What Panamanians Have to Say about the Panama Canal

Students protest for the right to hang the Panamanian flag in the Canal Zone, circa January 1964.

They say they fought too hard to wrest it from the U.S. to now hand back the waterway, which is part of the nation’s identity.  Panama’s control of the canal that bears its name should not be returned to the United States despite President Donald Trump’s calls of “we’re taking it back,” Panamanians say.  Although most people thought the matter was closed when Panama officially took control of canal operations from the United States in 1999, the issue reared its head during his campaign when he suggested the engineering marvel that connects the Atlantic and Pacific oceans was being run by China and should return to U.S. control.  Trump repeated that claim in his inaugural speech, saying, “China is operating the Panama Canal,” and “we’re taking it back.”

Panamanian rioters cheer after hanging their country’s flag over a fence near the Ancon Elementary School, which is inside the Panama Canal Zone, 1955.

Secretary of State Marco Rubio will visit Panama during a Latin American and Caribbean tour that starts late next week.  Speaking at the World Economic Forum in Davos, Switzerland, Panama’s President Jose Raul Mulino dismissed the notion as he and other Panamanian leaders tried to gain international support this week for keeping the canal under their nation’s authority.  Among those leaders is Jorge Luis Quijano, a former canal administrator, who insists Panama is running the waterway, not China. He also disputed Trump’s complaint that U.S. ships pay more to pass through the canal than other countries.  “A ship with a Panamanian flag pays as much as an American-flagged ship,” Quijano said, adding that rates are based on a vessel’s size, and large container ships may pay as much as $1.2 million to pass through the 51-mile waterway that cuts through the Isthmus of Panama. 

Panama Canal Zone, Panama: Panamanian high school students fight with Canal Zone police over a torn Panamanian flag, January 9.

Quijano said he started working at the canal in 1975 after graduating as an engineer from Lamar University in Beaumont, Texas, when the United States still controlled it. He said Americans were the supervisors when he started, but Panamanians eventually became the managers and “the Americans retired.”  “I saw the whole movie,” Quijano said jokingly about witnessing the transition over the 44 years he worked at the canal, eventually becoming vice president of operations and leading a reconstruction effort that expanded the channel’s capacity in 2016.  Humberto Arcia, 72, who lived two miles from the canal in the Chorrillo neighborhood as a child, said he will never forget the price Panamanians paid for the right to run the canal in their own country.  The Hay-Bunau-Varilla treaty signed in 1903 gave the United States the right to build and manage the Panama Canal. Construction began in 1904 after a failed attempt by a French construction team to build the ambitious passage. 

PANAMA: Canal Zone, Visitor Of The Canal Zone At Panama

The massive project took the lives of more than 5,000 construction workers, 350 of them U.S. citizens, by the time it was completed in 1914. Most of the workers were from Caribbean nations.  Panama’s relationship with the United States was marked by riots and demonstrations opposing American involvement in the Central American nation’s affairs and control over the canal.  In 1964, anti-American riots broke out in Panama because the Panamanian flag was not allowed to fly next to the U.S. flag at Balboa High School in the U.S.-controlled Canal Zone that was attended by American students, according to the U.S. National Archives. The Canal Zone was a 10-mile concession of the United States where canal employees and their families lived. 

American students in the U.S. controlled Canal Zone stand in the balcony of Balboa High School exhibiting the American flag, on Jan. 9, 1964.

US President Franklin D. Roosevelt (center) pictured in his car with Major General Daniel E. Van Voorhis (left), Commanding General of the Canal Zone, and Rear Admiral Frank D. Sadler (right), Commandant of the 15th Naval District at Fort Clayton, during a six hour tour of army posts on the Canal Zone on February 18, 1940, They are shown visiting Fort Clayton. The president was on a fishing vacation aboard the USS Tuscaloosa, which took him to the Canal Zone in Panama.

The protests escalated and students from multiple high schools outside the Canal Zone marched to its entrance, where at least 20 people were killed in clashes with the U.S. military, National Guard and Canal Zone Police during three days of riots. The protests are commemorated each year on Jan. 9, a national holiday, known as the Day of Martyrs. Arcia, a retired banker and attorney, remembers hearing relatives of the students talk about their loss when he lived near the Canal. “Their suffering changed the lives of their families forever,” he said.

