Country Profile


Country profile: Panama

Where is Panama? The last time Panama made international headlines was in 1990, when General Manuel Noriega’s pockmarked face stared impassively out from a Miami police mugshot. Noriega, a former CIA ‘asset’, had been overthrown by a massive US invasion in the closing days of the 1980s. At the time, it was the biggest US military action since Vietnam, resulting in a chaos of looting and overkill which left much of the capital, Panama City, destroyed, and between 500 and 2,000 civilians dead. Noriega was subsequently sentenced to 40 years in a Florida jail on eight counts of drug trafficking.

After the invasion, the US installed a more co-operative president, Guillermo Endara, but little else changed. Drug trafficking and money laundering, the avowed reason for the invasion, both increased; Endara’s shaky coalition fell apart, and in 1994 Ernesto Pérez Balladares, the candidate of Noriega’s PRD party, won presidential elections. Under US and IMF pressure, both Endara and Pérez Balladares carried out a free-market shock programme of public spending cuts and privatizations.

Washington has treated Panama as its protectorate since US gunboats helped the country secede from Colombia in 1903. In return, Washington was given sovereignty over a strip of territory running through the heart of Panama ‘in perpetuity’. The US promptly fulfilled a centuries-old dream, building a canal across the narrowest point of the Americas, massively reducing the costs of trade between the US West and East coasts. The Canal Zone became home to the US military’s ‘Southern Command’, the launch pad for its domination of much of Latin America throughout this century.

US interference in Panamanian politics provoked a strong nationalist movement and a schism between it and those who have benefited from US largesse. The US bases currently pump $250 million a year into the Panamanian economy, and jobs on the bases pay four or five times more than equivalent jobs elsewhere. Nationalism reached its height under General Omar Torrijos, immortalized in Graham Greene’s Getting to Know the General, leading in 1977 to a renegotiated Canal treaty signed by Torrijos and Jimmy Carter, under which the US promised to hand the Canal back and leave its Panamanian bases by the end of the century.

Most of the people, jobs and wealth are concentrated in a thin strip either side of the Canal, including Panama City, which has become an international banking centre, and the giant Colón Free Zone, the largest in the world after Hong Kong. Here over 800 international companies warehouse and distribute goods across the Americas from behind a high barbed-wire fence separating their enclave from the shacks of Colón city.

Beyond the Canal strip, Panama is a thinly populated, heavily forested tropical cornucopia of plants and wildlife, facing the familiar threats of peasant colonization and deforestation. With one special twist – the resulting soil erosion is threatening to silt up the Canal just as ownership is finally handed over to Panama in the year 2000.

Duncan Green


Children of Panama.

LEADER: President Ernesto Pérez Balladares

ECONOMY: GNP per capita $2,600 (UK $18,060)
Monetary Unit: Effectively the US dollar, since the Panamanian Balboa has been tied at parity to the dollar since 1904
Main exports: Bananas, seafood, sugar, beef and coffee
Main imports: Manufactured goods, fuel.
Panama’s economy is distorted by the Canal Zone, making trade secondary to the income generated by services, such as canal tolls, banking income, and revenue from the Colón free zone. Service income enables it to run a large trade deficit.

PEOPLE: 2.6 million. Annual population growth rate 1980-94 2.0%.

HEALTH: Infant mortality 18 per 1,000 live births (Canada 6 per 1,000). Health conditions are generally better than elsewhere in Central America, a legacy of greater government spending. This is now under threat, especially in rural areas, from government cuts as part of structural-adjustment policies.

CULTURE: Panama’s role as an international crossroads has produced a multi-ethnic society in which 13% of the population are black, many the descendants of immigrant Caribbean workers who died in thousands building the Canal. A further 10% of Panamanians are indigenous, while the remainder are mestizo, or mixed blood.
Religion: 86% identify themselves as Roman Catholic, though less than one in five regularly attend mass; 8% are Protestant.
Languages: Spanish, and the five Indian groups also speak indigenous languages.

Sources Inside Panama, UNDP Human Development Report, UNICEF State of the World’s Children 1996.

Previously profiled December 1981.


[image, unknown] INCOME DISTRIBUTION [image, unknown]
The most unequal country in the Americas apart from the world leader in the field, Brazil.
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[image, unknown] LITERACY [image, unknown] [image, unknown] [image, unknown] [image, unknown]
90%: high due to education reforms in the 1960s and 1970s and higher per-capita income.
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[image, unknown] SELF-RELIANCE [image, unknown] [image, unknown]
Panama is highly dependent on its role as international trade and finance centre. This plugs a large trade gap.
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[image, unknown] FREEDOM [image, unknown] [image, unknown]
The human-rights situation is generally better than in neighbouring countries such as Colombia and Nicaragua.
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[image, unknown] POSITION OF WOMEN [image, unknown] [image, unknown] [image, unknown]
A long history of feminist organizing has produced political gains for women, though machismo remains deeply embedded.
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[image, unknown] LIFE EXPECTANCY [image, unknown] [image, unknown] [image, unknown] [image, unknown]
73 years. Compares favourably with other Latin American countries (Aotearoa/NZ 75 years).
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[image, unknown] NI ASSESSMENT [image, unknown] [image, unknown]
Panama's history is dominated by regular US intervention, which has undermined stability and led to several military coups. But the 1994 elections were reasonably fair, and allowed a peaceful transition to an elected president. Power is generally in the hands of the white élite, backed by the US and by financial interests.

NI star rating

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New Internationalist issue 279 magazine cover This article is from the May 1996 issue of New Internationalist.
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