Panama Steps Back as China and US Jostle for Influence in Latin America

Panama's President Jose Raul Mulino announced that his nation would not renew its membership in China's Belt and Road Initiative (BRI), marking a significant shift in the ongoing geopolitical tug-of-war between the United States and China in Central and South America. The BRI, which has recently expanded to include countries such as South Africa, Egypt, and Indonesia, has been a testament to China's growing influence through strategic investments, particularly in energy and infrastructure. Meanwhile, the US remains a key player, with substantial foreign direct investment in nations like Bolivia.

The competition between the US and China for regional dominance is heating up. Chinese Foreign Minister Wang Yi emphasized that "Latin America is the home of the Latin American people, and is not any country's 'backyard.'" This statement underscores China's commitment to strengthening ties with Latin American nations while challenging US influence. In Bolivia alone, Chinese firms have invested approximately US$6 billion in sectors including metals, energy, and transport.

The United States maintains a significant economic presence in Bolivia, with investments around US$430 million primarily focused on oil, gas, and manufacturing. Despite this, Bolivia's economic ties with China remain robust, having established diplomatic relations since 1985. China aims to "continuously elevate the China-Bolivia strategic partnership," a relationship bolstered by Bolivia's debt to China amounting to over US$1.7 billion, according to World Bank data.

In response to these shifting alliances, former US President Donald Trump issued a stark warning to the BRICS nations, of which Bolivia is now a member. Trump cautioned against undermining the dominance of the US dollar by threatening a 100% tariff on those who "want to play games with the dollar."

Chinese investments in Latin America are increasingly challenging US influence. The inclusion of seven new countries into the BRI signifies China's strategic interest in expanding its global economic footprint. Wang Yi's assertion that "China supports Latin American countries in defending their sovereignty, independence and national dignity" is a clear message of China's intent to deepen its influence.