When the President of Panama laid a wreath in memory of those who lost their lives protesting the U.S. occupation 60 years ago, event attendees showed their determination.
This month’s commemoration comes just days after President-elect Donald J. Trump falsely claimed China controls the Panama Canal and suggested it could use military force to retake the waterway.
The threat has rippled through a country still reeling from a 1964 incident in which students trying to plant the Panamanian flag in the U.S.-occupied canal zone faced lethal force.
“My brother did not die in vain,” said Carlos E. Bonilla Cacó, whose brother was killed in protests that sparked a movement that led Panamanians to regain their sovereignty.
The country’s leader agreed.
At the foot of the mountain near the Panama Canal Authority offices, President Jose Raul Mulino took a firm stand. “The canal is Panama’s and always will be,” he said.
The statement directly challenged President Trump, who said it would only pressure Panama to lower fees on U.S. goods passing through the canal, a topic the president has criticized recently.
But former U.S. officials have warned he could alienate Panama as China seeks to enlist it as an ally and expand its influence in Latin America.
“Trump’s threat of force could undermine the Panamanian government’s aspirations to expand its relationship with the United States economically,” said John F. Trump, who served on the National Security Council until September and is now a managing director at Actum, a global consulting firm. Director Ramon Escobar said:
“He might push them out when there is a real opportunity to get Panama back on track,” Mr. Escobar said.
The canal was built by the United States in the early 20th century, but Panama regained full control in 1999 and has been operating the waterway through the Panama Canal Authority.
Today, Panama has special strategic importance to China because of the canal, but China has sought to further expand its influence in Latin America and the developing world. The United States portrayed itself as an alternative to American hegemony and bullying, portraying itself as a more sympathetic and fellow developing country.
And by investing heavily in building ports around the world, China is well positioned to influence global commerce and monitor international activity.
In particular, U.S. officials are increasingly concerned about two ports at either end of the Panama Canal that have been operated for decades by Hong Kong-based company CK Hutchison Holdings.
Although CK Hutchison is a publicly traded conglomerate majority-owned by a Hong Kong billionaire family, the Chinese government can still use the national security law to force the company to support intelligence gathering or military operations.
But Panamanian officials insist China poses no risk. The canal is open to the public, so Chinese interference will be highly visible, they say.
“Anyone can use satellites to see what’s going in and out of the port,” Ilia Espino de Marotta, deputy director of the Panama Canal, said in an interview last week. “The canal runs through the country along the national highway and is open to the public.”
John Feeley, who served as U.S. ambassador to Panama from 2015 to 2018, said that during his first administration, Trump referred to the Panama Canal internally, suggesting he viewed the waterway as unfinished business.
In June 2017, Mr. Trump met with then-Panamanian President Juan Carlos Varela and complained that the U.S. Navy was paying too much to cross the canal, Mr. Feeley said. (The cost would be so minuscule that it would amount to a rounding error in the Pentagon’s budget, analysts say.)
But Mr. Trump never mentioned China’s presence or influence on the canal, even just weeks before Panama severed ties with Taiwan and allied with China, said Mr. Feeley, who attended the White House summit.
The former ambassador said the White House tried to keep the focus on China’s growing influence in Panama, but the problem never grew to the level of serious alarm.
At the time, China pledged to invest in Panama’s high-value infrastructure items, including canal bridges, as part of its Belt and Road Initiative. Through this plan, China has expanded its global influence by investing in ports, roads and trains from Kenya to Sri Lanka and, most recently, Latin America. Critics say China uses the program to saddle foreign governments with failed projects or unsustainable debt in a bid to exert Chinese influence.
Mr. Feeley said he had tried to get American companies to bid on such projects to counter China. But the U.S. Embassy in Panama City never got the support of the White House to persuade U.S. companies to bid, he said.
“We are not losing to China in Latin America. Most of the time we don’t even show up on the commercial battlefield,” Feeley said.
Latin American governments like Panama have complained that the United States is often absent when bidding on expensive infrastructure projects, forcing them to rely on other countries from Europe to China to get the work done.
“The United States is not bidding on large infrastructure projects here, but China is,” said Giulia de Sanctis, president of the Panama Business Management Association. “Should I tell them this now? ‘It’s time to leave Panama. Trump doesn’t like you. So does anyone feel safe investing here?”
The Panama Canal Authority says while the United States built the canal for military purposes, the Panamanians developed it into a major hub for global trade.
After it was handed over to the U.S. military, authorities invested more than $5 billion to expand the waterway and accommodate large cargo ships traveling to East Asia, the most popular shipping route from the United States.
“Without our investment, this canal would have been irrelevant to the volume of world trade,” said Espino de Marotta.
“Our neutrality is our greatest business asset and allows us to be a conduit for global commerce,” she said. At the canal’s Atlantic mouth, three separate ports are operated by companies based in Hong Kong, Taiwan and the United States, she said.
He added, “These ports have been managed by Hong Kong since 1997, during President Trump’s first administration.” “Trump didn’t say anything about it then, so why now?”
Some Panamanians are reluctant to see China investing more in the country. Mr. Varela moved Panama’s diplomatic recognition from Taiwan to China and signed several business agreements with China, but subsequent governments have sought to scale back those commitments.
Ramon Martinez, who served as Commerce Minister after Varela resigned, expressed discomfort with the political and economic agreements the previous government signed with China. He said he had suspended the free trade agreement being negotiated with China. A bridge over the canal that China had promised to build was also halted.
Mr. Martinez emphasized that Panama’s most important ally will always be the United States.
Last week, hundreds of tourists gathered on the terrace of the Miraflores Visitor Center to get a bird’s eye view of the Panama Canal. They waved as towering cruise ships passed through the canal.
“It made me laugh at first, it was so crazy,” Jacqueline Williams said of President Trump’s threats against Panama while waving at a passing cruise ship. The 67-year-old non-profit educator was visiting the canal in New York City.
“But then you would think this is someone who idolizes Putin,” she said, referring to the Russian president. “Trump said on the campaign trail that he wanted to restore world peace, but now he is threatening military expansionism.”
Alex E. Hernández contributed reporting from Panama City. Vivian Wang in beijing and Emiliano Rodriguez Mega From Mexico City.
