Empire by invitation

The 1999 transfer of the Canal marked the beginning of an entirely new relationship between the US and Panama through voluntary association


The Big Ditch: How America Took, Built, Ran, and Ultimately Gave Away the Panama Canal
Noel Maurer and Carlos Yu
2011, Princeton University Press
419 pages, hardback

Reviewed by Gavin O’Toole

THE economic calculus of empire will always be too arcane for mere mortals to understand, clouded by the many contradictions that obscure the self-interest and strategic thinking of mighty states and their eager servants.

Thankfully, The Big Ditch blows away some of the clouds, providing a refreshingly more candid look at America’s motivations behind the greatest material expression of its imperialistic prowess – the Panama Canal – than we might expect to be coming from within the US itself.

The book studies the long-term and changing value of the imperialist US venture in Panama in an effort to explain why America eventually withdrew from it.

Theoretically informed
In a highly original and theoretically well informed examination of the benefits accruing to the US of the canal, and their decline over time, the authors demonstrate that by the 1970s it was in the interests of both countries to transfer control from the US to Panama itself.

US ownership of the canal had lost much of its strategic and economic value after the second world war as domestic cargoes made up ever less of the traffic.

While US policy largely denied Panama economic benefits from the canal, growing Panamanian national self-assertion also required the US to channel compensating aid flows to the country and this, combined with the institutional control over the canal’s administration exerted by its workforce, made it increasingly less profitable.

As a result, transferring its control to Panama would, in fact, make the canal more valuable to the US, and it was only American nationalism that delayed this through equivocation until the eventual signing of an agreement in 1977. In this case decolonisation followed no apparent model, but was greatly complicated by what Maurer and Yu call the “Zonians” – a de facto colonial settler class made up of canal employees, former military personnel and their dependents. Capturing the canal’s administration, they greatly exacerbated its decline and made it even less valuable to Washington.

The achievement of democracy in Panama by the 1990s cordoned the canal off from political interference, freeing it from the control that had hampered its efficient administration. In one of the great ironies of the canal story, the new Panama Canal Administration that now ran it did so much more efficiently and commercially than the US ever had. Mind you, that was not particularly difficult.

There is considerable irony in the fact that many Americans who opposed the handover doubted Panamanian ability to manage the canal at all, let alone more efficiently than ithad been managed under the US. The past record certainly was not promising. But the new political stability that prevailed in the 1990s following the removal of Manuel Noriega created a new infrastructure of democratic political control over the country’s greatest asset that surprised the sceptics.

The benefits to Panama were enormous, rapidly putting behind it a century in which it had received little of the “empire effect” that colonies were said to have benefited from under the British empire, and the 1999 transfer marked the beginning of an entirely new relationship between the US and Panama through voluntary association – better described by the authors as “empire by invitation”.

Rather than act as an imperial power, the US now implicitly guarantees Panama’s security and its economic well-being through use of the dollar and a free trade agreement. Panama’s side of the bargain is to adhere to democratic norms and manage the canal well – both of which are in its own interests.

The evidence suggests it is managing the canal extremely well – but also that there could be future pitfalls for the US in this new settlement as the relationship is no longer one between patron and client and the levers of control by Washington are limited.

Gavin O’Toole is Editor of the Latin American Review of Books

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