PANAMA

Republic of Panama
República de Panamá

CAPITAL: Panama City

FLAG: The national flag is divided into quarters. The upper quarter next to the staff is white with a blue star; the upper outer quarter is red; the lower quarter next to the staff is blue; and the lower outer quarter is white with a red star.

ANTHEM: Himno Nacional, beginning "Alcanzamos por fin la victoria" ("We reach victory at last").

MONETARY UNIT: The balboa (b) of 100 centésimos is the national unit of account. Panama issues no paper money, and US notes are legal tender. Panama mints coins of 0.05, 0.10, 0.25, 0.50, 1 and 5 balboas which are interchangeable with US coins. b1 = $1.00000 (or $1 = b1) as of 2005.

WEIGHTS AND MEASURES: The metric system is official, but British, US, and old Spanish units also are used.

HOLIDAYS: New Year's Day, 1 January; Martyrs' Day, 9 January; Labor Day, 1 May; National Revolution Day, 11 October; National Anthem Day, 1 November; All Souls' Day, 2 November; Independence from Colombia, 3 November; Flag Day, 4 November; Independence Day (Colón only), 5 November; First Call of Independence, 10 November; Independence from Spain, 28 November; Mother's Day and Immaculate Conception, 8 December; Christmas, 25 December. Movable religious holidays are Shrove Tuesday and Good Friday.

TIME: 7 am = noon GMT.

LOCATION, SIZE, AND EXTENT

The Republic of Panama, situated on the Isthmus of Panama, has an area of 78,200 sq km (30,193 sq mi). Comparatively, the area occupied by Panama is slightly smaller than the state of South Carolina. The Canal Zone (1,432 sq km/553 sq mi), over which the United States formerly exercised sovereignty, on 1 October 1979 was incorporated into Panama, with the United States retaining responsibility for operation of the Panama Canal and the use of land in the zone for maintenance of the canal until the year 2000.

Panama extends 772 km (480 mi) e–w and 185 km (115 mi) n–s. Bordered on then by the Caribbean Sea, on the e by Colombia, on the s by the Pacific Ocean, and on the w by Costa Rica, Panama has a total boundary length of 555 km (345 mi), of which 2,490 km (1,547 mi) is coastline.

Panama's capital city, Panama City, is located where the Panama Canal meets the Gulf of Panama.

TOPOGRAPHY

Panama is a country of heavily forested hills and mountain ranges. The two principal ranges are in the eastern and western sections of the country, and a third, minor range extends southward along the Pacific coast into Colombia. The eastern Cordillera de San Blas parallels the Caribbean coastline, while the Serranía de Tabasará ascends westward, culminating in the Barú volcano (3,475 m/11,401 ft), formerly known as Chiriquí. Between these ranges, the land breaks into high plateaus, ridges, and valleys. The Panama Canal utilizes a gap in these ranges that runs northwest to southeast and averages only 87 m (285 ft) in altitude.

Panama has more than 300 rivers, most of which flow into the Pacific, with only the Tuira River in Darién Province of any commercial importance. Both coasts of the isthmus have deep bays, but the Gulf of Panama is especially well provided with deepwater anchorages. Panama also has more than 1,600 islands, including the Amerindian-inhabited San Blas Islands in the Caribbean (366) and the Pearls Archipelago (Archipiélago de las Perlas) in the Gulf of Panama (over 100). Its largest island is the penal colony Coiba, which is south of the Gulf of Chiriquí.

Panama rests upon the Caribbean Tectonic Plate near its convergence with the Cocos, Nazca, and South American plates. The same motion of these plates, which created the Isthmus of Panama, continues to cause frequent tremors and earthquakes in the region; most of these are of low magnitude and cause little damage.

CLIMATE

Panama is tropical, but temperatures vary according to location and altitude. The annual average temperature on both coasts is 29°c (81°f), and it ranges from 10° to 19°c (50 to 66°f) at various mountain elevations. There is little seasonal change in temperature, with warm days and cool nights throughout the year. Humidity is quite high, however, averaging 80%. Rainfall averages 178 cm (70 in) in Panama City and 328 cm (129 in) in Colón. The period of lightest rainfall is from January to March.

FLORA AND FAUNA

Most of Panama is a thick rain forest, with occasional patches of savanna or prairie. On the wet Caribbean coast, the forest is evergreen, while on the drier Pacific side the forest is semi-deciduous. Species of flowering plants total over 9,900 and include the national flower, the Holy Ghost orchid. Mammals inhabiting the isthmus are the anteater, armadillo, bat, coati, deer, opossum, peccary, raccoon, tapir, and many varieties of monkey. Reptiles, especially alligators, are numerous along the coasts. Bird life is rich and varies according to the presence of migratory species. Fish abound, with the Pacific coast being a favored region for sport fishing. As of 2002, there were at least 218 species of mammals and 302 species of birds throughout the country.

ENVIRONMENT

Soil erosion and deforestation are among Panama's most significant environmental concerns. Soil erosion is occurring at a rate of 2,000 tons per year. During 1990–2000, the annual average rate of deforestation was 1.6%. Air pollution is also a problem in urban centers due to emissions from industry and transportation. In 2000, the total of carbon dioxide emissions was at 6.3 million metric tons. Pesticides, sewage, and pollution from the oil industry cause much of the pollution.

Agencies with environmental responsibilities include the Ministry of Health and Ministry of Rural Development. The Smithsonian Tropical Research Institute, in Balboa, conducts studies on the conservation of natural resources.

According to a 2006 report issued by the International Union for Conservation of Nature and Natural Resources (IUCN), threatened species included 17 types of mammals, 20 species of birds, 7 types of reptiles, 52 species of amphibians, 17 species of fish, 2 species of invertebrates, and 195 species of plants. Endangered species include the red-backed squirrel monkey, tundra peregrine falcon, spectacled caiman, American crocodile, and four species of sea turtle (green sea, hawksbill, olive ridley, and leatherback).

POPULATION

The population of Panama in 2005 was estimated by the United Nations (UN) at 3,232,000, which placed it at number 130 in population among the 193 nations of the world. In 2005, approximately 6% of the population was over 65 years of age, with another 29% of the population under 15 years of age. There were 102 males for every 100 females in the country. According to the UN, the annual population rate of change for 2005–10 was expected to be 1.8%, a rate the government viewed as too high; it was addressing the relatively high fertility rate with family life and sexuality education programs in primary and secondary schools. The projected population for the year 2025 was 4,239,000. The population density was 43 per sq km (111 per sq mi).

The UN estimated that 62% of the population lived in urban areas in 2005, and that urban areas were growing at an annual rate of 2.31%. The capital city, Panama City (Panamá), had a population of 930,000 in that year. Other major cities and their estimated populations include Colón, 187,705; and David, 112,000.

MIGRATION

Immigration and emigration have been roughly in balance in recent years. In the 1990s, there were 61,400 foreign-born persons in Panama, of which 13,644 were Colombians. In 1999, the United Nations High Commissioner for Refugees (UNHCR) urged Panamanian authorities to take a more flexible approach toward Colombians who arrived after February 1998 and were under a Temporary Protection plan. The total number of migrants in the country in 2000 was 82,000. In 2004 worker remittances were $231 million. In 2004 there were 1,608 refugees in Panama and 271 asylum seekers. In 2005, the net migration rate was an estimated - 0.86 migrants per 1,000 population. The government viewed the migration levels as satisfactory.

ETHNIC GROUPS

The racial and cultural composition of Panama is highly diverse. According to recent estimates, about 70% of the inhabitants are mestizo (mixed Amerindian and white) or mulatto (mixed white and black); 14% are Amerindian and mixed (West Indian); 10% are white (mostly Europeans); and 6% are Amerindian. There is also a Chinese community of about 150,000. The indigenous tribes include the Embera-Wounaan, Ngobe-Bugle, and the Kona, all of which reside in tribal-led reservations within the country. The Bri-Bri and the Naso are smaller tribes found near the Costa Rica border.

LANGUAGES

Spanish, the official language of Panama, is spoken by over 90% of the people, but English is a common second language, spoken by most Panamanian professionals and businesspeople. The Amerindians use their own languages. Many Panamanians are bilingual.

RELIGIONS

At the last census in 1998, an estimated 82% of the people were Roman Catholic; 10% were evangelicals; and 3% were unaffiliated with any religious group. More recent, but unofficial, estimates suggest that the Catholic population is declining in favor of the evangelicals, which may account for up to 20% of the population. Mainstream Protestant groups include Lutherans, Southern Baptists, and Methodists (United Methodist and the Methodist Church of the Caribbean and the Americas). There are small groups of Latter-Day Saints (Mormons), Seventh-Day Adventists, Jehovah's Witnesses, Episcopalians, and other Christians. Buddhists, Jews, Muslims, and Baha'is also had small communities. Panama is home to one of the world's seven Baha'i Houses of Worship.

Although Roman Catholicism is recognized by the constitution of 1972 as the majority religion, it is not designated as an official religion of state and religious freedom, as well as separation of church and state, are guaranteed. The Panamanian Ecumenical Committee is a nongovernmental group that encourages interfaith dialogue and charitable service.

TRANSPORTATION

Motor vehicles transport most agricultural products. In 2002, there were 11,592 km (7,203 mi) of roads, of which about 4,079 km (2,534 mi) were paved, including 30 km (19 mi) of expressways. The principal highway is the National (or Central) Highway—the Panamanian section of the Pan American Highway—which runs from the Costa Rican border, via Panama City and Chepo, to the Colombian border. The 80-km (50-mi) Trans-Isthmian Highway links Colón and Panama City. Panama's rugged terrain impedes highway development, and there are few good roads in the republic's eastern sections. In 2003 there were 266,900 registered passenger cars and 171,800 commercial vehicles.

As of 2004, there were a total of 355 km (220 mi) of standard and narrow gauge railway lines, all government-run. Of that total, narrow gauge accounted for 279 km (174 mi). The Panama Railroad parallels the canal for 77 km (48 mi) between Colón and Panama City. Other lines connect Pedregal, David, Puerto Armuelles, and Boquete and unify Bocas del Toro Province.

In 2005, the Panamanian merchant marine registered 5,005 ships of 1,000 GRT or more, totaling 122,960,929 GRT. Most of the ships are foreign-owned but are registered as Panamanian because fees are low and labor laws lenient. International shipping passes almost entirely through the canal ports of Cristóbal, which serves Colón, and Balboa, which serves Panama City.

Panama is a crossroads for air travel within the Americas. As of 2004, there were an estimated 105 airports, 47 of which had paved runways as of 2005. The most widely used domestic airline is Compañía Panameña de Aviación (COPA), which also flies throughout Central America. Air Panama International serves passenger traffic to the United States and South America. Internacional de Aviación (INAIR) is an international passenger and cargo carrier. Panama has two international airports: the largest, Tocumen International Airport is in Panama City; the smaller, Omar Torrijos International Airport, is 19 km (12 mi) east of Panama City. In 2003, about 1.264 million passengers were carried on scheduled domestic and international airline flights.

The Panama Canal traverses the isthmus and is 82 km (51 mi) in length from deepwater to deepwater and is part of the nation's 800 km (497 mi) of navigable internal waterways. The great technical feat involved in constructing the canal was to cut through the mountains that span the region, dam the Chagres Lake, and then design and build the three sets of double locks that raise and lower ships the 26 m (85 ft) between lake and sea levels. The first passage through the canal was completed by the S.S. Ancon on 15 August 1914. As of 1 October 1979 when the US-Panama treaties went into effect, the canal was administered by the joint Panama Canal Commission, on which the United States had majority representation through the end of 1989. The United States turned over complete control of the canal to Panama on 31 December 1999. The canal takes ships of up to 67,000 tons. An oil pipeline across the isthmus was opened in 1982 to carry Alaskan oil. Its capacity is 830,000 barrels per day. The Bridge of the Americas across the canal at the Pacific entrance unites eastern and western Panama as well as the northern and southern sections of the Pan American Highway. Panama, the United States, and Japan have commissioned a $20-million study to search for alternatives to the canal. The feasibility of building a new canal at sea level was to be examined. Alternatively, the Panama Canal Commission has indicated its intention to increase the width of the Gaillard Cut (Corte Culebra), since larger ships are restricted to one-way daylight passage due to the narrowness. Panama also plans to consolidate the ports of Balboa on the Pacific and Cristóbal on the Caribbean into a single container terminal system.

HISTORY

The isthmian region was an area of economic transshipment long before Europeans explored it. It was also the converging point of several significant Amerindian cultures. Mayan, Aztec, Chibcha, and Caribs had indirect and direct contact with the area. The first European to explore Panama was the Spaniard Rodrigo de Bastidas in 1501. In 1502, Columbus claimed the region for Spain. In 1513, Vasco Nuñez de Balboa led soldiers across the isthmus and made the European discovery of the Pacific Ocean. Despite strong resistance by the Cuna Amerindians, the settlements of Nombre de Dios, San Sebastián, and, later, Portobelo were established on the Caribbean coast, while Panama City was founded on the Pacific coast. In 1567, Panama was made part of the viceroyalty of Peru. English buccaneers, notably Sir Francis Drake in the 16th century and Henry Morgan in the 17th, contested Spanish hegemony in Panama, burning and looting its ports, including Panama City in 1671.

From the 16th until the mid-18th century, the isthmus was a strategic link in Spanish trade with the west coast of South America, especially the viceregal capital of Lima. In 1740, the isthmus was placed under the jurisdiction of the newly recreated viceroyalty of New Granada.

Panama declared its independence from Spain in 1821 and joined the Republic of Gran Colombia, a short-lived union of Colombia, Venezuela, and Ecuador, founded in 1819. In 1826, it was the seat of the Pan American Conference called by the liberator, Simón Bolívar. When Gran Colombia was dissolved in 1829–30, Panama still remained part of Colombia. Secessionist revolts took place in 1830 and 1831, and during 1840–41.

The discovery of gold in California in 1848 brought the isthmus into prominence as a canal site linking the Atlantic and Pacific oceans. After the French failed to build one in the 1880s, they sold those rights to the United States for $40 million. The United States then negotiated the Hay-Herrán Treaty with Colombia in 1903. After Colombia refused to ratify the treaty, Panama seceded from Colombia and, backed by US naval forces, declared its independence on 3 November 1903. Panama then signed a canal agreement with the United States and received a lump sum of $10 million and an annual rent of $250,000. The Hay-Bunau-Varilla Treaty (1903) granted the United States in perpetuity an 8-km (5-mi) strip of land on either side of the canal and permitted the United States to intervene to protect Panamanian independence, to defend the canal, and to maintain order in the cities of Panama and Colón and in the Canal Zone.

The United States intervened to establish order in 1908—while the canal was under construction—and, after the canal had opened to traffic, in 1917 and again in 1918. In 1936, however, the United States adopted a policy of nonintervention, and in 1955, the annuity was raised to $1,930,000.

During the postwar decades, the question of sovereignty over the Canal Zone was a persistent irritant in Panamanian politics. On 9 January 1964, riots broke out in the Canal Zone as Panamanians protested US neglect of a 1962 joint Panama-US flagflying agreement. On the following day, Panama suspended relations with the United States and demanded complete revision of the Canal Zone treaty. Thereafter, Panama sought sovereignty over the Canal Zone and the elimination of the concept of perpetuity on any future arrangement. Diplomatic relations were restored in April, but negotiations went slowly thereafter.

The Panamanian government turned to dictatorship in October 1968, when National Guard Brig. Gen. Omar Torrijos Herrera deposed the elected president and established a dictatorship.

Final agreement on the future of the canal and the Canal Zone came on 7 September 1977, when Gen. Torrijos and US president Jimmy Carter signed two documents at OAS headquarters in Washington, DC. The first document, the Panama Canal Treaty, abrogated the 1903 Hay-Bunau-Varilla accord, recognized Panama's sovereignty over the Canal Zone (which ceased to exist as of 1 October 1979), and granted the United States rights to operate, maintain, and manage the canal through 31 December 1999, when ownership of the canal itself would revert to Panama. Panama would receive a fixed annuity of $10 million and a subsidy of $0.30 (to be adjusted periodically for inflation) for every ton of cargo that passed through the canal, plus up to $10 million annually from operating surpluses. The second document, the so-called Neutrality Treaty, guaranteed the neutrality of the canal for "peaceful transit by the vessels of all nations" in time of both peace and war. An additional provision added in October denied the United States the right of intervention into Panamanian affairs. The treaties were ratified by plebiscite in Panama on 23 October 1977 and, after prolonged debate and extensive amendment, by the US Senate in March and April 1978. When both treaties came into force in 1979, about 60% of the former Canal Zone's total area immediately came under Panama's direct control, including 11 of 14 military bases, the Panama City-Colón railway, and ports at both ends of the canal.

The Torrijos regime was populist, with a wide appeal to the neglected lower and lower middle classes of Panama. Moreover, Torrijos established nationalist credentials by standing up to the United States and demanding recognition of Panama's positions on the Canal Zone. Torrijos resigned as head of government in 1978 but continued to rule behind the scenes as National Guard commander until his death in a plane crash on 31 July 1981. Over the next few years, the National Guard, now renamed the Panama Defense Forces (PDF), came under the influence of Gen. Manuel Noriega.

On the civilian side, Aristedes Royo was elected president by the Assembly in October 1978, and was later forced out of office in July 1982. His successor was the vice president, Ricardo de la Espriella, who resigned in February 1984, just three months before scheduled presidential elections. In those elections, the economist and former World Bank official Nicolás Ardito Barletta, the military's approved candidate, won a close victory over former president Arnulfo Arias Madrid (running for the fifth time), in an election marked by voting irregularities and fraud. Barletta soon lost the confidence of the military and was forced out in September 1985. Vice President Eric Arturo Delvalle assumed power.

By 1987, Noriega had been accused by close associates and the United States of falsifying the 1984 election results, plotting the deaths of prominent opposition leaders and Gen. Torrijos, drug trafficking, giving aid to the Colombian radical group M-19 and Salvadoran rebels, and providing intelligence and restricted US technology to Cuba. Opposition forces, including the Roman Catholic Church, intensified and the government responded by banning public protest. The US Senate approved legislation cutting off aid to Panama in December 1987. In February 1988, following indictments of Noriega in US courts for drug trafficking, President Delvalle announced Noriega's dismissal. Noriega refused to step down, and the Legislative Assembly voted to remove Delvalle from office and replace him with Manuel Solís Palma, the minister of education. Delvalle went into hiding, and Panama entered a two-year period of instability and conflict.

Noriega also had problems within the PDF. Dissident military leaders, with either tacit or direct US approval, attempted coups in March 1988 and in October 1989. Unable to rely on the loyalty of the PDF, Noriega created his own paramilitary force, called the "Dignity Batallions," which were nothing more than freelance thugs called in at the dictator's whim. Domestically, Noriega suffered from a lack of support. In March 1987, a general strike occurred for several weeks. Emboldened by US efforts to remove Noriega, opposition forces coalesced, even as the government became more repressive. In elections held in May 1989, opposition candidates scored overwhelming victories, forcing Noriega to annul the elections and rely on intimidation and force.

Finally, the United States was engaged in a series of moves calculated to bring down the Noriega regime, which eventually led to a showdown. In March 1988, President Ronald Reagan suspended preferential trade conditions and withheld canal-use payments. In April, Reagan froze US-held Panamanian assets and suspended all private payments to Panama. Negotiations to allow Noriega to step down dissolved in May, when Noriega refused to abide by an agreement between the United States and Noriega's assistants. The administration of President George H. W. Bush continued pressure on Noriega, but itself came under criticism for its inability to resolve the problem. Finally, in December 1989, Noriega played his final card, declaring war on the United States and ordering attacks on US military personnel.

President George H. W. Bush responded quickly, ordering the US military into Panama. The troops remained for a week, delayed when Noriega sought sanctuary in the residence of the Papal Nuncio. Noriega surrendered and was returned to the United States for trial. Immediately, the Panamanian Electoral Tribunal declared the 1989 elections valid and confirmed the results. Guillermo Endara became president, Ricardo Arias Calderón first vice president, and Guillermo "Billy" Ford second vice president. Legislative elections were confirmed for most Legislative Assembly seats, and in January 1991 a special election filled the remaining seats.

Under President Endara, Panama made some strides toward economic recovery, but these were only impressive because the situation under Noriega had become so desperate. Politically, Endara lacked nationalist credentials, especially since he was installed by US military might. His administration was widely criticized for the continuing poor economic conditions.

In May 1994, a new president, Ernesto Pérez Balladares, was elected in the country's first free and fair elections since 1968. His opponent, Mireya Moscoso, entered political life in 1964 when she worked on the campaign of Arnulfo Arias, whom she eventually married. After Arias's death in 1988, Moscoso returned to Panama, where she formed the Arnulfista party, named for Arnulfo Arias. Balladares's Democratic Revolutionary Party (PRD) was closely associated with the Noriega dictatorship but the new president identified himself with the populist Torrijos regime. The years of Pérez Balladeres's rule were characterized by a multiparty cabinet that included several members who publicly denounced former dictator Manuel Noriega. Peréz Balladeres set in motion various economic reforms and continued close collaboration with the United States to implement treaties regarding the eventual turnover of the Panama Canal to Panamanian rule (which occurred 31 December 1999). A law ratified in 1997 created the Canal Authority to administer the Canal after the United States relinquished control. Though Pérez Balladeres worked to pass a referendum to allow his reelection, it failed.

Presidential campaigns ensued. The PRD, with its majority in congress, campaigned fiercely with its candidate Martin Torrijos Espino, son of the late dictator. The main opposition was the Arnulfista Party. Its candidate, Mireya Moscoso (who is the widow of Arias) swept the elections on 2 May 1999. Moscoso thus became the first woman to take the office. After having run in 1994 and lost to Pérez Balladeres), Moscoso defeated Torrijos in what was considered a fair election: 75% of the country's 2.7 million citizens voted. Moscoso took office on 1 September 1999.

As the end of the decade neared, the country prepared for the withdrawal of the US military on 31 December 1999, under the terms of the Panama Canal Treaty. Moscoso officiated, with former US president Jimmy Carter, at the formal ceremony where the United States relinquished power over the Canal. The Panama Canal was officially handed over to Panamanian rule on 31 December 1999; this marked an end to 80 years of US occupation. Though the accompanying ceremony took place a week prior to the historic date due to potential complications with millennium celebrations, the significance was nonetheless grand. The ceremony included King Juan Carlos of Spain and several Latin American leaders. Carter, who began the process to grant Panama control over the waterway more than 20 years prior under a treaty with then-president General Omar Torrijos, signed over the United States rule. President Bill Clinton declined invitations to attend the ceremony. The celebrations that ensued were overshadowed somewhat by concerns from US conservative politicians that the canal will not be secure in Panamanian hands. However, President Clinton pledged continued collaboration with Panama to ensure the canal's security.

In 2004, on a strong "zero tolerance" anticorruption platform that called for increased transparency, Martin Torrijos won the presidency, and his PRD party won a majority in the National Assembly over the Panameñista (formerly Arnulfista) party. After his inauguration in September of that year, he created a broad coalition of labor, religious, and civil society, as well as government leaders to form the Anti-Corruption Council to crack down on the corruption endemic to previous administrations.

Since regaining control of the canal, Panama has experienced difficulties turning the canal into an engine for economic growth. The economy expanded by less than 3% in 2001 and 2002, but GDP increased to approximately 4% in 2004 and 6% in 2005. Despite being the country with the highest per capita income in Central America, roughly 40% of Panamanians live in poverty.

GOVERNMENT

Under the constitution of 1972, Panama is a republic in which the president, assisted by a cabinet, exercises executive power. Reforms adopted in April 1983 changed the election of the president from an absolute majority of the National Assembly of Municipal Representatives to a direct popular vote, and a second vice president was added. The president and the two vice presidents must be at least 35 years of age and native Panamanians; they serve for five years and are not eligible for immediate reelection. For the 2009 national elections the executive branch will be reduced to including only one vice president. The constitution was ratified to reflect these changes in 2004.

Legislative power is vested in the unicameral Legislative Assembly, which replaced the National Assembly of Municipal Representatives in 1984. The 78 members are elected for five-year terms by direct popular vote. However, as per the 2004 constitutional changes, assembly membership will be capped at 71 representatives for the 2009 elections. Regular sessions are from 11 October–11 November annually, and special sessions may be called by the president. Suffrage is universal for Panamanians 18 years of age or over. The next national elections were scheduled to take place 3 May 2009.

The 1972 constitution conferred extraordinary decision-making powers upon the commander of the Panama Defense Forces (PDF), who was allowed to participate in sessions of all executive and legislative organs, to direct foreign policy, to appoint Supreme Court magistrates, and to appoint and remove ministers of state, among other responsibilities.

The PDF was subsequently converted into a civilian group called the Public Forces. Following a purge of PDF senior officials, the Public Forces were placed under the cabinet-level Minister of Government and Justice.

POLITICAL PARTIES

Personalities rather than ideological platforms tend to be the dominating force in Panamanian politics. The traditional political parties were the Liberals and the Conservatives, and their differences lay initially in the issue of church and state power. More recently, parties tended to be coalitions of the many splinter groups that had formed around local leaders. Military interventions frequently led to the banning of political parties. Such interruptions have led to an extremely splintered party system, which held together only insofar as they opposed the military regimes.

The coalition that came to power in 1990 consisted of President Endara's Arnulfista Party, led by Dr. Arnulfo Escalona, the National Liberal Republican Movement (MOLIRENA), led by second vice president Guillermo Ford; and the Christian Democratic Party (PDC), led by first vice president Ricardo Arias. Subsequently, Arias broke from the coalition, and the PDC, which held a plurality of seats in the Legislative Assembly, became the leader of the opposition.

With the election of Ernesto Pérez Balladares to the presidency in May 1994, the Democratic Revolutionary Party (PRD), which had been closely linked to the country's former military regime, was returned to power, as part of a coalition that also included the Liberal Republican Party (PLR) and the Labor Party (PALA). This coalition gained effective control of the National Assembly as well as the executive branch.

Although the PRD was defeated with the election of Mireya Moscoso in 1999, in 2004 the PRD came back with a victory fueled by a much-awaited anticorruption campaign, and a coalition with the Popular Party (PP). The other six constituted political parties are the former Arnulfista party of the Partido Panameñista (PA), MOLIRENA, Democratic Change (CD), Solidarity Party (PS), National Liberaly Party (PLN), and the Liberal Party (PL).

LOCAL GOVERNMENT

Panama is divided into nine administrative provinces, each headed by a governor appointed by the president, and one Amerindian territory. The provinces are subdivided into 67 municipal districts, each of which is governed by a mayor and a municipal council of at least five members, including all that district's representatives in the National Assembly. There are 511 municipal subdistricts in all.

JUDICIAL SYSTEM

Judicial authority rests with the Supreme Court, composed of nine magistrates and nine alternates, all appointed by the president (subject to approval by the Legislative Assembly) for 10-year terms. The Supreme Court magistrates appoint judges of the superior courts who in turn appoint circuit court judges in their respective jurisdictions. There are four superior courts, eighteen circuit courts (one civil and one criminal court for each province), and at least one municipal court in each district.

At the local level, two types of administrative judges—corregidores and night (or police) judges—who hear minor civil and criminal cases involving sentences under one year. Appointed by the municipal mayors, these judges are similar to Justices of the Peace. Their proceedings are not subject to the Code of Criminal Procedure and defendants lack procedural safeguards afforded in the regular courts.

The constitution guarantees a right to counsel for persons charged with crimes and requires the provision of public defenders for indigent criminal defendants. Trial by jury is afforded in some circumstances.

The 1996 amendment to the constitution abolished the standing military and contains a provision for the temporary formation of a "special police force" to protect the borders. The Judicial Technical Police perform criminal investigations in support of public prosecutors. The constitution also provides for an independent judiciary; however, the judiciary is susceptible to corruption.

The legal system is based on the civil law system. Panama accepts the compulsory jurisdiction of the International Court of Justice with reservation.

ARMED FORCES

The Panamanian Defense Force disappeared with the US intervention in 1989. The National Police Force numbers approximately 11,800 members, supported by a maritime service (estimated at 400 with 39 patrol boats) and an air service (400 staff, 12 aircraft, and 34 utility helicopters). In 2005, Panama's defense budge totaled $158 million.

INTERNATIONAL COOPERATION

Panama is a charter member of the United Nations, having joined on 13 November 1945, and participates in ECLAC and several nonregional specialized agencies, such as the FAO, IAEA, the World Bank, the IFC, UNESCO, UNIDO, and the WHO. Panama is also a member of the Inter-American Development Bank, G-77, the Latin American Economic System (LAES), the Latin American Integration Association (LAIA), the OAS, the Association of Caribbean States (ACS), and the Río Group. Panama is also a part of the Central American Parliament (PARLACEN). The nation is part of the Nonaligned Movement.

