Panama, February 3: US Secretary of State Marco Rubio has demanded that Panama make “immediate changes” to what he calls the “influence and control” of China over the Panama Canal. But Panama has rejected the demand firmly, BBC reports.
America’s top diplomat said Panama must act or the US would take necessary measures to protect its rights under a treaty between the two countries., the BBC said.
The warning follows President Donald Trump’s vow to retake the canal and a meeting between Rubio and Jose Raul Mulino, Panama’s conservative president, in Panama City on Sunday.
The two men appeared to emerge from their two-hour meeting with different interpretations.
Mulino told reporters he did not see a serious threat of US military force to seize the canal, saying he had proposed technical-level talks with the US to address Mr Trump’s concerns about Chinese influence.However, Trump’s vow to retake the canal has sparked a significant backlash in Panama. Protesters in Panama City on Friday burned effigies of Trump and Rubio, BBC said.
Riot police moved in on another crowd of demonstrators, firing tear gas and wrestling people away. The clashes were small-scale, but the resistance to the US president’s stance is widely felt.
On Thursday, Mulino said the issue of the canal’s ownership would not be up for discussion with Rubio. “I cannot negotiate or even open a negotiation process about the canal. It’s sealed, the canal belongs to Panama,” he said.
Trump’s Claim About China is Unfounded
Mr Trump’s comments about the canal included an unfounded claim that Chinese soldiers are operating it. He also said American ships were unfairly charged more than others, despite the fact such a practice would be unlawful under treaty agreements.
The waterway is in fact owned and operated by the Panamanian government, under a neutrality treaty signed with the US decades ago, BBBC pointed out.
However, Chinese companies have invested heavily in ports and terminals near the canal. A Hong Kong based company runs two of the five ports close to its entrances. But President Trump’s muscular approach – even refusing to rule out military action to take the canal – has aroused a strongly patriotic reaction in the small strategic nation.
“It’s ridiculous,” says Panama City resident Mari, who asked not to have her surname published.
“There’s a treaty that he has to respect, and there’s nothing in the treaty that says that we cannot have ports run by the Chinese,” she told the BBC, pointing out that there is Chinese investment in American ports and cities.
Demonstrators came out in Panama City on Friday to protest Rubio’s visit
Surrounded by tourists and stalls hawking Panama hats and souvenirs, Mari explained that many residents have strong memories of US control of the canal and don’t want to go back, BBC said.
The US and Panama signed a treaty in 1979, starting a handover process that saw Panama take full control of the canal in 1999.
“We could not cross into the canal zone without being arrested if we didn’t follow all the American rules. The minute you stepped across that border, you were in the United States,” Mari said.
“We had no rights within our own country, and we will not put up with that again… We are very insulted by [Trump’s] words.”
For some, Trump’s refusal to rule out the use of military force has also triggered suspicion and fear. It evokes memories of the 1989 US invasion of Panama to depose de facto ruler General Manuel Noriega, a conflict that lasted several weeks and rapidly overwhelmed Panamanian forces.
“I was the political leader of the opposition when Noriega said he was going to kill all the leaders of the opposition if the US were to invade,” recalled former Panama congressman Edwin Cabrera, speaking to the BBC by the locks of the canal’s Pacific entrance.
“I heard the bombs and started seeing people dying… The only thing President Trump and Rubio have left to say is that they will invade us,” he told the BBC. “I wouldn’t like to live that again in the 21st Century, relive the imperial experience. Panama is in the middle of war between two powers, the USA and China, while we are looking at the sky.”
People not Gaining from Canal
Hotel worker Andre Howell told BBC that Panamanians don’t see enough of the benefits from the Panama Canal
Marco Rubio is the first Hispanic Secretary of State and is well known for his hawkish positions on some leaders in the region and on China. While Panama closely co-operates with the US on many issues, Mr Rubio’s visit is meant to signal the administration’s intolerance of countries soaking up Chinese investment in what the US sees as its own backyard.
In Panama, he claims China could ultimately use its interests at the ports to block US merchant or war ships in the event of a conflict or trade war.
“If China wanted to obstruct traffic in the Panama Canal, they could. That’s a fact… That’s what President Trump is raising and we’re going to address that topic… That dynamic cannot continue,” Mr Rubio said on The Megyn Kelly Show last week.
Despite the overwhelming support among ordinary Panamanians for their country’s ownership of the canal, some remain sceptical of their own leadership, arguing profits from the waterway don’t filter through to enough ordinary Panamanians.
