The Panama Canal, a marvel of modern engineering completed in 1914, stands as a critical link between the Atlantic and Pacific oceans, stretching 51 miles across the Central American nation of Panama. This crucial waterway facilitates the passage of up to 14,000 ships annually, serving as a vital shortcut that significantly reduces maritime journey times. Handling approximately 5% of global maritime trade volume, the canal remains an essential asset in international shipping.
Since 1999, the Panama Canal Authority, an agency of the Panamanian government, has held exclusive control over the canal's operations. Despite this, Chinese companies have established a notable presence in the ports adjacent to the canal. Two of the five ports are operated by a subsidiary of Hutchison Port Holdings, a Hong Kong-based entity, since 1997. This significant involvement has sparked discussions on China's influence in the region.
The United States historically played a pivotal role in the construction and administration of the Panama Canal. The canal remained under U.S. control until 1977 when President Jimmy Carter signed a treaty to gradually transfer authority to Panama. The treaty underscored Panama's sovereignty over the canal while allowing the U.S. to defend its neutrality against any threat through military means.
However, geopolitical dynamics shifted further when Panama severed diplomatic ties with Taiwan in 2017, opting instead to establish formal relations with China. This move marked a significant victory for Chinese diplomacy and paved the way for Panama to become the first Latin American country to join China's Belt and Road Initiative. China is now a key player, accounting for 21.4% of the cargo volume transiting the Panama Canal from October 2023 to September 2024, making it the second-largest user after the United States.
Amid these developments, former U.S. President Donald Trump made remarks regarding China's involvement in the canal.
"China is operating the Panama Canal and we didn't give it to China. We gave it to Panama and we're taking it back" – Donald Trump
This statement drew attention to the strategic importance of the waterway and its role in ongoing geopolitical tensions between the U.S. and China.
In response, José Raúl Mulino, a prominent figure in Panamanian politics, clarified Panama's sovereign control over its administration.
"no presence of any nation in the world that interferes with our administration" – José Raúl Mulino
This assertion aims to reinforce Panama's independent management of the canal amidst external perceptions and claims.
The Panama Canal remains permanently neutral, as stipulated by international agreements. The United States retains rights to protect this neutrality under a treaty signed with Panama. Despite this provision, the canal continues to be a focal point in U.S.-China relations, reflecting broader geopolitical shifts and economic interdependencies.