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Panama<\/a>\u00a0has always been a small country with an oversized profile because of the canal and its long history with the United States. The canal bridges the Atlantic and Pacific oceans. It has been the force behind\u00a0Panama<\/a>\u2019s emergence as a maritime and air logistics hub with a substantial global banking and services center. It is still relevant after more than a century in operation and factors in around 6% of international trade. The United States is the top customer, with 68% of canal traffic beginning or ending at a U.S. port, while\u00a0China<\/a>\u00a0is 16%. \u00a0The U.S., via treaty with\u00a0Panama<\/a>, guarantees permanent neutrality of the canal, with fair access for all nations and nondiscriminatory tolls. With that in mind, the PRC maneuvers carefully, but it is emboldened.<\/p>\nPanama<\/a>\u00a0robustly turned toward\u00a0China<\/a>\u00a0during the presidency of Juan Carlos Varela (2014-2019).\u00a0Panama<\/a>\u00a0broke diplomatic relations with\u00a0Taiwan<\/a>\u00a0in 2017. It fully embraced the Belt and Road Initiative (BRI), the PRC\u2019s global infrastructure development strategy that invests in countries to expand Chinese economic and political influence. In\u00a0Panama<\/a>, many infrastructure projects were proposed during the Varela years, including a 4th bridge across the canal, a high-speed rail system to the interior, and a cruise terminal. From the outset, questions were raised about contract transparency and the necessity of some projects. Corrupt payments to Varela officials once only whispered allegations are now openly accepted as matter-of-fact.<\/p>\n\nThe Chinese BRI template for Latin America is well established: they get major infrastructure projects approved with inflated costs through a process designed to be opaque and enable fraud and corruption. Lax enforcement of key provisions is a program hallmark as labor stipulations, costs and timelines are rarely upheld. By the time the actual costs and beneficiaries surface, the government that signed the deal is out of office. The new government finds the projects do not generate the promised benefits, and the country is more deeply in debt.<\/p>\n
Panama<\/a>, like many nations, has a history of high-level corruption. It seems each administration seeks new and innovative ways to monetize their time in office. With Laurentino Cortizo and the return of the Democratic Revolutionary Party (PRD) in 2019 after a decade in political exile, relations with\u00a0China<\/a>\u00a0have cooled. Many projects envisioned have been canceled or restructured. This has been primarily attributed to the impact of Covid-19 on the Panamanian economy. Still, there is noise members of the Cortizo administration have been attempting to renegotiate the terms of some contracts in their favor. The PRD is the party of Omar and Martin Torrijos, of Balbina Herrera and Ernesto Perez Balladares. They are the party of the canal treaty, and the government deposed during the U.S. 1989 invasion. They know how to find an advantage, but even some \u2018old\u2019 PRD members find the \u2018new\u2019 PRD tactics unseemly.<\/p>\nMany Panamanian elites are U.S.-educated, and the cultural ties between the countries are strong. Still, there is concern about the Biden administration and whether the U.S. can keep its historic leadership role. The U.S. open borders policy has resulted in thousands of migrants pushing through\u00a0Panama<\/a>. Many Panamanians are tired of the daily news coverage of migrants begging for food and water, the increase in petty crimes and the draining of already scarce public resources to support their crossing. The Afghan debacle, the cultural chaos, and the overall perception of weak U.S. leadership contrast negatively with an aggressive\u00a0China<\/a>\u00a0open for business. \u00a0Panama<\/a>\u00a0also knows there are other countries courting BRI projects, and\u00a0Panama<\/a>\u00a0has few other realistic options for financing their infrastructure projects.<\/p>\nWith the disruption of global supply chains from COVID-19, increased shipping costs, and the PRC\u2019s formidable drive to invest in Panamanian infrastructure, the significance of these pending decisions has only increased for the United States.<\/p>\n
<\/a>A broad-based engagement strategy that advances both U.S. and Panamanian interests are needed, or the Chinese will look like the better option. None of this is news. In recent years, many frank assessments have been published highlighting Chinese maneuvering in\u00a0Panama<\/a>, but the Biden administration continues to project indifference, and their policies lack relevancy.<\/p>\nFor example, some Panamanian officials quietly expressed doubts about the sincerity of a recent high-level U.S. delegation. They described meetings as full of tired rhetoric and typical promises, which is not a good sign. So time is short, and decisions are pending. Real diplomacy is needed to reassure a traditional partner, or we could wake up one morning wondering how strategic control of the\u00a0Panama Canal<\/a>\u00a0was lost to the People\u2019s\u00a0Republic of China<\/a>.<\/p>\n\u2022 Ron MacCammon taught International Relations and the Government and Politics of Latin America at the United States Military Academy at West Point and was the U.S. Defense Attach\u00e9 in\u00a0Panama<\/a>\u00a02002-2005.<\/em><\/p>\n
