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Panama Canal: A Megaproject of a kind

Collecting over 2 billion dollars per year in revenue and considered a man-made wonder of the world the Panama Canal is a masterpiece of human engineering. It was constructed in one of the most unforgiving environments, can imagined as construction passing through 80 kilometers if deadly tropical rainforest, full of poisonous mosquito, spiders and many other carrying deadly diseases. More than 25000 people lost their lives during construction of Panama Canal. Today this passage provides a safe passage between Atlantic and Pacific Ocean but still remains as a center of political disputes. In further part of this article, we will take a quick overview on turbulent history to the current scenario of Panama Canal.

Panama Canal

Why Panama Canal Was Made ?

Governments and philosophers have dreamt of building the canal ever since 16th century, in that time a ship which have to cross east to west coast of American continent have to go around the South America, a journey of 15000 km which takes almost 2 months to complete. So, one can say this canal as economic and political goldmine.

Panama Canal

This project was attempted by several countries and many countries failed, this almost caused a war between two countries and thousands of people died.

How it Started ?


The story of the construction of the Panama Canal begins in 16th century with an adventurous Spanish explorer Vasco Nunez de Balboa. He was the first to find that Panama is a bridge between world’s two largest oceans. He worked out on how can a canal be constructed and proposed this idea to his king, Charles V. The King ordered for a survey but concluded as this plan to be impossible.

Panama Canal
Vasco Nunez de Balboa


Then it took another 300 years for this idea to refurbish, this time it was visionary mind of ambitious French men who have just completed another megaproject called Suez Canal, which was deemed impossible. Suez Canal is between Mediterranean Sea and Red Sea. The construction was supervised by charismatic French diplomat Ferdinand de Lesseps. Further he developed the initial design and estimated that it would be easier than the Suez, as it was only 40% of the length and now, they have a lot of experience. French government approved their plan and founded the entire mission. In 1881 the construction began.


A few hundred kilometers to the north in Nicoragua, United States was planning for constructing a canal. Their canal would run from Brito on Pacific side over lake Nicoragua to the blue field on the Atlantic side, but there were a few serious concerns specially about the consequences of ships going through lake Nicoragua, the most abundant source of fresh water in North America. Many scientists worried about the impact of canal on the lake and tried to persuade American government to withdraw their plan.

Challenges For French Men

  • French engineers planned to make the canal entirely on the sea level just like Suez but they ran into serious engineering problems. The canal had to be deep enough for large vessels but the slope developed was much steeper. The solution was to build 400m wide canal of but there was a lot of excavation work for canal that is just 80 kilometers long.
  •  There were other issues that French had no solutions for, the Atlantic and Pacific oceans are at different heights, due to tidal differences, this would turn the canal as an uncontrolled passage of unstoppable forces.
  • The hazardous environment of the jungle with mosquitos and insects carrying deadly unknown diseases. The workers were dying with symptoms of malaria and yellow fever. 3 years after the construction has started the death rate was over 200 per month.

The project was at a loss. In 1894, the construction company declared bankruptcy. 260 million dollars has already been invested in it whose valuation would be 6 billion dollars today which is equivalent to cost of 5 Burj Khalifa. French tried their hands in many ways but officially ended the production in 1894.

United States Grabbed The Opportunity

French failure paved the way for entry of united states. The were unable to go ahead in Nicoragua, so they decided to purchase the French established assets but the only minor challenge to overcome was the Colombian government. In that time Panama was not an independent country but a province of Colombia and their government felt that they are getting a bad deal and denied for the agreement. In 1893 US forcefully surrounded Panama by their warships, they supported the Panamian independence movement and later that same year Panama became an independent country.

US Deal with Independent Panama

US made a deal of newly installed government to guarantee their independence that provided a one-time payment of $10 millions and annual stipend of $250,000. In return they would receive an unrestricted right to build and monetize the canal.


Panama Canal
Panama Canal

The US designed a canal using a lock system devices (used for lowering and raising the ships) between water at different levels, this approach saved a lot of excavation work for US. Construction got into high gear; 40000 people worked on the canal every day. US workers were also affected by the tropical diseases but this time scientists understood better about the role of mosquitoes in spreading diseases. They took several preventive measures but still 5600 workers were dead under US supervision. After several decades of hard work, thousands of lives lost, on August 15, 1914 the canal was finally open. Every vessel transferred through the canal now has to pay a toll based on their size and cargo. Nowadays this toll goes up to $450,000 for a single passage. On average there are 9000 ships cross through this passage every year. Panama Canal has become a pride of engineering. It cost them a total of $375 million dollar and it is valuated close to $10 billion dollar when adjusted through inflation. They paid an additional $40 million dollars to the French and $10 million dollars to the Panamian government.

Control Over Panama Canal

US controlled Panama Canal until 1999. In 1999 control over the canal were transferred to panamian people under the administration of Bill Colington, the decision followed by several decades of riots and protests against the involvement of US in their national politics. The Panama Canal continues to be subjected to the international criticism and concern.


There is growing concerns about the involvement of China, the Chinese company Land Bridge group signed a $900 million dollars deal to control the Panama’s largest port situated at the canals entrance in Atlantic Ocean. The Land Bridge group is a private company but they have their close ties with communist party. The have cooperated with Chinese military in past and their board consists of a large number of Chinese ex government officials. Chinese are also planning to build canal in Nicaragua of which the constraints remain the same. A Chinese company has made a deal of $40 billions for this project with Nicaraguan government.

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