The FIU-SOUTHCOM Academic Partnership Strategic Cultures Assessments

Florida International University’s Applied Research Center (FIU ARC), in collaboration with the United States Southern Command (USSOUTHCOM) and FIU’s Latin American and Caribbean Center (LACC), has recently formed the FIU-USSOUTHCOM Academic Partnership. The partnership entails FIU providing the highest quality research-based knowledge to further explicative understanding of the political, strategic, and cultural dimensions of state behavior and foreign policy. This goal will be accomplished by employing a strategic culture approach. The initial phase of strategic culture assessments consists of a year-long research program that focuses on developing a standard analytical framework to identify and assess the strategic culture of ten Latin American countries. FIU will facilitate professional presentations of the following ten countries over the course of one year: Venezuela, Cuba, Haiti, Brazil, Colombia, Ecuador, Nicaragua, Bolivia, Chile, and Argentina. In addition, a report of findings on the impact of Islam and Muslims within Latin America will be produced. The overarching purpose of the project is two-fold: to generate a rich and dynamic base of knowledge pertaining to the political, social, and strategic factors that influence state behavior; and to contribute to USSOUTHCOM’s Socio-Cultural Dynamics (SCD) Program. Utilizing the notion of strategic culture, USSOUTHCOM has commissioned FIU ARC to conduct country studies in order to explain how states comprehend, interpret, and implement national security policy vis-à-vis the international system. USSOUTHCOM defines strategic culture as follows: “the combination of internal and external influences and experiences – geographic, historical, cultural, economic, political and military – that shape and influence the way a country understands its relationship to the rest of the world, and how a state will behave in the international community.” FIU will identify and expound upon the strategic and cultural factors that inform the rationale behind the perceptions and behavior of select states in the present political and security climate by analyzing demography, history, regional customs, traditions, belief systems, and other cultural and historical influences that have contributed to the development of a particular country’s current security rationale and interpretation of national security. To meet the stated goals, FIU ARC will host a series of professional workshops in Miami. These workshops bring subject matter experts from all over the US and Latin America together to explore and discuss country-specific history, geography, culture, economic, political, and military climates vis-à-vis strategic culture. At the conclusion of each workshop, FIU publishes a findings report, which is presented at USSOUTHCOM.

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The following Panamanian Strategic Culture Findings Report, authored by Dr. Orlando J. Pérez, is the product of a working group held in Miami on March 21, 2011, which included seven prominent academic and private sector experts in Panamanian history, culture, geography, economics, politics, and military affairs. In addition to Dr. Pérez these experts were Drs.

Richard Millet, Peter Szok, William Furlong, Gerardo Berthin, Jennie Lincoln, and Joseph Tulchin.

The views expressed in this findings report are those of the author and do not necessarily reflect the official policy or position of the US Government, US Department of Defense, US Southern

Command, FIU-ARC, or Florida International University.

On behalf of FIU-ARC, we wish to acknowledge and thank all of the participants for their contributions, which made the Panamanian Strategic Culture workshop a tremendous success.

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Table of Contents

Executive Summary

4

The Preeminence of Geography and the Transit Route for Establishing Panama’s Strategic Culture

8

Elite Beliefs and Behavior: Building a Transactional Society

10

Militarism and United States Influence as Key Elements in Panama’s Strategic Culture

12

The Transformation of the Military and the Challenges to Security

18

Counter-Elite Movements and Strategic Culture of Panama

24

Mass Political Culture

26

Challenges and Opportunities

30

About the Author 39

4

Executive Summary

• Panama demonstrates how geography shapes the formation and development of the social

institutions of a nation. As such, the strategic culture of Panama has to be understood in

terms of the political, social, economic and cultural processes surrounding the

management of the Panama Canal. The Canal created the nation and the society of

Panama as it is today.

• For a country “at the service of the world,” Panama’s foreign relations have historically

been quite narrow. Since independence in 1903 the United States has been the focal point

of Panama’s foreign relations, both politically and economically.

• Panama is a transactional rather than a confrontational society. Panama therefore can be

characterized as the nation of the “deal,” where everything is for sale.

• Panamanian elites developed a system based on tight social and economic networks

greased by pragmatism and opportunism. The system enabled the elite to prosper while

the primary element of the service economy – the Panama Canal – was under external

control, and during a populist military regime whose rhetoric was clearly anti-elite. The

resourcefulness of Panamanian elites is probably one of their most enduring qualities.

• While Panama today has no formal military institution, the armed forces played a

significant role in the development of the Panamanian nation-state and thus are important

in understanding the country’s strategic culture.

• Militarism in Panama has two historically defined origins: First, the geopolitical factor

that placed Panama at the center of United States expansionism in the hemisphere; and

second, the strategic importance of the Panama Canal to the United States. The first

explains the large influence of the United States in Panamanian politics and its role in

shaping the nature of Panama’s military. The second explains the emergence of military-

5

led governments in the context of a dominant ideology that saw the Isthmus as a function

of its geographic position.

• Sovereignty over the Panama Canal was a central issue that bridged the gap between the

military and all sectors of the elite. The military-led governments used the negotiations

for new Canal treaties to silence opposition to its policies. With an appeal to national

pride and unity, the regime sought to silence any opposition in lieu of the “sensitive”

treaty negotiations. A unified Panama, so the argument went, would be able to utilize the

international support it had already acquired to effectively pressure the U.S. government

for better terms.

• After the years of economic sanctions, popular protests, failed elections and sustained

political pressures from the United States failed to remove General Noriega from power,

the United States mounted a military invasion on December 20, 1989.

• The post-invasion government dismantled the armed forces. Three factors were decisive

in demilitarizing public security. First, the invasion destroyed the operational capabilities

of the Panamanian Defense Forces. Second, the looting and ensuing anarchy dramatized

the urgent need for an organization whose task could ensure public security. Third, the

country required a new security apparatus independent of the party in power.

• The transformation of Panama’s security forces has moved forward under administrations

of different parties and ideological orientation. Subsequent changes and the political

debates surrounding them, however, are the result of a number of unresolved issues

stemming from a changed security environment and geopolitical pressures for Panama to

more effectively protect the Panama Canal, as well as its borders. Nonetheless, Panama’s

basic constitutional prohibition on the establishment of traditional armed forces has been

sustained. De-militarization, thus, has been a pillar of the country’s process of

democratization and is now firmly established as a key element of the nation’s strategic

culture.

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• Rising crime rates, homicides per 100,000 inhabitants that have doubled in the last 5

years, drug trafficking, and the continued spillover of the Colombian civil war, are all

among the key security challenges that drive Panama’s strategic culture. Few

Panamanians argue for a return to the 1980s and a strong role for the military, but many

clamor for greater security. How to provide the latter without the former is a key issue in

Panama today.

• The extent to which leftist or progressive movements have been able to challenge the

dominance of the traditional commercial elite has been rather limited. Organically weak

because of the small number of industrial proletariat, the political left has mobilized

around nationalism and the recovery of the Panama Canal. However, its electoral

prospects are limited.

• While historically isolated and politically weak, indigenous communities have recently

mobilized to defend their economic and political rights. Particularly important have been

a series of mobilizations against mining concessions in the Western part of Panama. The

success of these mobilizations might embolden indigenous communities to pursue

additional political activism, and challenge the prevailing elite-dominated strategic

culture.

• While Panama continues to be part of a handful of countries that do not have diplomatic

relations with the PRC, China’s investment and involvement in Panama in the last 10

years is impressive. A Chinese subsidiary company, Hutchinson-Whampoa, manages the

ports in Panama City and Colón. The PRC is one of the leading users of the Colón Free

Trade Zone, relying on the zone for the shipment of goods to the United States and Latin

America, as well as being the single largest supplier of goods to the zone, accounting for

more than a third of total goods sold. As of 2010, the PRC is Panama’s second largest

trading partner, accounting for 18.7% of total trade (20.5% of imports).

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• China will likely be the biggest beneficiary from Canal expansion.

• The very culture of transaction that enables elites to seek compromise also promotes

corrupt deal-making. Instrumental rationality dictates that “the ends justify the means,”

therefore, cheating, or as Panamanians say “juega vivo” (play smartly), generates a

tendency to cut corners and do what is necessary to succeed, even if it means violating

the rules. Over half of Panamanians believe that personal interest is one of the key drivers

of behavior and over 80% respectively believe that individual criteria guide decisions in

public administration.

• In the end, Panama’s balance sheet of democratic assets and liabilities tilts toward the

former, particularly when compared to most of its neighbors in Central America. We

would be hard-pressed to devise a scenario where Panama’s Fuerza Pública (Public

Force) would do what the Honduras military did in June 2009. Unlike Guatemala, El

Salvador and Nicaragua, Panama did not suffer prolonged civil wars. The political

behavior of Panama’s elites promotes accommodation and compromise rather than

violence and confrontation.

