US Influence in Central America: Bananas, Panama Canal, and Nicaragua
The Banana Empire
The United Fruit Company significantly expanded its business into Guatemala, Costa Rica, and Honduras. It acquired land and benefited from the free marketing of bananas without paying export taxes. The so-called “banana empire” stretched from the early 20th century until the 1929 crisis. Coffee-growing families, fortified by this trade, were the elite of these countries and had strong ties to the global market in the 20th century. However, American companies introduced the cultivation of both bananas and coffee. Honduras became the world’s largest producer of bananas. The constitution of this fruit enclave immediately became a decisive factor of power, around which local politicians revolved, because banana companies encouraged infighting and put pressure on the weak Honduran governments. The presence of this foreign company, United Fruit Co., displaced and ruined small local banana growers and imposed terrible conditions on workers in the plantations. The arrival of US capital redefined Central American economies as dependent. Foreign plantations constituted a real production site in Central America.
The Panama Canal
After independence, Panama was part of Gran Colombia, led by Bolivar. The route across the isthmus gained renewed interest from the great powers. North American capital arrived in 1885. They built the interoceanic railroad in Panama, which allowed them to quickly connect the two growing trade routes with the Pacific coasts. This encouraged the project of opening a canal connecting the two oceans through Central America. At first, construction was planned for Nicaragua, but a private French company obtained permission to build the canal in Panama. In 1903, US Marines landed in the city, the secession of the province occurred, and local leaders proclaimed their independence. Panama was then born as a weak republic, independent from Colombia but under a North American protectorate. The Republic of Panama was geographically divided by the Canal Zone, thus establishing a commercial and military enclave under North American jurisdiction. It is worth highlighting the construction of the canal, which represents a gigantic piece of engineering.
The Return of the Canal
The Panamanian government requested the revision of the treaty and the restoration of effective sovereignty over the Canal Zone. However, the US only granted a yearly rent increase, the right to display the Panamanian flag alongside the US flag, and pledged to match the salaries of Panamanian workers. In 1960, Panama again demanded the removal of the clause related to management and presented its claim to the United Nations Security Council. In 1977, the president of Panama, Torrijos, formalized an agreement with President Carter that established the end of American control of the canal on December 31, 1999.
US Intervention in Nicaragua
At the end of the 19th century, Nicaragua’s economy was based on coffee cultivation. Since the US occupation of 1912, the US began replacing Great Britain. The naval intervention had a strategic reason: to build the Panama Canal, the US needed to secure an alternative award, a second interoceanic passage. The local dominant groups were supporters of US intervention to overthrow the dictator Zelaya. The foreign military presence lasted over 20 years, directly consolidating a neocolonial situation, a protectorate over Nicaragua. The US imposed supervision of customs, banking supervision, border inspection, and the creation of the first professional army.