Deep Dive: Panama Balances Between United States and China Influence

Panama's position as a linchpin in global trade routes, particularly through the Panama Canal (the vital waterway connecting the Atlantic and Pacific Oceans, handling 5% of world trade), places it at the center of great power competition. Historically, the United States has exerted significant influence over Panama since the canal's construction in the early 20th century, with full control transferred to Panama in 1999 under the Torrijos-Carter Treaties. China has rapidly expanded its footprint through massive infrastructure investments under the Belt and Road Initiative (BRI, China's global infrastructure and trade connectivity program), including port developments and trade deals post-Panama's 2017 diplomatic switch from Taiwan to Beijing. Key actors include the United States, seeking to counter China's regional expansion via initiatives like the Partnership for America's Growth in the Americas to bolster influence in its traditional backyard; China, pursuing economic dominance through loans and contracts that deepen dependency; and Panama's government under President José Raúl Mulino, aiming to diversify partnerships without alienating either side. Culturally, Panama's mestizo society with strong U.S. ties from migration and remittances contrasts with growing Chinese business communities, creating domestic tensions over sovereignty and debt sustainability. Cross-border implications ripple through Latin America, where China's BRI has enrolled over 20 countries, challenging U.S. hegemony and affecting migration patterns, commodity flows, and security alliances. Beyond the region, global shipping firms, commodity traders in Europe and Asia, and U.S. allies like Japan face higher costs or delays if canal access is politicized. Stakeholders such as the International Maritime Organization monitor for disruptions, while investors weigh risks in Chinese-funded projects amid U.S. sanctions threats. Looking ahead, Panama's balancing act could stabilize if it leverages multilateral forums like CELAC or APEC, but escalation—such as U.S. pressure on Chinese contracts or Beijing's port expansions—risks economic coercion. This microcosm of U.S.-China rivalry underscores shifting power dynamics, with Panama's choices influencing hemispheric stability and global supply chain resilience.