Longtime Panama Canal Administrator Speaks to American Canal Concerns

WASHINGTON — The Wilson Center held a program on the future of the Panama Canal, Thursday, Feb. 13, with Alberto Alemán Zubieta, President Mulino’s International Affairs Advisory Committee member and John Feeley, former U.S. ambassador to Panama.

“In no way, shape, or form has Panama not done what it should have done with the Treaty [of 1977]. We have abided by the treaty fully,” Zubieta stated.

Zubieta was the first Panamanian administrator of the canal following its transfer from U.S. to Panamanian control in 2000 until 2012. He was also previously the administrator when the canal was under American control. 

The Wilson Center’s discussion on the future of the Panama Canal centered around his expertise in the operation of the canal and the Treaty of 1977, which, along with the Neutrality Treaty, gave Panama control of the canal by the year 2000.

The Panama Canal, often regarded as one of the greatest engineering feats in history, has served as a vital waterway for global trade for over a century. Spanning 51 miles across the Isthmus of Panama, this transit pathway has proven indispensable to international commerce, with 5% of all seaborne trade passing through its locks. 

The United States, its top user, relies heavily on the canal as a strategic shortcut, bypassing a long and costly trip around the tip of South America.

As Zubieta explains, this vital artery for global shipping is facing some challenges that have caused the canal and its operation to be under increased scrutiny. However, he stated that pursuant to the Treaty of 1977, the canal remains “neutral for the transit of every ship in the world.” 

Despite this claim, President Donald Trump recently took direct aim at the canal, putting it firmly in the headlines, and in late January, the Senate Commerce, Science and Transportation Committee called maritime experts and others to testify on the impact of the Panama Canal specifically on U.S. trade and national security.

In his inaugural address, Trump called the canal a “foolish gift,” expressing regret for the U.S. handoff to Panama a century ago and stating a Chinese company now operates ports on either side of the canal. 

In light of actual concerns for the canal, Zubieta spoke on the history of the canal as well as current geopolitical concerns.

“I was the last U.S. administrator for the Panama Canal Commission, and the first administrator of the Panama Canal Authority… after the [2000] transfer,” he explained. 

“We had one mission, to make sure that we had a seamless transfer of the Panama Canal from the U.S. to Panama,” he said. “There was a lot of concern; From the shipping companies if we would continue to do a good job of running the Panama Canal and also from the people who work in the Panama Canal, passing from being a U.S. federal employee into an employee of the Republic of Panama.” 

“We had a lot of support from the U.S. side to make that transfer a successful one,” he said. “I think [it was a] success story for both countries.”

But he admitted that what is now the lifeblood of the Panamanian economy had not always been operated as a business, which Panama sought to change. 

“Under the U.S., [it] was run as a break-even operation, but we wanted the canal to be run… like a corporation,” Zubieta said.

In 1994, Panama amended its Constitution to set the rules by which the canal would be managed. This amendment gave rights to control of the watershed independent from the Panamanian government with an 11-person board of directors. 

“The philosophy behind that is… it’s 100% Panamanian, but it’s out of party politics,” Zubieta said.

He says that the canal Panama is currently managing is a very different canal than the one originally constructed — or even the one handed to it during the 2000 transfer. 

After input from major shipping clients, the canal was deepened and expanded which Zubeita said is a “huge benefit to the U.S.” because “it open[s] a lot of opportunities to the East Coast of the U.S.”

This expanded third set of locks, which had a cost of around $5.8 billion, was paid for largely by Panama, with a multilateral loan. Rising costs of business are among the reasons the canal has increased tolls with further adjustments planned into the future.

The toll system, designed to manage traffic flow and generate revenue for the canal, has sparked debate over its impact on global shipping companies. The canal’s authorities have been working to balance these financial pressures while ensuring that ships continue to use the route efficiently. Recently, the Panama Canal Authority announced a review process for potential toll adjustments, opening the floor for discussions with global stakeholders.

But tolls are not the canal’s largest concern. 

Prolonged droughts have led to a drop in freshwater levels. Every time a vessel crosses the canal, some 50 million gallons of water are displaced. In response, authorities have imposed restrictions on the number and size of ships permitted to pass through, a measure that has raised alarms in both Panama and around the world.

The proposed solution to secure the water supply needed to keep the canal operational is construction of a new reservoir, which would require an estimated $1.6 billion and six years to construct. 

In the meantime, the canal faces additional mounting pressures, including increasing concerns about the presence of Chinese-operated ports on both sides of the canal. 

Panama maintains that it has fully adhered to its neutrality treaty with the United States. 

As described by George Mason University Law Professor Eugene Kontorovitch in his testimony before the Senate Committee, “each party to the treaty is able to determine for itself whether a violation has occurred.”

At the Wilson Center, Zubieta said, “We consulted with Chinese shipping companies because we needed to understand the size of vessels people were using, but not China as a government for planning in terms of expanding the canal,” he said. “We didn’t even have a relationship with China.”

He also stated the Panama Canal Authority did not consult with China the way it consulted with the U.S. on canal expansion.

But the presence of a Hong Kong company, Hutchison Whampoa, which operates ports in 50 countries, managing two ports on either side of the canal has some in the U.S. concerned. 

There are a total of five ports managed in the Panama Canal including the two Hong Kong-operated ports, a U.S. port on the Caribbean side, one run by OSA Singapore on the Pacific side, and one run by Evergreen, a Taiwanese company. 

Secretary of State Marco Rubio, while visiting the Miraflores locks, voiced concern over Panama’s decision to allow Hutchinson Whampoa to operate two ports in the country.

“Every vessel that enters our waters is under the control of a Panama Canal pilot,” Zubieta insisted. 

“The heart of the canal is water, how we move water and use water,” said Zubieta, adding that preserving the canal’s neutrality and ensuring its continued operation as a lifeline for global trade is “about maximizing [Panama’s] biggest resource, which is the position that Panama has.”

“As an engineer, I see it as an infrastructure, but most importantly for us in Panama, what happened on Dec. 31 at noon,” when the canal was transferred to Panamanian control, “is that Panama was fully 100% owner of our geographical position because that’s the most important asset that we have.”