• In the end, despite key challenges, there are four factors that shape Panama’s democratic

development since the U.S. invasion: (1) A process of de-militarization, made easier by

the results of the invasion, which dismantled the old military and established firm civilian

command of security forces. This process was successful because all political actors,

despite their political affiliations prior to the invasion, supported it; (2) The consolidation

of a free, fair and competitive electoral process underpinned by the institutionalization of

an independent Electoral Tribunal; (3) The ability of Panama to successfully acquire

control of the interoceanic waterway focused the mind and attention of political actors

who understood that failure in that front would represent failure nationally and

internationally; and (4) Panamanian citizens support democracy as a political system.

Significant majorities of Panamanians express the view that democracy is the best form

of government despite all of its shortcomings.

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The Preeminence of Geography and the Transit Route for Establishing

Panama’s Strategic Culture

Panama’s motto “At the Service of the World” (Pro Mundi Beneficio) reflects the key

element defining the nation’s identity, history, culture, politics, and society.1

1 The author wishes to thank the participants in the FIU-ARC sponsored workshop on the “Strategic Culture of Panama” held March 21, 2011. Particularly useful were papers prepared by Joseph Tulchin, Richard Millett, William Furlong, Peter Szok and Gerardo Berthin, as well as a presentation by Jennie Lincoln. Additionally, portions of the analysis of elite culture and militarism are taken from Pérez, Orlando J., 2011, Political Culture in Panama: Democracy after Invasion. New York: Palgrave-Macmillan. The author also wishes to thank Brian Fonseca and Bradley Porter of FIU-ARC for their valuable assistance in putting together the workshop and the finding’s report. Additionally, I wish to thank Moisés Caballero and the staff of FIU-ARC for their assistance.

One cannot

understand Panama without first understanding the nation’s role at the center of a global

commercial hub. This fact, and all that flows from it, more than anything else explains the

underlying components of Panama’s strategic culture. While Panama is certainly more than a

Canal, the interoceanic waterway has defined the country’s existence since the nineteenth

century. As such, the strategic culture of Panama has to be understood in terms of the political,

social, economic and cultural processes surrounding the management of the Panama Canal. The

struggle to build, control and manage the Canal shaped the development of the Panamanian

nation-state and defined the nation’s relations with the rest of the world.

As we enter the second decade of the twenty-first century, Panama’s role as custodian

and manager of an important global trade infrastructure will be shaped by issues such as ethnic

and social integration, governance and accountability, economic development, and security.

These issues in turn constitute important factors that influence Panama’s strategic culture, and

serve as anchors to our discussion in this report.

Panama demonstrates how the physical environment shapes the formation and

development of the social institutions of a nation. In the case of Panama, this phenomenon has

been called “transitismo.” According to Panamanian historian, Alfredo Castillero Calvo, the

Spanish Crown assigned a transit role to the Isthmus; in other words, to serve as a land bridge for

the transportation of gold, silver, and other merchandise between the Pacific and Atlantic

Oceans. Between 1543 and 1748, Panama became the center of a mercantile system based on

galleons and fairs with a local productive sector that, while not dedicated exclusively to

supporting this system, depended enormously on it (Castillero Calvo, 1973:18-21; 1980; 1983).

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As a result, and differently from other regions of Latin America, the dominant class came to be

composed primarily of merchants. The pattern of colonization also favored the capital city. For

example, in the first census of 1607, almost half of the 12,000 people living on the Isthmus lived

in the capital city of Panama (Castillero Calvo, 1973:26).

Between 1821 and 1903, when Panama formed part of Colombia, after independence

from Spain, the dominant class was composed of the urban commercial bourgeoisie, “urbanized”

rural landowners, and foreign merchants tied to the local elite. Their economic power was based

on the representation of foreign commercial interests and urban property (Figueroa Navarro,

1982:358-359).

The completion of the trans-isthmian railroad in 1855 favored international commerce by

reducing the time and cost of transporting goods across Panama. In that way, Panama received

an influx of foreign capital larger than domestic production would justify. The result was the

deepening of the hypertrophy in the tertiary sector and the dependence on global commerce.

Beyond this, the construction of the railroad and the Panama Canal placed in foreign hands

control of the most productive sector of Panama's economy.

In large part, Panama's separation from Colombia in 1903 was a function of the desire of

Panama's elites to deepen the transit nature of Panama's economy. The refusal by the Colombian

Senate to approve the Herran-Hay Treaty, which provided for the construction of an interoceanic

canal through the Isthmus, moved a significant sector of the elite to push for independence from

Bogotá (Lemaitre, 1971:386, 388, and 392; Teran, 1976). The group that supported the

separation from Colombia was composed of leaders of various political orientations. The

motivation that united both groups was the idea of independence as a way of saving the project

of building an interoceanic canal. That project constituted the ultimate expression of the

geopolitical doctrine that saw the Isthmus as the center of world commerce.

In the 300 or so years as a colony, Panama did not develop the major areas of economic

activities that were common in the rest of Spanish Latin America. Most Latin American colonies

survived on agriculture, mining, fishing, and forestry. The elites in most Latin American

countries were the large landowners (the latifundistas) who controlled the economic systems, the

social systems, and the political systems of those colonies and later of each independent country.

In Panama, it was always the service and commercial sectors which controlled the economic

10

system. Over 75% of the GDP is produced by the service sectors of the country. The number of

the economically active population also indicates that the vast majority of the work force is

engaged in the service sector. Approximately 67% work in the service sector; 16.6 in agriculture,

fishing, and mining; and 16.8 in industry, manufacturing and construction. It is impossible to

separate the many impacts of the Canal on Panama.2

2 Furlong, William, 2011, “Sin el Canal, No hay Panama,” Paper prepared for the Workshop on the Strategic Culture of Panama, Florida International University, Applied Research Center, Biltmore Hotel, Miami, FL. March 21, 2011.

The Canal created the nation and the

society of Panama as it is today. The economic system would be completely different without a

Canal. According to a recent report from the Comptroller’s Office, the value of all goods and

services produced in the country is estimated at US$26 billion for 2010. Transport and

communications represent the largest percentage of GDP, followed by property and services

(15.1%), commerce (13.3%) and financial services (7.9%). Although the Canal itself brings in

only 4% of total GDP, the multiplier effect is very significant. This includes expenditures made

by employees from their income going to supermarkets, warehouses, restaurants, homes, schools

and recreation. When all is included it is estimated that the Canal brings Panama about 30% of

the entire GDP, rising to 40% once the expansion project is completed. In FY 2010 the Canal

provided US$754 million to the national treasury. It is expected to provide an average of US$902

million until 2014. Once the expanded Canal becomes operational, contributions will increase

significantly to more than $5 billion a year by 2025.

Elite Beliefs and Behavior: Building a Transactional Society

Ricardo Arias Calderón, former Vice-president of Panama, has stated that, “Panama is a

transactional, rather than a confrontational society” (Arias Calderón, 1987/88: 329). Panama

therefore can be characterized as the nation of the “deal,” where everything is for sale. This

modus operandi is closely tied to the nature of the economy. The model of economic

development shaped the way elites thought and behaved. The lack of a well-integrated national

economy led to the weakness of labor and other popular sectors. Lacking a strong economic

base, these sectors could not hope to seriously challenge the political dominance of the

commercial elite.

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As a vital zone of transit for global commerce, the Isthmus was object to the military,

economic and political interests of Seville, Madrid, London, Bogotá, and Washington. Alfredo

Castillero Calvo points out that an elite that depended on foreign interests, of necessity must be

pragmatic and liberal, rather than insular and conservative (Castillero Calvo, 1973:29-30). The

geographic position of Panama thus promoted tolerance, pragmatism, and opportunism among

the dominant class.

Historically, both liberals and conservatives saw the development and “salvation” of

Panama as a function of the construction of an interoceanic canal. The organic weakness of the

conservative forces and the dominance of the service sector reduced ideological confrontation.

The size of the nation, as well as the social and economic networks that sustained the dominant

class regardless of party affiliation, also helped to diminish ideological confrontations. Julio E.

Linares, writing about the differences between liberals and conservatives, says, “In speaking of

Panamanian conservatives, we must warn (the reader) that the ideological differences between

them and the liberals were much less in this land (speaking of Panama) than in the rest of

Colombia” (Linares, 1989:15). Linares attributes this phenomenon to two factors: the absence of

feudal forms of socioeconomic organization, which were the bases of conservative thought

throughout the rest of Latin America, and Panama's relative isolation from the rest of Colombia.

