The southernmost of the Central American nations, Panama is south of Costa Rica and north of Colombia. The Panama Canal bisects the isthmus at its narrowest and lowest point, allowing passage from the Caribbean Sea to the Pacific Ocean. Panama is slightly smaller than South Carolina. It is marked by a chain of mountains in the west, moderate hills in the interior, and a low range on the east coast. There are extensive forests in the fertile Caribbean area.
Explored by Columbus in 1502 and by Balboa in 1513, Panama was the principal shipping point to and from South and Central America in colonial days. In 1821, when Central America revolted against Spain, Panama joined Colombia, which had already declared its independence. For the next 82 years, Panama attempted unsuccessfully to break away from Colombia. Between 1850 and 1900 Panama had 40 administrations, 50 riots, 5 attempted secessions, and 13 U.S. interventions. After a U.S. proposal for canal rights over the narrow isthmus was rejected by Colombia, Panama proclaimed its independence with U.S. backing in 1903.
For canal rights in perpetuity, the U.S. paid Panama $10 million and agreed to pay $250,000 each year, which was increased to $430,000 in 1933 and to $1,930,000 in 1955. In exchange, the U.S. got the Canal Zone—a 10-mile-wide strip across the isthmus—and considerable influence in Panama's affairs. On Sept. 7, 1977, Gen. Omar Torrijos Herrera and President Jimmy Carter signed treaties giving Panama gradual control of the canal, phasing out U.S. military bases, and guaranteeing the canal's neutrality.
Gen. Noriega in Charge; Relations with U.S. Deteriorate
Nicolas Ardito Barletta, Panama's first directly elected president in 16 years, was inaugurated on Oct. 11, 1984, for a five-year term. He was a puppet of strongman Gen. Manuel Noriega, a former CIA operative and head of the secret police. Noriega replaced Barletta with vice president Eric Arturo Delvalle a year later. In 1988, Noriega was indicted in the U.S. for drug trafficking, but when Delvalle attempted to fire him, Noriega forced the national assembly to replace Delvalle with Manuel Solis Palma. In Dec. 1989, the assembly named Noriega “maximum leader” and declared the U.S. and Panama to be in a state of war. In Dec. 1989, 24,000 U.S. troops seized control of Panama City in an attempt to capture Noriega after a U.S. soldier was killed in Panama. On Jan. 3, 1990, Noriega surrendered himself to U.S. custody and was transported to Miami, where he was later convicted of drug trafficking. Guillermo Endara, who probably would have won an election suppressed earlier by Noriega, was installed as president.
On Dec. 31, 1999, the U.S. formally handed over control of the Panama Canal to Panama. Meanwhile, Colombian rebels and paramilitary forces have made periodic incursions into Panamanian territory, raising security concerns. Panama has also faced increased drug and arms smuggling.
In May 2004 presidential elections, Martín Torrijos Herrera, the son of former dictator Omar Torrijos, won 47.5% of the vote. He took office in September.
Panamanians approved a plan to expand the Panama Canal in 2006. It will likely double the canal's capacity and is expected to be completed by 2015.
Defying the current Latin American trend for left-leaning governments, Panama elected millionaire businessman Ricardo Martinelli as its president on May 3, 2009. After a period of rapid economic growth, Panama had succumbed to the global recession. Trading on his personal record of success—and utilizing his fortune to get his message out—Martinelli promised to encourage foreign investment and help the poor.
After serving as vice president under Martinelli, Juan Carlos Varela was elected president in May 2014. In the election, Varela defeated José Domingo Arias, the candidate from Martinelli's party, Cambio Democrático. A member of the Panameñista Party, the oldest party in Panama, Varela took office on July 1, 2014.