Panama promotes itself \u201cas the bridge of the world, heart of the universe\u201d but lately the narrow Central American Isthmus and its namesake canal that joins the Atlantic to the Pacific have become the setting for a bitter clash between the world\u2019s two preeminent economic superpowers. <\/p>\n
The escalating war of words between the US and China over the canal has left Panama \u2013 which does not have a military \u2013 baffled and brings to mind the old proverb of how \u201cwhen elephants fight, it is the grass that suffers.\u201d <\/p>\n
From the beginning of his second term, US President Donald Trump has claimed without proof that China secretly controls the canal where around 40% of US container traffic passes through. If China\u2019s alleged influence over the canal wasn\u2019t halted, Trump threatened to \u201ctake back\u201d the iconic waterway that the US returned to Panama in 2000, employing military force if needed. <\/p>\n
Panama\u2019s President Jos\u00e9 Ra\u00fal Mulino rejects Trump\u2019s claims but has also made significant efforts to placate the White House, such as dropping out of China\u2019s Belt and Road investment initiative in February. <\/p>\n
In March, US investment giant BlackRock announced a $22.8 billion deal to buy 43 ports, including two located on either side of the Panama Canal, from CK Hutchison, the Hong Kong logistics company that the Trump administration has accused of being under Beijing\u2019s control \u2013 something Hutchison denies. <\/p>\n
But those concessions seem to have only added fuel to the White House\u2019s bellicose rhetoric, most recently this week from Secretary of Defense Pete Hegseth during a visit to Panama to attend the Central American Security Conference. <\/p>\n
\u201cI want to be very clear, China did not build this canal,\u201d Hegseth said Tuesday. \u201cChina does not operate this canal and China will not weaponize this canal. \u201cTogether with Panama in the lead, we will keep the canal secure and available for all nations through the deterrent power of the strongest, most effective and most lethal fighting force in the world.\u201d <\/p>\n
Beijing angrily fired back at Hegseth\u2019s verbal broadsides. <\/p>\n
\u201cWho represents the real threat to the canal? People will make their own judgment,\u201d China\u2019s government retorted. <\/p>\n
Hegseth\u2019s statements represented a shift \u2013 Panama was again a \u201cpartner\u201d that, contrary to what Trump had said, \u201coperates\u201d the canal. Still, the defense secretary stopped short of saying publicly the canal belonged to Panama. <\/p>\n
In fact, the Pentagon appeared to omit a key line to that effect from a joint statement, which in the Panamanian version reads, \u201cSecretary Hegseth recognized the leadership and inalienable sovereignty of Panama over the Panama Canal and its adjacent areas.\u201d <\/p>\n
The discrepancy over the statement called into mind a similar puzzling episode in February where the State Department announced that Panama would waive tolls on US Navy ships going through the canal; Mulino the next day angrily denied his government had ever agreed to that. <\/p>\n
But on Wednesday Panama\u2019s Canal Affairs Minister Jos\u00e9 Ram\u00f3n Icaza told reporters that the Panama Canal Authority agreed to find a \u201cmechanism\u201d that allows US Naval ships to pass through the canal at a \u201cneutral cost\u201d in exchange for security provided by those ships and the US recognizing Panamanian sovereignty over the canal. <\/p>\n
Even though, according to Panama\u2019s government, US Navy ships only spend on average a few million dollars each year crossing through the canal, the Trump administration had pushed hard for the concession from the Canal Authority which according to Panamanian law is supposed to charge all countries the same rates for crossings. <\/p>\n
Mulino has proven to be a key ally on immigration to Washington. During the Biden administration, Mulino had already begun closing the Darien Gap, where hundreds of thousands had crossed on their way to the US and by accepting deportation flights from the US. <\/p>\n
But there are clearly limits on which US demands he can accommodate, as his countrymen and much of the region grow exasperated by increasing saber rattling from Trump and demands for further concessions. <\/p>\n
On Wednesday, at a news conference, Hegseth alluded to the possibility of reestablishing US military bases to guard the canal. <\/p>\n
Minutes later, with Hegseth looking on, Panama\u2019s Security Minister Frank \u00c1brego flatly denied that Mulino was considering the possibility of allowing US bases in the country. <\/p>\n
It\u2019s not clear if Trump will take \u201cno\u201d for an answer and as the US-China tug of war over the canal heats up, Panama is clearly feeling the strain. <\/p>\n<\/p>\n
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