The Panama Canal - State Dept. Screwup
Segment # 312
Trump is raising hell about the Panama Canal and being attacked by Dems and their legacy media hacks for “sabre rattling”. Who is right? Trump has a track record for understanding the obvious that is being ignored by everyone else. China’s “Belt and Road” policy if successful in Panama could have a disastrous impact on our economy and US world standing as a trade partner. Beyond this the military implications of China controlling the canal are obvious. The State Department and our foreign policies of past administrations have seriously screwed this up and should have been proactive long before now.
The Panama Canal and the Torrijos-Carter Treaties
The Panama Canal and the Torrijos-Carter Treaties
One of President Jimmy Carter’s greatest accomplishments was negotiating the Torrijos-Carter Treaties, which were ratified by the U.S. Senate in 1978. These treaties gave the nation of Panama eventual control of the Panama Canal.
Jimmy Carter and Omar Torrijos at the September 7th signing ceremony. (Jimmy Carter Library)
The United States acquired the rights to build and operate the Panama Canal during the first years of the 20th century. The Hay-Herrán Treaty, negotiated with the nation of Colombia in 1903, allowed the United States rights to the land surrounding the planned canal. The Colombian Senate refused to ratify the treaty, but Panama was in the process of seceding from Colombia. President Theodore Roosevelt therefore supported the cause of Panamanian independence with the Canal in mind. His support paid off, and on November 18, 1903, the United States signed the Hay-Bunau-Varilla Treaty, establishing permanent U.S. rights to a Panama Canal Zone that stretched across the isthmus. Phillippe-Jean Bunau-Varilla, the Panamanian representative, entered the negotiations without formal consent from the Panamanian government, and had not lived in Panama for seventeen years. The Canal opened in 1914, but many Panamanians questioned the validity of the treaty.
As the 20th century progressed, tensions between the United States and Panama over U.S. control of the Canal grew. In 1964, a riot between U.S. residents and Panamanians, sparked over the right to fly the Panamanian flag in the Canal Zone, led to a brief interruption of diplomatic relations between the two countries. Within months, ties were re-established and both sides recognized the importance of negotiating a new agreement concerning the Canal. In 1967, the United States and Panama reached agreement on three treaties regarding the status of the Canal, however, Panamanian president Marco Robles was defeated by Arnulfo Arias Madrid in the 1968 Panamanian elections. Eleven days into Arias’s term, a coup led by Colonel Omar Torrijos deposed Arias and established a new government. Because of the political uncertainty, the negotiations suffered a major setback.
Torrijos, like his predecessors, wished to reach an agreement with the United States. U.S. officials wanted a treaty as well. Secretary of State Henry Kissinger set forth his reasoning in a meeting with President Ford in 1975: “If these [Canal] negotiations fail, we will be beaten to death in every international forum and there will be riots all over Latin America.” In 1973, the Nixon administration appointed Ellsworth Bunker, a seasoned U.S. diplomat, to lead the U.S. delegation. Bunker focused on ensuring perpetual U.S. use of the Panama Canal, rather than perpetual U.S. control of the Panama Canal Zone. Between the years of 1973 and 1976, Bunker and his team were able to conclude a series of draft agreements with the government of Panama that formed the foundation of the eventual Torrijos-Carter Treaties.
The 1976 presidential elections proved to be a perilous time for the negotiations. While President Ford supported a Canal treaty, his primary opponent, Ronald Reagan, did not. The Democratic nominee for president, Jimmy Carter, also seemed to oppose a treaty. In an October debate with Ford, Carter vowed that he would not surrender “practical control of the Panama Canal Zone any time in the foreseeable future.”
In the weeks after his electoral victory, President-elect Carter’s views on the Canal began to change. One of his closest advisors, Sol Linowitz, supported a treaty, as did Secretary of State-designate Cyrus Vance. The two men were able to convince Carter of the importance of a new treaty, and when he took office, Carter made concluding negotiations with Panama a priority and named Linowitz co-negotiator with Bunker.
Despite the fact that both Carter and Torrijos were eager to conclude a treaty, many obstacles remained. A treaty must be ratified by the Senate with at least a two-thirds majority in order to take effect. Many Senators were opposed to giving Panama control over the Canal Zone. Most notable of these critics was Strom Thurmond (R–SC). Thurmond, who was born twelve years before the Canal was built, had a different perspective than the Carter administration. “The loss of this canal would contribute to the encirclement of the United States,” he stated in a 1978 debate. Thurmond and other conservatives also distrusted Torrijos, whom they considered to be pro-communist. Because of the strong opposition in the Senate, Carter’s consultations with Congress amounted to a second set of treaty negotiations.
