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Has the Possibility of US Intervention Sounded the Alarm for the Panama Canal?

 

Newly sworn-in President Donald Trump said that the purpose of the Panama Agreement and the spirit of our treaty have been completely violated. US ships, including those of the US Navy, are being charged exorbitant fees, which is not fair in any way. The US also says that the canal was given as a gift, and the result is foolish.

 

Trump claimed in his inaugural address that "Panama has broken its promise to be neutral, and China is running the Panama Canal." He asked Panama to either reduce the fees of the Panama Canal or return its control to America.

America's China concern regarding Panama Canal

The reason why Chinese influence over the Panama Canal has become a topic of US strategic discussion is because Chinese companies such as Landbridge Group and Hong Kong-based CK Hutchison Holdings operate ports on both ends of the canal. Their presence and strategic maneuvering are a matter of concern for the US. Of particular concern is China's deepening ties with Latin America.

Panamanian President Jose Raul Mulino rejected Trump's claim that the US had gifted the canal to Panama. He has clarified that China does not manage the canal, a Chinese company manages two ports on the canal. He has claimed the right over the Panama Canal and said that it will remain Panama's.

Panama has described Trump's threats as 'worrying'

Panama has announced "a comprehensive audit" of the Panama Ports Company, which manages the canal, aimed at "ensuring the efficient and transparent use of public resources."

The audit report will determine whether the company is complying with its concession agreements. The report will reveal information on income, payments, and the country's contribution.

Panama has described Trump's threats as 'worrying' and has advocated a discussion in the United Nations Security Council (UNSC).

It has written a letter to UN Secretary-General Antonio Guterres in this regard, in which Panama has cited the article of the UN Charter, which prohibits the use or threat of use of force against the territorial integrity or political independence of any country. However, the letter does not demand a meeting of the UNSC.

Panama Canal is a good source of Income for Panama

Indeed, Panamanians consider the Canal to be central to their national identity and depend on the lucrative traffic the Canal generates. When this canal was built, about 1000 ships passed through it every year and now after a hundred years, their number has come down to about 42 ships per day. The income from the Panama Canal can be estimated from this.

The canal is reported to have earned nearly $5 billion in total profits in 2024. According to a report released by IDB Invest, 23.6% of Panama's annual income comes from the canal and companies providing services related to the canal's operation.

In 2007, Panama began work on the largest expansion of the canal, building a new set of locks that can accommodate more than 1.5 times the size of ships that previously passed through the waterway. Panama spent more than $5 billion on the new locks, which began operating in 2016. It doubled the maritime traffic.

The expanded canal has brought billions of dollars in economic benefits to Panama and has allowed the country to become a stable nation in Central America, while others still lag.

And while Panama has reached the pinnacle of success, the US claim that it "foolishly gave away the canal for nothing" does not seem logical. Panamanian officials have made it clear that "the canal is and will remain Panama's and its administration will remain under Panamanian control concerning its permanent neutrality."

Facts related to the history of the Panama Canal

The Panama Canal is a man-made waterway built in the country of Panama. This canal connects the Atlantic Ocean to the Pacific Ocean. The construction of the Panama Canal was completed on August 14, 1914, and it was opened for ship traffic on August 15, 1914. This canal is one of the major waterways for international trade.

The construction of the Panama Canal was first started by France in 1881. In 1904, the United States took control of this project. On August 15, 1914, the first ship passed through the Panama Canal.

In 1903, Panama was a restive part of Colombia. Feeling neglected, many Panamanians were openly advocating for independence from the central government located across the impassable Darien Gap jungle, while Colombia had no interest in giving up the region.

Before the Panama Canal was built, ships had to circumnavigate South America, facing the dangerous waters of Cape Horn, which took a lot of time. With this in mind, outsiders had always believed that the narrow isthmus was the perfect spot for a trans-oceanic canal, cutting the sea journey by thousands of miles.

Financial mismanagement and deaths of workers from yellow fever and malaria led to the bankruptcy of France, which was building the canal. As a result, France's attempt to build the canal failed in the 1880s.

Eventually, the US imported workers from the Caribbean to build the canal. An ingenious system of locks designed by US Army engineers raised ships from sea level to Gatun Lake, the largest man-made lake at the time, where they could cross the isthmus. The last blast to flood the canal was initiated in 1913 by then-President Woodrow Wilson via telegraph from the White House.

Initially, the US paid Panama $10 million for this area. After this, $250,000 was paid to Panama every year. But the canal that divided their country into two parts was off-limits to Panamanians. Panamanians were angry that they had everything but they could not go inside.

In January 1964, the protesters lost patience and entered the restricted Canal Zone and attempted to hoist the Panamanian flag. Riots broke out and fighting left 22 Panamanian students and four US Marines dead.

The US and Panama discussed a plan to return the canal to Panama for 13 years. Finally, in 1977, then-President Jimmy Carter struck a deal with Panama's then-strongman Omar Torrijos that the US and Panama would jointly administer the vital waterway, with the canal being handed over to Panama at midnight on December 31, 1999.

However, the final agreement still gave the US the right to intervene militarily to keep the canal open—a condition that Trump could potentially exploit to retake the canal by force, which is unlikely to meet legal scrutiny as the canal continues to see record traffic.

Although critics have accused Trump of using language reminiscent of modern imperialism, they believe that such rhetoric can also encourage other countries and this could have wide-ranging potential implications for the global political landscape.