Secretary of State Marco Rubio embarks soon on his inaugural trip as the United States’ top diplomat. His first stop, Panama could prove to be the most contentious on the itinerary following President Donald Trump’s repeated demands for control of the Panama Canal.
“Panamanian sovereignty over the canal is clear. There is no discussion on this issue. The soul of a country is not up for discussion,” Panama President José Raúl Mulino emphasized on Thursday, just days ahead of his scheduled meeting with Rubio.
Yet the Trump administration doesn’t seem to be letting this go. In his inauguration speech, Trump mentioned Panama six times, more than any other foreign country. He and Republican allies are increasingly painting a dark scenario where the Panama Canal has secretly fallen under Chinese military control – arguing that’s why the US needs to seize the canal back from Beijing’s clutches.
“A foreign power today possesses, through their companies, which we know are not independent, the ability to turn the canal into a choke point in a moment of conflict,” Rubio himself insisted during his Senate confirmation hearings this month.
“That is a direct threat to the national interest and security of the United States,” he added.
As ominous as it all sounds, the reality is not so straight forward. Here is a fact check about claims Trump’s administration has made about the Panama Canal.
Is the Panama Canal under Chinese control?
Trump has long complained about the “bad deal” Jimmy Carter made when he returned the canal to Panama in 1977. But he’s been ratcheting up the rhetoric and falsehoods from the very start of his second term.
“Panama’s promise to us has been broken,” Trump said during his inaugural speech. “Above all China is operating the Panama Canal and we didn’t give it to China, we gave it to Panama and we are taking it back!”
On his Truth Social network, Trump has also claimed – without proof – that Chinese soldiers have been deployed to the canal and that “Panama is, with great speed attempting to take down the 64% of signs which are written in Chinese. They are all over the Zone.”
But the “Zone” – a former American enclave bordering the canal – hasn’t existed since 1979.
And if the scenario Trump describes sounds like the plot of a movie, well, it was. In the 2001 movie “The Tailor of Panama,” which starred Pierce Brosnan and Geoffrey Rush, the US invades Panama after receiving bogus intelligence that China is trying to secretly buy the canal.
In reality, since 2000 the canal has been operated by the Panama Canal Authority, whose administrator, deputy administrator and 11-member board are selected by Panama’s government but operate independently.
The majority of the canal’s employees are Panamanians and Panama designates which companies are awarded the contracts to run the ports near the canal. Ships transiting the 50-mile-long canal are required to be piloted by local captains that work for the Canal Authority.
While there is real concern about increased Chinese investment in Latin America, Panama included, to date there is no evidence of Chinese military activity in Panama. At his press conference on Thursday, Mulino said the US government has yet to provide his administration with any proof they had gathered of Chinese control of the canal.
So what does Rubio mean by ‘a foreign power’ in the Panama Canal?
The Trump administration seems to be pointing to the fact that Panama Ports – part of a subsidiary of the Hong Kong-based conglomerate CK Hutchison Holdings – operates terminals on the Atlantic and Pacific sides of the canal. So do several other companies.
Hutchinson was first granted the concession over the two ports in 1997 when Panama and the US jointly administered the canal. That same year, control of Hong Kong – where Hutchinson is based – was transferred from the United Kingdom to China.
While falling under Beijing’s sphere of influence, Hutchison is hardly some murky Chinese military front company. It’s publicly traded, not known to be on any US blacklists and their subsidiary Hutchinson Ports is one of the world’s largest port operators, overseeing 53 ports in 24 countries, including for other US allies such as the UK, Australia and Canada.
Crucially, Hutchison does not control access to the Panama Canal. Workers at their two ports only load and unload containers onto ships and supply them with fuel. And they’re not the only ones – three other ports in the vicinity of the canal are operated by competing companies providing similar services.
Since Trump’s comments, Panama’s government has announced an audit of the Hutchison-owned Panama Ports. The company says it is complying fully and has even invited Rubio to visit its ports.
The State Department would not comment if Rubio planned to accept the invitation to visit what the Trump administration has described – incorrectly — as a de facto Chinese military outpost in Panama.
Does the US have any legal standing to seize the Panama Canal?
Under the 1977 treaty with Panama, the US returned the canal with the understanding that the waterway remain neutral.
According to the agreement, the US could intervene militarily if the canal’s operations were disrupted by internal conflict or a foreign power. This seems to be what Trump is referencing when he threatens to “take the canal back.”
But it would be hard to argue that the waterway’s operations are disrupted or endangered. Following the expansion of the canal, which began in 2007 and Panama financed at a cost of more than $5 billion, more cargo than ever runs through the canal than it did during the years of US administration.
A US occupation of the canal would fly in the face of international law and the treaty the US agreed to.
Ok, but theoretically what would happen if the US tried to take the Panama Canal?
Since the 1989 US invasion that deposed dictator Manuel Noriega, Panama does not have an army but Panamanians are fiercely protective of the canal which is central to their national identity. And despite the saber rattling coming from the Trump administration, attempting to force the issue would pose major complications for two other top US priorities: migration and the economy.
The canal isn’t the only critical passageway that Panama controls. Threatening Panama militarily could throw open the Darien Gap, the jungle crossing where hundreds of thousands of migrants make their way north from South America to the US.
Mulino had promised to close the gap to northbound migrants with Trump’s help – but don’t count on him honoring old commitments if US boots touch Panamanian soil.
Americans would also feel the heat. At least 25,000 US citizens live in Panama who would likely be placed in harm’s way by any US military action to seize the canal. Disruption of the canal’s operations would likely send prices of US goods from automobiles to sneakers soaring – about 40% of US container traffic passes through the waterway.
And of course, backing out of a decades-old deal and trying to wrest the canal back by force from an ally would be a propaganda goldmine for Russia and China which have both called for maintaining neutrality in the canal.
Any US military action would also further inflame tensions in Latin America where mass deportations have already tested Washington’s partnerships in the region.
Trump’s dream of flying a US flag over the Panama Canal would come at a much higher cost than he appears to have calculated.