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COUNTRY PROFILES


PROFILE

Country Facts

Area: 77,381 sq km; 29,762 sq miles.
Population: 3,405,813 million (Panama National Census May 2010.)
Capital: Panama, the largest city of the Republic of Panama with a total metropolitan population of 1,272,672 (January 2011)
People: Mostly of mixed descent, with sizeable communities of indigenous Indians, Afro-Caribbeans, Italians, Spanish, Arabs, Jews and Asians.
Languages: The official language is Spanish. English is widely understood by the middle-classes.
Religion(s): Roman Catholic 90%; Protestant groups, Judaism and Islam are also represented in the country.
Currency: Panamanian Balboa (PAB) at parity with the United States dollar (USD) since the monetary agreement of 1904. The USD is the paper currency of Panama, Panama mints its own coinage but US coins are also accepted. Exchange rate, £1 = 1.566 PAB/ USD (December 2011).
Political Parties: Panama is a pluralist democracy. The ruling party (2009 to 2014) is Cambio Democratico (CD). Others include the Panameñista Party (formerly Arnulfista Party) and the Democratic Revolutionary Party (PRD), traditionally the main political forces in Panama. Other existing political parties are the Popular Party (PP), National Republican Liberal Movement (MOLIRENA).
Government: Panama has three branches to its representative presidential democracy: the executive, comprising the President, Vice-President and a Cabinet of Ministers; the legislature - a 71 member single chamber assembly; and the judiciary. The president is the head of the state and of the government. The judiciary is independent of the executive and the legislature and comprises a twelve-member Supreme Court of Justice appointed by the executive and ratified by the Assembly (each appointed for a ten year period). The President serves one term of five years and is not eligible for immediate re-election. The president and vice-president must sit out two additional terms before becoming eligible for re-election. Elections for President and the single chamber legislative assembly are held at the same time.
Head of State: President Ricardo Martinelli Berrocal
Vice President: Juan Carlos Varela Rodríguez
Membership of International Groups/Organisations: Panama is a member of the United Nations (UN) since 1945 (and has served four terms on the Security Council); the World Bank; the Inter-American Development Bank (IADB); the International Monetary Fund (IMF); the International Bank for Reconstruction and Development (IBRD); the Rio Group (founder member); the Union of Banana Export Countries (UPEB) - founder member; the Central American Parliament (PARLACEN); the Central American Integration System (SICA); the Community of Latin American and Caribbean States (CELAC); the Central American United States of America Joint Accord (CONCAUSA); International Atomic Energy Agency (IAEA); the Group of 77 at the UN (G-77); the Non-Aligned Movement (NAM); the Organisation of American States (OAS); the Organisation for the Prohibition of Nuclear Weapons in Latin America (OPANAL); the Organisation for the Prohibition of Chemical Weapons (OPCW); the World Tourism Organisation (WTO);the International Maritime Organisation (IMO) and the World Intellectual Property Organisation (WIPO).

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HEALTH

A social security system, financed by employers and workers’ contributions was established in 1941. It provides old-age pension and disability benefits, maternity and medical benefits for workers and their dependents. Its funding is a growing source of political debate. There is also national health system administered by the Government managed hospitals, clinics and day care centres throughout the country. Five new hospitals have been commissioned and are in the first stages of construction.

Life expectancy: Male: 75 years, Female: 80.7 years.
Infant mortality rate: 13.4 per 1,000 (2011 est)

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ECONOMY

Basic Economic Facts

Nominal GDP: 34.2 billion USD (2012)
Nominal GDP per capita: 10,000 USD (2010)
Forecast growth: 7.4% (2011) Inflation: 3.5% (2010)
Unemployment: 4.7% (August 2011as a % of labour force in 2011)
Major industries: Construction, Transport, Communications, Warehousing, Wholesale and Retail, Hospitality and Tourism, Agriculture (bananas, sugar, coffee), Industry, Telecommunications, Maritime Services.

