Panama and Its Neighbours in Central America

PANAMA · NEIGHBOURHOOD

The Panama neighbourhood spans two land borders, Costa Rica’s and Colombia’s, and one canal that ties the Americas together. This guide maps the borders, the friendships, the disputes and the regional clubs as of October 2026.

Panama sits where Central America meets South America, with Costa Rica to the west and the Darién jungle to the east. Between those two lines pass the migrants, power lines, cargo and ships that tie North and South America together.

For US readers, the Panama neighbourhood matters because the Canal, Darién migration and Costa Rica trade all touch US interests. Every figure below carries its date, and the Rio Times Panama page tracks daily news.

The Panama Neighbourhood at a Glance

Panama has only two land neighbours, Costa Rica to the west and Colombia to the east. Its Caribbean coast faces north and its Pacific coast faces south.

Colombia’s foreign ministry puts the land border with Panama at about 266 kilometres, roughly 165 miles. A treaty of limits signed in Bogotá on Wednesday, 20 August 1924, settled the line.

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Panama’s president is José Raúl Mulino, in office since 1 July 2024. Costa Rica’s president is Laura Fernández, who took office on Friday, 8 May 2026.

Colombia’s president is Abelardo de la Espriella, a conservative lawyer sworn in on Friday, 7 August 2026. He has said he has a very good relationship with Mulino.

Beyond the two borders, Panama belongs to a wider Central American family that includes Guatemala, Belize, Honduras, El Salvador and Nicaragua. The guide to Panama as a whole covers the country itself, and the Nicaragua neighbourhood guide covers its northern neighbours.

The Costa Rica Border, Friendship and Friction

Costa Rica and Panama share a frontier and what Fernández calls a historically good relationship. The sharpest recent fight is over farm goods, and it has now reached electricity.

The World Trade Organization (WTO) is the global trade referee, and Costa Rica took Panama to it on 11 January 2021. Costa Rica said Panama’s bans on strawberries, dairy, meat, pineapples and bananas broke WTO rules.

A WTO panel report of Thursday, 5 December 2024, found Panama’s strawberry ban inconsistent with WTO rules. It also faulted Panama for delays in approving dairy and meat plants.

Panama appealed on Friday, 24 January 2025, into an Appellate Body that has no members. Commerce minister Julio Moltó said on 10 May 2026 that Panama has the same WTO rights as any member.

Costa Rica’s president, Laura Fernández, said she would not let the restrictions continue and is willing to talk. Moltó replied that Panama is open to talks on clear, fair rules, La Estrella de Panamá reported.

On Thursday, 21 May 2026, Mulino told his weekly press conference that for now Panama sells no power to Costa Rica. He said Costa Rica had asked for more Panamanian power, and the Rio Times covered the standoff.

ICE, Costa Rica’s state electricity utility, replied that it holds no firm contracts to buy Panamanian power. It plans no imports for the rest of 2026 and says the national grid has enough resources, Observador reported.

The two countries still share a bridge over the Sixaola River, open since Thursday, 4 March 2021, which cost US$25 million. Mexico’s regional infrastructure fund paid US$10 million, and Costa Rica and Panama paid US$7.5 million each, the United Nations records.

They also share La Amistad, a mountain park that UNESCO listed in 1983 and extended into Panama in 1990. The site covers 570,045 hectares, about 1.4 million acres, with roughly 221,000 hectares on the Panamanian side.

The Colombia Border and the Darién Gap

Colombia is Panama’s other land neighbour, and the frontier runs through the Darién, a jungle that is still hard to reach. UNESCO says Darién National Park, listed in 1981, covers almost the entire border with Colombia.

The park spans about 575,000 hectares, or 1.4 million acres, and adjoins Colombia’s Los Katíos National Park. UNESCO names a possible completion of the Pan-American Highway through the area as a key conservation concern.

Panama’s Security Ministry reinforced the border on Sunday, 9 August 2026, a day after attacks in Colombia killed a police officer. SENAFRONT, the National Border Service, and SENAN, the naval-air service, sent agents and more than 15 boats, as the Rio Times covered.

Security Minister Frank Ábrego said there was no reliable information that Colombian armed groups had crossed into Panama. SENAFRONT director Larry Solís said the aim was to block all coasts and borders, Uno TV reported.

In July 2026, Colombia’s president-elect gave Clan del Golfo members 17 days to surrender amid claims they had fled to Panama. The Clan del Golfo is a Colombian drug-trafficking armed group, and Panama had not officially reacted by 24 July.

