The Panamanian government has announced it will terminate its memorandum of understanding (MOU) with China’s Belt and Road Initiative, bowing to pressure from Washington over concerns about Chinese influence in the Panama Canal. The decision follows a high-level diplomatic visit from U.S. Secretary of State Marco Rubio, who warned of potential repercussions if Panama did not align more closely with American interests.
President José Raúl Mulino confirmed Sunday that his administration would not renew the 2017 agreement with China when it expires. The MOU, which is automatically extended every three years unless revoked by either party, has facilitated significant Chinese investment in the region, including the operation of two ports near the canal by Hong Kong-based Hutchison Port Holdings.
U.S. Concerns Over China’s Canal Influence
The Trump administration has long expressed alarm over China's growing role in Panama. Former President Donald Trump has claimed that the Chinese Communist Party (CCP) effectively controls the canal and has suggested the U.S. could use military or economic means to counter Beijing’s presence there. Secretary Rubio echoed these concerns during his visit, citing violations of the 1977 treaty that guaranteed the canal’s neutrality and Panamanian control.
“Secretary Rubio made clear that this status quo is unacceptable and that absent immediate changes, it would require the United States to take measures necessary to protect its rights under the Treaty,” the State Department said in a statement.
The Panama Canal is a vital global shipping route, with roughly 72 percent of vessels passing through either arriving at or departing from U.S. ports. American officials fear that in the event of a geopolitical conflict, Beijing could leverage its influence in Panama to restrict access to the canal, disrupting global trade.
Trump Administration Eyes Canal Reacquisition
Amid escalating tensions with China, House Republicans have introduced legislation to repurchase the Panama Canal, a move that would give Trump authority to negotiate its reacquisition. The canal, built by the U.S. between 1904 and 1914, was handed over to Panama in 1999 following the terms of the Carter-Torrijos Treaty.
“If the government in China in a conflict tells them to shut down the Panama Canal, they will have to,” Rubio warned last week, citing potential national security risks.
Panama: No Threat of Force, But U.S. Influence Prevails
Despite the pressure from Washington, President Mulino downplayed any immediate threat of U.S. intervention. He described his discussions with Rubio as “respectful” and “positive” and denied any serious risk to Panama’s sovereignty.
“There is no real threat of retaking the canal or the use of force,” Mulino said. However, the Panamanian government’s decision to exit the Belt and Road Initiative signals a clear shift toward U.S. interests, likely reshaping the balance of power in the region.
The move comes as the U.S.-China trade war intensifies, with Trump imposing new tariffs on Chinese goods just a day before Rubio’s visit. As tensions grow, the Panama Canal—one of the world’s most critical maritime chokepoints—remains at the center of an escalating geopolitical battle between the two superpowers.
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