Panama Canal

Panama Canal


From the time of its opening in 1914 until 1977, when the United States transferred it to the nation of Panama, the Panama Canal was a symbol of U.S. influence in the Americas and, ultimately, the world. Despite the bitterness that attended the debate over its transfer to Panama, combined with fears of foreign takeover that surfaced when Panama took formal control on December 31, 1999, the Canal lacks the strategic importance it enjoyed in its heyday. Still, it remains one of several important "chokepoints"—areas in which the flow of the world's oil supply traverses a narrow passage vulnerable to attack—and for this reason, the United States remains committed to the Canal's defense.

Early history

From the earliest voyages of discovery in the area of Central America and the Caribbean, it became clear that a canal across one of Central America's narrowest points would greatly shorten travel and transport time between Atlantic and Pacific ports. In 1835, the U.S. Senate passed a resolution in favor of building such a canal, but through Nicaragua. In 1881, a French team under the leadership of Ferdinand de Lesseps, builder of the Suez Canal, attempted to build a canal across the isthmus of Panama, but the project suffered a number of misfortunes, including bankruptcy and outbreaks of disease among workers. The French project was scrapped for good in 1898.

Meanwhile, the idea of a canal remained a topic of debate in the United States, which still favored a route through Nicaragua. After much political wrangling, however, Congress in 1902 passed the Spooner Act, which authorized the United States to purchase the assets of the French company and begin building a canal through Panama. The latter at that time belonged to Colombia, and when treaty negotiations with Colombia stalled, U.S. authorities gave their support to a declaration of independence by Panama in November 1903. Colombia, convulsed by four years of civil war, could do little to stop the act of secession, and the United States completed a treaty with the new nation of Panama. In February 1904, Congress created the Panama Canal Zone.

The building of the Canal took place over a 10-year period beginning in the summer of 1904. Its builders, who numbered as many as 40,000 at any one time, consisted of American and European engineers and technicians, with Latin American and Chinese immigrant labor. Among the challenges they confronted were disease, carried by mosquitoes that lived in the swampy lands along the canal route, and topography. Rather than build at sea level, the engineers finally decided on a plan involving a series of locks and an earthen dam, which created what was then the world's largest artificial lake, Gatun. The Canal—which actually follows a route from the northwest to the southeast, rather than east to west—opened on August 15, 1914.

Rethinking the Canal

Although the Canal was a vital lifeline during the two world wars, by the time of the Korean War, its limitations had begun to show. The Canal could not accommodate very large aircraft carriers, an increasingly critical aspect of U.S. national security. By the mid-1970s, most large oil tankers were also too big for passage.

Coupled with the physical issues were political ones associated with the growth of anti-American sentiment in Panama and elsewhere. On January 9, 1964, American refusal to fly the Panamanian flag over a high school in the Canal Zone sparked riots that left 23 Panamanians and four U.S. Marines dead. Afterward, Panama called for new treaty discussions with the United States.

The treaties. On September 7, 1977, President James E. Carter and Panamanian military dictator Omar Torrijos signed the Panama Canal Treaty, which abolished the Canal Zone, terminated all prior treaties regarding the Canal, and provided for the full transfer of the Canal to Panama on December 31, 1999. A separate Neutrality Treaty guaranteed the neutrality of the Canal in perpetuity.

The Neutrality Treaty and several aspects of the Panama Canal Treaty served to protect U.S. interests—interests that, in the view of many Treaty supporters, were best supported by a voluntary transfer of the Canal. The alternative, supporters maintained, would be a political and public-relations disaster for the United States, and would only serve to bolster Latin American resentment against the wealthy, powerful neighbor to the north.

As ten percent of the world's ships are unable to pass through the strategic Panama Canal waterway, the canal is undergoing its largest expansion since workers carved the 50-mile path through Panama's mountains, linking the Pacific and Atlantic oceans. AP/WIDE WORLD PHOTOS.
As ten percent of the world's ships are unable to pass through the strategic Panama Canal waterway, the canal is undergoing its largest expansion since workers carved the 50-mile path through Panama's mountains, linking the Pacific and Atlantic oceans.

