Executive Summary
For most of Earth's history, Panama didn't even exist. It was all open water, a seaway connecting the Pacific and the Atlantic, back when they were still essentially one continuous ocean. Around 20 million years ago, volcanic islands began emerging as one tecnonic plate slowly subducted beneath another. Tectonic uplift and sediments accumulation did the rest, and the Isthmus closed for a good recorded 3 million years ago.
Closing the gap cut off the flow between two oceans and rerouted their currents, strengthening the Gulf Stream. It also opened a land corridor for what's called the Great American Biotic Interchange: armadillos and opossums moved north, and horses, cats, and bears moved south. The exchange wasn't balanced: more North American mammal lineages established and diversified in South America than the reverse.
Every geographic fact about Panama comes back to this.
Panama sits close enough to the equator that conditions are generally unfavorable for hurricanes to form or hold their strength. The Coriolis effect is weak here, and it keeps the principal Atlantic hurricane corridor well to the North. NOAA's hurricane track records go back to 1851, and the pattern holds: the corridor runs through the Caribbean, the Gulf of Mexico, and the southeastern United States and never bends far enough south to reach Panama. No major hurricane landfall is documented for the country in the modern historical record.
Panama is the narrow land bridge where North and South America are physically connected, sitting inside the tropics, which already hold more species per acre than anywhere else on Earth. A country roughly the size of South Carolina has more bird species than the United States and Canada combined.
In 1914, engineers cut through one of the narrowest sections of the isthmus, closing a project that's still counted among the great engineering achievements of the twentieth century. Ships no longer needed to sail around the bottom of South America, a permanent win for global commerce.
Millions of years later, the same geological forces are still shaping Panama's climate biodiversity, a strategic position.
My favorite, most accurate description of Panama unites the geographic advantage with the cultural one: "Panama, Puente del Mundo, Corazon del Universo" - Bridge of the World, Heart of the Universe.
Sources: Smithsonian Tropical Research Institute (STRI); NASA Earth Observatory; NOAA National Hurricane Center (HURDAT2); U.S. Geological Survey (USGS); Panama Canal Authority.
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