This year marks the commemoration of two key dates in the urban development of Panama City: the invasion by the U.S. Army on December 20, 1989, to depose dictator Manuel A. Noriega, and the full reversion of the lands of the former Canal Zone and the administration of the Canal to Panamanian sovereignty on December 31, 1999.
To understand the impact of the post-invasion regime change on the urban configuration of the city, it is crucial to analyze the previous context. During the 1970s and 1980s, Panama implemented policies and created instruments that laid the foundations for future urban development. First, there was the creation of the international banking center in 1970, which sought to consolidate the country as a platform for financial services at the regional and global level.
This period also saw the elimination of the building height limit —established in the 1940 urban development regulations— which allowed the construction of skyscrapers starting in the 1970s, transforming the city’s skyline. Ultimately, the law of preferential interest was created in 1985, an instrument that would serve to boost real estate development starting in the 1990s. The economic and political crisis that afflicted the country for much of the 1980s put Panama City’s economic and urban growth on hold.
After the invasion, the 1990s were characterized by economic adjustment. The neoliberal approach focused on the privatization of public enterprises, such as the National Telecommunications Institute (INTEL) and the Institute of Hydraulic Resources and Electrification (IRHE), and the concession of logistical assets such as ports and railroads.
At the same time, the Canal assets reverted with the return of the Canal were integrated through urban planning exercises, such as the Metropolitan Plan for the Pacific and Atlantic (2000) and the Plan for the Development of the Interoceanic Region (1997). These plans sought to prepare an integration structure for the development of the reverted areas, in the hope of achieving “the greatest possible common benefit”.
The withdrawal of the U.S. military bases, which for decades had represented an important source of income for the economy of the port cities of Panama and Colon, posed serious challenges. A 1995 INDESA study, Economic Impact of the Withdrawal of U.S. Military Bases, analyzed the consequences of base closures.
Regarding income from salary payments, it was estimated at B/56 million, in addition to B/17.4 million in pensions to Panamanian workers on the bases, paid annually. INDESA estimated that 42% of the rents in Panama City and Colon corresponded to rents paid by North American personnel, with an average of B/1,036.00 per month, considerably higher than the average of B/300.00 paid for housing rented by Panamanians. The total impact of the withdrawal of the bases in 1994 was estimated at B/294 million for that year alone.
Canal expansion and accelerated economic and urban growth
The period of the closure of the military bases in 1999, and the initial years of the Panamanian administration of the Canal, from 2000 to 2003, were of weak economic growth, ranging from 0.5% in 2001 to 4.2% in 2003. However, the approval via referendum in 2006 of the Canal expansion would generate a shock wave in Panama’s economy and urban and real estate development.
For the average Panamanian, the city’s growth was an unexpected wave of change. From a city where the average GDP of the construction sector was at B/540 million, it went in 2007 to investment amounts that would start at B/1,498 million in 2007 and reach B/13,342.4 million in 2019, 13 times its size at the beginning of the boom in 2006.
The shock of the speed of urban development generated conflicts between developers and the communities that expressed their discontent through legal actions and protests, arguing lack of planning, violation of regulations and negative impact on the quality of life. The lack of adequate infrastructure to support the proposed developments remains a major challenge in an environment that has grown from single houses to 40-floor, 300-apartment buildings.
Between 2000 and 2020, Panama City’s urban footprint increased from 15,280 to 27,661 hectares, with 55% growth in that period. Hyper-verticalization placed it among the Latin American capitals with the most skyscrapers (2006-2012), including the former Trump Tower —second tallest in the region. This accelerated growth, driven by construction incentives and lack of urban planning, led to the expulsion of the population to the periphery and long daily commutes, averaging 60 to 90 minutes per trip.
Currently, the Panamanian economy is facing a slowdown in the real estate and construction sectors, high indebtedness and fiscal deficit. Added to this is the lag in basic infrastructure in sectors such as drinking water, sanitation, roads, public transportation and mobility, in addition to the crisis in solid waste management.
To reverse this situation, the Panamanian government seeks to reactivate the economy through a program of construction of mega-infrastructures such as the Panama-Costa Rica train (B/4 billion), a new dam for the Panama Canal (B/1.6 billion) and the expansion of Tocumen Airport (B/1.2 billion), among other investments of US$1.2 billion), among other infrastructure investments, trying to emulate the dynamics that occurred during the Canal expansion (2006- 2015), at a time when the population is afflicted by the increase in unemployment (9%) and informality (50%).
The 1989 invasion marked the end of the Noriega dictatorship in Panama, also coincided with the fall of the Berlin Wall and the beginning of the end of most of the dictatorships that had dominated the political scene, both in Eastern Europe and Latin America. Thirty-five years later, liberal democracy’s promise of greater progress and well-being contrasts with the general problems of Panama City and most cities around the world: accelerated sprawl, expulsion of the middle and working classes from urban centers, housing crisis, loneliness, lack of public spaces and environmental degradation.
*Machine translation proofread by Janaína da Silva.
Autor
Geographer and historian from the University of Panama. Associate researcher at the Urban Risk Observatory at Florida State University. Master in Geographic Information Technologies from the Autonomous University of Barcelona,
