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 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.