The Carter administration formulated a strategy to conclude debate over the Canal and to gain Senate ratification. Carter officials worked on selling the treaty to the public, holding hundreds of forums where policymakers explained the administration’s rationale for completing a treaty. Torrijos hosted U.S. Senators in Panama, where he stressed that he was neither an enemy of the United States nor a communist. Actor John Wayne, both a conservative and a friend of Torrijos, also endorsed the negotiations. The negotiators decided that their best chance for ratification was to submit two treaties to the U.S. Senate. The first, called The Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal, or the Neutrality Treaty, stated that the United States could use its military to defend the Panama Canal against any threat to its neutrality, thus allowing perpetual U.S. usage of the Canal. The second, called The Panama Canal Treaty, stated that the Panama Canal Zone would cease to exist on October 1, 1979, and the Canal itself would be turned over to the Panamanians on December 31, 1999. These two treaties were signed on September 7, 1977.
It took more than six months before the Senate voted. Many Senators who opposed the treaties tried to add amendments that would make it harder for other Senators to vote in favor of them. In the end, the Carter administration succeeded—but just barely. The Senate ratified the Neutrality Treaty on March 16, 1978 by a vote of 68 to 32. On April 18, they ratified The Panama Canal Treaty by an identical margin. The Carter administration revisited many of these issues with Congress when it negotiated the implementation legislation for the Torrijos-Carter Treaties. Carter signed the implementation legislation into law on September 27, 1979.
The Torrijos-Carter Treaties allowed the United States to defend itself from charges of imperialism made by Soviet-aligned states. While the treaties represented a great moment of cooperation between the United States and Panama, relations between the two countries grew contentious after the death of Torrijos in 1981. In December of 1989, President George H.W. Bush ordered an invasion of Panama to remove Panamanian leader Manuel Noreiga from power. By 1999, however, relations had grown more peaceful and the Canal was turned over to the Panamanians who have administered it ever since.
https://history.state.gov/milestones/1977-1980/panama-canal
Key Conditions of the Transfer
Gradual Transition: The transfer process was not immediate but occurred over two decades:
On October 1, 1979, the Panama Canal Zone ceased to exist
The canal itself was turned over to Panama on December 31, 1999
Canal Neutrality: The Permanent Neutrality Treaty, which continues in perpetuity, gives the United States the right to act to ensure the canal remains open and secure
Operational Control: The Panama Canal Authority, an autonomous government entity created in 1997, took over the administration, operation, and maintenance of the waterway
U.S. Non-Interference: The transfer agreement did not grant the United States any right to interfere in Panama's internal matters or jeopardize Panama's territorial integrity or political sovereignty
Tuesday, December 24, 2024
25 Years since the Transfer of the Panama Canal
To hold its status in global trade, the canal expanded. Now it faces water level challenges, as well as pressure from U.S. President-elect Donald Trump.
On December 31, 1999, at noon, crowds standing by the Panama Canal erupted in cheers, waving hundreds of flags, as a countdown clock marked a line of zeroes: the canal was now fully under Panamanian control. The United States transferred the administration, operation, and maintenance of the waterway, which they had completed building in 1914 and controlled thereafter, to Panama. In doing so, the United States made good on an agreement signed 22 years prior in the Torrijos-Carter treaties. The Panama Canal Authority, an autonomous government entity created in 1997, has administered the canal since the transfer.
Over the last 25 years, the canal has continued being central to international commerce and to Panama’s position as a regional hub. Under Panamanian control, the canal underwent a major expansion project, carried out from 2007 to 2016. The expansion has helped keep the canal’s significant place in global trade by allowing larger ships to cross the waterway. In 2024, the canal’s revenue stood at nearly $5 billion, which represents about 4 percent of the country’s GDP.
On December 21, United States President-elect Donald Trump threatened to demand the Panama Canal be “returned.” Trump claimed the canal was “foolishly” given to Panama and said he would not let it “fall into the wrong hands,” referring incorrectly to China managing the canal. In a speech the day after, the president-elect complained of high fees charged to American vessels, saying, “This complete rip-off of our country will immediately stop.” U.S. ships pay the same universal rates to cross the waterway, which the Panama Canal Authority updates yearly to ensure the canal’s sustainability.
On December 22, Panamanian President José Raúl Mulino responded to Trump’s threats. “Every square meter of the Canal and its adjacent zone belongs to Panama and will continue to do so. The sovereignty and independence of our country are not negotiable,” said Mulino, addressing the nation. He highlighted Panama’s management and expansion of the canal, and noted that the Torrijos-Carter treaties established the waterway’s “permanent neutrality” to guarantee it works “openly and safely for all nations.”
A quarter of a century since the transfer, what has the canal looked like under Panamanian control? AS/COA Online covers its importance for regional trade today and the challenges ahead.
The canal remains a cornerstone of global trade
Every year, 5 percent of global trade is estimated to pass through the Panama Canal’s locks. The principal trading route that the canal services is that of cargo coming to and from the United States East Coast and Asia. Some of the main commodities that transit are metals, minerals, oil, fuels, grains, and chemicals.
Even after the transfer, the canal has continued to be intricately tied to U.S. trade, with around 40 percent of all U.S. container traffic traveling through its locks. Thus, the United States is still, by a large margin, the primary user of the canal, as the origin or destination country of 74 percent of the tons of cargo shipped through it. China and Japan follow with 21 percent and 14 percent, respectively.
