The Story So Far
On December 22, 2024, Donald Trump threatened to take back control of the Panama Canal, calling the Panama Canal Treaty “foolish.”
He criticized the U.S. Navy's treatment and demanded the canal be returned to the U.S. in full.
Panama’s President José Raúl Mulino rejected the claim, asserting Panama’s sovereignty over the canal and reaffirming that it belongs to Panama.
Why is Trump upset with Panama?
The Panama Canal Authority (ACP) raised transit fees for U.S. vessels due to a severe drought in 2023, which reduced the canal's operational capacity.
This led to concerns from Trump about the increased costs for U.S. ships.
Since 2017, Panama signed a Belt and Road Initiative (BRI) agreement with China.
Trump's concerns focus on Chinese investments and operations near the canal, fearing increased Chinese control and surveillance over U.S. naval movements.
What is the U.S.-Panama treaty?
The Panama Canal is a key global trade route connecting the Atlantic and Pacific Oceans, facilitating 6% of global maritime trade.
The U.S. built and controlled the canal from its opening in 1914 until 1999.
The Torrijos-Carter Treaties (1977): The U.S. handed over control of the canal to Panama on December 31, 1999.
Permanent Neutrality Treaty: Declared the canal neutral and open to all nations. The U.S. retained the right to defend its neutrality and have priority passage during military emergencies.
What has been Panama’s response?
Panama’s President Mulino rejected Trump’s accusations and defended Panama's rights:
He clarified that the transit fees are based on international standards.
Denied any external interference from China or other nations, emphasizing Panama’s sovereignty.
What next?
The dispute over transit fees and external influence will likely be addressed through diplomatic discussions.
While the U.S. may try to exert pressure on Panama, the latter will seek international backing to uphold its sovereignty.
China responded to the accusations by reaffirming its respect for Panama’s sovereignty and describing the canal as a neutral passageway beneficial to Panama.
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