Panama Grants Free Passage To U.S. Navy, Ends Belt and Road Ties With China

Panama has agreed to offer free passage to U.S. Navy ships after a visit by US Secretary of State Marco Rubio, who warned the country of consequences unless it took action against what the U.S. sees as growing Chinese influence over the vital waterway.

During his visit on Sunday, Rubio met with Panama’s President Jose Raul Mulino, where he expressed concerns about China’s expanding presence in the region and its involvement with the canal.

Rubio stated that the US could take “necessary measures” to protect its rights under the Panama Canal Treaty if Panama did not make immediate changes.

After the meeting, Mulino assured Rubio that US Navy vessels would now receive free passage through the canal. The Panama Canal Authority also stated that it would optimise “transit priority” for US Navy Ships.

While Panama’s officials did not immediately confirm the details of the free passage offer, the statement from the canal authority was clear about giving priority to US vessels.

These measures are taken after US President Donald Trump’s repeated complaints about Panama charging “exorbitant” rates for the US Navy’s use of the canal.

Trump had earlier threatened to take control of the waterway, accusing Panama of favouring Chinese interests. Trump also criticised Panama for allowing a large presence of Chinese signage in the canal area, saying it was “not right” and undermined US security interests.

In response, Mulino assured Rubio that Panama would not relinquish control of the canal. He rejected Trump’s claims stating that there was no real threat to the canal’s neutrality and no plans to allow foreign military forces to take over the area.

Mulino said that the Panama Canal is managed by Panama’s Canal Authority, a constitutionally independent entity.

Panama has also announced it will not renew its participation in China’s Belt and Road Initiative, making it the first Latin American country to take such a step.

Mulino explained that Panama’s involvement in the initiative which began in late 2017, would end in 2026 unless a decision is made earlier to terminate the agreement.

China’s Foreign Ministry responded to Panama’s announcement, reiterating its respect for Panama’ Sovereignty over the canal and maintaining that the waterway remains a permanently neutral international zone.

However, China did not comment on Panama’s decision to withdraw from the Belt and Road Initiative.

Despite the diplomatic disagreements, Mulino described the meeting with Rubio as “respectful and cordial.” He dismissed reports that military force would be used to take control of the canal, stating that he did not perceive any real threat to the treaty that governs its use.

Rubio’s six-day trip also included stops in El Salvador, Costa Rica, Guatemala, and the Dominican Republic. The trip follows Trump’s decision to impose tariffs on Canada, China and Mexico.

The Panama Canal, a critical chokepoint in global trade, has been under increased scrutiny in recent months due to Panama’s growing ties with China. In 2017, Panama severed diplomatic relations with Taiwan in favour of China, which increased tensions in the US about China’s growing presence in the region.

The US government has expressed concerns that Chinese influence, especially through a Hong Kong-based company managing nearby ports, could undermine the canal’s neutrality and security.

These concerns intensified after Trump’s 2017 statements, where he labelled the 1999 treaty that handed control of the canal to Panama as a “foolish” decision. Despite Trump’s rhetoric, Panam has made it clear that it maintains full control over the canal and its operations.

References: Bloomberg, baltimoresun

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