In environmental cooperation, Panama is part of the Basel Convention, Conventions on Biological Diversity and Whaling, Ramsar, CITES, the London Convention, International Tropical Timber Agreements, the Kyoto Protocol, the Montréal Protocol, MARPOL, the Nuclear Test Ban Treaty, and the UN Conventions on the Law of the Sea, Climate Change and Desertification. The nation is also a part of the Central American-US Joint Declaration (CONCAUSA).

ECONOMY

Panama depends largely on its privileged geographical position: the economy is based on a well-developed services sector, including the Panama Canal, banking, insurance, government, the transPanamanian oil pipeline, and the Colón Free Zone. The Panama Canal and the monetary regime anchored in the use of the US dollar as legal tender spurred the rapid development of the service economy which offset markedly unfavorable terms of trade. The unique monetary system played a significant role in the creation of an International Banking Center and the Colón Free Zone.

Whereas many countries were characterized by a growing protectionism in the late 1940s, Panama launched the Colón Free Zone (the world's largest free zone, with Hong Kong as the largest free port). Panama also earned substantial rents through the construction of the trans-Panamanian oil pipeline and by the licensing of the Panamanian flag to merchant ships from around the world.

The economy generated annual growth of more than 6% during the period 1950–81. However, economic growth stagnated to 1.9% annually over 1977–87, caused by the aftermath of the second oil shock and the debt crisis. In the early 1990s, Panama rebounded from an excruciating recession brought about by a US embargo and subsequent military invasion. The US objective was the capture of General Manuel Noriega, who had installed puppet governments and was responsible for an increase in drug trafficking and money laundering. After Noriega was captured, extradited and condemned at a Miami federal court, Guillermo Endara assumed office. Nevertheless, his administration was widely criticized for not fulfilling Panamanians' hope for a rapid and bountiful recovery.

In May 1994, Armando Perez Balladares was elected president. The economy continued to grow, but at a slower pace during the first half of the 1990s. Panama's main engines of economic growth (the Panama Canal, the Colón Free Zone, and International Banking Center) continued to lose competitiveness in the context of an open economy throughout the world. The Balladares administration responded in 1996 with a solid program of economic reforms. These included the privatization of two seaports (Cristóbal and Balboa), the promulgation of an antimonopoly law, the renegotiating of foreign debt with commercial banks, the privatization of the electricity and water companies, and a banking reform law. These economic reforms were accompanied with the recovery of the majority of traditional sectors, with the exception of the construction sector.

Between 1988 and 1998, the economy grew at 5% annually. In 1999, Mireya Moscoso was elected to the presidency. She did not intend to privatize the few remaining state enterprises, and wanted to raise protectionist tariffs to help local farmers, but membership in the WTO forbade this action. In December 1999, in accordance with the 1977 Panama Canal Treaty, the Panama Canal and all American bases were returned to the Panamanian government, comprising 364,000 acres and estimated to be worth $4 billion. Real GDP growth fell to 3.2% in 1999 (down from 4.4% in 1998) and then to 2.5% in 2000. A major cause of the slowdown was a decline in foreign direct investment (FDI), which had run at about $1.3 billion in 1997 and 1998, but fell to $.65 billion in 1999 and $.60 billion in 2000. Real GDP growth fell to 2.5% in 2000.

In 2001, growth declined further as declining export demand and a dramatic drop in tourism following the 11 September 2001 terrorist attacks on the United States were added to declining domestic demand. Real GDP annual growth fell to 0.3% in 2001, and is estimated to have reached only 1.2% in 2002. Inflation has been held in control, falling from 1.5% in 1999 to 0.3% in 2001, and estimated at 0.8% for 2002. Unemployment remains in double digits, reaching 14.4% in 2001. In 2001 Panama was removed from both the United States and the OECD lists of noncooperating countries on money laundering, having been certified as compliant with 23 of 25 Basel Core Principles by the IMF Offshore Financial Center Module II assessment in August 2001. However, in 2002 and 2003, Panama remained one of 23 countries on the US list of major illicit drug producing and/or drug transit countries.

The economy expanded by 7.6% in 2004, up from 4.3% in 2003; in 2005, the GDP growth rate was estimated at 5.5%, while the GDP per capita, at purchasing power parity, reached $7,300. Most of this growth has been fueled by export-oriented services, and the construction boom, which in turn were backed up by tax incentives. The inflation rate was fairly stable and at 0.2% in 2004 it did not pose a major problem to the economy. The unemployment rate was modest in 2005 (8.7%), and as such was not a key concern for the government.

INCOME

The US Central Intelligence Agency (CIA) reported that in 2005 Panama's gross domestic product (GDP) was estimated at $22.2 billion. The CIA defines GDP as the value of all final goods and services produced within a nation in a given year and computed on the basis of purchasing power parity (PPP) rather than value as measured on the basis of the rate of exchange based on current dollars. The per capita GDP was estimated at $7,300. The annual growth rate of GDP was estimated at 4.3%. The average inflation rate in 2005 was 2.5%. It was estimated that agriculture accounted for 7.6% of GDP, industry 17.9%, and services 74.5%.

According to the World Bank, in 2003 remittances from citizens working abroad totaled $85 million or about $28 per capita and accounted for approximately 0.7% of GDP. Foreign aid receipts amounted to $30 million or about $10 per capita and accounted for approximately 0.3% of the gross national income (GNI).

The World Bank reported that in 2003 household consumption in Panama totaled $8.07 billion or about $2,703 per capita based on a GDP of $12.9 billion, measured in current dollars rather than PPP. Household consumption includes expenditures of individuals, households, and nongovernmental organizations on goods and services, excluding purchases of dwellings. It was estimated that for the period 1990 to 2003 household consumption grew at an average annual rate of 4.9%. In 2001 it was estimated that approximately 22% of household consumption was spent on food, 18% on fuel, 14% on health care, and 4% on education. It was estimated that in 1999 about 37% of the population had incomes below the poverty line.

LABOR

In 2005, Panama's workforce was estimated at 1.39 million. As of 2003, the services sector accounted for 65.2% of the labor force, with 17.51% in agriculture, 17.2% in industry, and 0.1% in undefined occupations. Panama's workforce is marked by an abundance of unskilled laborers, but a shortage of skilled workers. The unemployment rate rose from 11.8% in 1985 to 17% in 1990, and then declined to 13% by 2000. In 2005, the unemployment rate was estimated at 8.7%.

In 1999, Panama had over 250 unions with about 80,000 private sector members, organized into 48 federations and 7 confederations. The province of Panama is where more than two-thirds of the total number of unions are found. About 10% of the workforce was unionized as of 2001. The Confederation of Workers of the Republic of Panama, formed in 1963, is an affiliate of the ICFTU, and the National Center of Panamerican Workers is affiliated with the WFTU. Strikes are permitted, and collective bargaining is widely practiced.

The law provides for an eight-hour day, a six-day week, minimum wages, a month's vacation with pay, maternity benefits and equal pay for women, and restrictions on the employment of minors. The minimum wage ranged from $0.80 to $1.50 per hour in 2001. All employees are entitled to a one-month annual bonus in three equal installments, two of which the worker receives directly and one of which is paid into the Social Security Fund. The law prohibits children under the age of 14 from working, but child labor continues to be widespread.

AGRICULTURE

About 9.3% of the total land area was classified as arable in 2003. Farming methods are primitive, and productivity is low. The best lands are held by large owners. Agriculture contributes about 7% to GDP and accounted for 34% of exports in 2004.

Panama is self-sufficient in bananas, sugar, rice, corn, and coffee, but imports large quantities of other foods. Bananas are the leading export product and the banana industry is an important source of rural employment; exports were valued at $108.2 million in 2004, about half destined for the German market. In 2004, crop production (in tons) included sugarcane, 1,650,000; bananas, 525,000; rice, 296,000; corn, 80,000; and coffee, 8,700.

ANIMAL HUSBANDRY

The Panamanian livestock industry produces sufficient meat to supply domestic demand and provides hides for export. Most cattle and hogs are tended by small herders, and dairy farming has expanded in recent years. In 2005 there were 1,600,000 head of cattle, 272,000 hogs, and about 14 million chickens. Milk production in 2005 was reported at 187,000 tons. Panama imports a substantial amount of its dairy needs (powdered milk, butterfat, and cheese), primarily from New Zealand.

FISHING

The offshore waters of Panama abound in fish and seafood, and fisheries are a significant sector of the national economy. There is freshwater fishing in the Chiriquí River and deep-sea fishing along the Pacific and Caribbean coasts for amberjack, barracuda, bonito, corbina, dolphinfish, mackerel, pompano, red snapper, sailfish, sea bass, and tuna.

In 2006, the fish catch totaled 229,652 tons, as compared with 131,514 tons in 1986. The main commercial species caught that year were Pacific anchoveta (78,618 tons), Pacific thread herring (55,730 tons), yellowfin tuna (28,694 tons), and skipjack tuna (11,474 tons). Exports of fish products were valued at nearly $412.3 million in 2003.

FORESTRY

Forests cover about 39% of the country's area but have been largely unexploited because of a lack of transportation facilities. Nearly all forestland is government-owned. Hardwood, particularly mahogany, is produced for export in Darién and along the Pacific coast in Veraguas. Abacá fiber, which is obtained in Bocas del Toro and is used in the making of marine cordage, is a valuable forest product. Approximately 30% of Panama's natural forests are still unused. The average annual deforestation rate was 1.6% during 1990–2000. In order to protect and preserve native forests, the National Association for the Conservation of Nature has begun a vast reforestation program. Production of roundwood was 1,372,000 cu m (48.4 million cu ft) in 2004, 89% used as fuel wood.

MINING

Panama had a small-to-moderate mineral sector, with known deposits of copper, manganese, iron, asbestos, gold, and silver. Construction materials were a leading industry, including cement, clays, lime, limestone, and sand and gravel. There was no recorded gold or silver production from 2000 through 2003, nor was there any copper output that year. Salt, produced by evaporation of seawater at Aguadulce, was a major mineral product. Output was in 2003 was estimated at 23,000 metric tons. Cement production in 2003 was estimated at 770,000 metric tons in 2003.

ENERGY AND POWER

Panama has no proven reserves of oil, natural gas, or coal, nor any oil-refining capacity. As a result, the country is totally dependent upon imports to meets its fossil fuel needs.

In 2002, Panama's petroleum imports, including crude oil, averaged 88,980 barrels per day, of which 28,000 barrels per day consisted of crude oil. Demand for refined oil products averaged 76,580 barrels per day. Refinery output that year averaged 19,790 barrels per day. However, in that same year, Panama closed its sole refinery. As a result, the country must import all of its refined petroleum products.

There were no recorded imports of natural gas in 2002, although Panama did import 50,000 tons of hard coal that year.

Panama had a total installed electric capacity of 1,260,000 kW in 2002, of which conventional thermal facilities accounted for 51.3% of capacity, with hydroelectric dedicated capacity accounting for the rest. Production of electric power that year totaled 5.162 billion kWh, of which 34.4% was from fossil fuels, 65.2% from hydropower, and the rest from other renewable sources. Consumption of electricity in 2002 was 4.786 billion kWh.

INDUSTRY

The performance of Panama's industry as a whole was negative during the 1980s, but garnered a 7% growth rate during the 1990s. Construction, manufacturing, mining, and utilities together accounted for 17% of GDP in 2000, but industrial activity decreased by 1.5% that year. The government and the private sector have invested large amounts in the construction of ports, roads, and bridges. Thus, the production of construction-related materials and finished wood products have all risen considerably in recent years. Construction activity itself rose 7.5% in 2000.

Limited by a small domestic market, Panamanian manufacturing represents around 8% of GDP. Growth in production reached an average 1.1% annually between 1978 and 1988, rising to 5.4% between 1988 and 1998 due to an import-substitution high tariff regime that ended in 1998. Manufacturing of mainly nondurable goods consists principally of food-processing plants and firms for the production of: alcoholic beverages, sugar, ceramics, tropical clothing, cigarettes, hats, furniture, shoes, soap, and edible oils. Other manufactured products include clothing, chemicals, cement, and construction products for domestic consumption.

Panama has potential to further develop its mining industry. The country has one oil refinery with a production capacity of 60,000 barrels per day. The government's privatization program was largely complete as of 2002.

The industrial production growth rate in 2005 year was 3.5%, lower than the overall GDP growth rate and an indicator that industry was not an economic growth engine. In 2005, industry accounted for 17.9% of the GDP and was bested by services—which comprised 74.5% of the economy; agriculture was the smallest economic sector although it employed more people than the industrial sector. Panama currently suffers from a shortage of skilled labor, but has an oversupply of unskilled labor.

SCIENCE AND TECHNOLOGY

Although the shipping technology of the Panama Canal is owned and operated by the United States, technicians from the United States who operated the canal's facilities were replaced gradually by Panamanian personnel before the canal was officially turned over to Panama. The National Academy of Sciences of Panama (founded in 1942) advises the government on scientific matters, and the National Research Center (1976) coordinates scientific and technological research. The Smithsonian Institution has had a tropical research institute in Balboa since 1923. The University of Panama, founded in 1935 in Panama City, has faculties of agriculture, medicine, sciences, dentistry, nursing, and pharmacy. Santa María La Antigua University, founded in 1965 at El Doradom Panama, has a department of technology and natural science. The Technological University of Panama, founded in 1984 at El Dorado, has colleges of civil, mechanical, industrial, electrical, and computer-science engineering. The Nautical School of Panama, founded in 1959 at Paitilla, offers courses in nautical engineering. In 1987–97, science and engineering students accounted for 29% of college and university enrollments. The Museum of Natural Sciences, founded in Panama in 1975, is concerned with natural history and the fauna of Panama and other countries.

In 2001, spending by Panama on research and development (R&D) totaled $68.432 million or 0.37% of GDP. Of that amount, foreign sources accounted for the largest portion (55.1%), followed by the government sector (32.8%). Business accounted for 10.2%, with higher education and nonprofit organizations at 0.6% and 1.2%, respectively. In that same year, Panama had 95 researchers and 213 technicians engaged in R&D per million people. In 2002, Panama's high technology exports totaled $1 million, or 1% of its manufactured exports.

DOMESTIC TRADE

About 65% of the total national sales of consumer goods occurs in Panama City. The cities of David, Colón, Santiago, and Chitre sponsor nearly all of the rest. Marketing and distribution are generally on a small scale, with direct merchant-to-customer sales. Some wholesalers also act as retailers. Many shops in Panama City and Colón sell both native handicrafts and imported goods. Luxury items are generally untaxed in order to attract tourist sales. There are also US-style variety stores. In rural districts, agricultural products and meat are sold at markets. A 5% value-added tax (VAT) applies to most goods and services.

The usual business hours are 8 am to 5 pm, Monday through Friday; and 8 am to noon on Saturday. Government offices are open weekdays from 8:30 am to 4:30 pm, Monday through Friday. Banking hours in Panamanian urban centers are generally from 8:00 am to 3 pm, Monday through Friday, and most banks are open on Saturdays from 9 am to 12 noon.

FOREIGN TRADE

The leading agricultural export—mainly controlled by foreigners—is bananas, followed by shrimp. The decline in exports of almost 11% from 1997 to 1998 can be explained by quotas imposed on banana exports by the EU (bananas represent nearly one-fifth of all exports). Light industry exports (clothing and manufacturing textiles) have been increasing due to the free trade zone; but competition from Mexico starting in 1996 and the reduction of protective tariffs in 1998 stunted growth. All of Panama's main export

commodities are foods, including bananas (19%), fish (18%), shrimp (10%), sugar (2.6%), and coffee (2.1%).

In 2005, exports reached $7.4 billion (FOB—free on board), while imports grew to $8.7 billion (FOB). In 2004, the bulk of exports went to the United States (50.5%), Sweden (6.6%), Spain (5.1%), the Netherlands (4.4%), and Costa Rica (4.2%). Imports included capital, food products, and petroleum products, and mainly came from the United States (33.3%), Netherlands Antilles (8.1%), Japan (6%), Costa Rica (5.7%), Mexico (4.6%), and Colombia (4.2%).

BALANCE OF PAYMENTS

Panama's adverse balance of trade is largely made up by invisible foreign exchange earnings from sales of goods and services in the Colón Free Trade Zone and from the Panama Canal. Nonetheless, Panama has had one of the highest amounts of goods and services export earnings in the region, relative to GDP. A strong services sector and foreign direct and financial investments have usually offset large merchandise trade deficits. In addition, Panama's debt traditionally trades with less volatility and a lower risk premium than most other Latin American issues.

The US Central Intelligence Agency (CIA) reported that in 2001 the purchasing power parity of Panama's exports was $5.9 billion while imports totaled $6.7 billion resulting in a trade deficit of $800 million.

The International Monetary Fund (IMF) reported that in 2001 Panama had exports of goods totaling $5.88 billion and imports totaling $6.71 billion. The services credit totaled $1.82 billion and debit $1.14 billion.

Exports of goods reached $8.8 billion in 2004, up from $7.6 in 2003. Imports increased from $7.4 billion in 2003 to $8.4 billion in 2004. The resource balance was consequently positive in both years, improving from $171 million in 2003 to $395 million in 2004. The current account balance was negative however, reaching

-$408 million in 2003, and -$274 million in 2004. Foreign exchange reserves (including gold) reached $1.1 billion in 2004, covering more less than two months of imports.

BANKING AND SECURITIES

Panama was considered the most important international banking center in Latin America in the late 1980s. In 1970, 28 banks operated in Panama's international banking center; by 1987 there were 120, with assets of nearly $39 billion. Liberalized banking regulations and use of the dollar made Panama one of Latin America's major offshore banking centers.

Since 1983, the year of the onset of Latin America's financial crisis, the Panamanian banking sector has contracted, both in number of banks and total assets. In 2001 there were about 85 banks in Panama, holding $38 billion in total assets. Fifty of the banks in Panama have general licenses, 25 banks have offshore licenses, eight foreign banks have representative offices, and two banks are government owned. The National Bank of Panama (Banco Nacional de Panamá—BNP), founded in 1904, is the principal official (but not central) bank and also transacts general banking business. Banking activities are supervised by the National Banking Commission (Comisión Bancaria Nacional—CBN).

The balboa is fully convertible with the dollar at a fixed rate of 1:1. The government cannot, therefore, implement a monetary policy. Most monetary developments are exogenously determined by the balance of payments.

Panama's banking center has allegedly been the main money laundering point for proceeds from international drug-trafficking. In March 1994, it was decreed that persons entering Panama had to declare money or financial instruments in excess of $10,000. For deposits and withdrawals in excess of this amount from local banking institutions, a form had to be completed, providing details about the person carrying out the transaction. In 1998, a banking law was enacted in order to modernize the banking system and increase government supervision. The International Monetary Fund reports that in 2001, currency and demand deposits—an aggregate commonly known as M1—were equal to $1.3 billion. In that same year, M2—an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual funds—was $9.4 billion.

Panama's international stock exchange, the Bolsa de Valores de Panama, began operations in June 1990. In 2003, there were a total of 94 listed companies. Companies rarely issue stock on the stock market and investment is small because of a 10% withholding tax. Panama's Central de Custodia de Valores (Panaclear) began operations in November 1996. A rating agency began operations in early 1997.

INSURANCE

There were about 41 national insurance companies in Panama in 1997. Domestic companies include the General Insurance Co., the International Insurance Co., and the International Life Insurance Co. For a firm to qualify as a national insurance company, 51% of the capital must be Panamanian. In Panama, third-party automobile liability and workers' compensation are compulsory insurance. Only the government provides workers' compensation, as it is a part of the social security scheme. All firms must be approved by the Superintendency of Insurance. In 2003, the value of all direct

insurance premiums written totaled $388 million, of which nonlife premiums accounted for $261 million. Panama's top nonlife insurer in 2003 was ASSA, which had gross written nonlife premiums of $44.8 million, while the nation's leading life insurer, Aseguradora Mundial had gross written life insurance premiums of $48.1 million.

PUBLIC FINANCE

Panama does not issue its own currency; US dollar notes circulate as the paper currency. Panama's local currency, the balboa, established in 1904, is issued only in coins. One balboa equals one US dollar.

The US Central Intelligence Agency (CIA) estimated that in 2005 Panama's central government took in revenues of approximately $3.4 billion and had expenditures of $3.9 billion. Revenues minus expenditures totaled approximately -$533 million. Public debt in 2005 amounted to 73.2% of GDP. Total external debt was $9.859 billion.

The International Monetary Fund (IMF) reported that in 2001, the most recent year for which it had data, central government revenues in millions of US dollars were 3,041 and expenditures were 2,934.4. Government outlays by function were as follows: general public services, 27.5%; public order and safety, 6.7%; economic affairs, 6.0%; housing and community amenities, 3.7%; health, 18.0%; recreation, culture, and religion, 1.3%; education, 16.2%; and social protection, 20.6%.

TAXATION

As of 2005, Panama's corporate tax rate stood at a flat rate of 30%. However, companies not declaring any dividends during the tax year are subject to a minimum dividend tax of 4% of taxable income, minus the income tax. For companies registered in Panama's tax-free processing zones (TFTZs), which are modeled after the long-standing Colón Free Trade Zone (CFTZ), a much-vaunted 0% rate is applied on all profits arising outside of Panama. The 0% corporate tax rate goes with an exemption from all export and import duties on reexports. Companies in TFPZs have tax liability only for sales within Panama's fiscal jurisdiction which, by statute, can make up no more than 40% of their business. Capital gains are generally taxed as income and at the corporate rate. Interest income and royalties are subject to withholding taxes of 15% and 30%, respectively.

Personal income tax in Panama, as of 2005, was taxed according to a progressive schedule that has a top rate of 30%. Dividends received by individuals are subject to a 10% withholding tax on nominative shares, and 20% if issued to the bearer. There are targeted deductions for mortgage interest, loans to pay school fees, medical expenses, health insurance, and donations to charity among others that reduce taxable income for individuals. Gift taxes depend on the amount, unless the gift was between linear descendants, in which case, the gift is tax-exempt.

The main indirect tax is Panama's value-added tax (VAT) with a standard rate of 5%, and a reduced rate of 0% applied to basic foodstuffs, trade and medical services. Tobacco-related products are subject to a 15% excise tax, with alcohol subject to a 10% rate. Other levies include license fees, stamp and education taxes, and property taxes. Property improvements are tax-exempt for the first five years.

CUSTOMS AND DUTIES

Panama imposes tariffs ranging of 0–15% on most manufactured goods. A 3% rate is applied to industrial equipment, industrial production inputs and raw materials. Agricultural inputs, agricultural machinery and agricultural chemicals pay no import duties. However, automobiles are subject to a 15–20% duty, while dairy products and rice are subject to duties of 40% and 50%, respectively. There is also a 5% value-added tax (VAT) on imports.

Panama has a free port in the Colón Free Trade Zone, the world's second-largest free trade zone, where foreign goods enter without going through customs. Goods may be stored, assembled, processed, or repackaged for sale or shipment to another country free of duty. Panama is a part of the Caribbean Basin Initiative and has bilateral preferential trade agreements with Costa Rica, El Salvador, Honduras, Guatemala, Nicaragua, and the Dominican Republic. The country also has special arrangements with Mexico, Colombia, and Chile.

FOREIGN INVESTMENT

Increased private sector investment and inflows from lending agencies should offset lower public expenditure and help to stimulate economic growth. The government sold the electricity generation and distribution utilities in 1996. In addition, the government partially sold the telephone company. The United Kingdom's Cable and Wireless bought a 49% stake in INTEL, the national telecommunications monopoly. Privatization of the state water utility was put on hold in 1998 due to violent protests. Other parastatal sales included the transisthmian railroad, both canal ports, two sugar companies, a casino, a cement company, a fruit company, and a horse racetrack.

The government encourages industrialization by granting special tax concessions to new enterprises and imposing protective duties on competing foreign manufacturers. The Industrial Development Bank, equivalent to the US Small Business Administration, promotes small industries and facilitates credit on a longterm basis. A 1986 law on industrial incentives grants industrial investors a wide range of benefits, the foremost of which is tax exceptions that vary according to whether all or part of the output is earmarked for the export or domestic market.

In 1997 and 1998, annual inflows of foreign direct investment (FDI) peaked at almost $1.3 billion a year. Total FDI reached 40% of GDP in 1998. In 1999, as sovereignty over the canal was transferred from the United States to Panama, FDI flows declined by more than half, to $652 million in 1999, $603 million in 2000, and $513 million in 2001. Major investors include the United States, the United Kingdom, Mexico, and Taiwan. The majority of foreign investments in Panama are in the transport, storage, services, and communication sectors.

In 2003, total capital inflows reached $792 million (or 5.72% of the GDP), up from $98.6 million in 2002. Most of the investments went to Colón Free Zone businesses and banks.

ECONOMIC DEVELOPMENT

The Panamanian economy is the most stable and among the most prosperous in the region. But the economy is highly segmented between its dynamic, internationally oriented service sector and the domestically oriented sector, which is beset with policy-induced rigidities and low productivity. About 14% of the labor force is unemployed despite the preponderance of services in the economy, low growth of the economically active population and relatively slow rural-urban migration. The protected poor performance of the economy has impeded job creation and contributed to high poverty levels and income inequality.

Despite Panama's relatively high per capita income, distribution of the wealth is highly skewed and had become progressively more evident in the 1990s. In 1979, the poorest 20% of the population received 4% of income; in the early 1990s that share had plunged to 2%, leaving Panama with one of the most unequal distributions in the hemisphere. The government's strategy for mitigating poverty and inequality rests primarily on reviving sustainable growth; its economic program emphasizes reforms that will mitigate the bias against employment creation (unemployment surpassed 14% in 2002), increase agricultural productivity, and reduce the high cost of the basic consumption basket.

In 2000, the International Monetary Fund (IMF) approved a 21-month, $85.5-million Stand-By Arrangement with Panama, to support the government's economic reform program. Economic growth slowed in the early 2000s, due in part to the global economic downturn, and weak domestic demand that resulted from the completion of large investment projects and a decline in bank credit to the private sector. The government in 2002 invested in infrastructure projects and strengthened the banking system.

The economy expanded at healthy rates in 2005, due to strong world trade growth, and good performance in the primary sectors. By 2006 and 2007 this trend was expected to dampen following a slower world trade growth.

SOCIAL DEVELOPMENT

The Social Security Fund, established by the government in 1941, provides medical service and hospitalization, maternity care, pensions for disability or old age, and funeral benefits. Retirement is set at age 62 for men and age 57 for women. This program is financed by an alcohol tax, in addition to employee and employer contributions. Employed women receive 14 weeks of maternity leave at 100% pay. Compulsory workers' compensation legislation covers employees in the public and private sectors. This program is funded entirely by employer contributions.

Despite constitutional equality, women generally do not enjoy the same opportunities as men. While Panama has a relatively high rate of female enrollment in higher education, many female graduates are still forced to take low-paying jobs. Women's wages are, on average, 30% lower than those of men. Women also face sexual harassment in the workplace, although it is prohibited by the Labor Code. Domestic violence remains a widespread problem. Convictions for domestic abuse are rare; victims generally choose counseling over prosecution. The Ministry of Women, Youth, Family, and Childhood was established to focus national attention on social issues affecting women and families. In 2004, child labor and trafficking in children continued.

Indigenous peoples in Panama are increasingly demanding more participation in decisions that affect their land. Semiautonomous status has been given to some tribal groups. Despite these provisions, many indigenous groups feel that existing reserves are too small. Human rights abuses include prolonged pretrial detention, poor prison conditions, and internal prison violence.

HEALTH

Public health services are directed by the Ministry of Health, whose programs include free health examinations and medical care for the needy, health education, sanitation inspection, hospital and clinic construction, and nutrition services. Health care expenditure was estimated at 7.3 % of GDP.

In 2004, Panama had 168 physicians, 48 dentists, and 152 nurses per 100,000 people. In 2000 there were close to 2,000 beds in public hospitals at the national, regional, and municipal levels.

Proceeds from a national lottery support state hospitals, asylums, and public welfare. Assistance has been received from such organizations as the World Health Organization, the US Institute of Inter-American Affairs, the Pan American Sanitary Bureau, the Institute of Nutrition of Central America and Panama, and UNICEF.

