KELLOGG INSTITUTE
at the University of Notre Dame

November 14, 1996
"Towards 1999 : Highlights of an Historical Review
(US-Panama Relations) in the context of an Electoral and Democratic Evolution"
by
Eduardo Valdés E.

Introduction

Certainly it's no secret that the Republic of Panama has evolved largely as a result of its particular relation with the USA. Opinions, of course, vary as to degree of that influence, which admittedly is not the same throughout the country. It's more evident in the metropolitan area, surrounding the capital in the Pacific, partly because Panama's capital like any other in the third world, attracts those living in rural areas and has become the most populated area of the country ; and partly, because the American military presence, due to the Canal, is larger in the Pacific entrance of the waterway.
We will also find evidence of American culture in the particular communities in the rural areas where private US investment has developed important banana plantations. And, more recently, in the semi-urban locations where the oil refinery and pipeline, also representing private capital, have made their place of business.
In order to understand the meaning of the transfer of the Canal and the US withdrawal from our territory within our process of independence and electoral and democratic evolution, one must necessarily make a historical review of our relations. To that effect, I have divided approximately 150 years of US/Panama relations into six different eras, which will highlight some of the important events along the way. By no means, this is a complete and detailed study of our bilateral relations, which would have to be made by an expert in the field which I am not. But I can not begin to speak of our electoral process and transition to democracy after the US invasion in 1989, in which I have been personally involved, without sharing some highlights of our background.
My historical review is divided as follows :
1. The Pre-Republican or Colombian Era from 1846-1903.

2. The First Republican Era from 1903-1925.

3. The Second Republican Era from 1926-1941.

4. The Third Republican Era from 1941-1968.

5. The Military Era from 1968-1989.

6. The New Beginning from 1989-1999.

I. The Pre-Republican or Colombian Era (1846-1903).

Certainly the Mallarino-Bidlack Treaty signed on December 12, 1846 between Colombia and the US government is the starting point to our bilateral relations. This first agreement was called Treaty of Peace, Amity, Commerce and Navigation but it granted the US, concessions for inter-oceanic communication through the Isthmus of Panama, in exchange for which the US government was to guarantee Colombia, not only the neutrality of the Isthmus to allow the free transit from one ocean to the other, but its sovereignty and property rights, as well.

Based on this Treaty, we find that in 1850 the first trans-isthmian railroad was built by private US initiative at a cost of eight million dollars , providing the first modern inter-oceanic communication between the Atlantic and the Pacific.

One single historic event has to be mentioned to determine the degree of the US influence, not only in Panama but in Colombia, in the 19th century. I am referring to the first US military intervention due to the "water melon incident". It took place in 1856 , the year after the railroad was finished, when the marines landed in the city of Panama to occupy the Railroad Station due to an incident that had taken place on April 15 of that year. An American, presumably intoxicated, refused to pay ten cents for the purchase of a watermelon slice and the subsequent quarrel between buyer and seller degenerated in an attack to the Railroad Station. US casualties amounted to fifteen dead and six wounded versus two Panamanians dead and thirteen wounded. A diplomatic claim from the US followed and nine years later, in 1865, Colombia agreed to pay over 400 thousand dollars in compensation.

From then on, and until 1903, the 1846 Mallarino-Bidlack Treaty was invoked by the US to intervene in the Isthmus for the exclusive benefit of US interests with the consent of the Colombian government .

In 1899 the Isthmus of Panama got involved in an internal political struggle between liberals and conservatives that would last until 1902 when due to US Intervention, a peace Treaty was signed aboard the USS Wisconsin. It was called the "thousand day war" considered by many the prelude of our final independence initiative of 1903. The liberals were carrying the flag of independence against the conservatives who were backed by the government of Colombia.

II. The First Republican Era (1903-1925).

It is a known fact that we were able to become independent from Colombia on November 3rd, 1903, thanks to the military support of the US government who had a special interest in completing the construction of a canal through Panama. Said venture, initiated by a private French group led by Ferdinand de Lesseps -promoter of the Suez Canal- had failed to build a sea level canal, as it faced, not only technical difficulties but sanitation problems that caused over twenty thousands casualties, as well.

US support for our independence subsequently led to the Hay-Bunau-Varilla Treaty signed in Washington, D.C. on November 18, 1903 which legalized colonialism and intervention in the new republic. And to understand the mental attitude of the majority of our first politicians back in the old days, let me tell you that the first Constitution of Panama, approved in 1904 by an elected Constitutional Assembly, went to the extreme of including an article that gave the US Government the right to intervene in any point of the Republic of Panama to restore public peace and constitutional order if, by virtue of a public Treaty, the US had assumed, or would assume, the obligation to guarantee the independence and sovereignty of the Republic of Panama. This Treaty was, of course, the Hay-Bunau-Varilla.

