In News:

Recently, Donald Trump threatened to take back the Panama Canal, calling the transfer treaty “foolish”.

Why Trump Called the Panama Canal Transfer 'Foolish'?

• Transit Fees:
  • Trump expressed frustration over high transit fees imposed by the Panama Canal Authority (ACP) on U.S. vessels.
  • In 2023, due to droughts affecting Lakes Gatun and Alhajuela (which are crucial for canal operations), the ACP reduced crossing slots by 36%, leading to an increase in transit fees for ships.
• Chinese Presence:
  • Trump is also concerned about the growing Chinese influence in the Panama Canal region.
  • In 2017, Panama became the first Latin American country to sign a Belt and Road Initiative (BRI) agreement with China, increasing Chinese investments.
  • Hutchison Ports PPC, a subsidiary of a Hong Kong-based company, operates ports near the canal, raising concerns over China's influence on logistical operations and potential surveillance capabilities.

The Torrijos-Carter Treaties and Canal Transfer:

• Panama Canal Treaty (1977):
  • The treaty transferred control of the Panama Canal from the U.S. to Panama by December 31, 1999.
  • The U.S. would no longer control the canal, and Panama would assume full responsibility for its operation and defense.
• Permanent Neutrality Treaty (1977):
  • Declared the canal to be neutral and open to vessels of all nations.
  • U.S. Right to Defense: The U.S. retained the right to defend the neutrality of the canal and had priority passage in case of military emergencies.

Panama’s Response to Trump’s Criticisms:

• Defense of Transit Rates:
  • President José Raúl Mulino rejected Trump’s claims, defending the transit fees as being in line with international standards and based on a transparent procedure.
• Sovereignty:
  • Mulino emphasized Panama’s sovereignty over the canal, asserting that Panama’s control over the canal was non-negotiable. He categorically denied the presence of Chinese soldiers in the canal, stating that there would never be any.

China’s Response:

• China's Position:
  • China's Foreign Ministry responded by emphasizing that the Panama Canal is a neutral passageway, a vital infrastructure for Panama and the global trade system.
  • China affirmed its respect for Panama's sovereignty and denied any military presence in the canal area.

Implications and Future:

• Diplomatic Tensions:
  • The issue of transit fees and foreign influence, particularly China's presence in the region, is likely to remain a point of diplomatic negotiation.
  • Panama is expected to assert its sovereignty and seek international support to prevent any external interference in the canal’s operations.
• U.S. Influence:
  • The U.S. might attempt to renegotiate terms related to the Panama Canal's operations, especially concerning transit fees and military rights, although Panama remains firm on maintaining control.

Torrijos-Carter Treaties:

• Significance:
  • Panama Canal Treaty and Permanent Neutrality Treaty marked a major shift in U.S.-Latin America relations, ending U.S. control and restoring Panamanian sovereignty.
  • The treaties also ensured the neutrality of the canal while maintaining U.S. military access in emergencies.
• Impact:
  • The treaties were a symbol of Panama’s regained sovereignty and played a key role in stabilizing relations between the U.S. and Panama, as well as resolving tensions over control of the canal.