The first European to discover the area we now know as Panama was Rodrigo de Bastidas, who set off from Venezuela at the beginning of the 16th century looking for gold. He was followed by Christopher Columbus the following year who stayed for a short time in the Darien area. Vasco Nunez de Balboa crossed the country in order to lay claim to the Pacific Ocean for Spain and the area became a focal point for Spain's colonisation of the New World. The Spanish used Panama as a loading point for the gold and silver which they brought from South America to be shipped back to Europe.

Overall, Panama remained part of the Spanish empire for more than 300 years, with rule finally ending in 1821. The history of Panama is reflected in its strategic importance to other countries, until it began to establish its own identity and economic strength. The Panama Canal has played a very important part in the economic strength of the country. Work on the canal began in 1880 by a company run by Ferdinand de Lesseps, but after 10 years the work was still not complete.

Panama became an independent country in 1903 and entered into the Hay/Bunau-Varilla Treaty with the US. This treaty gave the US rule over an area of the country which was 50 miles long and 10 miles wide. This is the area that was then marked out for the canal which would be built and run by the United States. The canal was completed in 1914. It runs for 52 miles and is now considered to be a great feat of engineering. The arrangement with the US worked very well in the early years but during the 1960s there was pressure within the country to have this agreement renegotiated.

There has been a history of military coups in Panama, particularly during the 1950s and 60s. One president in particular, Dr Arnulfo Arias Madrid, was elected president and on two occasions was removed from power by military forces and a third occasion saw him removed by the National Guard. This led to a military government in the country, led by Brigadier General Omar Torrijos, who ran a corrupt government, but one which was popular with the public which had been ignored by previous administrations thanks to some populist policies. Torrijos died in 1981 and there were amendments to the constitution in 1983 which gave the military, known as the Panama Defense Forces (PDF), a larger political role.

The government was then run by General Manuel Noriega who also oversaw the military forces of the country. This led to a breakdown in the relationship between Panama and the United States and in 1988 Noriega was indicted on charges of drug trafficking by the American courts. The same year saw all Panamanian assets frozen by US banks and all companies and individuals were prevented from giving any money to the Panamanian government. The public tried to vote out Noriega in 1989, who then cancelled the elections in an attempt to keep control.

The US military were ordered into the country to protect US citizens and US business and property interests as well as with the intention of restoring democracy. Noriega eventually gave himself up and is currently in a Miami prison for the offences for which he was indicted.

At the end of 1989, a new administration upheld the true result of the cancelled election and democracy was restored but a series of coalition governments followed which encountered internal difficulties. The governments did, however, carry out some economic reforms and also began to rebuild the relationship with the US.

Arnulfo Arias Madrid’s widow was elected as president in 1999 and she carried out a great deal of work in social reform, particularly in the field of child welfare and protection as well as education. It was this government which dealt with the transfer of the administration of the Panama Canal from the US to Panama which took place on 1st January 2000.

Since then the country has remained a democracy and coup-free and is now on track to becoming a popular tourist and expat destination.