The military history of Panama is an interesting one, and not just for the whole Noriega thing. At present Panama has no standing army, instead it has the Panamanian Public Forces, who act as a national security force (police). The Panamanian military has had several different formations over the years. There have been several points in the country's history where it did not have a standing army (after independence, and present-day).
However, the Public Forces still retain some warfare capabilities. Notably they are listed by Global Firepower.com as 98th out of a list of 106. That means Panama ranks higher than 8 other countries that actually have militaries. And GFP excluded a number of other countries (like Cuba and Latvia) that have militaries from the list. You can visit their website to see how the rate each country's ability to wage war and what criteria they look for.
Because it is the location of a certain canal and the antics of a certain dictator, you can probably expect Panama to show up in fictional works a good bit.
Early History
Panama gained its Independence from Colombia in 1903, with hearty encouragement from the United Statesnote . Initially the government did not create an army, instead forming a National Police.
In 1941, Panama declared war on Japan just a few days after the U.S. During the war the canal was a vital asset to the Allied war effort as it allowed easy transfer of forces and supplies from the Atlantic to the Pacific and vice versa. This made it a prime target for Axis attacks and sabotage. In fact Japan did indeed draw up several plans for an attack to destroy or at least damage the canal. They would use "submarine aircraft carriers", basically an enhanced sub with a single plane inside and a catapult, to launch a small group of planes to attack. Such a plot was still in motion and in fact under way when Japan surrendered.
After the war, the National Police were reorganized into a full military with the name National Guard.
In 1968, a Lieutenant Colonel named Omar Torrijos staged a coup, installed himself as the de facto leader of Panama and promoted himself to General.
The National Guard meanwhile, continued to expand and grow into a legitimate military.
Panamanian Defense Force and the Rise and Fall of Noriega
Torrijos died in a plane crash in 1981. After a couple of years General Manuel Noriega evetually rose to take his place. Once again Noriega reorganized the military, this time into the Fuerzas de Defensa de Panamá or Panamanian Defense Force. He set up the PDF to crack down on political opponents and neglected training them to fight an actual war! Needless to say he would live to regret this.
He also formed a number of paramilitary units called Dignity Battalions who were completely loyal to him and were tasked with smacking down anyone who dared to speak out against him.
Noriega was also a major player in the drug trade to fund his government, and was a huge exporter of drugs to the U.S. He also became more and more oppressive towards his people and increasingly paranoid. This eventually drew the wrath of the Yanks with Tanks.
It's worth noting that, with the exception of the last few days of his reign, Noriega was never technically Panama's head of state. He never technically held any political position. Instead he would find a politician that could be a useful lackey, have them run for President, rig the election so they would win, then have the new puppet President carry out his will for him. Because of this he did not have diplomatic immunity, and an American court was able to indict him on drug charges while he was still in power. It also meant those puppet Presidents had the authority to fire his sorry self.
Eventually one of those Presidents worked up the nerve to do just that, but Noriega deposed him and installed another puppet. By this point tensions between Noriega and America were getting worse and worse. In 1989, he held another election seeking to put another lackey of his in charge. However, by this point the opposition was gaining more and more strength. On election day, Noriega was shocked to see just how massively unpopular he had become. The opposition had won three-fourths of the vote. Aware that the world was watching him, he had hoped the vote would be close enough to rig without drawing too much suspicion. Instead he voided the vote, and international news crews caught his Dignity batallions beating the snot out of the victorious candidates.
With the international community condemning him, he began to position more and more PDF troops near the canal, which frightened the U.S. as there were lots of American military and civilian personnel there. In late 1989, PDF forces shot and killed a U.S. Marine at a checkpoint. This was the final straw for the U.S.
Noriega had Panama's legislature (which a rubber-stamp for him) declare him the "Maximum Leader" of Panama. He then declared that a state of war existed between the U.S. and Panama. Their was no denying that he was completely nuts by this point. That night the Yanks with Tanks invaded Panama with the objective of removing Noriega. As mentioned above, Noriega spent so much time designing the PDF to preserve his power, that they were woefully unprepared to face the might of the U.S. military. The Americans curbstomped Noriega's troops. In some cases the Dignity Battalions displayed more competence in combat than the actual soldiers.
After the invasion, Noriega was sent to the U.S. to face trial on drug charges. The Panamanians did not (and do not) want him anywhere near their country for fear that he could still regain power, or at least stir up serious trouble. He eventually served his sentence in America and was promptly extradited to France where the French wanted to try him for the same charges as the U.S.
The Public Forces
After Noriega, the rightful winners of the 1989 election were put into office. The new Panamanian Public Forces were formed. As mentioned above, they are a police force, but retain some military capabilities, which is why they appear on Global Firepower.com's list.
It is probably reasonable to assume that the Public Forces are capable of becoming a military if and when the need arises. In addition to their normal security duties, they have been in control of the Panama Canal for the last decade. so they are now tasked with it's protection and security.
In 2013, they seized a North Korean freighter carrying old and mostly outdated military equipment that had apparently been bought from the Cubans.
Divided into the National Police, National Border Service, the Air and Naval Service (formerly two separate services) and the Institutional Protection Service.
Only the NBS and the NANS are paramilitary given their reponsibilities for national defense aside from law enforcement.
In fiction
As stated at the top of the page, the Panama Canal and the Noriega affair mean that the Panamanians can be featured in fiction a good bit. Alot of this fiction may take place during Operation Just Cause, or sometime when Noriega was calling the shots. But there may also be more recent examples as well. The threat of terrorism means that the Public Forces could make an appearance anytime the Canal is threatened.
- The third season of Prison Break takes place in Panama (somewhere between 2005 and 2009, so it's the modern Panamanian administration). The season centers around breaking a Company asset out of a Hellhole Prison which is only guarded from the outside, with a drug lord running things inside. The authorities are shown to be ruthless and insanely corrupt, with the only halfway-decent military man in the series being a Hard line general with no qualms about torturing a random woman with barely any evidence to her involvement in anything.
- Call of Duty: Black Ops 2 has the PDF appear in a few of the 1980s missions. They first appear trying to nab Raul Menendez, the game's villain. Later they appear as enemies in the Just Cause mission.
