• Panama has formally announced its withdrawal from China's Belt and Road Initiative (BRI).
• The move comes after US pressure, including threats regarding control of the Panama Canal.
• China has condemned the US for "coercion" and expressed regret over Panama's decision.
• Panamanian President José Raúl Mulino criticized the benefits of the BRI for his country.
• US officials are touting this exit as a significant step against China’s influence in Latin America.

In a significant diplomatic shift, Panama has officially withdrawn from China's Belt and Road Initiative, marking a shift in its foreign policy amid intensifying pressure from the United States. The announcement was made by President José Raúl Mulino, who stated that the Panamanian Embassy in Beijing submitted the required 90-day notice of withdrawal from the program originally signed in 2017, underlining the uncertainty over the promised economic benefits from the initiative.

The backdrop to this decision is a series of escalating tensions regarding the Panama Canal, a crucial waterway for global trade that has been a focal point of US foreign policy. President Donald Trump and US Secretary of State Marco Rubio have expressed growing concerns over what they view as increasing Chinese control over the canal. Rubio recently indicated that unless Panama takes action to diminish China’s influence, the US would consider implementing potentially severe measures. This follows allegations by the Trump administration that China is exerting its influence in the region through various international agreements, including the BRI, which is meant to enhance global infrastructure connectivity but has been criticized as a means of creating dependency on Chinese loans.

China's reaction to Panama's withdrawal was immediate and severe, characterized by a statement from Foreign Ministry spokesperson Lin Jian, who accused the US of engaging in “coercion” and working to undermine the BRI segment of its infrastructure investments. Beijing describes the BRI as essential for economic integration and progression among participating nations, asserting that the program has delivered various tangible benefits. During a diplomatic discussion, Chinese officials summoned the Panamanian ambassador to express their dissatisfaction and encouraged Panama to reconsider its choices based on their long-standing bilateral relations. They emphasized that the BRI has actively involved more than 150 countries globally.

Amid these geopolitical shifts, Mulino defended his government’s decision, questioning the tangible benefits that the BRI has brought to Panama, stating bluntly: “What are the great things that this Belt and Road Initiative has brought to the country?” His remarks echo concerns voiced by various analysts that smaller nations might find themselves caught in a geopolitical tug-of-war as both the US and China vie for influence in Central America. Some experts suggest that other Central American nations could follow Panama's lead if similar pressures build.

This exit not only marks a significant pivot for Panama but may also serve as a bellwether for other nations that have aligned with the BRI. The Trump administration seizes on this opportunity as a part of a broader strategy to combat Chinese influence in the Western Hemisphere while projecting US dominance in Latin American policies. The Panama Canal was initially taken under US control in the early 20th century before being transferred back to Panama in 1999, and it remains a vital link for 40% of container traffic to and from the United States.

Both countries remain in a delicate balancing act of asserting their respective influences in a region that has historically been within the US sphere of influence but is increasingly susceptible to Chinese investments and interests.

For more details, check the original reports from India Times, South China Morning Post, and AP News.