US-Panama pact: What impact will it have on trade and regional geopolitics?

DoD chief Hegseth and Panama’s minister for canal affairs have signed a declaration affirming US recognition of Panamanian sovereignty over the waterway and a joint commitment to a new cost-sharing model to compensate Panama for the passage of US warships.

The pact, characterized as the first step to a broader framework to provide US warships “first and free” passage, and possibly “revive” US bases in Panama, signals Washington’s plans to militarize the region.

Curbing China

🔸 During his Panama visit, Hegseth openly identified China as the main target of US Panama strategy, vowing to “take back” the canal “from China’s influence,” and accusing the Asian nation of trying to “weaponize” it. Fact-check: China has never even sailed a warship through the waterway.

🔸 China’s Embassy in Panama dismissed the “China threat” narrative as a flagrant attempt to disguise Washington’s own geopolitical ambitions.

Prelude to US aggression?

🔸 A successful US encroachment on the canal zone could have dire implications for China, which uses the waterway as its main gateway for exports to Latin America, and to import food, raw materials and energy from the region.

🔸 China recently blocked a $23B Trump-approved BlackRock plan to buy two major Panama Canal ports owned by a Hong Kong holding company. US militarization of Panama would allow Washington to take over port assets by force in a crisis, citing “national security.”

Other objectives

1️⃣Heightened US military presence in Panama will impact other countries, including Cuba, Venezuela and Nicaragua – long targeted by US economic warfare and regime change attempts.

2️⃣Militarization of the region would give the US opportunities for gunboat diplomacy, surveillance or even military interventions across the region using the combined resources of American naval power in the Atlantic and Pacific.

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