Opponents to the Canal agreements, led by future President Ronald Reagan, cited the Treaty as one further sign of America's worldwide retreat, and warned of foreign takeover. Nevertheless, the transfer plan enjoyed support from a number of Republicans, including former President Gerald R. Ford and former Secretary of State Henry Kissinger. In 1978, the Senate ratified both treaties, and in 1979 Congress passed the Panama Canal Act. Among its many provisions, the Act created the Panama Canal Commission, which would act as custodian over the Canal for the next 20 years.

The transfer. Panama has not fared well in the years since the Treaty. The United States deposed another dictator, Manuel Noriega, in 1989, acting partly to protect the Canal from takeover. The country has been run by civilian governments since then, but these have proven inadequate to solve the nation's domestic problems. As the December, 1999, deadline loomed, some Panamanians expressed reservations regarding the transfer of the Canal.

On the one hand, its acquisition would greatly enhance national prestige, but many wondered if any small, poor country could undertake an operation hitherto over-seen by the world's leading superpower. Similar concerns in the United States led to a proposal regarding a continued U.S. military presence. However, talks between the two nations ended in September, 1998, without any such agreement.

On the last day of the 1900s, U.S. Army Secretary Louis Caldera led a delegation that officially turned over control of the Canal to Panama, represented by President Mireya Moscoso. Minutes before the hoisting of the Panamanian flag over the Canal administration building, a triumphant Moscoso proclaimed to her people, "The Canal is ours!"

The Canal Today

Subsequent events have not served to reinforce this initial enthusiasm. The Canal has faced several environmental problems, including a lack of rainwater, important to the transport of ships through its 12 locks, caused by droughts resulting from the El Niño weather phenomenon. Political and economic corruption has also shadowed the Canal. Not only did a local land-sale scam involving Canal properties bilk investors, but in November, 2000, it was discovered that millions of dollars in U.S. equipment (including firearms) from the former Canal Zone had disappeared.

Some of the fears raised prior to the transition, however, have proven illusory. One was the question of Chinese control, a powerful issue in Washington due to allegations of widespread Chinese espionage against the United States during the administration of President William J. Clinton. When the Hong Kong conglomerate Hutchison-Whampoa gained a contract to manage ports on the Atlantic and Pacific sides, this raised concerns that the Chinese might use this as an opportunity to seize control of the Canal. Subsequent events, however—or rather, the lack of events in this regard—have served to support the view of those who pointed out that China has never been expansionist beyond Asia.

If the Canal faces a serious foreign threat, it is likely to come from much closer to home, such as from Colombia, which continually teeters on the brink of anarchy as its government battles drug traffickers, revolutionaries, and paramilitary groups. At the beginning of the twenty-first century, many international observers expressed grave concerns that Panama in general, and the Canal in particular, could be drawn into these struggles.

In any case, the Canal lacks the strategic significance it once held, and in 2000 only 1.7 percent of total U.S. petroleum imports passed through it. Though as many as 10,000 vessels navigate the Canal each year, traffic has declined since the peak year, 1970, and today 10 percent of the world's cargo ships are too large to traverse it. Additionally, the Trans-Panama Pipeline, opened in October 1982, could be used to ship oil across the Panamanian isthmus if the Canal were closed. Discussions regarding an enlarged or alternate canal are ongoing, though it is unlikely such a project could undertaken without a wealthy nation or nations to underwrite it.



Collin, Richard H. Theodore Roosevelt's Caribbean: The Panama Canal, the Monroe Doctrine, and the Latin American Context. Baton Rouge: Louisiana State University Press, 1990.

Falcoff, Mark. Panama's Canal: What Happens When the United States Gives a Small Country What It Wants. Washington, D.C.: AEI Press, 1998.

Leonard, Thomas M. Panama, the Canal, and the United States: A Guide to Issues and References. Claremont, CA: Regina Books, 1993.

Major, John. Prize Possession: The United States and the Panama Canal, 1903–1979. New York: Cambridge University Press, 1993.

Strong, Robert A. Working in the World: Jimmy Carter and the Making of American Foreign Policy. Baton Rouge: Louisiana State University Press, 2000.


Americas, Modern U.S. Security Policy and Interventions
Carter Adminstration (1977–1981), United States National Security Policy
Clinton Administration (1993–2001), United States National Security Policy
Suez Canal

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