Other countries have attempted to compete with the Panama Canal’s route, aiming to find other ways to transport cargo between the Pacific and Atlantic oceans. In 2013, the Nicaraguan government signed an agreement with a Chinese company to build a canal through the Central American nation. These plans have yet to materialize. Mexico has also proposed an interoceanic railway project to transport cargo from coast to coast.
Larger ships can pass through the canal, thanks to the expansion project
On October 22, 2006, less than seven years after the transfer, Panamanians cast their votes in a referendum on whether to take on a major project as a country: expand the canal. It passed with 76 percent of voters approving with a turnout of 43 percent of the electorate.
The project began construction in 2007 and was inaugurated in 2016, with a total cost of over $5.2 billion. The expansion increased the canal’s capacity by building a third set of locks that allows larger vessels to pass through. This set of locks built in the expansion project is designed to fit Neopanamax ships, which are larger than the Panamax ships, the size the original locks can accommodate. The new locks are 70 feet wider and 18 feet deeper than the original ones.
The project also widened and deepened parts of the waterway and increased the water levels of Gatun Lake, the main lake servicing the canal. The expansion of the canal prioritized water efficiency, creating water-saving basins next to the expanded locks, which recycle 60 percent of the water used per transit.
What has the canal expansion meant for trade volumes?
Water levels continue to be a problem
Panama experiences two seasons every year: a dry season that runs from January to May and a rainy season that runs from May to January. While this cycle is expected, the El Niño and La Niña climate phenomena—periods of excessive heat and rainfall, respectively—exacerbate the two seasons. This creates uncertainty around the canal's water levels, as it runs on freshwater from lakes and rivers.
In late 2023 and early 2024, a drought exacerbated by the El Niño, decreased Gatun Lake’s usual water levels. The Panama Canal Authority had to limit the amount of ships that were able to cross daily. During normal operation, this number oscillates between 36 to 38 ships. In December 2023, it was limited to 22. Some companies announced they would start using alternative routes, like transporting cargo through Panama by land or undertaking the longer traverse through the Strait of Magellan, to avoid the canal during the drought.
By August 2024, the number was raised back to 36 after rains increased the water levels. Water levels are expected to hit an all-time high in December 2024.
To tackle this problem, the board of directors of the Panama Canal Authority has proposed the construction of a reservoir in the Rio Indio basin, located west of the Gatun Lake. The reservoir construction, which would take around four years to complete and require the relocation of 2,000 people, would help maintain the canal’s water supply during droughts, increasing the amount of traffic possible. The project has also been deemed important for ensuring that Panama’s population continues to have reliable access to water, as over half of the country relies on the lakes that the canal administers for clean drinking water.
“The Rio Indio reservoir project would be the most complete solution in a 50-year horizon,” said the Panama Canal Authority Deputy Administrator Ilya Espino de Marotta. Panama’s President José Raúl Mulino said that the reservoir project will be properly presented to Panamanians in 2025, though he has not defined what that will look like.
U.S. Totally Oblivious While China Moves into Panama
China's growing influence in Panama and its potential impact on the Panama Canal have become significant geopolitical concerns in recent years. Here's an overview of how China can impact Panama and the canal:
Economic Influence
China has established a strong economic presence in Panama:
Nearly 40 Chinese companies operate in Panama across various sectors, including mining, finance, logistics, and telecommunications
Chinese firms have secured control of two out of five principal ports adjacent to the Panama Canal: Balboa on the Pacific side and Cristobal on the Caribbean side
China-based Landbridge Group acquired control of Margarita Island, Panama's largest Atlantic port, for $900 million in 2016
Infrastructure Projects
China has been involved in several major infrastructure projects in Panama:
Chinese companies are completing work on the Amador Pacific Coast cruise terminal
A consortium of Chinese state-owned firms is set to restart construction of a $1.3 billion fourth bridge across the Panama Canal
China has proposed other large-scale projects, including a $4 billion high-speed rail line connecting Panama City with Costa Rica
Strategic Implications
China's involvement in Panama has raised concerns about its potential strategic impact:
There are worries that Beijing could use its projects to monitor activity in the canal, gathering information with security implications for the continent
Some experts fear that in an eventual conflict, China could potentially disrupt or even close the Panama Canal due to its deep understanding of the lock system and operational characteristics
China's growing presence in Panama is seen as part of its broader Belt and Road Initiative and its efforts to expand influence in Latin America
Diplomatic Influence
China has also made diplomatic inroads in Panama:
n 2017, Panama severed diplomatic relations with Taiwan and established ties with Beijing
Panama joined China's Belt and Road Initiative in 2018, becoming the first nation in the Western Hemisphere to do so
U.S. Concerns
The United States has expressed concerns about China's growing influence in Panama:
U.S. officials worry about the potential for China to leverage its commercial presence for strategic advantages
The U.S. is encouraging competitive bidding processes for port contracts to counter Chinese influence