The latter gave rise to a commonality of political and economic interests among isthmian liberals

and conservatives. Entrance into the social networks controlled by the elite was possible only to

the extent that persons entering the network could provide specific economic, social, or political

benefits to its members. In this way, we find many immigrants who easily became part of the

social networks because they were “white” and brought significant economic benefits to the local

elite.

The dominant political elites in Panama are integrated via a process that is reflected in the

following circumstances: A) a concentration of the prosperous economic groups (either in local

retail commerce, the Colón Free Trade Zone, the banking center, or the industrial sector); B) the

concentration within the economic groups has the effect of establishing significant links among

the various entrepreneurs, links made in relation to the capabilities of gaining financing from

major banks and domination of the small domestic market; and C) the links that are enforced as

groups that remain outside of the top network are placed at a disadvantage in relation to their

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competitors. From these economic networks the top entrepreneurs come together to meet the

challenges posed by social and political problems. In Panama, the concentration of wealth and

political power is reflected in the fact that most civic leaders are powerful entrepreneurs.

Panamanian elites have operated through a system based on tight social and economic

networks greased by pragmatism and opportunism. That system has enabled the elite to prosper

while the primary element of the service economy – the Panama Canal – was under external

control, and during a populist military regime whose rhetoric was clearly anti-elite. The

resourcefulness of Panamanian elites is probably one of their most enduring qualities.

Militarism and United States Influence as Key Elements in Panama’s

Strategic Culture

While Panama today has no formal military institution, a fact that will be discussed

further later in the paper, the armed forces played a significant role in the development of the

Panamanian nation-state and thus are important in understanding the country’s strategic culture.

Militarism in Panama has two historically defined origins: First, the geopolitical factor that

placed Panama at the center of United States expansionism in the hemisphere; and second, the

strategic importance of the Panama Canal to the United States. The first explains the large

influence of the United States in Panamanian politics and its role in shaping the nature of

Panama’s military. The second explains the emergence of military-led governments in the

context of a dominant ideology that saw the Isthmus as a function of its geographic position. The

influence of the United States in the formation of the armed forces has been felt throughout the

20th century.

The proclaimed right of the United States to intervene in the internal affairs of Panama

goes back to the middle of the 19th century. In 1846 the Republic of New Granada – of which

Panama was a part– and the United States signed a treaty regarding the “neutrality and freedom

of transit across the Isthmus of Panama.” The document is known as the Mallarino-Biblack

Treaty. Article 35 of the treaty was the most important. By virtue of this article, New Granada

was committed to grant to the citizens of the United States the same commercial prerogatives

that its citizens enjoyed. At the same time, the United States “guaranteed to New Granada... the

neutrality of the previously mentioned isthmus with the objective that under no

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circumstances...(would) the free transit from ocean to ocean be obstructed. As a consequence, the

United States (guaranteed) the sovereign rights and property that the New Granada (had) and

(possessed) over said territory” (Castillero Pimentel, 1988: III-IV).

The limits to the U.S. right of intervention would expand considerably with the signature

of the Hay-Buneau Varilla Treaty of 1903. The eccentric Minister of Panama in Washington, the

Frenchman Phillipe Buneau Varilla, and the Secretary of State of the United States John Hay,

signed the pact by which the United States and Panama set the basis to “ensure the construction

of a canal for ships across the Isthmus of Panama to communicate the Atlantic and Pacific

Ocean.” The treaty, in Article 2, gave the United States in perpetuity “the use, occupation, and

control of a zone of land and land under water for the construction, maintenance, operation,

sanitation, and protection of said Canal.” Article 3 granted the U.S. “all rights, power, and

authority within the zone...which the United States would possess and exercise as if it were the

sovereign of the territory...to the entire exclusion of the exercise by the Republic of Panama of

any such sovereign rights, power, or authority.”

In relation to the right of intervention by the United States, the new treaty in its first

article stated, “The United States guarantees and will maintain the independence of the Republic

of Panama.” In Article 7, the United States was granted the “right and authority...for the

maintenance of public order in the cities of Panama and Colón and the territories and harbors

adjacent thereto in case the Republic of Panama should not be, in the judgment of the United

States, able to maintain such order” (Castillero Pimentel, 1988, XLIX-LI).

The treaty fulfilled the dreams of the commercial elite, which dominated political and

social life on the isthmus. Through the construction of the canal, Panama would finally achieve

its “manifest destiny” to become the center of world commerce. Moreover, the guarantee and

maintenance by the United States of the independence of Panama was extremely important for

the founders because it prevented Colombia from militarily threatening the new state. The

circumstances under which the new nation was born, however, made the local military institution

and the state they were entrusted to defend, a virtual protectorate of the United States. For the

latter, order and stability was the principal concern. Having supported the separatist movement,

the United States was not about to allow any force, internal or external, to jeopardize its ability to

establish the necessary political and social stability needed for the successful construction of an

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interoceanic canal. Thus, the United States came to regard the existence of a Panamanian army

as a threat to the stability of the country. As a result of U.S. pressure, the original Panamanian

Army was dissolved in 1904 and replaced by a National Police (Arias, 1977). In 1916, the then

police force was disarmed on orders from the Governor of the Canal Zone (Zuñiga, 1973). In

1943, the National Police was militarized by the United States in order to meet the security needs

posed by World War II (Arosemena González, 1953). In 1953, scarcely ten years later, the police

was transformed again by the United States into a National Guard capable of carrying out the

dual tasks of economic development and national security. Finally, in 1983 the National Guard

was transformed into the Panamanian Defense Forces to meet Canal security obligations

acquired under the 1977 Canal Treaty (Wong, 1988; Palacios, 1989; Delgado Diamante, 1988).

There are five direct manifestations of the rights granted to the United States in the 1903

Treaty and Article 1363

By the 1940s and 1950s, a sector of the commercial elite sought to use the revenues of

the service economy to promote import substitution industrialization (ISI). The project intended

to diversify the Panamanian economy, while maintaining the concentration of control within the

hands of an elite whose principal means of wealth were derived from the tertiary sector. The

of Panama’s first Constitution. First, the elimination of the army in 1904,

at the insistence of the U.S., directly transferred responsibility for maintaining order to the

United States. Second, Panama renounced its right to establish an independent monetary system.

By virtue of the Monetary Treaty of 1904, Panama agreed to place the nation’s monetary system

under U.S. control. By this accord, Panama adopted the U.S. dollar as the national currency.

Third, Panamanians established an administrative dependency by turning over key public

administration positions to officials recommended by the extra-territorial power. Fourth, they

developed the practice of asking the United States for supervision of elections, coupled with the

need for obtaining U.S. consent over potential presidential candidates. Fifth, the construction of

the Canal subordinated the national economy to the “canal economy.” The creation of the Canal

Zone divided Panama in two; the interior of the country languished as the service-oriented

economy tied to the Canal prospered. Furthermore, the militarization of the Canal Zone

incorporated Panama into the global defense system of the United States. Panama thus became

militarily allied to the United States ad-perpetuum.

3 Article 136, a provision demanded by the U.S. Senate in exchange for ratifying the Hay-Buneau Varilla Treaty, gave the United States the right to intervene in the isthmus for the “protection” of Panamanian independence.

15

process of ISI deepened the personal and sectorial differences among the Panamanian elites. A

sector of the bourgeoisie supported the new policies, but another (particularly those tied to sugar,

construction, and brewery interests) opposed them. The period of the 1960s was marked by

increased popular opposition to the corrupt policies of the Liberal regimes, continued divisions

within the political elite, and an increase in the professionalization and institutionalization of the

National Guard. Those events and the turbulent 1968 elections precipitated a political crisis that

ended in the coup d’état that toppled the civilian-elected government on October 11, 1968.

While the military regime’s initial pronouncements aimed to restore civilian authority, by

1970 it had abandoned that goal and initiated the institutionalization of a populist military-led

regime with the explicit support of a significant sector of the national bourgeoisie. After the

signing of the 1977 Canal Treaties by the governments of Panama and the United States, the

regime initiated a “liberalization” project that would supposedly culminate in free and

competitive elections for president and the institutionalization of a democratic regime.

The military-led government formed an alliance with sectors of the dominant class. These

sectors supported a national development program that sought to use the resources of the transit

economy to promote the modernization of the Panamanian state and the diversification of the

economy.

The issue of sovereignty over the Panama Canal had an important impact in helping to

bridge the gap between the military and sectors of the elite. The government used the

negotiations for new Canal treaties to silence opposition to its policies. Since the Panama Canal

opened to world commerce in 1914, the dominant commercial elite sought to gain access to the

lucrative canal market. The United States set up a zone that isolated the Canal from Panama and

prevented the local bourgeoisie from fulfilling their ultimate dream: to have direct access to the

transit route.