The finances involved in the signing of this Treaty were as follows: the French group led by Bunau-Varilla received 40 million dollars for their investment and the government of Panama 10 million dollars. After nine years, term originally contemplated for the completion of the Canal, the US was to begin paying Panama an annuity of 250,000 dollars. The Canal was eventually finished in 1914 when the first ship sailed through its waters from one ocean to the other. However, due to the First World War its official completion date was set for six years later, in 1920 when, as required by the Panama Canal Act , President Woodrow Wilson declared it open for world commerce.

The first US intervention in Panamanian politics occurred in 1908, during our very first national election for the presidential seat after our independence. The event had generated such a confrontation between liberals and conservatives that the government decided to invite the US to intervene and jointly appoint electoral commissions throughout the country. The conservatives, by then already a minority, decided to withdraw from the election, in order to guarantee the subsistence of the republic, according to their historic argument.

In 1912, this time both the government and the opposition, due to the heat of the campaign, decided to request -again- US intervention to safeguard public order and supervise the elections. Notwithstanding, the official candidate accused the Americans of supporting the opposition and as a protest asked his followers to abstain from voting.

On February 13 and 14, 1915, in the city of Panama, during a carnival celebration, some one hundred US soldiers, generated a fight that forced the Panamanian police to intervene. Eighteen American soldiers were reported wounded. Almost two months later, on April 2, in the city of Colón, during Holy Week festivities, US soldiers ended up fighting with Panamanian civilians. Again, our small police force stationed in Colón had to intervene to restore order. This time, one American soldier was reported dead and three wounded. The US government claimed 20,000 dollars in compensation and requested the Panamanian government to disarm its police force at both terminal cities of the Canal : Panama and Colón. On January 12, 1916, a fire broke in an old wooden house in Panama and some members of the local police showed up with rifles to preserve order. As a result, on May 9, 1916 the US government issued a final ultimatum to the government of Panama to render all long range rifles. Henceforth, Panamanian police force would only be allowed to use pistols. Some rifles could be used for the presidential palace. Panama complied, but sent a diplomatic letter of protest, and President Porras declared one month of mourning.

In 1916, the opposition requested US intervention but it was denied. The official candidate was imposed among denunciations of all kinds of violations.
1918 is a special year. The President elected in 1916 dies shortly before the legislative elections and the vice-president, sympathetic to the opposition, decided to suspend the election, generating a reaction among the people who demanded that the Americans intervene, and they did. US troops occupied Panamanian territory and the government revoked the suspension of the elections which took place as planned, but in a very confusing atmosphere with claims of wrong doing from both sides. In addition to the military occupation, the Panamanian government requested the US the appointment of a formal electoral commission and the disputes were settled by giving the victory to the government's candidates.

In 1924 the official candidate was again imposed and the US declined to intervene when the opposition so requested.

Another intervention I will refer to, occurred on October 12, 1925, this time at the request of the President of Panama to face a public uprising in the capital city, over an increase in rents by the landlords, who in turn were reacting to an increase in taxes made by the government. Sixhundred US soldiers stationed in the Canal Zone moved in and stayed for about a week until peace was restored.

I close this First Republican Era in 1925 because it is a turning point in our bilateral relations. It is the end of a particular way in which US would intervene in our internal political life. After that, a period of revision of our bilateral relations begins.
The fact is that until Panama was able to have its own and sufficient police force to maintain order amidst political corruption and electoral fraud, Panamanian politicians did request US intervention to oversee our elections and it was usually granted when those in government agreed to it. And in most cases, the government candidates would win.

III. The Second Republican Era (1925-1941).

In this period we find two negotiations pertaining to the Hay-Bunau-Varilla Treaty of 1903. The first revision took place in 1926 but it was not ratified by Panama since it had a clause that allowed the US to appropriate any part of our territory in case of war.
In 1928 another presidential election was held and the political opposition requested the US to intervene in order to avoid the imposition of the official candidate but the government rejected it and so the US declined.

The second revision to the Treaty took place in 1936 but it was ratified by the US 3 years later and after an exchange of diplomatic notes as to the correct interpretation of the amendments made in said Treaty.

