Panama has decided to let its participation in China’s Belt and Road Initiative (BRI) expire and has pledged free passage for U.S. warships through the Panama Canal, following intense pressure from the U.S. Secretary of State Marco Rubio during his visit on Sunday.
Rubio, making his first overseas trip as the top U.S. diplomat under President Donald Trump, openly criticised Panama’s ties with China, calling Beijing’s global infrastructure program a tool for “debt trap diplomacy.”
After discussions with Rubio, Panamanian President Jose Raul Mulino announced that his country would not renew its broad agreement with China and might even terminate it early.
“Yesterday’s announcement by President @JoseRaulMulino that Panama will allow its participation in the CCP’s Belt and Road Initiative to expire is a great step forward for U.S.-Panama relations and a free Panama Canal,” Rubio posted on X after departing the country.
Panama was the first Latin American country to endorse the Belt and Road Initiative in 2017, just months after switching diplomatic recognition from Taiwan to China.
While China insists the initiative promotes global development, critics argue it leaves countries saddled with unsustainable debt and increases Beijing’s geopolitical influence.
The United States has long raised concerns about China’s growing presence near the Panama Canal, particularly a Hong Kong-based company’s control of two major ports at its entrances.
Following talks with Rubio, Mulino hinted at a review of the 25-year concession granted to CK Hutchison Holdings, a Chinese firm that operates these key ports.
The U.S. State Department reiterated Sunday that Rubio had conveyed Trump’s concerns that China’s presence in Panama posed a threat to the canal and violated the U.S.-Panama neutrality treaty.
Panama’s move mirrors Italy’s decision to exit the Belt and Road Initiative in 2023, also under U.S. pressure.
Analysts suggest that an audit of the Chinese company’s operations in Panama could pave the way for American or European firms to take over the port concessions.
Speaking from El Salvador after his Panama visit, Rubio praised Mulino as a trusted U.S. ally, emphasising that Washington sought a strong partnership rather than a hostile relationship with Panama.
“We’ve achieved some potentially really good things,” Rubio stated.
With this latest shift, Panama appears to be recalibrating its foreign policy, moving closer to Washington while stepping away from Beijing’s economic orbit.
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