One of the major goals of the military-led government was to negotiate new treaties and

gain total Panamanian sovereignty over the Canal Zone. With an appeal to national pride and

unity, the government sought to silence any opposition in lieu of the “sensitive” treaty

negotiations. The government used the argument that Panamanians needed to be united in the

face of U.S. opposition. A unified Panama, so the argument went, would be able to utilize the

international support it had already acquired to effectively pressure the U.S. government for

16

better terms. Torrijos explained that, “we need a climate of peace so that our negotiating team

does not think that the people want just any treaty” (Torrijos 1974, 103).

It is clear that in the struggle to reform the 1903 Treaty and acquire concessions from the

United States, no Panamanian organization would side with the latter against the stated wishes of

the national government. This reluctance gave the military regime the political latitude it sought

to negotiate with the United States. In the end, being true to their historic pragmatism and

opportunism, the commercial elite would support any efforts that would increase Panamanian

sovereignty and commercial access to the Canal Zone, regardless of the nature of the regime.

The evidence suggests that after the death of Omar Torrijos in 1981, the military

institution, under the control of Manuel A. Noriega, altered the rules of the game by changing the

relationship between the commercial elite and the military and by monopolizing control of

politics and the economy.

One of Noriega’s first acts as Commander of the National Guard was to have the

Legislative Assembly approve a bill to restructure the Guard, which thereafter would operate

under the name of Panamanian Defense Forces (PDF) (Fuerzas de Defensa de Panamá – FDP).

Nominally, the president of the republic would head the PDF, but real power would be in the

hands of Noriega.4

The functions of the PDF stated in the organic law were broad, giving it an increasing

role and bringing other organizations under its control. Major functions included protecting the

life and property of Panamanians and foreigners living in Panama; cooperating with civilian

authorities to guarantee individual rights in the republic; preventing crime; defending the Panama

Canal in cooperation with the United States as specified under terms of the treaties; regulating

traffic; and cooperating with civilian authorities in the areas of drug trafficking, contraband, and

illegal immigration. The new organizational structure created a “public force” that brought a

Opposition parties strongly criticized the new law, claiming that it “implies

the militarization of national life, converts Panama into a police state, makes the members of the

armed forces privileged citizens, and gives the commander of the National Guard authoritarian

and totalitarian power” (Pizzurno and Araúz 1996, 600-01).

4Law No. 20 of September 29th, 1983 reorganized the National Guard in an attempted to strengthen its organizational and professional base. The law went on to concentrate power in the hands of the Commander-in-Chief of the new Panamanian Defense Forces (PDF) (Ley 20 de 29 de septiembre de 1983, Gaceta Oficial, Organo del Estado, No. 19.909, viernes, 30 de septiembre de 1983, Panama, Republica de Panama, p. 1-8).

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broad array of institutions under a single operational command. The PDF encompassed the

General Staff, Military Regions and Zones, Ground Forces, Panamanian Air Force, National

Navy, Police Forces, National Guard, the traffic bureau, the national investigations bureau, and

the immigration service. In addition, the PDF would include any institution created in the future

that might perform functions similar to the institutions listed above. One effect of these changes

was to reduce the National Guard to only one of a number of co-equal military institutions within

the PDF structure that was bound together, as the Guard had been, through a single command

and commander in chief.

Between 1983 and 1989, the PDF not only grew in size, but it modernized its

administrative, recruitment and security apparatus. The PDF redefined its role within

Panamanian society from a mediating force among competing social forces, to claiming an

exclusive role in defending the national interests. The most important role, however, was control

and operation of the Canal, which, as a result of the Torrijos-Carter treaties, would occur on

December 31, 1999.

The comfortable relationship between the commercial elite and the National Guard that

had secured the stability of the regime gradually came to an end as Noriega expanded the reach

of the military. The PDF went from an intermediary organization capable of negotiating with all

social classes, to imposing their vision of Panama on all sectors of society. Steve Ropp (1992)

argues that the rift between the military and the commercial elite was mainly the result of the

concentration of economic resources in the hands of the military, to the exclusion of the

commercial elite. Ropp states, “He (Noriega) surrounded himself with a new class of both

civilian and military entrepreneurs who increasingly forced the elite to accept them as silent

partners. Equally important was the fact that the officer corps was beginning to challenge the

commercial elite for social status; the predominantly white elite strongly resented the presence of

the drug-tainted mestizo and colored nouveau riche in their exclusive urban neighborhoods”

(229).

The Panamanian commercial elite have traditionally seen their economic and political

interests closely tied to those of the United States. Therefore, as long as the U.S. was perceived

as supportive of Noriega, the elites would not break with the regime. However, by 1987 it was

evident that sectors of the U.S. government were growing weary of Noriega’s illicit activities and

18

regional policies,5

The minister of government and justice at the time, Ricardo Arias Calderón, decided in

February 1990 to replace the Defense Forces with a Public Force composed of three services: the

National Police, the National Air Service, and the National Maritime Service. The decree that

created these entities assigned them responsibility for public order and national defense, and

envisioned the possibility that special units with external defense functions might be created in

as well as on the increasingly difficult economic situation. All these problems

threatened the political stability required by the United States for the implementation of the

Torrijos-Carter treaties. Therefore, the growing animosity between Noriega and the United States

freed the traditional commercial elites to oppose the regime without incurring the wrath of their

Northern “godfather.” In fact, by mid-1987 elite opposition to Noriega was encouraged and

financed by the United States.

The Transformation of the Military and the Challenges to Security

After the years of economic sanctions, popular protests, failed elections, and sustained

political pressures from the United States failed to remove Noriega from power, the United

States mounted a military invasion on December 20, 1989 that toppled the military-led regime.

The invasion signaled a failure of domestic actors’ pressures to remove Noriega from power, but

also represented the limits of U.S. power to influence events in Panama without resorting to

force. Furthermore, the invasion signaled a continuation of Panama’s historical dependence on

U.S. action to resolve internal political disputes.

As far as the local military forces were concerned, the invasion precipitated a complete

re-organization. The Panamanian Defense Forces (PDF) were dissolved, its command destroyed,

and its personnel the subject of a massive re-structuring. From the ashes of the PDF emerged a

Fuerza Pública [Public Force] of 12,000 men and women. Three factors were decisive in

demilitarizing public security. First, the invasion destroyed the operational capabilities of the

Panamanian Defense Forces. Second, the looting and ensuing anarchy dramatized the urgent

need for an organization whose task could ensure public security. Third, the country required a

new security apparatus independent of the party in power.

5Andrew Zimbalist and John Weeks (1991) argue that Noriega’s increasing reluctance to involve Panama in U.S. policy to support the Nicaraguan contra forces was a primary reason why the United States sought the general’s removal from power.

19

the future. Yet these services were almost completely de-militarized in terms of their structure,

philosophy, weapons, and training – though not in terms of their personnel, who were largely

recruited from the former PDF. The new security forces were subordinated to civilian authorities

through direct control by the Ministry of Government and Justice, and budgetary oversight by

the Office of the Comptroller General, as well as the Legislative Assembly.6

The institutional success of demilitarization in Panama is bound to the internal changes in

the Revolutionary Democratic Party (PRD).

In July 1994 President Guillermo Endara proposed to the National Assembly a series of

Constitutional reforms, including the abolition of the army. The reforms placed responsibility for

public order and security on the police. In case of foreign aggression, Panama would organize

special police forces to defend the national territory. The reforms prohibited the Public Force as

an institution and its individual members to participate in political protests, make political

declarations or intervene in political party rivalries. However, members still retain the right to

vote in elections. The constitutional reforms were approved on August 23, 1994.

7

Once the constitution was amended, it was possible to institutionalize the other aspects of

public security reform, notably with the drafting of the organic law for the National Police.

Overall, the National Police’s organic law (Law 18 of 3 June 1997) consolidated the changes that

had already taken place within the security institution since 1990. Key aspects of the law

Without acceptance by the PRD hierarchy of the

preeminence of civilian authority, along with the constitutional and institutional changes

undertaken since December 1989, it is doubtful de-militarization would have been consolidated.

The embrace of demilitarization was the result of both internal structural changes within the

party that purged the influence of former members of the PDF and their most ardent supporters,

but more importantly, a change in attitudes toward the role of the military within the State. The

latter was perhaps more due to political convenience than real conviction, but nonetheless it was

important. The PRD stopped short of totally repudiating its military past, picking out the

elements that shored up popular appeal whilst remaining within the norms of the new political

order. It accepted the new rules of the game and made no call or attempt to orchestrate

disturbances or destabilize the reforms.

6 “Decreto de Gabinete No. 38 de 10 de febrero de 1990,” Gaceta Oficial, No. 21, 479 (20 de febrero de 1990). 7 The PRD was created in the late 1970s by the military government as the regime’s political vehicle for leading the transition process.

