Panama As Crossroads of Empire & Crime


A review of Illicit Nation: State, Empire, and Illegality on the Isthmus of Panama, by Matthew Scalena.


“When you hit a rock with an egg, the egg breaks. Or when you hit an egg with a rock, the egg breaks.
The United States is the rock. Panama is the egg. In either case, the egg breaks.”

—Unidentified Panamanian diplomat, New York Times, 1927 (p. 174).


One of the least studied Latin American countries among U.S. scholars, Panama has been a protagonist of the United States’ hemispheric history of empire, as Matthew Scalena’s Illicit Nation shows. This apparent contradiction will not surprise readers of Greg Grandin’s Empire’s Workshop (New York: Metropolitan Books, 2007), which argues that Latin America and the Caribbean are “like the camel not in the Koran”—an indispensable laboratory for American strategies and tactics of extraterritorial control since the early eighteenth century, and at the same time subject of little curiosity from the neighbor to the north and consistently absent in discussions about the United States and its empire. Scalena’s work on modern Panama puts new questions to this interpretation, while focusing on a new problem to the paradox of invisibility and prominence: illegality in all its permutations.

Drawing on an ensemble of historiographies that have so far remained separated by sub-field—from illicit flows, contraband and history of drugs to borderlands, European colonialism and U.S. history of empire—with archival sources scattered in ten repositories in three different countries, Illicit Nation opens a window to Panamanian efforts at nation-state building vis-á-vis U.S. imperial formation in the hemisphere. Building upon the growing Latin American history of drugs, and works such as Paul Gootenberg’s Andean Cocaine (Chapel Hill: North Carolina University Press, 2009), Scalena aims to tackle the two most puzzling questions in the study of illegal trade in the hemisphere: does an entrenched colonial legacy of contraband nurture modern illegal commerce? Is an institutionally weak state the framework in which illegal trade thrives and consolidates? Uncovering new empirical evidence, and going against the grain of racializing narratives that have depicted Panamanian elites’ political shrewdness, unscrupulous economic behavior, and oligarchic tendencies as dynamics inherited from the three centuries of Spanish colonial domination, Scalena provides us with an interpretation that, while recognizing colonial legacies, emphasizes local agency in modern times. Instead of seeing illegal activities as a byproduct of a colonial culture that refused to die or a weak modern state that cannot rule over its national territory, Scalena finds capitalist rationality and unequal patron-client state relationships between Panama and the United States.

Since Panama became its own nation-state after its elites declared independence from Colombia in 1903 with Washington’s military backing, “el juega vivo panameño”—the duplicitous, savvy and often illegal strategies Panamanians developed to conduct business and politics—has constituted a pragmatic and imaginative response to circumvent damaging, foreign impositions. Thus, in chapter 1, Scalena goes back to colonial times to uncover the earliest traces of this strategic response to curtailing foreign presence. Building upon Panamanian historical production in Spanish—works by Alfredo Figueroa Navarro, Alfredo Castillero Calvo, Omar Jaén Suárez, and Celestino Araúz—and historiography about the isthmus produced in the U.S. academy—works by Marixa Lasso, Christopher Ward, Aims McGuinness, and Michael Conniff—Scalena makes the point that the exaggerated importance of the transit route for the local economy made Panama’s power holders highly dependent on foreign powers to bolster a service economy reliant on international traffic. Local elites in Panama therefore differed from their counterparts in the insular Caribbean, and were similar to the neighboring ones along the continental coast—that is, like elites along the New Granada coast, they did not exercise their power by monopolizing land in a society organized for the production of agricultural commodities for export. The elites consisted of urban merchants with few significant clientelist ties to the urban, black majority, and high-ranking military officials with access to situado funds that they pumped back into the commerce and service economies.

