112-43 ). Since that time, the country has had five successive civilian governments, with the current government of President Ricardo Martinelli of the center-right Democratic Change (CD) party elected in May 2009 to a five-year term. Inaugurated on July 1, 2009, Martinelli is a businessman and former government minister. Panama's Cabinet approved the expansion plan in June, and the National Assembly approved it in July 2006. Martinelli's Alliance for Change also won a majority of seats in the unicameral National Assembly. Challenges for the Martinelli Government

The strength of President Martinelli's CD grew significantly after the 2009 election because of defections from other parties, but the CD's ruling alliance with the PP fell apart at the end of August 2011. Varela retains his position as vice president, but plays the role of an opposition leader. Tensions within the coalition between the CD and the PP had been growing throughout 2011, largely related to which party would head the coalition's ticket for the 2014 presidential election. President Martinelli's once strong approval rating diminished significantly in the aftermath of his break with the Panameñista Party in 2011, but has recovered recently. Nevertheless, at various junctures, President Martinelli has been criticized by civil society groups and political opponents for taking a heavy-handed approach toward governing and for not being more consultative, and this has affected his popularity. The president has backed away from other policy initiatives after strong public opposition. Since then, the economy has rebounded, with a growth rate of 7.6% in 2010, 10.6% in 2011, and a forecast of 9.5% growth in 2012, fueled by both the Canal expansion project and the construction of a metro system in Panama City. 2014 Presidential Election

While Panama's next presidential election is not scheduled until May 2014, the country will be gearing up for the race in early 2013. Martinelli is not eligible to run since Panama's Constitution only allows for a president to return to power after two terms (10 years). U.S.-Panama Relations

Since the 1989 U.S. military intervention that ousted the regime of General Manuel Antonio Noriega from power (see " Background on the 1989 U.S. Military Intervention "), the United States has had close relations with Panama, stemming in large part from the extensive history of linkages developed when the Panama Canal was under U.S. control and Panama hosted major U.S. military installations. The current U.S. relationship with Panama is characterized by extensive cooperation on counternarcotics efforts; support to promote Panama's economic, political, and social development; and a bilateral free trade agreement (FTA) that was approved by Congress in October 2011 and entered into force on October 31, 2012. U.S. bilateral assistance (not including Peace Corps) amounted to $3 million in FY2011 and an estimated $2.8 million in FY2012. Second, Panama has been receiving significant amounts of assistance since FY2008 initially under the Mexico-focused Mérida Initiative and, beginning in FY2010, under the Central America Regional Security Initiative (CARSI) that assists countries in their efforts to combat drug trafficking and organized crime. A number of U.S. agencies provide support to Panama. After more than four years, the U.S. Congress approved implementing legislation for the FTA on October 12, 2011 ( P.L. After the FTA was approved by both countries, work began on the implementation of the agreement over the next year. According to the Office of the United States Trade Representative (USTR), both countries completed a thorough review of their respective laws and regulations related to the implementation of the agreement. For additional information, see the USTR's website on the U.S.-Panama FTA, available at http://www.ustr.gov/uspanamatpa ; also see CRS Report RL32540, The U.S.-Panama Free Trade Agreement , by [author name scrubbed]. Once the TAA issue was resolved, President Obama submitted implementing legislation for the Panama FTA on October 3, 2011 ( H.R.
With five successive elected civilian governments, the Central American nation of Panama has made notable political and economic progress since the 1989 U.S. military intervention that ousted the regime of General Manuel Antonio Noriega from power. Current President Ricardo Martinelli of the center-right Democratic Change (CD) party was elected in May 2009, defeating the ruling center-left Democratic Revolutionary Party (PRD) in a landslide. Martinelli was inaugurated to a five-year term on July 1, 2009. Martinelli's Alliance for Change coalition with the Panameñista Party (PP) also captured a majority of seats in Panama's National Assembly. Panama's service-based economy has been booming in recent years—with a growth rate of 7.6% in 2010 and 10.6% in 2011—largely because of the ongoing Panama Canal expansion project, now slated for completion in early 2015.
The CD's coalition with the PP fell apart at the end of August 2011 when President Martinelli sacked PP leader Juan Carlos Varela as foreign minister. Varela, however, retains his position as vice president. Tensions between the CD and the PP had been growing throughout 2011, largely related to which party would head the coalition's ticket for the 2014 presidential election. Despite the breakup of the coalition, the strength of the CD has grown significantly since 2009 because of defections from the PP and the PRD, and it now has a majority on its own in the legislature. President Martinelli's strong approval rating diminished in the aftermath of his break with the PP in 2011, but has recovered recently. President Martinelli has been criticized by civil society groups and political opponents for taking a heavy-handed approach toward governing and for not being more consultative. At times, strong public protests have resulted in President Martinelli backing away from unpopular policy initiatives. While Panama's next presidential election is not scheduled until May 2014, the country will be gearing up for the race in early 2013. Martinelli is not eligible to run since Panama's Constitution only allows for a president to return to power after two terms (10 years).
U.S. Relations
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 and Panama hosted major U.S. military installations. The current relationship is characterized by extensive counternarcotics cooperation; support to promote Panama's economic, political, and social development; and a bilateral free trade agreement (FTA) that entered into force at the end of October 2012. U.S. bilateral assistance amounted to $3 million in FY2011 and an estimated $2.8 million for FY2012 while the FY2013 request is for $3.7 million. This funding does not include health assistance to combat HIV/AIDS and malaria funded under regional programs or assistance allocated to Panama under the Central America Regional Security Initiative (CARSI) that assists countries in their efforts to combat drug trafficking and organized crime. A number of U.S. agencies provide additional support to Panama.
The United States and Panama signed the bilateral FTA in June 2007, and Panama's National Assembly approved the agreement in July 2007. After more than four years, the U.S. Congress considered and approved FTA implementing legislation, H.R. 3079, on October 12, 2011, which President Obama signed into law on October 21, 2011 (P.L. 112-43). U.S. congressional concerns had included Panama's labor rights and tax transparency issues, but the Obama Administration worked with Panama to resolve concerns over these issues. After the FTA was approved by both countries, work began on the implementation of the agreement over the next year. The agreement entered into force on October 31, 2012, after both countries had completed a thorough review of their respective laws and regulations needed for FTA implementation.
For additional information, see: CRS Report RL32540, The U.S.-Panama Free Trade Agreement, by [author name scrubbed]; and CRS Report R41731, Central America Regional Security Initiative: Background and Policy Issues for Congress, by [author name scrubbed] and [author name scrubbed].