciary. The executive branch includes a president and two vice presidents. The legislative branch consists of a 72-member unicameral Legislative Assembly. The judicial branch is organized under a nine-member Supreme Court and includes all tribunals and municipal courts. An autonomous Electoral Tribunal supervises voter registration, the election process, and the activities of political parties. Everyone over the age of 18 is required to vote, although those who fail to do so are not penalized.

National Security

The Panamanian Government has converted the former Panama Defense Forces (PDF) into a civilian "public force," subordinate to civilian officials and composed of four independent units: the Panamanian National Police, the National Maritime Service (Coast Guard), the National Air Service, and the Institutional Protective Service (VIP Security). A constitutional amendment, passed in 1994, abolished the military permanently.

Law enforcement units that have been separated from the public force, such as the Technical Judicial Police, also are directly subordinate to civilian authorities. The public force budget--in contrast to the former PDF--is on public record and under control of the executive.

The United States, with congressional approval, is delivering assistance to help train and establish truly professional law enforcement agencies. In fiscal year 1997, the United States provided police skills training and technical assistance in civilian law enforcement development through a program managed by the International Criminal Investigative and Training Assistance Program (ICITAP).

Real GDP (1982 baseline): $6.8 billion.
Annual growth rate: 3.1%.
Real per capita GDP: $2,502.
Natural resources: Timber, seafood, copper.
Services (72% of GDP): Finance, insurance, canal-related services, Colon Free Zone.
Agriculture (11% of GDP): Products--bananas and other fruit, corn, sugar, rice, coffee, shrimp, timber, vegetables, cattle. Land--agricultural 24%, exploitable forest 20%, other 56%.
Industry (19% of GDP): Types--food and drink processing, metalworking, petroleum products, chemicals, paper and paper products, printing, mining, refined sugar, clothing, furniture, construction.
Trade: Exports--$640 million: bananas 33%, shrimp 11%, sugar 4%, coffee 2%, clothing 5%. Major markets--U.S. 40%. Imports--$3.15 million: capital goods 21%, crude oil 11%, foodstuffs 9 %, other consumer and intermediate goods 57%. Major suppliers--U.S. 40%.
Exchange rate: Fixed at unity with the U.S. dollar.

Panama is a member of the UN General Assembly, most major UN agencies, and has served three terms as a member of the UN Security Council. It maintains membership in several international financial institutions, including the World Bank, the Inter-American Development Bank, and the International Monetary Fund.

Panama is a member of the Organization of American States, and was a founding member of the Rio Group. Although it was suspended from the Latin American Economic System (known informally both as the Group of Eight and the Rio Group) in 1988 due to its internal political system under Noriega, Panama was readmitted in September 1994 as an acknowledgment of its present democratic credentials.

Panama also is one of the founding members of the Union of Banana Exporting Countries and belongs to the Inter-American Tropical Tuna Commission. Panama is an active participant in Central American regional meetings, although it is not a formal participant in integration activities. Panama is a member of the Central American Parliament (PARLACEN) as well as the Central American Integration System (SICA). Panama joined its six Central American neighbors at the 1994 Summit of the Americas in signing the Alliance for Sustainable Development known as the Conjunta Centroamerica-USA or CONCAUSA to promote sustainable economic development in the region and participates in some Miami summit follow-on meetings.

Panama strongly backed efforts by the United States to implement UN Security Council Resolution 940, which was designed to facilitate the departure of Haiti's de facto authorities from power. Panama offered to contribute personnel to the Multinational Force, which restored the democratically elected government to Haiti in October 1994, and granted asylum to some former Haitian military leaders. Also in 1994, Panama agreed to accept 9,000 Cuban "rafters," who were housed temporarily on U.S. military range areas until 1995.

The Panama Canal Treaties provided the foundation for an enduring partnership. The U.S. and Panama implemented the treaties by preparing for the transfer to Panama of the Canal and the U.S. base properties. Headquarters of the U.S. Southern Command transferred to Miami in 1997. U.S. development assistance through USAID in FY 1997 was $3 million. Panama does not have a military; therefore, the United States provides no bilateral military assistance to the country. However, civic action projects, direct, and indirect military spending pump several $100 million annually into the Panamanian economy.

The United States cooperates with the Panamanian Government in promoting economic, political, and social development through U.S. and international agencies. Cultural ties between the two countries are strong, and many Panamanians come to the United States for higher education and advanced training. About 6,000 Americans reside in Panama, most of whom are retirees from the Panama Canal Commission and individuals who hold dual nationality. The number of U.S. visitors to Panama from July 1995 to June 1996 averaged around 3,600.

Panama continues to fight against illegal narcotics. The country's proximity to major cocaine-producing nations and its role as a commercial and financial crossroads make it a country of special importance in this regard. Although money laundering remains a problem, a new banking law of 1998 [should help--helps?] combat this crime. Panama has worked closely with the U.S. Treasury Department's Financial Crimes Enforcement Network.

