In a pivotal move with broad geopolitical implications, the United States and Panama have signed a security pact to strengthen their cooperation around the Panama Canal. The agreement, signed by US Defence Secretary Pete Hegseth and Panama’s Minister for Canal Affairs, is positioned as a critical step toward safeguarding the interoceanic waterway from external influence, particularly from China. The Panama Canal, which carries nearly 5% of global trade and around 40% of US container traffic, has become a growing area of concern for the United States due to the increasing footprint of Chinese-linked businesses in its infrastructure.
Highlights:
US and Panama reach a strategic pact to safeguard canal operations.
The agreement aims to limit China’s growing regional influence.
Defence Secretary Pete Hegseth led the US delegation in the signing.
Agreement Reinforces Panama’s Sovereignty While Enhancing Coordination
The joint declaration reaffirms Panama’s sovereign control over the canal, while laying the groundwork for greater coordination in maritime logistics, cybersecurity, and strategic naval operations. The Panama Canal Authority emphasized that the agreement is designed to facilitate a cost-neutral model where Panama would be compensated for services rendered to US naval and auxiliary vessels. The US sees this as a starting point for securing reliable access to the canal for its military operations, with the possibility of granting the US Navy prioritized transit during emergencies.
Highlights:
Panama maintains full sovereignty over the canal under the new pact.
Cost-sharing model proposed for naval assistance services.
Coordination to cover cybersecurity, logistics, and strategic access.
US Pushes for Preferential Naval Access Through the Canal
Defence Secretary Hegseth disclosed that the memorandum of understanding signed between the two countries envisions granting US Navy ships “first and free” passage through the canal. While the final agreement is yet to be concluded, US officials regard this provision as critical for national security and logistical planning. The Panama Canal Authority described the current declaration as a “first step” toward building a robust framework for shared responsibilities, prioritization protocols, and financial arrangements that suit both nations.
Highlights:
US seeks “first and free” canal passage for military vessels.
Final agreement still under negotiation, per Canal Authority.
Passage priority is deemed critical for US maritime strategy.
Panama Rejects Proposal for US Military Bases Despite Closer Ties
Despite the diplomatic momentum, Panama has categorically rejected the idea of hosting US military bases again. Hegseth proposed the re-establishment of American military facilities through rotational deployments, but Panama’s government declined, citing sovereignty concerns and historical sensitivities. Panama’s resistance is rooted in the legacy of the 1989 US invasion, which led to the ouster of dictator Manuel Noriega but also caused significant civilian casualties and infrastructural destruction. This remains a deeply sensitive topic in Panamanian political discourse and national memory.
Highlights:
Panama refuses revival of US military bases on its soil.
Proposal included rotational deployments “by invitation.”
Historical trauma from the 1989 invasion remains influential.
China’s Growing Footprint in Latin America Prompts US Countermeasures
The agreement comes amid intensifying efforts by the United States to counter China’s expanding presence in Latin America. Hegseth voiced concerns that Beijing’s influence in strategic sectors such as energy, infrastructure, and telecommunications is becoming a threat to regional stability. He accused China of exploiting economic partnerships for military leverage and warned that the Western Hemisphere is facing a new phase of geopolitical competition. The USNS Comfort, a Navy hospital ship, was also deployed to the region as a symbol of US commitment to regional alliances and humanitarian diplomacy.
Highlights:
US officials warn of China’s deepening economic and strategic ties in Latin America.
Beijing accused of seeking military leverage through economic investments.
Deployment of USNS Comfort symbolizes America’s regional presence.
Trump Administration Criticizes Canal Operations and China’s Role
Former President Donald Trump has repeatedly criticized Panama’s canal policies, accusing authorities of overcharging US vessels and favoring Chinese interests. He also highlighted the involvement of the Hong Kong-based Panama Ports Company, which operates terminals at both ends of the canal. These comments align with a broader push from Washington to reduce Chinese control over maritime infrastructure in key strategic locations. The Trump administration previously demanded that Panama re-evaluate all port-related contracts with entities tied to China.
Highlights:
Trump accused Panama of unfair treatment toward US shipping.
Chinese-linked operators flagged for strategic infrastructure control.
Calls for audit and review of port contracts involving Chinese firms.
Commercial and Political Fallout Over Chinese-Operated Port Contracts
Amid pressure from Washington, Panama has accused the Hong Kong-backed Panama Ports Company of violating its contractual terms, including a failure to pay $1.2 billion owed under its port concession. In response, CK Hutchison, the parent firm of the port operator, announced plans to divest 43 global ports, including those in Panama. The assets are being sold to a consortium led by BlackRock for $19 billion. China, in retaliation, has initiated an antitrust review of the deal, raising the stakes in this evolving geopolitical standoff.
Highlights:
Panama Ports Company accused of breaching payment agreements.
CK Hutchison selling global port assets to US-led consortium.
China launches antitrust probe into BlackRock’s acquisition.
US Clarifies Intent: Deter China, Not Engage Militarily
During his address in Panama, Hegseth clarified that the United States does not seek war with China. Instead, Washington is pursuing a strategy of deterrence through increased engagement, security cooperation, and regional diplomacy. The defence chief emphasized that preventing conflict requires robust resistance to Chinese encroachment. His rhetoric suggested that although tensions are high, the Biden administration aims to avoid direct confrontation while maintaining influence over critical global trade routes like the Panama Canal.
Highlights:
US emphasizes deterrence, not aggression, in China policy.
Hegseth rules out inevitability of war with China.
Regional partnerships prioritized to counter Beijing’s expansion.
Canal’s Neutrality in Global Trade Faces Growing Geopolitical Pressure
While the Panama Canal is legally required to remain open to all nations, the evolving military and diplomatic alignments are putting pressure on its neutrality. With the US seeking privileged access and China pushing back through commercial leverage, Panama finds itself navigating a delicate balance between two superpowers. As trade tensions escalate and military priorities shift, the canal’s role as a neutral facilitator of international commerce may come under increased scrutiny from the global community.
Highlights:
Legal neutrality of Panama Canal tested by geopolitical pressures.
US and China competing for strategic influence over canal operations.
Panama faces balancing act amid global power contestation.
