My Policy Proposal for the Panama Canal

5/23/2026

Premise: A Latin America that thrives economically can boost the global economy, and therefore also boost the United States economy.

Proposal:  My proposal is for the United States and China to start a period of “cooperative competition” beginning with the Panama Canal. Specifically, the United States and China should allow a shared private control of the Panama Canal. With two key ports at the Panama Canal, Balboa and Cristobal, a United States and Chinese company should each control one, with the Panamanian government having the ability to resolve any significant dispute. I believe this scenario will improve opportunities and economic growth at the Panama Canal, and ultimately, it can be a blueprint for similar initiatives throughout all of Latin America. Then, if Latin America can grow and thrive economically, this can boost the global economy and ultimately benefit the United States.

Background: CK Hutchison, a Chinese-based company, held control over the Panama Canal at both ports, Balboa and Cristobal, from approximately 1999-2021, before renewing its rights for an extended 25 year term. The U.S. has had growing concerns that through this company, China’s economic influence over the Panama Canal may also mean the influence of the Chinese government so close to the U.S., in an area where the U.S. wants its own interests to dominate. In March 2025, BlackRock, a U.S. based company, announced it was buying ports around the world from CK Hutchison. Part of this deal included the two Panama Canal ports. President Trump highlighted how the U.S. was “taking back” the Panama Canal in his March 2025 state of the Union speech.

Since then, something has changed and, perhaps, the Chinese government has “dug in.” CK Hutchison’s desired sale of these ports is now, apparently, not so desired. CK Hutchison filed an arbitration asserting that the transition of the operations of the ports for the Panama Canal to a Danish shipping company, A.P. Moller – Maersk, is improper. As a result, control over these ports is tied up in litigation, and now, BlackRock is reportedly moving ahead with its purchase without the two Panama ports.

My view is that none of this is good for world trade through the Panama Canal, and therefore not good for economic growth in Latin America. There will be stagnation while control over the ports is unclear and then ultimately, one winner and one loser. The eventual winner will assert its will and, per the teachings of Why Nations Fail, by Daron Acemoglu and James Robinson, there will be extractive undertakings throughout the region.

A better result for the region and Latin America as a whole would be a U.S. corporation like BlackRock and a Chinese corporation like CK Hutchison cooperating through each controlling one of the Panama Canal’s ports, in ways arbitrated by the Panamanian government, who will necessarily act in the best interests of its own economy and citizens.

Without the ability of one world power (China or the U.S.) to have a complete say over this critical point in world commerce, there can be “good competition” in the region, the kind that can stimulate rapid growth.  Then, W=with a thriving local economy, the benefits of competitive cooperation could become evident to the entire Latin American region. And, if the Latin American region expands economically, the region should have greater supply and product needs from around the world, including from both China and the U.S. Thus, with this chain of events, the United States economy can also grow.

Addressing The Likely Resistance:

There will be numerous arguments against my proposal, I know.  I will start with some of those, and my brief address of them.

·       Countries suspicious of each other’s motives and sensitive to each other’s power cannot possibly cooperate. 

BUT: it is private companies that need to cooperate, each with a profit motive; private companies like CK Hutchison and BlackRock. Governments can (and should) stay out of it and let natural market incentives drive CK Hutchison and BlackRock together with a common interest.

·       Two private companies, influenced by their own governments, will never agree.

BUT: they do not have to. The only thing they need to agree upon with my proposal is giving the Panamanian government a deciding vote in the event of disagreement.

·       For national security reasons, with areas in Latin America (particularly Central America in Panama), being so close to the U.S. border, the U.S. cannot share control. The U.S. has to assert clear control over the region for the U.S. to feel safe and thrive. 

BUT: our history reflects a similar concern but decades of evidence suggest those concerns do not improve economies. In 1962, when the Soviet Union was placing nuclear weapons in Cuba, the U.S. grew understandably concerned and reacted in what is called the “Cuban Missile Crisis”. The U.S. has, to some degree, kept Cuba under its thumb ever since, trying hard to keep it from straying too far toward U.S. “enemies.” For its part, the Cuban economy has lagged and still today, more than 60 years later, it adds almost nothing to the U.S. economy. Therefore, national security should be looked at differently. Not controlling Panama entirely and not creating another “stand-off” in Panama like in Cuba has a chance of a better outcome.

·       There will not be a better outcome with “cooperative competition”, and more likely, this will stagnate growth in the region.

BUT: competition amongst companies is good for consumers. It drives down prices, and it allows market conditions to dictate costs and expenses. In contrast, a monopoly only benefits the one with the monopoly. We are more likely to see a better outcome, and better growth in the region with competitive positions staked at each port.

·       There is no true “competition” in my proposal, and therefore, my proposal won’t change anything because ultimately both companies – one at each port – will want to charge the same amounts, and collect the same amounts, and shipping companies do not have a right to choose a port. They have to pass through both.

