Panama Boots China From Canal: A US Soft Power Renaissance?

Panama Boots China From Canal: A US Soft Power Renaissance?

In a move that signals a potential shift in geopolitical influence within the Western Hemisphere, Panama has formally taken control of a series of vital ports previously operated and owned by Chinese entities. This development, occurring on February 24th, marks a significant moment in the often-tenuous relationship between the United States and China, particularly concerning strategic infrastructure in regions crucial to global trade. While the immediate implications for Chinese shipping operations are clear, the broader significance lies in what this event portends for American foreign policy and its capacity for projecting influence without overt military might.

The Panama Canal: A Geopolitical Chokepoint

The Panama Canal, a marvel of engineering and a linchpin of global commerce, connects the Atlantic and Pacific Oceans, drastically reducing transit times and costs for maritime trade. For cargo originating from the East Asian Rim and destined for the U.S. East Coast, passage through the canal is not just a convenience but a near necessity, especially for vessels that cannot navigate larger waterways like the Suez Canal. Consequently, control and access to ports surrounding this vital waterway are inherently strategic, even if the facilities themselves lack the capacity for significant military assets.

A Legal Tussle with Geopolitical Undertones

The recent events in Panama are not entirely sudden. The Trump administration had previously voiced concerns, initiating legal proceedings within Panama that ultimately led to the current outcome. Last month, Panamanian courts ruled that the Chinese had secured their contracts through bribery, rendering the agreements void. This legal victory paved the way for the Panamanian government to officially reclaim operational control of the ports. While China has expressed strong disapproval, the ruling was based on domestic legal consequences, forcing their withdrawal.

Marisque: A Danish Intermediary

Following the Chinese exit, temporary operational control of the ports has been handed over to Marisque, a Danish company. The involvement of an allied nation like Denmark, despite past diplomatic friction over issues like Greenland, underscores a pragmatic approach. It suggests that the United States, while initiating the action, is leveraging partnerships rather than directly occupying or seizing control, a tactic that could be perceived as less aggressive and more palatable internationally.

China’s Western Hemisphere Strategy Under Scrutiny

According to geopolitical analyst Peter Zeihan, China’s entire strategic posture in the Western Hemisphere has been predicated on a flawed assumption: that the United States would passively ensure the safety of Chinese shipping and allow unfettered economic expansion. This assumption, Zeihan argues, is fundamentally flawed. The U.S. possesses a global navy capable of projecting power worldwide, whereas China’s naval capabilities are more regional. The Panama incident, achieved through legal means rather than military confrontation, serves as a stark illustration of how this underlying assumption can unravel.

Beyond Panama: A Broader Regional Strategy?

The implications of the Panama situation extend beyond the canal itself. Zeihan suggests this could be part of a broader U.S. strategy to reassert influence in the Western Hemisphere. While actions in Venezuela (military) and Cuba (functional boycott) represent different facets of this strategy, the Panama example is particularly noteworthy for its demonstration of “soft power.” The ability to persuade a sovereign nation to alter its policies and actions in favor of U.S. interests, simply by asking and leveraging legal frameworks, is a potent display of influence. The presence of Marisque, a foreign but allied operator, further suggests that this reassertion of influence can be achieved diplomatically and economically, rather than through direct confrontation.

Challenges for U.S. Policy Implementation

Despite the apparent success in Panama, the United States faces significant internal challenges in replicating such diplomatic and economic maneuvers consistently. The transcript highlights a concern that the National Security Council was weakened during the Trump administration, as were the State Department and parts of the Defense Department. Furthermore, the Commerce Department was tasked with enforcing an exceptionally complex tariff regime, stretching its resources thin. This reduction in diplomatic and economic personnel could hinder the U.S.’s ability to effectively craft, advise, and execute nuanced foreign policy initiatives across the region.

The Future Outlook: Mexico and Beyond

Looking ahead, Zeihan anticipates a continued focus on Mexico due to its significant economic ties with the United States. However, other countries like Ecuador, Peru, Argentina, and Brazil, which have previously sought Chinese investment, may also become focal points. The success of the U.S. in Panama demonstrates that a nation can, through legal and diplomatic pressure, shift its allegiances. The critical question is whether the U.S. has the institutional capacity and diplomatic bandwidth to capitalize on these opportunities. While the U.S. possesses the “tools” of influence, their effective deployment hinges on robust diplomatic and economic machinery.

China’s Limited Recourse

For China, the options in response to this setback appear limited. Their protests, while vocal, have not altered the legal outcome. Forcing a Latin American country to disregard its own court rulings, especially on grounds of being pro-American or anti-Chinese, would likely backfire, alienating regional partners and undermining China’s own claims of non-interference. While U.S. policy may require refinement, the ability to leverage domestic legal frameworks and international partnerships presents a powerful, albeit underutilized, avenue for projecting influence in the Western Hemisphere.

Why This Matters

The expulsion of Chinese port operators from Panama is more than just a trade dispute; it’s a potential indicator of a renewed American capacity for strategic influence in its traditional sphere of influence. It suggests that, even in an era of great power competition, the U.S. can leverage legal systems, diplomatic alliances, and economic leverage to achieve strategic objectives without resorting to overt military action. However, the long-term success of this approach hinges on the U.S. rebuilding its own diplomatic and economic statecraft capabilities, which have been reportedly diminished in recent years. If the U.S. can effectively rebuild these capacities, the Panama incident could mark the beginning of a more assertive, yet strategically nuanced, American presence in Latin America, challenging China’s growing economic footprint and reshaping regional dynamics.

Source: Panama Boots China from the Canal || Peter Zeihan (YouTube)