When the dust had begun to settle by mid-February, how much had really changed over the question of strategic control of the Panama Canal since the new U.S. Donald Trump administration took office?
Quite a lot, but not in the way that would seem explicit or quantifiable in media or public perception terms. Rather, it would show in the deeper movement of Panama’s allegiances. Under President José Raúl Mulino, the Panama government happily moved back to a position of closer Panama–U.S. relations and dampened Panama–China relations. Mulino immediately said Panama would not renew its participation in Beijing’s Belt and Road Initiative (BRI), an easy gesture—it was moribund, in any event.
There were, in fact, many in the Western Hemisphere—the Americas—who were glad to see a greater focus by the new U.S. administration on affairs in the Americas, even though Trump had seemed to signal that all of these would be on a bilateral basis, avoiding a return to, for example, the Organization of American States, but that, clearly, has not yet been defined.
Mulino did not need encouragement or threats to recognize that the People’s Republic of China was in a declining position to replace U.S. influence in the Americas, and the United States was in an ascendant position. That was probably also true under the previous Biden administration, although Washington at that time did not pursue a comprehensive policy toward the Americas.
So what has changed with the visit by Trump’s Secretary of State Marco Rubio to Panama on Feb. 2?
Clearly, the media indicated that Rubio “warned” Mulino to restore U.S. influence over the Panama Canal, while Mulino riposted that the sovereignty of the canal—now part of Panama—was not up for negotiation. Both sides were able to save face, and there was no indication that Mulino was unhappy with the outcome. The other aspects of the discussion over the canal, however, involve far more subtle issues. However, the Rubio–Mulino agreement cannot change the reality that the United States has lost control of the world’s ports and world shipping, with the PRC being the major beneficiary.
However, the PRC does not directly control the operation of the Panama Canal. A Hong Kong firm, CK Hutchison, manages the ports at each end of the canal, at Balboa and Christobal, but there are three other non-Chinese ports on the canal.
Significantly, CK Hutchison has been managing these ports since 1997, in a deal signed by Hong Kong billionaire port operator Li Ka-shing (of Hutchison Whampoa), who—although he may now need to operate cautiously under the communist Chinese domination of Hong Kong—has a history of being pro-British and pro-Hong Kong rather than pro-Beijing. Still, access to aspects of the port management does give the PRC intelligence and, possibly, subversion capability in the canal zone.
This, however, has largely been a result of the United States neglecting its interests in Panama and the rest of the Americas since President Jimmy Carter unilaterally surrendered U.S. sovereignty over the U.S.-built Panama Canal in 1997, ratified by the Senate in 1998. Since that time, the PRC has built its capabilities in Panama, not just with regard to the canal but also as part of its regional network of influence and guerilla-terrorist training.
Of primary importance to the United States is unfettered access by U.S. Navy vessels through the Panama Canal, particularly in times of crisis, and access to U.S. shipping. However, in the post-1997 years, U.S.-flagged shipping has virtually disappeared, and the canal itself has faced environmental impact from declining rains in the area, particularly in 2024, diminishing the canal’s capacity.
The follow-on steps for the Trump administration include revitalizing U.S. naval and commercial shipbuilding and U.S. shipping and flagging operations, largely still hampered by the Jones Act of 1920. The Act was originally designed to protect U.S. shipbuilding and shipping but largely caused a diversion of shipping to foreign-flagged vessels. That will need to be addressed separately by Washington.
In the meantime, the Panama understanding reached by Rubio and Mulino was far more symbolic than substantive. That—and the fact that Washington got its way on the repatriation of illegal immigrants to the Americas—meant that the United States would begin its re-ascendancy in the Southern Americas, and the PRC would be on the defensive.
The question now is how Washington will follow up in Canada and the Caribbean. Canada will address its issues during the elections in 2025, but the Caribbean and parts of the Americas will require focused attention.
Rubio, whose family originated in Cuba, could be the first American official to provide that focus for some time.
