PANAMA

Created: 9/1/1967

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Current Inlclligenco Country Handbook ^

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DIRECTORATE OF INTELLIGENCE

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FDR RELEASE DBTESEP

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Current Intelligence Country Handbooks iir designed to give the render ready access to the ubent factsountry and It* main currenthey are not intended to provide comprehensive baiic mteUigenceountry or to ipeak with the authority of coordinated national intelligence. The Informationhe best available to the Office of Current Intelligence as of the date Ml the top of tbe page.

This material contains Information affecting the national defense of tbe United State* within the meaning of the Espionage Laws, Title IS. CSC,nd 7M. tbe transmistton ot revelation of which in any manner to an unauthorized person is prohibited by law.

PANAMA

I. Political

Revolt and violence are well-accepted political techniques in Panama. Although recent attempts to cause trouble have been dealt with firmly by the Robles Government, antigovernment and anti-US riots which can quickly get out of hand are always possible, as was proven In9 anderious antigovernment riots in6 wrought considerable property damage in Colon and taxed the government's ability to maintain order.

Extreme nationalists and political opportunists, using Panama's sensationalist and powerful press and radio media, havelimate of restlessness in the country. Communists have greater in* fluence than any others among students and labor in Panama; these groups would probably spearhead any future trouble. Thequick response In4 was an important clement in escalating and prolonging mob violence and in contributing to the subsequent intransigent attitude assumed by then President ChiarL Ultra nationalist and irresponsible demagogy over the canal treaty issue could again arouse public feeling and offer new opportunities for violence.

After President Robles took office ine forced political differences behind the scenes by his firmness, determination, and support from the US. However, disgruntlement over Robles' mildnew la*political appointments quickly generated opposition to him from several disparate groups, even including members of his own government coalition. The bulk of criticism against his adminIj1 ration has been directed at the conduct of the canal treaty negotiations.

Leaders of defeated presidential candidate Arnulfo Arias' Pan-amenista Party (PP) have reportedly encouraged opposition activity even to the point of aiding the Communists financially. Arias has repeatedly threatened to oppose :my treaty settlement concluded with the US. However, Arias departed the country7 shortly after the joint presidential statement announcing that negotiations had produced agreement nn the three proposed treaties. Arias has since said that he left the country to show the US that there was widespread opposition to the treaties and that he had nothing to do with stirringthis opposition.

The oligarchy's cynical willingness to go to any length to retain their privileged positionominant aspect of Panamanian political life Unrest among Communist-led studentsigh level of urban unemployment provide trouble-makers of all political colorations with ready-made support. Overt hostility towards the president and his cabinet and an almost total disregard for civic responsibility flourishociety where political change proceedsighly personalized

and corruption and manipulation are widespread.

conomic

of the Panama Canal Zone, the large United Fruit Company

banana plantations in Chiriqui Province, and extensive foreignin business and commerce, the economy of Panama is more externaily-oriented than that of any other Latin Americanapid rise in returns to Panama from the Canal, improved export performance, and the first glimmeringseaningful development program arc responsible for pushing the growth rate of the economy in8 to an average of moreeicenl annually, or moreercent per capita. The development of manufacturinghas paced this growth, although apart from food processing, petroleum refining, and some construction products, mostare still imported. Except for wheat, Panama is able to meet most of its food requirements.

Tax reforms and improvements in collection have strengthened the government's fiscal performance. Income lax receipts, for example, roseercent5 amiercentoreign assistance (gross inflows have averagedillion annually in recentevertheless, is still Important to government development efforts, financing about one-third of public investment. Administrative reforms have improved the government's ability to acquire and use foreign financing and the country's small foreign public debt provides considerable room for further borrowing abroad. Private sector investment, which accounts for about three-fourths of the total, is financed primarily from earnings of corporations in Panama. Many arc subsidiaries of foreign firms. The country also attracts private foreign capital by allowing deposits in "nameless-numbered accounts. These funds, however, arc particularly vulnerable to political instability.

Per capita GNP6ne of the highest in Latin America. Although there arc wide disparities in income distribution and the overwhelming majority of the rural population is particularly

2Panama

overnment price support program for basic food crops and some technical assistance has contributedeneral improvement In rural income*igh levels of economic activity are providing increased employment opportunities in Panama City and Colon but rural migration lo these cities keep* unemployment high. Implementation of programs to ameliorate conditions in urban slums, however, has lagged badly.

