Marco Rubio says Panama must reduce Chinese influence around the canal or face possible US action

U.S. Secretary of State Marco Rubio told Panamanian President José Raúl Mulino on Sunday that the Central American ally must immediately reduce China’s influence in the Panama Canal area or risk retaliation from the Trump administration. This was Rubio's first trip as the top U.S. diplomat, and he held face-to-face talks with Mulino, who has been resisting pressure from the new U.S. government regarding Panama's management of the waterway crucial to global trade.

Mulino told reporters after the meeting that Rubio "did not really threaten to take back the canal or use force." Rubio was speaking on behalf of President Donald Trump, who has demanded the return of the canal to U.S. control. Rubio stated that Trump has made a preliminary determination that China’s presence in the canal area violates the treaty that led to the U.S. handing over the waterway to Panama in 1999. The treaty requires the U.S.-built canal to remain permanently neutral, and Rubio planned to visit the canal later on Sunday.

In a summary of the meeting, the U.S. State Department said, “Secretary Rubio made it clear that the status quo is unacceptable and that the U.S. will take necessary measures to protect its rights under the treaty if immediate changes are not made.” The statement was unusually blunt in diplomatic terms, but consistent with the tone and tenor Trump has set for foreign policy. Trump has been increasing pressure on Washington's neighbors and allies, including demands regarding the canal, and on Saturday announced steep tariffs on Canada and Mexico, triggering retaliation from those close allies and sparking a trade war.

Meanwhile, Mulino called his meeting with Rubio “respectful” and “positive,” and said he did “not believe there is a real threat to the treaty and its validity.” He acknowledged that China’s role in ports at both ends of the canal has raised concerns in Washington. But the president said the consortium controlling those ports is undergoing an audit, and the canal authority will provide Rubio with a more detailed explanation. Mulino also stated that Panama would not renew its agreements with China’s Belt and Road Initiative when they expire. Panama joined the initiative, designed to promote and fund infrastructure and development projects, after dropping its recognition of Taiwan and recognizing Beijing, but critics argue it saddles poor member states with heavy Chinese debt.

On Sunday, about 200 people marched in the capital, waving Panamanian flags and chanting “Marco Rubio get out of Panama,” “Long live national sovereignty,” and “One territory, one flag,” while the meeting was taking place. Some burned a banner with images of Trump and Rubio before being stopped by riot police from reaching the presidential palace. Rubio also stressed Trump’s top concern of stemming illegal immigration, telling the Panamanian president that cooperation on that effort was important and thanking him for receiving migrants. However, Rubio's visit comes amid a freeze on U.S. foreign aid funding and stop-work orders that have shut down U.S.-funded programs in Central American countries targeting illegal immigration and crime.

In a Wall Street Journal opinion piece on Friday, Rubio stated that mass migration, drugs, and hostile policies pursued by Cuba, Nicaragua, and Venezuela are causing significant damage, and that port facilities at both ends of the canal are operated by a Chinese company, making the waterway vulnerable to pressure from Beijing. “The president has been very clear he wants to run the canal again,” Rubio said on Thursday. “Obviously, the Panamanians don’t like that idea. That message has been communicated very clearly.”

Although Mulino has refused to negotiate on ownership, some believe Panama might accept a compromise in which operating rights on both sides of the canal would be removed from Hong Kong-based Hutchison Ports, which received a 25-year no-bid extension to operate those ports. An audit of whether that extension was appropriate is already underway and could lead to a re-bidding process. What is not clear is whether Trump would accept the transfer of the concession to a U.S. or European company to satisfy his demands, which appear to go beyond just operations. Rubio's visit will also take him to El Salvador, Costa Rica, Guatemala, and the Dominican Republic, coming amid the U.S. freeze on foreign aid. The State Department said Sunday that Rubio had approved waivers for some critical projects in the countries he is visiting, but details of those projects were not immediately available.