Panama has opted not to renew its participation in China’s Belt and Road Initiative (BRI), a global infrastructure program launched by Chinese President Xi Jinping in 2013. The BRI has been a key part of China’s foreign policy, aiming to deepen economic and strategic ties through investments in roads, railways, power plants, and ports worldwide. Panama became the first Latin American country to join the initiative in 2017, welcoming Chinese investment in its infrastructure.
However, under the administration of newly elected President José Raúl Mulino, Panama has now distanced itself from Beijing, a move that many see as a direct result of pressure from Washington. The United States has long expressed concerns about growing Chinese influence near the Panama Canal, a vital waterway for global trade. Former President Donald Trump has repeatedly accused China of attempting to exert control over the canal, citing the presence of Hutchison Ports, a Hong Kong-based company that operates facilities on both ends of the passage.
During a recent diplomatic visit, U.S. Secretary of State Marco Rubio issued a stark warning to Panama’s leadership. According to reports, Rubio told Mulino that Panama must “immediately reduce” Chinese influence over the canal or face “potential retaliation” from the United States. This statement underscored Washington’s strong stance on the issue and signaled that maintaining close ties with Beijing could come with consequences.
China’s Reaction: Allegations of U.S. Interference
Beijing was quick to respond, condemning what it described as U.S. interference in Panama’s sovereign decisions. Chinese Foreign Ministry spokesperson Lin Jian sharply criticized Washington’s actions, stating, “We firmly oppose the U.S. smearing and undermining the Belt and Road cooperation through means of pressure and coercion.” Lin argued that the initiative had led to “fruitful results” in Panama and other participating nations, though he did not specify particular projects in the Central American country.
The Chinese government took further diplomatic action by summoning Panama’s ambassador in Beijing for formal discussions. Assistant Foreign Minister Zhao Zhiyuan “lodged solemn representations” with the Panamanian diplomat, indicating China’s dissatisfaction with the country’s decision. Lin urged Panama to “bear in mind the general picture of the bilateral relationship and the long-term interests of both peoples, resist external interference, and make the right decision.”
Chinese state media echoed this sentiment, characterizing the situation as yet another example of Washington’s “hegemonic” tactics. A statement from the Chinese Foreign Ministry denounced the U.S. for its “Cold War mentality,” accusing it of attempting to divide Latin American nations and disrupt China’s legitimate economic partnerships.
U.S. Pressure and Panama’s Response
Despite Beijing’s claims, President Mulino has denied that the U.S. directly influenced his administration’s decision to exit the BRI. Instead, he has framed the move as part of a broader reassessment of Panama’s foreign policy and economic priorities. Nevertheless, his government remains engaged with Washington on key security and trade matters related to the Panama Canal.
A major point of contention has been the ongoing scrutiny over Hutchison Ports’ extended contract to operate canal-side facilities. Some analysts believe Panama may be open to a compromise in which the Chinese company’s lease is revoked or restructured. A government audit of the contract is already underway, which could lead to a rebidding process that might see a U.S.-aligned firm take control of the operations.
Meanwhile, tensions between the U.S. and Panama flared last week over an alleged agreement concerning free passage for U.S. military vessels through the canal. The U.S. State Department had claimed that Panama had agreed to waive toll fees for American government ships, a claim that Mulino strongly refuted. “That statement is based on a falsity, and that’s intolerable,” Mulino said in response. Rubio later walked back his comments, saying he respected Panama’s legal processes but reaffirming America’s “treaty obligation” to protect the canal if necessary.
While Mulino has rejected U.S. discussions about ownership of the waterway, he may still seek to renegotiate Panama’s agreements with foreign operators, particularly Hutchison Ports. Some observers speculate that Washington could push for a more American-aligned company to take over key canal operations if China’s presence is further reduced.
Beyond geopolitics, the canal itself faces pressing environmental and logistical challenges. A historic drought has lowered water levels, slowing ship transit and exacerbating existing tensions. Trump has seized upon these delays as further justification for reevaluating China’s role in the region, though experts argue that climate factors, not Beijing’s influence, are to blame.
ACZ Editor: Of course it was coercion. And very likely the entrance of Panama into the Belt and Road Initiative also contained a certain measure of coercion. Trump is essentially on his home turf and he won this round. Biden, of course, was barely aware that America was competing with China. Hopefully Trump will keep up the good work with the rest of Latin America.