What Panama鈥檚 New Embassy Means for China-Panama Relations
China is the second-biggest user of the Panama Canal, and Washington The United States switched official sovereign relations to the. Panama and China on Monday signed 19 cooperation agreements on However, relations between the United States and Central America. Panama, which had been one of the last countries maintaining diplomatic relations with Taiwan, severed those ties and established relations with the People's.
The facility, called Martano, is being built by the Chinese State-owned electric company, Shanghai Electric, and will also store natural gas. The license for the facility, currently held by the NG groupwas originally obtained by a Panamanian mall owner and business tycoon in an irregular auction in which there were no competitors.
The certification process ran into problems, however, because the Chinese company was not part of the International Association of Recognized Organizations IAROthe peer group used to establish credibility of certifying organizations.
Other Chinese projects Even where awards won by Chinese companies and investment deals going forward seem legitimate, the quantity of such outcomes, and their growth in the 16 months since Panama recognized the PRC, is striking. In telecommunications, the Chinese firm Huawei has an important presence in Panama, including making the Colon Free Trade Zone a regional hub for the distribution of its electronic systems.
Huawei has also committed to assemble products there, arguably the most important new investment in the zone as it struggles with the loss of demand in the context of a falloff in business from its two major customers, Venezuela currently in full economic collapse and Colombia in the middle of a commercial feud with Panama. Other Chinese companies have expressed an interest to the Panamanian government in establishing themselves as telecommunications providers in Panama.
While to date they have been turned down, a Chinese company could still enter the market in the near to mid-term by acquiring the Panamanian operations of Digicel. In the crime-ridden city of Colon and the associated Colon Free Trade Zone, Huawei is seeking to install a system of security cameras possibly including facial recognition capabilities and linked databases.
On the Amador causeway—in addition to the Chinese embassy and the inexplicable construction of a cruise ship terminal—the Chinese firms China Harbor, China Construction America, and China Construction Group are completing a massive convention centerbegun during the previous administration of Ricardo Martinelli by a contractor who took the pre-payment but did not complete the project. In the banking sector, the PRC-based Bank of China has had a presence in the country for decades, principally financing purchases of Chinese products through the Colon Free Zone, but more recently serving as the commercial bank for other Chinese companies doing business in the country.
In the mining sector, Chinese companies have quietly approached small-scale mine operators as potential partners and suppliers. There, the previously mentioned Chinese investment groups Landbridge and Gorgeous have combined to secure concessions for a major new port operation, PCCP, being built by the construction company China Harbour, and complemented as previously noted by a new natural-gas fired power plant and a possible associated facility for storing liquid natural gas for maritime transports and powering port operations.
These established operators are already struggling with overcapacity in the context of slow demand growth from Venezuela and Colombia, and with competition from the Colombian port of Cartagena, with its large, efficient consolidation area and base labor costs approximately one-third those of Panama.
Panama the new flashpoint in China's growing presence in Latin America
Indeed, the appointment of a President at the port with a background in mergers and acquisitions could be an indication that Evergreen may be preparing the operation for sale.
A merged COSCO-run port facility combining the PCCP and Evergreen properties which are physically adjacent to each otherwould make particular sense to significantly increase their berths and container handling capacity, particularly since redistribution of cargo to smaller ports is the primary business of most Ports on the Atlantic side of Panama, and the rest of the continent.
Indeed Hutchison is already arguably vulnerable to influence from its fellow Chinese shipping and port companies, since its year lease for the ports of Cristobal and Balboa are up for negotiation next year. Its position is strengthened by the connection by rail with its port on the Atlantic side currently owned by Kansas City Railroad, but which the Chinese have already expressed an interest in purchasing.
Panama, China sign accords on Xi visit after diplomatic ties start | Reuters
Building on the dominant Hutchison position in the Pacific, PRC-based investors have reportedly expressed interest to the Panamanian government in leasing a 1,hectare parcel of land on the Western side of the canal for use as a logistics park. While the Panama Canal Authority has ambitions to establish an independent Roll-On-Roll-Off cargo port, and a new container port on the Pacific side Corozal in the next two years, analysts consulted for this study believe that an array of 28 legal complaints which may be encouraged by those with whom Corozal would compete on the Pacific sidewill continue to prevent the Panama Canal Authority from successfully establishing the new port.