20

emphasized the civilian nature of the institution – for instance by replacing “ranks” (rangos) with

“levels” (niveles); how and when force could be used was clearly defined; and the concept of due

obedience was eliminated. The subordination of the police to civilian authority was reiterated

throughout the law, clearly stating the prohibition on political activities, intervention and

partisanship, all punishable by sacking from the institution. Law 18 facilitated the

professionalization of the police forces in that the mission, functions and regulation of the police

force were clearly established, including a strict code of conduct and a clear career path. Law 18

did not introduce anything new, but rather served two purposes: first, unifying what had been an

ad hoc and disparate public security reform process and anchoring the process into Panamanian

law, and second, bringing to a close most of the bitter political disputes that had surrounded

public security issues since the early 1990s. The strengthening and professionalization of the

security forces (especially the national police, or PNP) continued throughout the mid-1990s, with

budgets increasing from $77,286,258 in 1995 to $103,929,183 in 1999; and the number of PNP

staff increased from 12,000 in 1994 to 16,000 by 2002.

The argument for strengthening the security forces in order to improve their ability to

carry out their public security duties has thus been established since the mid-1990s and has not

attracted negative publicity or engendered debates. Some recent changes, however, have been

more controversial, as have the plans of the Martin Torrijos administration (2004-2009)

discussed below. On the one hand, the U.S. has encouraged the strengthening of the Panamanian

security apparatus, including augmenting the military capacity of its forces. In 2003, for instance,

General James T. Hill, Commander in Chief of the U.S. Southern Command, openly criticized

the lack of military capability in Panama, arguing that this left Panama vulnerable to terrorist

attacks or drug trafficking networks. In addition, the U.S. State department has underlined the

need to reinforce the border area (notably with U.S. troops) in order to deal with the aftermath of

the implementation of Plan Colombia and the Andean Regional Initiative, as well as spill-over

from the Colombian conflict.

By the time Torrijos came to power in 2004 concerns abounded as to the effectiveness of

the Panamanian security forces to meet the new challenges posed by international criminal

networks, terrorism, and drug trafficking, among others. The United States, concerned over this

situation, encouraged Panama to restructure its security apparatus. Torrijos obliged by pushing

21

the first significant re-organization of security agencies since the early 1990s. Of particular note,

on August 18, 2008, the Cabinet Council approved the creation of the National Intelligence and

Security Service (SENIS) and the modification of Article 41 of the National Police Organic Law,

to allow former military officers to be named as Chief of the National Police. Two days later, the

remaining three Torrijos reforms were passed, consolidating the Air and Maritime Services into

the Aeronaval National Service, creating the National Border Patrol, and reorganizing the

Council on Public Security and National Defense as a separate entity. Torrijos justified his

highly controversial reforms in large part because “the Colombian military is pushing the

Revolutionary Armed Forces of Colombia (FARC) so hard,” that they are illegally transferring

their operations to Panama.”

In August 2009, Ricardo Martinelli, the winner of the 2009 presidential elections,

criticized Torrijos’ reforms and sought to repeal the decree that created the National Intelligence

and Security Service (SENIS). Martinelli, nevertheless, has made additional significant changes

to Panama’s security apparatus in order to deal more effectively with rising rates of crime and

other security threats such as drug trafficking. On March 31, 2010, the National Assembly

approved the draft law establishing the Ministry of Public Security. This change comes after the

Ministry of Government and Justice was basically split in half and turned into two new, smaller

Ministries. The Ministry of Security will be composed of the National Police, State Border

Service (Senafront), the National Naval Air Service (Senan) and the National Immigration

Service (SNM). The other part of the split – the new Ministry of the Interior – will be responsible

for the Civil Protection System (SINAPROC), the Office for Attention to Refugees, the post

office system, the Office of Indian policy, the office for coordination with local governments, the

passport office, the Ground Traffic and Transportation Administration (ATTT), the Civil

Aviation Authority, and prisons. It remains to be seen how effective the new agencies will be.

The transformation of Panama’s security forces has moved forward under administrations

of different parties and ideological orientation. The initial process of de-militarization, purging,

and constitutional reforms was successful in moving Panama beyond the institutional power and

role the military apparatus had under General Noriega’s regime. The near-universal acceptance

of this process by political actors, particularly the PRD, ensured its success. Subsequent changes,

and the political debates surrounding them, however, are the result of a number of unresolved

22

issues stemming from a changed security environment and geopolitical pressures for Panama to

more effectively protect the Panama Canal, as well as its borders. Nonetheless, Panama’s basic

constitutional prohibition on the establishment of traditional armed forces has been sustained.

De-militarization, thus, has been a pillar of the country’s process of democratization; a process

that could only be successful as a result of the U.S. invasion, which destroyed the Panamanian

Defense Forces and altered the political environment in the country.

The Challenge of Rising Crime Rates

Central America is the sub-region with the highest level of homicides per 100,000

inhabitants in Latin America. The recently published Human Development Report for Central

America provides aggregate data for homicide rates between 2000 and 2008 that indicates a

significant increase. Table 1 illustrates the evolution of homicide rates. In the case of Panama,

the data show an increase from 10 per 100,000 persons in 2000 to 19 in 2008. In 2009, the

homicide rate increased to 23.7 per 100,000 inhabitants.8

Table 1. Central America Homicide Rates, 2000-2008

The Spillover of the Colombian Civil War

In the last five years the issue of security in the Darien region of Panama, bordering

Colombia, has escalated. In the last two decades there have been at least 20 clashes between

8United Nations Development Program (PNUD), “Observatorio de seguridad ciudadana,” Fondo para el logro de los ODM (Millenium Development Goals), October 2010.

23

Panamanian police and Colombian irregular groups, which have left nearly 20 deaths: nine

civilians – including three children, and four policemen and guerrillas. Additionally, in the most

recent cases at the beginning of 2010, in the areas of Alto Tuira and Jaqué, three members of the

FARC were killed and two others were wounded. A Panamanian police officer was also gunned

down.

The United States has pushed for the strengthening of Panama’s security apparatus as a

bulwark against the spillover of the Colombian civil war, but also to address the increasing

threats of drug trafficking, money laundering and other transnational criminal networks. The

reforms implemented by the Martinelli administration were aimed at providing greater

capabilities to the country’s security forces. The administration increased security spending in

2010 and has proposed additional increases for 2011. The 2010 increase included a pay raise of

US$100 per member of the security forces. The Minister of Security José Raúl Mulino pointed

out that some of the US$120 million had been invested in the acquisition of new technology over

the past 20 months (i.e. 2009 and 2010) and in order to stand up new units and installations.

Included in that spending was the acquisition of two new Cessna 208B Grand Caravan for the

SENAN (National Naval Air Service) and the repair and overhaul of five helicopters. The 12%

increase for FY2011 allows the acquisition of new helicopters, 19 radars and naval vessels

equipped with modern technology from Italy. The 2011 budget includes US$80 million for

capital investments and US$39 million in social services including pensions and retirement funds

for retired police and security personnel. The United States assigned US$3.8 million during 2008

and a further US$2 million in 2009 through the Mérida Initiative.

While the current Panamanian government has moved to strengthen the country’s

security forces, the exact nature and extent of those forces remains a controversial issue,

particularly their relations with the United States. Some Panamanians, particularly those who led

the struggle against General Noriega, and the small political left, argue that the reform of the

security apparatus constitutes a re-militarization of Panama’s security forces. For some

Panamanians, the security of the Canal can only be assured though the application of the

principle of neutrality, and greater intelligence capabilities, rather than military force. In the end,

increased levels of crime and pressure from the United States have reopened the debate over

militarism and security in Panama. Few Panamanians argue for a return to the 1980s and the

24

Panamanian Defense Forces, but many clamor for greater security. How to provide the latter

without the former is a key issue in Panama today.

Counter-Elite Movements and Strategic Culture of Panama

From the perspective of the upper class and a nascent middle-class sector, the Canal and

independence did not always strengthen their position but instead seemed to weaken it in relation

to perceived rivals. The building of the waterway and the role of the United States invited the

entry of economic competitors, who challenged and displaced national investors, while

disrupting the country in a number of important ways. Strikes, indigenous rebellions, and

feminist mobilization characterized the first decades of the republic, whose political life became

sharply fragmented and beyond the control of the Liberal Party.9 North Americans especially

galvanized a rising group of professionals who had emerged from a new educational system and

who were eager to take up responsibilities in the republic, but who found a host of U.S. advisors

blocking their advancement through the expanding state bureaucracy. Finally, the Canal did not

“whiten” or “civilize” the isthmus, but rather, it dramatically increased its black population, just

as the United States strengthened racist doctrines by imposing segregation in the Canal Zone.

