A New Era of Tensions Over the Panama Canal

The Panama Canal, one of the most strategic waterways in the world, has recently become the focal point of a heated dispute between the United States and Panama. At the center of this controversy is a claim by U.S. President Donald Trump that his administration is "reclaiming" the Panama Canal, a statement that has been met with fierce resistance from Panamanian leaders. On February 21, 2024, President José Raúl Mulino of Panama directly accused Trump of lying about the supposed "reclaiming" of the canal during a recent address to Congress. This accusation came in response to Trump’s comments about a deal involving the sale of a controlling stake in a company operating ports at both ends of the Panama Canal.

The deal in question involves a consortium led by BlackRock Inc., a U.S.-based investment management company, which announced its intention to purchase a majority stake in a Hong Kong-based group that operates the ports. Panama has been quick to clarify that this transaction is a private business deal and does not imply any loss of sovereignty over the canal. In a strong statement, President Mulino rejected Trump’s claims, calling them an affront to Panama’s dignity and national sovereignty. This exchange has once again brought the Panama Canal to the forefront of international attention, reigniting debates about its history, its strategic importance, and the complex relationship between the United States and Panama.

The Historic Background of the Panama Canal

The Panama Canal, often referred to as one of the "Seven Wonders of the Modern World," is a vital waterway that connects the Atlantic Ocean to the Pacific Ocean, allowing ships to pass through the Isthmus of Panama in Central America. Built by the United States in the early 20th century, the canal was officially opened in 1914 and quickly became a cornerstone of global trade. For much of the 20th century, the canal was under U.S. control, with the U.S. exercising jurisdiction over the Canal Zone, a strip of land surrounding the waterway.

However, this arrangement became a source of tension between the U.S. and Panama, as many Panamanians felt that the canal, which runs through their territory, should be under their control. After decades of negotiations, the U.S. and Panama signed the Torrijos-Carter Treaties in 1977, which paved the way for the transfer of ownership of the canal from the U.S. to Panama. The treaties, signed during the presidency of Jimmy Carter, stipulated that the U.S. would transfer full control of the canal to Panama by December 31, 1999.

On that day, in a symbolic ceremony, the U.S. officially relinquished control of the Panama Canal, marking a significant shift in the relationship between the two nations. The transfer was seen as a gesture of goodwill and a recognition of Panama’s sovereignty. However, Trump has repeatedly criticized this decision, claiming that the U.S. was wrong to "give away" the canal. He has argued that the U.S. should have retained control, often referring to the canal as a valuable asset that should be leveraged for American interests.

The Recent Deal and Its Implications

The latest controversy surrounding the Panama Canal arose from the announcement of a major business deal involving the ports at both ends of the waterway. On February 20, 2024, CK Hutchison Holding, a Hong Kong-based conglomerate, revealed that it had reached an agreement to sell its controlling stake in Hutchison Port Holdings and Hutchison Port Group Holdings to a consortium led by BlackRock Inc. The deal, valued at nearly $23 billion, including $5 billion in debt, would transfer ownership of these port operations to the U.S.-based investment firm.

While this deal is significant in terms of its financial value and the change in ownership of critical infrastructure, Panama has been quick to downplay any notion that this transaction affects its sovereignty over the canal itself. Panamanian officials have emphasized that the ports are separate entities from the canal’s operations and that the sale is purely a commercial transaction. Frank Sixt, co-managing director of CK Hutchison, also clarified that the deal was the result of a competitive bidding process and was unrelated to any political developments involving the canal.

Despite these clarifications, Trump seized on the news as evidence of his administration’s efforts to "reclaim" the Panama Canal. In his address to Congress, he claimed that the deal was a step toward restoring U.S. influence over the waterway, a claim that Panama has vehemently denied. According to Trump, the U.S. should never have relinquished control of the canal, which he views as a strategic asset that should be used to bolster American interests. His comments have been met with frustration from Panama, which sees the claims as attempt to undermine its sovereignty.

