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Long overshadowed by the Panama Canal and a reputation as a hub for drug-running, Panama City is not only reinventing itself as the thriving commercial and financial hub of the Americas, it is asserting itself as a burgeoning tourist destination. Panama City (commonly referred to simply as "Panama") is one of those rare Latin American capitals that has it all: a high standard of living, a seemingly endless supply of investment from abroad, a surplus of natural beauty, and a rich cultural brew of ethnicities and religions. There is a sizeable ex-pat presence in the city, as well as a growing Asian community, which continues to change the face of Panama City. It has been called the new Hong Kong and Miami -- a sleek and modern city proud of its role as host to the world.

Signs of Panama City's reinvention are everywhere. The Amador Causeway, formerly a U.S. military base, is ground zero for several multimillion-dollar condominium and commercial-center developments, such as the new Biodiversity Museum designed by famed architect Frank Gehry. The run-down 19th-century buildings of Casco Viejo have been revitalized with private and public funds and declared a World Heritage Site by UNESCO. Along the coast, swiftly rising skyscrapers, spurred by an irresistible 20-year tax exemption, portend a megalopolis in the making: By 2009, 5 of the 10 tallest buildings in Latin America will be here in Panama City, including the tallest, at 104 stories. Even the dirty Panama Bay is undergoing a $360-million cleanup.

But Panama City's visitors need not venture far from their air-conditioned hotels to immerse themselves in the wild tropical jungle that is characteristic of this region. Even the city's Natural Metropolitan Park is the protected home of more than 200 species of birds, mammals, and reptiles. Dozens of remarkable destinations outside the city limits can be reached in less than 2 hours, meaning travelers can spend the day exploring but head back to the city and be well fed and rested for the next day's adventure.

Panama City is the oldest Spanish settlement on the mainland of the Americas, founded in 1519 by Pedro Arias Dávila (Pedrarias the Cruel). The settlement was used as a base for stealing Peruvian gold and silver and transporting it back to Spain via a treacherous road that linked Panama City with the Caribbean Sea. The immense wealth that passed across the isthmus proved irresistible to treasure-thirsty pirates and buccaneers, who conducted raids throughout the region during the 16th and 17th centuries. In 1671, the Welsh buccaneer Henry Morgan sacked Panama City, and the settlement burned to the ground. The ruins of Panama Viejo, or Old Panama, can be toured today.

By 1673, Panama City had been rebuilt in what is now known as Casco Viejo; it was heavily fortified and the city was never taken again. However, raids on the Caribbean coast mounted, and the Spanish, defeated, returned to sailing around Cape Horn in 1746. Panama declared its independence from Spain in 1821, but declined in importance until the Gold Rush of the mid-19th century, when thousands of forty-niners used the isthmus as a shortcut from the East Coast of the U.S. to California. Later, when Panama seceded from Colombia in 1903, Panama City was designated the capital. With the opening of the canal in 1914, Panama City became the most important center of trade and commerce in the Americas.

Panama City's modern history was marred by the rise of strongman dictator Manuel Noriega and by the 1989 U.S.-led invasion to overthrow him, which left hundreds dead, most of whom lived in the poor Chorillo neighborhood. But today, Panama City is one of Latin America's safest cities, and nearly every tourist will feel secure walking the streets day or night.

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