On October 31, 2012, the U.S.-Panama Free Trade Agreement (FTA) entered into force. Both houses of Congress had approved implementing legislation for the FTA in October 2011, and the measure was signed into law by President Obama on October 21, 2011 ( H.R. 3079 , P.L. 112-43 ). (See " U.S. Commercial Relations and the Free Trade Agreement " below.) On October 28, 2012, President Martinelli promulgated legislation repealing a recently enacted law initiated by his administration that would have sold off state-owned land in the Colón Free Zone. Protests against the law resulted in three dead in clashes with the police. (See " Challenges for the Martinelli Government " below.) From August 6 to 17, 2012, the United States and 16 nations from the region participated in annual PANAMAX defense exercises focused on ensuring the security of the Panama Canal. The exercises have been held annually since 2003. (See " Port Security and Other Counterterrorism Efforts " below.) On July 31, 2012, the State Department issued its Country Reports on Terrorism 2011 , which maintained that "the most direct terrorism threat to Panama" was the presence of a small unit of the Revolutionary Armed Forces of Colombia (FARC) in the Darién province bordering Colombia. Panama's government has stepped up its efforts in recent years to confront this presence and has cooperated closely with Colombia to secure its border. The report maintained that Panama had an adequate legal and regulatory framework for countering terrorist finance, but also contended that "uneven enforcement of the existing anti-money laundering and terrorist finance controls ... coupled with the weak judicial system, remained a problem." (The "Western Hemisphere Overview" section of the State Department's 2011 terrorism report is available at http://www.state.gov/j/ct/rls/crt/2011/195546.htm . Also see " Port Security and Other Counterterrorism Efforts " below.) On May 24, 2012, the State Department issued its 2011 human rights report. According to the report, the Panamanian government generally respects human rights, but remaining problems included harsh prison conditions, judicial ineffectiveness, and discrimination against various groups (especially indigenous groups) and individuals, including some cases of violence. The State Department reported that the judiciary was susceptible to corruption and outside influence and faced allegations of manipulation of power by other government branches, but also cited Panamanian government efforts to improve the functioning of the judiciary. (See " Human Rights Issues " below. The Panama section of the State Department human rights report is available at http://www.state.gov/documents/organization/186743.pdf .) Panama has made notable political and economic progress since the December 1989 U.S. military intervention that ousted the military regime of General Manuel Antonio Noriega from power. The intervention was the culmination of two and a half years of strong U.S. pressure against the de facto political rule of Noriega, commander of the Panama Defense Forces. Since that time, the country has had five successive civilian governments, with the current government of President Ricardo Martinelli of the center-right Democratic Change (CD) party elected in May 2009 to a five-year term. Inaugurated on July 1, 2009, Martinelli is a businessman and former government minister. His electoral alliance, known as the Alliance for Change, also won a majority of seats in the unicameral National Assembly. Panama's largely service-based economy has been booming in recent years, spurred on by the Panama Canal expansion project that begun in 2007 and is expected to be completed in 2015. Before the U.S. intervention, Panama had held national elections in May 1989, and in the presence of a large number of international observers, the anti-Noriega coalition, headed by Guillermo Endara, prevailed by a three-to-one margin. The Noriega regime annulled the election, however, and held on to power. By the fall, the military regime was losing political power and relied increasingly on irregular paramilitary units, making the country unsafe for U.S. forces and U.S. citizens. On December 20, 1989, President George H. W. Bush ordered the U.S. military into Panama "to safeguard the lives of Americans, to defend democracy in Panama, to combat drug trafficking, and to protect the integrity of the Panama Canal Treaty." Noriega was arrested on January 3, 1990, and brought to the United States to stand trial on drug trafficking charges. (Also see " Status of Manuel Noriega ," below.) As a result of the intervention, the opposition coalition headed by Guillermo Endara that had won the May 1989 election was sworn into office. During his term, President Endara made great progress in restoring