Panama strengthens ties with the US
A 29 January ruling by Panama’s supreme court (CSJ) striking down a concession for two ports on the Panama Canal owned by Hong Kong-headquartered CK Hutchison Holdings (CKH) via its subsidiary Panama Ports Company (PPC) is widely considered a victory for the US, which has sought to curb Chinese influence in the region. It comes amid renewed signs of US-Panama cooperation after tensions last year stemming from President Donald Trump’s threat to retake control of the Panama Canal, citing Chinese influence, among other factors [SSR-25-02].
CKH’s concession, which US officials have long maintained is vulnerable to influence from Beijing, has emerged as a flashpoint in US-China tensions. In March 2025, CKH announced a deal to sell its stake in the Balboa and Cristóbal ports to a consortium led by US investment firm BlackRock Inc. However, this provoked resistance from Chinese antitrust authorities, after which the media reported talks were underway regarding the possibility of China’s state-owned shipping giant Cosco being granted a major stake. On 29 January however the CSJ issued a ruling in response to legal challenges filed last July by Panama’s comptroller general after an audit identified irregularities in the extension of the contract granted in 2021 to PPC, which has been operating the ports since 1997.
The ruling was blasted by China, which warned, without going into detail, that Panama would pay “heavy prices”, while CKH announced it would file arbitration proceedings against Panama. However, it has been hailed in Washington as another step in the gradual unwinding of Chinese influence in Panama – a process which began in February 2025, when Panama became the first country to withdraw from China’s Belt and Road Initiative which it had joined in 2017, after switching ties that year to Beijing from Taiwan. Ties were then further boosted with the US in April 2025 with a memorandum of understanding (MoU) which “formalized the use of designated facilities for joint rotational training and the protection of the Canal against malign influence”, albeit while drawing complaints domestically that Panama had ceded sovereignty to the US.
Since then, on 28 January, in a report published on its news website Diálogo Américas, the US Southern Command (Southcom) declared that as of the start of 2026, Panama and the US had reached a “historic high point” in their security and defence alliance. As well as the April MoU, the Diálogo Américas report highlighted that in the same month Panama and Southcom co-hosted the Central American Security Conference (Centsec), focusing on combined maritime operations and cybersecurity, while over the past five years, the US has provided over US$230m in security assistance to Panama.
Security claims
A 2 February Diálogo Americas report states that throughout 2025, Panama “solidified its standing as a strategic leader in hemispheric security”, stating that that by “integrating advanced technology, institutional leadership, and a sophisticated network of international alliances, Panamanian security forces achieved historic victories against transnational criminal organizations (TCOs) across air, sea, and land”. Citing data from Panama’s security ministry, it said that authorities seized more than 118 tonnes (t) of illicit substances in 2025, including cocaine, marijuana, methamphetamine, ecstasy, and ketamine. It states that nearly 80 t of the total volume was cocaine, and references the record drug seizure in November 2025 [SSR-26-01].
Huawei controversy
On 11 June the US embassy in Panama announced the US government would replace telecoms equipment of Chinese firm Huawei installed at 13 sites across Panama with “secure American technology”. According to the embassy, the US$8m US-funded project, which is being carried out in partnership with Panama’s public security ministry (Minseg), will also add seven new communications towers in four provinces and, once the project was completed, Panama’s security forces “will be able to control and manage their own telecommunications systems – strengthening shared security and the U.S.-Panama partnership”. However, the announcement was controversial, prompting President José Raúl Mulino to call on the US embassy to refrain from public announcements on domestic issues. Minseg also issued a statement clarifying that the deal to which the US embassy was referring dated back to 2017, as part of an investment plan to improve the communications system of the national border service (Senafront), inter alia.