Panama Made Canal Profitable When U.S. Couldn't

After 85 years of United States ownership and control, the Panama Canal was handed over to the Panamanian government in 1999 under the Torrijos-Carter Treaties (“Torrijos”). The change in ownership presented an opportunity for Panama to profit from the canal's existence, something that had not happened during the years it was under US control even though the canal was on Panamanian soil. The handover resulted in several key changes to how the canal was managed. First, while the United States ran the canal as a public utility keeping tolls low to minimize shipping rates, Panama ran the canal as a profit maximizing business, raising the rates it charged to shippers. Second, unlike the US, Panama made sure the canal was properly staffed and managed, leading to more successful operations at the canal. Lastly, Panama turned the canal region from a military zone to a commercialized area, creating further opportunities for the country to profit from the region. These changes increased profitability of the canal considerably, making Panama the second wealthiest Latin American country in GDP terms (“Panama”).