The Panama Canal Treaties provided the foundation for an enduring partnership. The U.S. and Panama implemented the treaties by preparing for the transfer to Panama of the Canal and the U.S. base properties. U.S. military properties transferred to the Government of Panama from October 1979 through December 1999 totaled 95,293 acres with 5,237 buildings and other facilities (including 12 major active military bases) -- all together worth over $4 billion. Headquarters, U.S. Southern Command was transferred to Miami in 1997, and U.S. Army South and Special Operations Command-South were transferred to Puerto Rico in 1999. The phased departure of U.S. military forces from 1994 through December 1999 terminated the U.S. military presence in Panama.

U.S. development assistance through USAID in FY 1997 was $3 million. Panama does not have a military; therefore, the United States provides no bilateral military assistance to the country. However, civic action projects, direct, and indirect military spending had pumped several hundred million annually into the Panamanian economy.

The United States cooperates with the Panamanian Government in promoting economic, political, and social development through U.S. and international agencies. Cultural ties between the two countries are strong, and many Panamanians travel to the United States for higher education and advanced training. About 6,000 Americans reside in Panama, most of whom are retirees from the Panama Canal Commission, some retired military and retired U.S. employees of the military and individuals who hold dual nationality. The number of U.S. visitors to Panama from July 1995 to June 1996 averaged around 3,600.

Panama continues to fight against illegal narcotics. The country's proximity to major cocaine-producing nations and its role as a commercial and financial crossroads make it a country of special importance in this regard. Although money laundering remains a problem, a new banking law of 1998 should help combat this crime. Panama has worked closely with the U.S. Treasury Department's Financial Crimes Enforcement Network.

Panama is considered a major cocaine transhipment point and major drug-money-laundering center; no recent signs of coca cultivation. Monitoring of financial transactions is improving. (Source note 3)