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Or do you think people will be like "oh look like that tusked omniped has just killed and puked down that womans throat. OMG not another braindead zombie to try and make conversation with. Whatever, aliens are so yesterday"
Now there are also successful EXALT Covert Ops missions in Enemy Within (but you might had a Propaganda from them, which raises the panic by the same amount)
Then you would have literally no way to lose outside of one (Alien Base Assault) or two (Base Defense) missions. There are also the very first mission and the very last, but those allow you to just restart them instantly without even a reload.
You see why you can't remove panic?
I use to believe that was because you had not done a mission to their satisfaction, needless to say it just meant a little less money, it never got in the way of play or ended your game as this panic mechanic can.
And countries left if you did poorly in their region (ignoring bases and UFOs, doing bad missions) or when they were taken over by Aliens.
So, yes, panic existed in the Original game. It just wasn't called that and had no direct tracker.
And again, without panic, you have NO OTHER WAY TO GET A GAME OVER (besides the two mentioned story missions), meaning if you disable panic, you can't lose. Ever. Making even things like Impossible Ironman a breeze to win.
That's... the same thing, really. Except instead of trying to guess why the nations are reducing funding or are panicking, you know very well why.
Three nations send message of "JESUS ♥♥♥♥♥♥♥ CHRIST ALIENS RAMPAGING DOWNTOWN GET THE ♥♥♥♥ HERE!" and... you only can answer one places. So other places think you are doing bad job.