Show notes
President Trump has been threatening to "take back" the Panama Canal since he regained power. In this episode, listen to testimony from officials serving on the Federal Maritime Commission who explain why the Panama Canal has become a focus of the administration and examine whether or not we need to be concerned about an impending war for control of the canal. View the show notes on the Congressional Dish website at https://congressionaldish.com/cd312-threatening-panamas-canal/ Please Support Congressional Dish – Quick Links Contribute monthly or a lump sum via PayPal Support Congressional Dish via Patreon (donations per episode) Send Zelle payments to: Donation@congressionaldish.com Send Venmo payments to: @Jennifer-Briney Send Cash App payments to: $CongressionalDish or Donation@congressionaldish.com Use your bank's online bill pay function to mail contributions to: 5753 Hwy 85 North, Number 4576, Crestview, FL 32536. Please make checks payable to Congressional Dish Thank you for supporting truly independent media! Background Sources Recommended Congressional Dish Episodes CD292: Sabotaging Palestine CD287: War Money Current Events around the Panama Canal "Panama president calls Trump's talk of 'reclaiming' the Panama Canal a lie." March 5, 2025. the Associated Press. "Blackrock to buy Hong Kong firm's Panama Canal port stake amid Trump pressure." Sabrina Valle, Suzanne McGee, and Michael Martina. March 4, 2025. Reuters. "Mapping China's Influence around the Panama Canal." Matt Murphy, Jake Horton and Erwan Rivault. February 14, 2025. BBC. "Low water levels in Panama Canal due to increasing demand exacerbated by El Nino event." May 1, 2024. World Weather Attribution. "59 Iran-Linked Ships Stripped of Panamanian Flag, US DOS Confirms." World Maritime News Staff. March 15, 2019. World Maritime News. "Chinese Consortium to Build Fourth Panama Canal Bridge." July 29, 2018. Reuters. Panama Canal Treaty of 1977 "Panama Canal Treaty of 1977." U.S. Department of State. The Chinese "Belt and Road Initiative" "Belt and Road Initiative." Michele Ruta. March 29, 2018. World Bank Group. The Trump-Gaza Video Donald Trump shares 'what's next' for Gaza AI video on his Truth Social Platform February 26, 2025. Sky News. Laws Section 19 of the Merchant Marine Act Audio Sources President Trump Threatens to "Reclaim" The Panama Canal during his March 4, 2025 Presidential Address Examining the Panama Canal and Its Impact on U.S. Trade and National Security Senate Committee on Commerce, Science, and Transportation January 28, 2025 Watch on YouTube Witnesses: Louis E. Sola, Chairman, Federal Maritime Commission (FMC) Daniel B. Maffei, Commissioner, FMC Eugene Kontorovich, Professor, Scalia Law School, George Mason University Joseph Kramek, President & CEO, World Shipping Council Clips 17:30 Sen. Ted Cruz (R-TX): Between the American construction of the Panama Canal, the French effort to build an isthmus canal, and America's triumphant completion of that canal, the major infrastructure projects across Panama cost more than 35,000 lives. For the final decade of work on the Panama Canal, the United States spent nearly $400 million, equivalent to more than $15 billion today. The Panama Canal proved a truly invaluable asset, sparing both cargo ships and warships the long journey around South America. When President Carter gave it away to Panama, Americans were puzzled, confused, and many outraged. With the passage of time, many have lost sight of the canal's importance, both to national security and to the US economy. 18:45 Sen. Ted Cruz (R-TX): But the Panama Canal was not just given away. President Carter struck a bargain. He made a treaty. And President Trump is making a serious and substantive argument that that treaty is being violated right now. 19:10 Sen. Ted Cruz (R-TX): President Trump has highlighted two key issues. Number one, the danger of China exploiting or blocking passage through the canal, and number two, the exorbitant costs for transit. 19:20 Sen. Ted Cruz (R-TX): Chinese companies are right now building a bridge across the canal at a slow pace, so as to take nearly a decade. And Chinese companies control container points ports at either end. The partially completed bridge gives China the ability to block the canal without warning, and the ports give China ready observation posts to time that action. This situation, I believe, poses acute risks to US national security. 19:50 Sen. Ted Cruz (R-TX): Meanwhile, the high fees for canal transit disproportionately affect Americans, because US cargo accounts for nearly three quarters of Canal transits. US Navy vessels pay additional fees that apply only to warships. Canal profits regularly exceed $3 billion. This money comes from both American taxpayers and consumers in the form of higher costs for goods. American tourists aboard cruises, particularly those in the Caribbean Sea, are essentially captive to any fees Panama chooses to levy for canal transits, and they have paid unfair prices for fuel bunkering at terminals in Panama as a result of government granted monopoly. Panama's government relies on these exploitative fees. Nearly 1/10 of its budget is paid for with canal profit. 