Panama has taken control of the port facilities previously run by a Chinese company after the courts ruled the original contracts were secured through bribes. This move reaffirms U.S.–Panama relations, as a U.S. ally is now operating the ports.
While the ports weren’t a direct military threat, they are strategically significant. So, removing China from the equation makes Chinese activity in the region that much more difficult, especially as the U.S. Navy begins to step away from its role as global protector of the sea lanes.
This move is a great example of using legal pressure to reshape outcomes and affirm U.S. soft power. While I’m not sure this administration can replicate this success elsewhere, let’s see how well the U.S. can sustain and expand power across Latin America.
Hey all, Peter Zeihan here. Coming to you from Colorado, today is the 24th of February. And the news is that the government of Panama has just formally taken control of the series of ports that used to be run and owned by the Chinese. This is something that has been an irritant in US Panamanian relations for a few years. Basically. The Chinese subsidize their shipping system and then go into places to buy up infrastructure.
There are a lot of people in America who feel this is a security risk. It really isn’t. These facilities didn’t have the ability to hold military assets of any meaningful size, but that doesn’t mean that they’re not strategic anyway, because the Panama Canal is the primary connection between the Pacific and the Atlantic, and unless you’re in a really big ship, that’s just how you’re going to get from A to B, and for cargo that is destined from the East Asian Rim to the U.S. East Coast, pretty much all users Panama.
Anyway, the Trump administration threw a bit of a fit, shortly after it came into office, started legal proceedings within Panama. Last month, the Panamanian courts basically ruled that the Chinese bribed their way into getting the contract, which is absolutely true. And so therefore, it was void. Today was the day that the Panamanian government took formal control of the facilities from the Chinese.
The Chinese a bitch and moan and bitch and moan. But at the end of the day, under legal consequences, they were shepherded out of the building and it is now under the operational control temporarily of a company called Maersk, which is based in Denmark, which is a country that, despite all of the problems between the United States and Denmark over the Greenland issue, remains an ally.
Fun, fun, fun.
Anyway, the question is, what’s next? China’s entire position in the Western Hemisphere is based on one very stupid assumption that the United States will actively keep the seas safe for Chinese shipping and allow the Chinese to establish whatever economic footprint they want in the Western Hemisphere. This is dum dum dum dum dum, but it has always been the basis of all Chinese decision making.
The idea that we don’t have a global navy, we just have a lot of little ships that are close. The Americans have a global navy, so it’s up to the Americans and their global navy to allow us to penetrate into the wider world. It’s always a stretch, and this is a great example of showing how it all falls apart with nothing more than a little bit of legal action.
The question now is, what is the United States going to do with this? It’s not that Panama isn’t important on its own, but it’s only one piece of a broader environment in the overall region. We’ve seen a military side of the strategy now with Venezuela. We’re seeing basically a functional boycott in places like Cuba. But really, if you want to talk about American power projection in the Western Hemisphere, the Panama example is far more important because it’s one thing to knock off a government you don’t care about, it’s another to get a government to do it for you to reshape its policies in your direction simply because you asked.
Soft power is not dead, apparently. Not even in the Trump administration. But the presence of Maersk tells you that it’s always easier to do it if you’re not a dick about it. So future topics are absolutely going to be Mexico centric, because that’s where the real money is in the American economic relationship in the hemisphere. But we’re probably also going to see things in Ecuador, Peru, Argentina and Brazil, all of which have, for various reasons, butted up to the Chinese in order to get the cash.
Whereas the United States is the strategic guarantor of everything that matters in the region. We’re not there yet. The big problem that we’re facing is that when the Trump administration came in, it gutted the National Security Agency or, excuse me, the National Security Council. It gutted the State Department. And it winnowed down a lot of things in the Defense Department as well.
And then the Commerce Department was not simply winnowed down. It was then given the task of enforcing the most complicated tariff regime in human history. We’ve now had over 6000 tariff changes in the last year. And a lot of this is going to be based on diplomacy and economic activity. And there aren’t a lot of personnel in the United States to craft, to advise, and then ultimately to carry out the policy.
So strong start on Panama. The question is, how deep can this go and how much can it be replicated? As for the Chinese, their options are kind of limited here. The screenplay screenplay screamed, but at the end of the day, it was a domestic court ruling. And if the Chinese pressure a Latin American country to go against its own courts because it might be pro-American or anti-Chinese, you know, that doesn’t exactly resonate in Brasilia and Buenos Aires and the rest, it doesn’t mean that the U.S. policy couldn’t use a lot of work and a bit of a facelift when it came to diplomacy.
But hey, when you’ve got the tools, you’ve got the tools.
