Panama Quits China’s Belt and Road Initiative Amid Pressure From U.S.

Panama has decided to withdraw from China's Belt and Road Initiative (BRI), a decision that has elicited regret from China and illustrates changing geopolitical dynamics in Latin America. [para. 1] President José Raúl Mulino announced that the Panamanian embassy in Beijing had officially given 90 days' notice of the country's intention not to renew its participation in the initiative. [para. 2] Although Mulino emphasized the need to reassess the tangible benefits of the BRI, he ruled out severing diplomatic ties with China, stating the decision was made before recent high-level U.S. visits to Panama. [para. 3]

China's Foreign Ministry spokesperson Lin Jian expressed regret over Panama's decision, attributing it to U.S. coercion and pressure intended to undermine BRI cooperation. He urged Panama to consider the long-term bilateral relationship and resist external interference. [para. 4][para. 5] Lin highlighted that the BRI, an economic cooperation effort, has been embraced by over 150 countries worldwide, including more than 20 in Latin America, and has yielded significant benefits for Panama and China. [para. 6]

The U.S. has seemingly played a role in Panama's decision, with newly appointed Secretary of State Marco Rubio touring Latin America and meeting with President Mulino on February 2. During their meeting, Mulino disclosed Panama's intention not to renew its BRI agreement with China, a move Rubio publicly supported, citing it as a positive step in U.S.-Panama relations. [para. 7][para. 8] Furthermore, Panama and the U.S. agreed to extend a memorandum of understanding regarding immigration management and trade cooperation. [para. 9]

Panama was the first Latin American nation to join the BRI, having formalized ties with China in 2017, leading to significant investments, including a notable infrastructure project, the Amador Cruise Terminal, built by China Harbour Engineering Co. Ltd. on Perico Island. [para. 10][para. 11] However, several major Chinese-backed projects have faced delays or cancellations, such as the Panama Colón Container Port initiative, stalled due to contract violations by the Chinese company Landbridge Group. [para. 12] The withdrawal from the BRI could impact Chinese operations in Panama but is expected to be limited due to the short span of formal diplomatic relations and pandemic-related investment slowdowns. [para. 13]

Panama has also launched an audit into Chinese-operated port operations, particularly those managed by Hutchison Ports PPC, at the canal's two endpoints. This review was announced following U.S. President Donald Trump's pressure and aims to ensure transparency and appropriate resource use. [para. 14][para. 15] Analysts suggest that Panama's BRI departure could shape other Latin American countries' perspectives on Chinese initiatives, potentially introducing more challenges and uncertainties for Chinese investments in the region. [para. 16] However, current Chinese trade and shipping through the canal remain unaffected. [para. 17]

In his inaugural speech, President Trump vowed to regain control over the Panama Canal, asserting unfair treatment while accusing China of exerting control over it. [para. 18] During his meeting with Mulino, Rubio relayed Trump's concerns, later falsely claiming that U.S. ships could transit the canal for free, a statement quickly refuted by Panamanian authorities. [para. 19] According to the Panama Canal Authority, U.S. military vessels have been using the canal since 1998, paying substantial toll fees, and no discussions about waiving these fees have been entertained. [para. 20][para. 21][para. 22]

China's Foreign Ministry reaffirmed its support for Panama’s sovereignty over the canal, stressing it has never engaged in the canal's management or governance, dismissing any accusations of control as fabrications. [para. 23]