The Panama Canal is an artificial 82-kilometer waterway that connects the Atlantic Ocean with the Pacific Ocean, cutting across the Isthmus of Panama.
This engineering marvel, completed in 1914, significantly reduces the time for ships to travel between the two oceans, avoiding the lengthy and hazardous route around the southern tip of South America.
The canal is crucial for global maritime trade, facilitating around 5% of the world’s sea trade.
The canal was initially controlled by the United States, which oversaw its construction under president Theodore Roosevelt.
However, in 1977, the Torrijos-Carter Treaties were signed, leading to the gradual transfer of control to Panama. By December 31, 1999, Panama had full ownership and control of the canal.
Economic significance
The Panama Canal is not just a strategic waterway but also a significant economic asset. Up to 14,000 ships traverse the canal annually.
It contributes approximately 6% of Panama’s GDP and has added over $28 billion to the Panamanian economy since 2000.
The canal is vital for the United States, which accounts for 74% of its cargo traffic, followed by China at 21%.
The canal is crucial to the US for importing goods from Asia. The US also uses the waterway to export commodities, including liquified natural gas.
Drying up
In 2023, drought conditions in Central America led to low water levels in Gatun Lake, affecting the Panama Canal’s operations.
This resulted in restricted ship traffic and increased usage fees.
The canal saw a 29% decrease in ships, with 9,944 traversing between October 2023 and September 2024, compared to 14,080 the previous year.
Traffic has since returned to pre-drought levels, but fees are expected to rise.
Panamanian authorities stated that increased fees will fund improvements to accommodate more ship traffic.
Trump’s threat to take over
Recently, US President-elect Donald Trump has sparked international debate by threatening to reclaim US control over the Panama Canal.
During a speech at AmericaFest, Trump accused Panama of charging exorbitant passage fees and voiced concerns about potential Chinese influence on the canal.
He claimed that the US was being “ripped off” and suggested that the canal could fall into the “wrong hands.”
Panamanian President José Raúl Mulino strongly rebuked Trump’s statements, asserting that every square meter of the Panama Canal belongs to Panama and will continue to do so.
Mulino emphasized that the sovereignty and independence of Panama are non-negotiable and that the canal’s administration is a matter of national pride.
