Michael McDonald, Josh Wingrove, and Gregory Korte, Bloomberg News

WASHINGTON/PANAMA CITY
EnergiesNet.com 12 23 2024

Panama’s president rebuffed Donald Trump’s threat to reimpose US control over the Panama Canal, saying its shipping tolls aren’t inflated and that sovereignty over the waterway isn’t negotiable.

“Every square meter of the Panama Canal and its adjacent zones is part of Panama, and it will continue to be,” President José Raúl Mulino said Sunday in a video statement on X, the social platform. 

Mulino’s defense of Panamanian control over the key commercial waterway shows how Trump is already exerting global influence after he brought control over the canal into play over the weekend, decrying “ridiculous” transit fees for US vessels and alleged Chinese encroachment.

Trump’s diplomatic hardball — just less than a month before his inauguration — represents a new front in his attempt to ratchet up pressure on trading partners. After Mulino’s retort about continued Panamanian control, Trump said, “We’ll see about that!” on his Truth Social platform.

China doesn’t control the canal, though a Chinese company — a subsidiary of Hong Kong-based CK Hutchison Holdings Ltd. — has two of the five ports adjacent to the canal, one on each side.

Under Panama’s constitution, the canal is managed by the Panama Canal Authority, with some of the tolls going into the national treasury. The authority said last week that it had deposited almost $2.5 billion in the last fiscal year. 

And China’s influence has been growing in the region. In 2017, Panama severed diplomatic ties with Taiwan and declared that there was “only one China.”

After raising the issue on his social platform, Trump claimed Sunday that the canal was “falling into the wrong hands.”

“It’s not for China or any other country to manage,” he told a conservative audience in Phoenix. “You see what’s going on there? China.”

In a post on his Facebook account later Sunday, Trump posted an image of a US-flagged vessel on a body of water with the caption “Welcome to the United States Canal!”

Chinese Foreign Ministry spokesperson Mao Ning said later that “the canal is not directly or indirectly controlled by any major power.”

“China will, as always, respect Panama’s sovereignty over the canal and recognize it as a permanently neutral international waterway,” she said at a regular press briefing in Beijing on Monday, according to a video clip posted online by state broadcaster China Central Television.

It’s unclear what circumstances would allow Trump to invoke control over the canal, which the US built at the start of the last century before returning it to Panamanian control 25 years ago under a set of 1977 treaties signed by then President Jimmy Carter. 

However, a US-Panamanian treaty establishing the canal’s permanent neutrality for transit by all nations remains in effect — a fact cited by Mulino on Sunday. That treaty also says the US could use military force to defend the canal’s neutrality.

The 51-mile (82-kilometer) canal connecting the Atlantic and Pacific oceans is a major strategic asset — and has been a choke point for global trade as Panama has suffered a prolonged drought that has impeded crossings.

Mulino said the canal’s tolls aren’t excessive. Citing the US-Panamanian treaties, Mulino said the canal is controlled exclusively by Panama and isn’t influenced by China, Europe or the US.

“Our country’s sovereignty and independence are not negotiable,” he said. Canal tolls are established transparently, based on operating costs and market conditions, he said. 

While not making any specific demands, Trump’s statement served as a warning that the US reserved the right to “demand that the Panama Canal be returned to us, in full, and without question.” 

Mulino suggested that Trump’s comments were out of line.

“Panama respects other nations and demands respect,” he said. “The canal will remain in Panamanian hands as an inalienable patrimony of our nation.” 

–With assistance from Qianwei Zhang and Philip Glamann.

bloomberg.com 12 22 2024