At the end of 2024, the new president of the United States once again put Panama in the eye of the storm. The metaphor is not exaggerated. As a crossroad of major transnational flows and an unprecedented gateway between two oceans, Panama is today one of the points of contact between the two major powers of the moment and between two geopolitical eras. Since 1999, the isthmus has no longer been the protectorate of yesteryear, unilaterally controlled by the United States. Nor is it a totally sovereign nation, with its margins of maneuver definitively assured. Today, it is a place of extremely high interdependence, where a hybrid confrontation is being waged between the two geopolitical blocs of the moment within the framework of a new Cold War.

Panama's manifest destiny

Some nations have a manifest destiny. Panama is one of them. The boom in maritime transport in the last four decades, its inter-oceanic geography, and its proximity to the United States have made it a triple hub. Its maritime infrastructure connects 160 countries and 1,700 ports worldwide. It allows the transit of about 6% of global maritime trade and 70% of U.S. trade. At once an air, maritime, financial, and migratory node, the Panamanian economy developed largely on this predisposition to operate within the transnational flows, inevitably also in the field of the illicit economy. This route connecting the Atlantic Ocean with the Pacific Ocean now finds another competitor with the Northern Arctic axis project, pushed by Russia and China, linking Europe with East Asia.

The country became responsible for this destiny in 1999, following the Carter-Torrijos transfer agreements signed in 1977. The “strategic income” obtained from this colossal inheritance allowed the country to enjoy an outstanding growth model in the region, ranking among the top ten countries (in terms of GDP per capita). However, this prosperity is based on a political-institutional precariousness. The political culture responds to a sociological profile quite characteristic of the territorial “enclave”. The exercise of power is often conceived as a privilege reserved for a selective minority, distorting the basic rules of the rule of law and amputating local dynamism. In October 2023, the legislative reform of the Mining Contract brought this contrast to the surface. While the Assembly ratified a confusing and discretional mining framework, the massively mobilized citizenry and the Supreme Court of Justice made it expire. The paralysis of the mining sector now affects a sector that exports 95% of its production to China.

China's conflictive matrix

The conflictive plot that surrounds the Panamanian isthmus is not easy to x-ray. It is so because both the United States and China have developed systemic, extended, and stealthy combat cultures that work permanently in a dual logic, both visible and invisible, active in multiple fields. It is framed within a fifth-generation war or a “war without limits” to borrow the Chinese lexicon of the doctrine of Unrestricted Warfare (1991).

According to the Chinese Communist Party's own words, expressed in May 2019, this offensive against the United States is “total”, that is to say precisely “without limits” between the domains of confrontation. “A people's war is a total war, and its strategy and tactics require the global mobilization of political, economic, cultural, cultural, diplomatic, military, and other power resources, the integrated use of multiple forms of struggle and methods of combat.” The arrival of a new threshold of confrontation, observable in several areas and points of the planet, now designs a clearer cold war scenario, in other words, a multi-domain “total” war, fought in peacetime.

The relative silence of the leadership and the strategic community contributes to this lack of awareness. Moreover, as Mike Studeman, a retired former US Navy admiral, has pointed out, Washington has voluntarily resigned itself to communicating about this conflict, thus losing ground in a confrontation that heavily involves the psychological and informational dimension.

In essence, China is weaving a diplomatic, economic, and cultural web that permeates Panamanian society and envelops it in dependencies.

Beijing is already present in the infrastructure of the bioceanic canal with the Hutchison Holdings group, with proven links to Chinese intelligence and the Chinese Communist Party. Together with a handful of other groups, the Hutchison group is a vector of conquest of logistics nodes at the global level. It has been operating since 1996 in Panama in the two main ports of the canal. It also controls the surrounding areas that were under Washington's supervision, including the former Rodman and Albrook Air Force Bases.

Despite coming fourth in the international bidding, the contract was arranged for a period of 25 years (with automatic renewal), through the well-known method of bribery. Its presence as an operator allows it to define certain rules for the control (or non-control) of the ships, to cover up intelligence activities, and eventually to close access in the event of a military conflict with the United States. The electrical grid that feeds the infrastructure is also under Chinese orbit. In 1991, the same group had been vetoed by the Philippine authorities from operating the port of Subic Bay in the same country. In Argentina, a country with a high level of Chinese influence, the new authorities canceled in 2024 a military base project that had been pre-agreed by the previous government.

