Dec 23 (Reuters) - Latin American leaders on Monday

rallied to Panama's defense after U.S. President-elect Donald

Trump threatened to reimpose U.S. control over the Panama Canal,

a key global shipping route located in the Central American

nation.

WHAT IS THE PANAMA CANAL?

The Panama Canal is an 82-km (51-mile) artificial waterway

that connects the Pacific and Atlantic Oceans through Panama,

saving ships thousands of miles and weeks of travel around the

stormy, icy southern tip of South America.

The journey for ships traveling from Los Angeles to New York

is close to 8,000 miles (around 22 days) shorter via the canal

compared to traveling through the Strait of Magellan off Tierra

del Fuego, an archipelago that embraces southern Chile and

Argentina.

The canal transports ships through the Gatun Lake, some 26

meters (85 ft) above sea level, via a series of interconnecting

locks. Each ship's transit requires some 200 million liters (53

million gallons) of fresh water.

BUILDING THE CANAL

Spanish colonizers began studying the construction of an

inter-oceanic canal cutting through the isthmus at its narrowest

point, in southern Central America, as early as the 1530s. But

it was not until 1878 that Colombia - which then counted Panama

as a province - signed a concession with French engineers.

The French effort was ultimately a failure, going bankrupt

in 1899. Around 22,000 workers lost their lives on the project,

many from disease and accidents.

In 1903 the U.S. sought a permanent concession for a canal

from Colombia, which rejected the proposal. In response, the

U.S. supported Panama's independence, which was declared on Nov.

3.

Three days later, Panama's ambassador to Washington signed a

treaty granting the U.S. rights to build and indefinitely

administer the canal. The U.S. paid Panama $10 million and later

a $250,000 annuity for the rights. Many Panamanians condemned

the treaty as an infringement on their newfound sovereignty.

The U.S. construction was largely carried out by

Afro-Panamanian and Caribbean workers, over 5,000 of whom died

before the canal finally opened in 1914.

THE HANDOVER

During the 20th century, U.S.-Panama tensions worsened and

there were growing protests against U.S. control of the canal,

notably after the Suez Canal crisis in 1956, when British and

French plans to invade Egypt after it nationalized the Suez

Canal were halted after U.S. pressure.

In 1977, President Jimmy Carter signed a treaty with

Panamanian military leader Omar Torrijos that granted Panama

free control over the canal and guaranteed the waterway's

permanent neutrality.

This took effect on Dec. 31, 1999. The canal has since been

administered by the Panamanian government's Panama Canal

Authority, and remains a key source of income for the country.

RECENT DEVELOPMENTS

Climate change has contributed to increasing droughts that

have impacted water levels in the lakes feeding the canal,

forcing the canal authority to limit transits as it balances

Panamanians' water needs.

On Sunday, Trump threatened to reimpose U.S. control, citing

what he said were excessive fees to use the canal and a risk of

Chinese influence. A subsidiary of Hong Kong-based CK Hutchison

Holdings ( CKHUF ) has long managed two ports near canal

entrances.

"It was given to Panama and the people of Panama, but it

has provisions," Trump said of the canal.

"If the principles, both moral and legal, of this

magnanimous gesture of giving are not followed, then we will

demand that the Panama Canal be returned to us, in full, quickly

and without question."

PANAMA'S RESPONSE

Panamanian President Jose Raul Mulino rejected Trump's

threat. He said the canal's tariffs were carefully and

transparently evaluated, and that these maintain the canal and

helped expand it in 2016, boosting traffic and global trade.

"Every square meter of the Panama Canal and its surrounding

area belongs to Panama and will continue to do so," he said in a

statement on Sunday. "Our country's sovereignty and independence

are not negotiable."

"The canal is not under any direct or indirect control from

China, the European community, the United States, or any other

power," Mulino added.