Capital: Panama City
Population: 3,454,000

Political Rights Score: 1 *
Civil Liberties Score: 2 *
Status: Free


Ricardo Martinelli of the Democratic Change party took office as president in July 2009 after defeating Balbina Herrera, the candidate of the incumbent Democratic Revolutionary Party, by the widest margin in a presidential election since Panama's transition to democracy. Martinelli faced challenges related to Panama's slowed economic growth, record crime rates, and increasing exposure to drug trafficking.

Panama was part of Colombia until 1903, when a U.S.-supported revolt resulted in the proclamation of an independent republic. A period of weak civilian rule ended with a 1968 military coup that brought General Omar Torrijos to power. After the signing of the 1977 Panama Canal Treaty with the United States, under which the canal was gradually transferred to Panamanian control by 1999, Torrijos promised democratization. However, a real transition to democracy would not come for another dozen years.

After Torrijos's death in 1981, General Manuel Noriega emerged as Panamanian Defense Force (PDF) chief. He rigged the 1984 elections to bring the Democratic Revolutionary Party (PRD), then the PDF's political arm, to power. The Democratic Alliance of Civic Opposition (ADOC) won the 1989 elections, but Noriega annulled the vote and declared himself head of state. He was removed during a U.S. military invasion late that year, and ADOC's Guillermo Endara became president. Both the PRD and the Arnulfista Party (PA) – named after the late former president Arnulfo Arias – won elections in the 1990s. Presidential and legislative elections in 2004 returned the PRD to power, with Martin Torrijos, the son of the former strongman, winning the presidency.

By 2008, Torrijos faced mounting protests related to safety standards for construction workers and the rising cost of living. He also stoked opposition that year by issuing decrees during a legislative recess that created new security services and appeared to partly reverse the 1994 abolition of the military.

In Panama's May 2009 presidential and parliamentary elections, Ricardo Martinelli of the center-right, business-oriented Democratic Change (CD) party easily won the presidency with 60 percent of the vote, the largest margin of victory obtained by any president since the end of military rule. Balbina Herrera of the PRD, who had served as housing minister under the outgoing administration, placed second with 37.6 percent, and former president Endara garnered 2 percent. In the parliamentary contest, the PRD won 26 of the 71 seats, followed by the Panamenista Party with 21 seats, the CD with 15, and smaller parties and independents each taking less than five seats. Voter turnout was relatively high at 74 percent.

As of the end of 2009, the U.S. Congress had yet to ratify a bilateral free-trade pact signed with Panama in 2007. Meanwhile, Panama pushed ahead with its $5.25 billion canal expansion project, set to be completed in 2014. Supporters of the project said it would boost Panama's economy, but opponents argued that the funds would be better spent on antipoverty programs, education, and health care. The canal is the country's largest source of income, but both it and the Colon Free Zone, a commerce and export-processing hub, felt the effects of the global economic slowdown in 2009. Workers in the free zone staged a strike in August to protest proposed increases in taxes and fees that they feared would do more damage to trade.

Political Rights and Civil Liberties

Panama is an electoral democracy. The 2009 national elections were considered free and fair by international observers. The president and deputies to the 71-seat unicameral National Assembly are elected by popular vote for five-year terms. Presidents may not seek consecutive terms. The constitution guarantees freedom for political parties and organizations.

In early 1999, Panama's largest political parties agreed to ban anonymous campaign contributions in an effort to stem the infiltration of drug money into the political process. Nevertheless, corruption remains widespread, and 2006 electoral reforms have been criticized as inadequate for improving transparency on campaign financing. President Martin Torrijos launched an anticorruption commission after taking power in 2004, and implemented a transparency law that had been suspended by his predecessor. However, he later worked to limit the law's scope, preventing the release of minutes from cabinet meetings and asset disclosures by public officials. In 2008, Torrijos came under scrutiny after it was revealed that his company had accepted $1 million in dubious consulting fees from the government of the Dominican Republic between 2001 and 2004. Panama was ranked 84 out of 180 countries surveyed on Transparency International's 2009 Corruption Perceptions Index.

