During the Spanish-American War the warship Oregon was summoned from the West Coast. The trip took two months to travel 14,000 miles around Cape Horn to the Atlantic. (The American Journey 741) How was the United States supposed to defend it shores if it took ships that long to get between them? The United State had to build a canal through Central America; national security depended on it.
The Politics of the Panama Canal are confusing. This confusion includes the building, the economics and the operation of this facility.
The canal, began in 1881 and finished in 1914(Dolan 55), has caused one country to fail, another to triumph, and another to gain its independence.
There was a need for a canal through the isthmus of Central America. The big question was who would step up and build it. France had just lost the Franco-Prussian War against Germany. The country felt that it had lost some prestige in eyes of other nations. There seemed only one certain way to restore its glory, undertake and complete the most challenging engineering feat in history.
Build a canal through Central America and link the world’s two greatest oceans. (Dolan 53)
The French chose Panama to build its canal because it was far narrower than Nicaragua, it’s closet competitor. They obtained permission from Columbia to lay the waterway. (Dolan 53) A private company was founded in 1879 to raise the needed capital to undertake the construction. Appointed president of the company was Ferdind de Lesseps, who had guided the construction of the Suez Canal. (Panama)
The French abandoned the project in 1889, due to a lack of funding. (Dolan 59) Now it was time for the American’s to get involved. But there was one problem; they had signed a treaty with Great Britain that said, if one or the other decided to build a canal then the two countries would work together. This treaty was called the Clayton Bulwer Treaty. In 1901 the treaty was replaced with the Hay-Pauncefote treaty. It called for Great Britain to give the United States the right to act independently in the development of an Atlantic Pacific waterway. Why did the British agree to the treaty? They were tied up in the Boer War in South Africa and didn’t want to split the bill on a canal? (Dolan 63)
Now congress had to decide on where to dig the canal. The two main choices were Panama and Nicaragua. Just days before the vote on the canal site, Philipee Benau-Varilla obtained ninety Nicaragua stamps that pictured a railroad dock with an active volcano in the background, and sent them to all of the senators with a message: “An official witness of the volcanic activity in Nicaragua. (Mcneese 78) Did it work? Panama got the go ahead.
The United States now to get permission from Columbia to dig in Panama. In 1902, John Hay, the U.S. Secretary of State began negotiate with the Colombian government. An agreement was finally reached in January 1903 in the signing of the Hay-Banau-Varilla Treaty, which granted the United States a strip of land 6 miles wide along the general route laid out by de Lesspes. The U.S. had the right to administer and police this zone. In return they would pay the Colombian government $10 million, and after nine years of operation Columbia would get an annual fee of $250,000. (Dolan 63)
The treaty had to be ratified in both the U.S. and Columbia before it could take affect. The U.S. gave its approval in March 1903, but the Colombian Congress said there was not enough money for the right to dig in Panama. They wanted an additional $5 million from the Americans. They also objected to many of the points on the administration of what was now known as the Canal Zone. (Dolan 64)
When the Columbian Government refused to ratify the treaty, Panama revolted because they feared the United States would build through Nicaragua. After they declared their independence from Columbia, President Theodore Roosevelt ensured the success of the revolt when he ordered a U.S. warship to prevent Colombian troops from entering the isthmus. (Panama) Now Panama had its independence and the U.S. had the right to build the canal.
The Canal Zone was ten miles wide and 50 miles long; it embraced an area of 553 square miles- an area that, totaling 5 percent of the nation’s landmass speared its way directly through the heart of Panama. The Panamanians complained that it chopped their already small country into smaller pieces. The split made it difficult, if not impossible for Panama to grow as a single united nation and with the Canal lying in their path, the people would have trouble moving from one side of the country to the other. Families and friends would be separated. Business would be difficult to conduct across the waterway. Political views might grow too different on each side. In the end, Panama could end up being two countries. (Dolan 101) But these concerns would have to wait the treaty had already been signed, in fact the Canal was already nearing completion.
