Inside Panama’s foreign policy.

Panama’s foreign policy is transactional, canal-centered, and security-first. President José Raúl Mulino took office on 1 July 2024 after winning the May 2024 election, and he now combines head of state and head of government powers in a presidential system, with Foreign Minister Javier Martínez-Acha carrying the diplomatic file under presidential control Tribunal Electoral de Panamá, Presidencia de la República de Panamá, Ministerio de Relaciones Exteriores de Panamá. The core interest pyramid is unusually clear: survival means protecting the Canal and territorial control of the Darién border zone; regime and state security mean controlling migration, organized crime, and fiscal pressure; economic interests mean keeping Panama’s logistics, finance, and maritime services connected to U.S. and global markets; status means presenting Panama as a neutral services hub and reliable multilateral actor U.S. Department of State, Panama Canal Authority, BTI 2026 Panama Country Report. Panama does not operate from a formal grand-strategy doctrine in the way larger powers do; in practice, its doctrine is legal neutrality for the Canal, commercial openness, and close security coordination with Washington, tempered by selective engagement with China where investment is at stake Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal, U.S. Department of State, Jamestown Foundation.

The United States is Panama’s central bilateral relationship because it sits across all four tiers of interest. A Trade Promotion Agreement has been in force since 2012, the United States is a major trading partner and security partner, and U.S.-Panama cooperation is dense on counternarcotics, money laundering, migration management, and Canal security Office of the United States Trade Representative, U.S. Department of State, Congressional Research Service. Colombia and Costa Rica matter for border management and migration routes, especially the Darién Gap, while Panama also treats maritime links with the Caribbean and Central America as a direct economic security issue International Organization for Migration, SICA. China is the most important balancing relationship. Panama switched diplomatic recognition from Taiwan to the People’s Republic of China in 2017, joined Belt and Road cooperation in 2018, and then under later governments slowed or reconsidered several China-linked projects while keeping commercial channels open Ministerio de Relaciones Exteriores de Panamá, Reuters, Jamestown Foundation. That pattern is the key to Panama’s diplomacy: it will accept Chinese commerce, but not at the price of strategic distrust from Washington.

Regionally, Panama behaves less like an ideological Latin American state and more like a service economy guarding transit routes. It is a member of the United Nations, the Organization of American States, and the Central American Integration System, and it uses those forums to back rules on democracy, maritime governance, trade facilitation, and migration burden-sharing rather than bloc-style geopolitical projects United Nations Digital Library, Organization of American States, SICA. Its multilateral leverage is larger than its population would suggest because the Canal gives it systemic relevance in global shipping and supply chains Panama Canal Authority, World Bank. That leverage, however, is bounded by limited hard power: SIPRI reported Panama with no standing military and security functions carried by public forces rather than an army, which makes diplomacy, policing cooperation, and legal instruments more important than coercive capacity in its external behavior SIPRI, U.S. Department of State.

At the UN, Panama usually aligns with the broad Western and inter-American center on sovereignty, democracy language, and the law of the sea, but it is more cautious than Washington on any issue that threatens its commercial neutrality or relationships with multiple great powers United Nations Digital Library, U.S. Department of State. The analytically useful divergence is that Panama often sounds like a U.S.-leaning partner in bilateral diplomacy while voting and messaging in multilateral forums remain more legalist and non-confrontational than U.S. preferences would imply, especially on questions where Latin American states favor de-escalation, non-intervention, or broad humanitarian framing United Nations Digital Library, BTI 2026 Panama Country Report. The same divergence appears on China: Panama belongs politically to a U.S.-friendly camp in the hemisphere, but unlike more explicit China skeptics, it has not converted strategic caution into full economic decoupling Jamestown Foundation, Reuters.

Domestic politics drive that caution. Mulino came in with a mandate shaped by concern over