For the past month, both before and after taking the oath of office on January 20, U.S. President Donald Trump has repeatedly threatened the territorial integrity of Panama. More recently, during his inaugural address, he openly pledged to take back the Panama Canal. In doing so, he has falsely claimed that China “operates” the canal and that Panama is, therefore, in breach of the canal’s neutrality regime.
Such threats certainly mean the dawn of a new era in international politics, devolving inter-state relations to a “might makes right” age. In such a scenario, Panama could face the same fate as the Melians at the hands of the Athenians, as summed up in ancient Greek historian Thucydides’ famous axiom, with the strong (the United States) doing what they can and the weak (Panama) suffering what they must.
Nonetheless, Trump’s bet is to not have to pursue military conquest in the Athenian way. He would rather have a complacent Panama, accepting all U.S. demands. As shown by the recent Colombia-U.S. clash over deportations, Trump’s approach seems to be “cooperate or else.”
In the case of Panama, besides the claim of taking back the canal, it could be argued that Trump is seeking to expel any and all Chinese influence from the country. He seems to be demanding full submission from Panama by expelling the likes of CK Hutchison Holdings, China Communications Construction Company, China Harbor Engineering Company, Landbridge Group, and even Huawei from its jurisdiction. In the U.S. Congress, some lawmakers have even suggested requiring Panama to break diplomatic ties with Beijing and to reestablish them with Taipei. Such a gambit apparently seeks to completely root out China’s influence in Panama. However, this may achieve the opposite of what is intended.
The current U.S. policy toward China’s influence in Panama is fundamentally flawed. First, it is alienating Panama, a treaty ally and a partner, which since receiving the canal has willingly cooperated with the United States in most of its international undertakings, including as part of the Coalition of the Willing in the 2003 Iraq War, the Proliferation Security Initiative of the same year and the Global Coalition to defeat ISIS established in 2014. Panama has even granted the U.S. permission to patrol Panamanian sovereign waters.
Second, the United States has apparently decoupled its policy vis-à-vis Panama from the defense of common values and principles, particularly regarding democracy, transparency and human rights.
Third, Trump’s approach ignores the efforts jointly undertaken by the U.S. (during the Biden administration) and Panama to counter China’s influence by inter alia halting free trade agreement talks and the projects in Margarita Island (currently in arbitration) and Pilón Port, which have significantly reduced China’s influence around the canal.
Fourth and last, by focusing exclusively on the economic and potential military components of China’s presence in Panama, the Trump administration is ignoring other realms where China’s influence is more significant. Here is the paradox tied to Trump’s gambit as his upcoming moves against Panama may well end up increasing China’s influence in the country.
The 2024 China Index, which measures China’s influence in 98 jurisdictions, ranks Panama 12th globally and second regionally (Latin America), which means that it is among the countries where Beijing exerts a relatively high level of influence. When analyzed, however, the data compiled demonstrates that it is in Panama’s economic and military domains where China exerts less influence and seems fairly contained. In fact, China’s influence in Panama is more significant in the fields of media (59.1 percent), academia (47.7 percent), society (68.2 percent), law enforcement (50 percent), technology (40 percent), domestic politics (82.5 percent), and foreign policy (68.2 percent), which sharply contrast with China’s limited influence in Panama’s economy (27.3 percent) and military (30 percent).
By focusing on the immediate returns – i.e. forcing Panama to expel CK Hutchison Holdings and others – Trump is implementing a policy based on economic coercion against an ally without taking due regard for the facts regarding China’s influence in the country. In the short term this may align Panama even further with China in the realms of domestic politics and foreign policy, which in the medium and long terms could be accompanied by a consolidation of China’s influence in the country in the realms of media, society, academia, and law enforcement.
Since the establishment of diplomatic ties in 2017, it is undeniable that China has exponentially increased its influence in Panama. This is in large measure due to the United States’ incremental passivity in its bilateral relations with Panama. For example, during almost five of these seven-plus years of China-Panama bilateral relations the United States did not have an ambassador in Panama, while China had two different ambassadors uninterruptedly advancing its agenda.
In order to counter China’s influence in Panama, the United States needs a comprehensive and values-oriented approach. It is precisely through the support of democracy, transparency, and human rights that substantive improvements can be introduced, and foreign interference be prevented. If the current trend continues it would further empower autocrats like China’s Xi Jinping and Russia’s Vladimir Putin. In the end, it is very likely that economic coercion or even the threat of it would force Panama to “cooperate” – but make no mistake, such a policy based on threats, devoid of principles and values, which ignores past-joint efforts and lacks a comprehensive and factual approach, may well end up having the paradoxical effect of increasing China’s influence in Panama.