What was the chief advantage that construction of the panama canal offered the united states?

More information about Panama is available on the Panama Page and from other Department of State publications and other sources listed at the end of this fact sheet.

U.S.-PANAMA RELATIONS

The United States established diplomatic relations with Panama in 1903 following its declaration of independence from Colombia. That year, through the Hay/Bunau-Varilla Treaty, Panama granted the United States rights to a zone spanning the country to build, administer, fortify and defend an inter-oceanic canal. The Panama Canal opened in 1914. In 1977, the United States and Panama signed the Carter-Torrijos Treaties to set basic governing standards for the Canal through 1999 and guarantee its permanent neutrality. These treaties went into effect in 1979, and on December 31, 1999, Panama assumed full jurisdiction and operational control over the Canal.

Changes in Panama’s government and tensions over the Canal led to the interruption of diplomatic relations several times during the 20th century. From 1987-1989, relations deteriorated sharply under the rule of Manuel Noriega. During Operation Just Cause in 1989, U.S. troops entered Panama and captured Noriega, who would not cede power following elections. Since the restoration of democracy, Panamanians have elected five presidents from three political parties in free and fair elections.

Panama’s location and role in global trade make its success vital to U.S. prosperity and national security. Panama’s key location along major land and sea transit routes makes it a critical partner in the interdiction of illegal drugs destined for the United States. While Panama’s economic growth rate is among the highest in the hemisphere, the country faces the challenge of making this growth more inclusive. It also faces added pressure for more fiscal transparency as it enforces recent anti-money laundering legislation. Increasing pressure from drug trafficking and organized criminal activity – including migrant smugglers – contributes to security problems that threaten to undermine Panamanian security, democratic institutions, and economic prosperity. Because of our shared history, cultural ties between both countries are strong.

U.S. Assistance to Panama

U.S. assistance to Panama aims to ensure Panama remains a secure, prosperous, and democratic country that continues to work with the United States as its principal partner in the region. The United States and Panama work together to advance common interests in improving citizen safety and strengthening the rule of law. They cooperate in many ways, including combating illegal drug trafficking and other criminal activity, as well as promoting economic, democratic, and social development through U.S. and international agencies.

The U.S. Strategy for Central America (Strategy) guides U.S. diplomatic efforts and foreign assistance in the region. The Strategy is a bipartisan, multiyear U.S. government plan covering all seven Central American countries (Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Panama). The Strategy aims to secure U.S. borders and protect American citizens by addressing the security, governance, and economic drivers of illegal immigration and transnational crime, while increasing opportunities for U.S. and other businesses. The Strategy focuses on three overarching lines of action: 1) promoting prosperity, 2) enhancing security, and 3) improving governance.

Bilateral Economic Relations

The United States and Panama have signed a bilateral investment treaty and a Trade Promotion Agreement. The trade agreement eliminates tariffs and other barriers to U.S. exports, promotes economic growth, sets high standards for the treatment of investments, provides a framework for resolution of investment or trade disputes, and expands trade between the two countries. In 2016, Panama inaugurated the expansion of the Panama Canal, which has provided substantial benefits to Panama and many U.S. East Coast ports. U.S. exports to Panama include oil, machinery, aircraft, agricultural products, and low-value shipments. The United States is the number-one user of the Canal, with 68 percent of transits heading to or from U.S. ports. U.S. imports from Panama include fish and seafood, gold, cane sugar, bananas, and pineapples. The finance/insurance and wholesale trade sectors lead U.S. direct investment in Panama, while the manufacturing and real estate sectors lead Panamanian direct investment in the United States.

Panama’s Membership in International Organizations

Panama and the United States belong to a number of the same international organizations, including the United Nations, Organization of American States, International Monetary Fund, World Bank, International Maritime Organization, and World Trade Organization.

Bilateral Representation

Principal U.S. embassy officials are listed in the Department’s Key Officers List.

Panama maintains an embassy in the United States at 2862 McGill Terrace, NW, Washington, DC 20008 (tel: 202-483-1407).

More information about Panama is available from the Department of State and other sources, some of which are listed here:

CIA World Factbook Panama Page 
U.S. Embassy
USAID Panama Page 
History of U.S. Relations With Panama
Office of the U.S. Trade Representative Countries Page 
U.S. Census Bureau Foreign Trade Statistics 
Export.gov International Offices Page 
Library of Congress Country Studies 
Travel Information

Following the failure of a French construction team in the 1880s, the United States commenced building a canal across a 50-mile stretch of the Panama isthmus in 1904. The project was helped by the elimination of disease-carrying mosquitoes, while chief engineer John Stevens devised innovative techniques and spurred the crucial redesign from a sea-level to a lock canal. His successor, Lt. Col. George Washington Goethals, stepped up excavation efforts of a stubborn mountain range and oversaw the building of the dams and locks. Opened in 1914, oversight of the world-famous Panama Canal was transferred from the U.S. to Panama in 1999.

The idea of creating a water passage across the isthmus of Panama to link the Atlantic and Pacific Oceans dates back to at least the 1500s, when King Charles I of Spain tapped his regional governor to survey a route along the Chagres River. The realization of such a route across the mountainous, jungle terrain was deemed impossible at the time, although the idea remained tantalizing as a potential shortcut from Europe to eastern Asia.