On October 7, 1941 the President Arnulfo Arias traveled to Cuba incognito for a personal and short trip - but without the authorization of the National Assembly as required by the Constitution- so, as soon as his political opponents found out, they were able to get the participation of the Supreme Court, and so appointed a new President. Two days prior to his trip to Havana, President Arias had refused to allow Panamanian ships carrying the flag of Panama to arm themselves against Germany and its allies as President Roosevelt had requested from Panama. It is said, therefore, that due to this fact, not only did the US Government tacitly endorse the coup against the President but that it promptly provided the opposition with the information of this secret presidential trip.

I close this second Era with the conspiracy against President Arias because it seems to me that it was the last action in Panamanian politics for many decades where the hand of the US government was so visible.

IV. The Third Republican Era (1941-1968).

Once Arnulfo Arias was out of the way, Panama signed an agreement on May 1942 with the US to allow the construction of up to 134 bases to be used for the duration of the war involving 15,000 acres of land.

Between 1952 and 1954, during the government of President Remón, the National Police was reorganized as the National Guard with military counseling and supplies coming from the US under a Latin American program conceived to help the governments of the region fight communism. Remón had set his mind on revising the 1903 Treaty and was able to rally over 100,000 supporters on August 1953 to back his demands to the US. Even his local political enemies joined the teams of experts that had gathered to pool intellectual resources for the negotiations. Finally, Remón visited President Eisenhower in Washington and obtained a promise to make a mutual, profound revision, of the Panama Canal Treaty. Eventually, the 1955 Remón-Eisenhower Treaty was signed and ratified.

1959 was another year when history records initiatives from Panamanian political leaders entering the Canal Zone to plant Panamanian flags as a symbol of our sovereignty over said portion of our territory. They were faced with repression from Canal Zone authorities, thus generating a new cycle of general disturbances against the Treaty . On January 1962, President Chiari was received by President Kennedy in Washington and they agreed to begin new negotiations to revise the Treaty in order to improve bilateral relations.

On January 9, 1964 another bloody confrontation took place between US soldiers and Panamanian civilians because a group of our students decided to raise the Panamanian flag in the Canal Zone. Twenty three dead and five hundred wounded Panamanians vis a vis three American dead, was the result of this confrontation.
This unfortunate incident seems to have set in the correct perspective, for the first time, the attitude and policy of the US government. An emergency meeting of the Organization of the American States (OAS) took place and the international community became aware of our struggle.

1968 was a turning point in the slow process of Panamanian democracy to reach a minimum of consensus among its politicians in order to provide significant solutions to the population. Political and Economic Power was concentrated basically in the same hands. A rigid society that allowed a limited upward mobility from its lower echelons had prevailed as the beneficiary.

Its traditional challenger, Dr. Arnulfo Arias, the most controversial politician since 1940 when he was first elected, was finally recognized as the winner of the general elections and sworn into office on October 1,1968. And this happened, because his historical political enemies, at that time in the government, had not being able to agree on the person that was to be the official candidate.

V. The Military Era (1968-1989).

Just eleven days after Arnulfo Arias was sworn into office as the constitutional and legitimate President, the first Panamanian military coup took place and Arias sought refuge in the Canal Zone. The Americans did not intervene and he went into exile in the US.

Without precedents of military rulers, Panamanians assumed it would be a temporary measure while new elections were called. The coup had been triggered as a self protection measure by senior officers of the National Guard against President Arias who had ordered a major reorganization of the institution disregarding a prior commitment to the contrary. Some believe that Dr. Arias's mistake was to press former Chief of the National Guard, General Bolivar Vallarino, to retire after he had played a key role in having Arias recognized as the winner by his traditional adversaries.

After a few months in total control and with the recognition of the new government by the US, the military decided to continue in power and attempt to put in practice their own ideas as to how a country should be run.

By this time the first struggle among the original leaders of the coup had come to a climax. The then Colonel Omar Torrijos Herrera, had taken over leadership from Colonel Boris Martinez. And as it turned out the October 11th coup became the most important single event in our political history. An authoritarian regime, established by the National Guard, would be in power for two decades to come.

Torrijos was lucky enough to benefit from two external factors : 1. The petrodollar revolution of the seventies that made possible the financing throughout the world of state run economies. This is how his government had access to huge loans to run the country and carry out public works. 2. Latin America was mostly in the hands of military governments or dictatorships. In North and Central America we had at the time : Mexico, Nicaragua, Honduras and Guatemala; and in South America : Argentina, Bolivia, Brazil, Paraguay and Peru. Ecuador joined the group in 1972 with the coup against Velasco Ibarra, Chile in 1973 with the coup against Allende and Uruguay also in 1973 when President Bordaberry dissolved the Congress. That left Colombia, Venezuela and Costa Rica as the only democratic countries holding free and fair elections in mainland Latin America.