The rapid pace of economic growth has continuedipoits roseercent in the first sin months of the year over theperiodhe government's investment program Is being maintainedigh level; tax revenues in the first quarter7 wereercent above the same quarternd borrowing from international lending agencies has increased.

nternational Relations

Panamas major International concern has always been the status of the Canal Zone and the concomitant dose relations with the United Slates It has used the OAS and UN to air its complaints against the US on the canal issue, although its votes and attitudes on most international question* generally coincide with those of the US. Never-theanama's relations with the rest of the world will for the foreseeable future be dominated by sea level canal considerations and by efforts to workew canal treaty settlement with the US. Although the US and Panama announced on7 thatbad been reached on the three proposed draft treaties, opposition in Iwilli countries appears to beostponement of ratification until at least after the4 election! in Panama. The three proposed treaties deal with the present lockuture sea-level canal, and defense of the canal

Diplomatic, culltu.it, and economic relations with Communistincluding Cuba, are negligible. Communist Chinaajor propaganda issue of theiots and there is some evidence of it* (ontinumg interest in maintaining contacts among tbe Chinese community in Panama. Several Soviet and other Communist area newsmen have viittcd Panama since the riots. There has alsooticeable increase In travel to Communist countries by Panamanians sincehe Polish and Yugoslavian ambassadors in Mexico are accredited to Panama and Panama maintains limited diplomatic relations with Chechoslovakia, where tlie honorary-Consul in Piaguczech citizen.

Panama3

ubversion

The major threat to stability inob violence of the sort which snowballed lo major proportions inresident Robles has already effectively used the National Cuard several times to avert violence since he took office, however, and the Guard isboth its relation* with the public and methods for riot control.

Attempts by Panamanian- trained in Cuba, or other Communist countries, to organize subversive training and activity in Panama have not in the past been successful extent In arousing students. If,Anuilfo Arias' mass-based PanamenisU Party does participate ia revolutionary activities, the potential for insurgency will be increased markedly.

Tbe small Communist movement, although badly splintered and relatively weak, has tried to capitalize on unrest and poverty to subvert the eiUling order. Despite the inability of tbe Communists to create mass disturbances on their own. they are always ready to seize the initiative and control the streetsituation brought about by other forces. Their greatest asset is an optitudr for inciting national emotions over the Canal Zone.

Hie leaders of the People's Party (Communist) attempted lothe organization6 lmt failed to inject new vigor. The Colon riots in8 and the subsequent government roundup of Communist leaders greatly weakened the party, which was already disorganized and fragmented. In addition, many of the members went into hiding to avoid arrest. Since this incident the party hasautious line to avoid further government action against it.

The studentrimef the Communists for overears, has been successfully and widely penetrated. In large part due to the apathy of the majority of the students, tbe POP's influence in the university anal secondary organizations represents perhaps its most significant achievement. Tlx- Communists work through tbe Federation of Panamanian Studentshich ctaun* to represent0 students, however, il does not exercise control over the entire mcmhrrship They have gained control over student organizations through their pursuit ol leadershipnity of action, timely exploitation ol political opportunities, and lack of effective competition.

an Nation.il Guard iv the only uniformed police or military organization in thr comilry mid spendv aboutercent of its time in police activity. Its commandant. Brigadier General Bolivar Vallarino, wields substantial political and economic influence and in

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closely allied with Ihe oligarchy. The National Cuard is capable of controlling sporadic uprisings, rioting, and disorderly crowds, as demonstrated during the6 disturbances. It would have difficultyuppressing simultaneous or widespread disorders or inmall well-organized insurgent band or bands which might operate in isolated areas, however.

anal Zone

The Canal Zone Government is an independent US government agency under direct supervision of the President who has delegated this authority to tbe Secretary of the Army. The Secretary of the Army is designated Stockholder of the Panama Canal Companyederal Charter and appoints Ihe Board of Directors ofembers in which management of tbe corporation is vested. Brigadier General W. P. Leber is Covernor of the Canal Zone and President of the Panama Canal Company. He is appointed by the President, subject to confirmation by the US Senate, and serves ex officio as President of the Company.

As of7 the Panama Canal Company48 UShe Canal7 USanamanians).

Although grovs revenues of the Panama Canal Company for6illion, net revenues were4 million afteT charges for interest costi and the net cost of operations of the Canal Zone Government. Out of the net0 is earmarkedart of0 annuity to Panama. The remainder of thisfrom tbe US Government lather than the Panama Canal Company. The net earnings, or surplus, after these payments26 and3 The total US investment in the Canal9 billion of1 million is interest-beating. Congress has no statutory requirement for amor-ligation payments and5 such payments have been sporadic, the last capital reimbursementillion

In3 million long tons of cargo passed through the Canal0 vessels. The number of vessels transiting the Canal has been averaging abouter day. It is estimated that theull can liamllc the needs of world commerce up to thoS-owned ship are the prime users of the Canal withillion long tons of cargoapan was second svithillion and Venezuela thirdillion.)

