Panama Announces Withdrawal from the Belt and Road Initiative

On February 3, 2025, Panamanian President José Raúl Mulino made a sudden announcement that Panama would not renew the Belt and Road Initiative (BRI) Memorandum of Understanding (MoU) signed with China in 2017. Furthermore, he indicated plans to terminate related agreements ahead of their scheduled expiration in 2027 and 2028, while also guaranteeing unrestricted passage for U.S. warships through the Panama Canal.

According to Bloomberg and NBC News, Mulino's decision came after a meeting with U.S. Secretary of State Marco Rubio on February 2. While Mulino emphasized that Rubio did not explicitly threaten to reclaim the canal or use military force, he made it clear that Panama would not renew the Belt and Road agreement upon its expiration and was actively considering an early termination of the initiative.

As one of the world's most strategic maritime corridors, the Panama Canal facilitates nearly 6% of global trade annually, making Panama's decision particularly significant. Given its critical location as a bridge between the Atlantic and Pacific Oceans, Panama's withdrawal has instantly drawn international attention.

Notably, Panama was the first Latin American country to sign onto China's BRI. In 2017, then-President Juan Carlos Varela cut diplomatic ties with Taiwan in favor of establishing formal relations with Beijing, later signing the Belt and Road agreement during a visit to China. At the time, this move was considered a major diplomatic breakthrough for China in Latin America.

However, Panama's abrupt withdrawal now presents a new challenge for the BRI, potentially prompting other skeptical nations to reconsider their participation—raising concerns about a possible "domino effect." Moreover, given Panama's geopolitical significance, its departure could impact China's strategic ambitions in the region.

That said, this development is unlikely to disrupt China's broader global strategy. China has already signed Belt and Road cooperation agreements with numerous countries and continues to drive large-scale infrastructure and trade investment projects worldwide. While Panama's withdrawal may pose a short-term setback, it is unlikely to have a fundamental impact on China's overall global agenda.