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US secretary of state Marco Rubio told Panamanian President José Raúl Mulino on Sunday to reduce China’s influence over the Panama Canal or face immediate consequences.

Rubio met Mulino in Panama City and said US President Donald Trump had determined that China posed “a threat to the canal” and had violated a treaty concerning its neutrality, according to state department spokesperson Tammy Bruce.

Unless the situation changed, the US would “take measures necessary to protect its rights under the Treaty,” wrote Bruce.

On Sunday night, Trump told reporters: “China is running the Panama Canal. It was not given to China, it was given to Panama foolishly. But they violated the agreement, and we’re going to take it back, or something very powerful is going to happen.”

Mulino, Panama’s conservative pro-business president, has described a previous Trump claim that Chinese soldiers were operating the canal as “nonsense” and has insisted the waterway “is and always will be Panama’s”.

The US built the 82km canal connecting the Pacific and the Caribbean more than a century ago and controlled it and an adjacent stretch of territory until it signed a treaty in 1977 for a gradual handover to Panama, which was completed in 1999.

The treaty guarantees the permanent neutrality of the canal and allows the US to intervene if neutrality is violated.

When attacking Chinese influence, US critics of Panama have focused on two ports at either end of the canal which are run by Hutchison Ports, an arm of Hong Kong-listed conglomerate CK Hutchison Holdings, under long concessions. They were renewed without a bidding process in 2021 for 25 years.  

Mulino on Sunday acknowledged US concerns over the ports and noted that his government had launched an audit of the port concessions, which have a nearly 40 per cent market share, amid speculation in Panama that they may be cancelled.

It is not clear, however, whether the cancellation of the Chinese concessions would be sufficient to satisfy Trump, who has called the canal fees “a complete rip-off” and demanded that the US take back the canal.

About 200 people marched in Panama’s capital on Sunday, carrying national flags and shouting ‘Marco Rubio out of Panama’ while the US secretary’s meeting was going on, the Associated Press reported. Some burnt a banner with images of Trump and Rubio.

In another gesture towards the US, Mulino said Panama’s participation in China’s Belt and Road infrastructure initiative would not be renewed, without giving a date for its expiry. Panama joined BRI in 2017 when it switched diplomatic recognition from Taiwan to China.

In recent years, Chinese state-controlled companies have built a huge convention centre close to the mouth of the canal and are constructing a new bridge over the waterway and a cruise ship port, contracts that were secured through bidding processes. Beijing was seeking to build a big embassy on land near the canal until US objections killed the scheme.

In his meeting with Mulino and Panamanian foreign minister Javier Martínez-Acha, Rubio also praised Panama’s efforts to end illegal migration and “underscored the desire for an improved investment climate and ensuring a level playing field for fair competition by US firms,” according to Bruce.

The number of migrants illegally crossing the Darién jungle between Panama and Colombia — a major international migration route towards the US in recent years — has plunged since Trump took office. Numbers were down 94 per cent last month compared with the same month a year earlier, according to Panama’s national migration authority.