At a recent event in Panama, the nation’s President, José Raúl Mulino, paid tribute to those who fought for Panamanian sovereignty, leading to the nation’s control of the significant Panama Canal. This followed statements by former US President Donald Trump, emphasizing China’s considerable influence over the canal. However, many argue that Trump’s statements reflect strategic positioning targeting negotiations over fees for American goods crossing through the canal.
Gaining control of the canal has been a significant achievement in Panama’s history, marking the country’s autonomous control over a global-extensive waterway. As Mulino firmly stated, ‘The canal is and will continue to be Panamanian.’ This assertion underscores Panama’s resolution not to relinquish control over the canal, denying Trump’s claim that China has superior command.
While Trump’s remarks concerned some, it also sparked discussion about the future of Panama’s economic relationship with the U.S. Former U.S. officials asserted that Trump’s comments were mostly bluster and that Panama’s relationship with the U.S. remains steady. Yet with China positioning itself as a potential ally to Panama, the situation merits consideration.
The Panama Canal presents immense strategic importance due to its role in global trade. The United States constructed the canal in the 20th century with Panama taking full command in 1999. Under Panama’s stewardship, commerce through the canal thrives, with the Panama Canal Authority providing effective management.
China’s interest in Panama stems from its strategic significance and the opportunity to broaden its influence within Latin America. Its investment in international port construction portrays it as an alternative to the United States, interacting with other developing countries as a peer rather than a bully. However, these moves are not necessarily at odds with American interests.
Concerns have emerged about two seaports at each end of the Panama Canal, operated by Hong Kong’s CK Hutchison Holdings. Though the company is publicly listed with a Hong Kong billionaire as its primary owner, there are suggestions it could potentially be coerced by Beijing to assist in intelligence operations. Yet Panama’s government asserts that the publicly accessible nature of the canal system negates these concerns.
According to the Panama Canal’s deputy administrator, transparency is one of the canal’s key features. Given its visibility and the access anyone with satellite technology would have to monitor its operations, concerns about covert control by China are unfounded. These arguments provide an interesting counterpoint to fear-mongering regarding China’s influence over the canal.
In Trump’s first term as President, he did express concern over the Panama Canal, citing its operational management and costs as areas requiring attention. Discussions with then Panamanian president, Juan Carlos Varela, in 2017 focused solely on the substantial fees the U.S. Navy had to pay to use the canal, but notably omitted any references to China.
China’s intended investments in Panama included extensive infrastructure improvements, such as the construction of a canal bridge. These investments, while beneficial to Panama, purportedly allow China to leverage its position. Still, Panamanian officials maintain steadfast in their assertion that the canal’s primary function is as a hub for global trade rather than a vessel for foreign influence.
With the Panama Canal’s modernization, it remains relevant in global trade due to immense investments after the U.S. handover of the waterway. Around $5 billion has gone to widening the waterway to accommodate larger cargo ships that facilitate trade between the U.S. and East Asia. Neutrality, as the Canal’s deputy administrator puts it, is the greatest business asset of the canal.
Ports at the canal’s Atlantic entrance are managed by companies based in Hong Kong, Taiwan, and the United States, displaying its international connectedness. These ports’ operations have continued smoothly without any significant issues, putting into question the sudden speculative interest on China’s supposed control during Trump’s administration.
Not all voices within Panama are in favor of extended Chinese investment. China’s previous commitments have met with resistance in some government circles, leading to a pause in proposed infrastructure projects. Despite this, it’s evident that Panama regards the United States as its most important ally.
Tourists at the Miraflores Visitors Center recently witnessed the marvel of commerce in motion, as a colossal cruise ship traversed the canal. Their awe at this sight sums up the significance the Panama Canal holds. However, as one tourist noted, the recent controversies over the Canal’s control started as almost amusing but have since taken on a more serious tone given global geopolitical shifts.