Export partners (2010 figures in millions):
United States: US $211
Canada: US $75,
Netherlands: US $50.5
Sweden: US $49.9
Costa Rica: US $49.5
Import partners* (2010 figures in millions): United States: US $2,518
China: US $489
Costa Rica: US $444
Mexico: US $394
Colombia: US $300
*Note: 54% of all European exports to Central America come to Panama.
Import Partners of Panama take two forms, those exporting directly into Panama and those exporting from the Colon Free Zone (CLZ) or Petrol Free Zones into Panama. The export partners mentioned are those exporting directly into Panama. Imports from the Petrol Free Zones and from the Colon Fee zone in 2010 were:

(2010 figures in millions)
Petrol Free Zones*: US $1,486
Colon Free Zone* US $1,030

Petrol imports come from around the world as is the case for the Colon Free Zone. Petrol Free Zones are doubling their capacity with a view to benefit fom serving larger Post Panamax vessels transiting the expanded canal from 2014. In 2010 the CFZ bought and sold US$ 21 Billion worth of goods. In July 2011 the Colon Free Zone had increased the value of its transactions versus same period last year by 42%. Import and Export partners of the Colon Free Zone are: Re-export partners CFZ (2010 figures in millions)

Central America (including Panama): US $2,475
Others: US $1,850
Venezuela US $1,770
Colombia: US $1,630
Puerto Rico: US $1,630

Import partners CFZ (2010 figures in millions)

China (PRC): US $3,600
Singapore: US $1,680
USA: US $860
Hong Kong: US $710
Taiwan: US $302
Historically one of the most stable economies in Latin America, Panama has a well-developed services sector accounting for about 75% of GDP. Services include the Canal, banking, the Colon Free Zone, insurance, transport, telecommunications, container ports and flagship registry. As a result average incomes are high by regional standards. In spite of its wealth about 30% of the population lives in poverty; however from 2006 to 2010 poverty was reduced by 10 percentage points, while unemployment dropped from 12% to 6.5 % and is currently dropping. Panama’s economy has proved resilient against world downturn mainly due to the fact that not one sector of the Panamanian economy accounts for more than 10% of GDP. Panama received investment grade status in the middle of the downturn and in 2010 was again upgraded. In 2010 Panama received Foreign Direct Investment of US$ 2.3 billion, one of the highest FDI/GDP ratios in the region.

