Panama promotes itself “as the bridge of the world, heart of the universe” but lately the narrow Central American Isthmus and its namesake canal that joins the Atlantic to the Pacific have become the setting for a bitter clash between the world’s two preeminent economic superpowers.

Panama and the US appear to have agreed to let American warships use the Panama Canal, effectively for free. But beneath the agreement is an ongoing threat to Panamanian sovereignty over the use of the canal.

Panama said on Wednesday the United States recognized its sovereignty over the Panama Canal, despite tough rhetoric from Washington, as the two nations announced agreements to deepen U.S. military training in the Central American nation.