In the rest of chapter 1, Scalena makes the case that although colonial economic orientation toward commerce and services, along with the deep history of shady dealings with foreign powers, set the stage for modern statecraft, it was the shifting alliances that Panamanian elites established with bigger and more powerful countries after they declared independence from Spain in 1821 that constituted the basis for nation-state building in the twentieth century. Panama’s elites declared independence from the Spanish Crown and pledged allegiance to the Gran Colombia on November 28, 1821, with the hope of using the larger, more powerful southern neighbor to turn the isthmus into a global entrepôt. But the political chaos and economic downturn that follow the wars of independence, along with the completion of the U.S. transcontinental railroad in 1869, diminished the importance of Panama as a transit route between the Caribbean and the Pacific. Local elites thus had to shift their geographic orientation from the North Atlantic markets to the southern ones. During the second half of the nineteenth century, the transit route channeled all the European luxury goods that a liberalizing Colombian economy demanded during the gold rush that financed the colonization of the western mountain range’s agricultural frontier and the formation of a coffee belt. With the failure of the project to make Panama a global entrepôt and the consequent accommodation to unexpected circumstances, Panamanian power holders began to adapt fraudulent business practices, such as contraband and tax evasion, to deal with the impositions foisted upon them by an outside power.

After this condensed first chapter, Scalena takes us to the core of his dissertation, and shows how contraband allowed for the exercise of a restricted sovereignty for Panamanians, and how the criminalization of certain goods and practices fostered political and economic domination of the U.S. From chapters 2 through 5, Scalena disaggregates the process of border construction and maintenance in the Canal Zone into its constitutive elements, demonstrating how the reproduction of two different political, legal, and moral regimes of governance and capital accumulation—an American Canal Zone and a Panamanian Republic—not only created an artificial border at the center of the isthmus but also, and more importantly, produced a contentious space where foreigners and locals dealt with the tensions of the patron-client relationship. The analysis of the continuous strain between the American and the Panamanian societal models and patterns of accumulation, and the ways in which the two sides dealt with it through new legislations and law enforcement tactics works as a lens to focus on the most salient characteristics of the Panamanian struggles to develop a nation-state and the U.S. project of imperial expansion.

In chapters 2 and 3, Scalena addresses the problem of Panama’s nation-state formation specifically. He focuses his attention on developments during Belisario Porras administration (1912-1916, and 1918-1924) to set out the case that criminal elements did not penetrate the Panamanian state because it was institutionally weak—although it was—but rather because local elites formally depended on the military and political might of the U.S. to preserve Panama’s unequal status quo, which fostered an infrastructure of illegality in which they found room to maneuver within the contours set by foreign power. Using untapped archival sources, such as National Police advisor Albert Lamb’s unpublished book manuscript, Scalena sheds light on the contradictory ways in which traders and state officials established unwritten codes and policies to continue servicing demands that fell outside Panamanian and American laws.

This is perhaps Scalena’s most important contribution. With a foreign power occupying and monopolizing the country’s most important resource, i.e. the transit route, government became the only enterprise that remained almost entirely in the hands of Panamanians, while the commercial and service economies became the spoils that different diasporas fought for along with local merchants. In the intersection between government, commerce, and services throve the illegal markets that concerned American officials during the century of occupation. “Vice” and “corruption,” as the illegal infrastructure of contraband, tax evasion, gambling, booze, drugs and prostitution was dubbed in the American media and official discourse, offered Panamanian elites opportunities to exercise a restricted sovereignty, and preserve their privileges over a population deeply fractured along social, racial, and ethnic lines. In illegality, Panamanian elites bolstered anti-American sentiments when it was necessary, carved out an autonomous space to consolidate local political powers, promoted the interests of personal or kinship group networks, and even funded the project of state modernization. The consensus between government and business leaders to brand the country an international hotspot for nightlife under President Belisario Porras’ aegis, the “architect” of Panama’s modern state, was the umbrella under which illegal activities interwove into early state formation.

In the first half of chapter 4 Scalena elaborates on the specific strategies Panamanian elites developed to take full advantage of the meager resources they had at their disposal. Beginning in 1915, the Panamanian state criminalized most border flows as contraband in order to satisfy U.S. demands for greater state control. Patrolling the border for smuggled goods, and promoting the state anti-contraband efforts in the public sphere of the press provided state officials with a justification to intervene in cross-border traffic, created a problem to use as leverage against the United States in both diplomatic and broader political channels, and galvanized public opinion over the apparent threat of contraband. The state policy of criminalization of contraband ultimately enabled state officials to reinforce the anti-Americanism and anti-diasporic peoples sentiments that lay at the roots of Panama’s popular nationalism.