“What you see here – that the United States and Donald Trump want to take back the canal – that’s what we call cause and effect,” says Andre Howell, a hotel worker in the historic centre of Panama City.
“They’re not administrating the Panama Canal the right way… No Panamanians have [the] benefits,” he said.
Does China run the Panama Canal?
China is the second-biggest user of the Panama Canal by metrics of cargo volumes
“China is operating the Panama Canal and we didn’t give it to China. We gave it to Panama and we’re taking it back,” he said. The 51-mile (82km) Panama Canal cuts across the Central American nation and is the main link between the Atlantic and Pacific oceans.
According to BBC, Up to 14,000 ships use it each year as a shortcut to a journey which, before the canal was built, would have taken them on a lengthy and costly trip around the tip of South America.
The strategic waterway, which handles about 5% of global maritime trade volume, is operated by the Panama Canal Authority, an agency of the Panamanian government, not Chinese soldiers.
However, Mr Trump’s inaccurate claim reflects the concerns of some US officials over China’s significant investments in the canal and its surrounding infrastructure.
History of Panama Canal
Historically, the US played a pivotal role in the construction and administration of the passage, which links the Atlantic and Pacific oceans. After a failed attempt by the French to build it, the US secured the rights to undertake the project. The canal’s construction was completed in 1914.
It remained under US control until 1977, when then President Jimmy Carter signed a treaty to gradually hand it over to Panama, which Trump has referred to as “foolish”. Since 1999, the Panama Canal Authority has held exclusive control over the operations of the waterway.
The treaties signed by both the US and Panama stipulated that it shall remain permanently neutral, but the US reserves the right to defend any threat to the canal’s neutrality using military force under this deal.
China’s role in the operations of the canal
There is no public evidence to suggest that the Chinese government exercises control over the canal, or its military. However, Chinese companies have a significant presence there. From October 2023 to September 2024, China accounted for 21.4% of the cargo volume transiting the Panama Canal, making it the second-largest user after the US.
In recent years, China has also invested heavily in ports and terminals near the canal. Two of the five ports adjacent to the canal, Balboa and Cristóbal, which sit on the Pacific and Atlantic sides respectively, have been operated by a subsidiary of Hutchison Port Holdings since 1997.
The company is a subsidiary of the publicly listed CK Hutchison Holdings, a Hong Kong-based conglomerate founded by Hong Kong businessman Li Ka-shing. It has port operations in 24 countries, including the UK.
Although it is not state-owned by China, Ryan Berg, director of the Americas Program at the Centre for Strategic and International Studies told BBC. there have been concerns in Washington over how much control Beijing would be able to exert over the company. A wealth of potentially useful strategic information on ships passing through the waterway flows through these ports.
“There is an increasing geopolitical tension of economic nature between the US and China,” Mr Berg says. “That kind of information regarding cargo would be very useful in the event of a supply chain war.”
CK Hutchison did not respond to the BBC’s request for comment.
The bids to operate those ports faced almost no competition, Andrew Thomas, a professor at the University of Akron who has written a book on the canal told BBC. “The US at the time didn’t really care about these ports and Hutchison faced no objection,” he says.
Chinese companies, both private and state-owned, have also strengthened their presence in Panama through billions of dollars in investments, including a cruise terminal and a bridge to be built over the canal.
This “package of Chinese activities”, as described by Mr Thomas, might have prompted Trump’s assertion that the canal is “owned” by China, but operation of those ports does not equate to ownership, he stresses. Beijing has repeatedly said that China’s ties with Latin America are characterised by “equality, mutual benefit, innovation, openness and benefits for the people”.
Panama First to Join BRI
Panama’s strategic location means China has been vying to increase its influence in the country for years and expand its footprint on a continent that has traditionally been considered the “backyard” of the US. In 2017, Panama broke diplomatic ties with Taiwan and established formal relations with China – a huge win for Chinese diplomacy.
Months later, Panama became the first Latin American country to join China’s signature Belt and Road Initiative, a trillion-dollar global infrastructure and investment initiative.
The Dominican Republic, El Salvador, Nicaragua, and Honduras followed suit and also severed ties with Taipei in favour of Beijing.
China has slowly expanded its soft power by opening its first Confucius Institute in the country and providing a grant to build a railway. Chinese companies have also sponsored “media training” for Panamanian journalists.
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