Panama has announced its decision not to renew its involvement with China's ambitious Belt and Road Initiative (BRI) following high-profile discussions with U.S. Secretary of State Marco Rubio, marking a pivotal shift in the Central American nation’s foreign investment strategy.
During a press conference held on Sunday, Panamanian President José Raúl Mulino declared, "We are going to study the possibility of whether it can be finished earlier or not. I think it is due for renewal in one or two years." This statement signifies Panama's intention to step back from the agreement initially signed in 2017, under the previous administration of President Juan Carlos Varela, after severing diplomatic ties with Taiwan.
The announcement came shortly after Mulino met with Rubio, who articulated U.S. concerns about the Chinese Communist Party's (CCP) growing influence over the Panama Canal, which connects the Pacific Ocean to the Atlantic. Rubio emphasized, "The United States cannot, and will not, allow the Chinese Communist Party to continue with its effective and growing control over the Panama Canal area." The Secretary of State's visit marks his first international trip since taking office, and highlights America’s intensified focus on countering Chinese involvement in strategic regions.
U.S. President Donald Trump has long voiced his dissatisfaction with Chinese control over the canal, claiming, "Something very powerful is going to happen" if Panama does not reduce the fees charged to American ships, which Trump claims are excessively high. Mention of potential U.S. actions reflects broader American anxieties about the geopolitical shifts brought on by the Belt and Road Initiative—a vast infrastructure investment strategy launched by China to increase its global economic footprint.
Mulino has reassured both U.S. officials and his own constituents of Panama’s sovereignty over the canal, insisting there is no threat to the Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal, which paved the way for Panama to gain control of the waterway from the United States. This treaty, signed by the U.S. and Panama in 1977, ensures the canal operates as neutral territory.
The potential withdrawal from the Belt and Road Initiative is linked to criticisms of the program being characterized as “debt-trap diplomacy.” U.S. officials have noted how many countries end up overburdened with unsustainable debts from their involvement with China, leading to compromised national sovereignty over strategic infrastructures, including ports and railways.
Concerns about the impactful alliance between Panama and China had been at the forefront of U.S. discussions. The Secretary of State noted, "If the current status of influence and control of the Chinese Communist Party continues, it would require the United States to take measures necessary to protect its rights under the treaty." These comments reflect growing bipartisan support within the U.S. government for taking proactive steps to limit Chinese influence within the region.
Reactions within the United States have highlighted this development as strategically favorable, with key figures claiming it as a triumphant step for U.S.-Panama relations. National Security Adviser Mike Waltz stated, "This is clearly a step in the right direction," as U.S. officials took to social media to celebrate Panama's decision to potentially end its agreement with China.
Discussing the potential gains of fostering closer ties with the U.S., Mulino said, "I think this visit opens the door to build new relations and try to increase as much as possible U.S. investments in Panama." His statements indicate Panama may be seeking to capitalize on the opportunity for U.S. infrastructure investments as it distances itself from China's financial grip.
The pushback against Chinese influence is not solely diplomatic; House Republicans have also made moves to assert the U.S. interests in the canal. A bill titled the Panama Canal Repurchase Act has been introduced, aiming to provide Trump with the authority to negotiate the reacquisition of the canal. This legislative action suggests there is significant political sentiment aligned with Trump’s ambitions of regaining control over the strategically significant waterway.
While Rubio's visit signaled the U.S.'s commitment to protect its interests, Mulino downplayed the idea of military intervention or severe U.S. actions, saying, "I don’t feel there is any real threat at this time against the treaty, its validity, or much less of the use of military force to seize the canal."
The conversations had between the U.S. and Panama indicate strategic maneuvering, as global powers vie for influence. The U.S. hopes to reinforce its standing within Latin America and regain momentum against the encroaching presence of China, which has rapidly expanded its economic partnerships across the region.
Mulino's commitment not to renew the Belt and Road Initiative serves as both a reaction to pressure from the U.S. and as part of broader geopolitical realignments taking place within Central America. The outcome of this development could significantly reshape trade relations and foreign investment priorities as Panama seeks to navigate the complex waters of international diplomacy.
Looking forward, both nations appear eager to bolster economic interactions, with Mulino's administration signaling readiness for increased collaboration. The pivot away from the BRI toward strengthening ties with the United States signifies important developments for the broader region as it assesses the long-term impacts of foreign investments and diplomatic relationships.