During the first two decades of the 20th century, when the Panama Canal was being built, the major health threats were yellow fever, malaria, smallpox, typhoid, dysentery, and intestinal parasites. Through the efforts of Col. William Crawford Gorgas, a US military surgeon and sanitary officer, malaria was controlled and the yellow fever mosquito was virtually eliminated. In the early 2000s, the principal causes of death were cancer, heart disease, cerebrovascular disease, pneumonia and bronchopneumonia, enteritis, and diarrhea.

Col. Gorgas pioneered in providing Panama City and Colón with water and sewer systems; in some areas of Panama, poor sanitation, inadequate housing, and malnutrition still constitute health hazards. In 2000, 87% of the population had access to safe drinking water and 94% had adequate sanitation. However, in the same year, 18% of children under five years old were considered malnourished. The government of Panama is currently increasing distribution of vitamin A capsules to populations with high risk of vitamin A deficiency, mostly the Indians in the western region of Panama. Immunization rates for children up to one year old were: tuberculosis, 99%; diphtheria, pertussis, and tetanus, 95%; polio, 99%; and measles, 92%. Polio, measles, and neonatal tetanus were at extremely low numbers during 1994. Goiter was present in 13.2% of school-age children.

As of 2002, the crude birth rate and overall mortality rate were estimated at, respectively, 18.6 and 5 per 1,000 people. The infant mortality rate in 2005 was 16.73 per 1,000 live births. Maternal mortality was 70 per 1,000 live births in 1998. Average life expectancy in 2005 was 75 years.

The HIV/AIDS prevalence was 0.90 per 100 adults in 2003. As of 2003, there were approximately 16,000 people living with HIV/AIDS in the country. AIDS and pneumonia were the only communicable diseases among the ten leading causes of death in Panama.

HOUSING

Housing in urban areas has been a permanent problem since US construction in the Canal Zone brought a great influx of migrant laborers into Colón and Panama City. The government-established Bank of Urbanization and Rehabilitation began to build low-cost housing in 1944, and by 1950, it had built more than 1,500 units to house 8,000 people near Panama City. A 1973 housing law, designed to encourage low-income housing construction, banned evictions, froze all rents for three years, and required banks to commit half their domestic reserves to loans in support of housing construction projects. By the early 1980s, however, the shortage of low-income housing remained acute, particularly in Colón. A construction boom in the early 1980s was mainly confined to infrastructure projects and office space.

In 2000, there were 793,732 dwellings units nationwide with an average of 3.6 people per dwelling. Though most homes are made of brick, stone, or concrete blocks, about 4% of the total housing stock was made of straw and thatch.

EDUCATION

Education is free for children ages 6 through 15. Primary school covers the first six years of compulsory studies. Secondary education has two stages, each lasting three years. At secondary, vocational, and university levels, fees may be charged for the development of libraries and laboratories. The academic year runs from April to December.

In 2001, about 50% of children between the ages of four and five were enrolled in some type of preschool program. Primary school enrollment in 2003 was estimated at about 100% of age-eligible students. The same year, secondary school enrollment was about 63% of age-eligible students. It is estimated that about 97.5% of all students complete their primary education. The student-to-teacher ratio for primary school was at about 24:1 in 2003; the ratio for secondary school was about 16:1. In 2003, private schools accounted for about 10% of primary school enrollment and 14.5% of secondary enrollment.

The leading institution of higher education, the state-run University of Panama, was founded in Panama City in 1935. A Catholic university, Santa María la Antigua, was inaugurated in May 1965, with an initial enrollment of 233. In 2003, about 43% of the tertiary age population were enrolled in some type of higher education program; (32% for men and 55% for women). The adult literacy rate for 2004 was estimated at about 91%.

As of 2003, public expenditure on education was estimated at 4.5% of GDP, or 7.7% of total government expenditures.

LIBRARIES AND MUSEUMS

The National Library of Panama, located in Panama City, was founded in 1892 as Biblioteca Colón and reorganized as the National Library in 1942. It is a branch of the Ministry of Education's public library system and has over 200,000 volumes. There are more than 40 other public libraries and branches. The National Archives, established in 1924, contain historical documents, books, and maps, as well as administrative papers of government agencies and a judicial section with court records. The Biblioteca Pública Morales has 280,000 volumes, while the Simón Bolívar Library at the University of Panama has holdings of over 267,000 volumes. The Smithsonian Tropical Research Institute in Balboa has 44,000 volumes.

The Instituto Panameño de Arte, founded in 1964, displays excellent collections of pre-Columbian art. Newer museums in Panama City include the Museum of Nationhood (dedicated in 1974); the Museum of Colonial Religious Art (1974); the Museum of the History of Panama (1977), which exhibits documents and objects of historical value; and the Museum of Panamanian Man (1976), with archaeological, ethnographic, and folkloric displays. Panama City also hosts the Museum of Contemporary Art, the Afro-Antillean Museum, the Museum of Natural Sciences, the Postal Museum, and the Anthropological Museum Reina Torres de Arauz. The Museum of History and Tradition of Penonome is in Cocle.

MEDIA

The Instituto Nacional de Telecomunicaciones (INTEL) operates Panama's telephone and telegraph systems. In 2003, there were an estimated 122 mainline telephones for every 1,000 people. The same year, there were approximately 268 mobile phones in use for every 1,000 people. Telegraph cables link Panama to the United States, to Central and South America, and to Europe.

In 2004, there was one government-owned educational television station. The same year, there were 8 television stations and 120 radio stations that were privately or institutionally owned. In 2003, there were an estimated 300 radios and 191 television sets for every 1,000 people. The same year, there were 38.3 personal computers for every 1,000 people and 62 of every 1,000 people had access to the Internet. There were 149 secure Internet servers in the country in 2004.

There were five major daily newspapers in 2004. With their estimated circulations, they were: El Siglo, 42,000; Crítica Libre, 40,000; La Prensa, 40,000; La Estrella de Panama, NA; and El Panama America, 40,000. The constitution provides for freedom of speech and the press, and the government is said to respect these rights in practice.

ORGANIZATIONS

The cooperative movement in Panama is limited. Producers' organizations are small, local, uncoordinated groups concerned mainly with practical education in techniques to improve production. The Chamber of Commerce, Industry, and Agriculture is in Panama City. There are some professional associations, including the National Medical Association.

National youth organizations include the Student Federation of Panama, the National Scout Association of Panama, and the YMCA. There are several sports associations organizing amateur competitions for such pastimes as baseball, tennis, squash, and track and field.

There are several associations dedicated to research and education in health and medicine, including the National Cancer Association and branches of Planned Parenthood. The Panama Association of University Women promotes career and education opportunities for women. Kiwanis and Lion's Clubs have programs in the country. There are national chapters of the Red Cross, UNICEF, and Habitat for Humanity.

TOURISM, TRAVEL, AND RECREATION

Travel facilities within Panama are good; Panama City and Colón are only one hour apart by road or rail. In addition to the Panama Canal itself, tourist attractions include Panama City, beach resorts in the Pearls Archipelago and San Blas Islands, the ruins of Portobelo, and the resort of El Valle in the mountains. Water sports, tennis, golf, and horse racing are popular. Nature treks and historic tours also attract visitors to Panama. Citizens of the United States and Canada need only a valid passport and tourist card to enter Panama. Other foreign nationals are required to have a valid passport, and either a visa or tourist card; both card and visa are valid for up to 90 days.

The government encourages tourism through the Panamanian Tourist Bureau. In 2003, about 534,000 tourists arrived in Panama, with about 88% of travelers from the Americas. That year there were 16,766 hotel rooms with 33,532 beds and an occupancy rate of 44%. The average length of stay per visit was two nights.

In 2005, the US Department of State estimated the daily cost of staying in Panama City and Colón at $186.

FAMOUS PANAMANIANS

Outstanding political figures of the 19th century include Tomás Herrera (1804–54), the national hero who led the first republican movement, and Justo Arosemena (1817–96), a writer and nationalist. The international lawyer Ricardo J. Alfaro (1882–1971) and the rector of the University of Panama, Octavio Méndez Pereira (1887–1954), were well-known Panamanian nationalists. The most important political leader of the 20th century was Omar Torrijos Herrera (1929–81), who ruled Panama from 1969 until his death and successfully negotiated the Panama Canal treaties of 1979 with the United States.

Important poets were Tomás del Espíritu Santo (1834–62), nationalist Amelia Denis de Icaza (1836–1910), Federico Escobar (1861–1912), Darío Herrera (1870–1914), and Ricardo Miró (1888–1940). Panamanian-born José Benjamin Quintero (1924–1999) was a noted stage director in the United States. Narciso Garay (1876–1953) founded the National Conservatory of Music and served as a foreign minister. Harmodio Arias (1886–1962) was the prominent owner of the newspaper El Panamá-America. Leading Panamanian painters include Epifanio Garay (1849–1903), Roberto Lewis (1874–1949), Sebastián Villalaz (1879–1919), and Humberto Ivaldi (1909–47). Noteworthy among Panamanian athletes is the former world lightand welter-weight boxing champion Roberto Durán (b.1951); the former baseball star Rod (Rodney) Carew (b.1945) is also of Panamanian birth.

DEPENDENCIES

Panama has no territories or colonies.

BIBLIOGRAPHY

Buckman, Robert T. Latin America, 2005. 39th ed. Harpers Ferry, W.Va.: Stryker-Post, 2005.

Cadbury, Deborah. Dreams of Iron and Steel: Seven Wonders of the Nineteenth Century, from the Building of the London Sewers to the Panama Canal. New York: Perennial, 2005.

Calvert, Peter. A Political and Economic Dictionary of Latin America. Philadelphia: Routledge/Taylor and Francis, 2004.

Guevara Mann, Carlos. Panamanian Militarism: A Historical Interpretation. Athens, Ohio: Ohio University Center for International Studies, 1996.

Health in the Americas, 2002 edition. Washington, D.C.: Pan American Health Organization, Pan American Sanitary Bureau, Regional Office of the World Health Organization, 2002.

Major, John. Prize Possession: The United States and the Panama Canal, 1903–1979. New York: Cambridge University Press, 1993.

Zencey, Eric. Panama. New York: Farrar, Straus, and Giroux, 1995.

PANAMA

Republic of Panama

Major City:
Panama City

Other Cities:
Balboa, Chitré, Colón, Cristóbal, David, Portobelo, Santiago

EDITOR'S NOTE

This chapter was adapted from the Department of State Post Report dated August 1996. Supplemental material has been added to increase coverage of minor cities, facts have been updated, and some material has been condensed. Readers are encouraged to visit the Department of State's web site at http://travel.state.gov/ for the most recent information available on travel to this country.

INTRODUCTION

PANAMA , because of its strategic position on the isthmus connecting the North and South American continents, was a major center for exploration and expansion during the 16th and 17th centuries. In 1821, some years after the decline of Spanish colonial power in the Western Hemisphere, the territory became part of Greater Colombia.

The question of a waterway across the isthmus, linking the Atlantic and Pacific oceans, and Colombia's refusal to ratify a treaty allowing construction, led to Panama's revolt and secession. The United States supported Panama with military forces, and recognized the new state on November 6, 1903. A treaty was signed, giving the U.S. perpetual control over what came to be known as the Canal Zone, a designation that no longer applies. The covenant was amended in 1977, and implemented in 1979, with provision for ending U.S. military presence in Panama on the last day of this century, and for turning over responsibility and operation of the canal to the Panamanians.

MAJOR CITY

Panama City

Panama City, the capital and principal city of the Republic of Panama, is situated on the Pacific side of the country. In 2000, it had an approximate population of 1,088,00. Often called the "Crossroads of the World," it offers a uniquely international ambience and an active life with modern shopping centers, art expositions and many excellent NSrestaurants.

Food

A wide variety of American and ethnic foods are available at modern supermarkets in Panama City. Seafood, meat, fruits, vegetables, and canned and packaged goods are readily available in Panamanian shops, although prepared foods which are imported from the U.S. or elsewhere can be expensive. Restaurants vary widely in both cost and cuisine. A full lunch can be had for seven dollars. There are also numerous top quality restaurants specializing in seafood, or any type of ethnic food, around the city. Pizza Hut, Dominos Pizza and other vendors offer home and office delivery.

Clothing

Summer clothes are worn year round in Panama. Cottons are the most comfortable, but cotton blends are satisfactory. Fabrics that are 100% synthetic neither absorb moisture nor "breathe" and are uncomfortable in Panama's humid climate. Many office buildings are overly air-conditioned so a light jacket or sweater can come in handy.

All types of clothing suitable for the Panamanian climate are available in retail shops in the Canal area, although selection may be limited at any given time. Prices in the local retail stores can be higher than U.S. prices, and size ranges are limited.

Men: Normal attire for male staff during working hours is a suit and tie. It is also preferred by many Panamanians. Some men use either the "guayabera" or a short-sleeved shirt. Casual sports attire is the rule outside the office. The guayabera, a long, untucked embroidered shirt, is frequently worn for daytime or evening social functions and can be purchased locally.

Women: Female officers and staff members are most comfortable in lightweight suits or tailored or otherwise professional-looking one or two-piece dresses. A blazer, whether in a traditional color or something more tropical, is a useful addition to a working wardrobe. Casual outfits should be brought for general use, and beachwear, shorts, and slacks for recreational purposes. Shorts are not generally worn on the streets, but pants are acceptable. Sun hats are useful when outdoors. In recent years, the trend in female formal wear in Panama has been towards street-length rather than long gowns.

Children: Department of Defense schools do not enforce a dress code. Girls wear mostly shirts or blouses with slacks, jeans or skirts. Boys wear long pants (mostly jeans) or shorts with T-shirts or sport shirts. Private schools require school uniforms, which vary from school to school.

Supplies and Services

American brands of toilet articles, cosmetics, home medicines, drugs, tobacco products, cleaning materials, and household and entertainment accessories are readily available in retail stores in Panama City, but at prices higher than in the United States. Local brands are available at retail stores for very reasonable prices.

Panama City has good facilities for shoe repair, laundry and dry-cleaning, and radio and automobile repair. Beauty and barbershops are also available. You can take advantage of competent tailoring and dressmaking services here.

Religious Activities

Although Panama is a predominately Catholic country (approximately 85%), places of worship of all denominations—with services in both English and Spanish—are located in Panama City and the Canal area. Sunday schools and church-related activities are numerous.

Education

Department of Defense Dependent Schools (DODDS) operates a school system in the canal area including grades K-l2, as well as a two-year college curriculum. The schools are modeled on the U.S. public school system and are accredited by the Middle States Association of Colleges and Secondary Schools. Instruction is in English. The schools are modern and well-equipped. Special education is available for children ages three and older. DODDS also has a talented and gifted program. Bus transportation is available for students in grades Kindergarten through twelfth grade. The school year runs from late August until mid June.

La Escuela Internacional de Panama (the International School of Panama) is the alternative school most often attended by American students, and is increasingly used due to the gradual closure of the DODDS system in Panama. Classes presently include grades K-12. The school's academic program meets the requirements of the Panamanian Ministry of Education and it has been accredited by the Southern Association of Colleges and Schools of the United Schools. Instruction is in English except for a 40-minute class in Spanish each day.

Applications for admission to the International School are accepted at any time during the year. Classes are limited to a maximum of 24 students. All students are tested by the school counselor or other qualified staff member at the time of registration. If you would like to initiate the admission process before arriving in Panama, you may send your child's Iowa Test (ITBS) results or the equivalent. Following testing, the school's Admissions Committee will review the completed application to evaluate the student's potential and to determine whether acceptance will contribute to a balance of nationalities, transient vs. local population, language capability, personal interests, and personalities. The school year runs from early August to late June, with approximately seven weeks of vacation from just before Christmas until the end of January.

There are two other private schools: St. Mary's Parochial School and the Episcopal School of Panama both schools are well regarded in Panama. St. Mary's Parochial School, located in the canal area, offers classes for pre-school through the twelfth grade. Instruction is in English and Spanish. Registration is held one day during the first week of March. Preregistration is not possible.

The Episcopal School of Panama (Colegio Episcopal de Panama) is a small college preparatory school. Both English and Spanish are taught as first languages. This school has a waiting list. Both of these schools are in session from April through December.

There are several good nursery schools on the military bases, in the canal area, and in Panama City. Those located on the military bases conduct classes in English from September through June. All others, as a general rule, are bilingual with a preference toward Spanish, and are in session from April through December. It is best to postpone any decision until parents can visit the schools to determine which will best suit the needs and personality of their child.

For most schools you will need proof of age (for pre-kindergarten and kindergarten), a copy of the student's last report card, and an up-to-date immunization record. All schools that comply with the regulations set forth by the Panamanian Ministry of Education (all but DODDS) require that the birth certificate or a photocopy of the passport, and the previous year's school record be translated into Spanish and notarized.

Special Educational Opportunities

The Panama Canal College, part of the Department of Defense School system, offers a two-year college course with Associate degrees available in Business Administration, Accounting, Business Data Processing, and others, including Secretarial skills. Current full-time tuition is $716 per semester for sponsored dependents under the age of 21. Dependent spouses may attend on a part-time basis (up to eleven credits), at a charge of $65.00 per credit hour.

The Panama Canal branch of Florida State University is located at Albrook Air Force Base. The university offers Bachelor of Arts degrees in Interamerican Studies, International Affairs and Social Science. In addition, students may complete up to 90 semester credit hours towards the 120 required for a degree in Business Administration. The last thirty credit hours must be taken in Florida. Tuition at Florida State is $90.00 per semester credit hour.

Florida-based Nova University offers several degrees at the Panama Learning Center, which was founded in 1977. These include a Bachelor of Science degree in Professional Management, a Master of Arts degree in Applied Linguistics and Teaching English as a Second Language, and a Master's degree in Business Administration, and Computer Programs. The cost per credit hour ranges from $125.00 for undergraduates to $200.00 for graduate courses.

The University of Oklahoma has an extension campus at Albrook, offering a Master of Educational Psychology and a Master of Public Administration. Current tuition is $203.75 per credit hour.

The above institutions are fully accredited. For additional information, they may be contacted at the following addresses:

Panama Canal College
DODDS, Panama Area
Unit 0925
APO, AA 34002

Florida State University
Panama Canal Branch
Unit 0922
APO, AA 34002

The University of Oklahoma
Education Service Center
Unit 0924
APO, AA 34002

Nova University
Panama Center
Unit 0924
APO, AA 34002

The University of Panama is located in Panama City. In general, you must successfully complete a five-year course to obtain a degree. The University will accept certificates from recognized secondary schools. Many classes are held in the evening and all instruction is in Spanish. For further information contact the University of Panama at Urbanizacion El Cangrejo, Republic of Panama.

The YMCA in the Canal area holds classes in Spanish, cooking, art, oil painting, ceramics, design, jewelry making, bridge, swimming, scuba diving and a variety of other subjects.

Sports

Organized athletic programs for adults are limited, but you can participate on an individual basis in almost any warm-weather sport. A number of swimming pools, tennis courts, golf courses, and stables are found throughout the city and the canal area. You can purchase athletic equipment of all types locally or at the sport shops on the bases.

Several hotels offer memberships to use their pools and other recreational facilities. There are also several quality health clubs in the city, as well as the gymnasiums on the bases, that offer aerobics and weightlifting. A variety of private social athletic clubs in Panama include the Club de Golf de Panama, the Club de Montana Altos del Lago, the Club de Yates y Pesca, and the Club Union.

Canal area facilities for children (organized by the Youth Recreation Program) include swimming, bowling leagues, league baseball and softball (December through April), soccer (in the Spring), Little League football (August through October), and lessons in judo, scuba diving, karate, and gymnastics.

Deep-sea and fresh-water fishing in the waters in and around Panama are among the best in the world. You can use most types of freshwater and saltwater tackle. Fishing in Gatun Lake for Peacock Bass is a popular pastime. Private boat skiing, fishing, and cruising is facilitated by the availability of various water crafts from several different locations for modest fees.

For the hunter, a variety of wild fowl, small game animals, and some larger animals such as deer abound. Most hunters in Panama use a shotgun, but air rifles are also used occasionally. Panama has a trap-shoot club, as well as several rifle ranges in the canal area. Neither a hunting nor a fishing license is required in the Republic of Panama. The Panamanian Government does requires a gun permit. The canal area has some easily-met licensing requirements, although there are some restrictions.

Horse racing, boxing and baseball are the favorite spectator sports in Panama. A local track holds races each week.

Baseball, basketball, softball and soccer are played extensively on the amateur level, and facilities are available for squash, racquetball, volleyball, and weight training.

Touring and Outdoor Activities

One small zoo is located in the Canal area. The Panama Canal Experimental Gardens are a popular spot for visits or picnics. Barro Colorado Island is a biological research center and forest preserve that is located in Gatun Lake within the canal system; day trips are made to explore this site where the Smithsonian Institute researches local flora and fauna.

Museums include the Canal Area Museum, Museum of Contemporary Art, the National Museum of Panama, and the Museum of the Panamanian Man, with its interesting collection of pre-Columbian pottery and gold artifacts.

Another point of interest is the ruins of "Panama La Vieja," the first Panamanian city on the Pacific side of the isthmus, which was founded by the Spaniards in 1519. It was destroyed by the pirate Henry Morgan in 1671. The Church of San Jose, with its famous Golden Altar, is another well-known site located in the colonial sector of Panama City. According to legend, the altar was saved from the assaults of Morgan the Pirate in the year 1671 when it was painted with whitewash to look like wood.

You can find a moderate change of climate in El Valle (2,000 feet) in the Cordillera de Veraguas, 80 miles from Panama, where a fair hotel is available. Boquete and Volcan are 350 miles away. At elevations of 4,000 and 7,000 feet, they offer spectacular mountain scenery, a cool climate, and good hotels. Contadora Island in the Las Perlas Archipelago is seventeen minutes by air from Panama City. The resort-like island offers a hotel, private homes that may be rented, and beautiful beaches.

San Jose, Costa Rica, is accessible by air at a reasonable price. The Colombian island of San Andres, as well as Bogota, Medellin, Cali, Barranquilla, and Cartagena in Colombia are also within easy reach by air. Country clearance must be obtained from the U.S. Embassy in Bogota prior to any travel to Colombia. By car, San Jose, Costa Rica is about thirteen hours from Panama City.

Beaches are available on the Pacific side (Panama Bay) approximately 60-90 minutes from Panama City. Beaches on the Atlantic side (Carib-bean Sea) can be reached in a twoto three-hour drive. Both areas provide a number of good beaches and varied facilities.

Entertainment

Panama City has a number of fine indoor theaters, as well as those in the canal area, where first-run American films are shown. Those shown in the city are in English with Spanish subtitles. Video stores also abound. No professional theater exists, but a few small theater groups produce plays periodically in Spanish and English. The Ancon Theater Guild has an active production schedule and there has been high interest and involvement from the mission community. The Balboa High School drama department presents two productions per year.

Concerts are presented by visiting musical artists and dance groups, either under the sponsorship of the National Concert Association, The National Institute of Culture or various Embassies. The national symphony and the ballet company also perform periodically.

A few cocktail lounges feature small combos and the major hotels have Happy Hours with local variety artists.

During the dry season, folk dancing in native costumes can be seen at the picturesque ruins of Old Panama and in some interior towns. A number of small fairs and festivals are held in the provinces at various times during the year. The ATLAPA Convention Center attracts a few big name musical and dance groups; most of the productions charge big-city prices for tickets.

Social Activities

Ample opportunities exist for social contact with both Panamanians and American residents of Panama and the American civilian and military population in the canal area. Many resident Americans play important roles in business and professional circles.

There are a number of social, vocational and fraternal organizations in the canal area. The Panama Audubon Society offers unique bird and nature study opportunities, and a Junior Audubon Society was established in 1986 to sponsor monthly outings and activities for children ages nine and over. The "Who's New" is another active and well-organized club where Americans may meet and mix with people of other nationalities. This club offers a book study group, children's play groups, bridge, tennis and a variety of other activities in addition to monthly coffees.

Extracurricular activities for school age children include Boy and Girl Scouts and Little League sports as well as the activities organized by the Youth Recreation Centers on the military bases.

Apply the same techniques here to get to know people that you would to develop social contacts in any overseas community. While knowledge of Spanish helps considerably, many Panamanians speak English. Memberships in local international fraternal organizations such as the Lions Club and Rotary Club are available.

OTHER CITIES

BALBOA , at the Panama Canal's Pacific entrance, is the largest town in the area formerly designated as the Canal Zone. It has a population of only 3,000, but is the administrative headquarters of the new joint Panama Canal Commission, which replaced the U.S. governing body in October 1979. An American naval base remains here, with military forces of more than 10,000. Balboa is the port for Panama City.

Situated 90 miles southwest of Panama City, CHITRÉ is the capital of Herrara Province. The Río de la Villa flows by, nourishing locally grown livestock and agricultural products. Chitré is a marketing center that produces ice and beverages. Transportation facilities for this city of approximately 34,700 include a road link to the Pan-American Highway and an airfield.

COLÓN is the second largest city in Panama, with a population of 141,000 (2000 est.) Located at the Caribbean entrance to the Panama Canal, Colón is situated at the northern terminus of the trans-Panama railroad. The city was founded in 1850 by Americans constructing the railroad, and was originally named Aspinwall after William H. Aspinwall, one of the builders. The name was changed to Colón ("Columbus" in Spanish), in honor of Christopher Columbus, in 1890. An important port and commercial center, Colón was made a free trade zone in 1953.

CRISTÓBAL , a suburb of Colón, is also an important port in this area. It has a population of about 12,000. Rainbow City, formerly called Silver City, with a population of 3,000, adjoins Cristóbal.

DAVID , 200 miles west of Panama City, is the fourth largest city in the country and the capital of mountainous Chiriquí Province. It dates to 1738, when gold prospectors set up camp here. David, though modern, maintains old traditions. San José Church has two bell towers—one to call to worship, another to warn against Indian attack. This major commercial area's economy depends on industries such as meat-packing, food processing, and tanning. David may be best known for the saddles and harnesses made here. The city is located near Enrique Malek Airport and had a population of roughly 103,000 in 2000.

PORTOBELO (also called Porto Bello and Puerto Bello) is located on the Caribbean side of Panama, about 20 miles northeast of Colón. Founded in 1597 just west of Christopher Columbus' earlier colony of Nombre de Dios, Portobelo lies in a banana-growing region and has an excellent harbor. Once a thriving colonial city, Portobelo was linked to Panama City by a stone highway. As a port, it sent out and received the royal Spanish fleets and was a transshipment point for Spanish Pacific riches. Portobelo declined with the building of the trans-Panama railroad and the Panama Canal, and has a population of just under 3,000 (1992 est.) Sir Francis Drake died aboard ship near here in 1596, and was buried at sea.

SANTIAGO is one of Panama's oldest cities, situated about 110 miles southwest of Panama City. The capital of Veraguas Province, it thrived in colonial times, as many historic buildings indicate. Santiago is an agricultural marketing center with local gold deposits. The municipality has an airfield and is on the Pan-American Highway. Approximately 61,000 people live in Santiago.

COUNTRY PROFILE

Geography and Climate

The Republic of Panama, occupying the isthmus connecting the North and South American continents, is situated between 77° and 83° west longitude and 7° and °30′ north latitude. Covering an area of some 29,208 square miles, the Republic of Panama is slightly smaller than South Carolina. It is bounded on the north by the Caribbean Sea, on the south by the Pacific Ocean, on the east by Colombia, and on the west by Costa Rica. Due to the configuration of the isthmus, in Panama City the sun rises over the Pacific.

The Panama Canal Commission, in conjunction with a binational board of directors, operates the 43-mile canal which passes through the isthmus between the Atlantic (Caribbean) and Pacific oceans. Under the Panama Canal Treaty of 1977, the Commission will remain a U.S. Government agency until December 31, 1999, at which time the canal comes under total Panamanian control.

Panama has two well-defined regions: the Atlantic Watershed, which is covered by tropical rain forest, and the Pacific Watershed, whose narrow valleys and coastal plains receive less rainfall. Mountain ranges form the backbone of the Isthmus. Although some peaks reach 11,000 feet, the "cordillera" descends in the canal area to a height of only 290 feet.

Panama has a year-round tropical climate. During the dry season, which runs from January through April, there is only sporadic rainfall. The rainy season extends from May through December, with heaviest precipitation between September and November. The average annual rainfall in Panama City, on the Pacific side, is 69 inches; in Colon, on the Atlantic side, 128 inches. Temperatures and humidity vary only slightly between the two seasons. During the rainy months, average relative humidity is 85%; in the dry season, only 55 to 75%. The average annual temperature in Panama City is 26°C (80°F), with an average maximum of 30°C (87°F) and an average minimum of 22°C 3°F). Colon's temperature and humidity are about the same. Nearly constant year-round breezes provide some relief from the heat, especially at night.

