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Politics in Panama has been more of constitutional democracy throughout the 20th century. The history of coup led by General Manuel Noriega back in 1968 has brought power to the military as Noriega had manipulated most of the highest officials of the government. It resulted to economic and diplomatic conflicts within Panama which affects the US relation to Panama. When Panama lost efforts to remove the dictatorship of Noriega, the US stepped with intentions to protect its assets established in Panama. When Noriega had slowly lost its power with low civil and public supports, he surrendered to the US. The Panama was then restored to democracy by 1991.

At present, politics in Panama is under the framework of constitutional representative democracy. There are three branches of the government namely executive, legislative and judicial. The executive branch consists of the president who is elected by the people for a term of five years. He serves as the head of the government and the head of the state and appoints the members of the national cabinet. Currently, the president of Panama is Martin Torrijos who was elected since 2004. Together with the president are two vice presidents. The two vice presidents in the current politics in Panama are Samuel Lewis Navarro who serves as the first vice president and Ruben Arosemena Valdez serving as the second vice president. They are also elected for the same term. Legislative branch previously consists of 78 members but was changed to 74 in the 2004 political reform. Finally, the national Supreme Court, the 5 superior courts and 3 courts of appeal composed the judicial branch of Panama.

The politics of Panama also composes other independent commissions that functions separately from the three executive branches. One of which is the Electoral Tribunal which takes responsibility in the electoral law and policies and its implementation. They are in charge of voter's registration, flow of election, judgment of electoral conflicts and disputes and other matters related to election. Politics of Panama also involves the independent responsibility of the Controller General of the Republic of Panama whose main function is to take charge of State funds. They are responsible for managing public fund taking into account budget flow and expenditures of the State. Also, independent responsibilities are given to the Ministry of Public whose main function is to oversee the country's interests and its municipalities.

The most known and active political party of Panama is Democratic Revolutionary Party (PRD) who concerns with economic matters and focuses on Panama's child's welfare and urban poor. Other political parties of Panama include The Arnulfist Party, the president's current party, which emphasizes on rural population of Panama. The National Liberal Republican Movement and Democratic Change and The Popular Block are two political parties that consist of pro-business groups and former Christian Democrats. These two parties comprise the upper and middles class with ties on the business community in Panama.

Politics of Panama has been generally corrupt in the past years. However, there are various attempts from the current government to make political reforms to support sustainable economic development in Panama.