Image Source: PBS News.
One of the founding passages in international relations is the Melian Dialogue in Thucydides’s Peloponnesian Wars. It’s a conversation between Athens, a strong military power at the time, and the island of Melos, a small and weak power that relied for its survival on lofty ideals and the favor of the gods. The Athenians, demanding submission from the Melians, remind them: “The strong do what they can and the weak suffer what they must.” In other words, might makes right. The Melians turned down the demand, to their detriment. The Athenians slaughtered them. Might makes right is a theme that recurs frequently in history. The Dialogue comes to mind in the recent diplomatic spat between the United States and Panama over the issue of Chinese presence in Canal port operations.
The United States and Panama have a unique bond. Nearly a century of American presence in the old Canal Zone and extensive intermarriage resulted in many dual citizenships and a cosmopolitan population. Canal pilots – essential for guiding ships through the Canal – are still educated at the U.S. Merchant Marine Academy. As a result, Panamanians are generally pro-American, and the leadership class is highly educated, many with degrees from American universities.
The Canal is one of the world’s most important maritime routes, connecting the Atlantic and Pacific Oceans. Since 1999, Panama has had complete control, thanks to the Torrijos-Carter Treaties. These agreements also guarantee the Canal’s neutrality and give the U.S. the right to intervene if that neutrality is at risk. Lately, though, President Donald Trump has been vocal about his concerns over China’s growing presence around the Canal, even hinting that the U.S. might take back control with military force. Naturally, Panama has pushed back hard, insisting on its sovereign rights over the Canal and shock over the proposal.
Strategic and Economic Impact
How valuable is the Canal to U.S. trade? Maritime trade accounts for 69 percent of U.S. trade. The U.S. is the largest user of the waterway, accounting for approximately 73 percent of total cargo transiting . The Canal handles nearly 6 percent of total global trade. The Canal has become increasingly important for U.S. energy exports, particularly natural gas (LNG) and crude oil. The expanded Neopanamax Locks accommodate larger LNG tankers, enhancing Canal’s role in global energy markets.
The likeliest interruption or slowing down of Canal traffic will be due to climate change. The Canal operates with fresh salt-free water, a delicate environmental and engineering factor. The annual reduction in rainfall within the Lake Gatun catchment area has resulted in a slowdown in traffic and an increase in shipping costs. Per the Treaty of Permanent Neutrality, American naval vessels go to the head of the line in time of crisis. The Navy has paid $17 million in total in fees since 2015, that is 0.000021 percent of the Pentagon’s annual budget. The Canal is of minor military strategic value, because technological advancements in warfare made the Canal obsolete after World War II. The value of the Neutrality Treaty is further demonstrated by the fact that Panama Canal officials are not allowed to discuss the strategic military value. They are strictly focused on efficient and safe operation of the Canal.
Moreover, moving forces in both directions through the Canal is no longer imperative because the United States has a two-ocean Navy and sophisticated technology to shorten operational distances and time. While the Canal shortens trade routes, alternatives exist, even if they take longer and cost more. One of these would be intercontinental rail traffic in the United States. Unfortunately, in some circles the Canal is still called “vital” for the America economy and defense. It has become a buzzword, a clarion call, to link strategic necessity with partisan political purposes.
In one of the most bizarre diplomatic scenes in American diplomatic history, on February 2, 2025, the visiting Secretary of State Marco Rubio, informed the President of Panama, José Raúl Mulino, “The president’s been pretty clear he wants to administer the canal again.” Note that “he,” not “the United States,” wants to administer the Canal again – a strange locution for a democracy. Your house guest announces his intention to take away your most valuable real estate, implying the possibility of using military force to do it. He then softens the offer: “Obviously, the Panamanians are not big fans of that idea.” This is not quite the Nazi Anschluss of Austria in 1939. It’s gunboat diplomacy, recalling the Athenian threat to the Melians. With President Donald Trump pushing an aggressive foreign policy, the visit underscores the tricky relationship between the U.S. and Panama and the broader geopolitical struggles.