Panama<\/a>\u00a0has always been a small country with an oversized profile because of the canal and its long history with the United States. The canal bridges the Atlantic and Pacific oceans. It has been the force behind\u00a0Panama<\/a>\u2019s emergence as a maritime and air logistics hub with a substantial global banking and services center. It is still relevant after more than a century in operation and factors in around 6% of international trade. The United States is the top customer, with 68% of canal traffic beginning or ending at a U.S. port, while\u00a0China<\/a>\u00a0is 16%. \u00a0The U.S., via treaty with\u00a0Panama<\/a>, guarantees permanent neutrality of the canal, with fair access for all nations and nondiscriminatory tolls. With that in mind, the PRC maneuvers carefully, but it is emboldened.<\/p>\n Panama<\/a>\u00a0robustly turned toward\u00a0China<\/a>\u00a0during the presidency of Juan Carlos Varela (2014-2019).\u00a0Panama<\/a>\u00a0broke diplomatic relations with\u00a0Taiwan<\/a>\u00a0in 2017. It fully embraced the Belt and Road Initiative (BRI), the PRC\u2019s global infrastructure development strategy that invests in countries to expand Chinese economic and political influence. In\u00a0Panama<\/a>, many infrastructure projects were proposed during the Varela years, including a 4th bridge across the canal, a high-speed rail system to the interior, and a cruise terminal. From the outset, questions were raised about contract transparency and the necessity of some projects. Corrupt payments to Varela officials once only whispered allegations are now openly accepted as matter-of-fact.<\/p>\n The Chinese BRI template for Latin America is well established: they get major infrastructure projects approved with inflated costs through a process designed to be opaque and enable fraud and corruption. Lax enforcement of key provisions is a program hallmark as labor stipulations, costs and timelines are rarely upheld. By the time the actual costs and beneficiaries surface, the government that signed the deal is out of office. The new government finds the projects do not generate the promised benefits, and the country is more deeply in debt.<\/p>\n Panama<\/a>, like many nations, has a history of high-level corruption. It seems each administration seeks new and innovative ways to monetize their time in office. With Laurentino Cortizo and the return of the Democratic Revolutionary Party (PRD) in 2019 after a decade in political exile, relations with\u00a0China<\/a>\u00a0have cooled. Many projects envisioned have been canceled or restructured. This has been primarily attributed to the impact of Covid-19 on the Panamanian economy. Still, there is noise members of the Cortizo administration have been attempting to renegotiate the terms of some contracts in their favor. The PRD is the party of Omar and Martin Torrijos, of Balbina Herrera and Ernesto Perez Balladares. They are the party of the canal treaty, and the government deposed during the U.S. 1989 invasion. They know how to find an advantage, but even some \u2018old\u2019 PRD members find the \u2018new\u2019 PRD tactics unseemly.<\/p>\n Many Panamanian elites are U.S.-educated, and the cultural ties between the countries are strong. Still, there is concern about the Biden administration and whether the U.S. can keep its historic leadership role. The U.S. open borders policy has resulted in thousands of migrants pushing through\u00a0Panama<\/a>. Many Panamanians are tired of the daily news coverage of migrants begging for food and water, the increase in petty crimes and the draining of already scarce public resources to support their crossing. The Afghan debacle, the cultural chaos, and the overall perception of weak U.S. leadership contrast negatively with an aggressive\u00a0China<\/a>\u00a0open for business. \u00a0Panama<\/a>\u00a0also knows there are other countries courting BRI projects, and\u00a0Panama<\/a>\u00a0has few other realistic options for financing their infrastructure projects.<\/p>\n With the disruption of global supply chains from COVID-19, increased shipping costs, and the PRC\u2019s formidable drive to invest in Panamanian infrastructure, the significance of these pending decisions has only increased for the United States.<\/p>\n <\/a>A broad-based engagement strategy that advances both U.S. and Panamanian interests are needed, or the Chinese will look like the better option. None of this is news. In recent years, many frank assessments have been published highlighting Chinese maneuvering in\u00a0Panama<\/a>, but the Biden administration continues to project indifference, and their policies lack relevancy.<\/p>\n For example, some Panamanian officials quietly expressed doubts about the sincerity of a recent high-level U.S. delegation. They described meetings as full of tired rhetoric and typical promises, which is not a good sign. So time is short, and decisions are pending. Real diplomacy is needed to reassure a traditional partner, or we could wake up one morning wondering how strategic control of the\u00a0Panama Canal<\/a>\u00a0was lost to the People\u2019s\u00a0Republic of China<\/a>.<\/p>\n \u2022 Ron MacCammon taught International Relations and the Government and Politics of Latin America at the United States Military Academy at West Point and was the U.S. Defense Attach\u00e9 in\u00a0Panama<\/a>\u00a02002-2005.<\/em><\/p>\n