In a significant development, Panama's President José Raúl Mulino announced on Friday that the diplomatic crisis with the United States regarding the Panama Canal has been resolved. This announcement comes in the wake of former President Donald Trump's repeated threats in 2025 to reclaim control of the canal, claiming it was under Chinese influence. Since taking office a year prior, Trump had initiated a campaign of diplomatic pressure against Panama, asserting that China exercised control over this crucial maritime route through the Hong Kong-based Hutchison Holdings, which operates two port concessions—one on the Pacific side and another on the Atlantic. Trump's alarming rhetoric raised concerns in Panama, a key ally of Washington, prompting the Panamanian government to demand, albeit unsuccessfully, that their vessels be allowed free passage through the canal, despite existing bilateral treaties that prohibit such exemptions.
During his customary New Year’s speech to the National Assembly, President Mulino emphasized that Panama has forged a relationship characterized by respect, restored trust, cooperative endeavors, and friendship, affirming that the canal remains firmly under Panamanian sovereignty and will continue to do so. "With consistent determination and patience, along with diplomatic efforts, we have managed to mend our bilateral relations and are now actively collaborating with the United States in combating international crime," he stated. Addressing his critics, he remarked, "The dire predictions and exaggerated claims are now behind us."
It's important to remember that the United States originally constructed and inaugurated the canal in 1914 but officially transferred control to Panama on December 31, 1999, as stipulated by bilateral agreements. These agreements dictate that all ships, regardless of their nationality, must pay tolls that depend on the size of the vessel and the nature of the cargo.
In light of Trump's threats, the U.S. and Panama formalized contentious security agreements permitting American troops to conduct military exercises on Panamanian soil for a period of three years. Amid escalating tensions with Venezuela, U.S. military forces have already engaged in three joint drills with the police in Panama, with additional exercises planned for the near future. Moreover, Hutchison Holdings is in the process of selling its canal port terminals to a consortium led by the American investment firm BlackRock, although the sale has yet to be finalized. The concession agreement with Hutchison has faced legal challenges and criticism from high-ranking officials within the Panamanian government.
