Panama Withdraws From China’s Belt and Road Initiative

February 4, 2025

Recently, Panama officially withdrew from China’s Belt and Road Initiative. The country decided not to renew the 2017 Memorandum of About with China. This move signals Panama’s intent to reaffirm its sovereignty over the Panama Canal. President Jose Raul Mulino declared that the canal’s control is not negotiable. This decision follows warnings from former US President Donald Trump about the potential US takeover of the canal.

Background on the Panama Canal

The Panama Canal is an 82-kilometre artificial waterway connecting the Pacific and Atlantic Oceans.
It is crucial for international shipping.
The canal saves ships from a lengthy journey around South America.
Over two-thirds of the canal’s traffic is linked to the United States.
The US built the canal in the early 20th century, transferring control to Panama in 1999.

Panama’s Sovereignty Assertion

Panama’s government has taken a firm stand on its sovereignty over the canal. President Mulino stressed that the canal’s neutrality is not up for debate. The US transferred control to Panama under treaties signed in 1977. These treaties guaranteed the canal’s permanent neutrality and Panama’s sovereignty.

US Concerns and Claims

US President Trump claimed that Panama had ceded control of the canal to China. He accused Panama of breaching neutrality agreements. Trump’s statements included allegations of Chinese military presence at the canal. Both Panama and China have denied these claims.

China’s Role in the Canal

Chinese influence in Latin America has been a concern for the US. CK Hutchison Holdings operates key ports at the canal. This Hong Kong-based company has been involved in canal operations for over two decades. However, it is not directly controlled by the Chinese government. Panama is auditing CK Hutchison to ensure compliance with concession agreements.

Economic Implications

The Panama Canal is source of revenue for the Panamanian government. Toll revenues increased by nearly 26% from 2020 to 2023. Trump has criticised the tolls as excessively high for American ships. Panama insists that tolls are set transparently and are based on demand.

Future Developments

Panama’s withdrawal from the Belt and Road Initiative may impact its international relations. The US has expressed its intention to monitor Panama closely. Secretary of State Marco Rubio plans to visit Panama soon to discuss immigration and other bilateral issues. The situation remains fluid, with potential implications for Panama’s economy and sovereignty.

« Previous Post Next Post »