Financial Sanctions and Embargoes in Panama Worsen Economic Crisis
The United States’ economic sanctions against Panama have had a devastating impact on the country’s economy, according to a recent report by government auditors. The sanctions, imposed in response to Panama’s military regime, have resulted in widespread job losses, reduced sales, and a crippling blow to the country’s already struggling economy.
Effects of Sanctions
The sanctions, which include:
- Suspension of all economic and military assistance to Panama
- Elimination of official loans from multilateral lending institutions
- Suspension of trade preferences
- Freezing of Panamanian assets in the United States
- Suspension of payments to the military regime from various sources
have had a significant impact on US businesses operating in Panama. Despite exceptions made by the US government to minimize the sanctions’ effects, employment at these firms declined by 17 percent and sales fell by 26 percent in 1988.
Impact on Panama’s Economy
The sanctions have also had a devastating effect on Panama’s economy as a whole. The country’s economy contracted by 20 percent in 1988, with unemployment more than doubling to 23 percent. The military regime attempted to compensate for the significant reduction in revenues by drastically cutting spending by over 50 percent, but was still operating at a deficit of $200 million.
Challenges Ahead
Panama’s economic recovery and reconstruction will likely require significant expenditures, making it difficult to estimate when the country can expect to recover from this crisis. The US government’s sanctions have clearly had unintended consequences, causing harm not only to Panama’s economy but also to American businesses operating in the country.
Uncertain Future
As the situation continues to unfold, it remains to be seen whether the sanctions will ultimately achieve their intended goals or simply prolong Panama’s economic suffering. The devastating impact of the sanctions on both Panama’s economy and US businesses highlights the need for a re-evaluation of the sanctions’ effectiveness and the exploration of alternative solutions to address the crisis in Panama.