Star Metro - Pentagon chief in Panama vows to counter China 'threat'

Hegseth made the remarks in a speech to a regional security conference a day after visiting the US-built Panama Canal, which President Donald Trump has threatened to seize because of what he calls China's excessive influence over the waterway.

The United States says it is a threat to its national security and the region as a whole for a Hong Kong company to operate ports at either end of the canal linking the Atlantic and Pacific, and through which five percent of all global shipping passes.

"We do not seek war with China. And war with China is certainly not inevitable. We do not seek it in any form," the secretary said.

"But together, we must prevent war by robustly and vigorously deterring China's threats in this hemisphere," the former Fox News anchor said in his speech.

Hegseth asserted that China-based companies are capturing land and infrastructure in strategic sectors like energy and telecommunications, and that China has too large a military presence in the hemisphere.

"Make no mistake, Beijing is investing and operating in this region for military advantage and unfair economic gain," Hegseth said.

Panama, under pressure from the Trump administration to reduce alleged Chinese influence in the waterway, has accused the Hong Kong firm that runs the ports at either end of the canal of failing to meet its contractual obligations and pushed for it to pull out of the country.

On Wednesday that firm, Panama Ports Company, rejected an audit that said it had failed to pay $1.2 billion due under its concession.

A Panamanian audit released this week said it found "many breaches" of the concession awarded to Panama Ports Company (PPC), a subsidiary of Hong Kong conglomerate CK Hutchison.

PPC denied the finding, saying any suggestion it "has failed to pay approximately $1,200 million balboas ($1.2 billion) to the Panamanian State is absolutely contrary to reality."

- 'Significant investments' -

Panama has denied US assertions that China exercises undue control over the waterway, but faced with Trump's repeated threats to seize the canal, launched the audit in January.

The United States built the more than century old canal and handed it over to Panama in 1999.

PPC won the concession to operate one port on the Pacific side and another on the Atlantic side in 1997, and then renewed for another 25 years in 2021.

Panama state comptroller Anel Flores concluded that Panama did not receive $1.2 billion it was owed under the contract, adding that PPC benefited from many tax exemptions and had irregularities in a previous audit.

But the company said on Wednesday that it has more than met its contractual obligations, having made "significant investments that exceed $1,695 million balboas" -- which it said was confirmed by authorities in a 2020 audit.

CK Hutchison last month announced a deal to offload 43 ports in 23 countries -- including its two on the Panama Canal -- to a consortium led by US asset manager BlackRock for $19 billion in cash.

A furious Beijing has since announced an antitrust review of the deal.

S.Cloutier--SMC