Panama is emerging as the Singapore of Central America with its annual growth rate exceeding 10 percent and its canal expanding to handle the growing demands of East-West trade, according to the U.S. ambassador posted there.

“It is becoming the Singapore of the region because of its logistical importance and geographic location,” William Eaton, the U.S. ambassador to Panama since 2005, told GlobalAtlanta during an interview at his residence in Panama City on May 14.

Although a small country with a population of less than 5 million, Singapore has become one of the world’s wealthiest countries as a financial and trading hub for Southeast Asia.
Panama, a nation of 3.2 million people, is becoming a logistics and transshipment hub for Latin America.

GlobalAtlanta Publisher Phil Bolton and reporter Trevor Williams traveled to Panama May 12-16 to report on Panama’s economic growth and the impact that the canal’s expansion would have on Georgia ports.
Mr. Eaton said that there is no comparison today with the Panama of 1989, when U.S. troops captured and overthrew dictator Manuel Noriega.

The country has made healthy gains by almost all economic and political measures.

But Panama remains at “a tipping point” between a secure future with healthy civil institutions and the continuing challenge of corruption and drug trafficking.

“Panama is the world’s greatest shortcut, and it’s not just for the good things; it’s for the bad things too,” he said.

Mr. Eaton said next year’s elections will be the fifth peaceful transfer of power since the U.S. invasion. He called that a “huge accomplishment,” especially in view of the government’s fiscal responsibility.
Both the U.S. and Panama have benefited from Panama’s stability, he added. The U.S. enjoys a high approval rating among Panamanians today partly due to former President Carter’s decision to grant Panama control over the management of the canal.

Recent polls show that 80 percent of Panamanians approve of the U.S. That percentage, Mr. Eaton jested, may even exceed that of American respondents living in typical U.S. cities such as Peoria, Ill., given current attitudes revealed in poll data at home.
The main issue of contention between the U.S. and Panama has traditionally been control of the canal. The U.S. had enjoyed the right to manage and operate it from completion in 1914 until its transfer back to Panama in 1999.

For all those years, the U.S. controlled five miles of land on either side of the canal in exchange for annual payments, creating an insulated American zone that some Panamanians resented.

The treaties Mr. Carter signed on Sept. 7, 1977, relinquished control of the canal at the end of 1999 and guaranteed its neutrality.

At the time, the treaties became a political football, drawing harsh criticism from some conservative Republicans such as Jesse Helms, the former senator from North Carolina and member of the Foreign Relations Committee.

While running for president in the 1976 North Carolina primary, Ronald Reagan reportedly said of the canal, “We paid for it. We built it, and we intend to keep it.” The canal issue brought widespread attention to Mr. Reagan, who was elected president four years later.

Mr. Eaton, a career diplomat, said that the Panamanians have been “enormously grateful” for the manner in which Mr. Carter “graciously” arranged for the canal to be transferred.

Without the transfer, U.S.-Panama relations would never have become so positive, since Panamanians view the canal not only as an economic engine but also as part of their national identity, he said.

The canal currently is “superbly run,” the ambassador said, better than when it was managed like a utility by U.S. authorities. Now, rules and regulations are in place allowing U.S. companies to compete for the many contracts associated with its expansion.

Panamanian voters approved by a margin of greater than 3 to 1 in 2006 a plan to expand and modernize the canal by its centennial in 2014.

The proposal calls for a $5.25 billion investment in new three-step locks at both ends of the existing canal to accommodate the increasingly larger vessels used to transport goods.

Ports on the U.S. eastern seaboard, like the Port of Savannah, already are seeing an increase in trade diverted from U.S. ports on the West Coast, Mr. Eaton said.

Mr. Eaton has met with a delegation from Gulfport, Miss., to discuss that city’s efforts to expand its facilities to accept fresh fruit and flowers for distribution into the U.S. heartland.

Meanwhile, U.S. companies such as Dell Inc. and Caterpillar Inc. are investing in Panama. American tourists also are visiting the country in large numbers, and many are retiring there because of the country’s affordable and laid-back lifestyle.

Investment in real estate projects is also growing. Some 11,000 new housing units are planned for completion before 2012, according to the American Chamber of Commerce & Industry of Panama.

Among the country’s continuing problems, however, are a suffering educational system, a corrupt judicial system and the continuing problem of drug trafficking, Mr. Eaton said.

As managing editor of Global Atlanta, Trevor has spent 15+ years reporting on Atlanta’s ties with the world. An avid traveler, he has undertaken trips to 30+ countries to uncover stories on the perils...