This long-standing logistical implantation in Panama goes hand in hand with other elements. The mega project of the fourth road bridge over the Panama Canal has been tendered to operators from the Asian giant. The Chinese community in Panama is already the largest in Central America, with 200,000 citizens. Infrastructure investment levels have been steadily increasing since 2010, with a growing presence in other Atlantic and Pacific ports regionally. Logistics investment is also directed to Nicaragua, Costa Rica, Ecuador, Mexico, Brazil, Salvador, and Argentina, thus changing the maritime logistics landscape. All Brazilian ports are now operated by Chinese players (in addition to the national power grid). The latest example is the mega-port of Chancay, recently launched in Peru, whose operation remains under Beijing's orbit. Faced with such a development, a former Honduran general declared: “China does not conquer the world. China is becoming the world").

These advances were accompanied by the affirmation of new red lines addressed to Washington on the part of Chinese diplomacy. These “red lines” make up the informational shield through which China can occupy the terrain with the consent of local actors and whitewash its conflictive purpose. It pivots on the following tactical aspects:

  • Legitimizing China's action (valorization of the right to development and defense of the sovereignty of Latin American countries).

  • Emphasizing the advantages of cooperation with China.

  • Limiting local and external reticence, encouraging divergences in the opposing camp.

  • Neutralizing counter-reactions.

These elements have rapidly emerged after Donald Trump's declarations on the “reconquest” of the Panama Canal at the end of 2024. They result from a closely coordinated action between the governmental spheres, the media, and local influence (through repeaters).

In parallel and in a more covert manner, Beijing is using drug trafficking and migration to wage a direct offensive against the United States. It is promoting the distribution of fentanyl precursors through logistical channels open to American society. In 1993, a classified report highlighted the links between Hutchison Whampoa, the Sinaloa cartel in Mexico, and Sun Yee On and the 14K Triads for the trafficking of this narcotic.

The same is true for migratory flows. The eastern territory of the Darien Gap, bordering Colombia, forms a platform for the reception of migrants from five continents (about 150 nationalities registered). It is supported by international agencies (IOM, UNHCR, Red Cross, UN) and the United States. Some observers estimate the influx of migrants to the north at between 4,000 and 10,000 migrants per day. A significant number of Chinese nationals are observed. This migratory flow has naturally become a security concern for Panamanians. The new president elected in July 2024 promised to reduce the transit flow. He took still timid measures in this respect. The flow, articulated between several countries where the Chinese influence weighs structurally (Venezuela, Colombia, Brazil, Mexico), is still very active.

Other elements of the order of soft power and persuasion could complete this picture, from media, academic and diplomatic influence.

Beijing does not work only for a win-win objective as several actors involved in its influence pretend. It is not just implementing a policy of economic expansion in order to compete with its Western rival. Like the United States, its combat culture pivots on a principle of duality and spillover. Its involvement in the strategic field of perceptions is essential to establish the legitimacy of its power (right to development, community of destiny, win-win cooperation, defense of Panamanian sovereignty, etc.), while it builds economic dependencies aimed at constructing new forms of geopolitical domination and simultaneously waging an offensive against the United States. The strategy of overflow consists of not confronting its adversaries head-on, but indirectly, taking positions in areas where Washington and the Ibero-American countries cannot, or do not want to, be.

This characterization does not discredit cooperation with Beijing or with its main rival. Nor is it a reason to promote warlike and Manichean discourse. In fact, it is not possible today to disengage from China. It implies first of all understanding the current physiology of confrontation and elaborating a way of acting in these correlations of forces. The nature of this conflictive reality implies a Copernican turn in terms of how to frame this cooperation and organize society to that end.

It has already placed Panama in a growing web of dependencies that a fraction of the local elites extract from its influence. It makes Panama a co-participant in its conflictive design, dragging it into a zone of greater exposure in the framework of the global confrontation mentioned above. Other countries in Asia and Africa show examples of this. Ecuador is another case that is closer to home (violation of rights of Chinese companies, cutting off electricity supply in response to the Ecuadorian government's action).

