Donald Trump has announced that he will implement an aggressive US policy on the very important naval communication route, talking about high tariffs and foreign interference. “The Canal will continue to belong to Panama,” however, the Panamanian president replied harshly.
The United States “must take back the Panama Canal”Like this Donald Trump has explicitly announced the upcoming aggressive US policy on the all-important naval route between the Atlantic and Pacific oceans, arguing that US ships are being charged too high fees for the passage. That of Panama is only the latest of the new US President's statements on the country's expansion policy given that among other things he also spoke of an annexation of Canada and an interest in the purchase of Greenland.
The canal was built by the US but surrendered in 1999
The Panama Canal is an artificial canal 82 kilometers long which lies entirely in the territory of the state of Panama, created by cutting the isthmus of the same name to allow the circulation of ships and avoid the circumnavigation of South America and join the Atlantic Ocean with Pacific Ocean. After France launched the project in 1881, without success, the United States took over the work in 1904 and managed to open the canal in 1914. The United States continued to control the Panama Canal exclusively until 1977 when a transfer agreement signed by President Jimmy Carter established joint American-Panamanian control and then the exclusive passage to the Central American country in 1999.
Trump's statements and the response of the president of Panama
Precisely in reference to those treaties, in recent days US President Trump has accused Panama of applying excessive tariffs for the passage of ships and threatened that his new administration could try to regain control. “They are robbing us of the Panama Canal,” Trump said Sunday during his first major rally after winning the White House, complaining that his country had “foolishly given him away.”
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“It was given to Panama and to the people of Panama, but it contains stipulations,” Trump said, adding: “If the principles, both moral and legal, of this magnanimous gesture of giving are not upheld, then we will demand that the Canal of Panama be returned to us in full, quickly and without questions asked.” Speaking to a crowd of supporters in Arizona, Trump also said that will not allow the channel to fall “into the wrong hands”, warning of potential Chinese influence on the Canal. The reference is to the entry of some Chinese companies into the management of the two ports located at the entrances to the canal.
“Every square meter of the Panama Canal and the surrounding area belongs to Panama and will continue to belong to Panama,” the Panamanian president replied harshly José Raul Mulino. “Tariffs are not set on a whim,” he continued, saying they are set by experts who take into account operating costs and supply and demand factors. The president also noted that Panama has expanded the canal over the years to increase vessel traffic “on its own initiative,” and added that increases in shipping rates help pay for the improvements.
The commercial importance of the Panama Canal and the weight of China
The Panama Canal remains one of the most important communication routes in the world. The man-made waterway allows up to 14,000 ships to pass through each year, accounts for 5% of global maritime trade, and is critical to U.S. imports of automobiles and commercial goods via container ships from Asia, as well as exports US raw materials, including liquefied natural gas. China has increased its economic and political presence in Panamabecoming one of the largest users of the channel but does not control or administer the channel. A subsidiary of Hong Kong-based CK Hutchison Holdings has long operated two ports located at canal entrances in the Caribbean and Pacific.
What could happen if the US controlled the canal
It is unclear how Trump would seek to regain control of the Panama Canal and what legal leverage he might rely on. If he actually decided to try to take possession of it as threatened, he would in fact clash with international law but also with numerous commercial interests and even with the opposition of the local government. In fact, the Canal is fundamental to the country's economy as it generates around a fifth of Panama's annual revenue.
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