Panama Canal: Geopolitical rift between the US and China

After Donald Trump's comments about the Panama Canal, the people of Panama must be pretty upset, right?

The remarks of President Trump about the Canal have upset the Panamanian people. The Panama-US relationship is very complex. In the 19th century, it was a relationship based on vassalage and interventionism. During the 20th century, it evolved, through ups and downs, to a partnership and alliance based on common shared values and the preservation of the neutrality of the Panama Canal. President Trump's remarks remind the Panamanians of the gunboat diplomacy that prevailed during the 19th and early to mid-20th centuries and not the partnership and alliance built since 1977. Those remarks have aroused patriotic fervor in the Panamanian people, united in a single driving issue: The Canal is and always will be Panamanian.

Could you tell us about the two ports that are causing Trump so much concern?

The two ports are Balboa and Cristobal, which are on the Pacific and Atlantic (Caribbean) sides of the Canal, respectively. They are operated by CK Hutchison Holdings, formerly Hutchison Whampoa, a Hong Kong-based company whose owner is a family of Hong Kong billionaires. Given that Beijing has extended its national security laws to Hong Kong and its government has shown willingness to weaponize supply chains, claims regarding the Chinese control over such ports have risen. Other key infrastructure projects have been built by China-related entities, such as a cruise port in Amador (Pacific side of the Canal), the fourth bridge over the Canal and Central America's largest Convention Center. There were also other projects controlled by China-related entities currently under litigation, such as a container facility and a power plant, both in Colón. Most of these projects have a potential dual use (commercial and military), which leads to concern from the US side.

How real is the security threat that the Chinese military could use the ports as a point of access?

The ports have a potential dual use, that is undeniable, but operatively doing so in a strategic choke point as the Panama Canal is almost impossible. The Canal has a neutrality regime precluding any type of military mobilization or troop stationing in the Canal, besides from Panamanian security forces. This regime is not only guaranteed by Panama and the US but also by 40 other States, including France, the United Kingdom, and the Russian Federation.

Port operators gain insight into a vast amount of data. How high is the risk of such quantities, especially since China controls so many ports worldwide? Hutchinson operates 53 ports in 24 countries alone.

It is very significant, particularly given the opacity that accompanies Hutchison operations in Panama. This, together with the fact that China has deployed security equipment and a cybersecurity company in Colón and San Miguelito, respectively, points to a specific interest in data gathering.

In 2017, Panama severed its ties with Taiwan and established diplomatic relations with China. Less than eight years have passed, but according to China Index, Panama is the country with the greatest Chinese influence in Latin America after Chile. How did this happen so quickly?

This could only have happened with the acquiescence of the subsequent Panamanian governments and its economic and political elites. The data compiled by the China Index shows that China's influence in Panama goes way beyond the military and economic realm; in fact, those are the areas in which China exerts less influence. 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 contrast the fields of economy (27.3 percent) and military (30 percent).

After the change of government, the initial honeymoon phase cooled off. Several super projects were suspended. Panamanian society considered the proposal to build the Chinese embassy right at the gates of the Canal an insult. There were massive protests against the exploitation of Cobre Panama, the largest open-cast copper mine in Central America, which is reportedly also backed by a Chinese company. Where did this shift come from?

After the Juan Carlos Varela government (2014-2019), the Laurentino Cortizo administration (2019-2024) pledged to cool down the bilateral ties with China. While it initially did so, including by halting the fourth bridge over the Canal project, the Margarita island container port facility and power plant in Pilón, towards the middle of his government, things changed. In 2021, Hutchison received a 25-year renewal of Balboa and Cristobal ports (through a very opaque process and despite the political situation in Hong Kong). The copper mine also received a new contract in 2023, even though there were claims that the Canadian company had among its shareholders a company controlled by the Chinese Communist Party. Moreover, towards the end of the government, the fourth bridge project was reactivated.

How do people in Panama see China these days, and how are they trying to position themselves in the growing geopolitical rift between China and the US?

A 2023 poll conducted by the International Republican Institute in Panama shows that 62 percent of the people in Panama consider the US to be the country's most important political partner, while 22 percent deem it to be China. Moreover, in the economic realm, the data varies slightly, with 59 percent deeming the US as the most important economic partner, with China in second place with 28 percent. The same poll shows that the general perception is that China-Panama ties have not affected Panama's democratic system (44 percent), with 19 percent considering that it has strengthened its democracy and 23 percent deeming that it has been weakened.

Alonso E. Illueca is an Associate Professor at Universidad Santa María La Antigua, where he teaches International Law and Human Rights. He is also an Associate Researcher at Expediente Abierto, a Central American research and dialog forum.