Donald Trump has recently stirred controversy by threatening to reclaim control of the Panama Canal due to complaints over exorbitant fees charged by the Panamanian government. The incoming U.S. president voiced his frustrations on his social media platform, Truth Social, claiming the fees are not only excessively high but also indicative of how America's naval operations and trading fleets are unfairly managed. According to Trump, the treatment received by the U.S. is unreasonable, stating, "This total 'rip-off' of our country will stop immediately."
Since November 2023, navigational activities through the canal have faced unprecedented restrictions due to severe drought conditions. Yet, the Panama Canal Authority reported annual revenues reaching $5 billion as of October 2023, showcasing the economic significance of this international waterway, which is pivotal for global trade.
The Panama Canal, spanning approximately 82 kilometers, was fully operational by 1914, having been constructed by the United States, which maintained control over it until it was officially handed over to Panama at the end of 1999 as part of a treaty signed during Jimmy Carter's presidency. Trump remarked, "The canal was not handed over for the benefit of others but merely as a sign of cooperation between us and Panama." This perspective reflects his broader concerns about the fairness of current arrangements between the two nations.
With scrutiny on the increasing global influence of China, Trump expressed concern over Beijing's alleged reach within the canal's management. He stated, "The canal should not be managed by China or anyone else. We will not allow it to fall back to the wrong hands." Trump indicated if Panama fails to provide safe, efficient, and reliable operations, the U.S. might demand the canal's complete and unconditional return, adding gasoline to the fire of diplomatic tensions.
Responding to Trump's threats, Panama's President José Raúl Mulino made it clear his country stands firm on its sovereignty. "Every square meter of the Panama Canal and its surrounding area belongs to Panama and will continue to belong to Panama," he said, defending the nation's rights against what he termed as external pressure from Trump. Mulino also emphasized the legitimacy of the canal's operational fees, clarifying, "The fees are not arbitrary; they are established publicly and at public hearings." This assertion challenges Trump's claims of exploitation.
The economic ramifications of the Panama Canal cannot be overstated, as it accounts for about 5% of the global shipping traffic. Inside the canal, the amount of cargo transported is staggering, presenting not only U.S.-Panama trade relations but also interactions with key trade partners such as China, Japan, and South Korea, all of whom rely heavily on this shortcut between the Atlantic and Pacific Oceans.
The continuous dialogue surrounding the canal's management reflects not just bilateral relations but also the broader geopolitical chess game involving China. Trump's threats to reclaim control come as the U.S. grapples with its international standing and the dynamics of trade, bringing about reflections on past agreements and the impact on global markets.
Experts are left wondering how Trump, should he pursue this controversial path, might navigate the legal and diplomatic challenges tied to reclaiming control over the canal. Existing treaties signify the complexity of such actions. Trump himself has previously shown interest in altering territorial boundaries, evidenced during his first presidency when he floated the idea of purchasing Greenland—a notion swiftly rejected by Danish authorities. Just as past territorial aspirations have been met with resistance, Trump's proposal for the Panama Canal may evoke similar pushback amid the geopolitical climate.
Observers also point out the muted response from China's government, which has not officially commented on Trump's remarks. Nevertheless, Trump's narrative casts China as posing greater influence over Panama than it actually has as the country does not control the canal itself. They do own nearby port facilities through Hong Kong's CK Hutchison Holdings, reinforcing Trump's rhetoric on foreign involvement.
These developments signify the challenges facing U.S.-Latin American relations under Trump's presidency. It is yet to be seen how this will play out officially or move beyond mere threats. For now, the situation remains precarious, with future interactions likely to be fraught with tension and scrutiny as both nations navigate economic and diplomatic waters.