The government of Panama had a "de facto" status from 1968 to 1972 when a Constitutional Assembly was elected in August, without the participation of political parties. They approved a new Constitution written by the intellectuals of the new regime who introduced significant changes in the distribution of political power among the three branches of government so as to provide the National Guard and in particular Torrijos himself, ultimate power to control the government apparatus. Democracy was "legally and democratically" redesigned for the benefit of an executive branch controlling the other two powers of government and behind it all was Torrijos, supreme leader of the revolutionary process and Commander in Chief of the National Guard.
Torrijos was careful to have civilians running the government with very few and occasional exceptions, when members of his Joint Chiefs of Staff would be appointed Cabinet Members. Effective and dangerous opposition, be it political leaders or independent citizens, where promptly sent into exile. The enjoyment of absolute control of the country with no free press and no political opposition while at the same time disposing of large amounts of resources to carry out public works with practically no red tape, made Torrijos a very popular leader . He implemented a political strategy that he called "domestic patrols" (patrullaje domestico) whereby he constantly visited different parts of the country, including distant rural areas with his helicopter, reaching places very seldom visited in the past by politicians, and providing, as he went by, immediate answers to small but important requests of the communities.
The Military logic seemed to have been that, as long as there was work available, both in the private sector and in the government which began to grow as the main employer in the country, the lack of political liberties and democratic values would not be a major concern to the people. Specially when the bonanza of public corruption became accessible to a larger and he began to woo to his side the most popular activists against the traditional political parties.

Torrijos presented himself as the leader of a revolutionary process that was dismantling the traditional Political and Economic Power that had ruled the country and he was doing it for the benefit of the lower and middle classes. And in fact, he took political power away from the historical minority and began to rule mostly with young and inexperienced professionals which, in my opinion, gave way in most of the cases, to the huge corruption that swept the country and that normally follows every dictatorship. And to the weakened traditional economic power, the government became a competitor in some of their traditional emporiums, such as sugar cane and cement. He also nationalized some American Companies doing business in Panama like the Power and Light Company that had the monopoly for electricity and telephone communication. He attempted to do something similar with the banana plantations but soon learned that the key to the business was marketing overseas, so he backed out of that one.

The conception of a more representative and larger National Assembly, integrated by one elected member from each of the 501 communities in which the country was administratively divided , gave the appearance that the people was in control in a more democratic way. But the fact was that the majority of this Assembly complied with the wishes of the National Guard, whom they saw as their creator and benefactor. According to the new Constitution, the President would no longer be elected by direct vote of the population but by the National Assembly. Thus, when the time to elect the President came every six years, they logically looked for instructions. As far as the democratic representation of this Assembly, giving each community one single vote, regardless of the enormous difference in population between them, it was nonexistent. There was no rule by the majority.

In March, 1973 the Security Council of the United Nations finally held a meeting in Panama regarding our claims and the US had to VETO the proposed resolution recognizing our legitimate demands. From then on, new negotiations began, not with the intention of making concessions to a small country but finally to actually solve the true causes of the conflict.

With that frame of mind the two countries decided on 1974 to sign the Kissinger-Tack Agreement where Panama was able to get the US government to recognize that the 1903 Treaty was a permanent cause of conflict between them and that in order to eliminate such conflicts, a list of eight principles were agreed upon. These principles served as the base for the Torrijos-Carter Treaty of 1977. (See Annex for list of principles).

As we look back now, we can see that the relation between the two nations has been, for our predecessors, a very difficult and frustrating task, to say the least. Generation after generation, Panamanians have given the best of their abilities to re-negotiate the Hay-Bunau-Varilla Treaty that allowed the US to complete the construction and provide maintenance and defense -in perpetuity- to a Canal through the Isthmus with so many rights and concessions that from the very beginning of our bilateral relations, we can say it had within itself a permanent cause of conflict and therefore, a negative and self destructive component.

But by the time the new treaties were signed, the financial burden of the Torrijos regime began to be felt in the national budget. The authoritarian system of government had "received" in 1968, after 65 years of independence, a country with a public debt of US$ 234 million and in only 9 years of the Torrijos regime, it had grown to US$ 1.7 billion dollars.

To guarantee the future of the Treaties, the US demanded a free debate in Panama for its discussion prior to the national plebiscite that the Panamanian Constitution required for its ratification. Logically, Torrijos' political opponents were against the Treaties since they had no part in the negotiations and they would not endorse his regime. In any case, the Treaties had severe critics as the debate took place prior to the national plebiscite held on October 23, 1977. This was the first democratic experience after the coup in and limited to a single issue.