The U.S. construction project depended heavily on Afro-Antillean laborers, thousands of whom

remained after its completion. As Peter Szok argues, “popular art arose as an African Diaspora

expression which became increasingly evident in the early 1940s, just as President Arias was

disenfranchising the Afro-Antillean population. Critical to its rise was the same process of

modernization which “democratized” cultural norms in Panama and elsewhere and which so

frightened members of the intelligentsia. Popular art emerged as a consequence of economic

changes and exploited the opportunities of the isthmus’ transformation, particularly its rapid

commercial development.”10

By the late 1920s, the impact of a world depression served to exacerbate tensions

between Panamanians and the United States. The ill effects of the depression were especially

acute in Panama City and Colón. In these cities resided the emerging middle class of Panama,

9Szok, Peter, 2011, “Popular Art, Blackness and Panamanian Strategic Culture,” Paper prepared for the Workshop on the Strategic Culture of Panama, Florida International University, Applied Research Center, Biltmore Hotel, Miami, FL. March 21, 2011. 10 Ibid.

25

who depended on the commercial prosperity of the canal for their livelihood. Most of the middle-

class groups had migrated from rural to urban areas, where they had managed to acquire the

rudiments of an education and had entered business or government service. As much as the

unemployed Panamanian who competed with blacks in the Canal Zone, the middle classes of

Panama City and Colón resented U.S. policy in Panama and sought greater commercial benefits

from the Canal. Similarly, these elements were xenophobic, expressing hostility toward the

encroachment of Anglo-Saxon norms in isthmian life – they were constant agitators for the

nationalization of foreign-owned businesses.

The depression and the emergence of a politically-mobilized middle class divided the

ruling elite. The 1940s saw Arnulfo Arias win the presidency twice, in 1940 and 1948. On both

occasions he was overthrown by the National Police, with the support of the commercial elite

and the United States. Arnulfo Arias became the great “caudillo” of Panamanian politics. He ran

for the presidency five times (1940, 1948, 1964, 1968, and 1984), three times (1948, 1964 and

1984) he was denied his electoral victory through fraud, and three times (1941, 1951, and 1968)

he was overthrown by the military. While Arnulfo Arias and his movement represented a

challenge to the dominant commercial class, Arias himself had married into the Panamanian

oligarchy, and incorporated many of its members into his political movement. In the end, his

movement came to represent sectorial interests that could easily be reconciled with the interests

of the dominant commercial elite; Panamanian political culture made this reconciliation

inevitable.

The extent to which leftist or progressive movements have been able to challenge the

dominance of the traditional commercial elite has been rather limited. Organically weak because

of the small number of the industrial proletariat, the political left has mobilized around

nationalism and the recovery of the Panama Canal. The working class gained certain rights

during the military regime as the government led by General Omar Torrijos sought to build a

multiclass alliance by providing selective benefits to the country’s industrial proletariat.

The military regime fragmented the labor movement by developing close ties between the

Revolutionary Democratic Party (PRD) and certain sectors of the movement, particularly

government employees. After the U.S. military invasion, the restoration of democracy enabled

the labor movement to mobilize more freely than during the Noriega regime. However, the

26

application of neoliberal economic policies by all post-invasion governments, including those led

by the PRD, weakened labor’s ability to organize politically as reforms to the Labor Code

reduced some of the rights unions had acquired during the 1970s. Periodically, labor unions have

had limited success in challenging government policy, but more often than not governments have

been able to carry out their policies with only minor concessions to the labor movement.

Indigenous peoples in Panama account for 10% of the population, with 285,231 people

having identified themselves as indigenous in the 2000 National Census. Panama’s seven

indigenous groups are the Ngobe, Bugle, Kuna, Embera, Wounan, Bribri and Naso. The Ngobe

account for 59.3% of the indigenous population, followed by the Kuna, accounting for 21.6%.

Panama has five indigenous regions, representing 20% of the national territory: the Ngobe-Bugle

and Campesino region, the Kuna Yalar region, the Embera-Wounan region, the Kuna de

Madugandi region and the Kuna de Wargandi region. While historically isolated and politically

weak, indigenous communities have recently mobilized to defend their economic and political

rights. Particularly important have been a series of mobilizations against mining concessions in

the Western part of Panama. Indigenous mobilization recently brought down a contentious law

that made it easier for multinational mining corporations to gain entry into the Central American

country. Law 8, a revision of Panama’s 1963 mining code, enabled foreign, state-owned

companies to directly invest in large-scale mining projects. The success of the mobilization

might embolden indigenous communities to pursue additional political activism.

Mass Political Culture

To what extent do Panamanian masses believe in democracy? This section uses data from

the AmericasBarometer surveys11

11The surveys employ a stratified multi-stage cluster sample with a minimum size of 1500, providing a margin of error at the 95% confidence interval of +/- 2.5%. Additional information about the AmericasBarometer can be obtained at www.americasbarometer.org. The author wishes to thank Mitchell A. Seligson, director of the AmericasBarometer, for his generosity in permitting the use of the data.

to answer this question. Additionally, we look at attitudes

toward various political institutions. The survey asked: “Which of the following three statements

do you most agree with? (1) People like us do not care if there is a democratic or non-

democratic regime; (2) Democracy is preferable to any other kind of government; (3) In some

circumstances, an authoritarian government might be preferable to a democratic one.”

27

Figure 1 - Preference for democracy over Authoritarianism

Figure 1 shows a reduction in the preference for democratic government between 2004 and 2006,

but a significant rebound in 2008. In 2004, 77.7% of survey respondents preferred democracy to

any other form of government. This figure fell to 68.3% in 2006, but rebounded significantly in

2008 to 86%. Also significant is the decrease of people who express indifference between

democratic and authoritarian governments, from 19.1% in 2006 to 8.4% in 2008. These results

indicate a near universal preference for democracy among Panamanian citizens.

Additionally, the survey asked: “Do you believe that our country needs a strong-handed

government, or that its problems can be resolved with everyone participating? (1) Strong-

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handed (2) Everyone participating.” In Figure 2, we can see a significant increase in the support

for a “heavy-handed” government between 2004 and 2006, with no appreciable change in 2008.

There are doubts about the substantive meaning of support for a “strong-handed” government,

since for many people this can mean a government capable of dealing with the country’s

problems, especially crime. Rising crime and corruption have been constant themes in post-

invasion Panama. The media and political activists have continually highlighted the increase in

corruption among government and private sector, and in the past 4 or 5 years increasing crime

has become a significant issue for citizens and politicians alike. Thus the increase for a “strong-

hand” government could be attributed to these trends.

Figure 2 - Preference for Strong-Hand Government

29

The AmericasBarometer survey asked respondents how much trust they had in various

political and private institutions. We find a general decline in trust in institutions since 2004,

with the Catholic Church consistently receiving the highest level of trust, followed by the media.

In 2006 and 2008, the survey asked about the Panama Canal Authority, and the results indicate

that this institution has relatively high levels of trust. Another institution for which levels of trust

are relatively high is the Electoral Tribunal. Political parties and the Congress are the least

trusted institutions.

Figure 3 - Level of Trust of Various Institutions, 2004-08

30

A key problem for democracy in post-invasion Panama is the nature of executive-

legislative relations. While the post-invasion regimes have taken steps to strengthen the National

Assembly vis-à-vis the executive branch, constitutionally, politically, and financially the

legislature in Panama remains a rather weak institution. Constitutionally, the executive has

extensive legislative powers and the assembly is subordinate on important economic, budgetary,

and international matters. Additionally, legislators are incapable or unwilling to exercise some of

the limited oversight powers vested in the National Assembly by the constitution. Historically,

the Panamanian executive, not unlike other executives in the region, has enjoyed the power and

status the viceroys had during the colonial period and that caudillos had during the nineteenth

and early twentieth century.

Moreover, the institutional changes made by the military regimes during the period of

1968-89 left a legacy of clientelism and particularism that the legislature has yet to shed. Under

the current circumstances of executive dominance of the legislative process and constitutional

constraints on the assembly’s legislative initiative, practically no significant role is left for

deputies to play except as peddlers and providers of particularistic benefits.

While the political context is conducive to free and competitive elections, the weakness

of the political party system continues to be an obstacle to the consolidation of a democratic

regime. Panamanian political parties have traditionally represented narrow economic interests

rather than broad popular sectors. Parties lack the two most important elements of

institutionalization: stability and value. With few exceptions, political parties lack stable roots in

society, they do not play a significant role in policy-making (other than through control of

executive office), and they do not have great support among the population. When asked if they

sympathize with any party overwhelming majorities say no. Over 79% in 2006 and 68% in 2008,

an election year, expressed a negative attitude toward political parties. Furthermore, slightly over

a third of Panamanians believe that political parties represent their supporters or listen to people

like them. In turn, over 60% believe that corruption is rampant within political parties.