21:25 Sen. Ted Cruz (R-TX): Panama has for years flagged dozens of vessels in the Iranian ghost fleet, which brought Iran tens of billions of dollars in oil profits to fund terror across the world. 21:40 Sen. Ted Cruz (R-TX): And Chinese companies have won contracts, often without fair competition, as the infamous Belt and Road Initiative has come to Panama. China often engages in debt trap diplomacy to enable economic and political coercion. In Panama, it also seems to have exploited simple corruption. 32:40 Louis Sola: The Panama Canal is managed by the Panama Canal Authority, ACP, an independent agency of the Panamanian government. The ACP is a model of public infrastructure management, and its independence has been key to ensure a safe and reliable transit of vessels critical to the US and global commerce. 33:25 Louis Sola: In contrast, the broader maritime sector in Panama, including the nation's ports, water rights, and the world's largest ship registry, falls under the direct purview of the Panamanian government. 33:35 Louis Sola: Unfortunately, this sector has faced persistent challenges, including corruption scandals and foreign influence, particularly from Brazil and China. These issues create friction with the ACP, especially as it works to address long term challenges such as securing adequate water supplies for the canal. 33:55 Louis Sola: Although the ACP operates independently, under US law both the ACP and the government of Panama's maritime sector are considered one in the same. This means that any challenges in Panama's maritime sector, including corruption, lack of transparency, or foreign influence, can have a direct or indirect impact on the operations and long term stability of the canal. This legal perspective highlights the need for diligence in monitoring both the ACP's management and Panama government's policies affecting maritime operations. 34:30 Louis Sola: Since 2015, Chinese companies have increased their presence and influence throughout Panama. Panama became a member of the Belt and Road Initiative and ended its diplomatic relations with Taiwan. Chinese companies have been able to pursue billions of dollars in development contracts in Panama, many of which were projects directly on or adjacent to the Panama Canal. Many were no bid contracts. Labor laws were waived, and the Panamanian people are still waiting to see how they've been benefited. It is all more concerning that many of these companies are state-owned, and in some cases, even designated as linked to the People's Liberation Army. We must address the significant growing presence and influence of China throughout the Americas and in Panama, specifically. 35:20 Louis Sola: American companies should play a leading role in enhancing the canal's infrastructure. By supporting US firms, we reduce reliance on Chinese contractors and promote fair competition. 36:55 Daniel Maffei: Because the canal is essentially a waterway bridge over mountainous terrain above sea level, it does depend on large supplies of fresh water to maintain the full operations. Panama has among the world's largest annual rainfalls. Nonetheless, insufficient fresh water levels have occurred before in the canal's history, such as in the 1930s when the Madden Dam and Lake Alajuela were built to address water shortages. Since that time, the canal has undertaken several projects to accommodate larger, more modern ships. In the last couple of years, a trend of worsening droughts in the region, once again, has forced limits to the operations of the canal. Starting in June of 2023 the Panama Canal Authority employed draft restrictions and reduced the number of ships allowed to transit the canal per day. Now the Panama Canal limitations, in combination with the de facto closure of the Suez Canal to container traffic, has had serious consequences for ocean commerce, increasing rates, fees and transit times. 39:30 Daniel Maffei: Now, fortunately, Panama's 2024 rainy season has, for now, alleviated the most acute water supply issues at the canal, and normal transit volumes have been restored. That said, while the Panamanian government and Canal Authority have, with the advice of the US Army Corps of Engineers, developed credible plans to mitigate future water shortages, they also warned that it is likely that at least one more period of reduced transits will occur before these plans can be fully implemented. 41:55 Eugene Kontorovich: We shall see that under international law, each party to the treaty is entitled to determine for itself whether a violation has occurred. Now, in exchange for the United States ceding control of the canal which it built and maintained, Panama agreed to a special regime of neutrality. The essential features of this regime of neutrality is that the canal must be open to all nations for transit. That's Article Two. Equitable tolls and fees, Article Three. An exclusive Panamanian operation, Article Five. The prohibition of any foreign military presence, Article Five. Article Five provides that only Panama shall operate the canal. Testifying about the meaning of the treaty at the Senate ratification hearings, the Carter administration emphasized that this prohibits foreign operation of the canal, as well