Panama must navigate its growing economic ties with China with extreme caution to protect its sovereignty and strategic assets. That is the stark warning from Leland Lazarus, a former U.S. State Department official and expert on China-Latin America relations, who spoke to journalists in Panama City this week. Lazarus, who has Panamanian roots, argued that while trade diversification is positive, the relationship carries hidden dangers comparable to a “Trojan horse,” especially concerning the Panama Canal and critical infrastructure.
He identified specific legal and geopolitical vulnerabilities stemming from Chinese corporate behavior and national laws. Lazarus pointed to port operations, major construction projects like the cuarto puente (4th bridge), and digital infrastructure as areas of particular concern.
“China today is Panama’s second most important economic partner. It is one of the most important users of the Canal,” Lazarus acknowledged at the start of the discussion. [Translated from Spanish] He noted access to cheap goods and commercial diversification as benefits. “All of that is very good,” he said. The problem, he warned, emerges when that relationship operates as a “Trojan horse.”
The analyst urged Panamanian authorities to scrutinize deals with state-linked Chinese firms under a different lens. He emphasized that their obligations under Beijing’s directives fundamentally alter the nature of such partnerships.
Legal Mandates and Canal Neutrality
A core element of Lazarus’s analysis focused on the 2017 Chinese National Intelligence Law. This legislation compels all Chinese companies, both state-owned and private, to support state intelligence work when requested. Lazarus stressed that this legal framework creates an unavoidable conflict for any Chinese firm operating strategic assets abroad.
“Articles 7 and 14,” he specified, referencing the law. Under that framework, he maintained, a company like port operator CK Hutchison cannot refuse to cooperate if the Chinese state demands it. [Translated from Spanish]
He also highlighted China’s refusal to sign the Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal. This treaty, signed by numerous other nations, is a cornerstone of the waterway’s international governance. Lazarus framed the absence of China’s signature as a deliberate and significant gap. It leaves a question mark over Beijing’s long-term commitment to the canal’s neutral status, especially if a Chinese firm controls adjacent port terminals.
Corruption Risks and Strategic Projects
Lazarus dedicated a portion of his remarks to corruption patterns. He cited ongoing public debates in Panama surrounding several high-profile Chinese-financed projects. These include the Fourth Bridge over the canal, the Isla Margarita development, and a container port in Colon.
He specifically mentioned the case of Jorge Gonzalez, a member of the Panama Canal Authority board. Gonzalez previously held a consultancy with a company involved in the consortium building the Fourth Bridge. Lazarus connected this to the inherently state-driven nature of major Chinese contractors like China Harbour Engineering Company, a member of that same bridge consortium.
“That is very worrying,” he stated. [Translated from Spanish] To illustrate the inherent imbalance, he used a soccer metaphor. Doing business with these Chinese companies, he said, “is like playing a fixed match.” [Translated from Spanish]
The companies have direct links to the Chinese political and military apparatus, he explained. This fusion of commercial and state power creates an environment where standard business transparency can be secondary to political objectives.
The Taiwan Question and Commercial Sovereignty
Lazarus challenged Panama’s current stance on Taiwan, which was dropped as a diplomatic partner in 2017 when relations with Beijing were established. He noted that other major democracies maintain robust commercial ties with Taiwan despite recognizing the “One China” principle diplomatically.
“Panama as a sovereign country can do business with any country,” he asserted. [Translated from Spanish]
He suggested Panama has adopted a more restrictive interpretation of the “One China” policy than its peers. If mainland China could once have a commercial office in Panama while it recognized Taiwan, he asked, why can Taiwan not have one now? This forfeiture of flexible international development finance and trade options, in his view, diminishes Panama’s sovereign leverage.
Global Ports and the Hong Kong Precedent
When asked about the global presence of firms like CK Hutchison and Panama’s unique sensitivity, Lazarus pointed to Hong Kong. The 2019 national security law imposed by Beijing, he argued, was a watershed moment.
“It removed all independence from the city and from the companies that operate there,” he said. [Translated from Spanish] Since then, he claimed, it is no longer clear that Hong Kong-based conglomerates retain real autonomy from Beijing.
This precedent directly informs the risk calculus for Panama. Awarding new port concessions to state-owned giants like Cosco is not merely a commercial decision, Lazarus insisted. The core issue is not trade but the rules governing the players. Engaging with a Western corporation and a Chinese state-owned enterprise are fundamentally different games, he concluded, because the underlying obligations of the companies are not the same.
5G, Data Security, and Strategic Positioning
The conversation turned to technology and the potential role of Chinese firms like Huawei in building Panama’s 5G networks. Lazarus advised reviewing the documented history of such companies, including the military background of Huawei’s founder. He expressed deep concern over data opacity.
“There is evidence that Huawei equipment collects personal data and we do not know where it goes,” he stated. [Translated from Spanish] Here he again referenced the 2017 Chinese National Intelligence Law, which would legally compel Huawei to hand over any data to Chinese authorities upon request.
Ultimately, Lazarus framed Panama not just as a trade partner from Beijing’s perspective, but as a geopolitical node. He introduced the concept of “strategic support points,” a term found in Chinese policy documents. These are key global locations where China seeks logistical footholds and projection capabilities. Panama, with its iconic canal and central geography, fits this description perfectly. The analyst’s comprehensive critique, echoed by other regional security experts like Isaac Ortega, serves as a detailed roadmap of the potential pitfalls awaiting nations that welcome Chinese investment without sufficient safeguards. The message was clear. Diversification is wise, but vigilance is non-negotiable.