US Warns Panama Over Chinese Influence, Threatens Action on Canal

The United States has issued a stark warning to Panama regarding what it views as excessive Chinese influence over the Panama Canal area, threatening to take “measures necessary” to protect its interests if changes are not made, Al Jazeera reports.

US Secretary of State Marco Rubio delivered the message to Panamanian President Jose Raul Mulino during his first official foreign trip on Sunday.

Rubio stated that the Trump administration believes the current situation at the canal is “unacceptable” and would require the US to take action under its treaty with Panama if the situation is not remedied. The Panama Canal is a vital artery for global trade, handling 40% of US container traffic between the Atlantic and Pacific oceans.

President Donald Trump has previously stated he would not rule out military force to seize control of the canal, which the US handed over to Panama in 1999. Trump has expressed concerns that China has gained too much control through investments in surrounding ports, even declaring during his inaugural address last month that the US will be “taking it back.” Trump reiterated his position on Friday, saying Panama has offered to do many things but “we think it’s appropriate that we take it back.”

However, following the meeting between Rubio and Mulino, there appears to be a degree of easing tensions. According to Al Jazeera’s Latin American editor Lucia Newman, Panamanians “seem to be breathing a sigh of relief.” She reports that Panama has agreed not to renew its Belt and Road Initiative agreement with China, Beijing’s global infrastructure development strategy, as a result of the talks. Details regarding an agreement focusing on undocumented migrants are also reportedly being worked out between the two countries.

Despite Rubio’s firm stance, President Mulino downplayed the threat of military action to seize the canal. “I don’t feel that there is any real threat at this time against the treaty, its validity, or much less of the use of military force to seize the canal,” Mulino told reporters on Sunday. Instead, Mulino proposed technical-level talks with the US to address concerns about Chinese influence and reaffirmed that Panama will not negotiate the ownership of the canal. He had hoped Rubio’s visit would focus on shared interests such as migration and combating drug trafficking.

While Mulino rejected negotiation on canal ownership, sources suggest Panama may be open to a compromise, possibly involving the transfer of canal operations from the Hong Kong-based Hutchison Ports company. However, it remains unclear if Trump would consider the transfer of canal operations to an American or European firm as sufficient, as his demands appear to extend beyond just operations.

Rubio’s mission also coincides with other recent actions taken by the Trump administration including tariffs imposed on Canada, Mexico, and China, as well as the freezing of nearly all US foreign aid. These actions signal an increasingly assertive foreign policy.