Panama's government: a constitution written around a canal

Why Panama's constitution gives the canal its own title

Title XIV of the Political Constitution of the Republic of Panama is headed simply "The Panama Canal", and its nine articles read like the charter of a second state inside the first. Article 315 declares the canal an inalienable patrimony of the Panamanian nation and binds it to remain open to the peaceful and uninterrupted transit of vessels from all nations. Article 316 creates the Panama Canal Authority as an autonomous legal entity under public law, with the exclusive administration, operation, conservation, maintenance and modernisation of the waterway, its own patrimony and the right to administer it. The same article hands the Authority the water of the canal watershed, the lakes and the streams that feed them, and requires its prior approval for any construction on the banks.

The Authority's money is kept apart from the state's. Article 320 says its annual budget "shall not be part of the General State's Budget". The board approves it, the Cabinet Council forwards it and the National Assembly approves or rejects it, and the Comptroller General may audit it only after the money has been spent. What reaches the National Treasury is the surplus left once operation, maintenance, modernisation and reserves have been paid for, together with a fee per net ton of shipping that Article 321 forbids from falling below what the republic received on 31 December 1999. The Authority pays no national or municipal tax beyond social security and public service charges, and Article 322 adds a sentence few constitutions contain about any institution: the canal's operation "shall not be interrupted for any reason".

The sums are large enough to explain the caution. The Authority reported total revenue of about 5.7 billion balboas for fiscal year 2025, against 4.986 billion in fiscal year 2024, and a net profit of 4.134 billion, from 13,404 transits. The balboa is fixed at par with the United States dollar, so the figures read the same in either currency.

The governing board has eleven directors. One is appointed by the president, chairs the board and holds the rank of Minister for Canal Affairs. One is appointed freely by the National Assembly. The other nine are appointed by the president with the consent of the Cabinet Council and ratified by an absolute majority of the Assembly, and they are renewed three at a time every three years for terms of nine years. A president elected for five years therefore inherits most of the board and leaves most of it in place. The board appoints and removes the canal's administrator and sets its tolls, subject to final approval by the Cabinet Council, and it may borrow only with the Cabinet's prior consent.

Article 325 is the provision with no counterpart elsewhere in the text. Any treaty about the canal, its adjacent area or its protection, and any proposal to build "a sea-level canal or a third set of locks", must be approved by the legislature and then put to a national referendum held no earlier than three months later. The rule applies whether the plan comes from the executive or from the Canal Authority itself, and any project for a new canal goes to the voters as well. A specific piece of engineering is named in the constitution, and its construction is reserved to the electorate.

How a treaty signed without Panamanians made the state

The reason lies in the founding. In 1903 the Senate of Colombia rejected the Hay-Herran Treaty, which would have leased the United States a canal strip across what was then a Colombian department. The United States backed the secessionist movement instead. Panama declared its separation on 3 November 1903, US warships having blocked the sea lanes against Colombian troop movements the day before, and Washington recognised the new state on 13 November. Panamanians mark 3 November as Separation Day and keep 28 November 1821 as the date of independence from Spain.

On 18 November 1903 the Hay-Bunau-Varilla Treaty was signed in Washington by the US Secretary of State, John Hay, and Philippe Bunau-Varilla, a French engineer, lobbyist and shareholder in the French canal company, who had been appointed Panama's representative. It was signed the night before the Panamanian delegation arrived. The new government had instructed him to make no canal treaty without consulting it, and he ignored the instruction. The treaty granted the United States rights "as if it were sovereign" in a zone roughly 16 kilometres wide and 80 kilometres long, where it would build, administer, fortify and defend a canal "in perpetuity". The United States paid the new republic US$10 million and US$250,000 a year. Fearing the alternative, the Panamanian government ratified it.

For the next sixty years the treaty was the central question of Panamanian politics. On 9 January 1964 students entered the zone to raise the Panamanian flag beside the American one under a 1963 agreement; the flag was torn in a scuffle, rioting followed, and more than 20 Panamanians were killed and about 500 injured. January 9 is now a national holiday, Martyrs' Day. Three protocols negotiated in 1967 would have abrogated the 1903 treaty and provided for joint operation, and they were never ratified.

The treaties that ended the arrangement were signed in Washington on 7 September 1977 by President Jimmy Carter and General Omar Torrijos, commander of the National Guard. The Panama Canal Treaty abolished the Canal Zone on 1 October 1979 and transferred the canal to full Panamanian control at noon on 31 December 1999. The Neutrality Treaty guaranteed an open canal for the ships of all nations in peace and war and left the United States a permanent right to defend it against any threat to that neutrality. The US Senate consented by 68 votes to 32 on 16 March and again on 18 April 1978, and attached reservations extending US rights to intervene.

