Trump Threatens to Seize Panama Canal Over Rising Costs.
In a bold and controversial move, President-elect Donald Trump threatened to retake control of the Panama Canal unless Panama reduced the transit fees for U.S. ships. This announcement has sparked significant debate and concern, highlighting the strategic importance of the canal and the complexities of international relations.
The Panama Canal, a 51-mile waterway connecting the Atlantic and Pacific Oceans, is one of the world’s most crucial maritime routes. Built by the United States over a century ago, the canal revolutionized global shipping by allowing vessels to avoid lengthy and hazardous trips around South America. Today, it remains vital for international trade, with around 14,000 ships making the crossing each year, and the U.S. accounting for roughly three-quarters of the traffic.
Trump has criticized the fees charged by Panama for the use of the canal, calling them exorbitant and a “complete rip-off” of the U.S. He argues that the fees are unfair, especially considering the historical and financial investment the U.S. made in building the canal. Trump has stated that the 1977 agreement to transfer ownership from the U.S. to Panama was signed as a gesture of cooperation, but he now views the current fee structure as a betrayal of that agreement.
Trump Threatens to Seize Panama Canal Over Rising Costs
The threat of seizing control of the Panama Canal has significant geopolitical implications. If Trump follows through, it could strain U.S.-Panama relations and potentially disrupt global trade. The canal is not only a critical route for commercial shipping but also holds strategic military importance, allowing the U.S. to quickly move naval ships between the Atlantic and Pacific Oceans.
The canal was originally started by the French in the 1880s but was abandoned due to engineering problems and tropical diseases. The U.S. took over the project in 1904 and completed it ten years later, at a cost of around $375 million (almost $12 billion in today’s money) and thousands of lives lost to sickness. In 1977, President Jimmy Carter signed an agreement to gradually hand over control of the canal to Panama by 1999, a move that Trump has described as “foolish”.
Trump’s statements also hint at concerns over China’s growing influence around the canal. Beijing has successfully convinced Panama to join its “Belt and Road” trade initiative, and Chinese companies have become heavily involved in infrastructure projects along the waterway. This includes running major ports at each end of the canal and acquiring control of significant port facilities. Trump’s rhetoric suggests a fear that the canal could fall under Chinese control, which he views as a threat to U.S. interests.
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In recent years, prolonged droughts have forced authorities to reduce throughput to conserve water, triggering competition for places and higher prices. This has added to the economic challenges faced by the canal, making the issue of transit fees even more contentious. The economic impact of these changes is significant, affecting not only Panama but also the global shipping industry.
