General Manuel Noriega and the American invasion

When Guillermo Endara won the Presidential elections held in May 1989, the Noriega regime annulled the election, citing massive US interference. Foreign election observers, including the Catholic Church and 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. The US began sending thousands of troops to bases in the canal zone. Panamanian authorities alleged that US 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 troop withdrawal began on December 27. The US was obligated to hand control of the Panama Canal over to Panama on January 1 due to a treaty signed decades before. Endara was sworn in as President at a US 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 7000. There are also unproven claims that US troops buried many corpses in mass graves (which have never been found) or simply threw them into the sea. For different perspectives, see references below. 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 a billion dollars in aid to Panama. Critics argue that about half the aid was a gift from the American taxpayer to American businesses, as $400 million consisted of incentives for US 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 US investors.[2]

The entire Panama Canal, the area supporting the Canal, and remaining US military bases were turned over to Panama on December 31, 1999.

Politics and institutions after Noriega

On the morning of December 20, 1989, a few hours after the beginning of the invasion, the presumptive winner of the May 1989 election, Guillermo Endara, was sworn in as president of Panama at a U. S. military installation in the Canal Zone. Subsequently, on December 27, 1989, Panama's Electoral Tribunal invalidated the Noriega regime's annulment of the May 1989 election and confirmed the victory of opposition candidates under the leadership of President Guillermo Endara and Vice Presidents Guillermo Ford and Ricardo Arias Calderón.

President Endara took office as the head of a four-party minority government, pledging to foster Panama's economic recovery, transform the Panamanian military into a police force under civilian control, and strengthen democratic institutions. During its 5-year term, the Endara government struggled to meet the public's high expectations. Its new police force proved to be a major improvement in outlook and behavior over its thuggish predecessor but was not fully able to deter crime. In 1992 he would have received 2.4 percent of the vote if there had been an election.[citation needed] Ernesto Pérez Balladares was sworn in as President on September 1, 1994, after an internationally monitored election campaign.

Pérez Balladares ran as the candidate for a three-party coalition dominated by the Democratic Revolutionary Party (PRD), the erstwhile political arm of the military dictatorship during the Torrijos and Norieiga years. A long-time member of the PRD, Pérez Balladares worked skillfully during the campaign to rehabilitate the PRD's image, emphasizing the party's populist Torrijos roots rather than its association with Noriega. He won the election with only 33% of the vote when the major non-PRD forces, unable to agree on a joint candidate, splintered into competing factions. His administration carried out economic reforms and often worked closely with the U.S. on implementation of the Canal treaties.

On May 2, 1999, Mireya Moscoso, the widow of former President Arnulfo Arias Madrid, defeated PRD candidate Martín Torrijos, son of the late dictator. The elections were considered free and fair. Moscoso took office on September 1, 1999.

During her administration, Moscoso attempted to strengthen social programs, especially for child and youth development, protection, and general welfare. Education programs have also been highlighted. More recently, Moscoso focused on bilateral and multilateral free trade initiatives with the hemisphere. Moscoso's administration successfully handled the Panama Canal transfer and has been effective in the administration of the Canal.

Panama's counternarcotics cooperation has historically been excellent (in fact, officials of the DEA praised the role played by Manuel Noriega prior to his falling-out with the U.S.) The Panamanian Government has expanded money-laundering legislation and concluded with the U.S. a Counternarcotics Maritime Agreement and a Stolen Vehicles Agreement. In the economic investment arena, the Panamanian Government has been very successful in the enforcement of intellectual property rights and has concluded with the U.S. a very important Bilateral Investment Treaty Amendment and an agreement with the Overseas Private Investment Corporation (OPIC). The Moscoso administration was very supportive of the United States in combating international terrorism.

In 2004, Martín Torrijos again ran for president but this time won handily.