From March 12-18, I traveled to Panama to interview authorities officers, businesspeople, and others in regards to the nation’s evolving relationship with China. My journey got here shortly after a Chinese language donation of navy gear together with 6,000 bulletproof vests and helmets to Panama’s safety forces, in addition to congressional testimony by the top of U.S. Southern Command, Common Laura Richardson, wherein she warned of the strategic risks from China’s presence in Panama.
Due to COVID-19 and added scrutiny of Chinese language tasks by the federal government of Laurentino “Nito” Cortizo, the speed of China’s advance in Panama is less alarming than it was under the administration of Juan Carlos Varela, who switched Panama’s diplomatic relations to Beijing in 2017. Below Varela, Panama had signed as much as a sequence of ultimately deserted high-profile initiatives with Chinese language firms, together with $4 billion high-speed train between Panama Metropolis and David, a $1 billion port investment by a shady China-based consortium within the port in Colon, and a $1 billion pure gasoline energy plant initially designed to help the challenge.
China’s setbacks in Panama beneath the Cortizo administration shouldn’t invite complacency. It’s investing important effort in Panama and making necessary, if uneven progress in constructing affect, in addition to business place.
China has despatched one in every of its most gifted ambassadors, Wei Qiang, to Panama, illustrating its recognition of the nation’s strategic significance. Wei’s impeccable Spanish, low-key type, and energetic engagement throughout Panamanian political, authorities and enterprise circles was nearly universally famous by these with whom I spoke. Wei advised me, once we chatted over lunch, {that a} prior public remark of mine about his impeccable dress had prompted some native diplomats to affiliate him with the John LaCarre spy novel “The Tailor of Panama.”
Past Wei himself, China has established a Confucius Institute on the College of Panama, sends 30 Panamanians to mainland China per yr on scholarships, and often gives items to poor communities. After I met with Wei, he advised me he had simply come from a donation ceremony in Cocli with Panama’s first woman, and was heading to officiate a dragon boat race after.
Within the safety sector, the previously-mentioned Kevlar vests from China got here simply days after a high-profile shooting death of a Panamanian policeman whose protecting vest was not bulletproof. The vests have been a donation from Beijing, though the Panamanian authorities should spend more money to place new fabric round them as a result of the vest got here in Folks’s Liberation Military colours, and never these of Panama’s uniforms.
Importantly, the present represents a resumption of low-level however important safety cooperation that, through the prior authorities, included sending Panamanian safety forces to coaching establishments in China and offering items to Panamanian police items.
In business logistics, Hong-Kong-based Hutchison controls two of Panama’s 5 principal canal zone ports, with one on either side of the Panama Canal. In development, Chinese language firms are ending work on the Amador Pacific-coast Cruise terminal, making ready to renew work on the delayed and restructured fourth bridge over the Canal, and are engaged on business tasks such because the Hyatt Compania Hotel.
Numerous Chinese language firms, amongst others, have regional distribution hubs within the nation, principally within the Panama Pacific free commerce zone, which options not solely particular tax remedy, however a more flexible labor law regime.
In telecommunications, Chinese language tech giants Huawei, ZTE, and Xiaomi are all properly established. Huawei makes use of the Colon Free Commerce Zone as a regional distribution hub. Its try to ascertain an built-in “good metropolis” in Colon was blocked, though the 300 safety cameras it donated to Colon are nonetheless in place.
Hikvision, along with Dahua, has a dominant place within the Panamanian surveillance programs market. Throughout COVID-19, Chinese language thermal sensing cameras have been donated to the Panamanian authorities and put in in strategic logistics areas such as the Tocumen Airport, though they’re not visibly current.
In finance, Financial institution of China conducts commercial banking in Panama, whereas China Improvement Financial institution, China Export-Import Financial institution, and ICBC are licensed to conduct worldwide operations from Panama. In July 2021, the Superintendency of Banks of Panama (SBP) fined the Financial institution of China $1 million for deficiencies in cash laundering prevention and one other $250,000 for violations of the banking rules, the highest-ever high quality imposed by SBP.
In mining, Jiangxi Copper Co. is a significant, albeit silent, shareholder in First Quantum, whose Minera Panama operation contributes 4.75 p.c of Panama’s GDP. Throughout a prolonged legal conflict with the federal government over the mine, Jiangxi was reportedly approached as a potential buyer. As well as, 60 p.c of the mine’s output is exported to China for smelting.
The senior Panamanians with whom I spoke had an nearly common need to proceed the nation’s traditionally shut relationship with the US, but additionally to proceed to work with China, in addition to different companions corresponding to South Korea, Japan, and the European Union.
Inside a Panamanian enterprise and political surroundings the place public corruption has lengthy been a priority, the best approach for the United States is not to block Panama’s engagement with China, however to broaden U.S. engagement with Panama. Washington can alert Panamanian stakeholders to the dangers in working with the Chinese language, whereas serving to Panama to strengthen the country’s institutions for planning and evaluating contracts and equally implementing legal guidelines, sustaining transparency in contracting, and interesting on a degree taking part in area. Such partnership is one of the best ways to forestall an overwhelming wave of money from China, coupled with the lure of non-public advantages for these making the offers, from silencing critics of Beijing and hijacking Panama’s financial system to the detriment of the nation.
The USA, as guarantor of a rules-based worldwide order primarily based on free markets and honest commerce, has a protracted historic report of encouraging Panamanians to do issues the “clear and clear means.” As such, Washington has an inherent position to play in serving to Panama to decide on trusted companions in commerce, commerce, and different actions, and to seek out viable alternate options to China’s typically predatory choices.
The creator want to thank former Panamanian President Ernesto Balladares, China’s Ambassador to Panama Wei Qiang, Robert Eisenman, Eddie Tapiero, Stacy Hatfield, Jorge Gobea, Tony Bonilla, Keith Inexperienced, Humberto Macea, Janet Cesar, Walter Luchsinger, and Moises Figuera, amongst others, for his or her contributions to this work.