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Tolls are currently leviedet tonnageper ton for laden shipsn ballast. Other types, including worshipser displacement ton. US Covemment ships pay tolls on the same basis aship which would otherwise have to sail around the "Horn" can save as much as ten times the amount of her toll by using the Canal. The average toll per ship

The Canal generates about two-fifths of Panama's GNP and two-thirds of its foreign exchange earnings.his amounted to6 million.

Chronology of Key Events

ovember) Independence from Colombia proclaimed.

ovember) Hay-Bunau-Varilla Treaty signed in

ugust) Panama Canal opened.

2 March) Treaty of Friendship and Cooprrutlon replaced wine provisions3 treaty and increased the annuity paid to Panama.

October) Amulfo Arias inaugurated president for first

term.

October) Amulfo Arias ousted when he left tbe country

without assembly approval.

arch) Present constitution adopted.

ecember) Anti-US riots over air bases, bases close

down.

July-November) Daniel Cham's succeeds to presidency on death of Domingo Diaz; National Police Install Arnulfo Arias onovember as actual winner3 presidential election.

ay) Amulfo Arias ousted after attempt to rewrite the constitution; replaced by Vice President Aldbiadcs Arose-rnena.

(May) Colon Free Zone2 ay) Jose Antonio Rernoo elected3 2 December) Peoples Party (Communist)5 anuary) President Rcmon assassinated; succeededew days by Vice President Jose Ramon Cui/ado, tlien by Second Vice President Ricardo Arias Espinosa after Cuizado accuved ol part inanuary) Remon-Eiscnhower agreement3 Canal treaty, including increase in annuity paid to Panama,

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ay) Ernesto de la Cuardin, Jr. elected2 July) President Eisenhower attended Meeting olof the American Republics in PanamaS 5 May) Antigmernment student riotjight deaths.

April) Abortive invasion by small Cuban-backed force

and Roberto Arias. (November) Celebration of two national anniversaries during the month marked by violent anti-US disorders.

May) Roberto Chiari elected president

eptember) Panamanian Sag officially raised alongside

US flag in Carol Zone,ctober) Ernesto de la Cuardia, Jr. becomes first president

to complete term in almostears.

December) Panama breaks relations with Cuba.

anuary) Three days of unrestrained violence along Zone border follow* display of US flag by Zone students in violation of agreement;illed. Panama breaks relation) with theanuary) for threeay) Marco Rohles defeats Arnulfo Arias in presidential election.

ecember) President Johnson oilers new treaty to Panama andea-level canal will be constructed.

ecember) First ma for hu reform bill6 une) Estensive antigovemment rioting in Colon follows murder of Communist student who bad returned from USSR.

une) Joint statement by Presidents Johnson and Robles announced that negotiators hid reached agreement on proposed canal treaties.

Holidays and Significant Dates

1Year's Day

4 anti-US Riots

overnment offices closed)

IDay

1Day

Iof Colon Riots

1of National Assembly

12Day

3from Colombia

Panama7

Day

Independencefrom

Selected Factual Data LAND

Total sq.xcluding Canalrable, of whichsxploitable forests;orests, urban areas, and waste. Canal Zoneq. miles nfs inland water.

PEOPLE

it for military service. Ethnicegro,hite.ndian, andther.

r over, Romanemainder largely Protestant.

languages: Official language Spanish; relatively large West Indian minoritypeak English as native language; smaller minority Speaks Cuayml or other Indian dialect; most English or Indian speakers are bilingual inf populationears of age or over. School year: Secondary schools in session during March-December;

University in session during May-January, Labor force:ith onlyrganized. Time differential:our (CMTours).

GOVERNMENT Type of government; Unitary republic; constitutional democracy; National Assembly convenesctober and adjourns onanuary.

Branches of government;ice presidentsm.mber unicameral legislature electedears by direct popular vote; Supreme Courtudges appointed forerms bywith legislative approval, president appoints cabinet. President; Marco Aurebo Robles Mendez for48 During temporary or permanent absence of the president his functions are assumed by one of the t'vo vicein the order in which they were elected. Attitude incumbent regime toward US: Friendly, financiallywary of US sea-level canal plans and their ramification* for Panama.

Capital: Panama City.

Regionalrovincesndian reservation, the

Comarca de San Bias. Principal political parties and leaders: National Liberal Partyed by Marco Robles, David

Sarnudio, Alfredo Ramirez, and the Chiari brothers. Republican Partyed by Jose Ba/an. Marcel Peaso. and Max Del Valle.

National Patriotic Coalition Partyed by Augusto "Sammy" Boyd

Third Nationalist Partyed by Cllberto Arias Cuardla. Panamcnlsta Partyed by Arnulfo Arias Madrid. Except for the Panamenista Party, most important parties arc in the government coalition at present

Voting Strengths; In4 elections the coalition supporting Roblesf the votes. Arnulfo Arias; the remainder was dividedtherf whom had Communist support.

