Plus: Price hike of the day
IN TODAY’S EDITION
1️⃣ Why Trump is eyeing the Panama Canal |
2️⃣ Why millions are gathering in Prayagraj |
3️⃣ Price hike of the day |
Hi Intriguer. I’ve never seen a place quite so mystical as Lake Nicaragua — it’s the country’s enormous body of fresh water that’s near the Pacific, but which actually drains out via the San Juan River and into the Caribbean. Some quick facts:
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The beautiful old lakeside city of Granada was long a prime target for pirates
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Folks thought the local sharks were trapped in the lake, until researchers actually saw them skipping up and down the river rapids like salmon, and
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For a while there, US lawmakers were tossing up whether to finance an interoceanic canal across Nicaragua. In the end, Congress got spooked by Nicaragua’s volcanos, and approved the Panama Canal by four votes instead.
Just four votes to change the course of history. That’s on my mind today as we look at why Donald Trump is eyeing the Panama Canal.
Trump tells Putin to end war.
Trump has (via social media) told Vladimir Putin to “STOP this ridiculous war” or face “high levels of Taxes, Tariffs, and Sanctions on anything being sold by Russia”. Meanwhile in a televised interview, Trump has played down national security concerns linked to TikTok, saying the app will “stay around”.
Israel-Hezbollah ceasefire to be extended.
The ongoing truce between Israel and Hezbollah is likely to be extended after it expires next week, according to various reports citing French, Lebanese, and Israeli officials.
Syria boots Russia?
According to some local outlets, the new Syrian government might’ve terminated a long-term lease that’s allowed a Russian company to operate the commercial port in Tartus, which is also home to Russia’s only naval base outside the former Soviet Union. The future of Russia’s base there remains unclear.
Trump re-designates Houthis as terrorists.
The US president has signed an order to re-designate Yemen’s Houthis as a foreign terrorist organisation, four years after Biden revoked the designation. Meanwhile, the Houthis have finally released the crew of the Galaxy Leader car carrier, who were first taken captive way back in November 2023.
Thailand to sign trade pact with Europeans.
On the side-lines of Davos, Prime Minister Paetongtarn Shinawatra has just inked Thailand’s first trade deal with any European country — the deal covers Iceland, Liechtenstein, Norway, and Switzerland, and looks a bit like insurance against any possible trade hit stemming from future US tariffs.
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TOP STORY
Why Trump is eyeing the Panama Canal
Just as Donald Trump was wrapping up his inauguration speech on Monday, Panama’s comptroller general (accountant-in-chief) pulled the trigger on a tweet showing a bus-load of suit-clad auditors arriving at the local offices of Hutchison Ports.
Of course, Intriguers will recall that Hutchison Ports is the Hong Kong-based firm managing container terminals near each end of the Panama Canal, prompting the new US president to claim in his inaugural address that China is effectively operating the canal.
Now before we dive into what’s going on here, it’s first worth donning our leather-elbow-patched tweed coats for some quick history.
The US-built engineering marvel opened in 1914 after a decade of work costing ~$15B (today) — by connecting the Atlantic and Pacific Oceans, the 82km (51mi) Panama Canal cut weeks off shipping times and was a commercial and geopolitical game-changer.
Legally, it was based on a 1903 Panama-US treaty which gave the US permanent control over the canal zone in return for regular payments. That treaty came just two weeks after Panama seceded (with US help) from Colombia, which had rejected an earlier canal treaty.
Things really then started to turn in 1964 when rising resentment at the US presence gave birth to 13 years of US-Panama talks culminating in the Torrijos-Carter Treaties of 1977, which in turn kicked off the canal’s gradual transfer to Panama by the end of 1999.
The key loophole? One of the treaties (the ‘Neutrality Treaty’) gives the US the permanent right to defend the canal’s continued neutral service to ships of all nations. And in fact, that was one of Bush Sr’s justifications for then invading Panama in 1989.
Anyway, the Canal has since become critical to Panama, generating a cool $3.5bn profit in 2024. Panama has also invested billions to expand the canal, doubling marine traffic (and profit) along the way.
