American vessels to sail free through Panama Canal, claims State Dept

WASHINGTON: The United States on Wednesday said that its government vessels would be allowed to sail for free through the Panama Canal, following heavy pressure from President Donald Trump.

"US government vessels can now transit the Panama Canal without charge fees, saving the US government millions of dollars a year," the State Department said.

It was the first public announcement of promises hinted at by US Secretary of State Marco Rubio, who said that Panama offered concessions during his talks on Sunday.

Rubio said he had told Panama that it was unfair for the United States to be in a position to defend the vital waterway and also to be charged for its use.

Since winning the November US election, Trump has refused to rule out the use of force to seize the canal, through which 40% of US container traffic passes.

Trump and Rubio have complained about Chinese investment — including ports on both sides of the canal — and warned that Beijing could close the waterway to the United States in a crisis.

Panama has forcefully denied Trump's repeated allegations that China has been given a role in operating the canal.

But it has also moved to address US concerns. President Jose Raul Mulino after his talks with Rubio said that Panama would not renew membership in the Belt and Road Initiative, Beijing's signature infrastructure-building programme.

Rubio told reporters on Monday that his talks with Mulino were "respectful" and that the visit was "going to achieve potentially good things that assuage concerns we have."

Trump, however, said that he was still "not happy," although he acknowledged that Panama had "agreed to certain things."

The United States and Panama are scheduled to hold new talks on Friday to discuss the canal.

Trump in his inaugural address said the United States would be "taking back" the canal — built more than a century ago by Washington with Afro-Caribbean labour and handed back to Panama at the end of 1999.

Panama Canal denies US claim

However, the Panama Canal Authority denied the US State Department's claim that US government vessels would be able to cross the canal without paying fees, likely ratcheting up tensions after President Donald Trump threatened to take back control of the crossing.

The canal authority, an autonomous agency overseen by the Panamanian government, said in a statement that it had not made any changes to charge fees or rights to cross the canal, adding its statement was directly in response to the US claims.

"With total responsibility, the Panama Canal Authority, as it has indicated, is willing to establish dialogue with relevant US officials regarding the transit of wartime vessels from said country," the canal authority responded.

Panama has became a focal point of the Trump administration as the president has accused the Central American country of charging excessive rates to use its trade passage, one of the busiest in the world.