PANAMA CITY, Panama — When President Bush stops here on his way home from the Americas Summit, he will see evidence of what he would like to achieve in Iraq: Panama was invaded by the United States, its dictator captured and tried, and democracy is now a way of life.

He also is likely to receive a much warmer reception when he arrives here Sunday than in Argentina, where he was met by angry anti-free trade protesters and at least one Latin American leader who openly sympathized with them.

Panamanian President Martin Torrijos is an enthusiastic supporter of free trade and his country is in talks with the United States on a bilateral accord. Panama also is studying a project that holds much interest for the United States — the nearly $10 billion expansion of the Panama Canal. It must first be approved in a national referendum.

Bush's visit will remind some here of an event orchestrated by his father, former President George H.W. Bush, in 1989, which was both traumatic and welcomed by many — the invasion that overturned a 21-year-old military regime and ousted dictator Manuel Noriega. The United States had accused Noriega of repression and drug trafficking.

The United States replaced Noriega with Guillermo Endara, who previously had won a presidential election that Noriega voided. Since the invasion, three presidents have been democratically elected.

Panamanian officials expect the tone of Bush's two-day visit to be friendly.

"There will be some demonstrations, but I am sure they will be peaceful," Foreign Minister Samuel Lewis Navarro told the AP. "Most Panamanians recognize a special relationship with the United States with its ups and downs and, luckily, this is an up."

Friendly relations between the two countries date to 1903, when Panama declared its independence from neighboring Colombia and U.S. warships patrolled offshore to discourage Colombian attempts to retake the country.

The United States stayed for 97 more years, opening the Panama Canal on August 14, 1914, and building a string of military bases on a narrow strip of land known as the Canal Zone, which served the United States' strategic military purposes in the region.

Under treaties signed in 1977 by former President Jimmy Carter and the Panamanian dictator Gen. Omar Torrijos, the United States handed over control of the canal and the surrounding zone on Dec. 31, 1999.

The United States continues to be the largest user of the Panama Canal, followed by China, and Lewis Navarro said it would be natural for Bush to show interest in the expansion project. Fourteen percent of the United States' exports and imports, as well as 4 percent of the world's trade, pass through the canal, which saves ships a long trip around the southern tip of South America.

But 10 percent of the world's ships today are unable to pass through the narrow waterway. Canal authorities says its expansion would help it remain one of the fastest and easiest shipping routes between the Pacific and Atlantic oceans. Many worry, however, that the project will mean too much debt for the small country.

A scheduled meeting on Monday between Bush and President Torrijos, son of Omar Torrijos, will deal mostly with financial matters, including the bilateral free trade agreement now under discussion.

"The free trade agreement with the United States is one of the pillars of our development plans," Lewis Navarro said.

U.S. investments in Panama in 2004 reached $800 million and total U.S. investments in the country are estimated at more than $2.4 billion.

Bush was to arrive Sunday evening and depart on Monday afternoon. The two leaders may also discuss drug trafficking and terrorism, and the increased flow of drugs from Colombia. According to official records, Panamanian police have confiscated more than 22 tons of cocaine this year alone.