Commentary: China’s investments and influence in Panama – problems ahead for the United States?

China’s intentions are abundantly clear when it comes to Panama. In December 2018, Xi Jinping became the first premier in the history of China to visit Panama. He was accompanied by executives from Chinese telecommunications, transportation and construction companies and participated in a trade show while there. The centerpiece of the show was a plan for a proposed $4 billion high-speed rail line across the Isthmus of Panama.

Xi’s visit to Panama is seen by many as a victory lap in its challenge to the U.S. for supremacy in canal-related infrastructure. Panama nearly suffered a complete financial meltdown a few years ago (ironically right after the completion of the expansion of the canal that promised to bring so much prosperity). With the release of the “Panama Papers,” major U.S. banks cut ties with the country and Panama realized it needed investment from somewhere to carry out its vision for the implementation of a comprehensive logistics strategy. China was more than happy to oblige and that same year diplomatic ties were formalized. The comprehensive logistics strategy, designed to take full advantage of the canal expansion, includes new ports, new bridges and even the completion of the Pan-American Highway, which runs from Alaska to Argentina but has a gap in Panama’s Darién Province near the country’s border with Colombia.

So far, the United States has shown very little public push-back against this Chinese incursion into Panama. To some Panamanian government officials, it seems that the United States takes its relationship with Panama for granted. This is not to say that the relationship between the United States and Panama isn’t strong on the day-to-day level. It’s rare that you meet a Panamanian who does not have family in the United States, has not lived in the United States, or are dual citizens themselves (because of being born in the Canal Zone when it was U.S. territory). In fact, the U.S. dollar is the official curry of the nation. However, there is a perception that the absence of direct investment by the U.S. on the scale of what China is investing shows that the U.S. is disinterested.

Panama isn’t the first government in the region to strengthen its ties with China recently. Countries across Latin America and the Caribbean have signed onto the Belt and Road Initiative that China launched in 2013, which promises $1 trillion in investments for infrastructure projects around the world to facilitate the exportation of Chinese goods. 

But the Panama Canal feels different – it has always been perceived as such a uniquely American achievement. “The Panama Canal was the great work of the industrial age, as symbolic to the U.S. as the Great Wall is to China,” historian and Panamanian political analyst Richard Koster told Foreign Policy. “The Chinese plan to develop a permanent presence in Panama.”

That may spell trouble for the United States, whether in the short-term or the longer-term…