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General Studies 2 >> International Relations

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PANAMA TREATY

PANAMA TREATY

 
1. Context
 
On December 22, 2024, Donald Trump threatened to take back the Panama canal, calling the transfer treaty “foolish”. He said, “Our Navy and Commerce have been treated in a very unfair and injudicious way....we will demand that the Panama canal be returned to us, in full, and without question.” Panama’s President José Raúl Mulino rejected Trump’s threat, and said, “I want to express precisely that every square metre of the Panama canal and its adjacent area belong to Panama, and will continue to belong to Panama.”
 
 
 
2. What is the US-Panama Treaty?
 
  • The Panama Treaty, more formally known as the Torrijos-Carter Treaties, is a pair of agreements signed on September 7, 1977, between the United States and Panama.
  • These treaties were historic because they marked the transfer of control over the Panama Canal from the United States to Panama and laid the groundwork for the eventual end of U.S. jurisdiction in the canal zone.
  • The treaties were named after the leaders of the two nations at the time: General Omar Torrijos, the military leader of Panama, and President Jimmy Carter of the United States.
  • For decades before this agreement, the Panama Canal had been under U.S. control, following the 1903 treaty between the two nations, which granted the U.S. rights to build and manage the canal and govern the surrounding "Canal Zone."
3.Torrijos-Carter Treaty
 

The canal, a critical waterway connecting the Atlantic and Pacific Oceans, was not just a strategic military asset but also a vital economic route. However, the arrangement heavily favored the U.S., leading to widespread resentment among Panamanians who saw it as a symbol of foreign domination and economic injustice.

The Torrijos-Carter Treaties had two parts:

  • The Panama Canal Treaty: This agreement nullified the 1903 treaty, stating that the U.S. would transfer control of the canal to Panama on December 31, 1999. Until then, the U.S. would operate and defend the canal while gradually transferring management responsibilities to Panama.

  • The Neutrality Treaty: This established that the canal would remain neutral and open to ships of all nations, even during wartime. The U.S. retained the right to intervene militarily to defend the canal's neutrality, if necessary

These treaties were significant in reshaping U.S.-Latin American relations. They addressed long-standing grievances in Panama and were seen as a step toward respecting the sovereignty of smaller nations. However, they were controversial in the U.S., with critics arguing that giving up control of such a strategically valuable asset could compromise national security and economic interests.
The treaties were ratified by the U.S. Senate in 1978, albeit with considerable debate and amendments, and they remain an essential example of international negotiation aimed at resolving historical injustices while maintaining global cooperation. Today, the Panama Canal is fully under Panamanian control and is a vital part of the country's economy and global trade infrastructure
 
4. Latest Controversy by Trump Government
 
  • The primary concern for the U.S. President-elect stems from the steep transit fees imposed on American vessels by the Panama Canal Authority (ACP). In 2023, a severe drought affected Lakes Gatun and Alhajuela, which are crucial for operating the canal's locks.
  • This water shortage forced the ACP to cut the number of ship transit slots by 36%, leading to higher transit fees.
  • Another significant issue is the growing Chinese presence in the Panama Canal region. Since Panama became the first Latin American nation to join the Belt and Road Initiative (BRI) in 2017, Chinese investments have surged.
  • Hutchison Ports PPC, a subsidiary of a Hong Kong-based company, manages two ports at the canal’s entrances, raising concerns about China's influence on logistical operations and its potential to monitor U.S. naval activities
Panama's Response
 
Panama’s President José Raúl Mulino has dismissed the allegations made by Mr. Trump, defending both the canal's transit fees and its operational integrity. He explained that the transit rates are established through a formal process based on international standards. President Mulino also refuted claims of external powers, such as China or the European community, influencing the canal, stressing Panama’s commitment to maintaining its sovereignty. Addressing Mr. Trump’s assertion about the presence of Chinese soldiers in the canal, he firmly stated, “There is not a single Chinese soldier in the canal, nor will there ever be.”
 
 
5. Way Forward
 
The issues surrounding fee increases and logistical operations are expected to be addressed through diplomatic channels, despite Mr. Trump’s threats. While the United States may seek to influence Panama and push for renegotiations, Panama is likely to seek international backing to assert its sovereignty. In response to the allegations, China has also issued a statement. Foreign Ministry spokesperson Mao Ning emphasized that the Panama Canal is a remarkable achievement of the Panamanian people and serves as a neutral passageway. He further affirmed China’s respect for Panama’s sovereignty
 
 
 
For Prelims: Panama Treaty, Panama Canal
 
For Mains: GS II - International Relations: US-Panama Treaty
 
Source: The Hindu

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