Rubio’s Diplomatic Moves
During his meeting with Mulino, Rubio laid out the U.S. administration’s concerns about China’s involvement near the Canal. He called the current situation “unacceptable” and suggested the U.S. might act if changes weren’t made quickly. Mulino responded by promising a reevaluation of Panama’s engagement with China. Despite these attempts at diplomacy, Trump doubled down on his threats. Because of the asymmetry in power between Panama and the United States, the coercive diplomacy of implied threats worked.
Could the U.S. Really Take Back the Canal?
How could Trump “administer the Canal again,” what would it take? Tariffs, his favorite tool to make foreign governments genuflect, won’t suffice. An invasion to reestablish American control of the Canal might, but with unacceptable costs. It would require a very expensive military operation, including stationing a permanent force of at least a brigade (3,000 to 5,000 personnel), with elements from the Army, Navy, Marines, and Air Force. It costs over three billion dollars a year to operate a U.S. Army brigade. Add the huge costs of building new facilities in the Canal area. In addition, Panama, a friend and ally of the United States for decades, would become the enemy whose people might resort to violence to threaten and perhaps attack American soldiers and civilians. The global backlash would be severe, tarnishing the U.S. reputation, especially since its last military intervention in Panama – Operation Cause in 1989 – was to remove a dictator. Additionally, an invasion of Panama would undermine U.S. credibility vis-à-vis the Russian invasion of Ukraine—an incursion the U.S. has roundly condemned and mobilized global action against. Would the American public support an invasion and prolonged occupation that lack a clear moral justification? Probably not!
From a legal perspective, the ratification debates in the U.S. Senate approved several reservations that circumscribed the U.S. right to intervene only “If the Canal is closed or its operations are interfered with…” and any such intervention “shall not have as its purpose or be interpreted as a right of intervention in the internal affairs of the Republic of Panama or interference with its political independence or sovereign territory.” It is difficult to imagine a scenario in which alleged violations of the Neutrality Treaty could be used as pretext to intervene militarily against the sovereignty of a democratically elected government that has demonstrably not compromised the regime of neutrality.
What About China?
China’s role in Panama has been central to Trump’s threats. While Chinese companies have secured port contracts near the Canal, there’s no evidence that they control its operations. Those who point to potential Chinese covert or military operations against the Canal, ignore the fact that China is the second largest user of the waterway and has little incentive to disrupt operations. Sure, in case of a global conflict with the United States, China might try to use assets in Panama and elsewhere in the region to disrupt U.S. commerce. But in that highly remote scenario the United States would no doubt be justified to use maximum lethality against an aggressor. However, such belligerent actions would almost certainly undermine Chinese diplomatic and economic engagement in Latin America.
Panama has repeatedly assured the world that the Canal remains neutral, and it’s even taking steps to ease U.S. concerns by auditing Chinese-linked companies, reconsidering, and terminating some current and future agreements. Panama is trying to walk a fine line – maintaining its sovereignty while balancing relations with China and the U.S. The geopolitical reality in Panama City is that the United States-Panama partnership is far more valuable than Chinese port operations.
Final Thoughts
Rubio’s visit to Panama highlights the delicate dance between protecting national interests and respecting the sovereignty of key allies. The Panama Canal plays a significant role in global trade, but any aggressive move by the U.S. would have serious consequences. The mere threat by Rubio has shocked Latin America. The Organization of American States (OAS) Secretary General and multiple leaders across the region have expressed support for Panama’s management of the Canal. While concerns over foreign influence are legitimate, an innovative strategy involves diplomacy, upholding international agreements like the Torrijos-Carter Treaties, and working with Panama to keep the Canal neutral. In the end, maintaining strong U.S.-Panama relations is far more valuable than aggressive posturing by modern Athenians.
Orlando J. Pérez is a Professor of Political Science at the School of Liberal Arts & Sciences at the University of North Texas at Dallas. You can find him on Twitter at: @perez1oj.
Gabriel Marcella is a Distinguished Fellow at the United States Army War College, Carlisle, Pennsylvania. He has written extensively on Latin American security and US policy. During his career he has also been a consultant to the Departments of State and Defense.
