History of The Panama Canal - Canal Handover

Canal Handover

After construction, the canal and the Canal Zone surrounding it were administered by the United States. On 7 September 1977, U.S. President Jimmy Carter signed the Torrijos-Carter Treaty, which set in motion the process of handing over the canal to Panamanian control. The treaty came into force on 1 October 1979 and provided for a twenty-year period during which Panama would have increasing responsibilities for Canal operations, culminating in complete U.S. withdrawal on 31 December 1999. Since then the canal has been run by the Panama Canal Authority or the Autoridad de Canal de Panama ( the ACP).

The treaty was highly controversial in the U.S., and its passage was difficult. The controversy was largely caused by contracts to manage two ports at either end of the canal, which were awarded by Panama to a Hong Kong-based conglomerate, Hutchison Whampoa. Republicans contend that the company has close ties to the Chinese government and the Chinese military. However, the U.S. State Department says it has found no evidence of connections between Hutchison Whampoa and Beijing. Some Americans were also wary of placing this strategic waterway under the protection of the Panamanian security force.

There was some concern in the U.S. and in the shipping industry for the Canal after the handover. But opponents of the Torrijos-Carter Treaties turned out to be wrong. On virtually all counts, Panama is doing extremely well:

• The Panama Canal's income has soared from US$769 million in 2000, the first year under Panamanian control, to US$1.4 billion in 2006, according to Panama Canal Authority figures.
• Traffic through the canal went up from 230 million tons in 2000 to nearly 300 million tons in 2006;
• The number of accidents has gone down from an average of 28 per year in the late-1990s to 12 accidents in 2005;
• The average transit time through the canal is averaging about 30 hours, about the same as in the late-1990s;
• Canal expenses have increased much less than revenues over the past six years — from US$427 million in 2000 to US$497 million in 2006.
• On October 22, 2006, after many studies made by the agency, Panamanian citizens approved by a wide margin on a referendum a project to expand the Panama Canal.

Former U.S. Ambassador to Panama Linda Watt, who served in Panama from 2002 to 2005, said that the canal operation under Panamanian hands has been "outstanding." She added, "The international shipping community is quite pleased."