Panama and Colombia also sit together on the UN Security Council in 2026, according to the United Nations. Panama’s term ends in 2026 and Colombia’s in 2027, and the guide to Colombia’s neighbours covers the Andean side.

Darién Migration, From 520,085 to a Trickle

Panama’s National Migration Service counted 520,085 irregular crossings from Colombia in 2023 and 302,203 in 2024. The revised total for 2025 was only 3,091, a drop of about 99% from 2023.

From January to September 2026 the service counted 539 crossings, a preliminary figure subject to revision. That is less than a fifth of the 3,091 counted in all of 2025.

Of the 539, a total of 449 came from South America, 43 from Africa, 25 from the Caribbean and 12 from Asia. South Americans were also 81% of the 520,085 recorded in 2023.

June brought 102 crossings, August 148 and September 71, so the 2026 trend is mixed. Infobae reported in July 2026 that specialists found it too early to call June’s rise a new wave.

Trade and Power Lines Across the Isthmus

The Colón Free Zone, a duty-free trading hub on the Caribbean coast, sells goods across the region. Re-exports from the zone in October to December 2025 totalled US$2.75 billion, in preliminary figures from INEC, Panama’s statistics institute.

Colombia was the largest buyer among Panama’s neighbours, at US$235.6 million, followed by Costa Rica at US$199.9 million. Guatemala took US$151.6 million, Nicaragua US$116.5 million, El Salvador US$96.0 million and Honduras US$89.5 million.

Together, Costa Rica, Guatemala, Nicaragua, El Salvador and Honduras took about US$653 million, or 24% of the quarter’s re-exports. Add Colombia and the neighbours took about 32%, calculated from the INEC table.

Colombia’s president also proposed reviving the air route between Montería and Panama City, La Estrella de Panamá reported on 24 July 2026. Mulino said on the social network X that he would reopen Panama’s consulate in Montería.

The Canal and Its Neighbours

The Panama Canal anchors the region’s trade, and Panama alone runs it. Treaties signed on 7 September 1977 set 31 December 1999 as the handover date, the US State Department records.

One of them, the Neutrality Treaty, lets the United States use its military to defend the canal’s neutrality. The canal neutrality report shows how other countries have joined that regime.

The Panama Canal Authority (ACP) runs the waterway and reported 10,726 transits from October 2025 to June 2026, up 5.2%. Revenue for those nine months reached US$4.802 billion, up 17%, and net income was US$3.614 billion, up 19%.

The ACP’s fiscal 2027 budget assumes 10,750 transits and revenue of US$5.555 billion, with US$3.608 billion paid to the national treasury. Panama uses the US dollar, so the budget’s balboa figures equal US dollar amounts.

El Niño is the canal’s main weather risk, because the lakes that feed its locks depend on rain. The ACP put the chance of a severe El Niño at 81% in July 2026, up from 25% in April.

A strong earthquake struck Panama on Friday, 9 October 2026, and agencies put its magnitude between 7.5 and 7.7. The Pan American Health Organization reports that a state of emergency followed on 10 October.

The Panama Canal Authority said transits continued normally after the quake. Damage assessments were still under way, so the full cost of the quake is not yet known.

Ilya Espino de Marotta became the canal’s administrator on Monday, 7 September 2026, for a term running to 2033. She is the first woman in the post, and the ACP says work on its Río Indio reservoir continues.

SICA, Parlacen and Other Regional Bodies

The Central American Integration System, known as SICA, is the region’s main political club, headquartered in El Salvador. Presidents Mulino and Nasry Asfura of Honduras met in Panama City on Monday, 22 June 2026, and pledged to strengthen it.

The Honduran daily El Heraldo reported that the two leaders also want more regional trade and coordination. The meeting came during events marking 200 years since the Amphictyonic Congress, held in Panama in 1826.

Costa Rica said in May 2026 that Fernández would skip those anniversary events, as the trade dispute simmered. Panama also sits in the Central American Parliament, known as PARLACEN, a regional assembly whose value Panamanians debate.

On 6 September 2026 La Estrella reported that deputy Neftalí Zamora refiled a bill for a non-binding vote on staying. Panama’s Supreme Court declared a 2009 attempt to leave PARLACEN unconstitutional, and no vote on the bill has been reported.

Where Panama Leads and Where It Follows

Panama leads in the Canal, in Colón Free Zone trade and in diplomacy, with a UN Security Council seat in 2026. Colombia holds the other neighbourhood seat, so the two work side by side in New York until the end of 2026.

Panama’s weight lies outside the regional clubs, in the Canal and the free zone, while SICA’s secretariat sits in El Salvador. At home it still debates whether PARLACEN is worth keeping.

