Trump vs Panama

The president-elect has threatened to retake the Panama Canal. Though unlikely, Panama should take him seriously.

Dec 23, 2024

President-elect Donald Trump says he wants the US to retake control of the Panama Canal. He posted the threat to social media, made comments in a speech, and then posted pictures showing the US flag over the Canal. Why would Trump make this threat?

There is a long term case by conservative Republicans that the US should have never handed over control of the Panama Canal.
There is a modern concern, some real and some overhyped, that China is gaining too much control of the canal and its infrastructure. Trump cited this threat in his speech.
To the extent this issue is debated, it usually happens in December with the anniversaries of the US handover of control in 1999 and Operation Just Cause to remove Manuel Noriega in 1989. It’s plausible Trump’s comments are timed to those anniversaries, and in a week, the whole issue goes quiet again until next December.
Trump claims Panama is overcharging US ships to transit the canal. Although all ships transit the canal at the same rate, Trump may think he can negotiate a better deal.
Perhaps he is using this threat to convince Panama to crack down on migrants. That would be odd because Mulino was already one of the most pro-crackdown presidents in the hemisphere and was eager to work with the Trump administration on the issue before the threat.
Mining interests are lobbying the incoming Trump administration to pressure Mulino to reopen the copper mine. This threat could be part of those negotiations.
Mulino and Martinelli are having issues. Last week, the Mulino government sent a note of formal protest to the Nicaraguan government over Martinelli's continued political activity from the embassy where he is hiding from corruption charges. Martinelli is a longtime ally of Trump, and perhaps there is pressure from that angle. However, Martinelli sent a note saying he fully supports Mulino and Panama’s sovereignty regarding the Canal.
More broadly, Trump seems to be leaning in favor of US territorial expansion. He has also said he wants Canada to become a state and wants to buy or trade for Greenland.

President Mulino’s statement in response to Trump says Panama will defend every inch of the canal as part of its sovereignty. Him and what army? Literally. Panama does not have a standing military. Mulino’s statement was clearly aimed at Panama’s population, trying to reassure them that he does not support any handover of sovereignty. However, in responding to Trump, Mulino also exposes Panama’s weakness on this issue. They have a limited ability to defend themselves.

One of the more concerning things about Trump’s threat - as opposed to “defeat the Mexican cartels” or “take over Greenland” or the many other threats the next US president makes - is that taking over and successfully controlling the Panama Canal is absolutely within the US military’s capabilities. The US military has done it before. That doesn’t mean the US should do it. The amount of resources and personnel would be significant (Operation Just Cause, which lasted less than two months, took about 30,000 US personnel, including those already based in Panama at the time). The political cost would be absurd and counterproductive. The risk of damage or shutdown to the Canal, a vital piece of global critical infrastructure, is high and would cause major economic chaos. Still, from a security analysis standpoint, retaking the Canal is a more plausible and realistic military objective than most of the empty, vague threats made by Trump.

So should we take Trump’s threats against Panama seriously? Yes and No. I don’t think a new invasion of Panama or a military retaking of Panama is actually the policy of the next Trump administration. Like a lot of threats made by Trump, this is a negotiation position of some sort. He wants better rates for US ships or guarantees of less Chinese influence or something else, and this threat is part of that negotiation for him. It’s more likely that Trump orders a military operation targeting Mexican cartels than Panama.

At the same time, this threat reinforces the analysis that Trump’s next will be focused on the Western Hemisphere with a coercion-first strategy of dealing with US neighbors. For Panama, this is a sign that they cannot take an alliance with Trump for granted, even though their president is ideologically closer to Trump than many others in the region. Other countries are going to see Trump’s comments on Panama and readjust their policies toward the next administration. For the region, if these sorts of threats are how Trump’s policy towards Latin America goes in the coming year (and that is not certain), it’s going to be a string of bellicose rhetoric and coercive policy that eventually explodes into a bigger controversy and challenge somewhere in the hemisphere.