Who Is the Owner of the Panama Canal Today?

Did you know that the idea of building a canal across Panama dates back to the 16the century? In 1513, Spanish explorer Vasco Nunez de Balboa was the first European to find out that the Isthmus of Panama was just a narrow land bridge parting the Pacific and Atlantic oceans. That discovery birthed the search for a natural waterway that could connect the two major oceans. The surveyors sent by Charles V decided that constructing a canal was impossible, so they called it off in 1534. France engineered the canal starting 1881 until the canal finally opened in 1914. 

Today, the Panama Canal Authority owns and controls the canal. The Panama Canal was owned by the United States the entire 20th century despite France’s initial work on the project. The US took over the construction in 1904 after France stopped working due to the high worker mortality rate (more than 25,000 workers died) and engineering problems. It was only at the end of the century, in 1999, that the US transferred the operation and management of the Panama Canal to Panama.

Learn more about the history and controversies involved in the ownership of the Panama Canal as we dissect them below. 

Why Did the US Give up the Panama Canal?

The US control over the Panama Canal in the 20th century definitely did not sit well with Panamanians and the rest of the Latin Americas. For that long, there was tension between the US and the Latin Americans. Many locals of Panama cited experiences of how they weren’t allowed near the waterway and how the canal was this US land they simply weren’t allowed to enter. 

In 1997, President Jimmy Carter and Panamanian dictator Omar Torrijos agreed to the transfer of control of the Panama Canal back to Panama in 1999. They signed what is now known as The Panama Canal Treaty or Torrijos-Carter that authorized the immediate eradication of the Canal Zone, a US-controlled area that divided the Republic of Panama. Many US politicians were against giving up the Panama Canal, but the administration felt it was time to end the growing tension between the US and Panama.

What many people don’t know is that the US didn’t have the Panama Canal as a property to give in the first place. The US only had the canal as a lease. After the French gave up the construction of the canal, Theodore Roosevelt failed at buying the property from Colombia, which Panama was a province of at that time. He sent the US Navy to blockade the Colombian Navy from entering Panama. 

Within just a week, Secretary of State John Hay and French Diplomat Philippe Bunau-Varilla created a treaty to lease the 10-mile strip in the center of Panama from the Republic of Panama to the US. The US only got the exclusive right to defend the canal, assured that the canal had international neutrality to all countries, and the right of first rejection for a new canal or expansion proposal. 

The Panama Canal was never a property of the United States. They simply had a massive military control that deprived the Panamanians of having anything to do with the canal for a century. 

Why Did the US Build the Panama Canal?

It really makes one wonder why the US offered to continue building the Panama Canal despite the French’s good reasons for their discontinuance of the project. If you go back to the 16th-century history of the canal, however, you’ll be able to understand the many values of this canal–practically, economically, politically, etc. 

The Panama Canal was a geopolitical strategy to make the United States the most powerful country in the world. The Americans knew that moving ships from east to west quickly would give them great power because they would be able to control the two major oceans. At that time they took over the canal’s construction was amidst the war where it was crucial to have such control over the Pacific and the Atlantic. There was no air power at that time, so maritime power was an asset when everyone fought in the sea.

The United States saw the Panama Canal as the opportunity to distinguish itself from the old powers of Europe. The vision was to gain global power through control of the key oceans in the world, especially during the war. It didn’t translate well with the Panamanians, of course. Still, the Panama Canal remains a central American national identity as it has exemplified what was then visualized as a beneficient self-image. 

Who Uses the Panama Canal?

The Panama Canal is known for its trade and military significance. Those things were what the US politicians against the 1999 authority transfer were holding on to. Historically, of course, the military aspect of the waterway’s function was the highest priority. In 1898, Theodore Roosevelt was interested in building a canal for the Spanish-American war. That’s why later on, he fought to lease the rights to the Panama Canal. 

Ships that transport commercial goods such as grain, automobiles, and other products are the regular uses of the canal. It’s cheaper and faster to transport cargo between the Atlantic and Pacific Oceans. There are still military ships passing by the canal these days, although they are purely for traveling purposes. 

Before the canal started operating, vessels moving between New York and San Francisco ports would have to sail around Cape Horn which is already the southernmost point of South America. That would be a 67-day, 12000-mile trip now reduced by 8,000 miles, making the transit just 8-10 hours. 

