Panama Refutes U.S. Claim of Deal to Cut Canal Fees

A black container ship seen from the side, with four large stacks of red and grey shipping containers on the front end.

A tugboat navigates a container ship into the Culebra Cut from the Chagres River near Gamboa, Panama. Photo: Walter Hurtado/Bloomberg

Panama's President José Raúl Mulino is denying a claim from the U.S. State Department that the Latin American country had agreed to allow U.S. naval vessels free passage through the Panama Canal.

After meeting with U.S. Secretary of State Marco Rubio on February 2, Mulino announced that he would be pulling Panama out of China's Belt and Road initiative, and appeared willing to reconsider the concession allowing Hong Kong-owned CK Hutchison Holdings to operate a pair of ports at either end of the Panama Canal. Three days after that meeting, the U.S. State Department claimed on social media that Panama had also agreed to allow U.S. government vessels to move through the canal without having to pay any fees, "saving the U.S. government millions of dollars." According to ABC News, Mulino then countered in a press conference on February 6, where he said that he had actually told the U.S. that he can't exempt anyone from the canal's transit fees.

"I completely reject that statement," Mulino said in reference to the State Department's claim, adding that it "really surprises me, because they’re making an important, institutional statement from the entity that governs United States foreign policy under the president of the United States based on a falsity, and that’s intolerable.” The Panama Canal Authority issued a statement as well, saying that it has not made any adjustments to its fees.

Panama operates the canal under a neutrality treaty that took effect in 1999, which requires equal treatment of all countries transiting the waterway. Despite that, President Donald Trump has asserted that U.S. navy ships should be allowed to move freely through the canal as part of its obligations to protect the region in times of conflict.

Trump has also pushed for the U.S. to retake control of the canal, over concerns related to China's supposed influence over its day-to-day operations. Mulino has repeatedly refuted that claim, stressing that Panama has continued to operate the canal fairly and independently.