U.S. Demands “Immediate Changes” to Panama Canal Governance
U.S. Secretary of State Marco Rubio issued a stark warning to Panama’s President JosĂ© RaĂşl Mulino during high-stakes talks in Panama City this week, demanding “immediate changes” to curb China’s growing influence over the Panama Canal.
The diplomatic push follows years of U.S. concerns about Beijing’s strategic foothold in the critical maritime corridor, which handles 5% of global trade.
Diplomatic Talks Highlight U.S.-China Tensions
Rubio’s visit – his first international trip as Secretary of State – focused on reasserting U.S. authority under the 1977 Torrijos-Carter Treaties, which guarantee Panama’s sovereignty over the canal while ensuring U.S. rights to defend its “neutrality.”
During closed-door meetings, Rubio reportedly warned that Chinese state-linked companies’ control over canal infrastructure violates these agreements.
Key developments from the talks:
- Panama confirmed it will not renew its 2017 Belt and Road Initiative (BRI) partnership with China, ending infrastructure projects tied to the canal zone
- Mulino pledged closer collaboration with U.S. agencies on canal security and modernization efforts
- Both nations agreed to establish a joint task force addressing regional migration and drug trafficking
Why the Panama Canal Matters
The 50-mile waterway remains vital to global commerce:
Metric | Detail |
---|---|
Annual Ship Transits | 14,000+ |
Cargo Volume | 450 million tons |
U.S. Trade Share | 68% of canal traffic |
(Source: Panama Canal Authority 2024 data)
Chinese firms have increasingly dominated canal operations since 2016, winning contracts for:
- Port expansions
- Bridge construction
- Logistics hubs
This expansion triggered alarms in Washington, particularly after China Merchants Port Holdings acquired a major stake in Margarita Island’s container terminal.
Trump’s “Reclaim the Canal” Rhetoric Resurfaces
Former President Donald Trump amplified pressure on Panama ahead of Rubio’s visit, reiterating claims that China “stole” canal control through corrupt deals. During a Fox News interview, Trump warned:
“We built it, we paid for it, and we’re going to take it back – or something very powerful will happen”.
While current U.S. officials distanced themselves from Trump’s remarks, analysts note his statements reflect bipartisan concerns about Chinese influence in Latin America.
Panama’s Balancing Act
President Mulino struck a conciliatory tone post-meeting, stating:
“Our dialogue with Secretary Rubio was respectful and productive. Panama remains committed to sovereign decisions that benefit our people first.”
However, challenges persist:
- Economic Pressures: China remains Panama’s second-largest trading partner ($2.3B annual trade)
- Domestic Criticism: Opposition leaders accuse Mulino of capitulating to U.S. demands
- Canal Upgrades: $2.5B modernization plan requires international financing
Regional Implications
The talks signal broader U.S. efforts to counter China’s Latin American footprint:
- Nicaragua Canal Project: Defunct Chinese-backed rival to Panama Canal
- El Salvador Port Deal: Recent U.S. intervention in Chinese port contract
- Argentina Lithium Rights: Ongoing U.S.-China competition for resources
Energy analyst MarĂa González notes: “Who controls the Panama Canal controls access to both hemispheres. This isn’t just about trade – it’s about hemispheric security”.
What Comes Next
- July 2025: U.S.-Panama task force holds first meeting on canal security
- Q3 2025: Deadline for Panama to finalize new canal operator contracts
- 2026: Planned completion of U.S.-funded surveillance system along canal
As Rubio departed Panama, he emphasized: “This isn’t about choosing sides – it’s about upholding agreements that keep global commerce flowing safely.”
Yet with China vowing to “protect legitimate interests” in Panama, the canal’s future remains a geopolitical flashpoint.