Panama president to US: stop ‘lies and falsehoods’ about canal

Panama President Jose Raul Mulino said on Thursday the United States was spreading "lies and falsehoods" after the State Department claimed U.S. government vessels would be able to pass the Panama Canal without paying.

The comments were likely to exacerbate tensions between the two countries, marking a setback after the U.S. had cited progress on military cooperation and confronting alleged Chinese influence over the canal.

Panama has been in the White House's crosshairs since President Donald Trump claimed the country's vital waterway had effectively been taken over by China and vowed that the U.S. was "taking it back."

Speaking to journalists, Mulino expressed his "absolute rejection" that the two countries' relations be "based on lies and falsehoods."

The U.S. State Department did not immediately respond to a request for comment.

The Panama Canal Authority issued a statement late on Wednesday, denying the claim from the U.S. State Department that Panama's government had agreed to no longer charge crossing fees for U.S. government vessels, in a move that would save the U.S. millions of dollars a year.

Trump has accused the Central American country of charging excessive rates to use its trade passage, one of the busiest in the world.

"Why are they making an important institutional statement from the entity that governs the foreign policy of the U.S., under the president of the U.S., based on a falsehood?" Mulino asked, calling the claim "simply and plainly intolerable."

Mulino said he had asked his ambassador in Washington to take "firm steps" to deny the Trump administration's claim.

Earlier this week, U.S. Secretary of State Marco Rubio met with Mulino in Panama during a trip through Central America. After the visit, Rubio welcomed Panama's decision not to renew participation in China's Belt and Road Initiative, a vast global infrastructure plan led by Beijing, calling the move "a great step forward" for bilateral ties.

Mulino said on Thursday that Panama had formally presented a document to exit the Belt and Road Initiative but denied the decision had been made at the request of the U.S., adding that he was taking time to evaluate Panama's relationship with China and what was best for the country.