Destined for War: can America and China escape Thucydides’ Trap?

by Graham Allison

The deal was, Roosevelt’s secretary of state admitted privately, “very satisfactory, vastly advantageous to the United States, and we must confess, with what face we can muster, not so advantageous to Panama.”60 The arrangement only proved more imbalanced in the years that followed. For example, while Panama continued to receive only $250,000 annually from the canal, the US Treasury collected about $1 million in profits from the canal in 1921, close to $14 million in 1925, and over $18 million each year from 1928 to 1930.61 Moreover, this does not include the impact of reduced shipping costs, which made products cheaper for American consumers and US goods more competitive in foreign markets. By 1970, tolls exceeded $100 million annually, and by the end of the twentieth century, when the United States finally transferred ownership back to Panama under the terms of a treaty signed by President Jimmy Carter, the canal was collecting $540 million in tolls.