Panama: Foreign Relations

Panama's foreign relations have long centered on the Panama Canal, control of which passed fully to Panama in 1999. Relations with the United States, close since the 1989 U.S. invasion that removed General Manuel Noriega from power, remain the cornerstone of Panamanian foreign policy, encompassing security cooperation, trade, and continued American interest in the canal's neutral operation. Panama maintains an embassy in Washington, D.C., and the United States maintains an embassy in Panama City, alongside broad cultural and economic ties.

Panama switched diplomatic recognition from Taiwan to the People's Republic of China in June 2017, ending a relationship with Taipei that dated to the early twentieth century. Chinese investment expanded quickly afterward, including port and infrastructure projects associated with Beijing's Belt and Road Initiative, most notably long-standing concessions to operate terminals at the Pacific and Atlantic entrances of the Panama Canal.

As of 2026, Panama has moved to recalibrate that relationship. Panama's Supreme Court ruled that Hong Kong-based CK Hutchison's concession to operate the Balboa and Cristobal ports was unconstitutional, a decision that has strained ties with Beijing and prompted retaliatory Chinese measures, including increased inspections of Panama-flagged vessels. Washington has pressed Panama to limit Chinese influence over canal operations, framing the issue as a matter of hemispheric security. Under the administration of President Jose Raul Mulino, who took office in July 2024, Panama has sought to balance continued commercial engagement with China against a deepening security and economic partnership with the United States. Panama remains a member of the United Nations, the Organization of American States, and the World Trade Organization.