The Rio Times Latin America Power Index puts Panama in the group closer to Washington in its October 2026 edition. Its strongest pillar there is state capacity and security, and its weakest is military means; the power map has the table.

What It Means for US Readers

US shipping lines, cruise operators and importers depend on the Canal, so calm across the Panama neighbourhood matters to prices and schedules. The ACP’s budget allows for a challenging water scenario, and the dry-season slots auction shows how slots are sold.

Visitors and residents can read the Panama safety guide, the Panama City page and the flight guide from the United States. Check border rules before crossing to Costa Rica at Sixaola.

Migration is the other US link, as crossings fell from 520,085 in 2023 to 539 in January to September 2026. Monthly releases from Panama’s migration service are the early warning if that changes.

What Prediction Markets Say

Kalshi, a US exchange regulated by the Commodity Futures Trading Commission, lists the bet "Will Trump take back the Panama Canal?". The Yes price was 20.5%, the midpoint of bid and ask, at 10:36 a.m. ET on 16 October 2026.

The bid was 19 cents and the ask 22 cents, and the last trade was 19 cents. The bet resolves Yes if the US government takes control of at least some part of the Canal before 20 January 2029.

About 610,000 contracts have traded, and open interest is about 100,200. These are bets on an outcome, not forecasts by any government or by this newsroom.

Why we show this: prediction markets turn real-money bets into a live probability that moves within minutes of the news, which is why investors, campaigns and newsrooms in the United States now follow them closely. We show them next to polls and official results, never instead of them.

What Is Not Known

Whether and when Panama will restore power sales to Costa Rica is not known. Neither is how the WTO appeal will be heard while the Appellate Body has no members.

No move of Clan del Golfo members into Panama is confirmed, and the Security Minister says there is no reliable information. The 2026 migration figures are preliminary and may be revised.

No US move to take control of any part of the canal has been confirmed. How long the recovery from the October 2026 earthquake will take, and what it will cost, is not yet known.

Frequently Asked Questions

Which countries border Panama?

Costa Rica lies to the west and Colombia to the east. Colombia’s foreign ministry puts the Colombian land border at about 266 kilometres, roughly 165 miles.

What is the Darién Gap?

It is a hard-to-reach jungle on the Panama and Colombia border, where Darién National Park covers almost the whole frontier. Irregular crossings there fell from 520,085 in 2023 to 3,091 in 2025.

Why are Panama and Costa Rica in a trade dispute?

Panama blocked Costa Rican farm goods in 2019 and 2020, and a WTO panel faulted parts of that policy in December 2024. Panama appealed on 24 January 2025, and the appeal is stuck because the Appellate Body has no members.

Is Panama part of SICA?

Panama works with SICA, the Central American Integration System headquartered in El Salvador. Mulino and Honduras’s president pledged in June 2026 to strengthen it.

How many ships use the Panama Canal?

The ACP counted 10,726 transits from October 2025 to June 2026. It built its fiscal 2027 budget on 10,750 transits, allowing for a possible strong El Niño.

Can the United States take back the Panama Canal?

The 1977 treaties handed the canal to Panama on 31 December 1999 but let the United States defend its neutrality. Kalshi bettors priced US control of at least part of it at 20.5% on 16 October 2026 at 10:36 a.m. ET.

Sources: Cancillería de Colombia, land border with Panama; WTO, dispute DS599, Panama and Costa Rica; United Nations Costa Rica, Sixaola binational bridge; UNESCO, Darién National Park; UNESCO, La Amistad; Servicio Nacional de Migración de Panamá, statistics; Servicio Nacional de Migración, irregular transit 2026; INEC Panama, Colón Free Zone re-exports, October to December 2025; Panama Canal Authority, third quarter fiscal 2026; Panama Canal Authority, fiscal 2027 budget; Panama Canal Authority, new administrator; United Nations, Security Council members; US State Department, Office of the Historian, Panama Canal treaties; La Estrella de Panamá, power sales and Costa Rica; La Estrella de Panamá, WTO dispute talks; La Estrella de Panamá, Montería consulate; La Estrella de Panamá, PARLACEN bill; El Heraldo, Panama and Honduras on SICA; Uno TV, Panama reinforces its border; Infobae, Darién flows in June 2026; Pan American Health Organization, situation report on the Panama earthquake; Teletica, Panama suspends electricity sales; Observador, ICE responds to Panama; The Rio Times Latin America Power Index; Kalshi market data from its public API (all accessed 16 October 2026).