Panama Ends Participation in China’s Belt and Road Initiative

Current Affairs International Issues

Posted by newadmin on 2025-02-05 09:08:58 |

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Panama has officially withdrawn from China’s Belt and Road Initiative, opting not to renew the 2017 Memorandum of Agreement with China. This decision signals the country's commitment to reaffirming its sovereignty over the Panama Canal. President Jose Raul Mulino has firmly stated that control of the canal is not negotiable. The move follows warnings from former U.S. President Donald Trump, who suggested that the United States might take over the canal.

The Panama Canal, an 82-kilometer artificial waterway connecting the Pacific and Atlantic Oceans, plays a vital role in international trade. It significantly reduces travel time for ships, eliminating the need for a lengthy journey around South America. Over two-thirds of the canal’s traffic is linked to the United States. Originally built by the U.S. in the early 20th century, control of the canal was officially transferred to Panama in 1999 under treaties signed in 1977, which guaranteed its permanent neutrality and Panamanian sovereignty.

President Mulino has taken a firm stance, asserting that the canal’s neutrality is not up for debate. Meanwhile, former President Trump has accused Panama of allowing China to gain control over the canal, claiming that the country violated its neutrality agreements. He also alleged that China has a military presence at the canal, claims that both Panama and China have denied.

China’s influence in Latin America has been a growing concern for the U.S. A Hong Kong-based company, CK Hutchison Holdings, has been operating key ports at the canal for over two decades. Although the company is not directly controlled by the Chinese government, Panama has launched an audit to ensure compliance with concession agreements.

Economically, the canal remains a crucial revenue source for Panama. Toll revenues have increased by nearly 26% between 2020 and 2023. Trump has criticized these tolls as being excessively high for American ships, but Panama maintains that the rates are transparently set based on market demand.

Panama’s decision to withdraw from the Belt and Road Initiative may have implications for its international relations. The U.S. has expressed its intention to closely monitor the situation, with Secretary of State Marco Rubio planning a visit to discuss immigration and other bilateral issues. As events unfold, Panama’s economy, diplomatic ties, and sovereignty will remain key areas of focus.

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