Why Trump is eyeing up the Panama Canal
Trump appears to have two main gripes: the “exorbitant” rates that US ships are charged for using the waterway and increasing Chinese influence in the Canal.
America’s top diplomat, Marco Rubio, is reportedly planning a trip to Panama as early as next week, in a move that Washington chatter says is intended to underscore President Donald Trump’s seriousness about taking back the Panama Canal.
The 51-mile canal, with a history rich in symbolism of America’s rise as a global power, has again been thrown into the limelight this week after the US President used his inauguration speech to accuse China of “operating” the Canal, before doubling down on his pledge to bring it back under US control.
The Panama Canal - which cuts through the middle of Panama, a country occupying the strip of land between Central America and South America - was built by US President Teddy Roosevelt in the early part of the 20th century. The aim was to cement America’s status as the most powerful nation on earth. For the first time, it meant that the US could gain control of both the Atlantic and Pacific oceans and unite trade between them.
It was the largest public construction project in US history - on a scale so significant that, at peak construction time, one-third of the city of Pittsburgh was working on building the canal. It was considered an engineering marvel, relying on a series of locks that lift ships – and their cargo – above mountains. Though its construction was controversial too: the US imported tens of thousands of Caribbean workers to build it, who died in large numbers from accidents or disease.
Amongst Panamanians themselves, initial excitement at becoming the centre of world commerce soon turned to resentment that the Canal was being administered exclusively by Americans to serve their own geopolitical interests. Eventually, in 1977, then US President Jimmy Carter signed a treaty with the Panamanian National Guard that relinquished US control of the canal by 1999.
This move from Carter helped to defuse US tensions not just with Panama but with countries throughout Latin America, since the Canal had come to be regarded as a symbol of American colonialism in Latin America.
However, Trump has criticised the arrangement as a “foolish gift that should never have been made”.
While the US no longer controls the Canal, it remains its biggest customer, responsible for roughly three-quarters of the cargo moving through it each year. The second largest user is China.
Trump appears to have two main gripes: the “exorbitant” rates that US ships are charged for using the waterway and increasing Chinese influence in the Canal.
Trump’s claims that China operates the Canal are not to be taken at face value. And Jose Raul Mulino, the country’s leader has put him straight, insisting that Panama has “full control of the canal.”
It’s also true that Chinese companies, both private and state-owned, have heavily strengthened their presence in Panama through billions of dollars in investments in infrastructure-related contracts in and around the Canal, including a cruise terminal and a bridge to be built over the Canal. A Chinese company also manages two ports on either end of it.
In 2017, Panama severed diplomatic ties with Taiwan and established formal relations with China – a big win for Chinese diplomacy. Months later, Panama became the first Latin American country to join Beijing’s signature Belt and Road Initiative, opening the door to China’s expanded footprint in critical Canal infrastructure.
Given that Trump has even threatened military force in his quest to take back the Canal, tensions will be running high during Rubio’s trip to Panama. The US President’s bombastic approach to foreign policy has not amused Mulino, who retorted this week: “Every square metre of the Panama Canal and its adjacent zones is part of Panama, and it will continue to be.”
The prospect of America regaining control of the Canal any time soon seems unlikely. Trump’s threats are perhaps largely just a crass bargaining technique to negotiate better rates for American use of the waterway.
Meanwhile, China’s increasing presence in and around the Canal will only continue to make the Panama Canal a key flashpoint for US-China superpower competition.
Caitlin Allen
Deputy Editor
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