As soon as the ratification process by the US was completed in April 1978 , Torrijos began gradually to open the valve for a democratic way of life in the country. This had been a public although non-written understanding between President Carter and Torrijos.

The first step was taken in October 1978 when the Constitution was amended to allow one third of the National Legislative Council to be elected by direct popular vote beginning on August 1980, and setting the date for the next general election as 1984, where the President and Vice-presidents would again be elected by direct popular vote.

On the same month of October 1978, new legislation was passed determining the rules under which the re-activation of political parties would take place and in 1979 the parties slowly began to register by seeking the required amount of signatures from the population. However, some parties, including the most important one, led by Arnulfo Arias, the President overthrown in 1968, refused to participate in the process.
In 1980 the partial election of one third of the National Legislative Council took place and the opposition parties were able to get 8 of 19 seats amidst controversy and division among opposition leaders that participation signified endorsing an authoritarian system they had been fighting to change. It was argued that participating and even wining all the seats in the election, would not change the system. So why endorse it ? Others argued that to change a system required opponents to penetrate it and to fight it from within.

Torrijos died in an airplane accident on July 1981 and a succession struggle began in the National Guard until General Paredes emerged as the man in control and together with President De la Espriella concurred in the need to sponsor deeper changes in the Constitution so as to evolve into a more democratic republic as demanded by the opposition. A constitutional reform was then agreed between the military, its civilian political allies and almost all of the political parties . This time, Arnulfo Arias endorsed the reform which was approved by a landslide in a referendum held on April 24, 1983.
Eventually, the 1984 elections became a reality but by that time General Paredes had decided to retire from the National Guard and run for President while Noriega assumed command of the military. Arias announced his nomination and became the most important opposition candidate. The National Guard looked for a candidate that had the endorsement of the State Department and finally found Nicolás Ardito Barletta, former Vice-president of the World Bank and a friend of Secretary Schultz.
In the election, Arias clearly won but Barletta was imposed with a narrow margin of less than two thousand votes. The traditional method of discarding the tally sheets in the places where the official candidate has lost, without ordering new elections, was used once again. Noriega's veto against Arnulfo Arias and the people of Panama prevailed with repression and coercion from the military.

A year later, Hugo Spadafora, an MD and well known revolutionary activist, with original ties to Torrijos, but opposed to Noriega, was found decapitated generating what I call a first national convulsion, in addition to the international scandal that followed. Days later, Barletta was forced to resign when he was about to appoint a special commission to investigate the crime. Vice-president Eric del Valle was sworn into office on September 27, 1985.

Almost two years later, on June 7, 1987, things began to crumble again for the military when a private agreement among the senior officers of the National Guard (by now renamed National Defense Forces) establishing an order of retirement was not honored. So, the second in command, Colonel Roberto Diaz Herrera, went public against Noriega accussing him, among other things, of the death of Dr. Hugo Spadafora. Panama entered into its second national convulsion which finally induced the alliance of all opposition groups, both political and non-political including the business community and the Catholic Church. The Civil Cruzade (Cruzada Civilista) was born to put in motion a series of strategies to press for the retirement of Noriega. Street protests came first, followed by strikes and then more street protests, all of which were met with extreme repression and violence by the National Defense Forces. Human rights were brutally violated.

On February 4, 1988 a Federal Grand Jury in Miami indicted Noriega and other Panamanians, charging them with racketeering and drug trafficking. This long awaited event was then used by President del Valle to fire him as Chief of the National Defense Forces, presumably with the understanding from the State Department that the US would back him up with the military forces stationed in the Canal Area when and if needed. A brief struggle followed among the Panamanian military but Noriega surfaced in command. American troops did not intervene and del Valle received political asylum at the US embassy. The US government continued to recognize him as the legitimate President while imposing economic sanctions against Panama . But, all efforts made to pursue a negotiation with Noriega failed.

The country entered into its deepest economic recession but the government was able to survive and even organized the general elections of May 1989 with practically the whole country against one man. The political speech of defending Panama against American Imperialism, did not reverberate among the population so the opposition candidate won by a landslide. Still refusing to accept defeat, Noriega forced an annulment of the elections. The Organization of American States (OAS) also intervened to no avail.

Five months later, on October, a new and bloody uprising took place within the military ranks, supposedly with an understanding of backing from US troops which did not materialize when Noriega was made prisoner, and so the coup failed. For the first time, rebels were shot to death.

