Panama: Political and Economic Conditions and U.S. Relations [Updated January 16, 2007]   [open pdf - 266KB]

"The most significant challenges facing the Torrijos government have included dealing with the funding deficits of the country's social security fund; developing plans for the expansion of the Panama Canal; and combating unemployment and poverty. After protests and a protracted strike by construction workers, doctors, and teachers in 2005, the Torrijos government was forced to modify its plans for reforming the social security fund. In April 2006, the government unveiled its ambitious plans to build a third lane and new set of locks that will double the Canal's capacity. In an October 2006 referendum on the issue, 78% of voters supported the expansion project. The United States has close relations with Panama, stemming in large part from the extensive linkages developed when the Panama Canal was under U.S. control and Panama hosted major U.S. military installations. The current bilateral relationship is characterized by extensive cooperation on counternarcotics efforts, assistance to help Panama assure the security of the Canal and its border with Colombia, and negotiations for a bilateral free trade agreement. The United States provided Panama with $19 million in foreign aid in FY2005, and an estimated $14.4 million in FY2006. The FY2007 request is for $17.4 million, with $4 million under the Andean Counterdrug Initiative and $3.2 million in development assistance. After 10 rounds of negotiations, the United States and Panama announced the conclusion of a free trade agreement on December 19, 2006."

Report Number:
CRS Report for Congress, RL30981
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