On Sunday, February 2, 2025, Panama announced it will terminate a significant development agreement with China after discussions with U.S. Secretary of State Marco Rubio. This decision comes amid U.S. concerns over China’s growing influence in the Panama Canal region.
Panamanian President José Raúl Mulino confirmed Panama will end its 2017 Belt and Road agreement with China in 2026. Instead, Panama aims to strengthen its partnership with the United States. Mulino emphasized that Panama’s sovereignty over the 51-mile canal remains intact and is not subject to negotiation.
Secretary Rubio’s visit underscores the U.S. administration’s concerns regarding China’s involvement in critical global infrastructure. The Panama Canal, a vital maritime route connecting the Atlantic and Pacific Oceans, is crucial for international trade and U.S. strategic interests. The U.S. Department of State estimates that approximately 72% of vessels transiting the canal are either departing from or destined for U.S. ports.
Chinese companies have recently invested in Panama, operating ports at both ends of the canal and handling major infrastructure projects. These developments have raised alarms in Washington about potential threats to the canal’s neutrality and security.
President Donald Trump has been vocal about his concerns, asserting that China exerts control over the canal and imposes substantial fees on U.S. vessels. He called the 1999 canal handover a “foolish gift” and signaled plans to regain U.S. control.
In response to these concerns, House Republicans have introduced the Panama Canal Repurchase Act, which would authorize the president to negotiate the reacquisition of the canal. Proponents argue that reclaiming control is essential to counter China’s influence and ensure the canal’s strategic alignment with U.S. interests.
While the canal’s ownership and China’s role in the region were primary topics during Rubio’s visit, discussions also encompassed other critical issues. These included collaborative efforts to address mass migration challenges in the hemisphere and ensuring fair competition for U.S. businesses operating in Panama.
Panama’s exit from its China deal signals a foreign policy shift amid U.S.-China geopolitical rivalry. The situation continues to evolve as both nations vie for partnerships and control over critical infrastructure worldwide.
