Panama has vehemently denied claims made by the US on Thursday that its government vessels would have free passage through the Panama Canal, calling the US claims lies and falsehoods.

Panamaon Thursday rejected the United States' claim that it had secured free passage for government vessels through thePanamaCanal while bowing to US pressure to quit a key Chinese project.

Panamanian President Jose Raul Mulino told reporters the US assertion about the waterway was "intolerable, simply and plainly intolerable", adding that he rejected "bilateral relations based on lies and falsehoods".

Since winning the US election in November, US PresidentDonald Trumphas refused to rule out the use of force to seize the canal built by Washington over a century ago and later handed over to Panama.

Around 40 percent of US container traffic passes through the narrow body of water linking the Caribbean Sea with thePacific Ocean.

US Secretary of State Marco Rubio on Thursday hit back at Mulinos comments, saying it was "absurd" for US naval vessels to pay to transit the PanamaCanal.

"I find it absurd that we would have to pay fees to transit a zone we are obligated to protect in time of conflict. Those are our expectations," Rubio told reporters in the Dominican Republic.

Rubio, however, stopped short of insisting that an agreement had been reached.

"They're a democratically elected government. They have rules; they have laws. They're going to follow their process, but our expectations remain the same," he said.

The new row between Panama and Washington erupted after the US State Department claimed that Panama had agreed to let US government vessels through the canal for free after talks last weekend between Mulino and US Secretary of StateMarco Rubio.

In a post on the social media platform X, the State Department claimed the decision would save the US government "millions of dollars a year".

The Panama Canal Authority, which runs the waterway, quickly rejected the claim, saying it had "not made any adjustments" to its tariffs.

US government vessels which would be primarily from the navy make up a small portion of the ships that pass through the canal.

Trump has loudly complained that US vessels are being overcharged to use theshippingroute.

Both he and Rubio have complained about Chinese investment in the canal a subsidiary of aHong Kongfirm operates ports on the waterway and warned thatBeijingcould close the canal to the United States in a crisis.

Panama has forcefully denied Trump's claim thatChinahas a role in running the canal.

Trump and Mulino are scheduled to hold telephone talks on Friday to discuss the issue.

In a key concession to Washington ahead of the discussions, Mulino on Thursday confirmed that Panama had pulled out of China's massive Belt and Road Initiative (BRI) infrastructure program.

Mulino said that the Panamanian Embassy in Beijing had given China the required 90-day notice of its decision not to renew its involvement in the BRI, which it joined in 2017.

Panama is the first Latin American country to announce its withdrawal from the trillion-dollar program, which operates in over 100 countries.

(FRANCE 24 withAFP)

Originally published on France24