Panama Withdraws From China Deal As Trump Issues New Threat: 'Something Very Powerful...'

Last Updated:February 03, 2025, 09:13 IST

Trump has repeatedly threatened to reimpose US control over the Panama Canal, accusing it of ceding control to China and violating the agreement made with the US in 1999.

Panama's government had repeatedly denied Trump's accusations of ceding operations to China. (Reuters/File)

Panama’s President Jose Raul Mulino said his government would not renew a 2017 deal to join China’s Belt and Road Initiative, after US President Donald Trump’s repeated threats of reimposing American control over the Panama Canal.

The decision came during a meeting between Mulino and US Secretary of State Rubio, who issued a warning to the Panamanian leader: immediately reduce Chinese influence over the Panama Canal or face potential retaliation from the US.

Mulino had resisted pressure from the new US government over the management of a waterway that is vital to global trade. He told reporters after the meeting that Rubio made “no real threat of retaking the canal or the use of force", according to CNN. The Panamanian leader also said he had addressed the US concerns over Chinese presence around the waterway and suggested that the deal with China’s BRI could end early, an indication that Trump’s warnings have had an effect.

“I think this visit opens the door to build new relations … and try to increase as much as possible US investments in Panama," he said on Sunday about Rubio’s first foreign trip as the top US diplomat. Mulino has repeatedly said Panama’s sovereignty was not up for debate in the face of repeated threats by Trump.

Trump’s New Threat: ‘Something Very Powerful Will Happen’

US President Donald Trump on Sunday (local time) reiterated his threat to take back the Panama Canal citing a violation of the agreement and China’s growing influence in the area.

Speaking to reporters, Trump said the Canal was given to Panama “foolishly" and said “something very powerful" was going to happen if it was not handed over to the US. “Secretary of State (Marco) Rubio is in Panama right now, and we’re talking about the Panama Canal," he said.

“What they have done is terrible. They violated the agreement. China’s running the Panama Cana. It was not given to China, it was given to Panama. But they violated the agreement and we’re gonna take it back or something very powerful is going to happen," he added.

Even before taking office on January 20, Trump has repeatedly threatened to reimpose US control over the canal, and accused Panama of breaking the promises it made for the final transfer of the strategic waterway in 1999 and of ceding its operation to China – claims that the Panamanian government has vehemently denied.

Under the 1977 treaty, the US returned the canal to Panama’s control with the understanding that the waterway remained neutral. According to the agreement, the US could intervene militarily if the canal’s operations were disrupted by internal conflict or a foreign power. Today, more cargo than ever runs through the canal than it did during the years of US control.

However, Panama joined China’s BRI project, which promotes and funds infrastructure and development projects that critics say leave poor member countries heavily indebted to China. To that extent, Panama dropped diplomatic recognition of Taiwan and recognised Beijing. The US has argued that Panama has ceded control of the waterway to China.

“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 summary of the meeting. between Rubio and Mulino.

Panama To Conduct Audit Of China-Linked Company

Meanwhile, Mulino also said Panamanian authorities are carrying out an audit on a company linked to China that operates two terminals around the canal. “We have to wait until that audit ends before we can reach our legal conclusions and act accordingly," he said.

He was referring to the Panama Ports Company, part of a subsidiary of the Hong Kong-based conglomerate CK Hutchison Holdings. Hutchinson Ports is one of the world’s largest port operators, overseeing 53 ports in 24 countries, including for other US allies such as the UK, Australia and Canada.

Mulino also said Panamanian authorities spoke with Rubio about the possibility of expanding a migrant repatriation flight program to remove foreign nationals who don’t have the legal basis to be in Panama, insisting that the US would have to shoulder the costs.

Earlier, about 200 people marched in the capital, carrying Panamanian flags and shouting “Marco Rubio out of Panama," “Long live national sovereignty" and “One territory, one flag" while the meeting was going on. Some burned a banner with images of Trump and Rubio after being stopped short of the presidential palace by riot police.

(with inputs from agencies)

Washington D.C., United States of America (USA)

News world Panama Withdraws From China Deal As Trump Issues New Threat: 'Something Very Powerful...'