China has slammed the United States for “smearing and sabotaging” its Belt and Road Initiative in Panama through “pressure and coercion” after the Latin American country pulled out of the Chinese infrastructure program, following pressure from US President Donald Trump to reduce Beijing’s influence in the Panama Canal.
Beijing also condemned a “Cold War mentality” by the United States in Latin America, saying it had raised a complaint over comments by Secretary of State Marco Rubio during a visit to the region.
Mr Rubio’s remarks “unjustly accuse China, deliberately sow discord between China and relevant Latin American countries, interfere in China’s internal affairs, and undermine China’s legitimate rights and interests”, a foreign ministry spokesperson said in a statement.
Panama’s Exit From BRI
Panama has formally presented a document to exit the Belt and Road Initiative (BRI), President Jose Raul Mulino said on Thursday, after meeting Mr Rubio this month, but denied that the United States had sought the move.
China introduced the Belt and Road Initiative in 2013– a massive infrastructure project that is a central pillar of Chinese President Xi Jinping’s bid to expand his country’s clout overseas. In November 2017, Panama became the first Latin American country to officially join the initiative, five months after switching diplomatic ties to China from Taiwan, the democratically governed island Beijing claims as its territory.
China’s foreign ministry on Friday said it deeply regretted Panama’s decision. “We hope that Panama will make the right decision based on the overall situation of bilateral relations and the long-term interests of the two peoples, and eliminate external interference,” ministry spokesperson Lin Jian said
He added that more than 20 Latin American nations are among the more than 150 countries that have participated in the Belt and Road Initiative, with results benefiting their people.
Trump’s Panama Threat
Panama Canal, a narrow body of water linking the Caribbean Sea with the Pacific Ocean, is run by an independent authority appointed by Panama’s government. Around 40 per cent of US container traffic passes through the waterway, for which it has to pay hefty tolls.
Beyond the tolls paid, Washington has appeared chiefly concerned about Chinese investment in the 80-kilometre (50-mile) long canal, which handles five per cent of global maritime trade.
Since taking office for the second term, US President Trump has repeatedly threatened to “take back” the Panama Canal, accusing Panama of ceding control of the critical waterway to America’s rival China –an accusation both nations deny.
“China is operating the Panama Canal. And we didn’t give it to China. We gave it to Panama, and we’re taking it back,” Mr Trump claimed in his inaugural speech on January 20. The President has also refused to rule out the use of force to seize the Panama Canal, built by Washington over a century ago and later handed over to Panama.
However, Panama’s President Jose Raul Mulino has asserted that Panama’s sovereignty over the canal was not up for debate, but the country has made other concessions to US pressure.
Beijing has also insisted that it “supports Panama’s sovereignty over the canal”.
China’s Link To Panama Canal
There is no evidence linking China with the authorities controlling the trade through the Canal. However, western critics have often accused China of using the BRI to enmesh developing nations in unsustainable debt to exert diplomatic leverage over them or even seize their assets.
But, at the heart of Mr Trump’s concern is a Hong Kong-based company — CK Hutchison– which operates two of the five key ports at either end of the 50-mile-long waterway under its subsidiary called Panama Ports Company (PPC).
Publicly listed CK Hutchison is one of the world’s largest port operators, overseeing 53 ports in 24 countries, according to the company. The Hong Kong-based company was first granted the concession over two key ports in the Panama Canal in 1997, when the US jointly administered the canal operations with its Latin American neighbour. That concession was renewed in 2021 for another 25 years, according to a report by CNN.
China took control of Hong Kong in 1997. Though the city is meant to have a high level of autonomy from mainland China, Beijing has tightened its reins over it in recent years, especially after widespread pro-democracy protests.
Ahead of his visit to Panama, Mr Rubio has said Hong Kong-based companies “having control over the entry and exit points” of the canal is “completely unacceptable.”
“If there’s a conflict and China tells them, do everything you can to obstruct the canal so that the US can’t engage in trade and commerce so that the US military and naval fleet cannot get to the Indo-Pacific fast enough, they would have to do it,” he added without directly naming the company.
The Hong Kong-owned company, however, does not control access to the Panama Canal. Citing a recent statement issued by PPC, CNN reported that the company is the only canal port operator where the Panamanian state is a shareholder. More than 99 per cent of its workforce was Panamanian, it added.
Per the report, workers at the two ports controlled by PPC load and unload containers onto ships and supply them with fuel, while the canal itself is operated by the Panama Canal Authority,
Meanwhile, the Hutchison ports are reportedly not the only China-linked firms involved in canal infrastructure. A consortium comprising state-backed China Harbour Engineering Company and China Communications Construction Company was also awarded the contract to build a $1.4 billion highway bridge over the canal to ease traffic in Panama City.
Is China Controling The Panama Canal?
Experts say that there is no evidence linking the Chinese government’s control over the canal or of its military’s activity in Panama. However, the US concerns come in the face of Beijing’s constant efforts to secure access to commercial ports across the globe which could also benefit its trade and expand its navy’s presence.
Quoting R Evan Ellis, a research professor of Latin American Studies at the US Army War College Strategic Studies Institute, CNN reported that from the US military’s perspective, if China has more commercial assets around the canal, it gets more options to block the US from moving military equipment through the waterway in the event of a conflict between them.
“All of these operations, and the relationships with Panama Canal Authority … plus the technical knowledge that you get as a regular operator of the canal basically multiplies the possibilities that if you are (China) and you want to shut down the canal at a time of conflict, there are a thousand ways to do it,” he said.
“Their physical presence, influence and technical knowledge … would make it harder for us to defend against,” Mr Ellis added.