Challenges and Opportunities

An important challenge for Panama as it enters the second decade of the twenty-first

century is the development of a coherent and effective foreign policy. We began this paper by

31

establishing that Panama’s geographic position shaped the country’s strategic culture in profound

ways. Geography has dictated Panama’s place within the world economic order. Ironically, for a

country “at the service of the world,” Panama’s foreign relations have historically been quite

narrow. Since independence in 1903 the United States has been the focal point of Panama’s

foreign relations, both politically and economically. This fact should not be surprising since until

1999 the nation’s most important asset, the Panama Canal, was under U.S. control. However, the

years since 1999 have seen a gradual growth in the importance of relations with other countries

and regions, primarily the People’s Republic of China (PRC) and Central America.

First, Panama’s move to become part of the Sistema de Integración Centroamericana

(SICA) [Central American Integration System] is a significant shift in focus for the country that

shunned Central America as a “natural” partner12

Second, and far more important for Panama’s economic future, is its relations with the

PRC. Despite the increase in investments since 1999 and the PRC’s status as the second largest

user of the Panama Canal, Panama does not have diplomatic relations with the PRC. Panama

instead is one of a handful of countries in the world that continues to have diplomatic relations

with Taiwan. Taiwan provides substantial amounts of assistance and investment in Panama. The

relationship between Panama and Taiwan is also greased by direct assistance, or what some call

and gravitated toward South America because

of its historical ties to its southern neighbor, Colombia. While Panama continues to maintain ties

with South America, for example, as an observer nation within the Andean Pact, Central

America has become an important geopolitical focus. The country now participates actively in

the presidential summits of Central American presidents that serve as a key component of the

sub-region’s integration architecture. Ironically, however, and true to historical patterns, Panama

is not part of CAFTA-DR (the Central American and Dominican Republic Free Trade

Agreement). Instead, Panama signed a bilateral free trade agreement with the United States; a

treaty that has not been fully ratified because of opposition in the United States Congress. One of

the principal problems for further economic integration with Central America is opposition from

agricultural sectors who argue that Panama’s relatively high labor wages will place them at a

disadvantage vis-à-vis farmers from other countries in Central America.

12 Panama played a role in attempts to resolve the civil wars in El Salvador and Nicaragua during the 1980s through the so-called Contadora process (named after the Panamanian island in the Pacific). However, other than hosting several meetings, Panama’s influence was minimal.

32

“bribes,” to Panamanian public officials; for example the purchase of a presidential plane, or

expensive fully paid trips to the East Asian island. Apparently, Panama’s current policy is to

seek closer relations with the PRC. The Martinelli administration sought to distance itself from

Taiwan and pursue a policy of gradually recognizing the PRC, but apparently the latter has

rebuffed such efforts in order not to damage relations between Taiwan and the mainland.13

China’s investment and involvement in Panama in the last 10 years is impressive. For

example, Chinese subsidiary companies manage the ports of Panama City and Colón. When

Hutchinson-Wampoa purchased the ports there was great consternation in the United States that

this meant China would control the Panama Canal. The fact is that the ports, while important for

the overall maritime industry and economy of Panama, are not part of the Panama Canal. The

latter has been managed efficiently, independently and transparently by an independent agency

that employs strict business principles and neutrality in the treatment of international users. In

fact, the very existence of the Canal as a credible and reliable international waterway depends on

not being controlled by any extra-territorial power.

However, the PRC’s increasing level of investment and use of the Canal are indications that in

the long-run Panama will follow the lead of other Central American countries and normalize

relations with the mainland.

14

13 According to U.S. envoy Barbara Stephenson, incoming Panamanian President Ricardo Martinelli had told her that he wanted his homeland to benefit from China's economic rise. However, a 2010 meeting between the Panamanian and Chinese Foreign Ministers resulted in Beijing rebuffing Panama City’s wish for fear of cooling cross-straits relations, according to Stephenson. (Read more: http://globalspin.blogs.time.com/2011/05/13/poor-panama-chinas-not-interested/#ixzz1Q1etwf90). 14 For example, Canal toll revenue for FY2010 (Oct.1-Sept.30) reached US$1.466 billion, which represent a US$28 million increase from the US$1.438 billion collected in FY2009.

However, China’s role in Panama’s

economy goes beyond the ports. For example, the PRC is one of the leading users of the Colón

Free Trade Zone, relying on the zone for shipment of goods to the United States and Latin

America, as well as being the single largest supplier of goods to the zone, accounting for more

than a third of total goods sold. As of 2010, the PRC is Panama’s second largest trading partner,

accounting for 18.7% of total trade (20.5% of imports); Japan is number one and the United

States number four. In the next several years, opportunities for Chinese investment in Panama

will increase significantly as the current government pursues a strategic development plan

centered on large infrastructure projects.

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The most significant such project will continue to be the expansion of the Canal. As of

August 31, 2010, the Panama Canal Authority (ACP) had awarded contracts totaling US$3.95

billion, of the US$5.5 billion total cost of the project. While so far Japan is the largest investor in

the expansion project, China has expressed some interest in investing as well. Regardless of the

amount of direct Chinese investment, the fact remains that China will likely be the biggest

beneficiary from Canal expansion. One effect of the project will be to make transport costs of

finished goods from China to the East Coast of the United States much cheaper – perhaps by 30

percent. When the project is completed, the canal will be navigable by tankers with capacity of a

million barrels of crude oil. That, in turn, will open new routes whereby oil and mineral

resources from West Africa can be taken directly to China. The same dynamic could also bolster

China’s influence in the Caribbean, expected to develop as a storage hub for oil before it heads

west through the Canal and on to China. By 2014, the year in which the project is scheduled to

be finished, the Canal will be able to take ships capable of holding 12,600 containers –more than

double the capacity of the “Panamax” ships that represent the Canal's present size limit.

Another critical challenge stems from the need to manage a booming economy. Despite

exceptional recent economic growth (averaging 9% per year) and a positive outlook due to the

Canal expansion project, Panama’s economy may be overheating as indicated by rising inflation

and a deteriorating trade balance. Several factors are fueling this overheating: dollar

depreciation, rising oil prices, and a housing boom. As a dollarized economy, Panama shares the

woes of the depreciating U.S. dollar. Depreciation has accelerated a rise in food prices linked to

a rise in the cost of food imports. Rising global prices for petroleum are adding to inflationary

and current account pressures as well. Finally, canal expansion and the local housing boom are

requiring more imports of raw materials and construction equipment, contributing to the

deterioration of the trade balance. The boom, fed in part by expatriate demand for housing in the

Canal Zone and government-subsidized housing throughout Panama, adds to inflationary

pressures.

Additionally, despite the country’s strong economic growth, poverty levels remain high.

Nationwide, according to 2008 data from the Economic Commission for Latin America and the

Caribbean (ECLAC), 28.6% of the population is poor and 11.7% is extremely poor. The

incidence of poverty is particularly high in rural areas, where about 45.8% of the population is

34

poor and about 23.6% of rural people live in extreme poverty. Among the indigenous population,

poverty rates are even higher. Across the country, more than 80.5% of Panama’s indigenous

peoples live below the poverty line, and about 51.9% are extremely poor. Indigenous peoples are

also the most rapidly growing segment of the population, with an average growth rate that is

more than double that of the country average. In recent years there has been an increase in rural

people’s migration to urban areas. Rural-urban migration, coupled with low demand for

unskilled laborers in the country’s service-based economy, has led to an increase in urban

poverty.

The very culture of transaction that enables elites to seek compromise also promotes

corrupt deal-making. Instrumental rationality dictates that “the ends justify the means,” therefore,

cheating, or as Panamanians say “juega vivo” (play smartly), generates a tendency to cut corners

and do what is necessary to succeed, even if it means violating the rules. Although the situation

improved following the restoration of democracy in 1989, there is nearly unanimous consensus

that corrupt practices are still a major problem in Panama. According to Gerardo Berthin, the

drivers of corruption in Panama are related to the high levels of inequality. Panama continues to

be one of Latin America’s most unequal countries. Panama’s Gini Index of Per Capita

Household Income is 55, which is much higher than any country in Asia and double in average

than the figures found in developed countries. Only 9 countries in the world have a higher

coefficient (Namibia 74, Comoros 64, Botswana 61, Belize 60, Haiti 59, Angola 59, Colombia

58, South Africa 58, and Bolivia 57). Another factor is a legacy of clientelism that continues to

shape citizens’ relations with the State. Over half of Panamanians believe that personal interest is

one of the key drivers of behavior and over 80% respectively believe that individual criteria

guide decisions in public administration. Finally, Berthin points to a lack of political will and

insufficient or non-existent checks and balances within government institutions.15

The management of the Panama Canal constitutes a significant challenge moving

forward. Despite the skepticism at the time the waterway was transferred to Panama in 1999, the

country has shown that it can manage the Canal in an efficient, transparent and profitable

manner. The Autoridad del Canal de Panama (ACP) has performed exceptionally well managing

15Berthin, Gerardo, 2011, “Corruption as an Element of Strategic Culture: The Case of Panama,” Paper prepared for the Panama Strategic Culture Workshop, Florida International University, Applied Research Center, Biltmore Hotel, Miami, FL. March 21, 2011

35

this most important national asset. The ACP has provided more than US$ 2 billion to the national

treasury, and has managed to come up with internal and external financing for a $5.3 billion

project to expand Canal capacity. The key challenge moving forward has to do with developing

mechanisms to expand the benefits of the transit zone to the rest of the country, particularly

incorporating the rural and indigenous communities to the nation’s economic development and

growth.

