Panamanian President Jose Raul Mulino has denied the U.S. State Department’s claim that his country had reached a deal allowing U.S. warships to transit the Panama Canal for free.
Mulino said he was surprised by the U.S. State Department’s statement on X that U.S. government vessels “can now transit the Panama Canal without charge fees, saving the U.S. government millions of dollars a year.”
Mulino on February 6 rejected that statement and asked Panama’s ambassador to the United States to dispute it. The ambassador is scheduled to speak with U.S. President Donald Trump on February 7.
Mulino said he had told U.S. Secretary of Defense Pete Hegseth on February 5 that he could neither set the transit fees nor exempt any vessels from paying from them.
The Panama Canal Authority also said it had "not made any adjustments” to the fees.
U.S. Secretary of State Marco Rubio, who met with Mulino and canal administrators and visited the critical trade route earlier this week, said on February 6 from the Dominican Republic that he respects Panama's legal process, but the United States has a treaty obligation to protect the Panama Canal if it comes under attack.
"That treaty obligation would have to be enforced by the armed forces of the United States, particularly the U.S. Navy,” Rubio said. “I find it absurd that we would have to pay fees to transit a zone that we are obligated to protect in a time of conflict.”
State Department spokeswoman Tammy Bruce said Rubio delivered a message from Trump when he met with Mulino, saying that that China's presence was a threat to the waterway and a violation of the U.S.-Panama treaty.
The treaty calls for the permanent neutrality of the American-built canal.
China's business with the canal is mainly carried out through Hong-Kong based Hutchison Holdings, which operates two ports near the entrances to the waterway under a 25-year concession renewed in 2021.
Rubio last week said under the current status, China could theoretically use the ports to shut down the canal should a conflict break out between the United States and China.
China has denied it plays any role in the operation of the canal and that it respects Panama's control over the waterway.
"Never ever has China interfered," Chinese Foreign Ministry spokesman Mao Ning said last month and added that Beijing recognizes the canal as "a permanently neutral international waterway.”
The Panamanian president said his meeting with Rubio on February 2 was cordial and respectful. He indicated it was possible to review some Chinese businesses in Panama, including the port concession.
Mulino announced after Rubio's visit that Panama would not renew its memorandum of understanding to join China's flagship Belt and Road Initiative (BRI). He also announced further steps to cooperate on immigration, a major policy matter with the U.S. administration.
The BRI is Chinese leader Xi Jinping's signature foreign policy initiative, and the globe-spanning infrastructure project has led to hundreds of billions of dollars worth of Chinese investment around the world.