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HISTORY

1501 Spanish explorer, Rodrigo Galvan de Bastidas first European to explore the Isthmus of Panama, sailing along the eastern coast.
1502 Columbus sails on his fourth and last voyage to the New World (Honduras and Panama)
1513 Spanish explorer, Vasco Nuñez de Balboa, named the Pacific the South Sea and claimed the ocean and all lands it bordered for Spain, giving the territory the name of Castilla del Oro.
1514 Balboa assigned Pedro Arias Dávila as Royal Governor.
1519 Panama City is founded.
1572-73 Sir Francis Drake’s famous raids on Panama.
1671 Panama City was attacked and destroyed by Henry Morgan.
1673 Panama City was reconstructed 2 kms south-west from the original city (actual Casco Viejo)
1698 Establishment of the Scottish Colony (New Caledonia) in the Darién led by William Paterson (founder of the Bank of England)
1700 Spanish forces surround the Scottish Colony and force the remnants to flee the isthmus and return to Scotland causing serious losses to Scottish treasury and business and influencing the Union between Scotland and England in 1706.
1821 Panama becomes independent of Spain. Joined the confederacy of Gran Colombia, comprising Colombia, Venezuela, Ecuador, Peru and Bolivia
1830 Following the collapse of Gran Colombia, Panama becomes part of Colombia.
1830 First attempt of separation of Colombia leaded by Jose Domingo Espinar.
1831 Second attempt of separation of Colombia leaded by Eligio Alzuro
1840 Third attempt of separation of Colombia leaded by Tomas Herrera.
1850 fourth attempt of separation of Colombia leaded by Jose Domingo Espinar.
1846 Treaty with USA for the building of a railway across the isthmus to serve the California Gold Rush miners.
1855 Inauguration of the Panama Railway
1855 Panama became a Federal State Associated to Colombia.
1881 Ferdinand de Lesseps (France) attempted over a ten year period to build a canal between the Atlantic and Pacific oceans. Financial and management difficulties, climatic conditions, and deaths of more than 20,000 workers from tropical diseases finally destroyed the project. De Lesseps became a broken man and investors lost all their money. France was almost bankrupted.
1886 Colombia’s new Constitution suppressed Panamanian Federal State.
1903 Rejection of Herran-Hay Treaty by the Senate of Colombia.(.The Treaty stipulated a lease in perpetuity over a six mile strip of the isthmus of Panama for the construction of the Canal.
1903. Panama achieved separation from Colombia. The US played a key role as American ships deterred Colombia from a military action against Panamanians. 1903 Hay/Bunau-Varilla Treaty (named after its two primary negotiators, Phillipe Bunau-Varilla, French representative of Panama and the US Secretary of State John Hay. Treaty signed in Washington giving the US rights over a zone of 10 miles width and 51 miles in length across the isthmus. The US controlled the waterway for nearly a century.
1914 Construction of the Panama Canal completed by US Military Corps of Engineers.
1919 Canal, mothballed during the First World War, opened to commercial shipping
1936 Arias- Roosevelt treaty was signed (named after president Harmodio Arias of Panama and US President Franklim D. Roosevelt) the treaty abolished the right of the US to intervene in Panamanian internal affairs as a measure to guarantee the security of the Canal.
1953 Remon-Eisenhower treaty signed. (Named after Panamanian president Jose A. Remon and US president Dwight Einsenhower) The treaty established a new regime of economic compensation around the canal.
1964 Panamanian president Roberto Chiari ceased diplomatic relations with US, as consequence of deathly clashes between American Military and Panamanian Civilians following a student protest in the Canal Zone. Diplomatic Relations were re-established after the US agreed to start negotiations for a new agreement on the Canal.
1968 Election of Dr Arnulfo Arias Madrid as President followed 10 days later by National Guard coup. Led by Major Boris Martinez and Major Omar Torrijos
1977 Torrijos- Carter Treaty, 2nd Treaty signed by President Carter and General Torrijos on 7 September at OAS, Washington. The treaty abrogated the Hay-Bunau Varilla Treaty of 1903 and guaranteed that Panama would gain control of the Panama Canal after 1999. It also implied a progressive rethread of the American military bases placed around the Canal Zone.
1983 General Manuel Noriega gained control of the National Guard (Later to become Panama Defence Force) and assumed de facto power over civilian authorities and the country.
1984 Noriega imposed a candidate (Nicolas A. Barleta) in the presidential election followed by fraud accusations.
1988 Noriega was indicted by US on drug trafficking and money-laundering charges, Noriega refused to resign.
1989 Presidential Elections were called null by Noriega as the opposition candidate (Guillermo Endara) achieved a vast majority of the votes.
1989 US invasion of Panama (Operation Just Cause). Noriega removed by US forces to Miami to stand trial, replaced by elected President Guillermo Endara
1989 Noriega convicted of drug racketeering in Miami, 20 years in a US prison
1991 Legislative Assembly approves constitutional reforms, abolishes armed forces.
1992 Noriega found guilty by US courts of drug smuggling and money-laundering, sentenced to 40 years imprisonment, to be served in a US prison
1994 Ernesto Pérez Balladares from the PRD took office (internationally monitored elections)
1998 Referendum rejects constitutional amendment proposed by President Balladares, which would permit a second presidential term.
1999 Mireya Moscoso, the widow of former President Arnulfo Arias Madrid defeated PRD candidate Martin Torrijos
1999 Panama assumes full control of Panama Canal from US in handover ceremony attended by Panamanian President Mireya Moscoso.
2004 Presidential Elections. Martin Torrijos Espino, PRD, wins with 47% of the vote.
2006 President Torrijos announced a referendum to decide on the proposed $5.25 billion expansion of the Panama Canal. The referendum takes place on 22 October with almost 80% of those who voted in favour of canal expansion.
2009 Presidential Elections. Ricardo Martinelli, Democratic Change, wins with 59.97% of the vote, leading the Alliance for Change coalition.
2010 The US extradited the former dictator, Manuel Noriega to France to face charges of money laundering. He was convicted and handed a seven-year sentence
2011 The Alliance for Change coalition collapses, with the Panameñista Party (PAN) leaving government. However Vice President Varela, Head of PAN, continues in his role.
2011 Former dictator, Manuel Noriega, extradited from France to Panama (11 December).

