Local opinion: I went to see if China has taken over the Panama Canal

The following is the opinion and analysis of the writer:

As this is written, I have just completed an extensive visit to the Panama Canal and Central America. At the same time, Secretary of State Marco Rubio has arrived in Panama to discuss the future of this strategically crucial region. President Trump’s rhetoric about the reclamation of the Panama Canal due to China’s “intrusion” stands out as a focal point of immediate strategic significance. Trump raised alarm by refusing to rule out the use of military force to reclaim the canal.

Is there validity to Trump’s claims that China has “taken over” the Canal? The president’s remarks likely represent a calculated strategy: Internationally, Trump is looking to tackle rising canal transit fees, while countering China’s expanding influence in Panama. Domestically, Trump is carrying out campaign promises to extend his America First strategy.

While there is no public evidence to suggest that the Chinese government exercises control over the canal, Chinese companies have a significant and ever-growing presence. Two of the five ports adjacent to the canal, Balboa and Cristóbal, which sit on the Pacific and Atlantic sides respectively, have been operated by Hong Kong-based Hutchison Port Holdings since 1997. While technically privately owned, like everything else in China, the business is under the watchful eye of Beijing. This presence raises concerns about potential infrastructure and strategic maneuvering, particularly given China’s deepening ties to Latin America. A wealth of potentially useful strategic information on ships passing through the waterway flows through these ports. That kind of information regarding cargo would be very useful in the event of a “supply chain war.”

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Chinese companies, both private and state-owned, have strengthened their presence in Panama through billions of dollars in investments, including a cruise terminal and a bridge to be built over the canal. In 2017, Panama became the first Latin American country to join China’s Belt and Road Initiative, a trillion-dollar global infrastructure and investment initiative. The Panama–David railway will be built by China, having a maximum speed of 160 km/h, with a length of over 400 km and a cost of over $5 billion, 85% of which will be paid with a loan from a Chinese state-owned bank. It will be part of China’s Belt and Road Initiative, also known as the New Silk Road. Panama already owes $20 billion and none of it has been paid back. China has slowly expanded its power in Panama by opening its first Confucius cultural institute and sponsored “media training” for Panamanian journalists. This “package of Chinese activities probably prompted Trump’s assertion that the canal is “owned” by China, but projects, propaganda and operation ports do not equate to ownership.

President Jimmy Carter and Panamanian Chief of Government Torrijos signed the Panama Canal Treaty and Neutrality Treaty in 1977. The agreement relinquished American control over the canal by the year 2000 and guaranteed its neutrality. Both parties agreed to maintain the canal’s permanent neutrality with particular emphasis on ensuring access for military vessels. China’s economic control on both sides of the canal raises concerns about the potential for rapid militarization and its ability to control canal access. Panama’s willingness to relinquish critical economic control of strategically significant areas and infrastructure — a hallmark of China’s Belt and Road Initiative strategy — casts doubt on Panama’s resolve and capacity to effectively safeguard the canal’s neutrality as agreed to in the treaty.

There are legitimate concerns about growing Chinese influence over the Canal, which demand Washington’s attention. While appealing to nationalist sentiments of Trump’s base, an increased level of U.S. involvement in the Panama Canal risks undermining decades of diplomacy, established international law, and US-Panama relations. But Washington cannot afford to overlook China’s growing influence, particularly given the canal’s strategic importance in the US-China competition — China ranks as its second-largest customer behind the U.S.. Trump’s statements likely aim to pressure Panama on transit tariffs, caution Panama on increased reliance and cooperation with China, and project US resolve. To protect its interests without destabilizing the region, the United States must approach this situation with strength, strategic foresight and diplomatic precision.