A new defense agreement allows US troops to deploy along the Panama Canal without establishing permanent bases, as tensions rise over shipping costs and China’s influence in the region.
Key Takeaways
- The US and Panama signed a memorandum allowing American troops to conduct joint training exercises along the Panama Canal, without establishing permanent military bases.
- Defense Secretary Pete Hegseth proposed reviving former US military installations for rotational deployments, a move firmly rejected by Panamanian officials.
- President Trump has threatened to retake control of the canal if Panama doesn’t lower fees for American ships, citing concerns over Chinese influence.
- The agreement focuses on joint operations at former US facilities including Fort Sherman, Rodman Naval Station, and Howard Air Force Base.
- Panama maintains that its sovereignty over the canal is non-negotiable, following its complete transfer from US control in 1999.
US-Panama Defense Agreement Details
A significant agreement between the United States and Panama has been signed allowing for American military troops to conduct training exercises along the strategically vital Panama Canal. The memorandum of understanding focuses on joint military operations and aims to increase cooperation between the two nations’ forces. However, the agreement explicitly excludes the establishment of permanent US military bases in Panama, a point of contention that has sparked heated diplomatic discussions between the two nations in recent weeks.
Defense Secretary Pete Hegseth provided details about the agreement’s scope during his recent visit to Panama. The memorandum specifies the use of former US military installations that were transferred to Panama in 1999, including Fort Sherman, Rodman Naval Station, and Howard Air Force Base. These facilities would not become permanent US bases but would instead serve as locations for rotational deployments and joint training exercises, according to American officials.
JUST IN – Panama deal allows US to deploy troops to canal — The document, signed by top security officials from both countries, allows US military personnel to deploy to Panama-controlled facilities for training, exercises and a range of other activitieshttps://t.co/lCOAVmZbUA
— Insider Paper (@TheInsiderPaper) April 11, 2025
Panama’s Opposition to Permanent US Military Presence
Panamanian officials have taken a firm stance against any permanent US military presence in their country. Security Minister Frank Abrego explicitly stated that “Panama made clear, through President Mulino, that we cannot accept military bases or defense sites.” The Panamanian government views the canal as a symbol of national sovereignty and has consistently rejected proposals that might undermine that sovereignty, including the establishment of foreign military bases on their soil.
President José Raúl Mulino’s administration has maintained that while joint training exercises are acceptable, permanent US military installations are not. This position aligns with the 1977 Torrijos-Carter Treaties, which established the framework for transferring control of the canal from the United States to Panama, a process completed in 1999. The treaties explicitly prohibited permanent US military presence after the transfer of control.
Trump’s Threats and Strategic Concerns
The agreement comes amid escalating tensions between the United States and Panama over canal fees and alleged Chinese influence in the region. President Donald Trump has publicly threatened to retake control of the canal if Panama doesn’t lower fees for American ships, particularly naval vessels. The Trump administration has advocated for US warships to pass through the canal “first, and free,” a position that directly challenges the Panama Canal Authority’s policies.
The US administration has expressed concerns about China’s growing influence near the canal, a vital shipping lane that handles approximately 6% of global trade. Trump has claimed that China has too large a presence near the canal, allegations that both Panama and China have denied. The Pentagon has particularly focused on the Hong Kong-backed Panama Ports Company, which operates facilities at both ends of the canal.
Canal Fee Dispute and Economic Implications
A key point of contention between the US and Panama centers on the fees charged for vessels passing through the canal. The Panama Canal Authority maintains that all vessels must pay the same rates regardless of nationality, in accordance with international maritime law and the principle of Panamanian sovereignty. This stance directly contradicts the Trump administration’s position that US warships should receive preferential treatment.
“We will seek a mechanism by which warships and auxiliary ships can have a compensation system for services, that is, a way to make them cost-neutral but not free,” said Panamanian official Jose Ramón Icaza.
The Panama Canal represents a critical economic asset for Panama, generating billions in revenue annually. The canal has recently faced challenges from drought conditions that have limited its capacity, leading to increased passage fees. These fee increases have affected shipping companies worldwide, including American firms, contributing to the current tensions.
Historical Context and Future Implications
The current situation must be viewed within the historical context of US-Panama relations, particularly the 1989 US invasion to remove dictator Manuel Noriega and the subsequent transition of canal control to Panama. The 1977 Torrijos-Carter Treaties established that the canal would be transferred to complete Panamanian control by December 31, 1999, ending nearly a century of American control over this strategic waterway.
The timeline for implementing the new agreement remains unclear, with no specific dates announced for when US troops might begin deploying for joint exercises. The memorandum represents a delicate diplomatic balancing act, allowing for increased US military presence without undermining Panamanian sovereignty. How this arrangement will affect long-term US-Panama relations and the ongoing disputes over canal fees remains to be seen.