Two months later, on December 20, 1989, a planned US invasion took place and opposition leaders who had won the May elections were sworn into office and assumed control of the government. The same Electoral Tribunal that had declared the annulment of the elections, revoked its prior decision and with the copies of the tally sheets that had been held in custody by the Catholic Church, it was able to declare Guillermo Endara as the legitimate President of the Republic of Panama.
The fighting that followed the invasion cost the lives not only of American soldiers but of an undetermined number of Panamanians, including innocent civilians. This will, for ever, be one of the more controversial issues in our history.

Twenty one years of authoritarian government finally came to an end with a tragic event that hurt every Panamanian deeply, regardless of their political inclinations.
The country had by 1989 a public debt of 4 billion dollars and a devastated economy not only because of US sanctions but due to the looting suffered by the merchants in the cities of Panama and Colon in the aftermath of the invasion. We still have no explanation why US forces allowed looting to take place with no contingency plan anticipated for such a probable scenario when you go into a country and destroy its army and police.

VI. The New Beginning (1989-1999).

This section pertains to the Panamanian Transition to Democracy or the Restoration of Civilian Rule and Democratic Institutions.

For many Panamanians, the Invasion and deliverance of Noriega meant that US dollars would be poured into the country similarly to a Marshall Plan. But nothing even close to it happened. The US government basically helped to face commitments with the IFIS. Our internal resources were then totally used within the country.

The main concern after the Invasion was restoring public order and fighting crime in the streets with practically no police left. So, the reorganization of a new one began with what could be saved from the old one, now under civilian rule and with a civilian as Chief of Police. Purge after purge followed while new recruits were called in until gradually the institution was able to stand on its own feet to get professional training and resources as a police force and not as an army, which had been the tradition. Eventually, it got back to the streets, but it was a defeated force with a low morale and it lacked the confidence to fight crime face to face. However, continued support and a good job was done in a short period of time and a new and authentic police came to take form and substance, with some deficiencies but improving along the way.
In another aspect, government finances were a total chaos and overcoming it was no easy task but it was done. After a year, a balanced budget was functioning with very strict controls.

Three months after the Invasion, the Legislative Branch was in operation lacking only nine of its members because there was no legitimate tally sheets from the elections to determine the real winner in those nine electoral circuits. The municipal elected authorities were more incomplete. From five hundred and five, 35% could not be sworn into office for the same reason.

All of the Magistrates of the Supreme Court of Justice had resigned right after the Invasion, so the Executive Branch made the new appointments as per the Constitution.

By August of 1990, the new government had been able to obtain the resignation of the Electoral Tribunal and new constitutional appointments where made, one from the Executive Branch, another from the Legislative Branch and the third one appointed by the Supreme Court. I have to recognize that the fact that all of the new Magistrates had been proposed by the political parties at that time in government and opposed to the military process, were reasons for concern to the new opposition and to independents which only time would dispel.

To face the immediate need to fill the nine seats in the Assembly and the 176 members of the municipal governments, new elections where ordered to be held on January 1991, that is, barely thirteen months after the Invasion.
At the same time, the private sector of Panama began to repatriate their funds from overseas and to rebuild the economy by reactivating their own businesses specially in the field of construction.

Newspapers that had been taken away from their legitimate owners where returned and a television network with close ties to the military was acquired by independent businessmen.

The first democratic test of the country was the 1991 elections where the candidates of the political parties with links to the military regime that had been overthrown in 1989, won most of the respective seats in an election that attracted only 40% of the voters. The new opposition could not believe that their triumphs where being recognized and this was the first fact towards cementing the credibility of the new Electoral Tribunal.

The second test, was the national referendum of November 1992 to vote Yes or No to a large package of constitutional reforms which included the proscription of an army in Panama. For the very first time, the results where known on the same night of the election and the negative vote won 2 to 1, which was considered a victory for the opposition and for the democratic process because the government had proposed the Referendum. However, again only 40% of the voters had participated.
There were six other factors that played a key role during the transition to our democracy:

1. One of the traditional ways to arrange elections used to be through the manipulation of the Voter´s Registry, so it became top priority for us in the Electoral Tribunal, to handle it with total transparency. A preliminary version was delivered personally by us to every municipal council in the country early in 1993 and every political party was provided with an on-line communication system to our computer giving them access to the Voter´s Registry and being able to audit it. There was no longer a mystery regarding this issue and a massive campaign was carried out to make every citizen aware of its importance and the need to have everyone verify their proper registration. Official visits where made to all new communities both in the urban and rural areas. This activity was complemented with an active campaign on the identity card required to vote.

