Key Takeaways:

I. Reclaiming the Panama Canal would be a blatant violation of international law, specifically the Torrijos-Carter Treaties, which unequivocally transferred control of the canal to Panama.

II. Seizing the canal would inflict severe economic damage on Panama and disrupt global trade, leading to increased shipping costs, supply chain disruptions, and potential retaliatory measures.

III. Reclamation would severely damage US relations with Latin America, escalate geopolitical tensions with China, and undermine US credibility on the world stage.

Former President Trump's suggestion that the US might reclaim the Panama Canal has reignited a debate about the canal's ownership, operation, and strategic importance. While the statement may have been politically motivated, it raises critical questions about the feasibility and implications of such a move. This article examines the historical context of the Panama Canal, the legal framework governing its current operation under the Torrijos-Carter Treaties, and the potential economic and geopolitical consequences of a US reclamation attempt. By analyzing these factors, we aim to provide a nuanced and data-driven assessment of this complex issue, moving beyond political rhetoric to offer insights for expert readers.

The Torrijos-Carter Treaties of 1977 serve as the cornerstone of the legal framework governing the Panama Canal. These treaties, ratified by both the US and Panama, abrogated all prior treaties, including the contentious Hay-Bunau-Varilla Treaty of 1903. Critically, the Torrijos-Carter Treaties unequivocally transferred ownership and control of the canal to Panama, marking a significant historical shift and recognizing Panama's full sovereignty over this vital waterway. The treaties established a timeline for the gradual transfer of control, culminating in the complete handover on December 31, 1999. This transfer was not merely symbolic; it was a legally binding agreement that fundamentally altered the geopolitical landscape of the region and solidified Panama's sovereign right to manage and operate the canal.

The Neutrality Treaty, a key component of the Torrijos-Carter Treaties, guarantees the canal's permanent neutrality and ensures non-discriminatory access for all nations. This provision is crucial for maintaining the canal's function as a vital artery of global commerce, open to vessels from all countries on equal terms. While the US retains the right to defend the canal's neutrality, this right is explicitly tied to protecting the canal's open and secure operation, not to intervening in Panama's internal affairs or reclaiming control. This distinction is essential for understanding the limitations of US involvement and the emphasis on international cooperation in safeguarding the canal's neutrality.

Any attempt by the US to reclaim the Panama Canal would constitute a clear violation of international law and the Torrijos-Carter Treaties. Such a move would not only disregard a legally binding agreement but also undermine the principle of pacta sunt servanda, a fundamental tenet of international law that emphasizes the sanctity of treaties. Panama would undoubtedly challenge such an action in international courts, and given the clear legal framework established by the treaties, the US would face a formidable legal battle with little chance of success. Furthermore, the Panamanian Constitution explicitly prohibits the transfer of the canal to any foreign government or private entity, further strengthening Panama's legal position and underscoring the illegality of a US reclamation attempt.

The legal arguments against US reclamation are overwhelming. The Torrijos-Carter Treaties, ratified by both nations and recognized by the international community, provide an unambiguous legal framework that protects Panama's sovereignty over the canal. Any attempt to circumvent these treaties would not only be illegal but would also severely damage US credibility on the world stage, undermining its commitment to international law and potentially setting a dangerous precedent for other nations to disregard treaty obligations. The legal complexities and potential for protracted legal battles further underscore the impracticality and high cost of pursuing such a course of action.

Economic Repercussions: Global Trade and Panama's Economy

The Panama Canal is an economic linchpin for Panama, contributing significantly to the nation's GDP, export revenue, and employment. In 2024, the canal's direct, indirect, and induced contributions accounted for 7.7% of Panama's GDP and represented 15.9% of its total annual exports. Moreover, the canal and its related activities support approximately 55,000 jobs, equivalent to 2.9% of Panama's total employment. These figures underscore the canal's vital role in Panama's economic prosperity and highlight the potential for severe economic disruption if its operation were to be altered or interrupted.

