Why Donald Trump is threatening to take control of the Panama Canal

For weeks, Donald Trump has been stating his intention to take control of the Panama Canal, a critical 51-mile long waterway that connects the Atlantic and Pacific oceans.

At a press conference on January 7, Trump was asked by a reporter whether the US could use military force to acquire the canal. He refused to rule it out and said “we need” the canal for economic security. The president-elect’s refusal to rule out invading Panama does not bode well for his respect for national borders in general, and in Latin America in particular.

The Panama Canal has always been intimately linked to external powers. The idea of connecting the two great oceans through a man-made channel was first mooted by Spanish explorer and conquistador Vasco Núñez de Balboa in the 16th century. But it wasn’t until the 1880s when the French, following their success with the construction of the Suez Canal in Egypt, started working on the project.

And it was finally finished during the US presidency of Theodore Roosevelt. From the inception of the US project in 1903 up until 1979, the Panama Canal and the surrounding area (extending five miles on both sides) remained a de facto US territory under the Panama Canal Zone treaty, or the Hay-Bunau-Varilla Treaty as it was officially known.

The US and Panama would exercise joint control over the canal for next two decades, before the US turned it over to Panama in 1999.

Trump’s gripe

The construction of the canal was a major undertaking. It cost Americans around US$375 million (equivalent to around US$13 billion or £10.5 billion in today’s money), making it the single most expensive construction project in US history at that time.

The US has also certainly poured plenty of resources into the construction, maintenance and successful operation of this major international waterway. Of the 40,000 workers (many of whom were admittedly not American) who were employed in the canal’s construction, more than 5,600 perished to accidents and disease.

But Trump’s ire is directed at the injustice he feels has been done to the US by the Panamanians in recent years. He has falsely claimed that Panama has handed over the operation of this once mega US project to the Chinese.

On January 7, Trump stated: “Look, the Panama Canal is vital to our country. It’s being operated by China. China! And we gave the Panama Canal to Panama, we didn’t give it to China. And they’ve abused it. They’ve abused that gift. It should have never been made, by the way.”

A Hong Kong-based company called Hutchison-Whampoa does operate two of the ports on the ends of the canal. But the canal in its entirety is administered by an independent government agency, the Panama Canal Authority.

Owing to existing treaty arrangements between the US and Panama, Trump cannot take control of the canal legally. However, there is nothing stopping him from staging a military takeover. And there are precedents for this in the history of US interventions in Latin America.

In January 1990, for example, President George H. Bush oversaw the ousting of the former US protégé, Panamanian president Manuel Noriega. A month-long military invasion called Operation Just Cause, which was launched under the pretext of protecting US interests and security in the region, ultimately resulted in the deaths of 23 US soldiers, 150 Panamanian defence forces personnel and around 500 civilians.

Trump’s argument that the Panama Canal is a “vital national asset” for the US and “crucial” for the protection and promotion of its economy and security is likely to resonate with the hawks in his administration as well as his popular base.

The US role in Latin America

The US has repeatedly intervened in Latin American countries over the past 200 years. These interventions have primarily been undertaken to stop the spread of regimes and ideologies deemed inimical to US interests.

Although these interventions violated the sovereignty of nations, they were never explicitly about the US taking over foreign territories. Rather, they were about installing or supporting a leader that was felt to be in the US interest.

During the cold war years, for instance, the US orchestrated over a dozen coups d'etat in Latin America, from Brazil and Chile to El Salvador and Grenada. But it never occupied those nations’ territories.

Nonetheless, Trump’s latest rhetoric has justifiably rattled the Panamanians. In a video posted on social media in early December 2024, the country’s president, José Raúl Mulino, said: “As president, I want to clearly state that every square metre of the Panama Canal and its adjoining zone is Panama’s and will remain so.” Panamanian officials have since called Panama’s control of the waterway “non-negotiable”.

If Trump were to go ahead and take the canal by force, it would grossly undermine the position of the US in Latin America. It would also probably prompt many worried nations in the region to pull out from the Organisation of American States, the intergovernmental institution of which most North and South American and Caribbean countries are members.

Worse still, it could also encourage many of the fearful nations to openly seek military alliances with enemies of the US, such as Russia, China and Iran – an outcome that would far from strengthen US security. So, the actual chances of the incoming Trump administration taking the Panama Canal by force looks highly unlikely in practice.

Amalendu Misra is a recipient of British Academy and Nuffield Foundation Fellowships.