The Strategic Importance of The Panama Canal?

As the world moves closer to the eventual end of uni-polar American dominance, the U.S. has another super power to contend with, China. While Russia has returned to the status of superpower as well, they act more as a regional spoiler to the U.S. in Africa, The Middle East and their 'Near Abroad", while China has the capability to challenge the U.S. globally, and even in the Western Hemisphere, long thought to be the "backyard" of the U.S.

One area that manifests the U.S. concerns about fortifying its interests is in the Panama Canal. On his first day back in office, and even before his inauguration on January 20th, President Donald Trump raised the issue that the U.S. needed to take back control of the Panama Canal, citing also that China "runs it now".

Leaving the question aside on if China even actually does operate the Canal at this moment, is this waterway vital to the United States?

Why was the Panama Canal built?

Between 1867 and 1900, the U.S. had massively expanded its territory, obtaining through purchases, coups, and war,, Alaska, Hawaii, Eastern Samoa, Guam, the Philippines and various other islands in the Pacific, while now having control of Puerto Rico and Cuba in the Atlantic.

Already being a bi-coastal nation, with now a multi-ocean empire, the U.S. needed to expand its navy and have a link that would connect the two oceans, and the two coasts of the United States.

After becoming President in 1901, Theodore Roosevelt declared that building the Canal was vital and purchased a concession originally given to the French to build the waterway, which was completed in 1904.

in !903, the U.S. would sign a treaty with Panama, transferring the Canal and its immediate area on both side to the sovereignty of the U.S. where it would remain until the "Canal Exclusion Zone" was transferred back under Panamanian Sovereignty in 1978.

Is it Important today?: United States

Today, the Canal still serves its military and economic purpose for the U.S. It allows the U.S. Navy to move from the Pacific to the Atlantic and vice versa rapidly and allows U.S. ships, military and civilian to travel from one coast to the other in little time. With forty percent of U.S. shipping going through Panama, and over fifteen percent of all trade that goes to the U.S. in total going through the Canal. Overall, over 70 percent of all ships going through the Canal are going to or from the U.S.

Having dominance over the canal also allows for greater U.S. influence on in Latin America.

If a hostile government in Panama were to take power, or if an outside actor were to influence Panama to the detriment of the U.S., this would serve as a massive disruption to U.S. trade and its force projection around the world if a major conflict were to break out that directly pulled in the U.S.

After World War 2, despite losing India, the United Kingdom remained a super power, this was until 1956, when Egyptian President Gammal Abdel Nasser nationalized the Suez Canal, ending British control over it. Any situation where the United States loses access to or dominance over the Canal would have major military, economic and geopolitical implications for the U.S.

Is it important today?: China

While China does benefit from shipping routes through Panama, available data has shown decreases over the last decade in the percentage of Chinese exports going through the Canal and total amount.

A hypothetical loss of China from being able to trade through Panama would be a negligible loss that the Chinese would be able to offset and trying to gain de-facto control over the port to gain some leverage over the U.S. may not be in China's interest either.

Any perceived threat from China to the U.S. influence in Latin America may come through its One Belt One Road Initiative, if China were to build an alternative or rival to Panama.

China has recently built the Port of Chancy in Peru, with some estimates saying will reduce shipping time from Latin America to Asia by 12 days and may cut back on costs by 20 percent. Having their own de-facto "Panama" may reshape hemispheric trade and eventually the balance of influence in Latin America.

The future overall

Donald Trump's claims that China "runs" the Panama Canal now, may be overstated, when compared to the Port of Chancy, the need for the U.S. to control the Canal may be overstated also. As long as the Canal exists, ships will go through it, including to and from U.S., but if the Canals importance may be on the verge of decline in the coming decades, whatever control or influence the U.S. has over it may be a moot point.

If there is a, in the vernacular commonly used by Donald Trump, "bigger and better" transshipment point for shipping between oceans, the strategic importance of the Panama Canal to the Atlantic coast of South America wanes over time. And with it, the balance of power that could tip more to China in the Western Hemisphere. The issue for Donald Trump, or possibly future U.S. Presidents in the next couple decades, will not be who controls Panama, but how they can make it important or build their own Port of Chancy.