US-China rivalry could trample Panama underfoot

Three bridges span the Panama Canal, one of the world’s most important shipping lanes, and a fourth is planned. The first was a feat of American engineering, while European companies built the second and the third. The fourth is to be constructed by China and controversy has delayed it for several years.

The story of the bridges illustrates the shifting geopolitical winds buffeting Panama, located at a strategic crossroads between the Atlantic and the Pacific and between North and South America.

The former Spanish colony finds itself caught in a tug of war between its old protector, the US, and the rising power of China.

American hackles were raised in 2017, when Panama suddenly switched its diplomatic allegiance from Taiwan to China. Around the same time, many Chinese-backed projects were announced, including a cruise ship terminal, a high-speed rail line to Costa Rica, a huge convention centre, the fourth bridge and a new Chinese embassy building near the canal.

Six years later, after a change of president in Panama and what officials say privately was strong US lobbying, the Chinese portfolio is more modest. The terminal is nearing completion and the convention centre is open, but the other projects have been delayed or abandoned.

China’s ambassador to Panama, Wei Qiang, is indignant. “I don’t understand how a country which is the only superpower in the world can have such paranoia,” he says of the American opposition to Chinese projects. “The hysterical feeling and passions are comparable with the cold war. It’s a new McCarthyism.”

Officially, the Americans have not flexed their diplomatic muscles. “Absolutely not, no kind of US pressure, none,” insists Panama’s president Laurentino Cortizo. Rita Vásquez, managing editor of the newspaper La Prensa, sees it differently. “This government seems to have divorced from China,” she says. “The high-speed train to Costa Rica was shelved as soon as it took power.”

Throughout the 20th century, Panama was a top US priority. The Americans helped it secede from Colombia and in return were granted ownership of a strip of land to build and operate the shipping canal. Large air and naval bases sprang up, as well as the headquarters of US Southern Command. The presence lasted until 1999.

Panama, meanwhile, had been attempting to build a relationship with China for decades. Jorge Ritter, a former foreign minister, recalls that when Panama’s then president Aristides Royo started talks with China about diplomatic recognition in 1979, US president Jimmy Carter telephoned. “He said it had been very difficult to get the Canal treaty [returning sovereignty over the Canal Zone to Panama] passed in Congress,” Ritter said. “So he pleaded with Royo: ‘Don’t do this to me.’ Royo put it in the deep freeze.”

But this century, with the US focused on other global events, Panama has taken a back seat. “It’s as if we were not on the agenda for the US,” laments a former Panamanian president. “We went four years without a US ambassador. It’s as if the region doesn’t interest them.”

Even Cortizo, a Washington ally, is frustrated by America’s inability to realise grand promises of development projects. He recalls a visit from a Biden administration delegation touting a “Build Back Better World” agenda a year ago. “So far it has not come to fruition,” he sighs. China, meanwhile, is steaming ahead. It sent the biggest delegation of companies to Panama’s trade fair this year and plans to start building its new embassy in a few months time. Construction of the fourth bridge is set to move forward.

While happy to have the additional investment, Panamanians are fretting that their long-prized neutrality is becoming harder to sustain. “In a country as small and fragile as ours,” says Ritter, neutrality “is not just necessary. It is the only position that Panama can take.”

“I’m not here so that Panama has to choose between the US and China,” says the American ambassador, Mari Carmen Aponte. But that is how it can often feel to Panamanians.

michael.stott@ft.com