functioning political institutions after 21 years of military-controlled government, and under his administration, a new civilian Public Force replaced Noriega's Panama Defense Forces. But Endara had difficulties in meeting high public expectations, and the demilitarization process was difficult, with some police and former military members at times plotting to destabilize, if not overthrow, the government. In May 1994, Panamanians went to the polls to vote in presidential and legislative elections that observers called the freest in almost three decades. Ernesto Pérez Balladares, candidate of the former pro-Noriega Democratic Revolutionary Party (PRD), who led a coalition known as "United People," won with 33% of the vote. Placing a surprisingly strong second, with 29% of the vote, was the Arnulfista Party (PA) candidate, Mireya Moscoso de Gruber, heading a coalition known as the "Democratic Alliance." In the electoral race, Pérez Balladares campaigned as a populist and advocated greater social spending and attention to the poor. He stressed the need for addressing unemployment, which he termed Panama's fundamental problem. Pérez Balladares severely criticized the Endara government for corruption, and he was able to overcome attempts to portray him as someone closely associated with General Noriega. (Pérez Balladares served as campaign manager during the 1989 elections for candidate Carlos Duque, who the Noriega regime had tried to impose on the electorate through fraud.) Instead, Pérez Balladares focused on the PRD's ties to the populist policies of General Omar Torrijos, whose 12-year (1969-1981) military rule of Panama ended when he died in a plane crash in 1981. President Pérez Balladares implemented an economic reform program that included liberalization of the trade regime, privatization of state-owned enterprises, the institution of fiscal reform, and labor code reform. Tariffs were reduced to an average of 8%. Pérez Balladares also worked closely with the United States as the date of the Panama Canal turnover approached. Under his government, Panama and the United States held talks on the potential continuation of a U.S. military presence in Panama beyond the end of 1999 (the date Panama was to assume responsibility for defending the Canal). Ultimately negotiations ended without such an agreement. Although Panama's constitution does not allow for presidential reelection, President Pérez Balladares actively sought a second term in 1999. In 1997, the PRD had begun studying the possibility of amending the constitution to allow a second bid for the presidency in the May 1999 elections. Ultimately, a referendum was held on the issue in August 1998 but failed by a large margin. Late in his administration, Pérez Balladares became embroiled in a scandal involving the illegal sale of visas to Chinese immigrants attempting to enter the United States via Panama. As a result, U.S. officials cancelled the former president's U.S. tourist visa in November 1999. In her second bid for the presidency, Arnulfista Party (PA) candidate Mireya Moscoso was victorious in the May 1999 elections. Moscoso, who was inaugurated September 1, 1999, for a five-year term, captured almost 45% of the vote and soundly defeated the ruling PRD's candidate Martin Torrijos (son of former populist leader Omar Torrijos), who received almost 38% of the vote. Until March 1999, Torrijos had been leading in opinion polls, but as the election neared, the two candidates were in a dead heat. A third candidate, Alberto Vallarino, heading a coalition known as Opposition Action, received about 17% of the vote. President Moscoso, a coffee plantation owner and Panama's first female president, ran as a populist during the campaign, promising to end government corruption, slow the privatization of state enterprises, and reduce poverty. She also promised to ensure that politics and corruption did not interfere with the administration of the Canal. The memory of her husband Arnulfo Arias, a nationalist who was elected three times as president, but overthrown each time, was a factor in the campaign, particularly since Arias was last overthrown in 1968 by General Omar Torrijos, the father of the PRD's 1999 and 2004 presidential candidate. Although Moscoso took the presidency, the PRD-led New Nation coalition won a majority of 41 seats in the 71-member unicameral Legislative Assembly. Just days before her inauguration, however, Moscoso was able to build a coalition, with the support of the Solidarity Party, the Christian Democratic Party (which later became the Popular Party), and the National Liberal Party, that gave her government a one-seat majority in the Assembly. In August 2000, the Christian Democrats deserted the coalition and formed an alliance with the principal opposition, the PRD.