Title: The Panamal Canal: A Century of History, Tirades, and Tariffs
Article:
In recent weeks, U.S. President-elect Donald Trump has repeatedly threatened to seize control of the Panama Canal, drawing a firm response from Panama’s government, which insists that its sovereignty cannot be questioned. To understand the controversy swirling around this strategic waterway, we must delve into its rich history.
The Canal’s Construction: A American Achievement?
Trump frequently boasts that the U.S. built the Panama Canal over a century ago, revolutionizing global maritime trade. Before 1914, ships bound for the Pacific from the Atlantic had to circumnavigate South America, a journey taking months, even with the most advanced vessels of the time. The Panama Canal cut that journey down to a mere eight to ten hours.
Trump claimed recently that between 35,000 and 38,000 Americans died during the canal’s construction from 1904 to 1914, largely due to malaria, yellow fever, and accidents. However, these figures are not accurate. Official records show 5,609 lives were lost in total, the majority of them being Barbadian workers. Around 300 Americans perished, according to author Matthew Parker’s book, "Hell’s Gorge: The Battle to Build the Panama Canal."
Trump may have inadvertently included deaths from a previous French attempt to construct the canal in the late 1880s, which resulted in between 20,000 and 25,000 fatalities, but with almost no American casualties.
Panama’s Role in Canal Management
For decades, the U.S. was the canal’s operator. In 1977, President Jimmy Carter signed a treaty gradually transferring control to Panama. The agreement stipulated that the canal remain a neutral territory, open to all nations, and that the U.S. could still intervene to protect it. The U.S. finally handed over the canal in 1999, and Panama has managed it since.
Trump has asserted that the canal is now controlled by "tremendous amounts of Chinese military," but Panama’s President José Raúl Mulino refuted this, stating, "For God’s sake, there are no Chinese soldiers in the canal."
While no evidence supports Trump’s claim of a Chinese military presence, U.S. observers are concerned about two ports managed by Hutchison Whampoa, a subsidiary of the Hong Kong-based Hutchison Holdings. Furthermore, China is involved in the construction of a new bridge over the canal.
Canal Traffic and Tariffs
Each year, around 13,000 to 14,000 ships traverse the Panama Canal. The U.S., China, and Japan are its primary clients, with nearly 72% of cargo transiting the canal moving to or from U.S. ports.
Recently, reduced water levels have led to fewer transits and higher fees. In fiscal year 2020, the canal generated a net profit of $3.45 billion.
Given the significant U.S. trade that passes through the canal, American businesses have also felt the pinch of increased fees. In December, Trump accused Panama of imposing "ridiculous" and "excessive" tolls, amounting to "extortion."
Can the U.S. Retake or Reduce Canal Tariffs?
The 1977 treaty obliges Panama to maintain the canal’s neutrality, preventing it from giving preferential tariffs to U.S.-flagged ships. However, Trump’s administration could potentially pressure the canal authority to lower prices or suspend planned increases during future crises.
A more unlikely scenario is the U.S. militarily retaking the canal, though it’s not entirely without historical precedent. In 1989, U.S. forces invaded Panama to oust the military dictator Manuel Noriega. The subsequent U.S.-backed government dismantled Panama’s army. Today, Panama has a small paramilitary force. Trump hasn’t ruled out military action to resolve the dispute.
The Canal: A Symbol of Pride, Power, and Prosperity
The Panama Canal stands as a testament to human ingenuity and perseverance, connecting two vast oceans and facilitating global trade. As the new U.S. administration takes office, the canal’s future—and the nature of U.S.-Panama relations—hangs in the balance.
