Why is the US taking back the Panama Canal and can they actually do that?
So in case you missed it, one of the world’s most important shipping lanes is going through a major change.
American asset management giant, BlackRock, has agreed to buy two ports in the Panama Canal from a Hong Kong-based firm. This is significant because Donald Trump has been saying the US plans to “take back” the Panama Canal.
Quick history lesson, the United States built the canal in the 1900s and ran it until 1977 when the US signed a treaty agreeing that Panama would take it over. The transfer was completed in 1999, and since then, Panama has managed the canal through the Panama Canal Authority.
But! During his second campaign, President Donald Trump started saying that Panama was charging American ships too much to use the canal, and he was worried that China had too much control over it, which could hurt US interests.
The US is the largest user of the Panama Canal. Each year, about 73 percent of the canal traffic is US imports and exports. Forty percent of all US container traffic travels through the Panama Canal.
And just to be clear, there is no evidence to support the claim that China controls the canal. Other than the fact that two of the ports were operated by a company based in Hong Kong.
Now we have BlackRock, an American company, shelling out 22 point 8 billion US dollars to purchase those two ports at either end of the canal.
So Panama still technically owns and manages the canal, but BlackRock and in turn, America do now control critical parts of its infrastructure.
Taking full control would mean going back on the Treaty and I’m not sure if that’s something the US wants to do. But I mean if Trump can change the Gulf of Mexico to the Gulf of America, anything is possible.
And that’s the bottom line.
What do you think about this news?