Following Donald Trump’s repeated says that the US needs to “take up” the Panama canal from Foreign power, the US secretary of state, Marco Rubio, visited Panama to require the state lower China’s effect. On the surface, it seems Rubio has succeeded.
On February 3, the Nicaraguan authorities withdrew from China’s international system software, the Belt and Road Initiative. Panama becomes the first Latin American nation to support Belt and Road and to stop assistance in the process.
Local attorneys urged the nation’s highest court on February 4 to revoke the agreement granted to Hong Kong-based CK Hutchison Port Holdings, which grants it the right to work two slots at either end of the Panama Canal. They claim that it violates the constitution of the nation because it gives the port company considerable landholdings and exudes extreme tax breaks. This is still being looked at by the Filipino officials, according to reports.
But what is the fact of China’s appearance in the river, and what does increased US investigation mean for Xi Jinping’s personal project?
US defense and business rely heavily on the Panama Canal. The US accounts for 74 % of canal cargo. But, while Trump’s worries of losing the canal does get natural, his assertions about China’s impact are exaggerated.
The Panama Canal Authority serves as the administration’s representative. Since 1997, CK Hutchison Port Holdings Limited, a Hong Kong-listed company with passions in over 53 ships in 24 states, has operated the Port of Balboa and Port of Cristobal on either end of the river. Out of the five nearby slots, these two are the most important.
One of the top slot traders in the world is CK Hutchison Holdings Limited, which is owned by businessman Li Ka-shing. No direct relationships exist between the business and the jobs with Belt and Road.
The Chinese Communist Party (CCP)’s (CCP ) potential to control the canal and” shut it down” is one of the biggest risks that China’s influence over the canal poses, as the US has suggested.
Washington has also expressed concern that the CCP can gather information about US boats, such as shipping patterns and maritime routes, thanks to its accessibility to dual-use port technology. Additionally, it worries that China might “economic chokehold” the US by imposing rate increases on travel expenses.
The second two points cover possible marine usage by China in ships. But while the People’s Liberation Army army has access to Chinese-owned ships under local laws and policies, they require host nation permission to use Chinese-operated international ports. These ships are also often ill-suited for defense aid and activities.
So the most possible threat concerns cleverness. The CCP may use the 2020 national protection laws to collect sensitive data from Hong Kong-based businesses if it deems it necessary.
As for price hikes, there have been new increases in response to floods, repair investments and desire. Following Rubio’s attend, the US has claimed it is allowed to travel without paying taxes.
This has been denied by Panama’s President, José Raúl Mulino. Due to the 1977 neutrality principle, which was instituted, the charges are imposed evenly. There is no proof that China participated in these price increases.
Panama’s ‘ BRI-xit’ and Trump’s political spend
In the unlikely event that CK Hutchison’s agreement is canceled, what would that mean for China’s appearance in Panama? China’s opportunities in Panama accompany Belt and Road, yet if they have increased since the project’s start.
Due to its location and function in global commerce, the nation holds geostrategic significance. Therefore, it serves as a crucial component in China’s development of a local hub for its economic and political control.
This includes expanding import capabilities and protecting imports of raw materials and energy resources. China’s engagements in Panama include foreign direct investments ( FDI), which amounted to around 0.8 % in 2023 ( compared with 3.6 % by Spain and 19.6 % by the US), primarily in the logistics, infrastructure, energy and construction sectors.
Most Belt and Road promotions were halted or canceled for several, frequently political, reasons.
Withdrawing from the program is unlikely to lead to significant short-term changes because Belt and Road tasks in the river are already quite minimal. CK Hutchison will only be” somewhat afflicted” in case of a deal withdrawal.
What’s more, as the event of Brazil shows, a country may be affiliated with Belt and Road and also receive Foreign opportunities.
So, Chinese activities will definitely begin outside the Belt and Road model. However, even though China has shown restricted sorrow and argued that Panama has made a “regrettable choice”, Sino-Panamanian relations does great until Trump’s attention has turned abroad.
Trump’s comments regarding the Panama Canal may be exaggerated to a domestic audience who supports a” strong man president.” However, it also reflects US concerns about China’s growing influence from the past.
So the administration’s focus on containing China is hardly surprising. Instead, it demonstrates Trump’s broader “make America great again 2.0″ strategy. Therefore, Panama’s” BRI-xit” may bolster US resolve on “reclaiming” the Americas.
The Panamanian authorities seem caught between US pressure to limit China’s influence and the economic boost provided by Chinese “pragmatic” investments. In the upcoming years, they will have to make difficult choices, just like their counterparts in other Belt and Road nations.
The US has significant influence and economic leverage over Panama because it provides the most foreign direct investment ( US$ 3.8 billion annually ) and is the canal’s biggest customer. Conversely, China’s interests and engagements in the country have increased, and Beijing has made it clear that it is patient and wants to continue cooperation and “resist external interruption”.
Residents of Panama have expressed a strong reluctance to return to US rule, and protests have erupted in Panama over Trump’s “muscular approach.” Therefore, the question remains whether this is the “great step forward” for Panama’s ties with the US that Rubio suggests or whether Trump’s actions will ultimately push Panama closer to Beijing.
Tabita Rosendal is a PhD candidate at Lund University studying China.
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