2. Electoral reforms were also introduced in 1993 to improve the efficiency of the system. First, the so called "single ballot" or "boleta única de votación" was introduced in spite of opposition from some parties. We wanted to put an end to the individual ballot system which allowed manipulation of the voter and stealing of the ballots. Second, the group of Electoral Delegates (Delegados Electorales) was created, following the example of Costa Rica. These people perform as friendly mediators between political parties and between them and the authorities. Third, all decisions in the voting stations were to be made only by those appointed by the Electoral Tribunal ; henceforth, the political parties would not have voting power but only the right to voice their objections and demand that they be stated in the tally sheets. Fourth, important government employees aspiring to run for office would have to resign six months in advance and not three months as in 1989. Fifth, all city mayors would be elected by popular vote instead of being appointed by the President. Sixth, the control of the Police Force had to be transferred from the President of the Republic to the Electoral Tribunal, six days prior to the elections and until proclamation of the new President-Elect. And seventh, the administrative independence of the Electoral Tribunal was improved by eliminating, at least partially, the co-signature in all its bank accounts of a representative from the General Comptroller's Office.

3. The Catholic Church promoted a year in advance the signature of an Ethic Electoral Commitment, called the "Pacto de Santa María La Antigua" whereby all political parties would basically agree to carry out a decent campaign, to avoid any violence and cooperate in a peaceful transition of power to the legitimate winner. Any violation of the Pact would be subject to a moral sanction and made public by the Peace and Justice Commission of the Church created during the military years to handle denunciations of human rights violations.

4. When the Lady Mayor for the City of Panama was accused of using municipal resources for the benefit of a political party in violation of the Electoral Code and sufficient evidence was presented to the Electoral Attorney General or "Fiscal Electoral" in charge of investigating electoral criminal offenses, it was decided to separate her from her job and eventually call her to trial. In the history of Panama, the electoral jurisdiction had been applied only once or twice back in 1972 and not to any important political figure.

5. When one particular political party arrived a few minutes late to present his nominations for Legislators in the Province of Panama, it was rejected, even though they were an important ally of the government.

6. We mounted an operation and the logistics necessary to provide the population with non-official results beginning 4 hours after the closing of the voting stations as we had done for the previous referendum. No mystery would surround the results, as in past elections. And such non-official results, transmitted by phone, VHF or HF radio from all over the country and made public as they came to us, matched the official proclamation to the decimals.

All these factors contributed to assure the political parties that we were absolutely neutral and that victory would be awarded to the true winner, as it actually happened. For the first time in our political history, seventy two hours after the polls closed, the new President and two Vice-presidents Elect were officially proclaimed without a single claim from their opponents, who recognized their victory without delay.
After examining forty eight elections held between 1903 and 1994, in my opinion, only twenty three qualify as a free and fair expression of the wish of the people. That's 48%. In one of the annexes I am making available a table which summarizes these findings, thus far.

Notwithstanding the electoral success of 1994, I am aware that holding free and fair elections is not sufficient for a democracy. Actually it's the beginning of the real challenge and crusade behind it all. The new elected government has to comply with his electoral promises and provide satisfaction to the needs of the majority. And the fact that a government is legitimate does not mean that the people were right when they voted for him or that he was the best choice or that in fact, he is the one who is going to solve the main problems of the country. The people want and need leaders that, are not only committed to human rights in its fullest extent but who are able to put economic and material content into them, so the majority can begin to enjoy some of the benefits of that better quality of life that a minority has been enjoying for as long as they can remember. And politicians in general have a tradition of promising much more than they can achieve and certainly this lack of performance, with their wide spread legacy of corruption, has not contributed to improve their image and that of their political parties, which seem to be at their lowest level ever in Latin America.
According to a recent survey conducted at the request of the Electoral Tribunal and for the benefit of the political parties as part of a project conceived for their institutional strengthening, which we are carrying out with the financial support of the European Community, 88% of the Panamanian people perceive the political parties as entities whose interest is the access to power and not to watch over the interests of the people. As far as the most corrupt institutions, the survey revealed the National Assembly leading with 56%, the National Government with 54% and the political parties with 49%. However, 62% still believe that the political parties are the only mean available to the common citizen to access to power. And though 59% believe the democratic system to be the best, they are not satisfied with democracy in Panama. It is perceived as incipient and with many problems to solve. We are holding seminars with the political parties to face these realities and try to generate a consensus as to what are we all going to do to improve conditions and to strengthen our democratic process.