as the garrisoning of foreign troops. Now, Article Five appears to be primarily concerned about control by foreign sovereigns. If Panama signed a treaty with the People's Republic of China, whereby the latter would operate the canal on Panama's behalf, this would be a clear violation. But what if Panama contracted for port operations with a Chinese state firm, or even a private firm influenced or controlled in part by the Chinese government? The Suez Canal Company was itself, before being nationalized, a private firm in which the United Kingdom was only a controlling shareholder. Yet this was understood to represent British control over the canal. In other words, a company need not be owned by the government to be in part controlled by the government. So the real question is the degree of de jure or de facto control over a Foreign Sovereign company, and scenarios range from government companies in an authoritarian regime, completely controlled, to purely private firms in our open society like the United States, but there's many possible situations in the middle. The treaty is silent on the question of how much control is too much, and as we'll see, this is one of the many questions committed to the judgment and discretion of each party. Now turning to foreign security forces, the presence of third country troops would manifestly violate Article Five. But this does not mean that anything short of a People's Liberation Army base flying a red flag is permissible. The presence of foreign security forces could violate the regime of neutrality, even if they're not represented in organized and open military formations. Modern warfare has seen belligerent powers seek to evade international legal limitations by disguising their actions in civilian garb, from Russia's notorious little green men to Hamas terrorists hiding in hospitals or disguised as journalists. Bad actors seek to exploit the fact that international treaties focus on sovereign actors. Many of China's man made islands in the South China Sea began as civilian projects before being suddenly militarized. Indeed, this issue was discussed in the Senate ratification hearings over the treaty. Dean Rusk said informal forces would be prohibited under the treaty. Thus the ostensible civilian character of the Chinese presence around the canal does not, in itself, mean that it could not represent a violation of the treaty if, for example, these companies and their employees involved Chinese covert agents or other agents of the Chinese security forces. So this leads us to the final question, Who determines whether neutrality is being threatened or compromised? Unlike many other treaties that provide for third party dispute resolution, the neutrality treaty has no such provision. Instead, the treaty makes clear that each party determines for itself the existence of a violation. Article Four provides that each party is separately authorized to maintain the regime of neutrality, making a separate obligation of each party. The Senate's understanding accompanying to ratification also made clear that Article Five allows each party to take, quote, "unilateral action." Senator Jacob Javits, at the markup hearing, said that while the word unilateral is abrasive, we can quote, "decide that the regime of neutrality is being threatened and then act with whatever means are necessary to keep the canal neutral unilaterally." 46:35 Joseph Kramek: My name is Joe Kramek. I'm President and CEO of the World Shipping Council. The World Shipping Council is the global voice of liner shipping. Our membership consists of 90% of the world's liner shipping tonnage, which are container vessels and vehicle carriers. They operate on fixed schedules to provide our customers with regular service to ship their goods in ports throughout the world. 47:15 Joseph Kramek: As you have heard, using the Panama Canal to transit between the Atlantic and Pacific saves significant time and money. A typical voyage from Asia to the US or East Coast can be made in under 30 days using the canal, while the same journey can take up to 40 days if carriers must take alternate routes. From a commercial trade perspective, the big picture is this. One of the world's busiest trade lanes is the Trans Pacific. The Trans Pacific is cargo coming from and going to Asia via the United States. Focusing in a bit, cargo coming from Asia and bound for US Gulf and East Coast ports always transits the Panama Canal. Similarly, cargo being exported from US and East Coast ports, a large share of which are US Agricultural exports, like soybeans, corn, cotton, livestock and dairy also almost always transits the Panama Canal. The result is that 75% of Canal traffic originates in or is bound for the United States. 48:55 Joseph Kramek: We've talked about the drought in 2023 and the historic low water levels that it caused in Lake Gatún, which feeds the canal locks, a unique system that is a fresh water feed, as contrasted to an ocean to ocean system, which the French tried and failed, but which is actually active in the Suez Canal. These low water levels reduced transits from 36 transits a day to as low as 22 per day. Additio…
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