Panama Canal

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On December 31, 1999, the Panama Canal became operated entirely by Panama for the first time in history, though over the proceeding 20 years, the United States had been slowly turning it over to them. The canal has long been a cause of conflict between Panama and the US. The changeover was very controversial, and the question is raised: Should the Panama Canal have remained in the control of the US? First off, it is necessary to have some understanding of the canal’s history. The US built the canal and maintained it well for 85 years after construction. However, Panama never actually allowed the Canal Zone to become part of the US, and although a fee was paid to the Panamanian government for the use of the canal, the government receives far more from the actual ownership. On the other hand, the people of Colon and Panama City, which benefited directly and indirectly from US presence, did not want the US to leave. Furthermore, there is the question of whether the US or Panama operate this important resource better. 

The French were the first to try and build a canal across South America, starting in 1882. Before they could start work, they needed to secure a concession from the Columbian government, which controlled Panama at that time. However, their project failed, thousands of workers died (mainly from disease,) and the company went bankrupt six years later, in 1888. A Frenchman named Philippe Bunau-Varilla managed to keep the effort from collapsing entirely, and looked for another party to take up the concession. The United States, which was also interested in building a canal, negotiated to buy the concession from the French. However, Columbia refused the sale.

Meanwhile, nationalism was stirring in Panama. An agreement was made with the US government that if the US would help Panama gain their independence, they would allow the canal to be built. In 1903, Panama became its own country, and the United States immediately recognized the new government. Columbia sent troops to reclaim Panama, but US warships prevented them from landing.

After the United States helped Panama win its independence, a treaty was immediately negotiated to allow the US to build a canal. The treaty granted considerably more to the US then the failed agreement with Columbia had, including rights to use military within Panama and US control of the Canal Zone in perpetuity. In essence, the Canal Zone would be part of the US in all but name. However, the man who signed for the Panamanians, the Frenchman Bunau-Varilla, was not part of the official delegation from the new Panamanian government, and some Panamanians felt that the rights granted to the US in the treaty were excessive.

Construction of the current Panama Canal began in 1904. Casualties among the workers were much lower due to extensive projects to control yellow fever and malaria, and the canal was completed in ten years, three years ahead of schedule. However, the cost was a phenomenal $350 million, the most expensive operation the US government had ever undertaken. In addition, Panama was paid ten million dollars, plus another quarter million each year, for use of the territory. This was a very large amount of money at the time, and the fees would be raised in 1936 and again in 1955. During construction, the US also established stores, schools, and military bases around the canal.

As agreed in the 1903 treaty, the United States Military had been allowed to take action within Panama to ensure the safety of the canal. However, this meant that Panamanians had no military of the own, and sometimes felt that the US interfered with Panamanian interests. In 1936, a new treaty was signed that increased the amount paid the Panamanian government for the use of the land, and limited the area in which the US could use its military to within the Canal Zone.

This increased Panamanian independence and caused the growth of their armed forces. However, in 1941, the National Police, Panama’s closest thing to a military at the time, overthrew the republican government and took over. They made the police more like a military, and renamed it the National Guard. In 1968, the government was overthrown again, and a military junta was created. They dissolved the National Assembly, suspended the constitution, censored the press, and used the National Guard to suppress opposition. On the other hand, they started massive modernization projects in Panama, especially Panama City. Although this caused a large national debt, it won much popular support.

Despite the 1936 and 1955 treaty modifications, Panama still chafed over the United States controlling the canal. Rioting and conflicts with US personnel caused major problems for relations between the two countries. In 1977, a new treaty was proposed which would phase out US control, and turn the Panama Canal over to Panama. US workers would train Panamanian replacements, Panama would have a hand in the government of the canal, and Panama would gain control of more than half of the land of the Canal Zone. The rest, renamed the Panama Canal Area, would remain under the US until the changeover was completed at the end of 1999. However, it would be subject to the Panamanian legal system. The treaty was modified in 1978, to maintain permission for the US to use its military in defense of the canal. However, over the next two decades, military bases in the Canal Zone and all US duties for the canal would come under Panamanian control. This new treaty finally went into effect in 1979.

Two years after the treaty was signed, the leader of the Panamanian military junta was killed in a plane crash. The Panamanian government then came under the effectively complete control of Manuel Noriega. Noriega, a former informer for the CIA, acted as the power behind the throne in Panama for a while, selecting and removing presidents. During this time, Panamanian relations with the US became worse and worse. Noriega was found to be involved in drug deals, organized crime, and possible dealings with Cuba. When he was indicted in 1988, the US insisted that he be removed. Trade sanctions were imposed, and the US stopped its payments for the canal, which had reached ten million dollars per year plus a share of all fees collected after the two treaty modifications. Although the current president in Panama tried to have Noriega removed, Noriega dismissed him instead. When the 1989 elections went strongly against Noriega’s candidate, however, he declared them null and void and made himself president. He immediately declared that Panama was at war with the US, and an unarmed US soldier was killed by Panamanian troops the next day.