Population

In 2000 Panama's estimated population was 2,821,085. Nearly half of the country's population is located in the province of Panama, with the next largest concentrations located in the provinces of Chiriqui and Colon. Approximately two-thirds of the population is located in these three of the country's nine provinces.

Rodrigo de Bastidas, one of the captains accompanying Columbus on his second voyage to America, discovered the Isthmus of Panama in 1502. Columbus visited Portobelo, a small bay on the Atlantic, on his fourth voyage in 1502. Panama City was founded in 1519, about 5 miles east of its present site. Because of its strategic position, Panama City became the crossroads of Spanish exploration and expansion in America.

At the time of Columbus, more than sixty Indian tribes were living on the isthmus. Today, however, Indians comprise only 6% of the population. While the majority of these are Kuna and Guaymi, a small group of Chocoe Indians remain in the southeastern part of the Darien Province.

Direct descendants of the Spaniards who colonized the country remain influential, but no longer dominate Panama's social, economic, and political life. Mixed-blooded Panamanians share prominent political and professional status with the Spanish-descendant group, and participate fully in Panama's diverse and influential social circles. Much of Panama's population is a mix of Spanish-Indian and black Hispanic ancestry. Immigrants from China, India, Europe, the Middle East, and South and Central America can be found in the growing middle class. Blacks of West Indian descent, whose ancestors provided most of the labor in digging the canal, tend to be concentrated in the provinces of Panama and Colon. While North American influence on Panama's basically Hispanic culture is evident in Panama City and Colon, the history and heritage of these distinct ethnic groups have combined to form the modern Panamanian way of life.

In the interior provinces, the ethnic makeup is more homogenous. The Spanish-Indian mixture is preponderant, and North American influence on customs and mores is relatively minor.

Spanish is the official language of the country. Although many Panamanians speak English, a working knowledge of Spanish is useful for shopping, communicating with servants, taking taxis, speaking with neighbors, and, especially, traveling in the interior.

Public Institutions

On November 28, 1821, the country declared its secession from Spain and associated itself with Colombia. This alliance existed in one form or another until November 3, 1903, when Panama was established as an independent republic.

Panama's constitution, which was adopted in 1972, provides for a representative democracy with direct popular election of the president and legislators, an independent judiciary, and a broad range of individual and civil rights. The constitution delineates the respective powers of the three branches of government, and contains extensive sections establishing broad economic, social and cultural rights and objectives for all its citizens. There have been several notable amendments. The last two, passed in 1994, abolished the Panamanian military and created an agency of the Panamanian government to deal with the reverted areas of the Panama Canal zone.

Operation Just Cause, which began on December 19th, 1989, ended years of political instability in Panama with the reinstatement of President Guillermo Endara's administration and the removal of Manuel Noriega as national leader. 1994 saw a return to free, fair, and violence-free elections for Panama, in which Ernesto Perez Balladares won the Presidency as the head of a multi-party coalition. Balladares won with only 33% of the popular vote, but his party, the Revolutionary Democratic Party (PRD), regained a near-majority in the Legislature. One of the first moves of this administration was to amend the Constitution to abolish the military, breaking with the tainted past of the Noriega era.

Legislators are chosen in a complicated process. Certain seats are granted to the party winning the plurality of the popular vote in the electoral circuits, while others are awarded by proportional representation in the more populous areas, and still others are reserved for Indian minorities. Legislators are nominated by a party and are subject to its discipline.

The 1983 constitutional reforms significantly increased the powers of the Legislative Assembly relative to the other branches of government. In contrast to the situation that prevailed between 1968 and 1984, the legislature now has a significant hand in budget matters and in establishing public institutions. Legislators are able to interpellate and censor Ministers and to impeach and try Presidents and Supreme Court justices. They may override a presidential veto of approved legislation with a two-thirds majority vote. The Assembly also has the power to declare war and to grant amnesty for political crimes. In addition, it must approve the appointment of Supreme Court justices, the Attorney General, the Solicitor General or Prosecutor, and other high administrative officials.

The Executive Branch is comprised of the President of the Republic, two Vice-Presidents, and the Ministers of State, or Cabinet Secretaries. The President and Vice Presidents and other elected authorities serve five-year terms. Voting is by direct and secret ballot, and a plurality is needed for election.

The President is responsible for appointing the Cabinet, coordinating the government, and maintaining public order. Along with the Cabinet, the President approves and promulgates laws passed by the Legislature and ensures their enforcement; appoints police, provincial governors and heads of various public agencies; prepares the national budget for submission to the legislature and conducts the country's foreign affairs.

The President, Vice Presidents, and Ministers of State together form the Cabinet Council, which appoints the Magistrates of the Supreme Court of Justice, the Attorney General, and the Solicitor General, or Prosecutor, subject to legislative approval.

The President and Vice Presidents may be removed from office for abusing their constitutional duties, for violent actions or coercion during an electoral process, or for preventing the meeting of the Legislative Assembly. The President and Vice Presidents need not belong to the same political party.

The Judicial Branch is comprised of the Supreme Court of Justice, the Electoral-and other Tribunals. The latter are created by the Legislature, while the first two are constitutionally decreed.

Under the 1983 constitutional amendments, Supreme Court Magistrates are appointed by the Cabinet Council and confirmed by the Legislature for staggered ten-year terms, with two magistrates appointed every other year, or as present magistrates resign or retire. The nine-member court is divided into three-judge panels for civil, criminal and administrative cases.

Its decisions are final and binding. The Judicial Branch is the ultimate interpreter of the Panamanian constitution and of the constitutionality of the laws and decrees of the Executive and Legislative Branches.

A separate three-judge Electoral Tribunal oversees elections, with one member chosen by the Supreme Court, the Legislature, and the Executive, respectively. Supreme Court justices choose the magistrates who sit on other tribunals, and the magistrates in turn choose the judges who sit on the lower courts. All sitting judges are prohibited from engaging in any other employment except as law professors, and from participating in political activities, except as voters. Although the Constitution provides for the right to trial by jury, the Legislative Assembly is empowered to determine whether this right will apply in cases against the President, Supreme Court Justices or members of the Legislative Assembly.

The Public Ministry, or Attorney General's office, is separate from the Ministry of Government and Justice and is constitutionally a part of the Judicial Branch. The Attorney General is appointed for a 10-year term. The Constitution mandates setting aside at least 2% of the annual government income for the Judicial Branch, thereby establishing its financial independence from the Legislature and the Executive. The Attorney General also oversees Panama's criminal police investigative agency, the Judicial Technical Police (PTJ).

Panama is a civil law country, with most law created by legislative codes rather than judicial decision. In 1983, the Legislature enacted new criminal and administrative codes. Implementation of some of these reforms has been delayed, however, for budgetary reasons.

Panamanian Public Forces. On December 20, 1989, the former Panamanian Defense Forces (PDF) were neutralized by U.S. armed forces during Operation Just Cause and, over the next several days, were diminished as an effective military force. As a result, the PDF was disbanded.

Panama no longer desires a military, and in 1994 the Constitution was amended, abolishing the standing army. The Panamanian Public Forces (PPF), a civilian law enforcement organization comprised of police, air, and sea services was created in the wake of Operation Just Cause. It drew heavily on the ranks of the former PDF because of the urgent requirement to reestablish law and order throughout Panama.

The PPF, the Panamanian civil police force, remains Panama's national security force. Challenged by rising international crime and narco-trafficking activity, the PPF continues to adapt to Panama's security concerns. Its efforts in this direction are aided by the U.S. Department of Justice, as well as other agencies. Resource limits are placing financial constraints on the PPF's ability to face up to dynamic crime challenges.

The Panamanian National Police (PNP) is charged with maintaining law and order nationwide. Directed by a civilian attorney, the PNP falls under the control of the Minister of Government and Justice. The police draw heavy criticism from opposition groups and the media for a variety of reasons related to its own transitional problems. The PNP still has no organic law upon which to establish itself firmly. In the meantime, and with U.S. assistance, it strives to build confidence, establish institutional roots, and—most importantly—serve the Panamanian public.

The Panama Canal Treaty. The Panama Canal Treaty was negotiated by four different U.S. Administrations over a period of thirteen years. This treaty, along with a separate treaty pertaining to the neutrality of the Canal, and a host of ancillary agreements, was signed on September 7, 1977. The U.S. Senate gave its consent to ratification of the Canal Treaty on April 18, 1978.

As a result of the treaties, control of the Canal is presently in the process of being turned over to the Government of Panama. On December 31, 1999 Panama assumed ownership of and full operational responsibility for the Canal. The Panama Canal Commission, which operates the Canal, is a U.S. Government agency; however, its administrator is Panamanian.

The Department of Defense, under the terms of the Carter-Torrijos Treaty of 1977, is in the process of withdrawing U.S. forces from Panama. This process is scheduled to be completed by the year 2000. The U.S. military drawdown will include the closure of U.S. Military PX and Commissary facilities, Gorgas Hospital, DODDS schools and other social facilities and services to which embassy personnel now have access.

In 1994 the newly elected government amended the Constitution to create the Interoceanic Regional Authority (ARI) to plan for and implement the reversion of all lands formerly belonging to the U.S.

The U.S. Embassy in Panama has the responsibility of ensuring that the treaties and their related agreements are carried out smoothly and effectively and to ensure that the rights of the U.S. Government and of American citizens in Panama are respected.

Arts, Science, and Education

Panama's intellectual and cultural life largely revolves around activities sponsored by the Instituto Nacional de Cultura (INAC), the National Concert Association, and, from time to time, the University of Panama. INAC sponsors the National Theater, School of Dance, School of Plastic Arts, Symphony Orchestra, and Ballet.

Architecture is rich and varied, ranging from colonial to modern in private homes, public buildings, commercial office buildings, and high rise condominiums.

A fairly active art colony is to be found here, and several Panamanian artists have achieved international recognition. Accomplishments in music, drama, dance, and literature have been less notable in the last few years.

In the Canal area, research projects conducted at Gorgas Hospital (renowned for its work in tropical medicine), by the Middle America Research Unit of the National Institutes of Health, the Smithsonian Institution's Tropical Research Institute on Barro Colorado Island, and the Gorgas Memorial Institute are of international import. And, of course, the Panama Canal represents one of the greatest engineering feats of modern times.

Panamanians have historically attached great importance to education. This is reflected in its literacy rate of 83%—one of the highest in Latin America. There are a number of very good private schools in the country. Many graduates of the Instituto Nacional, a public school known throughout the country, have subsequently entered Panamanian political life. The Ministry of Education is working hard to improve instructional facilities and teacher preparation throughout the country.

The University of Panama consists of a main campus in Panama City and branches in three provincial capitals. Total enrollment is approximately 45,000. The Technological University of Panama, also based in Panama City, has branches in seven provinces and an enrollment of 8,000. A private Catholic university, Santa Maria la Antigua, has an enrollment of 4,500. American officers receive a cordial welcome at these universities, and many opportunities exist for exchanges and cooperative programs. Instruction is in Spanish.

The Panama Canal College, a two-year institution linked to the U.S. Department of Defense, is open to all qualified individuals. Several other U.S. institutions, including Nova, Florida State and Oklahoma universities, also offer courses in Panama. Instruction in these universities and at the Panama Canal College is in English, and course credits can be transferred to institutions in the United States.

Commerce and Industry

Panama's economy is based primarily on a well-developed services sector that accounts for 76.5% of GDP. Services include the Panama Canal, banking, insurance, government, the Colon Free Zone, and the transisthmian oil pipeline. Manufacturing, mining, utilities, and construction together account for 16.5% of GDP. Manufacturing is principally geared to production of items such as processed foods, clothing, chemical products, and construction materials for the domestic market. Agriculture, forestry, and fisheries account for the remaining 7% of GDP. Principal primary products include bananas, shrimp, sugar, coffee, meat, dairy products, tropical fruits, rice, corn, and beans. The sectors of the Panamanian economy with the greatest potential for substantial growth are mining, tourism, and maritime services.

From 1968 until 1989, Panama was governed by a military regime which implemented a statist plan of economic development. The government nationalized various private enterprises and instituted price controls on many goods, some of which still exist today. In 1990 the newly reinstated democratic government embarked on a reform program to liberalize trade and modernize government operations. These reforms were diluted, however, by entrenched special interest groups.

In 1994 a new government was elected and took office with an even more ambitious program of reforms, including GATT/WTO accession and labor code reforms. The Government of Panama has recently taken initial steps toward privatization of the state-owned telecommunications company and has revoked the government-owned electricity utility's monopoly on electricity generation. Reform of the national labor code, although one of this administration's top priorities, is being met with strong opposition by the various labor organizations.

The use of the U.S. dollar as Panama's currency means that fiscal policy is the government's principal macroeconomic policy instrument. Because Panama does not issue its own currency, government spending and investment are strictly bound by tax and non-tax revenues and the government's ability to borrow.

Panama Canal business rose in 1994 over the previous year. Ocean-going transits increased 2.6% to 12,671 or 34.7 vessels daily, and net tonnage, on which tolls are assessed, jumped 7.9%. Toll revenues rose 3.1% to US$425 million. The near-term outlook is for continued moderate to strong growth in both tonnage and toll revenue projected for 1995 and 1996. Work on expanding the canal's capacity by widening the Gaillard Cut through the continental divide continues and numerous other maintenance and upgrade projects are constantly in progress.

The development of areas reverting to Panama under the Panama Canal Treaties will present many opportunities for the Government of Panama, as well as investors. Projects in tourism, industry, and environmental areas will be possible. The exact nature of these projects will be determined by a development plan which is being prepared by Panama's Interoceanic Regional Authority (ARI).

The Colon Free Zone is the largest of its kind in Latin America and rivals Hong Kong in overall activity. Total imports to the Free Zone reached US$5.0 billion in 1994, an increase of 11.5% per 1993. Free Zone trade is expected to show solid growth during 1995 as it has already made many of the adjustments necessary to deal with market liberalization in Latin America. U.S. exports to the free zone totaled approximately US$370 million in 1994. The free zone's contribution to real GDP increased to 9.2% in 1994.

Transportation

Local

Taxi service is readily available and generally adequate. City buses are often very poorly maintained however, and riding them is not recommended for safety and security reasons.

Regional

Panama has two major highways. The Transisthmian Highway links Panama City to Colon. A Branch of the Inter-American Highway extends from the Costa Rican border to the town of Chepo, about 35 miles beyond Panama City. Both roads are two-lane and paved. There is also a recently finished road between Chepo and Colombia. Streets within Panama City and Colon are adequate. Many are subject to flooding during the rainy season.

American Airlines and Continental Airlines, COPA, and other major foreign carriers operate daily flights to the United States and other parts of the world from Panama's Tocumen International Airport. All flights to or from Panama enter and exit the U.S. from either Houston or Miami. AERO-PERLAS and ALAS-CHIRICANAS are local carriers that provide service to Panama's provinces, Contadora and the San Blas Islands. These flights operate from Paitilla Airport, a ten-minute drive from the city center.

Communications

Telephone and Telegraph

Telephone service in Panama City is good, although in some sections of the city residents must wait long periods for initial installation of a telephone.

Long-distance service is available to all parts of the country. Facilities are excellent for overseas calls to the United States (with direct dialing from Panama City) and to other parts of the world via radio or satellite. Rates vary depending on country and time zone.

Telegram facilities are excellent and provide worldwide service.

Radio and TV

There are both English and Spanish-language AM and FM radio programs and commercial TV stations (including one educational channel), some of which broadcast sporting events and reruns of American feature programs and movies (all dubbed).

The Southern Command Network (SCN), an affiliate of the Armed Forces Radio and Television Service, broadcasts on AM and FM radio in English on a 24-hour basis. SCN-TV presents news programs, sports events, old movies, reruns of U.S. feature programs and Saturday-morning children's programs in English. SCN-TV broadcasts daily: the weekly schedule is published in the base newspaper, The Tropic Times. American variety and series programs are broadcast in English. Live TV coverage via satellite of some news programs or sporting and special events is also provided. The station broadcasts Monday through Sunday from 6:00 a.m. until midnight, plus additional late night movies on weekends.

Cable TV is available in Panama City and provides a variety of satellite programming, including the Disney Channel, HBO/Showtime, CNN, and ESPN. There is usually an installation fee; monthly fees are upwards of $40.

Local cinemas are comparable in quality to those in the U.S., yet prices are much lower. First run movies are shown in English with Spanish subtitles. Local video stores rent both VHS and Beta tapes at reasonable prices comparable to stateside, usually with Spanish subtitles.

Newspapers, Magazines, and Technical Journals

Six Spanish-language newspapers (including three tabloids) are published on a daily basis. The English-language international edition of The Miami Herald is published locally.

Airmail editions of USA Today are available on the bases. Copies of the New York Times and the Wall Street Journal are occasionally available at the major hotels. Along with the Washington Post, they are also available through subscription, but rates are higher than in the U.S. Home delivery of U.S. newspapers is available, but delivery is one day late.

The Latin American issues of Time and Newsweek are sold at most newsstands, drug stores, and in major hotels, usually within days of their domestic editions in the United States. Other U.S. magazines (on topics such as cars, sports, and outdoor hobbies) are available on the bases. Prices are comparable to those in the United States, although tax must be paid when purchased off the bases.

Health and Medicine

Medical Facilities

Health care services for U.S. citizens residing in Panama are generally excellent. Nearly all medical and surgical specialties are represented. Many of the local dentists and orthodontists are considered to be on a par with those in the United States, and prices are slightly lower than U.S. prices.

In conjunction with the U.S. military drawdown in Panama Gorgas Hospital is scheduled to close in 1998; however Paitilla Hospital is up to U.S. standards. Many Americans have been very pleased with the quality of care received there.

Many standard medications are available from Gorgas Hospital or from local pharmacies in Panama.

Community Health

For a tropical region, Panama's community health standards are good. With normal precautions one can avoid most health hazards. The cities of Panama and Colon have potable and fluoridated water supplies, although water should be boiled before drinking for 24 hours following water cutoffs. Travelers to more remote parts of the country should boil their water or use a water purifier. Milk is pasteurized and bottled under sanitary conditions, as are locally produced beers and other beverages. Domestically produced meats are packaged and sold under generally sanitary conditions in the larger grocery stores. Local fruits and vegetables should be thoroughly washed before eating. Fresh fish and seafood are plentiful and inexpensive. Between the local markets and bakeries there is little one cannot find in Panama.

Trash is collected daily in most areas of Panama City. Roaches, ants, and other insects as well as mice and rats are ever present in this tropical climate, but, with vigilance, they can be kept under control. Until recently, Panama City had an active mosquito control program.

Common medical complaints include colds and other upper respiratory infections. Sinus and asthmatic conditions may be aggravated by the humidity, molds, and pollens. Swimmer's ear is a common complaint among both children and adults.

More serious illnesses such as malaria and yellow fever are virtually nonexistent in Panama City, but persons travelling to the interior of the country may be at risk. Hepatitis is considered a significant health threat, and individuals are encouraged to keep their gamma globulin inoculations current. Tuberculosis is endemic and common among residents of the poorer areas. Dengue fever cases are on the increase.

Preventive Measures

Persons being assigned to Panama should ensure that their Yellow Fever, Typhoid, and Tetanus/Diphtheria immunizations, as well as a TB skin test are current. Hepatitis-A vaccine or gamma globulin is also recommended.

Immunization requirements for Panamanian schools vary. The Department of Defense schools require the following immunizations:

Oral Polio Vaccine —3 doses of Trivalent, at least one of which was administered after the fourth birthday.

Diphtheria/Tetanus/Pertussis^* —3 doses, given singly or in combination, at least one dose of which was administered after fourth birthday and the last dose was given within ten years.

Measles (Rubeola) Mumps Rubella —1 dose of live attenuated vaccine given singly or in combination on or after 15 months of age. Individuals immunized after one year of age but before 15 months need not be reimmunized.

^*Pertussis immunization is not required for individuals after their seventh birthday.

NOTES FOR TRAVELERS

Passage, Customs & Duties

U.S. citizens are encouraged to obtain a U.S. passport before traveling to Panama. Although entry into Panama is permitted with any proof of U.S. citizenship (such as a certified birth certificate or a Naturalization Certificate) and official photo identification (such as a driver's license), travelers may experience difficulties entering and/or exiting Panama when not in possession of a valid U.S. passport. Panamanian law requires that travelers must either purchase a tourist card from the airline serving Panama or obtain a visa from a Panamanian embassy or consulate before traveling to Panama. Further information may be obtained from the Embassy of Panama, 2862 McGill Terrace, N.W., Washington, D.C. 20009, tel. (202) 483-1407, or the Panamanian consulates in Atlanta, Chicago, Houston, Los Angeles, Miami, New Orleans, New York, Philadelphia or Tampa.

U.S. citizens transiting the Panama Canal as passengers do not need to obtain visas, report to customs, or pay any fees. U.S. citizens piloting private craft through the canal should contact the U.S. Embassy in Panama City for details on required procedures.

Panamanian customs authorities may enforce strict regulations concerning temporary importation into or export from Panama of items such as firearms and ammunition, cultural property, endangered wild-life species, narcotics, biological material, and food products. It is advisable to contact the Embassy of Panama in Washington or one of Panama's consulates in the United States for specific information regarding customs requirements.

U.S. citizens living in or visiting Panama are encouraged to register at the Consular Section of the U.S. Embassy in Panama and obtain updated information on travel and security within Panama. The Consular Section of the U.S. Embassy is located on Panama Bay, Panama City, at Balboa Avenue and 39th Street. The international mailing address is Apartado 6959, Panama 5, Republic of Panama. The U.S. mailing address is U.S. Embassy Panama, Department of State, Washington, D.C. 20521-9100. The telephone number of the Consular Section is 011-507-207-7000/7030 (after hours, 011-507-207-7000); fax 011-507-207-7278; web site http://www.orbi.net/usispan/ and e-mail is usispan@pty.com.

Pets

Panama requires a veterinary certificate of health and certification of vaccination against rabies, distemper, hepatitis, leptospirosis, parvovirus (dogs) and feline panleucopenia (cats) for each arriving pet. Each certificate must be authenticated by a Panamanian consul to be acceptable. This can be done by sending your pet's health certification to the following address for a consular stamp. There is a fee for this service.

Consulate General of Panama
2862 McGill Terrace NW
Washington, D.C. 20008
202-483-8413/8416 (fax)

All incoming pets are placed in quarantine. If your pet arrives on a commercial flight to Tocumen Airport it must be examined by a Panamanian vet at the airport prior to being moved to quarantine. If your pet arrives on Friday it may not be examined and released until Monday. There is a transportation fee of $13.50, as well as admission and importation permit fees.

The following documents are required for your pet to enter Panama: a health certificate for the animal (good for only ten days), a rabies vaccination certificate, a stamp from a Panamanian Consulate as outlined above, and a copy of your travel orders. These documents are to be attached, in an envelope, to the outside of the animal's cage.

Currency, Banking, and Weights and Measures

The official currency of Panama is the Balboa (B/) which is on par value to the U.S. dollar. The Balboa exists only in coin form and, in Panama, is interchangeable with U.S. coins. The official paper currency of Panama are U.S. dollar bills.

Both the U.S. system of weights and measures and the metric system are used in Panama. Speed limits are posted in miles per hour in some places, kilometers per hour in other places, some signs give both miles and kilometers per hour, and in many areas the limits are not posted.

Complete banking facilities are available at many banks in Panama City, including branches of Chase Manhattan, Citibank, Bank of Boston and American Express. Many local retail outlets accept personal checks drawn on U.S, banks.

You can purchase or cash travelers checks locally without difficulty. To deposit or cash U.S. checks in Panamanian banks, a service charge is assessed. Major U.S. credit cards are widely accepted in shops, hotels and restaurants.

LOCAL HOLIDAYS

Jan. 1 … New Year's Day

Jan. 9 … Day of Mourning

Feb/Mar … Carnival^*

Mar/Apr. … Good Friday^*

Mar/Apr. … Easter^*

May 1 … Panama Labor Day

Nov. 3 … Independence Day from Colombia

Nov. 4 … Flag Day

Nov.10… Uprising of Los Santos

Nov. 28 … Independence Day from Spain

Dec. 8 … Mother's Day

Dec. 25 … Christmas Day

^*variable

RECOMMENDED READING

The following titles are provided as a general indication of the material published on this country. The Department of State does not endorse unofficial publications.

Abbot, W. Panama and The Canal (1976) . Gordon Press Publications.

Anderson, Charles L.G. Old Panama and Castilla del Oro. Sudwarth: 1911 0. Narrative history of the discovery, conquest, and settlement by the Spaniards of Panama, Darien, Veraguas, and other parts of the New World.

Anguizola, Gustavo Phillipe Bueneau-Varilla: The Man Behind The Panama Canal (1980). 480p. Nelson-Hall, Inc.

Avery, R. America's Triumph at Panama (1976). Gordon Press Publications.

Bair, Frank E., ed. Countries of the World and Their Leaders Year-book 1993. Detroit, MI: Gale Research, 1993.

Barry, Tom. Panama: A Country Guide. Albuquerque, NM: Inter-Hemispheric Education Resource Center, 1990.

Behar, D., and G. Harris. Invasion: The American Destruction of the Noriega Regime in Panama. Los Angeles, CA: Americas Group, 1990.

Bennett, Wendell C. Ancient Arts of the Andes (1954). Museum of Modern Art, New York. This book discusses the Indian art of Panama which is related to the pre-Columbian art of the Andes.

Biesanz, John and Mavis. The People of Panama (1955). Columbia University Press: New York. A readable introduction to the people and an analysis of the social conditions in Panama and the canal area.

Billard, Jules B. "Panama, Link Between Oceans and Continents." (March 1970) National Geographic Magazine. Vol. 137, pp. 402-440.

Chidsey, Donald Barr. The Panama Canal, an Informal History. (1970) Crowan: New York.

Cobb, Charles A. Jr. "Panama, Ever at the Crossroad." (April 1986). National Geographic Magazine.

Coniff, Michael L. Black Labor on a White Canal: Panama. 1904-1981.

——. Panama and the United States: The Forced Alliance. Athens, GA: University of Georgia Press, 1992.

Crane, Philip M. Surrender in Panama: the case against the treaty (1978). 180p. Green Hill Publications.

Dinges, John. Our Man in Panama: The Shrewd Rise & Brutal Fall of Manuel Noriega. New York: Random House, 1991.

Donnelly, Thomas, et al. Operation Just Cause: The Invasion of Panama. New York: Free Press, 1991.

Du Val, Miles P. And the Mountains Will Move. (1947) Stanford University Press: Stanford, California. Scholarly account of the digging of the Panama Canal from the start of the French effort through the successful American achievement.

Flanagan, Edward M., Jr. Battle for Panama: Inside Operation Just Cause. McLean, VA: Brasseys, 1993.

Gordon, Burton A Panama Forest and Shore (1983). Boxwood Press.

Hogan, J. Michael. The Panama Canal in Americas Politics: Domestic Advocacy and the Evolution of Policy (1986). 304p. Southern Illinois University Press.

Howarth, David A. Panama: 400 Years of Dreams and Cruelty (Also called The Golden Isthmus.) McGraw: New York, 1966. Readable history of the isthmus from Balboa's exploration in 1513 to 1964.

Jorden, William J. Panama Odyssey

Keeler, Cylde E. Land of the Moon Children: The Primitive San Blas Culture in Flux (1956). University of Georgia: Athens, Georgia. An account of the findings of Dr. Keeler after four summers spent with the Cuna Indians in the San Blas Islands.

Keeler, Cylde E. Secrets of the Cuna Earth Mother: A Contemporary Study of Ancient Religions (1960). Exposition: New York. 1st ed. Notes on the religion and lives of the Cuna Indians and a comparison of the religion with some in the Far East.

Keller, Ulrich, ed. The Building of the Panama Canal in Historic Photography (1983). 176p. Dove Macmillan Publishing Co. Inc.

Kempe, Frederick. Divorcing the Dictator: America's Bungled Affair with Noriega (1990). 352p. Putnam Publishing Group.

Koster, R.M., and Guillermo Sanchez. In the Time of the Tyrants: Panama: 1968-1990. New York: Norton, 1990.

LaFeber, Walter. The Panama Canal: The Crisis in Historical Perspective. New York: Oxford University Press, 1990.

Langstaff, Eleanor D. Panama (1982). 184p. ABC-Clio, Inc.

