When I first heard that Donald Trump was talking about reacquiring the Panama Canal, I thought, "He's just trolling the world." Now that I realize he isn't, I thought I'd better bone up on the subject. I've known the history of it because it's an amazing story of engineering and human will. It's also fascinating that Ferdinand de Lesseps, the guy who built the Suez Canal, failed at building the Panama Canal, gave up, and left. Americans came in, took up the job, and ten years later, Voila!
About 5,000 Americans died constructing this, with many more suffering from malaria for the rest of their lives. Teddy Roosevelt, president at the time, gave Panama good terms after having run the Colombians out of the area, who were threatening to take over the isthmus. In more recent times, Ronald Reagan basically said, "We paid for it, we built it. It's ours." Until Jimmy Carter gave it away to the Panamanians in 1977. He thought it would enhance America's image in the world as a great benevolent power, but just like all of the foreign aid we've given to the rest of the world for decades and decades, it did little in that regard and just about everybody on the planet still hates us. Oh well...
So here we are, 110 years after its completion and how has the picture changed? Well aside from the standard upkeep and modifications needed to keep the thing usable, the Chinese have moved into the neighborhood. Now, I was completely oblivious to that fact and learned that CK Hutchinson, a company moored up pretty tightly to the CCP, runs two port facilities located at each end of the canal. In 1997, they initiated a deal with the Panamanian government (two years before the US fully handed over the canal) to manage them.
Apparently, they have no plans to go anywhere. And this is a problem because Beijing is not our friend. They are expanding their holdings across the world, which means they are expanding their influence, and their influence undercuts our own interests. Letting the fox into the barn is bad for the animals.
From deputy mayor of Panama City Augusto Diaz in 1999:
"If Red China gets control of the canal, it will get control of the government...The Panama Canal is essential to China...if they control the Panama Canal, they control at least one third of world shipping."
Ok, who else thinks the Chinese are bad actors in addition to being owners of stuff in sensitive areas? Probably the British. The China Strategic Risks Institute prepared this report called Impact on Security of UK Critical National Infrastructure from Proposed Merger Between Vodafone (British company) and the Three Group (Chinese-controlled CK Hutchison company). It's full of interesting stuff, but basically they say:
The PRC’s ownership of much of the UK’s Critical National Infrastructure presents a host of dependency and espionage concerns. This weakens the UK’s economic security and reduces its strategic autonomy in the event of an escalating geopolitical crisis.
CK Hutchison’s close links to the Chinese Communist Party are cause for particular concern, with the PRC government practising a deliberate strategy of co-opting businesses and financial elites to achieve its broader geopolitical goals.
And of particular note:
Nearly 200 British companies are either controlled by PRC investors or have them as minority shareholders, with such investments totalling £134bn.i Among these are significant stakes owned by the PRC’s sovereign wealth fund, the China Investment Corporation (CIC), a body overseen by high level officials at the PRC’s State Council. CIC’s UK portfolio expands into many sectors including energy, water, transportation and other elements of Critical National Infrastructure. This includes a 10% share in Heathrow Airport, the UK’s largest airport; a 49% share in oil and natural gas company Neptune Energy; and a 9% share in Thames Water – which serves over a quarter of English households.
Wow. Talk about putting the ol' wedding vegetables in your adversary's hands...
Okay, so anybody who pays attention to world events probably understands that China always has a plan. And it is always a long-term plan. They do realpolitik, and they do it pretty well. And they do it pretty well because they don't give much of a damn what the rest of the world thinks. They don't even give a damn what their own people think (remember, these are the guys who welded shut the doors on apartment buildings to keep the tenants inside during COVID). As such, they don't have to deal with an incurious press because they own that incurious press.
So, in 2017, Panama severed diplomatic relations with Taiwan. Shortly thereafter, they signed up for Belt & Road and its cheap debt trap loans. And as the day goes on, Panama becomes ever more tied to the PRC. Taking control of both ends of the canal is basically taking control of the entire canal. Trump doesn't like that, and wants to do something about it even though the American press is telling us all that China does not, in no uncertain terms, control the Panama Canal. Personally, I don't think these reporters can dig very deeply nor assess by implication.
Anyway. So what does the canal do for us these days? It facilitates trade between the coasts and it allows us to transfer naval assets from one ocean to the other. Sort of. Anything we have up to Nimitz and Ford-class carriers can transit the canal. Those flattops cannot. Their sponsons make the hulls too wide. And we don't have any carriers in service that predate those classes of ships, so if China attempted to restrict the US Navy, it would affect submarines, frigates, destroyers, cruisers, and support ships. The movement of our big carriers would remain as it always has since they got too big.
As far as merchantmen go, the US is the largest customer of the Panama Canal. Seventy percent of our import/export traffic passes through it. This amounts to about $270 billion in trade per year. So, if China decided to restrict that, they'd be in a position to do it. Remember what happened to world trade when the Suez Canal got constipated?
Now, you have to remember that China always has a plan, and they don't do anything without forethought. And as they have become increasingly belligerent over the past 20 years at least, one has to assume that putting down roots in Panama, a global choke point, serves a purpose for Beijing. I doubt that purpose has any sort of goodwill for us.
This could be to establish a surveillance ability to record who and what transits the canal, or it could be to pressure the Panamanian government into controlling U.S. shipping (through its cheap loan debt traps), or it could simply be to shut the whole thing down at some critical time in the future. Now, if the Chinese actually did this, I suspect Trump would send in the Army to take control of the canal. Militarizing that facility with Chinese troops would probably be ineffective because it would foreshadow nefarious intent, which would bring U.S. troops in anyway, and as they are a long way from mainland China, supporting them would be a considerable logistical problem. Also, we are standing right there in the front yard. Having said that, I presume that Beijing has already thought of this and made other plans. My guess is that the locks down there have already been rigged to blow up. But, again, just spitballing.
What I do know is that if China shut down the canal to us, we'd be going to war unless the plan is to shut down the canal once they actually invade Taiwan. I doubt they'd ever do it beforehand. That would sort of be like expecting Egypt to sit on its hands if the Sudanese ever dammed up the Nile. Which I don't think Cairo would stand for.
So this story has a number of facets relating to the treaties we have with Panama regarding our usage of the canal, etc. but I haven't explored them very deeply because I think Chinese intentions in that area really don't care about those. And as it stands, the Chinese are in the canal zone in an official capacity; they're there for a reason, and they have become increasingly belligerent on the world front over the years, so it's safe to assume that reason doesn't bode well for us as the largest user of the canal. I believe Donald Trump recognizes this. I don't think he's trolling. I think he is forewarning.
And I think he should.
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