Panama (păn'əmä') , Span. Panamá, officially Republic of Panama, republic (2005 est. pop. 3,039,000), 29,760 sq mi (77,081 sq km), occupying the Isthmus of Panama, which connects Central and South America. To the west and east of Panama, respectively, are Costa Rica and Colombia; the Panama Canal bisects the country. The capital and largest city is Panama City.

Land and People

In the west are rugged mountains (Volcán Barú is 11,401 ft/3,475 m high) of volcanic origin, which yield in the middle of the country to low hills; there is a low mountain range in the east. Lowlands line both the Caribbean and Pacific coasts, and there are numerous offshore islands. The climate is generally tropical with abundant rainfall. Colón, a major port, is the second largest city, and David is the third largest city. More than half the population is urban. The population is primarily mestizo, although the building of the canal brought large numbers of people from the West Indies and other parts of the world, many of whom stayed and intermarried with the indigenous population. Spanish is the official language, and many Panamanians also speak English. The population is almost entirely Roman Catholic. There are two universities in the country.

Economy

Panama's economy has become largely service-based, with banking, tourism, and commerce all playing important roles. Only about a quarter of the land is used for agriculture. On the upland savannas cattle are grazed and subsistence crops such as rice, sugarcane, cocoa, and coffee are grown. Bananas are grown on the Pacific coast. The country has various light industries. The Colón Free Zone, established in 1953, is a center for foreign investment in manufacturing.

Bananas are the leading export, followed by shrimp and fish products, sugar, clothing, and coffee. Manufactured goods, raw materials, and foodstuffs are imported. Much of the trade is with the United States. In recent years the country has become a nexus for the shipment of illegal drugs from Colombia to the United States, as well as a center for drug-related financial transactions. During the 1990s Panama continued to struggle to stabilize and develop its economy.

Government

Panama is a constitutional republic. Executive power is held by the president, who is popularly elected for a five-year term and cannot serve two consecutive terms. The unicameral Legislative Assembly has 72 members who are also elected for five years. Administratively the country is divided into nine provinces, plus three autonomous territories for indigenous people.

History

Early History and Spanish Control

Panama was densely inhabited by different indigenous peoples before the arrival of the Spanish. The first European sighting of Panama was by the Spaniard Rodrigo de Bastidas in 1501, and Columbus dropped anchor off the present-day Portobelo in 1502. Martín Fernández de Enciso and Diego de Niuesa failed in their efforts at colonization in Darién. Vasco Núñez de Balboa established the first successful colony in 1510 and became governor of the region. The indigenous population was soon devastated by the Spanish and by the diseases they carried from Europe.

In 1513, Balboa made his momentous voyage across the isthmus to the Pacific, thus highlighting the dominant factor in the nation's history—the short distance from sea to sea. Under the governorship of Pedro Arias de Ávila, Panama City was founded (1519). Soon the isthmus became the route by which the treasures of the Inca empire were transferred to Spain, attracting the unwelcome attention of English buccaneers—such as Sir Francis Drake, William Parker, Sir Henry Morgan, and Edward Vernon—who swooped down on the gold-bearing galleons and the treasures of Portobelo. Panama was subordinated to the viceroyalty of Peru and remained in this status until 1717, when it was transferred to New Granada.

Attempts at Scottish settlement in the Darién Scheme of the 17th cent. failed wretchedly. With the decline of the Spanish Empire, Panama lost much of its importance in the carrying trade. Panama became a part of independent Colombia in 1821. Its significance as a crossroad was enhanced again when U.S. settlers bound for Oregon and the goldfields of California passed through Panama. W. H. Aspinall built (1848–55) the Panama RR, and the question of a canal across the isthmus became paramount. The project ultimately led to a revolution against Colombian sovereignty and the establishment of Panama as a separate republic (see Panama Canal).