Does the US Make Money From the Panama Canal?

Leasing the Panama Canal to the United States also meant giving them profit control, although it wasn’t so much about the money back when they took over the construction. These days, the canal earns revenues from different fees imposed on cargos passing by and a few tours conducted by the locals. 

When the authority over the Panama Canal was handed over to Panama, they’ve taken sole control over everything that concerns the canal. The Panama Canal Authority (ACP) is in charge of setting up the operations of the canal including its financial aspects. All the money obtained from the canal’s business transactions goes to Panama, not the United States. 

The law also states that part of the Panama Canal Authority’s responsibilities is maintaining the profitability of the waterway. The ACP has financial autonomy over the Panama Canal. they do They to make sure that Panama’s economy can benefit greatly from such an important source of income without selling out to private interests. 

Who Protects the Panama Canal?

The Torrijos-Carter Treaty was very specific about the protection aspect of the Panama Canal. Panama received the responsibility of keeping the waterway safe and thriving upon the 1999 transfer of authority. However, it doesn’t mean that the Panama Canal Authority is alone in making sure the canal is secured at all times. 

The treaty states that in case there’s a threat to the neutrality of the waterway, the United States is free to exert its right of using military force to defend the Panama Canal. The ACP does a great job of maintaining efficiency, peace, security, and consistent income in the canal, but advanced threats certainly call for the assistance of the United States.

Who Paid for the Panama Canal?

Of course, it took some money to build this engineering marvel. The Panama Canal’s construction is not your ordinary infrastructural project, after all. Still, it’s interesting how the expenses for the canal had only cost less than estimated or expected by anyone at all. Add the surprising fact that there weren’t any corruption issues involved in the project when it’s most likely the type to be plagued by such a problem.

The Panama Canal cost Americans an estimated $375,000,000. That includes the $10,000,000 given to Panama and the $40,000,000 paid to the French company that initiated the construction efforts of the waterway. At that time, it was the only most expensive construction project in the entire US history.  Fortifications cost extra, it amounted to $12,000,000.

Other unfortunate costs of building the canal were the lives of many workers, though. Hospital records report that 5,609 lives were taken by accidents and diseases during the American’s takeover. Back in the French era, there were already 25,000 deaths that had taken place during the project.

What Was the Impact of Giving the Panama Canal Back to Panama?

The political impact in Panama was the most significant consequence of the transfer of control to Panama. Just within two years into the transition, the Canal Zone was completely abolished. Although the Americans were still managing it and there were still military bases around so the security was in the hands of the US, the area was already a Panamanian land. 

There wasn’t any tension between the US and Latin America anymore. The canal was the symbol of American colonialism in Latin America, and the transfer of management back to Panama erased all those issues away. The Panamanians are now managing the canal well. There are no cases of corruption within the operations and the profit goes straight to the country. 

Many locals of Panama felt a huge sense of relief starting in 1999 when the official transfer of authority was done. They were able to get more into the trade business going on the canal, helping out to ensure there is growth in that area. The revenues increased indeed, and the 3 major ports of the canal paved the way for thousands of jobs. The result was an industry of dedicated shipping services.

The ecotourism in Panama has also grown tremendously over the years. There are cruises or organized tours along the canal where many locals get a decent income. It’s also a nice way to show people from all over the world how incredible this manmade creation is. The canal alone has increased tourism, job opportunities, trade income, and stronger global connections for the country. 

Lastly, of course, it’s the element of peace that’s the most important here. The neutrality clause signed in the Torrijos-Carter treaty, the political stability, and the absence of corruption despite the impressive earning potential of the waterway has all been maintained since 1999. 

Conclusion

It has been a long journey of tragedy, war, diseases, and differences just to get to the point of handing the Panama Canal to its rightful owners, the Panamanians. In the end, this amazing waterway will always be for everyone to use. It’s for both the enterprises who have products to ship and tourists who want to experience a partial or full transit through the iconic canal.

Matt Romero

I’m Matthew Romero, one of the guys behind PanamaLifeInsider.com I am incredibly passionate about Panama, its beautiful territory, and all the incredible opportunities which offer to people coming here from all over the world both either visiting and settling. In this blog, I decided to share my passion with you!

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