Trump’s ultimatum worked: Panama curtails cooperation with China
3 February 09:01
Panama has announced important changes in its relations with China after President Jose Raul Mulino met with U.S. Secretary of State Marco Rubio. This was reported by Komersant ukrainskyi citing CNN.
The key outcome of the meeting was Panama’s decision not to continue participating in China’s One Belt, One Road initiative. This is a particularly significant decision, given that Panama joined the initiative in 2017, while simultaneously severing diplomatic relations with Taiwan in favor of China.
In his statement, President Mulino said:
“I believe this visit opens the door to building new relationships… and trying to increase as much American investment in Panama as possible.”
The Panamanian authorities are currently auditing ports near the Panama Canal operated by Chinese companies. Moreover, the government is considering an early withdrawal from the Chinese project, without waiting for the current three-year term of the agreement to expire.
This decision comes amidst US concerns about Chinese influence on the Panama Canal, a critical global trade facility. U.S. Secretary of State Marco Rubio had earlier warned of possible measures by the U.S. to protect its interests if the situation with Chinese control over the canal does not change.
US President Donald Trump, as usual, did not mince words, but was not very clear either.
“China is running the Panama Canal, which was not given to China, which was given to Panama in a meaningless way. But they broke the agreement, and we’re going to take it back, or something very powerful is going to happen,”
– trump said the day before.
Nevertheless, during the meeting, the American side reaffirmed its recognition of Panama’s sovereignty over the canal, which President Mulino characterized as part of a “cordial and respectful” meeting.
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The Panama Canal
The Panama Canal is a strategically important shipping route connecting the Pacific and Atlantic Oceans through the Isthmus of Panama. Its length is 81.6 km, of which 65.2 km is by land. Thanks to the canal, the sea route from New York to San Francisco was reduced from 22.5 thousand kilometers to 9.5 thousand kilometers.
The first attempt to build the canal was made by the French Société Générale de l’Interoceanique Canal in 1879, but ended in failure and a corruption scandal. In 1904, the United States began construction, having previously supported the separation of Panama from Colombia in exchange for the right to build the canal. Construction lasted until 1920 in extremely difficult conditions – at least 27,500 workers out of 75,000 involved in the project died due to the tropical climate, epidemics, and landslides.
After the opening, the canal was controlled by the United States until December 31, 1999, when it was transferred to the Panamanian government. Contrary to initial fears, the efficiency of the canal under Panamanian management has not decreased, but rather improved due to modernization and improvement of operational processes.
In 2016, a large-scale $5.25 billion modernization of the canal was completed, increasing its capacity to 18.8 thousand vessels per year and the ability to pass larger vessels. Today, the canal handles about 5% of the world’s maritime trade and generates more than $2.5 billion in annual revenue for Panama. In fiscal year 2024, the canal’s total revenue was nearly $5 billion, despite challenges from drought and shipping restrictions.
Does China really control the Panama Canal?
Donald Trump’s administration claims that China has secretly taken control of the Panama Canal and even has a military presence there. In particular, Trump claims that Chinese soldiers have been deployed near the canal, and the Panamanian authorities are allegedly urgently removing Chinese inscriptions to hide the extent of Chinese influence. However, these allegations are not supported by any evidence. It is worth noting that the so-called “zone” around the canal, which is mentioned by supporters of this theory, was eliminated back in 1979, when the United States transferred control of the territory to Panama.
In fact, since 2000, the Panama Canal has been fully controlled by the Panama Canal Authority, which operates independently of other governments. All vessels passing through the canal are guided by Panamanian pilots, and decisions on the management of the canal are made exclusively by the Panamanian authorities. During a press conference, Panamanian President Jose Raul Mulino emphasized that the United States has not provided any evidence of a Chinese military presence in the country or threats to Panama’s sovereignty.
One of the main arguments of the supporters of the Chinese control version is the activities of Panama Ports, which operates ports at both ends of the canal. It is a subsidiary of the Hong Kong-based CK Hutchison Holdings. However, this holding is an international corporation operating in 24 countries, including the United States, Canada, and the United Kingdom. According to CNN, the main thing is that Hutchison does not have any control over the canal itself – its activities are limited to loading and unloading containers, as well as supplying fuel for ships. Besides Hutchison Ports, there are three other port companies operating in Panama that perform similar functions.
After Trump’s statements, the Panamanian authorities initiated an audit of Hutchison Ports’ activities to dispel doubts about its impact on the canal. The company, in turn, declared full transparency and invited US Secretary of State Marco Rubio to visit its terminals. However, the U.S. State Department has not confirmed whether Rubio will accept the invitation.
Thus, there is currently no evidence that China controls the Panama Canal or has a military presence there.