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Trump Suggests Retaking Panama Canal; Panama's President Strongly Rejects

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Former U.S. President Donald Trump stirred international controversy on Sunday, December 22, 2024, by suggesting his administration might attempt to regain control of the Panama Canal, which the U.S. relinquished to Panama in 1999. Calling the decision to hand over the canal “foolish,” Trump criticized the “ridiculous” fees charged to shippers for using the vital waterway connecting the Atlantic and Pacific Oceans.

Panama Pushes Back

Panama’s conservative President José Raúl Mulino swiftly dismissed Trump’s remarks as an affront to his nation’s sovereignty. In a video statement, Mulino declared, “Every square meter of the canal belongs to Panama and will continue to belong to Panama.” Without naming Trump directly, he defended the canal’s pricing structure, explaining that fees are determined by experts based on operational costs and global market factors.

Mulino, elected in May on a pro-business platform, is known for his alignment with certain Trumpian policies. However, he drew a clear line on this issue, emphasizing Panama’s ownership of the canal as a matter of national pride and economic necessity.

Historical Context

The Panama Canal, a critical artery for global commerce, was built by the U.S. in the early 20th century and operated under American control for nearly a century. In 1977, President Jimmy Carter signed a treaty transferring control of the canal to Panama, effective December 31, 1999. This transition marked a pivotal moment in U.S.-Panama relations and reinforced Panama’s sovereignty over the strategic waterway.

Despite this history, Trump hinted at reversing the treaty, stating, “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 the United States of America, in full, quickly, and without question.” He offered no specifics on how such a move could be achieved.

Economic and Environmental Challenges

The Panama Canal is vital to Panama’s economy, generating approximately 20% of the government’s annual revenue. However, the waterway has faced challenges, including significant disruptions caused by Central American droughts in 2023. These droughts forced canal administrators to reduce daily ship crossings and increase fees for reserved slots, a decision that drew criticism from international shipping companies.

While canal operations have largely normalized with the return of favorable weather, higher fees are expected to persist into the next year to offset past losses. Trump's criticism of these fees as "ridiculous" appears to have struck a chord with his supporters, even as it has drawn rebukes from Panama.

Political Backdrop

Trump’s comments came during a rally at Turning Point USA’s AmericaFest in Arizona, his first major public appearance since securing the presidency in the November 5 election. The event was marked by his pledge to revive the U.S. economy, secure borders, and address ongoing conflicts in the Middle East and Ukraine.

“I can proudly proclaim that the Golden Age of America is upon us,” Trump declared, emphasizing his vision for a resurgent nation under his leadership. However, his remarks about the Panama Canal have sparked a diplomatic dispute, underscoring potential challenges in U.S.-Latin America relations during his administration.

The incident highlights the complexities of balancing nationalist rhetoric with international diplomacy, as Trump’s remarks resonate domestically but risk alienating a key U.S. ally in the region.

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