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Rubio to tour Central American and Caribbean countries

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Trump has threatened to take control of Panama Canal

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Hong Kong port operator under scrutiny

By Simon Lewis, Michael Martina

WASHINGTON, Jan 31 (Reuters) - China's presence around

the Panama Canal is a national security concern that Panama's

government has to deal with, Mauricio Claver-Carone, the U.S.

special envoy for Latin America, said on Friday, ahead of U.S.

top diplomat Marco Rubio's visit to the country.

Rubio will depart on Saturday on his first foreign trip, with a

scheduled visit to the canal and a meeting with Panamanian

President Jose Raul Mulino, the first talks between the

countries since President Donald Trump's threat to take control

of the U.S.-built canal.

Rubio will also visit El Salvador, Costa Rica, Guatemala and the

Dominican Republic, where the Trump administration's efforts to

repatriate migrants from the region and stem migration into the

U.S. will be on the agenda, Claver-Carone said in a briefing

call with reporters.

Claver-Carone said it was not Mulino's fault that China's

presence around the canal "got completely out of hand" under

previous Panamanian governments, but added that the Panamanian

president now "has to deal with it."

"This increasingly creeping presence of Chinese companies

and actors throughout the Canal Zone, in everything from ports

and logistics to telecommunications infrastructure and

otherwise, which is very concerning, not only frankly to the

national security of the United States, but frankly to the

national security of Panama and to the entire Western

Hemisphere," he said. "So that will be an issue of

discussion."

Hong Kong-based CK Hutchison Holdings ( CKHUF ) has for more

than two decades operated the ports at the canal's entrances.

The company is publicly listed and not financially tied to the

Chinese government, though Hong Kong firms are subject to

government oversight.

China's economic influence has been growing in Latin

America, fueling worries in Washington that the resource-rich

region will tilt to Chinese interests rather than those of the

U.S.

Panama has vehemently denied ceding operation of the canal

to China, but Rubio said on Thursday he had "zero doubt" that

Beijing had a contingency to be able to

block the canal

in the event of a conflict.

Mulino says he

won't discuss control

of the canal with Rubio.

Panama is awaiting the results of an audit into CK

Hutchinson's payments to the state, which analysts say could

provide Panama with a pretext to alter its concession with the

company.

Despite the awkwardness in relations with Panama, one of

the closest U.S. partners in Latin America, R. Evan Ellis, a

professor at the U.S. Army War College, said he thought the two

sides were likely to search for a quick resolution.

"I think it could actually go down relatively quickly,"

Ellis told Reuters. "At the end of the day, President Trump is

probably looking for a deal where he can declare victory. The

Panamanians are looking for what they can give up in the context

of not violating their own management of the canal."