Liss, Sheldon B. The Canal: Aspects of The United States-Panamanian Relations (1967). University of Notre Dame Press: Notre Dame, Indiana. A history of the relations of the two nations from 1903 to 1966, with emphasis on the post-World War II years.

Mack, Gerstle. The Land Divided (1944). Knopf: New York Documented history of the Panama Canal and other isthmian canal projects, embracing the entire concept of the interoceanic communication of Panama.

Marsh, Richard O. White Indians of Darien (1934). Putnam: New York. Account of an exploratory trip in the Darien.

McCullough, David. Path Between the Seas (1977). Simon & Schuster: New York,. Perhaps the best book written on the construction of the canal.

Melditz, Sandra W. and Dennis M. Hanratty, eds. Panama: A Country Study (1989). 4th ed. 1989. USGPO.

Mellander, Gustavo Adolfo. The United States in Panamanian Politics: The Intriguing Formative Years. The Interstate Printers & Publishers, Inc.: Danville, Ill., 1971.

Minter, John E. The Chagres, River of Westward Passage (1948). Rinehart: New York. The Chagres River as it influenced the history of the Isthmus of Panama.

Moore, Evelyn. Sancocho (1947).Star & Herald Co.: Panama, 2d ed. Stories and sketches of Panama. Drawings by Jan Koerber.

Navarrete Talavera, Ela. Panama: Invasion o Revolucion (1990) 356p. Group Editorial Planeta.

Nyrop, Richard F., ed. Panama: a Country Study (1990). 3rd. ed. 300p. USGPO.

Oliver, Carl R. Panama's Canal. New York: Franklin Watts, 1990.

Panama Canal Company. The Panama Canal Fiftieth Anniversary (1964). Panama Canal Information Office: La Boca, Canal Zone. The story of a great conquest. This book celebrates the 50th anniversary of the operation of the Panama Canal.

Pirer, Rene. The Fifteen Wonders of the World (1961). Random: New York. A history of the Panama Canal. Translated by Margaret Crossland.

Priesley, George. Military Government and Popular Participation in Panama (1985). 200p. West-View Publishing Co.

Ropp, Steve C. Panamanian Politics: From guarded nation to National Guard (1982). 174p. Greenwood Press Inc.

St. George, Judith. The Panama Canal: Gateway to the World. New York: Putnam Publishing Group, 1989.

Sanchez Borbon, Guillermo and Richard Kosyer. In the Time of the Tyrants (1990). Norton.

Scranton, Margaret E. The Noriega Years: U.S.-Panamanian Relations, 1981-1990. Boulder, CO: Lynne Rienner, 1991.

Simon, Maron. The Panama Affair (1971). Scribner: New York An account of the French Isthmian Canal venture.

Summ, G. Harvey and Tom Kelly, eds. The Good Neighbors: America, Panama, and 1977 Canal Treaties (1988). 135p. Ohio University Press.

The Americas Group Invasion: The American Destruction of the Noriega Regime in Panama (1990). The Americas Group.

The South American Handbook. Rand McNally, Chicago, Illinois. Issued annually, this handbook provides detailed current information on central and South American and Caribbean countries.

Vazquez, Ana M. Panama. Chicago, IL: Childrens Press, 1991.

Wali, Alaka. Kilowats and Crisis: A Study of Development and Social Change in Panama (1988). 250p. West View Publishing Co.

Weeks, John. Panama: Made in the U.S.A. New York: Monthly Review Press, 1990.

World Bank. Panama: Structural Change and Growth Prospects (1985). 384p. World Bank.

Zimbalist, Andrew, and John Weeks. Panama at the Crossroads: Economic Development & Political Change in the Twentieth Century. Berkeley, CA: University of California Press, 1991.

PANAMA

Republic of Panama

República de Panamá

COUNTRY OVERVIEW

LOCATION AND SIZE.

Panama is located in Central America between Costa Rica to the north and Colombia to the south. It is at the southern end of the Central American isthmus (a narrow piece of land that connects two larger land areas) and forms the land bridge between North and South America. The nation is S-shaped and runs from east to west with a length of 772 kilometers (480 miles) and a width that varies from 60 to 177 kilometers (37 to 110 miles). Panama has an area of 77,381 square kilometers (29,762 square miles) which makes it slightly smaller than South Carolina. This area consists of 75,990 square kilometers (29,340 square miles) of land and 2,210 square kilometers (853 square miles) of water. The nation borders the Caribbean Sea on one coast and the Pacific Ocean on the other. The 80-kilometer (50-mile) Panama Canal cuts the nation in half and joins the Atlantic and Pacific Oceans. The combined coastlines of Panama are 2,857 kilometers (1,786 miles) long. The nation's border with Costa Rica is 330 kilometers (205 miles), and its border with Colombia is 225 kilometers (140 miles) in length. Panama's capital and largest city, Panama City, with a population of 827,828, is located on the Pacific coastline of the country. The second largest city is Colón, located on the Atlantic coast. Colón has a population of 140,908.

POPULATION.

The population of Panama was calculated to be 2,808,268 according to a July 2000 estimate. The country's population growth rate was 1.34 percent in 2000. The Panamanian population is growing rapidly. In 1970, the nation's population was approximately 1.5 million, but by 1990, the population had grown to about 2.2 million. Current estimates have the population expanding to 3.2 million by 2010. There were 19.53 births per 1,000 people, and the Panamanian fertility rate was 2.32 children born per woman. The nation's mortality rate was 4.95 deaths per 1,000 people. Panama has a high infant mortality rate due to the rudimentary health-care system and high incidence of poverty. In 2000, there were 20.8 deaths per 1,000 live births. The country has a high emigration rate and in 2000, 1.16 out of every 1,000 Panamanians emigrated to other nations. Emigration is frequent because of the lure of higher-paying jobs in places such as the United States (the main destination for Panamanian emigrants). Life expectancy in Panama is 72.74 years for males and 78.31 years for females.

The majority of the Panamanian population is young. In 2000, the largest age group in Panama was the 5 to 14 age group with about 550,000 people. In comparison, those over the age of 60 number only 240,000. By 2025, the demographics of the nation will have shifted, and the largest single group of people will be in the age group 30 to 39, and by 2050, the largest group will be over those over the age of 55.

The majority of the population is mestizo (mixed ethnic backgrounds, mainly Spanish and Native-American). Mestizos makeup 70 percent of the population. Other ethnic groups include Africans (14 percent), whites (10 percent), and Native Americans (6 percent). Members of ethnic minorities and the nation's Native American population face discrimination in employment, housing, and politics. The culture and society of Panama is mainly Spanish-Caribbean. Spanish is the official language, but much of the population also speaks English. This is especially true of West Indian descendants. English is also commonly used in business. Almost 85 percent of the population is Roman Catholic; the remaining 15 percent are Protestant.

The majority of the population is urban; almost 60 percent of people live in towns or cities, especially in the metropolitan areas around Panama City and Colón. About 50 percent of Panamanians live in the corridor that runs from Colón on the Caribbean Coast to Panama City on the Pacific. Only about 25 percent of the land is inhabited. The nation has a population density of 36.6 per square kilometer, compared to that of the United States which is 28.4 per square kilometer.

OVERVIEW OF ECONOMY

Panama has a long history as a trading area. In 1501, the Spanish began exploring the area that is now Panama in search of gold and silver. Panama soon became one of the main crossroads for the trade between Spain and its colonies in Central and South America, including Mexico, Peru, and Cost Rica. Gold and silver were transported to Panama and then shipped to Spain abroad ships. This route became known as the Camino Real or Royal Road.

The modern economic history of Panama has been dominated by efforts to construct a canal across the isthmus. The Panama Canal currently forms the backbone of the Panamanian economy. In addition to revenues from the tolls, maintenance work, and general operations of the canal, a variety of businesses and industries have emerged to support the trade goods going through the canal, including storage warehouses, refueling stations, and repair facilities. In order to capitalize on the importance of the canal, the government has long supported the establishment of free trade areas where goods can be transshipped without tariffs or taxes. The U.S.-built 80-kilometer (50-mile) canal opened in 1914. The United States paid Panama US$10 million for the rights to construct the canal and then a base of US$250,000, plus inflation , annually for the right to operate the canal. In 1999, the United States turned control of the canal over to the Panamanians. Ships going to Japan from the east coast of the United States save 3,000 miles by using the canal, and ships sailing from Europe save 5,000 miles traveling to Asia.

Because of the Panama Canal, the nation's small geographic size, and small population, Panama's economy is centered on services. The main elements of this sector include services related to the transshipment of goods across the canal: banking, insurance, and international trade. The Colón Free Zone is the world's second largest free trade area after Hong Kong. The agricultural sector is small, but it accounts for the majority of the country's exports. The main Panamanian industries are construction, petroleum refining, brewing, paper and paper products, clothing, furniture, the production of cement and other construction materials, and sugar milling. While the Panamian economy is structured around the services in the Canal Zone, the nation does have a variety of economically-advantageous natural resources including timber, precious minerals, and seafood.

Since 1991, the Panamanian economy has been increasing by 5 to 8 percent annual growth (as measured by the GDP). However, growth slowed toward the end of the decade. In 1997, the GDP grew at a rate of 4.5 percent. The rate slowed to 3.2 percent in 1999 and to 2.6 percent in 2000. Economic growth was greatly affected by the economic and political reforms which followed the restoration of democracy in 1991. The nation's per capita GDP has increased from US$3,198 in 1997 to US$3,513 in 2000 to give Panama the highest GDP per capita in Central America. Panama's prosperity is directly attributable to the canal.

In 1999, the United States withdrew from the 50-mile wide Canal Zone that it had maintained since 1914. This withdrawal provided the Panamanian government with 364,000 acres of land and 5,000 buildings. In 2000, the canal provided the government with $569 million in tolls. However, the U.S. withdrawal also meant the loss of numerous jobs and $175-350 million in funds that were spent by U.S. military forces in the region. Most of the lost jobs were service sector jobs that had provided for the U.S. forces. Examples include domestic help, restaurant workers, and retail employees. After the withdrawal of the United States from the canal, many Panamanians found that their own government paid less than the Americans had. Unemployment and underemployment continue to cause problems for the economy. In 2000, unemployment in Panama was 11.6 percent, down from 13.6 percent in 1998. Underemployment affects approximately 25 to 30 percent of the working population.

There is also a large informal or black market economy. Estimates are that the informal economy may be worth as much as US$2 billion annually. Among the main components of this sector of the economy are the illegal drug trade and various types of personal services including maintenance work, household help, and transportation.

Panama is dependent on foreign trade. In 1996, the nation joined the World Trade Organization (WTO). Membership allowed Panama to export goods to other members of the WTO with substantially reduced tariffs and import duties . During the 1990s, there were broad efforts to privatize government-owned companies and firms; however, the current administration has slowed or halted these programs in order to prevent further increases in unemployment. In addition, to the withdrawal of U.S. forces, which created an increase in unemployment, the slowdown in the U.S. economy has also caused an economic slowdown in Panama since the United States is one of the nation's largest trading partners.

Panama is a net recipient of foreign aid. Each year the country receives approximately US$200 million in aid. Panama has a substantial foreign debt which in 2000 was US$7 billion. When the nation joined the WTO, it renegotiated some of its debt and reduced interest rates. However, payments on the debt continue to be a drain on the government's revenues. Currently, about 15 percent of the budget to devoted to debt management.

POLITICS, GOVERNMENT, AND TAXATION

For most of the 20th century, Panama was a constitutional democracy. However, a coup in 1968 brought the military to power. During the 1980s, Panamanian General Manuel Noriega assumed control of the government. After diplomatic and economic pressure failed to remove Noriega, U.S. president George Bush used American troops to remove the dictator from power and restore democracy in 1991 in a military operation known as "Just Cause."

Panama is now a constitutional representative democracy. The government is divided into 3 branches: executive, legislative, and judicial. The executive branch is led by an elected president who serves as both the head of state and the head of the government. The president is elected for a 5-year term and appoints the national cabinet. There are also 2 elected vice-presidents who also serve 5-year terms. The legislative branch of government is made-up of a 1 chamber legislature. It has 71 members who are elected for 5-year terms. The judicial branch consists of a national supreme court, 5 superior courts and 3 courts of appeal. The judicial system is plagued by corruption and inefficiency.

The largest political party in Panama is the Democratic Revolutionary Party (PRD). The PRD is conservative on economic matters and appeals mainly to the country's young and urban poor. The Arnulfista Party (PA) is the party of the nation's current president and its base is among the Panama's rural population. The Popular Block is a coalition of former Christian Democrats and pro-business groups, as is the National Liberal Republican Movement and Democratic Change. These parties appeal to the middle and upper classes and tend to have strong ties to the business community.

In 1997, the government's budget was US$2.4 billion and it had revenues of US$2.4 billion. Government spending accounts for about 30 percent of the nation's GDP. In 1999, Panama's official foreign debt exceeded US$7 billion. Currently there are over 50 different forms of taxes, but plans are underway for reforms to reduce that number to 10. These reforms are designed to simplify the tax code in order to increase efficiency and make the tax system more friendly to business with reductions in some forms of corporate taxes. The maximum personal income tax is 33 percent, and the maximum corporate tax rate is 30 percent. The government's tax collection system is very inefficient, and collection rates of some forms of taxes fall below 50 percent.

Because of its history of military interference in the government, the nation adopted a constitutional amendment in 1994 which abolished the military. Security is now in the hands of the national police force, the coast guard, and a national air service. In 1997, the government spent 1.9 percent of the nation's GDP on security or about US$132 million. About 150,000 people work for the government in some capacity.

During the 1990s, the government was engaged in a variety of programs to liberalize the economy. It enacted reforms in banking, labor regulation, and taxes. In 1996, the government passed the first anti- monopoly laws. This legislation created 4 special commercial courts to hear cases related to patent, trademark, and anti-trust cases. It also created a consumer protection agency known as the Free Competition and Consumer Affairs Commission. New laws levy fines against companies that engage in practices that are harmful to consumers, including the sale of expired products and price fixing. However, there remain a number of problems in Panamanian business law. For instance, there is no bankruptcy law that allows companies to restructure themselves rather than go out of business.

A number of previously government-owned businesses were privatized. These include the ports of Cristobal and Balboa; the nation's telecommunications company, INTEL; power generation facilities; and a cement company. In addition, the government has privatized the nation's 17 casinos and slot-machine companies. Plans to privatize the electric and water companies were halted by a new government in 1999. Because the nation uses the U.S. dollar, it cannot control its monetary policy .

INFRASTRUCTURE, POWER, AND COMMUNICATIONS

The nation's infrastructure is relatively well developed. Roads in the urban areas are generally good, but in the rural areas of the nation they remain poor. Panama has 11,258 kilometers (6,996 miles) of roads, but only 3,783 kilometers (2,350 miles) are paved. Plans are underway for the construction of 2 major superhighways that will be funded through tolls. In addition, there are 355 kilometers (220 miles) of railways. The government is in the midst of a program to privatize the nation's main railway, the Panama-Colón Railroad. In addition, a joint venture between the U.S. companies, Kansas City Southern Industries and Mi-Jack Products, is investing US$73 million to rebuild a rail line parallel with the canal and across the nation. There are 105 airports in the country, but only 41 have paved runways. The withdrawal of the Americans from the Canal Zone has provided the government with a former military airfield that can serve as a major international airport. There are 130 kilometers (81 miles) of crude oil pipelines in Panama.

In addition to the 80-kilometer (50-mile) Panama Canal, the country has 800 kilometers (497 miles) of navigable waterways, although most of these can only be used by shallow-draft vessels. The major ports in Panama are Balboa, Cristobal, Coco Solo, Manzanillo, and Vacamonte. The international shipping terminal in Manzanillo is the largest container port in Latin America. Hutchison Port Holdings of Hong Kong has initiated a $150 million port project to develop a port facility on the Pacific side of the Panama Canal. Panama allows ships of other nations

to register themselves under the Panamanian flag. In 2000, there were 4,732 ship registered under Panamanian registry, including ships from 71 different nations. Given these ships, Panama has the largest merchant fleet in the world, followed by Liberia with 1,644 ships.

The nation's telecommunications company is in the midst of a multi-million-dollar upgrade and expansion of the country's phone system. INTEL employs about 3,400 people, and the government retains 49 percent of the company's stock. Panama's telephone density is close to 200 phone lines per 1,000 people. The U.S. firm, Bell South, paid $72.6 million for the rights to offer cellular service. Both Bell South and the national telephone company have begun to offer cellular phone service, and the country has about 200,000 mobile phones in use. By 1999, Panama had 3 Internet service providers.

Electric production in the country in 1998 was 4.523 billion kilowatt hours (kWh). Electric consumption was 4.3 billion kWh. The excess production was exported. The majority of production (73.78 percent) was done by hydroelectric plants. Fossil fuel provided the majority of the rest of production (25.56 percent). That same year, Panama imported 136 million kWh of electricity and exported 13 million kWh.

ECONOMIC SECTORS

The Panamanian economy is dependent on trade. The canal provides the main source of economic activity, although efforts to diversify the economy are ongoing. The service sector is the dominant part of the Panamanian economy and continues to grow. In 1997, the service sector accounted for 67 percent of the nation's GDP, but by 2000 that percentage had grown to 80 percent. As such, the country's economy is geared toward banking, commerce, and maritime services. Services provide 67 percent of employment.

Agriculture, including forestry and fisheries, only accounts for about 7 percent of the nation's GDP. However, they provide 25 percent of the country's employment and provide the main exports. Among the country's major crops are bananas, coffee, rice, and sugar cane. Like agriculture, industry only accounts for a small percentage of the GDP when compared to the service sector. Industry provides about 25 percent of the country's GDP and 8 percent of employment. Panamanian industry includes manufacturing, construction, mining, and processed foods.

AGRICULTURE

Agriculture employs such a large number of Panamanians (in relation to its percentage of the country's GDP) because many farmers are engaged in subsistence farming and only produce enough for their family to consume. Concurrently, agricultural products also provide the nation's main exports. In 1998, agricultural exports were valued at US$409.3 million (out of the nation's total exports of $640 million), while imports totaled US$397.7 million. That same year bananas accounted for 33 percent of the nation's exports, shrimp 11 percent, sugar 4 percent, and coffee 2 percent. About half of the land in Panama is used for agriculture.

Several large international companies dominate Panamanian exports, especially when it comes to export crops such as bananas. For instance, the U.S. company, Chiriqui Land Company, which operates under the brand name Chiquita, is one of the largest landowners in Panama, as well as the main banana exporter. Other major foreign agricultural companies include Del Monte Corporation and Dole Foods.

The primary crops are bananas, cocoa beans, coffee, coconuts, corn, potatoes, rice, soybeans, and sugar cane. Throughout the 1990s, agricultural production increased by an average of 5 percent per year, with the exception of 1998 when Hurricane Mitch caused extensive damage to crops. In 1999, sugar cane production was at 2.05 million metric tons, bananas at 650,000 metric tons, rice at 232,370 metric tons and corn at 89,806 metric tons. The main export crop was bananas with exports worth US$182 million in 2000. There has been a steady increase in tropical fruit exports which were worth US$14 million in 2000.

The main livestock products in Panama are beef, veal, chicken, and pork. Panama has the highest rate of chicken consumption per capita in Latin America. The main fishing product is shrimp, both sea-caught and farm-raised. Although the industry has suffered from the outbreak of disease, in 1999 it was worth US$69 million.

Panama has significant stocks of timber, mainly mahogany. There are also 61,000 hectares of planted forests, mainly teak and pine. However, concerns over deforestation have led to increased regulation of the timber industry. During the 1990s, Panama annually lost 2.1 percent of its forested areas to logging. However, after 1996, timber production dropped by 50 percent. There are 3 major timber companies which own 41 sawmills. Annual output is now around 60,000 cubic meters of forest products.

INDUSTRY

Industry in Panama is dominated by mining, construction, and milling. The sector's growth rate was 4.6 percent in 1999. Mining continues to expand in importance. In 1999, mining was worth US$25 million. In 1991, there were only 20 mining operations in the nation, but by 1999 there were 120 mining projects. The key mineral produced was gold. In 1997, 1,550 kilograms of gold were mined. The nation has 2 billion tons of proven copper reserves. There are 2 major copper mines set to begin operations. At Cerro Colorado, the mine is estimated to be worth US$150 million and another, at Petaquilla, is estimated at US$800 million.

CONSTRUCTION.

Construction rose 12 percent in 1999 as the government initiated a series of infrastructure programs, including highway construction and expansion and the renovation and expansion of port facilities. In 2000, the total private construction market was worth US$336 million. Clay and cement are produced for the construction industry. Production of building materials was worth US$150 million in 2000.

After the privatization of 2 of the nation's main sugar mills, production increased 13.1 percent in 1999 and is now worth US$25.5 million. However, the refining industry suffers from excess production of at least 15,000 metric tons per year. As a result, many mills are closing, and some producers have begun shipping raw sugar overseas for processing and then re-importing the refined sugar. The government has also sold an orange processing plant to private investors for US$5 million.

ENERGY.

The U.S. company Texaco operates an oil refinery in Panama that has a capacity of 60,000 barrels per day. The refinery provides all of the nation's gasoline and a majority of its fuel oil. In addition, about 8,000 barrels of refined petroleum are exported from the refinery. There are plans to implement a US$400 million project to build a pipeline from Colombia which will bring substantial natural gas into Panama and reduce the nation's dependency on oil. The government is engaged in negotiations with other Central American nations to join their electrical grids which would increase the nation's electricity exports.

SERVICES

Services make up the largest share of the Panamanian economy and are the country's largest employer. The largest segments of this sector are financial services and trade services related to the Canal. Service exports amounted to US$585.3 million in 1999. The nation's retail sector caters mainly to the middle and upper classes, and it experienced a 3.4 percent decline because of the country's continuing high level of unemployment. The strongest segment of the retail sector is new car sales. While there is no local production, new car sales were worth US$74 million in 2000. Franchising of businesses is increasing dramatically and there are 50 different franchises operating in Panama. Among those franchises experiencing the greatest growth are McDonald's, Chevron, Coca-Cola, and Sherwin Williams. Franchising is expected to provide US$3 to US$6 million annually in new investment.

FINANCIAL SERVICES.

In 1999, there were 82 licensed banks in Panama with assets of US$37 billion. This number included a number of foreign firms such as Citibank, Chase and Bank Boston. Panama has endeavored to establish itself as an international banking center, but instability and economic problems have impaired this effort. The total number of banks has declined from a high of 104 in the mid-1990s, and total assets declined by US$400 million in 2000. Foreign businesses may incorporate in Panama for the small sum of US$200. Doing so provides a way to escape high corporate taxes in certain countries. In 2000, there were over 400,000 companies incorporated in Panama.

TOURISM.

During the 1990s, tourism experienced strong growth. However, much of the tourist trade was based on visits by relatives of U.S. military personnel to the country and concurrently, tourist trips within Panama by U.S. troops and their dependents. In 2000, the number of foreign visitors who stayed overnight had declined to 300,000 from a peak of 420,000. Nonetheless, foreign and domestic tourism is worth US$300 million annually. Each year, 276 cruise ships shop in Panama. In order to promote tourism, the government exempts all new tourist businesses from income and real estate taxes . The government plans to use many of the former U.S. Army facilities as tourist areas, including Fort Amador which already has extensive golf courses, boating facilities and buildings which can be converted into hotel space. The area is also home to the Smithsonian Institute for Tropical Research laboratories.

The form of tourism that is expected to experience the most dramatic growth is ecotourism . Panama has the most comprehensive wildlife management systems in Central America. About 29 percent of the nation's territory is protected by a series of 15 national parks, wildlife refuges and reserves. Panama has over 10,000 varieties of plants and at least 933 bird species (more than the total of Europe and North America combined).

PANAMA CANAL.

On average, 50 ships per day travel the Panama Canal. In 1999, there was a total of 14,336 ship crossings of the canal. The largest commodity that is shipped through the canal is grain. However, the canal is a major shipping route for oil, the number-two commodity in volume (17 percent of total volume). Each day, approximately 600,000 barrels of oil are shipped through the canal. A large amount of coal is also transshipped. Coal accounts for 6 percent of total volume. That same year, the canal generated US$569 million in tolls and an additional US$50 million in revenues for the government. About 10,000 people work for the Panama Canal Authority, the company that oversees the operations of the canal.

A special, but distinct, part of the service sector is the Colón Free Trade Zone (CFTZ). This area was established in 1948 at the Atlantic entrance of the Panama Canal. The CFTZ is a trans-shipment area where foreign companies import products to be re-exported to other nations. In 1999, the CFTZ received US$4.9 billion in imports of which US$4 billion were re-exported. Most exports are sent to Latin America. The largest exports to the CFTZ were Hong Kong (27 percent), Japan (13 percent), the United States (11 percent), South Korea (10 percent), and Taiwan (8 percent). The majority of exports went to Colombia (27 percent), Ecuador (9 percent), Panama (6 percent), and both Venezuela and the United States (5 percent each). These figures are not included in the overall trade statistics for the nation. The products that were imported to or exported from the CFTZ included electronics (22 percent), apparel (17 percent), textiles (7 percent), footwear (5 percent), and jewelry (5 percent). The Panamanian government received US$899 million in revenues from the CFTZ in 1999.

INTERNATIONAL TRADE

Because of the Panama Canal, the country's economy is heavily reliant on international trade. The entry of Panama into the WTO opened new trade opportunities. Panama now has the lowest tariff rates in Latin America. Despite these expansions, the United States remains the nation's main trade partner. In 1998, the United States provided 40 percent of the nation's imports and exports. Other major export partners are Sweden, Costa Rica, Spain, the Benelux nations (Belgium, the Netherlands, and Luxembourg) and Honduras. Besides the United States, Panama's main import partners are Japan and other nations in Central America.

As a result of entry into the WTO, the government lowered tariffs on imported goods to a maximum of 15 percent. The average tariff on goods is now 12 percent which is the lowest in the region. The higher tariff rates are maintained on agricultural products in an effort to protect the nation's farmers from foreign competition. However, negotiations continue under WTO auspices to lower the agricultural tariffs. Panama and the United States are engaged in a longstanding dispute with the EU over banana imports. The EU places high tariffs on imported bananas and the United States has led an effort to force the EU to lower these trade impediments.

Improvements and renovations in the Canal Zone and the CFTZ have expanded capacity. The nation's container handling capacity has been expanded from 250,000 containers per year in 1997 to 1 million per year in 2000. An American firm, Kansas City Southern, is building a

railway across the isthmus that will further expand trade by allowing shipment of goods between the coasts.

In addition to the WTO, Panama has a variety of agreements that regulate its trade. Panama also has a variety of agreements with individual countries; among the most significant are those with the United States, the United Kingdom, France, Germany, Switzerland, and Taiwan. It also has preferential trade agreements with most of the nations of Latin America. In 2000, it signed an accord with Mexico to ultimately allow complete freedom of trade. Panama has also sought to negotiate agreements with nations to establish country-specific free trade zones. The first of these was signed in 2000 and grants Taiwan an area of the former military base at Fort Davis. It has also entered into negotiations to join the Andean Pact and the Central American Market.

In 1998, direct foreign investment in Panama totaled $3.76 billion and was responsible for 13.2 percent of the nation's GDP. The United States was the largest investor with 40 percent of all investments ($1.5 billion). The United Kingdom ranked second with 23 percent of investments ($880 million), Mexico was third with 19 percent ($700 million), and Taiwan fourth with 8 percent ($300 million). Transportation and maritime services accounted for 33 percent of investment ($1.29 billion), services 31 percent ($1.15 billion), manufacturing 11 percent ($400 million), and real estate 11 percent ($400 million).

MONEY

Panama uses the U.S. dollar as its currency, calling it the balboa. Although its value fluctuates freely on world markets, the dollar has remained relatively stable. The use of the dollar as the nation's currency has provided a number of benefits for the Panamanian economy. The dollar has provided monetary stability, since the Panamanian government cannot devalue the currency or print new supplies. However, it also means that the government has no control over monetary policy and that the

nation is dependent on the U.S. economy. Many goods which are imported into Panama are more expensive than they would be in the United States. This has created local inflation that is slightly higher than that of the United States: the U.S. inflation rate is 3.4 percent, that of Panama can be up to 10 percent higher. Panamanian banks are overseen by the Superintendent of Banks, a government agency whose head is appointed by the president. The agency regulates mortgages, loans, and liens.