Panama’s Firm Stance on Sovereignty

In response to Trump’s claims, Panamanian President José Raúl Mulino was quick to issue a strong rebuke. In a message posted on the social media platform X, Mulino rejected Trump’s assertions, calling them a lie and an affront to Panama’s dignity. He emphasized that the sale of the ports was a private transaction and had no bearing on the sovereignty of the Panama Canal. "I reject in the name of Panama and all Panamanians this new affront to the truth and our dignity as a nation," Mulino wrote, accusing Trump of "lying again."

The Panamanian government has long maintained that it has full control over the canal and that the operation of the ports by foreign companies does not equate to foreign control of the waterway itself. Panama has always been protective of its sovereignty over the canal, which it views as a symbol of national pride and independence. The government has also sought to clarify that the sale of the ports is a business deal and should not be conflated with issues of national sovereignty or control over the canal.

This is not the first time that U.S.-Panama relations have been strained over the issue of the canal. In early February 2024, U.S. Secretary of State Marco Rubio met with President Mulino to discuss concerns about Chinese influence over the canal’s operations. Rubio expressed worries that China was exerting undue influence through its involvement in the ports, a claim that Panama has categorically denied. Panamanian officials have repeatedly stated that the operation of the ports is separate from the management of the canal, which remains under Panamanian control.

Trump’s Perspective and Historical Grievances

President Trump’s comments about the Panama Canal are part of a broader narrative that he has promoted since his presidential campaign, in which he has often revisited the theme of U.S. dominance and the need to "reclaim" what he perceives as lost assets and influence. Trump has long been critical of the U.S. decision to transfer control of the canal to Panama, calling it a mistake and claiming that the U.S. was "fooled" into giving it away. He has argued that the U.S. should have retained control of the canal, not only for strategic reasons but also because he believes it would have been more financially beneficial for the U.S.

In his public statements, Trump has frequently invoked the idea of "reclaiming" the canal as a way to assert U.S. power and influence on the global stage. This rhetoric has resonated with some of his supporters, who view it as part of a broader agenda to restore American dominance in international affairs. However, this approach has also been criticized for being based on a simplistic view of history and a misunderstanding of the complex geopolitical dynamics involved.

Trump’s remarks about the Panama Canal also reflect his broader skepticism toward international treaties and agreements, which he often views as unfair to the U.S. In the case of the Panama Canal, he has repeatedly criticized the Carter administration for "giving away" the canal, framing it as an example of weak leadership and bad deal-making. This narrative has been a staple of his political rhetoric, particularly when discussing U.S. foreign policy and the need to renegotiate or exit agreements that he believes do not favor the U.S.

The Broader Geopolitical Implications

The controversy over the Panama Canal highlights the complex and often contentious nature of U.S.-Panama relations, as well as the broader geopolitical dynamics at play in Central America and beyond. The canal remains a critical waterway for global trade, with approximately 14,000 vessels passing through it every year. Its strategic importance makes it a focal point for both economic and political interests, and any perceived shift in control or influence over the canal is closely watched by nations around the world.

The involvement of China in the region has also added a new layer of complexity to the situation. In recent years, China has increased its economic and diplomatic engagement in Central America, including investments in infrastructure projects such as ports and railroads. This has raised concerns in Washington about the growing influence of China in the region, particularly in relation to the Panama Canal. The U.S. has traditionally viewed itself as the dominant power in the region, and the idea of China gaining a foothold near the Panama Canal has been a source of anxiety for some policymakers.

In response to these concerns, the U.S. has sought to strengthen its ties with Panama and other Central American nations, framing itself as a partner in economic development and regional security. However, the tone and approach taken by the Trump administration have often been seen as heavy-handed, leading to tensions with nations that are wary of U.S. interference in their internal affairs.

Looking ahead, the situation surrounding the Panama Canal serves as a reminder of the delicate balance of power in international relations and the challenges of maintaining cooperation in a rapidly changing geopolitical landscape. As global powers jockey for influence, the Panama Canal will likely continue to be a focal point of both economic and political interest, with significant implications for the nations involved and for global trade as a whole.