In 1978, the American President, Jimmy Carter, and Panama's President, Omar Torrijos, successfully negotiated two treaties that stipulated how the United States would turn over the Panama Canal to Panamanians in 1999. A number of excellent monographs have appeared since the 1970s to explain why this historic transition occurred, and especially how US actions between 1903 and 1978 climaxed in a series of Panamanian riots that demanded that the canal come under Panama's rule and no longer serve as one of the better known and more successful examples of American imperialism. Tracing the origins, characteristics, and decline of this imperialism, then exploring it in relation to the theories of Lenin, Hobson, and Fieldhouse, among others, are particular contributions of Noel Maurer, who teaches at Harvard Business School, and Carlos Yu, a private consultant and independent economic historian in New York City.
But Maurer and Yu go well beyond their analysis of US imperialism to provide both a highly readable (and at the right moments scathingly sarcastic) historical narrative and a sophisticated analysis of the canal's economic long-term benefits and, particularly, losses. These accomplishments set this book apart. The narrative is informative about the three-century-long approach to President Theodore Roosevelt's seizure of the passageway from Colombia in 1903, and also traces the twists and turns in Colombia's domestic politics that had increasingly frustrated, then infuriated, Roosevelt.
The authors describe in depth how the desperate search for labour to build the canal identified Jamaicans, Barbadians, and Chinese, all of whom for various reasons failed to fit the need, until economic and political changes struck Barbados (particularly the devastating effect of the US–Cuban sugar deal in 1902 on Barbados’ sugar exports), sending its desperate people abroad in search of work. The canal administration finally employed 19,900 Barbadians, nearly one-half of its contract labour force. Most other accounts have emphasized the successful American campaign to eradicate the infectious diseases that had destroyed the 1880s French effort, led by Ferdinand de Lesseps, to build a canal. Maurer and Yu employ comparative examples to demonstrate the uniqueness of this US campaign – for example, water purification plans were constructed on the isthmus before most major American cities had the technology. This and the medical victories over malaria and yellow fever drove Panamanian mortality rates lower than Cuba's (where US officials were fighting similar battles), Puerto Rico, and Venezuela, among others. The authors carefully note, however, that ‘the United States charged the cost of [the new technology] to the Panamanian government, plus interest’ – amounting to nearly US$97 million in 2009 dollars (p. 128).
Maurer and Yu argue that, overall, the canal's economic benefits were specific, not general. For the United States, after 1921, when the canal became fully operational, ‘the cost of moving material between California and New York dropped a full 30 percent. The Panama Canal generated a transportation revolution’ (p. 145). They can, however, find only two other nations that notably gained from the canal's opening. One was Chile, whose nitrates temporarily accounted for the largest commodity shipped through the passageway, while Bethlehem Steel profitably imported Chilean iron ore. The other was Japan, particularly Japanese shipping. As for US military benefits, ‘Naval spending declined after World War I, but only to its pre-canal level. In other words, there was no sign of a “canal dividend” in terms of naval spending’ (p. 168).
The isthmus's value for the United States sharply declined after the Second World War. Washington built a five-ocean navy, not a two-ocean one, while the 1950s Interstate Highway System enabled trucking companies to haul even more than railroads. Transcontinental shipments of lumber, for example, ‘had exploded to 7 million tons, twenty-eight times [sic] as much as was carried via the Panama Canal’ (p. 241). US grain exports to Asia that had once utilized Gulf Coast ports now travelled through Pacific Coast docks.
By the mid 1970s, as Maurer and Yu demonstrate statistically, the canal's importance rapidly diminished for US shippers and consumers, just as Panamanians accelerated their anti-American protests demanding the canal's turnover. Last major bastions of defence included, above all, the Zonians, Americans who had long operated the canal while living privileged lives rigidly separated from Panamanians. Maurer and Yu delight in noting how the Zonians undercut their own cause by refusing to modernize, either economically or politically, a passageway that was decreasingly relevant to American needs, both military and economic. The climactic result was the 1978 treaties.
In the 1980s, Panamanians gradually took over the operation of the canal. Much to the surprise of the Zonians and a number of other Americans, including President Ronald Reagan, the operations continued to go smoothly. Maurer and Yu emphasize that a particularly important turn occurred in the 1990s, when a political transformation in Panama broke up the old-boy networks that had long lived by graft and unsavoury political deals among the elite. The networks were replaced by new, younger, political activists who insisted, successfully, that the canal be sharply separated from everyday Panamanian politics. The passageway ran ever more efficiently and cleanly. The activists’ success led to Panama's ability to find funding for a $5 billion widening and deepening of key parts of the canal, which will, according to some estimates, allow it to take 70% of world shipping, instead of the approximately 40% that it can presently accept.
Panamanians will face threats to their newly enlarged canal after it opens in 2014, including the ability of shipping to use the Northwest Passage for the first time because of the warming climate. But the economic rise of China and its burgeoning economic relationships east of the canal, notably with Brazil and east coast American ports, should play a vital role in making Panama more strategically important and wealthier. Panamanians have travelled a long way since Theodore Roosevelt made the Panamanian negotiator irrelevant in 1903, as he simply took over the country and then dictated the terms of a US-built and -operated canal. Maurer and Yu have provided a superb account of how and why this historic trip has been taken.