Other pohticalhe People's Partyillegal,embersmall groups of "hardline" pro-Castro and pro-Chinese Communist activists divided Into the Movement of RevolutionaryMUR) and the Marxist-Leninist Party of Panamaembership estimated at; leaders are Floyd Brlltou, Alvaro Mcnendez Franco, and Carlos Ariel Garciahe Christian Democratic Partymall but growing party which polledf the votes in the lost election, led by Dr. Antonio Con/ale/ Bevilla and Dr. Antonio Enriqitez Navarro.

Suffrage: Compulsory for both men and womenears of age or over.

Next national election:8 (presidential andualifiedf voting age population. Significant exclusions from voting: None.

Actual voters in election of;;.

;.f registered voters.

Extent of fraud: Evidence of significant manipulation in final

System of balloting: President and Vice Presidents by direct election; deputies arc electedomplicated system of proportional representation.

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Member of: UN. OAS; Panama is affiliatedubsidiary bodies of the Organization of Central American StatesCouncils of Tourism, Labor and Welfare, and Public Health; in addition, it has limited participation in the Central American Common Market (CACM).

ECONOMY Covemmcnr)illion CNP:st0% increase during

er capita. Inflation: The Balboa is pegged to tbe US$ and there is little inflation

rice index2griculture: Bananas, rice, corn, coffee,l imports are

fond.

Major industries: Food processing, petroleum refining, construction materials, handicrafts.

Critical shortages: Heavy capital equipment, transportationchemicals, manufactured items.

Exports:, petroleum;.

5; machinery, vehicles and transport.!iiuu; crude; food and;

Exportsloillion orf total exports

Imports fromillion orf total imports.

Electricwxcluding Canal Zone, annualillion kwhwh pet capita.

Trade: Major trading partner% of total export*

o( total imports) Other partners are Canal Zone. Venezuela,

European Common Market, and Japan. Aid: US economic essLvtnitceillion loans.illion

grants. international organizationsillion

xchangeS$1.

COMMUNICATIONS

outeiles" gage.

iles of plantation feederiles excluding Canal0 miles

miles concrete oriles crushed stone or gravel);

Canal Zoneiles, all paved.

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Inlandmile Panamailes of shallow rivers.

rincipalecondary (Balhoa/Panama

and Coco0 minor.

esselsrt, almost all

V-ft's'^W'^ .owned.

sable airfields,ith hard-surfaced runways (1

handles jetelecommunications: Republic of Panama: adequate tn urban areas; Canal Zone: adequate.

DEFENSE FORCES Personnel: Nationalecret police,. Loyalty to government: Majority are loyal, but feel underpaid.

National Guard commander is important figure in politics. Majorational guard public order companies

men each; ISO-man cavalry squadron.

oastalanding craftir facilities:irfields suitable for military useirfields have runwayseet orapable of supporting jet mediuman6 light bombers and jet fighters,ave only marginal capabilities for jet aircraft because of limited weight capacity. Supply: Dependent on foreign sources, mostly US. US Missions: US Army mission US Military aid:6 and6 million. Percentage ol national budget:6 national guard received% of the total% of the estimated gross national product;f this amount was for police and internal security activity since the guard is not equipped to defend Panama against outside attack

RELATIONS WITH THE COMMUNIST COUNTRIES

Diplomatic missions: Polish and Yugoslavian ambassadors in Mexico

are accredited lo Panama. Guiiml.tr misiions: Panama ma in tains limited diplomatic relations with Cxecnoslovakia, where the honorary Panamanian Consul in

rech citizen.

Permanent commercial missions;national cultural centers: None.

Exports and imports are insignificant

National Intelligence Survey (NIS) Material

The following sections of tho NIS are relevant; NIS AreaPanama)

GENERAL SURVEYnd the flowing specialized sections:

Sec 21 Military Geographic Regions

Sec 23 Weather and Climate

Sec 24 Topograph

Sec 23 Urban Areas

Sec 31 Railway

Sec 32 iUgbway

Sec 33 Inland Waterways

Sec 35 Ports and Naval Facilities

Sec 36 Merchant Marine

Sec 41 Population

Sec 43 Religion, Education, and Public Information

Sec 44 Manpower

Sec 45 Health and Sanitation

Sec 51 The Constitutional System

Sec 52 Structure of the Covemment

Sec 53 Political Dynamics

Sec 54 Public Order and Safety

Sec 55 National Policies

Sec 56 Intelligence and Security

Sec 57 Subversion

Sec 58 Propaganda

(Chap IX) Map and Chart AppraisalazetteerISCentral America} Sec 22 Coasts and Landing Beaches

Map

The best availablel icIctcikc map is: Texaco;:

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