Panama: Panama Canal Zone entrance to Albrook AFB. Canal Zone.

Trump Official with Ties to Amador

Two of the people who will act as witnesses at the hearing called by Republican Senator Ted Cruz (pictured below), with the purpose of speaking about the Panama Canal and scheduled for next Tuesday, January 28, were received at the Palace by President José Raúl Mulino, just a few days after he assumed power.  These are Louis E. Sola, recently appointed president of the Federal Maritime Commission (FMC), the agency in charge of regulating the international maritime transport system of the United States (US), and Daniel B. Maffei, commissioner of this same organization.  However, the spotlight is on Sola, a former military officer specializing in counterintelligence and a businessman with interests in Panama. He is linked to the company Amador Marina, SA, to which the Ministry of Public Security gave an 11.3 hectare plot of land on the Amador Causeway for the private development of a marine landfill on Flamenco Island, at the entrance to the Panama Canal.

That’s not all. Amador Marina, SA, also has a seabed concession with the Panama Maritime Authority (AMP) and another administrative concession with the Administrative Unit of Reverted Assets (UABR), both of 20 years renewable. Sola served as the company’s legal representative until 2018. Currently, the chairman of the board is his daughter, Carolyn Sola Riley Puga, while his son, Anthony Sola Riley Puga, serves as secretary.  During the meeting between Sola and Mulino, they discussed how the conditions of the Panama Canal affect American carriers. During those days, the American businessman also met with personnel from the Panama Canal Authority (ACP) and, according to an investigation by this newspaper, the ACP approved the compatibility permits for Amador Marina to build a private marina and a breakwater.

Trump recently appointed him as FMC chairman. “I am honored that President Trump has appointed me as chairman and am grateful for his confidence in my ability to lead the Federal Maritime Commission. There are many ways the commission contributes to the competitiveness of American businesses, access to foreign markets for American ships and businesses, and the economic growth of the nation,” he said.  The hearing, titled “ Tariffs and Foreign Influence: Examining the Panama Canal and its Impact on U.S. Trade and National Security,” will address the canal’s key role in U.S. trade, challenges arising from its capacity limitations and rising tariffs, as well as “concerns” about China’s growing involvement in this strategic infrastructure. This is what is reported on the Senate Commerce Committee’s official website.  For Cruz, the Panama Canal is critical to the U.S. economy and national security, handling 40 percent of the country’s maritime container trade.

Mulino Meets the Pope and Gives Him Books about the Panama Canal

The President of the Republic, José Raúl Mulino, was received Saturday in an audience by Pope Francis, to whom he gave some volumes of the history of the construction of the Panama Canal, after the declarations of the President of the United States, Donald Trump, of wanting to regain control of it.  Mulino and Francisco spoke privately for 30 minutes and in the traditional exchange of gifts he gave him the photographic books about the Canal and a commemorative medal of the presidency, which began last July.  The Argentine pontiff gave him a terracotta work entitled “Tenderness and Love,” this year’s message of Peace, and some books.  Mulino, who is visiting Italy, also met this Friday with the Italian president, Sergio Mattarella. 

The president assured at this meeting that he will be inflexible on the issue of sovereignty over the Canal in the face of President Trump’s intentions and expressed his hope of being able to count on the support of the international community in this regard.  For its part, the Panamanian Presidency said in a statement that Mattarella stressed that the management of the Canal in Panamanian hands has been an example of international collaboration and offered him “all international support and the respect of all friendly countries, and above all the support of the West.” Mulino arrived in Rome after participating in the World Economic Forum (WEF) in Davos (Switzerland), where he said that his country has international law on its side in the face of Trump’s intentions to recover the Panama Canal.  “We have international law on our side” regarding “nationality and sovereignty” (of Panama over the Canal), on our side forever,” said the president after participating in a session at the World Economic Forum.

