Panama denies making deal for US ships to transit the canal for free

Panamanian President Jose Raul Mulino has denied the US State Department’s claim that his country had reached a deal allowing US warships to transit the Panama Canal for free.

Mr Mulino said he had told US secretary of defence Pete Hegseth on Wednesday that he could neither set the fees to transit the canal nor exempt anyone from them and that he was surprised by the US State Department’s statement suggesting otherwise late Wednesday.

“I completely reject that statement yesterday,” Mr Mulino said during his weekly press conference, adding that he had asked Panama’s ambassador in Washington to dispute the State Department’s statement.

On Wednesday evening, the US State Department said via X that “US government vessels can now transit the Panama Canal without charge fees, saving the US government millions of dollars a year”.

The department had no immediate comment on Mr Mulino’s remarks on Thursday.

The Panama Canal Authority put out its own terse statement later on Wednesday evening saying it had “not made any adjustments” to the fees.

Mr Mulino said the US statement “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 differing versions came just days after US secretary of state Marco Rubio met with Mr Mulino and canal administrators and visited the critical trade route.

Mr Rubio had carried a message from US President Donald Trump that China’s influence at the canal was unacceptable.

Mr Rubio had told the Panamanian president that Mr Trump believed that China’s presence in the canal area may violate a treaty that led the United States to turn the waterway over to Panama in 1999.

That treaty calls for the permanent neutrality of the American-built canal.

Canal administrators said they were open to discussing giving US warships priority in crossing the canal but did not say they had considered waiving fees.

Mr Mulino said that both Panama’s constitution and laws regulating the Canal Authority make clear that neither the government nor the authority can waive fees.

“It’s a constitutional limitation,” he said.