A bilateral treaty between the USA and Panama on the operation of the canal stipulates neutral treatment of ships of all nationalities. However, President Donald Trump had threatened to "reclaim" the Panama Canal Zone, which was controlled by the United States for more than 70 years.

Trump had also accused Panama ofthat China would allow it to influence the operation of the canal and demanded changes.

The Panamanian government has now promised to grant US warships free passage through the Panama Canal, according to a US official. U.S. Secretary of State Marco Rubio visited the canal in early February. After the visit, the agency confirmed that it wanted to "optimise the transit priority of U.S. Navy vessels through the Panama Canal".

Panama's government has also promised to review the lease agreements for two Chinese terminals on both sides of the canal, both of which are controlled by Hong Kong-based Hutchison Ports. It has also pledged not to renew its membership of China's Belt and Road Initiative, an economic development pact centred on Chinese loans.

It's clear who is the strongest here.

The canal was transferred to Panama by contract in 1977 and the handover was finalised in a festive ceremony in 1999. You can read about the history and construction here: Read more

kdk, The Maritime Executive