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From a modern control room high above the canal expansion – overlooking the Cocolí locks, then lakes, rainforest canopy and, eventually, the Atlantic ocean – it barely registers that the era of gunboat diplomacy is returning to the Panama canal.
But four days into Donald Trump’s second administration, here we are. Trump has declared that he is “taking back” the Panama canal, sending TV crews from Washington to Beijing scrambling here to cover a crisis that has led to frenzied diplomatic efforts and elicited fears of a repeat of the 1989 US military invasion.
Never mind that there are no signs of the Chinese influence Trump claims dominates this waterway, and the canal’s administrators deny his accusations that they overcharge US ships. Panama may have the truth on its side – the question is whether that counts for much these days.
“What I say is: come and see it,” said Ilya Espino de Marotta, the Panama canal’s deputy administrator, when asked in the control tower about Trump’s remarks. “It’s pretty obvious when you come to the canal. We’re a very transparent entity.”
Panama CanalUS secretary of state Marco Rubio may do just that this week as he descends on Latin America for his first tour abroad. According to Espino de Marotta, he is already discussing a meeting with the canal’s leadership. “I understand he’s going to meet with the administrator of the canal, so hopefully this would be a good place to meet,” she told the Observer, adding that she couldn’t speak for Rubio’s official agenda. On visiting the canal, she said: “I hope they are.”
Rubio’s potential visit to the canal zone – which would come as part of a week-long swing through Central America that will also include Guatemala, El Salvador, Costa Rica and the Dominican Republic – has not been previously reported. The Observer has approached the state department for comment.
“The canal is run by Panamanians 100%. We are an autonomous entity,” added Espino de Marotta, who began working for the canal in the shipyard in 1985, when it was still under US control, and rose to lead its ambitious expansion. “There is no Chinese management of the canal.”
Speaking with current and former officials in Panama, as well as analysts, activists and rights watchdogs, it’s clear this country of just 4.5 million people at the southernmost tip of Central America is holding its breath as it tries to figure out what Trump wants and how far he is willing to go to get it.
He has said he will not rule out military force to take the canal – or annexing Greenland. The Financial Times on Friday reported that he held a “fiery” phone call with the Danish prime minister over US claims on Greenland that, according to five European sources, went “very badly”. Denmark is now in “crisis mode”.
In Panama, a country with a dollarised economy and a recent familiarity with American imperialism, the muggy air is thick with risk management. Few expect a military campaign, but economic coercion is a real threat for this country.
Yet the claims that the canal is mismanaged have touched a nerve. Just days after Trump first issued his threats over the canal, three former leaders of the country convened with President José Raúl Mulino in a rare show of support in Panama’s fractured politics.
“I know you know that some people don’t care about facts, but they’re there,” Martín Torrijos, the president of Panama from 2004-09 and the initiator of the expansion project, said in an interview with the Observer from his offices overlooking Panama Bay.
In 1977, his father, the strongman Gen Omar Torrijos, signed the two treaties with Jimmy Carter that would eventually cede control of the canal to Panama by 1999. Last month, Torrijos attended Carter’s funeral, where he said that old US opponents of the handover told him it had been the right decision all along.
(At the time, it was extremely divisive. Ronald Reagan’s take was: “We built it, we paid for it, it’s ours.” Within a decade, the US would invade the country to overthrow the dictator Manuel Noriega.)
But the days when the US could overthrow a Panamanian government had passed, said Torrijos, and a military intervention against the canal, much less the country, was not realistic. “The times where the US had a military presence in Panama – that finished on 31 December at 12 noon, 1999,” said Torrijos, who was sitting in front of a portrait of his father painted by a Cuban artist. “They are not coming back.”
The last place Panama wanted to be was in Trump’s inauguration speech, which turned his earlier threats to take back the canal into a pledge for his second term in office.
“I don’t believe that Panama has a strategy,” said Danilo Toro, a political analyst, saying that President Mulino should have done “everything possible to avoid being in that speech. It’s gonna be harder for Panama to deal with that now. If it doesn’t do something soon, it will get worse.”
But in the post-truth era of world politics, Panama’s protests may only go so far before it needs to cut a deal.And for that, Panama may need currency. Earlier last week, the comptroller began to audit the two ports at either end of the canal. Both are owned by a Hong Kong-based company that Rubio had claimed China could use to “turn the canal into a choke point in a moment of conflict, and that is a direct threat to the national interest and security of the United States”.
Sceptics have argued that the audit could be a cover to take those ports away from their current owners. But current officials say the financial reviews were long-planned and were not politicised, a portrayal that watchdog groups carefully agreed with, saying a recent renewal of the government port had raised suspicions and appeared disadvantageous.
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Other ports would be audited, the comptroller said, and whole industries such as the electric utilities were also undergoing checks.
“This is not a witch hunt,” Anel Flores, the comptroller general of the Republic of Panama, who took office this month, said in an interview. “We want to find out what the real numbers are and if we’re getting really what we deserve.”
The audit could take 45 days, he estimated, refusing to speculate on its results. But he did confirm that the audit could produce grounds that could lead Panama to strip the concession from the China-headquartered companies.
That would be a bombshell, said Lina Vega Abad, head of the local chapter of Transparency , and the government would need “very strong proof … because [the Chinese] are going to fight back”. It could also send a “dangerous message” for other investors, she said.
Still it could be one way to appease the US. “That might be the only strategy for the new government with Trump,” said Toro.
Trump was not necessarily unpopular in Panama City before he began making threats to renew a dormant conflict. There are superfans like Mayer Mizrachi, the elected mayor, who jets around town in a Cybertruck. His social media is littered with homages to Trump, Elon Musk and podcast host Joe Rogan, among others.
After Trump threatened to seize the canal, Mizrachi posted on X, saying that the country wanted dialogue but warning that it would “never be the 51st state”.
Still, Mizrachi tries to take a positive tack and says he is “concerned but not scared”. “I’m a very big fan of American democracy, capitalism, free speech, innovation, the pursuit of greatness,” he said.
“I was excited when Trump won. I made it quite open, you know – I posted a picture and everything. And I think that’s my interpretation: finally, we have a president in the US who is interested in Panama. And I think that’s great.”
Across town in a small cafe, Paula Rodriguez recalls the night of the US invasion – 20 December 1989. It was the night her father died.
Lt Octavio Rodriguez was on duty when US Navy Seals stormed an aerodrome. According to some reports, they were targeting Noriega’s Learjet. Responding to the attack, Rodriguez and his troops ambushed the Seals.
Four US soldiers were killed, and Rodriguez was fatally wounded, one of hundreds of Panamanians killed that evening. Rodriguez was three years old at the time. But nearly every Panamanian in their 40s or older will have vivid memories of the night US troops landed in the city.
Toro, the political analyst, recalled seeing men shoot each other as he walked across the city to a friend’s in order to secure baby formula for his three-month-old child.
Rodriguez organises a music event each year that she has called Never Forget. “Panamanian people – we rise, you know, we defend and we unite, after all, to defend our country and our people. Because it’s not about the canal, it’s about our integrity,” Rodriguez said.
“If you can see in the social media, people are angry, angry, and writing: ‘No way – this is not gonna happen again’.”
