NewsTrump threatens Panama canal takeover amid fee disputes

Trump threatens Panama canal takeover amid fee disputes

President-elect Donald Trump threatened on Saturday that the USA would take control of the Panama Canal if they believe Panama is not adhering to the conditions of the 1977 treaty regarding the legal status of this waterway. This includes, among other things, Panama charging excessively high fees for using the canal.

Donald Trump will be inaugurated again as President of the USA on 20 January 2025.
Donald Trump will be inaugurated again as President of the USA on 20 January 2025.
Images source: © Getty Images | 2024 Getty Images, Chip Somodevilla
Piotr Bera

Trump argued that the treaties that initially allowed Panama to take control of the canal permit the USA to regain it. "If the principles, both moral and legal, of this magnanimous gesture of giving are not followed, then we will demand that the Panama Canal be returned to us, in full, and without question," wrote the president-elect on the Truth Social platform.

"Politico" points out that although China has increased its presence in Latin America, and a company based in Hong Kong runs two ports at the canal's entry and exit, no commercial or government entity of the People's Republic of China plays a direct role in managing the ship traffic on this critical waterway. The canal is administered by an independent governmental agency of Panama, and Beijing has not recently made any moves indicating a desire to purchase the canal or increase its presence in this country.

The recently elected president of Panama, José Raúl Mulino, has pledged to strengthen cooperation with the USA.

This is another warning from Donald Trump since he won the presidential elections in the USA. Back in November, he announced that he could impose 100% tariffs on BRICS countries. Previously, he threatened to raise tariffs on products from China, Canada, and Mexico. He also announced that he would "consider leaving NATO" if allies "do not pay their bills".

"Number one, they take advantage of us on trade, meaning the European nations, okay, like terrible. They don’t take our cars, they don’t take our food product, they don’t take anything. It’s a disgrace. And on top of that, we defend them. So it’s a double-whammy," Trump stated. He also assessed that if it weren't for his threats towards NATO and pressure to increase defence spending, European countries "wouldn't even be fighting". It is said that Trump will aim to increase defence spending in NATO countries to 5% of GDP.

The Panama Canal and the role of the USA

In 1903, the United States signed a treaty with Panama that allowed it to build the canal connecting the Pacific and Atlantic Oceans. Panama earns revenue generated by this waterway. Meanwhile, Washington guaranteed the canal's neutrality and control of the territory on both sides.

The region, known as the Panama Canal Zone, was administered by the United States, and American laws applied to the region's residents. After decades of tensions surrounding the waterway, President Jimmy Carter's administration signed two treaties in 1977 with Panama's military dictator, Omar Torrijos, to transfer control of this key maritime route by the end of 1999. The USA retains the right to defend the canal against any threat to its neutrality. As "Politico" emphasizes, analysts do not believe that the treaty's provisions will allow Washington to legally regain control of the canal.

The 80-kilometre-long Panama Canal is crucial for international maritime transport. About 5% of global maritime trade passes through it. About three-quarters of the canal's revenues come from fees paid by passing ships, emphasizes IMF.

At the end of the fiscal year, which ended on 30th September, revenues amounted to nearly $5 billion (£4 billion). During this period, over 11,000 ships passed through it.

Last year, a blockage occurred before the canal. As a result, one operator paid $2 million (£1.6 million) to bypass the "maritime jam". The problems with capacity were due to drought. The system of several locks that enables ships to pass requires an appropriate water level, drawn from Lake Gatun. Meanwhile, prolonged drought caused problems with water supply and forced the introduction of restrictions on the size of vessels passing through.

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