The image captures a Maersk container vessel navigating the Agua Clara Locks, part of the Panama Canal expansion project completed in 2016. The locks, located on the Atlantic side of the canal, allow New Panamax-class ships to transit between the Atlantic and Pacific Oceans. In the background, the Atlantic Bridge spans the canal while multiple cargo ships wait their turn to cross one of the world's most strategic waterways.

THE HISTORY OF THE PANAMA CANAL: FROM IMPERIALISM TO MODERN GEOPOLITICS

The Panama Canal, an 82-kilometre-long artificial waterway, connects the Atlantic and Pacific Oceans and has been a pivotal axis of global trade since its opening in 1914. Yet its history is far more complex than a simple tale of engineering triumph. It is a story of imperial ambitions, human sacrifice, and geopolitical manoeuvring. This article explores the canal’s history, from its earliest conceptions to its modern strategic role, while critically examining its ethical implications and long-term impact on Panama.

Ships awaiting transit at the Atlantic entrance of the Panama Canal. A key route for global trade since 1914, the canal connects the Atlantic and Pacific Oceans, shaping Panama’s economy and geopolitics.

EARLY VISIONS AND CONSTRUCTION ATTEMPTS

Long before the canal was built, the maritime passage between the Atlantic and Pacific Oceans was arduous and perilous. Ships were forced to navigate around Cape Horn, a treacherous and time-consuming route at the southern tip of South America. As early as the 16th century, Spanish explorers envisioned a canal across Panama, but serious efforts only materialised in the 19th and 20th centuries.

In 1881, France, under the leadership of Ferdinand de Lesseps—the architect of the Suez Canal—embarked on an ambitious attempt to construct the Panama Canal. However, the project was plagued by engineering failures and devastating outbreaks of malaria and yellow fever, ultimately collapsing in 1889. More than 22,000 workers perished during the French attempt, primarily Caribbean labourers. These workers were overrepresented in the most dangerous and low-paying jobs, often involving hazardous excavation work and exposure to tropical diseases. In contrast, European workers were generally employed in supervisory and technical roles.

The United States took over the project in 1904, implementing advanced engineering techniques and comprehensive disease control measures under Dr William Gorgas. This significantly reduced mortality rates, yet the construction remained fraught with challenges and human suffering.

This historical image shows a group of workers, likely of Caribbean origin, using heavy drills to bore through rock, a crucial step in the excavation process. These labourers played an essential yet often overlooked role in the construction of the canal, enduring harsh conditions, dangerous tasks, and systemic racial inequalities.

CONSTRUCTION AND SOCIAL INEQUALITIES

The building of the Panama Canal was one of the most ambitious engineering feats of the 20th century, but it came at a severe human cost. The workforce exceeded 75,000 labourers from across the globe, including thousands of Caribbean migrants from Barbados, Jamaica, and Martinique. These workers endured extreme humidity, dangerous landslides, and frequent dynamite explosions. Many lived in overcrowded, unsanitary barracks and were paid significantly less than their white American counterparts.

The construction followed a strict racial and social hierarchy. White American engineers and supervisors enjoyed superior wages, housing, and access to exclusive social clubs, while Black and Caribbean labourers were assigned the most hazardous tasks, such as dynamite handling, while living in substandard conditions. Black workers were often denied access to medical facilities available to white workers, exacerbating the disparity in mortality rates. Additionally, segregated pay structures ensured that Black and Caribbean labourers earned significantly less despite performing the most dangerous work. White American workers were generally placed in supervisory or skilled trade positions, reinforcing the rigid racial division.

One of the greatest engineering challenges was the excavation of the Culebra Cut. The terrain consisted of unstable volcanic sediment and shale, making landslides a constant hazard. Workers had to remove millions of cubic metres of earth, with repeated collapses delaying progress and causing additional fatalities.

Despite these hardships, the canal was finally completed and inaugurated on August 15 1914, permanently reshaping global trade. Yet its legacy was not solely one of innovation—it also left deep-rooted social and economic inequalities that continued to affect Panama for decades.

This historical image captures the excavation of the Culebra Cut, one of the Panama Canal's most challenging engineering feats. Railway tracks and steam shovels are seen at work, removing massive amounts of earth and rock to create a navigable passage. Landslides and unstable volcanic sediment made this section particularly hazardous, causing repeated delays and significant worker casualties.

