The Panama Canal is 82 km long, around 15,000 vessels use it every year, it takes around 12 hours to navigate it, the fees collected represent 5% of Panama’s GDP, 40% of US containers in the world pass through it, and it reduces the distance of travel by more than half for vessels going from the Pacific to the Atlantic Ocean compared to the route south of Chile and Argentina. The American Society of Civil Engineers has called the Panama Canal one of the 7 Wonders of the Modern World; it's one of the largest and most difficult engineering projects ever undertaken and is the largest public construction project in U.S. history. Today, a system of locks at each end of the Canal lifts ships up 26 meters above sea level to an artificial lake. Ships traverse the artificial lake, as well as a series of improved and artificial channels, and then are lowered again in more locks to sea level at the other side.
In the 19th century, Panama didn’t exist as a country; it was part of Colombia. In that context, the US was expanding westwards and sea travel was much safer and shorter in time when travelling from New York to San Francisco and crossing by land the Panama Isthmus before the first transcontinental railway opened in 1869. To sort this situation, the US got from Colombia preferential transit rights and military influence over the isthmus by the Mallarino-Bidlack Treaty of 1846.
However, in 1869 the French diplomat and businessman Ferdinand de Lesseps completed successfully the 190 km Suez Canal in Egypt working for an Anglo-French joint-venture company that operated it until its nationalisation in 1956. French investors hired then Lesseps and famous engineer Gustav Eiffel to build a similar canal in Panama and exploit it after they got a 99 years lease from the Colombian government in 1878. The construction began in 1881 but the project turned out to be a humanitarian, financial and political disaster when it was stopped in 1889. It had a permanent labor force of around 40,000 people, of which 90% were Afro-Caribbean (the rest from metropolitan France), but with a death toll of 22,000 people (of which 5000 ethnic French), peaking at 200 deaths per month in 1884 because of tropical diseases. The project cost the equivalent US$10 billion worth in 2023 and the savings of 800,000 investors were lost, in part due to members of the French government who had taken bribes to keep quiet about the Panama Canal Company's financial troubles in what is regarded as the world's largest monetary corruption scandal of the 19th century. Lesseps and Gustave Eiffel were eventually prosecuted due to misappropriation of funds.
American and French lobbyists that got the assets of the defunct Panama Canal project convinced US President Theodore Roosevelt to pursue the Panama option over Nicaragua to build a canal. As a consequence, the US and Colombia tried to sign a lease similar to the French one, but the Colombian Senate rejected it because it violated national sovereignty. Roosevelt then ordered that the US would support the independence of Panama and effectively invaded Colombia by occupying the Isthmus in 1903 to make this happen. In the same year, the government of the recently seceded Panama agreed to lease most of the Isthmus in perpetuity to the US and the construction of the canal began in 1904 using French excavations.
The person appointed to lead the project was John Frank Stevens, a self-educated engineer who had built the Great Northern Railroad, and later by Army Major George Goethals. The sanitation plans were led by William Gorgas, which included water systems, fumigation of buildings, spraying of insect-breeding areas with oil and larvicide, installation of mosquito netting and window screens, and elimination of stagnant water. This eliminated the spread of almost all the tropical diseases among the workers and is considered to have been the key to finish the canal in 1914, two years ahead of the original plan.
The US project employed roughly the same amount of people as the French did, but the death toll mounted to less than 5,500, of which 300 were American citizens and the rest from the Caribbean islands. The final construction cost the equivalent of $15 billion in worth in 2023 and the investment became profitable for the US government after just a couple of decades. However, the people of Panama increasingly demanded its nationalisation after Egypt got the Suez Canal and US reputation dropped in many Latinamerican countries following military interventions during the Cold War. Eventually, US President Jimmy Carter signed a treaty in 1977 by which Panama would take full control of the Canal in 1999 and guaranteed its full neutrality and passage to all nations in times of peace and war to improve relations with Latin American countries.
Today, the Panama Canal is owned by Panama, administered by the Panama Canal Authority, but some ports at both ends of the canal are operated by a Hong Kong based company called Hutchison Whampoa that manages 53 ports around the world, and whose owner, billionaire Li Ka-shing, has expressed support for the protests against Beijing that took place in 2019. The Canal is a critical waterway that serves as a transit point for almost 5% of the world's maritime trade. US ships account for 73% of the total cargo volume that passes the Canal, while China is at 22%, followed by Japan with 14%. The system of fees is very complicated, but it costs around 70 US dollars per container, and the fees are applied equally no matter the flag of the ship. Last week, Trump falsely claimed that the U.S. has been “overcharged” for its ships to sail through the canal, saying that Panama was in “violation” of the treaty signed by Carter in 1977. “American ships are being severely overcharged and not treated fairly in any way, shape or form. And that includes the United States Navy,” he said in the inaugural address. But, because the waterway, which is fed by a freshwater lake, is seeing its water levels decrease from a prolonged drought, the Panama Canal Authority has limited the number of ships that can pass through daily and raised fees for all ships regardless of the country they belong to. Moreover, the Panama Canal Authority announced a new audit of Hutchison Ports as an attempt to reassure Washington.
Finally, Trump claims that the United States "lost 38,000 lives in the building of the Panama Canal" is false. It conflates the over 25,000 lives lost in the failed French attempt to build the Canal in the 1880s to the 5,500 lives lost during the US project between 1904 and 1914, and the vast majority of those who died were subjects of the British Crown from the Caribbean islands. Also, Trump claimed that the Canal was “given to China”, but the ports operated by the Hong Kong-based company, though at opposite ends of the canal, are not gateways to the waterway — ships do not have to pass through them to enter the canal. Instead, the ports mostly serve as places to handle cargo. Moreover, all evidence suggests that Beijing has zero influence in the operation of these ports.
It is true that in case of world war China could block some operations in the Canal, it has expanded commercially in Latin America and Panama does not recognize Taiwan anymore as a legitimate country since 2017. But the moves of Trump regarding the Panama Canal are not sustained in facts and are more a declaration of intentions against China regarding its area of influence in the world.
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