The News
US Defense Secretary Pete Hegseth met Panama’s President José Raúl Mulino Tuesday for talks, amid rising tension over global trade and alleged Chinese influence in the strategic Panama Canal waterway.
Hegseth on social media hailed “increased security cooperation” between the US and Panama: The visit came hours after Panama said it would call for an investigation into local executives of a Hong Kong-listed firm that owns two ports at either end of the Canal.
CK Hutchison had recently sought to sell its Panama ports to a US-led consortium after US President Donald Trump vowed to take control of the canal. Beijing, however, has blocked the sale.
SIGNALS
China views Panama port deal as potential negotiating tool
Even before CK Hutchison tried to make a deal to sell its ports, Beijing had hoped “to use the Panama port issue as a bargaining chip” in negotiations with the US, sources told The Wall Street Journal. Chinese leader Xi Jinping’s refusal to clarify his stance on the transaction suggests that he is “trying to build leverage” to gain concessions on tariffs, Taiwan, and other issues, The Economist wrote. Beijing’s move to probe a Hong Kong-based company raises the question: “Is this a warning shot to [other multinational firms] or a look to scuttle this deal?” one insider told the Financial Times. Still, “Beijing has limited leverage to halt the transaction,” the Mercator Institute for China Studies argued: Panama could terminate its contract with CK Hutchison, effectively voiding the sale.
Trump threats put Panama’s president in a difficult spot
Donald Trump’s designs on the canal have “triggered suspicion” among Panamanians, some of whom remember the 1989 US invasion, the BBC reported. President Mulino — a pro-US technocrat, “might move faster to curb Chinese presence if he didn’t have to worry about it looking like the US was forcing his hand,” one analyst wrote: Trump’s demand that US government ships receive free passage along the canal — despite its neutrality treaty — puts Mulino “in an impossible position,” The Guardian wrote. And though Panama’s highly dollarized economy means it “has little choice but to appease America,” its regional partners could decide otherwise, The Economist noted, and move closer to China instead.
Panama deal brings ‘prescriptive geopolitics’ to the fore
The proposed sale of Panama Canal ports to US investors demonstrates that “prescriptive geopolitics has fulfilled its purpose,” an analyst argued in El País: The idea that China’s infrastructure investments could conceal its military interests in Latin America is being used to facilitate US control there. The region is “in the crosshairs of US-China competition,” a Carnegie researcher noted. Rather than confront China’s influence “comprehensively”, Trump appears instead to be targeting “weaker links” like Panama to counter it, a Beijing-based analyst told South China Morning Post. By signaling to Beijing to “back off” on Panama, a security analyst at a right-leaning think tank argued, Trump could be aiming to avoid a more direct confrontation with China at a later date.