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US President-elect Donald Trump’s remark that he would not rule out the use of military force to secure control over the Panama Canal has sparked a fresh debate and thrown the spotlight on the critical global waterway connecting the Atlantic and Pacific Oceans.
“The Panama Canal is vital to our country, it’s being operated by China…we gave the Panama Canal to Panama, we didn’t give it to China and they’ve [Panamanians] abused it; they’ve abused that gift,” Trump said, prompting a swift and firm response from Panama’s Foreign Minister Javier Martinez-Acha. “The only hands that control the canal are Panamanian, and that’s how it will continue to be,” Martinez-Acha hit back.
Built and managed by the US for several years, the Panama Canal was transferred back to the country in 1999 under a 1977 treaty. It is this decision that Trump is now bringing into question.
Since its inception, the Port of Panama has been a crucial international hub for the global movement of goods. In the 16th and 17th centuries, it was silver, slaves, and textiles; today, it is oil, cars, and industrial products. At the heart of this connectivity lies the Panama Canal, which links the Atlantic and Pacific Oceans through the narrow Isthmus of Panama.
Completed in 1914, the canal is one of the two most strategic artificial waterways in the world alongside the Suez Canal. For ships travelling between the US’s east and west coasts, the canal cuts the journey by 8,000 nautical miles, sparing them the perilous passage around Cape Horn.
The Panama Railroad, built by the US in the 1850s, paved the way for the Panama Canal but it was the French attempt at building a canal in the 1880s that first disrupted Panama’s close ties to its port.
Early in the 20th century, US President Theodore Roosevelt made canal construction a priority. At the time, Panama was part of Colombia, a country facing internal strife. By 1886, Colombia became a centralist government, stripping Panama of its autonomy. Tensions boiled over into The Thousand Days’ War (1899-1902), a bloody civil war in which Panama was a key battleground.
In 1903, after the war ended, some Panamanians saw the canal as their best hope for economic recovery. On January 22 of that year, the US and Colombia signed the Hay-Herrán Treaty, granting the US the right to build the canal. But Colombia’s Congress rejected the treaty, citing concerns over sovereignty.
Meanwhile, a separatist movement in Panama, backed by the US, declared independence on November 3, 1903. The US and newly independent Panama quickly signed a treaty giving the US control over a 10-mile strip of land for the canal’s construction.
In the 1903 treaty, Panama gave up the canal zone, but crucially, the cities of Panama and Colón and their ports were excluded from US control. Panamanian historian Marixa Lasso writes in Erased: The Untold Story of the Panama Canal: “Perhaps nothing captures the contradictions of Panama’s independence more than the presence of U.S. gunboats during its independence declarations.”
Noel Maurer and Carlos Yu echoed a similar sentiment in The Big Ditch: How America Took, Built, Ran, and Ultimately Gave Away the Panama Canal. “It was an American plan, made for American interests,” Maurer and Yu write, “with global benefits being mostly incidental.”
In 1904, Roosevelt established the Isthmian Canal Commission (ICC) to oversee canal construction. According to Maurer and Yu, the ICC was a failure in its early years. “It was an unmitigated disaster,” they write, critiquing the ICC’s management of the canal from its Washington headquarters during its first decade.
The Americans who arrived in Panama encountered yellow fever and malaria. Initially, officials thought Panama City’s small population of 20,000 in 1904 would make it possible to eradicate the Aedes mosquito through fumigation. After three failed attempts and several American deaths from yellow fever, they adopted more effective measures. The yellow fever incidence plummeted, and by December 1905, the canal commission could claim, “yellow fever has been virtually extirpated from the Isthmus.” The US had triumphed where the French had failed some decades ago.
Lasso argues that transforming Panama into an American model of urban modernity in the tropics proved increasingly difficult for ICC officials. Highlighting the tactics adopted then, she observes that the US aimed to transform Panamanians into “jungle nomads” and strip their towns of historical and political ties to Panama. Only then could the canal zone’s inhabitants be moulded into subjects of a “higher civilization”, writes Lasso.
The canal’s completion in 1914 marked the US as an engineering powerhouse but it came at a heavy human cost. Thousands of people lost their lives during the construction of the Panama Canal. The project, which began in 1904, cost $326 million – nearly double the original $144 million estimate.
After opening in 1914, it faced setbacks, including landslides, strikes, and World War I, delaying full commercial traffic until 1920.
The US maintained a strong presence in Panama, intervening militarily and politically. Early on, it disarmed Panama’s police force and abolished its nascent army. By 1914, the US Navy monopolised radio communications on the isthmus. After anti-American riots in 1915, the US demanded Panama surrender high-powered rifles, and in 1929, Pan American took control of Panama’s air travel.
The Panama Canal’s strategic value as a vital route for the Allied war effort was highlighted during World War II. “In the last full fiscal year of the war, 1945, the canal administration recorded that over 10.7 million tons of U.S. military cargo passed through,” Maurer and Yu write.
However, relations between the US and Panama soured over disputes concerning canal control and the treatment of Panamanian workers, among other issues. By the post-WWII era, the canal began to feel more like a strategic liability than a military asset. While still important to the US, the practical benefits of maintaining control were diminishing.
Tensions erupted on January 9, 1964, with anti-American riots in the Canal Zone, resulting in deaths and a temporary severing of diplomatic ties. In response, the Lyndon Johnson administration in the US intensified negotiations for the canal’s handover. The 1967 Panama Canal Treaty draft proposed joint administration, with five Americans and four Panamanians overseeing the canal.
By 1977, when US President Jimmy Carter began public negotiations to return the canal to Panama, the tangible benefits of US control had largely dissipated. Tensions resurfaced in the late 1980s under Panama’s military leader Manuel Noriega, who was removed from power after the US invaded Panama as part of the “war on drugs”.
After years of negotiations, two treaties were signed during Carter’s presidency, declaring the canal neutral and open to all vessels. They established joint US-Panamanian control until December 31, 1999, when Panama would gain full control.
Once Panama assumed control, shipping volumes quickly exceeded the canal’s capacity, prompting a $5.4 billion expansion project completed in 2016. However, droughts have led to lower water levels and operational challenges, prompting authorities to impose traffic restrictions and raise fees.
These curbs have rankled US politicians, including Trump, who called the canal’s fees “highly unfair” given the “extraordinary generosity” shown to Panama by the US. He also raised concerns about China’s alleged growing influence in the region.
The construction of the Panama Canal was a monumental endeavour in a small economy, fraught with challenges. Yet, scholars argue the canal brought two significant achievements for Panama: the canal itself, an engineering marvel that transformed global maritime trade, and the successful eradication of malaria and yellow fever in the Canal Zone, making it a healthier and more viable site for construction and operation.
It is perhaps these achievements that prompted Trump to criticise Carter’s decision to relinquish the canal, saying, “He was a very fine man, but that was a big mistake.”
Further reading:
Erased: The Untold Story Of The Panama Canal by Marixa Lasso
The Big Ditch: How America Took, Built, Ran, and Ultimately Gave Away the Panama Canal by Noel Maurer & Carlos Yu
