mic Powers Act, freezing Panamanian Government assets in U.S. banks, withholding fees for using the canal, and prohibiting payments by American agencies, firms, and individuals to the Noriega regime. The country went into turmoil.
When national elections were held in May 1989, the elections were marred by accusations of fraud from both sides. However, the elections proceeded as planned, and Panamanians voted for the anti-Noriega candidates by a margin of over three-to-one. When Guillermo Endara won the election, the Noriega regime annulled the election, citing massive U.S. interference. Foreign election observers, including the Catholic Church and former U.S. President Jimmy Carter, certified the electoral victory of Endara despite widespread attempts at fraud by the regime. At the behest of the United States, the Organization of American States convened a meeting of foreign ministers but was unable to obtain Noriega's departure. By the fall of 1989, the regime was barely clinging to power.
The U.S. began sending thousands of troops to bases in the Canal Zone. Panamanian authorities alleged that U.S. troops left their bases and illegally stopped and searched vehicles in Panama. During this time, an American Marine got lost in the former French quarter of Panama City, ran a roadblock, and was killed by Panamanian Police (who were then a part of the Panamanian Military). On December 20, 1989, the United States troops commenced an invasion of Panama. Their primary objectives were achieved quickly, and the combatants' withdrawal began on December 27. Endara was sworn in as President at a U.S. military base on the day of the invasion.
General Manuel Noriega is now serving a 40-year sentence for drug trafficking. Estimates as to the loss of life on the Panamanian side vary between 500 and 7,000. Much of the Chorillo neighborhood was destroyed by fire shortly after the start of the invasion. Following the invasion, President George H. W. Bush announced one billion dollars in aid to Panama. Of this amount, $400 million consisted of incentives for U.S. business to export products to Panama, $150 million was to pay off bank loans and $65 million went to private sector loans and guarantees to U.S. investors. The entire Panama Canal, the area supporting the Canal, and remaining U.S. military bases were turned over to Panama on December 31, 1999, in accordance with the treaty signed two decades prior.
The politics of Panama takes place in a framework of a presidential representative democratic republic, whereby the President of Panama is both head of state and head of government, and of a pluriform multi-party system. Executive power is exercised by the government. Legislative power is vested in both the government and the National Assembly. The Judiciary is independent of the executive and the legislature. The branches are according to Panama's Political Constitution of 1972, reformed by the Actos Reformatorios of 1978, and by the Acto Constitucional in 1983, united in cooperation and limited through the classic system of checks and balances. Three independent organizations with clearly defined responsibilities are found in the Political Constitution. Thus, the Comptroller General of the Republic has the responsibility to manage public funds. There also exists the Electoral Tribunal, which has the responsibility to guarantee liberty, transparency, and the efficacy of the popular vote; and, finally, the Ministry of the Public exists to oversee interests of State and of the municipalities.
Administratively, Panama's major divisions are nine provinces and five indigenous territories (comarcas indígenas).
With unemployment rates at 8.8 percent, Panama has the second highest unemployment rate in Central America, after Belize. The population living in poverty is at 37 percent (est. 2006). However, the Panamanian economy grew 8.1 percent in 2006 and for the first time in ten years the public sector closed the year 2006 with a trade surplus of US$88 million. Furthermore, the GDP in 2006 reached US$26.04 billion.
Panama's economy is service-