Panama’s President Jose Mulino, left, and U.S. Secretary of State Marco Rubio arrive for a meeting at presidential palace in Panama City
On February 2, 2025, Panamanian President José Raúl Mulino announced that his administration will not renew the Memorandum of Understanding (MoU) on China’s Belt and Road Initiative (BRI) following discussions with U.S. Secretary of State Marco Rubio. The decision marks a significant realignment of Panama’s foreign policy toward the United States, signaling a strategic shift in the country’s international partnerships.
During the meeting, President Mulino explicitly ruled out renewing the BRI agreement signed in 2017, emphasizing that Panama’s priority lies in strengthening its strategic alliance with the United States. The U.S. State Department later confirmed that Secretary Rubio conveyed President Donald Trump’s firm stance, expressing concerns over China’s expanding influence in Panama, particularly regarding the Panama Canal, which handles nearly 12% of global maritime trade. The Trump administration has long viewed Chinese investments in key infrastructure projects in Latin America as a geopolitical challenge, prompting increased diplomatic and economic engagement in the region.
Panama’s withdrawal from the Belt and Road Initiative could present challenges for China’s strategic foothold in Latin America. Since establishing diplomatic ties in 2017, China has played a significant role in Panama’s infrastructure development, including port expansions, 5G telecommunications, and financial cooperation. Washington’s pressure to push Panama out of the BRI is widely seen as an attempt to curb China’s growing regional influence through infrastructure investments. While this development may weaken confidence among smaller Latin American nations in deepening ties with China, it also provides Chinese enterprises an opportunity to reassess their regional strategy. By expanding cooperation with Mexico, Brazil, and other key Latin American economies, China can mitigate potential setbacks in Panama while leveraging multilateral diplomacy and economic partnerships to maintain long-term regional influence.