China Saw Opportunity in the Panama Canal as US Interest Dwindled

Over decades, a shift in US military strategy, larger carriers and the growth of commerce on the West Coast deemphasized US involvement. During the 2024 campaign at his many rallies, Donald Trump almost always mentioned the United States’ construction of the Panama Canal as evidence of the past U.S. greatness. President-elect Trump’s recent pronouncements on the Panama Canal—and China’s role in the canal’s operations—have brought a renewed focus on the “path between the seas.”  Before exploring what might happen during the second Trump Administration concerning the Canal, it would be best to understand how we got to now.

A Canal Built for War

1903-1914: President Theodore Roosevelt (pictured below in the steam shovel) negotiated with the new nation of Panama the right to build and fortify the Canal on a 10-mile strip of land through Panama. Roosevelt used the military argument to lobby Congress to build the Canal, arguing that it would allow the U.S. Navy to move between Atlantic and Pacific in a matter of a few hours rather than the weeks needed via the Straits of Magellan.

1914: The Canal is completed. Over 1,000 merchant ships pass through that year. Nonetheless, an obscure German academic, correctly identified that the political importance of the Canal was greater than its economic value. It was not built by the Americans principally as a trade route but as an instrument of war. Zadow saw the building of the canal as a serious setback for Japan, allowing Americans to fully exploit Hawaii as their base of naval operations. “The possession of the Hawaii Islands is equivalent to the mastery of the Pacific” and would cause conflict with Japan, Zadow wrote, more than 20 years before Japan’s attack on Pearl Harbor. 

PANAMA CANAL – AUGUST 15: A painting depicting the S.S. Ancon, the first ship to pass through the Panama Canal on the opening day on August 15,1914 in the Canal Zone, Panama.

WWII and Postwar Era: the Canal’s Shift from Military to Commerce

Paradoxically, World War II would ultimately reduce the Canal to an auxiliary status of both the U.S. Navy and America’s global ambitions. As aircraft carriers got bigger and bigger during and post-World War II, the Canal simply could not handle them. The locks were too small.

1950s: Driven by the strategic goal of deploying more and more carrier groups, America had developed a multi-ocean fleet navy: the opposite of what Teddy Roosevelt originally envisioned. The biggest single reason the Americans built the Canal in the first place was moot in less than 30 years. The Canal was now merely an auxiliary of the U.S Navy.  World War II also transformed the United States economy and solidified for all time the strength of both coasts, further reducing the need for the Canal. The full industrialization of the Western United States, along with the greater integration of America’s transcontinental railroads and the new Interstate Highway System, diminished the relevance of the Canal to both the U.S. government and the American economy. As historian Bruce Cummings observed, after the war “the Pacific States and much of the West were independent: in oil, steel, factories, and investment capital.” As the years went on, the Canal had less and less to do with all this.

The U.S. Looks for an Exit

The post-War era saw leaders on both sides the political aisle looking for an exit out of Panama. The U.S. lost more money every year operating it. Further, the continued presence of America’s Canal Zone in the middle of sovereign Panama made it harder for U.S. foreign policy to argue against imperialism by the Soviet Union and its satellites.  President Harry Truman, who rarely held back on sharing his thoughts, said, “Why don’t we get out of Panama gracefully, before we are kicked out? In 1956, President Dwight D. Eisenhower observed about America’s continued ownership of the Panama Canal: “The world moves, and ideas that were good once are not always good.”

1960s and ‘70s: Presidents Lyndon Johnson, Richard Nixon, and Gerald Ford each looked for ways out of Panama, yet none were willing to risk the political capital necessary to make it happen. The American trade unions that represented highly-paid U.S. workers in the Zone and key Republicans in Congress were formidable opponents.

Jimmy Carter and Omar Torrijos at the signing of the Panama Canal Treaty. ca. 16 June 1978.

1977: President Jimmy Carter was the one to finally wade in and strike a deal that garnered enough Senate support to turn over the Canal and its entire infrastructure to Panama by the end of 1999. One aspect of the agreement, however, remains in place today with no expiration date. The Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal assures the permanent neutrality of the Canal with fair access for all nations and nondiscriminatory tolls. Only Panama may operate the Canal or maintain military installations in Panamanian territory. The U.S. reserves the right to exert military force in defense of the Canal against any threat to its neutrality. This seems to be where President Trump is focusing his argument that Panama might have violated the spirit of The Treaty.