United States

Is it possible that the United States has not been able to prevent and contain such an overflow in its hemisphere from the Monroist vision or another hemispheric security referential? Any power, aware of this multi-domain deployment and the vulnerabilities of the South American countries, would have taken defensive or offensive action in the face of such a systemic risk. Certainly, this strategy had some manifestations. The military intervention in Panama in 1989 demonstrated a non-negotiable limit with respect to the management of the bioceanic pass. Panama had to remain Washington's partner in the main issues of the international agenda. But a broader view shows that this agenda has been partial, under-executed and even functional to its Chinese rival.

On the one hand, Washington has exercised a commercial siege towards Panama, characteristic of its model of hegemony. The Trade Promotion Agreement, signed in the 1980s, brought unfavorable results for the isthmus. The public debt has been growing since 2008 to reach today approximately two-thirds of the GDP. Free trade and indebtedness, including with China now, have been the umbrella behind which Washington established an advantageous correlation of forces in commercial terms. Panamanians found a slightly more fluid economic relationship with Beijing to leverage their mining, agricultural, and manufacturing sectors that support a third of the country's labor force. But asymmetries with China are also the rule. Costa Rica bears witness to this.

Panama had no other solution but to open up to global flows and China to get other ingredients of prosperity. In 2017, a point of diplomatic acceleration, it reversed its stance on Taiwan, along with other Central American countries. The same year, it was the first at the regional level to join the Belt and Road Initiative (BRI). As Washington's distancing from Taiwan grew stronger in the late 1990s, its economy gradually shifted its exports to Asia.

On the other hand, Washington worked to induce this evolution, to the point of playing against its own interests. In 1999, several U.S. officials hushed up the risks linked to the transfer of the canal to Panama in the known context of the Chinese presence. This paradox can be explained by the internal fracturing that has widened in the Anglo-American world. This was exported to Panama and to the region as a whole. It is a deeper dividing line than a mere partisan split between democrats and conservatives or neo-liberals and protectionists. It has to do with what we could call the “fourth war of independence” that Washington has been waging for decades to extricate itself from the “umbilical” influence of the United Kingdom.

Looking back, London worked since the 18th century to maintain an “informal” empire with the Americas. After weakening the Hispanic empire, its attempt at Anglo-American unification failed. After the three intra-Anglo-American conflicts, part of its grand strategy has been to prevent the United States from becoming an excessively unipolar power. At the same time, London helped the Russian and French revolutions to weaken the monarchical powers of the time. It contributed to the first Cold War in order to design a global order more oriented towards a balance of powers, compatible with its interests. After World War II, he pushed China's growth to form a global counterweight to the United States.

In this perspective, the British strategic genius consisted in installing a “globalist” ideology in the Western elites. This collectivist and authoritarian ideology hybridized communist ideology with that of capitalism and statism. Its combat matrix is broad. It resorts to all the resources of a fifth-generation war. Although it is unknown to the general public, this ideology enjoys a hegemonic status. It was propagated very effectively among the American elites to become embodied particularly in figures such as Wilson, Kissinger, Carter, Brzezinski, Soros, Obama, Clinton, Bush, Biden, and many others. Generations of leaders were involved in this cognitive horizon, whose aim was to weaken the American sphere and organize the means to exercise a post-national dominium. Richard Poe and the young Sean Stone are two contemporary American historians who described this trend.

After decades of presence in the United States, Donald Trump broke with this ideological current, first in 2016. It is a major event, not perceived as such. Part of his new administration is inevitably going to remain entwined with this current. China understood this movement from its beginnings insofar as it was directly benefited from the turnaround operated by Deng Xiaoping in 1979 and the normalization carried forward by Henry Kissinger. It naturally used it to its advantage, as did other powers on the international chessboard contesting the Western order.

The direct consequences of these periods under the “globalist” orbit have been several. Washington's hemispheric security agenda was under-executed within the framework of the Monroist tradition. It also contributed to the erosion of Latin American and North American society by stealthily supporting Castro's armed struggle, cultural Marxism, irregular migration, drug trafficking, and adverse political regimes, as well as the entry of Russia and China into the hemisphere. Today in Panama, international agencies (IOM, UN, HIRAS, International Red Cross), Washington, and Beijing support the destabilization action through the migratory flow in Panama and other countries.