All of the country's media outlets are privately owned, with the exceptions of the state-owned television network and a network operated by the Roman Catholic Church. However, there is a considerable concentration of media ownership among relatives and associates of former president Ernesto Perez Balladares (1994-99) of the PRD. Internet access is unrestricted. Panama is notable for its harsh legal environment for journalists. In 2005, the country's restrictive gag rules were repealed and the censorship board was disbanded, but Torrijos in 2007 enacted criminal code reforms that lengthened sentences for offenses including libel.

Freedom of religion is respected, and academic freedom is generally honored.

Freedom of assembly is recognized, and nongovernmental organizations (NGOs) are free to operate. Although only about 10 percent of the labor force is organized, unions are cohesive and powerful. Construction workers mounted major strikes in February 2008 after one of their comrades was shot dead by police during protests over safety standards. In 2009, the construction workers' union SUNTRACS denounced the government to the International Labour Organization (ILO) for its failure to investigate the assassinations of three union leaders in 2007.

The judicial system remains overburdened, inefficient, politicized, and prone to corruption. Criminal code reforms that took effect in 2008 increased sentences for a number of offenses and raised questions about human rights. The prison system is already marked by violent disturbances in its decrepit, overcrowded facilities. The prisoner-to-public ratio is high, with approximately 300 inmates for every 100,000 residents.

The police and other security forces are poorly disciplined and corrupt. Security decrees issued by the Torrijos government in 2008 included the creation of a national aero-naval service, a border service, a council for public security and national defense, and a national intelligence service. Torrijos also named a former soldier to the post of police chief. He argued that the reforms were needed to combat drug trafficking and possible terrorist attacks on the Panama Canal, but opponents warned of a return to Panama's military past and said the changes lacked safeguards against abuse of power. President Ricardo Martinelli nominated former Noriega military lieutenant Gustavo Perez as chief of police, who took office in July 2009 amid protests.

The government's counternarcotics campaign has been limited by a lack of resources, weak border enforcement, and corruption. Analysts believe that Panama is an emerging problem area for drug trafficking from Colombia to the United States, and the quantity of drug seizures, mostly cocaine, has grown from around 32,000 kilograms in 2005 to 54,000 kilograms in 2009. While crime rates have risen overall, the year 2009 saw a 23 percent increase in Panama's homicide rate from the previous year, with 806 homicides reported last year. It is believed that the majority of violent crimes are drug related.

Refugees from Colombia have faced difficulty obtaining work permits and other forms of legal recognition. There were approximately 1,900 recognized refugees living in Panama in 2009 mainly Colombians. The Martinelli administration had suggested measures to normalize the status of thousands of undocumented Colombians living in Panama without official refugee status, but no progress had been made on these measures at year's end. New immigration rules that took effect in 2008 tightened controls on foreigners, but other legislation gave recognized refugees who have lived in Panama for more than 10 years the right to apply for permanent residency. This law would apply mostly to long-standing refugees who fled Central American conflicts in the 1980s.

Discrimination against darker-skinned Panamanians is widespread. The country's Asian, Middle Eastern, and indigenous populations are similarly singled out. Indigenous communities enjoy a degree of autonomy and self-government, but some 90 percent of the indigenous population lives in extreme poverty. Since 1993, indigenous groups have protested the encroachment of illegal settlers on their lands and government delays in formally demarcating them. In March 2009, police leveled indigenous Naso communities in Bocas de Toro in response to a peaceful protest against a hydroelectric dam project. According to the NGO Cultural Survival, the action left over 200 people homeless. Separately, NGOs condemned the government before the Inter-American Commission on Human Rights for using force and intimidation to displace thousands of indigenous people in connection with a hydroelectric project on the Changuinola River, and in June 2009 the commission called on Panama to suspend all work on the dam.

Violence against women and children is widespread and common. Panama is a source, destination, and transit country for human trafficking. The government has worked with the ILO on information campaigns addressing the issue, and it has created a special unit to investigate cases of trafficking for the purpose of prostitution. However, the resources dedicated to such efforts remain insufficient. The U.S. State Department's 2009 Trafficking in Persons Report removed Panama from its Tier 2 Watch List, but the country remains classified as Tier 2 and does not fully comply with minimum international standards. In 2008, the government eliminated its alternadora visa category, which had been used to traffic foreign women for Panama's sex trade.

*Countries are ranked on a scale of 1-7, with 1 representing the highest level of freedom and 7 representing the lowest level of freedom.

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