POVERTY AND WEALTH

Panama has extremes of wealth and poverty. The wealthiest 20 percent of Panamanians control more than 50 percent of the country's wealth, while the poorest 40 percent only control 12 percent. The wealthiest Panamanians live a lifestyle that is similar to that of many Americans—they have access to consumer goods such as cars, televisions, cellular phones, and so forth. However, the majority of the nation's people live in poverty. Government estimates in 1999, classified 48 percent of the nation as living in poverty and 9.8 percent as living in extreme poverty. The Human Development Report 2000 by the United Nations ranked Panama number 59 out of 172 countries. This places Panama in the middle rankings of countries. The survey measures nations' GDPs, education levels, and standard of living to rate them in comparison with other countries. Many Western, industrialized countries such as the United States, Canada, Norway, and Luxembourg, usually rank among the highest in the survey, while lesser developed nations in the poorer areas of the world rank toward the bottom of the survey. Although Panama has a high GDP per capita, the reality is that most of the income in the country is concentrated among the wealthy few. For instance, in 2000, the nation's per capita GDP was US$3,513. However, most poor people earn less than the average. A worker making minimum wage in some areas of Panama would only earn US$2,080 per year. Regulations on the minimum wage, social security provisions, and working conditions are rarely enforced by the government which means that many workers are unable to earn even the minimum wage.

Poverty in Panama tends to be concentrated in specific geographic regions. For instance, the nation's second largest city, Colón, has the highest rates of poverty and crime in the Panama. Unemployment among youth (ages 15 to 25) in Colón is estimated to be 50 percent. There are also high levels of drug use, and Panama is often cited as one of the main areas for the shipment of drugs from South America to the United States.

Among the poorest in Panama are the indigenous native peoples, who make up about 8 percent of the population (194,000). Native Americans suffer from malnutrition and higher levels of disease and illiteracy. This minority tends to live in the more remote areas of the nation where access to education and health care is limited. In addition, the Native Americans face discrimination in hiring and educational opportunities. Minority groups, including ethnic Chinese and Indian, also face discrimination.

WORKING CONDITIONS

A 1995 law significantly expanded the right of workers to establish unions. However, only about 10 percent of the workforce is unionized. There are over 250 active unions with approximately 80,000 members. Many employees in the public sector , including police and health-care workers, are not allowed to strike. In addition, the 10,000 employees who work for the Panama Canal Authority are also not allowed to strike.

There are laws against child labor, but children between the ages of 12 and 14 may work on farms or as domestic workers. In addition, children as young as 9 are employed in occupations such as street vendors, car washers, or baggers in grocery stores. Nonetheless, the government estimates that the worst excesses of child labor occur in agriculture, especially on coffee, sugar cane, and banana plantations. Children between the ages of 14 and 16 may be employed with a 36-hour workweek. The national workweek is 48 hours with a minimum one day rest period per week. The Ministry of Labor is responsible for overseeing worker health and safety issues.

Panama has the highest minimum wage in Central America. The nation's minimum wage varies from province to province and ranges from US$0.80 percent per hour to US$1.50 per hour. The highest wage is in the capital region, the lowest is in the rural regions. The government of President Mireya Elisa Moscoso Rodriguez plans to increase the minimum wage by 40 percent by 2005. In spite of the minimum wage, most workers in the rural areas only earn between US$3 to US$6 per day. Government estimates are that as much as 39 percent of the population earns less than the minimum wage. Women earn an average of 20 percent less than men do in similar occupations. Women also face discrimination in hiring and promotion.

COUNTRY HISTORY AND ECONOMIC DEVELOPMENT

10,000-20,000 B.C. Panama is settled by Native-Americans.

1501 A.D. Rodrigo de Bastidas is the first European to explore the isthmus of Panama.

1510. First Spanish colony is established at Nombre de Dios.

1513. Vasco Nunez de Balboa reaches the Pacific Ocean by crossing the isthmus.

1534. Charles I of Spain orders the first survey for a potential canal through Panama.

1538-1821. Panama is the crossroads of Spanish trade in Central and South America. The region is known as the Camino Real or Royal Road since it is the point of departure for gold and silver shipments to Spain.

1821. Panama gains independence from Spain as part of the new nation of Colombia.

1846. Colombia signs treaty with the United States to allow the American construction of a railway across the isthmus.

1848. The discovery of gold in California leads thousands of Americans to travel across Panama in an effort to shorten their trip to the gold mines.

1870. U.S. President Ulysses S. Grant appoints a commission to examine the possibility of constructing a canal across Central America.

1880-1900. A French company undertakes an unsuccessful effort to build a canal across Panama. During the attempt, some 22,000 people die as a result of malaria and other tropical diseases.

1903. With U.S. support, Panama becomes independent. The United States begins work on the Panama Canal.

1905. Yellow fever is eradicated in Panama.

1906. Theodore Roosevelt becomes the first president to leave the continental United States while in office when he visits Panama to observe progress on the canal.

1914. The canal is completed at a cost to the United States of US$375 million making it the most expensive construction project in the nation's history at the time.

1921. The United States pays Colombia US$25 million in compensation for American support of the Panamanian revolution. The completed canal has 4 times the volume that was envisioned by the original French plan.

1968. The civilian government is overthrown by a military coup.

1972. A new constitution is adopted.

1977. The United States and Panama conclude the Torrijos-Carter Treaty to turn control of the canal over to Panama. Under the terms of the Treaty, the United States retains the right to defend the canal. Also under the terms of the accord, tolls are increased by 29.3 percent.

1983. Reforms are enacted to the constitution.

1984. Manuel Noriega becomes dictator of Panama.

1987. In response to Noreiga's actions, the United States suspends aid to Panama.

1989. After invalidating legal elections, Noriega is ousted from power by a U.S. military invasion. Noriega is taken to the United States and tried for drug-smuggling. He is convicted and sentenced to 40 years in prison. The legally-elected president is restored to power.

1993. The Interoceanic Region Authority is established to promote commercial development in the Canal Zone.

1994. The military is abolished through a constitutional amendment, and additional reforms are added to the constitution to ensure democracy.

1996. Panama joins the WTO.

1999. The canal is transferred to Panamanian control.

FUTURE TRENDS

The potential economic benefits of the Panama Canal are substantial. However, in order to capitalize on this potential, the nation needs a significant amount of investment. This is problematic since the current government has announced an end to privatization programs and many foreign firms are unwilling to invest new monies into Panama until there is further privatization. The loss of income from American forces in the Canal Zone will continue to impact the economy for some years. There is also widespread domestic pressure to increase tariffs that were lowered in order to join the WTO. A rise in tariffs could significantly harm foreign trade. The wide gaps between the rich and poor in the nation may mean future political instability. The country's high unemployment rate poses the same threat. The nation's high foreign debt also continues to constrain the economy by forcing the government to pay over US$740 million per year in debt payments.

There is international support to widen the canal to allow 2-way traffic by large vessels which is expected to increase traffic by 20 percent. The government has a US$1.3 billion fund as a reserve to provide increased social spending to compensate for the loss of funds associated with the American presence in the Canal zone. In addition, the government has received loans from the Inter-American Development Band to help develop rural areas (the most significant being a US$18 million loan to improve infrastructure in the Darien province). The commitment of the government to the development of new, and the expansion of existing, free trade areas means that the nation will continue to attract new foreign investment and new businesses.

DEPENDENCIES

Panama has no territories or colonies.

BIBLIOGRAPHY

Economist Intelligence Unit. Country Profile: Panama. London: Economist Intelligence Unit, 2001.

Major, John. Prize Possession: The United States and the Panama Canal, 1903-1979. New York: Cambridge University Press, 1993.

U.S. Central Intelligence Agency. World Factbook 2000. <http://www.odci.gov/cia/publications/factbook/index.html>. Accessed August 2001.

U.S. Department of State. Background Notes: Panama. <http://www.state.gov/www/background_notes/panama_0100_bgn.html>. Accessed April 2001.

—. FY 2001 Country Commercial Guide: Panama. <http://www1.usatrade.gov/Website/CCG.nsf/ShowCCG?OpenForm&Country=Panama>. Accessed April 2001.

—. "Panama." 1999 Country Reports on Human Rights Practices. <http://www.state.gov/www/global/human_rights?1999_hrp_report/panama.html>. Accessed April 2001.

Zimbalist, Andrew, and John Weeks. Panama at the Crossroads: Economic Development and Political Change in the Twentieth Century. Berkeley: University of California Press, 1991.

—Tom Lansford

CAPITAL:

Panama City.

MONETARY UNIT:

Balboa (B). One balboa equals 100 centésimos. Panama only issues coins in denominations of 5, 10, 25, and 50 centésimos and 1 and 5 balboas. The U.S. dollar is distributed freely throughout the country and is legal tender.

CHIEF EXPORTS:

Bananas, shrimp, sugar, coffee.

CHIEF IMPORTS:

Capital goods, crude oil, foodstuffs, consumer goods, chemicals.

GROSS DOMESTIC PRODUCT:

US$21 billion (purchasing power parity, 1999 est.).

BALANCE OF TRADE:

Exports: US$4.7 billion (f.o.b., 1999). Imports: US$6.4 billion (f.o.b., 1999).

PANAMA

Compiled from the February 2005 Background Note and supplemented with additional information from the State Department and the editors of this volume. See the introduction to this set for explanatory notes.

Official Name:
Republic of Panama

PROFILE

Geography

Area: 78,200 sq. km. (30,193 sq. mi.); slightly smaller than South Carolina. Panama occupies the southeastern end of the isthmus forming the land bridge between North and South America.

Cities: Capital—Panama City (827,828). Other cities—Colon (140,908), David (102,678).

Terrain: Mountainous (highest elevation Cerro Volcan, 3,475 m.—11,468 ft.); coastline 2,857 km. (1,786 mi.).

Climate: Tropical, with average daily rainfall 28 mm. (1 in.) in winter.

People

Nationality: Noun and adjective—Panamanian(s).

Population: (July 2004 est.) 3.1 million.

Annual growth rate: 1.31%.

Ethnic groups: Mestizo (mixed Amerindian and European ancestry) 70%, Amerindian and mixed (West Indian) 14%, Caucasian 10%, Amer-indian 6%.

Religions: Roman Catholic 84%, Protestant 15%, other 1%.

Languages: Spanish (official); 14% speak English as their native tongue; various indigenous languages. Many Panamanians are bilingual.

Education: Years compulsory—6. Attendance—95% for primary school-age children, 60% for secondary. Literacy—92.6% overall: urban 94%, rural 62%.

Health: Infant mortality rate—20.95/1,000. Life expectancy—72.14 yrs.

Work force: (1.1 million) Commerce (wholesale and retail)—19.1%; agriculture, cattle, hunting, silviculture—14%; industries (manufactures)—8.8%; construction—7.7%; transportation, storage, communications—7.2%; public and defense administration—6.9%; other community and social activities—5.8%; hotels and restaurants—3.7%; financial intermediation—2.6%.

Government

Type: Constitutional democracy.

Independence: November 3, 1903.

Constitution: October 11, 1972; amended 1983 and 1994.

Branches: Executive—president (chief of state), two vice presidents. Legislative—Legislative Assembly (unicameral, 71 members). Judicial—Supreme Court.

Administrative subdivisions: Nine provinces and five (Indian) territories.

Political parties: Former President Mireya Moscoso belonged to the Arnulfista Party (PA). The PA in coalition with smaller parties held a slim majority in the Legislative Assembly. The Democratic Revolutionary Party (PRD) was the primary opposition. Represented by its presidential candidate, Martin Torrijos, the PRD on May 2, 2004 won the presidency and a legislative majority and took power on September 1, 2004.

Suffrage: Universal and compulsory at 18.

Economy

GDP: (2003) $18.62 billion (nominal).

Annual growth rate: (2002) 0.8%; (2003) 3.2%.

Per capita GDP: (2003) $3,906.

Natural resources: Timber, seafood, copper.

Services: (78% of GDP) Finance, insurance, health and medical, transportation, telecommunications, the Canal and maritime services, tourism, Colon Free Zone, public administration, and general commerce.

Agriculture: (5% of GDP) Productsbananas and other fruit, corn, sugar, rice, coffee, shrimp, timber, vegetables, livestock.

Industry/Manufacturing: (11.2% of GDP) Types food and drink processing, metalworking petroleum refining and products, chemicals, paper and paper products, printing, mining, refined sugar, clothing, furniture, construction.

Trade: (2002 figures include Colon Free Zone or CFZ) Exports—$5.3 billion: bananas, petroleum products, shrimp, sugar, coffee, and clothing. Major markets—U.S. 47.8% (excluding CFZ). Imports—$6.5 billion: capital goods, crude oil, foodstuffs, chemicals, other consumer and intermediate goods. Major suppliers—U.S. 34.4%.

PEOPLE

Panamanians' culture, customs, and language are predominantly Caribbean Spanish. The majority of the population is ethnically 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 business-people and professionals. 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 tamborito. Lively salsa—a mixture of Latin American popular music, rhythm and blues, jazz, and rock—is a Panamanian specialty, and Ruben Blades its best-known performer. 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. More than 90% of Panamanians are literate.

HISTORY

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, although it was more commonly known as Camino de Cruces (Road of the Crosses) because of the abundance of gravesites along the way.

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.

Building the Canal

Modern Panamanian history has been shaped by its transisthmian canal, which had been a dream since the beginning of Spanish colonization. From 1880 to 1900, a French company under Ferdinand de Lesseps attempted unsuccessfully to construct a sea-level canal on the site of the present Panama Canal. In November 1903, with U.S. encouragement and French financial support, Panama proclaimed its independence and concluded the Hay/Bunau-Varilla Treaty with the United States.

The treaty granted rights to the United States "as if it were sovereign" in a zone roughly 10 miles wide and 50 miles long. In that zone, the U.S. would build a canal, then administer, fortify, and defend it "in perpetuity." In 1914, the United States completed the existing 83 kilometer (50 mile) lock canal, which today is one of the world's greatest engineering triumphs. The early 1960s saw the beginning of sustained pressure in Panama for the renegotiation of this treaty. (See discussion of U.S.-Panama relations and the 1977 Panama Canal Treaties below.)

Military Coups and Coalitions

From 1903 until 1968, Panama was a constitutional democracy dominated by a commercially oriented oligarchy. During the 1950s, the Panamanian military began to challenge the oligarchy's political hegemony. In October 1968, Dr. Arnulfo Arias Madrid, twice elected president and twice ousted by the Panamanian military, was again ousted as president by the National Guard after only 10 days in office. A military junta government was established, and the commander of the National Guard, Brig. Gen. Omar Torrijos, emerged as the principal power in Panamanian political life. Torrijos' regime was harsh and corrupt, but he was a charismatic leader whose populist domestic programs and nationalist foreign policy appealed to the rural and urban constituencies largely ignored by the oligarchy.

Torrijos' death in 1981 altered the tone but not the direction of Panama's political evolution. Despite 1983 constitutional amendments, which appeared to proscribe a political role for the military, the Panama Defense Forces (PDF), as they were then known, continued to dominate Panamanian political life behind a facade of civilian government. By this time, Gen. Manuel Noriega was firmly in control of both the PDF and the civilian government.

The United States froze economic and military assistance to Panama in the summer of 1987 in response to the

domestic political crisis and an attack on the U.S. Embassy. General Noriega's February 1988 indictment in U.S. courts on drug trafficking charges sharpened tensions. In April 1988, President Reagan invoked the International Emergency Economic Powers Act, freezing Panamanian Government assets in U.S. banks and prohibiting payments by American agencies, firms, and individuals to the Noriega regime. When national elections were held in May 1989, Panamanians voted for the anti-Noriega candidates by a margin of over three-to-one. The Noriega regime promptly annulled the election and embarked on a new round of repression. By the fall of 1989, the regime was barely clinging to power, and the regime's paranoia made daily existence unsafe for American citizens.

On December 20, 1989, President George H.W. Bush ordered the U.S. military into Panama to protect U.S. lives and property, to fulfill U.S. treaty responsibilities to operate and defend the Canal, to assist the Panamanian people in restoring democracy, and to bring Noriega to justice. The U.S. troops involved in Operation Just Cause achieved their primary objectives quickly, and troop withdrawal began on December 27, 1989. Noriega eventually surrendered voluntarily to U.S. authorities. He is now serving a 40-year sentence for drug trafficking.

Rebuilding Democracy

Panamanians moved quickly to rebuild their civilian constitutional government. On December 27, 1989, Panama's Electoral Tribunal invalidated the Noriega regime's annulment of the May 1989 election and confirmed the victory of opposition candidates under the leadership of President Guillermo Endara and Vice Presidents Guillermo Ford and Ricardo Arias Calderon.

President Endara took office as the head of a four-party minority government, pledging to foster Panama's economic recovery, transform the Panamanian military into a police force under civilian control, and strengthen democratic institutions. During its 5-year term, the Endara government struggled to meet the public's high expectations. Its new police force proved to be a major improvement in outlook and behavior over its thuggish predecessor but was not fully able to deter crime. Ernesto Perez Balladares was sworn in as President on September 1, 1994, after an internationally monitored election campaign.

Perez Balladares ran as the candidate for a three-party coalition dominated by the Democratic Revolutionary Party (PRD), the erstwhile political arm of the military dictatorship during the Torrijos and Noriega years. A long-time member of the PRD, Perez Balladares worked skillfully during the campaign to rehabilitate the PRD's image, emphasizing the party's populist Torrijos roots rather than its association with Noriega. He won the election with only 33% of the vote when the major non-PRD forces, unable to agree on a joint candidate, splintered into competing factions. His administration carried out economic reforms and often worked closely with the U.S. on implementation of the canal treaties.

On May 2, 1999, Mireya Moscoso, the widow of former President Arnulfo Arias Madrid, defeated PRD candidate Martin Torrijos, son of the late dictator. The elections were considered free and fair. Moscoso took office on September 1, 1999. She was term-limited to a single term in office. During her administration, Moscoso attempted to strengthen social programs, especially for child and youth development, protection, and general welfare. Education programs also were highlighted. Later in her term, Moscoso focused on Panama's desire for a free trade agreement (FTA) with the United States. Moscoso's administration successfully handled the Panama Canal transfer and was effective in the administration of the canal.

Panama's counternarcotics cooperation has been excellent, and the Panamanian Government has expanded money-laundering legislation and concluded with the U.S. a counternarcotics maritime agreement and a stolen vehicles agreement. The Panamanian Government also has been paying increasing attention to maritime security issues. In the economic investment arena, the Panamanian Government has been successful in the enforcement of intellectual property rights and has concluded with the U.S. a Bilateral Investment Treaty Amendment and an agreement with the Overseas Private Investment Corporation. The Moscoso administration was very supportive of the United States in combating international terrorism.

National elections were held May 2, 2004. The PRD's Martin Torrijos won the presidency and a PRD legislative majority in the Assembly. Torrijos was inaugurated on September 1, 2004.

GOVERNMENT AND POLITICAL CONDITIONS

Panama is a representative democracy with three branches of government: executive and legislative branches elected by direct vote for 5-year terms, and an independently 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 Government has converted the former PDF into the Panamanian Public Forces (PPF), a "law enforcement focused" force that is subordinate to civilian authority, composed of four independent organizations: the Panamanian National Police (Policia Nacional de Panamá or PNP), National Maritime Service (Servicio Maritimo Nacional or SMN), the National Air Service (Servicio Aéreo Nacional or SAN), and the Institutional Protectional Service (Servicio de Protección Institucional or SPI). A constitutional amendment passed in 1994 permanently abolished the military.

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

Principal Government Officials

Last Updated: 1/10/05

President: Martin TORRIJOS Espino
First Vice President: Samuel Lewis NAVARRO
Second Vice President: Ruben AROSEMENA Valdes
Min. of Agricultural & Livestock Development: Laurentino CORTIZO Cohen
Min. of Commerce & Industries: Alejandro FERRER
Min. of Economy & Finances: Ricaurte VASQUEZ
Min. of Education: Juan BOSCO Bernal
Min. of Foreign Affairs: Samuel LEWIS Navarro
Min. of Government & Justice: Hector ALEMAN
Min. of Health: Camilo ALLEYNE
Min. of Housing: Balbina HERRERA
Min. of Labor & Work Development: Reynaldo RIVERA
Min. of the Presidency: Ubaldino REAL
Min. of Public Works: Carlos VALLARINO
Min. of Youth, Women, Children, & Family Affairs: Leonor CALDERON
Attorney General: Ana MATILDE Gomez
Manager, National Bank of Panama: Juan Ricardo DE DIANOUS
Ambassador to the US: Federico Antonio HUMBERT Arias
Permanent Representative to the UN, New York: Ramon MORALES Quijano

Panama maintains an embassy in the United States at 2862 McGill Terrace, NW, Washington, DC 20008 (tel: 202-483-1407).

ECONOMY

Panama's economy is based primarily on a well-developed services sector that accounts for nearly 80% of GDP. Services include the Panama Canal, banking, the Colon Free Zone, insurance, container ports, flagship registry, medical and health, and other business.

A major challenge facing the government under former President Mireya Moscoso was turning to productive use the 70,000 acres of former U.S. military land and the more than 5,000 buildings that reverted to Panama at the end of 1999. Administratively, this job falls to the Panamanian Inter-Oceanic Regional Authority.

GDP growth for 2003 was about 3.2% compared to 0.8% in 2002. Though Panama has the highest GDP per capita in Central America, about 40% of its population lives in poverty. The unemployment rate surpassed 14% in 2002.

From March 2001 to February 2003, Panama served as host for the Free Trade Area of the Americas negotiations. Panama's first free trade agreement, with El Salvador, entered into force in early 2003, and in August 2003 Panama concluded negotiations on an FTA with Taiwan. Panama also is negotiating FTAs with its Central American neighbors and with the U.S.

FOREIGN RELATIONS

Panama is a member of the UN General Assembly and 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 a member of the Central American Parliament as well as the Central American Integration System.

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.

U.S.-PANAMANIAN RELATIONS

The United States cooperates with the Panamanian Government in promoting economic, political, security, 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 19,000 American citizens reside in Panama, many retirees from the Panama Canal Commission and individuals who hold dual nationality. There is also a rapidly growing enclave of American retirees in Chiriqui Province in western Panama.

Panama continues to fight against the illegal narcotics and arms trade. 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, Panama passed significant reforms in 2000 intended to strengthen its cooperation against international financial crimes, and the conclusion of the Speed Joyeros case in April 2002 marked the dismantling of a major money-laundering network with scores of arrests in several countries.

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. 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, a process, which was finalized on December 31, 1999.

Principal U.S. Embassy Officials

PANAMA (E) Address: Apartado 0816-02561 Zona 5; APO/FPO: APO AA 34002; Phone: 011-507-207-7000; Fax: (507)225-0949-Exec Office, (507)207-7143-HRO, (507)207-1964-Mailroom; Workweek: 8am to 5pm with flex hours.; Website: orbi.net/usispan/

Other Contact Information

American Chamber of Commerce and Industry in Panama
Estafeta Balboa
Apartado 168
Panama, Republica de Panama
Tel: 507-269-3881
Fax: 507-223-3508
E-mail: amcham@pan.gbm.net

U.S. Department of State
Office of Central America and Panama Affairs (CEN-PAN)
2201 C St. NW
Washington, DC 20520
Tel: (202) 647-3330
Fax: (202) 647-2901

U.S. Department of Commerce
International Trade Administration Office of Latin American and the Caribbean
14th and Constitution, NW
Washington, DC 20230
Tel: 202-482-0057
800-USA-TRADE
Fax: 202-482-0464
Home Page: http://www.ita.doc.gov

TRAVEL

Consular Information Sheet

September 20, 2004

Country Description: Panama has a developing economy. Outside the Panama City area, which has many first-class hotels and restaurants, tourist facilities vary in quality. U.S. currency is the currency of Panama, and is also referred to as the Panama balboa.

Entry/Exit Requirements: U.S. citizens are strongly encouraged to obtain a U.S. passport before traveling to Panama. Although entry into Panama is permitted with proof of U.S. citizenship (such as a certified birth certificate or a Naturalization Certificate) and official photo identification (such as a driver's license), travelers may experience difficulties exiting Panama and re-entering the U.S. when not in possession of a valid U.S. passport. Panamanian law requires that travelers must either purchase a tourist card from the airline serving Panama or obtain a visa from a Panamanian embassy or consulate before traveling to Panama. Further information may be obtained from the Embassy of Panama, 2862 McGill Terrace, N.W., Washington, D.C. 20009, tel. (202) 483-1407, or the Panamanian consulates in Atlanta, Chicago, Houston, Los Angeles, Miami, New Orleans, New York, Philadelphia or Tampa.

In an effort to prevent international child abduction, many governments have initiated procedures at entry/exit points. These often include requiring documentary evidence of relationship and permission for the child's travel from the parent(s) or legal guardian not present. Having such documentation on hand, even if not required, may facilitate entry/departure.

U.S. citizens transiting the Panama Canal as passengers do not need to obtain visas, report to customs, or pay any fees. U.S. citizens piloting private craft through the canal should contact the U.S. Embassy in Panama City for current details on required procedures.

Safety and Security: U.S. citizens are warned not to travel overland through the eastern area of Darien Province (beyond a line drawn from Punta Carreto in the Comarca de San Blas Province on the Atlantic coast, through Yaviza in the eastern Darien Province, to Punta Pina on the Pacific coast). This area encompasses parts of the Darien National Park as well as privately owned nature reserves and tourist resorts. While no incidents have occurred at these resorts, U.S. citizens, other foreign nationals and Panamanian citizens have been the victims of violent crime, kidnapping and murder in this area. The Panama-Colombia border area is very dangerous due to the activities of Colombian terrorist groups, drug traffickers and common criminals. Note: The Secretary of State has designated the Revolutionary Armed Forces of Colombia (FARC), the National Liberation Army (ELN) and the United Self-Defense Forces of Colombia (AUC) as Foreign Terrorist Organizations.

From time to time, there may be demonstrations or other manifestations of anti-American sentiment by small but vociferous groups. While most demonstrations relate to labor disputes or other local issues and are typically non-violent, it is nonetheless a good security practice to avoid demonstrations. U.S. citizens are advised to exercise caution on the campus of the University of Panama, where members of radical, anti-U.S. student groups are active.

Visitors should be cautious when swimming or wading at the beach. Some beaches, especially those on the Pacific Ocean, have dangerous currents that cause drowning deaths every year. These beaches are seldom posted with warning signs.

On the Pacific coast, boaters should steer clear of Coiba Island, which houses a penal colony, and be wary of vessels that may be transporting narcotics northward from Colombia. Similarly, boaters should avoid the southeastern coast of Kuna Yala Comarca (or Comarca de San Blas), south of Punta Carreto. Local maritime search and rescue capabilities are limited and well below U.S. standards.

For the latest security information, Americans traveling abroad should regularly monitor the State Department's Internet website at http://travel.state.gov, where the current Worldwide Caution Public Announcement, Travel Warnings and Public Announcements can be found. Up to date information on security can also be obtained by calling 1-888-407-4747 toll free in the United States, or, for callers outside the United States and Canada, a regular toll line at 1-317-472-2328. These numbers are available from 8:00 a.m. to 8:00 p.m. Eastern Time, Monday through Friday (except U.S. federal holidays).

Crime: Crime in Panama City is moderate, but growing, particularly because of the activities of youth gangs. Colon is a high crime area. Police checkpoints have become commonplace on weekends on roads in both cities. Based upon reported incidents by local police, the high-crime areas around Panama City are San Miguelito, Rio Abajo, El Chorillo, Ancon, Curundu, Vera Cruz Beach, Panama Viejo, Parque Soberania, and the Madden Dam overlook. Crimes there are typical of those that plague metropolitan areas and range from rape to armed robberies, muggings, purse-snatchings, petty theft, and "express kidnappings" from ATM banking facilities, in which the victim is briefly kidnapped and robbed after withdrawing cash from an ATM.

There has been a substantial increase in crimes involving the use of weapons, as well as for possession of illegal weapons. Armed robberies targeting tourists have become more frequent on the beaches of Bocas del Toro province. Police resources there are limited.

Panama City has a curfew for persons less than 18 years of age, although this law is not often enforced. Under the law, students attending night classes must have a carnet, or permit, issued by the school or, if employed, a Certificate of Employment. Minors who are picked up for a curfew violation are subject to detention at a police station until parents or legal guardians can arrange for them to be released into their custody. Parents or legal guardians may be fined up to U.S. $50.00 for the violation.

The loss or theft abroad of a U.S. passport should be reported immediately to the local police and the nearest U.S. Embassy or Consulate. If you are the victim of a crime while overseas, in addition to reporting to local police, please contact the nearest U.S. Embassy or Consulate for assistance. The Embassy/Consulate staff can, for example, help you find appropriate medical care, to contact family members or friends and explain how funds could be transferred.