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INTERNATIONAL RELATIONS

Relations with the International Community

For historical, geographical and economic reasons, Panama has a very close relationship with the US. Under the 1977 Torrijos-Carter treaties, sovereignty of the Canal was handed back to Panama on 31 December 1999; the US withdrew all troops; and military installations were returned. The Neutrality Treaty also signed in 1977 grants expeditious passage to US warships, and calls for US and Panama to defend the Canal from any threats. Threats to the Canal under the Neutrality Treaty where invoked by President Bush Senior to justify 1989 invasion of Panama. Unlike the Torrijos - Carter Treaties the Neutrality Treaty has no expiration date. The Treaty of Monteria signed in 1979 with Colombia and The San Jose Declaration, exempt government owned ships from Colombia and Costa Rica from payment of tolls.

Panama is one of the few countries to have diplomatic relations with Taiwan, which is an important source of aid. Panama and Taiwan signed a Free Trade Agreement (FTA) in 2003, which took effect from January 2004, Taiwan’s first with a Latin American country. The Panama –Singapore FTA of 2005 was also one of the first bilateral FTAs signed by Singapore with a Latin American country. Panama also has a FTA with El Salvador (2003). In the Americas, only Panama and Chile have negotiated a FTA bilaterally with the US. The Panama–US FTA, which was signed in Washington on 28 June 2007, was ratified on October 2011. On 18 April 2011 a Tax Information Exchange Agreement (TIEA) went into effect between the US and Panama. A FTA has also been signed between the Canadian Prime Minister, Stephen Harper and President Martinelli (August 2009). Panama has also concluded FTA negotiations with Chile, Honduras, Costa Rica and Guatemala. The FTA between Panama and Nicaragua came into effect on 23 November 2009. Together with its neighbours, Panama also negotiated a Political Dialogue and Co-operation Agreement with the EU, which was signed in Rome on 15 December 2003.

Relations with Neighbours

Panama is bordered by Colombia and Costa Rica. Panama has diplomatic relations with both countries.
Occasional skirmishes occur between the Panamanian Frontier Force (SENAFRONT) and Colombian paramilitaries and guerrilla groups in the Darien region.

For the last two years Colombian Customs (CC) have imposed restrictions on goods coming from the Colon Free Zone (CFZ). CC now requires that goods from CFZ enter Colombia only through the Port of Barranquilla if goods are shipped and only through Bogota if goods are transported by air. Other restrictions include list of goods and countries that are not subject to normal customs valuation procedure. Instead minimum prices and benchmarking valuation to local products are used. Panama considers the measures inconsistent with Colombia’s WTO obligations, mainly MFN Treatment (Art II of GATT), Freedom of Transit (article V of GATT) and breach of the Customs Valuation Agreement.

Association Agreement with the EU

Panama has participated alongside the other five Central American countries in talks to reach an association agreement. In order to comply with the EU’s requirement to negotiate jointly with the rest of Central America, Panama will have to overcome two major obstacles in order to access the negotiations: joining SIECA (Secretariat of Central American Economic Integration) and agreeing on a common customs union. It is anticipated that the Agreement will be ratified by the EU during 2012.

Relations with the UK

Recent Inward Visits

The President of Panama, Ricardo Martinelli made a successful visit to the UK in November 2011, meeting the Prime Minister, Deputy Prime Minister, Chancellor of the Exchequer and Home Secretary. He was accompanied by a delegation of senior ministers and businessmen.

Recent Outward Visits

-- Jeremy Browne, the Minister of State in the Foreign and Commonwealth Office, visited Panama in November 2010 and October 2011.

