Folks, you may not have been paying attention, but there is a rapidly, rapidly Brewing crisis over in the Panama Canal Why is this a problem? Well, it's a problem because over 60 percent of goods transiting the canal originate in or end up in U.S Markets If you look up the world's key Maritime choke points where if they were blocked off, big portions of the economy would collapse Well, there's about eight primary ones, but but there's only one in North America and that is the Panama Canal. The Panama Canal serves more than 144 Maritime routes connecting 160 countries and reaching some 1700 ports globally. The Panama Canal has 46 percent of the total market share of containers moving from Northeast Asia to the east coast of the United States and 40 percent of global cargo ship traffic worldwide. One another important: Canal The Suez Canal was blocked off in 2021 by the Evergreen container ship.

Well, that was estimated to have cost roughly 12 percent of global trade and helped in part Drive Global Inflation around the world. But of course, the Panama Canal have in any kind of blockage would have a much, much more direct impact on the United States and the United States economy. So what is the problem? What is going on Charlie Charlie Well, the canal is in a severe drought and there's a backlog of vessels trying to go through it, and you can actually see many stranded waiting endlessly in this video clip. And as a result of the drought, the Panama Canal Authority The ACP has actually suspended booking for super vessels through September 30th.

in addition to other measures to remove the drought-related backlog waiting to travel the canal, this Authority is also going ahead and reducing the number of ships that can go through the canal every single day and now it's at a maximum of 32, which is really really a small amount in August. The average wait time for ships went from less than a week to nearly a week and a half, and that bottleneck is getting worse fast. This was reported from Fright wave quote as a result of water levels not recovering enough to resume normal passage. The daily Transit limits and vessel draft restrictions the ACP imposed earlier this year will need to remain in place until this time next year.

This can change if extensive rainfall is received, but the dry season begins in late November The reduction in Daily passages is behind the backlog. so they have already dramatically reduced daily passages and and it looks like that's going to get worse and worse as we head into actual dry season. this was supposed to be the wet season, so clearly this is going to be a much, much much bigger issue. So what caused this? Obviously, we know there's a drought, but is there an overall picture of what is causing this? Were there mistakes made? Who is to blame and how costly is this going to be? Well, the LA Times ran an opinion piece the other day saying that this drought is the US's fault and the US's problems and quite frankly, they are right, but not in the way they met.

Let me give you the context here. this is a very, very important issue that you got to be informed on, so let me walk you through it. The Panama Canal's construction was started first in 1882 by the French and then they scrapped the project after too many workers died and it proved to be too costly. Some years later, the United States took over the project and purchased control after tons of U.S taxpayer money and almost 6 000 American lives lost.

The canal opened in 1914 and was of huge strategic, military and economic importance for the next 60 plus years. Then President Carter decided to sell back control of the Panama Canal to Panama for one dollar under an agreement that he did with a military dictator that had just performed a coup on the previous Panama government. Why did he do this? While an argument was made that this was a more moral thing to do to let Panama control their own Canal even though U.S taxpayer dollars had built the canal, many American lives were lost in the canal and and the canal brought a huge economic boom to Panama over the course of its operations And on December 31st 1999, it was officially turned over to the Panama government with the promise that the Panama Canal would remain neutral. but then over the coming decades Panama decided to sell more and more control of the Panama Canal to who: China raising a lot of questions as to how neutral the Panama Canal actually is and so essentially American control in Panama was sold to Panama and then Panama immediately turned it around for a massive profit and sold key chunks of it to China.

And while Panama used to have a very, very close relationship with the US, well, a lot of that relationship has evaporated and has gone towards China Panama The country and Panama the canal have now become a very, very important military and economic strategic point for China In this region, Panama is a key player in China's imperialist belt and wrote initiative which is the Ccp's way to expand Chinese influence and power. Around The World Panama now gives China direct geopolitical favors in return for investment. Here's an example of that from the Financial Times quote: American Hackles were raised in 2017 when Panama suddenly switched its diplomatic Allegiance from Taiwan to China. Around the same time, many Chinese-backed projects were announced, including a cruise ship terminal, a high-speed rail line to Costa Rica, a huge Convention Center the fourth bridge, and a new Chinese Embassy building near the canal.

Not only is Panama and the Panama Canal a key key point of strategic and Military importance for China and the Ccp, but the government there is increasingly a puppet for China China Now controls two ports on either end of the canal, and while it doesn't interact or influence all Goods transiting the canal, their influence is growing rapidly as they see this as a geopolitical and economic gold mine. Now look folks, I Know that a lot of people would argue that American power around the globe has had some big negative impacts and thus should be curtailed. But what's interesting is that China seems to have no problem picking up where Americans have left off. Every time America pulls out of a region, it seems like China pulls in.

Very, very interesting. A lot of the policy decisions made from the top leaders in the U.S have gone directly to empowering China over the last 30, 40, 50 years and look to continue to do so. Okay, but Charlie Wait a second. How does this relate to how the Panama Canal is drawing and how this is the US's fault and the US's problem? While this LA Times piece is making the case, that this is the US's fault? because the U.S hasn't done enough to stop climate change from drying up the canal.

Of course, the peace blames the U.S solely instead of the dozens of other countries that pollute, or the fact that China specifically releases almost twice as much CO2 as does the U.S But of course it's only the US's fault, of course. But the truth is it's not just climate. Climate just revealed a lot of the problems that were already going on behind the scenes. Poor preparation, poor management, corruption.

That's the US has given up management of the Panama Canal about 20 years ago. Panama has done a horrible, horrible, and well-documented horrible job of managing it and managing its water. This isn't surprising. Of course, Panama is known as one of the most corrupt countries in the world, and its management of the Panama Canal is also very, very corrupt.

And this is all very, very well documented. They've seriously dropped the ball again and again and again when it comes to water management. For example, in 2010, the country got way way too much rain and flood enforce the canal to close. A water researcher and renowned professor in this industry said quote the bigger issue one that is only exacerbated by the drought, is the country's Water Management Offloading and restricting the number and weight of vessels are mere temporary fixes for this overarching problem along with using water for things like consumption, agriculture, technology, and waste.

Panama relies extensively on hydropower. With this Reliance on water for many critical components of the country's economy. Thomas says there needs to be a better emphasis on water conservation. It's expected that as a result of this blockage and ongoing issues with management, that Panama is going to end up giving even more control and management of this canal up to China And then China will fix the problem and then years from now charge massive, massive tariffs on U.S Imports which of course will be a huge National Security risk to the US but also a big threat to the global stage.

but of course at the same time will increase CCP power internationally. Anyways, what do you think about this? Panama Canal Crisis was the U.S right to give up control of the Panama Canal to Panama which then sold it basically to China wilting Shane should U.S policy recognized Panama's importance and start taking aggressive actions to protect it. Well, let us know down below. Anyways, if you appreciated today's Deep dive, make sure to hit that ravishing like button and subscribe.

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