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Panama: Other Aspects of Panamanian-United States Relations
Country Study > Chapter 4 > Government and Politics > Foreign Relations > Other Aspects of Panamanian-United States Relations


Panamanian relations with the United States, in areas other than those related to the canal, have undergone increasing strains since the 1985 ouster of President Ardito Barletta. The United States protested this action by reducing economic assistance to Panama and began pressuring Panama to reform its banking secrecy laws, crack down on narcotics trafficking, investigate the murder of Spadafora, and reduce the FDP's role in the government. When these points were raised by United States ambassador-designate to Panama, Arthur Davis, in his confirmation hearings, Panamanian officials issued an official complaint, claiming that they were the victim of a "seditious plot" involving the United States Department of State, Senator Jesse Helms, and opposition politicians in Panama.

Additional problems continued to arise throughout 1986 and early 1987. In April 1987 the United States Senate approved a nonbinding resolution calling for a 50-percent reduction in assistance to Panama because of alleged involvement by that nation's officials in narcotics trafficking. The Panamanian legislature responded with a resolution of its own, calling for the withdrawal of Panama's ambassador in Washington. Hearings on Panama held by Senator Helms produced further controversy, especially when a Senate resolution called on the United States Central Intelligence Agency to investigate narcotics trafficking in Panama. Again Panama protested. The FDP issued a resolution accusing Helms of a "malevolent insistence on sowing discord," and the Panamanian representative to the Nonaligned Movement's meeting in Zimbabwe charged that the United States was not fulfilling the Panama Canal treaties.

Continued United States pressure in such areas as human rights, political reform, narcotics trafficking, and money laundering, as well as conflicts over economic matters, including a reduction in Panama's textile quota, kept relations tense during the first months of 1987. In March Panama issued an official protest, charging the United States with exerting "political pressures damaging to Panama's sovereignty, dignity, and independence." This, however, did not deter Senate passage, a few days later, of a nonbinding resolution rejecting presidential certification of Panamanian cooperation in the struggle against the drug trade. President Ronald Reagan's certification that Panama was cooperating in the struggle against drug trafficking was based on some Panamanian concessions on bank secrecy laws and a highly publicized narcotics and money-laundering sting operation.

The deterioration in relations accelerated following the outbreak of disturbances in June 1987. United States calls for a full investigation of the allegations made by Díaz Herrera and for movement toward "free and untarnished elections" led to Panamanian charges of United States interference in its internal affairs.

The Legislative Assembly adopted a resolution demanding the expulsion of the United States ambassador, and the head of the PRD charged that United States pressures were part of a plot "not to fulfill the obligations of the Carter-Torrijos Treaties," and were also designed to "to get Panama to withdraw from the Contadora Group." Panama took its protest over United States policy and the Senate resolution to the Organization of American States (OAS), which on July 1 adopted, by a vote of seventeen to one with eight abstentions, a resolution criticizing the Senate resolution and calling for an end to United States interference in Panama's internal affairs. On June 30, a government-organized mob attacked the United States embassy, inflicting over US$100,000 in damages. The United States responded by suspending economic and military assistance until the damage was paid for. Panama apologized for the attack and, at the end of July, paid for the damage, but the freeze on United States assistance remained in effect as a demonstration of United States displeasure with the internal political situation.

Relations between the two nations failed to improve during the balance of 1987. Attacks on United States policies by progovernment politicians and press in Panama were almost constant. The actions of the United States ambassador were an especially frequent target, and there were suggestions that he might be declared persona non grata. There was also a growing campaign of harassment against individual Americans. In September the economic officer of the United States embassy was arrested while observing an antigovernment demonstration. The following month, nine American servicemen were seized and abused under the pretext that they had been participating in such demonstrations. United States citizens driving in Panama were repeatedly harassed by the Panamanian police. Restrictions also were increased on United States reporters in Panama.

For its part, the United States kept up pressure on Panama. In August the secretary of state announced that the freeze on United States aid would remain in effect, despite Panama's having paid for the damage done to the embassy. In November the United States cancelled scheduled joint military exercises with Panama. In December Congress adopted a prohibition on economic and military assistance to Panama, unless the United States president certified that there had been "substantial progress in assuring civilian control of the armed forces," "an impartial investigation into allegations of illegal actions by members of the Panama Defense Forces," agreement between the government and the opposition on "conditions for free and fair elections," and "freedom of the press." The same bill suspended Panama's sugar quota until these conditions were met. Panama responded by ordering all personnel connected with the United States Agency for International Development mission out of the country.

At the end of 1987, United States-Panamanian relations had reached their worst level since at least 1964. On the United States side, there was a high degree of agreement between the executive branch and the Congress that fundamental changes in both the domestic and international behavior of Panama's government were needed. There was little sign of movement toward resolving any of the basic issues that divided the two nations, and it appeared that this deadlock would continue until there was a change in the Panamanian leadership's position or composition.

Data as of December 1987

Last Updated: December 1987

Editor's Note: Country Studies included here were published between 1988 and 1998. The Country study for Panama was first published in 1987. Where available, the data has been updated through 2008. The date at the bottom of each section will indicate the time period of the data. Information on some countries may no longer be up to date. See the "Research Completed" date at the beginning of each study on the Title Page or the "Data as of" date at the end of each section of text. This information is included due to its comprehensiveness and for historical purposes.

Note that current information from the CIA World Factbook, U.S. Department of State Background Notes, Australia's Department of Foreign Affairs and Trade Country Briefs, the UK's Foreign and Commonwealth Office's Country Profiles, and the World Bank can be found on

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