US President Donald Trump on his 20 Jan inaugural address, came forward as a peacemaker, but then immediately vowed that the US would be “taking back” the Panama Canal. Many observers were taken aback. The threat was issued without details or specifics but Trump did not rule out military action to regain control over the waterway which the United States under Jimmy Carter first decided on it and Bill Clinton handed over completely at the end of 1999. Trump accused Panama’s leaders of violating conditions for the handover and ceding control of the canal to China, threatening US interests.
“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,” Mr Trump said after being sworn in inside the US Capitol.
Before the Sinophiles start calling Trump out for being a hooligan and a warmonger. Let’s take a look at what went on in Panama leading up to the current situation.
Since 2013, China made numerous major infrastructural investments worldwide as part of Xi Jinping’s signature Belt and Road Initiative (BRI). Panama was one of the main target countries. Under then President Juan Carlos Varela, the country switched diplomatic recognition from Taiwan to the People’s Republic of China in 2017. Xi visited the next year and Chinese investments poured in. Major infrastructural projects including bridges, a rail line, commercial ports, and a cruise ship terminal were rolled out at speeds unknown to the small country which occupies the highly strategic isthmus between the Atlantic and the Pacific Oceans.
However, these even these mammoth projects are eclipsed by the Panama Colon Container Port (PCCP), a new port facility that is strategically located at the Panama Canal’s Caribbean entrance and promised to greatly increase transshipment capacity following a 2015 expansion of the canal’s locks. A consortium of PRC companies led by Landbridge Group – a Chinese conglomerate with equities in ports, oil and gas, real estate and other areas – promised to invest an estimated $900 million in building PCCP.
The expanded Panama Canal opened on June 26, 2016. This expansion is the third set of locks that enabled the canal to double its capacity through the addition of new traffic lanes, which allowed neo-Panamax and some post-Panamax vessels to transit across the canal. The widening of the canal has increased maritime traffic within Latin America and the Caribbean (LAC). Major ports in the regions have made huge investments in port expansion and infrastructural development to accommodate neo-Panamax vessels. While all this seems good for business, one must be conversant with the 36 Dirty Tricks From Ancient China.
All this ought to make China the most loved country in Panama but while business seemed good, the reality on the ground is quite different. Panama citizens overwhelmingly favour American influence over Chinese influence. 80% view America favourably while only a little over 40% view China favourably.
Landbridge describes itself as a “private company,” but like many ostensibly private Chinese companies, it has close ties to the Chinese Communist Party (CCP) and the People’s Liberation Army (PLA). It has a branch of CCP members embedded in the company and in 2014 it established a “people’s armed militia” unit within the company with PLA support. There were concerns that Chinese companies, with Landbridge being only one of them, might consolidate control over port infrastructure with strategic military implications. In his previous term, Trump had already recognised the threat to American interests but the Biden administration did not follow through.
Things changed, following the election of Laurentino Cortizo as Panama’s president (2019-2024) who suspended or cancelled multiple Chinese investment projects. It was not a bowdown to America. A review by the Panama Maritime Authority (PMA), the government agency that oversees the country’s ports, it was found that the Landbridge-led consortium had failed to comply with numerous contractual terms, including investing only roughly one-fifth of the promised amount, failing to provide key project documentation, and employing much less local labor than promised. The review led to the PMA’s decision to revoke the PCCP concession in June 2021.
In July 2024, José Raúl Mulino assumed office as Panama’s 39th president. He was a last minute stand in after billionaire Ricardo Martinelli was disqualified following conviction on embezzlement and money laundering charges. While Mulino seemed unlikely to backtrack to the pro-China days, Panama’s current economic situation is dire and its leaders do not wish to offend China as a 4th bridge is being built over the canal. What should be obvious to the rest of the world is that the Chinese have quietly, in the name of business and investment, embedded trojan horses within the country. There’s a bit of 反客为主 and 瞒天过海 in China’ approach. If Panama “disobeys”, China can do a 上屋抽梯。For detailed explanations of the 36 Dirty Tricks From Ancient China, check out my book. China has made it very clear during the pandemic that business cannot be separated with politics when it refused to supply Paraguay with vaccines because of their diplomatic relations with Taiwan. Knowing what China is capable of, Mulino has to tread cautiously.
In comparison with China’s sneaky approach, Trump is a loudmouth who has nothing hidden under his sleeve. From the very start, he has made his intentions clear. While the honesty is appreciated, it puts one at a distinct disadvantage in the propaganda war, especially when there’s so much political correctness going around and netizens don’t normally look beyond the superficial.