Panama has made a significant decision to step back from China's Belt and Road Initiative (BRI), marking a pivotal shift in the nation's international economic strategy. Having been the first Latin American country to officially endorse the BRI in November 2017, Panama's decision not to renew its agreement represents a notable departure from its previous diplomatic alignment with China, established after switching from Taiwan in June 2017. This move comes amid growing concerns over Beijing's expansive economic reach and under pressure from the United States.
The BRI, a cornerstone of China's global development strategy, aims to enhance infrastructure through the construction of new ports, bridges, railways, and other projects. While over 100 countries have joined the initiative, recent withdrawals, such as Italy in 2023, underscore rising apprehensions about China's growing influence. In Panama, two Chinese state-owned firms are currently constructing a fourth bridge over an entrance to the Panama Canal.
Panama's President Jose Raul Mulino announced that the country's agreement with the BRI will not be renewed. The deal was initially set to expire within two to three years. This decision aligns with U.S. Secretary of State Marco Rubio's urging for Panama to distance itself from the BRI during his visit. Rubio expressed concerns about China's presence, labeling it a threat to the Panama Canal and a potential violation of the U.S.-Panama treaty.
"Yesterday's announcement by President @JoseRaulMulino that Panama will allow its participation in the CCP's Belt and Road Initiative to expire is a great step forward for US-Panama relations, a free Panama Canal, and another example of @POTUS leadership to protect our national security and deliver prosperity for the American people," – Rubio
The United States has long expressed concerns regarding Chinese companies operating near the Panama Canal. Among these is a Hong Kong-based firm overseeing two ports. The U.S. alleges that China employs "debt trap diplomacy" through the BRI to solidify its international influence.
In asserting its autonomy, Panama has reiterated its sovereignty over the Panama Canal, the world's second busiest waterway. An audit of Panama's BRI deal might offer a legal avenue to rescind concessions if corruption is uncovered.
"That provides more legal framework for Panama to wiggle out of the concessions and for Panama to reopen them such that an American company or a European company might come in and win the bid," – Ryan Berg
The U.S. State Department has welcomed Panama's decision to let its participation in the BRI expire, calling it a "great step forward" for bilateral relations with the U.S. This development not only strengthens ties between the two nations but also supports broader American strategic interests in maintaining control over key global trade routes.
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