Panama has decided not to renew its participation in China's Belt and Road Initiative (BRI), President Jose Raul Mulino announced on Monday following a meeting with US Secretary of State Marco Rubio. The decision comes as Washington intensifies its efforts to curb Beijing's influence in Latin America, particularly in strategic trade and infrastructure sectors like the Panama Canal.

"I have made an important decision and I am informing you of it. My government will not renew the 2017 memorandum of understanding on the Belt and Road Initiative. That is true. We will study the possibility of ending the project ahead of schedule, but I think it should be renewed in a year or two, which happens every three years," Mulino said after his meeting with Rubio.

US applauds Panama's decision amid Canal tensions

Washington has long opposed BRI, claiming that China uses the initiative to expand geopolitical influence through the so-called "debt trap diplomacy." Rubio's visit to Panama reflects growing US concerns over China's presence in the region, with the Trump administration openly warning that Beijing's growing economic footprint in the Panama Canal could be a national security threat.

Rubio pressed Mulino on Chinese influence in the canal, noting that Trump does not want to maintain the status quo regarding the waterway. The concern stems from the fact that CK Hutchinson Holdings, a Hong Kong-based company, operates key port terminals at both ends of the canal. While Panama has insisted that it retains full sovereignty over the canal, Washington has accused Beijing of using its economic ties to influence operations.

Read more: US threatens Panama over alleged 'China influence' in canal operations

After Panama's announcement, Rubio praised the decision as a major victory for US-Panama relations and a step toward limiting Chinese influence in Latin America.

"Yesterday's announcement by President @JoseRaulMulino that Panama will allow its participation in the CCP's Belt and Road Initiative to expire is a great step forward for US-Panama relations, a free Panama Canal, and another example of @POTUS leadership to protect our national security and deliver prosperity for the American people," Rubio posted on X (formerly Twitter) after leaving the country. 

Panama's shift away from China and US leverage

Panama was the first Latin American country to officially join the Belt and Road Initiative in 2017, shortly after severing diplomatic ties with Taiwan in favor of Beijing. BRI, China's flagship infrastructure initiative, seeks to connect economies worldwide through investments in roads, ports, telecommunications, and energy projects.

While China defends the program, saying it fosters global development, Washington argues that the initiative burdens countries with unsustainable debt, expanding Beijing's political leverage.

Read more: Panama Canal chief rejects Trump's accusations of biased use of canal

Senator Ted Cruz has been among the leading voices in Congress calling for Panama to remove Chinese port operators, describing them as a "national security risk."

Meanwhile, some US officials have even raised the possibility that Chinese involvement could violate Panama's treaty obligations, fueling speculation over whether Washington might seek to regain influence over the canal.