Portugal Colonial - 'Intolerable' US claim sparks new row over Panama Canal

Panamanian President Jose Raul Mulino told reporters the US assertion about the waterway was "simply and plainly intolerable," adding that he rejected "bilateral relations based on lies and falsehoods."

Since winning the US election in November, President Donald Trump has refused to rule out the use of force to seize the canal built by Washington over a century ago and later handed over to Panama.

Around 40 percent of US container traffic passes through the narrow body of water linking the Caribbean Sea with the Pacific Ocean.

The new row between Panama and Washington erupted after the US State Department claimed that Panama had agreed to let US government vessels through the canal for free after talks last weekend between Mulino and US Secretary of State Marco Rubio.

In a post on the social media platform X, the State Department claimed the decision would save the US government "millions of dollars a year."

The Panama Canal Authority (PCA), an independent body that runs the waterway, quickly rejected the claim, saying it had "not made any adjustments" to its tariffs.

The authority added however that it was open to dialogue on the matter.

- 'Not breaking the US' -

US government vessels -- primarily from the navy -- make up a small portion of the ships that pass through the canal.

Trump has loudly complained that US vessels are being overcharged to use the shipping route.

Mulino said that US government vessels, including navy vessels, paid "$6-7 million a year" for the right of passage.

"It's not as if the canal toll is breaking the economy of the United States," he remarked.

Beyond the tolls, Washington has appeared chiefly concerned about Chinese investment in the 80-kilometer-long canal, which handles 5 percent of global maritime trade.

CK Hutchison Holdings -- owned by Hong Kong billionaire Li Ka-shing -- has a concession to manage two of the canal's five ports.

Trump, who is scheduled to hold telephone talks on Friday with Mulino, has claimed that Beijing could close the canal to the United States in a crisis -- a claim Panama strenuously denies.

But in a key concession to Washington, Mulino on Thursday confirmed that Panama had pulled out of China's massive Belt and Road Initiative (BRI) infrastructure program.

- Chinese project torpedoed -

Mulino said that the Panamanian Embassy in Beijing had given China the required 90-day notice of its decision not to renew its involvement in the program, which it joined in 2017.

Panama is the first Latin American country to announce its withdrawal from President Xi Jinping's signature, trillion-dollar program, which operates in over 100 countries.

On Wednesday, China's Foreign Affairs spokesman, Lin Jian, had argued that the partnership was yielding "fruitful results" and urged Panama to "resist external interferences."

The latest controversy over the Panama Canal comes at the end of Rubio's week-long visit to Central America, his first as the US top diplomat.

He had threatened action against Panama unless it made immediate changes to reduce Chinese influence on the canal but later appeared more conciliatory, hailing Mulino's pledge to quit China's infrastructure program as a "great step forward" for bilateral relations.

Following Trump's canal takeover threat, Mulino last month ordered an audit of Hutchison Holdings.

"If they violate the terms of the concession or cause imminent economic harm to the country, we will act accordingly, but for now the audit is ongoing," he said Thursday.

A.F.Rosado--PC