Panama has officially announced its withdrawal from China's ambitious Belt and Road Initiative (BRI), marking a significant shift in its international alignment amid growing tensions between the United States and China. President José Raúl Mulino's declaration follows productive discussions with U.S. Secretary of State Marco Rubio, where concerns about Chinese influence over the Panama Canal were at the forefront.
During the meeting, Mulino characterized the talks with Rubio as "respectful" and "positive," emphasizing Panama's intent not to extend the memorandum of mutual agreement with China established back in 2017. "I have made an important decision and I'm informing you of it. My government will not extend the 2017 agreement on the Belt and Road Initiative," Mulino stated, as reported by PBS News.
The BRI, launched by Chinese President Xi Jinping on September 7, 2013, aims to bolster global connectivity through infrastructure development and economic cooperation. This initiative includes both the Silk Road Economic Belt and the 21st Century Maritime Silk Road, representing one of the largest infrastructure projects globally. A month after introducing the idea, Xi emphasized the need for increased political coordination and trade links among participating countries, which makes Panama's withdrawal particularly noteworthy.
U.S. concerns over the BRI stem mainly from China's involvement with ports and infrastructure projects along transit routes, particularly around the strategic Panama Canal. The U.S. has maintained its interest in the canal since it was transferred to Panama's control under the 1977 treaty, which dictates the nature of American rights and protections over the waterway. Secretary Rubio conveyed to Mulino the U.S. position, insisting upon the need to contest China's increasing foothold.
"The presence of China in this region raises alarms because it potentially disrupts the treaty established during the canal's transfer," Rubio reportedly warned. "If changes do not occur immediately, the U.S. will be compelled to take necessary measures to protect its rights under the existing treaty initiatives." This statement reflects broader American apprehensions about maintaining influence over the canal, viewed as both strategically and economically important.
Following these discussions, Mulino hinted at exploring the option of concluding the BRI project even sooner than the scheduled timeline. “But I think we need to extend it [the project] for another year or two, as these things happen every three years,” he added, commenting on the necessity of reassessing commitments.
The dialogue about the canal escalated after President Donald Trump’s inauguration when he made statements concerning the canal's U.S. ownership and the need to reassess Panama's agreements with China. Trump expressed dissatisfaction with tariffs imposed by the Panamanian authorities on American vessels, claiming they amounted to economic sabotage and invited military intervention if necessary.
"We didn’t give it to China. We gave it to Panama, and we will take it back," Trump stated, prompting Mulino to firmly respond: "Each square meter of the Panama Canal belongs only to Panama." This potential for U.S. military response has stirred significant unrest across Latin America, raising fears of historical tensions reminiscent of previous U.S. interventions.
After the talks with Rubio, Mulino reassured his administration's commitment to preserving Panamanian sovereignty. He affirmed the sentiment repeatedly stated during the negotiations, emphasizing, "Our sovereignty over the canal is non-negotiable." This insistence upon maintaining sovereignty resonates deeply with past instances where Latin American nations faced pressures from foreign powers over territorial matters.
While Rubio's visit has seemingly strengthened bilateral relations, it has also laid bare the precarious ties between Panama, the U.S., and China. The Panama Ports Company and its association with Chinese conglomerate CK Hutchison Holdings came under scrutiny, with U.S. authorities contemplating the potential for tightened oversight of Chinese business engagements around the canal.
Particularly alarming is the possibility of retaliation or heightened diplomatic strain following Trump's insistence on reclaiming the canal. Experts warn such hardline policies may push Panama closer to Beijing, counteracting U.S. interests altogether. Trump's approach of steep tariffs on goods from Canada and Mexico also signals his administration's broader strategy of economic pressure which some analysts suggest could shift alliances among U.S. neighbors.
With such dynamics playing out, the Biden administration will need to tread carefully as it navigates its policy toward Panama and broader Latin American relations. Increased Chinese influence must be met with tact, ensuring mutual respect and enduring partnerships independent of coercive threats.
The outcome from these discussions marks the beginning of what could become one of the pivotal moments for Panama's foreign policy and positions it squarely within the larger chessboard of U.S.-China relations. The visible pivot away from BRI could be seen as Panama asserting greater independence on the global stage, and the consequences will likely reshape economic and diplomatic interactions for years to come.