Panama Strategy

China is quietly considering stage two of its strategy to dominate one of the world’s most strategic ocean crossroads.

The Chinese government seized the opportunity, through the communist-controlled corporate giant Hutchison Whampoa, to buy up the entry and exit ports to the Panama Canal when the U.S. relinquished its sovereign rights to this crucial sea gate in December 1999. But the canal is suffering a steady decrease in traffic as the supervessels of the 21st century are being commissioned. These huge container ships are simply too big to fit through the canal.

Although Panama has become one of the biggest container trans-shipment centers in the Americas, by virtue of its rail system, the throughput of vessels actually traversing the canal will drop from 4.3 percent of global shipping volume this year to 1.3 percent by 2010, based on current projections.

So, did the Chinese buy a lemon? Hardly.

The Oriental mind thinks long term—extremely long term. Recently, motivated by their conviction that the U.S. imposes too much arrogance in its conduct of foreign policy as the world’s major power, the Chinese have been reaching out to Latin America as part of their long-range foreign policy. Intent on positioning themselves economically and strategically to limit and to work to reduce U.S. hegemony, China is wooing the Latino countries into its sphere of influence. Panama, Cuba, oil-rich Venezuela and drug-drenched Colombia are in its sights. Senior Chinese military and trade representatives visited these countries last December. They represent the back door to the U.S.

But crucial to the development of Chinese influence in South America is its long-term strategy for the Panama Canal. Having control of the entry and exit ports at each end of the canal, China is in a prime position to influence infra-structural development and investment opportunities in the canal zone. To remain viable, a program of canal improvement and expansion totaling at least $6 billion is necessary, according to feasibility studies completed last year for the Panama Canal Authority. Slated development would result in the canal raising daily throughput of shipping to 67 vessels, quadrupling the cargo that passes through the canal at present.

Should China take on the role as not only controller of incoming and outgoing traffic via Panama but also prime developer of its touted expansion, Chinese economic and strategic prestige in the Americas will be massively enhanced, no doubt to the detriment of the U.S