In his opening statement, Sen. Ted Cruz (R-TX) brought up the issue of foreign influence in the canal.
“The United States paid for and built the Panama Canal, but Panama is treating America unfairly and ceding control of key infrastructure to China,” Cruz, the Committee Chairman, said.
The United States owned and operated the Panama Canal from its completion in 1914 until 1977. That year, President Jimmy Carter signed a treaty gradually transferring control of the canal to Panama under the condition that it would remain neutral. Panama took full control on Dec. 31, 1999.
In recent years, however, China has exerted more influence on the canal, with Panama allegedly charging them lower rates for passage than they do for American shipments.
Federal Maritime Commission Chairman Louis Sola was the first to testify before the committee.
“Chinese companies have been able to pursue billions of dollars in development
contracts in Panama, many of which were physical infrastructure projects, some on or adjacent to
the Panama Canal,” he said. “No bid contracts were awarded, labor laws were waived, and the Panamanian people are still waiting to see how they benefitted.”
Sola said the United States needs to increase support for American businesses wishing to do business in Panama.
“Chinese companies must not be the sole bidders on contracts,” he said.
Although the President of Panama denied any wrongdoing, Sola said he believes the Chinese government is engaged in corruption with Panama.
“Communist officials are known to bribe other officials around the world,” he said. “No offense to Panama, but they don’t have the greatest reputation of officials who aren’t on the take.”
Eugene Kontorovich, senior research fellow at the Heritage Foundation, also examined the issue of neutrality at the canal.
According to Kontorovich, it is important to determine the extent of Chinese influence in Panama.
“If Panama signed a treaty with the People’s Republic of China, whereby the latter would operate the Canal on Panama’s behalf, it would be a clear violation of the treaty,” he said. But what if Panama contracted for port operations with a Chinese state firm? Or even a private firm? The Suez Canal Company was itself a private firm in which the United Kingdom was only a controlling shareholder, and yet it was understood to represent Anglo-French control over the Canal.”
Although Chinese businesses have not blocked passage through the canal yet, Cruz said China is slowly building bridges at each end of the canal, which would give the Chinese government the option to block passage whenever they choose.
In the event of a war, the Chinese government’s ability to control passage through the canal could drastically alter the balance of power.
Although there is evidence pointing toward Chinese influence in Panama, President Trump must be careful when addressing Panama due to its president’s claims of innocence.
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A tariff threat, like in Colombia, could work, but it may also backfire unless the Trump administration can show sufficient proof of violations. Also, Panama is a smaller trade partner with the U.S. than Colombia, and a tariff would have less impact.
Trump has stated that he will work to restore the Panama Canal to American control. Given the importance of the Panama Canal to U.S. Commerce, Trump must do everything he can to restore integrity to operation of the canal, whether it is regaining it for the U.S. or enforcing the neutrality treaty on Panama.
This article was originally published at www.washingtonexaminer.com
