Panama exits China’s belt and road initiative, reaffirms sovereignty over canal amid U.S. warnings

Panama’s withdrawal from China’s global infrastructure project fuels geopolitical tensions as Donald Trump warns of U.S. intervention over the Panama Canal.

Panama has officially withdrawn from China’s Belt and Road Initiative (BRI), announcing that it will not renew the 2017 Memorandum of Understanding (MoU) that allowed the Central American nation to participate in China’s overseas development program. The move comes amid escalating tensions between the U.S. and China over control and influence in the strategically vital Panama Canal.

Panama Stands Firm on Canal Sovereignty

President Jose Raul Mulino sent a strong message to the U.S., asserting that Panama’s sovereignty over the world’s second-busiest waterway is not up for discussion.

“We'll study the possibility of terminating it early. I do not feel that there is any real threat at this time against the neutrality treaty, its validity, and much less the use of military force to make the treaty,” Mulino stated, reinforcing that sovereignty over the canal is not in question.

The Panama Canal, a crucial shipping route built by the U.S. in the early 20th century, was handed over to Panama in 1999 under the Panama Canal Treaty. However, former U.S. President Donald Trump has reignited controversy by claiming that China has taken control of the canal—a claim that Panama has firmly denied.

Trump Threatens to “Take Back” the Panama Canal

Donald Trump, who is running for another term in the 2024 U.S. presidential elections, has repeatedly warned that the U.S. would intervene to reclaim control over the Panama Canal if China’s influence is not curtailed.

“China's running the Panama Canal. That was not given to China; that was given to Panama, foolishly, but they violated the agreement, and we're going to take it back, or something very powerful is going to happen,” Trump said during a public address.

U.S. Secretary of State Marco Rubio Issues Warning to Panama

As tensions rise, U.S. Secretary of State Marco Rubio delivered a stern warning to President Mulino, stating that Washington will take necessary measures if Panama does not immediately sever ties with China’s influence over the canal.

During a high-level meeting, Rubio conveyed Trump’s explicit concerns about China’s involvement in the waterway, emphasizing that it violates the U.S.-Panama treaty. He warned that the Biden or future U.S. administrations could intervene if Panama does not take corrective action.

China’s Growing Presence in Latin America Raises Concerns

China’s expanding influence in Latin America, particularly through Belt and Road projects, has been a growing concern for Washington. The Panama Canal, which facilitates nearly 6% of global maritime trade, is of strategic interest to both the U.S. and China.

Beijing has heavily invested in ports, infrastructure, and logistics projects in Panama, sparking geopolitical tensions with the U.S., which sees China’s presence as a national security threat.

Panama’s Decision Sparks Global Reactions

Panama’s decision to exit the Belt and Road Initiative signals a potential shift in Latin America’s geopolitical alliances. As China continues to expand its economic footprint, Washington is ramping up diplomatic pressure on governments across the region to limit Beijing’s influence.

With the Panama Canal at the center of U.S.-China tensions, the global shipping industry is closely watching how this power struggle unfolds.