Page 131 - DMGT519_Conflict Management and Negotiation Skills

Unit 6: Negotiation Style

Notes
Nothing really occurred with this development and ultimately, a French company called
the Compagnie Nouvelle du Canal de Panama acquired the contract to build the canal in
1881. By 1889, the Compagnie had gone bankrupt and had lost roughly around $287
million U.S. along with approximately 20,000 lives in the process. It is also in 1889 that the
U.S. has become convinced that the canal passage was absolutely vital to their interests.
They appointed Rear Admiral John Walker to head the Commission and to choose the
most viable route.
Naturally, the U.S. was interested in the Panama route already started by the French. The
French company which had been heading for bankruptcy, and seeing the writing on the
wall before their bankruptcy in 1889, had entered into negotiations with the U.S. The
French company was eager to extricate themselves from the project. At the time, their
holdings were extensive and included land, the Panama Railroad, 2,000 buildings, and an
extensive amount of equipment. They felt their total holdings should be valued around
109 million U.S., but Rear Admiral Walker estimated them to be not greater than about 40
million U.S., a significant difference.

As negotiations progressed, the Americans began to hint that they were also interested in
the possibility of building an alternative canal in Nicaragua. The French countered with
the ploy by claiming that both Great Britain and Russia were looking at picking up the
financing to complete the canal’s construction. It was subsequently leaked to the U.S.
press, much to the French company’s pique, that the Walker Commission concluded that
the cost to buy out the French company was too excessive and recommended the
Nicaraguan route.

A couple days later after this news, the president of Compagnie Nouvelle resigned. The
resulting furore caused the stockholders to demand that the company be sold to the U.S. at
any price they could get. The Americans became aware that they could now pick up all the
French holdings for 40 million dollars. However, the Walker Commission had not just
been a ploy by the Americans because the Nicaraguan route was actually a serious proposal
that had a lot of backing in the U.S. Senate. President Roosevelt had to engage in some
serious political manoeuvrings to get everybody on board of the Panama passage. The
Walker Commission changed its recommendation to favour Panama as the canal route.

But the story doesn’t end there. Next, the U.S. signed a new treaty with Colombia’s charge
d’affairs which gave the U.S. a six mile area across the Isthmus and agreed to financial
remuneration that was to be paid to Colombia. The Colombian charge d’affairs had signed
the treaty without communicating with his government. The treaty was rejected by
Colombia. In the meantime, revolution against Colombian authority was afoot in Panama.
Since they believed they had signed a legitimate treaty, Roosevelt sent warships to the
area to negate the Colombians, and thus secured U.S. interests, and offered aid to the
Panamanians in their quest to separate from Colombia. Panama succeeded in their revolt
and became a republic. In 1914, the Panama Canal was opened.
Questions:

1. How different negotiation tactics can be employed to negotiate and conclude a
better international agreement?

2. Analyse the case and Discuss the case facts.

LOVELY PROFESSIONAL UNIVERSITY 125