Panama’s new president means new China policy – ​​DNyuz

Panama’s 2017 decision to ditch Taiwan and establish diplomatic ties with China caught the United States by surprise and was a sign of Beijing’s growing influence in Latin America. It was the first time in a decade that China had poached a country in the region, and it paved the way for others to abandon Taipei, including the Dominican Republic, El Salvador, Nicaragua and Honduras.

Now, however, Panama could consider reversing the trend it has started, provided that Taiwan and the United States protect it from Beijing’s inevitable backlash and compensate it for economic losses. Restoring formal ties with Taipei, or simply rebuilding the relationship, would be a major victory for Taiwan in Latin America, home to seven of the 11 countries that still recognize it as a sovereign state. It would also be a rare victory for the United States in its struggle for influence in a region where its power was once largely unchallenged.

In May, Panamanians elected a conservative former foreign minister, José Raúl Mulino, as president. It was an awkward moment for the United States. Mulino had been handpicked by former President Ricardo Martinelli after the State Department sanctioned Martinelli for corruption and the Panamanian Supreme Court barred his candidacy after he was convicted of money laundering. Mulino’s campaign adopted the slogan, “Martinelli is Mulino, Mulino is Martinelli.”

But on election day, Mulino vowed to be “nobody’s puppet,” and his ties to Martinelli have not colored his approach to the United States. He has been quick to portray Panama as a “strategic partner” for the White House. His secretary of state has traveled to Washington four times, including in July to meet with Secretary of State Antony Blinken. Panama has shown no similar affection for China, the No. 2 customer of the Panama Canal.

The United States has a complicated history with Panama. President Theodore Roosevelt helped secure Panama’s independence from Colombia in 1903, and the United States built the Panama Canal, still the country’s most important economic asset and source of national pride. But over time, U.S. control of the canal came to be seen as a relic of imperialism. The dispute increasingly soured relations until U.S. President Jimmy Carter negotiated an agreement to hand over the waterway. In 1989, the United States invaded Panama; deposed its strongman leader, Manuel Noriega; and prosecuted him for drug trafficking.

Today, the United States is widely admired in Panama. Nearly 80 percent of Panamanians have a positive view of America, almost double the number who view China positively, according to the polling organization Latinobarómetro.

Mulino has shown a special interest in issues of interest to the White House. Just hours after his inauguration, Panama signed an agreement with the United States to deport migrants from Colombia who arrived through the Darién Gap en route north. He has also backed the U.S. hard line on Venezuela after disputed elections in July, at one point offering asylum to President Nicolás Maduro, who claimed victory, to help Venezuela negotiate a political transition. That would repeat Panama’s role in the 1970s, when it welcomed the deposed Shah of Iran, whose presence in the United States had complicated negotiations over the release of American hostages in Tehran. Panama could be an even more important partner starting next year, when it begins a two-year term on the United Nations Security Council.

A more decisive shift in Panama’s foreign policy would make it an outlier in a region where China’s steadily growing influence has led most governments to favor nonalignment. Despite years of U.S. warnings about Chinese “corrosive capital,” leaders of all ideologies have gone straight to Beijing in search of investment. Two years ago, Argentina joined China’s signature Belt and Road Initiative. Eight presidents from the region are scheduled to visit China in 2023, including the leaders of Brazil, Chile and Colombia. Trade between China and Latin America has exploded, from $14 billion in 2000 to $500 billion in 2022.

Given these trends, it is unclear how far Panama’s new government is willing to go in redesigning its China policy. Favoring Taiwan over China is rarely a popular political decision. Even Taiwan’s closest allies, including the United States, have formal ties with Beijing rather than Taipei. Meanwhile, the costs of opposing China are mounting, as Beijing punishes those who oppose its political or economic interests.

China is notoriously intolerant of disagreement over Taiwan, even when the critic lives 10,000 miles away from the disputed island. Just ask Paraguay, Taiwan’s only diplomatic partner in South America, where China withheld vaccines at the height of the COVID-19 pandemic. Or Haiti, where Beijing is reportedly protesting Haiti’s ties with Taipei by opposing a US plan for a UN peacekeeping mission to oust the criminal gangs that control 80 percent of the capital. Last year, the Central American parliament expelled Taiwan, where it had served as a permanent observer for decades, and replaced it with China.

Panama also needs all the friends it can get. The economy has suffered a series of blows in recent years, including the pandemic, nationwide protests, the closure of a major copper mine, a drought that disrupted canal operations and the loss of its investment-grade rating. Rather than take sides in the U.S.-China rivalry, the business community prefers to drink from both cups. China has a strong presence in Panama’s Colón Free Trade Zone and is currently building a fourth bridge across the canal.

But even if Panama does not restore diplomatic relations with Taiwan, it could strengthen the relationship between the two countries, which would show that Taiwan can be a valuable partner for us. all countries in the region—and that Panama’s foreign policy reflects Panamanian interests. As a first step, Mulino could consider inviting Taiwan’s new president, Lai Ching Te, to visit Panama City on his first trip to the region to discuss options for cooperation. One promising area is semiconductors, given Taiwan’s expertise and Panama’s ambitions. Panama is already a recipient of U.S. funds intended to promote the “nearshoring” of chip manufacturing.

The United States, for its part, could use this opportunity to showcase meaningful alternatives to Chinese money. Panama is considering two massive projects, a $1.6 billion dam to meet the canal’s freshwater needs and a 250-mile tourist train from the capital to the western city of David. The U.S. government and U.S. businesses could play a role in both projects and in meeting other infrastructure needs. Washington could provide further support by admitting Panama to the updated North American Free Trade Agreement. A visit by the next U.S. president would also go a long way. Roosevelt’s 1906 trip to inspect the canal’s construction was the first overseas trip by an American leader, but it has been almost a decade since the last presidential trip to Panama.

China has been schooling the United States in Latin America for decades, but a strong showing in Panama could turn the tide. Now is the time for a comeback. China’s lending to the region has fallen sharply, to an average of $1.3 billion a year between 2019 and 2023, down from $25 billion in 2010. In the meantime, the debt to China must be repaid, eroding goodwill. Many governments have trade deficits with China. Countries that dumped Taiwan, such as Costa Rica, regret their purchase, with unfulfilled expectations for big investment and rising trade.

Regional leaders are beginning to push back against Beijing. In Brazil, Chile and Mexico, China is facing investigations into alleged dumping. Costa Rica is trying to bar Chinese company Huawei from building advanced mobile networks. In November, Argentina elected a president who campaigned on a promise to “not do business with communists.”

Washington is typically stingy when it comes to Latin America, but there is a bipartisan interest in outmaneuvering China and recognition that Panama’s new government is a potentially important ally in that competition. China had a “foothold” in Panama, one senator said at a recent hearing, “until we got this president there.” Will the United States seize the opportunity? It’s hard to say, but it should.

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