-- In April 2011 the Inter-Parliamentary Union held its annual conference in Panama, with the participation of some UK MPs.

-- Former Prime Minister, John Major, visited Panama in September 2011

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GEOGRAPHY

Panama lies along the narrow land bridge dividing North and South America, traversed by the 50-mile long ship canal built by the USA between 1904 and 1914. A mountain range runs through the centre of the country, with coastal plains of varying width on either side. The eastern region of Darién, adjacent to Colombia, is dominated by dense tropical rain forest. The main agricultural areas are in the west in Chiriqui province, bordering on Costa Rica.

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TRADE AND INVESTMENT

Trade and Investment with the UK

According to UKTI, British trade in goods with Panama in 2008 was worth £148 million. That ranks Panama 10th in absolute numbers as an export destination for the whole of the American continent and the Caribbean. On a per capita basis, Panamanians bought an average of £46 per capita from the UK, ranking fourth behind Puerto Rico £65, Canada £110 and US £114. Emerging market Mexico managed less than £8 per capita. Brazil managed less than £9. The UK's principal exports to Panama are beverages (44%, notably Scotch whisky), medical and pharmaceutical (29%) and chemicals. Panamanian exports to the UK in 2008 were worth £12.1 million.

UK Trade & Investment Country Profile: Panama (http://www.uktradeinvest.gov.uk/ukti/panama)

UK Development Assistance

The Department for International Development does not have a programme in Panama. But the British Embassy in Panama City manages a number of small projects mostly dealing with climate change or the environment. Further information can be obtained from the Embassy. There is a large EU development assistance programme, including to the judicial authorities. The EU has financed the construction of over 20 small courthouses in rural areas and four of these were opened in August 2007.

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POLITICS

Presidential and Legislative Assembly elections took place on 3 May 2009. Ricardo Martinelli won the election with 59.97% of the vote, heading the Alliance for Change. The other contending parties secured the following percentage of votes: Balbina Herrera (Democratic Revolutionary Party, Governing Party) 37.7%; and Guillermo Endara (Moral Vanguard Party) 2.33%. Martinelli’s Democratic Change and supporting parties won 44 seats of the 71-seat National assembly. The Alliance broke down in August 2011, with the Panameñista Party (PAN) leaving government. However Vice President Varela, PAN’s leader, has continued in his directly-elected role and attends cabinet.

In July 2006, President Torrijos announced a referendum on the proposed US$5.25 billion expansion of the Panama Canal. On 22 October 2006 the referendum took place. Voter turnout was 43.5% of which almost 80% voted in favour of the expansion.

The expansion project is expected to begin in June 2007 and should be completed by 2014. The proposals include two new shipping channels and locks at either end of the canal as well as raising the water level of the Gatun Lake. The expansion will double the capacity from the current 14,000 ships per year which transit the canal. This represents 5% of global shipping. The enlarged canal will also be able to accommodate the largest container ships. Thousands of jobs will be generated in the construction phase of the project.

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HUMAN RIGHTS

Panama has ratified the following international human rights treaties:

-- International Covenant on Economic, Social and Cultural Rights;

-- International Covenant on Civil and Political Rights;

-- International Convention on the Elimination of all forms of Racial Discrimination;

Convention on the Rights of the Child;

-- Convention on the Elimination of all forms of Discrimination Against Women;

-- Convention against Torture or other Cruel, Inhuman or Degrading Treatment or Punishment.

Panama is also a Party to the American Convention on Human Rights and has accepted the jurisdiction of the Inter-American Court of Human Rights based in San José.

UK Support for Human Rights

The UK contributes, through the EU, to a European Commission project for the modernisation of the Panamanian prison system, including improvements to prison welfare.

On a smaller scale, recent British Embassy assistance has included funding of a technical visit to the UK by a member of Panama’s Truth Commission, and support for a NGO-organised national seminar on disability and human rights.

Past Human Rights Abuses

Occurrences of human rights abuses were prevalent under the military regimes (1968-1989). The government of President Mireya Moscoso set up a panel in 2000 to examine cases of abuses and of crime committed during these years.

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Last Updated: January 2012

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