When the canal was finished in 1914(McCullogh 609) it was approximately 51 miles long. Passage through it by a ship sailing from New York to San Francisco saved 7, 872 miles and it the same plans of operation that the canal has today. It was also very costly. The canal had cost the American’s $352 million. When added you that to the French expenditures the total peaks out approximately at $639 million. In 1914 this made the Panama Canal the greatest single construction project in American History. In, lives the canal cost the Americans 5,609; workers, added to the French, the total swells to nearly 25,000. (McNeese 85)
Another cost to the United States was an indemnity to Columbia of $25 million during the Wilson administration. Apparently this was to smooth out tensions between the two countries. As can be expected Columbia was infuriated by the aid Panama received from the United States. Now Columbia was evolving into one of the most important countries in South America, really only second to Brazil. It was a neighbor to the United State’s canal and it had power. The payment was to insure America’s investment. However this still angered former President Theodore Roosevelt. In a letter he wrote to Banau-Varilla, he said “Is that they are eager to take advantage of the deeds of the man of action when action is necessary and then eager to discredit him when the action is once over.”(McCullough 617)
The Panama Canal had substantial effect on the Panamanian Economy. In addition to the $10 million payment to Panama, the U.S paid $250,000 after the canal had been in operation for nine years. That annuity has increased since, in 1999 it was well over $100 million. The canal also prompted many American Companies to invest in Panama. They bought land from the nation’s rich land owning families. This money seldom filtered down to the ordinary citizens. However, there were advantages for these citizens. (Dolan 98)
The canal and the zone, until recently, were ran by two organization, the zone government (to supervise such bodies as the police, postal, and court systems) and the Panama Canal Company, which held responsibility for operating and maintaining the waterway. These two organizations were the major employer on the isthmus. Between 1914 and 1940 they consistently employed between 10,00 and 13,000 civilian workers. When the work force stood at 13,000 in 1977, 3,500 employees were Americans and 9,600 were non-U.S. citizens. The non U.S. citizens were mainly Panamanians. (Dolan 99)
Many other Panamanians also profited from the waterway. Though not directly employed by the canal, they sold goods and services to the zone and its workers, the passing ships, and the 10,000 U.S. military troops (and their families) stationed in the zone to protect the canal. It has been estimated that the canal accounted for over 20 percent of Panama’s employment. (Dolan 99)
The canal tolls per ton were not raised for 59 years. In 1915 tolls were about $14 million. By 1970 they exceeded $100 million. In 1973 the Panama Canal Company recorded its first loss, this was the reason for the change from 90 cents per cargo ton to $1.08. Revenues in 1975 exceeded $ 140 million. (McNeese 215)
Was the Hay-Banan-Varilla Treaty fair? In the words of former President Jimmy Carter “No Panamanians had ever seen the terms of the treaty of which were highly favorable to the U.S.”. Among the terms that Panama resented was the U.S. control over the zone. The question of sovereignty over the canal aroused deep passions, which came to boil in 1964 with massive rioting by Panamanians, a response to U.S. troops, bloodshed on both sides. In the aftermath, President Lydon Johnson agreed to renegotiate the treaty related to the Panama Canal. (Conaway)
In 1977 United States and Panama agreed on a new treaty. The most significant agreement was the transferring of ownership of the canal to Panama to take the place on December 31, 1999. Also they agreed to cooperate in the defense of the canal. The annual payment was upped to $ 10 million and was to be paid from the canals revenue, plus a payment of 30 cents for each ton of shipping. And when Panama took control of the canal it was free to employ Americans. (Dolan 128)
Also included in the treaty was a neutrality clause. The canal is to remain open to merchant vessels of all nations indefinitely, without discriminations as to conditions or tolls. The clause does not allow the U.S. to intervene in the internal affairs of Panama. It does however give the United States and Panama the responsibility to insure that the canal remains open. (Crane 81)
Though it was rich with symbolic significance the signing ceremony on September 7, 1977, hardly ended the controversy over the treaties. The ratification battle in the U.S. Senate still lay ahead, and it called for the use of every political tool available to President Carter’s team. It was a battle won vote by vote, through personal appeals, political accommodations, and occasionally silly details. Carter recall one senator, a former college professor, was proud of a book he had written on semantics. Before meeting with him to try to persuade him to vote for the treaties, Carter read the entire book – “which was really boring” – and proved that he had by discussing some of it’s point with him. He eventually got the senator’s vote. (Second Decade)
In 1988 the canal became involved in a struggle for power in Panama. Manuel Noreiga had assumed military power over Panama. In response President Ronald Reagan decided to ban the annual payments to Panama and freeze Panama’s assets in U.S. banks. This cut Noriega revenue by $180 million a year. (Dolan 140)
Facing a rapidly deteriorating situation, President Bush ordered U.S. troops into Panama on December 20 1989, to protect U.S. citizens, to meet treaty responsibilities, to defend the canal, and to assist in restoring democracy and bring Noreiga to Justice. The Panamanian democratic opposition formed a new government led by President Guillermd Endum. (Second Decade)
Finally Panama was under democratic control and had something to look forward to. The turning over of the Panama Canal to Panama. No longer would their economic depend on how another country wanted to run things. They now will decide how they want to run the canal. And they will run it as the please because as of December 31, 1999, the day the U.S. turned over the canal, they owned the canal. Finally after decades of frustration they were truly free.
Politics will undoubtedly have an influence in the maintaining, the economics, and the operation of the Panama Canal in the years to come. They will help the canal expand in the lives of more Panamanians and maybe someday even building of another canal over the Isthmus of Panama.
Crane, Phillip F: Surrender in Panama, the Case Against the Treaties. New York:
Dale Books, 1978
Conaway, Janell. America’s. Jan 1999, 16. NewsBank, Online 1999
Dolan, Edward F.: Panama and the United States, Their Canal, and Their Stormy Years.
New York: Moffy Press Inc., 1990
McCullough, David: The Path Between the Seas. New York: Simon a Schuster, 1977
McNeese, Tim. The Panama Canal. San Diego: Lucent Books. Inc, 1997
“Panama”. The Volume Library. South Western Company, 1994
The Second Decade: Panama at the Canal Treaties. U.S. Department of Dispatch, 1990
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