Panamanian President José Raúl Mulino recently announced that his country will not renew its agreement with China’s Belt and Road Initiative (BRI), marking a significant shift in Panama’s foreign policy. This decision comes after a meeting with U.S. Secretary of State Marco Rubio, who has been vocal about the risks of Panama’s deepening ties with China. Panama was the first Latin American nation to join the BRI in 2017, a move that symbolized China’s expanding influence in the region. However, Mulino’s decision signals a reorientation towards strengthening relations with the United States.

China’s Belt and Road Initiative has been a major tool for Beijing to expand its economic and political influence globally, particularly in Latin America. By withdrawing from the agreement, Panama distances itself from Chinese investments in infrastructure projects, including developments related to the Panama Canal. Secretary Rubio has warned that Panama’s engagement with China could lead to violations of the Panama Canal treaty, an issue that has long been a point of concern for Washington. The U.S. has consistently expressed apprehension over China’s growing foothold in the region, especially regarding strategic assets like the canal.

Adding to the tension, former President Donald Trump has criticized Panama’s management of the canal, particularly over what he described as unfair toll fees and the country’s increasing economic cooperation with China. Trump has suggested that if violations of the treaty occur, the U.S. might push for greater control over the canal to safeguard its economic and security interests. The Panama Canal remains a crucial global trade route, and with toll fees sometimes exceeding $500,000 per vessel, control over the canal has significant financial and geopolitical implications.

Panama’s decision to step back from the Belt and Road Initiative will likely have lasting consequences for its economic relationships. While China has been a key investor in the country, its withdrawal from the agreement may pave the way for increased U.S. engagement and investment in Panamanian infrastructure. Moving forward, the Panamanian government will need to balance its economic interests with diplomatic pressures from both global powers. This shift could redefine Panama’s role in international trade and politics, particularly concerning its management of the vital canal. READ MORE BELOW