Showdown at the Panama Canal: Critical Global Waterway Now a Focal Point in US vs. China

PANAMA – The Panama Canal, one of the world's most important trade routes, has become a hot discussion item thanks to President Donald Trump. Much of that has to do with China's growing influence in the region, and he's making waves about America taking it back.  

In his inaugural address, President Trump accused Panama of not honoring its agreements with the U.S.

"Panama's promise to us has been broken," he said. "The purpose of our deal and the spirit of our treaty has been totally violated. American ships are being severely overcharged and not treated fairly in any way, shape, or form. And that includes the United States Navy. And above all, China is operating the Panama Canal. And we didn't give it to China. We gave it to Panama, and we're taking it back."

The U.S. helped to engineer and build the 50-mile waterway from 1904 to 1914. Then the U.S. controlled it from its opening in 1914 until 1979.

CBN News visited the canal to get a look at the port facility and the ships passing through. We observed a spot where China has begun the process of building two bridges here as part of their Belt and Road Initiative. It was a deal that was made in 2017 between then-President Varela and Chinese President Xi that the Chinese have invested more than 1.3 billion just along the canal itself, in more than 40 different businesses. That doesn't affect the canal directly, but it certainly shows that China is getting its hooks into Panama little by little.

Panama's current President José Raúl Mulino is pushing back on Trump.

"The Panama Canal belongs to Panama and will continue to belong to Panama. The Panama Canal is not a concession or a gift from the United States. The Panama Canal came into being in 1914, following a bilateral treaty in 1903, at the dawn of our independence with Colombia," President Mulino said.

Panama has invested heavily to keep the canal efficient and competitive. For that reason, if the U.S. were to take it back, it would get a completely different canal than the one turned over in 1999.

Matthew Tomlet of the Panama Canal Trading Company said, "Panama has invested billions of dollars expanding the canal. They dredged the entire channel from the Atlantic to the Pacific to accommodate much bigger vessels. They've widened the Culebra Cut and added two new sets of locks. Panama has some serious skin in the game."

One site we visited was actually built by the Chinese. They even erected a large monument here to 150 years of China in Panama. Nobody's making the case that there are no Chinese in Panama. The real question is, how much influence does China have over the Panama Canal?

The canal administration insists it operates under strict rules of neutrality.

Ricaurte Vásquez, administrator of the Panama Canal, said, "The neutrality treaty says: everyone passes equally, under the same rules. Once an exception process is opened in the Panama Canal transit and operations allocation processes, a Pandora's box is opened, and we don't know where it ends. The most prudent way is to maintain the established rules, which have operated since before the canal's transfer."

Trump's comments have sparked anger in Panama, a longtime U.S. ally.

"Panama is very pro-American, very American-friendly," Tomlet said. "So for Trump to just come out with these statements is highly insulting to Panama. If Trump is trying to thwart Chinese influence here, this is not the right diplomatic approach."

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