Although the investigation and prosecution of the crime is solely the responsibility of local authorities, consular officers can help you to understand the local criminal justice process and to find an attorney if needed.

U.S. citizens may refer to the Department of State's pamphlet A Safe Trip Abroad for ways to promote a trouble-free journey. The pamphlet is available by mail from the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402, via the Internet at http://www.gpoaccess.gov, or via the Bureau of Consular Affairs home page at http://travel.state.gov.

Medical Facilities: Although Panama City has some very good hospitals and clinics, medical facilities outside of the capital are limited.

Medical Insurance: The Department of State strongly urges Americans to consult with their medical insurance company prior to traveling abroad to confirm whether their policy applies overseas and whether it will cover emergency expenses such as a medical evacuation. U.S. medical insurance plans seldom cover health costs incurred outside the United States unless supplemental coverage is purchased. Further, U.S. Medicare and Medicaid programs do not provide payment for medical services outside the United States. However, many travel agents and private companies offer insurance plans that will cover health care expenses incurred overseas including emergency services such as medical evacuations.

When making a decision regarding health insurance, Americans should consider that many foreign doctors and hospitals require payment in cash prior to providing service and that a medical evacuation to the U.S. may cost well in excess of $50,000. Uninsured travelers who require medical care overseas often face extreme difficulties, whereas travelers who have purchased overseas medical insurance have, when a medical emergency occurs, found it life-saving. When consulting with your insurer prior to your trip, ascertain whether payment will be made to the overseas healthcare provider or whether you will be reimbursed later for expenses you incur. Some insurance policies also include coverage for psychiatric treatment and for disposition of remains in the event of death. In Panama, most hospitals accept credit cards for hospital charges, but not for doctors' fees.

Useful information on medical emergencies abroad, including overseas insurance programs, is provided in the Department of State's Bureau of Consular Affairs brochure Medical Information for Americans Traveling Abroad, available via the Bureau of Consular Affairs home page.

Other Health Information: In August 2004, the Ministry of Health issued a health alert for the Escobal Corregimiento in Colon Province due to the rise in classic dengue cases and a recent case of dengue hemorrhagic fever. There has been a rise in malaria cases in the past few years in the Ngobe Buglé Indian reservation. Malaria also exists in Bocas del Toro, San Blas, Darien, Chiriquí and Veraguas.

Information on vaccinations and other health precautions, such as safe food and water precautions and insect bite protection, may be obtained from the Centers for Disease Control and Prevention's hotline for international travelers at 1-877-FYI-TRIP (1-877-394-8747); fax 1-888-CDC-FAXX (1-888-232-3299), or via the CDC's Internet site at http://www.cdc.gov/travel.

For information about outbreaks of infectious diseases abroad consult the World Health Organization's website at http://www.who.int/en. Further health information for travelers is available at http://www.who.int/ith.

Traffic Safety and Road Conditions: While in a foreign country, U.S. citizens may encounter road conditions that differ significantly from those in the United States. The information below concerning Panama is provided for general reference only, and may not be totally accurate in a particular location or circumstance.

Safety of Public Transportation: Fair
Urban Road Conditions/Maintenance: Fair
Rural Road Conditions/Maintenance: Poor
Availability of Roadside Assistance: Fair

Panama's roads, traffic and transportation systems are generally safe, but traffic lights often do not exist, even at busy intersections. Driving is often hazardous and demanding due to dense traffic, undisciplined driving habits, poorly maintained streets, and a lack of effective signs and traffic signals. On roads where poor lighting and driving conditions prevail, night driving is difficult, and should be approached with caution.

Buses and taxis are not always maintained in safe operating condition due to lack of regulatory enforcement. Auto insurance is not mandatory and many drivers are uninsured. If an accident occurs, the law requires that the vehicles remain in place until a police officer responds to investigate. Traffic in Panama moves on the right, as in the U.S., and Panamanian law requires that drivers and passengers wear seat belts.

Flooding during the April to December rainy season often makes city streets impassible and washes out some roads in the interior of the country. In addition, rural areas are often poorly maintained and lack illumination at night. Such roads are generally less traveled and the availability of emergency roadside assistance is very limited. Road travel is more dangerous during the rainy season and in the interior from Carnival through Good Friday. Carnival starts the Saturday prior to Ash Wednesday and goes on for four days.

Traveling On The Pan American Highway: There is often night construction on Panama's main highway, the Pan American Highway. There are few signs alerting drivers to such construction and the highway is not well lit at night. When traveling on the highway, travelers should be aware of possible roadblocks. The Pan American Highway does not go through to Colombia. It ends at Yaviza in the Darien Province of Panama. The highway's final portion from Chepo to Yaviza is reasonably passable only during the January to April dry season. If destined for South America, automobile travelers should ship their cars on a freighter.

For additional general information about road safety, including links to foreign government sites, see the Department of State, Bureau of Consular Affairs home page at http://travel.state.gov/travel/abroad_roadsafety.html. For specific information concerning Panamanian driving permits, vehicle inspection, road tax and mandatory insurance, contact Panama national tourist organization offices in New York via the Internet at http://www.visitpanama.com.

Aviation Safety Oversight: The U.S. Federal Aviation Administration (FAA) has assessed the Government of Panama's civil aviation authority as Category 1—in compliance with international aviation safety standards for the oversight of Panama's air carrier operations. For further information, travelers may contact the Department of Transportation within the U.S. at 1-800-322-7873, or visit the FAA's Internet site at http://www.faa.gov/avr/iasa/index.cfm.

Domestic Air Travel: Several incidents have called into serious question the safety standards of small air carriers flying domestic routes. In recent years, there have been fatal crashes involving small domestic carriers, while other flights have experienced mechanical problems resulting in cancellations, emergency landings, and non-fatal crashes. In light of these incidents, U.S. citizens should give serious consideration to alternative modes of travel before booking flights on domestic Panamanian airlines.

Only Tocumen International Airport, serving Panama City, maintains airport security measures known to meet international standards. Security measures at domestic commuter fields serving popular travel destinations such as Colon, Contadora Island, Bocas Del Toro and Kuna Yala islands (or San Blas Islands) are lax.

Customs Regulations: Panamanian customs authorities may enforce strict regulations concerning temporary importation into or export from Panama of items such as firearms and ammunition, cultural property, endangered wildlife species, narcotics, biological material, and food products. It is advisable to contact the Embassy of Panama in Washington or one of Panama's consulates in the United States for specific information regarding customs requirements. In many countries around the world, counterfeit and pirated goods are widely available. Transactions involving such products are illegal and bringing them back to the United States may result in forfeitures and/or fines. A current list of those countries with serious problems in this regard can be found here.

Criminal Penalties: While in a foreign country, a U.S. citizen is subject to that country's laws and regulations, which sometimes differ significantly from those in the U.S. and may not afford the protections available to the individual under U.S. law. Penalties for breaking the law can be more severe than in the U.S. for similar offenses. Persons violating Panamanian laws, even unknowingly, may be expelled, arrested or imprisoned. Penalties for possession, use, or trafficking in illegal drugs in Panama are strict, and convicted offenders can expect jail sentences and heavy fines.

Under the PROTECT Act of April 2003, it is a crime, prosecutable in the United States, for a U.S. citizen or permanent resident alien, to engage in illicit sexual conduct in a foreign country with a person under the age of 18, whether or not the U.S. citizen or lawful permanent resident alien intended to engage in such illicit sexual conduct prior to going abroad. For purposes of the PROTECT Act, illicit sexual conduct includes any commercial sex act in a foreign country with a person under the age of 18. The law defines a commercial sex act as any sex act, on account of which anything of value is given to or received by a person under the age of 18.

Under the Protection of Children from Sexual Predators Act of 1998, it is a crime to use the mail or any facility of interstate or foreign commerce, including the Internet, to transmit information about a minor under the age of 16 for criminal sexual purposes that include, among other things, the production of child pornography. This same law makes it a crime to use any facility of interstate or foreign commerce, including the Internet, to transport obscene materials to minors under the age of 16.

Children's Issues: For information on international adoption of children and international parental child abduction, please refer to our Internet site at http://www.travel.state.gov/family/index.html or telephone Overseas Citizens Services at 1-888-407-4747. This number is available from 8:00 a.m. to 8:00 p.m. Eastern Time, Monday through Friday (except U.S. federal holidays). Callers who are unable to use toll-free numbers, such as those calling from overseas, may obtain information and assistance during these hours by calling 1-317-472-2328.

Although Panama is a signatory to the Hague Convention on the Civil Aspects of International Child Abduction, it has not enacted domestic implementing legislation. Without such legislation, the Panamanian code of family justice takes precedence over the convention, which makes the return of children abducted to Panama from the United States and elsewhere uncertain. For more information on international adoption of children and international parental child abduction, please refer to our Internet site at http:/./family/about.html, or telephone 1-888-407-4747.

Registration/Embassy Location: Americans living or traveling in Panama are encouraged to register with the Consular Section of the U.S. Embassy in Panama City through the State Department's travel registration website, https://travelregistration.state.gov, and to obtain updated information on travel and security within Panama. Americans without Internet access may register directly with the nearest U.S. Embassy or Consulate. By registering, American citizens make it easier for the Embassy to contact them in case of emergency. The Consular Section of the U.S. Embassy is located in The Clayton Building (formerly Fort Clayton Building 520) in the Clayton section of Panama City.

The international mailing address is: Apartado 6959, Panama 5, Republic of Panama. The U.S. mailing address is U.S. Embassy Panama, Department of State, Washington, D.C. 20521-9100.

The telephone numbers for the Embassy are 011-507-207-7000, after hour emergencies, 011-507-207-7200; Consular Section 011-507-207-7030 and fax 011-507-207-7278. The Embassy web site is http://usembassy.state.gov/panama. E-mail inquiries may be addressed to Panama-ACS@state.gov.

International Adoption

January 2005

The information below has been edited from a report of the State Department Bureau of Consular Affairs, Office of Overseas Citizens Services. For more information, please read the International Adoption section of this book and review current reports online at www.travel.state.gov/family.

Disclaimer: The information in this circular relating to the legal requirements of specific foreign countries is provided for general information only. Questions involving interpretation of specific foreign laws should be addressed to foreign legal counsel.

Please Note: International adoption is essentially a private legal matter between an individual or couple who wishes to adopt and a foreign legal system which operates under that country's laws and regulations. U.S. authorities cannot intervene on behalf of the prospective adoptive parent(s) with the legal system or other governmental entity in the country where the adoptions take place.

Availability of Children for Adoption: Recent U.S. immigrant visa statistics show that in the last five to six years, 24 IR-3s were given to Panamanian orphans, and 8 IR-4s have been given. This chart reflects the following pattern for visa issuance to orphans:

FY-1996: IR-3 immigrant visas issued to Panamanian orphans adopted in the U.S. – 5, IR-4 immigrant visas issued to Panamanian orphans adopted in the U.S. – 4
FY-1997: IR-3 Visas—11,
IR-4 Visas – 0
FY-1998: IR-3 Visas—6,
IR-4 Visas – 1
FY-1999: IR-3 Visas—5,
IR-4 Visas – 4
FY-2000:
IR-3 Visas—2,
IR-4 Visas—2

Panamanian Adoption Authority: The government office responsible for adoptions in Panama is the two major courts, the "Juzgado de la Niñez y Adolescencia" (Children and Minors' Court) and "Juzgados Seccionales de Familia" (Family Courts). There are 12 district courts throughout the provinces in Panama. In provinces that do not operate with either legal system, the "Juzgados de Circuitos, Ramo Civil" (Circuit Courts) will handle some adoption cases.

Juzgado de la Niñez y Adolescenciathe Juzgado de la Niñez y Adolescencia has jurisdiction over adoption cases of abandoned children wards of the court or orphans. The Juzgado de la Niñez y Adolescencia is the legal system for orphan adoptions in Panama. The courts generally require proof from the U.S. government such as the I-600A approval notification that the parent(s) are eligible for adoption.

Juzgados Seccionales de Familia-The Juzgados Seccionales de Familia have jurisdiction over adoption cases where the child has been placed under adoption by written consent of the child's birth parent(s).

Panama Adoption Procedures: To begin the adoption process, an attorney must present the necessary paperwork in the form of a "demanda" or petition for the courts to review. Usually, the adoptive parent(s) and their attorney will communicate with the judge's staff until the petition is ready for review. If the judge approves the petition, the judge will forward the documents to the "Registro Civil de Panama" (Civil Register). The adoption is not official until it is published in the Civil Register and the judge has signed a final decree. Please review current reports online at travel.state.gov/family for more details.

Age and Civil Status Requirements: For parent(s) who wish to adopt a non-orphan child under the age of sixteen, the child must be in the legal custody of, and have resided with, the adopting parent or parent(s) for at least two years. This is called a "two-year provision" and only applies to children who do not qualify as orphans. After the two years, the child is eligible for the I-600 Petition to Classify a Child as an Immediate Relative.

Panamanian courts allow United States citizens to adopt; however, Panamanian citizens are given preference. Please review current reports online at travel.state.gov/family for more details.

Panamanian law requires that prospective adoptive parent(s) fall within the following categories:

• The couple must have been married for at least five years.
• The man's age can be no older than forty-five and the woman's age no older than forty.
• Single persons may adopt but only children of their own sex.
• No family line adoptions.
• The courts do not separate siblings. If a parent would like to adopt one child, they must adopt the child's siblings.
• There must be a fifteen-year age difference between the prospective adoptive parent and the child.

Homosexual individuals or couples are not permitted to adopt children.

Doctors: The U.S. Embassy (Consulate) maintains current lists of doctors and sources for medicines, should either you or your child experience health problems while in Panama.

Panamanian Medical Requirements for Adoptive Parents and Adopted Children: In addition to a medical examination of the child to be adopted, the courts may request a psychological evaluation of the prospective adoptive parent(s). For further details on medical exam requirements, please review current reports online at travel.state.gov/family

Panama Documentary Requirements: The following are vital documents for processing an adoption in both Panamanian court systems. All of the following documents must be translated into English and Spanish for the Panamanian and United States agencies. Prospective adoptive parent(s) must also have notarized copies of the documents readily available in the event that a judge may need to keep these documents for future use:

• Birth Certificate of each adoptive parent
• Marriage Certificate and Death or Divorce Certificate of each adoptive parent (Death/Divorce certificates only required if either adoptive parent was previously married)
• Health Certificate from a comparable social services agency to the Panamanian social services certifying good mental and physical health of each parent
• Certificate of Good Conduct from local police in adoptive parent(s) state of resident
• Letter from employer stating position and salary
• 2 photographs, passport size of each parent
• 2 reference letters from a person who can attest to your character, financial situation and living conditions
• Sociological home study report conducted by U.S. social worker or a U.S. certified investigative agency approved by Panamanian court systems
• Psychological evaluation conducted by authorized medical officer in Panama or U.S. certified medical official approved by Panamanian courts. If evaluated in the United States, this evaluation should be performed by an agency equivalent to the Panamanian social services.

Note: Although procedures and documentary requirements may seem repetitive, authenticating and obtaining several copies of the same document is advisable to meet documentary requirements. The process is designed to protect the child, the adoptive parent(s) and the birth parent(s). Please review current reports online at travel.state.gov/family for more details.

U.S. Immigration Requirements: A Panamanian child adopted by an American citizen must obtain an immigrant visa before he or she can enter the U.S. as a lawful permanent resident. Please see the International Adoption section of this book for more details and review current reports online at travel.state.gov/family

Panamanian Embassy (Consulates) in the United States: Embassy of the Republic of Panama; 2862 McGill Terr., NW; Washington, DC 20008; Phone: 202-483-1407; Fax: 202-483-8413.

Panama also has consulates in Mobile, Alabama; Los Angeles, California; San Francisco, California; Miami, Florida; Atlanta, Georgia; Honolulu, Hawaii; Chicago, Illinois; New Orleans, Louisiana; New York, New York; Cleveland, Ohio; Philadelphia, Pennsylvania; Houston, Texas, and San Juan, Puerto Rico.

U.S. Embassy (Consulate) in Panama: Bureau of Citizenship and Immigration Services in the Department of Homeland Security –Panama; American Embassy in Panama; Unit 0945 RSO; APO, AA 34002; Tel: (507)-207-7415. Consular Section; APO, AA 34002; Tel: (507)-207-4213

Costs and Fees: The following fees are associated with the adoption process. These fees do not include personal travel, lawyers' fees or other expenses associated with the adoption process. The adopting parent should prepare to pay these fees either in U.S. dollars, money order, cashier's check. Personal checks and credit cards are not widely accepted for these types of services and fees.

• Bureau of Citizenship and Immigration Services in the Department of Homeland Security (BCIS) Fees: Fee for filing the I-600-A/I-600 Petition—$525.00. Note: There are no additional charges for siblings above and beyond the $525.00 for the first child if the children are adopted simultaneously.
• The Immigrant Visa: Fee for an Immigrant visa application —$260.00. Fee for an Immigrant visa issuance—$65.00. Note: This fee only applies if the consular officer approves the visa.
• United States Lawyers' Fees: United States lawyers' fees vary and are not associated with the United States government.
• Panamanian Courts: The Panamanian legal systems, Juzgado de la Niñez y Adolescencia and Juzgados Seccionales de Familia do not have fees for the adoption process.
• Panamanian Lawyers and Translators: The adopting parent(s) should expect to pay from $500.00 to $2500.00 for lawyers in Panama. If the prospective adoptive parent(s) do not speak Spanish, it is necessary for the parent(s) to hire a translator for both speaking and document translation. Many Panamanian lawyers provide translator services and include the service in their fees.

Special Circumstances: During the adoption process, there are often specific situations/scenarios that occur outside of the normal adoption process. Questions about situations/scenarios not mentioned below or throughout this pamphlet may be addressed to BCIS/Panama or the consular section at the American Embassy in Panama.

Agent Accompanying Adoptive Child to the U.S.: If the child has been brought to the U.S. by a third party, (e.g. representative of social services organization or adoption agency), BCIS requires a notarized statement from the Juzgado de la Niñez y Adolescencia authorizing the individual to bring the child to the U.S. for adoption. This statement may be included in the judge's statement authorizing the child to travel to the United States. Even if an agent is accompanying the child to the United States, the immigrant petition must be signed by the adoptive parent(s) after the child has been identified.

Processing Time: Many unexpected circumstances often arise during adoption. The international adoption process is lengthy. The Panamanian court process generally takes from three weeks to six months. After the Panamanian court has finalized the adoption, the parent(s) can contact the consular section of the American Embassy in Panama to arrange for the filing of the I-600 petition and further visa processing. The I-600 petition cannot be processed if the consular section hasn't received a notification of the approved I-600A from the BCIS.

*Important: Adoptive parent(s) should also pay close attention to the expiration of the various vital documents. It is very difficult to continue with the steps of adoption when documents have expired*

Travel: Often prospective adoptive parent(s) attempt to make travel arrangements without factoring in the possibility of unforeseen complications during the adoption process. The adoption process is very lengthy, and the adopting parent(s) should make flexible travel arrangements when planning international adoption.

Personal Experience: Each adoption case is unique and each family experiences various levels of unpredictable circumstances that can affect the international adoption process. Experienced adoptive parent(s) recommend that those seeking to adopt do the following:

• research the international adoption process and legal systems in the U.S. and Panama
• seek an experienced bilingual family lawyer or a lawyer who offers translator services
• keep all vital documents in an organized and easily accessible manner
• communicate with lawyer and courts from the U.S. to see what paperwork and evaluations can be performed in the U.S. prior to traveling to Panama

The adoptive parents should identify the prospective child in Panama before they leave the U.S.

Questions: Specific questions regarding adoption in Panama may be addressed to the Consular Section of the U.S. Embassy or Consulate in Panama. You may also contact the Office of Children's Issues, SA-29, 2201 C Street, NW, U.S. Department of State, Washington, DC 20520-2818, Tel: 1-888-407-4747 with specific questions.

Panama

PROFILE
PEOPLE
HISTORY
GOVERNMENT AND POLITICAL CONDITIONS
NATIONAL SECURITY
ECONOMY
FOREIGN RELATIONS
U.S.-PANAMANIAN RELATIONS
TRAVEL

Compiled from the November 2007 Background Note and supplemented with additional information from the State Department and the editors of this volume. See the introduction to this set for explanatory notes.

Official Name:

Republic of Panama

PROFILE

Geography

Area: 78,200 sq. km. (30,193 sq. mi.); slightly smaller than South Carolina. Panama occupies the southeastern end of the isthmus forming the land bridge between North and South America.

Cities: Capital—Panama City (1.1 million). Other cities—Colon (198,551), David (138,241).

Terrain: Mountainous (highest elevation Cerro Volcan Baru, 3,475 m.—11,468 ft.); coastline 2,857 km. (1,786 mi.).

Climate: Tropical, with average daily rainfall 28 mm. (1 in.) in winter.

People

Nationality: Noun and adjective— Panamanian(s).

Population: (2004 estimate) 3.3 million.

Annual growth rate: 1.7%.

Ethnic groups: Mestizo (mixed African, Amerindian, and European ancestry) 70%, Amerindian and mixed (West Indian) 14%, Caucasian 10%, Amerindian 6%. Origins: 36.5% African, 37.6% indigenous and 25.9% Caucasian.

Religions: Roman Catholic 84%, Protestant 15%, other 1%.

Languages: Spanish (official); 14% speak English as their native tongue; various indigenous languages. Many Panamanians have a working knowledge of English and most professional college-educated Panamanians in Panama City are bilingual.

Education: Years compulsory—6. Attendance—95% for primary school-age children, 60% for secondary. Literacy—92.6% overall: urban 94%, rural 62%.

Health: Infant mortality rate (2004)—14.9/1,000. Life expectancy—75.0 yrs.

Work force: (March 2007, 1.4 million) Commerce (wholesale and retail)—17.9%; agriculture, cattle, hunting, silviculture—16.1%; construction—9.8%; industries (manufactures)—9.2%; transportation, storage, communications—6.9%; private home domestic services—5.8%; public and defense administration— 5.6%; hotels and restaurants—5.4%; other community and social activities, teaching—4.9%; real estate activities, business and rentals— 4.8%; social and health services— 3.5%; financial intermediation— 2.0%.

Government

Type: Constitutional democracy.

Independence: November 3, 1903.

Constitution: October 11, 1972; amended 1983 and 1994 and reformed in 2004.

Government branches: Executive—president (chief of state), two vice presidents. Legislative—National Assembly (unicameral, 78 members reduced to 74 members for September 2009 elections). Judicial—Supreme Court.

Political subdivisions: Nine provinces and five (Indigenous) territories.

Political parties: The Panamenista Party (formerly the Arnulfista Party (PA); Democratic Change (CD); National Liberal Republican Movement (MOLIRENA); the Democratic Revolutionary Party (PRD); Patriotic Union (UP).

Suffrage: Universal at 18.

Economy

GDP: (2006, nominal) $15 billion.

Annual growth rate: (2005) 6.9%; (2006) 8.1%; (first 3 months of 2007) 9.4%.

Per capita GDP: (2006) $4,611.

Natural resources: Timber, seafood, copper.

Services: (80% of GDP) Finance, insurance, health and medical, transportation, telecommunications, the Canal and maritime services, tourism, Colon Free Zone, public administration, and general commerce.

Agriculture and fisheries: (7.4% of GDP) Products—bananas and other fruit, corn, sugar, rice, coffee, shrimp, timber, vegetables, livestock.

Industry/Manufacturing: (12.7% of GDP) Types—food and drink processing, petroleum products, chemicals, paper and paper products, printing, mining, refined sugar, clothing, furniture, construction.

Trade: (2006) Exports—$1 billion: bananas, petroleum products, shrimp, sugar, coffee, and clothing. Major markets—U.S. 38.4%. Imports—$4.8 billion: capital goods, crude oil, foodstuffs, chemicals, other consumer and intermediate goods. Major suppliers—U.S. 26.8%. U.S. goods exports to Panama in 2006— $2.7 billion; first 6 months of 2007— $1.67 billion. U.S. goods imports from Panama 2006—$378.7 million; first 6 months of 2007—168 million.

PEOPLE

Panamanians' culture, customs, and language are predominantly Caribbean Spanish. The majority of the population is ethnically mestizo or mixed Spanish, Indigenous, 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 businesspeople and professionals. More than half the population lives in the Panama City-Colon metropolitan corridor.

Panama is rich in folklore and popular traditions. Lively salsa—a mixture of Latin American popular music, rhythm and blues, jazz, and rock—is a Panamanian specialty, and Ruben Blades its best-known performer and Minister of Tourism since September 2004. Indigenous 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 widely admired.

As of 2004, more than 92,500 Panamanian students attended the University of Panama, the Technological University, and the University of Santa Maria La Antigua, a private Catholic institution. Including smaller colleges, there are 88 institutions of higher education in Panama. The first six years of primary education are compulsory, and for the 2004/ 2005 school year there were about 430,000 students enrolled in grades one through six. The total enrollment in the six secondary grades for the same period was 253,900. More than 90% of Panamanians are literate.

HISTORY

Panama's history has been shaped by the evolution of the world economy and the ambitions of great powers. The earliest known inhabitants of Panama were the Cuevas and the Coclé tribes, but they were decimated by disease and fighting when the Spanish arrived in the 1500s.

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, although it was more commonly known as Camino de Cruces (Road of the Crosses) because of the abundance of gravesites along the way.

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.

Building the Canal

Modern Panamanian history has been shaped by its transisthmian canal, which had been a dream since the beginning of Spanish colonization. From 1880 to 1890, a French company under Ferdinand de Lesseps attempted unsuccessfully to construct a sea-level canal on the site of the present Panama Canal. In November 1903, with U.S. encouragement, Panama proclaimed its independence and concluded the Hay/ Bunau-Varilla Treaty with the United States.

The treaty granted rights to the United States “as if it were sovereign” in a zone roughly 10 miles wide and 50 miles long. In that zone, the U.S. would build a canal, then administer, fortify, and defend it “in perpetuity” In 1914, the United States completed the existing 83-kilometer (52 mile) canal, which is one of the world's greatest feats of engineering. The early 1960s saw the beginning of sustained pressure in Panama for the renegotiation of this treaty.

Military Coups and Coalitions

From 1903 until 1968, Panama was a constitutional democracy dominated by a commercially oriented oligarchy. During the 1950s, the Panamanian military began to challenge the oli-garchy's political hegemony. In October 1968, Dr. Arnulfo Arias Madrid, twice elected president and twice ousted by the Panamanian military, was ousted for a third time as president by the National Guard after only 10 days in office. A military government was established, and the commander of the National Guard, Brigadier General Omar Torrijos, soon emerged as the principal power in Panamanian political life. Torrijos' regime was harsh and corrupt, but his charisma, populist domestic programs, and nationalist (anti-U.S.) foreign policy appealed to the rural and urban constituencies largely ignored by the oligarchy.

Torrijos' death in 1981 altered the tone but not the direction of Panama' political evolution. Despite the 1983 constitutional amendments, which appeared to proscribe a political role for the military, the Panama Defense Forces (PDF), as they were

then known, continued to dominate Panamanian political life behind a facade of civilian government. By this time, General Manuel Noriega was firmly in control of both the PDF and the civilian government.

The United States froze economic and military assistance to Panama in the summer of 1987 in response to the domestic political crisis in Panama and an attack on the U.S. Embassy. In April 1988, President Reagan invoked the International Emergency Economic Powers Act, freezing Panamanian Government assets in all U.S. organizations. In May 1989 Panamanians voted overwhelmingly for the anti-Noriega candidates. The Noriega regime promptly annulled the election, and embarked on a new round of repression. By the fall of 1989 the regime was barely clinging to power, and the regime's paranoia made daily existence unsafe for American citizens.

On December 20, 1989, President George H.W. Bush ordered the U.S. military into Panama to protect U.S. lives and property, to fulfill U.S. treaty responsibilities to operate and defend the Canal, to assist the Panamanian people in restoring democracy, and to bring Noriega to justice. The U.S. troops involved in Operation Just Cause achieved their primary objectives quickly, and Noriega even-tually surrendered to U.S. authorities. He completed his sentence for drug trafficking charges in September 2007. In August 2007, a U.S. federal court in Miami found Noriega extraditable to France to serve a sentence imposed there after an in absentia conviction for money laundering. Noriega remains in custody pending the outcome of his legal challenges to the certificate of extraditability issued August 2007.

