This report discusses the current political and economic conditions in the country of Panama, which has made notable political and economic progress since the 1989 U.S. military intervention that ousted the regime of General Manuel Noriega from power. The United States has close relations with Panama, stemming in large part from the extensive linkages developed when the canal was under U.S. control. This report describes the U.S.-Panama relationship at length, including trade relations.

December 20, 1989, U.S. military intervention in Panama, known as Operation Just Cause, heralded a new period in U.S.-Panamanian relations. In the aftermath of the intervention, U.S. policymakers immediately faced a new range of challenges including assistance for economic recovery, support for the development of a civilian police force, cooperation with the new government on counter-narcotics measures, and support for fragile democratic institutions.