So, what’s Trump playing at here? The Panama Canal is the ultimate chokepoint and (at least in Trump’s view) that now creates vulnerabilities for the US, including:
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Economic: 75% of all the canal’s cargo heads to or from US ports. To put it another way, the canal carries ~40% of all US container traffic. And that level of dependency realistically also makes this vulnerability…
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Strategic: When the Spanish-American War forced the US to schlep warships the long way to Cuba, the idea of a canal shifted from a nice-to-have to a must-have. The canal then enabled the US to have a two-ocean navy, going on to win wars in the Atlantic and Pacific and become the world’s sole superpower. These days, a canal delay or blockage could hit its ability to respond to (say) a war over Taiwan.
But even if you accept those vulnerabilities, would Panama willingly exploit them? Not only is the current president very pro-US, but every single leader post-Noriega (the general ousted by Bush Sr) has been US-educated. And even if a hostile leader still emerged, Panama has no military (a treaty requirement) to back up any wild moves.
But it’s the word ‘willingly’ above that we imagine keeps Trump strategists awake. So then… what could an unwilling screw-over theoretically look like? Here are three options:
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Espionage: Hutchison’s Beijing links could leave it vulnerable to intelligence agency pressure to, say, share intel on — or even delay — US shipments
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Elite capture: China’s growing local presence since Panama ditched Taiwan in 2017 has left some fearing that Panama’s elites could lean East, shaping the canal’s operations, and
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Sabotage: Think of those ships ‘accidentally’ severing cables near Taiwan and the Baltic, or a more malicious version of the Ever Given that blocked the Suez in 2021. But think of it timed to cripple the Panama Canal and hamper any US response to a war.
Now, we’re not suggesting any of these scenarios will happen, or that even the mere possibility justifies (or not) Trump’s rhetoric. To boot, there’s still real debate around the extent to which China is actually making inroads in Panama. But either way, the US president just devoted two paragraphs to this very issue in his inaugural address.
As for Panama? The pro-US president (Mulino) is rejecting the idea of a US takeover, and told reporters in Davos to “be serious” when they asked again. Meanwhile, his diplomats just lodged a formal complaint at the UN, citing the UN Charter’s rejection of threats of force. And in what looks like an attempted signal of good faith, he’s also sending those suit-clad auditors into Hutchison to assure Washington that all’s still in order.
INTRIGUE’S TAKE
Zooming out a little, there’s a common thread across so many disparate issues right now: the Panama Canal, undersea cables, the SWIFT international payments system, the Arctic, cyberspace, outer space, and beyond. They’re all really meant to be global public goods — linking and serving broader mankind. But as global trust collapses and more players feel and fear their mis-use, more capitals are rushing to control them.
So what’s Trump’s play here? Maybe it’s another ‘threaten then negotiate’ move to cut canal transit fees and/or curb China’s Panama influence. Maybe. But if that’s the case, one risk is that US rivals will start quoting his lines back at him, whether it’s Putin seeking to justify his invasion of Ukraine, or Xi seeking to justify any move on Taiwan.
The other thing to note is that, in the face of any growing influence from China and others, many capitals want more US interest and presence. But they want it as a source of options and support. Not fear.
Also worth noting:
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Hutchison has a major presence at other critical waterways, including Egypt’s Suez Canal. It’s been operating in Panama since 1997, and signed another 25-year extension in 2021.
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A typical medium-sized ship now pays ~$250k to pass through the canal, while the largest ships pay double that. Transit fees are based on factors like a vessel’s type, size, and cargo.
MEANWHILE, ELSEWHERE…
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🇦🇫 Afghanistan: After years of negotiations, the Taliban has released two US citizens in exchange for an Afghan national imprisoned in the US on terrorism and drug trafficking charges. The little-known US citizens returned just before Joe Biden left office, and the Taliban is apparently still holding two more Americans.
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🇷🇺 Russia: President Vladimir Putin and his Chinese counterpart Xi Jinping held a video call hours after Donald Trump’s inauguration on Monday. The two leaders pledged to “guide China-Russia relations to a new height”, in a call that’s become a bit of a January tradition.
