US President Donald Trump. (Photo by Chip Somodevilla/Getty Images)
On Monday 20 January 2025, Donald Trump was once again inaugurated as the president of the US. In his — rather more forceful than the last time — inaugural speech he spoke on many topics but one that caused some international consternation was that of the Panama Canal.
Trump said: “… We gave it to Panama and we’re taking it back.” But why should the US be so dogmatic about reclaiming this tiny strip of South American territory and what justification could they possibly have for doing so?
To understand the US’s claim that it has a right to the Panama Canal we must first understand the history of its construction. The idea for a canal across Panama, which at the time was part of Colombia, was the brainchild of Ferdinand de Lesseps, the celebrated French engineer who completed construction of the Suez Canal in 1869.
In 1879, he organised an international congress in Paris to finalise, and get international support for, connecting the Pacific and Atlantic oceans. This gathering ultimately resulted in the formation of the Compagnie Universelle du Canal Interocéanique de Panama (Universal Company of the Interoceanic Canal of Panama).
France was supportive of the initiative, seeing it as an opportunity to expand its influence in the region. The Colombian government was also on board as it too recognised the opportunities such a canal would offer them, having signed the Wyse Agreement the previous year, authorising the French to build a canal and licensing them to operate it for 99 years.
The failure of the project was largely the result of poor design — while a sea-level canal might have been appropriate for the Suez, the mountainous environment of Panama made such a canal unviable. The expedition also failed to account for the tropical diseases of the region, malaria and yellow fever, which killed more than 22 000 people before the Lesseps company declared bankruptcy and the attempt was abandoned in 1889.
That seemed to be that but president Theodore Roosevelt saw the opportunities the Panama Canal could offer the US and attempted to negotiate with Colombia to secure the right to complete it. Colombia refused and so the US supported an independence movement which saw the declaration of Panamanian independence from Colombia in 1903 and the signing of the Hay-Bunau-Varilla Treaty with the new Panamanian government. This gave sovereignty over the canal to the US in perpetuity.
Construction of the canal by the US began in 1904 and it was officially opened on 15 August 1914.
The canal remained sovereign territory of the US until 1977 when president Jimmy Carter and Panama’s leader Omar Torrijos signed the Torrijos-Carter Treaties, which agreed to the handover of the canal to Panama over a period to be completed by 31 December 1999 and that it would be operated by Panamanian state-owned entity the Panama Canal Authority (PCA).
It just so happened that, during this period, 1997, Hong Kong-based company Hutchison Whampoa (known today as CK Hutchison Holdings) successfully obtained 25-year leases for both the Balboa and the Cristóbal ports on either side of the canal. These leases were renewed in 2022 for an additional 25 years.
Right, now that we are all caught up, why does Trump want the US to “take it back”?
Well, for starters, it is a global choke point for international shipping and is the most efficient route between the Atlantic and Pacific oceans. Without the canal, ships would have to sail south around Cape Horn at the bottom of South America, or else north through the Bering Strait. This would add significantly to the distance and time required to traverse the route and increase the cost of shipping, which would ultimately drive up the cost of goods for consumers.
Roughly 14% of all US trade ships use the canal — about 72% of all shipping that uses it. China makes up the second highest percentage with about 21% of all canal shipping. US control of the canal would allow them to set the tolls for using it and ensure that US shipping was “treated fairly”, something Trump argued is not the case under PCA control.
The matter of fairness is of particular importance as, alongside the Torrijos-Carter, a second agreement, the Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal, was also signed. Should the US be able to provide evidence of unfair treatment of US shipping by the PCA, they could argue that article 4 of the treaty, which guarantees canal neutrality, has been violated and is therefore void. This could give the US a pretence for re-establishing US control of the canal.
However, such action would require very compelling evidence to succeed and even then would probably attract international condemnation.
Another comment made in Trump’s inaugural speech — “China is operating the Panama Canal” — must be interrogated. The PCA denies this, however, the US could argue that control of the ports on either side of the canal gives China undue influence over operations and is therefore a breach of the spirit of the treaty, particularly of article 5, which requires that only Panama can operate the canal and maintain military forces or installations within the national territory.
Any argument regarding the militarisation of the canal by a foreign power would have to be proved but, should it be determined that operation of the ports violates the spirit of neutrality and the requirement of Panamanian control of the canal, the US could use this as a justification for pushing their territorial claim.
One could argue, as the PCA does, that Chinese operation of the ports does not constitute a violation, as it has maintained control of the operations of the canal itself, but the US might not accept that position.
It should also be noted that the US could be alarmed by the possibility of military and espionage activities occurring in the Chinese-controlled ports.
This is despite CK Hutchison Holdings being a private company. The US could argue that, due to the nature of Chinese governmental control over private industry, and its activities in Hong Kong, the lines between private and state control of the business has been blurred.
This claim would also require sufficient evidence and any action taken by the US could be seen as hostile, warranting a Chinese response.
Another factor to be taken into account is the opportunity for whoever has control over the Panama Canal to exert influence, both military and diplomatic, over the region. US control would firmly establish its dominance over the Western Hemisphere. It would be in line with the Monroe doctrine, which demands no foreign influence on the American continent in order to establish a sphere of influence separate from the problems of the rest of the world, and could be seen as a vital security objective for the Trump administration.
There are some downsides for the US in pushing their territorial claim over the Panama Canal, not just a potential response from China and the possibility of international condemnation, but also the alienation of countries in the region.
Trump could choose to make use of bilateral agreements with individual countries to mitigate the effects on US relations with Latin America or he could choose to portray any action the US takes as of importance for regional stability and resistance to be the result of weak and corrupt leaders.
Any criticism he is faced with at home could be excused as the actions of unpatriotic elements so beholden to international interests that their opposition is merely an extension of their opposition to the broader “America first” agenda.
Regardless of how Panama, or the rest of the world feels, Trump has made his intentions for the Panama Canal known. He sees it as being of vital economic, diplomatic and military interest to the US and he wants it back. It is clear from his inaugural address that he believes he has legal cause to take such action.
This must be seen in light of comments on the matter made by Marco Rubio, during his senate confirmation hearing to be secretary of state, that there was a possibility that Panama might have breached the articles of the neutrality agreement.
In short, we must take account of the fact that Trump is a dealmaker — he loves to win and any move he makes must be seen to be a win for his America first agenda.
The US might settle for leaving the canal itself in the hands of the PCA, should the Panamanian government void the leases to the ports held by China in favour of American companies or companies from a US ally.
Ultimately, would the international fallout stemming from any action taken to assert control of the Panama Canal be offset by the benefits to the US? After all, there are few, if any, capable of stopping the US from taking it over, if that is a decision it chooses to make.
Douglas White is head of circulation and subscriptions at the Mail & Guardian.