How the National Guard governed Panama for two decades

From 1903 to 1968 Panama was a constitutional republic dominated by a commercial oligarchy, and from the 1950s its police force grew into a rival power. Arnulfo Arias Madrid took office as president on 1 October 1968 and began restructuring the National Guard. On 11 October 1968 the Guard removed him. Lieutenant Colonel Omar Torrijos emerged as the dominant figure, and the military government named itself the Revolutionary Government.

The constitution still in force is that government's work. To write it the military created an Assembly of Corregimiento Representatives of 505 members, chosen with no participation from political parties, which the regime had eliminated. The text it adopted entered into force on 11 October 1972, the fourth anniversary of the coup, proclaimed Torrijos Maximum Leader of the Panamanian Revolution and gave him unlimited power for six years, while Demetrio B. Lakas held the presidency. BTI's 2026 country report traces the five-year electoral cycle and the shape of the party system to that document, which was amended in 1978, 1983, 1994 and 2004 and never replaced.

The treaty campaign ran through the same years. Before the referendum on the 1977 treaties the government lifted restrictions on the press and on political parties for several weeks, partly in answer to claims in the United States that Panama could not ratify the treaties democratically. On 23 October 1977, 96% of eligible voters went to the polls and 67.4% approved. The neutrality treaty drew most of the opposition, particularly on the political left.

Torrijos died in a plane crash on 31 July 1981. Amendments in 1983 appeared to bar the military from a political role, and the Panama Defense Forces under General Manuel Noriega went on dominating civilian government. In the election of May 1989 the opposition's own count of precinct results showed Guillermo Endara defeating the pro-Noriega candidate, Carlos Duque, by nearly three to one. Noriega annulled the result. The United States invaded on 20 December 1989, Endara was sworn in at Fort Clayton, a US base, within hours, and on 27 December the Electoral Tribunal reinstated the May results and confirmed his victory. The Pentagon put the Panamanian dead at 516, including 202 civilians, while the United Nations estimated 500 civilian deaths. The UN General Assembly called the intervention a "flagrant violation of international law".

How Panama replaced its army with a police force

Article 310 of the constitution opens with one sentence: "The Republic of Panama shall not have an Army." The Endara government abolished the Panama Defense Forces, created the Public Force as a civilian police in 1990, and amended the constitution to prohibit a regular military; the amendment was ratified in October 1994. BTI describes that change as the disappearance of the most important potential veto power in Panamanian politics.

The article that replaced the army is written as a list of restraints. The law organises police services for public order, and special police services for the frontiers may be organised only temporarily, by law, in the face of external aggression. Every service is subordinate to civil power, with the president as its chief. Article 311 makes the police non-deliberative: their members may make no political statements, individually or collectively, and may take no part in party politics beyond casting a vote, on pain of immediate removal. Article 312 reserves arms and implements of war to the government.

In practice the security apparatus is substantial. In 2023 the Public Forces included some 20,000 police officers, about 3,600 uniformed personnel in the air and naval service and about 4,500 in SENAFRONT, the border service, which is divided into six brigades. In 2024 the air and naval service operated about 19 small vessels and 24 aircraft, with no large warships. All of it answers to the Ministry of Public Security. BTI records that the security services have grown stronger since 2004 with the support of both the Panamanian and the US governments, and that they act as informal veto players in matters concerning them.

How Panamanians elect a president and an assembly

The president and a single vice president are elected together on one ballot by direct popular vote for five years. Article 178 bars anyone who has held either office from being elected to it again in the two presidential terms immediately following, so a former president waits ten years. A referendum in 1998 that would have allowed an immediate second term was defeated. The contest is decided by plurality, which in May 2019 gave the presidency to a candidate with about 33% of the vote against about 31% for the runner-up.

The National Assembly has one chamber of 71 deputies, elected for five years on the same day as the president. Article 147 divides the country into single-member and multi-member constituencies drawn in proportion to the electoral register, and each deputy is elected with an alternate who sits in their absence. The constituency law is drafted by the Electoral Tribunal after consulting the parties. Two provisions give the electorate and the parties unusual reach over sitting members. A party may terminate the mandate of a deputy it nominated for grave violations of its statutes or platform, subject to appeal to the Electoral Tribunal, and may remove one who has left the party by summary procedure. Voters in a constituency may petition the Tribunal to terminate the mandate of an independent deputy they elected.

Independent candidacies have been possible since the elections of 2014, and they changed the chamber in 2024. On 5 May 2024 Panamanians elected a president, 71 deputies, 20 deputies to the Central American Parliament, 81 district mayors, 702 township representatives and 11 council representatives. The share of the vote won by the traditional parties fell from 85% in 2019 to 17% in 2024, two new parties won almost 50% between them, and the Democratic Revolutionary Party lost nearly two-thirds of its seats. The president's coalition won 17 of the 71 seats, no party held a majority, and the unaffiliated deputies sat in opposition. BTI calculated the effective number of parties at 5.5 after that vote. Women won 14 of the 71 seats, against 22.5% of seats in 2019.

