The Business of the Canal: The Economics and Politics of the Carter Administration's Panama Canal Zone Initiative, 1978

Abstract

The Carter-Torrijos Treaty of 1978, the initiative to relinquish controi of the Panama Canal Zone to the Republic of Panama, allowed Panama for the first time in its short history to become an autonomous nation and to take control of its destiny as a global trading crossroads. Conservatives rallied against President Carter and accused him of jeopardizing US security and hegemony. Fears were that Panama did not have the economic or technical resources to maintain Canal operations, lacked the administrative knowledge and resources to manage the business of the Canal, lacked the military presence to insure security of the Canal, and did not have the political and social will to maintain the environmental integrity of the region. In short, disastrous results were predicted. Carter prevailed. December 31, 1999 saw the surrender of the Canal Zone, and all its facilities, to Panama. This paper discusses events that precipitated Carter’s decision, economic and political arguments presented during the 1977-78 debate, implementation of the treaty, and an evaluation of the ‘business of the Canal’ today.