On March 5, U.S. President Donald Trump restated his intention to reclaim the Panama Canal, saying, “We’re taking it back,” in an address to a joint session of Congress.
That was in spite of the fact that earlier the same day, a deal had been announced between BlackRock and Hong Kong-based CK Hutchison Holdings, granting the U.S multinational investment company control over the Balboa and Cristobal ports on the Pacific Ocean and the Caribbean Sea—a point of contention for the U.S.
The Panamanian government had hoped that this deal would scale down the diplomatic crisis with the U.S. over the canal. Instead, Trump used the deal as a measure of the success of his policy. And it seems to be a major priority for his administration: the Panama Canal was the first item in the foreign policy section of his speech, before Greenland and Ukraine.
For Panama, this looks like an escalation. And it signals the apparent failure of the government’s policy of accommodating the U.S. The lack of a concrete Panamanian response that goes beyond rhetoric is also a reflection of the country’s strategic dissonance.
Panama’s Trump strategy
After initially ignoring Trump’s bluster as president-elect, the Panamanian government moved to placate the U.S. in late December, announcing that a U.S. based company would update the feasibility studies of the Panama-David train project, originally developed by the Chinese government. After Trump took the oath of office, Panama also decided to audit Panama Ports as a further attempt to win favor with the new U.S. administration.
This policy continued with the visit of Secretary of State Marco Rubio. In his first official mission abroad, Rubio received other concessions from Panama. President José Raúl Mulino announced his country was withdrawing from the Beijing-led Belt and Road Initiative, and the U.S. claimed Panama had granted its warships free transit through the Canal, which was rejected as false by the Panama Canal Authority. In February, Panama received hundreds of deportees from the U.S., nationals of third countries, mostly from Asia.
At the United Nations, Panama abstained from a General Assembly resolution on Ukraine and backed the U.S.’s competing resolution in the Security Council, which made no mention of the cause of the war—allowing it to pass. The decision to support the U.S.-drafted resolution reflects the current strategic dissonance in Panama. After his inauguration eight months ago, Mulino pledged that Panama would use its vote on the Security Council “in accordance with the reciprocity with which international relations should be managed, knowing that we will be consistent with those countries that, on the international stage, need our vote.” If Panama and one other country had abstained, the Security Council vote would have been defeated, sending a message from the international community repudiating Russia’s war of aggression against Ukraine and, implicitly, one from Panama upholding its autonomy in relation to the U.S.
Throughout the current bilateral crisis, Panama has been reluctant to use the various mechanisms at its disposal. At the multilateral level, it has not sought recourse at the U.N. Security Council, the Organization of American States, the depositary of the Panama Canal Treaties, or before the nearly 40 member states of the Canal neutrality treaty protocol. The narrative of its top officials, such as President Mulino’s comments that “I reject, on behalf of Panama and all Panamanians, this new affront to the truth and to our dignity as a nation,” does not comport to its actions abroad.
The U.S.’s agenda in Panama
Some analysts believe Trump is simply intent on gaining further concessions from Panama, with maximalist demands serving as a negotiating tactic, but his address to Congress suggests he is serious about reclaiming direct U.S. control over the Panama Canal—and that regardless of Panama’s concessions, he will continue to work towards that end.
In any case, Panama should abandon its accommodating policy towards the U.S., which can only lead to escalating demands to banish Chinese influence, to the detriment of Panama’s national sovereignty. These demands could range from revisiting the status of the consortium constructing a fourth bridge over the Canal, to questioning Huawei’s presence in the Panamanian market. The same buyout strategy used by BlackRock in the case of Panama Ports could be replicated for the copper mine in Donoso formerly operated by First Quantum Minerals, which has among its most important shareholders a Chinese company, Jiangxi Copper.
An alternative policy for Panama is to align with the rules based international order. This includes establishing synergies with like-minded states which have been also affected by U.S. actions such as Canada, Mexico, Greenland and Denmark. The country should seek to transcend the U.S.-China binary and find alternatives for alliances, which should include partners like the European Union. In short, the way forward for Panama lies in replacing strategic dissonance with strategic clarity.
ABOUT THE AUTHOR
Alonso E. Illueca
Reading Time: 3 minutesIllueca is an associate professor and researcher at Universidad Santa María La Antigua.
