The+Panama+Canal+Negotiations

=The Panama Canal Negotiations=

Prior to the Panama Canal being built, a United States ship had a 14,000 mile trip around Cape Horn in order to get from New York to San Francisco. With the Canal, this trip was cut to less than half the distance, only 6,000 miles. Because of this, the United States realized that the Canal was “vital to their interests” and signed a treaty in 1847 with what is now Columbia. The treaty allowed for passage over the Isthmus of Panama for US transit.

Many negotiations were made during the years to follow which involved 3 international entities (French company, United States, and Columbia). A French company got the contract to build in 1881, and in the next 8 years, over 20,000 lives were lost, millions of dollars gone and the company went bankrupt. Seeing this inevitable downfall, the US offered $40 million dollars to buy out the French company (who valued their holdings at around $109 million). The United States also recognized an alternate route through Nicaragua as what would seem like a ploy to get the French company to sell. However, the French company simply countered that two other countries were willing to finance them for the canal construction in hopes of scaring off the US. Unfortunately for the French company, that didn’t happen as it was leaked to the press that the US’ intentions were to continue with the Nicaraguan route. The French company was sold to the US for $40 million and the United States again favored the Panama route.

The US then signed another treaty with a Columbian group agreeing to pay Columbia for a “six mile area across the Isthmus”. However, this particular group did not have authority to sign this treaty, and it was overturned by the Columbian government. Ultimately, war broke out against Columbian authorities and riots ensued in Panama. The US president sent warships to negate the Columbian decision. “Panama succeeded in their revolt and became a republic. In 1914, the Panama Canal was opened”. Total construction costs were $336,650,000. Multiple negotiation tactics were used in getting the desired end result of having the Panama Canal built. The bigger ones being that the US took advantage of the French company’s bankruptcy and ‘low-balled’ them with their $40 million offer to buy. The French then countered with their ‘scare’ tactic stating that two other countries were willing to bail them out (true or not?). Unthreatened by this, the US finds an alternate route (which turned out to be not just a ploy as dealings were underway for the Nicaraguan route in the US Senate). The US then follows this with a ‘leak’ to the US Press. Finally, in negotiating with Columbia, the US sends warships to negate the Columbian government and ultimately gets their interests secured.