In response to pressure from the Trump administration, Panama has withdrawn from China’s Belt and Road Initiative. Eric Olander, co-founder of the China-Global South Project, says the U.S. president will likely feel emboldened to seek similar leverage from the more than 100 other countries that are still part of Beijing's infrastructure project.
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00:00US President Donald Trump says that China has an outsized influence on the operation
00:04of the Panama Canal.
00:06What does he mean by this?
00:07Donald Trump and his associates are concerned about the presence of CK Hutchinson Whampoa
00:14which is the Hong Kong-based shipping company's presence on two of the ports, two out of the
00:19five ports along the canal and now that those are significant ports in part because they're
00:24at the beginning of the canal and at the end of the canal.
00:27So first and foremost, the Americans view this as a security threat in terms of the
00:33ability to move their commerce through the canal, their ability to move their navy ships
00:38through the canal and just the presence of Chinese entities even though they're from
00:44Hong Kong in such prominent places along the canal.
00:47Those two ports actually account for about 40% of the traffic that does move through
00:52the canal so they have a significant presence.
00:55Now this is a private Hong Kong company, it is not the Chinese government and so the
01:00way that the administration has framed this is that this could be a security threat because
01:05they could shut traffic down on the canal.
01:08Panama has now submitted documents to exit from the Belt and Road Initiative after pressure
01:13from the Trump administration.
01:15What is the state of relations between Panama and China and how might this affect them?
01:20Panama was a part of the Belt and Road Initiative.
01:23The government has now submitted the paperwork to leave the Belt and Road, making it the
01:28first Central American or South American country to exit the Belt and Road.
01:34The relationship between China and Panama was getting quite close.
01:38China and Panama established diplomatic relations in 2017 after Panama switched its affiliation
01:45and recognition with Taiwan to China.
01:49In that intervening time, the Chinese came to invest heavily in the canal as we've talked
01:55about but also in financial services, also in a number of different trading.
02:00Panama is a major interchange in Central America in terms of financial services.
02:06It's a dollarized economy so it's very appealing.
02:09There was quite a bit of infrastructure that has been developed between the Chinese and
02:14Panamanians on this, you know, in this relationship.
02:18And then, you know, from 2017, for the first three or four years, there was a there was
02:23a very active diplomatic presence.
02:25They had an ambassador who spoke fluent Spanish and he was very outgoing.
02:29What other effects might Panama exiting the Belt and Road Initiative have?
02:33I think the bigger issue, though, for the Chinese and the much bigger concern was the
02:38forced departure from the Belt and Road.
02:41And I take a much more aggressive view on this than I think a lot of people are, that
02:47I think that the reaction that Rubio got among the MAGA base in the United States to Panama
02:54withdrawing from the BRI was huge.
02:57And that is going to motivate Donald Trump and Marco Rubio now to look through the 140
03:04or so countries that are member states of the Belt and Road and start finding everyone
03:08where they have the same kind of leverage that they have with Panama.