Panama Maritime Authority says legally impossible for US to take control of Panama Canal

The previously proposed US takeover of the Panama Canal is legally impossible, and its current status as an international neutral waterway will continue as usual, a senior official of the Panama Maritime Authority said March 25.

"There is a solid legal framework under which Panama Canal is under our control. It is legally impossible for the US to take it," Alexander De Gracia, vice minister for Maritime Affairs and Deputy Administrator at Panama Maritime Authority, told Platts in an interview on the sidelines of the Sea Asia conference and exhibition in Singapore.

"It can only be taken by force and hopefully it will not happen," De Gracia said.

In 2024 and again earlier in 2025 US President Donald Trump suggested the country should take control of the canal from Panama because the Canal was charging very high tariffs on the American ships that were passing through.

There are international treaties that govern the administration of the Canal and therefore while they are adhered to, Panama Canal's control cannot be taken away, a Panama-based maritime lawyer, who was on a visit to Singapore, said.

Under the treaties inked by the then US President Jimmy Carter in 1977 with Panama's leader Omar Torijos, the control of the Canal was transferred to Panama on Dec. 31, 1999, on the condition that its neutrality would be maintained.

Under the treaty, the US has the right to protect the Panama Canal from those threats that can interfere with its functioning as a neutral entity to all countries.

De Gracia said the Panama Canal is a neutral waterway that functions in accordance with the Torrijos-Carter treaties.

Earlier in March, CK Hutchison Holding said it would sell all shares in Hutchison Port Holdings and in Hutchison Port Group Holdings to a consortium that includes US-based BlackRock in a deal valued at nearly $23 billion, including $5 billion in debt. The Hutchison subsidiary operates 43 ports in 23 countries including Cristobal and Balboa, located on two ends of the Panama Canal.

The Panama-based lawyer said the deal still has to be approved by Panama's government.

Canal removes sanctioned ships from registry

Not only is Panama operating the Canal in accordance with the treaties, but it is also adhering to the international law on sanctions "when it comes to its ship registry," De Gracia said.

He said more than 70 ships have been removed from the Panama ship registry due to international sanctions since 2024, and dozens of others are in the process of being deleted. Those ships that are listed under sanctions of the UK, the EU, the UN and the US will not be listed under the Panama registry.

This results in lower revenues due to the removal of ships from the registry because of the sanction, De Gracia said.

"It is a high cost, this is the price we have to pay to observe international sanctions but we are focusing on quality instead of quantity," De Gracia said.

The removal of sanctioned ships from the registry will be offset by expanding the business in ships that can use alternative fuels, including new builds, he added.