The Mystery of Canals

12/29/2025

I crossed the Sagamore Bridge over the Cape Cod Canal this past weekend. We were getting away as a family for a weekend escape, “a chance to de-screen” over school break as my mother loved to say.

Crossing the Cape Cod Canal, I thought back to something President Trump had said about the Panama Canal after taking office. It stuck with me at the time.

On March 4, 2025, delivering his State of the Union speech, President Trump said this:  “To further enhance our national security, my administration will be reclaiming the Panama Canal, and we’ve already started doing it.”

I was surprised at the time, thinking, How had America started “reclaiming” the Panama Canal? 

President Trump continued in that speech, “Just today, a large American company announced it was buying both ports around the Panama Canal, and lots of other things around the Panama Canal and a couple of other Canals.” 

I had looked that up back then. He was referring to BlackRock, a large asset management firm who supposedly, along with Terminal Investment Limited (TiL) and Global Infrastructure Partners, announced the deal in March 2025 for a reported $22.8 billion, which includes over 40 ports globally, including two key ports on either side of the Panama Canal (Balboa and Cristobal).

Until this, I didn’t know Canals were for sale.  But it made sense. The ports where the boats load, unload, refuel, etc. are major economic centers of influence and opportunities for revenue.

President Trump went on to say that 25% of those who built the Panama Canal died. He said the Panama Canal was built by Americans for Americans, not for others.

Why did America build the canal?  According to a 2006 Harvard Business School paper, What Roosevelt Took: The Economic Impact of the Panama Canal, 1903-37 (by Noel Maurer and Carlos Yu), French efforts to build a canal in the 1800s failed, but the United States took up the effort in the early 1900s to further its own economic interests.

Why wasn’t a local labor force used?  According to that same Harvard Business School paper, the United States avoided using Panamanian labor and the main source of labor was from the British West Indies, because skilled labor in Panama was more expensive.

According to President Trump, building the Panama Canal was the most expensive project in history if you brought it up to modern day costs (apparently, about $4.4 billion if the costs when it was built is brought up to modern day costs), but President Carter gave it away for one dollar. He concluded with:  “But we didn’t give it to China and we are taking it back.”

A lot to unpack, so here’s a few things I looked into:

1.  What has been the history of “ownership” or “control” over the Panama Canal?  

 -  Panama used to be a colony of Columbia (and during that time, in about 1878, France negotiated a deal with Columbia to build a canal in Panama), but as the U.S. interest in Panama increased, the U.S. supported Panama seceding from Columbian control and asserting its own independence.

 - From 1903-1977, the U.S. first built and then had exclusive control over the Panama canal.

 - From 1977-1999, by way of the Torrijos-Carter Treaties, a joint U.S.-Panamanian authority managed the canal, which was intended to gradually hand over full control to Panama by 1999.

 - In 1999, full ownership and control of the canal was transferred to the Panama Canal Authority, a government agency in Panama.

 - Yet, in 1997, the two key ports (Balboa and Cristobal) have been operated by Panama Ports Company, which is a subsidiary of a Chinese company, CK Hutchison. CK Hutchison’s rights were initially 25 year rights, but then renewed and extended in 2021. (More on this below…)

2.   What kind of economic benefit is derived from the Panama Canal? 

- Tolls, opportunities for employment, control over a trade route to lower costs of shipping, sales of supplies and food to ships passing through, increase in demand for local business along the route.

3.   Why would a country let a private company “buy” any canal, such as the Panama Canal?   

- The 2026 Harvard Business School paper answers this question somewhat. The thinking historically was that such a sale would generate immediate sale revenue, and also ongoing revenue, and the influence and power of that country would increase. But Panama did not really “decide” this. It was Columbia that was opportunistic, and the United States eventually came in and used military power to pressure Columbia into a deal that made the decisions for Panamanians. Panama seems to have been more of a pawn while Columbia, France, and then the U.S. acted in their own national interests.

5.    What did any of this have to do with China?  

                           More to come…

6.     What has become of BlackRock’s purchase? 

                           More to come…