Panama

Panama, small Central American republic situated on the Isthmus of Panama, which is a narrow strip of land forming the connecting link between Central and South America that also separates the Atlantic and Pacific Oceans. Panama City is the capital. Panama is bisected by the Panama Canal, which cuts through the low hills of the country's central area. The canal is the most important feature of Panama, and it has played a major role in the creation of the country and in its subsequent development.

Land and climate

There are highlands in the west and east, wooded hills in the center, and lowland shelves along the Atlantic and Pacific coasts. The climate is tropical, with little variation from season to season.

People

Mestizos and mulattos (people of mixed racial ancestry) make up about 70 percent of the population; the rest is mostly composed of unmixed Indian, white, or black ancestry. Panama is a Spanish-speaking, predominantly Roman Catholic country. Nearly one-third of the population lives in Panama City and Colón.

Economy

Agriculture employs more people than any other economic activity, but the Panama Canal is the major single factor in the country's economy, providing about 10 percent of national income. It also provides many jobs. Exports—bananas, shrimp, sugar, and petroleum products—lag far behind imports, and Panama suffers from a huge trade deficit. Until its recent domestic turmoil, Panama was a center of international banking.

History

Indians were the first inhabitants of what is now Panama, but little is known about them. Spain took control of the region during the early 1500s and established settlements there. In 1513 Vasco Núñez de Balboa crossed the isthmus and became the first European to see the eastern shore of the Pacific. Panama became a springboard for Spanish conquests in the Americas and a route for transshipping Peruvian gold to Spain, but it lost importance in the 18th century after buccaneer attacks forced treasure ships from Peru to sail around South America. In 1819, Colombia broke away from Spanish rule, and in 1821 Panama freed itself from Spain and became part of Colombia. Relations between the two nations, however, were always strained. The California gold rush of 1848 caused many people from the eastern part of the United States to travel to Panama, cross the isthmus, and continue their sea journey on to California, and the idea of a canal across the isthmus took on new significance. In 1903, the United States tried to negotiate a deal with Colombia whereby it would build the canal, but Colombia refused. Panama, with encouragement from the United States, revolted from Colombia, became an independent nation, and agreed to the United States' plan. The completion of the canal in 1914 brought some prosperity to Panama, but also led to discontent with the United States' control of the canal and of the Panama Canal Zone. Those in favor of Panamanian control of the canal rioted in 1959, 1962, and 1964. General Omar Torrijos Herrera seized control of Panama in 1968 and backed the movement to return the canal to Panama. In 1977, Panama and the United States signed a treaty that transferred control of the Canal Zone to Panama in 1979 and provided for full transfer of the canal to Panama in 1999. In 1983, General Manuel Antonio Noriega became head of the army and Panama's most powerful figure. In 1988, grand juries in the United States indicted him for narcotics smuggling and racketeering. The Panamanian president dismissed him, but the military forced the president from office. In 1989, Panama held an election in which Noriega was apparently defeated. The government, under Noriega, declared the election invalid and refused to let the winning candidate, Guillermo Endara, take office. The United States intervened by imposing economic sanctions on Panama. When these failed to change the government, President Bush in 1989 ordered a United States expeditionary force to Panama to oust Noriega and restore the duly elected president. Noriega was captured and brought to the United States to stand trial. Panama's economy, however, remained in a weakened condition. With the return of a civilian government the political situation stabilized.