The Panama Canal which is one of the most important trade routes in the world is now at the centre of a major diplomatic firestorm that has drawn global attention. On 22nd December President-elect, Donald Trump warned to reassert U.S. control over the canal as he accused Panama of levying “exorbitant charges” to utilize the passage. Afterward, Jose Raul Mulino, the president of Panama launched a sharp rebuke in retaliation to the comments.
Trump demanded that the canal be returned to US control and lambasted Panama’s handling, telling Panamanian officials to “be guided accordingly.” The development transpired at his first significant rally in Phoenix, Arizona following his victory on 5th November. With many conservatives applauding, he also employed his remarks to commemorate his comeback to power. “Has anyone ever heard of the Panama Canal? Because we’re being ripped off at the Panama Canal like we’re being ripped off everywhere else,” he expressed.
“The Panama Canal is considered a vital national asset for the United States, due to its critical role to America’s economy and national security. A secure Panama Canal is crucial for US commerce, and rapid deployment of the Navy, from the Atlantic to the Pacific, and drastically cuts shipping times to US ports. The United States is the number one user of the canal, with over 70 per cent of all transits heading to, or from, US ports,” he highlighted.
Trump then shed light on its history and conveyed, “Considered one of the wonders of the modern world, the Panama Canal opened for business 110 years ago, and was built at huge cost to the United States in lives and treasure. 38,000 American men died from infected mosquitos in the jungles during construction. Teddy Roosevelt was President of the United States at the time of its building and understood the strength of naval power and trade. When President Jimmy Carter foolishly gave it away, for one dollar, during his term in office, it was solely for Panama to manage, not China, or anyone else.”
“The Panama Canal is considered a VITAL National Asset for the United States, due to its critical role to America’s Economy and National Security.
— Donald J. Trump Posts From His Truth Social (@TrumpDailyPosts) December 22, 2024
If the principles, both moral and legal, of this magnanimous gesture of giving are not followed, then we will demand that the Panama… pic.twitter.com/LLUO358P9Y
Trump added that shippers have to cough up “ridiculous” money to use the crucial transit route that connects the Atlantic and Pacific Oceans. “It was likewise not given for Panama to charge the United States, its Navy, and corporations, doing business within our country, exorbitant prices and rates of passage. Our navy and commerce have been treated in a very unfair and injudicious way. The fees being charged by Panama are ridiculous, especially knowing the extraordinary generosity that has been bestowed on Panama by the US. This complete rip-off of our country will immediately stop.”
Additionally, he cautioned to prevent the canal from ending up in the “wrong hands,” citing possible Chinese influence on the passage. Interestingly, two ports on the Caribbean and Pacific entrances of the canal are managed by CK Hutchinson Holdings, a Hong Kong-based company.
“The United States has a vested interest in the secure, efficient, and reliable operation of the Panama Canal, and that was always understood. We would and will never let it fall into the wrong hands. It was not given for the benefit of others, but merely as a token of cooperation with us and Panama. If the principles, both moral and legal, of this magnanimous gesture of giving are not followed, then we will demand that the Panama Canal be returned to us, in full, and without question. I’m not going to stand for it. So to the officials of Panama, please be guided accordingly,” he pointed out.
Jose Raul Mulino, the president of Panama, swiftly rejected Trump’s remarks as an insult to his nation’s sovereignty. “Every square meter of the Panama Canal and the surrounding area belongs to Panama and will continue belonging (to Panama),” he declared and added, “Panamanians may have different views on many issues. But when it comes to our canal, and our sovereignty, we will all unite under our Panamanian flag.”
He responded to criticism of growing canal prices without specifically mentioning Trump, claiming that professionals decide the tariffs based on supply-and-demand dynamics and operational costs. “The tariffs are not set on a whim,” he argued and then emphasized Panama’s autonomous initiatives to expand the canal over time to handle more ship traffic, noting that fee adjustments fund these improvements. Fees were reportedly increased to cover expenses and maintain the canal’s infrastructure after a difficult year in which droughts affected canal operations. Notably, the canal is key to Panama’s economy and generates about one-fifth of the government’s annual revenue.
🇵🇦 Mensaje del Presidente José Raúl Mulino 🇵🇦 pic.twitter.com/DMXU8qAuNT
— José Raúl Mulino (@JoseRaulMulino) December 22, 2024
“We’ll see about that,” Trump shortly responded, adding a picture of the US flag positioned in the canal zone with the phrase, “Welcome to the United States Canal.”
— Donald J. Trump Posts From His Truth Social (@TrumpDailyPosts) December 22, 2024
Brief history of Panama Canal
The concept of building a waterway to connect the Atlantic and Pacific Oceans across the Panamanian isthmus was first proposed at least in the 1500s. King Charles I of Spain asked his regional governor to map a path down the Chagres River when explorer Vasco Nuñez de Balboa discovered that a small landmass separated the two oceans. France was ultimately the first country to attempt the task.
