Panama Canal Hearing Includes Iran Sanctions Accusation
The auction process for ships to pass through the Panama Canal when the water is low, and the fact that a Hong Kong company owns ports by the entrance and exit of the Panama Canal were the focuses of a Senate hearing on the canal -- but the way Iranian ships used Panama to evade sanctions also came up.
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Committee on Commerce, Science, and Transportation Chairman Ted Cruz, R-Texas, said he called the hearing to uncover evidence that the treaty ending U.S. occupation of the land surrounding the Panama Canal is being violated. "President [Donald] Trump is making a serious argument that treaty is being violated right now," Cruz said in his opening statement, though after the hearing, he said he's drawn no conclusions about what should be done with regard to Panama.
Sen. John Curtis, R-Utah, asked witnesses how Panama enabled Iran to evade sanctions. New Federal Maritime Commission Chairman Louis Sola said that when OFAC identified vessels that were using the Panama flag to avoid sanctions, Panama had "a very complicated process to deflag the vessels," and by the time the appeals process was through, the companies had found another country that would issue a flag of convenience.
"We explained ... the situation, the very next day we met with the maritime minister, and Panama actually adjusted their appeals process to make it more expedient," Sola said.
Although Trump has argued that the prices charged to U.S. ships violates Panama's promise of neutrality for the canal, testimony at the hearing showed that's not true. A drought meant rationing of slots to traverse the canal, and the highest bidder -- usually U.S. LNG ships -- were chosen, but there was no national discrimination.
However, witnesses agreed that the fact that Hong Kong's Hutchison Port Holdings owns a port both at the Atlantic entrance and the Pacific entrance of the canal is a risk for U.S. exporters and importers. Some witnesses said if there were Chinese spies or military working at either of those ports, that would be a clear violation of the treaty.
But George Mason University Law Professor Eugene Kontorovich said that even if the U.S. withdrew from the treaty, that wouldn't mean the U.S. could return to the days when it controlled the land around the canal and the canal itself. "Given that the United States has transferred control and sovereignty to Panama, the reverse of the treaty would not necessarily reverse sovereignty," he said. It's not clear that the U.S. could regain territorial control, he added.