Diplomatic SOCIETY met Panama’s Ambassador to Austria, H.E. Javier Enrique Caraballo Salazar, to discuss Austrian-Panamanian relations, the Panama Canal, and Panama’s role in combating illicit drug trafficking and organized crime.
Panama is one of Austria’s most important economic partners in Central America. What are the key areas of cooperation?
According to the Austrian Federal Ministry for European and International Affairs, Panama ranks among Austria’s key economic partners in the region, even though bilateral trade volumes are still relatively modest. Both countries, however, see significant potential for future growth.
Economic cooperation is strongly linked to Panama’s role as an international logistics, maritime, and services hub. A number of Austrian companies are already active in the country in sectors such as construction technology, industrial manufacturing, machinery, transport systems, and consumer goods. Companies including Red Bull, Ciclon Energy Drink, Doka, Autolift, Doppelmayr, Swarovski, and Tyrolit are examples of Austrian business presence in Panama.
Cooperation also extends into the area of sustainable development and renewable energy. The Austrian Development Bank (OeEB) has supported projects related to renewable energy generation and energy efficiency, including the financing of a wind park. These initiatives reflect the shared interest of both countries in sustainable economic growth and environmentally responsible development.
Beyond the economic sphere, Austria and Panama maintain close cooperation in education, culture, and social initiatives. Austria offers study opportunities for Panamanian students, while Austrian NGOs have contributed to social and educational projects in Panama, including SOS Children’s Villages and other educational programs. Cultural initiatives organized by the Honorary Consulate of Austria further contribute to strengthening people-to-people relations.
How is Panama positioning itself in the new world order, and what challenges do smaller countries face?
Panama positions itself as an open economy committed to multilateralism, international law, and international trade. Due to its strategic geographic location and economic structure centered on logistics, maritime transport, financial services, and the Panama Canal, the country plays a relevant role as a platform for global connectivity and commerce.
The Panamanian government continues to strengthen the country’s position as a regional hub for logistics, finance, investment, and services, while at the same time promoting stronger economic integration with partners in Latin America, Europe, and other regions.
In today’s international environment, small and medium-sized countries face a variety of political, economic, and social challenges. Increasing geopolitical competition can place pressure on smaller states and reduce their room for independent maneuvering. At the same time, economic instability, inflation, and disruptions in global supply chains often affect smaller economies disproportionately, with direct consequences for employment, investment, and social stability.
For countries such as Panama, the main challenge lies in maintaining economic openness and international cooperation while simultaneously protecting sovereignty, institutional stability, and sustainable development. Preserving trust in international law and multilateral institutions therefore remains essential.
Panama gained full control of the Panama Canal in 1999. How does the country guarantee its neutrality?
Panama assumed full control of the Panama Canal on December 31, 1999, in accordance with the 1977 Torrijos–Carter Treaties signed between Panama and the United States. One of these agreements, the Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal, establishes that the Canal must remain permanently neutral and open to vessels of all nations under equal conditions in times of peace and war.
The neutrality of the Canal is safeguarded through this international legal framework and through the work of the Panama Canal Authority (ACP), the autonomous institution responsible for operating, maintaining, and modernizing the waterway.
Since Panama assumed administration of the Canal, the waterway has been managed according to principles of security, efficiency, reliability, and non-discrimination. Panama has not only maintained operations successfully but has also invested heavily in strengthening the Canal’s transit capacity and improving the efficient use of water resources.
A key milestone was the Canal expansion project inaugurated in 2016, which allows the transit of larger vessels and significantly increased the Canal’s competitiveness and global relevance. The expansion also reinforced Panama’s position as one of the world’s most important trade and logistics centers.
Panama additionally promotes broader international support for the neutrality regime by encouraging states to adhere to or formally endorse the treaty. Given the Canal’s strategic importance for global trade, guaranteeing its neutrality remains a central element of Panama’s foreign policy and its commitment to international law.
You have worked extensively on drug-related crime. How is Panama addressing this challenge?
Due to its geographic location between major cocaine-producing countries and its position along trafficking routes toward North America, Panama faces significant challenges related to illicit drug trafficking. In addition, Panama’s role as an international maritime logistics center makes it attractive for transnational criminal organizations involved in maritime and land trafficking of narcotics.
Despite these challenges, Panama has historically maintained a firm commitment to combating drug trafficking and organized crime. The country has continuously strengthened its security institutions, law-enforcement agencies, and judicial system in order to respond effectively to these threats.
Panama has positioned itself as an important regional barrier against drug trafficking by land and sea. This effort is reflected in the modernization of security institutions, specialized investigations, stronger criminal prosecution, and close coordination among police, prosecutors, and international partners.
In 2025 alone, Panamanian authorities seized more than 129 tons of illegal drugs, around 70 percent of which was cocaine. Most of these narcotics were intercepted while in transit to consumer markets in North America and Europe.
Drawing on my experience as Senior Prosecutor for Drugs and Organized Crime and later as Attorney General of the Nation, I can say that Panama has managed to maintain relatively low levels of domestic drug consumption and comparatively high levels of security in relation to many countries in the Central American region. This has been achieved through constant action against organized crime, specialized investigations, effective criminal prosecution, and close institutional coordination.
At the same time, Panama recognizes that drug trafficking is a transnational phenomenon that cannot be addressed by one country alone. Effective responses require broad international cooperation, intelligence sharing, joint maritime interdiction operations, and judicial collaboration with neighboring countries and strategic partners.
Prevention and rehabilitation also play an important role in Panama’s overall strategy, complementing law-enforcement measures with social and educational policies designed to reduce vulnerability and strengthen communities.
It is important to emphasize that Panama is neither a drug-producing country nor a major consumer market. Rather, because of its strategic geographic location, the country is mainly used as a transit route for narcotics, particularly through maritime channels.
For this reason, Panama’s strategy combines firm domestic action with active international cooperation aimed at strengthening institutions, sharing information, improving regional coordination, and contributing to the global fight against organized crime and illicit drug trafficking.