BUT: while this is very true, there can be “incentives” at each port that each company competes to offer. This could be similar to company sponsored promotions. Let’s take the type of promotion I see so frequently:  buy 1, get 1 free, or the like. Here, for example, CK Hutchison or BlackRock at each of their ports can offer pricing incentives to participate in other business initiatives. Something such as:  “by paying $XX for these additional services at our port, we will provide your company with $YY in distribution rights in our country. In this way, there can be more creative competitive benefits globally even though the basic costs of actual passage through the canal leave no real “choice”.

Clear Reasons In Favor of This Proposal

I believe there are clear reasons to support my proposal, beyond those noted above. Here are some:

·       I borrow from Why Nations Fail for my first point: when a government has an imperialistic approach to another country, the other country’s economy eventually stagnates. Control is too concentrated. Elite and wealthy citizens have close partnerships with the controlling government, and they gain power and wealth. In contrast, average citizens do not advance. When given an opportunity to advance, average citizens seek to join or replace the elite, causing an ongoing cycle of concentrated control. And, as Why Nations Fail teaches, there is no “creative destruction” that permits progress; that is, there is no innovation destroying older, less efficient ways in favor of greater technological advances.

·       An economic “cold war” with China, in the form of an economic stand-off (instead of the Cold War nuclear stand-off with the Soviet Union), will not be as effective as open markets. Yes, there were some countries that benefitted economically from the Cold War. Those countries that got substantial U.S. financial support grew substantially. But in those cases, the U.S. was funding the growth of those countries in order to spread democracy, looking specifically to financially fuel countries’ economies, not extract from them, so they would choose democracy over communism. With the Panama Canal, the United States seems not to have the same purpose. Its purpose seems more to control world trade but not make any changes to build up the Latin American economy. The purpose seems to keep China out by “force” and not by “winning” the free choice of Latin American consumers. For these reasons, I think forcing economic cooperation -- “cooperative competition” -- is a better solution.

·       A 2006 Harvard Business School paper by Noel Mauer and Carlos Yu speaks of a “social rate of return” from the Panama Canal. This is defined by them as a measurement of whether the transportation cost savings of the Panama Canal justify the high construction costs.  Their data showed that this “social rate of return” was higher than the return on U.S. Treasury Bonds. But one of the things they talk about is how U.S. control over the Panama Canal benefitted only the U.S. with only minor local benefits to Panamanians. It is no secret that numerous areas in Latin America are poor areas. So, this history alone shows that something different needs to happen for Latin America to thrive. The “cooperative competition” I propose, starting with the Panama Canal, can be that way.

·       A publication by Focus Economics from October 7, 2025 detailed how Latin America’s economy grew the least among all world regions in the prior decade. Eastern Europe’s growth — which was supposedly the next-slowest-growing emerging market—was nearly double that of Latin America. Focus Economics suggests that this was due to “Latin America’s chronic political instability, high levels of crime and corruption, subpar education system, reliance on the volatile commodity sector and lack of presence in fast-growing industries such as electronics and IT.” Clearly, something needs to change, because the status quo is not working. A new world order whose purpose is to improve the competitive economy in Latin America, starting with the Panama Canal, is worth a try.

·       When two entities compete, it is best for consumers.  Here is my own lay-person example to support this. Let’s pretend Starbucks was the only company that offered a place to buy coffee. Prices would rise as high as consumers were willing to pay. Gradually, Starbucks would appeal to a more limited groupl the most wealthy or those willing to spend their wealth on coffee. Now, introduce competitors (Dunkin Donuts, for example), offering a lower priced coffee. Consumers driven away by Starbucks pricing now have an alternative and customer loyalties may permanently shift to the alternative brand. To guard against this, Starbucks will have to keep its prices lower as well. The same can happen at the Panama ports.

·       Cooperative competition at the Panama Canal can be a blueprint for the entire Latin America region. I recently attended a symposium (vitually) put on by Harvard’s David Rockefeller Center for Latin American Studies called, “Rethinking the Global Order: Latin America, China, and the US Amid Transforming Economic and Political Paradigms. I learned that most countries in Latin America were already deeply tied to China economically. It is understandable if the U.S. is concerned about that, but the reason for this is an economic reason, not a political one. It is a product of Latin American countries choosing better economic opportunities for themselves, not choosing China politically. If the U.S. approaches economic influence in Latin America as “us” versus “them,” it will necessarily cause Latin American countries to make decisions by force rather than economic benefit. Cooperative competition, on the other hand, allows Latin America to continue to make the economic decisions that improve the lives of its citizens.

Conclusion: My proposal, which starts with the basics of control over the two ports at the Panama Canal, can improve opportunities and economic growth throughout all of Latin America. With a Chinese company and a U.S. company engaged in cooperative competition there, it can be blueprint for cooperative competition throughout Latin America. It can mean populations of people throughout Latin America will be able to choose the best products, best prices, and best incentives in their own economic interests. And when the economy in Latin America is growing, there are millions of consumers needing products and services available throughout the world, including from the United States. As a result, growth in the Latin American economy should mean growth for the United States economy.