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The crumbling colonial jewel that is Panama City's Casco Viejo, the capital's old quarter, is gradually being resurrected. As my wife and I stroll the cobblestones, two bicycle-mounted Tourism Police appear alongside us. Clad in shorts, faultlessly polite, they offer their services on our first day in Panama. They take us to see the gold church altar that was saved when Morgan the Pirate sacked the city in 1671, and the market where Kuna Indians sell their elaborately appliqueed molas. They show us fishing docks and former dungeons. Finally, they proudly point to an impeccably restored three-story house whose curving pastel facade overlooks the Pacific.
Until recently, Panama's economy relied mainly on commerce: canal tolls, Colon's humongous duty-free zone, and banking laws lubricated to let international capital glide through. The U.S. military discouraged cruise ships from lingering in the canal, and Panamanian dictators General Omar Torrijos (the current president's father) and drug thug Manuel Noriega rarely bothered trying to impress tourists.


