The scene last week at Panama City’s elegant Hilton Hotel spoke volumes about the precarious balance of power in the Western Hemisphere.
As Defense Secretary Pete Hegseth confidently announced that American warships would enjoy “first and free” access through the Panama Canal, Panamanian officials visibly stiffened. Within hours, they had carefully recast the same agreement as a “compensation for services” model. Two nations, one document and diametrically opposed interpretations revealed the high-stakes diplomatic dance unfolding over one of the world’s most strategic waterways.
The latest chapter in U.S.-Panama relations is increasingly defined by contradiction. At its heart lies a fundamental tension: a superpower’s strategic ambitions colliding with a smaller nation’s hard-won sovereignty over its most prized asset.
President Trump has never concealed his views on the Panama Canal, repeatedly suggesting “the U.S. had ‘foolishly’ given the Panama Canal to Panama” and perhaps should take it back. This simmering tension boiled over when Trump, flanked by Hegseth and Secretary of State Marco Rubio at the White House, declared that America has deployed “a lot of troops” to Panama with plans to increase this military footprint. During this remarkable meeting, Hegseth spoke plainly about his work to “secure the canal from Chinese influence,” telling Trump directly, “We’re taking back the canal.”
Such assertions blatantly contradict the 1977 Neutrality Treaty, which establishes with crystalline clarity: “After the termination of the Treaty of the Panama Canal, only the Republic of Panama will manage the Canal and maintain military forces, defense sites and military installations within its national territory.” The legal framework permits no ambiguity regarding military presence.
Panama Security Minister Frank Abrego reinforced this position, declaring, “Panama has made it clear through President Mulino that we cannot accept military bases or defense sites” and that “at no time during this memorandum of understanding has Panama ceded sovereignty over the Panama Canal.”
The contradictions extend to the joint communiqué itself. The Spanish version acknowledges “Panama’s inalienable sovereignty over the Panama Canal,” but that language was absent from the English version. This omission prompted Panama’s Foreign Ministry to formally request a correction.
Hegseth’s parting comments to the media during his trip to Panama revealed the fundamental contradiction. In the same breath, Hegseth claimed, “We certainly respect the sovereignty of the Panamanians and the Panama Canal. At the same time, we’re working with them to ensure that we take back the canal from malign Chinese influence.” The cognitive dissonance — simultaneously respecting sovereignty while speaking of “taking back” the canal — epitomizes the mixed messaging throughout.
Such contradictions have become a defining feature of U.S.-Panama relations. In February, the State Department proclaimed on social media that “the government of Panama has agreed to no longer charge fees to U.S. government vessels to transit the Panama Canal,” claiming savings of “millions of dollars” annually. Panama’s response was unequivocal: President José Raúl Mulino called it “an intolerable falsehood.”
Basic facts are leading to diametrically opposed official statements. Are these contradictions diplomatic missteps, or a deliberate strategy to normalize controversial positions? When American officials state one version of reality while Panamanian officials assert another, international audiences inevitably tend to believe the more powerful nation.
President Mulino revealed the delicate calculus his administration faces, stating, “My country cannot afford the image of a country in controversy with the United States.” With diplomatic precision, he disclosed rejecting multiple versions of the memorandum that included “permanent military presence,” “military bases” or “cession of territory.” His careful words offered a glimpse into the asymmetric negotiation, balancing national dignity against geopolitical reality.
The commercial backdrop adds another layer of complexity. Panama’s Comptroller General Anel Flores announced plans to sue officials who authorized a 25-year port concession renewal to Panama Ports Company, which is 90 percent owned by Hong Kong’s CK Hutchison. According to Flores, Panama “left $1.3 billion on the table” in tax incentives and benefits. Meanwhile, the U.S.-based investment firm BlackRock stands ready to acquire these strategic assets, effectively transferring control from Chinese to American interests.
This port controversy has become a proxy battle for a larger geopolitical contest. Hegseth claimed that “China-based companies continue to control critical infrastructure in the canal area,” while the Chinese Embassy responded by accusing the U.S. of “blackmail” and conducting a “sensationalist campaign about the ‘theoretical Chinese threat.’”
We are witnessing the gradual erosion of a sovereign nation’s hard-won independence through diplomatic finesse rather than military force. When Trump casually mentions sending “a lot of troops” to Panama while Hegseth speaks of “taking back the canal,” the subtext requires no decoding. The carefully constructed legal architecture of the Torrijos-Carter Treaties — documents that required generations of struggle and sacrifice — faces dismantling not through formal renegotiation but by the steady, inexorable pressure of asymmetrical power politics.
The implications transcend Central America. If treaties as significant as those governing the Panama Canal can be reinterpreted through unilateral action and linguistic sleight of hand, does any international agreement remain inviolable? What sovereign nation can place faith in the permanence of its diplomatic arrangements with global powers?
As Panama navigates these treacherous waters — maintaining the diplomatic fiction of “compensation for services” rather than acknowledging the reality of American military resurgence in the Canal Zone — the international community’s silence is deafening. This collective muteness speaks volumes about the true nature of sovereignty in the shadow of great-power competition.
The question facing Panama is no longer whether it can preserve its full independence, but how much of it will remain when the geopolitical chess match ends.
Nivia Rossana Castrellón is a former deputy minister of foreign affairs of the Republic of Panama.
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