Rebuilding Democracy

Panama's Electoral Tribunal moved quickly to rebuild the civilian constitutional government, reinstated the results of the May 1989 election on December 27, 1989, and confirmed the victory of President Guillermo Endara and Vice Presidents Guillermo Ford and Ricardo Arias Calderon.

During its 5-year term, the often-fractious Endara government struggled to meet the public's high expectations. Its new police force was a major improvement over its predecessor but was not fully able to deter crime. Ernesto Perez Balladares was sworn in as President on September 1, 1994, after an internationally monitored election campaign.

Perez Balladares ran as the candidate for a three-party coalition dominated by the Democratic Revolutionary Party (PRD), the erstwhile political arm of military dictatorships. Perez Balladares worked skillfully during the campaign to rehabilitate the PRD's image, emphasizing the party's populist Torrijos roots rather than its association with Noriega. He won the election with only 33% of the vote when the major non-PRD forces splintered into competing factions. His administration carried out economic reforms and often worked closely with the U.S. on implementation of the Canal treaties.

On September 1, 1999, Mireya Moscoso, the widow of former President Arnulfo Arias Madrid, took office after defeating PRD candidate Martin Torrijos, son of the late dictator, in a free and fair election. During her administration, Moscoso attempted to strengthen social programs, especially for child and youth development, protection, and general welfare. Moscoso's administration successfully handled the Panama Canal transfer and was effective in the administration of the Canal.

The PRD's Martin Torrijos won the presidency and a legislative majority in the National Assembly in 2004. Torrijos ran his campaign on a platform of “zero tolerance” for corruption, a problem endemic to the Moscoso and Perez Balladares administrations. Since taking office, Torrijos has passed a number of laws making the government more transparent. He formed a National Anti-Corruption Council whose members represent the highest levels of government, as well as civil society, labor organizations, and religious leadership. In addition, many of his closest Cabinet ministers are non-political technocrats known for their support for the Torrijos government's anticorruption aims. Despite the Torrijos administration's public stance on corruption, few high-profile cases, particularly involving political or business elites, have been acted upon.

GOVERNMENT AND POLITICAL CONDITIONS

Panama is a representative democracy with three branches of government: executive and legislative branches elected by direct vote for 5-year terms, and an independently appointed judiciary. The executive branch includes a president and two vice presidents. The legislative branch consists of a 78-member unicameral National Assembly. The Constitution was changed in 2004, however, and beginning with national elections in 2009, the executive branch will have only one vice president, and the membership of the National Assembly was to be capped at 71 (subsequently changed to 74). The judicial branch is organized under a nine-member Supreme Court (each judge is appointed for a 10-year term) and includes all tribunals and municipal courts. An autonomous Electoral Tribunal supervises voter registration, the election process, and the activities of political parties. Anyone over the age of 18 may vote.

NATIONAL SECURITY

The Government has converted the former PDF into the Panamanian Public Force (PPF), a “law enforcement focused” force that is subordinate to civilian authority, composed of four independent organizations: the Panamanian National Police (Policia Nacional de Panamá or PNP), National Maritime Service (Servicio Maritimo Nacional or SMN), the National Air Service (Servicio Aéreo Nacional or SAN), and the Institutional Protectional Service (Servicio de Protección Institucional or SPI). A constitutional amendment passed in 1994 permanently abolished the military. Law enforcement units that are separated from the PPF, such as the Technical Judicial Police (PTJ), also are directly subordinate to civilian authorities. The PPF budget, in contrast to the former PDF, is on public record and under the control of the executive. The lead criminal investigative entity is the PTJ. It is nominally under the direction of the autonomous Attorney General. Reforms are pending to re-organize and re-direct the PTJ.

Principal Government Officials

Last Updated: 2/1/2008

Pres.: Martin TORRIJOS Espino

First Vice Pres.: Samuel LEWIS Navarro

Second Vice Pres.: Ruben AROSEMENA Valdes

Min. of Agricultural & Livestock Development: Guillermo SALAZAR

Min. of Commerce & Industries: Alejandro FERRER

Min. of Economy & Finances: Carlos VALLARINO

Min. of Education: Belgis CASTRO Jaen

Min. of Foreign Affairs: Samuel LEWIS Navarro

Min. of Govt. & Justice: Daniel DELGADO Diamante

Min. of Health: Rosario TURNER

Min. of Housing: Balbina HERRERA

Min. of the Presidency: Ruben AROSEMENA Valdes

Min. of Public Works: Benjamin COLAMARCO

Min. of Social Development: Maria del Carmen ROQUEBERT Leon

Min. of Work & Labor Development: Edwin SALAMIN

Min. of Youth, Women, Children, & Family Affairs: Leonor CALDERON

Attorney Gen.: Ana Matilde GOMEZ Ruiloba

Dir., Council for Public Security & National Defense: Erick ESPINOSA Concepcion

Manager, National Bank of Panama: Juan Ricardo DE DIANOUS

Ambassador to the US: Federico Antonio HUMBERT Arias

Permanent Representative to the UN, NewYork: Ricardo Alberto ARIAS

Panama maintains an embassy in the United States at 2862 McGill Terrace, NW, Washington, DC 20008 (tel: 202-483-1407), and consulates in Atlanta, Boston, Chicago, Honolulu, Houston, Los Angeles, Miami, New Orelans, New York, Philadelphia, San Juan, San Diego, San Francisco, and Tampa.

ECONOMY

Panama's economy is based primarily on a well-developed services sector that accounts for nearly 80% of GDP. Services include the Panama Canal, banking, the Colon Free Zone, insurance, container ports, flagship registry, tourism, and medical and healthcare.

In October 2006, Panamanians voted in favor of a $5.25 billion Canal expansion project to construct a third set of locks, which is expected to take eight to ten years to complete. The Government of Panama expects the project to be a transforming event for Panama that will provide 7,000-9,000 direct new jobs during the peak construction period of 2009-2011 and set the tone economically for years to come. The expansion is expected to be financed through a combination of increased tolls and debt.

GDP growth in the first three months of 2007 was 9.4%, surpassing most private and government projections and the robust growth seen in 2006 and 2005, which was 8.1% and 6.9%, respectively. Growth has been fueled by the construction sector, transportation, port and Panama Canal-related activities, and tourism. Though Panama has the highest GDP per capita in Central America, about 40% of its population remains mired in poverty.

Panama has bilateral free trade agreements with Chile, El Salvador, Taiwan, Singapore, Honduras, and Costa Rica. Panama is exploring free trade negotiations with Mexico and other Latin American countries. The U.S. and Panama signed a Trade Promotion Agreement (TPA) in June 2007. Panama ratified the agreement in July 2007; it still requires U.S. congressional approval to enter into force. This agreement will promote economic opportunity by eliminating tariffs and other barriers to trade of goods and services.

FOREIGN RELATIONS

Panama is a member of the UN General Assembly and most major UN agencies, and started its fourth term as a member of the UN Security Council in January 2007. 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 1994 as an acknowledgment of its 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 a member of the Central American Parliament 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.

U.S.-PANAMANIAN RELATIONS

The United States cooperates with the Panamanian Government in promoting economic, political, security, 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. In 2007, the U.S. and Panama partnered to launch a regional health worker training center. The center provides training to community healthcare workers in Panama and throughout Central America. About 25,000 American citizens reside in Panama, many retirees from the Panama Canal Commission and individuals who hold dual nationality. There is also a rapidly growing enclave of American retirees in the Chiriqui Province in western Panama.

Panama continues to fight against the illegal narcotics and arms trade. 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. The Panamanian Government has concluded agreements with the U.S. on maritime law enforcement, counterterrorism, counter-narcotics, and stolen vehicles. A three-year investigation by the Drug Prosecutors Office (DPO), the PTJ, and several other law enforcement agencies in the region culminated in the May 2006 arrest in Brazil of Pablo Rayo Montano, a Colombian-born drug kingpin. Assets located in Panama belonging to his criminal cartel were among those seized by the Government of Panama following his indictment by a U.S. federal court in Miami. In March 2007 the U.S. Coast Guard in cooperation with the Government of Panama seized over 38,000 lbs. of cocaine off the coast of Panama, the largest drug seizure in the eastern Pacific.

In the economic investment arena, the Panamanian Government has been successful in the enforcement of intellectual property rights and has concluded a Bilateral Investment Treaty Amendment with the United States and an agreement with the Overseas Private Investment Corporation. Although money laundering remains a problem, Panama passed significant reforms in 2000 intended to strengthen its cooperation against international financial crimes.

In January 2005, Panama sent election supervisors to Iraq as part of the International Mission for Iraqi Elections to monitor the national elections.

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 (modified in 1936 and 1955), 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. 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, a process which was finalized on December 31, 1999.

Principal U.S. Embassy Officials

Last Updated: 2/19/2008

PANAMA (E) Edificio 783, Avenida Demetrio Basilio Lakas, APO/FPO APO AA 34002, 011-507-207-7000, Fax (507)225-0949-Exec Office, (507)207-7143-HRO, (507)207-1964—Mailroom, Workweek: 8am to 5pm with flex hours., Website: http://panama.usembassy.gov/panama-esp.

Other Contact Information

American Chamber of Commerce
and Industry in Panama
Estafeta Balboa
Apartado 168
Panama, Republica de Panama
Tel: 507-269-3881
Fax: 507-223-3508
E-mail: amcham@pan.gbm.net

U.S. Department of State
Office of Central America and
Panama Affairs (CEN-PAN)
2201 C St. NW
Washington, DC 20520
Tel: (202) 647-3482
Fax: (202) 647-2597

U.S. Department of Commerce
International Trade
Administration
Office of Latin American and the Caribbean
14th and Constitution, NW
Washington, DC 20230
Tel: 202-482-0057 800-USA-TRADE
Fax: 202-482-0464
Home Page: http://trade.gov.

TRAVEL

Consular Information Sheet

December 3, 2007

Country Description: Panama has a developing economy. Outside the Panama City area, which has many first-class hotels and restaurants, tourist facilities vary in quality. The U.S. dollar is the paper currency of Panama, and is also referred to as the Panama balboa. Panama mints its own coinage.

Entry Requirements: U.S. citizens traveling by air to and from Panama must present a valid passport when entering or re-entering the United States. Sea travelers must have a valid U.S. passport (or other original proof of U.S. citizenship, such as a certified U.S. birth certificate with a government-issued photo ID). American citizens can visit travel.state.gov or call 1-877-4USA-PPT (1-877-487-2778) for information on applying for a passport.

Panamanian law requires that travelers must either purchase a tourist card from the airline serving Panama or obtain a visa from a Panamanian embassy or consulate before traveling to Panama. Further information may be obtained from the Embassy of Panama, 2862 McGill Terrace NW, Washington, DC 20009, tel. (202) 483-1407, or the Panamanian consulates in Atlanta, Boston, Chicago, Honolulu, Houston, Los Angeles, Miami, New Orleans, New York, Philadelphia, San Juan, San Diego, San Francisco or Tampa.

U.S. citizens transiting the Panama Canal as passengers do not need to obtain visas, report to customs, or pay any fees. U.S. citizens piloting private craft through the canal should contact the Panama Canal Authority at 011-507-272-1111 or consult the canal's web page online at http://www.pancanal.com.

In an effort to prevent international child abduction, many governments have initiated procedures at entry/ exit points. These often include requiring documentary evidence of relationship and permission for the child's travel from the parent(s) or legal guardian not present. Having such documentation on hand, even if not required, may facilitate entry/ departure.

Panamanian law requires all persons to carry official identification documents at all times. This law applies to both Panamanian citizens and visitors to the country. Due to an increase in illegal aliens in Panama, the police have been checking documents more frequently, resulting in the detention of people not carrying identification. For this reason, all Americans are encouraged to carry their passports or other official identification at all times.

Safety and Security: U.S. citizens are warned not to travel to Darien Province. Embassy personnel are only allowed to travel to Darien Province on official business with prior approval of the Embassy's Regional Security Officer. This restricted area encompasses the Darien National Park as well as privately owned nature reserves and tourist resorts. While no incidents have occurred at these resorts, U.S. citizens, other foreign nationals and Panamanian citizens have been the victims of violent crime, kidnapping and murder in this general area. Reliable communications and medical infrastructure are not readily available in the region, which makes travel therein potentially hazardous. Moreover, all around the Panama-Colombia border area the presence of Colombian terrorist groups, drug traffickers and other criminals is common, increasing the danger to travelers. Note: The Secretary of State has designated the Revolutionary Armed Forces of Colombia (FARC), the National Liberation Army (ELN) and the United Self-Defense Forces of Colombia (AUC) as Foreign Terrorist Organizations.

From time to time, there may be demonstrations protesting internal Panamanian issues, or manifestations of anti-American sentiment by small but vociferous groups. While most demonstrations relate to labor dis-putes or other local issues and are typically non-violent, it is nonetheless a good security practice to avoid demonstrations. U.S. citizens are advised to exercise caution on the campus of the University of Panama, where members of radical, anti-U.S. student groups are active. For updated security information, contact the U.S. Embassy Consular Section at the address below.

Visitors should be cautious when swimming or wading at the beach. Some beaches, especially those on the Pacific Ocean, have dangerous currents that cause drowning deaths every year. These beaches are seldom posted with warning signs.

On the Pacific coast, boaters should be wary of vessels that may be transporting narcotics northward from Colombia. Special permission is needed from the Ministry of Government and Justice and the National Environment Authority to visit the National Park on Coiba Island. At this time, the island, a former penal colony, has fewer than 20 prisoners. Boaters should avoid the southeastern coast of Kuna Yala Comarca (San Blas Islands), south of Punta Carreto, on the Atlantic Coast.

Local maritime search and rescue capabilities are limited and well below U.S. standards.

For the latest security information, Americans traveling abroad should regularly monitor the Department's web site, where the current Worldwide Caution Travel Alert, Middle East and North Africa Travel Alert, Travel Warnings and other Travel Alerts can be found. Up-to-date information on safety and security can also be obtained by calling 1-888-407-4747 toll-free in the U.S. and Canada, or for callers outside the U.S. and Canada, a regular toll line at 1-202-501-4444.

Crime: Crime in Panama City is moderate but increasing, particularly because of the activities of youth gangs. The city of Colon is a high crime area. Police checkpoints have become commonplace on weekends on roads in both cities. Based upon reported incidents by local police, the high-crime areas around Panama City are San Miguelito, Rio Abajo, El Chorrillo, Ancon, Curundu, Veracruz Beach, Panama Viejo, and the Madden Dam overlook. Crimes there are typical of those that plague metropolitan areas and range from rapes to armed robberies, muggings, purse-snatchings, “express kidnappings” from ATM banking facilities, in which the victim is briefly kidnapped and robbed after withdrawing cash from an ATM, and petty theft. Tourists recently experienced a problem with armed bandits during an organized canoe trip on the Chagres River.

Panama City has a curfew for persons under 18 years of age. Under the law, students attending night classes must have a carnet or permit, issued by the school or, if employed, a Certificate of Employment. Minors who are picked up for a curfew violation are subject to detention at a police station until parents or legal guardians can arrange for them to be released into their custody. Parents or legal guardians may be fined up to U.S. $50.00 for the violation.

Information for Victims of Crime: The loss or theft abroad of a U.S. passport should be reported immediately to the local police and the nearest U.S. Embassy or Consulate. If you are the victim of a crime while overseas, in addition to reporting to local police, please contact the nearest U.S. Embassy or Consulate for assistance. The Embassy/Consulate staff can, for example, assist you to find appropriate medical care, contact family members or friends and explain how funds may be transferred. Although the investigation and prosecution of crime is solely the responsibility of local authorities, consular officers can help you to understand the local criminal justice process and to find an attorney if needed. The Panamanian Government also sponsors a program for Assistance to Victims of Crimes. The program is managed by the Oficina de Asistencia a Victimas de Crímenes, located at the Policia Tecnica Judicial in the Ancon area of Panama City, telephone number is 011-507-262-1973 or 011-507-512-2222.

Medical Facilities and Health Information: Although Panama City has some very good hospitals and clinics, medical facilities outside of the capital are limited. When making a decision regarding health insurance, Americans should consider that many foreign doctors and hospitals require payment in cash prior to providing service and that a medical evacuation to the U.S. may cost well in excess of $50,000. Uninsured travelers who require medical care overseas often face extreme difficulties, whereas travelers who have purchased overseas medical insurance have, when a medical emergency occurs, found it to be life-saving. Some insurance policies also include coverage for psychiatric treatment and for disposition of remains in the event of death. In Panama, most hospitals accept credit cards for hospital charges, but not for doctors' fees.

Information on vaccinations and other health precautions, such as safe food and water precautions and insect bite protection, may be obtained from the Centers for Disease Control and Prevention's hotline for international travelers at 1-877-FYI-TRIP (1-877-394-8747) or via the CDC's web site at http://wwwn.cdc.gov/travel/default.aspx. For information about outbreaks of infectious diseases abroad, consult the World Health Organization's (WHO) web site at http://www.who.int/en. Further health information for travelers is available at http://www.who.int/ith/en.

Medical Insurance: The Department of State strongly urges Americans to consult with their medical insurance company prior to traveling abroad to confirm whether their policy applies overseas and whether it will cover emergency expenses such as a medical evacuation.

Traffic Safety and Road Conditions: While in a foreign country, U.S. citizens may encounter road conditions that differ significantly from those in the United States. The information below concerning Panama is provided for general reference only, and may not be totally accurate in a particular location or circumstance. Panama's roads, traffic and transportation systems are generally safe, but traffic lights often do not exist, even at busy intersections. Driving is often hazardous and demanding due to dense traffic, undisciplined driving habits, poorly maintained streets, and a lack of effective signs and traffic signals. On roads where poor lighting and driving conditions prevail, night driving is difficult and should be approached with caution. Night driving is particularly hazardous on the old Panama City—Colon highway.

Buses and taxis are not always maintained in a safe operating condition due to lack of regulatory enforcement. Auto insurance is not mandatory and many drivers are uninsured. If an accident occurs, the law requires that the vehicles remain in place until a police officer responds to investigate. Traffic in Panama moves on the right, as in the U.S., and Panamanian law requires that drivers and passengers wear seat belts. Flooding during the April to December rainy season occasionally makes city streets impassible and washes out some roads in the interior of the country. In addition, rural areas are often poorly maintained and lack illumination at night. Such roads are generally less traveled and the availability of emergency roadside assistance is very limited. Road travel is more dangerous during the rainy season and in the interior from Carnival through Good Friday. Carnival starts the Saturday prior to Ash Wednesday and goes on for four days.

Traveling on the Pan American Highway: There is often construction at night on Panama's main Pan American highway. There are few signs alerting drivers to such construction and the highway is not well lit at night. When traveling on the highway, travelers should be aware of possible roadblocks. The Pan American Highway ends at Yaviza in the Darien Province of Panama and does not go through to Colombia. The paved portion of the road ends at Santa Fe, with all-weather surface through Canglón. Travelers going to South America by car may wish to ship their cars on a freighter.

Aviation Safety Oversight: The U.S. Federal Aviation Administration (FAA) has assessed the Government of Panama's Civil Aviation Authority as being in compliance with International Civil Aviation Organization (ICAO) aviation safety standards for oversight of Panama's air carrier operations. For more information, travelers may visit the FAA's web site at http://www.faa.gov.

Special Circumstances: Panamanian customs authorities may enforce strict regulations concerning temporary importation into or export from Panama of items such as firearms and ammunition, cultural property, endangered wildlife species, narcotics, biological material, and food products. It is advisable to contact the Embassy of Panama in Washington or one of Panama's consulates in the United States for specific information regarding customs requirements. In many countries around the world, counterfeit and pirated goods are widely available. Transactions involving such products are illegal and bringing them back to the United States may result in forfeitures and/ or fines.

Criminal Penalties: While in a foreign country, a U.S. citizen is subject to that country's laws and regulations, which sometimes differ significantly from those in the United States and may not afford the protections available to the individual under U.S. law. Penalties for breaking the law can be more severe than in the United States for similar offenses. Persons violating Panamanian laws, even unknowingly, may be expelled, arrested or imprisoned. Penalties for possession, use, or trafficking in illegal drugs in Panama are severe, and convicted offenders can expect long jail sentences and heavy fines. Engaging in sexual conduct with children or using or disseminating child pornography in a foreign country are crimes that are prosecutable in the United States.

Children's Issues: For information on international adoption of children and international parental child abduction, see the Office of Children's Issues website at http://travel.state.gov/family.

Registration and Embassy Locations: Americans living or traveling in Panama are encouraged to register with the nearest U.S. Embassy or Consulate through the State Department's travel registration web site so that they can obtain updated information on travel and security within Panama. Americans without Internet access may register directly with the nearest U.S. Embassy or Consulate. By registering, American citizens make it easier for the Embassy or Consulate to contact them in case of emergency. The U.S. Embassy and U.S. Consular Section are located in Avenida Demetrio Basilio Lakas, Building No.783 in the Clayton section of Panama City.

The international mailing address is: Apartado 0816-02561, Zona 5, Panama, Republic of Panama. The U.S. mailing address is U.S. Embassy Panama, Department of State, Washington, DC 20521-9100. The telephone numbers for the Embassy are 011-507-207-7000, or for after-hours emergencies, 011-507-207-7200; Consular Section 011-507-207-7030 and fax 011-507-207-7278 or 011-507-207-7303. The Embassy web site is http://panama.usembassy.gov. E-mail inquiries may be addressed to Panama-ACS@state.gov.

International Adoption

March 2006

The information in this section has been edited from a report of the State Department Bureau of Consular Affairs, Office of Overseas Citizens Services. For more information, please read the International Adoption section of this book and review current reports online at http://travel.state.gov/family.

Disclaimer: The information in this flyer relating to the legal requirements of specific foreign countries is based on public sources and current understanding. Questions involving foreign and U.S. immigration laws and legal interpretation should be addressed respectively to qualified foreign or U.S. legal counsel.

Please Note: In cases where the U.S. citizen is a resident of Panama and has an interest in filing a petition locally,the Department of Homeland Security in Panama is the first point of contact for an international adoption. The DHS officer will approve the 1-600 petition prior to receipt of an approved I-600A or Visas Thirty-Seven cable. The petition approval by DHS includes a field investigation.

Patterns of Immigration: Please review current reports online at http://travel.state.gov/family.

Adoption Authority: The government offices responsible for adoptions in Panama are the two major courts, the “Juzgado de la Niñez y Adolescencia” (Children and Minors' Court) and “Juzgados Seccionales de Familia” (Family Courts). There are 12 district courts throughout the provinces in Panama. In provinces that do not operate with either legal system, the “Juzgados de Circuitos, Ramo Civil” (Circuit Courts) will handle some adoption cases.

Juzgado de la Ninez y Adolescencia—The Juzgado de la Niñez y Adolescencia has jurisdiction over adoption cases of abandoned children, wards of the court, or orphans.* The Juzgado de la Niñez y Adolescencia is the legal system for orphan adoptions in Panama. The courts generally require proof from the U.S. government such as the I-600A approval notification that the parent(s) are eligible for adoption.

Juzgados Seccionales de Familia—The Juzgados Seccionales de Familia have jurisdiction over adoption cases where the child has been placed under adoption by written consent of the child's birth parent(s).

Contact Information:
Ministerio de Desarrollo Social
Telephone: 279-0667, 279-0101
Fax: 279-0713
www.mides.gob.pa
adopciones@mides.gob.pa

Eligibility Requirements for Adoptive Parents: Panamanian law requires that prospective adoptive parent(s) fall within the following categories:

• The couple must have been married for at least two years.
• No family line adoptions, meaning grandparents may not adopt their grandchildren and siblings may not adopt their minor siblings.
• The courts do not separate siblings. If a parent would like to adopt one child, they must adopt the child's siblings.
• There must be an eighteen-year age difference between the prospective adoptive parent and the child.
• Same sex couples are not permitted to adopt children.

Residency Requirements: Panamanian courts allow U.S. citizens to adopt; however, Panamanian citizens are given preference. Under Panamanian adoption law, adopted children do not need to be orphans, though their natural parent(s) must have legally abandoned them. Most adoptions of Panamanian children by U.S. parents take place in Panama. Less frequently, Panamanian Courts may grant the U.S. citizens guardianship, allowing for adoption following the family's return to he United States. There are no legal impediments to granting guardianship, but the two court systems discourage this practice.

Time Frame: Adoptions in Panama typically take 18-24 months.

Adoption Agencies and Attorneys: Panama allows adoptions through private agencies and will work through any accredited United States adoption agency.

Adoption Fees: Attorney fees for an adoption in Panama vary from $1000 to $2500. Government processing fees vary on a case by case basis.

Adoption Procedures: All of the documents supporting the prospective adoptive parent(s)' authority to adopt must be translated into Spanish.

Both courts, the Juzgado de la Niñez y Adolescencia and the Juzgados Seccionales de Familia, have similar processes for international adoption:

• An attorney must submit the necessary paperwork in the form of a “demanda” or petition, to the Panamanian courts.
• For the “Juzgados Seccionales de Familia,” the prospective adoptive parent(s) must have the birth parent(s) sign a document that “irrevocably” grants custody to release the child for adoption and immigration to the adoptive parent(s) or adoption agency.
• Usually, the prospective adoptive parent(s) and their attorney will communicate with the judge's staff until the demanda is ready for review. If the judge approves the demanda, the judge will forward the documents to the “Registro Civil de Panama” (Civil Register). The adoption is not official until it is published in the Civil Register and the judge has signed a final decree.
• In adoption cases where prospective adoptive parent(s) are granted legal guardianship of a child in order to adopt the child in the United States, a Panamanian judge must interview the prospective adoptive parent(s) and determine that an adoption outside of Panama is in the best interests of the child. This often includes a psychological evaluation of the parent(s) by a social worker. This evaluation can be performed by a comparable agency in the United States. The “Juzgados Seccional de Familia” requires a special investigation by a court-appointed agency to certify that the child is an orphan.
• A judge must approve the departure of a child from Panama if the child is leaving without the child's birth parent(s) or legal guardian. The judge will grant the prospective adoptive parents guardianship for a trial period. This trial period can take place in either the United States or Panama. If the judge determines that the child's adjustment has been successful, the adoption is finalized under Panamanian law. If the judge is concerned about the child's welfare, the judge may extend the trial period or cancel the process altogether.

Required Documents: For inter-country adoptions, the Government of Panama requires the below listed documents. English translations of Spanish documents are required. It is advisable to obtain several authenticated copies of the same document in case extra copies are requested or required.

• Birth certificate of each adoptive parent;
• Marriage certificate of each adoptive parent, and death or divorce certificate if either parent was previously married;
• Health certificate certifying good mental and physical health of each parent. The Panamanian authorities will accept a health certificate from the prospective adoptive parents' doctor in the U.S.;
• Certificate of good conduct from local police in adoptive parents' state of residence. The I-600A does not fulfill this requirement;
• Letter from employer(s) stating position and current salary. There is no minimum income requirement;
• 2 passport size photographs of each parent;
• 2 reference letters attesting to character, financial situation, and living conditions of adoptive parents;
• Sociological home study report conducted by U.S. social worker or U.S.-certified investigative agency approved by the Panamanian courts. Home studies conducted n the U.S. can be used if approved by the Panamanian courts;
• Psychological evaluation conducted by authorized medical officer in Panama or a U.S.-certified medical official approved by the Panamanian courts.

Embassy of the
Republic of Panama
2862 McGill Terr., NW
Washington, DC 20008
Phone: 202-483-1407
Fax: 202-483-8413

Panama also has consulates in: Mobile, Alabama; Los Angeles, California; San Francisco, California; Miami, Florida; Atlanta, Georgia; Honolulu, Hawaii; Chicago, Illinois; New Orleans, Louisiana; New York, New York; Cleveland, Ohio; Philadelphia, Pennsylvania; Houston, Texas, and San Juan, Puerto Rico.

U.S. Immigration Requirements: Prospective adopting parents are strongly encouraged to consult USCIS publication M-249, The Immigration of Adopted and Prospective Adoptive Children, as well as the Department of State publication, International Adoptions. Please see the International Adoption section of this book for more details and review current reports online at http://travel.state.gov/family.

U.S. Consulate
Clayton Building #520
1 st Floor
Panama City, Panama
Phone: 507-207-7000

Additional Information: Specific questions about adoption in may be addressed to the U.S. Embassy. General questions regarding international adoption may be addressed to the Office of Children's Issues, U.S. Department of State, CA/OCS/CI, SA-29, 4th Floor, 2201 C Street, NW, Washington, D.C. 20520-4818, toll-free Tel: 1-888-407-4747.

Toll Free—For information on international adoption of children and international parental child abduction, call Overseas Citizens Services at 1-888-407-4747.