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History, Panama in the 1990s

Guillermo Endara, Perez Balladares, Mireya Moscoso, Panama Canal Authority, proposed constitutional amendment

On the day of the invasion, U.S. forces swore a caretaker government into office. The new president was Guillermo Endara, the leading Arnulfista Party candidate in the election that had been annulled by Noriega. Behind the scenes, U.S. advisers wielded real power, arresting police officers and reestablishing order. A large U.S. aid program, amounting to nearly $1 billion, was assembled to help Panama recover from the invasion and years of economic sanctions. However, Endara never achieved much authority as president. The economy made a strong recovery, and the conversion of Panama’s military into a civilian police force restored public confidence and safety.

The 1994 presidential election brought a surprising victory to Ernesto Perez Balladares, the candidate of Noriega’s former party. Perez Balladares, a U.S.-trained banker, received a third of the popular vote. The new president embraced a program of economic reforms, including measures to reduce the size of government, sell public enterprises, create more jobs, and reduce some labor protections. He also sought to attract foreign investment, end protectionism so Panama could carry on more global trade, and renegotiate the large national debt.

Meanwhile, Panama created the Interoceanic Regional Authority to administer lands and buildings turned over by the United States. Designed to be nonpolitical and efficient, the agency is seen as an indicator of Panama’s ability to manage a major facility like the canal. In the mid-1990s, the Panama Canal Authority was formed to actually take over duties of managing the canal in 1999. Beginning in 1990, a Panamanian citizen served as chief administrator of the canal, and some 97 percent of the canal labor force was Panamanian. Both countries strove to achieve a smooth, trouble-free transition.

Perez Balladares pushed hard to attract foreign, especially Asian, investment to develop the lands and military bases being turned over to Panama. His greatest challenges were to maintain public order and confidence, create new jobs while privatizing the economy, reduce corruption in his government, and maintain friendly relations with the United States.

In August 1998 Panamanian voters rejected a proposed constitutional amendment to allow Perez Balladares to serve a second term in office. In May 1999 Mireya Moscoso de Gruber, widow of former president Arnulfo Arias, won the country's presidential election. On December 31, 1999, Panama completed the takeover of the canal, military bases, and all adjacent facilities, giving it control of all its territory for the first time in the nation’s history.

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