You know…

END GOAL: EU citizenship

I am an American citizen with a passport that doesn’t expire until 2013.
I am now here illegally, as of about 2 1/2 weeks. Not sure how to navigate any of this, despite reading for weeks on end about VISAs, schengen, naturalization, and what have you.

In this particular post, I am addressing the fact that my father is from Panama, and therefore, I have the right to panamanian citizenship by blood/birthright.  I have not applied for it yet, but I will soon… and certainly if it will help with the idea of being legal ..in some form.. in the European Union.

http://en.wikipedia.org/wiki/Multiple_citizenship

Panama is not a part of this agreement with Spain.

http://extranjeros.mtas.es/es/NormativaJurisprudencia/Internacional/ConveniosBilaterales/ConveniosDobleNacionalidad/

Basically, do I have any perks whatsoever in having citizenship with an Ibero-american country?

Un saludo!

bri_ana,
becoming a panama citizen will not give you the right to have a residence permit.
if you have a residence permit and a panamanian citizenship, you only need to accumulate two years legal residence + some paperwork to start application for spanish citizenship. this process takes 2 to 2.5 years.
your problem is how to get a residence permit.
if you stay illegally you need to stay for 2 or 3 years and meet the requirements of arraigo laboral or arraigo social. a long shot.
i would advise you to go back to the usa and plan how to get a residence permit.

okay then, i’ve done a ton (more) research since i last logged in.
here’s the question:

if i return to the USA
furnish my Panamanian passport
return to Spain as a Panamanian
establish residency for 2 years
apply for Spanish citizenship
successfully gain Spanish citizenship after the processing time

will the Spanish authorities know that i am also an American?
will they care?
will they still force me to renounce my US citizenship, despite being a Panamanian upon entry and in court?

bri_ana,
authorities will identify you and your nationality thru the passport you show them.
if you enter with a panama passport, you are a panama citizen traveling in spain.
obviously you are going to apply for citizenship as a citizen of panama residing in spain, so you are not required to renounce your panamanian citizenship.
where in the documents that you submit will they find that you are a united states citizen?

if you are so nervous about losing your united states citizenship, you should talk to the us consulate.
in any case, you do not lose usa citizenship just because you renounced it in front of spanish judge.
one american woman told me that the us consul told her she would lose it if she renounced it according to usa laws.

your first problem is how to get legal residency, regardless of your nationality.

Expatriator,

Thanks for the advice. I’ve just been wanting to be as clear as possible so that I know how to do this properly.  I intend on returning to the US soon so that I can begin the US/Panama double citizenship process.  I called the embassy last week, who told me it should take up to a week in the US, then the rest is done in Panama. After all done, I will return in good time to Spain to begin teaching and interning.