Panama Takes Over and China Moves In

The transfer of the Canal to Panama paralleled the integration of China into the world’s economy. Since the official handover in 1999, China’s rise as a global power made the Canal a logical target to increase its influence in the Western Hemisphere. Nevertheless, this was something brand new. As late as 1978, when the Canal treaties were still being negotiated, China was in the throes of the Cultural Revolution, where capitalism was the declared enemy of the people—and more than 90% of the population lived in extreme poverty.

1997: While the Canal’s transition was still unfolding and China was now part of the global capitalist system, a 25-year contract was granted to Hong-Kong based Hutchinson Ports Holdings to manage the ports of Balboa on the Pacific side and Cristobal on the Atlantic entrance. No American firms bid on the contract; and, hardly anyone in Washington noticed when Hutchinson was announced as the winner.

1999: When the official ceremony handing over the Canal to Panama took place in December 1999, the U.S. had tired of the Canal. While the U.S. was by far the biggest user of the Canal, it was less and less relevant to the American economy. Tellingly, it fell to Jimmy Carter, who had been out of office for 20 years, to represent the U.S. at the handover ceremony. The stage was now set for a new, Panamanian-run Canal with new international partners, including China.

Profitability, Expansion and China’s Growing Influence

2000-2005: It is not hyperbole to say that Panamanian management of the Canal since 2000 has been nothing short of remarkable. In the years after the Panama takeover, the Canal has broken records in tonnages, income and profitability. Critical to this initial success was the establishment of global operating standards for the Canal.  Immediately after taking over, the Panamanians sought to meet the requirements for earning the ISO-9001 designation: the international standard that specifies requirements for a quality management system (QMS). Under the United States, the Canal had never achieved the ISO-9001 standard. The Panamanians understood achieving it would prove to the world that the Canal was operating at full efficiency with the highest levels of quality assuredness. Further, ISO-9001 validation would allow for the Panamanians to expand the Canal’s offerings to a larger market with regular price increases, which would lead to greater tonnage each year and, ultimately, increased revenues.


Reaching the ISO-9001 threshold in 2001 immediately opened up enhanced communication with the Canal’s stakeholders and clients around the world. A “dialogue of equals” now existed with shipping companies, cargo importers and exporters, producers, and the ports that the ships use. The results spoke for themselves: between 2000 and 2005, when the Canal was completely under Panamanian control, it was able to pass on $1.822 billion to the government to bring improvements to the people of Panama, a figure nearly equal to what was contributed to Panama during the previous 86 years of U.S. management. All of this laid a foundation of trust in the Panamanians’ management of the Canal, which would serve well the cause of any future expansion plans. At the same time, the Canal Authority launched a detailed, publicly available series of business; engineering, environmental and archeological studies that explored various aspects of what a Canal expansion would look like.


2006: The Canal Authority presented to Panamanian citizens the proposal for the expansion of the Canal through the construction of a third set of locks. The people voted 77% in favor of the expansion.

2007: With a blast at Cerro Paraíso on the Pacific side, work began on the expansion of the Canal. A Spanish/Italian consortium was awarded the contract to design and build the new set of locks.

2016: The expansion of the Canal and its operations, allowing for larger vessels to transmit the lock system, were completed. The first container ship to pass through expanded Canal was Chinese-owned: the COCSO PANAMA. The ship entered the locks on June 26, marking the official opening of the expanded canal.  That same year, China acquired the management contract of Margarita Island of the Colon Free Trade Zone on the Atlantic side of the Canal. This deal established the Panama-Colón Container Port (PCCP) as a deep-water port for megaships.

2017: The Panamanian government severed ties diplomatic ties with Taiwan and fully recognized China. This opened-up Panama’s eventual entry into China’s “Belt Road Initiative” in 2018, when it became the first Latin American country to sign. In 2021, under the failing Panamanian administration of Laurentino Cortizo–and despite significant domestic and international opposition–the contract with China’s Hutchinson Ports was renewed for another 25 years.