The Panama Canal Treaties

The 1977 Panama Canal Treaties entered into force on October 1, 1979. They replaced the 1903 Hay/Bunau-Varilla Treaty between the United States and Panama, and all other U.S.-Panama agreements concerning the Panama Canal which were in force on that date. The treaties comprise:

A basic treaty governing the operation and defense of the Canal from October 1, 1979, to December 31, 1999 (Panama Canal Treaty); and
A treaty guaranteeing the permanent neutrality of the Canal (Neutrality Treaty). The details of the arrangements for U.S. operation and defense of the Canal under the Panama Canal Treaty are spelled out in separate implementing agreements.
Purpose of the Treaties

In negotiating the Panama Canal Treaties, four successive U.S. administrations acted to protect a fundamental national interest in long-term access to a secure and efficient Canal. Panama's cooperation is fundamental to this objective. By meeting Panamanian aspirations for eventual control of the Canal, the United States sought a new relationship with Panama based on friendship and mutual respect. The treaties make Panama a partner in the continued safe and efficient operation of the Canal. In serving the best interests of both nations, the treaties serve the interests of all users of the Canal.

History of the Negotiations

Our bilateral relationship with Panama has centered on the Panama Canal since the beginning of the century. Under the 1903 treaty, the United States acquired unilateral rights to build and operate a canal in perpetuity. It also acquired the Canal Zone--a 553-square mile area in which the United States exercised the rights, power, and authority of a sovereign state. In January 1964, Panamanian dissatisfaction with this relationship boiled over into riots that resulted in the deaths of four U.S. Marines and more than 20 Panamanians. A 3-month suspension of diplomatic relations followed.

The growing bilateral tension in the 1960s gave weight to the views of those who believed that a new Canal Treaty was needed to replace the 1903 treaty and to establish a new relationship with Panama. In June 1967, United States and Panamanian negotiators completed draft treaties dealing with the existing Canal, a possible sea-level Canal through Panama, and defense matters. Neither country ratified the treaties, however, and they were publicly rejected by the new Torrijos government in 1970.

A resumption of treaty negotiations led to a declaration of principles signed in 1973 by Secretary of State Henry Kissinger and his Panamanian counterpart, Juan Antonio Tack. On September 7, 1977, President Carter and General Torrijos signed the Panama Canal Treaties at the headquarters of the Organization of American States in Washington, DC. The Panamanian people approved the new treaties in a plebiscite held on October 23, 1977. The U.S. Senate ratified the Neutrality Treaty on March 16, 1978, and the Panama Canal Treaty on April 18, 1978. The treaties entered into force on October 1, 1979. The protocol to the Neutrality Treaty is open to accession by all nations, and more than 35 have subscribed.

Basic Provisions of the Treaties

The United States had primary responsibility for the operation and defense of the Canal until December 31, 1999. After that date, the United States and Panama will maintain a regime of neutrality for the Canal, including nondiscriminatory access and tolls for merchant and naval vessels of all nations. A U.S. Senate condition attached to the instruments of ratification allows the U.S. and Panama to negotiate a post-1999 defense-sites treaty, if both countries find such a treaty in their mutual interest. Negotiations for a possible post-1999 U.S. presence in Panama in a proposed multinational counter-narcotics center (MCC) ended in September 1998, and no further negotiations are planned.

In order to meet its treaty responsibilities, the United States has the right to use specified land and water areas and facilities in Panama necessary for the operation, maintenance, and defense of the Canal until December 31, 1999. After that date, U.S. warships will be entitled to expeditious passage through the Canal at all times, and the United States will continue to have the obligation to ensure that the Canal remains open and secure.

The United States operated the Canal through the Panama Canal Commission (PCC), which was a U.S. Government agency supervised by a Board of Directors consisting of five American and four Panamanian members, appointed by the President (the Panamanian members are initially nominated by their government). Until 1990, the Canal Administrator was an American, and the Deputy Administrator was Panamanian; these nationalities reversed for the final decade of the treaty on September 20, 1990, when Gilberto Guardia was installed as the first Panamanian Administrator.

He was succeeded in 1996 by another Panamanian, Alberto Aleman Zubieta. Pursuant to treaty obligations, the PCC trained Panamanians in all areas of Canal operations prior to the transfer of the Canal in 1999. In 1997 President Perez Balladares named the members of the Panama Canal Authority (PCA), the successor agency to the PCC.

During the life of the treaty, Panama received the following payments from Canal revenues:

A fixed annual payment of $10 million;
An annual payment of $10 million, adjustable for inflation, for public services provided to Canal operating areas by the Government of Panama (the Canal Zone and its government ceased to exist when the treaties entered into force, and Panama assumed jurisdiction over Canal Zone territories and functions);
An annual percentage of toll revenues assessed at $0.39 (since October 1, 1996) per Panama Canal net ton transiting the Canal, worth $84.6 million in 1996; and
A payment of up to $10 million in the event that revenues exceed PCC expenditures in a given year.
Under U.S. implementing legislation (the Panama Canal Act), the PCC was required to be self-sustaining; its costs could not exceed its revenues, nor could U.S. taxpayer funds be used for Canal operations or payments to Panama.

U.S. Embassy
Ambassador--Simon Ferro
Deputy Chief of Mission--Fredrick Becker
Counselor for Political and Economic Affairs--Lewis Amselem
Counselor for Public Affairs--Joao Ecsodi
Counselor for Administrative Affairs--Trevor Snellgrove
Consul General--Robert Blohm

Smithsonian Tropical Research Institute
Director--Dr. Ira Rubinoff

The U.S. embassy in Panama is located at Avenida Balboa y Calle 38, Panama City (tel: 507-207-7000). Personal and official mail for the embassy and members of the mission may be sent to: U.S. Embassy Panama, Unit 0945, APO AA 34002.

E-mail: U.S. Information Service (USIS): Political/Economic

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