By Edelmiro Franco V. | 2025-02-11

PANAMA CITY -- The Panamanian government has canceled its economic agreement with China's Belt and Road Initiative (BRI), a move hailed as a strategically sound decision that is not expected to impact the country's role as a key logistics hub.

President Jose Raúl Mulino announced the decision on February 6, stating that Panama's embassy in Beijing had submitted the required 90-day notice for termination.

"That is a decision I made," he affirmed during a news conference.

Mulino also questioned the agreement's benefits, criticizing its lack of tangible advantages for Panama.

"I don't know what motivated the person who signed this with China at the time," he said.

"What has this brought to Panama over the years? What are the major benefits? What has this Belt and Road Initiative really contributed to the country?" Mulino questioned in a frustrated tone.

Little to lose

Panama was the first in Latin America to join the BRI in November 2017 -- and now, the first to withdraw, said Juan Arias, president of the country's Chamber of Commerce, Industries and Agriculture.

"Panama was the first to sign in 2017, but we have not seen significant investments from this agreement. I don't see any major repercussions," Arias stated in a news conference on February 8.

Since the expected economic benefits never materialized, Panama has little to lose by stepping away, he said.

Launched in 2013 as a flagship initiative of President Xi Jinping, the BRI funds infrastructure projects worldwide, often relying on Chinese financing and labor.

However, critics warn that it not only expands China's geopolitical influence but burdens recipient nations with debt.

Since 2023, China's infrastructure investments have reached almost 150 countries. However, many projects remain unfinished, leaving several developing economies struggling with mounting financial obligations.

Excessive influence

Economist Eddie Tapiero, who has closely studied China's involvement in Panama, described Mulino's decision to suspend the agreement with Beijing as "a good sovereign decision that strengthens ties with the United States."

"Geopolitics have changed, and that's the reality. Obviously, this decision offends China," said Tapiero, a professor at the Catholic University of Santa María La Antigua and author of The Silk Road and Panama: Strategic Prospective Scenario between America and China.

Despite the move, Tapiero does not predict Panama's diplomatic and commercial relations with China will be affected.

Panamanian concerns over excessive Chinese influence in Panama's internal affairs, particularly in strategic projects like the Panama Canal, made Mulino's decision to withdraw from the BRI widely popular.

Panama can minimize geopolitical risks by reducing its reliance on China, say analysts. This policy will allow Panama to diversify its alliances and strengthen trade with multiple nations.

Beyond reinforcing ties with Washington, the move could enhance Panama's cooperation with other Latin American countries, bringing potential benefits in security, trade and international assistance, analysts add.