The United States response, termed Operation Just Cause, was quick and effective. A mere five days after Noriega’s declaration, the US invaded Panama City. More than 27,000 troops were involved including about 13,000 already stationed in Panama. They removed Noriega from power, captured him, and sent him to Florida to stand trial. Within a month of his becoming President, Noriega was in jail. However, considerable damage was done to Panama City, and despite the name, many people worldwide felt that Operation Just Cause was a misuse of the US armed forces, and an unjustified attack on a smaller country.

After the invasion, the winner of the 1989 elections became president for Panama. However, he never achieved much real power, and although Panama began to recover from its time under military rule, the United States had effective control of the government. The military was turned back into a civilian police force, and a massive aid project (nearly one billion dollars) was set up for Panama. Surprisingly, in the next elections, the winner was the candidate supported by Noriega’s former party. A banker trained in the US, he brought much wealth and foreign investment to Panama. At the same time, the Panama Canal was slowly transferring to Panamanian control, and most of the Americans were leaving.

In 1999, Panama’s first woman president and current leader was elected. At the end of the year, control over the Canal Zone transferred entirely to Panama, which for the first time in 95 years controlled all of its territory. Although some US workers remained on the canal (part of the treaty was that no workers would lose their jobs), Panama had complete control over the canal and collected all money from it.

The interesting thing is that the people of Colon and Panama City (the country’s two largest cities) did not want the United States to leave. When the canal was operated by the US, the Canal Zone and the areas around it were like a small part of the US. US schools were available to the children of Panamanians. US jobs were available to Panamanians, who could make far more working on the canal than an equivalently skilled job elsewhere in Panama, and they could have job security and benefits too. The people who lived alongside the Canal Zone were glad of the US influence.

The US influence was not all good for Panama, however. The US claimed extensive amounts of land, limiting the expansion of Panama City and Colon, both of which would likely have expanded well into the area the US claimed. Panamanians were paid well by their standards, but the US citizens working on the canal often made much more. Workers of other nationalities and cultures, such as West Indians and African Americans, descended from those who had helped build the canal, changed Panamanian culture and took jobs that might otherwise have gone to Panamanians. The disadvantages of US culture, such as leftover segregation from early in the century, were also present in the Canal Zone.

The fact remains that although much of Panama, and certainly the Panamanian government, wanted the canal under Panamanian control and the United States out of the Canal Zone, the people who lived and worked there felt differently. However, this is not necessarily an indication that the US should take back complete control. Historically, the Panamanian students and workers around the canal felt that Panamanians should control the canal. What changed their minds?

The other question is: Who managed the canal better? It is too soon to be sure, and accurate statistics are difficult to find. However, people who have worked in small jobs on the canal under both administrations supported the US by an overwhelming majority. They pointed to how well the canal ran in the years before the US left, and said that the canal was at its best then.

Panama is blamed for many things that go wrong on the canal, such as delays, increase in fees, and accidents and collisions, though the same things sometimes happened under the US. For example, while transit prices have been steeply increasing, they increased under the US as well. Some problems, however, are likely a result of policy changes. The US put yachts and other small boats through the canal together, not making them share locks with large ships. This severely reduced the risk of damage to such small craft, but meant that the canal collected less money when the smaller boats went through.

The use of the budget is another contended point. Although the US made sure that all of the workers currently employed at the time of the changeover would keep their jobs and pay, there have been almost no new workers hired, and few raises for current workers. Working on the canal is still a good job for a Panamanian, but it is more difficult to get such a job than it was under the US. Panama tried to hire new workers at Panamanian wages, but the current workers threatened to strike if any employees were not paid US wages. Panama is also spending an immense amount of money to purchase new guidance vehicles for large ships, despite the fact that the canal has plenty of them at this time. Beyond that, the canal, which is non-profit, sends about 200 million dollars to the Panamanian government each year. Many of the canal workers feel that more of the money should be spent to hire more workers. They also claim that most of the money that goes to the government is not used in a way that helps the Panamanian people.

Of course, the money the government makes from the canal now is far more than what the US was paying. Panama’s economy was very weak for a long time, and although it started recovering after Noriega was removed, more money is certainly welcome. The canal is a constant source of income, located right on Panamanian land.

Who has the better claim on the canal? The canal is located within Panama, on Panamanian territory. However, Panamanians could not have built the canal themselves, and Panama might have taken much longer to achieve independence without the help of the US. The US invested an immense amount of money and effort into building and defending the canal. However, even with the payments sent to Panama, the canal has long since paid back what it cost. The US maintained and operated the canal for many years, and when the US left, many of the workers wished they hadn’t. On the other hand, just a few decades earlier, they had all been trying to get Panama to take over the canal. 

It seems that the best time for the Panama Canal was when both the US and Panama operated it together. Both governments made money from the canal, and while most of the workforce was Panamanian, they were treated like US workers. Relations between the US and Panama were on the rise for the first time in many years, and many of the advantages of living in the US were available to Panamanians near the canal. Unlike throughout much of Panamanian history, there was very little complaining from the Panamanians around the canal. The only thing that would have made them change their minds in recent years is that, during the time between 1979 and 1999, the US and Panama jointly operated the canal. Living in the Canal Zone was like living in a small part of the US and working on the canal was like having a job in the US, but Panama was responsible for a lot of the canal’s operation and made a lot of money from it. In other words, it was the best of both options.

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