While Hutchison does also have some competition from the Singaporean Port Authority PSA facility on the western bank of the Pacific entrance to the canal, potential expansion of the PSA port as a competitor to Hutchison is limited by a lack of connectivity to the Atlantic by rail, and to the Panama City side of the canal.
In addition, Hutchison could have the option to collaborate with other Chinese companies in a massive new logistics park on the Western bank of the canal. Chinese interests could complement the previously indicated dominance of the Atlantic side of the canal, with an expanded dominance of the Pacific side. Although the organization has long been considered a bastion of apolitical, competent governance, its well-respected director, Jorge Quijanowho led ACP for 7 years and was part of it for over 40, is scheduled to retire this year along with his entire seven-member board of advisors.
Compounding these vulnerabilities, ACP itself is in the process of reorganization in a way that could strengthen the compartmentalization between its operations and new business organizations, decreasing the ability of experienced longstanding members to restrain its re-orientation in a more politicized direction.
As an indication of such politicization, a Chinese offer to perform a study regarding a fourth, larger set of locks to meet the future needs of the Panama Canal, which was turned down by the Panama Canal Authority four years ago because it had already conducted an analysis, is reportedly once again under discussion. It all began with a letter sent in to the Chinese government that, according to Isabel Saint Malo, Panama's vice president, was titled "Panama wants to make ties with China".
Panama the new flashpoint in China's growing presence in Latin America | World news | The Guardian
The contents of the letter are kept confidential, as well as the reasons of why it was sent. It has also been kept confidential who delivered the letter and assisted in the switchover process, which is only described as "a distinguished member of the Chinese community living in Panama". The ex-ambassador of the US to Panama, John Feeleysaid that he had asked Panamanian President Juan Carlos Varela about the switchover in but Varela lied to him, saying that there were no plans to make the switchover.
He also said that Varela did not tell him the truth until 1 hour before the nationwide announcement. Others questioned why the Panamanian government continues to use equipment donated by Taiwan. The Panamanian government initially gave no reason, later saying that one reason was because "China is the second largest user of the Panama Canal" and President Varela said it was because he "couldn't accept it anymore" and "that's what every responsible leader would do". The Panamanian government officially said that Taiwan was an inalienable part of China and that the switchover was to comply with the one-China policy.
The ROC government said that Panama was its "number one ally" and that it would not participate in Beijing's checkbook diplomacy.
The Taiwanese government complained that Panama maliciously hid the switchover process until the last moment. In the first year of diplomatic relations, 19 treaties were signed. Varela said that its main purpose was to allow Chinese nationals to easily invest in Panama. Controversies over the sudden switchover, included lack of due process, unusually high levels of confidentiality, and the fact that a few weeks before the switchover, Taiwan had donated medical equipment to Panama.
Varela called it a milestone in Panamanian aviation. Due to this new route, the Panamanian ministry of tourism expected at least 40, Chinese tourist visits per year. As a result, Panama City was almost immediately added to China's list of officially approved tourist destinations. The Plans for the campus in Amador were later scrapped due to Heavy criticism over the fear that the Chinese flag will be seen before the Panamanian Flag in Cerro Ancon due to its position in Amador, thus potentially giving the idea that Panama is Chinese territory.
The Chinese embassy in Amador was suggested by Varela, saying that "Amador has not been used properly, it's an area whose value has to rise. A Panamanian government agency later said that the switchover was because of Taiwanese president Tsai Ing-wen's violations and un-acknowledgement of the consensus regarding China, Taiwan and the One-china policy. Panamanian newspaper La Estrella questioned the reasons Varela initially gave for the switchover, like "China is the world's largest population and the 2nd largest economy and user of the Panama Canal", calling Varela's actions contradictory and saying that the reasons Varela gave were the reality Panama has lived under for decades, so those couldn't be regarded as valid reasons for the switchover.
The same newspaper also says that China's plans in latin america convince latin american nations easily, with apparent benefits in the short term but with dependency in China in the long term and that China is silently invading other countries and Latin america in general. Varela was criticized for inviting him, and for presumably ordering the closure of Corredor Sur, Balboa, and the Cinta Costera for three hours, even though Xi didn't use the Corredor Sur highway.
Xi presumably asked to be treated like Barack Obama was treated during his visit to Panama in and many consider Xi was treated even better than Obama.