Panama Caves to Trump’s DC

When Marco Rubio arrived Saturday in Panama for his first international trip as secretary of state, he was greeted by flags—Panamanian ones. They littered the highways and roads on his route from the airport to downtown Panama City. They were displayed on buildings and streets in Casco Viejo, the historic “old town” where Rubio on February 2 met with President José Raúl Mulino. And they were visible everywhere in such suburbs as Albrook and Clayton, a former neighborhood and fort, respectively, in the previously U.S.-administered Panama Canal Zone.

American corporate media covering the visit viewed the ubiquity of the banners as representative of Panamanian resolve in response to President Donald Trump’s inaugural address threats that the United States might be taking back the canal. The MSNBC foreign affairs correspondent Andrea Mitchell reported that “flags [are] being arrayed all across the streets in Panama. It’s not a big holiday here, it’s in defiance of the U.S. and Marco Rubio’s incoming visit.” Jorge Quijano, a former Panama Canal Authority administrator, told Mitchell visible with pride, “Everybody is wearing a flag, I’m wearing a flag.” Perhaps in light of Panama’s lack of a standing military, one might call it a policy of “bandera” (Spanish for “flag”) deterrence.

Yet given the importance of the canal to Panama—it earns the country about $5 billion a year and is the largest contributor to its primarily service sector economy—the reaction to Rubio’s visit was surprisingly muted, with only a couple hundred demonstrators outside the presidential palace. In the days leading up to the visit, there were a few minor protests in the streets; a small demonstration of less than 100 people blocked the U.S. Embassy on Christmas Eve (a day on which the embassy was actually closed because of an executive order by the former President Joe Biden). In January, a small crowd of Panamanians protested outside the residence of the U.S. ambassador and burned an American flag, though, ironically there was no senior diplomat there to witness it—the former Ambassador Mari Carmen Aponte, an appointee of the previous administration, had already departed the country.

Not that the Panamanians don’t know how to protest. Beginning in mid-October 2023, Panamanian activists led by a militant leftist labor union brought much of the country to a standstill for more than a month, blocking roads and daily filling the capital with thousands of demonstrators against a copper-mining contract with a Canadian firm. (They got their wish: in late November 2023, the country’s supreme court declared unconstitutional earlier bipartisan legislation that had granted the Canadian firm’s copper mine a 20-year concession.)

What gives? The Panamanians are a (curiously) fiercely patriotic people—they have three separate independence days. They also have two federal holidays commemorating resistance to the U.S. presence in their country: Martyrs’ Day on January 9 to honor those killed during the 1964 anti-American riots over the canal zone, and the National Day of Mourning on December 20 to honor those killed during Operation Just Cause, the 1989 George H.W. Bush–authorized intervention to protect American citizens and overthrow the dictator Manuel Noriega. The most they could muster to counter threats that they might lose their greatest source of national pride to the colonialist gringos was a few trivial protests and thousands of miniature flags?

One would think the content of Rubio’s exchange with Mulino, at least as it was distilled in a brief readout by the Department of State’s spokesperson, did little to temper Panamanian unease. Rubio reportedly told Mulino—who earlier rebuked Trump’s inaugural comments—and Foreign Minister Martínez-Acha that “the current position of influence and control of the Chinese Communist Party over the Panama Canal area is a threat to the canal and represents a violation of the Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal.” Rubio added that the status quo was “unacceptable” and that absent immediate changes, Washington would “take measures necessary to protect its rights under the Treaty.” (Trump later on Sunday told reporters, “We’re going to take it [the canal] back, or something very powerful is going to happen.”)

The respected Panamanian political analyst and former official Italo I. Antinori recently gave credence to American anxiety regarding the canal, describing the PRC’s decades-long “strategy to exert influence in Latin America.” For example, Antinori noted, China is the only permanent member of the UN Security Council to not acknowledge the aforementioned canal treaty. Moreover, in addition to PRC control of ports at the the Atlantic and Pacific side of the canal—providing China with strategically useful information on ships transiting the canal—the Panamanian government under Juan Carlos Varela in 2017 switched diplomatic recognition from Taiwan to China (with allegations still haunting Varela that he was bribed to do so). Varela’s government also granted a concession to a consortium formed by China Harbour Engineering Company (CHEC) to construct a cruise port on Perico Island, completed in March 2024. 

There are also the fourth bridge over the Panama Canal (contracted to China Communications Construction Company and CHEC) and the underwater metro line tunnel under the canal (contracted to a consortium of South Korean companies but subcontracted to China Railway Tunnel Group). Add to that the construction of a new PRC Embassy in the former canal zone, and it’s not hard to perceive the problem. “If China enters into a war with the United States, it could right now close the passage to ships of the United States Navy at the two entrances of the Canal or they could explode some electronic device that they could have left when making the tunnel under the Panama Canal,” Antinori warns.

Then there are the issues with the Panama Canal Authority, or ACP, itself. Assertions of its independence were undermined by widespread local media speculation that Jorge Gonzalez, a member of the ACP Board of Directors, was asked to resign in May 2023 because of a corrupt relationship with a major Chinese state-owned enterprise (SOE) doing business related to the canal. Even many Panamanians believe that the United States could probably run the canal better than Panama does, as NBC obliquely mentioned in a piece intended to foreground Panamanian resistance to the Trump administration.

Mulino’s government certainly seems to be taking the Trump administration’s warnings seriously. Following his meeting with Rubio, Mulino declared that Panama would not renew the 2017 MoU to join China’s Belt and Road initiative, and suggested he might prematurely end the current agreement with Beijing. And two weeks ago, on the same day as Trump’s inauguration, Panamanian government auditors visited the two canal ports operated by a subsidiary of Hong Kong–based conglomerate CK Hutchison Holdings to evaluate the company’s compliance with its port concession agreements.

These seem to be goodwill gestures by a relatively new Panamanian administration that is demonstrably more pro-U.S. than its predecessor, signing an MoU with the United States for closing the Darién Gap to illegal migrants immediately after coming into power. The Panamanians claim to be upholding their end of the agreement, with migration through the gap dropping by almost half in 2024. Nevertheless it’s possible more concessions will be demanded of Panama to curtail PRC influence—Trump’s incoming envoy to Latin America, Mauricio Claver-Carone, reportedly suggested the Panamanians offer to allow U.S. Navy and Coast Guard ships to transit the canal for free.

It’s unclear what other concessions—short of giving back the canal itself—might be asked of Panama to satisfy concerns about an issue that, incredibly, seems to now have bipartisan consensus as a security concern that will become more acute absent significant countermeasures. (As I noted previously for The American Conservative, there are a total of five PRC SOEs operating along the canal). It’s an ironic turn of events for the country, which just celebrated 25 years since the end of American control over the waterway. But for all the nationalistic bluster of Panama’s bandera deterrence, its leaders—perhaps driven by fear—seem willing to honor Washington’s demand that they more aggressively address the threat posed by the PRC.