And as we move towards the 1999 elections we are also working in new legal reforms to continue to improve our electoral system on issues such as financing, electoral advertising, political polls, primaries and elimination of other deficiencies detected in out voting system. Hopefully, no later than 1997 the reforms will be approved and the rules be known to all parties with sufficient time in advance.
However, 1999 is certain to be more of an important year to the Republic of Panama than to any other country. Three important events are taking place. First, in May the country will hold general elections and a new President, a new National Assembly and new municipal governments will be sworn into office and will have the responsibility of leading our country into the new millennium. Second, on December 31st, the last day of this century, the Canal will be transferred to Panama ; and Third, a continued US military presence of ninety five years, will have come to an end. For the first time, the country will be one hundred per cent sovereign and will have full jurisdiction over all of its territory.

I have no doubt that we shall continue to manage the Canal as it has been done in the past and this is important to tell. We are not going to begin running the Canal all of a sudden. First, most of the non skilled labor has been Panamanian ever since it was finished in 1914. And certainly after the new Treaties of 1977, management positions have been accessed by Panamanians in all divisions, including the delicate job of Panama Canal Pilot. By now, most of the pilots are nationals and it is a fact that accidents involving pilots have being decreasing in recent years, instead of increasing as some had anticipated. The post of Deputy Administrator was occupied by a Panamanian in 1980 while the Administrator remained American ; but in 1990 the situation was reversed to give Panama the opportunity of gaining experience at the top management of the Canal. At the Board of Director's level, four of its nine members have been Panamanians since the implementation of the new treaties. And to guarantee that traditional bureaucratic procedures would not affect the procurement of goods and services necessary to run the waterway in an efficient fashion, a special chapter in the Constitution was approved creating the entity that will run the Canal free of such traditional constraints.

The question is if political parties will refrain from attempting to make political appointments in the new Canal Entity, in violation of the professional and merit considerations that have so far prevailed, and/or if the Entity will be overburdened with unnecessary appointments of new employees to satisfy political pressure from party followers. I feel confident that as we continue to enjoy democratic conditions, there will be enough freedom to denounce any attempts of any government from interfering with the efficient management and operation of the Canal which represents a commitment we have with the world.

The coincidence of an election year with the important events pertaining to the Canal, should not affect each other. The Canal has its own independent schedule to comply with, which is being carried out in a positive and coordinated way by both countries without any controversy whatsoever. Whoever wins the Panamanian election on May 1999, will have the privilege of receiving the Canal negotiated by previous administrations. The same applies to the US. The new President elected just recently in November, shall have the historic responsibility of transferring the Canal to Panama in 1999 in compliance with the Treaties.

The only existing collateral conversation is the one pertaining to the interest that both countries may have as to the continuation of some US military presence in Panama after the year 2000. This possibility was contemplated in Condition No. 2 of the Neutrality Treaty as required by the US Senate. The US government has recently appointed (October'96) John D. Negroponte to represent US interests in the process of determining jointly with the government of Panama if there is any such interest. Panama, so far, has not made any appointments for these talks and the only idea that is being publicly explored is that of establishing in Panama an international center to fight the war against drugs.

From the political stand point, one may speculate that the above could become an issue in the electoral campaign in 1999. On that basis, some candidates will be in favor and others against of some continued US presence in Panama but it will be the people who will decide at the polls the outcome of these initiatives.
Others are of the opinion that this issue will be resolved before the year 2,000 by means of a national referendum.

The Electoral Tribunal and the Police Force are, as of today, neutral. However, the shadow of the authoritarian regime that still surrounds the political party now in government, remains in the minds of politicians and the people, and it will only vanish, hopefully for good, after free and fair elections are once more held in 1999 as constitutionally ordered, and when the new elected government is sworn into office in a peaceful transition as it happened in 1994 without any claims of foul play. Then, I believe, our democratic transition will have cemented one of its most important elements, after a century of growing up as a nation, and coincidentally, as we begin a new century, for the first time in control of all of our territory.

What are the present indications that such a transition will be completed as expected ? Actually, it depends on who you ask. The main political party in the opposition, believes that the President wants to re-elect himself and is willing to attempt to change the Constitution to allow for such a possibility, of course using the full power and resources that a President has at his disposal. Former President Endara has expressed that the government wants to take control of the Electoral Tribunal to ease his way towards this end. I was just recently ratified by the Supreme Court for ten years but as to he other two Magistrates remains to be seen.

I am optimist and positive minded, and I want to believe that, whatever the ambitions may be, the rule of Law shall prevail and Panama will not go back, not even an inch, to that despicable past of selfishness that justified violence, fraud, impunity, foreign intervention and disregard of the true will of the people. Our country has paid too large a price to allow it.

If anything to the contrary arises, we shall be the first to denounce it to the public and to the world, and we will use all the power that the Law and the Constitution have given us to hold free and fair elections in the full sense of the word.
Thank you.