Future US President Donald Trump has repeatedly threatened to take control of the Panama Canal. The government in Panama insists that the sovereignty of the canal cannot be questioned. What is the history of the strategic strait between the Atlantic and Pacific Oceans?
Who built the Panama Canal?
Trump is keen to remind the world that the US built the canal more than a century ago, revolutionizing global shipping. Before 1914, ships that had to cross from the Atlantic to the Pacific Ocean were forced to circle South America for months. Even the most modern vessels could not complete this course in less than two weeks. Thanks to the Panama Canal, however, the crossing from the Atlantic to the Pacific Ocean takes only between eight and ten hours.
The future US president recently stated that between 35,000 and 38,000 Americans died during the construction of the Panama Canal from 1904 to 1914. Indeed, thousands of people died during the construction from malaria, yellow fever and accidents, but Trump's calculations are not accurate. According to official figures, the victims are 5,600 people. The real number may be higher, but a larger percentage of the construction workers were from Barbados. About 300 Americans died, writes Matthew Parker in his book about the construction of the Panama Canal, "Hell's Gorge: The Battle to Build the Panama Canal".
Trump may have made a mistake by including in the American deaths during this period the victims of the previous attempt to build the canal, which was led by France in the 1880s but failed. Between 20,000 and 25,000 workers died then, but almost no Americans were among them.
Why is Panama responsible for the canal?
For years, the United States operated the Panama Canal. In 1977, President Jimmy Carter agreed to gradually hand over control of the canal to the Panamanian government. The agreement required that the canal remain neutral territory and that ships from all nations have free access. The United States also reserves the right to protect the Panama Canal from danger. Washington finally withdrew from the canal in 1999. Panama has controlled it ever since. Now Trump claims it is run by "incredible Chinese soldiers". Panamanian President Jose Raul Mulino has called that a farce. "For God's sake, there are no Chinese soldiers in the canal," he said.
There is no evidence that China has a military presence in the area. However, American observers are concerned that two ports are run by a subsidiary of Hong Kong-based "Hutchinson Holdings". Panama is also partnering with China to build a new bridge over the canal.
Ship-size-based fees
Each year, between 13,000 and 14,000 vessels pass through the Panama Canal. The United States, followed by China and Japan, are the Panama Canal’s top customers, with nearly 72% of cargo coming from or bound for U.S. ports.
The canal’s operators were recently forced to cut the number of crossings due to drought and have raised prices. In fiscal 2024, the canal generated a net profit of $3.45 billion.
Since trade with the United States accounts for a large portion of the canal’s traffic, its businesses have also borne the brunt of the increased costs. In December, Trump accused Panama of charging “ridiculous” and “exorbitant” fees. fees, calling them "extortion".
Can the U.S. really take back the canal or reduce the fees?
The terms of the 1977 treaty signed by Carter stipulate that Panama must maintain neutrality, meaning its government cannot impose lower fees on ships carrying goods from the U.S. But pressure from the Trump administration could lead to widespread price cuts or force the canal authority to abandon higher fees during the next crisis.
Another, less likely option is for the U.S. to take military control of the canal by invading the Central American country. Washington did so in late 1989, when U.S. troops were deployed there to oust military dictator and former CIA agent Manuel Noriega. After the U.S. invasion, Panama's U.S.-backed government abolished its army. The country, which has a population of about 4.5 million, now has a small paramilitary group. Trump has not ruled out military means to resolve the dispute.