Panama’s Foreign Minister: No Loss of Sovereignty in U.S. Canal Security Deal

 

Panama’s government has strongly denied any loss of sovereignty in its recent security agreement with the United States, which permits temporary joint military exercises aimed at safeguarding the Panama Canal. Three U.S. helicopters arrived recently for training sessions alongside Panamanian forces, prompting public concern and international speculation that Washington might be seeking more control over the critical trade passage.

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Foreign Minister Javier Martínez-Acha responded to these concerns, stating there will be “no permanent presence of foreign forces” in Panama. He emphasized that the memorandum of understanding signed with the U.S. is similar to agreements Panama has with other Latin American countries. The purpose, according to the minister, is to jointly prepare for “asymmetric threats” like drug trafficking and organized crime.

The Panama Canal remains a major strategic asset, handling about 6% of global maritime trade annually. This adds to tensions, especially given past accusations by former U.S. President Donald Trump that Panama was allowing China influence over the canal. Martínez-Acha noted those strained relations with Washington have since improved. He highlighted ongoing cooperation based on mutual respect and reaffirmed Panama's control over its own territory and infrastructure.

Panama’s leadership is determined to maintain national integrity while cooperating on regional security concerns. Officials insist that these actions are not about ceding control but rather about safeguarding both national and international trade interests through modernized security partnerships.

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In addition to addressing security concerns, Panama is focusing on improving its reputation in international finance. Foreign Minister Javier Martínez-Acha traveled to Brussels to attend the European Union–Central America Association Council, where he reaffirmed Panama's commitment to transparency and fair tax practices.

For years, Panama has faced criticism for being labeled a tax haven, especially after the Panama Papers scandal. Although the country has taken steps to align with global tax standards, it remained on the EU’s list of non-cooperative jurisdictions until recently. Martínez-Acha announced that Panama has now been officially removed from that blacklist following a European Parliament vote.

Despite this progress, the minister acknowledged that challenges remain. He said the government is working on further reforms to ensure companies operating in Panama show “genuine economic activity.” The goal is to eliminate offshore tax structures that avoid taxation by lacking physical operations or meaningful economic presence in Panama.

Martínez-Acha explained that Panama is reviewing how foreign income and multinational company profits are taxed. If companies have true economic substance in Panama or repatriate income there, the earnings would be taxed. However, income repatriated elsewhere would not be subject to Panamanian taxes.

He emphasized that Panama is not a tax haven and wants to be recognized as a responsible, transparent economy. This effort also aligns with broader EU goals, including monitoring financial flows that could violate sanctions against countries like Russia. With its strategic location and economic relevance, Panama is seeking to build trust with European partners and ensure its financial systems are secure and transparent.

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