The Panama Canal, a crucial waterway connecting the Atlantic Ocean to the Pacific Ocean, has become a focal point of geopolitical tension between the United States and China. The U.S. originally dug the canal during the early 1900s to facilitate transit for commercial and military vessels. On December 31, 1999, control of the canal officially reverted to Panama, under a treaty signed by then President Jimmy Carter in 1977. The treaty outlined the permanent neutrality of the canal, which is currently administered by the Panama Canal Authority.
In testimony before the Senate Foreign Relations Committee last week, Secretary of Defense Pete Hegseth made clear how vital the canal is for both countries. He declared that the U.S. accepted Panama’s sovereignty over the Canal and its neighboring territory. Tensions have more recently flared amid fears over Chinese encroachment into the management of the canal. The Hong Kong-based consortium currently has a 25-year lease agreement for the ports on either end of the canal. This alarming situation has drawn the attention and condemnation by U.S. lawmakers and generated widespread concerns over possible Chinese ownership.
Secretary Hegseth noted that these projects will greatly improve the collaboration between the U.S. and Panama in defense and security efforts. He proclaimed, “In just the last few weeks, we’ve done more to deepen our defense and security cooperation than we’ve done in decades.”
The huge, widening canal is as important as ever to international trade and commerce, and the U.S. still uses the Canal and pays tolls to do so. These tolls have become irritants that threaten the relationship between the two countries. As a result, they are now at odds over the economic impact.
“The Republic of Panama and the United States of America will work, as established, on a mechanism to compensate for the payment of tolls and charges.”
Such substantive debates were accelerated when the Panamanian government recently audited the Hong Kong consortium’s lease to run the canal. U.S. officials have raised national security concerns about China’s participation in key infrastructure located close to the canal zone. They absolutely reject any suggestion that they have or would seek direct control of the administration of the canal.
It was as though Secretary Hegseth had read our op-ed when he unequivocally stated that China didn’t build this canal. Further, he made a point that China doesn’t run it, and that they won’t weaponize it. He stated guarantees that both countries should jointly ensure the canal’s security.
In response to U.S. concerns, the Chinese Embassy in Panama issued a statement. They ran down what they described as a “sensationalistic campaign” over a nonexistent Chinese threat to the canal. The embassy cited that day’s echoes as proof that these assertions were based on U.S. geopolitical goals and not actual facts.
“The US has carried out a sensationalistic campaign about the ‘theoretical Chinese threat’ in an attempt to sabotage Chinese-Panamanian cooperation, which is all just rooted in the United State’s own geopolitical interests,” – Chinese Embassy in Panama
Panama’s President José Raúl Mulino would have liked to hear a different response. Reaching across the aisle, he called for a dialogue centered on finding shared interests rather than inventing baseless boogeymen.
“We aren’t going to speak about what is not reality, but rather those issues that interest both countries,” – President José Raúl Mulino
Though worries about foreign control remain, both countries have reiterated their determination to protect the Panama Canal. Joint U.S. and Panamanian officials released the following statement. They reiterated their promise to open, or at least leave the canal open, to vessels from each of the participating nations.
These geopolitical dynamics in this always complex and dynamic region are shifting quickly. The Panama Canal’s future is key not just for global trade but for American diplomacy. The ongoing dialogue between the U.S., Panama, and China will likely shape the operational landscape of this vital waterway for years to come.
