Panama has agreed to curb China’s influence over the Central American company, easing tensions following threats from President Donald Trump for the U.S. to retake control of the Panama Canal.
Secretary of State Marco Rubio met with Panamanian leaders Monday to discuss the Canal’s future, and after his visit, Panamanian President Jose Raul Mulino announced plans to drop out of the Belt and Road Initiative, China’s effort to fund building projects throughout the world.
In articles and a video interview with IndustryWeek in January, Canal expert Andrew R. Thomas predicted that Panama would work closely with Trump Administration officials to address American concerns. Thomas noted that after decades of being considered a financial burden to the U.S., the Canal has become vital again in recent years because of increased shipments of U.S. liquefied natural gas (LNG) to Asia.
Before Rubio’s visit, Panama had announced plans to review contracts held by China’s CK Hutchison Holdings to run Atlantic and Pacific Ocean ports to the Canal. Panamanian lawyers filed lawsuits Monday, asking that nation’s Supreme Court to throw out those contracts, which automatically renewed in 2021 for another 25 years.
During Congressional hearings about the Canal last week, several experts testified that CK Hutchison’s contract could violate U.S.-Panama agreements from 1977 – the agreements that turned over ownership of the Canal from the U.S. to Panama –to keep the canal neutral to geopolitical pressure.
“It was a worthwhile visit and very respectful. It is one that I think is going to achieve potentially good things that assuage concerns we have,” Rubio told reporters after arriving from Panama in El Salvador. "Time will tell – we’ll see – but I feel good about it.”
Mulino, speaking to reporters Sunday, said that Panama would not renew its membership in China’s infrastructure funding program and would look whether it can leave earlier than planned. Panama, during Trump’s first term, welcome Chinese spending and cut off diplomatic relations with Taiwan in 2017 to favor partnerships with China.
Rubio said to expect more announcements in the coming days. He suggested an agreement on U.S. concerns over Panama charging military vessels that go through the canal even though Washington is obliged to defend the waterway, the link between the Atlantic and Pacific coasts.
Before leaving Panama, Rubio observed a flight back of Colombians detained as they crossed the Darien Gap, a dense jungle that many migrants pass through towards the United States, through a deportation program negotiated under former president Joe Biden.
In his video interview, Thomas said Panama has long recognized the loose border between Colombia and Panama, but that it doesn’t have the financial resources to secure that on its own. He predicted that in return for more U.S.-friendly policies at the canal, the Trump Administration would likely offer some U.S. assistance to patrol the border – helping Panama while meeting Trump’s goal of lessening migrant flows from South America to North America.