Who supervises Panamanian elections

The Electoral Tribunal is the institution the 1989 crisis turned on, and the constitution makes it the sole authority to interpret and apply electoral law. Its three justices serve ten-year terms that begin at different intervals, one designated by each branch from candidates who are not its own members, and its decisions on electoral matters may be challenged only before the Tribunal itself and are then final. It also keeps the civil register of births, deaths and naturalisations and issues identity cards, so the same body that counts the vote holds the record of who the voters are. An Electoral Prosecutor with a budget of its own is attached to it.

Voting is open to every citizen from 18 and is compulsory in law, with no penalty for abstaining. The Electoral Tribunal reported in September 2024 that 53% of citizens of voting age were registered with a political party and that 77.6% of registered voters had cast a ballot in May. OAS observers described both the 2019 and the 2024 elections as orderly or generally free and fair.

The Tribunal's relationship with the Assembly is the recurring friction. In October 2021 legislators passed electoral reforms, some without consulting the Tribunal, that shortened the statute of limitations for electoral crimes and removed gender parity requirements in party primaries; the Tribunal's own magistrates were among those who challenged them before the Supreme Court. The electoral code was amended again in February and October 2023, the second time to change how Assembly seats are distributed, a reform BTI says favours the larger parties and the Tribunal opposed. In 2024 the Tribunal allowed a substitute to replace the disqualified former president Ricardo Martinelli as a presidential candidate, and the Supreme Court confirmed that candidacy on 3 May, two days before polling.

Why Panama's Supreme Court keeps ruling on concessions

The Supreme Court of Justice is appointed by the Cabinet Council with the approval of the Assembly, for ten-year terms. BTI notes that the executive appointed six of the nine justices during the 2019 to 2024 term, and Freedom House scored judicial independence at 2 of 4 in its report covering 2023, describing a system marked by corruption and inefficiency. The court has nevertheless become the place where the largest contracts the state signs are decided.

In October 2023 protests began against a 20-year copper mining concession won by First Quantum Minerals, on the grounds that the agreement had been drafted in haste and that the mine would damage the environment. Demonstrators blocked roads for weeks, the Ministry of Public Security reported 1,061 arrests over three weeks, and two protesters were shot dead by a man trying to clear a roadblock in early November. Late in November 2023 the Supreme Court ruled the concession unconstitutional. In early 2026 the high court cancelled the concessions held by CK Hutchison Holdings, the Hong Kong company operating the ports of Balboa and Cristobal at either end of the canal, as unconstitutional, and on 23 February 2026 the Panama Maritime Authority took over their operation.

Corruption cases run through the same courts. At least US$59 million was paid in bribes in Panama by the Brazilian builder Odebrecht during the presidency of 2009 to 2014. Ricardo Martinelli, president for that term, was convicted of money laundering in July 2023 and sentenced to ten and a half years; he later sought asylum in the Nicaraguan embassy. The Integrity and Transparency Tribunal, which prosecutes officials accused of misconduct, began operating in April 2023.

Where Panama stands between Washington and Beijing

Panama is a founding member of the United Nations and of the Organization of American States, and belongs to the Group of 77, the Non-Aligned Movement and the Central American Integration System. Its foreign minister was among those who launched the Contadora initiative for a negotiated peace in Central America during the Noriega years. BTI describes its interests as divided between its Central American neighbours and a special relationship with the United States, and names the canal as the red line of its foreign policy: the government rules out the presence of any foreign force there.

That position has been tested twice in recent years. Panama established diplomatic relations with China in 2017, and the United States has since pressed it to cool them. In December 2024 the US president-elect, Donald Trump, called the canal's tolls exorbitant, said the waterway was falling into the wrong hands and raised the prospect of the United States taking it back. The Panamanian government rejected each point and answered in the language of Article 315, calling the canal part of the country's "inalienable patrimony". The ports at either end, the ones the Supreme Court later took back from CK Hutchison, had never controlled access to the canal; the locks and marine traffic control are run by the Canal Authority, and the pilots who guide ships through are Panamanian.

The neighbourhood brings its own business. The number of migrants crossing the Darien Gap from Colombia reached 520,000 in 2023 and about 300,000 in 2024, and Panama, Colombia and the United States launched a joint campaign against smuggling on that route in April 2023. Freedom House scored Panama 35 of 40 for political rights and 48 of 60 for civil liberties in its 2024 report, a total of 83 in the band it labels free. In the 2024 Latinobarometro survey 54% of Panamanians said they supported democracy and 35% said they were satisfied with how it worked.