Why Did We Give Away the Panama Canal?

A ship passes through the Miraflores Locks while transiting the Panama Canal.

(PANAMA CANAL AUTHORITY)

On September 7, 1977, General Omar Torrijos of Panama embraced President Jimmy Carter and, with tears in his eyes, thanked him for his kindness toward the people of his country. The two heads of state then walked into the chamber of the Organization of American States and, before an audience of eighteen presidents and the international news media, signed a pair of treaties in which the President agreed to give up the Panama Canal, one of America’s most historically prized possessions, to the nation in which it was built. Carter defied domestic public opinion in an attempt to revolutionize his country’s relationship to the Third World, and he opened a new chapter in the history of a wonder of modern technology. Was it worth it?

The United States had had a close and often troubled relationship with Panama going back to the dawn of the twentieth century. At that time, American and European businessmen looked eagerly toward emerging commercial markets in East Asia, which would require a shortcut between the North Atlantic and the Pacific. The pace of shipping was frustratingly slow, as Asia-bound vessels traveled all the way around the tip of South America.

In 1901 the second Hay-Pauncefote treaty declared a plan for the United States to build a canal through Central America. Secretary of State John Hay then sought an agreement to let the U.S. use a 10-mile-wide stretch of land through Panama, which was then part of Colombia. But the Colombian Senate rejected the deal, and the United States turned to supporting Panamanian secessionists in a bid for independence. On November 18, 1903, the U.S. government signed the Hay-Bunau Varilla treaty with the newly sovereign and friendly nation of Panama, giving President Theodore Roosevelt the right to build and control the sought-after canal.

The canal was completed in 1914 and was a huge success, but that success presented problems. By 1950, 29 million tons of cargo were passing through each year, about half of it American owned. As the United States prospered from its Central American possession, resentment grew among the Panamanian people. In 1964, nationalist riots in Panama turned violent. America’s presence in the Canal Zone had become a source of serious tension with the native population, who saw it as a colonial intrusion. By 1967 American and Panamanian negotiators, fearing that these tensions could have grave consequences for both the country and the canal, drafted a set of principles on which to build a new canal treaty.

In 1968 Colonel Omar Torrijos, Chief of Staff of Panama’s National Guard, seized power from President Arnulfo Arias. Torrijos was determined to take action on the canal, and he adopted an aggressive strategy, calling on other Latin American leaders for support and inviting the United Nations Security Council to hold a special session in his country in March 1973. After the U.N. meeting (as well as after failed negotiations in 1971), Secretary of State Henry Kissinger and Panamanian Foreign Minister Juan Antonio Tack drafted an agreement in which the two countries promised to pursue future negotiations. The goal was to have the United States cede the canal to Panama but reserve for a time the right to defend it.

In the 1976 election campaign, as hard-line conservatives like Ronald Reagan vocally asserted the United States’s claim to the canal, President Gerald Ford let negotiations lapse in the interests of his own re-election. After Carter defeated Ford and was inaugurated, however, the new President took immediate action, retaining Nixon’s chief negotiator, Ellsworth Bunker, and adding the diplomat Sol Linowitz as a co-negotiator. Carter understood that time was of the essence, as both Panamanians and Americans were showing signs of unrest, and he appointed Linowitz for a six-month term in the hope of quick results.

Carter was not disappointed. By August, after making concessions on the right to defend the canal, the U.S. team had brokered a deal. Two treaties, the Panama Canal Treaty and the Treaty on the Permanent Neutrality of the canal, declared that the United States would, by degrees, transfer control of the canal to Panama, completing the process by the year 2000, after which Panama would keep the canal neutral, and both countries could protect it.

With Vietnam a recent memory, Carter and Linowitz hoped their spirit of cooperation toward Panama could usher in a new era of international reason, respect, and peace. They may not have fully achieved that lofty goal, but their actions in Panama were, in hindsight, successful. Those like Reagan who warned of Panamanian incompetence and of sinister motives on the part of the quasi-Communist Torrijos, were in the end proven wrong in their fears. The final transfer of sovereignty took place in 2000 as planned and without disturbance. It went particularly smoothly because 96 percent of the canal’s workers were by then already Panamanian and since 1990 the chief administrators had also been native-born. Though it suffered in the recessions of 2001 and 2002, the Panama Canal continues to prosper and deliver its crucial services. And as of this writing, the current Panamanian President, Martin Torrijos, son of the former dictator, is working toward a multi-billion-dollar expansion to permit more and larger ships to pass through the isthmus. Under new management, the Panama Canal continues to function as a vital gateway between the oceans.

—Alexander Burns, an undergraduate at Harvard College, is a frequent contributor to AmericanHeritage.com