France was ultimately the first country to attempt the task. Led by Count Ferdinand de Lesseps, the builder of the Suez Canal in Egypt, the construction team broke ground on a planned sea-level canal in 1880. The French soon comprehended the monumental challenge ahead of them: Along with the incessant rains that caused heavy landslides, there was no effective means for combating the spread of yellow fever and malaria. De Lesseps belatedly realized that a sea-level canal was too difficult and reorganized efforts toward a lock canal, but funding was pulled from the project in 1888.

Teddy Roosevelt and the Panama Canal

Following the deliberations of the U.S. Isthmian Canal Commission and a push from President Theodore Roosevelt, the U.S. purchased the French assets in the canal zone for $40 million in 1902. When a proposed treaty over rights to build in what was then a Colombian territory was rejected, the U.S. threw its military weight behind a Panamanian independence movement, eventually negotiating a deal with the new government.

On November 6, 1903, the United States recognized the Republic of Panama, and on November 18 the Hay-Bunau-Varilla Treaty was signed with Panama, granting the U.S. exclusive and permanent possession of the Panama Canal Zone. In exchange, Panama received $10 million and an annuity of $250,000 beginning nine years later. The treaty, negotiated by U.S. Secretary of State John Hay and French engineer Philippe-Jean Bunau-Varilla, was condemned by many Panamanians as an infringement on their country’s new national sovereignty.

Seemingly not grasping the lessons from the French effort, the Americans devised plans for a sea-level canal along the roughly 50-mile stretch from Colón to Panama City. The project officially commenced with a dedication ceremony on May 4, 1904, but chief engineer John Wallace encountered immediate problems. Much of the French equipment was in need of repair, while the spread of yellow fever and malaria was frightening off the workforce. Under pressure to keep construction moving forward, Wallace instead resigned after a year.

A railroad specialist named John Stevens took over as chief engineer in July 1905 and immediately addressed the workforce issues by recruiting West Indian laborers. Stevens ordered new equipment and devised efficient methods to speed up work, such as the use of a swinging boom to lift chunks of railroad track and adjust the train route for carting away excavated material. He also quickly recognized the difficulties posed by landslides and convinced Roosevelt that a lock canal was best for the terrain.

The project was helped immensely by chief sanitary officer Dr. William Gorgas, who believed that mosquitoes carried the deadly diseases indigenous to the area. Gorgas embarked on a mission to wipe out the carriers, his team painstakingly fumigating homes and cleansing pools of water. The last reported case of yellow fever on the isthmus came in November 1905, while malaria cases dropped precipitously over the following decade.

Although construction was on track when President Roosevelt visited the area in November 1906, the project suffered a setback when Stevens suddenly resigned a few months later. Incensed, Roosevelt named Army Corps engineer Lt. Col. George Washington Goethals the new chief engineer, granting him authority over virtually all administrative matters in the building zone. Goethals proved a no-nonsense commander by squashing a work strike after taking charge, but he also oversaw the addition of facilities to improve the quality of life for workers and their families.

Panama Canal Dangers 

Goethals focused efforts on Culebra Cut, the clearing of the mountain range between Gamboa and Pedro Miguel. Excavation of the nearly 9-mile stretch became an around-the-clock operation, with up to 6,000 men contributing at any one time. Despite the attention paid to this phase of the project, Culebra Cut was a notorious danger zone, as casualties mounted from unpredictable landslides and dynamite explosions.

Construction of the locks began with the pouring of concrete at Gatún in August 1909. Built in pairs, with each chamber measuring 110 feet wide by 1,000 feet long, the locks were embedded with culverts that leveraged gravity to raise and lower water levels. Ultimately, the three locks along the canal route lifted ships 85 feet above sea level, to man-made Gatún Lake in the middle. Hollow, buoyant lock gates were also built, varying in height from 47 to 82 feet. The entire enterprise was powered by electricity and run through a control board.

Panama Canal Completed

The grand project began drawing to a close in 1913. Two steam shovels working from opposite directions met in the center of Culebra Cut in May, and a few weeks later, the last spillway at Gatún Dam was closed to allow the lake to swell to its full height. In October, President Woodrow Wilson operated a telegraph at the White House that triggered the explosion of Gamboa dike, flooding the final stretch of dry passageway at Culebra Cut.

The Panama Canal officially opened on August 15, 1914, although the planned grand ceremony was downgraded due to the outbreak of WWI. Completed at a cost of more than $350 million, it was the most expensive construction project in U.S. history to that point. Altogether, some 3.4 million cubic meters of concrete went into building the locks, and nearly 240 million cubic yards of rock and dirt were excavated during the American construction phase. Many people died building the Panama Canal: Of the 56,000 workers employed between 1904 and 1913, roughly 5,600 were reportedly killed.

Impact of the Panama Canal

Bolstered by the addition of Madden Dam in 1935, the Panama Canal proved a vital component to expanding global trade routes in the 20th century. The transition to local oversight began with a 1977 treaty signed by U.S. President Jimmy Carter and Panama leader Omar Torrijos, with the Panama Canal Authority assuming full control on December 31, 1999. Recognized by the American Society of Civil Engineers as one of the seven wonders of the modern world in 1994, the canal hosted its 1 millionth passing ship in September 2010.