China's presence around the Panama Canal is a national security concern that Panama's government has to deal with, Mauricio Claver-Carone, the U.S. special envoy for Latin America, said on Friday, ahead of U.S. top diplomat Marco Rubio's visit to the country.
Rubio will depart on Saturday on his first foreign trip, with a scheduled visit to the canal and a meeting with Panamanian President Jose Raul Mulino, the first talks between the countries since President Donald Trump's threat to take control of the U.S.-built canal.
Rubio will also visit El Salvador, Costa Rica, Guatemala and the Dominican Republic, where the Trump administration's efforts to repatriate migrants from the region and stem migration into the U.S. will be on the agenda, Claver-Carone said in a briefing call with reporters.
Claver-Carone said it was not Mulino's fault that China's presence around the canal "got completely out of hand" under previous Panamanian governments, but added that the Panamanian president now "has to deal with it."
"This increasingly creeping presence of Chinese companies and actors throughout the Canal Zone, in everything from ports and logistics to telecommunications infrastructure and otherwise, which is very concerning, not only frankly to the national security of the United States, but frankly to the national security of Panama and to the entire Western Hemisphere," he said. "So that will be an issue of discussion."
Hong Kong-based CK Hutchison Holdings (0001.HK) has for more than two decades operated the ports at the canal's entrances. The company is publicly listed and not financially tied to the Chinese government, though Hong Kong firms are subject to government oversight.
China's economic influence has been growing in Latin America, fueling worries in Washington that the resource-rich region will tilt to Chinese interests rather than those of the U.S.
Panama has vehemently denied ceding operation of the canal to China, but Rubio said on Thursday he had "zero doubt" that Beijing had a contingency to be able to block the canal in the event of a conflict.
Mulino says he won't discuss control of the canal with Rubio.
Panama is awaiting the results of an audit into CK Hutchinson's payments to the state, which analysts say could provide Panama with a pretext to alter its concession with the company.
Despite the awkwardness in relations with Panama, one of the closest U.S. partners in Latin America, R. Evan Ellis, a professor at the U.S. Army War College, said he thought the two sides were likely to search for a quick resolution.
"I think it could actually go down relatively quickly," Ellis told Reuters. "At the end of the day, President Trump is probably looking for a deal where he can declare victory. The Panamanians are looking for what they can give up in the context of not violating their own management of the canal."
