The Republican-led Senate has initiated a formal hearing to address concerns over Panama’s alleged violations of the Panama Canal treaties.
The hearing, titled “Fees and Foreign Influence: Examining the Panama Canal and Its Impact on U.S. Trade and National Security,” was convened by Senator Ted Cruz (R-Texas), Chairman of the Senate Committee on Commerce, Science, and Transportation.
The Panama Canal, a testament to American engineering prowess, was constructed with immense effort and sacrifice. Over a decade of labor, the United States invested nearly $400 million—equivalent to over $15 billion today—and the project claimed more than 35,000 lives. Completed in 1914, the canal has been an invaluable asset, significantly reducing maritime travel time between the Atlantic and Pacific Oceans.
However, in 1977, President Jimmy Carter signed treaties that transferred control of the canal to Panama by the end of 1999.
In December, Trump warned that the United States could seize back the Panama Canal unless the country agreed to lower its costs and counter Chinese influence.
In a post on Truth Social, the incoming president urged the Panamanian government to start taking care of the canal or face the consequences.
He wrote:
The United States has a vested interest in the secure, efficient, and reliable operation of the Panama Canal, and that was always understood. We would and will NEVER let it fall into the wrong hands! It was not given for the benefit of others, but merely as a token of cooperation with us and Panama.
If the principles, both moral and legal, of this magnanimous gesture of giving are not followed, then we will demand that the Panama Canal be returned to us, in full, and without question. To the Officials of Panama, please be guided accordingly!
Trump later followed up with another post explaining its role preserving America’s economic and national security:
The Panama Canal is considered a VITAL National Asset for the United States, due to its critical role to America’s Economy and National Security. A secure Panama Canal is crucial for U.S. Commerce, and rapid deployment of the Navy, from the Atlantic to the Pacific, and drastically cuts shipping times to U.S. ports.
The United States is the Number One user of the Canal, with over 70 percent of all transits heading to, or from, U.S. ports. Considered one of the Wonders of the Modern World, the Panama Canal opened for business 110 years ago, and was built at HUGE cost to the United States in lives and treasure – 38,000 American men died from infected mosquitos in the jungles during construction.
Teddy Roosevelt was President of the United States at the time of its building, and understood the strength of Naval Power and Trade. When President Jimmy Carter foolishly gave it away, for One Dollar, during his term in Office, it was solely for Panama to manage, not China, or anyone else.
It was likewise not given for Panama to charge the United States, its Navy, and corporations, doing business within our Country, exorbitant prices and rates of passage. Our Navy and Commerce have been treated in a very unfair and injudicious way.
The fees being charged by Panama are ridiculous, especially knowing the extraordinary generosity that has been bestowed to Panama by the U.S. This complete “rip-off” of our Country will immediately stop….
Panama’s president fired back at Trump in a video statement.
“As President, I want to express clearly that every square meter of the Panama Canal and its adjacent zone belongs to Panama and will continue to do so,” Mulino said in a video statement. “The sovereignty and independence of our country are not negotiable.”
“The Canal is not under direct or indirect control, neither by China, nor by the European Community, nor by the United States, nor by any other power,” Mulino said. “As a Panamanian, I strongly reject any manifestation that distorts this reality.”
Recent developments have intensified these concerns. According to Sen. Ted Cruz, Chinese state-owned enterprises have secured control over critical port facilities at both entrances of the canal and are involved in constructing infrastructure projects within Panama.
This situation grants China potential leverage over this vital waterway, posing a direct threat to U.S. strategic interests.
Moreover, the Panama Canal Authority has imposed substantial increases in transit fees, disproportionately affecting American vessels, which account for nearly three-quarters of canal traffic. U.S. Navy ships are subjected to additional charges exclusive to warships, and American consumers bear the brunt of these costs through elevated prices for goods.
The hearing will address these concerns over Panama’s adherence to the Neutrality Treaty, which mandates the canal’s impartial operation.
Senator Cruz criticized Panama for “ceding control of key infrastructure to China,” suggesting a potential breach of treaty obligations.
Sen. Ted Cruz:
President Carter struck a bargain. He made a treaty. President Trump is making a serious and substantive argument that that treaty is being violated right now.This committee has jurisdiction under the Senate rules over the Panama Canal, and today we will examine evidence of potential violations. President Trump has highlighted two key issues. Number one, the danger of China exploiting fighting or blocking passage through the canal, and number two, the exorbitant costs for transit.
[…]
While President Trump has rightly focused on these key issues, there are additional problems. In the last two years, the Canal Authority generated record revenue, even while transits were depressed by drought conditions.
The only comfort to delayed and overcharged ships is that Panama may invest in more freshwater reserves in the future. Even as it takes advantage of the global maritime system, Panama has emerged as a bad actor.
Panama has, for years, flagged dozens of vessels in the Iranian Ghost Fleet, which brought Iran tens of billions of dollars in oil profits to fund terror across the world.
Chinese companies have won contracts, often without fair competition. As the infamous Belt and Road initiative has come to Panama, China often engages in debt trap diplomacy to enable economic and political coercion. In Panama, it also seems to have exploited simple corruption.
WATCH:
.@SenTedCruz on the Panama Canal: “With the passage of time many have lost sight of the canal’s importance both to national security and to the U.S. economy. Not President Trump.” pic.twitter.com/utXqNv0mbw
— CSPAN (@cspan) January 28, 2025
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