The construction crew began work on a proposed sea-level canal in 1880 under the direction of Count Ferdinand de Lesseps, who had previously built the Suez Canal in Egypt. The French soon realized that they faced a formidable challenge. There was no effective method to prevent the spread of malaria and yellow fever while the constant rains created massive landslides. De Lesseps redirected work toward a lock canal after realizing too late that a sea-level canal was too difficult, but funding was withdrawn from the project in 1888.
President Theodore Roosevelt’s push and the US Isthmian Canal Commission’s discussions led to the United States’ $40 million purchase of French assets in the canal zone in 1902. The US pushed its military might behind a Panamanian independence movement when a planned treaty concerning building rights in what was then Colombian territory was rejected, and eventually negotiated a settlement with the new government.
The Hay-Bunau-Varilla Treaty, which gave America exclusive and permanent sovereignty of the Panama Canal Zone, was signed with Panama on 18th November 1903, after the United States recognized the Republic of Panama on 6th November of the same year. Panama received $10 million and a $250,000 annuity starting nine years later in return.
The massive project started to come to an end in 1913, and after numerous hurdles and difficulties, the Panama Canal formally opened on 15th August. Nearly 240 million cubic yards of rock and gravel were dug up during the American construction phase, and approximately 3.4 million cubic meters of concrete were used in total to build the locks. However, many people lost their lives while constructing the Panama Canal.
Around 5,600 of the 56,000 labourers who were hired between 1904 and 1913 were reported deceased, however, the true number is likely far higher, as the French only documented hospital-related deaths. The United States spent roughly $375,000,000 on the Panama Canal, which included $10,000,000 paid to Panama and $40,000,000 paid to the French when they decided to abandon the project. It was the most expensive construction endeavour in American history at the time.
The Panama Canal, which was strengthened by the construction of the Madden Dam in 1935, was an essential part of the 20th century’s expansion of international commerce routes. A 1977 pact between U.S. President Jimmy Carter and Panamanian leader Omar Torrijos marked the beginning of the shift to local authority, and on 31st December 1999, the Panama Canal Authority took complete control. After a period of joint administration, Panama finally gained complete control of the canal from Washington in 1999. It was hailed as an important milestone in foreign policy at the time.
Significance of Panama Canal
The canal, which was named one of the seven wonders of the contemporary world by the American Society of Civil Engineers in 1994, witnessed its one millionth passing ship in September 2010. According to 2019 data, 13 per cent of the Panama Canal’s traffic consisted of cargo from or to China, while 66 per cent of its cargo flow started or ended at a US port, indicating that the United States remains the Canal’s largest customer.
The transit through the Panama Canal of the 72k dwt tanker Sauger
— Massimo (@Rainmaker1973) June 6, 2023
[ship: https://t.co/MWFoF4XbUI]pic.twitter.com/7cBAFPgvUC
The Panama Canal measures 300 meters in width and 80 kilometres in length. One set of locks and two sets of rivers are part of the canal. The rivers and locks allow ships to move from the Pacific to the Atlantic or from the Atlantic to the Pacific. It serves as a key component of international maritime transportation. As an essential connection between the Atlantic and Pacific Oceans, the Panama Canal allows ships to circumnavigate the dangerous and time-consuming journey around Cape Horn at the southern tip of South America. The canal even lessens the environmental impact of international sea transportation by offering a bypass and reducing carbon emissions.
The safe, effective, and dependable operations of the Panama Canal are of great importance to the United States. The strategic importance of the canal goes beyond its economic advantages and includes defensive capabilities, diplomatic links, national security, and logistical resilience. By reducing the distance between ports on the Americas’ east and west coasts, the canal promotes more effective trade and transit. The majority of transiting ships, roughly 72% are traveling to or from American ports.
Ships can save a significant amount of time and fuel by transiting the canal. The goods can be delivered sooner because of the decreased transit time. For industries with just-in-time supply chains, perishable items, and time-sensitive cargoes, this perk is especially remarkable. The canal assists in the passage of a variety of goods, including dry bulk, containers, chemical tankers, LPG carriers, LNG, vehicles, refrigerated freight, general cargo, and passengers. As such, it is essential to worldwide supply networks.
Moreover, the Panama Canal is strategically significant. It improves trade between Asia and North America, fostering closer ties between the two continents. Prior to the canal’s completion, a ship sailing from Los Angeles to Europe would have to either cross the Strait of Magellan or follow the South American coast to Tierra del Fuego, Argentina, which is the southernmost point. Others would travel north along the coast after circling Cape Horn before making the journey to Europe. The canal cut the voyage down by almost 8,000 nautical miles. Naturally, this resulted in large financial savings because a trip from beginning to end would be completed considerably faster, saving on fuel and all other operating expenses that rise over time.
