The Real Risk of China’s Engagement in Panama

 

The Real Risk of China’s Engagement in Panama

What Happened: U.S. President Donald Trump has stoked controversy – and alarm – with his insistence that the United States must regain control over the Panama Canal. Behind this demand lurks concern about China’s growing influence in Panama in general, and over the canal specifically, since the two countries established diplomatic relations in 2017. While Trump’s repeated claims that China controls the Panama Canal are baseless, Beijing’s influence in Panama – and potential to disrupt the canal – is real.

In terms of China-Panama relations, “the real issue is the scope of its commercial presence there,” explains R. Evan Ellis, Latin America Research Professor with the U.S. Army War College. Most notably, Chinese company “Hutchison operates ports on both the Atlantic and Pacific sides of the canal… under extremely generous terms and under non-transparent conditions.” COSCO, a Chinese SOE, is one of the canal’s biggest customers. A laundry list of other Chinese firms, both state-owned and private, are involved in big-ticket infrastructure and development projects throughout the country. Beyond the economic links, China’s government has been specifically courting “individual Panamanian academics, businesspeople, politicians, journalists, government officials, and others” through free trips to China, business opportunities, and scholarships.

What Comes Next: “China’s efforts have created a worrisome web of relationships of interest, with the potential to be exploited by Beijing for information, favors, or other purposes,” Ellis concludes. That includes the potential to covertly sabotage the Panama Canal in a worst-case scenario. But the problem won’t be solved by an aggressive U.S. push to seize the canal. Instead, shoring up Panama’s transparency and anti-corruption efforts across the board would help remove the potential for illicit influence peddling by China – or any other foreign actor.