President Trump has vowed to ‘take back’ the U.S.-built Panama Canal. Is that in America’s interest?
How important is the canal to the U.S?
A former symbol of American imperialism, the 51-mile manmade channel linking the Atlantic and Pacific oceans remains critical to the U.S.’s economy and security. The canal today handles about 5 percent of the world’s seaborne trade, and 40 percent of all U.S. container traffic—an annual $270 billion in cargo—passes through it. Before the U.S.-built canal was completed in 1914, a ship sailing from New York to San Francisco had to go around the southern tip of South America, a dangerous journey that could take months. The canal reduced that trip to weeks—today it takes 11 days—allowing the U.S. to flex its naval and commercial might around the world. The waterway linked America’s “growing Pacific power to more traditional Atlantic relationships,” said Richard Feinberg, a professor of international political economy at the University of California, San Diego. President Trump now wants the U.S. to again control and operate the canal, just as it did for the waterway’s first 85 years, saying the 1977 deal that ceded the canal to Panama was a “foolish gift.”
How did the U.S. come to build the canal?
That tale begins in 1903, when Panama, then part of Colombia, declared its independence. It got an assist from President Theodore Roosevelt, who recognized the breakaway nation and sent U.S. warships to protect it. In return, Roosevelt secured a treaty that for $10 million gave the U.S. the right to build the waterway plus control of a Canal Zone extending 5 miles on either side. Cutting a path through Panama’s mountains, swamps, and dense jungle was a staggering effort that took 10 years and cost the lives of more than 5,600 workers, most of them Afro-Caribbean. The canal was regarded as a wonder of engineering when it opened. But in the following decades, local resentment grew over the 553-square-mile Canal Zone, which was off limits to ordinary Panamanians. “This was the most valuable piece of land in the country,” said Ovidio Diaz-Espino, an expert on the canal’s history, “and it was being exploited by somebody else.” Tensions hit a boil in January 1964, when anti-U.S. rioting broke out; 21 Panamanians and four U.S. soldiers were killed. The U.S. and Panama began negotiations on the canal’s ownership, talks that concluded with the 1977 signing of two treaties by President Jimmy Carter.
What was agreed?
One treaty stated that the U.S. would gradually transfer canal ownership to Panama, with the handover being completed on Dec. 31, 1999. The other mandated that Panama would charge “just, reasonable, and equitable” canal transit fees and allow the U.S. military to combat any threat to its neutral operation. The treaties held even after President George H.W. Bush sent U.S. troops into Panama in 1989, to remove strongman leader Gen. Manuel Noriega. But Trump now claims Panama has violated the neutrality treaty. He says it is overcharging U.S. ships— even though all ships are charged by a set formula based on size, cargo, and other factors. In his inaugural address he claimed that “China is operating” the canal, and so “we’re taking it back.” He has since refused to rule out a military intervention.
Are the Chinese running the canal?
Panamanian President José Raúl Mulino calls the claim “nonsense,” noting “there is not a single Chinese soldier in the canal, for the love of God.” Still, concern is rising in Washington about Beijing’s growing presence in the region. In 2017, Panama became the first Latin American nation to join China’s Belt and Road Initiative; China is now backing infrastructure projects there, including a canal bridge, a railway line, and a cruise-ship terminal. The primary concern, though, is the Hong Kong–based companies that operate two of five ports adjacent to the canal, one on each end. Beijing could use those facilities to gather data on canal traffic, or to host Chinese military assets. “A foreign power today possesses—through their companies, which we know are not independent—the ability to turn the canal into a choke point,” said Secretary of State Marco Rubio. How has Panama responded to Trump’s threats? Mulino insists a return of the waterway is out of the question. “Every square meter of the Panama Canal and its adjacent zone area belongs to Panama,” he said. Trump’s words have stirred outrage and anxiety among Panamanians; hundreds protested Rubio’s visit to Panama City this month, and some burned images of Rubio and Trump. But the tiny country, which has no army, could offer no meaningful resistance if Trump decided to use force to grab the canal. “All he needs is to land 10,000 troops and that’s it,” said Diaz-Espino.
Would Trump do that?
Few experts expect Trump to try to seize the canal; more likely he is angling for more favorable terms or U.S. investment opportunities. Fees have risen sharply in recent years, due in part to drought conditions that have lowered the canal’s capacity. But it’s not clear what any concessions might look like. Mulino announced last week that his country will leave the Belt and Road Initiative, and the State Department claimed Panama would allow U.S. Navy ships to pass through for free—a claim Mulino blasted as false and Rubio quickly walked back. It hints at one possible concession, but the $13 million the Defense Department pays in fees is “dust” compared with its $850 billion budget, said Trump’s former Panama ambassador John Feeley. By offering the U.S. favorable terms Panama would also violate the 1977 treaties, which guarantee equal treatment for all canal users. And Trump’s public stance remains that nothing short of full U.S. control will do. “We’re taking it back,” he said, “or something very powerful is going to happen.”
Trump’s Panama hotel flop
Exactly why Trump is fixated on the canal is a question that’s prompted some head-scratching in Panama and the U.S. Some experts point out that his gripes about Carter’s deal go back decades; others that Trump is simply an expansionist who also wants to take over Canada, Greenland, and Gaza. But his past business experience on the isthmus could be a key factor. In 2018, a majority stakeholder in a Trump-branded and-managed hotel and condo complex in Panama City sought to cut ties with the Trump Organization, accusing it of “utterly incompetent management.” The dispute led not only to extensive court battles but also to fisticuffs between the investor’s employees and Trump’s security team. The investor eventually won ownership and the silver letters spelling out TRUMP were pried from the 70-story building; it is now a Marriott. “As with so many of Trump’s policy pursuits,” said New Yorker reporter Robin Wright, “an element of personal pique may be at play.”