Reclaiming the canal would not only harm Panama's economy but also disrupt global trade flows. The canal handles approximately 5% of global maritime traffic, facilitating the efficient movement of goods between Asia and the Americas, as well as between the Atlantic and Pacific oceans. A US takeover could lead to increased toll fees, operational inefficiencies, or even the temporary closure of the canal, resulting in higher shipping costs, supply chain disruptions, and delays in the delivery of goods. These disruptions would have cascading effects on businesses and consumers worldwide, potentially leading to price increases and economic instability.

While alternative shipping routes exist, such as the Suez Canal, the Cape of Good Hope, and the emerging Arctic routes, none offer a comparable combination of efficiency and cost-effectiveness for trans-Pacific trade. The Suez Canal, while suitable for some routes, is not a viable alternative for many trans-Pacific shipments due to distance and vessel size limitations. The Cape of Good Hope route significantly increases transit times and fuel costs, making it a less attractive option for time-sensitive cargo. Similarly, the Arctic routes, while potentially shorter, present logistical challenges and environmental concerns. The limited viability of these alternatives underscores the Panama Canal's unique role in global trade and the potential for significant economic disruption if its operation is compromised.

The economic fallout from a US reclamation attempt would extend beyond immediate disruptions to trade and shipping. The move would likely deter foreign investment in Panama, damage the country's reputation as a stable and reliable trading partner, and potentially trigger retaliatory measures from other nations. The long-term economic consequences for Panama could be devastating, undermining its economic growth and development prospects. Furthermore, the instability created by such a move could have ripple effects throughout the region, impacting other economies and potentially leading to broader economic uncertainty.

Geopolitical Tremors: US Influence and International Relations

Reclaiming the Panama Canal would be a geopolitical misstep with far-reaching consequences. The move would severely strain US relations with Latin American countries, many of whom view the canal as a symbol of Panamanian sovereignty and a testament to the peaceful resolution of historical disputes. It would also exacerbate tensions with China, which has been increasing its economic and political influence in the region. The canal's strategic importance makes it a focal point in the US-China rivalry, and a US attempt to reclaim control would likely be perceived as an aggressive act, potentially escalating tensions and undermining efforts to maintain regional stability. The US risks isolating itself in the region and globally by pursuing such a confrontational approach.

Beyond the immediate regional implications, a US reclamation attempt would have broader geopolitical consequences. It would undermine US credibility on the world stage, signaling a disregard for international law and treaty obligations. This could embolden other nations to challenge existing agreements and norms, potentially leading to a more unstable and unpredictable international order. The move would also damage US soft power, eroding its ability to influence other nations through diplomacy and cooperation. In a world increasingly defined by complex interconnected challenges, such a unilateral action would be counterproductive and detrimental to US long-term interests. The US should prioritize diplomacy and cooperation, working with Panama and other nations to address the canal's long-term challenges, including water scarcity and the need for modernization, rather than resorting to actions that would undermine international law and stability.

Charting a Course: Cooperation and the Canal's Future

The idea of the US reclaiming the Panama Canal is fraught with legal, economic, and geopolitical perils. Such a move would be a strategic blunder, undermining international law, disrupting global trade, and damaging US relations with key partners. Instead of pursuing this risky and counterproductive path, the US should focus on fostering cooperation with Panama and the international community to ensure the canal's continued operation as a neutral and vital artery of global commerce. Addressing the canal's long-term challenges, such as water scarcity and modernization needs, requires a collaborative approach, not unilateral action. The Panama Canal's future depends on respecting international agreements, promoting transparency, and working together to ensure its sustainable and efficient operation for the benefit of all nations.

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Further Reads

I. Torrijos–Carter Treaties - Wikipedia

II. Panama Canal Treaty of 1977

III. Milestones in the History of U.S. Foreign Relations - Office of the Historian