WSJ: Why does Trump want the Panama Canal?

President Donald Trump’s reasons for wanting control of the Panama Canal can be found at either end of the interoceanic waterway, notes ‘The Wall Street Journal’.

Every day, dozens of cargo ships pass by blue cranes at a port near the Pacific Ocean entrance, the towering skyline of Panama City visible across the horizon. About eight hours later, they drift past another terminal stacked with containers as they exit into the Atlantic.

These facilities are run by a giant Hong Kong port operator, Hutchison Whampoa. And that is the crux of the problem for the incoming Trump administration, which sees the Chinese infrastructure that has been built up around the canal in the past three decades as a national-security threat.

“In reality, a foreign power today possesses through their companies, which we know are not independent, the ability to turn the canal into a chokepoint in a moment of conflict,” Sen. Marco Rubio, the nominee for secretary of state, said at his confirmation hearing.

There are other China-backed projects in Panama that include a canal bridge, a new subway line, a cruise-ship terminal, a convention center and a wind-energy farm. Incoming Trump administration officials say it all amounts to a violation of the U.S.-Panama treaties that required the canal to remain neutral when Washington turned over the American-built canal to Panama in 1999. Trump hasn’t ruled out using military force to take the canal back.

Panamanian officials, and several former U.S. military officials, say those Chinese facilities don’t represent a military threat, breach the canal’s neutrality or even show that Panama is coming under Beijing’s influence.

This tiny Central American country loves baseball, uses the U.S. dollar as its currency and is the most pro-Washington nation in the region. Its president, José Raúl Mulino, is a center-right politician who wants to work with the U.S. on migration and security issues.

China would be hard-pressed to convert a busy container port terminal for military use, said Joe Reeder, a former U.S. Army undersecretary now on the Panama Canal’s international advisory board.

“No one who knows anything about military technology or tactics would view container ports around the world as a national-security threat,” Reeder said.

A Chinese Foreign Ministry spokesman said: “China will, as always, respect Panama’s sovereignty over the canal and recognize the canal as a permanently neutral international waterway.”

A Trump spokeswoman said the president-elect “is 100% correct about the threat that China’s growing influence over the Panama Canal poses to America’s national-security and economic interests.”

About 4% of global trade passes through the canal. More than 70% of the traffic is bound for or coming from the U.S. American oil and gas tankers shuttle fuel to the Pacific, while vessels loaded with Peruvian asparagus, Chilean wine and Ecuadorean bananas cut through en route to the U.S. East Coast.

The canal is a symbol of national identity here and a source of wealth. About half its $5 billion in annual revenue goes to government coffers. When it took over, Panama invested more than $5 billion to build larger locks, allowing more vessels to pass and triggering investments at U.S. ports that got busier as a result. Economists say the canal is an exception: a well-managed state company in a region known for corruption.

The 1977 treaty and Panama’s constitution include neutrality principles to shield canal operations from interference from foreign powers and from Panama’s central government.

The U.S. remains Panama’s top investor and trading partner, even as Chinese investment has displaced the U.S. elsewhere in Latin America as the dominant economic force.

Canal data show that Chinese cargo ranks a distant second to the U.S., accounting for less than 22% of goods transiting the waterway. U.S. investment in Panama stood at almost $13 billion in 2023, dwarfing the $515 million from China, according to Panama’s government. Chinese military vessels haven’t crossed the canal in almost a decade.

“China has no involvement whatsoever in our operations,” said canal administrator Ricaurte Vásquez. “We cannot discriminate against the Chinese, or the Americans, or anyone else.”

Panama is vulnerable to Trump’s pressure precisely because of its close ties to the U.S. It has no central bank or armed forces. The U.S. has intervened here before, as recently as 1989, when troops invaded to overthrow then-dictator Manuel Noriega.

Under the neutrality treaty, the U.S. has the right to act if the canal faces military or hostile threats against the peaceful passage of ships. Retired Gen. Barry McCaffrey, who once led the Southern Command, said a military takeover of the canal today would be illegal, spark outrage across Latin America and require U.S. troops to occupy the country.

“We would sound like it was the 1850s,” he said. “If you’re a foreign illegal power, how would we operate the canal without Panamanians?”

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