Panama pulls China away from the isthmus in the face of U.S. pressure

report SRA 2025 /[PDF version].

The American fund BlackRock has signed the purchase of the Hong Kong company that operates the two main ports of the interoceanic waterway.

° President Mulino has taken the country out of the Silk Road and has section Chinese companies from the construction of a large bridge and the laying of a railway line.

Washington also has its sights set on the concessionaire of Panama's largest mine, which accounts for 5% of GDP and whose main shareholder is Chinese.

Donald Trump's fixation with the Panama Canal responds, de entrance, to a normal geopolitical concern of Washington. The growing presence of the Chinese rival in a particularly strategic point for the security - economic and military - of the United States makes it non-negotiable for this country to keep Beijing away from the banks of the Canal. Suspicions had been growing and the Pentagon had been warning of this in recent years in its appearances before congress; now Trump has made this a priority.

In addition to being one of the most important straits in the world's maritime routes, through which 5% of international trade passes, for the United States it is a vital connection between its Atlantic and Pacific coasts and with the rest of the world: 40% of U.S. container traffic passes through the canal; if all ships going to or departing from U.S. ports are also taken into account, this figure rises to 72%.

The Panamanian government, under the presidency of José Raúl Mulino, in position since July 2024, has moved swiftly: it has opened a review of the concession of the two main ports of the canal to a Hong Kong company, announced Panama's exit from the Silk Road and Closed the door to Chinese intervention in the construction of a new bridge over the canal, as well as to Chinese investment in a railroad project . Other Chinese interests in Panama remain, but the actions already taken should reassure Washington, if eliminating the threat of Chinese influence in the isthmus was the goal of Trump's pressure.

Ports

The main concern expressed by the United States refers to the management of the country's two largest ports, Cristobal and Balboa, located on the Atlantic and Pacific sides, respectively, of the Canal. Their management was granted in 1997 to the Hong Kong company Hutchison, with a 25-year concession, the renewal of which came into effect in 2022. If during all this time no one saw this concession as a risk, the rise of China and its rivalry with the US has turned it into something observed with distrust from Washington.

It is not only that, agreement to the internal legislation of the communist power, Chinese companies must follow the national interests also abroad (the ports of Chinese companies could be forced to host Chinese warships or prevent the trawling of rival countries), but also that any disruption at the mouths of the canal, camouflaged as accidental, would be enough to prevent the US Navy from moving its capabilities between one ocean and the other, which would be catastrophic in a crisis.

In response to the disagreement expressed by the Trump Administration, President Mulino announced that he was opening a review of the concession granted to Hutchison. It was difficult to find any breach by the concessionaire, so a breach of contract would have result expensive for the Panamanian government. The solution came from the United States, when on March 4 the investment fund BlackRock, one of the largest in the world, announced that it had reached an agreement with Hutchison. agreement with the Hong Kong business to acquire the 43 ports it operates outside China, in 23 countries. As part of this agreement, BlackRock will acquire 90% of Panama Ports Company, on which the ports of Cristobal and Balboa depend.

A month earlier, coinciding with framework Rubio's visit to Panama on his first trip abroad as the new US Secretary of State, the Panamanian government made it known that it was abandoning its participation in the Silk Road, an infrastructure and connectivity financing program. Panama signed up to the Chinese initiative in 2017, a few months after breaking diplomatic relations with Taipei and establishing them with Beijing. It was the first Latin American country to join the Road and has also been the first to leave it.

China has expressed its complaints about the operation affecting Hutchison and called the Panamanian ambassador in Beijing to convey China's discomfort with the decisions being taken by the Mulino government. The latter, on the fringes of the country's traditional parties, has turned around the approaches to Beijing made by his two predecessors, Juan Carlos Varela and Laurentino Cortizo.

Train, bridge and mine

Another decision in the same direction taken by Panama has been to dispense with any Chinese participation in the railway line that the government wants to build between Panama City and the town of David, near the border with Costa Rica, the country to which the track could be extended. Mulino announced the hiring of AECOM, a "100% American" company, as he defined it, to supervise the realization of the project, valued at 4,000 million dollars. "I hope that no Chinese will be there," he said.

The government also expects to replace two major Chinese construction companies, CHEC and CCCC, in the construction of a new bridge over the Panama Canal, a US$1.4 billion project whose execution has already experienced several delays. The new perception towards China could also affect the location of the new embassy of the People's Republic, which had requested to be built right next to the Canal.

Works that China has already carried out in Panama include a port for cruise ships and a convention center in the Amador area of the capital (which it built, but does not manage). It also has interests in Isla Margarita, on the Atlantic entrance to the canal, and in the Colon Free Zone. In addition, Huawei has made the Panamanian isthmus its hub for Central America.

Apart from the facilities near the Canal, the Chinese are also present in mining, with a substantial participation in the largest copper mine in the country, an open-pit mine that had been contributing almost 5% to the Panamanian GDP. Accusations of lack of transparency in the renewal of the contract led to its annulment in 2023 by the Supreme Court. The concession is held by Canada's First Quantum Minerals, although the purchase of 18.3% of the concession by China's Jiangxi Copper makes the Chinese the main shareholders.

President Mulino has given the impression that he wants to unblock the exploitation of this mine and it is not ruled out that he may encourage some movement of investors so that there may be a shareholder restructuring that better responds to Washington's greater sensitivity. Although in principle the ownership of the mining company does not in any way jeopardize the security of the Canal for the US, there are those who interpret that a business with such a significant activity in the Panamanian Economics can exert a great political influence.

The steps taken by the Panamanian authorities to reduce the Chinese presence have not, however, prevented Trump from insisting on the return of the canal. Although some voices consider wrong, therefore, a strategy of concessions that has not served to placate Washington, it can be argued that in order to twist any serious attempt on the part of the United States to recover the management of the interoceanic waterway, in any case, it was first necessary to remove Chinese interests.