Panama’s China shift may threaten Taiwanese diplomacy

Significance

The visit follows Panama’s June 12 announcement that it had cut diplomatic ties with Taiwan in favour of establishing official relations with China -- the first such change in the region since Costa Rica switched diplomatic allegiances in 2007. Panama’s switch reflects China’s increasing economic links with Central America more generally and raises questions regarding the diplomatic stances of other countries in the Latin America/Caribbean (LAC) region, which is home to more than half of Taiwan’s remaining diplomatic partners.

Impacts

• Taiwan will be more interested in unofficial but substantive ties than in retaining formal diplomatic recognition at high cost.
• Funding issues and domestic opposition to Nicaragua’s canal project could dissuade Ortega from any high-profile moves on China or Taiwan.
• Improved relations between China and Panama may concern Washington, given the level of US investment in the Panama Canal.