China looms large in President Trump’s threats of U.S. expansionism in Greenland and Panama. “China is running the Panama Canal […] and we’re going to take it back, or something very powerful is going to happen,” he asserted on Sunday. This week, U.S. Secretary of State Marco Rubio traveled to Panama to warn Panamanian President Jose Raul Mulino that Washington will “take measures necessary” if Panama does not immediately take steps to end what he calls Chinese influence over the canal. Despite reiterating Panama’s sovereignty over the canal, Mulino ultimately acquiesced by announcing that his government would not renew its participation in the Belt and Road Initiative (BRI), which was inked via a memorandum of understanding in 2017, right after Panama decided to cut off diplomatic relations with Taiwan.
Mulino also announced an audit into a Hong Kong-based company operating two ports near the canal. The day after Rubio’s departure, Panamanian lawyers filed a lawsuit with the country’s supreme court arguing that the company’s contract for the two ports is unconstitutional. Kenji Kawase and Stella Yifan Xie from Nikkei Asia detailed the history of the relationship between the canal and the company at the center of the controversy:
While the Panamanians resumed full control of the canal [after decades of American control] at noon on Dec. 31, 1999, the government had opened an international tender to privatize the operations before the handover. Hutchison Whampoa — the present-day CK Hutchison Holdings, one of the two flagship conglomerates owned by Hong Kong tycoon Li Ka-shing’s family — was awarded a 25-year contract to run both ends of the canal, starting in 1997.
The two ports — Cristobal on the Caribbean side, leading to the Atlantic, and Balboa on the Pacific — are operated by Panama Ports Company, a unit of Hutchison Port Holdings. This in turn is a division of CK Hutchison. Panama authorized the automatic renewal of the arrangement for another 25 years in June 2021.
[…] Hong Kong’s geopolitical position has since changed drastically, however. The city, which was transferred from Britain to China in 1997, is now under a strict national security law that Beijing imposed in June 2020. "China’s doctrine of military-civil fusion means that any PRC investment is a de facto instrument of the state and has the potential to hold U.S. strategic interests at risk, including Hutchison Ports PPC," experts wrote in a recent commentary on the canal for the Center for Strategic and International Studies.
[…] A Hong Kong government spokesman told Nikkei Asia, "The allegation made by American officials on the operation of the Panama Canal is unwarrantable and untrue," expressing "strong disapproval and objection." [Source]
On Wednesday, China’s Foreign Ministry said it had lodged complaints with the U.S. over “irresponsible” remarks and “attacks on China-Panama cooperation related to the canal, hoping that Panama would “not be influenced by external interference.” As the Global Times reported, Chinese Ambassador to Panama Xu Xueyuan published an op-ed piece titled “US, please learn to respect” in Panama’s newspaper La Estrella de Panamá on Monday, strongly urging the U.S. to respect China’s diplomatic and economic relations with Panama. Party-media outlet CGTN editor Shen Shiwei dubbed Trump’s actions “Bully Diplomacy,” and Yanzhong Huang at the Council on Foreign Relations called them “brinkmanship diplomacy.” VOA shared other reactions from Chinese social media and academia. Richard McGregor tweeted, “This has symbolic import and thus will be spun as a great victory, but in truth, Panama (and many other countries) signing the #BRI is increasingly irrelevant for Chinese investment, the state-led part of which has fallen dramatically since 2017.” Meanwhile, Tom Bateman at the BBC described how Panamanians feared a return to “imperial” conflict between outside powers:
Surrounded by tourists and stalls hawking Panama hats and souvenirs, [Panama City resident] Mari explained that many residents have strong memories of US control of the canal and don’t want to go back.
[…] For some, Trump’s refusal to rule out the use of military force has also triggered suspicion and fear. It evokes memories of the 1989 US invasion of Panama to depose de facto ruler General Manuel Noriega, a conflict that lasted several weeks and rapidly overwhelmed Panamanian forces.
"I was the political leader of the opposition when Noriega said he was going to kill all the leaders of the opposition if the US were to invade," recalled former Panama congressman Edwin Cabrera, speaking to the BBC by the locks of the canal’s Pacific entrance.
"I heard the bombs and started seeing people dying… The only thing President Trump and Rubio have left to say is that they will invade us," he told the BBC. "I wouldn’t like to live that again in the 21st Century, relive the imperial experience. Panama is in the middle of war between two powers, the USA and China, while we are looking at the sky." [Source]
The extent of Chinese influence in Panama has been a topic of debate among Western analysts. Jennifer Parker wrote a commentary this week at the Australian Strategic Policy Institute arguing that despite his aggressive approach, “Trump is right to worry about China’s Panama Canal influence,” because of the CCP’s leverage over companies invested heavily in Panama’s infrastructure that underpins critical global maritime trade. In The Diplomat, R. Evan Ellis outlined the various ways in which Chinese influence in Panama provides opportunities that China could exploit during a conflict, and he advocated for transparency and good governance as a path forward. At the same time, however, the U.S. exerts its own coercive leverage over Panama similar to the threats attributed to China, while sometimes neglecting basic modes of engagement such as appointment or confirmation of ambassadors. Thus, as Alonso Illueca, an associate professor at Panama’s Universidad Santa María La Antigua, recently argued on the China-Global South Podcast, China’s growing influence in Panama and the Latin American region is as much a product of American neglect as of Beijing’s own initiative:
On the China side, it is important to draw also clear distinctions, which [is] a counterpoint to President Trump’s position in the sense that influence is very, very different from control. China, in fact, exerts influence in Panama. This is in due regard because of the U.S. lack of influence in recent years. Remember, Panama established diplomatic ties with China in 2017. From 2017 up until today, the U.S. had no ambassador for the four years of the Trump administration in Panama after Ambassador John Feeley presented his resignation. And afterwards, the Chinese have maintained basically a very robust diplomatic presence, firstly through Wei Qiang, who was a very knowledgeable and very articulate diplomat. And now with Xu Xueyuan, who was the former Chargé d’Affaires in the U.S. So, look at the importance China gives to Panama in their diplomatic post in the sense that they send their former head of mission in the U.S. during the balloon crisis to preside over the Panama mission.
[… I]n the current situation, basically, the U.S. is cutting all types of assistance that in the past will assist the world. […] It was a work focused on values, focused on the values of democracy, focused on the values of transparency, and focused on the values of human rights. If we go now into the era of hard power, in the era of hardball diplomacy, of gunboat diplomacy, if we basically withdraw the values from the entire picture, that’s going to end up empowering even more the People’s Republic of China. [Source]
