‘Not negotiable’: Panamanian President reaffirms sovereignty over Panama Canal after Trump threats

PANAMA CITY - Panama’s President rebuffed US President-elect Donald Trump’s threat to reimpose US control over the Panama Canal, saying its shipping tolls are not inflated and that sovereignty over the waterway is not negotiable.

“Every square metre of the Panama Canal and its adjacent zones is part of Panama, and it will continue to be,” President Jose Raul Mulino said in a video statement on X, the social media platform, on Dec 22. 

Mr Mulino’s defence of Panamanian control over the key commercial waterway shows how Trump is already exerting global influence after

he suddenly brought control over the canal into play over the weekend,

decrying “ridiculous” transit fees for US vessels and alleged Chinese encroachment on the route.

Trump’s diplomatic hardball –

less than a month before his inauguration

– represents a new front in his attempt to ratchet up pressure on trading partners.

Mr Mulino said the canal’s tolls are not excessive. Citing US-Panamanian treaties, he said the canal is controlled exclusively by Panama and is not influenced by China, Europe or the US.

“Our country’s sovereignty and independence are not negotiable,” he said. Canal tolls are established transparently, based on operating costs and market conditions, he said.

China does not control the canal, though a Chinese company – a subsidiary of Hong Kong-based CK Hutchison Holdings – controls two of the five ports adjacent to the canal, one on each side.

Under Panama’s Constitution, the canal is managed by the Panama Canal Authority, with some of the tolls going into the national treasury. The authority announced last week that it had deposited nearly US$2.5 billion (S$3.39 billion) in the last fiscal year. 

And China’s influence has been growing in the region. In 2017, Panama severed diplomatic ties with Taiwan and declared that there was “only one China”.

The 82km canal connecting the Atlantic and Pacific oceans is a major strategic asset – and has been a choke point for global trade as Panama has suffered a prolonged drought that has impeded crossings.

Trump repeated his complaints in a speech in Phoenix on Dec 22 before Mr Mulino’s response, saying the canal – built by the US at the beginning of the last century and returned to Panamanian control in 1999 – was “falling into the wrong hands”.

“It’s not for China or any other country to manage,” Trump said. “You see what’s going on there? China.”

While not making any specific demands, Trump’s statement served as a warning that the US reserved the right to “demand that the Panama Canal be returned to us, in full, and without question”. 

Mr Mulino suggested that Trump’s comments were out of line.

“Panama respects other nations and demands respect,” he said. “The canal will remain in Panamanian hands as an inalienable patrimony of our nation.” BLOOMBERG