One of the first gestures was precisely the act of transferring the canal to Panama in 1977 at the initiative of Jimmy Carter, under conditions that would guarantee strategic dispersion. The increased presence of Chinese actors in the infrastructure of the Panama Canal and more broadly in the Central American economy is linked to this undeclared but executed “withdrawal”. Inevitably, Panamanian elites have been influenced by this current. One of the many examples of this is that instead of attending Donald Trump's inauguration in January 2025, Panamanian President José Raúl Mulino preferred to participate in the highest meeting of the globalist circle, the World Economic Forum in Davos.

Donald Trump's rhetorical provocation thus covers this historical thickness. It has to do with the intention, for now confusingly stated, of recovering a damaged area of influence. In the immediate term, it exerts pressure on Beijing, which is struggling to keep its economy in recession afloat. The commitments signed in the treaty between Panama and Washington give the new president a kick-start to enter into a broader strategic agenda. A window of opportunity opens today, first to deconstruct the consolidated diplomatic positions. This raises the possibility of placing Panama once again as a protagonist in the repair of the hemispheric security gap.

Panama

Panama is caught between two giants. Between the “incestuous” legacy of U.S. interventionism and the challenge of building a modern and national culture, Panamanian elites still seem to be far from these circumstances. At the risk of being too caricatural, they took advantage of the privileges offered to them respectively by each power at the time. Panama's 1978 transfer of the canal fed a logic of “corporatocracy” that lives to a certain extent from the discretionary and predatory management of the country, to the detriment of the national agenda and hemispheric security. For two decades, the abundant Chinese investments have played a similar clientelist role. Symbolic of this, much of the numerous bilateral agreements signed between 2017 and 2018 between the two states bypassed constitutional circuits.

It did not prevent the country from leading the growth rankings for some years, along with Costa Rica, Chile, and Uruguay. But this situation has changed. Between 2022 and 2024, the thriving citizenry has shown that it was more difficult for it to accept the proposals of a privileged political society. The infrastructure of the bioceanic canal is showing relative wear and tear. As an expression of the ideology mentioned above, the episode of relative drought in 2023 was used by the political authorities to disguise the mismanagement of the canal's water resources. As is now common practice in several areas, the argument of climate change was used to hide a management problem. Basically, water problems have not been properly addressed by the canal authorities. Corruption and above all Panamanian crony capitalism, i.e. the cartelization of its economy, in close association with the political sphere, synthesize a trend already known at the regional level.

The United States, and China in particular, took advantage of this institutional archaism to advance their interests. The greater the institutional weakness, the greater the capacity for influence and coercion. These factors contribute directly to lowering the economic competitiveness of the canal in a more conflictive world. With the support of China, countries such as Mexico, Nicaragua, Peru, and Colombia have announced new infrastructures that intend to compete with the bioceanic passage. This is still a long way off. Panama remains a central gateway. But a new logistical landscape is taking shape as mentioned above.

Panama today has three main adversaries: China, the United States, and itself.

The future of the Panama Canal depends in large part on a genuine capacity for internal aggiornamento. That is to say, to modernize its political and institutional structures and its ways of understanding the forces that shape reality. Without this genuine updating in the current context, Panama will have all the luck to reduce its margins of maneuver, remain in a stationary state, or in degradation walking towards a more conflictive focus. Beyond new investments and “modernization plans” announced on the surface, it is necessary to free the engines of wealth generation with a more orderly and transparent institutional framework.

Basically, it is a matter of confronting two powers that have created gaps in the hemispheric balance and Panamanian society. In this perspective, the participation of the strategic community, the private sector, and civil society is central to changing the status quo. There are lucid observers of the conflictive plot. Panamanian society is more polarized. It expresses legitimate resentment toward Washington and in part toward its political system. However, its state of mobilization in favor of greater stability and modernization is a point of support. It can contribute to updating the framework for understanding the Panamanian conflict, influence the correlation of forces, and seek international allies.

Whether we like it or not, Panama is today a center of gravity that links the region with the Cold War 2.0 scenario that is taking hold globally. It is an area of regional interest that must be analyzed with precision and depth.