The Panama Canal is a global trade cornerstone, yet it’s recently become the centre of heated tension between Panama and the United States. Panama’s President, José Raúl Mulino, has fiercely denied U.S. claims that the country has agreed to allow U.S. government vessels to pass through the Panama Canal without paying fees. Mulino’s rejection of these accusations marks a fresh chapter in the ongoing diplomatic rift between the two countries.
In this article, I will delve into the unfolding controversy surrounding Panama Canal fees, dissect the claims made by the U.S. State Department, and explore how this dispute could impact Panama’s relations with its northern neighbour.
The Accusations: U.S. Claims and Panama’s Rejection
On Thursday, President José Raúl Mulino blasted the U.S. government, accusing it of spreading “lies and falsehoods” following a statement from the U.S. State Department. According to the State Department, U.S. government vessels would now be able to pass through the Panama Canal without incurring any crossing fees, a move that could save millions of dollars annually. However, the Panama Canal Authority (ACP) swiftly denied these claims, asserting that no such agreement had been made.
The timing of this diplomatic clash is especially significant, coming at a time when tensions have been high between Panama and the United States, particularly after former President Donald Trump’s remarks about the Canal. In 2018, Trump controversially suggested that China had effectively taken control of the Panama Canal, a claim that raised eyebrows in the global community. He vowed that the United States would “take it back,” leading to increased scrutiny of Panama’s dealings with China.
Why the Panama Canal Is So Important
The Panama Canal is undeniably one of the most vital trade routes in the world. Since its completion in 1914, it has allowed ships to bypass the lengthy journey around South America, significantly shortening travel times and reducing shipping costs. The Canal connects the Atlantic and Pacific Oceans, serving as a critical artery for international trade, particularly for goods between the U.S., Europe, and Asia.
For the United States, the Canal has long been of strategic importance. Historically, the U.S. controlled the waterway until 1999, when Panama assumed full ownership. However, the ongoing financial and geopolitical significance of the Canal ensures that it remains at the heart of U.S.-Panama relations.
The Dispute: What’s Really at Stake for Panama and the U.S.?
The row over fees is not just about money—though millions in fees are at stake. It’s about power, influence, and the future of the Canal. The idea that the U.S. would seek a waiver of fees could undermine Panama’s control over this strategic waterway. Mulino’s rejection of the U.S. claim highlights his administration’s desire to maintain sovereignty over the Canal, resisting any pressures that could diminish its financial or political independence.
As Mulino expressed to the press, the idea that Panama would allow such an arrangement based on “falsehoods” is unacceptable. He has even gone as far as instructing his ambassador in Washington to take firm steps in debunking the U.S. claims, signalling his administration’s willingness to confront Washington head-on over this issue.
Trump’s Past Statements on the Canal
This dispute is the latest chapter in a series of comments made by former U.S. President Donald Trump regarding Panama and the Canal. During his presidency, Trump repeatedly suggested that China had taken control of the vital waterway through increased investment and influence in Panama. While the Canal is not under Chinese control, China’s role in Panama’s economy—especially in infrastructure development—has drawn attention and scrutiny from the U.S.
Trump’s rhetoric about the Canal being “taken back” by the U.S. sparked alarm in Panama, with many fearing it would result in further diplomatic conflict. Even though Trump is no longer in office, his statements have left a lasting impact on U.S.-Panama relations, with many in Panama remaining suspicious of U.S. intentions.
Panama’s Response: Rejecting False Claims
President Mulino’s response to the recent accusations reflects his administration’s firm stance on protecting Panama’s sovereignty and the integrity of the Canal. By accusing the U.S. State Department of spreading falsehoods, Mulino is not only defending Panama’s economic interests but also asserting the country’s independence in handling its key assets. He made it clear that Panama would not bend to U.S. demands for special treatment or fees waivers, especially if such claims were unfounded.
The Panama Canal Authority’s quick denial of the U.S. statement reinforces Mulino’s message. The ACP, which manages the Canal, stated that no new arrangements regarding government vessel fee exemptions had been made, signalling that the U.S. was either misinformed or deliberately distorting facts.
What This Means for U.S.-Panama Relations
The disagreement over Canal fees could have lasting repercussions on diplomatic relations between Panama and the United States. While the Panama Canal remains a critical trade route for the U.S., Mulino’s rejection of U.S. claims signals that Panama is not willing to cede control or make concessions that could compromise its sovereignty.
This incident highlights the broader geopolitical context in which Panama operates. With increasing global competition for influence in Latin America and the Caribbean, Panama has a delicate balancing act to perform. It must maintain strong relations with the U.S. while simultaneously nurturing ties with China and other global powers, which has become increasingly important to its economic and political stability.
Conclusion: A Critical Moment for Panama and the U.S.
The ongoing dispute over Panama Canal fees is just one example of the broader tension that exists between Panama and the United States. As Mulino rightly pointed out, the U.S. government should not spread false information, especially when it concerns such a crucial asset as the Panama Canal. Panama’s government has made it clear that it will not stand for such claims and is prepared to defend its sovereignty.
As the situation continues to unfold, the rest of the world will be watching closely, particularly those who rely on the Canal for their own trade and shipping. With global trade routes becoming increasingly competitive and volatile, the Panama Canal will remain a vital piece of geopolitical chess for both Panama and the United States.
Photo credit: SBS
