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US Defence Secretary Pete Hegseth has raised alarms over China’s influence on the Panama Canal, claiming it poses a threat to both the safety and sovereignty of the vital waterway. Speaking at a ribbon-cutting ceremony for a US-funded dock at the Balboa Naval Base, Hegseth vowed to counter foreign interference, emphasizing the United States’ commitment to ensuring the canal’s security. His statements come amid rising concerns over China’s growing presence in the region, particularly with the involvement of Chinese-linked companies controlling infrastructure near the canal.

US and Panama Strengthen Defence Cooperation

In a show of solidarity, Hegseth reaffirmed the United States’ strong partnership with Panama, underscoring how defence coordination between the two nations has intensified over recent weeks. Following a meeting with Panama’s President José Raúl Mulino, Hegseth emphasized the critical importance of cooperation in protecting the canal and safeguarding regional stability. Both nations, Hegseth noted, have significantly increased their defence collaboration, marking a major shift in how the US and Panama approach security concerns.

Hegseth’s comments come at a time when the geopolitical landscape in the region is becoming increasingly complex. The US is particularly concerned about ports near the canal that are controlled by a Hong Kong consortium. The consortium, which has a long-standing lease in the area, is planning to sell its controlling stake to a group led by BlackRock Inc., which includes US-linked entities. This potential change in ownership is being closely monitored by US officials, as it could have far-reaching implications for Panama’s sovereignty and security.

Chinese Influence in the Canal Region

One of the main points of concern for Hegseth is the continued operation of critical canal-area infrastructure by China-linked companies. These companies, he warned, could potentially use their positions to conduct surveillance operations across Panama, further consolidating China’s influence in the region. Hegseth stressed that such influence not only threatens the security of Panama but also undermines the prosperity and sovereignty of both Panama and the United States.

Hegseth’s comments reflect a broader concern that China’s increasing involvement in global infrastructure projects, particularly those near critical strategic locations like the Panama Canal, could be used to advance its own geopolitical agenda. Quoting President Donald Trump, Hegseth called China’s presence in the canal region “unacceptable,” reinforcing the US’s commitment to pushing back against foreign interference in Panama’s affairs.

Tensions Between Trump and Panama Over Canal Access

Hegseth’s remarks also come amid ongoing tensions between the United States and Panama over the issue of canal access and charges. President Trump has repeatedly claimed that Panama overcharges the US for canal access and that China has significant influence over the canal’s operations. However, Panama has strongly denied both accusations, and the relationship between the two nations has been strained over these issues.

In February, Hegseth and Mulino had a phone call to discuss canal tolls, with the US State Department later suggesting that Panama had agreed to waive fees for US warships. However, Mulino publicly denied any such agreement, adding fuel to the ongoing diplomatic friction. Trump has also questioned the decision to relinquish control of the canal, hinting at the possibility of the US reclaiming control in the future.

The controversy surrounding China’s involvement in the canal stems from a 25-year lease agreement held by a Hong Kong-based consortium, CK Hutchison. The lease gives the consortium control over key ports near the canal’s entrances, raising concerns about China’s growing influence. However, Panama’s government recently audited the lease and discovered several irregularities, leading to the consortium agreeing to sell its stake to a group led by BlackRock Inc. If this transfer is completed, it could shift control of the ports to US-linked entities, alleviating some of the concerns regarding Chinese influence.

The 1999 Neutrality Treaty and China’s Role

One of the critical points raised by US officials is the potential violation of the 1999 neutrality treaty, which guarantees the permanent neutrality of the Panama Canal following the US handover of control. US Secretary of State Marco Rubio has raised concerns with President Mulino, suggesting that China’s presence in the region might breach the terms of the treaty. However, Mulino has consistently denied any undue Chinese influence over the canal’s operations, maintaining that Panama has full control over the waterway.

Despite these denials, the issue remains a sensitive and evolving diplomatic challenge for Panama. As tensions continue to simmer over the canal’s future, both the United States and Panama face the challenge of balancing economic interests with national security concerns.

A Complex Future for the Panama Canal

As the situation continues to unfold, the future of the Panama Canal remains uncertain. The growing influence of China in the region, coupled with ongoing tensions over canal access and tolls, is creating a complex geopolitical environment. The United States, through Hegseth’s statements and ongoing diplomatic efforts, is making it clear that it will not tolerate foreign influence over such a strategically important location.