Road Logistics

Belt and Road Hazards, Coming to the Americas


The Chinese train that came and went
At a nationally-televised press conference in Panama City in March 2019, a China-funded team of Chinese and Panamanian engineers took the stage. They unveiled the results of their feasibility study of the proposed Panama-Chiriquí Railway. They announced the megaproject would cost $4.1 billion and take six years to build. It would cut travel time from the capital to the Costa Rican border from eight hours to three. On this sunny day, Panama’s President Juan Carlos Varela was on hand to cut the blue ribbon, beaming alongside Wei Qiang, China’s Spanish-fluent ambassador. Varela said new urban areas would be created along the route, helping to develop Panama’s neglected interior. He added that the train would increase the export-competitiveness of Panama’s rural producers—noting it is currently cheaper to send cargo to Panama’s ports from Shanghai than from its own coffee-growing Chiriquí Highlands. Panama would modernize its slow, fragmented land transport, and China Railway Design Corporation would get a big fat contract. Everyone agreed it was a win-win.

“Win-win projects” are indeed the stated goal of China’s Belt and Road Initiative (BRI), also known as the New Silk Road. Introduced by President Xi Jinping in 2013, the BRI is China’s global economic strategy for the twenty-first century: to finance and build new infrastructure in partner countries around the world, linking them to China and Chinese-operated logistics hubs, putting China and its influence at the center of global commerce.

The Panama-Chiriquí Railway was to be China’s first BRI project in the Americas. Panama became the first country in the region to join to the BRI in November 2017. That was the year of what a local newspaper called a “honeymoon dance” between President Varela and Xi, when Varela cut Panama’s diplomatic relations with Taiwan and opened them with China. That same year, a Chinese firm won a $165 million contract to build the Amador Cruise Terminal at the Pacific end of the Panama Canal. At the Atlantic end, another Chinese firm began construction of a $900 million liquid natural gas (LNG) power plant and the $1.1 billion Panama Colón Container Port, to be the largest port in Panama. With hard hats and shovels, President Varela and Wei Qiang stood together at the ceremony to lay the port’s first stone—Varela noting it was the biggest investment China had ever made in Panama. The deal also meant Chinese firms would soon control three of the six container ports on the Panama Canal, as Hong Kong-based Hutchinson Ports already manages the ports of Balboa and Cristóbal. China was on a roll in Panama.

As Chinese firms poured billions into real estate and infrastructure projects at both ends of the Panama Canal, many locals worried that Panama’s sovereignty was being threatened—a sovereignty only recently achieved, when the US handed over the Canal Zone to Panama in 1997. In a 2018 editorial in La Estrella, Universidad Interamericana de Panama professor Euclid Tapia warned of the debt-trap diplomacy for which China has become infamous in many other BRI countries. Tapia cited Sri Lanka, “where to pay its debts to Chinese creditors the country was forced to lease its most important port for 99 years.” He said similarly, and with little public attention, China was now seeking to construct a new fourth set of locks on the Panama Canal at an “unspeakable” cost of $15 to $20 billion—which “will gladly be financed by China,” precisely because Panama would likely be unable to pay it back. “Knowing the degree of corruption of our governments,” wrote Tapia, “it is highly probable that the fate of the Panama Canal will follow that of the Suez Canal, which due to Egyptian debt, England took from France. China could take over our canal and swallow us by osmosis.”

Perhaps slow to respond, Secretary of State Mike Pompeo flew to Panama…



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