Pearls are being clutched in the pages of the legacy media over President-elect Donald Trump’s reported plans to expand the footprint of the United States. Whether it’s wresting back control of the Panama Canal, making an offer for Greenland, or even teasing Prime Minister Justin Trudeau over the possibility of a 51st state, each concept has one thing in common: They are the starting points for a negotiation. And while media pundits claim there’s no deal to be made regarding the advantageous canal, the reality is quite different.
The Panama Deal
Seemingly out of the blue, Trump, at a Turning Point USA event in Phoenix, AZ, teased that he would give thought to taking back control of the Panama Canal. Headlines flooded the web, declaring that the only way the incoming president could achieve such a goal would be to send in the troops and use force to wrest it from the grip of the Panamanian people.
Hyperbole always wins the short-term game in the media world – despite the long-term negatives. Journalists labeled Trump’s message as troubling, expansionist, unworkable, and even bordering on delusional. In reality, what the soon-to-be president wants and what he may even get are in the realm of possibility.
Trump was very clear that taking back control of the canal – which was handed over to Panama officially in 1999 – was dependent on conditions. He said:
“Our Navy and commerce have been treated in a very unfair and injudicious way. The fees being charged by Panama are ridiculous, highly unfair, especially knowing the extraordinary generosity that has been bestowed to Panama — I say, very foolishly, by the United States … This complete rip-off of our country will immediately stop.”
Let’s look at the numbers. According to the State Department, “The United States provides more foreign direct investment in Panama than any other country, with a total direct investment position of $3.8 billion in 2022.” The United States is responsible for roughly 75% of shipping through the canal, making it the largest payer of the almost $3 billion in tolls received in 2021.
As the biggest customer – and the original builder of the canal – better pricing is not something any US administration should be shy about negotiating. But what can Trump do if Panama says no?
The Nicaragua Alternative
Nicaraguan President Daniel Ortega is a political pariah in many respects, and the latest round of constitutional amendments that bolster his power are being met internationally with a level of concern. But Trump has never been one to shy away from reaching out to unpopular leaders (consider his meeting with North Korea’s Kim Jong Un in June 2019).
Further north than Panama, Nicaragua was once considered a viable option for the shipping canal that is now the point of contention. In fact, in the early 1900s, the two countries were in close contest for the trade route. Panama ultimately won because it was shorter (50 miles compared with 75 miles – and that includes a huge lake in the middle). It took ten years to build and cost the lives of thousands of Americans.
However, the idea of the Nicaragua Canal has not been dormant for the last 100 years. As BBC Future wrote in 2023:
“Just a decade ago, a Chinese businessman championed a huge project that intended to build such a canal by the end of the 2010s. Despite much fanfare, it never materialised. But the crippling drought now affecting the Panama Canal, and the threat of additional climate change-related water supply issues in the coming years, [have] prompted some to question whether a second canal in Nicaragua – or routes through other nearby Central American countries – might not be such a bad idea after all.”
If 50 miles could be built more than 100 years ago in just a decade, how much easier might 75 miles be with today’s technology? And to be clear, two routes from the Atlantic to the Pacific are better than one – and would likely create a more competitive climate for business.
The Art of the Deal
Building a canal through Nicaragua would be one of the greatest modern engineering feats and attract billions in investment. Its completion would assure the United States of trade routes at more compelling prices and end the stranglehold of Panama on international shipping. But here’s the real deal: It is a project that doesn’t need to be started.
If Panamanian President José Raúl Mulino doesn’t want to negotiate with Trump, he may end up on the losing side of a battle his country can’t really afford. Expectations of a new canal, closer to the United States and perhaps at a lower tariff, would shrivel any prospect of investment to keep the existing canal operating at capacity. The detriment is not years down the line but immediate. It’s beginning to look like Trump’s offer is one Mulino might not be able to refuse.