Using this last point as transition to the analysis of U.S. imperial formation, the second half of chapter 4 and the whole of chapter 5 reconstruct the legislative and law enforcement efforts the American management undertook to construct a tropical paradise of order and efficiency in the Canal Zone. Old World imperial rivalries functioned as the backdrop against which American contractors and state functionaries constructed the exculpatory narratives that presented the occupation of the isthmus as a democratic enterprise. They utilized the failed French project to build a canal as the anti-model not to follow, plagued with corruption and moral decadence due to the lack of legal jurisdiction to impose order. Scalena’s main contribution in this section stems from the parallels established between twentieth-century domestic struggles within the United States and those in the Canal Zone following the works of Matthew Frye Jacobson, Alfred McCoy and Francisco Scarano, and Courtney Johnson on the U.S. imperial state. Moral uplifting of degenerated people of color, racial segregation of spaces and activities, and promotion of white nuclear families as the basis of society became the three touchstones of the American occupation in the Zone. But Panamanians were not the only targets of the American civilizatory project. The West Indian and Chinese diasporas that were encouraged to migrate during the construction of the canal—the first as Canal’s workers and employees, the latter as merchants in retail commerce in the Zone—became sources of concern for Americans as much as for Panamanians authorities. By connecting markers of race and culture to clandestine activities, law enforcement officials targeted the two most populous diasporic communities in the country, and turned them into buffers in the clash of the American and Panamanian disparate legal and moral regimes.

Chapter 5 digs deeper into this process of racially-based criminalization of contraband, as Scalena studies the evolution of the Commissary Division at close range. Operated by a government-owned corporation, the Panama Railroad Company, the Commissary Division was run as a private firm that engaged in commercial activities with the goal of turning profits that were not held to the regulations as federal funds despite the Division’s putative non-for-profit objectives. In the face of official complaints from Panamanian authorities and even North American firms operating in the isthmus, the American administration created a set of racially specific regulations that restricted West Indian employees’ access to commissary goods. The new regulations gave credence to the nationalist rhetoric that deemed West Indians defrauders of the Panamanian state, and established a common ground between Panamanian authorities and Zone officials. The result was that the consensus advanced cross-border cooperation at the expense of a vulnerable portion of the Canal’s workforce.

The continuous flows of criminalized goods during the first half of the twentieth century helped create an ideal environment for more lucrative transnational contraband flows in the globalizing decades after World War II. To this topic Scalena turns in his epilogue, where he paints in broad strokes Panama’s efforts to diversify its economy in the postwar era. Like the first chapter on colonial history, the postscript synthesizes the existing historiography on President Omar Torrijo’s role in developing the Republic as a hub for international traffic apart from the U.S.-controlled canal without providing new empirical evidence. In this last section, Scalena calls our attention to two important developments. First, he describes how state-based entrepreneurs and other merchant elites increasingly saw lucrative possibilities to expand the role of Panama as a route for illegal drugs traffic and fiscal paradise for the emerging neoliberal bourgeoisie. Second, he examines the ramifications of this specific postwar project for the social fabric of the nation and the balance of power among branches within the state. Overall, Scalena sheds light on how elite clandestine stimulus to illegal trade turned law enforcement bureaucracies, particularly the National Police, into paths of upward mobility for wealth and power accumulation.

Scalena’s dissertation is a very well-conceived and well-structured study, and the resulting book will be a necessary and fascinating contribution to the field of modern Latin America and the Caribbean as well as to the study of illicit flows and crime in the global South.

Lina Britto, PhD
Postdoctoral Scholar
Harvard Academy for International and Area Studies
Harvard University

Primary Sources

Canal Record 1905-1914, Boxes 248, 298, 355-356, 360, and 363, Record Group 185, National Archives and Records Administrations at College Park, MD (150/47/2/1 E30GP, 150/47/3/2 E30GP, and 150/47/3/3 E30GP).
Aristides Arjona, Memoria de Gobierno y Justicia, 1909, XLVII, SB, Archivo Nacional de Panamá.
Secretario de Relaciones Exteriores-Cartas, 1918-1920, S 4-03 TVIII, Archivo Belisario Porras.
Albert Lamb, Autobiography-Manuscript, Albert Roswell Lamb Papers, Manuscripts and Archives Division, New York Public Library.
Gaceta Oficial 1901-1919, Asamblea Nacional de Panamá.

Dissertation Information

State University of New York at Stony Brook. 2013. 224 pp. Primary Advisor: Paul Gootenberg.


Image: La Nación newspaper, January 6th, 1922, Panama National Library. Photograph by Matthew Scalena.

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