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The US has demanded curbs to Beijing’s alleged influence over the country’s key waterway

Panama will not renew its participation in China’s Belt and Road Initiative, President Jose Raul Mulino said on Sunday.

The announcement comes on the heels of Mulino’s meeting with US Secretary of State Marco Rubio, who demanded “immediate changes” to management of the Panama Canal, a key waterway built by the US in the early 20th century and handed over to Panama in 1999. Washington believes that China has too much influence over the waterway.

“The 2017 memorandum of understanding on the Belt and Road Initiative will not be renewed by my government,” Mulino told reporters following the talks with Rubio, adding that his government will also study the possibility of terminating the deal earlier, as it is not due for renewal for a couple of years.

During the talks, Rubio warned Mulino that by allowing China’s involvement in the canal, Panama is violating the 1977 treaty with the US which guarantees the permanent neutrality of the waterway. Rubio said that unless the country reduces Chinese influence, which Washington views as “a threat to the canal,” it could face potential US retaliation.

Rubio’s warning followed threats made over the past few weeks by US President Donald Trump, who said Washington could retake control of the Panama Canal if China’s presence around the waterway is not reduced and Panama does not lower the “ridiculous fees” the US has to pay for using it.

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Under the [Belt and Road], Hong Kong-based CK Hutchison Holdings in 2021 won a 25-year contract for control over two ports at the canal’s entrances, and a consortium of Chinese companies has launched the construction of a $1.3 billion bridge over the waterway.