Posted on January 29, 2025
Jorge Quijano sat on a hotel balcony overlooking Panama Bay recently, watching massive ships waiting to cross the locks that are part of the 51-mile journey from the Pacific to the Atlantic on the Panama Canal.
Quijano, who ran the Panama Canal from 2012 to 2019, says he takes US President Donald Trump’s threats to take the canal back seriously.
“That’s not going to happen,” Quijano told CNN. “I’ll be on the streets myself defending our sovereignty because the canal is (our) land.”
Like many Panamanians, Quijano is concerned and furious over Trump’s comments regarding the canal, a source of national pride.
Panamanian President José Raúl Mulino, an ally of the US and one who quickly jumped to cooperate on migration issues after he took office in July, noted World Politics Review, immediately responded to the threats: “The canal is and will continue to be Panamanian,” he said. “Every square meter of the canal.”
More than a century after Americans completed the Panama Canal and 25 years after the United States turned it over to Panama, Trump says he wants it back because of Chinese encroachment and its “exorbitant” fees to cross.
“Panama’s promise to us has been broken,” Trump said recently. “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.”
One of the world’s busiest shipping passageways – one that allows ships to avoid the longer and costlier trip around Cape Horn at the tip of South America – roughly 4 percent of the world’s maritime trade and more than 40 percent of US container traffic use the canal. The US is the canal’s biggest customer, with China coming in a distant second.
Since the handover in 1999, the canal has been run by the Panama Canal Authority, an autonomous government entity, and earns the country of 4.5 million people about $5 billion in annual revenue. In 2016, the Panamanian government completed an upgrade to the canal that tripled its capacity, the authority said, at a cost of $5.2 billion.
The canal authority sets the fees, which must be “just, reasonable, equitable, and consistent with international law,” according to the treaty with the US turning over the canal.
In recent years, the canal authority has increased fees because of a drought in 2023 that lowered the water levels in the canal and allowed for fewer ships to pass through. To bypass the wait, some companies compete in auctions for slots that significantly raise the fees.
The treaty also dictates that the canal must remain neutral. Panamanian officials say they rigorously maintain that neutrality, in pricing also.
Analysts say Trump is overstating Chinese influence, arguing that China doesn’t control or operate the canal. That doesn’t mean there isn’t cause for worry, they add.
China has become far closer to the country since Panama revoked diplomatic relations with Taiwan in 2017, wrote the Associated Press, during Trump’s first term as president. Since then, Panama has joined China’s Belt and Road Initiative and entered into numerous infrastructure contracts with the Chinese. Still, a Hong Kong consortium had already won contracts to build ports on either side of the canal, and a powerplant and a convention center on the canal – in 1997.
“China doesn’t have control of the canal,” Alonso Illueca of Santa María La Antigua Catholic University in Panama City, told the Economist. “But it has taken advantage of weak institutions and endemic corruption to increase its influence in national politics and business.”
Analysts say the only way for the US to take control of the canal back is by force, and that would be blundering into disaster, said Richard M. Sanders, a senior fellow at the Center for the National Interest. Military analysts believe it would take 90,000 troops to maintain control over it.
Meanwhile, analysts say they believe Panama may try to appease the US by deepening its relationship with America and reducing its links with China. Last week, the country announced it would audit the Hong Kong company that operates the port to ensure Panama is receiving its fair share, Bloomberg reported.
Also, US reciprocity in deepening ties would help resolve the concerns over the canal, especially as the new Panamanian government that came into power last year is much more pro-US than its predecessors, says Jason Marczak of the Atlantic Council.
“One option is to ramp up US investment in the canal and in the many businesses that directly and indirectly support canal operations,” he wrote. “Recently, in Panama, I saw and heard concerns about a disproportionate uptick in Chinese investment and a yearning for more US companies to invest in Panama. The United States needs to really get in the game to win the game.”
The alternative is unthinkable, say Panamanians, who every Jan. 9 on Martyrs Day mark the anniversary of a 1964 protest of US control of the canal in which US forces killed 21 people.
Panamanian analyst Edwin Cabrera told the Wall Street Journal that the canal is too tied into the country’s national identity to let go: “To mess with the canal is to mess with all of Panama.”
