Trump’s Panama gambit: U.S. eyes canal control over fees

Trump argued that the treaties that initially allowed Panama to take control of the canal permit the United States to regain it. "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," wrote the president-elect on the Truth Social platform.

Politico points out that although China has increased its presence in Latin America and a company based in Hong Kong runs two ports at the canal's entry and exit — no commercial or government entity of China plays a direct role in managing ship traffic on this critical waterway. The canal is administered by an independent governmental agency of Panama, and Beijing has not recently made any moves indicating a desire to purchase the canal or increase its presence in this country.

Recently elected President of Panama, José Raúl Mulino, has pledged to strengthen cooperation with the United States.

This is another warning from Donald Trump since he won the presidential election in the United States. Back in November, he announced that he could impose 100% tariffs on BRICS countries. Previously, he threatened to raise tariffs on products from China, Canada, and Mexico. He also announced that he would "consider leaving NATO" if allies "do not pay their bills".

"Number one, they take advantage of us on trade, meaning the European nations, okay, like terrible. They don’t take our cars, they don’t take our food product, they don’t take anything. It’s a disgrace. And on top of that, we defend them. So it’s a double-whammy," Trump stated. He also assessed that if it weren't for his threats towards NATO and pressure to increase defence spending, European countries "wouldn't have money to fight". It is said that Trump will aim to increase defence spending in NATO countries to 5% of GDP.

In 1903, the United States signed a treaty with Panama that allowed it to build the canal connecting the Pacific and Atlantic Oceans. Panama earns revenue generated by this waterway. Meanwhile, Washington guaranteed the canal's neutrality and control of the territory on both sides.

The region, known as the Panama Canal Zone, was administered by the United States, and American laws applied to the region's residents. After decades of tensions surrounding the waterway, President Jimmy Carter's administration signed two treaties in 1977 with Panama's military dictator, Omar Torrijos, to transfer control of this key maritime route by the end of 1999. The United States retains the right to defend the canal against any threat to its neutrality. As Politico emphasizes, analysts do not believe that the treaty's provisions will allow Washington to legally regain control of the canal.

The 80-kilometre-long Panama Canal is crucial for international maritime transport. About 5% of global maritime trade passes through it. About three-quarters of the canal's revenues come from fees paid by passing ships, emphasizes IMF.

At the end of the fiscal year, which ended on September 30, revenues amounted to nearly $5 billion (CAD 6,8 billion). During this period, over 11,000 ships passed through it.

Last year, a blockage occurred near the Canal. As a result, one operator paid $2.4 million (CAD 3.3 million) to bypass the "maritime jam". The problems with capacity were due to drought. The system of several locks that enables ships to pass requires an appropriate water level, drawn from Lake Gatun. Meanwhile, prolonged drought caused problems with water supply and forced the introduction of restrictions on the size of vessels passing through.