The Panama Canal Negotiations

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Table of Contents

Introduction
Essay Body
Conclusion
References

Introduction

The legendary Panama Canal is a shipping canal that connects the Atlantic Ocean and the Pacific Ocean forming the basis for global marine trade. Its origin and construction can be traced from Sir Charles I of Spain who originally planned the initial survey for the canal’s path through the cape of Panama in 1534. However, his proposal was followed with three-century dormancy before its edifice began at around 1880s by the French Companies. Panama was built in ten years starting from 1904 to 1914.

Essay Body

It is considered as one of the greatest and most hectic engineering assignments the world has ever witnessed; the canal is also voted as one of the seven present wonders of the world by the Society of Civil Engineers in the United States of America. It is important to note that the Panama Canal was built in two phases with the first phase composing of French engineering companies that worked for about twenty years from 1880 and stopped due to disease attacks, financial constraints and many more; the second phase was picked up by the America who saw its completion by 1914.

Its official construction process started by the signing of treaties between the New Granada (currently renamed Colombia) and the United States in 1847; that gave the United States a transit passage over the cape of Panama guaranteeing Panama’s impartiality and distinguishing Colombia’s sovereignty. This was followed by the contracting of a French Company known as the Compagnie Universelle du Canal Interoceanique, led by Ferdinand de Lesseps (builder of Suez Canal) in March 1881.

They immediately went bankrupt and decided to allow their French counterparts known as the Compagnie Nouvelle du Canal de Panama to proceed on with the work from October 1894. Only four years later, this company incurred unbearable losses and succumbed to a lot of frailties that saw them unpredictably end their operations by late 1889. The company loosed around 287 million United States dollars and about 20,000 lives in the practice.

However, ousting them was a daunting task as they already acquired extensive holdings in America including, 2,000 buildings, Panama Railroad, equipment, and land that they considered to be worth 109 million US dollars that had to be compensated. Fortunately, after the appointment of Rear Admiral John Walker as the head of construction Commission, he assessed their holdings and estimated them as worth 40 million United States dollars only.

This situation led to several conflicting ideas, especially between the French and American government, leading to a negotiation between the two powers to reach amicable solutions. The American camp led by John Walker reacted by proposing that they were no longer interested in the Panama route and were planning to build an alternate Nicaraguan canal; this forced the French camp to express their weakness by revealing that Russia and Great Britain would offer the funds that would see the completion of the Panama Canal.

Walker, however, insisted that they were changing route since the cost of buying the French company was too high. After realizing their futility and high levels of desperation, the French company accepted to be paid any amount to abort their services in the United States of America. After the establishment of the Spooner Act in June 28, 1902, the United State president was authorized to purchase the all the ownership rights and holdings of the Compagnie Nouvelle de Canal de Panama company as well as its dividends in the Panama Railroad Company only at 40 million US dollars, and to choose another Isthmian Canal Commission to build the canal. This meant that the United States under John Walker convincingly worn the conflict between them and the French through negotiation by first pretending that they no longer needed the services of the Panama canal and later, after making the French appear so desperate, accepts to pay for the company’s ownership rights at a subsidized cost favoring their stand on the matter.

Conclusion

According to Raiffa (1982), this is a typical example of trying to address an endogenous agenda through negotiation where the US negotiators opted to start giving solutions to easy problems than later tackled the harder ones as the harder ones always appear to be highly sensitive. Flamini (2002) suggests that even though people often tend to tackle bigger issues first, it should be otherwise for an instant, Walker is conscious of this reasoning in the sense that he first introduces a small lie to try and solve the bigger issue of settling the French company’s demands.

Busch and Horstmann (2002) further add that in any conflict, there are always two kinds of issues, namely “easy issue” and “hard issue.” Having known that the French were within their right to claim for full compensation, Walker realizes that he is about to face a big issue hence he feigns a smaller one to be able to crack the bigger one. The project was later completed at a total cost of 387 US dollars.

References

Busch, L. A., & Horstmann, I. J. (2002). The Game of Negotiations: Ordering Issues and Implementing Agreements. Games and Economic Behavior. 41:169-191.

Flamini, F. (2002). First Things First? The Agenda Formation Problem for Multi-Issue Committees. Working Paper, Department of Economics. University of Glasgow: Sage Publishers.

Raiffa, H. (1982). The Art and Science of Negotiation. Cambridge, MA: Harvard University Press.

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The Panama Canal Negotiations

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