US Navy ships will go through the Panama Canal for free, an American official said following Secretary of State Marco Rubio’s visit to the Central American country during the weekend, Bloomberg reported.
Panamanian authorities did not comment on the claim.Panama’s canal authority did say late Sunday that it will “optimize transit priority” of US Navy ships through the waterway. It is one of the concessions made by President Jose Raul Mulino following the visit from Rubio, who had warned of “consequences” if the country did not take actions regarding what the US has described as China’s large influence over the canal.
While Trump made threats of taking control of the canal from the Panama Canal Authority, Mulino said Rubio made “no real threat of retaking the canal or the use of force.”
The Panamanian government also said it will not renew a memorandum of understanding with China regarding its “Belt and Road Initiative,” the country’s project to finance infrastructure projects across several continents.”
The memorandum of understanding from 2017 regarding the Belt and Road Initiative won’t be renewed by my government. We will study the possibility that it can be finished sooner but I think it will be done in a year or two because renewals take place every three years,” said Mulino said.
The State Department had anticipated that Rubio’s visit to the Central American country was focused on countering China’s influence.
Even though the Panama Canal is run by an autonomous entity overseen by the Panamanian government, the U.S. government claims China exerts influence through a Hong Kong-based company which operates ports on both ends of the waterway.
During his inauguration speech, Trump vowed to take back the Panama Canal. The president claimed that the U.S. has “been treated very badly by this foolish gift that should have never been made,” referring to an agreement with the Latin American country that would eventually lead to Panama retaining full control of the canal.
The government of Panama filed a complaint to the United Nations following Trump’s threat, referring to an article of the UN Charter precluding any member from “the threat or use of force” against the territorial integrity or political independence of another.
Enhanced security cooperation
U.S. Defense Secretary Pete Hegseth and Panama’s President Jose Raul Mulino agreed to expand cooperation between the U.S. military and Panama’s security forces during a call on Wednesday, the Pentagon said, in the wake of a dispute over the Panama Canal.”
They agreed on the strong relationship and many security interests that the United States and Panama share, to include safeguarding the Panama Canal,” a Pentagon spokesperson said.
After talks with U.S. Secretary of State Marco Rubio earlier this week, Mulino said his country’s broad agreement to contribute to China’s Belt and Road initiative will not be renewed, and could be terminated early.
Cancellation of port deal with China
Panama’s government is reportedly mulling over whether it should cancel its contract with the Hong Kong-based company that operates two ports adjacent to the Panama Canal as pressure from President Donald Trump mounts over alleged growing Chinese influence over the waterway.
According to a report from Bloomberg, Panama would be canceling the deal with Hutchison Ports PPC, also known as Panama Ports Company. PPC is a subsidiary of CK Hutchison Holdings, which has been the target of the Trump administration over its potential ties to Mainland China.
The report said that no decision has been made and that the government would proceed in a way intended to avoid lawsuits and follow due process.
Hutchison has operated two of Panama’s ports at Balboa and Cristobal under a deal that was first signed in 1997. In 2021, the deal was further extended until 2047.
The company says it oversees 53 ports in 24 countries.Two Panamanian attorneys also filed suit challenging Hutchison’s 25-year contract extension in the country’s Supreme Court on Monday, alleging it violates Panama’s constitution.
The complaint also accuses the Hong Kong subsidiary of not paying taxes and benefits due to a series of advantages that allegedly break the law.
The potential relations between Hutchison and China, regardless of current standing, have caused recent unease in Washington, namely since Hong Kong-based companies are still subject to broadly defined Chinese state oversight.
Trump has repeatedly threatened to “take back” the canal since December due to the possible ties, while also making unsubstantiated claims that China is operating the 51-mile trade artery and that the country has soldiers deployed at the waterway.
Panama’s government has sought to assuage Trump’s hawkish rhetoric, already having performed an audit on Panama Ports Company.
After Panama President José Raúl Mulino met with Secretary of State Marco Rubio on Sunday, the U.S. got an even bigger win when Panama’s government confirmed the country would not renew its participation in China’s Belt of Road Initiative.
This makes Panama the first Latin American country to leave the foreign infrastructure investment program.Along with Panama’s severing of its Chinese ties, the authority that runs the canal indicated that it will “optimize transit priority” of U.S. Navy vessels.
A State Department statement indicated that Rubio made clear during the meeting that the “status quo is unacceptable.” But the Secretary of State’s tune was more upbeat after its conclusion, calling the Belt and Road exit “a great step forward” for both U.S.-Panama relations and a “free Panama Canal.”
Deterring Chinese influence in the Western world has been a top platform for Trump and both of his administrations, as evidenced by the tariffs slapped on the country during his first go as president, as well as the most recent tariffs introduced Tuesday.
Those duties add an extra 10-percent charge on all China-made goods, targeting a total of $450 billion in imports.Trump’s protectionist-and more recently, quasi-expansionist-platforms have extended to the Panama Canal, which is a vital chokepoint for China-U.S. maritime trade. More than 76 percent of the cargo traveling through the canal either originates or is destined for the U.S, according to the Panama Canal Authority (ACP).
Additionally, the canal accounts for 46 percent of the total market share of containers moving from Northeast Asia to the U.S. East Coast.The president has claimed that China’s influence violates the Panama Canal Treaty and Neutrality Treaty first signed in September 1977 during the Carter administration.
That agreement ensured that the Panama Canal would be under Panama’s sovereignty starting on Dec. 31, 1999, operating as a neutral corridor for ships from every country to pass through.The Commander in Chief has lamented other concerns, namely another that U.S. ships are overcharged to sail through the canal.
That claim has been denied by the ACP.
China isn’t thrilled with Trump’s rhetoric surrounding the canal, with its foreign ministry saying Wednesday it had lodged complaints with the U.S. over “irresponsible” remarks.”
Currently, the cooperation between China and Panama under the framework of the Belt and Road Initiative is proceeding normally,” ministry spokesperson Lin Jian told a press briefing when asked about Panama’s decision to let the Belt and Road partnership expire.
“We hope that the relevant parties will remain confident, not be influenced by external interference, and make the right decisions based on the overall bilateral relationship and the long-term interests of the people of both countries,” Lin said.
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