Posted on February 5, 2025
By Eugene Kontorovic – Commentary from the Wall St Journal, Feb 5, 2025
Marco Rubio is right. The Neutrality Treaty authorizes America to enforce a prohibition against ‘foreign operation.’
In his inauguration speech, President Trump accused Panama of violating the terms under which the U.S. handed over the Panama Canal. “We’re taking it back,” he declared. Secretary of State Marco Rubio, during a visit to Panama this week, told President José Raúl Mulino that “absent immediate changes,” the U.S. will “take measures necessary to protect its rights” in the canal. The U.S. has a serious legal basis on which to contest—including by military intervention—what it regards as impermissible foreign influence in the canal.
President Jimmy Carter signed two treaties with Panama in 1977: One provided for the gradual transfer of the strategic waterway from the U.S. to Panama by 1999, and the other established a permanent “regime of neutrality” over the canal.
The regime of neutrality mandates equal access for all nations to peaceful transit, “just, equitable and reasonable” tolls and fees, exclusive Panamanian operation of the canal, and no foreign military or defense presence in the country. American shippers have objected to the canal’s toll system, but because it applies to all countries equally, it’s hard to see it as a treaty violation.
But Messrs. Trump and Rubio are correct that there may be other violations of the neutrality regime. As Assistant Secretary of State Douglas J. Bennet Jr. testified during Senate ratification hearings in 1977, the treaty prohibits not only “the garrisoning of foreign troops” but also “foreign operation of the canal.
A Hong Kong-based company currently operates ports on both sides of the canal. In 1997, when the company first won contracts to manage the ports, Hong Kong was still a British territory. A few months later the U.K. handed Hong Kong over to China, and two years after that the U.S. handed the canal over to Panama. In the ensuing decades, China has cemented its control over Hong Kong far beyond what was contemplated in its agreement with the U.K., eventually imposing a rigid “national security” law in 2020.
In a communist regime, distinctions between private and government-owned firms are matters of degree, not kind. China has an official strategy known as “military-civilian fusion,” aimed at integrating the country’s military and civilian sectors to advance the Chinese army. The country’s Belt and Road Initiative is a sprawling policy to strengthen its strategic influence overseas. Panama is an official signatory of the initiative, allowing China increased investment and influence.
There’s a parallel here: The Suez Canal Co., which built and operated the Egypt-controlled Suez Canal, was a private firm. But because the company’s shareholders were largely British and French, the canal was understood to be under de facto Anglo-French control. This is why Egypt’s nationalization of the company in 1956 spurred military action by Israel, Britain and France. Similarly, the Panama Canal’s facilities are under the control of companies that are subordinate to a rival authoritarian regime.
There may also be violations of the treaty’s prohibition on foreign troops or military infrastructure in the canal. This prohibition applies to naked violations like a People’s Liberation Army garrison, and to “informal forces,” as Dean Rusk, who served as secretary of state under John F. Kennedy and Lyndon B. Johnson, explained in ratification hearings. Belligerent powers often seek to evade international legal limitations by disguising their actions in civilian clothes. Mr. Trump must determine if China’s civilian presence around the canal includes covert Chinese intelligence agents or security forces.
The U.S. need not wait until canal operations are disrupted, or China unfurls the five-star red flag, to intervene. A 1977 joint statement from Carter and Panama’s Brig. Gen. Omar Torrijos made clear that Washington can “defend the Canal against any threat to the regime of neutrality.” Treaties don’t interpret themselves, and under this treaty each county decides for itself whether a violation has occurred. The Senate made clear that each party may take “unilateral action.”
The treaty also authorizes the use of military force. That said, the Carter-Torrijos joint statement specifies that any use of force may not be directed at the “territorial integrity or political independence of Panama.” Military force can be used only to remove the threat to neutrality; it may not permanently retake the Canal Zone.
When Panama received the canal, it agreed to the condition that the U.S. would have considerable discretion to intervene over perceived threats to the neutrality of the waterway. Panama also knew that Carter wouldn’t always be the president. The U.S. has the right to use military force, but Mr. Trump shouldn’t resort to this option lightly.
Under diplomatic pressure from Messrs. Trump and Rubio, Mr. Mulino promised on Sunday not to renew Panama’s Belt and Road agreement with China and “study the possibility of terminating it early.” While this falls far short of addressing the Trump administration’s concerns, it may be an early sign that Panama will also be open to ending its contracts with the Chinese companies operating around the canal.
Mr. Kontorovich is a professor at George Mason University Scalia School of Law and a senior research fellow at the Heritage Foundation.