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🇯🇵 Japan: The Bank of Japan is likely to raise rates to 0.5% tomorrow (Friday), only its third hike since 2006. Governor Ueda has been signalling this move loud and clear to avoid the kind of market meltdown that followed the last rise in July.
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🇭🇹 Haiti: Armed gangs have shot at several diplomatic vehicles this week, killing at least one occupant and injuring several others. The incidents have mostly occurred right near Haiti’s international airport, and came just before Colombia’s President Petro made a rare visit.
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🇱🇾 Libya: Italian authorities have released a Libyan general shortly after arresting him on International Criminal Court allegations of war crimes. Rome has said a procedural irregularity led to the release of the general, who was in town to watch Juventus play AC Milan and has now apparently already returned to Libya.
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EXTRA INTRIGUE
Meanwhile, in other worlds…
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Science: AI is now helping researchers design proteins to counter snake venom.
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Culture: Millions are converging on a northern Indian city for the Maha Kumbh Mela, a Hindu festival thought to be the biggest gathering in the world.
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Sports: Long-time Mercedes F1 driver Sir Lewis Hamilton has made his first on-track appearance in a Ferrari after stunning the world with his team switch last year.
PRICE HIKE OF THE DAY
Credits: The government of Nepal.
Inflation has hit almost every corner of our globe, and that now includes its highest peak: Nepal has announced plans to hike (🥁) its Everest climbing permit fees by 36% to $15k, the first increase in a decade. There’ll also be proportionate fee increases for the off-season.
The Nepalese tourism department hasn’t specified what the extra revenue might be for, but it could be a response to criticism over increasingly crowded and polluted hiking conditions.
DAILY POLL
What do you think President Trump is looking to get out of Panama? |
Yesterday’s poll: Which executive action do you think will have the biggest impact?
🟨⬜️⬜️⬜️⬜️⬜️ ✊ January 6th pardons (11%)
🟩🟩🟩🟩🟩🟩 🇺🇸 America First foreign and trade policies (55%)
🟨⬜️⬜️⬜️⬜️⬜️ ⛑️ Pulling the US out of the WHO, Paris (12%)
🟨⬜️⬜️⬜️⬜️⬜️ 💥 Designating cartels as terrorist organisations (9%)
⬜️⬜️⬜️⬜️⬜️⬜️ 💰 Pulling out of the OECD Global Tax Deal (4%)
⬜️⬜️⬜️⬜️⬜️⬜️ 💸 Reviewing foreign aid (7%)
⬜️⬜️⬜️⬜️⬜️⬜️ ✍️ Other (write us!) (2%)
Your two cents:
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🇺🇸 M.B: “Whether for better or for worse, these America First policies have the potential to cause significant swings in monies and relationships among the biggest players in world trade.”
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💥 K.N: “In the short term, cartels as terrorist organizations. As someone who lives on the southern border, I expect it to get spicy REALLY quickly.”
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⛑️ M.M: “The US is by far the largest contributor to WHO and, cutting that source of funding, will drastically curtail WHO's ability to fulfil its mandate. The US has been the leader in global health issues for decades and will leave a serious vacuum if it leaves WHO – both for the US and globally.”
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✊ W: “Taking the long view. Where the rule of law is flouted, there eventually is no rule of law.”
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✍️ R.T: “Delaying the TikTok ban 75 days… it's pretty rare the effects of an EO are immediately felt by tens of millions of Americans!”
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*Disclosures
1 Mode Mobile recently received their ticker reservation with Nasdaq ($MODE), indicating an intent to IPO in the next 24 months. An intent to IPO is no guarantee that an actual IPO will occur.
2 The rankings are based on submitted applications and public company database research, with winners selected based on their fiscal-year revenue growth percentage over a three-year period.
3 A minimum investment of $1,950 is required to receive bonus shares. 100% bonus shares are offered on investments of $9,950+.
✏️ Editor’s Corner
Thanks to those Intriguers who pointed out we misspelled Congressman Krishnamoorthi’s name in yesterday’s edition! 🤦