During Omar Torrijos’s control, the military regime transformed the political and economic structure of the country by initiating massive coverage of social security services and expanding public education. The constitution was changed in 1972. For the reform to the constitution, the military created a new organization, the Assembly of Corregimiento Representatives, which replaced the National Assembly. The new assembly, also known as the Poder Popular (“Power of the People”), was composed of 505 members selected by the military without the participation of political parties, which had been eliminated by the military. The new constitution proclaimed Omar Torrijos the “Maximum Leader of the Panamanian Revolution,” and conceded him unlimited power for six years, although, to keep a façade of constitutionality, Demetrio B. Lakas was appointed president for the same period (Pizzurno Gelós and Araúz, Estudios sobre el Panamá republicano 541).
Torrijos' death in 1981 altered the tone but not the direction of Panama's political evolution. Despite the 1983 constitutional amendments, which proscribed a political role for the military, the Panama Defense Forces (PDF), as they were then known, continued to dominate Panamanian political life. By this time, General Manuel Noriega was firmly in control of both the PDF and the civilian government.
In the 1984 elections, the candidates were Nicolás Ardito Barletta Vallarino, supported by the military in a union called UNADE; Dr. Arnulfo Arias Madrid, for the opposition union ADO; the ex-General Rubén Darío Paredes, who had been forced to an early retirement by Noriega, running for Partido Nacionalista Popular PNP (“Popular Nationalist Party”), and Carlos Iván Zúñiga, running for Partido Acción Popular (PAPO) meaning “Popular Action Party”). Nicolás Ardito Barleta was declared the winner of elections that had been clearly won by Arnulfo Arias Madrid. Ardito Barletta inherited a country in economic ruin and hugely indebted to the IMF and the World Bank. Amidst the economic crisis and Barletta’s efforts to calm the country’s creditors, street protests arose, and so did military repression.
Meanwhile, Noriega's regime had fostered the development of a well-hidden criminal economy that operated as a parallel source of income for the military and their allies, providing revenues from drugs and money laundering. Towards the end of the military dictatorship, a new wave of Chinese migrants arrived on the isthmus in the hope of migrating to the United States. The smuggling of Chinese became an enormous business, with revenues of up to 200 million dollars for Noriega’s regime .
The military dictatorship, at that time supported by the United States, perpetrated the assassination and torture of more than one hundred Panamanians and forced into exile at least another hundred dissidents. Noriega also began playing a double role in Central America under the supervision of the CIA. While the Contadora group conducted diplomatic efforts to achieve peace in the region, Noriega supplied the Nicaraguan Contras and other guerrillas in the region with weapons and ammunition (Pizzurno Gelós and Araúz, Estudios sobre el Panamá republicano 602).