An additional major challenge is the increasing levels of criminal activity, particularly

tied to drug trafficking and money laundering. Panama is a major transit country for illicit drugs

from South America to the U.S. Moreover, the country’s service-based economy, with a large

banking sector and trading center (Colón Free Zone, CFZ), makes Panama vulnerable to money

laundering. The State Department’s March 2010 International Narcotics Control Strategy Report

(INCSR) maintains that there were increased narcotics trafficking by Colombian, Mexican, and

other drug trafficking organizations through Panama. According to the report, the increased

trafficking and the presence of illegally armed Colombian groups in the Darién region

contributed to the rising crime, violence, and gang presence throughout the country.

In the end, however, four key factors help explain Panamanian success in building the

institutional foundations of democracy: (1) A process of de-militarization, made easier by the

results of the invasion, which dismantled the old military and established firm civilian command

of security forces. This process was successful because all political actors, despite their political

affiliations prior to the invasion, supported it; (2) The consolidation of a free, fair, and

competitive electoral process underpinned by the institutionalization of an independent Electoral

Tribunal. As a corollary to that process, another important transformation was that undertaken by

the Democratic Revolutionary Party (PRD), the party born under the military regime, and that

sustained it politically. The PRD became an organization that accepted and played by the

democratic rules of the game, winning two national elections since the invasion and twice

handing power to their opponents; (3) The development of a process of social dialogue that

created an atmosphere within which political leaders could discuss vital issues facing the nation.

The various meetings that sustained and furthered the process of dialogue enabled leaders to

construct agreements for conducting elections and for developing policy responses to key

national priorities, such as the management of the Panama Canal. The ability of Panama to

36

successfully acquire control of the interoceanic waterway focused the mind and attention of

political actors who understood that failure in that front would represent failure nationally and

internationally; and (4) Panamanian citizens support democracy as a political system. Significant

majorities of Panamanians express the view that democracy is the best form of government

despite all of its shortcomings. That is not to say that they express universal satisfaction with

how their institutions operate – particularly a great amount of scorn is heaped upon political

parties and Congress as institutions – but the evidence suggests that mass political culture in

Panama supports, rather than undermines, democratic governance.

Panama’s democratic regime might be far from fully consolidated, but compared to its

neighbors in Central America, perhaps with the exception of Costa Rica, Panamanian democracy

exhibits significant advantages. In 2009, Honduras, for example, suffered a military coup d’état

that toppled an elected civilian president. We would be hard-pressed to devise a scenario where

Panama’s Fuerza Pública (Public Force) would do the same. Unlike Guatemala, El Salvador and

Nicaragua, Panama did not suffer prolonged civil wars. The political behavior of Panama’s elites

promotes accommodation and compromise rather than violence and confrontation. For example,

in July 2010, President Ricardo Martinelli pushed Law 30 through the legislature that reformed

the Labor Code, among other provisions. The law was roundly condemned by labor unions,

human rights groups, and opposition political parties. Violence erupted when the government

confronted protestors in the Western province of Bocas del Toro. Several dozen protestors were

injured and at least three were killed. Despite heated rhetoric from the government and

opposition groups, the application of the most controversial parts of the law were suspended and

eventually repealed after several weeks of dialogue. The incident illustrates the modus operandi

that government and opposition forces have established in Panama since 1990; whereby the

government pushes controversial measures, protests follow, but dialogue and compromise

prevail in the end. As said earlier, Panama’s transactional political culture promotes compromise

as the preferred method of settling disputes. Often this could result in less than ideal solutions to

pressing problems, but it makes prolonged violence highly unlikely. In the end, Panama’s

balance sheet of democratic assets and liabilities tilts toward the former, particularly when

compared to most of Central America.

37

References

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Arosemena González, Carlos., 1953., “El cuerpo de policía nacional.,” In Panamá: 50 años de República. Panamá: Editorial Nacional.

Castillero Calvo, Alfredo. 1973. “Transitismo y dependencia: El caso del Istmo de Panama,” Loteria, 210:17–40.

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Castillero Pimentel.1988. Panama y los Estados Unidos. Panama: Editora Humanidad.

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Torrijos Herrera, Omar. 1974. Nuestra revolución: discursos fundamentales. Panama: Ministerio de Relaciones Exteriores, Departamento de Información.

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About the Author

Orlando J. Pérez received his M.A. and Ph.D. in political science from the University of

Pittsburgh. He is a professor of political science at Central Michigan University where teaches

courses in comparative politics, Latin American politics, and U.S.-Latin American relations. His

conference presentations and publications have focused on democratization, elite theory,

authoritarianism, public opinion, U.S.-Panama relations, and civil-military relations. He is a

recipient of a grant from the United States Institute of Peace for his project studying the

transformation of civil-military relations in post-authoritarian Central America. He has carried

out field research in several countries of the region, including Panama, Nicaragua, El Salvador,

Guatemala, Honduras, and Venezuela. His current research focuses on civil-military relations in

Latin America, crime and security issues in Central America, as well as survey research on

democratic political culture. With Angela Haddad, Department of Sociology, he is working on a

comparative project examining critical thinking and global literacy skills in Cuba, Panama and

the United States.

He is also currently involved as Co-Coordinator for Central America (with Ricardo

Cordova Macias of FUNDAUNGO-El Salvador) for the Project on Security in North America,

Central America and the Caribbean funded by the Ford Foundation and Woodrow Wilson

Center.

His work has appeared in the Journal of Interamerican Studies and World Affairs,

Hemisphere, South Eastern Latin Americanist, Political Science Quarterly, and Journal of

Political and Military Sociology, among a number of chapters in edited volumes. He is the editor

of Post-Invasion Panama: The Challenges of Democratization in the New World Order. He

recently published: Political Culture in Panama: Democracy after Invasion (New York, NY:

Palgrave-MacMillan, 2011).

As a consultant, he has worked on public opinion surveys, democratization, civil-military

relations, and corruption issues for USAID and the UN Development Program. Additionally, he

is a member of the Scientific Support Group for the Latin American Public Opinion Project

(LAPOP) at Vanderbilt University. Dr. Perez is serving as president of the Midwest Association

for Latin American Studies.

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FLORIDA INTERNATIONAL UNIVERSITY APPLIED RESEARCH CENTER (ARC)

Dr. John Proni

ARC Executive Director

Dr. Norman Munroe ARC Director of Research

Jerry F. Miller, Colonel, USAF (Ret.)

ARC Associate Director

STRATEGIC CULTURE STUDY FACILITATORS

Brian Fonseca (Fonsecab@fiu.edu) Bradley S. Porter (Bporter@fiu.edu)

Moisés Caballero (Moises.caballero@fiu.edu)

GRADUATE RESEARCH ASSISTANTS

Pamela Pamelá

COMPLETED STRATEGIC CULTURE FINDINGS REPORTS

Findings Report 1-Venezuela (June 2009) Findings Report 9 - Argentina (April 2010)

Findings Report 2 - Cuba (July 2009) Findings Report 10 -Chile (April 2010)

Findings Report 3 - Haiti (August 2009) Findings Report 11 - Guatemala (June 2010)

Findings Report 4 - Colombia (September 2009) Findings Report 12 – Peru (August 2010)

Findings Report 5 - Brazil (October 2009) Findings Report 13 - El Salvador (September 2010)

Findings Report 6 - Ecuador (November 2009) Findings Report 14 - Dom Rep (October 2010)

Findings Report 7 - Nicaragua (December 2009) Findings Report 15 – Paraguay (November 2010)

Findings Report 8 - Bolivia (March 2010) Findings Report 16 – Honduras (January 2011)

FORTHCOMING STRATEGIC CULTURE FINDINGS REPORTS

Findings Report 18 – Costa Rica (July 2011)

Findings Report 19 – Jamaica (August 2011)

Findings Report 20 – Uruguay (August 2011)