All of the Panama Canal expansion activity in the early 2000s almost fell flat on its face. It was built on the expectation of ever-increasing container imports coming from China into the U.S. on even-bigger ships: many of them transiting the new locks of the Canal. That traffic never materialized.  Container traffic through the Canal has remained flat for years. Yet, something more substantial and unforeseen emerged: the American shale energy revolution, bringing with it the need to transport liquefied natural gas from the U.S. to all over the world. No one saw this opportunity coming, but with the Canal improvements, the Panamanians put themselves squarely in a position to benefit. If luck is when opportunity meets preparation, then we’ll call the Panamanians lucky. 


In 2016, the first liquefied natural gas (LNG) carrier made its journey through the Canal. Thanks to the expansion, the Canal could accommodate 90% of the world’s LNG tankers—majorly impacting global LNG flows.  The Canal offers significant reductions in voyage times for vessels departing the U.S East and Gulf Coasts for Asia, making U.S. gas deliveries to major Asian importers such as China, India, Japan and Korea more competitive. Vessels departing the U.S. Gulf Coast for the West Coast of South America similarly experience generous time savings. LNG ships from production plants in Trinidad and Tobago through Chile for re-gasification, saving six days in transit time compared to the historic route through the Magellan Straits around Cape Horn.

Trump, China, and the Canal Today

When the Canal treaties were negotiated nearly 40 years ago, no one could have foreseen China’s global rise or the American shale energy revolution. Yet, today, both are shaping the current and future global power structure, and that of the Canal. As President Trump previously sought to renegotiate other deals which had their origins many decades previous (NAFTA, NATO, etc.) the original deal on the Canal with Panama seems inevitable for a revisit.  If this is the case, what will it mean for the users of the Canal? To that question: likely not much at all. The Canal’s increasing importance to all parties makes it very hard for anyone, even a U.S. President, to alter the day-to-day operations of the Canal. Behind the scenes, however, things could change significantly.


It would be hard to imagine a scenario where the U.S. mobilizes military force to enforce the Canal’s neutrality. First of all, the definition of neutrality is a legal one and subject to interpretation. Does Panama’s ongoing integration of international partners to improve and operate the Canal—most critically China—violate the spirit of neutrality? That would be a tough argument to prove.  On the other hand, might the U.S. use a carrot-and-stick on Panama to have it reconsider the relationships with China and move closer to the U.S? This is more likely.  As the biggest user of the Canal, the U.S. could cajole Panama to “reconsider “some of its current partners in the future and replace them with partners more favorable to the U.S.


A more feasible option might be to provide government incentives to U.S. firms when bids at the Canal open up. Such an approach is not an outlier. The U.S. government has historically provided generous subsidies to American firms who do business in places vital to national security. For example, the Export-Import Bank of the United States (EXIM Bank) has the Transportation Security Exports Program (T-SEP). This initiative provides enhanced financing support to programs that bolster the security of systems that support the movement of passengers and cargo between countries.


Another issue at the top of the Panama / U.S. agenda is illegal immigration. As President Trump quickly moves to secure the U.S. border, he will also be looking to reduce the migrant inflows into Mexico to reduce pressure there. Since 2021, an estimated 1.5 to 2 million migrants (including several hundred thousand Chinese nationals) have walked through the extremely dangerous Darien Gap from Colombia into Panama, and then headed north towards the U.S. The new President of Panama, Raul Mulino, has promised to secure his eastern border. While foot traffic appears to be slowing, gaps remain. A negotiated deal between the two nations on the future of the Canal will surely include illegal immigration.


Finally, it would be wise to pay attention to what candidate Trump said on the campaign trail over the past year. His closing remarks at the rallies that defined his campaign almost always included “digging out the Panama Canal” as a shining example of what had made America great.  Coming from Trump the developer and builder, this should be no surprise. In the end, it seems President Trump’s personal affinity for the Panama Canal, along with the issues of rising Chinese influence and immigration reform, will keep the Canal near the front page for years to come.