PANAMANIAN PERSPECTIVES: RESISTANCE AND NATIONALISM

For decades, many Panamanians resented the presence of a foreign-controlled enclave in their country. The Panama Canal Zone, governed exclusively by the United States, was seen as a symbol of colonial dominance. Growing nationalist movements led to increasing tensions, culminating in the 1964 riots, triggered by a dispute over whether the Panamanian flag should be flown in the Canal Zone. Panamanian students clashed with U.S. troops, and the violence resulted in multiple deaths. This confrontation marked a turning point, strengthening calls for Panamanian sovereignty and paving the way for future negotiations.

U.S. INTERESTS IN THE DANISH WEST INDIES AND GREENLAND

American involvement in the Panama Canal was closely tied to its broader security strategy in the Caribbean. During the First World War, the United States feared that Germany might invade Denmark and seize control of the Danish West Indies (now the U.S. Virgin Islands), using them as a strategic base to threaten shipping routes in the Gulf of Mexico and the Panama Canal. At the same time, Germany’s policy of unrestricted submarine warfare heightened U.S. concerns over regional stability.

In 1917, the United States purchased the Danish West Indies from Denmark for $25 million. Beyond this acquisition, the agreement also secured a U.S. commitment to respecting Danish sovereignty over Greenland. Until this point, Greenland’s international status had been uncertain, with several major powers, including Norway and the United States, expressing interest in the territory. The American guarantee proved decisive in 1933 when the Permanent Court of International Justice in The Hague reaffirmed Denmark’s sovereignty over Greenland, illustrating the wider geopolitical interests at play.

Salget af De Dansk Vestindiske Øer — This diplomatic settlement warrant, dated 31 March 1917, documents the $25 million payment from the United States to Denmark for the Danish West Indies (now the U.S. Virgin Islands). Issued to Constantin Brun, Denmark’s envoy, it formalised the 1916 treaty. The agreement also ensured U.S. recognition of Danish sovereignty over Greenland, a significant diplomatic achievement for Denmark. The sale was motivated by Denmark’s financial challenges and U.S. strategic interests in the Caribbean during World War I.

THE PANAMA CANAL IN THE 21ST CENTURY

Since assuming control, Panama has modernised the canal to accommodate larger vessels. In 2016, the Panama Canal Expansion Project was completed, doubling its capacity and allowing New Panamax-class ships to transit. The canal remains a major driver of Panama’s economy, generating between $2 and $3 billion in annual revenue.

However, it continues to be a geopolitical flashpoint. In recent years, China has significantly increased its investment in Panama’s infrastructure, including the construction of a new port in Colón and the development of a logistics hub near the canal, further strengthening its economic presence in the region. China, for its part, highlights the economic benefits of its involvement in Panama, presenting its investments as mutually beneficial. This has raised concerns in Washington, prompting the United States to strengthen diplomatic ties, expand trade agreements, and offer investment incentives to maintain its strategic position in the region.

In January 2025, tensions escalated further when U.S. President Donald Trump threatened to reassert American control over the Panama Canal, citing China’s growing influence and accusing Panama of failing to comply with treaty obligations. His statements have drawn sharp criticism from the Panamanian government while also triggering diplomatic unrest and increasing tensions between the United States and Panama

In his inaugural address on January 20, 2025, President Donald Trump stated:

"We have been treated very badly from this foolish gift that should have never been made, and Panama’s promise to us has been broken. The purpose of our deal and the spirit of our treaty has been totally violated. American ships are being severely overcharged and not treated fairly in any way, shape, or form. And that includes the United States Navy. And above all, China is operating the Panama Canal. And we didn’t give it to China. We gave it to Panama, and we’re taking it back."

THE CANAL’S FUTURE AMID GLOBAL SHIFTS

The history of the Panama Canal reflects broader patterns of power struggles, imperial ambitions, and economic interests. From its construction under U.S. control to its eventual transfer to Panama, the canal has remained a key player in global geopolitics.

In January and February 2025, President Trump’s remarks about reclaiming control over the canal have intensified diplomatic tensions between the United States and Panama. Panamanian President José Raúl Mulino has firmly rejected these claims, reaffirming the nation’s sovereignty and its commitment to keeping the canal a neutral and globally accessible trade route.

At the same time, climate change, which is worsening drought conditions, has already impacted the canal’s operations, leading to restricted transit capacity and rising shipping costs. The Panamanian government has responded by implementing water conservation measures, including the construction of new reservoirs and improved water management policies to ensure the canal’s future functionality.

For Panama, the greatest challenge will be to continue modernising and maintaining the canal, while also defending its sovereignty and ensuring economic stability in an increasingly multipolar world.

Text by Max